Operating Expenses
Our operating expenses consist of research and development, sales and marketing, general and administrative, and depreciation and amortization
expenses.
Research and Development Expenses
Our research and development expenses consist primarily of personnel and related expenses for our employees working on our product, design and
engineering teams, including salaries, bonuses, benefits, payroll taxes, travel and stock-based compensation. Also included are non-personnel costs such as amounts paid to our third-party contract
manufacturers for tooling, engineering and prototype costs of our hardware products, fees paid to third party consultants, R&D supplies and rent. We expect our research and development expenses to increase in absolute dollars as we continue to
make significant investments in developing new products and enhancing existing products.
Sales and Marketing Expenses
Sales and marketing expense consists primarily of personnel and related expenses for our employees working on our sales, customer success,
deployment and marketing teams, including salaries, bonuses, benefits, payroll taxes, travel, commissions and stock-based compensation. Also included are non-personnel costs such as marketing activities (trade
shows and events, conferences, and digital advertising), professional fees, rent and customer support. We expect our sales and marketing expense to increase in absolute dollars as the restrictions related to
COVID-19 begin to be lifted and as we continue to invest in our sales force to drive increased market share through new customer acquisition and provide best in class support to our existing customer base.
General and Administrative Expenses
General and administrative expense consists primarily of personnel and related expenses for our executive, legal, human resources, finance, and
IT functions, including salaries, bonuses, benefits, payroll taxes, travel, and stock-based compensation. Additional expenses included in this category are non-personnel costs such as legal fees, rent,
professional fees, audit fees, bad debt expense and insurance costs. During the first quarter of 2021, we incurred stock based compensation expense from a non-recurring secondary purchase as described in the
unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2021 set forth in Exhibit 99.1 hereto. Excluding this impact, we expect our general and administrative expenses to increase in absolute dollars
due to our plans to remediate our material weaknesses which were identified in the years ended December 31, 2020 and 2019, as well as the continued growth of our business and related infrastructure as well as legal, accounting, director and
officer insurance premiums, investor relations and other costs associated with operating as a public company.
Depreciation and Amortization
Depreciation and amortization consist primarily of depreciation expense related to investments in property and equipment and internally
developed capitalized software.
Other Income (Expense), Net
Other income (expense), net consists of interest expense associated with the significant financing component of our longer-term software
contracts, interest expense associated with our debt financing arrangements, interest income on highly liquid short-term investments, gain or loss on extinguishment of debt, and gain or loss on change in fair value of derivatives.
Income Taxes
The provision for income
taxes consists primarily of income taxes related to state jurisdictions in which we conduct business. We maintain a full valuation allowance on our deferred tax assets as we have concluded that it is more likely than not that the deferred assets
will not be utilized.