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.

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 November ~~1, 2019,~~2, 2020, the number of outstanding shares of the registrant’s common stock, par value $0.01 per share, was ~~49,481,559.~~50,454,122.

“Sientra”, “Sientra Platinum20”, “Sientra Full Circle”, “OPUS”, “Allox”, “Allox2”, “BIOCORNEUM”, “Curve”, “Dermaspan”, “Luxe”, “Softspan”, “Silishield”, “miraDry”, “Miramar Labs”, “miraDry and Design”, “miraDry Fresh”, “bioTip”, “The Sweat Stops Here”, “No Sweat No Stress”, “Sweat Less Live More”, “Drop Design”, “miraWave”, “miraSmooth”, “miraFresh”, “freshRewards”, “freshNet”, “freshEquity”, “freshConnect”, and “ML Stylized mark” are trademarks of our company. Our logo and our other trade names, trademarks and service marks appearing in this document are our property. Other trade names, trademarks and service marks appearing in this document are the property of their respective owners. Solely for convenience, our trademarks and trade names referred to in the document, appear without the TM or the (R) symbol, 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 rights of the applicable licensor to these trademarks and trade names.

	September 30,			December 31,			September 30,			December 31,
	2019			2018			2020			2019
Assets
Current assets:
Cash and cash equivalents	$	120,915		$	86,899		$	63,483		$	87,608
Accounts receivable, net of allowances of $3,302 and $2,428 at September 30, 2019 and December 31, 2018, respectively		24,791			22,527
Accounts receivable, net of allowances of $4,893 and $3,835 at September 30, 2020 and December 31, 2019, respectively								23,637			27,548
Inventories, net		30,374			24,085			48,467			39,612
Prepaid expenses and other current assets		3,144			2,612			2,113			2,489
Total current assets		179,224			136,123			137,700			157,257
Property and equipment, net		3,980			2,536			12,742			12,314
Goodwill		4,878			12,507			9,202			9,202
Other intangible assets, net		9,779			16,495			9,719			17,390
Other assets		22,021			698			8,441			8,241
Total assets	$	219,882		$	168,359		$	177,804		$	204,404
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt	$	7,352		$	6,866		$	928		$	6,508
Accounts payable		8,738			13,184			4,071			9,352
Accrued and other current liabilities		28,741			27,697			26,679			32,551
Legal settlement payable		—			410
Customer deposits		11,686			9,936			15,490			13,943
Sales return liability		7,563			6,048			10,079			8,116
Total current liabilities		64,080			64,141			57,247			70,470
Long-term debt		38,117			27,883			63,330			38,248
Derivative liability								24,520			—
Deferred and contingent consideration		364			6,481			5,342			5,177
Warranty reserve and other long-term liabilities		21,054			2,976			9,281			8,627
Total liabilities		123,615			101,481			159,720			122,522
Commitments and contingencies (Note 14)
Stockholders’ equity:
Preferred stock, $0.01 par value – Authorized 10,000,000 shares; none issued or outstanding		—			—
Common stock, $0.01 par value — Authorized 200,000,000 shares; issued 49,534,414 and 28,701,494 and outstanding 49,461,687 and 28,628,767 shares at September 30, 2019 and December 31, 2018 respectively		495			286
Preferred stock, $0.01 par value – Authorized 10,000,000 shares; NaN issued or outstanding								—			—
Common stock, $0.01 par value — Authorized 200,000,000 shares; issued 50,507,635 and 49,612,907 and outstanding 50,434,908 and 49,540,180 shares at September 30, 2020 and December 31, 2019, respectively								504			495
Additional paid-in capital		544,700			428,949			555,465			550,562
Treasury stock, at cost (72,727 shares at September 30, 2019 and December 31, 2018)		(260	)		(260	)
Treasury stock, at cost (72,727 shares at September 30, 2020 and December 31, 2019)								(260	)		(260	)
Accumulated deficit		(448,668	)		(362,097	)		(537,625	)		(468,915	)
Total stockholders’ equity		96,267			66,878			18,084			81,882
Total liabilities and stockholders’ equity	$	219,882		$	168,359		$	177,804		$	204,404

	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Net sales	$	22,412		$	16,875			60,489			49,104		$	19,217		$	22,412			48,597			60,489
Cost of goods sold		9,754			6,398			24,041			19,154			8,391			9,754			20,733			24,041
Gross profit		12,658			10,477			36,448			29,950			10,826			12,658			27,864			36,448
Operating expenses:
Sales and marketing		18,668			15,254			60,987			45,990			12,872			18,668			37,614			60,987
Research and development		3,201			2,881			9,526			7,930			2,060			3,201			7,747			9,526
General and administrative		12,249			11,904			37,538			31,419			10,238			12,249			27,500			37,538
Goodwill and other intangible impairment		—			—			12,674			—
Restructuring														(386	)		—			1,849			—
Impairment														—			—			6,432			12,674
Total operating expenses		34,118			30,039			120,725			85,339			24,784			34,118			81,142			120,725
Loss from operations		(21,460	)		(19,562	)		(84,277	)		(55,389	)		(13,958	)		(21,460	)		(53,278	)		(84,277	)
Other income (expense), net:
Interest income		510			133			1,083			214			5			510			203			1,083
Interest expense		(1,344	)		(953	)		(3,276	)		(2,474	)		(2,059	)		(1,344	)		(7,289	)		(3,276	)
Change in fair value of derivative liability														10,090			—			(8,420	)		—
Other income (expense), net		(139	)		(163	)		(101	)		(347	)		101			(139	)		74			(101	)
Total other income (expense), net		(973	)		(983	)		(2,294	)		(2,607	)		8,137			(973	)		(15,432	)		(2,294	)
Loss before income taxes		(22,433	)		(20,545	)		(86,571	)		(57,996	)		(5,821	)		(22,433	)		(68,710	)		(86,571	)
Income tax (benefit) expense		—			—			—			—
Income tax														—			—			—			—
Net loss	$	(22,433	)	$	(20,545	)		(86,571	)		(57,996	)	$	(5,821	)	$	(22,433	)		(68,710	)		(86,571	)
Basic and diluted net loss per share attributable to common stockholders	$	(0.45	)	$	(0.72	)		(2.30	)		(2.39	)	$	(0.12	)	$	(0.45	)		(1.37	)		(2.30	)
Weighted average outstanding common shares used for net loss per share attributable to common stockholders:
Basic and diluted		49,401,094			28,462,975			37,671,215			24,312,300			50,394,858			49,401,094			50,155,623			37,671,215

																Additional						Total
	Preferred stock				Common stock						Treasury stock					paid-in			Accumulated			stockholders'
	Shares		Amount		Shares			Amount			Shares		Amount			capital			deficit			equity
Balances at December 31, 2017		—	$	—		19,474,702		$	194			72,727	$	(260	)	$	307,159		$	(279,470	)	$	27,623
Stock-based compensation		—		—		—			—			—		—			2,548			—			2,548
Employee stock purchase program (ESPP)		—		—		62,491			1			—		—			390			—			391
Vested restricted stock		—		—		271,936			3			—		—			(3	)		—			—
Shares withheld for tax obligations on vested RSUs		—		—		(92,760	)		(1	)		—		—			(1,295	)		—			(1,296	)
Net loss		—		—		—			—			—		—			—		$	(19,423	)		(19,423	)
Balances at March 31, 2018		—		—		19,716,369		$	197			72,727	$	(260	)	$	308,799		$	(298,893	)	$	9,843
Proceeds from follow-on offering, net of costs		—		—		8,518,519			85			—		—			107,466			—			107,551
Stock-based compensation		—		—		—			—			—		—			3,138			—			3,138
Stock option exercises		—		—		61,203			1			—		—			409			—			410
Vested restricted stock		—		—		94,180			1			—		—			(1	)		—			—
Net loss		—		—		—			—			—		—			—			(18,028	)		(18,028	)
Balances at June 30, 2018		—	$	—		28,390,271		$	284			72,727	$	(260	)	$	419,811		$	(316,921	)	$	102,914
Stock-based compensation		—		—		—			—			—		—			4,391			—			4,391
Stock option exercises		—		—		86,260			—			—		—			738			—			738
Employee stock purchase program (ESPP)		—		—		83,125			—			—		—			601			—			602
Vested restricted stock		—		—		98,391			1			—		—			(1	)		—			—
Shares withheld for tax obligations on vested RSUs		—		—		(7,103	)		—			—		—			(123	)		—			(123	)
Net loss		—		—		—			—			—		—			—			(20,545	)		(20,545	)
Balances at September 30, 2018		—	$	—		28,650,944			285			72,727		(260	)		425,417			(337,466	)		87,976

																Additional						Total																		Additional						Total
	Preferred stock				Common stock						Treasury stock					paid-in			Accumulated			stockholders'			Preferred stock				Common stock						Treasury stock					paid-in			Accumulated			stockholders'
	Shares		Amount		Shares			Amount			Shares		Amount			capital			deficit			equity			Shares		Amount		Shares			Amount			Shares		Amount			capital			deficit			equity
Balances at December 31, 2018		—	$	—		28,701,494		$	286			72,727	$	(260	)	$	428,949		$	(362,097	)	$	66,878			—	$	—		28,701,494		$	286			72,727	$	(260	)	$	428,949		$	(362,097	)	$	66,878
Stock-based compensation		—		—		—			—			—		—			3,772			—			3,772			—		—		—			—			—		—			3,772			—			3,772
Stock option exercises		—		—		45,453			—			—		—			106			—			106							45,453			—			—		—			106			—			106
Employee stock purchase program (ESPP)		—		—		68,899			1			—		—			682			—			683			—		—		68,899			1			—		—			682			—			683
Vested restricted stock		—		—		671,245			7			—		—			(7	)		—			—			—		—		671,245			7			—		—			(7	)		—			—
Shares withheld for tax obligations on vested RSUs		—		—		(212,714	)		(2	)		—		—			(2,723	)		—			(2,725	)		—		—		(212,714	)		(2	)		—		—			(2,723	)		—			(2,725	)
Net loss		—		—		—			—			—		—			—			(26,484	)		(26,484	)		—		—		—			—			—		—			—			(26,484	)		(26,484	)
Balances at March 31, 2019		—		—		29,274,377		$	292			72,727	$	(260	)	$	430,779		$	(388,581	)	$	42,230			—		—		29,274,377		$	292			72,727	$	(260	)	$	430,779		$	(388,581	)	$	42,230
Proceeds from follow-on offering, net of costs		—		—		20,000,000			200			—		—			107,534			—			107,734			—		—		20,000,000			200			—		—			107,534			—			107,734
Stock-based compensation		—		—		—			—			—		—			2,963			—			2,963			—		—		—			—			—		—			2,963			—			2,963
Vested restricted stock		—		—		88,454			1			—		—			(1	)		—			—			—		—		88,454			1			—		—			(1	)		—			—
Shares withheld for tax obligations on vested RSUs		—		—		(12,565	)		—			—		—			(100	)		—			(100	)		—		—		(12,565	)		—			—		—			(100	)		—			(100	)
Net loss		—		—		—			—			—		—			—			(37,654	)		(37,654	)		—		—		—			—			—		—			—			(37,654	)		(37,654	)
Balances at June 30, 2019		—	$	—		49,350,266		$	493			72,727	$	(260	)	$	541,175		$	(426,235	)	$	115,173			—	$	—		49,350,266		$	493			72,727	$	(260	)	$	541,175		$	(426,235	)	$	115,173
Stock-based compensation		—		—		—			—			—		—			3,115			—			3,115			—		—		—			—			—		—			3,115			—			3,115
Stock option exercises		—		—		3,271			—			—		—			9			—			9			—		—		3,271			—			—		—			9			—			9
Employee stock purchase program (ESPP)		—		—		106,725			1			—		—			533			—			534			—		—		106,725			1			—		—			533			—			534
Vested restricted stock		—		—		92,676			1			—		—			(1	)		—			—			—		—		92,676			1			—		—			(1	)		—			—
Shares withheld for tax obligations on vested RSUs		—		—		(18,524	)		—			—		—			(131	)		—			(131	)		—		—		(18,524	)		—			—		—			(131	)		—			(131	)
Net loss		—		—		—			—			—		—			—			(22,433	)		(22,433	)		—		—		—			—			—		—			—			(22,433	)		(22,433	)
Balances at September 30, 2019		—	$	—		49,534,414		$	495			72,727	$	(260	)	$	544,700		$	(448,668	)	$	96,267			—	$	—		49,534,414		$	495			72,727	$	(260	)	$	544,700		$	(448,668	)	$	96,267

																																								Additional						Total
																									Preferred stock				Common stock						Treasury stock					paid-in			Accumulated			stockholders'
																									Shares		Amount		Shares			Amount			Shares		Amount			capital			deficit			equity
Balances at December 31, 2019																										—	$	—		49,612,907		$	495			72,727	$	(260	)	$	550,562		$	(468,915	)	$	81,882
Issuance of common stock through ATM																										—		—		37,000			1			—		—			263			—			264
Stock-based compensation																										—		—		—			—			—		—			2,000			—			2,000
Employee stock purchase program (ESPP)																										—		—		113,615			1			—		—			533			—			534
Vested restricted stock																										—		—		472,914			5			—		—			(5	)		—			—
Shares withheld for tax obligations on vested RSUs																										—		—		(157,412	)		(2	)		—		—			(1,199	)		—			(1,201	)
Net loss																										—		—		—			—			—		—			—			(28,612	)		(28,612	)
Balances at March 31, 2020																										—		—		50,079,024		$	500			72,727	$	(260	)	$	552,154		$	(497,527	)	$	54,867
Stock-based compensation																										—		—		—			—			—		—			1,718			—			1,718
Stock option exercises																										—		—		5,454			—			—		—			13			—			13
Employee stock purchase program (ESPP)																										—		—		(1,012	)		—			—		—			(5	)		—			(5	)
Vested restricted stock																										—		—		363,795			4			—		—			(4	)		—			—
Shares withheld for tax obligations on vested RSUs																										—		—		(91,529	)		(1	)		—		—			(226	)		—			(227	)
Net loss																										—		—		—			—			—		—			—			(34,277	)		(34,277	)
Balances at June 30, 2020																										—	$	—		50,355,732		$	503			72,727	$	(260	)	$	553,650		$	(531,804	)	$	22,089
Stock-based compensation																										—		—		—			—			—		—			1,574			—			1,574
Stock option exercises																										—		—		727			—			—		—			3			—			3
Employee stock purchase program (ESPP)																										—		—		91,125			1			—		—			306			—			307
Vested restricted stock																										—		—		85,255			1			—		—			(1	)		—			—
Shares withheld for tax obligations on vested RSUs																										—		—		(25,204	)		(1	)		—		—			(67	)		—			(68	)
Net loss																										—		—		—			—			—		—			—			(5,821	)		(5,821	)
Balances at September 30, 2020																										—	$	—		50,507,635		$	504			72,727	$	(260	)	$	555,465		$	(537,625	)	$	18,084

	Nine Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2020			2019
Cash flows from operating activities:
Net loss	$	(86,571	)	$	(57,996	)	$	(68,710	)	$	(86,571	)
Adjustments to reconcile net loss to net cash used in operating activities:
Goodwill impairment		7,629			—
Intangible asset impairment		5,045			—
Adjustments to reconcile net loss to net cash used in operating activities
Impairment								6,432			12,674
Depreciation and amortization		2,538			2,500			2,996			2,538
Provision for doubtful accounts		1,804			996			4,665			1,804
Provision for warranties		843			2			711			843
Provision for inventory		2,209			708			1,774			2,209
Amortization of acquired inventory step-up		—			106
Amortization of right-of-use assets		3,546			—
Lease liability accretion		1,385			—
Change in fair value of warrants		(110	)		333
Change in fair value of deferred consideration		9			18
Change in fair value of contingent consideration		590			2,178
Change in deferred revenue		504			275
Non-cash portion of debt extinguishment loss		53			—
Fair value adjustments to derivative liability								8,420			—
Fair value adjustments of other liabilities held at fair value								29			480
Amortization of debt discount and issuance costs		223			132			3,430			223
Stock-based compensation expense		9,681			10,077			5,465			9,681
Loss on disposal of property and equipment		119			—
Payments of contingent consideration liability in excess of acquisition-date fair value		(1,968	)		—			—			(1,968	)
Changes in assets and liabilities:
Other non-cash adjustments								198			181
Changes in operating assets and liabilities:
Accounts receivable		(4,068	)		(9,476	)		(720	)		(4,068	)
Inventories		(8,329	)		(2,827	)		(10,801	)		(8,329	)
Prepaid expenses, other current assets and other assets		(811	)		(2,168	)		537			2,735
Insurance recovery receivable		—			33
Accounts payable		(2,797	)		6,780
Accrued and other liabilities		(7,882	)		3,789
Legal settlement payable		(410	)		(590	)
Accounts payable, accrueds, and other liabilities								(10,642	)		(8,790	)
Customer deposits		1,750			2,283			1,547			1,750
Sales return liability		1,515			1,429			1,930			1,515
Legal settlement payable								—			(410	)
Net cash used in operating activities		(73,503	)		(41,418	)		(52,739	)		(73,503	)
Cash flows from investing activities:
Purchase of property and equipment		(3,180	)		(414	)		(3,192	)		(3,180	)
Net cash used in investing activities		(3,180	)		(414	)		(3,192	)		(3,180	)
Cash flows from financing activities:
Proceeds from option exercises and employee stock purchase plan								852			1,332
Net proceeds from issuance of common stock		107,734			107,551			264			107,734
Proceeds from exercise of stock options		115			1,149
Proceeds from issuance of common stock under ESPP		1,217			993
Tax payments related to shares withheld for vested restricted stock units (RSUs)		(2,956	)		(1,419	)		(1,496	)		(2,956	)
Gross borrowings under the Term Loan		5,000			10,000			—			5,000
Repayments under the Term Loan								(25,000	)		—
Gross borrowings under the PPP loan								6,652			—
Gross borrowings under the Revolving Loan		15,788			12,109			—			15,788
Repayment of the Revolving Loan		(8,436	)		(12,109	)		(6,508	)		(8,436	)
Net proceeds from issuance of the Convertible Note								60,000			—
Payments of contingent consideration up to acquisition-date fair value		(5,766	)		—			—			(5,766	)
Deferred financing costs		(1,997	)		(22	)		(2,958	)		(1,997	)
Net cash provided by financing activities		110,699			118,252			31,806			110,699
Net increase in cash, cash equivalents and restricted cash		34,016			76,420
Net increase (decrease) in cash, cash equivalents and restricted cash								(24,125	)		34,016
Cash, cash equivalents and restricted cash at:
Beginning of period		87,242			26,931			87,951			87,242
End of period	$	121,258		$	103,351		$	63,826		$	121,258

Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets
Cash and cash equivalents	$	120,915		$	103,008		$	63,483		$	120,915
Restricted cash included in other assets		343			343			343			343
Total cash, cash equivalents and restricted cash	$	121,258		$	103,351		$	63,826		$	121,258

Supplemental disclosure of cash flow information:
Interest paid	$	3,015		$	2,526		$	3,781		$	3,015
Supplemental disclosure of non-cash investing and financing activities:
Property and equipment in accounts payable and accrued liabilities	$	1,113		$	1,900		$	114		$	1,113
Non-cash deferred consideration settlement		—			1,000
Non-cash settlement of assets held for sale in accounts payable		—			2,674

Sientra, Inc. (“Sientra”, the “Company,” “we,” “our” or “us”), was incorporated in the State of Delaware on August 29, 2003 under the name Juliet Medical, Inc. and subsequently changed its name to Sientra, Inc. in April 2007. The Company acquired substantially all the assets of Silimed, Inc. on April 4, 2007. The purpose of the acquisition was to acquire the rights to the silicone breast implant clinical trials, related product specifications and pre-market approval, or PMA, assets. Following this acquisition, the Company focused on completing the clinical trials to gain FDA approval to offer its silicone gel breast implants in the United States.

In March 2012, the Company announced it had received approval from the FDA for its portfolio of silicone gel breast implants, and in the second quarter of 2012 the Company began commercialization efforts to sell its products in the United States. The Company, based in Santa Barbara, California, is a medical aesthetics company that focuses on serving board-certified plastic surgeons and offers a portfolio of silicone shaped and round breast implants, scar management, tissue expanders, and body contouring products.

~~In November 2014, the Company completed an initial public offering, or IPO, and its common stock is listed on the Nasdaq Stock Exchange under the symbol “SIEN.”~~

The Company has engaged Vesta Intermediate Funding, Inc., or Vesta, a Lubrizol Lifesciences company, for the manufacture and supply of the Company’s breast implants. On March 14, 2017, the Company announced it had submitted a site-change pre-market approval, or PMA, supplement to the FDA for the manufacture of the Company’s PMA-approved breast implants at the Vesta manufacturing facility. On January 30, 2018, the Company announced the FDA has granted approval of the site-change supplement for the Company’s contract manufacturer, Vesta, to manufacture its silicone gel breast implants. In support of the move to the Vesta manufacturing facility, the Company also implemented new manufacturing process improvements which, in consultation with the FDA, required three (3) additional PMA submissions. In addition to approving the manufacturing site-change PMA supplement, the FDA approved the Company’s three (3) process enhancement submissions on ~~January 10, 2018, January 19, 2018 and April 17, 2018~~.

On May 7, 2018, the Company completed an underwritten follow-on public offering of 7,407,408 shares of its common stock at $13.50 per share, as well as 1,111,111 additional shares of its common stock pursuant to the full exercise of the over-allotment option granted to the underwriters. Net proceeds to the Company were approximately $107.6 million after deducting underwriting discounts and commissions of $6.9 million and offering expenses of approximately $0.5 million.

On June 7, 2019, the Company completed an underwritten follow-on public offering of 17,391,305 shares of its common stock at $5.75 per share, as well as 2,608,695 additional shares of its common stock pursuant to the full exercise of the over-allotment option granted to the underwriters. Net proceeds to the Company were approximately $107.7 million after deducting underwriting discounts and commissions of $6.9 million and offering expenses of approximately $0.4 million.

The accompanying unaudited condensed consolidated financial statements of Sientra, Inc. (“Sientra”, the “Company”, “we”, “our”, or “us”) in this Quarterly Report on Form 10-Q have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, and the rules and regulations of the U.S. Securities and Exchange Commission, or SEC. Accordingly, they do not include certain footnotes and financial presentations normally required under accounting principles generally accepted in the United States of America for complete financial reporting. The interim financial information is unaudited, but reflects all normal adjustments and accruals which are, in the opinion of management, considered necessary to provide a fair presentation for the interim periods presented. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 filed with the SEC on March ~~14, 2019,~~16, 2020, or the Annual Report. The results for the three and nine months ended September 30, ~~2019~~2020 are not necessarily indicative of results to be expected for the year ending December 31, ~~2019,~~2020, any other interim periods, or any future year or period.

Since the Company’s inception, it has incurred significant net operating losses and the Company anticipates that losses will continue in the near term. ~~The~~Although the Company expects its operating expenses will ~~continue~~begin to ~~grow~~decrease with the implementation of the organizational efficiency initiative announced on November 7, 2019, and other measures introduced as ~~they expand operations. The~~announced in the Company’s filing on Form 8-K on April 7, 2020, the Company will need to generate significant net sales to achieve profitability. To date, the Company has funded operations primarily with proceeds from the sales of preferred stock, borrowings under term loans and the convertible note, sales of products since 2012, and the proceeds from the sale of common stock in public offerings.

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As of September 30, 2019, the Company had cash and cash equivalents of $120.9 million. Since inception, the Company has incurred recurring losses from operations and cash outflows from operating activities. The continuation of the Company as a going concern is dependent upon many factors including liquidity and the ability to raise capital.~~The Company received FDA approval of their PMA supplement on April 17, 2018 and was then able to access a $10.0 million term loan pursuant to an amendment to~~

During the ~~credit agreement with MidCap Financial Trust, or MidCap. In addition, in February 2018,~~nine months ended September 30, 2020, the Company ~~entered into an~~ sold 37,000 shares of its common stock under the At-The-Market Equity Offering Sales Agreement with Stifel, Nicolaus & Company, Incorporated, or Stifel, as sales agent pursuant to which the Company may sell, from time to time, through Stifel, shares of ~~our~~ common stock having an aggregate gross offering price of up to $50.0 million. AsThe sales of ~~September 30, 2019, the Company has not sold any~~ common stock ~~pursuant to the sales agreement. Further, on~~ ~~May 7, 2018 and June 7, 2019, the Company completed public offerings of its common stock, raising approximately $107.6 million and $107.7 million, respectively,~~resulted in net proceeds after ~~deducting underwriting discounts and~~ commissions ~~and other offering expenses.~~of approximately $0.3 million.

On ~~July 1, 2019,~~March 11, 2020, the Company entered into a facility agreement with Deerfield Partners, L.P., issuing $60.0 million in principal amount of 4.0% unsecured and subordinated convertible notes upon the terms and conditions set forth in the facility agreement. Further on May 11, 2020, the Company amended certain credit agreements with Midcap Financial Trust pursuant to which the Company repaid certain amounts of its existing ~~indebtedness under its Loan Agreement and the outstanding commitment fee was cancelled.~~indebtedness. See Note 10 – ~~Long-Term~~ Debt ~~and Revolving Loan~~ for further discussion.

As of September 30, 2020, the Company had cash and cash equivalents of $63.5 million. The Company believes that its cash and cash equivalents will be sufficient to fund its operations for at least the next 12 months. To fund ongoing operating and capital needs, the Company may need to raise additional capital in the future through the sale of equity securities and incremental debt financing.

The preparation of the condensed consolidated financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

In ~~February 2016,~~August 2018, the FASB issued ~~Accounting Standards Update,~~ASU 2018-13, Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The amendment modifies, removes, and adds certain disclosure requirements on fair value measurements. The ASU is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or ~~ASU, 2016-02, Leases (Topic 842). This ASU requires a company to recognize lease assets and liabilities arising from operating leases~~annual period presented in the ~~statement~~initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption was permitted. The Company adopted the applicable amendments within ASU 2018-13 prospectively in the first quarter of 2020 and there was no material impact on its condensed consolidated financial ~~position. This~~statements from the adoption.

In August 2018, the FASB issued ASU ~~does~~2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) - Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract. The amendment aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The accounting for the service element of a hosting arrangement that is a service contract is not ~~significantly change~~affected by the previous lease guidance for how a lessee should recognize the recognition, measurement, and presentation of expenses and cash flows arising from a lease. Additionally, the criteria for classifying a finance lease versus an operating lease are substantially the same as the previous guidance. Thisamendment. The ASU is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2019. Early adoption was permitted. The Company adopted ASU 2018-15 prospectively in the first quarter of 2020 and there was no material impact on its condensed consolidated financial statements from the adoption.

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The amendment eliminates certain accounting models and simplifies the accounting for convertible instruments and enhances disclosures for convertible instruments and earnings per share. The amendments are effective for public entities excluding smaller reporting companies for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, ~~2018,~~2023 including interim periods within those fiscal years and early adoption ~~was~~is permitted. The Company is currently evaluating the impact that adoption of the standard will have on the consolidated financial statements.

In ~~July 2018,~~March 2020, the FASB issued ASU ~~2018-11, Leases~~2020-04, Reference Rate Reform (Topic ~~842) Targeted Improvements, amending certain aspects~~848)-Facilitation of the ~~new leasing standard.~~Effects of Reference Rate Reform on Financial Reporting. The amendment ~~allowed~~provides optional expedients and exceptions for contract modifications that replace a reference rate affected by reference rate reform. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022, and entities may elect to apply by Topic as of any date from the beginning of an ~~additional optional transition method whereby~~interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an ~~entity records a cumulative effect adjustment~~interim period that includes or is subsequent to ~~opening retained earnings in~~March 12, 2020, up to the ~~year of adoption without restating prior periods.~~date that the financial statements are available to be issued. The Company ~~adopted Topic 842 on January 1, 2019 electing~~is currently evaluating the ~~package of practical expedients permitted under~~impact the transition guidance, which allowed the Company to carry forward the historical lease classification, the assessment on whether a contract is or contains a lease, and the initial direct costs for any leases that exist prior to adoptionelection of the ~~new standard. The Company has not restated prior periods under~~optional expedient will have on the optional transition method. The adoption of ASU 2016-02 on January 1, 2019 resulted in the recognition of right-of-use assets of approximately $22.7 million, lease liabilities of approximately $22.9 million and no cumulative-effect adjustment on retained earnings on its Condensed Consolidated Balance Sheets. Refer to Note 9 - Leases for further details.

In ~~February 2018,~~December 2019, the FASB issued ASU ~~2018-02,~~ 2019-12, Income Taxes (Topic 740)~~, which allows~~: Simplifying the Accounting for ~~an entity~~Income Taxes. The amendment removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation, and calculating income taxes in interim periods. The amendment also adds guidance to ~~elect~~reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to ~~reclassify the income tax effects on items within accumulated other comprehensive income resulting from U.S. Tax Cuts and Jobs Act to retained earnings.~~members of a consolidated group. The ~~guidance~~ASU is effective for annual and interim periods in fiscal years beginning after December 15, ~~2018 with early~~2020.Early adoption ~~permitted, including interim periods within those years.~~is permitted. The Company ~~adopted ASC 2018-02 and elected to not reclassify~~is currently evaluating the ~~income tax effects under ASU 2018-02, as it does not~~impact that adoption of the standard will have ~~a material impact~~ on the ~~condensed~~ consolidated financial statements.

As an aesthetics company, surgical procedures involving the Company's products are susceptible to local and national government restrictions, such as social distancing, “shelter in place” orders and business closures, due to the economic and logistical impacts these measures have on consumer demand as well as the practitioners’ ability to administer such procedures. The inability or limited ability to perform such non-emergency procedures significantly harmed the Company’s revenues during the three months ended June 30, 2020 and continued to harm the Company’s revenues during the three months ended September 30, 2020. While some states have lifted certain restrictions on non-emergency procedures during the three months ended September 30, 2020, the Company will likely continue to experience future harm to its revenues while existing or new restrictions remain in place.

Further, the spread of COVID-19 has caused the Company to modify workforce practices, and the Company may take further actions determined to be in the best interests of the Company’s employees or as required by governments. In addition, capital markets and economies worldwide have also been negatively impacted by the COVID-19 pandemic, and it is possible that this can lead to a local and/or global economic recession, which may result in further harm to the aesthetics market. Such economic disruption could adversely affect the Company’s

business. The continued spread of COVID-19, or another infectious disease, could also result in delays or disruptions in the Company’s supply chain or adversely affect the Company’s manufacturing facilities and personnel. Further, trade and/or national security protection policies may be adjusted as a result of the COVID-19 pandemic, such as actions by governments that limit, restrict or prevent the movement of certain goods into a country and/or region, and current U.S./China trade relations may be further exacerbated by the pandemic.

The estimates used for, but not limited to, determining the collectability of accounts receivable, fair value of long-lived assets and goodwill, and sales returns liability required could be impacted by the pandemic. While the full impact of COVID-19 is unknown at this time, the Company has made appropriate estimates based on the facts and circumstances available as of the reporting date. These estimates may change as new events occur and additional information is obtained.

Certain reclassifications have been made to prior year amounts to conform to the current year presentation.

On November 7, 2019, the Company announced an organizational efficiency initiative, or the Plan, designed to reduce spending and simplify operations. Under the Plan, the Company is implementing numerous initiatives to reduce spending, including closing the Santa Clara offices of miraDry, Inc. and consolidating a number of business support services via a shared services organization at the Company’s Santa Barbara headquarters.

Under the Plan, the Company intends to reduce its workforce by terminating approximately 70 employees. The Company expects to incur total charges of approximately $2.5 million in connection with one-time employee termination costs, retention costs and other benefits. In addition, the Company expects to incur estimated charges of approximately $0.5 million related to duplicate operating costs and other associated costs. In total, the Plan is estimated to cost approximately $3.0 million, excluding non-cash charges, with related cash payments expected to be substantially paid out with cash on hand by the end of 2020.

The following table details the amount of the liabilities related to the Plan included in "Accrued and other current liabilities" in the condensed consolidated balance sheet as of September 30, 2020 (amounts in thousands):

The following table details the charges by reportable segment, recorded in "Restructuring" under operating expenses in the condensed consolidated statements of operations for the nine months ended September 30, 2020 (amounts in thousands):

The Company anticipates incurring approximately $0.1 million of additional restructuring costs during the remainder of 2020 attributable to the miraDry segment. As the development of the Plan is completed, the Company will update its costs by reportable segment as needed.

The Company generates revenue primarily through the sale and delivery of promised goods or services to customers and recognizes revenue when control is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for the goods or services.

Performance obligations typically include the delivery of promised products, such as breast implants, tissue expanders, BIOCORNEUM, miraDry Systems and bioTips, along with service-type warranties and deliverables under certain marketing programs. Other deliverables ~~are sometimes~~may be promised but are ancillary and insignificant in the context of the contract as a whole. Sales prices are documented in the executed sales contract, purchase order or order acknowledgement prior to the transfer of control to the customer. Customers may enter into a separate extended service agreement to purchase an extended warranty for miraDry products from the Company whereby the payment is due at the inception of the agreement. Typical payment terms are 30 days for Breast Products and direct sales of consumable miraDry products, and tend to be longer for capital sales of miraDry Systems and sales to miraDry distributors, but do not extend beyond one year. For delivery of promised products, control transfers and revenue is recognized upon shipment, unless the contractual arrangement requires transfer of control when products reach their destination, for which revenue is recognized once the product arrives at its destination. Revenue for ~~extended~~ service ~~agreements~~warranties are recognized ratably over the term of the ~~agreements.~~

~~For Breast Products, with the exception~~agreements, and revenue related to marketing program deliverables are recognized upon delivery of the Company’s BIOCORNEUM scar management products, the Company allows for the return of products from customers within six months after the original sale, which is accounted for as variable consideration. Reserves are established for anticipated sales returns based on the expected amount calculated with historical experience, recent gross sales and any notification of pending returns. The estimated sales return is recorded as a reduction of revenue and as a sales return liability in the same period revenue is recognized. Actual sales returns in any future period are inherently uncertain and thus may differ from the estimates. If actual sales returns differ significantly from the estimates, an adjustment to revenue in the currentmarketing product or subsequent period would be recorded. The Company has established an allowance for sales returns of $7.6 million and $6.0 million as of September 30, 2019 and December 31, 2018 respectively, recorded as “sales return liability” on the condensed consolidated balance sheets.

~~The following table provides a rollforward~~performance of the ~~sales return liability (in thousands):~~service.

For Breast Products, a portion of the Company’s revenue is generated from the sale of consigned inventory of breast implants maintained at doctor, hospital, and clinic locations. For these products, revenue is recognized at the time the Company is notified by the customer that the product has been implanted, not when the consigned products are delivered to the customer’s location.

For miraDry, in addition to domestic and international direct sales, the Company leverages a distributor network for selling the miraDry System internationally. The Company recognizes revenue when control of the goods or services is transferred to the distributors. Standard terms in both direct sales agreements (domestic and international), and international distributor agreements do not allow for trial periods, right of return, refunds, payment contingent on obtaining financing or other terms that could impact the customer’s payment obligation.

The Company has determined that the delivery of each unit of product in the Company’s revenue contracts with customers is a separate performance obligation. The Company’s revenue contracts may include multiple products or services, each of which is considered a separate performance obligation. For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company generally determines standalone selling prices based on observable prices or using an expected cost plus margin approach when an observable price is not available. The Company invoices customers once products are shipped or delivered to customers depending on the negotiated shipping terms.

The Company introduced its Platinum20 Limited Warranty Program, or Platinum20, in May 2018 on all OPUS breast implants implanted in the United States or Puerto Rico on or after May 1, 2018. Platinum20 provides for financial assistance for revision surgeries and no-charge contralateral replacement implants upon the occurrence of certain qualifying events. The Company considers Platinum20 to have an assurance warranty component and a service warranty component. The assurance component is recorded as a warranty liability at the time of sale (as discussed in Note 6). The Company considers the service warranty component as an additional performance obligation and defers revenue at the time of sale based on the relative estimated selling price, by estimating a standalone selling price using the expected cost plus margin approach for the performance obligation. Inputs into the expected cost plus margin approach include historical incidence rates, estimated replacement costs, estimated financial assistance payouts and an estimated margin. The liability for unsatisfied performance obligations under the service warranty and deliverables under certain marketing programs as of September 30, ~~2019 and December 31, 2018 was $0.9 million and $0.4 million respectively. The short-term obligation related to the service warranty was $0.4 million and $0.2 million~~2020 were as of September 30, 2019 and December 31, 2018, respectively, and is included in “accrued and other current liabilities” on the condensed consolidated balance sheets. The long-term obligation related to the service warranty was $0.5 million and $0.3 million as of September 30, 2019 and December 31, 2018, respectively, and is included in “warranty reserve and other long-term liabilities” on the condensed consolidated balance sheets. The performance obligation is satisfied at the time that Platinum20 benefits are provided and are expected to be satisfied over the following 6 to 24 month period for financial assistance and 20 years for product replacement. Revenue recognized for the service warranty performance obligations for the three and nine months ended September 30, 2019 was immaterial.follows:

~~The Company generally expenses sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within sales and marketing expenses.~~

~~The Company does not adjust accounts receivable for the effects of any significant financing components as customer payment terms are shorter than one year.~~

The Company has elected to account for shipping and handling activities performed after a customer obtains control of the products as activities to fulfill the promise to transfer the products to the customer. Shipping and handling activities are largely provided to customers free of charge for the Breast Products segment. The associated costs were $1.4 million and $0.9 million for the nine months ended September 30, 2019 and 2018 respectively. The associated costs were $0.5 million and $0.3 million for the three months ended September 30, 2019 and 2018 respectively. These costs are viewed as part of the Company’s sales and marketing programs and are recorded as a component of sales and marketing expense in the condensed consolidated statement of operations as an accounting policy election. For the miraDry segment, shipping and handling charges are typically billed to customers and recorded as revenue. The shipping and handling costs incurred are recorded as a component of cost of goods sold in the condensed consolidated statement of operations. The associated costs were $0.6 million and $0.2 million for the nine months ended September 30, 2019 and 2018 respectively. The associated costs were $0.3 million and $0.1 million for the three months ended September 30, 2019 and 2018 respectively.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, customer deposits and sales return liability are reasonable estimates of their fair value because of the short maturity of these items. The fair value of the common stock warrant liability, ~~and~~ contingent consideration, and the convertible feature related to the convertible note are discussed in Note 5. The fair value of ~~the~~ debt is based on the amount of future cash flows associated with the instrument discounted using the Company’s estimated market rate. As of September 30, ~~2019,~~2020, the carrying value of the long-term debt and convertible note was not materially different from the fair value.

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.

Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

The Company’s common stock warrant liabilities are carried at fair value determined according to the fair value hierarchy described above. The Company has utilized an option pricing valuation model to determine the fair value of its outstanding common stock warrant liabilities. The inputs to the model include fair value of the common stock related to the warrant, exercise price of the warrant, expected term, expected volatility, risk-free interest rate and dividend yield. The warrants are valued using the fair value of common stock as of the measurement date. The Company estimates its expected stock volatility based on company-specific historical and implied volatility information of its stock. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve for time periods approximately equal to the remaining contractual term of the warrants. The Company has estimated a 0% dividend yield based on the expected dividend yield and the fact that the Company has never paid or declared dividends. As ~~several significant inputs are not observable,~~of September 30, 2020, the ~~overall~~ fair value ~~measurement~~ of the warrants ~~is classified~~was immaterial as ~~Level 3.~~a result of the decline in the Company’s stock price.

The Company assessed the fair value of the contingent consideration for future royalty payments related to the acquisition of BIOCORNEUM and the contingent consideration for the future milestone payments related to the acquisition of miraDry using a Monte-Carlo simulation model. ~~Significant assumptions used in~~The contingent consideration related to the ~~measurement include~~acquisition of BIOCORNEUM consist of royalty obligations based on future net sales for a defined term, ~~and~~beginning in 2024. The significant assumption utilized in the ~~risk-adjusted~~fair value measurement was the revenue discount rate, ~~associated with~~which was 20.0%. The contingent consideration for future milestone payments related to the ~~business.~~acquisition of miraDry is based on the timing of achievement of target net sales, which is estimated based on an internal management forecast. The significant assumption utilized in the fair value measurement was the miraDry company discount rate, which was 11.2%. As ~~the~~these inputs are not observable, the overall fair value measurement of the contingent consideration is classified as Level 3. During the nine months ended September 30, 2020, the total change in the fair value of contingent consideration was $0.1 million and 0 settlements were recorded.

The Company assesses on a quarterly basis the fair value of the conversion feature related to the convertible note due in 2025. The conversion feature was bifurcated and recorded as a derivative liability on the condensed consolidated balance sheet with a corresponding discount at the date of issuance that is netted against the principal amount of the note. The Company utilizes a binomial lattice method to determine the fair value of the conversion feature, which utilizes inputs including the common stock price, volatility of common stock, the risk-free interest rate and the probability of conversion to common shares at the Base Conversion Rate in the event of a major transaction (e.g. a change in control). As the probability of conversion is a significant unobservable input, the overall fair value measurement of the conversion feature is classified as Level 3. During the three months ended September 30, 2020, the change in the fair value of the derivative liability was a decrease of $10.1 million. During the nine months ended September 30, 2020, the change in the fair value of the derivative liability was an increase of $8.4 million. NaN settlements were recorded.

The following tables present information about the Company’s liabilities that are measured at fair value on a recurring basis as of September 30, ~~2019~~2020 and December 31, ~~2018~~2019 and indicate the level of the fair value hierarchy utilized to determine such fair value (in thousands):

	Fair Value Measurements as of								Fair Value Measurements as of
	September 30, 2019 Using:								September 30, 2020 Using:
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Liabilities:
Liability for common stock warrants	$	—		—		3		3
Liability for contingent consideration		—		—		6,437		6,437	$	—		—		6,959		6,959
Liability for convertible note conversion feature										—		—		24,520		24,520
	$	—		—		6,440		6,440	$	—		—		31,479		31,479

	Fair Value Measurements as of								Fair Value Measurements as of
	December 31, 2018 Using:								December 31, 2019 Using:
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Liabilities:
Liability for common stock warrants	$	—		—		113		113	$	—		—		38		38
Liability for contingent consideration		—		—		13,847		13,847		—		—		6,891		6,891
	$	—		—		13,960		13,960	$	—		—		6,929		6,929

The liability for ~~common stock warrants and~~ the current portion of contingent consideration is included in “accrued and other current liabilities” and the long-term ~~liabilities for the contingent consideration are~~portion is included in “deferred and contingent consideration” in the condensed consolidated balance sheet. The ~~following table provides a rollforward of~~liability for the ~~aggregate fair values of~~conversion feature related to the ~~Company’s common stock warrants and contingent consideration for which fair value~~convertible note is ~~determined by Level 3 inputs (in thousands):~~ included in “derivative liability” in the condensed consolidated balance sheet.

The Company recognizes changes in the fair value of the ~~warrants~~derivative liability in ~~“other income (expense), net”~~“change in fair value of derivative liability” in the condensed consolidated statement of operations and changes in the contingent consideration are recognized in “general and administrative” expense in the condensed consolidated statement of operations.

The Company offers a product replacement and limited warranty program for the Company’s silicone gel breast implants, and a product warranty for the Company’s miraDry Systems and consumable bioTips. For silicone gel breast implant surgeries occurring prior to May 1, 2018, the Company provides lifetime replacement implants and up to $3,600 in financial assistance for revision surgeries, for covered rupture events that occur within ten years of the surgery date. The Company introduced its Platinum20 Limited Warranty Program in May 2018, covering OPUS silicone gel breast implants implanted in the United States or Puerto Rico on or after May 1, 2018. The Company considers the program to have an assurance warranty component and a service warranty component. The service warranty component is discussed in Note 3 above. The assurance component is primarily related to the lifetime no-charge contralateral replacement implants and up to $5,000 in financial assistance for revision surgeries, for covered rupture events that occur within twenty years of the surgery date. Under the miraDry warranty, the Company provides a standard product warranty for the miraDry System and bioTips, which the Company considers an assurance-type warranty.

The following table provides a rollforward of the accrued warranties (in thousands):

	Nine Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2020			2019
Balance as of January 1	$	1,395		$	1,642		$	1,562		$	1,395
Warranty costs incurred during the period		(492	)		(395	)		(501	)		(492	)
Changes in accrual related to warranties issued during the period		820			639			717			820
Changes in accrual related to pre-existing warranties		23			(637	)		(6	)		23
Balance as of September 30	$	1,746		$	1,249		$	1,772		$	1,746

Basic net loss per share attributable to common stockholders is computed by dividing net loss by the weighted average number of common shares outstanding during each period. Diluted net loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares and dilutive potential common share equivalents then outstanding, to the extent they are dilutive. Potential common shares consist of shares issuable upon the exercise of stock options and warrants (using the treasury stock method). Dilutive net loss per share is the same as basic net loss per share for all periods presented because the effects of potentially dilutive items were anti-dilutive.

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,							Nine Months Ended September 30,
	2019			2018			2019			2018			2020			2019				2020			2019
Net loss (in thousands)	$	(22,433	)	$	(20,545	)	$	(86,571	)	$	(57,996	)	$	(5,821	)		$	(22,433	)	$	(68,710	)	$	(86,571	)
Weighted average common shares outstanding, basic and diluted		49,401,094			28,462,975			37,671,215			24,312,300			50,394,858				49,401,094			50,155,623			37,671,215
Net loss per share attributable to common stockholders	$	(0.45	)	$	(0.72	)	$	(2.30	)	$	(2.39	)	$	(0.12	)		$	(0.45	)	$	(1.37	)	$	(2.30	)

The Company excluded the following potentially dilutive securities, outstanding as of September 30, ~~2019~~2020 and ~~2018,~~2019, from the computation of diluted net loss per share attributable to common stockholders for the three and nine months ended September 30, ~~2019~~2020 and ~~2018~~2019 because they had an anti-dilutive impact due to the net loss attributable to common stockholders incurred for the periods.

	September 30,				September 30,
	2019		2018		2020		2019
Stock options to purchase common stock		924,097		1,926,835		1,571,375		2,036,027
Warrants for the purchase of common stock		47,710		47,710		27,264		47,710
Equity contingent consideration						607,442		—
Stock issuable upon conversion of convertible note						19,733,352		—
		971,807		1,974,545		21,939,433		2,083,737

The Company uses the if-converted method for calculating any potential dilutive effects of the convertible note. The Company did not adjust the net loss for the three and nine months ended September 30, 2020 to eliminate any interest expense or gain/loss for the derivative liability related to the note in the computation of diluted loss per share, as the effects would be anti-dilutive.

The Company has established an allowance for doubtful accounts of $3.3 million and $2.4 million as of September 30, 2019 and December 31, 2018, respectively, recorded net against accounts receivable in the balance sheet.

	September 30,		December 31,		September 30,		December 31,
	2019		2018		2020		2019
Raw materials	$	3,777	$	2,147	$	6,767	$	8,095
Work in progress		1,837		2,110		9,356		5,543
Finished goods		22,869		18,335		28,809		23,893
Finished goods - right of return		1,891		1,493		3,535		2,081
	$	30,374	$	24,085	$	48,467	$	39,612

	September 30,			December 31,			September 30,			December 31,
	2019			2018			2020			2019
Leasehold improvements	$	408		$	402		$	2,857		$	2,841
Manufacturing equipment and toolings		3,384			1,928			9,037			8,175
Computer equipment		908			682			2,375			1,250
Software		1,441			1,039			3,056			2,602
Office equipment		111			156			167			111
Furniture and fixtures		1,031			826			1,192			1,144
		7,283			5,033			18,684			16,123
Less accumulated depreciation		(3,303	)		(2,497	)		(5,942	)		(3,809	)
	$	3,980		$	2,536		$	12,742		$	12,314

Depreciation expense for the three months ended September 30, 2020 and 2019 ~~and 2018~~ was ~~$0.3~~$1.0 million and ~~$0.2~~$0.3 million, respectively. Depreciation expense for ~~both~~ the nine months ended September 30, 2020 and 2019 was $1.8 million and ~~2018 was~~ $0.9 ~~million.~~million, respectively.

Under the terms of the manufacturing agreement with Vesta, upon the commencement of Contract Year One (as defined in the agreement) which occurred following FDA-approval of all submissions related to the site-change PMA supplement for the Vesta manufacturing facility, Vesta was obligated to purchase the manufacturing equipment and tooling that Sientra had originally purchased for the manufacture of Sientra’s breast implant inventory at Vesta’s manufacturing facility. Vesta repurchased the equipment with a net book value of $2.7 million in the third quarter of 2018 through a reduction in the Company’s accounts payable balance owed to Vesta.

The Company has determined that it has two reporting units, Breast Products and miraDry, and evaluates goodwill for impairment at least annually on October 1^st and whenever circumstances suggest that goodwill may be impaired. ~~As of September 30, 2019 and December 31, 2018 the miraDry reporting unit had a negative carrying value.~~

The changes in the carrying amount of goodwill during the nine months ended September 30, 2020 and the year ended December 31, 2019 were as follows (in thousands):

	Breast Products			miraDry			Total			Breast Products			miraDry			Total
Balances as of December 31, 2018
Balances as of December 31, 2019
Goodwill	$	19,156		$	7,629		$	26,785			23,480			7,629			31,109
Accumulated impairment losses		(14,278	)		—			(14,278	)		(14,278	)		(7,629	)		(21,907	)
Goodwill, net	$	4,878		$	7,629		$	12,507		$	9,202		$	—		$	9,202

Balances as of September 30, 2019
Balances as of September 30, 2020
Goodwill	$	19,156		$	7,629		$	26,785			23,480			7,629			31,109
Accumulated impairment losses		(14,278	)		(7,629	)		(21,907	)		(14,278	)		(7,629	)		(21,907	)
Goodwill, net	$	4,878		$	—		$	4,878		$	9,202		$	—		$	9,202

In the ~~second~~first quarter of ~~2019,~~2020, the Company noted a decline in actual and forecasted earnings for the miraDry reporting unit ~~in comparison~~due to ~~forecasted earnings determined in prior periods. Based on this evaluation,~~ the ~~Company determined that~~impacts and uncertainty surrounding the ~~carrying value of the miraDry reporting unit more likely than not exceeded its estimated fair value.~~COVID-19 pandemic. As a result, the Company performed a ~~quantitative analysis to compare~~test of recoverability by comparing the ~~fair~~carrying value of the reporting unit ~~to its carrying amount.~~

The Company’s fair value analysis of goodwill utilizes the income approach, which requires the use of estimates about a reporting unit’s future revenues and free cash flows, discount rates, terminal value and enterprise value to determine the estimated fair value. The Company’s future revenues and free cash flow assumptions are determined based upon actual results giving effect to management’s expected changes in operating results in future years. The enterprise value, discount rates and terminal value are based upon market participant assumptions using a defined peer group.

After performing the impairment test as of June 30, 2019 the Company determined that the carrying value of its miraDry reporting unit exceeded its estimated fair value using the income approach, as described above, by an amount that indicated a full impairment of the carrying value of goodwill. Consequently, the Company recorded a non-cash goodwill impairment charge of $7.6 million during the second quarter ended June 30, 2019, which is reflected in the accompanying condensed consolidated statement of operations for the nine months ended September 30, 2019.

~~The components of the Company’s other intangible assets consist of the following (in thousands):~~

In connection with the circumstances leading to the impairment of goodwill for the miraDry reporting unit, in the second quarter of 2019 the Company performed a test of recoverability of the intangible assets in the miraDry reporting unit by comparing the carrying amount of the intangible assets to the future undiscounted cash flows the ~~assets are~~reporting unit is expected to generate. As the future undiscounted cash flows attributable to the ~~intangible assets~~asset group were less than the carrying value, the Company performed a quantitative analysis to compare the fair value of the intangible assets in the reporting unit to their carrying amount.

The Company’s fair value analysis of intangible assets utilizes methods under various income approaches. The Company values its customer relationships using an excess earnings method, which assumes the value of the asset is the discounted ~~cash flow using estimates of~~ future cash ~~flow~~flows derived from existing ~~customers. Similarly, distributor relationships~~customersand requires the use of customer attrition rates and discount rates to determine the estimated fair value. The future revenues and free cash flow from existing customers are ~~valued~~determined based upon actual results giving effect to management’s expected changes in operating results in future years. The attrition rate is based on average historical levels of customer attrition and the discount rate is based upon market participant assumptions using a ~~distributor method, which assumes the value of the asset is the discounted cash flow using estimates of future cash flow derived from existing distributors.~~defined peer group. Tradenames and developed technology are valued using a relief from royalty method, which assumes the value of the asset is the discounted cash flows of the amount that would be paid by a hypothetical market participant had they not owned the asset and instead licensed the asset from another company.

This method requires the use of royalty rates which are determined based on comparable third-party license agreements involving similar assets and discount rates similar to the above to determine the estimated fair value.

After performing the impairment ~~test~~analysis as of ~~June 30, 2019,~~March 31, 2020, the Company determined that the carrying values of all of the intangible assets in the miraDry reporting unit exceeded their estimated fair values. Consequently, the Company recorded total non-cash impairment charges of ~~$0.4~~$1.1 million for trade names, $1.4 million for developed technology, and $3.9 million for customer relationships ~~$0.3 million for distributor relationships, $3.3 million for tradenames, and $1.0 million for developed technology~~ within ~~goodwill and other intangible~~ impairment ~~during the second quarter ended June 30, 2019, which is reflected~~ in the accompanying condensed consolidated statement of operations for the nine months ended September 30, ~~2019.~~

2020. As of September 30, ~~2019~~2020, the ~~Company assessed qualitative factors in order to determine whether any events or circumstances existed which indicated that it was more likely than not that the fair~~remaining carrying value of the intangible assets ~~did not exceed their carrying values and concluded no such events or circumstances existed which would require a quantitative impairment analysis to be performed. As such,~~are entirely associated with the ~~Company did not record impairment charges for~~Breast Products segment.

The components of the ~~three months ended September 30, 2019.~~Company’s other intangible assets consist of the following (in thousands):

Amortization expense for the three months ended September 30, 2020 and 2019 was $0.3 million and ~~2018 were~~ $0.5 million, ~~and $0.6 million,~~ respectively. ~~Intangibles amortization~~Amortization expense for ~~both~~ the nine months ended September 30, 2020 and 2019 was $1.2 million and ~~2018 was~~ $1.7 ~~million.~~million, respectively. The following table summarizes the estimated amortization expense relating to the Company's definite-lived intangible assets as of September 30, ~~2019~~2020 (in thousands):

	Amortization		Amortization
Period	Expense		Expense
Remainder of 2019	$	511
2020		1,554	$	332
2021		1,305		1,221
2022		1,122		1,163
2023		975		1,092
2024				948
Thereafter		3,862		4,513
	$	9,329	$	9,269

	September 30,		December 31,		September 30,		December 31,
	2019		2018		2020		2019
Payroll and related expenses	$	5,729	$	6,466	$	2,574	$	6,789
Accrued severance						980		894
Accrued commissions		3,750		5,321		5,335		4,984
Accrued equipment		1,107		18
Accrued manufacturing						835		2,616
Deferred and contingent consideration, current portion		6,361		7,645		6,931		6,830
Audit, consulting and legal fees		585		703		304		630
Accrued sales and marketing expenses		1,314		1,374		861		1,109
Operating lease liabilities		5,008		—
Finance lease liabilities		41		—
Lease liabilities						1,556		1,299
Other		4,846		6,170		7,303		7,400
	$	28,741	$	27,697	$	26,679	$	32,551

The Company leases certain office space, warehouses, distribution facilities and office equipment. ~~The Company also has embedded leases of manufacturing facilities and equipment associated with the Company’s manufacturing contracts.~~ The Company determines if an arrangement contains a lease at inception by evaluating whether the arrangement conveys the right to use an identified asset and whether the Company obtains substantially all of the economic benefits from and has the ability to direct the use of the asset.

Operating and finance lease right-of-use, or ROU, assets and lease liabilities are recognized based on the present value of the future lease payments over the lease term at the commencement date. The Company determines its incremental borrowing rate based on the information available at the commencement date in determining the lease liabilities as the Company’s leases generally do not provide an implicit rate. The ROU assets also include any initial direct costs incurred and any lease payments made at or before the lease commencement date, less lease incentives received. Lease terms may include options to extend or terminate when the Company is reasonably certain that the option will be exercised. During the second quarter of 2019, the Company included a five-year renewal option in the lease term for one operating lease as it was concluded that it is reasonably certain that the Company will exercise the option. The Company elected to apply the short-term lease measurement and recognition exemption in which ROU assets and lease liabilities are not recognized for short-term leases. The Company’s lease agreements generally do not contain material residual value guarantees or material restrictive covenants.

The Company’s leases of office space, warehouses and distribution facilities are treated as operating leases and often contain lease and non-lease components. The Company has elected to account for these lease and non-lease components separately. Non-lease components for these assets are primarily comprised of common-area maintenance, utilities, and real estate taxes that are passed on from the lessor in proportion to the space leased by the Company, and are recognized in operating expenses in the period in which the obligation for those payments was incurred. Lease cost for these operating leases is recognized on a straight-line basis over the lease term in operating expenses.

The Company’s embedded leases of manufacturing facilities and equipment are treated as operating leases and often contain lease and non-lease components. The Company has elected to account for these lease and non-lease components as a single lease component. There may be variability in future lease payments as the amount of the non-lease components is based on the costs of manufacturing and is dependent on the amount and types of units produced. The Company reduces the operating lease liability when the inventory is purchased.

The Company’s leases of office equipment are accounted for as finance leases as they meet one or more of the five finance lease classification criteria. Lease cost for these finance leases is comprised of amortization of the ROU asset and interest expense which are recognized in operating expenses and other income (expense), net.

							Three Months Ended				Nine Months Ended
		Three Months Ended September 30,		Nine Months Ended September 30,			September 30,				September 30,
Lease Cost	Classification	2019		2019		Classification	2020		2019		2020		2019
Operating lease cost	Operating expenses	$	389	$	1,155	Operating expenses	$	428	$	389	$	1,270	$	1,155
Operating lease cost	Inventory		1,248		3,743	Inventory		131		1,248		364		3,743
Total operating lease cost		$	1,637	$	4,898		$	559	$	1,637	$	1,634	$	4,898
Finance lease cost
Amortization of right-of-use assets	Operating expenses		10		30	Operating expenses		10		10		31		30
Amortization of right-of-use assets						Inventory		12		—		24		—
Interest on lease liabilities	Other income (expense), net		1		3	Other income (expense), net		3		1		7		3
Total finance lease cost		$	11	$	33		$	25	$	11	$	62	$	33
Variable lease cost	Inventory		3,291		7,886	Inventory		—		3,291		—		7,886
Total lease cost		$	4,939	$	12,817		$	584	$	4,939	$	1,696	$	12,817

Short-term lease expense for ~~both~~ the three and nine months ended September 30, 2020 and 2019 was ~~immaterial.~~not material.

Supplemental cash flow information related to operating and finance leases for the nine months ended September 30, ~~2019~~2020 was as follows (in thousands):

	Nine Months Ended September 30,		Nine Months Ended September 30,		Nine Months Ended September 30,
	2019		2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	4,605	$	1,337	$	4,605
Operating cash outflows from finance leases		33		61		33
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	24,779	$	1,242	$	24,779
Finance leases		117		157		117

Supplemental balance sheet information, as of September 30, ~~2019,~~2020, related to operating and finance leases was as follows (in thousands, except lease term and discount rate):

	September 30,			September 30,			December 31,
	2019			2020			2019
Reported as:
Other assets
Operating lease right-of-use assets	$	21,263		$	7,581		$	7,494
Finance lease right-of-use assets		88			180			78
Total right-of use assets	$	21,351		$	7,761		$	7,572
Accrued and other current liabilities
Operating lease liabilities	$	5,008		$	1,472		$	1,259
Finance lease liabilities		41			84			40
Warranty reserve and other long-term liabilities
Operating lease liabilities		16,752			6,358			6,434
Finance lease liabilities		45			97			35
Total lease liabilities	$	21,846		$	8,011		$	7,768
Weighted average remaining lease term (years)
Operating leases		4			5			5
Finance leases		2			2			2
Weighted average discount rate
Operating leases		8.08	%		7.73	%		7.45	%
Finance leases		4.12	%		6.18	%		4.06	%

As of September 30, ~~2019,~~2020, maturities of the Company’s operating and finance lease liabilities are as follows (in thousands):

As previously reported in our Annual Report on Form 10-K for the year ended December 31, 2018 and under legacy lease accounting (ASC 840), future minimum lease payments under non-cancellable leases as of December 31, 2018 was as follows (in thousands):

The table above does not include the minimum purchase obligations of approximately $21.6 million over the five years following December 31, 2018 under the Company’s contracts with its manufacturers which upon adoption of ASU 2016-02 on January 1, 2019 were accounted for as operating lease ROU assets and lease liabilities.

On July 25, 2017, the Company entered into a Term Loan Credit and Security Agreement ~~or the Existing Term~~and a Revolving Loan Credit ~~Agreement, and a Credit~~ and Security ~~Agreement, or the Existing Revolving Credit~~ Agreement with MidCap Financial Trust (“MidCap”), which replaced the Company’s prior Silicon Valley Bank Loan ~~Agreement, or the SVB Loan~~ Agreement. ~~On July 1, 2019 the Company entered into a Restated Term Loan Credit Agreement with MidCap Financial Trust as the agent~~Both agreements were amended and ~~lender, and additional lenders thereto from time to time, or the Restated Term Loan Agreement, which~~ restated ~~the Existing Term Loan Agreement. Also~~ on July 1, 2019 and further amended on November 7, 2019 (as so amended, the ~~Company entered into an Amended~~“Restated Term Loan Agreement” and ~~Restated Credit and Security Agreement (Revolving Loan), by and among~~ the ~~Company, the lenders party thereto from time to time, and MidCap Financial Trust, or the Restated~~“Restated Revolving Credit ~~Agreement~~Agreement” and, together, ~~with~~ the ~~Restated Term Loan Agreement, the Credit Agreements, which restated the Existing Revolving Credit Agreement.~~“Credit Agreements”).

The Restated Term Loan Agreement ~~provided~~provides for the following tranches: (i) a $35 million term loan facility drawn at signing, (ii) a $5 million term loan facility drawn at signing, (iii) at any time after September 30, 2020 to December 31, 2020, a $10.0 million term loan facility (subject to the satisfaction of certain conditions, including evidence that the Company’s ~~Net Revenue~~net revenue for the past 12 months was greater than or equal to $100.0 million), and (iv) until December 31, 2020 and upon the consent of ~~Agent~~the agent and the lenders following a request from the Company, an additional $15.0 million term loan ~~facility, or altogether, the Restated Term Loan.~~facility. The ~~Restated Term Loan~~loan matures on July 1, 2024 and carries an interest rate of LIBOR plus 7.50%. The Company will make monthly payments of accrued interest ~~under the Restated Term Loan~~ from the funding date ~~of the Restated Term Loan,~~ until July 31, 2021, to be followed by monthly installments of principal and interest through the ~~Maturity Date of July 1, 2024.~~maturity date. The Company may prepay some or all of the ~~Restated Term Loan~~principal prior to its maturity date provided the Company pays MidCap a prepayment fee. ~~Net proceeds from~~The loan provides that the ~~Restated Term Loan were used~~Company shall pay an exit fee equal to ~~repay~~5.0% of the ~~$35 million outstanding balance related~~aggregate amount of all term loans funded to the Company.

On May 11, 2020, the Company entered in to the Second Amendment to Amended and Restated Credit and Security Agreement (Term Loan), by and among the Company, certain of the Company’s subsidiaries, the lenders party thereto and MidCap Financial Trust as agent (the “Term Amendment”). The Term ~~Loans.~~ Amendment provides for, among other things, the prepayment by the Company of $25.0 million of outstanding principal, $0.1 million of accrued interest, and $1.25 million in prepaid exit fees with the parties agreeing to waive the prepayment fee with respect to these amounts. The Term Amendment increases the tranche 3 commitment amount from $10.0 million to $15.0 million, extends the tranche 3 termination date from December 31, 2020 to June 30, 2021, and amended certain conditions upon which the tranche 3 commitment can be withdrawn, including evidence that the Company’s Net Revenue for the past six months was greater than or equal to $30.0 million. In addition, the Term Amendment amends certain financial requirements including reducing the Company’s minimum unrestricted cash amount from $20.0 million to $5.0 million and amends certain minimum net revenue requirements. Further, the monthly minimum net revenue requirements were revised to be calculated on a trailing three-month basis.

As of September 30, ~~2019,~~2020, there was ~~$40.0~~$15.0 million of outstanding principal and $0.8 million of exit fee payable related to the ~~Restated Term Loans. As of September 30, 2019, the long-term portion of the~~term loans, reduced by unamortized debt issuance costs ~~on the Restated Term Loans was approximately $1.9~~of $1.1 million included in “Long-term debt” and ~~are~~$0.7 million included ~~as a reduction to debt~~in “Current portion of long-term debt” on the condensed consolidated balance ~~sheet. As of September 30, 2019, there was no current portion of unamortized debt issuance costs.~~sheets.

The Restated Revolving Credit Agreement provides for, among other things, a revolving loan of up to $10.0 ~~million (the “Restated Revolving Loan”).~~million. The amount of loans available to be drawn under the Revolving Credit Agreement is based on a borrowing base equal to 85% of the net collectible value of eligible accounts receivable plus 40% of eligible finished goods inventory, or the Borrowing Base, provided that availability from eligible finished goods inventory does not exceed 20% of the Borrowing Base. The ~~Restated Revolving Loan~~revolving loan carries an interest rate of LIBOR plus 4.50%. The ~~Borrowers~~Company may make (subject to the applicable borrowing base at the time) and repay borrowings from time to time ~~under the Restated Revolving Credit Agreement~~ until the maturity of the facility on July 1, 2024. ~~Immediately prior~~

On May 11, 2020, the Company entered in to the ~~effectiveness~~Second Amendment to Amended and Restated Credit and Security Agreement (Revolving Loan), by and among the Company, certain of the ~~Restated~~Company’s subsidiaries, the lenders party thereto and MidCap Financial Trust as agent (the “Revolving Amendment”). The Revolving ~~Credit Agreement,~~Amendment includes conforming changes to reflect the ~~Company converted~~changes in the ~~$4.3 million outstanding borrowings under~~Term Amendment. In addition, the Revolving ~~Loan into~~Amendment reduces the ~~Restated Revolving Loan.~~ borrowing base by the portion of the eligible inventory previously included in the calculation.

As of September 30, ~~2019,~~2020, there were ~~$7.4 million~~0 borrowings outstanding under the Revolving Loan. As of September 30, ~~2019,~~2020, the unamortized debt issuance costs related to the ~~Revolving Loan~~revolving loan was approximately $0.1 million and was included in ~~other long-term assets~~“Other assets” on the condensed consolidated balance ~~sheet.~~sheets.

The amortization of debt issuance costs on the term loan and the revolving loan for the three months ended September 30, 2020 and 2019 were $0.2 million and ~~2018 was~~ $0.1 million, ~~and $47,000,~~ respectively. The amortization of debt issuance costs on the term loan and revolving loan for the nine months ended September 30, 2020 and 2019 ~~and 2018~~ was ~~$0.2~~$0.7 million and ~~$0.1~~$0.2 million, respectively, and was included in interest expense in the condensed consolidated statements of operations.

The Credit Agreements include customary affirmative and restrictive covenants and representations and warranties, including a financial covenant for minimum revenues, a financial covenant for minimum cash requirements, a covenant against the occurrence of a “change in control,” financial reporting obligations, and certain limitations on indebtedness, liens, investments, distributions, collateral, mergers or acquisitions, taxes, and deposit accounts. Upon the occurrence of an event of default, a default interest rate of an additional 5.0% may be applied to any outstanding principal balances, and MidCap may declare all outstanding obligations immediately due and payable and take such other actions as set forth in the Credit Agreements. The Company’s obligations under the Credit Agreements are secured by a security interest in substantially all of ~~The~~the Company’s assets.

On March 11, 2020, the Company issued $60.0 million of unsecured and subordinated convertible notes with an interest rate of 4.00% (“Note”) to Deerfield Partners, L.P. (“Holder”) in order to fund ongoing operations. The Note matures on March 11, 2025, subject to earlier conversion by the option of the Holder at any time in whole or in part into common shares of the Company, for a period up to five years. Upon conversion by the Holder, the Company shall deliver, shares of the Company’s common stock at a conversion rate of 14,634 per $1,000 principal amount of the Note (which represents an initial conversion rate price of $4.10), or the Base Conversion Rate, in each case subject to customary anti-dilution adjustments. In addition to the typical anti-dilution adjustment, the Note also provides the Holder with additional consideration (“Make-Whole Provision”) beyond the settlement of the conversion obligation, in the event of a major transaction prior to maturity (e.g. a change in control). Upon conversion by the Holder in the event of a major transaction, the Company shall deliver, either cash, shares of the Company’s common stock or a combination of cash and common stock at the Base Conversion rate plus the additional consideration from the Make-Whole Provision. The $60.0 million principal amount of the Note is not payable until the maturity date of March 11, 2025, unless converted to equity earlier. The Company will pay interest in cash on the Note at 4.00% per annum, quarterly from July 1, 2020.

The conversion features in the outstanding convertible debt instrument are accounted for as a free-standing embedded derivative bifurcated from the principal balance of the Note, as (1) the conversion features are not clearly and closely related to the debt instrument and are not considered to be indexed to the Company’s equity, (2) the conversion features standing alone meet the definition of a derivative, and (3) the Note is not remeasured at fair value each reporting period with changes in fair value recorded in the condensed consolidated statement of operations.

The initial embedded derivative liability of $16.1 million was recorded as a non-current liability on the condensed consolidated balance sheet and is remeasured to fair value at each balance sheet date with a resulting non-cash gain or loss related to the change in the fair value being charged to earnings (loss). As of September 30, 2020, the fair value of the derivative liability was $24.5 million. A corresponding debt discount to the initial embedded derivative liability of $16.1 million and issuance costs of $1.5 million were recorded on the issuance date and is netted against the principal amount of the Note. As of September 30, 2020, the unamortized debt discount and issuance costs were $16.3 million. The Company will amortize the debt discount and debt issuance costs to interest expense under the effective interest method over the term of the Note, at a resulting effective interest rate of approximately 12%. For the three and nine months ended September 30, 2020, the amortization of the convertible debt discount and issuance costs were $0.7 million and $1.5 million, respectively, and were included in interest expense in the condensed consolidated statements of operations.

On April 20, 2020, the Company was granted a loan of $6.7 million under the Paycheck Protection Program of the CARES Act, or the PPP Loan, from Silicon Valley Bank, or the Lender. The PPP Loan matures on April 20, 2022, or the Maturity Date, and bears interest at a rate of 1.0% per annum. Under the terms of the PPP Loan, the Company will make no payments until the date which forgiveness of the PPP Loan is determined, which can be up to 10 months following the end of the covered period (which is defined as 24 weeks from the date of the loan), or the Deferral Period. Commencing one month after the expiration of the Deferral Period, and continuing on the same day of each month until the Maturity Date, the Company will pay to Lender monthly payments of principal and interest, in an amount required to fully amortize the principal amount outstanding on the PPP Loan on the last day of the Deferral Period by the Maturity Date. As of September 30, 2020, $5.8 million is recorded in “Long-term debt” and $0.8 million is recorded in “Current portion of long-term debt” on the Company’s condensed consolidated balance sheets.

All or a portion of the PPP Loan may be forgiven upon submission of documentation of expenditures in accordance with certain specified requirements. Under the CARES Act, loan forgiveness is available for the sum of documented payroll costs, covered rent payments, covered mortgage interest and covered utilities during the 24-week period beginning on the date of loan approval. Not more than 40% of the forgiven amount may be for non-payroll costs. The amount of the PPP Loan eligible to be forgiven will be reduced if the Company’s full-time headcount declines, or if salaries and wages for employees with salaries of $100,000 or less annually are reduced by more than 25%. The Company will be required to repay any portion of the outstanding principal that is not forgiven, along with accrued interest, in accordance with the amortization schedule described above. The Company has elected to account for the PPP loan in accordance with ASC 470 – Debt, and any forgiveness of the loan will be treated as a gain on extinguishment within the condensed consolidated statement of operations.

The future schedule of principal and exit fee payments for ~~the~~all outstanding ~~Term Loans~~debt as of September 30, ~~2019~~2020 was as follows (in thousands):

Fiscal Year
Remainder of 2019	$	—
2020		—
Remainder of 2020			$	—
2021		5,556		5,409
2022		13,333		8,326
2023		13,333		5,000
2024				3,667
Thereafter		7,778		60,000
Total	$	40,000	$	82,402

The Company’s Amended and Restated Certificate of Incorporation authorizes the Company to issue 210,000,000 shares of common and preferred stock, consisting of 200,000,000 shares of common stock with $0.01 par value and 10,000,000 shares of preferred stock with $0.01 par value. As of September 30, ~~2019~~2020 and December 31, ~~2018,~~2019, the Company had no0 preferred stock issued or outstanding.

On January 17, 2013, the Company entered into a Loan and Security Agreement, or the Original Term Loan Agreement, with Oxford Finance, LLC, or Oxford. On June 30, 2014, the Company entered into an Amended and Restated Loan and Security Agreement, or the Amended Term Loan Agreement, with Oxford. In connection with the Original Term Loan Agreement and the Amended Term Loan Agreement, the Company issued to Oxford

(i) seven-year warrants in January 2013 to purchase shares of the Company’s common stock with a value equal to 3.0% of the tranche A, B and C term loans amounts, or the Original Warrants, and (ii) seven-year warrants in June 2014 to purchase shares of the Company’s common stock with a value equal to 2.5% of the tranche D term loan amount. The warrants have an exercise price per share of $14.671. The warrants within Tranche A expired on January 17, 2020 and the warrants within Tranche B expired on August 1, 2020. As of September 30, ~~2019,~~2020, there were warrants to purchase an aggregate of ~~47,710~~27,264 shares of common stock outstanding.

In April 2007, the Company adopted the 2007 Equity Incentive Plan, or the 2007 Plan. The 2007 Plan provides for the granting of stock options to employees, directors and consultants of the Company. Options granted under the 2007 Plan may either be incentive stock options or nonstatutory stock options. Incentive stock options, or ISOs, may be granted only to Company employees. Nonstatutory stock options, or NSOs, may be granted to all eligible recipients. A total of 1,690,448 shares of the Company’s common stock were initially reserved for issuance under the 2007 Plan.

The Company’s board of directors adopted the 2014 Equity Incentive Plan, or 2014 Plan, in July 2014, and the stockholders approved the 2014 Plan in October 2014. The 2014 Plan became effective upon completion of the IPO on November 3, 2014, at which time the Company ceased granting awards under the 2007 Plan. Under the 2014 Plan, the Company may issue ISOs, NSOs, stock appreciation rights, restricted stock awards, restricted stock unit awards and other forms of stock awards, or collectively, stock awards, all of which may be granted to employees, including officers, non-employee directors and consultants of the Company and their affiliates. ISOs may be granted only to employees. A total of 1,027,500 shares of common stock were initially reserved for issuance under the 2014 Plan, subject to certain annual increases. As of September 30, ~~2019,~~2020, a total of ~~541,244~~2,544,816 shares of the Company’s common stock were available for issuance under the 2014 Plan.

Pursuant to a board-approved Inducement Plan, the Company may issue NSOs and restricted stock unit awards, or collectively, stock awards, all of which may only be granted to new employees of the Company and their affiliates in accordance with NASDAQ Stock Market Rule 5635(c)(4) as an inducement material to such individuals entering into employment with the Company. As of September 30, ~~2019,~~2020, inducement grants for ~~1,201,728~~1,412,083 shares of common stock have been awarded, and ~~266,652~~923,342 shares of common stock were available for future issuance under the Inducement Plan.

Options under the 2007 Plan and the 2014 Plan may be granted for periods of up to ten years as determined by the Company’s board of directors, provided, however, that (i) the exercise price of an ISO shall not be less than 100% of the estimated fair value of the shares on the date of grant, and (ii) the exercise price of an ISO granted to a more than 10% shareholder shall not be less than 110% of the estimated fair value of the shares on the date of grant. An NSO has no such exercise price limitations. NSOs under the Inducement Plan may be granted for periods of up to ten years as determined by the board of directors, provided, the exercise price will not be less than 100% of the estimated fair value of the shares on the date of grant. Options generally vest with 25% of the grant vesting on the first anniversary and the balance vesting monthly on a straight-lined basis over the requisite service period of three additional years for the award. Additionally, options have been granted to certain key executives that vest upon achievement of performance conditions based on performance targets as defined by the board of directors, which have included net sales targets and defined corporate objectives over the performance period with possible payout ranging from 0% to 100% of the target award. Compensation expense is recognized on a straight-lined basis over the vesting term of one year based upon the probable performance target that will be met. The vesting provisions of individual options may vary but provide for vesting of at least 25% per year.

The following summarizes all option activity under the 2007 Plan, 2014 Plan and Inducement Plan:

				Weighted		Weighted average					Weighted		Weighted average
				average		remaining					average		remaining
	Option			exercise		contractual		Option			exercise		contractual
	Shares			price		term (years)		Shares			price		term (year)
Balances at December 31, 2018		1,953,334		$	7.42		6.30
Balances at December 31, 2019									1,880,846		$	7.42		5.48
Exercised		(48,724	)		2.37				(6,181	)		2.48
Forfeited		(10,500	)		16.24				(313,347	)		7.92
Balances at September 30, 2019		1,894,110		$	7.50		5.72
Balances at September 30, 2020									1,561,318		$	7.34		4.49

For stock-based awards the Company recognizes compensation expense based on the grant date fair value using the Black-Scholes option valuation model. There was 0 stock-based compensation expense related to stock options for the three and nine months ended September 30, 2020. Stock-based compensation expense related to stock options was $0.1 million and ~~$0.5~~$0.4 million for the three months ended September 30, 2019 and ~~2018, respectively. Stock-based compensation expense related to stock options was $0.4 million and $1.3 million for the~~ nine months ended September 30, ~~2019 and 2018, respectively.~~2019. As of September 30, ~~2019,~~2020, there ~~was $0.1 million of~~were also 0 unrecognized compensation costs related to stock options. The expense is recorded within the operating expense components in the condensed consolidated statement of operations based on the recipients receiving the awards. These costs are expected to be recognized over a weighted average period of less than 1 year.

The Company has issued restricted stock unit awards, or RSUs, under the 2014 Plan and the Inducement Plan. The RSUs issued to employees generally vest on a straight-line basis annually over a 3-year requisite service period. RSUs issued to non-employees generally vest either monthly or annually over the service term.

				Weighted average					Weighted average
	Number			grant date		Number			grant date
	of shares			fair value		of shares			fair value
Balances at December 31, 2018		2,141,350		$	13.27
Balances at December 31, 2019							2,232,956		$	11.99
Granted		1,314,547			8.01		934,965			5.63
Vested		(852,375	)		12.13		(921,964	)		10.45
Forfeited		(280,399	)		14.14		(701,907	)		9.07
Balances at September 30, 2019		2,323,123		$	10.60
Balances at September 30, 2020							1,544,050		$	10.38

Stock-based compensation expense for RSUs for the three months ended September 30, 2020 and 2019 ~~and 2018~~ was ~~$2.8~~$1.5 million and ~~$3.7~~$2.8 million, respectively. Stock-based compensation expense for RSUs for the nine months ended September 30, 2020 and 2019 ~~and 2018~~ was ~~$8.9~~$4.9 million and ~~$8.3~~$8.9 million, respectively. As of September 30, ~~2019,~~2020, there was ~~$16.5~~$7.1 million of total unrecognized compensation costs related to non-vested RSU awards. The cost is expected to be recognized over a weighted average period of approximately 21.43 years.

The Company’s board of directors adopted the 2014 Employee Stock Purchase Plan, or ESPP, in July 2014, and the stockholders approved the ESPP in October 2014. The ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to any plan limitations. The ESPP provides for offering periods not to exceed 27 months, and each offering period will include purchase periods, which will be the approximately six-month period commencing with one exercise date and ending with the next exercise date. Employees are able to purchase shares at 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the purchase date. A total of 255,500 shares of common stock were initially reserved for issuance under the ESPP, subject to certain annual increases.

During the nine months ended September 30, ~~2019,~~2020, employees purchased ~~175,624~~203,728 shares of common stock at a weighted average price of ~~$6.93~~$4.11 per share. As of September 30, ~~2019,~~2020, the number of shares of common stock available for future issuance was ~~654,619.~~946,292.

The Company estimated the fair value of employee stock purchase rights using the Black-Scholes model. Stock-based compensation expense related to the ESPP was $0.1 million and $0.2 million for ~~both~~ the three months ended September 30, 2020 and 2019, ~~and 2018.~~respectively. Stock-based compensation expense related to the ESPP was ~~$0.5~~$0.4 million and ~~$0.4~~$0.5 million for the nine months ended September 30, ~~2019~~2020 and ~~2018,~~2019, respectively.

During the nine months ended September 30, ~~2019 the Company entered into two consulting agreements with former employees that resulted in~~2020, there were 0 material modifications of ~~their existing~~ equity awards. During the nine months ended September 30, 2019, the Company recognized $0.6 million in incremental compensation cost resulting from ~~these modifications.~~entering into a consulting agreement with two former employees that resulted in the modification of their existing equity awards.

The Company operates in several tax jurisdictions and is subject to taxes in each jurisdiction in which it conducts business. To date, the Company has incurred cumulative net losses and maintains a full valuation allowance on its net deferred tax assets due to the uncertainty surrounding realization of such assets. The Company had no0 tax expense for both the three and nine months ended September 30, ~~2019~~2020 and ~~2018.~~2019.

The Company has ~~two~~2 reportable segments: Breast Products and miraDry. The Breast Products segment focuses on sales of silicone gel breast implants, tissue expanders and scar management products under the brands ~~Opus,~~OPUS, Luxe, Curve, AlloX2, Dermaspan, Softspan and BIOCORNEUM. The miraDry segment, acquired on July 25, 2017, focuses on sales of the miraDry System, consisting of a console and a handheld device which uses consumable single-use bioTips. These segments align with the Company’s principal target markets. miraDry has been included in the condensed consolidated results of operations as of the acquisition date and financial performance of the acquired business is reported in the miraDry segment. The Vesta Acquisition, completed on November 7, 2019, has been included in the condensed consolidated results of operations as of the acquisition date and financial performance of the acquired business is reported in the Breast Products segment.

The Company’s Chief Operating Decision Maker, or CODM, assesses the performance of each segment and allocates resources to those segments based on net sales and operating income (loss). Operating income (loss) by segment includes items that are directly attributable to each segment, including sales and marketing functions, as well as finance, information technology, human resources, legal and related corporate infrastructure costs, along with certain benefit-related expenses. There are no0 unallocated expenses for the two segments.

The following tables present the net sales, net operating loss and net assets by reportable segment for the periods presented (in thousands):

	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,				September 30,
	2019		2018		2019		2018		2020		2019		2020		2019
Net sales
Breast Products	$	12,626	$	8,613	$	33,570	$	26,566	$	15,330	$	12,626	$	37,109	$	33,570
miraDry		9,786		8,262		26,919		22,538		3,887		9,786		11,488		26,919
Total net sales	$	22,412	$	16,875	$	60,489	$	49,104	$	19,217	$	22,412	$	48,597	$	60,489

	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Loss from operations
Breast Products	$	(12,319	)	$	(13,873	)	$	(38,555	)	$	(39,111	)	$	(9,304	)	$	(12,319	)	$	(30,683	)	$	(38,555	)
miraDry		(9,141	)		(5,689	)		(45,722	)		(16,278	)		(4,654	)		(9,141	)		(22,595	)		(45,722	)
Total loss from operations	$	(21,460	)	$	(19,562	)	$	(84,277	)	$	(55,389	)	$	(13,958	)	$	(21,460	)	$	(53,278	)	$	(84,277	)

	September 30,		December 31,		September 30,		December 31,
	2019		2018		2020		2019
Assets
Breast Products	$	186,298	$	130,149	$	156,538	$	169,613
miraDry		33,584		38,210		21,266		34,791
Total assets	$	219,882	$	168,359	$	177,804	$	204,404

The Company is subject to claims and assessment from time to time in the ordinary course of business. The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated.

On August 3, 2017, a lawsuit styled as a verified class action on the part of the former stockholders of miraDry was filed in the Court of Chancery for the State of Delaware against the former board of directors of miraDry, or the Defendants, alleging breach of their fiduciary duties in connection with the Company’s acquisition of miraDry. On August 30, 2017, the Defendants moved to dismiss the verified class action complaint for failure to state a claim upon which relief can be granted. On November 11, 2017 the parties notified the Court that they had reached an agreement to settle the matter pending completion of confirmatory discovery regarding the fairness of the settlement and obtaining approval from the court. Following a hearing, the Delaware Chancery Court approved the proposed settlement terms on January 15, 2019, with a modification to the amount of attorneys’ fees awarded to the plaintiffs’ attorneys. Under the terms of the settlement, in exchange for a full and final settlement and release of all claims, the Defendants (and/or their indemnitors and/or insurers) paid a settlement consideration of $0.4 million. The miraDry Merger Agreement contained a holdback amount expected to be used for the settlement and associated costs of the miraDry Class Action litigation. The holdback amount has been used to offset $0.6 million of legal fees and $0.4 million was included in “legal settlement payable” on the consolidated balance sheet as of December 31, 2018. The legal settlement of $0.4 million was paid during the first quarter of 2019.

On November 7, 2019 (the “Closing Date”), the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Vesta Intermediate Fundings, Inc. (“Vesta”), pursuant to which the Company purchased certain assets and assumed certain liabilities and obtained a non-exclusive, royalty-free, perpetual, irrevocable, assignable, sublicensable, and worldwide license to certain intellectual property owned by Vesta (the “Vesta Acquisition”). In consideration of the Vesta Acquisition, the Company paid $14.0 million in cash on the Closing Date and will pay an additional $3.2 million and $3.0 million in cash (the “Post-Closing Amounts”) on November 7, 2021 and November 7, 2023, respectively. In addition, in the event the closing price of the Company’s common stock equals or exceeds a certain agreed upon price target (the “First Milestone Price Target”) on any date through November 7, 2023, the Company will issue Vesta 303,721 shares of common stock (the “First Milestone Shares”) within five business days of such date and in the event the closing price of the Company’s common stock equals or exceeds a certain agreed upon price target (the “Second Milestone Price Target”) on any date through November 7, 2023, the Company will issue Vesta 303,721 shares of common stock (the “Second Milestone Shares”) within five business days of such date. The Company will use its commercially reasonable efforts to file and maintain a resale registrations statement registering the resale of the First Milestone Shares and the Second Milestone Shares. The Purchase Agreement contains customary representations and warranties and indemnification provisions. The Purchase Agreement also includes a two-year, mutual non-solicitation agreement.

In connection with, and as a condition to the closing of, the Purchase Agreement, on November 7, 2019, the Company entered into a Lease with Vesta (the “Lease”) whereby the Company will lease approximately 24,000 square feet in the building where the manufacturing operations acquired in the Vesta Acquisition are located (the “Facility”). The Lease has an initial term of four years (the “Initial Term”). The Company will pay annual rent of $200,000 for each of the first two years and $320,000 for each of the third and fourth years of the Lease payable in equal monthly installments. The Lease includes an option for the Company to extend the term of the Lease one time for an additional four years (the “Extended Term”). The annual rent payable during the Extended Term shall be the annual rent payable during the Initial Term increased by the percentage increase in the Consumer Price Index, as specified in the Lease. The Lease contains customary events of default and, additionally, any failure by the Company to pay the Post-Closing Amounts when due or issue the First Milestone Shares or Second Milestone Shares when required shall be considered an event of default. The Lease also provides that, in the event of a sale of the Facility, the Company will have a right of first offer to purchase the Facility from Vesta.

Sientra is currently evaluating the purchase price allocation following the consummation of the Vesta Acquisition. It is not practicable to disclose the preliminary purchase price allocation, given the short period of time between the acquisition date and the issuance of these consolidated financial statements.

On November 7, 2019, the Company entered into an Amended and Restated Manufacturing and Supply Agreement (the “Manufacturing Agreement”) with Vesta Intermediate Funding, Inc. (“Vesta”), providing for the manufacture and supply of the Company’s tissue expanders and accessories (the “Expander Products”). The Manufacturing Agreement has a six-year term, which may be extended by written agreement of the parties, and may only be terminated for cause by the non-defaulting party following written notice of default with a reasonable period to cure. The Manufacturing Agreement provides that the Company will purchase fixed percentages of its requirements for Expander Products intended for global distribution from Vesta, with such percentages decreasing over time. In the event that Vesta fails to timely deliver a minimum threshold of the Expander Product orders for a specified period, the purchase requirements shall be adjusted downwards as provided in the Manufacturing Agreement. The Manufacturing Agreement contains customary representations and warranties.

Term”) which automatically renews for subsequent one year terms (each, a “Renewal Term”), unless a party provides written notice of intent to terminate the Supply Agreement no later than six (6) months prior to expiration of the Initial Term or the then current Renewal Term. The Supply Agreement may be terminated in the event of breach following a 45 day period to cure or in the event of insolvency of a party.

On November 6, 2019, the Board of Directors of the Company approved an organizational efficiency initiative (the “Plan”) designed to reduce spending and simplify operations, effective immediately. Under the Plan, the Company will implement numerous initiatives to reduce spending, including closing the Santa Clara offices of miraDry, Inc. (“miraDry”), outsourcing miraDry product assembly to a third party, and consolidating a number of business support services via a shared services organization at the Company’s Santa Barbara headquarters. Under the Plan, the Company intends to reduce its workforce by terminating approximately 70 employees, which the Company expects to be completed over the next 10 months. As a result, the Company expects to incur charges between $2.7 million and $3.0 million in connection with one-time employee termination costs, retention costs and other benefits. These charges are expected to be incurred over the next 10 months. In addition, the Company expects to incur estimated charges between $1.0 million and $1.5 million related to contract termination, outsourcing miraDry product assembly and duplicate operating costs over the next 10 months. In total, the Plan is estimated to cost between $3.7 million and $4.5 million over the next 10 months, excluding non-cash charges, with related cash payments expected to be substantially paid out by September 30, 2020.

~~The estimates of costs that the Company expects to incur and the timing thereof are subject to a number of assumptions and actual results may differ.~~

~~As previously disclosed, on September 30, 2019 (the “Separation Date”), Charles Huiner, the Company’s~~ ~~Chief Operating Officer and Senior Vice President of Corporate Development and Strategy~~, ~~stepped down from his role to pursue other opportunities~~. On November 1, 2019, the Company entered into a Confidential Settlement, Release and Consulting Agreement with Mr. Huiner (the “Huiner Agreement”). Pursuant to the Huiner Agreement, in exchange for a general release of all claims, the Company will (1) pay Mr. Huiner, in accordance with the Company’s regular payroll cycle, an amount equal to twelve months of his base salary in effect on the Separation Date, or $393,225, (2) make a lump sum payment equal to Mr. Huiner’s bonus for 2019 prorated through the Separation Date and based upon the achievement of objectives and the determination of the Board of Directors of the final 2019 corporate bonus payout, payable by check in a lump sum no later than April 1, 2020 and (3) reimburse Mr. Huiner for COBRA premiums until the earlier of (1) thirteen months following the Separation Date (2) the date Mr. Huiner is eligible for group health insurance coverage through a new employer or (3) the date Mr. Huiner ceases to be eligible for COBRA continuation coverage for any reason. In addition, the Huiner Agreement provides that Mr. Huiner will continue to provide consulting services (the “Services”) for eight months following the Separation Date. As consideration for the Services, the Company will pay Mr. Huiner a one-time lump sum consulting fee of $32,768.76, continue the vesting of all unvested restricted stock units and performance stock units granted in April 2019 and accelerated the vesting of 33,333 restricted stock units granted in January 2018. In addition, the Huiner Agreement extends the exercise period for any vested stock options until thirteen months from the Separation Date.

On October 7, 2019, a lawsuit was filed in the Superior Court of the State of California against the Company and Silimed Industria de Implantes Ltda. (the Company’s former contract manufacturer). The lawsuit alleges that the Company’s textured breast implants caused certain of the plaintiffs to develop a condition known as breast implant associated anaplastic large cell lymphoma (“BIA-ALCL”), and that the Company is liable to the ~~Plaintiffs~~plaintiffs based on claims for strict liability (failure to warn), strict liability (defective manufacture), negligence and loss of consortium. On January 21, 2020, the Company filed a demurrer to the plaintiff’s complaint, which demurrer is still pending before the Court. The Company intends to vigorously defend itself in this lawsuit. Given the nature of this case, the Company is unable to estimate the reasonably possible loss or range of loss, if any, arising from this matter.

On September 23, 2020, a lawsuit was filed in the Eastern District of Tennessee against the Company. The lawsuit alleges that the Company’s textured breast implants caused certain of the plaintiffs to develop a condition known as breast implant associated anaplastic large cell lymphoma (“BIA-ALCL”), and that the Company is liable to the plaintiffs based on claims for negligence, strict liability (manufacturing defects), strict liability (failure to warn), breach of express and implied warranties, and punitive damages. No response has been filed to the complaint at presented. The Company intends to vigorously defend itself in this lawsuit. Given the nature of this case, the Company is unable to estimate the reasonably possible loss or range of loss, if any, arising from this matter.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited financial statements and notes thereto as of and for the year ended December 31, ~~2018~~2019 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations are contained in our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, filed with the Securities and Exchange Commission on March ~~14, 2019,~~16, 2020, or the Annual Report. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “Sientra,” “the Company,” “we,” “us” and “our” refer to Sientra, Inc.

The information in this discussion contains forward-looking statements and information within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, which are subject to the “safe harbor” created by those sections. These forward-looking statements include, but are not limited to, statements concerning our strategy, future operations, future financial position, future revenues, projected costs, prospects and plans and objectives of management. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q and in our other filings with the SEC. The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements.

We are a medical aesthetics company committed to making a difference in patients’ lives by enhancing their body image, growing their ~~self~~ self‑esteem and restoring their confidence. We were founded to provide greater choices to ~~board~~ board‑certified plastic surgeons and patients in need of medical aesthetics products. We have developed a broad portfolio of products with technologically differentiated characteristics, supported by independent laboratory testing and strong clinical trial outcomes. We sell our breast implants ~~and tissue expanders~~for augmentation procedures exclusively to ~~board~~ board‑certified and ~~board~~ board‑admissible plastic surgeons and tailor our customer service offerings to their specific needs, which we believe helps secure their loyalty and confidence. We sell our breast tissue expanders for reconstruction procedures predominantly to hospitals and surgery centers, and our BIOCORNEUM scar management products to plastic surgeons, dermatologists and other specialties.

On June 11, 2017, we entered into a Merger Agreement with miraDry (formerly Miramar Labs) pursuant to which we commenced a tender offer to purchase all of the outstanding shares of miraDry’s common stock. Pursuant to the transaction, which closed on July 25, 2017 we added the miraDry System, the only ~~FDA cleared~~FDA-cleared device to reduce underarm sweat, odor and hair of all colors to our aesthetics portfolio. Following our acquisition of miraDry in July 2017, we began selling the miraDry System, consisting of a console and a handheld device, and consumable single-use bioTips. As a result of the miraDry acquisition, we determined that we ~~will~~ conduct our business in two operating segments: Breast Products and miraDry. The Breast Products segment focuses on sales of our breast implants, tissue expanders and scar management products under the brands ~~OPUS,~~Sientra, AlloX2, Dermaspan, Softspan and BIOCORNEUM. The miraDry segment focuses on sales of the miraDry System, ~~consisting of a console~~ and ~~a handheld device which uses consumable single-use~~ bioTips.

We sell both our Breast Products and miraDry products in the U.S. through a direct sales organization, which as of September 30, ~~2019,~~2020, consisted of ~~101~~65 employees, including 8654 sales representatives and 1511 sales managers. Additionally, we also sell our miraDry System in several international markets where we leverage a combination of distributor relationships and direct sales efforts. As of September 30, ~~2019~~2020, our international operations were supported by 73 sales representatives and 42 sales managers, as well as a number of consultants supporting both direct sales efforts and ~~distributer~~distributor relationships.

As an aesthetics company, surgical procedures involving our breast and miraDry products are susceptible to local and national government restrictions, such as social distancing, “shelter in place” orders and business closures, due to the economic and logistical impacts these measures have on consumer demand as well as the practitioners’ ability to administer such procedures. The inability or limited ability to perform such non-emergency procedures significantly harmed our revenues during the three months ended June 30, 2020 and continued to harm our revenues during the three months ended September 30, 2020. While some states have lifted certain restrictions on non-emergency procedures during the three months ended September 30, 2020, we will likely continue to experience future harm to our revenues while existing or new restrictions remain in place.

Further, the spread of COVID-19 has caused us to modify our workforce practices, and we may take further actions that we determine are in the best interests of our employees or as required by governments. In addition, capital markets and economies worldwide have also been negatively impacted by the COVID-19 pandemic, and it is possible that this can lead to a local and/or global economic recession, which may result in further harm to the aesthetics market. Such economic disruption could adversely affect our business. The continued spread of COVID-19, or another infectious disease, could also result in delays or disruptions in our supply chain or adversely affect our manufacturing facilities and personnel. Further, trade and/or national security protection policies may be adjusted as a result of the COVID-19 pandemic, such as actions by governments that limit, restrict or prevent the movement of certain goods into a country and/or region, and current U.S./China trade relations may be further exacerbated by the pandemic.

The estimates used for, but not limited to, determining the collectability of accounts receivable, fair value of long-lived assets and goodwill, and sales returns liability required could be impacted by the pandemic. While the full impact of COVID-19 is unknown at this time, we have made appropriate estimates based on the facts and circumstances available as of the reporting date. These estimates may change as new events occur and additional information is obtained.

In April 2020, in part as a result of the impact of COVID-19, we re-focused our miraDry business to drive high margin, bioTip utilization to our existing installed base. We expect that the net sales we generate from our bioTips will represent high margin sales (on a gross margin basis) and account for a substantial amount of our net sales for the next several years, with high margin consumables comprising a sizable percentage of our miraDry segment’s net sales.

On November 7, 2019, we announced an organizational efficiency initiative, or the Plan, designed to reduce spending and simplify operations. Under the Plan, we are implementing numerous initiatives to reduce spending, including closing the Santa Clara offices of miraDry, Inc. and consolidating a number of business support services via a shared services organization at our Santa Barbara headquarters.

Under the Plan, we intend to reduce our workforce by terminating approximately 70 employees. As a result, we expect to incur total charges of approximately $2.5 million in connection with one-time employee termination costs,

retention costs and other benefits. In addition, we expect to incur estimated charges of approximately $0.5 million related to duplicate operating costs and other associated costs. In total, the Plan is estimated to cost approximately $3.0 million, excluding non-cash charges, with related cash payments expected to be substantially paid out with cash on hand by the end of 2020.

It is anticipated that we will incur approximately $0.1 million of additional restructuring costs during 2020 attributable to the miraDry segment. We expect to realize cost savings of approximately $10.0 million in 2020 and approximately $5.0 million in 2021. All of the 2020 cost savings are expected to be realized in operating expenses, and the 2021 cost savings are expected to be realized approximately 20% in operating expenses and 80% in cost of goods sold. Savings in operating expenses are expected to result from the reduction of headcount through a shared services organization. Savings in cost of goods sold are expected to result from the elimination of manufacturing roles at miraDry. As the development of the Plan is completed, we will update the costs and cost savings as needed.

Our Breast Products segment net sales include sales of silicone gel breast implants, tissue expanders and BIOCORNEUM. We recognize revenue on breast implants and tissue expanders, net of sales discounts and estimated returns, as the customer has a standard six-month window to return purchased breast implants and tissue expanders. We defer the value of our service warranty revenue and deliverables under certain marketing programs and recognize it once all performance obligations have been met.

Our miraDry segment net sales include sales of the miraDry System and consumable bioTips along with service warranties and deliverables under certain marketing programs. We recognize revenue on miraDry Systems and bioTips on delivery to the customer. We defer the value of our service warranty and deliverables under certain marketing programs and recognize it over the term of the service warranty contract for service warranties and once all performance obligations have been met for deliverables under certain marketing programs.

We expect that, in the future, our net sales will fluctuate on a quarterly basis due to a variety of factors, including seasonality of breast augmentation procedures, the impact of the pandemic, and purchase of miraDry procedures. We believe that aesthetic procedures are subject to seasonal fluctuation due to patients planning their procedures leading up to the summer season and in the period around the winter holiday season.

Cost of goods sold consists primarily of raw material, labor, overhead, and variable manufacturing costs, ~~of finished products purchased from our third‑party manufacturers,~~ reserve for product assurance warranties, royalty costs, excess and obsolete inventory reserves, and warehouse and other related costs. ~~For miraDry, cost of goods sold also consists of raw material, labor, overhead, and variable manufacturing costs associated with the manufacturing of the miraDry Systems and bioTips.~~

With respect to our supplier contracts, all our products and raw materials are manufactured under contracts with fixed unit ~~costs.~~costs which can increase over time at specified amounts.

Under our Breast Products segment, we provide an assurance and service warranty on our silicone gel breast implants. Under our miraDry segment, we provide an assurance and service warranty on our miraDry Systems, and an assurance warranty on our handpieces and bioTips. The estimated warranty costs are recorded at the time of sale. Costs related to our service warranty are recorded when expense is incurred related to meeting our performance obligations. In addition, the inventory fair market value associated with purchase accounting adjustments and royalty costs related to ~~both~~ the SSP and miraDry acquisitions ~~were~~are recorded at the time of sale.

We expect our overall gross margin, which is calculated as net sales less cost of goods sold for a given period divided by net sales, to fluctuate in future periods primarily as a result of quantity of units sold, manufacturing price increases, the changing mix of products sold with different gross margins, warranty costs, overhead costs and targeted pricing programs. Specific to the Breast Products segment, we expect our gross margin to decline as a result of increased unit cost of our gel implants following the Vesta Acquisition.

Our sales and marketing expenses primarily consist of salaries, bonuses, benefits, incentive compensation, stock-based compensation, consumer marketing, and travel for our sales, marketing and customer support personnel. Our sales and marketing expenses also include expenses for trade shows, our no‑charge customer shipping program for the Breast Products segment and no-charge product evaluation units for the Breast Products segment, as well as educational and promotional ~~and marketing activities, including direct and online marketing.~~activities. We expect our sales and marketing expenses related to our Breast Products segment to fluctuate in future periods as a result of headcount and timing of our marketing ~~programs. However,~~programs, and we ~~generally~~ expect ~~these costs will increase~~our sales and marketing expense related to our miraDry segment to decrease as a result of the organizational efficiency initiative and the change in ~~absolute dollars.~~the miraDry business strategy.

Our research and development, or R&D, expenses primarily consist of clinical expenses, product development costs, regulatory expenses, consulting services, outside research activities, quality control and other costs associated with the development of our products and compliance with Good Clinical Practices, or cGCP, requirements. R&D expenses also include related personnel and consultant compensation and stock‑based compensation expense. We expense R&D costs as they are incurred.

We expect our R&D expenses to vary as different development projects are initiated, including improvements to our existing products, expansions of our existing product lines, new product acquisitions and our clinical studies. ~~However, we generally expect these costs will increase in absolute terms over time as we continue to expand our product portfolio and add related personnel.~~

Our general and administrative, or G&A, expenses primarily consist of salaries, bonuses, benefits, incentive compensation and stock-based compensation for our executive, financial, legal, business development and administrative functions. Other G&A expenses include contingent consideration fair market value adjustments, bad debt expense, outside legal counsel and litigation expenses, independent auditors and other outside consultants, corporate insurance, facilities and information technologies expenses.

We expect future G&A expenses to ~~increase~~decrease as we ~~continue to build our finance, legal, information technology, human resources and other general administration resources to continue to advance~~implement the ~~commercialization of our products. In addition,~~organizational efficiency initiative, but we also expect to continue to incur G&A expenses in connection with operating as a public company.

Other income (expense), net primarily consists of interest income, interest expense, changes in the fair value of the embedded derivative liability and common stock warrants, and amortization of issuance costs associated with our Credit Agreements.

Income tax expense consists of an estimate for income taxes based on the projected income tax expense for the period. We operate in several tax jurisdictions and are subject to taxes in each jurisdiction in which we conduct business. To date, we have incurred cumulative net losses and maintain a full valuation allowance on our net deferred tax assets due to the uncertainty surrounding realization of such assets.

The preparation of our unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and the revenues and expenses incurred during the reported periods. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We discussed accounting policies and assumptions that involve a higher degree of judgment and complexity in Note 21 of the “Notes to Financial Statements” in our audited financial statements included in the Annual Report. There have been no material changes to our critical accounting policies and estimates from those disclosed in the Annual ~~Report, other than the implementation of ASU 2016-02 (Topic 842) Leases, as discussed in Note 2 of the unaudited condensed consolidated financial statements included in this Form 10-Q.~~Report.

Please refer to Note 21 - Summary of Significant Accounting Policies in the notes to the unaudited condensed consolidated financial statements included in this Form 10-Q for information on recent accounting pronouncements and the expected impact on our unaudited condensed consolidated financial statements.

Comparison of the Three Months Ended September 30, ~~2019~~2020 and ~~2018~~2019

The following table sets forth our results of operations for the three months ended September 30, ~~2019~~2020 and ~~2018:~~2019:

	Three Months Ended						Three Months Ended
	September 30,						September 30,
	2019			2018			2020			2019
	(In thousands)						(In thousands)
Statement of operations data
Net sales	$	22,412		$	16,875		$	19,217		$	22,412
Cost of goods sold		9,754			6,398			8,391			9,754
Gross profit		12,658			10,477			10,826			12,658
Operating expenses
Sales and marketing		18,668			15,254			12,872			18,668
Research and development		3,201			2,881			2,060			3,201
General and administrative		12,249			11,904			10,238			12,249
Restructuring								(386	)		—
Total operating expenses		34,118			30,039			24,784			34,118
Loss from operations		(21,460	)		(19,562	)		(13,958	)		(21,460	)
Other income (expense), net
Interest income		510			133			5			510
Interest expense		(1,344	)		(953	)		(2,059	)		(1,344	)
Change in fair value of derivative liability								10,090			—
Other income (expense), net		(139	)		(163	)		101			(139	)
Total other income (expense), net		(973	)		(983	)		8,137			(973	)
Loss before income taxes		(22,433	)		(20,545	)		(5,821	)		(22,433	)
Income tax (benefit) expense		—			—
Income tax								—			—
Net loss	$	(22,433	)	$	(20,545	)	$	(5,821	)	$	(22,433	)

Net sales ~~increased $5.5~~decreased $3.2 million, or ~~32.8%~~14.3%, to $19.2 million for the three months ended September 30, 2020 as compared to $22.4 million for the three months ended September 30, ~~2019 as compared to $16.9~~2019. Net sales of our Breast Products segment was $15.3 million, an increase of $2.7 million for the three months ended September 30, ~~2018. Net sales of our Breast Products segment was~~2020, as compared to $12.6 ~~million, an increase of $4.0~~ million for the three months ended September 30, 2019, ~~as compared~~primarily due to ~~$8.6 million for the three months ended September 30, 2018, driven primarily by~~ an increase in the volume of domestic and international sales of ~~silicone~~ gel ~~breast~~ implants ~~and~~as well as an increase in the sales volume of BioCorneum, partially offset by a decrease in the sales volume of Allox2 and Dermaspan breast tissue expanders. Net sales of our miraDry segment was ~~$9.8~~$3.9 million, ~~an increase~~a decrease of ~~$1.5~~$5.9 million, as compared ~~to $8.3 million for the three months ended September 30, 2018, driven primarily by an increase in the volume of sales of miraDry consoles in the US.~~

As of September 30, 2019, our U.S. sales organization included 86 sales representatives as compared to 80 sales representatives as of September 30, 2018. The increase is attributed to headcount increases of both miraDry and Sientra sales representatives.

~~Cost of goods sold increased $3.4 million, or 52.5%,~~ to $9.8 million for the three months ended September 30, 2019 resulting from an overall decrease in the volume of sales of miraDry systems and consumable bioTips due to the effects of the COVID-19 pandemic and the change in miraDry business strategy.

As of September 30, 2020, our U.S. sales organization included 54 sales representatives as compared to ~~$6.4~~86 sales representatives as of September 30, 2019. The decrease is primarily attributed to an overall decrease in sales headcount implemented under the organizational efficiency initiative and the change in miraDry business strategy.

Cost of goods sold decreased $1.4 million, or 14.0%, to $8.4 million for the three months ended September 30, ~~2018. The increase was primarily due~~2020 as compared to ~~an adjustment in the warranty reserve in Q3 2018 in the Breast Products segment resulting in a reduction of cost of goods sold~~$9.8 million for the three months ended September 30, ~~2018 that did not re-occur~~2019. The decrease was primarily due to a decrease in ~~2019, coupled with a general~~sales in the miraDry segment, offset by an increase in ~~net sales.~~the sales volume and unit costs of breast implants in the Breast Products segment.

The gross margins for the three months ended September 30, 2020 and 2019 were 56.3% and ~~2018 were~~ 56.5% ~~and 62.1%~~, respectively. The decrease was ~~primarily~~ due to ~~an adjustment in the warranty reserve in Q3 2018~~increased unit cost of gel implants in the Breast Products segment ~~resulting in~~following the Vesta Acquisition, offset by a ~~reduction~~higher sales mix of ~~cost of goods sold for the three months ended September 30, 2018 that did not re-occur in 2019, and the impact of increased~~ miraDry ~~console sales~~consumables which carry ~~lower margins.~~a higher margin.

Sales and marketing expenses ~~increased $3.4~~decreased $5.8 million, or ~~22.4%~~31.0%, to $12.9 million for the three months ended September 30, 2020 as compared to $18.7 million for the three months ended September 30, ~~2019, as compared~~2019. The decrease was primarily due to ~~$15.3~~decreases in employee payroll and incentive compensation related expenses, and a reduction in marketing events and initiatives associated with the organizational efficiency initiative, the change in the miraDry business strategy and other cost saving measures implemented in response to COVID-19.

R&D expenses decreased $1.1 million, or 35.6%, to $2.1 million for the three months ended September 30, ~~2018. The increase was primarily due to higher employee-related costs~~2020 as ~~a result of increased sales headcount, and an increase in marketing expenses and initiatives.~~

~~R&D expenses increased $0.3 million, or 11.1%,~~compared to $3.2 million for the three months ended September 30, ~~2019, as compared to $2.9 million for the three months ended September 30, 2018.~~2019. The ~~increase~~decrease was primarily due to ~~higher employee-related costs as a result of additional headcount~~decreases in employee payroll and ~~an increase~~incentive compensation related expenses associated with the organizational efficiency initiative, the change in the miraDry business strategy and other cost saving measures implemented in response to COVID-19, coupled with decreases in costs related to clinical and regulatory activities.

G&A expenses ~~increased $0.3~~decreased $2.0 million, or ~~2.9%~~16.4%, to $10.2 million for the three months ended September 30, 2020 as compared to $12.2 million for the three months ended September 30, ~~2019, as compared~~2019. The decrease is primarily related to ~~$11.9 million~~decreases in employee payroll and incentive compensation related expenses, and consulting expenses associated with the organizational efficiency initiative, the change in the miraDry business strategy and other cost saving measures implemented in response to COVID-19. In addition, there were decreases in legal expenses, severance expenses, and fair value adjustments, offset by an increase in bad debt expense, insurance, and freight expense.

Restructuring expenses for the three months ended September 30, ~~2018. The increase is primarily related~~2020 were ($0.4) million, resulting from a change in estimated severance costs to ~~an increase in consulting expense, payroll related expenses and bad debt expense, offset by a decrease in incentive compensation expense and stock-based compensation expense.~~be incurred under the organizational efficiency initiative.

Other income (expense), net for the three months ended September 30, 2020 changed $9.1 million as compared to the three months ended September 30, 2019 ~~and 2018 was~~ primarily ~~associated with expenses related~~due to the decrease in the fair value of the derivative liability, offset by an increase in interest expense and amortization of debt issuance costs and debt discounts associated with our Credit Agreements ~~the change in fair value of warrants, interest income on cash held in a money market account,~~ and ~~foreign exchange gains and losses.~~Convertible Note.

For the three months ended September 30, ~~2019~~2020 and ~~2018~~2019 there was no income tax expense.

The following table sets forth our results of operations for the nine months ended September 30, ~~2019~~2020 and ~~2018:~~2019:

	Nine Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2020			2019
	(In thousands)						(In thousands)
Statement of operations data
Net sales	$	60,489		$	49,104		$	48,597		$	60,489
Cost of goods sold		24,041			19,154			20,733			24,041
Gross profit		36,448			29,950			27,864			36,448
Operating expenses
Sales and marketing		60,987			45,990			37,614			60,987
Research and development		9,526			7,930			7,747			9,526
General and administrative		37,538			31,419			27,500			37,538
Goodwill and other intangible impairment		12,674			—
Restructuring								1,849			—
Impairment								6,432			12,674
Total operating expenses		120,725			85,339			81,142			120,725
Loss from operations		(84,277	)		(55,389	)		(53,278	)		(84,277	)
Other income (expense), net
Interest income		1,083			214			203			1,083
Interest expense		(3,276	)		(2,474	)		(7,289	)		(3,276	)
Change in fair value of derivative liability								(8,420	)		—
Other income (expense), net		(101	)		(347	)		74			(101	)
Total other income (expense), net		(2,294	)		(2,607	)		(15,432	)		(2,294	)
Loss before income taxes		(86,571	)		(57,996	)		(68,710	)		(86,571	)
Income tax benefit (expense)		—			—
Income tax								—			—
Net loss	$	(86,571	)	$	(57,996	)	$	(68,710	)	$	(86,571	)

Net sales ~~increased $11.4~~decreased $11.9 million, or ~~23.2%~~19.7%, to $48.6 million for the nine months ended September 30, 2020 as compared to $60.5 million for the nine months ended September 30, ~~2019 as compared to $49.1~~2019. Net sales of our Breast Products segment was $37.1 million, an increase of $3.5 million for the nine months ended September 30, ~~2018. Net sales of our Breast Products segment was~~2020, as compared to $33.6 ~~million, an increase of $7.0~~ million for the nine months ended September 30, 2019, ~~as compared to $26.6 million for the nine months ended September 30, 2018,~~ driven primarily by an increase in the volume of sales of ~~silicone~~ gel ~~breast implants and Allox2 and Dermaspan breast tissue expanders.~~implants. Net sales of our miraDry segment was ~~$26.9~~$11.5 million, ~~an increase~~a decrease of ~~$4.4~~$15.4 million, as compared to ~~$22.5~~$26.9 million for the nine months ended September 30, ~~2018 driven primarily by~~2019 resulting from an ~~increase~~overall decrease in the volume of sales of miraDry systems and consumable bioTips due to the effects of the COVID-19 pandemic and the change in ~~the US and internationally.~~miraDry business strategy.

Cost of goods sold ~~increased $4.9~~decreased $3.3 million, or ~~25.5%~~13.8%, to $20.7 million for the nine months ended September 30, 2020 as compared to $24.0 million for the nine months ended September 30, ~~2019, as compared to $19.2 million for the nine months ended September 30, 2018.~~2019. The ~~increase~~decrease was primarily due to ~~an adjustment~~a decrease in sales in the ~~warranty reserve~~miraDry segment, offset by an increase in ~~Q3 2018~~the sales volume and unit costs of breast implants in the Breast Products ~~segment resulting in a reduction of cost of goods sold for the nine months ended September 30, 2018 that did not re-occur in 2019.~~segment.

The gross margins for the nine months ended September 30, 2020 and 2019 were 57.3% and ~~2018 were~~ 60.3% ~~and 61.0%~~, respectively. The ~~slight~~ decrease was ~~primarily~~ due to ~~an adjustment in the warranty reserve in Q3 2018~~increased unit cost of gel implants in the Breast Products segment ~~resulting in a reduction of cost of goods sold~~following the Vesta Acquisition.

Sales and marketing expenses decreased $23.4 million, or 38.3%, to $37.6 million for the nine months ended September 30, ~~2018 that did not re-occur in 2019, offset by increased sales of consumable bioTips in the miraDry reporting unit which carry higher margins.~~

~~Sales and marketing expenses increased $15.0 million, or 32.6%,~~2020 as compared to $61.0 million for the nine months ended September 30, ~~2019, as compared~~2019. The decrease was primarily due to ~~$46.0~~decreases in employee payroll and incentive compensation related expenses, and a reduction in consulting fees and marketing events and initiatives associated with the organizational efficiency initiative, the change in the miraDry business strategy and other cost saving measures implemented in response to COVID-19.

R&D expenses decreased $1.8 million, or 18.7%, to $7.7 million for the nine months ended September 30, ~~2018. The increase was primarily due to higher employee-related costs~~2020 as ~~a result of increased sales headcount, and an increase in marketing expenses and initiatives.~~

~~R&D expenses increased $1.6 million, or 20.1%,~~compared to $9.5 million for the nine months ended September 30, ~~2019, as compared to $7.9 million for the nine months ended September 30, 2018.~~2019. The ~~increase~~decrease was primarily due to ~~an increase~~decreases in employee payroll and incentive compensation related expenses associated with the organizational efficiency initiative, the change in the miraDry business strategy and other cost saving measures implemented in response to COVID-19, coupled with decreases in costs related to clinical and regulatory activities.

G&A expenses ~~increased $6.1~~decreased $10.0 million, or ~~19.5%~~26.7%, to $27.5 million for the nine months ended September 30, 2020 as compared to $37.5 million for the nine months ended September 30, ~~2019, as compared~~2019. The decrease is primarily related to ~~$31.4 million~~decreases in employee payroll and incentive compensation related expenses, and consulting and legal expenses associated with the organizational efficiency initiative, the change in the miraDry business strategy and other cost saving measures implemented in response to COVID-19. In addition, there were decreases in intangibles amortization expense, fair value adjustments, offset by an increase in bad debt expense, insurance expense, and accounting fees.

Restructuring expenses for the nine months ended September 30, ~~2018. The increase is~~2020 were $1.8 million, consisting primarily ~~related~~of severance expenses of employees affected by the organizational efficiency initiative.

Impairment expenses for the nine months ended September 30, 2020 were $6.4 million, due to ~~an increase~~full impairments of intangible assets in ~~consulting~~the miraDry reporting unit. Impairment expenses ~~payroll related expenses, legal expenses and bad debt expense, offset by a decrease in contingent consideration fair value adjustments, stock-based compensation, and incentive compensation.~~

~~Goodwill and other intangible impairment expenses were $12.7 million~~ for the nine months ended September 30, 2019 were $12.7 million, due to ~~impairments~~a full impairment of goodwill and partial impairment of intangible assets in the miraDry reporting unit.

Other income (expense), net for the nine months ended September 30, 2020 increased $13.1 million as compared to the nine months ended September 30, 2019 ~~and 2018 was~~ primarily ~~associated with expenses related~~due to the increase in the fair value of the derivative liability, interest expense and amortization of debt issuance costs and debt discounts associated with our Credit Agreements ~~the change in fair value of warrants~~ and ~~interest income on cash held in a money market account.~~Convertible Note.

For the nine months ended September 30, ~~2019~~2020 and ~~2018~~2019 there was no income tax expense.

Since our inception, we have incurred significant net operating losses and anticipate that our losses will continue in the near term. We expect our operating expenses will continue to grow as we expand our operations. We will need to generate significant net sales to achieve profitability. To date, we have funded our operations primarily with

proceeds from the sales of preferred stock, borrowings under our term loans and convertible note, sales of our products since 2012, and the proceeds from the sale of our common stock in public offerings.

As of September 30, 2020, we ~~entered into~~had $63.5 million in cash and cash equivalents. Our historical cash outflows have primarily been associated with activities relating to commercialization and increases in working capital, including the ~~Existing Credit Agreements with Midcap. On July 1, 2019,~~expansion of our sales force and marketing programs. In addition, we ~~entered into certain credit agreements with Midcap Financial Trust pursuant~~have used cash to ~~which we repaid~~fund the acquisitions of miraDry, BIOCORNEUM, our ~~existing indebtedness under our Existing Credit Agreements~~tissue expander portfolio, and the ~~outstanding commitment fee was cancelled.~~

~~See Note 10 to the condensed consolidated financial statements for a full description of our long-term debt and revolving line of credit.~~Vesta Acquisition.

In February 2018, we entered into an At-The-Market Equity Offering Sales Agreement with Stifel, Nicolaus & Company, Incorporated, or Stifel, as sales agent pursuant to which we may sell, from time to time, through Stifel shares of our common stock having an aggregate gross offering price of up to $50 million. As of September 30, ~~2019~~2020, ~~we have not~~the Company has sold ~~any~~37,000 shares of its common stock pursuant to the sales ~~agreement.~~ agreement, resulting in net proceeds after commissions of approximately $0.3 million.

On July 1, 2019, we entered into certain credit agreements with Midcap Financial Trust pursuant to which we repaid our existing indebtedness under our existing credit agreements and the outstanding commitment fee was cancelled. Further on March 11, 2020, we entered into a facility agreement with Deerfield Partners, L.P., issuing $60.0 million in principal amount of 4.0% unsecured and subordinated convertible notes.See Note 10 – Debt to the condensed consolidated financial statements for a full description of our long-term debt, revolving line of credit, and convertible note.

~~On May 7, 2018,~~In April 2020, we ~~completed an underwritten follow-on public offering~~were granted a loan of $6.7 million under the Paycheck Protection Program of the CARES Act, or the PPP Loan, all or a portion of which may be forgiven dependent on our use of proceeds. The PPP Loan matures on April 20, 2022 and bears interest at a rate of 1.0% per annum. All or a portion of the PPP Loan may be forgiven upon submission of documentation of expenditures in ~~which we sold 7,407,408 shares of common stock at $13.50 per share, as well as 1,111,111 additional shares of common stock pursuant~~accordance with certain specified requirements. See Note 10 – Debt to the condensed consolidated financial statements for a full ~~exercise~~description of the ~~over-allotment option granted~~PPP Loan. We sought and obtained the PPP Loan due to the ~~underwriters. Net proceeds were approximately $107.6 million after deducting underwriting discounts~~immediate and ~~commissions of $6.9 million and offering expenses of approximately $0.5 million.~~

Further, on June 7, 2019, we completed an underwritten follow-on public offering of 17,391,305 shares of common stock at $5.75 per share, as well as 2,608,695 additional shares of common stock pursuant to the full exercisecontinued impact of the ~~over-allotment option granted~~COVID-19 pandemic on our revenues and prospects. The PPP Loan has allowed us to satisfy our payroll obligations without a material reduction in pay for our employees or a material headcount reduction, other than the ~~underwriters. Net proceeds were approximately $107.7 million after deducting underwriting discounts and commissions of $6.9 million and offering expenses of approximately $0.4 million.~~reductions in the previously announced organizational efficiency initiative.

~~As of September 30, 2019, we had $120.9 million in cash and cash equivalents. Our historical cash outflows have primarily been associated with activities~~Due to the continued uncertainty relating to ~~commercialization and increases~~the COVID-19 pandemic, our revenues may continue to be adversely impacted. If we are unable to achieve certain revenue targets, we may breach certain financial covenants set forth in ~~working capital, including~~our Credit Agreement with MidCap Financial Trust. If we breach these covenants, MidCap will have the ~~expansion~~right to accelerate repayment of the outstanding amounts. In addition, a breach of a financial covenant in the Credit Agreement would result in a cross default under our Note with Deerfield, which would allow Deerfield to accelerate repayment of the amounts owed, subject to certain restrictions. In the event that any of MidCap or Deerfield accelerates the repayment of our ~~sales force and marketing programs. In addition,~~indebtedness, there can be no assurance that we will have ~~used~~sufficient cash on hand to ~~fund the acquisitions of miraDry, BIOCORNEUM~~satisfy such obligations and our ~~tissue expander portfolio.~~

To fund our ongoing operating and capital needs, we may need to raise additional equity or debt capital. We believe we have sufficient capital resources to continue as a going concern through the next twelve months.

The following table shows a summary of our cash flows (used in) provided by operating, investing and financing activities for the periods indicated:

	Nine Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2020			2019
Net cash (used in) provided by:
Operating activities	$	(73,503	)	$	(41,418	)	$	(52,739	)	$	(73,503	)
Investing activities		(3,180	)		(414	)		(3,192	)		(3,180	)
Financing activities		110,699			118,252			31,806			110,699
Net change in cash, cash equivalents and restricted cash	$	34,016		$	76,420		$	(24,125	)	$	34,016

Net cash used in operating activities was $52.7 million during the nine months ended September 30, 2020 as compared to $73.5 million during the nine months ended September 30, ~~2019, as compared to $41.4 million during the nine months ended September 30, 2018.~~2019. The ~~increase~~decrease in cash used in operating activities between the nine months ended September 30, ~~2019~~2020 and ~~2018~~2019 was primarily associated with ~~higher~~a lower net loss of $68.7 million for the nine months ended September 30, 2020 as compared to $86.6 million for the nine months ended September 30, 2019, ~~as compared to $58.0 million for the nine months ended September 30, 2018,~~ an increase in fair value adjustments to the derivative liability and the provision for doubtful accounts, and decreases in accounts receivable offset by a lower impairment, stock-based compensation expense, and inventory, and decreases in customer deposits, accounts payable, ~~and~~ accrued liabilities, partially offset by a smaller decrease in accounts receivable due to the timing of sales and collections, an increase in amortization of right-of-use assets expense, and an increase in goodwill and other ~~intangible impairment.~~liabilities, and prepaid expenses, other current assets and other assets.

Net cash used in investing activities was $3.2 million during the nine months ended September 30, ~~2019 as compared to $0.4 million during the nine months ended September 30, 2018.~~2020 and 2019. The slight increase in cash used in investing activities between the nine months ended September 30, ~~2019~~2020 and ~~2018~~2019 was due to an increase in property and equipment purchases.

Net cash provided by financing activities was $31.8 million during the nine months ended September 30, 2020 as compared to $110.7 million during the nine months ended September 30, ~~2019 as compared to $118.3 million during the nine months ended September 30, 2018.~~2019. The decrease in cash provided by financing activities was primarily the result of a decrease in ~~proceeds from borrowings under the Term Loan, an increase in tax payments related to shares withheld for vested RSUs, and payment of contingent consideration, offset by an increase in~~ the proceeds from issuance of common stock, repayments of the term loan, and decrease in borrowings under ~~ESPP for~~ the ~~nine months ended September 30, 2019.~~revolving loan, offset by an increase in proceeds from issuance of the convertible note and the PPP loan.

Our liquidity position and capital requirements are subject to a number of factors. For example, our cash inflow and outflow may be impacted by the following:

Our primary short-term capital needs, which are subject to change, include expenditures related to:

Although we believe the foregoing items reflect our most likely uses of cash in the short-term, we cannot predict with certainty all of our particular short-term cash uses or the timing or amount of cash used. If cash generated from operations is insufficient to satisfy our working capital and capital expenditure requirements, we may be required to sell additional equity or debt securities or obtain credit facilities. Additional capital, if needed, may not be available on satisfactory terms, if at all. Furthermore, any additional equity financing may be dilutive to stockholders, and debt financing, if available, may include restrictive covenants. For a discussion of other factors that may impact our future liquidity and capital funding requirements, see “Risk Factors — Risks Related to Our Financial Results” in our Annual Report on Form 10-K.

During the periods presented we did not have, nor do we currently have, any off-balance sheet arrangements as defined under SEC rules.

As of September 30, ~~2019,~~2020, we had ~~$120.9~~$63.5 million in cash and cash equivalents. We generally hold our cash in checking accounts and interest-bearing money market accounts. Our exposure to market risk related to interest rate sensitivity is affected by changes in the general level of U.S. interest rates. Due to the short-term maturities of our cash equivalents and the low risk profile of our investments, an immediate 100 basis point change in interest rates would not have a material effect on the fair market value of our cash equivalents. We have established guidelines regarding approved investments and maturities of investments, which are designed to maintain safety and liquidity.

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. GAAP. We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic and current reports that we file with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our ~~chief executive officer~~Chief Executive Officer, or CEO, and ~~chief financial officer,~~Chief Financial Officer, or CFO, as appropriate, to allow timely decisions regarding required disclosure. Our independent registered public accounting firm will be required to attest to the effectiveness of our internal control over financial reporting for our Annual Report on Form 10-K for the first year we are no longer an “emerging growth company” under the JOBS Act.

As of September 30, ~~2019~~2020, we carried out an evaluation, under the supervision and with the participation of our management, including our ~~Chief Executive Officer, or~~ CEO and ~~Chief Financial Officer, or~~ CFO, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on that evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were not effective as of September 30, 2020 as a result of the material weakness described in our Annual Report on Form 10-K and below.

The control environment was ineffective in holding individuals accountable for the operation of their internal control responsibilities. This control failure prevented the effective operation of controls over goodwill and intangible asset impairment, including the underlying financial data, calculations and assumptions supporting the forecasted financial information utilized to measure the fair value of the reporting unit, intangible assets, and the associated impairment charges. This deficiency did not result in an adjustment but still represented a material weakness in our internal control over financial reporting as of December 31, 2019 because there is a reasonable possibility that material misstatements to our consolidated financial statements would not be prevented or detected on a timely basis.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such ~~date.~~that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

As disclosed in our Annual Report, we have identified and begun to implement several actions designed to remediate the material weakness. Our remediation process includes, but is not limited to communicating expectations over performance of controls, monitoring for compliance with those expectations, and holding individuals accountable for their roles related to internal control over financial reporting.

~~There was~~Except as discussed above, there have been no ~~change~~changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

From time to time, we are involved in legal proceedings and regulatory proceedings arising out of our operations. We establish reserves for specific liabilities in connection with legal actions that we deem to be probable and estimable. The ability to predict the ultimate outcome of such matters involves judgments, estimates, and inherent uncertainties. The actual outcome of such matters could differ materially from management’s estimates. Information regarding certain legal proceedings is provided in this Quarterly Report in Note 14 ~~and Note 15~~ of the ~~Condensed Consolidated Financial Statements.~~condensed consolidated financial statements.

Except as set forth below, there have been no material changes from the risk factors disclosed in Part I, Item 1A, of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018,~~2019, which are incorporated herein by reference.

~~We rely on sole suppliers~~The COVID-19 pandemic has adversely affected, and continues to ~~manufacture some~~adversely affect, our business, our operations and our financial results. Future pandemics, epidemics or outbreaks of an infectious disease may similarly affect our business, our operations and our financial results.

The rapid, global spread of COVID-19 has resulted in significant economic uncertainty, significant declines in business and consumer confidence and global demand in the non-essential healthcare industry (among others), a global economic slowdown, and could lead to a global recession. The COVID-19 pandemic has drastically impacted healthcare systems in the United States and globally and resulted in travel restrictions which impact medical tourism and our sales professionals’ ability to travel. In addition, hospitals have limited access for non-patients, including our sales professionals, which could negatively impact our access to physicians. As an aesthetics company, a significant percentage of our products are utilized in elective surgeries or procedures, which may be deferred or avoided altogether due to the COVID-19 outbreak, materially impacting our financial results. Future pandemics or other outbreaks of infectious disease may result in a similar period of business disruption, including reduced sales as patients might cancel or defer elective procedures or otherwise avoid medical facilities, resulting in reduced patient volumes and operating revenues. Governmental agencies and hospital administrators may also instruct hospitals to postpone some elective procedures in preparation for COVID-19-related hospitalizations. Further, the spread of COVID-19 has caused us to modify our workforce practices, and we may take further actions that we determine are in the best interests of our employees or as required by governments. The continued spread of COVID-19, or another infectious disease, could also result in delays or disruptions in our supply chain or adversely affect our manufacturing facilities and personnel. Further, trade and/or national security protection policies may be adjusted as a result of the COVID-19 pandemic, such as actions by governments that limit, restrict or prevent the movement of certain goods into a country and/or region, and current U.S./China trade relations may be further exacerbated by the pandemic. The COVID-19 outbreak has materially impacted our operations and financial results and continues to be fluid and uncertain, making it difficult to forecast the final impact it could have on our future operations or financial results.

Our debt obligations could impair our financial condition and limit our operating flexibility.

Our indebtedness under our credit agreements with MidCap Financial Trust, or the Credit Agreements, our Convertible Note with Deerfield and our other financial obligations could:

Our financial covenants in the Credit Agreements require us to achieve certain levels of net revenue calculated on a rolling monthly basis. Due to the continued uncertainty relating to the COVID-19 pandemic, our revenues may continue to be adversely impacted. If we are unable to achieve certain revenue targets, we may breach certain financial covenants set forth in our Credit Agreements. If we breach these covenants, MidCap will have the right to accelerate repayment of the outstanding amounts. In addition, a breach of a financial covenant in the Credit Agreement would result in a cross default under our Convertible Note with Deerfield, which would allow Deerfield to accelerate repayment of the amounts owed, subject to certain restrictions. In the event that any of MidCap or Deerfield accelerates the repayment of our indebtedness, there can be no assurance that we will have sufficient cash on hand to satisfy such obligations and our business operations may be materially harmed.

Furthermore, there is no guarantee that we will be able to pay the principal and interest under the Credit Agreements or the Convertible Note or that future working capital, borrowings or equity financing will be available to repay or refinance any amounts outstanding under the Credit Agreements or Convertible Note. Our obligations under the Credit Agreements are secured by a perfected security interest in all of our tangible and intangible assets (including our intellectual property assets), except for certain customary excluded property and all of our and our subsidiaries capital stock, with certain limited exceptions. In addition, we may enter into debt agreements in the future that may contain similar or more burdensome terms and covenants, including financial covenants.

We may not successfully integrate newly acquired businesses into our business operations or realize the benefits of partnerships with other companies, acquisitions of complementary products or technologies or other strategic alternatives.

We have completed a series of business and product acquisitions including our ~~scar~~acquisition of our manufacturing operations from Vesta, our acquisition of miraDry, our product acquisitions, including BIOCORNEUM and our tissue expanders portfolio. As a result of these acquisitions, we have undergone substantial changes to our business and product offerings in a short period of time. In addition, in the future, we may consider other opportunities to partner with or acquire other businesses, products or technologies that may enhance our product platform or technology, expand the breadth of our markets or customer base or advance our business strategies.

Integrating the business practice and operations of a new business with that of our own is a complex, costly and time-consuming process, which requires significant management ~~tissue expander~~attention and ~~bioTips products,~~resources. The integration process may disrupt our existing operations and, ~~any production problems or inability~~if implemented ineffectively, would preclude realization of the full benefits expected by us. Our failure to meet the challenges involved in successfully integrating our ~~demand~~acquisitions in order to realize the anticipated benefits may cause an interruption of, or a loss of momentum in, our operating activities and could adversely affect our ~~business prospects.~~

We rely on sole suppliers to manufacture certain of our products or the components used therein, and the loss of any such supplier or any disruption in operations, production problems or inability to meet our supply demands of any such supplier could have a material adverse and severe effect on our business, financial condition and results of operations. ~~Additionally, there~~For example, we recently determined to refocus our miraDry reporting unit to driving sales of consumable bioTips to our existing installed base. There can be no ~~guarantees~~assurances that we ~~would~~will achieve significant sales of the miraDry system under this refocused plan or, if we do, that we will be able to ~~replace~~do so in a profitable manner. Potential difficulties, costs and delays we may encounter as part of the integration process may include:

Any one or ~~transition to alternative suppliers on a timely basis~~all of these factors may increase operating costs or ~~at all, if needed. If we~~lower anticipated financial performance. Many of these factors are ~~required to replace any~~also outside of our ~~sole suppliers, or transition to alternative suppliers, it may adversely impact our operations.~~

~~For example,~~ we have entered into a definitive manufacturing agreement with NuSil Technology LLC (“NuSil”), who serves as the sole supplier of our silicone materials for short and long-term implantable products (the “Silicone Products”). If NuSil is unable to scale its manufacturingcontrol. In addition, even if new business operations ~~to meet our requirements in any future period, or if there~~ are ~~any delays or disruptions in manufacturing or delivering the implants,~~integrated successfully, we may not realize the full benefits of the acquisition, including the synergies, cost savings or sales or growth opportunities that we expect or within the anticipated time frame. Additional unanticipated costs may be able to achieve our anticipated sales levels and our net sales and business prospects could suffer significantly. In addition, if NuSil were to terminate or otherwise fail to perform under the definitive ma ~~nufacturing agreement, we would need to identify and qualify another alternate manufacturer, which would require a significant amount of time and resources and result in a supply interruption.~~

~~There are numerous risks in relying on sole suppliers to manufacture our products, which, individually or~~incurred in the ~~aggregate,~~integration of the businesses. All of these factors could ~~have a material adverse~~decrease or delay the expected accretive effect of the transaction, and ~~severe effect on our business, financial condition and results of operations.~~

~~Disruption in our manufacturing operations may prevent us from meeting customer demand, and our sales and profitability may suffer as a result.~~

~~With~~negatively impact the ~~Vesta Acquisition, we are now responsible for the manufacturing~~price of our ~~breast implants. A serious disruption, such as an earthquake, flood, fire,~~common stock. The failure to ~~manufacturing facility could damage our inventory levels and manufacturing~~integrate the business operations ~~and could materially impair our ability to distribute our breast implant products to customers in a timely manner~~of miraDry or at a reasonable cost. We could also incur significantly higher costs and experience longer lead times during the time required to reopen or replace our primary distribution center or manufacturing facility. As a result, any ~~serious disruption could~~acquired business successfully would have a material adverse effect on our business, financial condition and results of operations.

~~Any disruption at~~ As noted above, we determined to refocus efforts on driving sales of bioTips to our ~~facilities could adversely affect~~existing installed base. There can be no assurance that this shift in focus will allow us to realize the expected benefits from this acquisition.

If we are unable to drive sales of our bioTips to our existing installed base of miraDry systems, our business and ~~operating results.~~future prospects will be harmed.

~~Our principal offices are located in Santa Barbara, California. Substantially all~~In April 2020, we determined to focus on driving high margin, bioTip utilization to our existing installed base combined with a controlled placement of consoles. We expect that the net sales we generate from our bioTips will represent high margin sales (on a gross margin basis) and account for a substantial amount of our ~~operations are conducted at this location, including customer service, development and management and administrative functions. Substantially all~~net sales for the next several years, with high margin consumables comprising a sizable percentage of our ~~inventory~~miraDry segment’s net sales. Accordingly, our success depends on the acceptance among physicians and patients of ~~Breast Products~~the miraDry procedure as a preferred treatment for being sweat-bothered. Although we have received FDA clearance to market the miraDry procedure for the treatment of primary axillary hyperhidrosis, odor and permanent hair reduction in the United States and are approved or are otherwise free to market the miraDry procedure for the treatment of primary ancillary hyperhidrosis in adults in over 40 international markets, the degree of market acceptance of the miraDry procedure by physicians and patients is ~~held~~unproven. We believe that market acceptance of the miraDry procedure will depend on many factors, including:

In addition, the COVID-19 pandemic has limited our ability to educate physicians and drive market acceptance of the procedure. We cannot guarantee that the miraDry procedure will achieve broad market acceptance among physicians and patients. We expect to derive a ~~second location~~substantial portion of sales from the sale of our consumable bioTip products, which represent higher margin products within our product portfolio. As a result, any failure of this product to achieve meaningful market acceptance will harm our business, sales, profitability and future prospects.

If changes in ~~Santa Barbara, California, we manufacture, distribute,~~the economy and ~~service~~consumer spending reduce consumer demand for our products, our sales and profitability would suffer.

We are subject to the risks arising from adverse changes in general economic and market conditions, pandemics or political actions including new or increased trade protection policies such as tariffs, particularly in China, where certain components of our miraDry ~~Systems at a third location~~products are manufactured. Certain elective procedures, such as breast augmentation and the miraDry procedure, are typically not covered by insurance. Adverse changes in ~~Santa Clara, California, and, with~~ the Vesta Acquisition, we manufacture our breast implants at a fourth location in Minnesota. Despite our efforts to safeguard our facilities, including acquiring insurance, adopting health and safety protocols and utilizing off-site storage of computer data, vandalism, terrorismeconomy or a ~~natural or~~“trade war” may cause consumers to reassess their spending choices and reduce the demand for these surgeries and other ~~disaster, such as~~procedures and could have an ~~earthquake, fire or flood,~~adverse effect on consumer spending. This shift could damage or destroy our inventory of finished goods, cause substantial delays in our operations, result in the loss of key information and cause us to incur additional expenses. Our insurance may not cover our losses in any particular case. In addition, regardless of the level of insurance coverage, damage to our facilities may have ~~a material~~an adverse effect on our ~~business, financial condition~~net sales and ~~operating results.~~

~~Product liability~~profitability. Furthermore, consumer preferences and ~~warranty claims or other litigation~~trends may shift due to a variety of factors, including changes in demographic and ~~related negative publicity~~social trends, public health initiatives and product innovations, which may ~~adversely affect~~reduce consumer demand for our ~~business, sales, financial condition and operating results.~~

As a supplier of medical devices, we are and may be subject to warranty or product liability claims alleging that the use of our products has resulted in adverse health effects or other litigation in the ordinary course of business that may require us to make significant expenditures to defend these claims or pay damage awards. The breast implant industry has a particularly significant history of product liability litigation. The risks of litigation exist even with respect to products that have received or in the future may receive regulatory approval for commercial sale, such as our Breast Products.products. For example, ~~on October 7, 2019,~~as a ~~lawsuit was filed in the Superior Court~~result of the ~~State of California against us and Silimed Industria de Implantes Ltda. (our former contract manufacturer). The lawsuit alleges that~~COVID-19 outbreak in China, our ~~textured breast implants caused certain of the plaintiffs~~bioTip manufacturer in China was required to develop a condition known as breast implant associated anaplastic large cell lymphoma (“BIA-ALCL”), and that we are liable to the Plaintiffs based on claims for strict liability (failure to warn), strict liability (defective manufacture), negligence and loss of consortium. We intend to vigorously defend ourselves in this lawsuit. Given the recent publicity surrounding BIA-ALCL and the FDA recommendationclose for a ~~“boxed warning” on labeling materials for breast implants,~~week. In addition, as the outbreak spread through the United States and globally, we ~~may face additional litigation and negative publicity surrounding~~have experienced a significant reduction in demand as non-emergency medical procedures are deferred. There can be no assurances that once healthcare systems resume normal activity that these deferred procedures will be rescheduled. The outbreak has adversely affected our ~~breast implants in the future. An increase in~~ ~~product liability claims and the related negative publicity could significantly harm our business, sales,~~ financial condition and results of ~~operations.~~

In addition, historically our silicone gel breast implants were sold with a warranty providing for no-charge replacement implants in the event of certain ruptures that occur any time during the life of the patient and this warranty also includes cash payments to offset surgical fees if the rupture occurs within ten years of implantation. In April 2018, we announced our Platinum20 product replacement and limited warranty program, which we believe provides an industry-leading program of no-charge replacement implants for covered rupture events that occur during the lifetime of the patient, and no-charge replacement implants for other covered events that occur within twenty years of the implant procedure, as well as financial assistance for certain qualifying events that occur within twenty years of the implant procedure. If we experience an increase in warranty claims following the launch of our Platinum20 warranty in excess of our expectations, or if our replacement costs associated with warranty claims increase significantly, we will incur liabilities for potential warranty claims that may be greater than we expect. An increase in the frequency of warranty claims or amount of warranty costs may harm our reputation and could have a material adverse effect on our business, results of operations and ~~financial condition.~~

~~We maintain product liability insurance, but this insurance is limited in amount and subject to significant deductibles. There is no guarantee that insurance~~ will be available or adequate to protect against all claims. Our insurance policies are subject to annual renewal and we may not be able to obtain liability insurance in the future on acceptable terms or at all. In addition, our insurance premiums could be subject to increases in the future, which may be material. If the coverage limits are inadequate to cover our liabilities or our insurance costslikely continue to ~~increase as a result of warranty or product liability claims or other litigation, then~~adversely impact our ~~business, financial condition and operating results may be adversely affected.~~

~~Failure to comply with the regulatory requirements for the PMA post-approval studies for our Breast Products may result in the suspension or withdrawal of our PMA.~~

We received pre-market approval, or PMA, for our silicone gel breast implants from the FDA in 2012. As a condition of PMA approval, the FDA imposes certain requirements in order to maintain the PMA. Failure to comply with the applicable regulatory requirements can result in, among other things, warning letters, administrative or judicially imposed sanctions such as injunctions, civil penalties, recall or seizure of products, total or partial suspension of production, the suspension or withdrawal of our PMA, or criminal prosecution. For example, in March 2019, we received a warning letter from the FDA stating that we failed to meet the expected patient follow-up rate in one of our post-approval studies for our silicone gel breast implants. The warning letter stated that failure to promptly correct this deficiency may result in the withdrawal of our PMA. We provided a comprehensive response to the FDA and are working collaboratively with the agency to quickly and fully resolve this matter. If we are unable to timely correct the deficiency included in the warning letter to the satisfaction of the FDA, or if we fail to meet any of the other requirements of our PMA, our PMA may be suspended or withdrawn by the FDA. Any such suspension or withdrawal would have a significant negative impact on our results of operations ~~or financial condition.~~

The long-term safety of our Breast Products has not fully been established and our breast implants are currently under study in our PMA post-approval studies, which could reveal unanticipated complications.

We have been marketing our silicone gel breast implants in the United States with pre-market approval from the FDA since 2012. However, there could still be unanticipated complications or unforeseen health consequences of being implanted with our silicone gel breast implants over the long-term (defined as 10 years or more). Additionally, we rely on our clinical data to make favorable comparisons of our product to our competitive products, and our longer-term data may change over time. Further, future studies or clinical experience may indicate that treatment with our products is not differentiated to treatment with competitive products. Such results could slow the adoption of our products and significantly reduce our sales, which could prevent us from achieving our forecasted sales targets or achieving or sustaining profitability. Moreover, if long-term results and experience indicate that our products cause unexpected or serious complications, we could be subject to required product labeling revisions, mandatory product recalls, suspension or withdrawal of clearance or approval by the FDA or other applicable regulatory bodies and significant legal liability.

We received a Warning Letter from FDA, dated March 19, 2019, relating to the Company’s failure to meet the FDA-approved minimum retention rate for a post-approval study. We responded to this Warning Letter and are in continued dialogue with FDA to fully address our study’s participant retention, including patient questionnaire completion and additional follow-up office visits.

On March 25-26, 2019, the FDA convened a meeting of the General and Plastic Surgery Devices Panel at the FDA’s Headquarters in Silver Spring, Maryland, to discuss a range of topics concerning the benefit-risk profile of breast implants. In addition to a presentation of data and information about our products and those of other breast implant manufacturers, this two-day public meeting included presentations, recommendations, and discussion on breast implant associated anaplastic large cell lymphoma (BIA-ALCL); systemic symptoms reported in patients receiving breast implants; the use of registries for breast implant surveillance; revision of magnetic resonance imaging (MRI) screening recommendations for silent rupture of silicone gel filled breast implants; the use of surgical mesh in breast procedures such as breast reconstruction and mastopexy; the use of real-world data and patient perspectives in regulatory decision making; product labeling revisions; and recommendations for best practices (including a standardized checklist) for informed consent discussions between patients and clinicians.

We cannot predict future changes that may occur to the regulatory landscape regarding our products based on this Panel Meeting and subsequent developments regarding long-term data. For example, FDA recently issued draft guidance informed by the Panel’s recommendations to require a boxed warning and a standardized patient decision checklist as part of the informed consent process, along with other recommendations to update and provide additional labeling information.

Among the long-term health risks of breast implants which are being studied and followed, health regulators believe there is an association between breast implants and a rare form of lymphoma called anaplastic large-cell lymphoma.

In January 2011, the FDA issued a Safety Communication indicating that there was a possible association between saline and silicone gel breast implants and anaplastic large-cell lymphoma, or BIA-ALCL. Since our FDA approval in 2012, Sientra’s breast-implant product labeling, which is approved by the FDA, has been required to contain a description of BIA-ALCL as a possible outcome. Since its report in January 2011, the FDA has continued to gather information about BIA-ALCL in women with breast implants through the review of medical device reports, review of medical literature, and collaboration with international regulators, scientific experts, ASPS, ASAPS, ISAPS, and other organizations.

As of August 23, 2017, the FDA updated its recommendations on BIA-ALCL and subsequently requested all breast implant manufacturers to revise their physician and patient labeling with the most up-to-date information. The FDA has continued to monitor these matters, and on February 6, 2019 issued a “Letter to Health Care Providers” and a public statement detailing updated medical device report (MDR) data involving BIA-ALCL, and stating that the data and published information reviewed to date suggest that patients with breast implants have an increased risk of BIA-ALCL. The FDA states: “Over time, we have strengthened our understanding of this condition. In 2016, the World Health Organization designated breast implant-associated anaplastic large cell lymphoma (BIA-ALCL) as a rare T-cell lymphoma that can develop following breast implants. The exact number of cases remains difficult to determine due to significant limitations in world-wide reporting and lack of global implant sales data.until heathcare systems resume normal activity. At this ~~time, most data suggest that BIA-ALCL occurs more frequently following implantation~~point, the duration and extent of breast implants with textured surfaces rather than those with smooth surfaces.” The FDA noted it does not recommend prophylactic breast implant removal in a patient without symptoms or other abnormality.

On March 25-26, 2019, the FDA convened a meeting of the General and Plastic Surgery Devices Panel which covered a range of topics concerning the benefit-risk profile of breast implants, including BIA-ALCL. More recently, on October 24, 2019, FDA issued a draft guidance document providing recommendations to breast implant manufacturers regarding the content and format of revised labeling information for saline and silicone gel-filled breast implants. The recommendations included a recommendation for a boxed warning that, among other things, states: “Breast implants have been associated with the risk of developing BIA-ALCL and may be associated with systemic symptoms.”

Further studies or clinical experience may indicate that breast implants, including our products, expose individuals to a more substantial risk of developing BIA-ALCL or other unexpected complications than currently anticipated. As a result, we may be exposed to increased regulatory scrutiny, negative publicity and lawsuits from any individual who may develop BIA-ALCL after using our products, any of which could have a significant negativesuch impact on our results of operations or financial condition. Moreover, if long-term results and clinical experience indicate that our products cause unexpected or serious complications, we could be subject to mandatory product recalls, suspension or withdrawal of regulatory clearances and approvals and significant legal liability.is uncertain.

If we are unsuccessful in executing our cost plan, our business and results of operations may be adversely affected.

In November 2019, we announced an organizational efficiency initiative (the “Plan”) designed to reduce spending and simplify operations to better align our cost structure to our long-term margin targets. Under the Plan, we will implement numerous initiatives to reduce spending, including closing the Santa Clara offices of miraDry, Inc. (“miraDry”), ~~outsourcing miraDry product assembly to a third party,~~ and consolidating a number of business support services via a shared services organization at our Santa Barbara headquarters. Under the Plan, we also intend to reduce our workforce in a series of targeted reductions, which we expect to be completed by the end of ~~the third quarter of~~ 2020. ~~In total, the Plan is estimated to cost between $3.7 million and $4.5 million through September 30, 2020, excluding non-cash charges.~~

We cannot provide assurance that our Plan will be successful, that anticipated cost savings will be realized, that our operations, business and financial results will improve and/or that these efforts will not disrupt our operations (beyond what is intended).

In April 2020, we implemented additional workforce reductions as cost savings measures. Our ability to achieve the anticipated cost savings and other benefits within the expected time frames is subject to many estimates and assumptions, which are subject to significant economic, competitive and other uncertainties, some of which are beyond our control. Further, we may experience delays in the timing of these efforts and/or higher than expected or unanticipated costs in implementing them. Moreover, changes in the size, alignment or organization of our workforce could adversely affect employee morale and retention, relations with customers and business partners, our ability to develop and deliver products and services as anticipated and/or impair our ability to realize our current or future business and financial objectives. If we do not succeed in these efforts, if these efforts are more costly or time-consuming than expected, if our estimates and assumptions are not correct, if we experience delays or if other unforeseen events occur, our business and results of operations may be adversely affected.

Any disruption at our facilities could adversely affect our business and operating results.

Our principal offices are located in Santa Barbara, California. Substantially all of our operations are conducted at this location, including customer service, development and management and administrative functions. Substantially all of our inventory of Breast Products is held at a second location in Santa Barbara, California, and, with the Vesta Acquisition, we manufacture our breast implants at a third location in Wisconsin. Despite our efforts to safeguard our facilities, including acquiring insurance, adopting health and safety protocols and utilizing off-site storage of computer data, vandalism, terrorism, public health crisis (such as the recent COVID-19 outbreak) or a natural or other disaster, such as an earthquake, tornado, fire or flood, could damage or destroy our inventory of finished goods, cause substantial delays in our operations, result in the loss of key information and cause us to incur additional expenses. Our insurance may not cover our losses in any particular case. In addition, regardless of the level of insurance coverage, damage to our facilities may have a material adverse effect on our business, financial condition and operating results.

We accepted a loan under the CARES Act pursuant to the Paycheck Protection Program, or the PPP, which loan may not be forgiven or may subject us to challenges and investigations regarding qualification for the loan. In addition, we may be subject to audit in connection with the loan and should we request that the loan be forgiven, the United States Small Business Administration, or SBA, will conduct a full audit in connection with the loan. If there is any adverse finding from the audit or if we are subject to any other investigation or challenge in connection with the loan, we could be required to return the full amount of the PPP loan plus interest, which could reduce our liquidity, and could be subject to significant fines, damages and penalties and our business could otherwise be adversely affected, whether or not there is an adverse finding. Such events could have a material adverse effect on our business, financial condition and results of operations.

In April 2020, we were granted a loan of $6.7 million under the PPP of the CARES Act, or the PPP Loan, all or a portion of which may be forgiven dependent on our use of proceeds. The PPP Loan matures on April 20, 2022 and bears interest at a rate of 1.0% per annum. All or a portion of the PPP Loan may be forgiven by the SBA upon submission of documentation of expenditures in accordance with the SBA’s requirements. Under the CARES Act, loan forgiveness is available for the sum of documented payroll costs, covered rent payments, covered mortgage interest and covered utilities during the 24-week period beginning on the date of loan approval. Not more than 40% of the forgiven amount may be for non-payroll costs. The amount of the PPP Loan eligible to be forgiven will be reduced if our full-time headcount declines, or if salaries and wages for employees with salaries of $100,000 or less annually are reduced by more than 25%. We will be required to repay any portion of the outstanding principal that is not forgiven, along with accrued interest, in accordance with the amortization schedule described above, and we cannot provide any assurance that we will be eligible for loan forgiveness, that we will ultimately apply for forgiveness, or that any amount of the PPP Loan will ultimately be forgiven by the SBA. Furthermore, on April 28, 2020, the Secretary of the U.S. Department of the Treasury stated that the SBA will perform a full review of any PPP loan over $2.0 million before forgiving the loan.

The PPP Loan application required us to certify, among other things, that the current economic uncertainty made the PPP Loan request necessary to support our ongoing operations. While we made this certification in good faith after analyzing, among other things, our financial situation and access to alternative forms of capital, and believe that we satisfied all eligibility criteria for the PPP Loan and that our receipt of the PPP Loan is consistent with the broad objectives of the PPP of the CARES Act, the certification described above does not contain any objective criteria and is subject to interpretation. In addition, the SBA has stated that it is unlikely that a public company with

substantial market value and access to capital markets will be able to make the required certification in good faith. The lack of clarity regarding loan eligibility under the Paycheck Protection Program has resulted in significant media coverage and controversy with respect to public companies applying for and receiving loans. If, despite our good faith belief that we satisfied all eligibility requirements for the PPP Loan, we are found to have been ineligible to receive the PPP Loan or in violation of any of the laws or governmental regulations that apply to us in connection with the PPP Loan, including the False Claims Act, we may be subject to penalties, including significant civil, criminal and administrative penalties and could be required to repay the PPP Loan. In the event that we seek forgiveness of all or a portion of the PPP Loan, we will also be required to make certain certifications which will be subject to audit and review by governmental entities and could subject us to significant penalties and liabilities if found to be inaccurate, including under the False Claims Act. In addition, our receipt of the PPP Loan may result in adverse publicity and damage to our reputation, and a review or audit by the SBA or other government entity or claims under the False Claims Act could consume significant financial and management resources. Any of these events could harm our business, results of operations and financial condition.

On November 7, 2019, the Company entered into a Master Supply Agreement (the “Supply Agreement”) with NuSil Technology LLC (“NuSil”) which provides that NuSil will serve as the exclusive supplier of the Company’s silicone materials for short and long-term implantable products (the “Silicone Products”). The Supply Agreement provides for Set Pricing and Discount Pricing that the Company is able to obtain upon reaching certain minimum purchase requirements in a calendar year. The Supply Agreement has an initial term through December 31, 2026 (the “Initial Term”) which automatically renews for subsequent one year terms (each, a “Renewal Term”), unless a party provides written notice of intent to terminate the Supply Agreement no later than six (6) months prior to expiration of the Initial Term or the then current Renewal Term. The Supply Agreement may be terminated in the event of breach following a 45 day period to cure or in the event of insolvency of a party.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		Page

Part I — Financial Information		1

Item 1. Condensed Consolidated Financial Statements - Unaudited		1
Condensed Consolidated Balance Sheets as of September 30, ~~2019~~2020 and December 31, ~~2018~~2019		1
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, ~~2019~~2020 and ~~2018~~2019		2
Condensed Consolidated Statement of Stockholders' Equity for the Period from December 31, 2018 through September 30, 2019 and December 31, 2019 through September 30, 2020		3
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, ~~2019~~2020 and ~~2018~~2019		4
Notes to the Condensed Consolidated Financial Statements		5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		25
Item 3. Quantitative and Qualitative Disclosures About Market Risk		3336
Item 4. Controls and Procedures		3436

Part II — Other Information		3538

Item 1. Legal Proceedings		3538
Item 1A. Risk Factors		3538
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		3943
Item 3. Defaults Upon Senior Securities		3943
Item 4. Mine Safety Disclosures		3943
Item 5. Other Information		3943
Item 6. Exhibits		4144

	Severance costs			Other associated costs			Duplicate operating costs
Balance at December 31, 2019	$	894		$	—		$	—
Costs charged to expense		1,467			208			174
Costs paid or otherwise settled		(1,995	)		(208	)		(174	)
Balance at September 30, 2020	$	366		$	—		$	—

	Sales return liability
Balance as of December 31, 2018	$	6,048
Addition to reserve for sales activity		74,621
Actual returns		(73,815	)
Change in estimate of sales returns		709
Balance as of September 30, 2019	$	7,563

	Nine Months Ended September 30,
	2020
Balance as of December 31, 2019	$	2,089
Additions and adjustments		2,077
Revenue recognized		(1,389	)
Balance as of September 30, 2020	$	2,777

Warrant Liability
Balance, December 31, 2018	$	113
Change in fair value of warrant liability		(110	)
Balance, September 30, 2019	$	3
Contingent Consideration Liability
Balance, December 31, 2018	$	13,847
Settlements of contingent consideration		(8,000	)
Change in fair value of contingent consideration		590
Balance, September 30, 2019	$	6,437

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

	Year Ended		Nine Months Ended		Cumulative Restructuring
	December 31, 2019		September 30, 2020		Charges
Breast Products	$	499	$	389	$	888
miraDry		584		1,460		2,044
Total	$	1,083	$	1,849	$	2,932

	Average
	Amortization		September 30, 2019
	Period		Gross Carrying		Accumulated			Intangible
	(in years)		Amount		Amortization			Assets, net
Intangibles with definite lives
Customer relationships		11	$	9,540	$	(3,412	)	$	6,128
Trade names - finite life		14		2,000		(257	)		1,743
Developed technology		13		1,500		(42	)		1,458
Non-compete agreement		2		80		(80	)		—
Regulatory approvals		1		670		(670	)		—
Acquired FDA non-gel product approval		11		1,713		(1,713	)		—
Total definite-lived intangible assets			$	15,503	$	(6,174	)	$	9,329

Intangibles with indefinite lives
Trade names - indefinite life	—			450		—			450
Total indefinite-lived intangible assets			$	450	$	—		$	450

	Average
	Amortization		December 31, 2018
	Period		Gross Carrying		Accumulated			Intangible
	(in years)		Amount		Amortization			Assets, net
Intangibles with definite lives
Customer relationships		11	$	11,240	$	(3,486	)	$	7,754
Trade names - finite life		14		5,800		(541	)		5,259
Developed technology		15		3,000		(338	)		2,662
Distributor relationships		9		500		(130	)		370
Non-compete agreement		2		80		(80	)		—
Regulatory approvals		1		670		(670	)		—
Acquired FDA non-gel product approval		11		1,713		(1,713	)		—
Total definite-lived intangible assets			$	23,003	$	(6,958	)	$	16,045

Intangibles with indefinite lives
Trade names - indefinite life	—			450		—			450
Total indefinite-lived intangible assets			$	450	$	—		$	450

Year Ended December 31:
2019	$	1,325
2020		1,134
2021		1,060
2022		947
2023 and thereafter		1,557
	$	6,023

Number		Description

~~10.1#~~		~~Confidential Settlement, Release and Consulting Agreement, dated November 4, 2019, by and between Sientra, Inc. and Charles Huiner.~~

~~10.2~~†		~~Amended and Restated Manufacturing and Supply Agreement, dated November 7, 2019, by and between Sientra, Inc. and Vesta Intermediate Funding, Inc.~~

~~10.3~~†		~~Master Supply Agreement, dated November 7, 2019, by and between Sientra, Inc. and NuSil Technology LLC.~~

31.1*		Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.

31.2*		Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.

32.1*		Certification of Principal Executive Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*		Certification of Principal Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Instance Document - the instance document does not appear in the interactive Data File because its XBRL ~~Instance Document.~~tags are embedded within the Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document.

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

	SIENTRA, INC.

November ~~7, 2019~~9, 2020	By:	/s/ Jeffrey Nugent
		Jeffrey Nugent
		Chairman and Chief Executive Officer
��
November ~~7, 2019~~9, 2020	By:	/s/ Paul Little
		Paul Little
		Chief Financial Officer and Treasurer