Prospectus Filed Pursuant to Rule 424(b)(3) (424b3)
06 Maio 2022 - 6:13PM
Edgar (US Regulatory)
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-254836
PROSPECTUS SUPPLEMENT NO. 1
To Prospectus dated April 28, 2022
BUTTERFLY NETWORK, INC.
Up to 110,352,371 Shares of Class A Common
Stock
Up to 26,426,937 Shares of Class B Common
Stock
Up to 6,853,333 Warrants
This
prospectus supplement no. 1 supplements the prospectus dated April 28, 2022, as supplemented from time to time (the “Prospectus”),
relating to the issuance by us of up to an aggregate of 20,652,790 shares of our Class A common stock, par value $0.0001 per
share (“Class A common stock”), which consists of (i) up to 6,853,333 shares of Class A common stock
that are issuable upon the exercise of private placement warrants (the “Private Placement Warrants”) originally issued
in a private placement in connection with the initial public offering of our predecessor company, Longview Acquisition Corp., a Delaware
corporation (“Longview”), at an exercise price of $11.50 per share of Class A common stock, and (ii) up to
13,799,457 shares of Class A common stock that are issuable upon the exercise of 13,799,457 warrants issued in connection with the
initial public offering of Longview (the “Public Warrants,” and together with the Private Placement Warrants, the “Warrants”).
The
Prospectus and prospectus supplement also relate to the resale from time to time by the Selling Securityholders named in the Prospectus
(the “Selling Securityholders”) of up to (i) 6,853,333 Private Placement Warrants, (ii) 6,853,333 shares
of Class A common stock that may be issued upon exercise of the Private Placement Warrants, (iii) 89,699,581 shares of
Class A common stock held by Longview’s sponsor, Longview Investors LLC (the “Sponsor”) and certain of its
transferees (the “Founder Shares”), shares of Class A common stock issued in the PIPE Financing (as defined in
the Prospectus), and shares of Class A common stock issued to our directors, officers and affiliates and the directors, officers
and affiliates of Legacy Butterfly (as defined in the Prospectus) pursuant to the Business Combination Agreement (as defined in the Prospectus),
including shares of Class A common stock that may be issued upon the exercise of stock options (the “Options”)
and the vesting of restricted stock units or upon the conversion of Class B common stock, par value $0.0001 per share (“Class B
common stock”), and (iv) 26,426,937 shares of Class B common stock issued pursuant to the Business Combination Agreement.
The Prospectus provides you with a general description
of such securities and the general manner in which we and the Selling Securityholders may offer or sell the securities. More specific
terms of any securities that we and the Selling Securityholders may offer or sell may be provided in a prospectus supplement that describes,
among other things, the specific amounts and prices of the securities being offered and the terms of the offering. The prospectus supplement
may also add, update or change information contained in the Prospectus.
We will not receive any proceeds from the sale
of shares of Class A common stock, shares of Class B common stock or Private Placement Warrants by the Selling Securityholders
or of shares of Class A common stock by us pursuant to the Prospectus, except with respect to amounts received by us upon exercise
of the Warrants or the Options. However, we will pay the expenses, other than any underwriting discounts and commissions, associated with
the sale of securities pursuant to the Prospectus.
We registered the securities for resale pursuant
to the Selling Securityholders’ registration rights under certain agreements between us and the Selling Securityholders. Our registration
of the securities covered by the Prospectus does not mean that either we or the Selling Securityholders will issue, offer or sell, as
applicable, any of the securities. The Selling Securityholders may offer and sell the securities covered by the Prospectus in a number
of different ways and at varying prices. We provide more information about how the Selling Securityholders may sell the shares or Warrants
in the section entitled “Plan of Distribution” in the Prospectus.
This prospectus supplement incorporates into the
Prospectus the information contained in our attached quarterly report on Form 10-Q, which was filed with the Securities and Exchange
Commission on May 6, 2022.
You should read this prospectus supplement in
conjunction with the Prospectus, including any supplements and amendments thereto. This prospectus supplement is qualified by reference
to the Prospectus except to the extent that the information in the prospectus supplement supersedes the information contained in the Prospectus.
This prospectus supplement is not complete without, and may not be delivered or utilized except in connection with, the Prospectus, including
any supplements and amendments thereto.
Our Class A common stock and Public Warrants
are listed on the NYSE under the symbols “BFLY” and “BFLY WS,” respectively. On May 5, 2022, the closing
price of our Class A common stock was $3.20 and the closing price for our Public Warrants was $0.518.
Investing in our securities involves a high
degree of risk. See “Risk Factors” beginning on page 12 of the Prospectus.
Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement of the
Prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus supplement is May 6,
2022.
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT
OF 1934
For
the quarterly period ended March 31, 2022
or
☐TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT
OF 1934
For
the transition period from
to
Commission
File Number: 001-39292
Butterfly
Network, Inc.
(Exact
name of registrant as specified in its charter)
|
|
|
Delaware |
|
84-4618156 |
(State or other jurisdiction of incorporation
or organization) |
|
(IRS Employer
Identification No.) |
|
|
|
530
Old Whitfield Street
Guilford,
Connecticut |
|
06437 |
(Address of principal executive offices) |
|
(Zip Code) |
(203)
689-5650
(Registrant’s
telephone number, including area code)
Securities registered
pursuant to Section 12(b) of the Act:
|
|
|
|
|
Title
of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange
on which
registered |
Class A common stock, par value $0.0001
per share |
|
BFLY |
|
The New York Stock Exchange |
Warrants to purchase one share of
Class A common stock, each at an exercise price of $11.50 per share |
|
BFLY WS |
|
The New York Stock Exchange |
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No
☐
Indicate by check mark whether the registrant is a
large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See
the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and
“emerging growth company” in Rule 12b-2 of the Exchange Act.
|
|
|
|
|
|
Large accelerated filer |
☒ |
Accelerated filer |
¨ |
|
|
|
|
|
|
|
|
Non-accelerated filer |
¨ |
Smaller reporting company |
☐ |
Emerging growth company |
☐ |
If an emerging growth company, indicate
by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of May 1, 2022, the registrant had 172,529,719 shares
of Class A common stock outstanding and 26,426,937 shares of Class B common stock outstanding.
TABLE
OF CONTENTS
In
this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,”
the “Company” and “Butterfly” mean Butterfly Network, Inc. (formerly Longview Acquisition Corp.) and our subsidiaries.
On February 12, 2021 (the “Closing Date”), Longview Acquisition Corp., a Delaware corporation (“Longview”
and after the Business Combination described herein, the “Company”), consummated a business combination (the “Business
Combination”) pursuant to the terms of the Business Combination Agreement, dated as of November 19, 2020 (the “Business
Combination Agreement”), by and among Longview, Clay Merger Sub, Inc., a Delaware corporation (“Merger Sub”), and
Butterfly Network, Inc., a Delaware corporation (“Legacy Butterfly”). Immediately upon the consummation of the Business
Combination and the other transactions contemplated by the Business Combination Agreement (collectively, the “Transactions”,
and such completion, the “Closing”), Merger Sub merged with and into Legacy Butterfly, with Legacy Butterfly surviving the
Business Combination as a wholly-owned subsidiary of Longview (the “Merger”). In connection with the Transactions, Longview
changed its name to “Butterfly Network, Inc.” and Legacy Butterfly changed its name to “BFLY Operations, Inc.”
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This
Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of
1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), that relate to future events or our future financial performance regarding, among other things, the plans, strategies and
prospects, both business and financial, of the Company. These statements are based on the beliefs and assumptions of the Company’s
management team. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions,
business strategies, events or results of operations, are forward-looking statements. Forward-looking statements contained in this Quarterly
Report on Form 10-Q include, but are not limited to, statements about:
|
● |
the
commercialization of our products and services; |
|
● |
the
success, cost and timing of our product development activities; |
|
● |
the
potential attributes and benefits of our products and services; |
|
● |
our
ability to obtain and maintain regulatory approval for our products, and any related restrictions and limitations of any authorized product; |
|
● |
our
ability to identify, in-license or acquire additional technology; |
|
● |
our
ability to maintain our existing license, manufacturing and supply agreements; |
|
● |
our
ability to compete with other companies currently marketing or engaged in the development of ultrasound imaging devices, many of which
have greater financial and marketing resources than us; |
|
● |
the
size and growth potential of the markets for our products and services, and the ability of each to serve those markets, either alone or
in partnership with others; |
|
● |
our
estimates regarding expenses, revenue, capital requirements and needs for additional financing; |
|
● |
our
ability to raise financing in the future; |
|
● |
our
financial performance; and |
|
● |
the
potential impacts of the COVID-19 pandemic on our business, financial condition and results of operations. |
These
statements may be preceded by, followed by or include the words “believes,” “estimates,” “expects,”
“projects,” “forecasts,” “may,” “will,” “should,” “seeks,” “plans,”
“scheduled,” “anticipates” or “intends” or similar expressions or phrases, or the negative of those
expressions or phrases. The forward-looking statements are based on projections prepared by, and are the responsibility of, the Company’s
management. Although the Company believes that its plans, intentions and expectations reflected in or suggested by these forward-looking
statements are reasonable, the Company cannot assure you that it will achieve or realize these plans, intentions or expectations. Forward-looking
statements are inherently subject to risks, uncertainties and assumptions relating to, among other things:
|
● |
our
rapid growth may not be sustainable and depends on our ability to attract and retain customers; |
|
● |
our
business could be harmed if we fail to manage our growth effectively; |
|
● |
our
projections are subject to risks, assumptions, estimates and uncertainties; |
|
● |
our
business is subject to a variety of U.S. and foreign laws, which are subject to change and could adversely affect our business; |
|
● |
the
pricing of our products and services and reimbursement for medical procedures conducted using our products and services; |
|
● |
changes
in applicable laws or regulations; |
|
● |
failure
to protect or enforce our intellectual property rights could harm our business, results of operations and financial condition; |
|
● |
the
ability to maintain the listing of our Class A common stock on the New York Stock Exchange; |
|
● |
economic
downturns and political and market conditions beyond our control could adversely affect our business, financial condition and results
of operations; and |
|
● |
the
impact of the COVID-19 pandemic on our business, financial condition and results of operations. |
These
and other risks and uncertainties are described in greater detail under the caption “Risk Factors” in Item 1A of Part I
of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as amended, in Item 1A of Part II of
this quarterly report, and in other filings that we make with the Securities and Exchange Commission, or SEC. The risks described
under the heading “Risk Factors” are not exhaustive. New risk factors emerge from time to time, and it is not possible
to predict all such risk factors, nor can the Company assess the impact of all such risk factors on its business or the extent to which
any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements.
Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements, which speak only
as of the date hereof. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified
in their entirety by the foregoing cautionary statements. The Company undertakes no obligations to update or revise publicly any forward-looking
statements, whether as a result of new information, future events or otherwise, except as required by law.
PART
I — FINANCIAL INFORMATION
Item 1. Financial Statements
BUTTERFLY
NETWORK, INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(In
thousands, except share and per share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
|
|
2022 |
|
2021 |
|
Assets |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
359,901 |
|
$ |
422,841 |
|
Accounts receivable, net |
|
|
13,071 |
|
|
11,936 |
|
Inventories |
|
|
48,354 |
|
|
36,243 |
|
Current portion of vendor advances |
|
|
29,424 |
|
|
27,500 |
|
Prepaid expenses and other current assets |
|
|
23,556 |
|
|
13,384 |
|
Total
current assets |
|
$ |
474,306 |
|
$ |
511,904 |
|
Property and equipment, net |
|
|
22,767 |
|
|
14,703 |
|
Non-current portion of vendor advances |
|
|
7,452 |
|
|
12,782 |
|
Operating lease assets |
|
|
23,524 |
|
|
24,083 |
|
Other non-current assets |
|
|
7,371 |
|
|
8,493 |
|
Total assets |
|
$ |
535,420 |
|
$ |
571,965 |
|
Liabilities
and stockholders’ equity |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Accounts payable |
|
$ |
2,683 |
|
$ |
5,798 |
|
Deferred revenue, current |
|
|
13,359 |
|
|
13,071 |
|
Accrued purchase commitments, current |
|
|
5,743 |
|
|
5,329 |
|
Accrued expenses and other current liabilities |
|
|
28,922 |
|
|
25,631 |
|
Total
current liabilities |
|
$ |
50,707 |
|
$ |
49,829 |
|
Deferred revenue, non-current |
|
|
6,272 |
|
|
5,476 |
|
Warrant liabilities |
|
|
21,066 |
|
|
26,229 |
|
Accrued purchase commitments, non-current |
|
|
13,786 |
|
|
14,200 |
|
Operating lease liabilities |
|
|
30,097 |
|
|
27,690 |
|
Other non-current liabilities |
|
|
828 |
|
|
850 |
|
Total liabilities |
|
$ |
122,756 |
|
$ |
124,274 |
|
Commitments
and contingencies (Note 14) |
|
|
|
|
|
|
|
Stockholders’
equity: |
|
|
|
|
|
|
|
Class A common stock $.0001 par value;
600,000,000 shares authorized at March 31, 2022 and December 31, 2021; 172,523,557 and 171,613,049 shares issued and outstanding at March
31, 2022 and December 31, 2021, respectively |
|
|
17 |
|
|
17 |
|
Class B common stock $.0001 par value;
27,000,000 shares authorized at March 31, 2022 and December 31, 2021; 26,426,937 shares issued and outstanding at March 31, 2022 and December
31, 2021 |
|
|
3 |
|
|
3 |
|
Additional paid-in capital |
|
|
884,336 |
|
|
874,886 |
|
Accumulated deficit |
|
|
(471,692) |
|
|
(427,215) |
|
Total stockholders’
equity |
|
$ |
412,664 |
|
$ |
447,691 |
|
Total liabilities
and stockholders’ equity |
|
$ |
535,420 |
|
$ |
571,965 |
|
The accompanying
notes are an integral part of these condensed consolidated financial statements.
BUTTERFLY NETWORK, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands,
except share and per share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three
months ended March 31, |
|
|
|
2022 |
|
2021 |
|
Revenue: |
|
|
|
|
|
|
|
Product |
|
$ |
11,014 |
|
$ |
9,595 |
|
Subscription |
|
|
4,560 |
|
|
2,848 |
|
Total
revenue |
|
$ |
15,574 |
|
$ |
12,443 |
|
Cost of revenue: |
|
|
|
|
|
|
|
Product |
|
|
6,149 |
|
|
5,648 |
|
Subscription |
|
|
1,083 |
|
|
379 |
|
Total
cost of revenue |
|
$ |
7,232 |
|
$ |
6,027 |
|
Gross
profit |
|
$ |
8,342 |
|
$ |
6,416 |
|
Operating expenses: |
|
|
|
|
|
|
|
Research and development |
|
$ |
23,623 |
|
$ |
15,716 |
|
Sales and marketing |
|
|
15,202 |
|
|
9,808 |
|
General and administrative |
|
|
19,050 |
|
|
34,640 |
|
Total
operating expenses |
|
|
57,875 |
|
|
60,164 |
|
Loss from
operations |
|
$ |
(49,533) |
|
$ |
(53,748) |
|
Interest income |
|
$ |
10 |
|
$ |
239 |
|
Interest expense |
|
|
— |
|
|
(638) |
|
Change in fair value of warrant liabilities |
|
|
5,163 |
|
|
54,112 |
|
Other income (expense), net |
|
|
(100) |
|
|
(631) |
|
Loss before
provision for income taxes |
|
$ |
(44,460) |
|
$ |
(666) |
|
Provision for income taxes |
|
|
17 |
|
|
24 |
|
Net loss
and comprehensive loss |
|
$ |
(44,477) |
|
$ |
(690) |
|
Net loss per common share attributable
to Class A and B common stockholders, basic and diluted |
|
$ |
(0.22) |
|
$ |
(0.01) |
|
Weighted-average shares used to compute
net loss per share attributable to Class A and B common stockholders, basic and diluted |
|
|
199,000,258 |
|
|
105,916,706 |
|
The
accompanying notes are an integral part of these condensed consolidated financial statements.
BUTTERFLY
NETWORK, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
(In thousands,
except share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended March 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible |
|
|
Class
A |
|
Class
B |
|
|
|
|
|
|
|
|
|
|
|
Preferred |
|
|
Common |
|
Common |
|
Additional |
|
|
|
|
Total |
|
|
Stock |
|
|
Stock |
|
Stock |
|
Paid-In |
|
Accumulated |
|
Stockholders’ |
|
|
Shares |
|
Amount |
|
|
Shares |
|
Amount |
|
Shares |
|
Amount |
|
Capital |
|
Deficit |
|
Equity
(Deficit) |
December 31, 2020 |
|
107,197,118 |
|
$ |
360,937 |
|
|
6,593,291 |
|
$ |
1 |
|
— |
|
$ |
— |
|
$ |
32,874 |
|
$ |
(394,806) |
|
$ |
(361,931) |
Net loss |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
(690) |
|
|
(690) |
Common stock issued upon exercise of
stock options |
|
— |
|
|
— |
|
|
3,155,050 |
|
|
— |
|
— |
|
|
— |
|
|
6,313 |
|
|
— |
|
|
6,313 |
Conversion of convertible preferred
stock |
|
(107,197,118) |
|
|
(360,937) |
|
|
80,770,178 |
|
|
8 |
|
26,426,937 |
|
|
3 |
|
|
360,926 |
|
|
— |
|
|
360,937 |
Conversion of convertible debt |
|
— |
|
|
— |
|
|
5,115,140 |
|
|
1 |
|
— |
|
|
— |
|
|
49,916 |
|
|
— |
|
|
49,917 |
Net equity infusion from the Business
Combination |
|
— |
|
|
— |
|
|
69,228,811 |
|
|
6 |
|
— |
|
|
— |
|
|
361,281 |
|
|
— |
|
|
361,287 |
Stock-based compensation expense |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
— |
|
|
— |
|
|
20,330 |
|
|
— |
|
|
20,330 |
March 31, 2021 |
|
— |
|
$ |
— |
|
|
164,862,470 |
|
$ |
16 |
|
26,426,937 |
|
$ |
3 |
|
$ |
831,640 |
|
$ |
(395,496) |
|
$ |
436,163 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended March 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class
A |
|
Class
B |
|
|
|
|
|
|
|
|
|
|
|
Common |
|
Common |
|
Additional |
|
|
|
|
Total |
|
|
Stock |
|
Stock |
|
Paid-In |
|
Accumulated |
|
Stockholders’ |
|
|
Shares |
|
Amount |
|
Shares |
|
Amount |
|
Capital |
|
Deficit |
|
Equity |
December 31, 2021 |
|
171,613,049 |
|
$ |
17 |
|
26,426,937 |
|
$ |
3 |
|
$ |
874,886 |
|
$ |
(427,215) |
|
$ |
447,691 |
Net loss |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
(44,477) |
|
|
(44,477) |
Common stock issued upon exercise of
stock options and warrants |
|
264,016 |
|
|
— |
|
— |
|
|
— |
|
|
651 |
|
|
— |
|
|
651 |
Common stock issued upon vesting of
restricted stock units, net |
|
646,492 |
|
|
— |
|
— |
|
|
— |
|
|
(106) |
|
|
— |
|
|
(106) |
Stock-based compensation expense |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
8,905 |
|
|
— |
|
|
8,905 |
March 31, 2022 |
|
172,523,557 |
|
$ |
17 |
|
26,426,937 |
|
$ |
3 |
|
$ |
884,336 |
|
$ |
(471,692) |
|
$ |
412,664 |
The
accompanying notes are an integral part of these condensed consolidated financial statements.
BUTTERFLY
NETWORK, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
Three
months ended March 31, |
|
|
2022 |
|
2021 |
Cash flows from operating activities: |
|
|
|
|
|
|
Net loss |
|
$ |
(44,477) |
|
$ |
(690) |
Adjustments to reconcile net loss to
net cash used in operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
839 |
|
|
458 |
Non-cash interest expense on convertible debt |
|
|
— |
|
|
389 |
Stock-based compensation expense |
|
|
8,730 |
|
|
20,298 |
Change in fair value of warrant liabilities |
|
|
(5,163) |
|
|
(54,112) |
Other |
|
|
40 |
|
|
397 |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Accounts receivable |
|
|
(1,179) |
|
|
585 |
Inventories |
|
|
(12,111) |
|
|
(10,324) |
Prepaid expenses and other assets |
|
|
(5,455) |
|
|
(6,114) |
Vendor advances |
|
|
3,406 |
|
|
(1,744) |
Accounts payable |
|
|
(3,176) |
|
|
(11,000) |
Deferred revenue |
|
|
1,084 |
|
|
2,329 |
Change in operating lease assets and liabilities |
|
|
622 |
|
|
(306) |
Accrued expenses and other liabilities |
|
|
2,606 |
|
|
(3,593) |
Net cash
used in operating activities |
|
$ |
(54,234) |
|
$ |
(63,427) |
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
Purchases of marketable securities |
|
|
— |
|
|
(691,908) |
Sales of marketable securities |
|
|
— |
|
|
165,000 |
Purchases of property and equipment, including capitalized software |
|
|
(4,506) |
|
|
(1,289) |
Net cash
used in investing activities |
|
$ |
(4,506) |
|
$ |
(528,197) |
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
Proceeds from exercise of stock options and warrants |
|
|
651 |
|
|
6,283 |
Net proceeds from equity infusion from the Business Combination |
|
|
— |
|
|
548,403 |
Payment of loan payable |
|
|
— |
|
|
(4,366) |
Other financing activities |
|
|
(101) |
|
|
(52) |
Net cash
provided by financing activities |
|
$ |
550 |
|
$ |
550,268 |
Net (decrease)
increase in cash, cash equivalents and restricted cash |
|
$ |
(58,190) |
|
$ |
(41,356) |
Cash, cash equivalents and restricted
cash, beginning of period |
|
|
426,841 |
|
|
60,206 |
Cash, cash equivalents and restricted
cash, end of period |
|
$ |
368,651 |
|
$ |
18,850 |
The
accompanying notes are an integral part of these condensed consolidated financial statements.
BUTTERFLY
NETWORK, INC.
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Organization
and Description of Business
Butterfly
Network, Inc., formerly known as Longview Acquisition Corp. (the “Company” or “Butterfly”), was incorporated
in Delaware on February 4, 2020. The Company’s legal name became Butterfly Network, Inc. following the closing of the business
combination discussed in Note 3 “Business Combination”. The prior period financial information represents the financial results
and condition of BFLY Operations, Inc. (formerly Butterfly Network, Inc.).
The Company is an innovative digital
health business transforming care with hand-held, whole body ultrasound. Powered by its proprietary Ultrasound-on-Chip™ technology,
the solution enables the acquisition of imaging information from an affordable, powerful device that fits in a healthcare professional’s
pocket with a combination of cloud-connected software and hardware technology.
The Company operates
wholly-owned subsidiaries in Australia, Germany, Netherlands, the United Kingdom and Taiwan.
Although the Company
has incurred recurring losses in each year since inception, the Company expects its cash and cash equivalents will be sufficient to fund
operations for at least the next twelve months.
Note 2. Summary
of Significant Accounting Policies
Basis
of Presentation and Principles of Consolidation
The
accompanying condensed consolidated financial statements include the accounts of Butterfly Network, Inc. and its wholly-owned subsidiaries
and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”)
and pursuant to the accounting disclosure rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding
interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance
with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial
statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s audited
consolidated financial statements as of and for the years ended December 31, 2021 and 2020. All intercompany balances and transactions
are eliminated upon consolidation.
The
condensed consolidated balance sheet as of December 31, 2021, included herein, was derived from the audited consolidated financial statements
as of that date, but does not include all disclosures, including certain notes required by U.S. GAAP, required on an annual reporting
basis.
In
the opinion of management, the accompanying condensed consolidated financial statements reflect all normal recurring adjustments necessary
to present fairly the financial position, results of operations, and cash flows for the interim periods. The results for the three months
ended March 31, 2022 are not necessarily indicative of the results to be expected for any subsequent quarter, the year ending December
31, 2022, or any other period.
Except
as described elsewhere in the notes, there have been no material changes to the Company’s significant accounting policies as described
in the audited consolidated financial statements as of December 31, 2021 and 2020.
COVID-19
Outbreak
The
COVID-19 pandemic that began in 2020 has created significant global economic uncertainty and has impacted the Company’s operating
results, financial condition and cash flows. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s
business, results of operations and financial condition will depend on future developments that are highly uncertain, including
those that result from new information that may emerge concerning COVID-19, the economic impacts of the COVID-19 pandemic and the actions
taken to contain the COVID-19 pandemic or address its impacts.
The Company has
not incurred any significant impairment losses in the carrying values of its assets as a result of the COVID-19 pandemic and is not aware
of any specific related event or circumstance that would require the Company to revise the estimates reflected in its financial statements.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentration of credit risk consist principally of cash and cash equivalents, and
accounts receivable. At March 31, 2022, substantially all of the Company’s cash and cash equivalents were invested in money market
accounts at one financial institution. The Company also maintains balances in various operating accounts above federally insured limits.
The Company has not experienced any significant losses on such accounts and does not believe it is exposed to any significant credit risk
on cash and cash equivalents.
One
customer accounted for 14% and 15% of the Company’s accounts receivable as of March 31, 2022 and December 31, 2021, respectively.
For the three months ended March 31, 2022 and 2021, no customer accounts for more than 10% of the total revenues.
Segment
Information
The
Company’s Chief Operating Decision Maker, its Chief Executive Officer (“CEO”), reviews the financial information presented
on a consolidated basis for purposes of allocating resources and evaluating its financial performance. Accordingly, the Company has determined
that it operates in a single reportable segment. Substantially all of the Company’s long-lived assets are located in the United
States. Since the Company operates in one operating segment, all required financial segment information can be found in the condensed
consolidated financial statements.
Use
of Estimates
The
Company makes estimates and assumptions about future events that affect the amounts reported in its condensed consolidated financial statements
and accompanying notes. Future events and their effects cannot be determined with certainty. On an ongoing basis, management evaluates
these estimates, judgments and assumptions.
The Company bases
its estimates on historical and anticipated results and trends and on various other assumptions that the Company believes are reasonable
under the circumstances, including assumptions as to future events. Changes in estimates are recorded in the period in which they become
known. Actual results could differ from those estimates, and any such differences may be material to the Company’s condensed consolidated
financial statements. There have been no material changes to the Company’s use of estimates as described in the audited consolidated
financial statements as of December 31, 2021.
Note 3. Business Combination
On February 12, 2021 (the
“Closing” or the “Closing Date”), the Company consummated the business combination (the “Business Combination”)
with Butterfly Network, Inc. (“Legacy Butterfly”). In connection with the Business Combination and the transactions related
to the Business Combination (the “Transactions”), Legacy Butterfly merged with and into a wholly owned subsidiary of the Company,
with Legacy Butterfly surviving the Business Combination as a wholly owned subsidiary of the Company (the “Merger”). The Merger
was accounted for as a reverse recapitalization in accordance with U.S. GAAP primarily due to the
fact that Legacy Butterfly stockholders continue to control the Company following the Closing of the Business Combination.
The
most significant change in the post-combination Company’s reported financial position and results was an increase in cash of $589.5 million.
The Company as the accounting acquirer incurred $11.4 million in transaction costs relating to the Business Combination, which has
been offset against the gross proceeds recorded in additional paid-in capital in the condensed consolidated statements of changes in convertible
preferred stock and stockholders’ equity (deficit). The Company on the date of Closing used proceeds of the Transactions to pay
off $30.9 million, representing all significant liabilities of the acquiree excluding the warrant liability. As of the date of the
Closing, the Company recorded net liabilities of $186.5 million with a corresponding offset to additional paid-in capital. The net liabilities
include warrant liabilities of $187.3 million and other insignificant assets and liabilities.
Note 4. Revenue
Recognition
Disaggregation
of Revenue
The
Company disaggregates revenue from contracts with customers by product type and by geographical market. The Company believes that these
categories aggregate the payor types by nature, amount, timing and uncertainty of their revenue streams. The following table summarizes
the Company’s disaggregated revenues (in thousands) for the three months ended March 31, 2022 and 2021:
|
|
|
|
|
|
|
|
|
|
|
|
Pattern of |
|
Three
months ended March 31, |
|
|
|
Recognition |
|
2022 |
|
2021 |
|
By Product
Type: |
|
|
|
|
|
|
|
|
|
Devices and accessories |
|
Point-in-time |
|
$ |
11,014 |
|
$ |
9,595 |
|
Subscription services and other services |
|
Over time |
|
|
4,560 |
|
|
2,848 |
|
Total
revenue |
|
|
|
$ |
15,574 |
|
$ |
12,443 |
|
By Geographical
Market: |
|
|
|
|
|
|
|
|
|
United States |
|
|
|
$ |
11,304 |
|
$ |
8,896 |
|
International |
|
|
|
|
4,270 |
|
|
3,547 |
|
Total
revenue |
|
|
|
$ |
15,574 |
|
$ |
12,443 |
|
Contract
Balances
Contract balances
represent amounts presented in the condensed consolidated balance sheets when either the Company has transferred goods or services to
the customer, or the customer has paid consideration to the Company under the contract. These contract balances include trade accounts
receivable and deferred revenue. Deferred revenue represents cash consideration received from customers for services that are transferred
to the customer over the respective subscription period. The accounts receivable balances represent amounts billed to customers for goods
and services where the Company has an unconditional right to payment of the amount billed.
The
Company recognizes a receivable when it has an unconditional right to payment, and payment terms are typically 30 days for all product
and service sales. The allowance for doubtful accounts was $0.4 million as of March 31, 2022 and December 31, 2021.
The
amount of revenue recognized during the three months ended March 31, 2022 and 2021 that was included in the deferred revenue balance
at the beginning of the period was $4.7 million and $3.3 million, respectively.
The
Company incurs incremental costs of obtaining contracts and costs of fulfilling contracts with customers. The amount of costs capitalized
for the periods presented herein was not significant.
Transaction
Price Allocated to Remaining Performance Obligations
On March 31, 2022,
the Company had $22.8 million of remaining performance obligations. The Company expects to recognize 65% of its remaining performance
obligations as revenue in the next twelve months, and an additional 35% thereafter.
Note 5. Fair Value
of Financial Instruments
Fair
value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and
specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment,
they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair value.
The
Company measures fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an
orderly transaction between market participants at the reporting date. The Company utilizes a three-tier hierarchy, which prioritizes
the inputs used in the valuation methodologies in measuring fair value:
|
● |
Level
1 — Valuations
based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access. |
|
● |
Level
2 — Valuations
based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets that are not active,
or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. |
|
● |
Level
3 — Valuations
based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The Company has no assets or liabilities valued with Level 3 inputs. |
The
carrying value of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximates their fair values
due to the short-term or on-demand nature of these instruments.
There
were no transfers between fair value measurement levels during the periods ended March 31, 2022 and December 31, 2021.
The Company determined the fair
value of its Public Warrants (defined in Note 13) as Level 1 financial instruments, as they are traded in active markets. Because
any transfer of Private Warrants (defined in Note 13) from the initial holder of the Private Warrants would result in the Private Warrants
having substantially the same terms as the Public Warrants, management determined that the fair value of each Private Warrant is the same
as that of a Public Warrant. Accordingly, the Private Warrants are classified as Level 2 financial instruments.
The
following table summarizes the Company’s assets and liabilities that are measured at fair value on a recurring basis, by level,
within the fair value hierarchy (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurement Level |
|
|
Total |
|
Level 1 |
|
Level 2 |
|
Level 3 |
March 31, 2022: |
|
|
|
|
|
|
|
|
|
|
|
|
Warrants: |
|
|
|
|
|
|
|
|
|
|
|
|
Public Warrants |
|
$ |
14,076 |
|
$ |
14,076 |
|
$ |
— |
|
$ |
— |
Private Warrants |
|
|
6,990 |
|
|
— |
|
|
6,990 |
|
|
— |
Total
liabilities at fair value on a recurring basis |
|
$ |
21,066 |
|
$ |
14,076 |
|
$ |
6,990 |
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2021: |
|
|
|
|
|
|
|
|
|
|
|
|
Warrants: |
|
|
|
|
|
|
|
|
|
|
|
|
Public Warrants |
|
$ |
17,525 |
|
$ |
17,525 |
|
$ |
— |
|
$ |
— |
Private Warrants |
|
|
8,704 |
|
|
— |
|
|
8,704 |
|
|
— |
Total
liabilities at fair value on a recurring basis |
|
$ |
26,229 |
|
$ |
17,525 |
|
$ |
8,704 |
|
$ |
— |
Note 6. Inventories
A
summary of inventories is as follows at March 31, 2022 and December 31, 2021 (in thousands):
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
|
2022 |
|
2021 |
Raw materials |
|
$ |
32,158 |
|
|
19,853 |
Work-in-progress |
|
|
3,583 |
|
|
1,122 |
Finished goods |
|
|
12,613 |
|
|
15,268 |
Total
inventories |
|
$ |
48,354 |
|
$ |
36,243 |
Work-in-progress
represents inventory items in intermediate stages of production by third-party manufacturers. For the three months ended March 31,
2022 and 2021, net realizable value inventory adjustments and excess and obsolete inventory charges were not significant and were recognized
in product cost of revenues.
Note 7. Property
and Equipment, Net
The
Company’s property and equipment, net consists of the following at March 31, 2022 and December 31, 2021 (in thousands):
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
|
2022 |
|
2021 |
Property and equipment, gross |
|
$ |
28,940 |
|
$ |
20,079 |
Less: accumulated depreciation and
amortization |
|
|
(6,173) |
|
|
(5,376) |
Property
and equipment, net |
|
$ |
22,767 |
|
$ |
14,703 |
The Company excluded
$2.0 million of accrued property and equipment as of March 31, 2022 from the cash used in investing activities on the condensed consolidated
statements of cash flows. The amount excluded as of March 31, 2021 was not significant.
Note 8. Restricted
Cash
A
reconciliation of cash, cash equivalents and restricted cash as of March 31, 2022 and 2021, from the condensed consolidated balance sheets
to the condensed consolidated statements of cash flows is as follows:
|
|
|
|
|
|
|
|
|
March 31, |
|
|
2022 |
|
2021 |
Reconciliation of cash, cash equivalents
and restricted cash: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
359,901 |
|
$ |
18,850 |
Restricted cash included within prepaid
expenses and other current assets |
|
|
4,750 |
|
|
— |
Restricted cash included within other
non-current assets |
|
|
4,000 |
|
|
— |
Total
cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows |
|
$ |
368,651 |
|
$ |
18,850 |
In
the second quarter of 2021, the Company delivered a $4.0 million letter of credit for the Company’s Burlington, MA lease, secured
by a deposit of the same amount with a financial institution that issued the letter of credit. The deposit is classified as restricted
cash and included in other non-current assets on the consolidated balance sheets.
In the first quarter
of 2022, the Company received $4.8 million of funding through a grant issued by the Bill & Melinda Gates Foundation (“BMGF”).
The BMGF funding is recorded on the condensed consolidated balance sheet as restricted cash upon receipt. Grant funding payments received
in advance of the contractual obligations being fulfilled are recorded as deferred grant funding as other current liabilities on the Company’s
condensed consolidated balance sheets. As of March 31, 2022, the Company has not begun to fulfill the obligations per the grant agreement.
Note 9. Accrued
Expenses and Other Current Liabilities
Accrued
expenses and other current liabilities consist of the following at March 31, 2022 and December 31, 2021 (in thousands):
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
|
2022 |
|
2021 |
Employee compensation |
|
$ |
5,846 |
|
$ |
12,746 |
Customer deposits |
|
|
934 |
|
|
1,850 |
Deferred grant funding from BMGF |
|
|
4,750 |
|
|
— |
Accrued warranty liability |
|
|
265 |
|
|
266 |
Non-income tax |
|
|
1,783 |
|
|
2,477 |
Professional fees |
|
|
4,947 |
|
|
2,797 |
Current portion of operating lease
liabilities |
|
|
1,590 |
|
|
1,391 |
Vendor advance payable |
|
|
1,775 |
|
|
— |
Other |
|
|
7,032 |
|
|
4,104 |
Total
accrued expenses and other current liabilities |
|
$ |
28,922 |
|
$ |
25,631 |
Warranty
expense activity for the three months ended March 31, 2022 and 2021 is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
Three
months ended March 31, |
|
|
|
2022 |
|
2021 |
|
Balance, beginning of period |
|
$ |
1,116 |
|
$ |
1,826 |
|
Warranty provision charged to operations |
|
|
161 |
|
|
(392) |
|
Warranty claims |
|
|
(183) |
|
|
(248) |
|
Balance,
end of period |
|
$ |
1,094 |
|
$ |
1,186 |
|
The Company classifies
its accrued warranty liability based on the timing of expected warranty activity. The future costs of expected activity greater than one year
is recorded within other non-current liabilities on the condensed consolidated balance sheet.
Note 10. Equity
Incentive Plans
During
the three months ended March 31, 2022, there were no significant changes to the Company’s 2012 Employee, Director and Consultant
Equity Incentive Plan, as amended, (the “2012 Plan”) and the Company’s Amended and Restated 2020 Equity Incentive Plan
(the “2020 Plan”). In the fiscal year 2022, pursuant to the terms of the 2020 Plan, the number of shares that may be issued
was increased automatically by 4% of the number of outstanding shares of common stock on January 1, 2022.
Stock
option activity
The following table summarizes
the changes in the Company’s outstanding stock options for the three months ended March 31, 2022:
|
|
|
|
|
Number of |
|
|
Options |
Outstanding at December 31, 2021 |
|
16,243,532 |
Granted |
|
554,863 |
Exercised |
|
(263,916) |
Forfeited |
|
(401,504) |
Outstanding at March 31, 2022 |
|
16,132,975 |
Each award will vest based on continued
service per the award agreement. The grant date fair value of the award will be recognized as stock-based compensation expense over the
requisite service period. The grant date fair value was determined using similar methods and assumptions as those previously disclosed
by the Company.
Restricted
stock unit (“RSU”) activity
The following table summarizes
the changes in the Company’s outstanding restricted stock units for the three months ended March 31, 2022:
|
|
|
|
|
Number of |
|
|
RSUs |
Outstanding at December 31, 2021 |
|
3,958,825 |
Granted |
|
7,236,796 |
Vested |
|
(666,191) |
Forfeited |
|
(111,677) |
Outstanding at March 31, 2022 |
|
10,417,753 |
Generally,
each award will vest based on continued service per the award agreement. The grant date fair value of the award will be recognized as
stock-based compensation expense over the requisite service period. The fair value of restricted stock units was estimated on the date
of grant based on the fair value of the Company’s Class A common stock.
The
Company’s total stock-based compensation expense for all equity awards for the periods presented is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
Three
months ended March 31, |
|
|
|
2022 |
|
2021 |
|
Cost of revenue – subscription |
|
$ |
10 |
|
$ |
— |
|
Research and development |
|
|
2,773 |
|
|
1,391 |
|
Sales and marketing |
|
|
1,768 |
|
|
1,674 |
|
General and administrative |
|
|
4,179 |
|
|
17,233 |
|
Total
stock-based compensation expense |
|
$ |
8,730 |
|
$ |
20,298 |
|
Note 11.
Net Loss Per Share
We
compute net loss per share of Class A and Class B common stock using the two-class method. Basic net loss per share is computed
by dividing the net loss by the weighted-average number of shares of each class of the Company’s common stock outstanding during
the period. Diluted net loss per share is computed by giving effect to all potential shares of the Company’s common stock, including
those presented in the table below, to the extent dilutive. Basic and diluted net loss per share was the same for each period presented
as the inclusion of all potential shares of the Company’s common stock outstanding would have been anti-dilutive.
As the Company
uses the two-class method required for companies with multiple classes of common stock, the following table presents the calculation of
basic and diluted net loss per share for each class of the Company’s common stock outstanding (in thousands, except share and per
share amounts):
|
|
|
|
|
|
|
|
|
|
|
Three months
ended March 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
Class
A |
|
Class
B |
|
Common
Stock |
|
Numerator: |
|
|
|
|
|
|
|
|
|
|
Allocation of undistributed earnings |
|
$ |
(38,571) |
|
$ |
(5,906) |
|
$ |
(44,477) |
|
Numerator
for basic and diluted net loss per share – loss available to common stockholders |
|
$ |
(38,571) |
|
$ |
(5,906) |
|
$ |
(44,477) |
|
Denominator: |
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding |
|
|
172,573,321 |
|
|
26,426,937 |
|
|
199,000,258 |
|
Denominator
for basic and diluted net loss per share – weighted-average common stock |
|
|
172,573,321 |
|
|
26,426,937 |
|
|
199,000,258 |
|
Basic
and diluted net loss per share |
|
$ |
(0.22) |
|
$ |
(0.22) |
|
$ |
(0.22) |
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended March 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
Class
A |
|
Class
B |
|
Common
Stock |
|
Numerator: |
|
|
|
|
|
|
|
|
|
|
Allocation of undistributed earnings |
|
$ |
(598) |
|
$ |
(92) |
|
$ |
(690) |
|
Numerator
for basic and diluted net loss per share – loss available to common stockholders |
|
$ |
(598) |
|
$ |
(92) |
|
$ |
(690) |
|
Denominator: |
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding |
|
|
91,822,338 |
|
|
14,094,368 |
|
|
105,916,706 |
|
Denominator
for basic and diluted net loss per share – weighted-average common stock |
|
|
91,822,338 |
|
|
14,094,368 |
|
|
105,916,706 |
|
Basic
and diluted net loss per share |
|
$ |
(0.01) |
|
$ |
(0.01) |
|
$ |
(0.01) |
|
For
the periods presented above, the net loss per share amounts are the same for Class A and Class B common stock because the holders of each
class are entitled to equal per share dividends or distributions in liquidation in accordance with the Certificate of Incorporation. The
undistributed earnings for each year are allocated based on the contractual participation rights of the Class A and Class B common
stock as if the earnings for the year had been distributed. As the liquidation and dividend rights are identical, the undistributed earnings
are allocated on a proportionate basis.
For
the periods presented, anti-dilutive common equivalent shares were as follows:
|
|
|
|
|
|
|
|
March 31, |
|
|
|
2022 |
|
2021 |
|
Outstanding options to purchase common
stock |
|
16,132,975 |
|
21,979,733 |
|
Outstanding restricted stock units |
|
10,166,609 |
|
3,442,557 |
|
Outstanding warrants |
|
20,652,737 |
|
20,653,333 |
|
Total
anti-dilutive common equivalent shares |
|
46,952,321 |
|
46,075,623 |
|
Note 12. Related
Party Transactions
There were no
significant changes in the nature of the Company’s related party transactions since December 31, 2021. Pursuant to a First
Addendum dated November 19, 2020 to the Amended and Restated Technology Services Agreement dated November 11, 2020 by and between the
Company, 4Catalyzer Corporation (“4Catalyzer”), and other participant companies controlled by Dr. Rothberg (the “ARTSA”),
Butterfly terminated its participation under the ARTSA immediately prior to the effective time of the Business Combination. The related-party
transactions with 4Catalyzer were not significant for the three months ended March 31, 2022 and 2021. The related-party balances
with 4Catalyzer were not significant as of March 31, 2022 and December 31, 2021.
On
February 2, 2022, an Executive Officer of the Company and an irrevocable trust previously established by a member of our board of directors
formed a limited liability company (“LLC”) to purchase real estate and entered into an operating agreement setting forth the
terms and conditions of the LLC. There was no impact as a result of this transaction to our condensed consolidated financial statements
for the three months ended March 31, 2022.
Note 13. Warrants
The Company’s outstanding
warrants include publicly traded warrants (the “Public Warrants”) which were issued as one-third of a warrant per unit during
Longview’s initial public offering on May 26, 2020 and warrants sold in a private placement to Longview’s sponsor (the “Private
Warrants”). As of March 31, 2022, there were an aggregate of 13,799,404 and 6,853,333 outstanding Public Warrants, and Private Warrants,
respectively. Each whole warrant entitles the registered holder to purchase one share of Class A common stock at an exercise price
of $11.50 per share, subject to adjustment per the warrant agreements. The warrants will expire on February 12, 2026 or earlier upon
redemption or liquidation. The Company recognizes the change in fair value of warrant liabilities in the condensed consolidated statement
of operations and comprehensive loss. During the three months ended March 31, 2022 and 2021, the number of exercises and the amount reclassified
into equity upon the exercise of the Public Warrants and Private Warrants were not significant.
Note 14. Commitments
and Contingencies
Commitments
Leases:
The
Company primarily enters into leases for office space that are classified as operating leases. Total lease cost, composed primarily
of the costs related to operating leases, was $1.2 million and $0.6 million in the three months ended March 31, 2022 and 2021, respectively.
Purchase commitments:
The
Company enters into inventory purchase commitments with third-party manufacturers in the ordinary course of business. These commitments
are generally non-cancellable and are based on sales forecasts. These agreements range from one to five-year periods and may contain fixed
or minimum annual commitments, subject to certain provisions that allow the Company to renegotiate the commitment. The aggregate amount
of minimum inventory purchase commitments as of March 31, 2022 was $103.8 million.
There
were no significant changes to the inventory supply agreement with the certain third-party manufacturing vendor during the three months
ended March 31, 2022. The Company applied the guidance in Topic 330, Inventory to assess the
purchase commitment as of March 31, 2022 and 2021 and determined that based on current conditions no change in the accrual for the purchase
commitment was required.
As
of March 31, 2022, the Company has a vendor advance of $27.3 million, net of write-downs and an accrued purchase commitment of $19.5 million
related to the agreement. The portion of the balances that is expected to be utilized in the next 12 months is included in current
assets and current liabilities in the accompanying condensed consolidated balance sheets.
Other commitments:
The
Company sponsors a 401(k) defined contribution plan covering all eligible U.S. employees. Contributions to the 401(k) plan are
discretionary. Effective January 1, 2022, the Company began making matching contributions to the 401(k) plan. The expense related
to the matching contributions was not significant for the three months ended March 31, 2022. The Company did not make any matching contributions
to the 401(k) plan for three months ended March 31, 2021.
Contingencies
The
Company is involved in litigation and legal matters from time to time, which have arisen in the normal course of business. Although the
ultimate results of these matters are not currently determinable, management does not expect that they will have a material effect on
the Company’s condensed consolidated balance sheets, statements of operations and comprehensive loss, or statements of cash flows.
On
February 16, 2022, a putative class action lawsuit, styled Rose v. Butterfly Network,
Inc., et al. was filed in the United States District Court for the District of New Jersey against
the Company, its President and Chief Executive Officer, its then Chief Financial Officer, the Chairman of its board of directors, as well
as Longview’s Chairman (who is a director of the Company), Chief Executive Officer, Chief Financial Officer and members of Longview’s
board of directors prior to the Business Combination, alleging violations of Sections 10(b), 14(a) and 20(a) of the Securities Exchange
Act of 1934, as amended, and Rules 10b-5 and 14a-9 promulgated thereunder. The alleged class consists of all persons or entities
who purchased or otherwise acquired the Company’s stock between February 16, 2021 and November 15, 2021 and/or holders as of the
record date for the special meeting of shareholders held on February 12, 2021 in connection with the approval of the Business Combination.
The lawsuit is premised upon allegations that the defendants made false and misleading statements and/or omissions about its post-Business
Combination business and financial prospects, including the impact of the COVID-19 pandemic. The Company intends to vigorously defend
against this action. The lawsuit seeks unspecified damages, together with interest thereon, as well as the costs and expenses of litigation.
There is no assurance that the Company will be successful in the defense of the litigation or that insurance will be available or adequate
to fund any potential settlement or judgment or the litigation costs of the action. The Company is unable to predict the outcome or reasonably
estimate a range of possible loss at this time.
On
March 9, 2022, Fujifilm Sonosite, Inc. (“Fujifilm”) filed a complaint against the Company, styled Fujifilm
Sonosite, Inc. v. Butterfly Network, Inc. (Case No. 1:22-cv-00309) in the United States District Court for the District of Delaware.
The complaint alleged that the iQ and iQ+ ultrasound probes, hard carrying case, and mobile device application software infringe certain
patents purportedly owned by Fujifilm. The Company intends to vigorously defend against this action. The lawsuit seeks unspecified damages
including compensatory damages, lost profits, and reasonable royalty damages, a preliminary and/or permanent injunction, pre- and post-judgment
interest, and the fees and costs of litigation. There is no assurance that the Company will be successful in the defense of the litigation
or that insurance will be available or adequate to fund any potential settlement or judgment or the fees and costs of the litigation.
The Company is unable to predict the outcome or reasonably estimate a range of possible loss at this time.
The Company enters
into agreements that contain indemnification provisions with other parties in the ordinary course of business, including business partners,
investors, contractors, customers and the Company’s officers, directors and certain employees. The Company has agreed to indemnify
and defend the indemnified party claims and related losses suffered or incurred by the indemnified party from actual or threatened third-party
claims because of the Company’s activities or non-compliance with certain representations and warranties made by the Company. It
is not possible to determine the maximum potential loss under these indemnification provisions due to the Company’s limited history
of prior indemnification claims and the unique facts and circumstances involved in any particular case. To date, losses recorded in the
Company’s condensed consolidated statements of operations and comprehensive loss in connection with the indemnification provisions
have not been material.
Item 2. Management’s
Discussion and Analysis of Financial Condition and Results of Operations
The
following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our
condensed consolidated results of operations and financial condition. The discussion should be read in conjunction with the unaudited
condensed consolidated financial statements and notes thereto contained in this Quarterly Report on Form 10-Q and the consolidated financial
statements and notes thereto for the year ended December 31, 2021 contained in our Annual Report on Form 10-K for the year ended December
31, 2021, as amended. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but
not limited to, those described in the “Risk Factors” sections of our Annual Report on Form 10-K for the year ended December
31, 2021, as amended, and of this Quarterly Report on Form 10-Q. Actual results may differ materially from those contained in any forward-looking
statements. Unless the context otherwise requires, references to “we”, “us”, “our”, and “the
Company” are intended to mean the business and operations of Butterfly Network, Inc. and its consolidated subsidiaries. The unaudited
condensed consolidated financial statements for the three months ended March 31, 2022 and 2021, respectively, present the financial position
and results of operations of Butterfly Network, Inc. and its wholly-owned subsidiaries.
Overview
We are an innovative digital health
business transforming care with hand-held, whole body ultrasound. Powered by our proprietary Ultrasound-on-Chip™ technology, our
solution enables the acquisition of imaging information from an affordable, powerful device that fits in a healthcare professional’s
pocket with a unique combination of cloud-connected software and hardware technology that is easily accessed through a mobile app.
Butterfly iQ+ is an ultrasound
transducer that can perform whole-body imaging in a single handheld probe using semiconductor technology. Our Ultrasound-on-Chip™
makes ultrasound more accessible outside of large healthcare institutions, while our software is intended to make the product easy to
use and fully integrated with the clinical workflow, accessible on a user’s smartphone, tablet, and almost any hospital computer
system connected to the Internet. Butterfly aims to enable the delivery of imaging information anywhere at point-of-care to drive earlier
detection throughout the body and remote management of health conditions. We market and sell the Butterfly system, which includes
probes and related accessories and software subscriptions, to healthcare systems, physicians and healthcare providers through a direct
sales force, distributors and our eCommerce channel.
COVID-19
The
COVID-19 pandemic that began in 2020 has created significant global economic uncertainty. Uncertainty remains regarding the extent, timing
and duration of the pandemic, including the emergence of new strains of the virus that may be more contagious or virulent and the extent
to which the availability of vaccines and other safety measures will positively impact public health conditions. The uncertainty and potential
economic volatility impact our customer base, supply chains, business practices and employees.
The COVID-19 pandemic and its economic
impact have caused financial strain on our customer base due to decreased funding and other revenue shortfalls. During the pandemic, we
have seen our customer base become further strained in solving immediate problems associated with the variants. As a result, some of our
customers have had to shift their attention to these pressing issues, resulting in longer sales cycles and slower adoption in the near
term.
In addition, the issues originally
brought on by COVID-19 continue to have an ongoing adverse impact on global supply chains, including ours. We have experienced constraints
in availability, increasing lead times and costs required to obtain some inventory components; however, the semiconductor chips used in
our probes are manufactured under an inventory supply agreement and to date we have not experienced any constraints. We have and will
continue to implement operating efficiencies in our supply chain and manufacturing processes to help offset the cost increases in component
parts for our device.
The pandemic caused us to make
modifications to our business practices, including work from home policies, establishing strict health and safety protocols for our offices
specific to COVID-19 and imposing restrictions on employee travel. Our employees have resumed traveling to perform sales-generating and
corporate activities, and we have opened our offices
and have allowed employees at their
discretion to return to our offices. We are designing and implementing a plan to allow employees safely to resume work in the office on
a more regular basis.
We continue to closely monitor
the developments of COVID-19 for any material impact on our business. Given the uncertainty and potential economic volatility of the impact
of the COVID-19 pandemic, the developments we have experienced may change based on new information that may emerge concerning COVID-19,
its economic impact on local, regional, national and international markets and the actions to contain it or address its impacts.
Key Performance Metrics
We
review the key performance measures discussed below to evaluate the business and measure performance, identify trends, formulate plans
and make strategic decisions. Our key performance metrics may fluctuate over time as the adoption of our devices increases which may shift
the revenue mix more toward subscriptions. The quarterly metrics may be impacted by the timing of device sales.
Units
fulfilled
We
define units fulfilled as the number of devices whereby control is transferred to a customer. We do not adjust this metric for returns
as our volume of returns has historically been low. We view units fulfilled as a key indicator of the growth of our business. We believe
that this metric is useful to investors because it presents our core growth and performance of our business period over period.
Units
fulfilled increased by 93, or 1.9%, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021, primarily
due to increased sales from our veterinary, distributor and direct sales force channels. The increase
was partially offset by slowing sales in our e-commerce channel.
Subscription
Mix
We
define subscription mix as a percentage of our total revenue recognized in a reporting period that is subscription-based, consisting
primarily of our software as a service (“SaaS”) offering. We view subscription mix as a key indicator of the profitability
of our business, and thus we believe that this metric is useful to investors. Because the costs and associated expenses to deliver our
subscription offerings are lower as a percentage of sales than the costs of sales of our products, we believe a shift towards subscription
will result in an improvement in profitability and margin expansion.
Subscription
mix increased by 6.4 percentage points, to 29.3% for the three months ended March 31, 2022 compared to the three months ended March 31,
2021. The increase was due to a higher volume of units fulfilled since the prior year quarter and increases in subscription renewals.
In addition, the increase is due to the timing of revenue recognition for our SaaS and other subscription contracts as revenue from such
contracts is deferred and recognized over the service period.
Non-GAAP Financial Measures
We
present non-GAAP financial measures in order to assist readers of our condensed consolidated financial statements in understanding the
core operating results that our management uses to evaluate the business and for financial planning purposes. Our non-GAAP financial measures,
Adjusted Gross Profit, Adjusted Gross Margin and Adjusted EBITDA, provide an additional tool for investors to use in comparing our financial
performance over multiple periods.
Adjusted
Gross Profit, Adjusted Gross Margin and Adjusted EBITDA are key performance measures that our management uses to assess our operating
performance. Adjusted Gross Profit, Adjusted Gross Margin and Adjusted EBITDA facilitate internal comparisons of our operating performance
on a more consistent basis. We use these performance measures for business planning purposes and forecasting. We believe that Adjusted
Gross Profit, Adjusted Gross Margin and Adjusted EBITDA enhance an investor’s understanding of our financial performance as they
are useful in assessing our operating performance from period-to-period by excluding certain items that we believe are not representative
of our core business.
Our
Adjusted Gross Profit, Adjusted Gross Margin and Adjusted EBITDA may not be comparable to similarly titled measures of other companies
because they may not calculate these measures in the same manner. Adjusted Gross Profit, Adjusted Gross Margin and Adjusted EBITDA are
not prepared in accordance with U.S. GAAP and should not be considered in isolation of, or as an alternative to, measures prepared in
accordance with U.S. GAAP. When evaluating our performance, you should consider Adjusted Gross Profit, Adjusted Gross Margin and Adjusted
EBITDA alongside other financial performance measures prepared in accordance with U.S. GAAP, including gross profit, gross margin, operating
loss and net loss.
Adjusted
Gross Profit and Adjusted Gross Margin
We
calculate Adjusted Gross Profit as gross profit adjusted to exclude depreciation and amortization, non-recurring changes to our warranty
liability, non-recurring losses on purchase commitments and non-recurring inventory write-downs. We calculate Adjusted Gross Margin as
gross margin adjusted to exclude depreciation and amortization, non-recurring changes to our warranty liability, non-recurring losses
on purchase commitments and non-recurring inventory write-downs.
Our
changes in the warranty liability are excluded from Adjusted Gross Profit and Adjusted Gross Margin when they are outside the normal course
of operations for our business. The non-recurring warranty liability adjustments are for changes in our warranty policy resulting from
a shift in product lines that impacted our estimate of future warranty costs.
We
also exclude from Adjusted Gross Profit and Adjusted Gross Margin non-recurring losses on purchase commitments and non-recurring inventory
write-downs when they are outside the normal course of business and in the period the expenses are incurred. The
periods shown below do not include such expenses.
The following table
reconciles Adjusted Gross Profit to gross profit and Adjusted Gross Margin to gross margin, the most directly comparable financial measures
calculated and presented in accordance with U.S. GAAP.
|
|
|
|
|
|
|
|
|
Three
months ended March 31, |
(In thousands) |
|
2022 |
|
2021 |
Revenue |
|
$ |
15,574 |
|
$ |
12,443 |
Cost of revenue |
|
|
7,232 |
|
|
6,027 |
Gross
profit |
|
$ |
8,342 |
|
$ |
6,416 |
|
|
|
|
|
|
|
Gross
margin |
|
|
53.6% |
|
|
51.6% |
|
|
|
|
|
|
|
Add: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
426 |
|
|
89 |
Warranty liability policy change |
|
|
— |
|
|
(560) |
Adjusted
gross profit |
|
$ |
8,768 |
|
$ |
5,945 |
|
|
|
|
|
|
|
Adjusted
gross margin |
|
|
56.3% |
|
|
47.8% |
Adjusted
EBITDA
We
calculate Adjusted EBITDA as net loss adjusted to exclude interest income, interest expense, changes in the fair value of warrant liabilities,
other expense, net, provision for income taxes, stock-based compensation, depreciation and amortization and other non-recurring items.
The other non-recurring items include costs related to our executive transition, adjustments for the warranty liability policy changes,
discretionary transaction bonuses, non-recurring losses on purchase commitments, non-recurring inventory write-downs and other fees incurred
with the close of the Business Combination.
Our
non-recurring discretionary bonuses are excluded from Adjusted EBITDA when they are outside the normal course of operations for our business
and were given at the discretion of management due to the completion of the Business Combination. The non-recurring costs related to the
executive transition include one-time severance and bonus payments and the recruiting expenses for our current CEO. The non-recurring
warranty liability adjustments are for changes in our warranty policy resulting from a shift in product lines that impacted our estimate
of future warranty costs.
The
non-recurring losses on purchase commitments relate to inventory supply agreements where the expected losses exceed the benefit of the
contracts and the non-recurring inventory write-down adjustments are for excess and obsolete inventory resulting from a shift in product
lines. The periods shown below do not include such expenses.
The following table
reconciles Adjusted EBITDA to net loss, the most directly comparable financial measure calculated and presented in accordance with U.S.
GAAP.
|
|
|
|
|
|
|
|
|
|
Three
months ended March 31, |
|
(In thousands) |
|
2022 |
|
2021 |
|
Net loss |
|
$ |
(44,477) |
|
$ |
(690) |
|
Interest income |
|
|
(10) |
|
|
(239) |
|
Interest expense |
|
|
— |
|
|
638 |
|
Change in fair value of warrant liabilities |
|
|
(5,163) |
|
|
(54,112) |
|
Other expense, net |
|
|
100 |
|
|
631 |
|
Provision for income taxes |
|
|
17 |
|
|
24 |
|
Stock based compensation |
|
|
8,730 |
|
|
20,298 |
|
Depreciation and amortization |
|
|
839 |
|
|
458 |
|
CEO transition costs |
|
|
— |
|
|
5,398 |
|
Warranty liability policy change |
|
|
— |
|
|
(560) |
|
Transaction bonus |
|
|
— |
|
|
1,653 |
|
Adjusted
EBITDA |
|
$ |
(39,964) |
|
$ |
(26,501) |
|
Description of Certain
Components of Financial Data
Revenue
Revenue consists of revenue from
the sale of products, such as medical devices and accessories, and related services, classified as subscription revenue on our condensed
consolidated statements of operations and comprehensive loss, which are SaaS subscriptions and product support and maintenance (“Support”).
SaaS subscriptions include licenses for teams and individuals as well as enterprise level subscriptions. For sales of products, which
include the ultrasound devices and any ultrasound device accessories, revenue is recognized at a point in time upon transfer of control
to the customer. SaaS subscriptions and Support are generally related to stand-ready obligations and are recognized ratably over time.
Over time as the adoption of our
devices increases through further market penetration and as practitioners in the Butterfly network continue to use our devices, we expect
our annual revenue mix to shift more toward subscriptions. The quarterly revenue mix may be impacted by the timing of device sales.
Cost
of revenue
Cost of product revenue
consists of product costs including manufacturing costs, personnel costs and benefits, inbound freight, packaging, warranty replacement
costs, payment processing fees and inventory obsolescence and write-offs. We expect our cost of product revenue to fluctuate over time
due to the level of units fulfilled in any given period and decrease as a percentage of product revenues over time as we focus on operational
efficiencies in our supply chain. Additionally, we expect there will continue to be supply constraints; however, the semiconductor chips
used in our probes are manufactured under an inventory supply agreement and to date we have not experienced any constraints. Our suppliers
have and may from time-to-time increase prices of certain inventory components, which we may not be able to offset through pricing actions
and therefore could in the future offset the operational efficiencies in our supply chain.
Cost of subscription revenue consists
of personnel costs, cloud hosting costs and payment processing fees. Because the costs and associated expenses to deliver our SaaS offerings
are less than the costs and associated expenses of manufacturing and selling our device, we anticipate an improvement in profitability
and margin expansion over time as our revenue mix shifts increasingly towards subscriptions. We plan to continue to invest additional
resources into our products to expand and further develop our SaaS and other subscription offerings. The level and timing of investment
in these areas could affect our cost of subscription revenue in the future. We expect the cost of subscription revenue to increase as
a percentage of subscription revenue in the near term due to the investments we are making, but will continue to be lower than the cost
of product revenue as a percentage of product revenue.
Loss on product purchase commitments
relates to inventory supply agreements where the expected losses exceed the benefit of the contracts. We consider a variety of factors
and data points when determining the existence and scope of a
loss for the minimum purchase commitment.
The factors and data points include Company-specific forecasts which are reliant on our limited sales history, agreement-specific provisions,
macroeconomic factors and market and industry trends. Determining the loss is subjective and requires significant management judgment
and estimates. Future events may differ from those assumed in our assessment, and therefore the loss may change in the future. The Company
did not incur any losses on product purchase commitments during the three months ended March 31, 2022 and 2021.
Research
and development (R&D)
Research and development expenses
primarily consist of personnel costs and benefits, facilities-related expenses, depreciation expense, consulting and professional fees,
fabrication services, software and other outsourcing expenses. Most of our research and development expenses are related to developing
new products and services, which we define as not having reached the point of commercialization and improving our products and services
that have been commercialized. Consulting expenses are related to general development activities and clinical/regulatory research. Fabrication
services include certain third-party engineering costs, product testing and test boards. Research and development expenses are expensed
as incurred. We expect to continue to make substantial investments in our product development, clinical and regulatory capabilities. Prospectively
on an annual basis, we expect research and development spending to increase in absolute dollars in the near term and then fluctuate over
time due to the level and timing of our product development efforts. In the near term, we expect research and development expenses as
a percentage of revenue to increase on an annual basis.
Sales
and marketing
Sales and marketing expenses primarily
consist of personnel costs and benefits, third party logistics, fulfillment and outbound shipping costs, digital marketing, advertising,
promotional, as well as conferences, meetings and other events and related facilities and information technology costs. We expect our
sales and marketing expenses to increase in absolute dollars in the long term as we continue to increase the size of our direct sales
force and sales support personnel and expand into new products and markets. We expect our sales and marketing expenses will also increase
in the near term as we promote our brand through marketing and advertising initiatives, expand our market presence and hire additional
personnel to drive penetration and generate leads. In the near term, sales and marketing expenses as a percentage of revenues may increase
on an annual basis and then fluctuate over time as we evaluate expansion opportunities.
General
and administrative
General and administrative expenses
primarily consist of personnel costs and benefits, insurance, patent fees, software costs, facilities costs and outside services. Outside
services consist of professional services, legal and other professional fees. We expect our general and administrative expenses to increase
in absolute dollars in the foreseeable future. In the near term, we anticipate general and administrative expenses as a percentage of
revenue will decrease on an annual basis.
Results of Operations
We operate as a
single reportable segment to reflect the way our chief operating decision maker (“CODM”) reviews and assesses the performance
of the business. The accounting policies are described in Note 2 “Summary of Significant Accounting Policies” in our condensed
consolidated financial statements included in this Quarterly Report on Form 10-Q.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended March 31, |
|
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
% of |
|
|
|
|
|
% of |
|
|
(in thousands) |
|
Dollars |
|
revenue |
|
|
Dollars |
|
revenue |
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
$ |
11,014 |
|
70.7 |
% |
|
$ |
9,595 |
|
77.1 |
% |
|
Subscription |
|
|
4,560 |
|
29.3 |
% |
|
|
2,848 |
|
22.9 |
% |
|
Total revenue: |
|
$ |
15,574 |
|
100.0 |
% |
|
$ |
12,443 |
|
100.0 |
% |
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
|
6,149 |
|
39.5 |
% |
|
|
5,648 |
|
45.4 |
% |
|
Subscription |
|
|
1,083 |
|
7.0 |
% |
|
|
379 |
|
3.0 |
% |
|
Total cost
of revenue: |
|
$ |
7,232 |
|
46.4 |
% |
|
$ |
6,027 |
|
48.4 |
% |
|
Gross profit |
|
$ |
8,342 |
|
53.6 |
% |
|
$ |
6,416 |
|
51.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
23,623 |
|
151.7 |
% |
|
|
15,716 |
|
126.3 |
% |
|
Sales and marketing |
|
|
15,202 |
|
97.6 |
% |
|
|
9,808 |
|
78.8 |
% |
|
General and administrative |
|
|
19,050 |
|
122.3 |
% |
|
|
34,640 |
|
278.4 |
% |
|
Total
operating expenses |
|
$ |
57,875 |
|
371.6 |
% |
|
$ |
60,164 |
|
483.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from
operations |
|
$ |
(49,533) |
|
(318.0) |
% |
|
$ |
(53,748) |
|
(432.0) |
% |
|
Interest income |
|
|
10 |
|
0.1 |
% |
|
|
239 |
|
1.9 |
% |
|
Interest expense |
|
|
— |
|
— |
% |
|
|
(638) |
|
(5.1) |
% |
|
Change in fair value of warrant liabilities |
|
|
5,163 |
|
33.2 |
% |
|
|
54,112 |
|
434.9 |
% |
|
Other income (expense), net |
|
|
(100) |
|
(0.6) |
% |
|
|
(631) |
|
(5.1) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before
provision for income taxes |
|
$ |
(44,460) |
|
(285.5) |
% |
|
$ |
(666) |
|
(5.4) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
|
17 |
|
0.1 |
% |
|
|
24 |
|
0.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(44,477) |
|
(285.6) |
% |
|
$ |
(690) |
|
(5.5) |
% |
|
Comparison of the three
months ended March 31, 2022 and 2021
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended March 31, |
|
|
|
|
|
|
(in thousands) |
|
2022 |
|
2021 |
|
Change |
|
% Change |
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
$ |
11,014 |
|
$ |
9,595 |
|
$ |
1,419 |
|
14.8 |
% |
Subscription |
|
|
4,560 |
|
|
2,848 |
|
|
1,712 |
|
60.1 |
% |
Total
revenue: |
|
$ |
15,574 |
|
$ |
12,443 |
|
$ |
3,131 |
|
25.2 |
% |
Product
revenue increased by $1.4 million, or 14.8%, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021.
The increase in product revenue was primarily driven by higher prices of products sold due to a price increase in the third quarter of
fiscal 2021 and, to a lesser extent, a higher volume of probes sold.
Subscription
revenue increased by $1.7 million, or 60.1%, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021.
The increase was driven by a higher volume of our SaaS subscriptions sold in conjunction with sales of our devices, as well as the current
year subscription renewals.
Cost of revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended March 31, |
|
|
|
|
|
|
(in thousands) |
|
2022 |
|
2021 |
|
Change |
|
% Change |
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
$ |
6,149 |
|
$ |
5,648 |
|
$ |
501 |
|
8.9 |
% |
Subscription |
|
|
1,083 |
|
|
379 |
|
|
704 |
|
185.8 |
% |
Total
cost of revenue: |
|
$ |
7,232 |
|
$ |
6,027 |
|
$ |
1,205 |
|
20.0 |
% |
Percentage of revenue |
|
|
46.4 |
% |
|
48.4 |
% |
|
|
|
|
|
Cost
of product revenue increased by $0.5 million, or 8.9%, for the three months ended March 31, 2022 compared to the three months ended March
31, 2021. The increase was primarily driven by $0.5 million of higher warranty expense due to the prior year change in our warranty liability
policy, higher inventory write-offs of $0.3 million and increases in component costs related to global supply chain constraints of $0.3
million. These increases were partially offset by a benefit from operational efficiencies of $0.8 million.
Cost
of subscription revenue increased by $0.7 million, or 185.8%, for the three months ended March 31, 2022 compared to the three months ended
March 31, 2021. This increase was primarily driven by increased cloud hosting costs and amortization expenses.
Research and development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended March 31, |
|
|
|
|
|
|
(in thousands) |
|
2022 |
|
2021 |
|
Change |
|
% Change |
|
Research and development |
|
$ |
23,623 |
|
$ |
15,716 |
|
$ |
7,907 |
|
50.3 |
% |
Percentage of revenue |
|
|
151.7 |
% |
|
126.3 |
% |
|
|
|
|
|
Research
and development expenses increased by $7.9 million, or 50.3%, for the three months ended March 31, 2022 compared to the three months ended
March 31, 2021. This increase was primarily driven by higher personnel costs, including stock-based compensation expense, of $5.0 million,
product development supplies of $0.9 million, software costs of $0.7 million and professional service fees of $0.8 million as we continue
to invest in expanding our overall product development capabilities and resources.
Sales and marketing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended March 31, |
|
|
|
|
|
|
(in thousands) |
|
2022 |
|
2021 |
|
Change |
|
% Change |
|
Sales and marketing |
|
$ |
15,202 |
|
$ |
9,808 |
|
$ |
5,394 |
|
55.0 |
% |
Percentage of revenue |
|
|
97.6 |
% |
|
78.8 |
% |
|
|
|
|
|
Sales
and marketing expenses increased by $5.4 million, or 55.0%, for the three months ended March 31, 2022 compared to the three months ended
March 31, 2021. This increase was primarily driven by higher personnel costs, including stock-based compensation, of $3.9 million, overhead
costs of $0.4 million and travel and entertainment costs of $1.0 million primarily related to the Company’s annual sales conference
and trade show participation.
General and administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended March 31, |
|
|
|
|
|
|
(in thousands) |
|
2022 |
|
2021 |
|
Change |
|
% Change |
|
General and administrative |
|
$ |
19,050 |
|
$ |
34,640 |
|
$ |
(15,590) |
|
(45.0) |
% |
Percentage of revenue |
|
|
122.3 |
% |
|
278.4 |
% |
|
|
|
|
|
General and administrative expenses
decreased by $15.6 million, or 45.0%, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. This
decrease was primarily due to lower personnel costs of $12.6 million driven by a reduction in stock-based compensation due to the non-recurrence
of certain performance based
restricted stock units
that vested upon the Closing of the Business Combination in the prior year, lower recruiting expense of $1.7 million from the non-recurrence
of certain costs associated with to our CEO transition, and lower professional service fees of $1.8 million as we scale up our internal
capabilities.
Liquidity and Capital
Resources
Since our inception, our primary
sources of liquidity are cash flows from operations, proceeds from the Business Combination and issuances of preferred stock and convertible
notes. Our primary uses of liquidity are operating expenses, working capital requirements and capital expenditures. Cash flows from operations
have been historically negative as we continue to develop new products and services and increase our sales and marketing efforts. We expect
to be cash flow negative on an annual basis, although we may have quarterly results where cash flows from operations are positive.
We expect that our existing cash
and cash flows from operations will be sufficient to meet our liquidity, capital expenditure, and anticipated working capital requirements
and fund our operations for at least the next 12 months.
Our cash and cash equivalents balance
as of March 31, 2022 was $359.9 million. Our future capital requirements may vary from those currently planned and will depend on various
factors, including our rate of revenue growth and the timing and extent of spending on strategic business initiatives.
We have restricted cash of $4.0
million as of March 31, 2022 to secure a letter of credit for one of our leases, which is expected to be maintained as a security deposit
for the duration of the lease. In addition, we have restricted cash of $4.8 million for a grant
issued by the Bill & Melinda Gates Foundation (“BMGF”). The restriction is expected to lapse as we fulfill our obligations
in the contractual agreement with BMGF.
The nature of the Company’s
cash requirements has not changed materially during the three months ended March 31, 2022. Our material cash requirements include our
facility lease arrangements for office space and inventory purchase obligations. As of March 31, 2022, we had fixed lease payment obligations
of $42.1 million, with $2.5 million payable within 12 months. As of March 31, 2022, we had fixed purchase obligations of $103.8 million,
with $65.9 million payable within 12 months. We expect to pay for approximately half of the fixed purchase obligations payable within
the next 12 months using vendor advances.
As of March 31, 2022, we had no
obligations, assets or liabilities, which would be considered off-balance sheet arrangements.
Cash flows
Comparison
of the period for the three months ended March 31, 2022 and March 31, 2021
The following table
summarizes our sources and uses of cash for the three months ended March 31, 2022 and 2021:
|
|
|
|
|
|
|
|
|
Three
months ended March 31, |
(in thousands) |
|
2022 |
|
2021 |
Net cash used in operating activities |
|
$ |
(54,234) |
|
$ |
(63,427) |
Net cash used in investing activities |
|
|
(4,506) |
|
|
(528,197) |
Net cash provided by financing activities |
|
|
550 |
|
|
550,268 |
Net (decrease) increase in cash, cash
equivalents and restricted cash |
|
$ |
(58,190) |
|
$ |
(41,356) |
Net
cash used in operating activities
Net
cash used in operating activities represents the cash receipts and disbursements related to our activities other than investing and financing
activities. We expect cash provided by historical financing activities will continue to be our primary source of funds to support operating
needs and capital expenditures for the foreseeable future.
Net
cash used in operating activities decreased by $9.2 million, or 14.5%, for the three months ended March 31, 2022 compared to the three
months ended March 31, 2021. The decrease in net cash used in operating activities was due to a $5.2 million decrease in cash used
in vendor advances resulting from the usage of the advance for purchases of inventory components during the period, a $14.0 million decrease
in cash used for accounts payable and accrued expenses due to the timing of expenses and payments and deferred grant funding, which was
partially offset by an increase in cash used for inventory purchases of $1.8 million due to timing and an increase of $1.8 million for
accounts receivable due to increased sales. Additionally, there was a $37.0 million decrease in adjustments to reconcile net loss partially
offset by a $43.8 million increase in net losses. The adjustments were primarily related to changes in the fair value warrant liability
and less stock-based compensation incurred.
Net
cash used in investing activities
Net
cash used in investing activities decreased by $523.7 million for the three months ended March 31, 2022 compared to the three months ended
March 31, 2021. The decrease was primarily due to a decrease of $526.9 million in purchases and sales of marketable securities for the
period ended March 31, 2022. The decrease was partially offset by an increase in purchases of property and equipment of $3.2 million due
to additional assets purchased for the Company’s office space and additional investments into our software platform.
Net
cash provided by financing activities
For
the three months ended March 31, 2022, net cash provided by financing activities decreased by $549.7 million compared to the three months
ended March 31, 2021. The decrease was primarily due to the non-recurrence of net proceeds from the Business Combination of $548.4 million
and a decrease in proceeds from option exercises of $5.6 million, which was partially offset by the non-recurrence of the $4.4 million
loan repayment under the Paycheck Protection Program.
Critical Accounting
Policies and Significant Judgments and Estimates
Our
management's discussion and analysis of our financial condition and results of operations are based on our condensed consolidated
financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial
statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported revenue generated
and expenses incurred during the reporting periods. Our estimates are based on our historical experience and various other factors that
we believe are reasonable under the circumstances, the results of which form the basis for making judgments about items that are not readily
apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
For
our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, there have been no material changes to
our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in our Annual Report
on Form 10-K for the fiscal year ended December 31, 2021, as amended.
Recently Adopted Accounting
Pronouncements
The
Company did not identify any significant recently issued accounting pronouncements that may potentially impact our financial position
and results of operations.
Item 3. Quantitative
and Qualitative Disclosures About Market Risk
Interest
Rate Risk
We did not have any floating rate
debt as of March 31, 2022. Our cash and cash equivalents are comprised primarily of bank deposits and money market accounts. Due to the
short-term nature of these investments, we do not expect cash flows to be affected to any significant degree by a sudden change in market
interest rates.
Inflation
Risk
We do not believe that inflation
has had a material effect on our business, financial condition or results of operations, other than its impact on the general economy.
Nonetheless, to the extent our costs are impacted by general inflationary pressures, we may not be able to fully offset such higher costs
through price increases or manufacturing efficiencies. Our inability or failure to do so could harm our business, financial condition
and results of operations.
Foreign
Exchange Risk
We
operate our business primarily within the United States and currently execute the majority of our transactions in U.S. dollars. We have
not utilized hedging strategies with respect to such foreign exchange exposure. This limited foreign currency translation risk is not
expected to have a material impact on our condensed consolidated financial statements.
Item 4.
Controls and Procedures
Evaluation
of Disclosure Controls and Procedures
Under
the supervision and with the participation of our management, including our principal executive officer and principal financial officer,
we conducted an evaluation 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 Securities Exchange Act of 1934, as amended (the "Exchange Act").
Disclosure
controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our
reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in
the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed
to ensure that information required to be disclosed in our company’s reports filed under the Exchange Act is accumulated and communicated
to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Based on the
evaluation of our disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure
controls and procedures were effective as of March 31, 2022.
Changes
in Internal Control over Financial Reporting
There
were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d)
and 15d-15(d) of the Exchange Act that occurred during the three months ended March 31, 2022 that have materially affected,
or are reasonably likely to materially affect, our internal control over financial reporting.
PART
II — OTHER INFORMATION
Item 1. Legal Proceedings
On
March 9, 2022, Fujifilm Sonosite, Inc. (“Fujifilm”) filed a complaint against the Company, styled Fujifilm
Sonosite, Inc. v. Butterfly Network, Inc. (Case No. 1:22-cv-00309) in the United States District Court for the District of Delaware.
The complaint alleged that the iQ and iQ+ ultrasound probes, hard carrying case, and mobile device application software infringe certain
patents purportedly owned by Fujifilm. The Company intends to vigorously defend against this action. The lawsuit seeks unspecified damages
including compensatory damages, lost profits, and reasonable royalty damages, a preliminary and/or permanent injunction, pre- and post-judgment
interest, and the fees and costs of litigation. There is no assurance that the Company will be successful in the defense of the litigation
or that insurance will be available or adequate to fund any potential settlement or judgment or the fees and costs of the litigation.
The Company is unable to predict the outcome or reasonably estimate a range of possible loss at this time.
In
addition, there has been no material change in the legal proceedings described in Part I, Item 3 of our Annual Report on Form 10-K for
the year ended December 31, 2021, as amended.
Item 1A. Risk Factors
Our
business, results of operations and financial condition are subject to various risks and uncertainties including the risk factors described
under the caption “Risk Factors” in our most recent Annual Report on Form 10-K, filed with the SEC on February 28, 2022,
as amended on March 28, 2022 and April 19, 2022 (the “2021 Annual Report on Form 10-K”). There have been no material changes
to the risk factors described in the 2021 Annual Report on Form 10-K.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered
Sales of Equity Securities
Not applicable.
Issuer
Purchases of Equity Securities
We
did not repurchase any of our equity securities during the three months ended March 31, 2022.
Item 3. Defaults
Upon Senior Securities
Not
applicable.
Item 4. Mine Safety
Disclosures
Not
applicable.
Item 5. Other Information
Not
applicable.
Item 6. Exhibits
See
Exhibit Index.
EXHIBIT
INDEX
|
|
|
|
|
|
|
|
|
|
|
Exhibit
Number |
|
Exhibit
Description |
|
Filed
Herewith |
|
Incorporated
by Reference herein from Form or Schedule |
|
Filing
Date |
|
SEC
File/ Reg. Number |
10.1+ |
|
Offer
Letter, dated as of April 1, 2022, by and between Butterfly Network, Inc. and Heather C. Getz. |
|
X |
|
|
|
|
|
|
10.2+ |
|
Separation
Agreement, dated as of February 3, 2022, by and between Butterfly Network, Inc. and Stephanie Fielding. |
|
|
|
Form 8-K
(Exhibit 10.1) |
|
2/4/2022 |
|
001-39292 |
31.1 |
|
Certification
of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
X |
|
|
|
|
|
|
31.2 |
|
Certification
of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
X |
|
|
|
|
|
|
32* |
|
Certifications
of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
X |
|
|
|
|
|
|
101.INS |
|
Inline XBRL Instance Document -
The instance document does not appear in the Interactive Data File because its Inline XBRL tags are embedded within the Inline XBRL document. |
|
X |
|
|
|
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema
Document. |
|
X |
|
|
|
|
|
|
101.CAL |
|
Inline XBRL Taxonomy Extension Calculation
Linkbase Document. |
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit
Number |
|
Exhibit
Description |
|
Filed
Herewith |
|
Incorporated
by Reference herein from Form or Schedule |
|
Filing
Date |
|
SEC
File/ Reg. Number |
101.DEF |
|
Inline XBRL Taxonomy Extension Definition
Linkbase Document. |
|
X |
|
|
|
|
|
|
101.LAB |
|
Inline XBRL Taxonomy Extension Label Linkbase
Document. |
|
X |
|
|
|
|
|
|
101.PRE |
|
Inline XBRL Taxonomy Extension Presentation
Linkbase Document. |
|
X |
|
|
|
|
|
|
104 |
|
Cover Page Interactive Data File (formatted
in Inline XBRL and contained in Exhibit 101) |
|
X |
|
|
|
|
|
|
+ |
Management contract or compensatory
plan or arrangement. |
* |
The
certifications attached as Exhibit 32 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the Securities and Exchange
Commission and are not to be incorporated by reference into any filing of Butterfly Network, Inc. under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-Q, irrespective of
any general incorporation language contained in such filing. |
SIGNATURES
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.
|
|
|
|
BUTTERFLY NETWORK, INC. |
|
|
|
Date: May 6, 2022 |
By: |
/s/ Todd Fruchterman, M.D., Ph.D. |
|
|
Todd Fruchterman, M.D., Ph.D. |
|
|
President and Chief Executive Officer |
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Date: May 6, 2022 |
By: |
/s/ Heather C. Getz, CPA, MBA |
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Heather C. Getz, CPA |
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Executive Vice
President and Chief Financial Officer
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DocuSign
Envelope
ID:
040B7949-111F-425A-A17A-72457B2432ED
April
1,
2022
Heather
Getz
Dear
Heather,
On
behalf
of
Butterfly
Network,
I
am
pleased
to
offer
you
a
position
as
Executive
Vice
President
and Chief Financial Officer beginning on May 2, 2022.
You will report directly to me.
Your
annualized
compensation
in
this
position
will
consist
of
an
annual
base
salary
of
$475,000.00
paid in twice monthly pay periods, less required deductions.
You
will receive an
annual (prorated
for the
first year) discretionary bonus
with a
target of 70%
of your base salary, based on goals, objectives, and
performance metrics to be determined by Butterfly Network’s management.
Such
bonus
will
be
paid
in
the
first
quarter
of
the
following
calendar
year.
It
will
be
a
condition
of your eligibility to receive any bonus that you remain
employed with Butterfly Network through the date of payment of such bonus.
You
will
receive
a
one-time
taxable
sign
on
bonus
of
$50,000.
This
will
be
paid
in
your
first
payroll check after the first month anniversary of
your start date. Such payment will be recoverable in full by the company in the event you voluntarily terminate your employment prior
to 12 months from your start date.
Subject
to the approval of the Board of Directors or Compensation Committee, within 30 days you will receive an award with a fair market value
of $3,000,000.00 on the grant date, 25% of which value will be in the form of options to acquire shares of the Company’s Common
Stock and 75% of which value will be in the form
of
restricted
stock
units
(RSUs)
that
(i)
will
be
subject
to
the
terms
of
the
grant
documents
therefore,
(ii)
subject
to continued service and the specific terms of your
grant. The options will vest over a four-year period with the following schedule: 25% on the one-year anniversary of the grant date, and
2.08% monthly thereafter. The RSUs will vest over a four-year period with the following schedule: 25% on the one-year anniversary of the
grant date, and 25% annually thereafter.
You
will
be
eligible
to
participate
in
Butterfly’s
long
term
incentive
program,
established
and
approved by the
Compensation Committee
of the
Butterfly Board of Directors (the
“LTIP”).
It is
currently expected that you will receive annual grants
under the LTIP.
This
position
is
eligible
for
the
Butterfly
Network
Executive
Severance
Program
as
publicly
filed,
and you will become a participant in such Executive
Severance Program commencing on your start date.
You
will relocate to
the Burlington,
MA area
within 12 months
of
your start date. You will be
based out of Philadelphia, PA until such time as you
relocate, at which time you will be based out of Butterfly Network’s facility in the Burlington, MA area. As part of your relocation,
Butterfly will reimburse reasonable moving expenses,
provided
you
move
within
12
months
of
your
start
date.
If
you
voluntarily
terminate
your
employment with Butterfly Network without Good Reason
within 18 months of your
start date, you will be required to repay the relocation costs.
Letter
to
Heather
Getz Page 2 of 2
Butterfly
Network recognizes the need for employees to take time away from the office to creatively recharge.
We
also
believe
in
taking
personal
responsibility
for
managing
our
own
time,
workload
and
results.
For these reasons our Flexible Paid Time Off (FPTO)
policy affords eligible employees the flexibility to be given an indeterminate amount of paid time off from work for vacation, personal
or family obligations and other personal requirements, subject to the requirements of the policy, including advance notice and prior approval
in Butterfly Network’s discretion. In no event will any employee be compensated for unused vacation time. You will also be eligible
to participate
in medical and other benefit plans
in accordance
with the
rules
and eligibility of
those
plans currently in effect. Health insurance shall commence
on your start date.
Further,
while
we
expect
you
to
remain
with
Butterfly
Network
for
a
long
time,
this
letter
is
not
an employment contract and you will be an at-will employee.
This
letter
is
subject
to
successful
completion
of
a
background
check
and
upon
the
completion
of references. By signing this letter, you authorize
Butterfly Network to conduct such background check.
Butterfly
Network
considers
the
protection
of
its
confidential
information,
proprietary
materials
and goodwill to be extremely important.
As a condition of this offer of employment, you are
required to sign Butterfly Network’s Non-competition/Non-solicit, Confidentiality and Intellectual Property Agreement.
Please
note
this
offer
will
expire
on
April
8,
2022,
unless
accepted
by
you
in
writing
prior
to
such
date.
We
appreciate your exceptional talent and are very excited about you joining our growing and dynamic team at Butterfly Network. We firmly
believe that Butterfly Network offers a unique combination of emotional, intellectual,
and
interpersonal
stimulation
that
will
be
truly
enjoyable.
As
a
member
of
our
growing
team
you
will be in the rare position of helping to shape the
culture and direction of our organization. We have tremendous opportunities
ahead
of
us,
and
I
am
confident
you
have
the
expertise
required
to
help
us
achieve
our
objectives.
If you have any questions regarding this offer, the
position, or the company’s benefits programs, please do not hesitate to reach out.
Kindest,
Butterfly
Network,
Inc.
By:
/s/ Todd M. Fruchterman, MD, PhD
Todd M. Fruchterman, MD, PhD
Chief
Executive
Officer
and
President
ACCEPTED
AND
AGREED:
Signature:
/s/ Heather Getz
Heather Getz
Address:
Exhibit 31.1
CERTIFICATIONS UNDER SECTION 302
I, Todd M. Fruchterman, M.D., Ph.D., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Butterfly Network, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 6, 2022
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/s/ Todd M. Fruchterman, M.D., Ph.D. | |
Todd M. Fruchterman, M.D., Ph.D. | |
President and Chief Executive Officer | |
Exhibit 31.2
CERTIFICATIONS UNDER SECTION 302
I, Heather C. Getz, CPA, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Butterfly Network, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 6, 2022
| |
/s/ Heather C. Getz, CPA | |
Heather C. Getz, CPA | |
Executive Vice President and Chief Financial Officer | |
Exhibit 32
CERTIFICATIONS UNDER SECTION 906
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of Butterfly Network, Inc., a Delaware corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:
The Quarterly Report for the quarter ended March 31, 2022 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Dated: May 6, 2022 | /s/ Todd Fruchterman, M.D., Ph.D. |
| Todd Fruchterman, M.D., Ph.D. |
| President and Chief Executive Officer |
| |
Dated: May 6, 2022 | /s/ Heather C. Getz, CPA |
| Heather C. Getz, CPA |
| Executive Vice President and Chief Financial Officer |
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