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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________

FORM 10-Q

______________________________

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38847

______________________________

SILK ROAD MEDICAL, INC.

(Exact name of registrant as specified in its charter)

______________________________


Delaware		20-8777622
(State or other jurisdiction of ‎incorporation or organization)		(I.R.S. Employer ‎Identification No.)
1213 Innsbruck Dr., Sunnyvale, CA 94089
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (408) 720-9002

_______________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	SILK	Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 31, 2024, the number of outstanding shares of the registrant’s common stock, par value $0.001 per share, was 40,632,143.

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TABLE OF CONTENTS


	Part I: Financial Information	Page
Item 1.	Condensed Financial Statements	4
	Condensed Balance Sheets	4
	Condensed Statements of Operations and Comprehensive Loss	5
	Condensed Statements of Stockholders’ Equity	6
	Condensed Statements of Cash Flows	7
	Notes to Condensed Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	29
Item 4.	Controls and Procedures	30

	Part II: Other Information
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	79
Item 3.	Defaults Upon Senior Securities	79
Item 4.	Mine Safety Disclosures	80
Item 5.	Other Information	80
Item 6.	Exhibits	81
	Signatures	82

As used in this report, references to “Silk Road Medical,” the “Company,” “we,” “our” or “us,” unless the context otherwise requires, refer to Silk Road Medical, Inc.

“Silk Road Medical,” the “Silk Road Medical” logo, “TCAR,” “ENROUTE,” the “ENROUTE” logo, “ENHANCE,” “Enflate” and our other registered or common law trade names, trademarks or service marks appearing in this Quarterly Report on Form 10-Q are our property. Trade names, trademarks and service marks of other companies appearing in this Quarterly Report on Form 10-Q are the property of their respective owners. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, these other companies unless otherwise stated. Solely for convenience, the trademarks and trade names referred to in this Quarterly Report on Form 10-Q appear without the ® and ™ symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights, or the right of the applicable licensor to these trademarks and trade names.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements concerning our business, operations, and financial performance and condition, as well as our plans, objectives and expectations for our business, operations, prospects, and financial performance and condition. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements within the meaning of the federal securities laws and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology, or the use of future dates.

These forward-looking statements include, but are not limited to, statements about the following subjects:

•our expectations regarding the expected timing and anticipated closing of our pending acquisition by Boston Scientific Corporation (Boston Scientific); our ability to obtain required regulatory and other approvals in connection with the proposed transaction on a timely basis or at all; anticipated expenses related to the proposed transaction; our ability to satisfy the conditions to closing or otherwise complete the transaction on a timely basis or at all; the occurrence of any event, change, or other circumstances that could delay or prevent completion of the proposed transaction or give rise to the termination of the Merger Agreement (as defined herein); the impact the pending transaction may have on our financial and operating results and current plans and operations, including potentially diverting management’s attention from our business; the effects of the transaction (or the announcement or pendency thereof) on our future business and financial and operating results; our ability to retain key personnel and maintain relationships with customers, manufacturers, suppliers, employees (including the risks relating to the ability to retain or hire key personnel), international distributors, other business partners or governmental entities; and the risk and outcome of legal proceedings related to the transaction;

•our goal to establish transcarotid artery revascularization, or TCAR, as the standard of care for the treatment of carotid artery disease;

•our 2024 strategic priorities to grow, strengthen and diversify our business;

•our plans to conduct further clinical trials and anticipated enrollment, clinical sites, completion, results and timing thereof;

•our plans and expected timeline related to our products, including timing of commercial launch, or developing new products, to address additional indications or to obtain regulatory approvals or clearances or otherwise;

•the expected use of our products by physicians, including market awareness, acceptance and adoption of our products, and anticipated increased utilization of our products and market penetration;

•our expectations regarding the number of procedures that will be performed with our products, the number of physicians we expect to train, and the number of our sales territories;

•our ability to obtain, maintain and expand regulatory approvals and clearances for our current products and any new products we create;

•the expected growth of our business and our organization;

•our expectations regarding government and third-party payer coverage and reimbursement and the anticipated effect of such decisions;

•our ability to manage our Chief Executive Officer transition and retain and recruit key personnel, including the continued expansion of our sales and marketing infrastructure, and the anticipated timing and effect of such actions;

•our ability to obtain an adequate supply of materials, components and finished goods for our products from our third-party suppliers, most of whom are single-source suppliers;

•our ability to manufacture sufficient quantities of our products with sufficient quality and the sufficiency of our current manufacturing capabilities;

Table of Contents

•our ability to obtain and maintain intellectual property protection for our products and our business;

•our ability to expand our business into new geographic markets and the anticipated timing thereof, including in Japan and China;

•our compliance with extensive Nasdaq and U.S. Securities and Exchange Commission, or SEC, requirements and government laws, rules and regulations both in the United States and internationally;

•our expectations regarding operating trends, future financial performance and expense management and our estimates of our future expenses, ongoing losses, future revenue, including per procedure revenue and the effect thereon of new products, gross margins, operating leverage, capital requirements and our need for, or ability to obtain, additional financing;

•our ability to identify and develop new and planned products and/or acquire new products;

•our experience with inflationary and price pressures and increased labor costs and labor and staffing shortages;

•developments and projections relating to our market opportunity and penetration, competitors or our industry; and

•our intended use of net proceeds from our public offerings.

We believe that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are not able to accurately predict or control and that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. These forward-looking statements are based on management’s current expectations, estimates, forecasts and projections about our business and the industry in which we operate and management’s beliefs and assumptions and are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control. As a result, any or all of our forward-looking statements in this Quarterly Report on Form 10-Q may turn out to be inaccurate. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q.

These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q to conform these statements to actual results or changes in our expectations. You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed with the SEC as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.

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Part I. Financial Information

Item 1: Condensed Financial Statements

Silk Road Medical, Inc.

Condensed Balance Sheets

(unaudited)



(in thousands, except share and per share data)	June 30,		December 31,
	2024		2023
Assets
Current assets:
Cash and cash equivalents	$	22,639	$	20,210
Short-term investments		149,344		161,264
Accounts receivable, net		26,252		23,573
Inventories		29,682		29,876
Prepaid expenses and other current assets		13,104		5,912
Total current assets		241,021		240,835
Long-term investments		14,178		9,456
Property and equipment, net		8,381		8,114
Other non-current assets		6,227		6,904
Total assets	$	269,807	$	265,309
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	3,693	$	5,676
Accrued liabilities		27,879		24,607
Total current liabilities		31,572		30,283
Long-term debt		76,147		75,626
Other liabilities		7,404		8,249
Total liabilities		115,123		114,158
Commitments and contingencies (Note 7)
Stockholders' equity:
Preferred stock, $0.001 par value
Shares authorized: 5,000,000 at June 30, 2024 and December 31, 2023
Shares issued and outstanding: none at June 30, 2024 and December 31, 2023		—		—
Common stock, $0.001 par value
Shares authorized: 100,000,000 at June 30, 2024 and December 31, 2023
Shares issued and outstanding: 40,612,481 and 39,165,481 at June 30, 2024 and December 31, 2023, respectively		41		39
Additional paid-in capital		584,959		550,495
Accumulated other comprehensive income (loss)		(122)		72
Accumulated deficit		(430,194)		(399,455)
Total stockholders' equity		154,684		151,151
Total liabilities and stockholders' equity	$	269,807	$	265,309

The accompanying notes are an integral part of these condensed financial statements.

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Silk Road Medical, Inc.

Condensed Statements of Operations and Comprehensive Loss

(unaudited)


(in thousands, except share and per share data)	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Revenue	$	51,242	$	45,298	$	99,726	$	85,429
Cost of goods sold		12,736		13,004		24,719		25,530
Gross profit		38,506		32,294		75,007		59,899
Operating expenses:
Research and development		11,883		10,780		22,543		21,213
Selling, general and administrative		43,818		35,830		84,593		69,913
Total operating expenses		55,701		46,610		107,136		91,126
Loss from operations		(17,195)		(14,316)		(32,129)		(31,227)
Interest income		2,321		2,434		4,792		4,721
Interest expense		(1,725)		(1,712)		(3,445)		(3,405)
Other income (expense), net		(4)		110		43		(33)
Net loss		(16,603)		(13,484)		(30,739)		(29,944)
Other comprehensive loss:
Unrealized loss on investments, net		(105)		(414)		(194)		(165)
Other comprehensive income loss		(105)		(414)		(194)		(165)
Comprehensive loss	$	(16,708)	$	(13,898)	$	(30,933)	$	(30,109)
Net loss per share, basic and diluted	$	(0.42)	$	(0.35)	$	(0.78)	$	(0.77)
Weighted average common shares used to compute net loss per share, basic and diluted		39,620,888		38,765,166		39,441,192		38,649,327

The accompanying notes are an integral part of these condensed financial statements.

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Silk Road Medical, Inc.

Condensed Statements of Stockholders' Equity

(unaudited)


(in thousands, except share data)	Common Stock			Additional ‎Paid-in		Accumulated		Accumulated ‎Other Comprehensive
	Shares	Amount		Capital		Deficit		Income (Loss)		Total
Balances at December 31, 2023	39,165,481	$	39	$	550,495	$	(399,455)	$	72	$	151,151
Issuance of common stock upon vesting of restricted stock units	271,153		—		—		—		—		—
Stock-based compensation	—		—		10,359		—		—		10,359
Net loss	—		—		—		(14,136)		—		(14,136)
Unrealized loss on investments, net	—		—		—		—		(89)		(89)
Balances at March 31, 2024	39,436,634		39		560,854		(413,591)		(17)		147,285
Exercise of stock options	902,719		1		11,562		—		—		11,563
Issuance of common stock upon vesting of restricted stock units	59,836		—		—		—		—		—
Issuance of common stock under employee purchase plan	213,292		1		1,503		—		—		1,504
Stock-based compensation	—		—		11,040		—		—		11,040
Net loss	—		—		—		(16,603)		—		(16,603)
Unrealized loss on investments, net	—		—		—		—		(105)		(105)
Balances at June 30, 2024	40,612,481	$	41	$	584,959	$	(430,194)	$	(122)	$	154,684

(in thousands, except share data)	Common Stock			Additional ‎Paid-in		Accumulated		Accumulated ‎Other Comprehensive
	Shares	Amount		Capital		Deficit		Income (Loss)		Total
Balances at December 31, 2022	38,355,972	$	38	$	507,715	$	(343,712)	$	(166)	$	163,875
Exercise of stock options	144,474		—		1,110		—		—		1,110
Issuance of common stock upon vesting of restricted stock units	207,995		1		—		—		—		1
Stock-based compensation	—		—		8,838		—		—		8,838
Net loss	—		—		—		(16,460)		—		(16,460)
Unrealized gain on investments, net	—		—		—		—		249		249
Balances at March 31, 2023	38,708,441		39		517,663		(360,172)		83		157,613
Exercise of stock options	32,483		—		232		—		—		232
Issuance of common stock upon release of restricted stock units	19,400		—		—		—		—		—
Issuance of common stock under employee stock purchase plan	51,956		—		1,359		—		—		1,359
Stock-based compensation	—		—		10,199		—		—		10,199
Net loss	—		—		—		(13,484)		—		(13,484)
Unrealized loss on investments, net	—		—		—		—		(414)		(414)
Balances at June 30, 2023	38,812,280	$	39	$	529,453	$	(373,656)	$	(331)	$	155,505

The accompanying notes are an integral part of these condensed financial statements.

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Silk Road Medical, Inc.

Condensed Statements of Cash Flows

(unaudited)



(in thousands)	Six Months Ended
	June 30,
	2024		2023
Cash flows from operating activities
Net loss	$	(30,739)	$	(29,944)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense		1,309		1,384
Stock-based compensation expense		21,399		19,037
Accretion of discounts on investments, net		(2,404)		(3,362)
Amortization of debt discount and debt issuance costs		117		114
Amortization of right-of-use asset		569		552
Non-cash interest expense		409		399
Loss on disposal of property and equipment		—		144
Provision for doubtful accounts receivable		—		19
Provision for excess and obsolete inventories		346		14
Changes in assets and liabilities:
Accounts receivable		(2,679)		(3,537)
Inventories		(152)		213
Prepaid expenses and other current assets		(7,192)		(619)
Other assets		108		(124)
Accounts payable		(2,218)		2,735
Accrued liabilities		3,268		(2,977)
Other liabilities		(846)		(811)
Net cash used in operating activities		(18,705)		(16,763)
Cash flows from investing activities
Purchases of property and equipment		(1,342)		(721)
Purchases of investments		(115,466)		(114,131)
Proceeds from maturity of investments		124,875		101,800
Net cash provided by (used in) investing activities		8,067		(13,052)
Cash flows from financing activities
Proceeds from issuance of common stock		13,067		2,702
Net cash provided by financing activities		13,067		2,702
Net change in cash and cash equivalents		2,429		(27,113)
Cash and cash equivalents, beginning of period		20,210		55,513
Cash and cash equivalents, end of period	$	22,639	$	28,400
Supplemental disclosure of cash flow information
Cash paid for interest	$	2,919	$	2,892
Noncash investing and financing activities:
Accounts payable and accrued liabilities for purchases of property and equipment	$	235	$	56
Right-of-use asset obtained in exchange for lease obligation	$	—	$	2,504

The accompanying notes are an integral part of these condensed financial statements.

Table of Contents

Silk Road Medical, Inc.

Notes to Condensed Financial Statements

(unaudited)

1. Organization

The Company

Silk Road Medical, Inc., or the Company, has developed a technologically advanced, minimally-invasive solution for patients with carotid artery disease who are at risk for stroke. The Company's portfolio of products enable a procedure referred to as transcarotid artery revascularization, or TCAR, that combines the benefits of endovascular techniques and surgical principles. The Company manufactures and sells in the United States its portfolio of TCAR products which are designed to provide direct access to the carotid artery, effective reduction in stroke risk throughout the procedure, and long-term restraint of carotid plaque.

On June 17, 2024, the Company entered into an Agreement and Plan of Merger (the Merger Agreement), with Boston Scientific Corporation (Boston Scientific) and Seminole Merger Sub, Inc. (Merger Sub). The Merger Agreement provides that, subject to the terms and conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company (the Merger), with the Company continuing as the surviving corporation of the Merger and a wholly-owned subsidiary of Boston Scientific. Pursuant to the Merger Agreement, at the effective time of the Merger (the Effective Time), each share of the Company’s common stock outstanding immediately prior to the Effective Time (subject to certain customary exceptions specified in the Merger Agreement) will be cancelled and converted automatically into the right to receive $27.50 in cash, without interest, and subject to applicable taxes. The Merger Agreement contains customary covenants and agreements, including with respect to the operations of the business of the Company between signing and closing. The Merger is expected to close in the second half of 2024, subject to customary closing conditions, including approval by the Company’s stockholders and regulatory approvals.

The foregoing summary of the Merger Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement, which is filed as Exhibit 2.1 of the Company’s Current Report on Form 8-K filed on June 18, 2024.

Other than as described under "Acquisition-Related Costs," the terms of the Merger Agreement did not impact the Company’s condensed financial statements for the three and six months ended June 30, 2024.

2. Summary of Significant Accounting Policies

Basis of Preparation

The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP, and applicable rules and regulations of the Securities and Exchange Commission, or SEC, regarding interim financial reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP have been condensed or omitted, and accordingly the condensed balance sheet as of December 31, 2023, and related disclosures, have been derived from the audited financial statements at that date but does not include all of the information required by U.S. GAAP for complete financial statements. These unaudited condensed financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair statement of the Company’s condensed financial information. The results of operations for the three months and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any other interim period or for any other future year.

The accompanying interim unaudited condensed financial statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2023 included in the Company's annual report on Form 10-K filed with the SEC on February 28, 2024.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts and disclosures reported in the financial statements. Management uses judgment when making estimates related to provisions for accounts receivable and excess and obsolete inventories, the valuation

Table of Contents

Silk Road Medical, Inc.

Notes to Condensed Financial Statements

(unaudited)

of deferred tax assets, the reserves for sales returns, and stock-based compensation. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may ultimately differ from these estimates and assumptions.

Fair Value of Financial Instruments

The Company has evaluated the estimated fair value of its financial instruments as of June 30, 2024 and December 31, 2023. The carrying amounts of certain of the Company’s financial instruments, which include accounts receivable, accounts payable and accrued liabilities approximate their respective fair values because of the short-term nature of these instruments. Management believes that its debt bears interest at the prevailing market rates for instruments with similar characteristics (Level 2 within the fair value hierarchy); accordingly, the carrying value of this instrument approximates its fair value.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less at the time of purchase to be cash equivalents. Cash equivalents are recorded at fair value, based on quoted market prices. As of June 30, 2024 and December 31, 2023, the Company’s cash equivalents were entirely comprised of investments in money market funds.

Investments

Short-term and long-term investments consist of debt securities classified as available-for-sale. Short-term investment have original maturities greater than 90 days, but less than one year as of the balance sheet date. Long-term investments have maturities greater than one year as of the balance sheet date. All investments are recorded at fair value based on the fair value hierarchy. Unrealized gains and losses, deemed temporary in nature, are reported as a separate component of accumulated other comprehensive income (loss). Realized gains and losses are included in earnings and are derived based on the specific-identification method for determining the costs of investments sold and were insignificant for the three and six months ended June 30, 2024 and 2023. Amortization of premiums and accretion of discounts are reported as a component of interest income.

A decline in the fair value of any security below cost that is deemed other than temporary results in a charge to earnings and the corresponding establishment of a new cost basis for the investment. The Company evaluates the securities in an unrealized loss position for expected credit losses by considering factors such as historical experience, market data, issuer-specific factors, current economic conditions and credit ratings. The Company did not recognize any credit losses on its available-for-sale securities during the three and six months ended June 30, 2024 and 2023.

Concentration of Credit Risk, and Other Risks and Uncertainties

Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents, investments and accounts receivable to the extent of the amounts recorded on the balance sheet. Cash, cash equivalents, and investments are deposited in financial institutions which, at times, may be in excess of federally insured limits. Cash equivalents are invested in highly rated money market funds. The Company invests in a variety of financial instruments, such as, but not limited to, commercial paper, corporate bonds/notes, U.S. government securities, U.S. treasury bills, agency bonds/notes and, by policy, limits the amount of credit exposure with any one financial institution or commercial issuer. The Company has not experienced any material losses on its deposits of cash and cash equivalents or investments during the three and six months ended June 30, 2024 and 2023.

The Company’s cash and cash equivalents are held by two major financial institutions in the U.S. Deposits in these banks may exceed the federally insured limits or any other insurance provided on such deposits, if any.

As of June 30, 2024 and December 31, 2023, a portion of the Company’s cash and cash equivalents was maintained with Silicon Valley Bank, a division of First Citizens Bank, or SVB. Substantially all of the Company’s cash equivalents and

Table of Contents

Silk Road Medical, Inc.

Notes to Condensed Financial Statements

(unaudited)

investments reside in a custodial account held by a third party, in which SVB Asset Management is the advisor. As of the issuance date of these financial statements, the Company has not experienced any losses on its deposits.

The Company’s accounts receivable are due from a variety of hospitals and medical centers in the United States. As of June 30, 2024 and December 31, 2023, no customer represented 10% or more of the Company’s accounts receivable. For the three and six months ended June 30, 2024 and 2023, there were no customers that represented 10% or more of revenue.

The Company provides for uncollectible amounts when specific credit problems are identified. In doing so, the Company analyzes historical bad debt trends, customer credit worthiness, current economic trends and changes in customer payment patterns when evaluating the adequacy of the allowance for expected credit losses on customer accounts.

The Company manufactures certain of its commercial products in-house. Certain of the Company’s finished goods, components and sub-assemblies continue to be manufactured by sole suppliers, the most significant of which is the ENROUTE Transcarotid Stent System, manufactured by Cordis Corporation, or Cordis. Disruption in finished goods, component or sub-assembly supply from these manufacturers or from in-house production would have a negative impact on the Company’s financial position and results of operations.

The Company is subject to certain risks, including that its devices may not be approved or cleared for marketing by governmental authorities or be successfully marketed. There can be no assurance that the Company’s products will achieve widespread adoption in the marketplace, nor can there be any assurance that existing devices or any future devices can be developed or manufactured at an acceptable cost and with appropriate performance characteristics. The Company is also subject to risks common to companies in the medical device industry, including, but not limited to, new technological innovations, competition, dependence upon government and third-party payers to provide adequate coverage and reimbursement, dependence on key personnel and suppliers, protection of proprietary technology, product liability claims, and compliance with government regulations.

Existing or future devices developed by the Company may require approvals or clearances from the U.S. Food and Drug Administration, or FDA, or international regulatory agencies. In addition, in order to continue the Company’s operations, compliance with various federal and state laws is required. If the Company were denied or delayed in receiving such approvals or clearances, it may be necessary to adjust operations to align with the Company’s currently approved portfolio. If clearance for the products in the current portfolio were withdrawn by the FDA, this would have a material adverse impact on the Company.

Leases

The Company accounts for its leasing arrangements in accordance with Accounting Standards Codification, or ASC 842, “Leases.” The Company considers if an arrangement is a lease at inception if it obtains the right to control the use of an identified asset under a leasing arrangement with an initial term greater than twelve months. The Company determines whether a contract conveys the right to control the use of an identified asset for a period of time if the contract contains both the right to obtain substantially all of the economic benefits from the use of the identified asset and the right to direct the use of the identified asset. The Company also evaluates the nature of each lease to determine whether it is an operating or financing lease and recognizes the right-of-use asset and lease liabilities based on the present value of future minimum lease payments over the expected lease term. The Company’s leases do not generally contain an implicit interest rate and therefore the Company uses the incremental borrowing rate it would expect to pay to borrow on a similar collateralized basis over a similar term in order to determine the present value of its lease payments. The Company considers renewal options in the determination of the lease term if the option to renew is reasonably certain. Variable lease costs represent payments that are dependent on usage, a rate or index. Variable lease costs, which consists primarily of taxes, insurance and common area maintenance costs, are expensed as incurred. The Company elected to account for contracts that contain lease and non-lease components as a single component, consistent with its historical practice. The Company does not have any finance leases.

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Silk Road Medical, Inc.

Notes to Condensed Financial Statements

(unaudited)

Revenue Recognition

The Company recognizes revenue in accordance with ASC Topic 606, "Revenue from Contracts with Customers." Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.

The Company’s revenue is generated from the sale of its products to hospitals and medical centers in the United States through direct sales representatives and is primarily comprised of product revenue net of returns, administration fees and sales rebates. Revenue is recognized when obligations under the terms of a contract with customers are satisfied, which occurs with the transfer of control of the Company’s products to its customers, either upon shipment of the product or delivery of the product to the customer. The Company’s products are readily available for usage as soon as the customer possesses it. Upon receipt, the customer controls the economic benefits of the product, has significant risks and rewards, and the legal title. The Company has present right to payment; therefore, the transfer of control is deemed to happen at a point in time. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring the goods. The Company is entitled to the total consideration for the products ordered by customers as product pricing is fixed according to the terms of customer contracts and payment terms are short. Administration fees and sales rebates are accounted for as a reduction in revenue, calculated based on the terms agreed to with the customer.

As of June 30, 2024 and December 31, 2023, the Company recorded $300,000 and $227,000, respectively, of unbilled receivables, which are included in accounts receivable, net on the condensed balance sheet, as the Company has an unconditional right to payment as of the end of the applicable period.

The Company excludes taxes assessed by governmental authorities on revenue-producing transactions from the measurement of the transaction price. Costs associated with product sales, which include commissions and royalties, are expensed when incurred because the expense is incurred at a point in time and the amortization period is less than one year. Commissions are recorded as selling expense and royalties are recorded as cost of goods sold in the condensed statements of operations and comprehensive loss.

The Company accepts product returns at its discretion or if the product is defective as manufactured. The Company establishes estimated provisions for returns based on historical experience and considers other factors that it believes could significantly impact its expected returns, which provisions are classified within accrued liabilities on the condensed balance sheet. The Company elected to expense shipping and handling costs as incurred and includes them in the cost of goods sold. In those cases where the Company bills shipping and handling costs to customers, it will classify the amounts billed as a component of revenue.

Cost of Goods Sold

The Company manufactures certain of its portfolio of TCAR products at its California and Minnesota facilities and purchases other products from third party manufacturers. Cost of goods sold consists primarily of costs related to materials, components and sub-assemblies, manufacturing overhead costs, direct labor, scrap, product rework, reserves for excess, obsolete and non-sellable inventories as well as logistics-related expenses. A significant portion of the Company’s cost of goods sold currently consists of manufacturing overhead costs. These overhead costs include the cost of quality control, material procurement, inventory control, facilities, equipment and operations supervision and management. Cost of goods sold also includes depreciation expense for production equipment and certain direct costs such as shipping costs and royalties.

Acquisition-related Costs

Acquisition-related costs, which consists of advisory, legal, accounting, valuation and other professional or consulting fees related to the Merger Agreement with Boston Scientific, are expensed as incurred and included within selling, general and administrative expenses in the condensed statements of operations and comprehensive loss for the three and six months ended June 30, 2024.

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Silk Road Medical, Inc.

Notes to Condensed Financial Statements

(unaudited)

Stock–Based Compensation

The Company accounts for stock-based compensation in accordance with Financial Accounting Standards Board, or FASB, ASC 718, "Compensation-Stock Compensation." ASC 718 requires the recognition of compensation expense, using a fair-value based method, for costs related to all share-based payments including stock options, restricted stock units, performance stock units, and shares issued under its employee stock purchase plan. ASC 718 requires companies to estimate the fair value of all share-based payment option awards on the date of grant using an option pricing model. The fair value of stock options is recognized over the period during which an optionee is required to provide services in exchange for the option award, known as the requisite service period (usually the vesting period), on a straight-line basis. The Company accounts for option forfeitures as they occur.

The Company accounts for stock-based compensation for restricted stock units at their fair value, based on the closing market price of the Company’s common stock on the date of grant. These costs are recognized on a straight-line basis over the requisite service period, which is usually the vesting period.

The Company accounts for stock-based compensation for performance stock units with market-based conditions at their fair value on the date of the award using the Monte Carlo simulation model. These costs are recognized over the requisite service period, which is usually the vesting period, regardless of the likelihood of achievement of the market-based performance criteria.

The Company accounts for stock-based compensation for its employee stock purchase plan based on the estimated fair value on the first day of the offering period using an option pricing model for each purchase period. These costs are recognized on a straight-line basis over the offering period.

Income Taxes

The Company accounts for income taxes under the liability method, whereby deferred tax assets and liabilities are determined based on the difference between the book basis and tax basis of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to affect taxable income. A valuation allowance is established when necessary to reduce deferred tax assets to the amounts expected to be realized. As the Company has historically incurred operating losses, it has established a full valuation allowance against its net deferred tax assets, and there is no provision for income taxes.

The Company also follows the provisions of ASC 740-10, "Accounting for Uncertainty in Income Taxes." ASC 740-10 prescribes a comprehensive model for the recognition, measurement, presentation and disclosure in financial statements of any uncertain tax positions that have been taken or expected to be taken on a tax return. No liability related to uncertain tax positions is recorded on the condensed financial statements. It is the Company's policy to include penalties and interest expense related to income taxes as part of the provision for income taxes.

Comprehensive Loss

Comprehensive loss consists of net loss and changes in unrealized gains and losses on investments classified as available-for-sale. For the three and six months ended June 30, 2024 and 2023, the Company’s unrealized gains and losses on available-for-sale investments represent the only component of other comprehensive loss that are excluded from the reported net loss and that are presented in the condensed statements of operations and comprehensive loss. Accumulated other comprehensive income (loss) is presented in the accompanying condensed balance sheets as a component of stockholders' equity.

Net Loss per Share

Basic net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the period, without consideration for potential dilutive common shares. Diluted net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock and potentially dilutive securities outstanding for the period. For purposes of the diluted net loss per share calculation, common stock options, restricted stock units and performance stock units are considered to be potentially dilutive securities. Since the Company

Table of Contents

Silk Road Medical, Inc.

Notes to Condensed Financial Statements

(unaudited)

was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share as the inclusion of all potential dilutive common shares would have been anti-dilutive.

Net loss per share was determined as follows (in thousands, except share and per share data):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Net loss	$	(16,603)	$	(13,484)	$	(30,739)	$	(29,944)
Weighted average common stock outstanding used to compute net loss per share, basic and diluted		39,620,888		38,765,166		39,441,192		38,649,327
Net loss per share, basic and diluted	$	(0.42)	$	(0.35)	$	(0.78)	$	(0.77)

The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted average shares outstanding because such securities have an antidilutive impact due to the Company's net loss:



	June 30,
	2024	2023
Common stock options	2,687,989	3,668,825
Restricted stock units and performance stock units	4,595,401	1,749,463
Total	7,283,390	5,418,288

Segment and Geographical Information

The Company operates and manages its business as one reportable and operating segment. The Company’s chief executive officer, who is the chief operating decision maker, reviews financial information on an aggregate basis for purposes of allocating resources and evaluating financial performance. Primarily all of the Company’s long-lived assets are based in the United States. Long-lived assets are comprised of property and equipment. All of the Company’s revenue was in the United States for the three and six months ended June 30, 2024 and 2023, based on the shipping location of the external customer.

Table of Contents

Silk Road Medical, Inc.

Notes to Condensed Financial Statements

(unaudited)

3. Recent Accounting Pronouncements

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, or ASU 2023-07, which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segments expenses. ASU 2023-07 became effective for the Company on January 1, 2024. The adoption of ASU 2023-07 did not have a material impact on the Company’s segment reporting disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, or ASU 2023-09, which enhances income tax disclosure requirements by requiring specified categories and greater disaggregation within the rate reconciliation table, disclosure of income taxes paid by jurisdiction, and providing clarification on uncertain tax positions and related financial statement impacts. ASU 2023-09 is effective for the Company on January 1, 2025 with early adoption permitted. The Company is currently evaluating the impact of adoption of this new guidance on its income tax disclosures.

4. Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value on a recurring basis, including cash equivalents and investments. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:

•Level 1 – quoted prices in active markets for identical assets and liabilities;

•Level 2 – observable inputs other than quoted prices in active markets for identical assets and liabilities;

•Level 3 – unobservable inputs.

Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. The Company’s investments are classified within Level 1 of the fair value hierarchy include money market funds valued using quoted market prices and U.S. treasury bills valued using broker or dealer quotations with reasonable levels of price transparency. Investments classified within Level 2 include commercial paper, which are valued using model-based valuation techniques, and corporate bonds/notes, U.S. government securities and agency bonds/notes, which are valued based upon quoted market prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets.

The following tables set forth by level within the fair value hierarchy the Company’s assets that are reported at fair value as of June 30, 2024 and December 31, 2023, using the inputs defined above (in thousands):



	June 30, 2024
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	20,805	$	—	$	—	$	20,805
U.S. treasury bills		11,799		—		—		11,799
Commercial paper		—		4,985		—		4,985
Corporate bonds/notes		—		33,716		—		33,716
U.S. government securities		—		99,547		—		99,547
Agency bonds/notes		—		13,475		—		13,475
Total	$	32,604	$	151,723	$	—	$	184,327

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Silk Road Medical, Inc.

Notes to Condensed Financial Statements

(unaudited)



	December 31, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	19,483	$	—	$	—	$	19,483
U.S. treasury bills		11,899		—		—		11,899
Commercial paper		—		33,150		—		33,150
Corporate bonds/notes		—		39,438		—		39,438
U.S. government securities		—		17,556		—		17,556
Agency bonds/notes		—		68,677		—		68,677
Total	$	31,382	$	158,821	$	—	$	190,203

There were no transfers between fair value hierarchy levels during the three and six months ended June 30, 2024 and 2023.

5. Balance Sheet Components

Investments

The fair value of the Company’s available-for-sale investments as of June 30, 2024 and December 31, 2023 are as follows (in thousands):


	June 30, 2024
			Gross Unrealized				Estimated
	Amortized Cost		Gains		Losses		Fair Value
Money market funds	$	20,805	$	—	$	—	$	20,805
U.S. treasury bills		11,799		1		(1)		11,799
Commercial paper		4,988		—		(3)		4,985
Corporate bonds/notes		33,736		5		(25)		33,716
U.S. government securities		99,635		—		(88)		99,547
Agency bonds/notes		13,486		—		(11)		13,475
Total	$	184,449	$	6	$	(128)	$	184,327

Classified as:
Cash equivalents							$	20,805
Short-term investments								149,344
Long-term investments								14,178
Total							$	184,327



	December 31, 2023
			Gross Unrealized				Estimated
	Amortized Cost		Gains		Losses		Fair Value
Money market funds	$	19,483	$	—	$	—	$	19,483
U.S. treasury bills		11,896		3		—		11,899
Commercial paper		33,160		5		(15)		33,150
Corporate bonds/notes		39,398		55		(15)		39,438
U.S. government securities		17,501		55		—		17,556
Agency bonds/notes		68,693		27		(43)		68,677
Total	$	190,131	$	145	$	(73)	$	190,203

Classified as:
Cash equivalents							$	19,483
Short-term investments								161,264
Long-term investments								9,456
Total							$	190,203

The following table summarizes the fair value of the Company’s cash equivalents, and available-for-sale investments classified by maturity as of June 30, 2024 and December 31, 2023 (in thousands):


	June 30,			December 31,

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Silk Road Medical, Inc.

Notes to Condensed Financial Statements

(unaudited)

	2024		2023
Amounts maturing within one year	$	170,149	$	180,747
Amounts maturing after one year through two years		14,178		9,456
Total	$	184,327	$	190,203

Available-for-sale investments held as of June 30, 2024 had a weighted average days to maturity of 202 days.

The following table presents the Company’s available-for-sale investments that were in an unrealized loss position for less than twelve months as of June 30, 2024 and December 31, 2023 (in thousands):


	June 30, 2024				December 31, 2023
Assets:	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U.S. treasury bills	$	4,977	$	(1)	$	—	$	—
Commercial paper		4,985		(3)		19,684		(15)
Corporate bonds/notes		27,280		(25)		21,842		(15)
U.S. government securities		99,188		(88)		—		—
Agency bonds/notes		13,329		(11)		48,964		(43)
Total	$	149,759	$	(128)	$	90,490	$	(73)

There were no available-for-sale investments in an unrealized loss position greater than twelve months as of June 30, 2024, and December 31, 2023.

Inventories

Components of inventories were as follows (in thousands):


	June 30,		December 31,
	2024		2023
Raw materials	$	4,967	$	6,512
Finished products		24,715		23,364
Total inventories	$	29,682	$	29,876

As of June 30, 2024 and December 31, 2023, there were no work-in-process inventories.

Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):



	June 30,		December 31,
	2024		2023
Accrued payroll and related expenses	$	19,813	$	17,113
Accrued professional services		2,053		326
Operating lease liability		1,760		1,703
Accrued travel expenses		1,055		944
Provision for sales returns		579		500
Accrued interest payable		501		517
Accrued administration fees and sales rebates		460		405
Accrued royalty expense		452		405
Accrued clinical expenses		339		256
Deferred revenue		270		143
Accrued other expenses		597		2,295
Total accrued liabilities	$	27,879	$	24,607

6. Long-term Debt

In May 2022, the Company entered into a Loan and Security Agreement, or Loan Agreement, with Oxford Finance LLC and its agents, or Oxford Finance, which provides for a $225,000,000 loan facility, comprised of a $25,000,000 secured revolving credit facility and a $200,000,000 secured term loan facility. The term loans are available in three tranches. The

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Silk Road Medical, Inc.

Notes to Condensed Financial Statements

(unaudited)

first $75,000,000 tranche of term loans was available at closing in May 2022. A second tranche of $75,000,000 of term loans is available through December 31, 2024. A third tranche of $50,000,000 would be available through December 31, 2024 so long as, at the time of draw, the Company has consolidated trailing 12-month revenues equal to at least 90% of the sum of the outstanding term loans plus the amount of any requested third tranche term loans.

Upon request of the Company, the revolving credit facility will be increased from $25,000,000 to $50,000,000. The revolving loans are available subject to a borrowing base equal to 85% of eligible receivables plus 50% of eligible inventory, up to the lesser of 40% of the borrowing base or $10,000,000, in the case of eligible inventory.

The revolving loans and the term loans mature on May 1, 2027. The principal amount of outstanding revolving loans, together with accrued and unpaid interest, is due on the maturity date. The term loans begin to amortize in equal monthly installments beginning on July 1, 2026. As the Company achieved a specified consolidated trailing twelve-month revenue target, it has the option to extend the first amortization date for the term loans to July 1, 2027. Such election may be made no later than thirty (30) days prior to July 1, 2026. If the Company exercises this option, then the maturity date for both the revolving loans and the term loans will be May 1, 2028.

The revolving loans accrue interest at the greater of 1-month Secured Overnight Financing Rate (SOFR), or the Index Rate, and 0.85%, plus a margin of 3.00%. The term loans accrue interest at the greater of the Index Rate and 0.85%, plus a margin of 5.00%. The Index Rate is capped at 2.50% for purposes of the Loan Agreement. Interest on both revolving loans and term loans is payable monthly in arrears. The Company may borrow, prepay and reborrow revolving loans, without premium or penalty. The term loans once repaid or prepaid may not be reborrowed. Term loans may be prepaid in full, or in part in increments of $10,000,000. The Company is required to pay a prepayment fee of 3.0% for prepayments of term loans made in the first year after closing, 2.0% for prepayments of term loans made in the second year after closing, 1.0% for prepayments of term loans made in the third year after closing and no prepayment fees thereafter. Upon the earlier of prepayment or maturity of the term loans, the Company is required to pay a fee of 5.0% of the aggregate original principal amount of the funded term loans, which fee increases to 6.75% if the Company exercises its option to extend the amortization date and maturity date. The Company is also obligated to pay other customary fees for a loan facility of this size and type.

Also in May 2022, the Company borrowed the first $75,000,000 tranche of the term loan and used a portion of the proceeds to pay off and terminate the prior term loan agreement with Stifel Bank totaling $49,181,000, which included a final interest payment of $181,000. The Company recognized a loss on debt extinguishment of $245,000 in connection with the early termination of its prior term loan agreement with Stifel Bank. Concurrent with the Stifel Bank term loan agreement, the Company entered into a Success Fee Agreement in October 2020 which survives the Stifel Bank term loan repayment and requires the Company to pay Stifel Bank $367,500 in the event the Company completes a Liquidity Event (liquidation, merger, sale of the Company or change in control) prior to the Success Fee Agreement termination date of October 29, 2025. The Success Fee Agreement obligation has not been recognized as a liability as of June 30, 2024.

Obligations under the Loan Agreement are secured by substantially all of the Company’s assets. The Loan Agreement requires the Company to maintain consolidated trailing twelve-month revenues of at least 75% of the outstanding principal amount of the term loans, measured as of the last day of each fiscal quarter; or if the revenue target is not achieved, the Company must have maintained unrestricted cash and cash equivalents (net of outstanding revolving loans) subject to control agreements in favor of Oxford Finance equal to at least 50% of the outstanding principal amount of the term loans. Additionally, the Loan Agreement contains customary affirmative and negative covenants, including covenants limiting the Company’s ability and the ability of the Company’s subsidiaries to, among other things, dispose of assets, effect certain mergers, incur debt, grant liens, pay dividends and distributions on capital stock, make investments and acquisitions, and enter into transactions with affiliates, in each case subject to customary exceptions for a loan facility of this size and type.

The events of default under the Loan Agreement include, among others, payment defaults, material misrepresentations, breaches of covenants, cross defaults with certain other material indebtedness, bankruptcy and insolvency events, and judgment defaults. The occurrence of an event of default could result in the acceleration of the Company’s obligations under the Loan Agreement, the termination of the lender’s commitments, a 5% increase in the applicable rate of interest and the exercise by the lender of other rights and remedies provided for under the Loan Agreement.

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Silk Road Medical, Inc.

Notes to Condensed Financial Statements

(unaudited)

As of June 30, 2024, the aggregate outstanding principal balance under the term loan facility was $75,000,000 with the variable interest rate capped at the maximum rate of 7.50%, and no amounts were outstanding under the revolving credit facility of the Loan Agreement. As of June 30, 2024, the Company was in compliance with all applicable financial covenants.

Future payments under the Oxford Finance term loan agreement as of June 30, 2024 are as follows (in thousands):



Period Ending December 31:	Amount
2024	$	2,875
2025		5,703
2026		45,699
2027		34,517
		88,794
Add: Accretion of closing fees		1,733
		90,527
Less: Amount representing interest		(13,794)
Less: Amount representing debt discount and debt issuance costs		(586)
Present value of minimum payments	$	76,147

7. Commitments and Contingencies

Operating Lease and Rights-of-Use

The Company’s operating lease obligation at its corporate headquarters in California consists of leased office, laboratory, and manufacturing space under a non-cancellable operating lease that expires in October 2027. In May 2023, the Company extended the lease term for an additional three years and recorded an additional $2,504,000 right-of-use asset and lease liability from the remeasurement. The lease agreement includes a renewal provision allowing the Company to extend this lease for an additional period of five years.

The Company’s non-cancelable operating lease obligation at its facility in Minnesota consists of additional office, laboratory and manufacturing space and expires in November 2029. The lease agreement includes a renewal provision allowing the Company to extend this lease for two additional five year terms.

Balance sheet information as of June 30, 2024 and December 31, 2023 consists of the following (in thousands):

December 31,

Operating Lease:

Operating lease right-of-use assets in other non-current assets

Silk Road Medical Inc 10-Q