Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Mar. 08, 2021 | Jun. 30, 2020 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2020 | ||
Entity Registrant Name | RESHAPE LIFESCIENCES INC. | ||
Title of 12(b) Security | Common stock | ||
Trading Symbol | RSLS | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Interactive Data Current | Yes | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 6,166,554 | ||
Entity Public Float | $ 1,769,725 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Entity Central Index Key | 0001371217 | ||
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 2,957 | $ 2,935 |
Restricted cash | 50 | 50 |
Accounts and other receivables (net of allowance for doubtful accounts of $968 and $709 respectively) | 2,620 | 4,096 |
Inventory | 2,244 | 1,317 |
Prepaid expenses and other current assets | 1,073 | 1,711 |
Total current assets | 8,944 | 10,109 |
Property and equipment, net | 584 | 16 |
Operating lease right-of-use assets | 465 | 758 |
Other intangible assets, net | 27,022 | 28,674 |
Other assets | 46 | 99 |
Total assets | 37,061 | 39,656 |
Current liabilities: | ||
Accounts payable | 3,655 | 4,263 |
Accrued and other liabilities | 3,630 | 3,821 |
Warranty liability, current | 397 | 105 |
Debt, current portion, net of deferred financing costs | 3,609 | 1,909 |
Operating lease liabilities, current | 314 | 291 |
Total current liabilities | 11,605 | 10,389 |
Debt, noncurrent portion | 9,168 | 2,728 |
Operating lease liabilities, noncurrent | 163 | 477 |
Warranty liability, noncurrent | 1,022 | 1,253 |
Deferred income taxes | 615 | 702 |
Total liabilities | 22,573 | 15,549 |
Commitments, contingencies and subsequent events | ||
Stockholders’ equity: | ||
Common stock, $0.001 par value; 275,000,000 shares authorized at December 31, 2020 and December 31, 2019; 6,166,554 and 391,739 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively | 6 | |
Additional paid-in capital | 529,429 | 517,311 |
Accumulated deficit | (514,827) | (493,197) |
Accumulated other comprehensive loss | (121) | (8) |
Total stockholders’ equity | 14,488 | 24,107 |
Total liabilities and stockholders’ equity | 37,061 | 39,656 |
Series B convertible preferred stock | ||
Stockholders’ equity: | ||
Preferred stock, 5,000,000 shares authorized: | ||
Series C convertible preferred stock | ||
Stockholders’ equity: | ||
Preferred stock, 5,000,000 shares authorized: | $ 1 | $ 1 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Allowance for bad debts | $ 968 | $ 709 |
Preferred stock, authorized | 5,000,000 | 5,000,000 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 275,000,000 | 275,000,000 |
Common stock, shares issued | 6,166,554 | 391,739 |
Common stock, shares outstanding | 6,166,554 | 391,739 |
Series B convertible preferred stock | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, issued | 3 | 3 |
Preferred stock outstanding | 3 | 3 |
Series C convertible preferred stock | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, issued | 95,388 | 95,388 |
Preferred stock outstanding | 95,388 | 95,388 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Consolidated Statements of Operations | ||
Revenue | $ 11,299 | $ 15,089 |
Cost of revenue | 5,037 | 5,784 |
Gross profit | 6,262 | 9,305 |
Operating expenses: | ||
Sales and marketing | 4,694 | 4,847 |
General and administrative | 10,527 | 17,224 |
Research and development | 3,498 | 3,121 |
Impairment of intangible assets | 6,588 | |
Loss on litigation settlement | 1,500 | |
Loss on disposal of asset | 486 | |
Total operating expenses | 18,719 | 33,766 |
Operating loss | (12,457) | (24,461) |
Other expense (income), net: | ||
Interest expense, net | 2,049 | 451 |
Loss on extinguishment of debt | 7,715 | 71 |
Warrant expense | 49,027 | |
Gain on foreign currency exchange | (410) | (247) |
Other, net | 1,337 | |
Loss before income tax provision | (21,811) | (75,100) |
Income tax benefit | (181) | (893) |
Net loss attributable to common shareholders | $ (21,630) | $ (74,207) |
Net loss per share - basic and diluted: | ||
Net loss per share - basic and diluted (in dollars per share) | $ (3.12) | $ (42.93) |
Shares used to compute basic and diluted net loss per share | 6,927,021 | 1,728,722 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Consolidated Statements of Comprehensive Loss | ||
Net loss | $ (21,630) | $ (74,207) |
Other comprehensive loss, net of tax: | ||
Foreign currency translation adjustments | (113) | (8) |
Other comprehensive loss, net of tax | (113) | (8) |
Comprehensive loss | $ (21,743) | $ (74,215) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Preferred StockSeries B convertible preferred stock | Preferred StockSeries C convertible preferred stock | Preferred StockSeries E convertible preferred stockAt The Market Offering | Preferred StockSeries E convertible preferred stock | Common Stock2019 private placement | Common Stock2018 institutional sales of common stock and warrants, net of issuance costs | Common StockIssuance of Series E Convertible Preferred Stock Noncash February2019 | Common StockAt The Market Offering | Common Stock | Additional Paid-in Capital2019 private placement | Additional Paid-in Capital2018 institutional sales of common stock and warrants, net of issuance costs | Additional Paid-in CapitalSeptember 2018 public offering | Additional Paid-in CapitalIssuance of Series E Convertible Preferred Stock Noncash February2019 | Additional Paid-in CapitalAt The Market Offering | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | 2019 private placement | 2018 institutional sales of common stock and warrants, net of issuance costs | September 2018 public offering | Issuance of Series E Convertible Preferred Stock Noncash February2019 | Total |
Balance at Dec. 31, 2018 | $ 1 | $ 450,652 | $ (418,990) | $ 31,663 | ||||||||||||||||||
Balance (in shares) at Dec. 31, 2018 | 159 | 95,388 | 73,092 | |||||||||||||||||||
Changes in Stockholders' (Deficit) Equity | ||||||||||||||||||||||
Net loss | (74,207) | (74,207) | ||||||||||||||||||||
Other comprehensive income (loss), net of tax | $ (8) | (8) | ||||||||||||||||||||
Stock-based compensation expense, net | 2,311 | 2,311 | ||||||||||||||||||||
Warrants expense | 130 | 130 | ||||||||||||||||||||
Warrant adjustment | $ (312) | $ (312) | ||||||||||||||||||||
Conversion of common stock into convertible preferred stock | $ 12 | $ 434 | $ (12) | $ 434 | ||||||||||||||||||
Conversion of common stock into convertible preferred stock (in shares) | 1,192,000 | 199,167 | (9,933) | |||||||||||||||||||
Conversion of convertible preferred stock into common stock | $ (12) | 12 | ||||||||||||||||||||
Conversion of convertible preferred stock into common stock (in shares) | (156) | (1,192,000) | 10,973 | |||||||||||||||||||
Warrant liability reclassified to equity | 63,954 | 63,954 | ||||||||||||||||||||
Issuance of common stock upon exercise of warrants, net of transaction costs | 142 | 142 | ||||||||||||||||||||
Issuance of common stock upon exercise of warrants, net of transaction costs (in shares) | 118,440 | |||||||||||||||||||||
Balance at Dec. 31, 2019 | $ 1 | 517,311 | (493,197) | (8) | 24,107 | |||||||||||||||||
Balance (in shares) at Dec. 31, 2019 | 3 | 95,388 | 391,739 | |||||||||||||||||||
Changes in Stockholders' (Deficit) Equity | ||||||||||||||||||||||
Net loss | (21,630) | (21,630) | ||||||||||||||||||||
Other comprehensive income (loss), net of tax | (113) | (113) | ||||||||||||||||||||
Stock-based compensation expense, net | 1,323 | 1,323 | ||||||||||||||||||||
Warrants expense | 9,917 | 9,917 | ||||||||||||||||||||
Institutional exercise of warrants | $ 6 | $ 673 | $ 679 | |||||||||||||||||||
Institutional exercise of warrants (Shares) | 5,665,834 | |||||||||||||||||||||
Cashless exercise of warrants (Shares) | 58,981 | |||||||||||||||||||||
Conversion of convertible preferred stock into common stock | $ 205 | $ 205 | ||||||||||||||||||||
Conversion of convertible preferred stock into common stock (in shares) | 50,000 | |||||||||||||||||||||
Balance at Dec. 31, 2020 | $ 1 | $ 6 | $ 529,429 | $ (514,827) | $ (121) | $ 14,488 | ||||||||||||||||
Balance (in shares) at Dec. 31, 2020 | 3 | 95,388 | 6,166,554 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (21,630) | $ (74,207) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation expense | 15 | 40 |
Amortization of intangible assets | 1,652 | 1,666 |
Impairment of intangible assets | 6,588 | |
Noncash interest expense | 230 | 451 |
Loss on extinguishment of debt | 7,715 | 71 |
Stock-based compensation | 1,323 | 2,311 |
Bad debt expense | 259 | 439 |
Provision for inventory excess and obsolescence | 248 | |
Warrant expense | 49,027 | |
Amortization of debt discount and deferred debt issuance costs | 1,697 | |
Deferred income tax benefit | (86) | (1,143) |
Loss on disposal of asset | 486 | |
Common stock warrant liability issuance costs | 1,442 | |
Other noncash items | 21 | 57 |
Change in operating assets and liabilities: | ||
Accounts and other receivables | 1,217 | (3,619) |
Inventory | (1,175) | (332) |
Prepaid expenses and other current assets | 843 | (442) |
Accounts payable and accrued liabilities | (992) | 1,629 |
Warranty liability | 61 | 1,358 |
Other | 52 | (22) |
Net cash used in operating activities | (8,550) | (14,200) |
Cash flows from investing activities: | ||
Capital expenditures | (390) | (14) |
Acquisition of LAP-BAND product line assets | (2,000) | (2,000) |
Cash used in investing activities: | (2,390) | (2,014) |
Cash flows from financing activities: | ||
Proceeds from issuance of subordinated convertible debentures | 2,000 | |
Payments of financing costs | (59) | (21) |
Repayment of subordinated convertible debentures | (2,200) | |
Proceeds from sale and issuance of equity securities | 478 | |
Proceeds from issuance of common stock warrant liabilities, net of issuance costs of $1,442 | 13,304 | |
Payments of equity issuance costs | (44) | |
Proceeds from institutional exercise of warrants | 679 | 142 |
Proceeds from credit agreement | 9,500 | |
Proceeds from PPP loan | 955 | |
Net cash provided by financing activities | 11,075 | 13,659 |
Effect of currency exchange rate changes on cash and cash equivalents | (113) | (8) |
Net increase (decrease) in cash, cash equivalents and restricted cash | 22 | (2,563) |
Cash, cash equivalents and restricted cash at beginning of period | 2,985 | 5,548 |
Cash, cash equivalents and restricted cash at end of period | 3,007 | 2,985 |
Supplemental disclosure: | ||
Cash paid for income taxes | 40 | |
Noncash investing and financing activities: | ||
Relative fair value of warrants classified as debt issuance costs | 1,393 | |
Fair value of warrants included as a component of loss on extinguishment of debt | 8,523 | |
Capital expenditures accruals | $ 193 | |
Common stock warrant liabilities reclassified to equity | 63,954 | |
Conversion of common stock to convertible preferred stock | $ (1) |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Consolidated Statements of Cash Flows | |
Common stock warrant liability, net of issuance costs | $ 1,442 |
Description of the Business and
Description of the Business and Risks and Uncertainties | 12 Months Ended |
Dec. 31, 2020 | |
Description of the Business and Risks and Uncertainties | |
Description of the Business and Risks and Uncertainties | (1) Description of the Business and Risks and Uncertainties Description of Business ReShape Lifesciences Inc. (the “Company”) was originally incorporated in the state of Minnesota in December 2002 and reincorporated in the state of Delaware in July 2004. In 2017, the Company changed its name from EnteroMedics Inc. to ReShape Lifesciences Inc. The Company is headquartered in San Clemente, California. The Company is a developer of minimally invasive medical devices that advance bariatric surgery to treat obesity and metabolic diseases. The Company’s current portfolio consist of the LAP-BAND ® Adjustable Gastric Banding System, ReShapeCare TM virtual health coaching program, the ReShape Vest TM , an investigational device to help treat more patients with obesity and the Diabetes Bloc-Stim Neuromodulation, a technology under development as a new treatment for type 2 diabetes mellitus. The Company sells the LAP-BAND worldwide and is managed in the following geographical regions: United States, Australia, Europe and the rest of world. Refer to Note 12 for additional information about operating segments. Risks and Uncertainties The Company continues to devote significant resources to developing its product technology, commercialization activities and raising capital. These activities are subject to significant risks and uncertainties, including the ability to obtain additional financing, and there can be no assurance that the Company will be successful in obtaining additional financing on favorable terms, or at all. If adequate funds are not available, the Company may have to further reduce its cost structure until financing is obtained and/or delay development, or commercialization of products, or license to third parties the rights to commercialize products, or technologies that the Company would otherwise seek to commercialize. The medical device industry is characterized by frequent and extensive litigation and administrative proceedings over patent and other intellectual property rights. Whether a product infringes a patent involves complex legal and factual issues, the determination of which is often difficult to predict, and the outcome may be uncertain until the court has entered final judgment and all appeals are exhausted. The Company’s competitors may assert that its products or the use of the Company’s products are covered by U.S. or foreign patents held by them. Refer to Note 15 for additional information about contingencies and litigation matters. On April 16, 2020, the Company implemented various short-term cost reductions and cash flow improvement actions, such as reducing the compensation for executives, management and key employees and decreasing operating expenses where possible. In addition, the Company also identified temporary headcount reductions and made the decision to furlough a portion of its workforce. During the second quarter of 2020, certain government-mandated closures began to ease and many areas throughout the world and within the United States began to allow elective surgeries. As a result of the easing, the Company did see sales volumes improve as we progressed through the third quarter. During the fourth quarter of 2020, there was another surge in COVID-19 cases resulting in a slowdown, or in some cases a shutdown of elective surgeries. Even after the COVID-19 outbreak has subsided, we may continue to experience materially adverse impact on our financial condition and results of operations. Additionally, on June 15, 2020, the Company ended the temporary pay reductions and the furloughed employees returned to work. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2020 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | (2) Basis of Presentation The Company has prepared the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Reverse Stock Splits On November 11, 2019, the Company’s board of directors and stockholders approved a 1-for-120 reverse stock split of the Company’s outstanding common stock that became effective after the close of market on November 11, 2019. In addition, the Company’s certificate of incorporation was amended to change the common stock par value from $0.01 per share to $0.001 per share. The reverse stock split in 2019 did not change the number of common or preferred shares authorized by the Company’s certificate of incorporation. All par value, share and per share amounts have been retroactively adjusted to reflect the reverse stock split for all periods presented. Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and accounts have been eliminated in consolidation Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers highly liquid investments generally with maturities of 90 days or less when purchased to be cash equivalents. Cash equivalents are stated at cost, which approximates market value. The Company’s cash equivalents are primarily in money market funds and certificates of deposit. The Company deposits its cash and cash equivalents in high-quality credit institutions. Restricted Cash Restricted cash represents $50 thousand related to a collateral money market account maintained by the Company as collateral in connection with corporate credit cards with Silicon Valley Bank at December 31, 2020 and 2019. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the consolidated balance sheets to the same total reported in the consolidated statements of cash flows (in thousands): December 31, December 31, 2020 2019 Cash and cash equivalents $ 2,957 $ 2,935 Restricted cash 50 50 Total cash, cash equivalents, and restricted cash in the consolidated statement of cash flows $ 3,007 $ 2,985 Inventory The Company accounts for inventory at the lower of cost or net realizable value, where net realizable value is based on market prices less costs to sell. The Company establishes inventory reserves for obsolescence based upon specific identification of expired or unusable units with a corresponding provision included in cost of revenue. The allowance for excess and slow-moving inventory was $0.1 million and $0.2 million at December 31, 2020 and 2019, respectively. Property and Equipment, Net Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation of property and equipment is computed using the straight-line method over their estimated useful lives of five to seven years for furniture and equipment and three to five years for computer hardware and software. Leasehold improvements are amortized on a straight-line basis over the lesser of their useful life or the term of the lease. Upon retirement or sale, the cost and related accumulated depreciation or amortization are removed from the Consolidated Balance Sheets and the resulting gain or loss is reflected in the Consolidated Statements of Operations. Repairs and maintenance are expensed as incurred. Other Intangible Assets Intangible assets are recorded based on their fair values at the date of acquisition. Indefinite-lived intangible assets consist of in-process research and development (“IPR&D”) for the ReShape Vest recorded in connection with the Company’s acquisition of BarioSurg, Inc. (“BarioSurg”) in May 2017. Finite-lived intangible assets primarily consist of developed technology and trademarks/tradenames and are being amortized on a straight-line basis over their estimated useful lives. See Note 6 for additional information. Impairment of Indefinite-Lived and Long-Lived Assets Acquired IPR&D is subject to impairment testing until completion or abandonment of the project. Indefinite-lived intangible assets are reviewed for impairment annually, or whenever an event occurs or circumstances change that would indicate that the carrying amount may be impaired. An impairment loss is recognized when the asset's carrying value exceeds its fair value. See Note 7 for additional information. The Company evaluates long-lived assets under the provisions of ASC 350 “Intangibles–Goodwill and Other” and ASC 360 “Property, Plant, and Equipment” which addresses financial accounting and reporting for the impairment of long-lived assets and for long-lived assets to be disposed of. For purposes of assessing the recoverability of long-lived assets, the Company has one asset group which includes all assets of the Company. For assets to be held and used, the Company compares the carrying amounts to future net undiscounted cash flows expected to be generated by such assets when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Should an impairment exist, the impairment loss would be measured based on the excess carrying value of the assets over the assets’ fair value or estimates of future discounted cash flows. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance for deferred income tax assets is recorded when it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The Company’s policy is to classify interest and penalties related to income taxes as income tax expense in the consolidated statements of operations. Equity Certain issuances of the Company’s convertible preferred stock and warrants classified within equity contain non-standard down round features that result in the strike price being reduced on the basis of the pricing of future equity offerings. The value of the effect of the down round feature when it is triggered is recorded similar to a dividend and as a numerator adjustment in the basic earnings per share calculation. Foreign Currency When the local currency of the Company's foreign subsidiaries is the functional currency, all assets and liabilities are translated into United States dollars at the rate of exchange in effect at the balance sheet date. Income and expense items are translated at the weighted-average exchange rate prevailing during the period. The effects of foreign currency translation adjustments for these subsidiaries are deferred and reported in stockholders’ equity as a component of Accumulated Other Comprehensive Loss. The effects of foreign currency transactions denominated in a currency other than an entity's functional currency are included in Gain on foreign currency exchange in the Consolidated Statements of Operations. The Company does not hedge foreign currency translation risk in the net assets and income it reports from these sources. Revenue Recognition The Company recognizes revenue when it satisfies a performance obligation by transferring control of the promised goods or services to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Product sales consist of a single performance obligation that the Company satisfies at a point in time. The Company recognizes product revenue when the following events have occurred: (a) the Company has transferred physical possession of the products, (b) the Company has a present right to payment, (c) the customer has legal title to the products, and (d) the customer bears significant risks and rewards of ownership of the products. For the Company’s Lap-Band product, these criteria are met under the agreements with most customers upon product shipment. This includes sales to distributors, who sell the products to their customers, take title to the products and assume all risks of ownership at the time of shipment. Distributors are obligated to pay within specified terms regardless of when, if ever, they sell the products. Refer to Note 12 for additional information about the Company’s products and contractual arrangements. Taxes collected from customers and remitted to governmental authorities are accounted for on a net basis. Accordingly, such amounts are excluded from revenues. Amounts billed to customers related to shipping and handling are included in revenues. Shipping and handling costs related to revenue producing activities are included in cost of sales. Research and Development Expenses Research and development expenses consist of costs incurred to further the Company’s research and development activities, including product development, clinical trial expenses, quality assurance, regulatory expenses, payroll and other personnel expenses, materials and consulting costs. Certain of these activities, such as pre-clinical studies and clinical trials, may be conducted by third-party service providers at the direction of the Company. In addition, during 2018, the Company entered into an arrangement with a Contract Research Organization (“CRO”) under which the CRO performs and manages research and development activities on the Company’s behalf. The Company records the estimated costs of research and development activities performed by third-party service providers based upon the estimated services provided but not yet invoiced and includes these costs in accrued expenses and other payables in the Consolidated Balance Sheets and within research and development expense in the Consolidated Statements of Operations. The Company accrues for these costs based on factors such as estimates of the work completed and in accordance with agreements established with its third-party service providers. As actual costs become known, the Company adjusts its accrued liabilities. The Company’s CRO arrangement generally requires payments in advance of services. Upon making a payment, the Company makes a determination as to the amount to record as a deferred charge and the amount of research and development expense. The amount of CRO related costs included in research and development expense each period is expensed based on the Company’s estimate of the time period over which services will be performed, enrollment of patients, number of sites activated and level of effort to be expended. Any amount of advances paid in excess of expense recognized is included in prepaid expenses and other current assets on the Consolidated Balance Sheets. If the actual timing of the CRO’s performance of services or the level of effort varies from the Company’s estimate, the amount of prepaid CRO expense is adjusted accordingly. Stock-Based Compensation The Company applies ASC 718 Compensation — Stock Compensation and accordingly records compensation expense for stock options over the vesting or service period using the fair value on the date of grant, as calculated by the Company using the Black-Scholes model. The Company’s stock-based compensation plans are more fully described in Note 13. Net Loss Per Share Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period, including the prefunded warrants that were reclassified from warrant liability to equity as a result of the reverse stock split. Diluted net loss per share is based on the weighted-average common shares outstanding during the period plus dilutive potential common shares calculated using the treasury stock method. Such potentially dilutive shares are excluded when the effect would be to reduce a net loss per share. For purposes of basic and diluted per share computations, loss from continuing operations and net loss are reduced by the down round adjustments for convertible preferred stock and warrants . The following table sets forth the potential shares of common stock that are not included in the calculation of diluted net loss per share because to do so would be anti-dilutive as of the end of each period presented: December 31, 2020 2019 Stock options 40 155 Convertible preferred stock 1,288 1,288 Warrants 13,483,446 13,647,740 Concentration of Credit Risk, Interest Rate Risk and Foreign Currency Exchange Rate Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash and trade accounts receivable. Cash and cash equivalents are primarily deposited in demand and money market accounts. At times, such deposits may be in excess of insured limits. Investments in money market funds are not considered to be bank deposits and are not insured or guaranteed by the federal deposit insurance company or other government agency. These money market funds seek to preserve the value of the investment at $1.00 per share; however, it is possible to lose money investing in these funds. The Company has not experienced any losses on its deposits of cash and cash equivalents. To minimize the risk associated with trade accounts receivable, management maintains relationships with the Company’s customers that allow management to monitor current changes in business operations so the Company can respond as needed. Substantially all of the Company’s revenue is denominated in U.S. dollars. Only a small portion of revenue and expenses are denominated in foreign currencies, principally the Australian dollar and Euro for 2020 and 2019. The Company has not entered into any hedging contracts. Future fluctuations in the value of the U.S. dollar may affect the price competitiveness of the Company’s products outside the U.S. Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (referred to as an “exit price”). Fair value of an asset or liability considers assumptions that market participants would use in pricing the asset or liability, including consideration of non-performance risk. Assets and liabilities are categorized into a three-level fair value hierarchy based on valuation inputs used to determine fair value. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are observable, either directly or indirectly. Level 3 inputs are unobservable due to little or no corroborating market data. The carrying amounts of the Company’s financial instruments, including cash equivalents, accounts receivable, accounts payable and certain accrued and other liabilities approximate fair value due to their short-term maturities. Refer to Note 8 regarding the fair value of debt instruments and Note 12 regarding fair value measurements and inputs of warrants. Recent Accounting Pronouncements New accounting standards adopted by the Company in 2020 are discussed below or in the related notes, where appropriate. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820) – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement , which modifies the disclosure requirements on fair value measurements and is intended to improve the effectiveness of disclosures, including the consideration of costs and benefits. The guidance is effective on January 1, 2020. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU 2018-15 Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40), Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The ASU is effective for the Company on January 1, 2020. The adoption of this guidance did not have a material impact on its consolidated financial statements. New accounting standards not yet adopted are discussed below. In December 2019, the FASB issued authoritative guidance intended to simplify the accounting for income taxes: ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This guidance eliminates certain exceptions to the general approach to the income tax accounting model and adds new guidance to reduce the complexity in accounting for income taxes. This guidance is effective for annual periods after December 15, 2020, including interim periods within those annual periods. The Company is currently evaluating the potential impact of this guidance on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which is intended to provide financial statement users with more useful information about expected credit losses on financial assets held by a reporting entity at each reporting date. In May 2019, the FASB issued ASU No. 2019-05, which amended the new standard by providing targeted transition relief. The new guidance replaces the existing incurred loss impairment methodology with a methodology that requires consideration of a broader range of reasonable and supportable forward-looking information to estimate all expected credit losses. In November 2019, the FASB issued 2019-11, which amended the new standard by providing additional clarification. This guidance is effective for the fiscal years and interim periods within those years beginning after December 15, 2022. The Company is currently evaluating the impact the guidance will have on its consolidated financial statements. Various other accounting standards and interpretations have been issued with 2021 effective dates and effective dates subsequent to December 31, 2020. The Company has evaluated the recently issued accounting pronouncements that are currently effective or will be effective in 2021 and believe that none of them have had or will have a material effect on the Company’s financial position, results of operations or cash flows. |
Liquidity and Management_s Plan
Liquidity and Management’s Plans | 12 Months Ended |
Dec. 31, 2020 | |
Liquidity and Management’s Plans | |
Liquidity and Management’s Plans | (3) The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company currently is not generating revenue from operations that is significant relative to its level of operating expenses. As of December 31, 2020, the Company had net negative working capital of $2.7 million. The Company’s principal source of liquidity as of December 31, 2020 consisted of approximately $3.0 million of cash and cash equivalents, and $2.6 million of accounts receivable. Our anticipated operations include plans to (i) integrate the sales and operations of the Lap-Band product line in order to expand sales domestically and internationally as well as to obtain cost savings synergies, (ii) introduce to the market place ReShapeCare, (iii) continue clinical test of the ReShape Vest, (iv) continue development of the Diabetes Bloc-Stim Neuromodulation, (v) seek opportunities to leverage our intellectual property portfolio and custom development services to provide third-party sales and licensing opportunities, and (vi) explore and capitalize on synergistic opportunities to expand our portfolio and offer future minimally invasive treatments and therapies in the obesity continuum of care. The Company believes that it has the flexibility to manage the growth of its expenditures and operations depending on the amount of available cash flows, which could include reducing expenditures for marketing, clinical and product development activities. However, the Company will ultimately need to achieve sufficient revenues from product sales and obtain additional debt or equity financing to support its operations Subsequent to year end management has successfully obtained a $15.0 million line of credit and has agreed to merge with Obalon, see Note 16 for further details, which the Company anticipates will result in the combined company’s common stock being traded on the NASDAQ Stock Market Exchange. The Company is also pursuing further funding options, including seeking additional equity or debt financing to support the expansion of the Lap-Band product line, the introduction of ReShapeCare to the market place; and the continued development and, successful commercialization of the ReShape Vest and the ReShape Diabetes Bloc-Stim Neuromodulation. COVID-19 Risk and Uncertainties and CARES Act Additionally, on January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally and on March 13, 2020, the United States declared a national emergency with respect to the coronavirus outbreak. This outbreak has severely impacted global economic activity, and many countries and many states in the United States have reacted to the outbreak by instituting quarantines, mandating business and school closures and restricting travel. These mandated business closures have at times included the cessation of non-elective surgeries in Australia, Europe and the United States for all but emergency procedures. As a result of these mandates, on April 16, 2020, the Company implemented various short-term cost reductions and cash flow improvement actions, such as reducing the compensation for executives, management and key employees and decreasing operating expenses where possible. In addition, the Company also identified temporary headcount reductions and made the decision to furlough a portion of its workforce. During the second quarter of 2020, the mandated closures began to ease in many areas throughout the world and within the United States. As a result of this, elective surgeries started back up again through various parts of the world, which led to improved sales progressing through the third quarter. Even after the COVID-19 outbreak has subsided, the Company may continue to experience materially adverse impact on its financial condition and results of operation. Additionally, on June 15, 2020, the Company ended the temporary pay reductions and the furloughed employees returned to work. The full impact of the COVID-19 outbreak continues to evolve and it is uncertain as to the full magnitude that the pandemic will have on the Company’s financial condition, liquidity, and future results of operations. Management is actively monitoring the impact of the global situation on the Company’s financial condition, liquidity, operations, suppliers, industry, and workforce and has taken actions to mitigate the impact including among other things, temporary reductions in pay, and furloughs of certain positions along with deferrals in payment for cash preservation. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, the Company is not able to estimate the effects of the COVID-19 outbreak on its results of operations, financial condition, or liquidity for fiscal year 2021. On March 27, 2020, President Trump signed into law the “Coronavirus Aid, Relief, and Economic Security (CARES) Act.” The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, increased limitations on qualified charitable contributions, and technical corrections to tax depreciation methods for qualified improvement property. The CARES Act established the Paycheck Protection Program (“PPP”) under which the Company received a PPP loan described in more detail in Note 8 below. On February 3, 2021, the Company submitted the application for PPP loan forgiveness according to the terms and conditions of the SBA’s Loan Forgiveness Application (Revised June 24, 2002). On March 1, 2021, the Company received confirmation from the SBA, the PPP Loan has been forgiven in full including all interest incurred. |
Supplemental Balance Sheet Info
Supplemental Balance Sheet Information | 12 Months Ended |
Dec. 31, 2020 | |
Supplemental Balance Sheet Information | |
Supplemental Balance Sheet Information | (4) Supplemental Balance Sheet Information Inventory December 31, 2020 2019 Raw materials $ 174 $ — Sub-assemblies 733 — Finished goods 1,337 1,317 Total inventory $ 2,244 $ 1,317 Prepaid expenses and other current assets: December 31, 2020 2019 Prepaid insurance $ 619 $ 190 Prepaid contract research organization expenses 295 1,356 Other 159 165 Total prepaid expenses and other current assets $ 1,073 $ 1,711 Accrued and other liabilities: December 31, 2020 2019 Payroll and benefits $ 1,735 $ 1,021 Accrued professional services 446 1,432 Customer deposits 398 202 Accrued insurance premium 272 87 Taxes 265 373 Equity transaction related liability — 211 Other 514 495 Total accrued and other liabilities $ 3,630 $ 3,821 In addition, to the accrued taxes included in the table above, the Company has $61 thousand of taxes payable to the Australian Taxation Office included within accounts payable in the consolidated balance sheet at December 31, 2020. There was no taxes payable included in accounts payable at December 31, 2019. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2020 | |
Property and Equipment | |
Property and Equipment | (5) Property and Equipment Property and equipment consist of the following: December 31, 2020 2019 Machinery and equipment $ 179 $ — Furniture and equipment 83 83 Computer hardware and software 78 78 Leasehold improvements 19 19 Construction in progress 404 — 763 180 Less accumulated depreciation and amortization (179) (164) Property and equipment, net $ 584 $ 16 Depreciation expense for the years ended December 31, 2020 and 2019 were approximately $15 thousand and $40 thousand, respectively. |
Other Intangible Assets
Other Intangible Assets | 12 Months Ended |
Dec. 31, 2020 | |
Other Intangible Assets | |
Other Intangible Assets | (6) Other intangible assets consist of the following: December 31, 2020 Weighted Average Useful Life (years) Gross Carrying Amount Accumulated Amortization Net Book Value Finite-lived intangible assets: Developed technology 10.0 $ 14,362 $ $ 11,429 Trademarks/Tradenames 10.0 2,045 1,460 Covenant not to compete 3.0 76 0 16,483 12,889 Indefinite-lived intangible assets: In-process research and development indefinite 14,133 — 14,133 Total $ 30,616 $ $ 27,022 December 31, 2019 Weighted Average Useful Life (years) Gross Carrying Amount Accumulated Amortization Net Book Value Finite-lived intangible assets: Developed technology 10.0 $ 14,362 $ $ 12,866 Trademarks/Tradenames 10.0 2,045 1,664 Covenant not to compete 3.0 76 11 16,483 14,541 Indefinite-lived intangible assets: In-process research and development indefinite 14,133 — 14,133 Total $ 30,616 $ $ 28,674 The gross amount and accumulated impairment loss of indefinite-lived intangible assets are as follows (in thousands): December 31, 2020 2019 Gross amount $ 20,721 $ 20,721 Accumulated impairment loss (6,588) (6,588) Indefinite-lived intangible assets, net $ 14,133 $ 14,133 Amortization expense for both the years ended December 31, 2020 and 2019 were approximately $1.7 million. Estimated amortization expense for each of the years ending December 31 is as follows: Year ending December 31, 2021 $ 1,641 2022 1,641 2023 1,641 2024 1,641 2025 1,641 Thereafter 4,684 $ 12,889 |
Impairment of Intangible Assets
Impairment of Intangible Assets | 12 Months Ended |
Dec. 31, 2020 | |
Impairment of Intangible Assets | |
Impairment of Intangible Assets | (7) During the second quarter of 2020, the Company determined a triggering event occurred due to the COVID-19 pandemic, and as such, the Company performed a quantitative analysis and determined the fair value of the IPR&D exceeded the carrying value and concluded there was no impairment of intangible assets. The Company has continued to monitor the delays and determined there is no impairment needed for the year ended December 31, 2020. Second Quarter 2019 The Company has completed the feasibility study for the ReShape Vest and began clinical trials in Europe in 2018. During the second quarter of 2019, the Company performed a qualitative impairment analysis of the IPR&D. Due to delays in the clinical trials experienced during the first six months of 2019, the Company revised its expectations of when revenues would commence for the ReShape Vest, thus reducing the projected near-term future net cash flows related to the ReShape Vest. As a result, the Company performed a quantitative impairment analysis of the IPR&D and recorded a one-time nonrecurring impairment charge of $6.6 million, for the excess of the carrying value over the estimated fair value. The fair value of the IPR&D was estimated using an income approach using Level 3 assumptions which included discounting the revised projected future net cash flows to their present value, with a discount rate of 22.4%. The Company also assessed the recoverability of finite-lived intangible assets and did not identify any impairment as a result the performance of this analysis. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2020 | |
Debt | |
Debt | (8) December 31, December 31, 2020 2019 Asset purchase consideration $ 2,867 $ 4,637 Credit agreement 9,500 — PPP Loan 955 — Total debt 13,322 4,637 Less: unamortized debt discount 545 — Less: current portion of debt 3,609 1,909 Debt, noncurrent portion $ 9,168 $ 2,728 CARES Act On April 24, 2020, the Company entered into a PPP Loan agreement with Silicon Valley Bank (“SVB”) under the PPP, which is part of the CARES Act administered by the United States Small Business Administration (“SBA”). As part of the application for these funds, the Company in good faith, has certified that the current economic uncertainty made the loan request necessary to support the ongoing operations of the Company. This certification further requires the Company to take into account our current business activity and our ability to access other sources of liquidity sufficient to support ongoing operations in a manner that is not significantly detrimental to the business. Under this program, the Company received proceeds of $1.0 million from the PPP Loan. In accordance with the requirements of the PPP, the Company intends to use proceeds from the PPP Loan primarily for payroll costs, rent and utilities. The PPP Loan has a 1.00% interest rate per annum, matures on April 24, 2022 and is subject to the terms and conditions applicable to loans administered by the SBA under the PPP. Under the terms of PPP, all or certain amounts of the PPP Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. On February 23, 2021, the Company submitted the application for PPP loan forgiveness, in accordance with the terms and conditions of the SBA’s Loan Forgiveness Application (revised June 24, 2020). On March 1, 2021, the Company received confirmation from the SBA, the PPP Loan has been forgiven in full including all interest incurred. Credit Agreement On March 25, 2020, the Company executed a credit agreement up to $3.5 million, with an institutional investor (the “Lender”), who holds warrants in connection with the June 2019 and September 2019 transactions. On the day of closing, the Company received $2.5 million and the additional $1.0 million may be drawn from time to time 30 days after the closing date but prior to five months after the closing date, in $500 thousand increments per draw. On June 23, 2020, the Company made the first additional draw of $500 thousand and on July 29, 2020 the second $500 thousand draw was made. On September 14, 2020, the Company and the Lender entered into the second amendment to the credit agreement that increased the amount available under delayed draw term loans by $2.0 million. The Company borrowed $1.0 million of the available amount immediately and the remaining $1.0 million was available in increments of least $500 thousand with at least 30 days between borrowings and issued an additional 1,200,000 Series G Warrants. On November 13, 2020, the Company made the first additional draw of $500 thousand and on December 16, 2020, at the time of the next amendment, the Company made the final draw of $500 thousand available within the terms of this amendment. The Company evaluated the accounting related to the amendment and in conjunction with the warrants issued. Based on this analysis the Company determined the agreements are substantially different and extinguished the original credit agreement and recorded the amended credit agreement as a new debt at a fair value of $3.9 million. As a result, the Company recorded a debt discount of approximately $0.6 million and a $2.4 million loss on extinguishment of debt which is comprised of the fair value of the warrants and unamortized debt issuance cost with the original credit agreement, offset by the debt discount. At September 30, 2020 there was approximately $0.5 million of unamortized debt discount. Pursuant to the amendment of the credit agreement, the maturity date of the loans are March 31, 2021 and the loans bear interest at LIBOR plus 2.5%. On December 16, 2020, the Company and the Lender entered into the third amendment to the credit agreement that increased the amount available under delayed draw term loans by an additional $4.0 million. The Company borrowed the entire $4.0 million of the available amount immediately and issued an additional 4,000,000 Series G Warrants. The Company evaluated the accounting related to the amendment and in conjunction with the warrants issued. Based on this analysis the Company determined the agreements are substantially different and extinguished the original credit agreement and recorded the amended credit agreement as a new debt at a fair value of $8.9 million. As a result, the Company recorded a debt discount of approximately $0.6 million and a $5.3 million loss on extinguishment of debt which is comprised of the fair value of the warrants and unamortized debt discount cost with the original credit agreement, offset by the debt discount related to the new debt. At December 31, 2020 there was approximately $0.5 million of unamortized debt discount. Pursuant to the amendment of the credit agreement, the maturity date of the loan is March 31, 2021 and the loans bear interest at LIBOR plus 2.5%. On March 10, 2021, the Company and the Lender entered into the fifth amendment to the credit agreement. As part of this amendment the maturity date was amended from March 31, 2021 to March 31, 2022 or, if earlier, the date that is 15 days after the Company completes a capital raising transaction resulting in gross proceeds of at least $15 million. For further details see Note 16. Asset Purchase Consideration Payable The Company granted Apollo a first security interest in substantially all of the Company’s assets as security for the payment and performance when due of all of all of its obligations under the Asset Purchase Agreement, including the remaining asset purchase consideration. On October 28, 2019, the Company received the acknowledgement from Apollo of the termination of the security interest granted by the Company. The security interest was automatically terminated as a result of the Company completing a Qualified Financing, as defined in the Security Agreement, in connection with the Company’s previously disclosed Securities Purchase Agreement, dated June 13, 2019, and Warrant Exercise Agreement, dated September 23, 2019. The net present value of the secured asset purchase consideration payable was determined using a discount rate of 5.1%. At December 31, 2020 and 2019, the aggregate carrying value of the current and noncurrent asset purchase consideration payable of approximately $2.9 million and $4.6 million respectively, as adjusted for accretion of interest of approximately $0.6 million and $0.3 million, respectively. Convertible Subordinated Debentures On March 29, 2019, the Company completed a private placement with certain healthcare focused institutional investors for the sale of secured subordinated original issue discount convertible debentures (“debentures”) for a purchase price of $2.0 million. The debentures had a maturity of June 28, 2019 and a face amount of $2.2 million, reflecting a 10% original issue discount. The Company recorded an additional debt discount and a derivative liability for the fair value of the bifurcated embedded conversion features discussed below. The initial carrying amount of the debentures, net of discounts and deferred financing costs, was $1.5 million. The Company repaid the debentures on June 20, 2019 at their face amount of $2.2 million with proceeds from an equity financing which closed on June 18, 2019. In connection with the early repayment of the debentures, the Company recorded a loss on extinguishment of debt of $0.1 million, which consisted of the unamortized debt discount and deferred financing costs. The debentures contained a conversion feature that provided that, at any time after June 28, 2019, if the debentures had not been repaid, but subject to certain investor ownership limitations, the debentures were convertible into shares of common stock at a conversion price equal to the lesser of $0.33 and 80% of the average of the lowest two volume weighted average prices of the Company’s common stock during the 20 trading days prior to conversion. The Company analyzed the conversion features embedded in the debentures and determined that bifurcation and liability classification was required under ASC 815 due to the variable number of shares issuable upon conversion. The fair value of the bifurcated embedded conversion features was determined to be $0.5 million as of the issuance date using a Monte Carlo model and primarily Level 3 inputs. Upon the closing of the Company’s equity financing and the Company’s planned use of a portion of the proceeds to repay the debentures, the fair value of the embedded derivative liability was reduced to zero as the conversion feature was no longer available. The fair value adjustment to the embedded derivative liability of $0.5 million was recorded as a reduction to Interest Expense. In connection with the financing, the Company amended the exercise price of warrants to purchase up to 66,667 shares of common stock held by the investors that were issued on November 28, 2018 from $180.00 per share to $1.20 per share. The value attributable to the exercise price reduction of $0.1 million was recorded in Warrant Expense and was estimated using the Black Scholes option pricing model using a risk-free interest rate of 2.2%, an expected term of 4.7 years, expected dividends of zero and expected volatility of 204.4%. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2020 | |
Leases | |
Leases | (9) On the date of adoption of Topic 842, the Company had noncancelable operating leases for office and warehouse space in San Clemente, California and noncancelable operating leases for certain office equipment that expire at various dates through 2022. Financing lease arrangements and the effects of any lease modifications have not been material. Certain of the Company’s equipment leases include variable lease payments that are adjusted periodically based on actual usage. Lease and non-lease components are accounted for separately. The Company determines the lease term as the noncancelable period of the lease, and may include options to extend or terminated the lease when reasonably certain that the Company will exercise that option. Leases with a term of 12 months or less are not recognized on the balance sheet. The Company uses its incremental borrowing rate based on the information available at lease commencement in determining the present value of unpaid lease payments. Right-of-use assets also include any lease payments made at or before lease commencement and any initial direct costs incurred, and exclude any lease incentives received. Operating lease costs for the year ended December 31, 2020 were $0.3 million. Variable lease costs were not material. Supplemental information related to operating leases is as follows: Balance Sheet Information at December 31, 2020 Operating lease ROU assets $ 465 Operating lease liabilities, current portion $ 314 Operating lease liabilities, long-term portion 163 Total operating lease liabilities $ 477 Cash Flow Information for the Year Ended December 31, 2020 Cash paid for amounts included in the measurement of operating leases liabilities $ 323 Maturities of operating lease liabilities at December 31, 2019 were as follows: Twelve months ending December 31, 2021 $ 331 2022 166 2023 — Total lease payments 497 Less: imputed interest 20 Total lease liabilities $ 477 Weighted-average remaining lease term at end of period (in years) 1.7 Weighted-average discount rate at end of period % |
Equity
Equity | 12 Months Ended |
Dec. 31, 2020 | |
Equity | |
Equity | (10) Equity The Company may issue preferred stock, common stock, or both, in connection with underwritten public offerings, registered direct offerings, or business acquisitions. Such issuances of equity typically include the issuance or sale of warrants to purchase common stock. Certain issuances of convertible preferred stock and warrants may contain anti-dilutive features apart from customary adjustments for splits and reverse splits of common stock (collectively, “down round features”). When a series of convertible preferred stock contains this non-standard down round feature, the Company is required to adjust the conversion price in the event of future stock sales at a lower unit price. When warrants issued in connection with an equity transaction contain, or are amended to contain, this non-standard down round feature, the Company is required to adjust the exercise price upon the issuance of any shares of common stock or securities convertible into shares of common stock below the then-existing exercise price and evaluate and account for the value attributable to the reduced warrant exercise price. In the event down round adjustments are triggered, the values attributable to the adjustment to the convertible preferred stock conversion price and warrant exercise price are recorded as an increase to additional paid-in capital and increase to accumulated deficit. All series of the Company’s convertible preferred stock are classified in stockholders’ equity, including those with the down round feature, when applicable to the equity transaction. Warrants to purchase common stock are classified in stockholders’ equity, including those issued with the down round feature, as they are both indexed to the Company’s own stock and meet the scope exception in ASC 815 “Derivatives and Hedging.” The Company had the following equity transactions during the years ended December 31, 2020 and 2019: December 2020 Exercise of Warrants for Common Stock On December 3, 2020, the Company issued 290,000 shares of common stock to two healthcare focused institutional investors, totaling 580,000 shares of common stock, as an exercise of pre-funded warrants issued in connection with the June 2019 and September 2019 private placement transactions. The Company received approximately $0.1 million in connection with these exercises. June 2020 Cashless Exercise of Warrants for Common Stock On June 23, 2020, the Company issued 58,981 shares of common stock as a cashless exercise of warrants issued to the placement agents in connection with the June 2019 private placement with healthcare focused institutional investors. May 2020 Common Stock Issued for Professional Services On May 28, 2020, the Company issued 50,000 shares of common stock, having an aggregate fair value of $0.2 million for ongoing professional services. The $0.2 million was recorded as a prepaid asset and will be amortized of the minimum life of the agreement. April 2020 Exercise of Warrants for Common Stock As discussed in Note 8 above, in connection with the credit agreement, the lender exercised its Series C and Series F warrants to purchase an aggregate of 5,085,834 shares of common stock with a current exercise price of $0.12 per warrant on April 15, 2020, in which the Company received net proceeds of $0.6 million. September 2019 Issuance of Common Stock and Warrants On September 23, 2019, the Company entered into a warrant exercise agreement with the holders of Series B warrants issued in the June 2019 private placement. The holders agreed to early exercise 3,333,334 Series B warrants in the private placement in exchange for 69,167 shares of common stock and 3,264,167 common stock equivalents in the form of Series F prefunded warrants. The net proceeds from the early exercise of Series B warrants were approximately $6.9 million, after deducting placement agent fees and other transaction costs. As an incentive for the warrant holders to exercise their Series B warrant in full, the warrant holders were issued new five-year series E warrants to purchase up to 3,333,334 unregistered shares of the Company’s common stock, in aggregate, at an exercise price of $6.00 per share, through a private placement. In connection with the registered direct offering, the placement agent received warrants to purchase 233,334 shares of common stock at an exercise price of $6.00 per share. June 2019 Issuance of Common Stock and Warrants On June 18, 2019, the Company completed a private placement with certain healthcare focused institutional investors for the sale of 130,000 shares of common stock at a purchase price of $2.40 per share and series C pre-funded warrants to purchase 3,203,334 shares of common stock at a purchase price of $2.28 per share. The exercise price of each pre-funded warrant is $0.12 per share. The Company also issued series A warrants to purchase 3,333,334 shares of common stock at an exercise price of $2.64 per share and series B warrants to purchase 3,333,334 shares of common stock at an exercise price of $2.40 per share. Net proceeds from the private placement were $6.9 million after deducting placement agent fees and other transaction costs. In connection with the registered direct offering, the placement agent received warrants to purchase 233,334 shares of common stock at an exercise price of $3.00 per share. Conversions of Stock On February 1, 2019, pursuant to an exchange agreement with Sabby Volatility Warrant Master Fund, Ltd. (“Sabby”) 9,993 shares of the Company’s common stock were exchanged for an aggregate of 1,192,000 shares of series E convertible preferred stock, par value $0.01 per share (“Series E Preferred Stock”) in a noncash transaction. Each share of Series E Preferred Stock was convertible into one share of common stock at Sabby’s election pre-effect of the reverse stock split that occurred during November 2019. In April 2019, all shares of Series E Preferred Stock were converted into an equal number of shares of common stock. The November 2019 reverse stock split had no effect on this transaction. During the year ended December 31, 2019, 156 shares of Series B Preferred Stock were converted into 1,040 shares of common stock. At December 31, 2020, the remaining 3 shares of Series B Preferred stock are convertible into 1,250 shares of common stock. At December 31, 2020, the remaining 95,388 shares of Series C Convertible Preferred Stock, par value $0.001 per share, are convertible into 38 shares of common stock. The Series C Preferred Stock has no voting rights. In the event of any voluntary or involuntary liquidation of the Company, the Series C Preferred Stock holders shall be paid after other series of preferred stock, but take preferential treatment over common shareholders. The series C convertible preferred stock has a liquidation preference of $274.88 per share, or $692,691.05 per underlying share of common stock, or approximately $26.2 million in the aggregate. Holders of the series C convertible preferred stock have the right to convert their shares into shares of common stock instead of receiving the liquidation preference. In general, the series C convertible preferred stock is entitled to receive dividends (on an as-if-converted-to-common stock basis) actually paid on shares of common stock when, as and if such dividends are paid on shares of common stock. No other dividends will be paid on shares of series C convertible preferred stock. |
Warrants
Warrants | 12 Months Ended |
Dec. 31, 2020 | |
Warrants. | |
Warrants | (11) Warrants The Company’s grants of warrants to purchase common stock are primarily in connection with equity financings. See Note 10 for additional information about equity financings and the related issuance of warrants. Warrant activity was as follows: Shares Balance December 31, 2018 127,540 Issued 16,934,170 (1) Exercised (3,451,642) (2) Cancelled (139) Balance December 31, 2019 13,609,929 Issued 6,400,000 (3) Exercised (5,724,815) (4) Cancelled (1) Balance December 31, 2020 14,285,113 (1) Warrants issued in 2019 include 6,467,501 of pre-funded warrants sold in connection with private placements completed on June 18, 2019 and September 23, 2019 (“June 2019 Pre-funded Warrants” and “September 2019 Pre-funded Warrants”). The pre-funded warrants do not expire. In addition, in June 2019 institutional investors purchased 3,333,333 Series A warrants, 3,333,334 Series B warrants, and in September 2019 the institutional investors purchased 3,333,334 Series E warrants. As part of both the June 2019 and September 2019 purchases there were 466,668 of placement agent warrants issued. For further details of the June and September 2019 transactions, see Note 10 equity above. (2) Warrants exercised in 2019 51,667 of the November 2018 Pre-funded Warrants at their exercise price of $1.20 per share. Warrants exercised in 2019 also include 66,666 of the Series A warrants issued in November 2018 (“November 2018 Series A Warrants”) at their exercise price of $1.20 per share, as adjusted. Warrants exercised in 2019 also include 3,333,334 of Series B warrants issued in June 2019. (3) Warrants issued in 2020 include 6,400,000 of three issuances of Series G warrants. (4) Warrants exercised in 2020 include 3,089,413 of Series C pre-funded warrants at an exercise price of $0.12 per shares, 2,576,421 Series F pre-funded warrants at an exercise price of $0.12 per share and 58,981 of placement agent warrants. Warrant Liability The Company had liability warrants related to the June 2019 and September 2019 transactions, due to the variable price feature that was in effect until the reverse stock split occurred on November 12, 2019. The Company analyzed the variable price features and established a warrant liability of $16.0 million and $24.6 million related to the June 2019 transaction and September 2019 transaction, respectively. As the initial fair value of both offering exceeded the cash received the company recorded $8.3 million and $17.2 million as warrant expense for the June 2019 transaction and September 2019 transaction, respectively. The initial fair value and changes to fair value through September 30, 2019 were determined using a Monte Carlo simulation model. The Company re-evaluated the warrants subsequent to reverse stock split and determined that the price becoming fixed, the warrants should be reclassified from liability to equity. In addition, as the price was fixed the Company determined the Monte Carlo simulation model was no longer the appropriate model; therefore the Company used a Black Scholes calculation to determine the fair value of these warrants at November 12, 2019. This resulted in the Company reclassifying $64.0 million of warrant liability to equity. The Company also recognized an additional $23.4 million of warrant expense for the changes in fair value of the liability warrants through November 12, 2019. Warrant Assumptions – 2020 Warrants Issued The following table provides the assumptions used to calculate the fair value of the Series G warrants issued during 2020, using a Black-Scholes model: Warrants Outstanding Strike Price Volatility Remaining Life Risk Free Rate First Issuance 1,200,000 3.70 % % Second Issuance 1,200,000 3.25 % % Third Issuance 4,000,000 3.50 % % Warrant Assumptions – 2019 Warrants Issued The following table provides the assumptions used to calculate initial fair value using a Monte Carlo simulation model: Strike Price Volatility Remaining Life Series A $ 2.64 % Series B $ 2.40 % Series E $ 6.00 % Series F $ % The following table provides the assumptions used at November 12, 2019, using a Black-Scholes model: Warrants Outstanding Strike Price Volatility Remaining Life Risk Free Rate Series A 3,333,333 $ 2.64 % % Placement Agent - June 233,334 $ 3.00 % % Series E 3,333,334 $ 6.00 % % Series F 3,264,167 $ 0.12 % % Placement Agent - September 233,334 $ 6.00 % % |
Revenue Disaggregation and Oper
Revenue Disaggregation and Operating Segments | 12 Months Ended |
Dec. 31, 2020 | |
Revenue Disaggregation and Operating Segments | |
Revenue Disaggregation and Operating Segments | (12) The following table presents the Company’s revenue disaggregated by product and geography: Year Ended December 31, 2020 2019 United States $ 8,275 $ 13,309 Australia 1,086 1,167 Europe 1,824 613 Rest of world 114 — Total net revenue $ 11,299 $ 15,089 · The next largest individual country outside the U.S. for the years ended December 31, 2020 and 2019 was Australia, which was 9.6% and 7.7% of total revenues, respectively. Variable Consideration The Company records revenue from customers in an amount that reflects the transaction price it expects to be entitled to after transferring control of the goods. Customers and distributors of the Lap-Band product generally have the right to return or exchange products purchased for up to thirty days from the date of product shipment contingent upon a 10% restocking fee. Any such return or exchange of Lap-Band products will be recorded as a reduction of revenue in the period incurred until sufficient historical information is available to enable management to estimate a returns reserve. Certain Lap-Band customers may receive volume rebates or discounts. Discounts are treated as a reduction in sales price and therefore corresponding revenue at the point of sale. Any volume rebates offered would be estimated and reserved as a reduction in revenue. Warranty The Company generally provides warranties against defects in materials and workmanship, and provides replacements at no charge to the customer, as long as the customer has notified the Company within 30 days of delivery and returns such products in accordance with the Company’s instructions. As they are considered assurance-type warranties, the Company does not account for them as separate performance obligations. Warranty reserve requirements are based on a specific assessment of the products sold with warranties where a customer asserts a claim for warranty or a product defect. For the vBloc product line, the Company has a 5-year warranty on all implantable parts. vBloc sales began in 2015 and ended in 2018, so this warranty will go through 2023. Contract Balances The Company records a receivable when it has an unconditional right to receive consideration after the performance obligations are satisfied. Practical Expedients The Company has elected the practical expedient not to determine whether contracts with customers contain significant financing components for contracts with a duration of one year or less. Operating Segments The Company conducts operations worldwide and is managed in the following geographical regions: United States, Australia, Europe and rest of world (primarily in The Middle East). All regions sell the LAP-BAND product line, which consisted of nearly all our revenue and gross profit for the years ended December 31, 2020 and 2019. During the second half of 2020 there were minimal revenue and gross profit related to ReShapeCare as this product was just launched and there were no revenue or gross profit recorded for the ReShape Vest or Diabetes Bloc-Stim Neuromodulation in 2020 or 2019 because these two products are still in the development stage. The Company’s geographic segments are reported based on the financial information provided to the Chief Operating Decision Maker (the Chief Executive Officer, or “CODM”). The Company’s CODM evaluates segment performance based on revenue and gross profit. The Company’s CODM does not use operating segment assets information to allocate resources or to assess performance of the operating segments and thus total segment assets have not been disclosed. |
Stock-based Compensation
Stock-based Compensation | 12 Months Ended |
Dec. 31, 2020 | |
Stock-based Compensation | |
Stock-based Compensation | (13) Stock-based Compensation The ReShape Lifesciences Inc. Second Amended and Restated 2003 Stock Incentive Plan (the “Plan”) provides for the grant of stock options or other stock-based awards to employees, officers, non-employee directors and outside consultants of the Company. In 2018, the Company’s stockholders approved an amendment to the Plan that increased the number of shares authorized for issuance by 26 shares. The Plan amendment in 2018 also added an automatic share increase provision that provides for an annual increase on January 1 of each year beginning in 2019 such that the number of shares of common stock authorized for issuance under the Plan is equal to 15% of the total shares of common stock outstanding, on an as converted basis, as of the last day of the immediately preceding fiscal year. The increased number of shares available for issuance under the Plan is subject to adjustment in accordance with certain provisions of the Plan. As of January 1, 2021, the number of shares authorized for issuance increased from 2,100,443 to 3,067,949 and there were 3,067,909 shares of common stock available for issuance under the Plan. The Plan is administered by the board of directors, which determines the types of awards to be granted, including the number of shares subject to the awards, the exercise price and the vesting schedule. Options granted under the Plan expire no later than ten years from the date of grant. The exercise price of each option may not be less than 100% of the fair market value of the common stock at the date of grant, except if an incentive stock option is granted to a Plan participant possessing more than 10% of the Company’s common stock, as defined by the Plan, the exercise price may not be less than 110% of the fair value of the common stock at the date of grant. Employee stock options generally vest over four years. In addition to the stock options granted pursuant to the Plan, the Company from time to time grants options to individuals as an inducement to accepting positions as employees (Inducement Grants). These Inducement Grants are made at the discretion of the board of directors and are issued outside of the Plan. Each of the Inducement Grants vests over a period of up to four years from the date of the officer’s employment agreement. Stock option activity for the Plan is as follows: Weighted Weighted Average Average Remaining Exercise Price Contractual Shares Per Share Life (years) Outstanding at December 31, 2018 28 $ 2,957,210.16 Shares reserved — — Options granted — — Options exercised — — Options cancelled — — Outstanding at December 31, 2019 28 2,957,210.16 Options granted — — Options exercised — — Options cancelled (3) 500,506.83 Outstanding at December 31, 2020 25 3,264,298.08 6.8 Exercisable at December 31, 2020 21 3,884,244.46 6.8 Vested and expected to vest at December 31, 2020 25 3,884,244.46 6.9 As of December 31, 2020, stock options under the Plan that were outstanding, exercisable and vested and expected to vest under had no intrinsic value. Stock option activity for Inducement Grants is summarized below: Weighted Weighted Average Average Remaining Exercise Price Contractual Shares Per Share Life (years) Outstanding at December 31, 2018 18 $ 352,876.06 Options granted — — Options exercised — — Options cancelled — — Outstanding at December 31, 2019 18 352,876.06 Options granted — — Options exercised — — Options cancelled (3) 532,766.92 Outstanding at December 31, 2020 15 316,897.88 7.1 Exercisable at December 31, 2020 15 316,897.88 7.1 Vested and expected to vest at December 31, 2020 15 316,897.88 7.1 As of December 31, 2020, Inducement Grants outstanding, exercisable and vested and expected to vest had no intrinsic value. There were no stock options granted during the years ended December 31, 2020 and 2019. Compensation cost for stock options granted to employees is based on the estimated grant-date fair value and is recognized over the vesting period of the applicable award on a straight-line basis. Compensation expense related to stock options was recognized as follows: Year Ended December 31, 2020 2019 Sales and marketing $ — $ 151 General and administrative 1,323 2,115 Research and development — 45 Total stock-based compensation expense $ 1,323 $ 2,311 As of December 31, 2020, there was approximately $0.3 million of total unrecognized compensation related to unvested stock option awards, which is expected to be recognized over a weighted-average period of 1.2 years. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2020 | |
Income Taxes | |
Income Taxes | (14) Income Taxes Income tax expense (benefit) consists of the following: Year ended December 31, 2020 2019 Deferred: Federal $ (84) $ (276) State (2) (867) Deferred income tax provision (benefit) (86) (1,143) Current: Federal — — State 1 18 Foreign (96) 232 Total income tax provision (benefit), net $ (181) $ (893) A reconciliation of the U.S. federal statutory income tax rate to the Company's effective income tax rate is as follows: Year ended December 31, 2020 2019 Income tax benefit at U.S. federal statutory rate 21.0 % 21.0 % State income tax benefit, net of federal benefit 4.2 % 3.9 % Stock warrant valuation (10.2) % (14.2) % Other permanent differences (0.6) % (0.7) % Research and development credit — % (0.2) % Change in state tax rate (0.3) % — % Foreign rate differential 0.5 % (0.1) % Other adjustments 1.4 % 0.3 % Change in valuation allowance (15.2) % (8.8) % Effective income tax rate 0.8 % 1.2 % The components of deferred tax assets and liabilities are as follows : December 31, 2020 2019 Deferred tax assets: Start-up costs $ 1,192 $ 1,208 Capitalized research and development costs 503 612 Reserves and accruals 9,235 8,180 Property and equipment 133 55 Research and development credit 1,194 1,194 Lease liability 41 118 State and local taxes 2 4 Net operating loss carryforwards 30,156 27,860 Total gross deferred tax assets 42,456 39,231 Valuation allowance (39,803) (36,349) Deferred tax assets, net of valuation allowance 2,653 2,882 Intangible assets (3,151) (3,396) Operating lease right-of-use assets (117) (188) Total gross deferred tax liabilities (3,268) (3,584) Net deferred tax liability $ (615) $ (702) In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. Based on the level of historical losses, projections of losses in future periods and potential limitations pursuant to changes in ownership under Internal Revenue Code (“IRC”) Section 382, the Company provided a valuation allowance at both December 31, 2020 and 2019. The remaining net deferred tax liability at both December 31, 2020 and 2019 is the result of the deferred tax liability associated with the indefinite-lived intangible asset less the deferred tax asset associated with U.S. federal net operating loss and 163j interest limitation carryforward that do not expire. The Company has a policy that NOL’s are shown gross with valuation allowances with respect to IRC 382 limitations. As of December 31, 2020 and 2019, the Company had U.S. federal net operating loss carryforwards of $77.2 million and $68.0 million, respectively. Of the total U.S. federal net operating loss carryforwards at December 31, 2020, $1.2 million is subject to a 20 year carryover period and will begin expiring in 2021. Losses generated beginning in 2018 will carryover indefinitely. The Company had state net operating loss carryforwards of $222.4 million and $212.7 million at December 31, 2020 and 2019, respectively and had foreign net operating loss carryforwards of $0.3 million and $0.4 million at December 31, 2020 and 2019, respectively. Net operating loss carryforwards of the Company are subject to review and possible adjustment by the taxing authorities. With certain exceptions (e.g. the net operating loss carryforwards), the Company is no longer subject to U.S. federal, state or local examinations by tax authorities for years prior to 2016. There are no tax examinations currently in progress. The Company’s ability to utilize its net operating loss carryforwards, tax credits, and built-in items of deduction, including capitalized start-up costs and research and development costs, has been, and may continue to be substantially limited due to ownership changes. These ownership changes limit the amount of net operating loss carryforwards, credits and built-in items of deduction that can be utilized annually to offset future taxable income. In general, an ownership change, as defined in IRC Section 382, results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50% of the outstanding stock of a company by certain stockholders or public groups. Due to the valuation allowance against deferred tax assets at December 31, 2020, the net effect of any further limitation will have no impact on results of operations. On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, a $2.0 trillion relief package comprising a combination of tax provisions and other stimulus measures. The CARES Act broadly provides entities tax payment relief and significant business incentives and makes certain technical corrections to the 2017 Tax Cuts and Jobs Act, or the Tax Act. The tax relief measures for entities include a five-year net operating loss carry back, increases interest expense deduction limits, acceleration of alternative minimum tax credit refunds, payroll tax relief, and a technical correction to allow accelerated deductions for qualified improvement property. The Act also provides other non-income tax benefits, including federal funding for a range of stabilization measures and emergency funding to assist those impacted by the COVID-19 pandemic. Similar legislation is being enacted in other jurisdictions in which the Company operates. ASC Topic 740, Income Taxes, requires the effect of changes in tax rates and laws on deferred tax balances to be recognized in the period in which new legislation is enacted. The enactment of the CARES Act and similar legislation in other jurisdictions in which the Company operates was not material to the Company's income tax benefit for the year ended December 31, 2020 The Company has adopted accounting standards which prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of uncertain tax positions taken or expected to be taken in a company's income tax return, and also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company had no amounts of unrecognized tax benefits that, if recognized, would affect its effective income tax rate for the years ended December 31, 2020 and 2019. The Company’s policy is to classify interest and penalties related to income tax expense as tax expense. As of December 31, 2020, the Company had no amount accrued for the payment of interest and penalties related to unrecognized tax benefits. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies | |
Commitments and Contingencies | (15) Commitments and Contingencies Employee Arrangements and Other Compensation Certain members of management are entitled to severance benefits payable upon termination following a change in control, which would approximate $1.8 million at December 31, 2020. The Company also has agreements with certain employees to pay bonuses based on targeted performance criteria. As of December 31, 2020 and 2019, approximately $1.3 million and $0.6 million was accrued for performance bonuses, which is included in accrued liabilities in the consolidated balance sheets. Purchase Commitments The Company generally purchases its products and accessories from a limited group of third-party suppliers through purchase orders. The Company had $1.7 million of purchase commitments as of December 31, 2020, for which the Company has not received the goods or services and which are expected to be purchased primarily within one year. These purchase commitments were made to secure better pricing and to ensure the Company will have the necessary inventory to meet anticipated near term demand. Although open purchase orders are considered enforceable and legally binding, the Company may be able to cancel, reschedule, or adjust requirements prior to supplier fulfillment. Litigation The Company is not currently a party to any material litigation and the Company is not aware of any pending or threatened litigation against it that could have a material adverse effect on the Company’s business, operating results or financial condition. The medical device industry in which the Company operates is characterized by frequent claims and litigation, including claims regarding patent and other intellectual property rights as well as improper hiring practices. As a result, the Company may be involved in various legal proceedings from time to time. Product Liability Claims The Company is exposed to product liability claims that are inherent in the testing, production, marketing and sale of medical devices. Management believes any losses that may occur from these matters are adequately covered by insurance, and the ultimate outcome of these matters will not have a material effect on the Company’s financial position or results of operations. The Company is not currently a party to any product liability litigation and is not aware of any pending or threatened product liability litigation that could have a material adverse effect on the Company’s business, operating results or financial condition. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent Events | |
Subsequent Events | (16) Agreement and Plan of Merger On January 19, 2021, the Company entered into an agreement and plan of merger with Obalon Therapeutics, Inc., a Delaware corporation (“Obalon”) and Optimus Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Obalon (“Merger Sub”), pursuant to which Merger Sub will merge with and into ReShape as the surviving corporation and a wholly-owned subsidiary of Obalon (the “Merger”). As a result of the Merger, Obalon will be renamed “ReShape Lifesciences Inc.” Subject to the terms and conditions of the Merger Agreement, at the closing of the Merger, each outstanding share of ReShape common stock and series B convertible preferred stock will be converted into the right to receive shares of common stock of Obalon (“Obalon Shares”) based on the exchange ratio set forth in the Merger Agreement. Upon completion of the Merger, ReShape stockholders will own approximately 51% of the combined company’s outstanding common stock and Obalon stockholders will own approximately 49%, subject to the terms of the Merger Agreement. Obalon will, at the effective time of the Merger, assume the outstanding warrants and series C convertible preferred stock of ReShape, subject to the terms of the Merger Agreement. All outstanding stock options of ReShape will be cancelled and terminated at the effective time of the Merger without any right to receive any consideration. No fractional shares will be issued in connection with the Merger and Obalon will pay cash in lieu of any such fractional shares. The Merger is intended to qualify for federal income tax purposes as a tax-free reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended. Consummation of the Merger is subject to certain closing conditions, including, among other things, approval by the stockholders of ReShape and Obalon and the NASDAQ Stock Market’s approval of (i) the Listing of Additional Shares Notice covering the Obalon Shares to be issued in the Merger and (ii) the continued listing of the combined company following completion of the Merger ((i) and (ii) together, the “NASDAQ Approvals”). Pursuant to the Merger Agreement, ReShape has agreed to exercise its reasonable best efforts to take all necessary steps to obtain the NASDAQ Approvals following the execution of the Merger Agreement, which may include procuring additional equity or debt investments, financings or other capital raising efforts. The Merger Agreement contains specified termination rights for both ReShape and Obalon. If Obalon terminates the Merger Agreement as a result of ReShape’s breach of its covenant to use its reasonable best efforts to obtain the NASDAQ Approvals, or if either party terminates the Merger Agreement because the NASDAQ Approvals have not been obtained within 30 days following the later of the Obalon Stockholders’ Meeting and the ReShape Stockholders’ Meeting, then ReShape will be required to pay Obalon a $1.0 million termination fee, which amount has been deposited with a third-party escrow agent. At the effective time of the Merger, the Board of Directors of the combined company is expected to consist of the five current members of the Board of Directors of ReShape and the executive officers of the combined company will be the current executive officers of ReShape. In addition, under the terms of the Merger Agreement, Obalon has agreed to file with NASDAQ a Listing of Additional Shares Notice covering the Obalon shares to be issued in connection with the Merger on the NASDAQ Stock Market and to seek approval of NASDAQ to change its name to ReShape Lifesciences Inc. and its trading symbol for its shares of common stock to “RSLS” upon the effective time of the Merger. The Merger Agreement contains customary representations, warranties and covenants by ReShape and Obalon. ReShape and Obalon have agreed, among other things, subject to certain exceptions, not to (1) directly or indirectly initiate, seek, or solicit, or knowingly encourage or facilitate any offer or alternative proposal for specified alternative transactions, or (2) participate or engage in discussions or negotiations regarding such an offer or proposal with, or furnish any nonpublic information regarding such an offer or proposal to, any person that has made or, to ReShape’s or Obalon’s knowledge, is considering making such an offer or proposal, (3) terminate, amend, modify, or waive any standstill or similar obligation (subject to certain conditions), or (4) enter into any agreement with respect to an alternative proposal. In addition, certain covenants require each of the parties to use, subject to the terms and conditions of the Merger Agreement, their commercially reasonable efforts to cause the Merger to be consummated as promptly as practicable. Subject to certain exceptions, the Merger Agreement also requires each of ReShape and Obalon to call and hold stockholders’ meetings and requires the board of directors of each of ReShape and Obalon to recommend approval of the Merger. Credit Facility Agreement On January 19, 2021, concurrently with the execution of the Merger Agreement, ReShape entered into a Credit Facility Agreement (“Credit Facility Agreement”) with Armistice, which is ReShape’s existing secured lender and majority stockholder, pursuant to which Armistice agreed to provide ReShape with a $15.0 million line of credit that ReShape may access from time to time until December 31, 2022. ReShape has not drawn down any amounts under the Credit Facility Agreement, but any advances will bear interest at a rate per annum equal to the LIBOR rate plus 2.5%. Any advances under the Credit Facility Agreement would be subject to the Guarantee and Collateral Agreement between ReShape and Armistice dated March 25, 2020. Under the terms of the Credit Facility Agreement, Armistice agrees that the transactions contemplated by the Merger Agreement will not be deemed an “Event of Default” under the Credit Agreement (as defined below) and agrees to waive its right to require ReShape to purchase any outstanding warrants to purchase capital stock of ReShape held by Armistice that may be triggered by the completion of the transactions contemplated by the Merger Agreement, including to the extent the Merger may be considered a “Fundamental Transaction” under the terms of such warrants. Waiver of Bigger Capital Fund LP and District 2 Capital Fund, LP On January 19, 2021, concurrently with the execution of the Merger Agreement, Bigger Capital Fund LP and District 2 Capital Fund, LP each waived its right to require ReShape to purchase any outstanding warrants to purchase capital stock of ReShape held by Bigger Capital Fund LP and District 2 Capital Fund, LP that may be triggered by the completion of the transactions contemplated by the Merger Agreement, including to the extent the Merger may be considered a “Fundamental Transaction” under the terms of such warrants. Amendment to Credit Agreement On January 19, 2021, concurrently with the execution of the Merger Agreement, ReShape and Armistice entered into a fourth amendment (the “Credit Agreement Amendment”) to the Credit Agreement, dated March 25, 2020 (as amended, the “Credit Agreement”), pursuant to which ReShape borrowed an additional $1.0 million, which amount was used to fund the $1.0 escrow fund securing the termination fee under the Merger Agreement described above. As an inducement to Armistice to enter into the amendment and make the additional loan contemplated thereby, ReShape issued to Armistice a warrant to purchase an aggregate of 1,000,000 shares of ReShape’s common stock, with an exercise price per share equal to $3.50. On March 10, 2021, the Company and the Lender entered into the fifth amendment to the credit agreement, dated March 25, 2020. Under the terms of this amendment the maturity date as amended from March 31, 2021 to March 31, 2022 or, if earlier, the date that is 15 days after the Company completes a capital raising transaction resulting in gross proceeds of at least $15 million. As a result of this amendment, the Company retroactively reclassified the outstanding balance net of debt discount from a short-term liability to long-term as of December 31, 2020. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The Company has prepared the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”). |
Reverse Stock Splits | Reverse Stock Splits On November 11, 2019, the Company’s board of directors and stockholders approved a 1-for-120 reverse stock split of the Company’s outstanding common stock that became effective after the close of market on November 11, 2019. In addition, the Company’s certificate of incorporation was amended to change the common stock par value from $0.01 per share to $0.001 per share. The reverse stock split in 2019 did not change the number of common or preferred shares authorized by the Company’s certificate of incorporation. All par value, share and per share amounts have been retroactively adjusted to reflect the reverse stock split for all periods presented. |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and accounts have been eliminated in consolidation |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers highly liquid investments generally with maturities of 90 days or less when purchased to be cash equivalents. Cash equivalents are stated at cost, which approximates market value. The Company’s cash equivalents are primarily in money market funds and certificates of deposit. The Company deposits its cash and cash equivalents in high-quality credit institutions. |
Restricted Cash | Restricted Cash Restricted cash represents $50 thousand related to a collateral money market account maintained by the Company as collateral in connection with corporate credit cards with Silicon Valley Bank at December 31, 2020 and 2019. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the consolidated balance sheets to the same total reported in the consolidated statements of cash flows (in thousands): December 31, December 31, 2020 2019 Cash and cash equivalents $ 2,957 $ 2,935 Restricted cash 50 50 Total cash, cash equivalents, and restricted cash in the consolidated statement of cash flows $ 3,007 $ 2,985 |
Inventory | Inventory The Company accounts for inventory at the lower of cost or net realizable value, where net realizable value is based on market prices less costs to sell. The Company establishes inventory reserves for obsolescence based upon specific identification of expired or unusable units with a corresponding provision included in cost of revenue. The allowance for excess and slow-moving inventory was $0.1 million and $0.2 million at December 31, 2020 and 2019, respectively. |
Property and Equipment, Net | Property and Equipment, Net Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation of property and equipment is computed using the straight-line method over their estimated useful lives of five to seven years for furniture and equipment and three to five years for computer hardware and software. Leasehold improvements are amortized on a straight-line basis over the lesser of their useful life or the term of the lease. Upon retirement or sale, the cost and related accumulated depreciation or amortization are removed from the Consolidated Balance Sheets and the resulting gain or loss is reflected in the Consolidated Statements of Operations. Repairs and maintenance are expensed as incurred. |
Other Intangible Assets | Other Intangible Assets Intangible assets are recorded based on their fair values at the date of acquisition. Indefinite-lived intangible assets consist of in-process research and development (“IPR&D”) for the ReShape Vest recorded in connection with the Company’s acquisition of BarioSurg, Inc. (“BarioSurg”) in May 2017. Finite-lived intangible assets primarily consist of developed technology and trademarks/tradenames and are being amortized on a straight-line basis over their estimated useful lives. See Note 6 for additional information. |
Impairment of Indefinite-Lived and Long-Lived Assets | Impairment of Indefinite-Lived and Long-Lived Assets Acquired IPR&D is subject to impairment testing until completion or abandonment of the project. Indefinite-lived intangible assets are reviewed for impairment annually, or whenever an event occurs or circumstances change that would indicate that the carrying amount may be impaired. An impairment loss is recognized when the asset's carrying value exceeds its fair value. See Note 7 for additional information. The Company evaluates long-lived assets under the provisions of ASC 350 “Intangibles–Goodwill and Other” and ASC 360 “Property, Plant, and Equipment” which addresses financial accounting and reporting for the impairment of long-lived assets and for long-lived assets to be disposed of. For purposes of assessing the recoverability of long-lived assets, the Company has one asset group which includes all assets of the Company. For assets to be held and used, the Company compares the carrying amounts to future net undiscounted cash flows expected to be generated by such assets when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Should an impairment exist, the impairment loss would be measured based on the excess carrying value of the assets over the assets’ fair value or estimates of future discounted cash flows. |
Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance for deferred income tax assets is recorded when it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The Company’s policy is to classify interest and penalties related to income taxes as income tax expense in the consolidated statements of operations. |
Equity | Equity Certain issuances of the Company’s convertible preferred stock and warrants classified within equity contain non-standard down round features that result in the strike price being reduced on the basis of the pricing of future equity offerings. The value of the effect of the down round feature when it is triggered is recorded similar to a dividend and as a numerator adjustment in the basic earnings per share calculation. |
Foreign Currency | Foreign Currency When the local currency of the Company's foreign subsidiaries is the functional currency, all assets and liabilities are translated into United States dollars at the rate of exchange in effect at the balance sheet date. Income and expense items are translated at the weighted-average exchange rate prevailing during the period. The effects of foreign currency translation adjustments for these subsidiaries are deferred and reported in stockholders’ equity as a component of Accumulated Other Comprehensive Loss. The effects of foreign currency transactions denominated in a currency other than an entity's functional currency are included in Gain on foreign currency exchange in the Consolidated Statements of Operations. The Company does not hedge foreign currency translation risk in the net assets and income it reports from these sources. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue when it satisfies a performance obligation by transferring control of the promised goods or services to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Product sales consist of a single performance obligation that the Company satisfies at a point in time. The Company recognizes product revenue when the following events have occurred: (a) the Company has transferred physical possession of the products, (b) the Company has a present right to payment, (c) the customer has legal title to the products, and (d) the customer bears significant risks and rewards of ownership of the products. For the Company’s Lap-Band product, these criteria are met under the agreements with most customers upon product shipment. This includes sales to distributors, who sell the products to their customers, take title to the products and assume all risks of ownership at the time of shipment. Distributors are obligated to pay within specified terms regardless of when, if ever, they sell the products. Refer to Note 12 for additional information about the Company’s products and contractual arrangements. Taxes collected from customers and remitted to governmental authorities are accounted for on a net basis. Accordingly, such amounts are excluded from revenues. Amounts billed to customers related to shipping and handling are included in revenues. Shipping and handling costs related to revenue producing activities are included in cost of sales. |
Research and Development Expenses | Research and Development Expenses Research and development expenses consist of costs incurred to further the Company’s research and development activities, including product development, clinical trial expenses, quality assurance, regulatory expenses, payroll and other personnel expenses, materials and consulting costs. Certain of these activities, such as pre-clinical studies and clinical trials, may be conducted by third-party service providers at the direction of the Company. In addition, during 2018, the Company entered into an arrangement with a Contract Research Organization (“CRO”) under which the CRO performs and manages research and development activities on the Company’s behalf. The Company records the estimated costs of research and development activities performed by third-party service providers based upon the estimated services provided but not yet invoiced and includes these costs in accrued expenses and other payables in the Consolidated Balance Sheets and within research and development expense in the Consolidated Statements of Operations. The Company accrues for these costs based on factors such as estimates of the work completed and in accordance with agreements established with its third-party service providers. As actual costs become known, the Company adjusts its accrued liabilities. The Company’s CRO arrangement generally requires payments in advance of services. Upon making a payment, the Company makes a determination as to the amount to record as a deferred charge and the amount of research and development expense. The amount of CRO related costs included in research and development expense each period is expensed based on the Company’s estimate of the time period over which services will be performed, enrollment of patients, number of sites activated and level of effort to be expended. Any amount of advances paid in excess of expense recognized is included in prepaid expenses and other current assets on the Consolidated Balance Sheets. If the actual timing of the CRO’s performance of services or the level of effort varies from the Company’s estimate, the amount of prepaid CRO expense is adjusted accordingly. |
Stock-Based Compensation | Stock-Based Compensation The Company applies ASC 718 Compensation — Stock Compensation and accordingly records compensation expense for stock options over the vesting or service period using the fair value on the date of grant, as calculated by the Company using the Black-Scholes model. The Company’s stock-based compensation plans are more fully described in Note 13. |
Net Loss Per Share | Net Loss Per Share Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period, including the prefunded warrants that were reclassified from warrant liability to equity as a result of the reverse stock split. Diluted net loss per share is based on the weighted-average common shares outstanding during the period plus dilutive potential common shares calculated using the treasury stock method. Such potentially dilutive shares are excluded when the effect would be to reduce a net loss per share. For purposes of basic and diluted per share computations, loss from continuing operations and net loss are reduced by the down round adjustments for convertible preferred stock and warrants . The following table sets forth the potential shares of common stock that are not included in the calculation of diluted net loss per share because to do so would be anti-dilutive as of the end of each period presented: December 31, 2020 2019 Stock options 40 155 Convertible preferred stock 1,288 1,288 Warrants 13,483,446 13,647,740 |
Concentration of Credit Risk, Interest Rate Risk and Foreign Currency Exchange Rate | Concentration of Credit Risk, Interest Rate Risk and Foreign Currency Exchange Rate Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash and trade accounts receivable. Cash and cash equivalents are primarily deposited in demand and money market accounts. At times, such deposits may be in excess of insured limits. Investments in money market funds are not considered to be bank deposits and are not insured or guaranteed by the federal deposit insurance company or other government agency. These money market funds seek to preserve the value of the investment at $1.00 per share; however, it is possible to lose money investing in these funds. The Company has not experienced any losses on its deposits of cash and cash equivalents. To minimize the risk associated with trade accounts receivable, management maintains relationships with the Company’s customers that allow management to monitor current changes in business operations so the Company can respond as needed. Substantially all of the Company’s revenue is denominated in U.S. dollars. Only a small portion of revenue and expenses are denominated in foreign currencies, principally the Australian dollar and Euro for 2020 and 2019. The Company has not entered into any hedging contracts. Future fluctuations in the value of the U.S. dollar may affect the price competitiveness of the Company’s products outside the U.S. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (referred to as an “exit price”). Fair value of an asset or liability considers assumptions that market participants would use in pricing the asset or liability, including consideration of non-performance risk. Assets and liabilities are categorized into a three-level fair value hierarchy based on valuation inputs used to determine fair value. Level 1 inputs are quoted prices in active markets for identical assets or liabilities. Level 2 inputs are observable, either directly or indirectly. Level 3 inputs are unobservable due to little or no corroborating market data. The carrying amounts of the Company’s financial instruments, including cash equivalents, accounts receivable, accounts payable and certain accrued and other liabilities approximate fair value due to their short-term maturities. Refer to Note 8 regarding the fair value of debt instruments and Note 12 regarding fair value measurements and inputs of warrants. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements New accounting standards adopted by the Company in 2020 are discussed below or in the related notes, where appropriate. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820) – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement , which modifies the disclosure requirements on fair value measurements and is intended to improve the effectiveness of disclosures, including the consideration of costs and benefits. The guidance is effective on January 1, 2020. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU 2018-15 Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40), Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The ASU is effective for the Company on January 1, 2020. The adoption of this guidance did not have a material impact on its consolidated financial statements. New accounting standards not yet adopted are discussed below. In December 2019, the FASB issued authoritative guidance intended to simplify the accounting for income taxes: ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This guidance eliminates certain exceptions to the general approach to the income tax accounting model and adds new guidance to reduce the complexity in accounting for income taxes. This guidance is effective for annual periods after December 15, 2020, including interim periods within those annual periods. The Company is currently evaluating the potential impact of this guidance on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which is intended to provide financial statement users with more useful information about expected credit losses on financial assets held by a reporting entity at each reporting date. In May 2019, the FASB issued ASU No. 2019-05, which amended the new standard by providing targeted transition relief. The new guidance replaces the existing incurred loss impairment methodology with a methodology that requires consideration of a broader range of reasonable and supportable forward-looking information to estimate all expected credit losses. In November 2019, the FASB issued 2019-11, which amended the new standard by providing additional clarification. This guidance is effective for the fiscal years and interim periods within those years beginning after December 15, 2022. The Company is currently evaluating the impact the guidance will have on its consolidated financial statements. Various other accounting standards and interpretations have been issued with 2021 effective dates and effective dates subsequent to December 31, 2020. The Company has evaluated the recently issued accounting pronouncements that are currently effective or will be effective in 2021 and believe that none of them have had or will have a material effect on the Company’s financial position, results of operations or cash flows. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Summary of Significant Accounting Policies | |
Reconciliation of cash, cash equivalents and restricted cash | The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the consolidated balance sheets to the same total reported in the consolidated statements of cash flows (in thousands): December 31, December 31, 2020 2019 Cash and cash equivalents $ 2,957 $ 2,935 Restricted cash 50 50 Total cash, cash equivalents, and restricted cash in the consolidated statement of cash flows $ 3,007 $ 2,985 |
Schedule of anti-dilutive securities | December 31, 2020 2019 Stock options 40 155 Convertible preferred stock 1,288 1,288 Warrants 13,483,446 13,647,740 |
Supplemental Balance Sheet In_2
Supplemental Balance Sheet Information (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Supplemental Balance Sheet Information | |
Schedule of components of inventory | December 31, 2020 2019 Raw materials $ 174 $ — Sub-assemblies 733 — Finished goods 1,337 1,317 Total inventory $ 2,244 $ 1,317 |
Schedule of components of prepaid expenses and other current assets | December 31, 2020 2019 Prepaid insurance $ 619 $ 190 Prepaid contract research organization expenses 295 1,356 Other 159 165 Total prepaid expenses and other current assets $ 1,073 $ 1,711 |
Schedule of components of accrued and other liabilities | December 31, 2020 2019 Payroll and benefits $ 1,735 $ 1,021 Accrued professional services 446 1,432 Customer deposits 398 202 Accrued insurance premium 272 87 Taxes 265 373 Equity transaction related liability — 211 Other 514 495 Total accrued and other liabilities $ 3,630 $ 3,821 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Property and Equipment | |
Schedule of property and equipment | December 31, 2020 2019 Machinery and equipment $ 179 $ — Furniture and equipment 83 83 Computer hardware and software 78 78 Leasehold improvements 19 19 Construction in progress 404 — 763 180 Less accumulated depreciation and amortization (179) (164) Property and equipment, net $ 584 $ 16 |
Other Intangible Assets (Tables
Other Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Other Intangible Assets | |
Summary of identifiable intangible assets | December 31, 2020 Weighted Average Useful Life (years) Gross Carrying Amount Accumulated Amortization Net Book Value Finite-lived intangible assets: Developed technology 10.0 $ 14,362 $ $ 11,429 Trademarks/Tradenames 10.0 2,045 1,460 Covenant not to compete 3.0 76 0 16,483 12,889 Indefinite-lived intangible assets: In-process research and development indefinite 14,133 — 14,133 Total $ 30,616 $ $ 27,022 December 31, 2019 Weighted Average Useful Life (years) Gross Carrying Amount Accumulated Amortization Net Book Value Finite-lived intangible assets: Developed technology 10.0 $ 14,362 $ $ 12,866 Trademarks/Tradenames 10.0 2,045 1,664 Covenant not to compete 3.0 76 11 16,483 14,541 Indefinite-lived intangible assets: In-process research and development indefinite 14,133 — 14,133 Total $ 30,616 $ $ 28,674 |
Schedule of gross amount and accumulated impairment loss of indefinite-lived intangible assets | The gross amount and accumulated impairment loss of indefinite-lived intangible assets are as follows (in thousands): December 31, 2020 2019 Gross amount $ 20,721 $ 20,721 Accumulated impairment loss (6,588) (6,588) Indefinite-lived intangible assets, net $ 14,133 $ 14,133 |
Schedule of future amortization of Finite-Lived intangible assets | Year ending December 31, 2021 $ 1,641 2022 1,641 2023 1,641 2024 1,641 2025 1,641 Thereafter 4,684 $ 12,889 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Debt | |
Summary of long term debt | December 31, December 31, 2020 2019 Asset purchase consideration $ 2,867 $ 4,637 Credit agreement 9,500 — PPP Loan 955 — Total debt 13,322 4,637 Less: unamortized debt discount 545 — Less: current portion of debt 3,609 1,909 Debt, noncurrent portion $ 9,168 $ 2,728 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Leases | |
Schedule of supplemental information related to operating leases | Balance Sheet Information at December 31, 2020 Operating lease ROU assets $ 465 Operating lease liabilities, current portion $ 314 Operating lease liabilities, long-term portion 163 Total operating lease liabilities $ 477 Cash Flow Information for the Year Ended December 31, 2020 Cash paid for amounts included in the measurement of operating leases liabilities $ 323 |
Schedule of maturities of operating lease liabilities | Twelve months ending December 31, 2021 $ 331 2022 166 2023 — Total lease payments 497 Less: imputed interest 20 Total lease liabilities $ 477 Weighted-average remaining lease term at end of period (in years) 1.7 Weighted-average discount rate at end of period % |
Warrants (Tables)
Warrants (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Schedule of warrant activity | Shares Balance December 31, 2018 127,540 Issued 16,934,170 (1) Exercised (3,451,642) (2) Cancelled (139) Balance December 31, 2019 13,609,929 Issued 6,400,000 (3) Exercised (5,724,815) (4) Cancelled (1) Balance December 31, 2020 14,285,113 (1) Warrants issued in 2019 include 6,467,501 of pre-funded warrants sold in connection with private placements completed on June 18, 2019 and September 23, 2019 (“June 2019 Pre-funded Warrants” and “September 2019 Pre-funded Warrants”). The pre-funded warrants do not expire. In addition, in June 2019 institutional investors purchased 3,333,333 Series A warrants, 3,333,334 Series B warrants, and in September 2019 the institutional investors purchased 3,333,334 Series E warrants. As part of both the June 2019 and September 2019 purchases there were 466,668 of placement agent warrants issued. For further details of the June and September 2019 transactions, see Note 10 equity above. (2) Warrants exercised in 2019 51,667 of the November 2018 Pre-funded Warrants at their exercise price of $1.20 per share. Warrants exercised in 2019 also include 66,666 of the Series A warrants issued in November 2018 (“November 2018 Series A Warrants”) at their exercise price of $1.20 per share, as adjusted. Warrants exercised in 2019 also include 3,333,334 of Series B warrants issued in June 2019. (3) Warrants issued in 2020 include 6,400,000 of three issuances of Series G warrants. (4) Warrants exercised in 2020 include 3,089,413 of Series C pre-funded warrants at an exercise price of $0.12 per shares, 2,576,421 Series F pre-funded warrants at an exercise price of $0.12 per share and 58,981 of placement agent warrants. |
Black Scholes Model | |
Schedule of warrant assumptions used to calculate fair value | Warrants Outstanding Strike Price Volatility Remaining Life Risk Free Rate First Issuance 1,200,000 3.70 % % Second Issuance 1,200,000 3.25 % % Third Issuance 4,000,000 3.50 % % Warrants Outstanding Strike Price Volatility Remaining Life Risk Free Rate Series A 3,333,333 $ 2.64 % % Placement Agent - June 233,334 $ 3.00 % % Series E 3,333,334 $ 6.00 % % Series F 3,264,167 $ 0.12 % % Placement Agent - September 233,334 $ 6.00 % % |
Monte Carlo Simulation Model | |
Schedule of warrant assumptions used to calculate fair value | Strike Price Volatility Remaining Life Series A $ 2.64 % Series B $ 2.40 % Series E $ 6.00 % Series F $ % |
Revenue Disaggregation and Op_2
Revenue Disaggregation and Operating Segments (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Revenue Disaggregation and Operating Segments | |
Schedule of revenue disaggregated by product and geography | Year Ended December 31, 2020 2019 United States $ 8,275 $ 13,309 Australia 1,086 1,167 Europe 1,824 613 Rest of world 114 — Total net revenue $ 11,299 $ 15,089 · The next largest individual country outside the U.S. for the years ended December 31, 2020 and 2019 was Australia, which was 9.6% and 7.7% of total revenues, respectively. |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Stock-based Compensation | |
Schedule of stock-based compensation expense | Year Ended December 31, 2020 2019 Sales and marketing $ — $ 151 General and administrative 1,323 2,115 Research and development — 45 Total stock-based compensation expense $ 1,323 $ 2,311 |
2003 Stock Incentive Plan, as amended and restated | |
Stock-based Compensation | |
Summary of Stock Option Activity | Weighted Weighted Average Average Remaining Exercise Price Contractual Shares Per Share Life (years) Outstanding at December 31, 2018 28 $ 2,957,210.16 Shares reserved — — Options granted — — Options exercised — — Options cancelled — — Outstanding at December 31, 2019 28 2,957,210.16 Options granted — — Options exercised — — Options cancelled (3) 500,506.83 Outstanding at December 31, 2020 25 3,264,298.08 6.8 Exercisable at December 31, 2020 21 3,884,244.46 6.8 Vested and expected to vest at December 31, 2020 25 3,884,244.46 6.9 |
Inducement grants | |
Stock-based Compensation | |
Summary of Stock Option Activity | Weighted Weighted Average Average Remaining Exercise Price Contractual Shares Per Share Life (years) Outstanding at December 31, 2018 18 $ 352,876.06 Options granted — — Options exercised — — Options cancelled — — Outstanding at December 31, 2019 18 352,876.06 Options granted — — Options exercised — — Options cancelled (3) 532,766.92 Outstanding at December 31, 2020 15 316,897.88 7.1 Exercisable at December 31, 2020 15 316,897.88 7.1 Vested and expected to vest at December 31, 2020 15 316,897.88 7.1 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Taxes | |
Income tax expense (benefit) | Year ended December 31, 2020 2019 Deferred: Federal $ (84) $ (276) State (2) (867) Deferred income tax provision (benefit) (86) (1,143) Current: Federal — — State 1 18 Foreign (96) 232 Total income tax provision (benefit), net $ (181) $ (893) |
Tax Rate Reconciliation | Year ended December 31, 2020 2019 Income tax benefit at U.S. federal statutory rate 21.0 % 21.0 % State income tax benefit, net of federal benefit 4.2 % 3.9 % Stock warrant valuation (10.2) % (14.2) % Other permanent differences (0.6) % (0.7) % Research and development credit — % (0.2) % Change in state tax rate (0.3) % — % Foreign rate differential 0.5 % (0.1) % Other adjustments 1.4 % 0.3 % Change in valuation allowance (15.2) % (8.8) % Effective income tax rate 0.8 % 1.2 % |
Deferred Tax Assets | December 31, 2020 2019 Deferred tax assets: Start-up costs $ 1,192 $ 1,208 Capitalized research and development costs 503 612 Reserves and accruals 9,235 8,180 Property and equipment 133 55 Research and development credit 1,194 1,194 Lease liability 41 118 State and local taxes 2 4 Net operating loss carryforwards 30,156 27,860 Total gross deferred tax assets 42,456 39,231 Valuation allowance (39,803) (36,349) Deferred tax assets, net of valuation allowance 2,653 2,882 Intangible assets (3,151) (3,396) Operating lease right-of-use assets (117) (188) Total gross deferred tax liabilities (3,268) (3,584) Net deferred tax liability $ (615) $ (702) |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Reverse Stock Splits (Details) $ / shares in Units, $ in Thousands | Nov. 11, 2019$ / shares | Dec. 31, 2020USD ($)$ / shares | Dec. 31, 2019USD ($)$ / shares | Dec. 31, 2018USD ($) |
Summary of Significant Accounting Policies | ||||
Reverse stock split ratio | 120 | |||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.001 | $ 0.001 | |
Cash and cash equivalents | $ 2,957 | $ 2,935 | ||
Restricted Cash | 50 | 50 | ||
Total cash, cash equivalents, and restricted cash in the consolidated statement of cash flows | 3,007 | 2,985 | $ 5,548 | |
Allowance for excess and slow moving inventory | $ 100 | $ 200 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Anti-dilutive Securities (Details) - shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Stock options | ||
Anti-dilutive securities | ||
Anti-dilutive securities (in shares) | 40 | 155 |
Convertible preferred stock | ||
Anti-dilutive securities | ||
Anti-dilutive securities (in shares) | 1,288 | 1,288 |
Warrants | ||
Anti-dilutive securities | ||
Anti-dilutive securities (in shares) | 13,483,446 | 13,647,740 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Property and Equipment Useful Lives (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Furniture and Fixtures | Minimum | |
Property and equipment | |
Property and equipment estimated useful life | 5 years |
Furniture and Fixtures | Maximum | |
Property and equipment | |
Property and equipment estimated useful life | 7 years |
Computer hardware | Minimum | |
Property and equipment | |
Property and equipment estimated useful life | 3 years |
Computer hardware | Maximum | |
Property and equipment | |
Property and equipment estimated useful life | 5 years |
Software | Minimum | |
Property and equipment | |
Property and equipment estimated useful life | 3 years |
Software | Maximum | |
Property and equipment | |
Property and equipment estimated useful life | 5 years |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Credit Risk Concentration (Details) | 12 Months Ended |
Dec. 31, 2020$ / shares | |
Concentration of credit risk | |
Concentration risk | |
Money market funds preserve the value of investment per share | $ 1 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Topic 842 (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Summary of Significant Accounting Policies | ||
Operating lease right-of-use assets | $ 465 | $ 758 |
Operating lease liability | $ 477 | $ 477 |
Liquidity and Management_s Pl_2
Liquidity and Management’s Plans (Details) - USD ($) $ in Thousands | Jan. 19, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Liquidity, Going Concern and Management’s Plans | ||||
Working capital | $ (2,700) | |||
Cash and cash equivalents and restricted cash | 3,007 | $ 2,985 | $ 5,548 | |
Accounts receivable | $ 2,620 | $ 4,096 | ||
Subsequent Events | ||||
Liquidity, Going Concern and Management’s Plans | ||||
Line of credit | $ 15,000 |
Supplemental Balance Sheet In_3
Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Inventory: | ||
Raw materials | $ 174 | |
Sub-assemblies | 733 | |
Finished goods | 1,337 | $ 1,317 |
Total inventory | 2,244 | 1,317 |
Prepaid expenses and other current assets: | ||
Prepaid insurance | 619 | 190 |
Prepaid contract research organization expenses | 295 | 1,356 |
Other | 159 | 165 |
Total prepaid expenses and other current assets | 1,073 | 1,711 |
Accrued and other liabilities: | ||
Payroll and benefits | 1,735 | 1,021 |
Accrued professional services | 446 | 1,432 |
Customer deposits | 398 | 202 |
Accrued insurance premium | 272 | 87 |
Taxes | 265 | 373 |
Equity transaction related liability | 211 | |
Other | 514 | 495 |
Total accrued and other liabilities | 3,630 | 3,821 |
Tax payable | 265 | 373 |
Accounts Payable Current [Member] | ||
Accrued and other liabilities: | ||
Taxes | 0 | |
Tax payable | $ 0 | |
Australia | Accounts Payable Current [Member] | ||
Accrued and other liabilities: | ||
Taxes | 61 | |
Tax payable | $ 61 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Property and equipment | ||
Property and Equipment, Gross | $ 763 | $ 180 |
Less accumulated depreciation and amortization | (179) | (164) |
Property and equipment, net | 584 | 16 |
Depreciation | 15 | 40 |
Machinery and Equipment [Member] | ||
Property and equipment | ||
Property and Equipment, Gross | 179 | |
Furniture and Fixtures | ||
Property and equipment | ||
Property and Equipment, Gross | 83 | 83 |
Computer hardware and software | ||
Property and equipment | ||
Property and Equipment, Gross | 78 | 78 |
Leasehold improvements | ||
Property and equipment | ||
Property and equipment, net | 19 | $ 19 |
Construction in Progress [Member] | ||
Property and equipment | ||
Property and Equipment, Gross | $ 404 |
Other Intangible Assets - Compo
Other Intangible Assets - Components (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Summary of identifiable intangible assets | ||
Gross Carrying Amount | $ 16,483 | $ 16,483 |
Accumulated amortization | (3,594) | (1,942) |
Total finite-lived intangible assets | 12,889 | 14,541 |
Indefinite-lived intangible assets | 20,721 | 20,721 |
Gross carrying amount | 30,616 | 30,616 |
Net book value | 27,022 | 28,674 |
Impairment of intangible assets other than goodwill | ||
Amortization expense | $ 1,652 | $ 1,666 |
Developed technology | ||
Summary of identifiable intangible assets | ||
Amortization period | 10 years | 10 years |
Gross Carrying Amount | $ 14,362 | $ 14,362 |
Accumulated amortization | (2,933) | (1,496) |
Total finite-lived intangible assets | $ 11,429 | $ 12,866 |
Trademarks/Tradenames | ||
Summary of identifiable intangible assets | ||
Amortization period | 10 years | 10 years |
Gross Carrying Amount | $ 2,045 | $ 2,045 |
Accumulated amortization | (585) | (381) |
Total finite-lived intangible assets | $ 1,460 | $ 1,664 |
Covenant not to compete | ||
Summary of identifiable intangible assets | ||
Amortization period | 3 years | 3 years |
Gross Carrying Amount | $ 76 | $ 76 |
Accumulated amortization | (76) | (65) |
Total finite-lived intangible assets | 0 | 11 |
In-process research and development | ||
Summary of identifiable intangible assets | ||
Indefinite-lived intangible assets | $ 14,133 | $ 14,133 |
Other Intangible Assets - Gross
Other Intangible Assets - Gross Amount and Accumulated Impairment Loss (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Other Intangible Assets | ||
Gross amount | $ 20,721 | $ 20,721 |
Accumulated impairment loss | (6,588) | (6,588) |
Indefinite-lived intangible assets, net | $ 14,133 | $ 14,133 |
Other Intangible Assets - Expec
Other Intangible Assets - Expected Amortization (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Estimated amortization of intangible assets | ||
2021 | $ 1,641 | |
2022 | 1,641 | |
2023 | 1,641 | |
2024 | 1,641 | |
2025 | 1,641 | |
Thereafter | 4,684 | |
Total finite-lived intangible assets | $ 12,889 | $ 14,541 |
Impairment of Intangible Asse_2
Impairment of Intangible Assets (Details) | 3 Months Ended |
Jun. 30, 2019USD ($) | |
Impairment of Intangible Assets | |
Indefinite-lived intangible assets impairment | $ 6,600,000 |
Discount rate | 22.40% |
Finite-lived intangible assets impairment | $ 0 |
Debt - Long term debt (Details)
Debt - Long term debt (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Total debt | $ 13,322 | $ 4,637 |
Less: unamortized debt discount | 545 | |
Less: current portion of debt | 3,609 | 1,909 |
Debt, noncurrent portion | 9,168 | 2,728 |
Asset purchase consideration | ||
Debt Instrument [Line Items] | ||
Total debt | 2,867 | $ 4,637 |
Credit agreement | ||
Debt Instrument [Line Items] | ||
Total debt | 9,500 | |
PPP Loan | ||
Debt Instrument [Line Items] | ||
Total debt | $ 955 |
Debt - CARES Act (Details)
Debt - CARES Act (Details) - USD ($) $ in Thousands | Apr. 24, 2020 | Dec. 31, 2020 |
Debt Instrument [Line Items] | ||
Amount received | $ 955 | |
PPP Loan | ||
Debt Instrument [Line Items] | ||
Amount received | $ 1,000 | |
Discount rate (as a percent) | 1.00% |
Debt - Credit agreement (Detail
Debt - Credit agreement (Details) - USD ($) $ / shares in Units, $ in Thousands | Mar. 10, 2021 | Jan. 19, 2021 | Dec. 16, 2020 | Nov. 13, 2020 | Sep. 14, 2020 | Jul. 29, 2020 | Jun. 23, 2020 | Apr. 15, 2020 | Mar. 25, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2020 |
Short-term Debt [Line Items] | ||||||||||||
Amount received | $ 955 | |||||||||||
Loss on extinguishment of debt | 7,715 | $ 71 | ||||||||||
Debt discount | 545 | |||||||||||
Warrant exercise price (in dollars per share) | $ 0.12 | |||||||||||
Proceeds from exercise of warrants | $ 600 | 679 | $ 142 | |||||||||
Credit agreement | ||||||||||||
Short-term Debt [Line Items] | ||||||||||||
Agreement amount | $ 3,500 | |||||||||||
Amount received | $ 500 | $ 500 | 2,500 | |||||||||
Additional borrowing amount | $ 2,000 | $ 1,000 | ||||||||||
Closing period | 30 days | |||||||||||
Threshold period to draw additional amount | 5 months | |||||||||||
Maximum amount per draw | $ 500 | |||||||||||
Credit facility bear interest | 2.50% | |||||||||||
Credit agreement | Subsequent Events | ||||||||||||
Short-term Debt [Line Items] | ||||||||||||
Agreement amount | $ 15,000 | |||||||||||
Additional borrowing amount | $ 1,000 | |||||||||||
Number of shares in exchange of warrant exercise | 1,000,000 | |||||||||||
Warrant exercise price (in dollars per share) | $ 3.50 | |||||||||||
Credit agreement | Subsequent Events | LIBOR | ||||||||||||
Short-term Debt [Line Items] | ||||||||||||
Credit facility bear interest | 2.50% | |||||||||||
Credit agreement third amendment | ||||||||||||
Short-term Debt [Line Items] | ||||||||||||
Amount received | $ 500 | $ 500 | 1,000 | |||||||||
Additional borrowing amount | 1,000 | |||||||||||
Minimum amount per draw | $ 500 | |||||||||||
Minimum number of days between borrowings | 30 days | |||||||||||
New debt fair value | $ 3,900 | |||||||||||
Loss on extinguishment of debt | 2,400 | |||||||||||
Debt discount | $ 600 | $ 500 | ||||||||||
Credit agreement third amendment | Series G Warrants | ||||||||||||
Short-term Debt [Line Items] | ||||||||||||
Warrants issued | 1,200,000 | |||||||||||
Credit agreement fourth amendment | ||||||||||||
Short-term Debt [Line Items] | ||||||||||||
Amount received | 4,000 | |||||||||||
Additional borrowing amount | 4,000 | |||||||||||
New debt fair value | 8,900 | |||||||||||
Loss on extinguishment of debt | 5,300 | |||||||||||
Debt discount | $ 600 | $ 500 | ||||||||||
Credit agreement fourth amendment | Series G Warrants | ||||||||||||
Short-term Debt [Line Items] | ||||||||||||
Warrants issued | 4,000,000 | |||||||||||
Credit agreement fifth amendment | Subsequent Events | ||||||||||||
Short-term Debt [Line Items] | ||||||||||||
Number of days after the entity completes capital raising transaction | 15 days | |||||||||||
Credit agreement fifth amendment | Minimum | Subsequent Events | ||||||||||||
Short-term Debt [Line Items] | ||||||||||||
Gross proceeds | $ 15,000 |
Debt - Asset Purchase Considera
Debt - Asset Purchase Consideration Payable (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Long-term debt | ||
Total debt | $ 13,322 | $ 4,637 |
Secured debt | ||
Long-term debt | ||
Total debt | 2,900 | 4,600 |
Accretion of interest | $ 600 | $ 300 |
Secured debt | Discount rate | ||
Long-term debt | ||
Debt fair value measurement input (as a percent) | 5.1 |
Debt - Convertible Subordinated
Debt - Convertible Subordinated Debentures (Details) $ / shares in Units, $ in Thousands | Jun. 20, 2019USD ($) | Mar. 29, 2019USD ($)Ditem$ / shares | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Apr. 15, 2020$ / shares | Jun. 18, 2019USD ($) | Mar. 28, 2019$ / shares | Nov. 28, 2018shares |
Short-term debt | ||||||||
Purchase price | $ 2,000 | |||||||
Repayment of subordinated convertible debentures | 2,200 | |||||||
Loss on extinguishment of debt | $ (7,715) | (71) | ||||||
Embedded derivative liability | $ 500 | $ 0 | ||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 0.12 | |||||||
Warrant expense | $ 49,027 | |||||||
Interest Expense | ||||||||
Short-term debt | ||||||||
Fair value adjustment of embedded derivative | 500 | |||||||
Secured subordinated convertible debentures due June 28, 2019 | ||||||||
Short-term debt | ||||||||
Purchase price | 2,000 | |||||||
Face amount | $ 2,200 | |||||||
Original issue discount | 10.00% | |||||||
Carrying amount | $ 1,500 | |||||||
Repayment of subordinated convertible debentures | $ 2,200 | |||||||
Loss on extinguishment of debt | $ 100 | |||||||
Percentage of average of lowest two volume weighted average price of common stock | 80.00% | |||||||
Number of volume weighted average price of common stock | item | 2 | |||||||
Number of trading days prior to conversion | D | 20 | |||||||
Secured subordinated convertible debentures due June 28, 2019 | Maximum | ||||||||
Short-term debt | ||||||||
Conversion price | $ / shares | $ 0.33 | |||||||
November 28, 2018 Series A investor warrants | ||||||||
Short-term debt | ||||||||
Number of shares in exchange of warrant exercise | shares | 66,667 | |||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 1.20 | $ 180 | ||||||
Warrant expense | $ 100 | |||||||
November 28, 2018 Series A investor warrants | Risk Free Rate | ||||||||
Short-term debt | ||||||||
Warrant fair value measurement inputs (as a percent) | 2.2 | |||||||
November 28, 2018 Series A investor warrants | Remaining Life | ||||||||
Short-term debt | ||||||||
Warrants term | 4 years 8 months 12 days | |||||||
November 28, 2018 Series A investor warrants | Expected dividends | ||||||||
Short-term debt | ||||||||
Warrant fair value measurement inputs (as a percent) | 0 | |||||||
November 28, 2018 Series A investor warrants | Volatility | ||||||||
Short-term debt | ||||||||
Warrant fair value measurement inputs (as a percent) | 204.4 |
Leases - Supplemental Informati
Leases - Supplemental Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Leases | ||
Operating lease costs | $ 300 | |
Balance Sheet Information related to operating leases | ||
Operating lease right-of-use assets | 465 | $ 758 |
Operating lease liabilities, current | 314 | 291 |
Operating lease liabilities, long-term portion | 163 | 477 |
Total operating lease liabilities | 477 | $ 477 |
Cash Flow Information related to operating leases | ||
Cash paid for amounts included in the measurement of operating leases liabilities | $ 323 |
Leases - Maturities of Liabilit
Leases - Maturities of Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Maturities of operating lease liabilities | ||
2021 | $ 331 | |
2022 | 166 | |
Total lease payments | 497 | |
Less: imputed interest | 20 | |
Total lease liabilities | $ 477 | $ 477 |
Weighted-average remaining lease term at end of period (in years) | 1 year 8 months 12 days | |
Weighted-average discount rate at end of period | 5.10% |
Equity - Issuance of stock and
Equity - Issuance of stock and warrants (Details) - USD ($) $ / shares in Units, $ in Thousands | Dec. 03, 2020 | Jun. 23, 2020 | May 28, 2020 | Apr. 15, 2020 | Sep. 23, 2019 | Jun. 18, 2019 | Dec. 31, 2020 | Dec. 31, 2019 |
Equity | ||||||||
Cashless exercise of warrants (Shares) | 58,981 | |||||||
Common stock issued for professional services (Shares) | 50,000 | |||||||
Common stock issued for professional services | $ 200 | |||||||
Institutional exercise of warrants (Shares) | 5,085,834 | |||||||
Warrant exercise price (in dollars per share) | $ 0.12 | |||||||
Proceeds from exercise of warrants | $ 600 | $ 679 | $ 142 | |||||
Warrants expired (in shares) | 1 | 139 | ||||||
Private placements | ||||||||
Equity | ||||||||
Net proceeds from issuance of stock | $ 6,900 | |||||||
2019 private placement | ||||||||
Equity | ||||||||
Proceeds from exercise of warrants | $ 100 | |||||||
Stock issued (in shares) | 290,000 | |||||||
Issuance of common stock upon exercise of warrants, net of transaction costs (in shares) | 580,000 | |||||||
Series A warrants | Private placements | ||||||||
Equity | ||||||||
Warrant exercise price (in dollars per share) | $ 2.64 | |||||||
Series B warrants | Private placements | ||||||||
Equity | ||||||||
Warrant exercise price (in dollars per share) | 2.40 | |||||||
Series C pre-funded warrants | Private placements | ||||||||
Equity | ||||||||
Warrant exercise price (in dollars per share) | $ 0.12 | |||||||
Unregistered Shares | Series E warrants | Private placements | ||||||||
Equity | ||||||||
Number of shares in exchange of warrant exercise | 3,333,334 | |||||||
Common Stock | ||||||||
Equity | ||||||||
Cashless exercise of warrants (Shares) | 58,981 | |||||||
Issuance of common stock upon exercise of warrants, net of transaction costs (in shares) | 118,440 | |||||||
Common Stock | Private placements | ||||||||
Equity | ||||||||
Number of shares in exchange of warrant exercise | 69,167 | |||||||
Stock issued (in shares) | 130,000 | |||||||
Purchase price (in dollars per share) | $ 2.40 | |||||||
Common Stock | 2018 institutional sales of common stock and warrants, net of issuance costs | ||||||||
Equity | ||||||||
Stock issued (in shares) | 199,167 | |||||||
Common Stock | 2019 private placement | ||||||||
Equity | ||||||||
Institutional exercise of warrants (Shares) | 5,665,834 | |||||||
Common Stock | Series A warrants | Private placements | ||||||||
Equity | ||||||||
Number of shares in exchange of warrant exercise | 3,333,334 | |||||||
Common Stock | Series B warrants | Private placements | ||||||||
Equity | ||||||||
Number of shares in exchange of warrant exercise | 3,333,334 | |||||||
Common Stock | Series C pre-funded warrants | Private placements | ||||||||
Equity | ||||||||
Number of shares in exchange of warrant exercise | 3,203,334 | |||||||
Common Stock | Placement agent warrants | Private placements | ||||||||
Equity | ||||||||
Number of shares in exchange of warrant exercise | 233,334 | |||||||
Warrant exercise price (in dollars per share) | $ 3 | |||||||
Warrants | Private placements | ||||||||
Equity | ||||||||
Proceeds from exercise of warrants | $ 6,900 | |||||||
Warrants | Series B warrants | Private placements | ||||||||
Equity | ||||||||
Number of warrants to be exercised early | 3,333,334 | |||||||
Warrants | Series C pre-funded warrants | Private placements | ||||||||
Equity | ||||||||
Purchase price (in dollars per share) | $ 2.28 | |||||||
Warrants | Series F prefunded warrants | Private placements | ||||||||
Equity | ||||||||
Number of shares in exchange of warrant exercise | 3,264,167 | |||||||
Warrants | Series E warrants | ||||||||
Equity | ||||||||
Term of warrants | 5 years | |||||||
Warrants | Series E warrants | Private placements | ||||||||
Equity | ||||||||
Warrant exercise price (in dollars per share) | $ 6 | |||||||
Warrants | Placement agent warrants | ||||||||
Equity | ||||||||
Warrant exercise price (in dollars per share) | $ 6 | |||||||
Number of warrants issued | 233,334 |
Equity - Conversions of stock (
Equity - Conversions of stock (Details) $ / shares in Units, $ in Millions | Feb. 01, 2019$ / sharesshares | Dec. 31, 2020USD ($)item$ / sharesshares | Dec. 31, 2019$ / sharesshares |
Series B convertible preferred stock | |||
Equity | |||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | |
Preferred stock outstanding | 3 | 3 | |
Series C convertible preferred stock | |||
Equity | |||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | |
Shares issuable upon conversion of preferred stock | 38 | ||
Preferred stock outstanding | 95,388 | 95,388 | |
Number of voting rights | item | 0 | ||
Preferred stock liquidation preference per share | $ / shares | $ 274.88 | ||
Preferred stock liquidation preference, value | $ | $ 26.2 | ||
Common Stock | |||
Equity | |||
Preferred stock liquidation preference per share | $ / shares | $ 692,691.05 | ||
Common Stock | Series E convertible preferred stock | |||
Equity | |||
Shares issuable upon conversion of preferred stock | 1 | ||
Common Stock | Series B convertible preferred stock | |||
Equity | |||
Shares issuable upon conversion of preferred stock | 1,250 | ||
Common Stock | Conversion of common stock into series E preferred stock | |||
Equity | |||
Shares converted | 9,993 | ||
Common Stock | Conversion of series B preferred stock into common stock | |||
Equity | |||
Shares issued on conversion | 1,040 | ||
Preferred Stock | Series E convertible preferred stock | |||
Equity | |||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.01 | ||
Preferred Stock | Series B convertible preferred stock | |||
Equity | |||
Preferred stock outstanding | 3 | ||
Preferred Stock | Conversion of common stock into series E preferred stock | Series E convertible preferred stock | |||
Equity | |||
Shares issued on conversion | 1,192,000 | ||
Preferred Stock | Conversion of series B preferred stock into common stock | Series B convertible preferred stock | |||
Equity | |||
Shares converted | 156 |
Warrants - Activity (Details)
Warrants - Activity (Details) - shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Warrants. | ||
Balance (in shares) | 13,609,929 | 127,540 |
Issued (in shares) | 6,400,000 | 16,934,170 |
Exercised (in shares) | (5,724,815) | (3,451,642) |
Cancelled (in shares) | (1) | (139) |
Balance (in shares) | 14,285,113 | 13,609,929 |
Warrants - Activity - Additiona
Warrants - Activity - Additional Information (Details) $ / shares in Units, $ in Thousands | Nov. 12, 2019USD ($) | Mar. 29, 2019USD ($) | Jun. 30, 2019shares | Dec. 31, 2020$ / sharesshares | Dec. 31, 2019USD ($)$ / sharesshares | Sep. 30, 2019shares | Dec. 31, 2018$ / shares | Nov. 28, 2018shares |
Warrants | ||||||||
Issued (in shares) | 6,400,000 | 16,934,170 | ||||||
Warrants exercised (in shares) | 5,724,815 | 3,451,642 | ||||||
Additional warrant expense | $ | $ 49,027 | |||||||
Warrant Expense | $ | $ 49,027 | |||||||
Series G Warrants | ||||||||
Warrants | ||||||||
Issued (in shares) | 6,400,000 | |||||||
Placement agent warrants | ||||||||
Warrants | ||||||||
Warrants exercised (in shares) | 58,981 | |||||||
June 2019 series C prefunded warrants | ||||||||
Warrants | ||||||||
Issued (in shares) | 6,467,501 | |||||||
Series C pre-funded warrants | ||||||||
Warrants | ||||||||
Warrants exercised (in shares) | 3,089,413 | |||||||
Warrants exercised (in dollars per share) | $ / shares | $ 0.12 | |||||||
Series F prefunded warrants | ||||||||
Warrants | ||||||||
Warrants exercised (in shares) | 2,576,421 | |||||||
Warrants exercised (in dollars per share) | $ / shares | $ 0.12 | |||||||
November 2018 prefunded warrants | ||||||||
Warrants | ||||||||
Warrants exercised (in shares) | (51,667) | |||||||
Warrants exercised (in dollars per share) | $ / shares | $ 1.20 | $ 1.20 | ||||||
November 28, 2018 Series A investor warrants | ||||||||
Warrants | ||||||||
Warrants exercised (in shares) | 66,666 | |||||||
Warrants exercised (in dollars per share) | $ / shares | $ 1.20 | |||||||
Additional warrant expense | $ | $ 100 | |||||||
Warrants issued | 66,667 | |||||||
November 28, 2018 Series A investor warrants | Risk Free Rate | ||||||||
Warrants | ||||||||
Warrant fair value measurement inputs (as a percent) | 2.2 | |||||||
November 28, 2018 Series A investor warrants | Remaining Life | ||||||||
Warrants | ||||||||
Warrants term | 4 years 8 months 12 days | |||||||
November 28, 2018 Series A investor warrants | Expected dividends | ||||||||
Warrants | ||||||||
Warrant fair value measurement inputs (as a percent) | 0 | |||||||
November 28, 2018 Series A investor warrants | Volatility | ||||||||
Warrants | ||||||||
Warrant fair value measurement inputs (as a percent) | 204.4 | |||||||
June 2019 series A warrants | Institutional Investors | ||||||||
Warrants | ||||||||
Warrants issued | 3,333,333 | |||||||
Class Of Warrant Investors Issued 13 June 2019 Seriesa And Seriesb [Member] | ||||||||
Warrants | ||||||||
Reclassification of warrants | $ | $ 64,000 | |||||||
Additional warrant expense | $ | 23,400 | |||||||
Warrant liability | $ | 16,000 | |||||||
Warrant Expense | $ | 8,300 | |||||||
June 2019 Series B warrants | ||||||||
Warrants | ||||||||
Warrants exercised (in shares) | 3,333,334 | |||||||
June 2019 Series B warrants | Institutional Investors | ||||||||
Warrants | ||||||||
Warrants issued | 3,333,334 | |||||||
September 2019 Series E warrants | ||||||||
Warrants | ||||||||
Warrant liability | $ | 24,600 | |||||||
Warrant Expense | $ | $ 17,200 | |||||||
September 2019 Series E warrants | Institutional Investors | ||||||||
Warrants | ||||||||
Warrants issued | 3,333,334 | |||||||
June and September 2019 placement agent warrants | ||||||||
Warrants | ||||||||
Warrants issued | 466,668 | 466,668 |
Warrants - Warrant assumptions
Warrants - Warrant assumptions (Details) | Dec. 31, 2020Y$ / sharesshares | Dec. 31, 2019Yshares | Nov. 12, 2019Yshares | Dec. 31, 2018shares |
Class of Warrant or Right [Line Items] | ||||
Warrants Outstanding (in shares) | shares | 14,285,113 | 13,609,929 | 127,540 | |
Series A warrants | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants Outstanding (in shares) | shares | 3,333,333 | |||
Series E warrants | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants Outstanding (in shares) | shares | 3,333,334 | |||
Series F warrants | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants Outstanding (in shares) | shares | 3,264,167 | |||
First Issuance | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants Outstanding (in shares) | shares | 1,200,000 | |||
Second Issuance | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants Outstanding (in shares) | shares | 1,200,000 | |||
Third Issuance | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants Outstanding (in shares) | shares | 4,000,000 | |||
June 2019 placement agent warrants | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants Outstanding (in shares) | shares | 233,334 | |||
September 2019 placement agent warrants | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants Outstanding (in shares) | shares | 233,334 | |||
Strike Price | Series A warrants | Monte Carlo Simulation Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 2.64 | |||
Strike Price | Series A warrants | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 2.64 | |||
Strike Price | Series B warrants | Monte Carlo Simulation Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 2.40 | |||
Strike Price | Series E warrants | Monte Carlo Simulation Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 6 | |||
Strike Price | Series E warrants | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 6 | |||
Strike Price | Series F warrants | Monte Carlo Simulation Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 0.12 | |||
Strike Price | Series F warrants | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 0.12 | |||
Strike Price | First Issuance | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | $ / shares | 3.70 | |||
Strike Price | Second Issuance | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | $ / shares | 3.25 | |||
Strike Price | Third Issuance | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | $ / shares | 3.50 | |||
Strike Price | June 2019 placement agent warrants | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 3 | |||
Strike Price | September 2019 placement agent warrants | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 6 | |||
Volatility | Series A warrants | Monte Carlo Simulation Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 164.1 | |||
Volatility | Series A warrants | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 93.5 | |||
Volatility | Series B warrants | Monte Carlo Simulation Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 164.1 | |||
Volatility | Series E warrants | Monte Carlo Simulation Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 93.2 | |||
Volatility | Series E warrants | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 93.5 | |||
Volatility | Series F warrants | Monte Carlo Simulation Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 93.2 | |||
Volatility | Series F warrants | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 93.5 | |||
Volatility | First Issuance | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | $ / shares | 97 | |||
Volatility | Second Issuance | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | $ / shares | 101.1 | |||
Volatility | Third Issuance | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | $ / shares | 100.8 | |||
Volatility | June 2019 placement agent warrants | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 93.5 | |||
Volatility | September 2019 placement agent warrants | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 93.5 | |||
Remaining Life | Series A warrants | Monte Carlo Simulation Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 5.22 | |||
Remaining Life | Series A warrants | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 5.1 | |||
Remaining Life | Series B warrants | Monte Carlo Simulation Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 1.22 | |||
Remaining Life | Series E warrants | Monte Carlo Simulation Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 5.11 | |||
Remaining Life | Series E warrants | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 5.1 | |||
Remaining Life | Series F warrants | Monte Carlo Simulation Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 5.11 | |||
Remaining Life | Series F warrants | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 5.1 | |||
Remaining Life | First Issuance | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 5 | |||
Remaining Life | Second Issuance | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 5 | |||
Remaining Life | Third Issuance | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 5 | |||
Remaining Life | June 2019 placement agent warrants | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 4.7 | |||
Remaining Life | September 2019 placement agent warrants | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 4.9 | |||
Risk Free Rate | Series A warrants | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 1.73 | |||
Risk Free Rate | Series E warrants | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 1.73 | |||
Risk Free Rate | Series F warrants | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 1.73 | |||
Risk Free Rate | First Issuance | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | $ / shares | 0.56 | |||
Risk Free Rate | Second Issuance | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | $ / shares | 0.27 | |||
Risk Free Rate | Third Issuance | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | $ / shares | 0.37 | |||
Risk Free Rate | June 2019 placement agent warrants | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 1.73 | |||
Risk Free Rate | September 2019 placement agent warrants | Black Scholes Model | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs (as a percent) | 1.73 |
Revenue Disaggregation and Op_3
Revenue Disaggregation and Operating Segments (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Revenue Recognition | ||
Revenue | $ 11,299 | $ 15,089 |
Restocking fee (as a percent) | 10.00% | |
Warranty term | 30 days | |
Practical Expedients | true | |
United States | ||
Revenue Recognition | ||
Revenue | $ 8,275 | 13,309 |
Australia | ||
Revenue Recognition | ||
Revenue | 1,086 | 1,167 |
Europe | ||
Revenue Recognition | ||
Revenue | 1,824 | $ 613 |
Rest of world | ||
Revenue Recognition | ||
Revenue | $ 114 | |
LAP-BAND product | Maximum | ||
Revenue Recognition | ||
Threshold period for right to return or exchange products purchased | 30 days | |
ReShape vBloc product | ||
Revenue Recognition | ||
Warranty term | 5 years | |
Revenues | Geographic area | Australia | ||
Revenue Recognition | ||
Percentage of total | 9.60% | 7.70% |
Revenue Disaggregation and Op_4
Revenue Disaggregation and Operating Segments - Operating Segments (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020USD ($)item | Dec. 31, 2019USD ($)item | |
Revenue Disaggregation and Operating Segments | ||
Revenue | $ 11,299 | $ 15,089 |
Gross Profit | $ 6,262 | $ 9,305 |
Number of Products in Development Stage | item | 2 | 2 |
Stock-based Compensation - Plan
Stock-based Compensation - Plan Description (Details) - shares | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2018 | Jan. 01, 2021 | |
2003 Stock Incentive Plan, as amended and restated | |||
Stock-based compensation | |||
Number of additional shares authorized | 26 | ||
Number of shares authorized for plan as a percentage of stock outstanding | 15.00% | ||
Shares authorized | 2,100,443 | 3,067,949 | |
Shares available for grant | 3,067,909 | ||
2003 Stock Incentive Plan, as amended and restated | Minimum | |||
Stock-based compensation | |||
Purchase price of common stock (as a percent) | 100.00% | ||
2003 Stock Incentive Plan, as amended and restated | Principal (10 percent) owner | Minimum | |||
Stock-based compensation | |||
Purchase price of common stock (as a percent) | 110.00% | ||
2003 Stock Incentive Plan, as amended and restated | Stock options | |||
Stock-based compensation | |||
Award vesting period | 4 years | ||
2003 Stock Incentive Plan, as amended and restated | Stock options | Maximum | |||
Stock-based compensation | |||
Option expiration period | 10 years | ||
Inducement grants | Maximum | |||
Stock-based compensation | |||
Award vesting period | 4 years |
Stock-based Compensation - Stoc
Stock-based Compensation - Stock Option Activity (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Stock options | |||
Outstanding | |||
Options granted (in shares) | 0 | 0 | |
2003 Stock Incentive Plan, as amended and restated | |||
Outstanding | |||
Beginning balance (in shares) | 28 | 28 | |
Options cancelled (in shares) | (3) | ||
Ending balance (in shares) | 25 | 28 | |
Exercisable (in shares) | 21 | ||
Vested and expected to vest (in shares) | 25 | ||
Weighted-Average Exercise Price | |||
Options cancelled (in dollars per share) | $ 500,506.83 | ||
Outstanding (in dollars per share) | 3,264,298.08 | $ 2,957,210.16 | $ 2,957,210.16 |
Exercisable (in dollars per share) | 3,884,244.46 | ||
Vested and expected to vest (in dollars per share) | $ 3,884,244.46 | ||
Weighted-Average Remaining Contractual Term | |||
Outstanding | 6 years 9 months 18 days | ||
Exercisable | 6 years 9 months 18 days | ||
Vested and expected to vest | 6 years 10 months 24 days | ||
Intrinsic value | |||
Outstanding (in dollars) | $ 0 | ||
Exercisable (in dollars) | 0 | ||
Vested and expected to vest (in dollars) | $ 0 | ||
Inducement grants | |||
Outstanding | |||
Beginning balance (in shares) | 18 | 18 | |
Options cancelled (in shares) | (3) | ||
Ending balance (in shares) | 15 | 18 | |
Exercisable (in shares) | 15 | ||
Vested and expected to vest (in shares) | 15 | ||
Weighted-Average Exercise Price | |||
Options cancelled (in dollars per share) | $ 532,766.92 | ||
Outstanding (in dollars per share) | 316,897.88 | $ 352,876.06 | $ 352,876.06 |
Exercisable (in dollars per share) | 316,897.88 | ||
Vested and expected to vest (in dollars per share) | $ 316,897.88 | ||
Weighted-Average Remaining Contractual Term | |||
Outstanding | 7 years 1 month 6 days | ||
Exercisable | 7 years 1 month 6 days | ||
Vested and expected to vest | 7 years 1 month 6 days | ||
Intrinsic value | |||
Outstanding (in dollars) | $ 0 | ||
Exercisable (in dollars) | 0 | ||
Vested and expected to vest (in dollars) | $ 0 |
Stock-based Compensation - Expe
Stock-based Compensation - Expense for Stock-Based Awards (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Compensation expense recognized | ||
Stock-based compensation expense | $ 1,323 | $ 2,311 |
Total unrecognized compensation costs related to unvested awards | $ 300 | |
Weighted-average period of recognition for unrecognized compensation costs related to unvested awards | 1 year 2 months 12 days | |
Selling and marketing | ||
Compensation expense recognized | ||
Stock-based compensation expense | 151 | |
General and Administrative | ||
Compensation expense recognized | ||
Stock-based compensation expense | $ 1,323 | 2,115 |
Research and development | ||
Compensation expense recognized | ||
Stock-based compensation expense | $ 45 |
Income Taxes - Income Tax Benef
Income Taxes - Income Tax Benefit (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Deferred: | ||
Federal | $ (84) | $ (276) |
State | (2) | (867) |
Deferred income tax provision (benefit) | (86) | (1,143) |
Current: | ||
State | 1 | 18 |
Foreign | (96) | 232 |
Total income tax provision (benefit), net | $ (181) | $ (893) |
Income Taxes - Tax Rate Reconci
Income Taxes - Tax Rate Reconciliation (Details) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income Taxes | ||
Income tax benefit at U.S. federal statutory rate | 21.00% | 21.00% |
State income tax benefit, net of federal benefit | 4.20% | 3.90% |
Stock warrant valuation | (10.20%) | (14.20%) |
Other permanent differences | (0.60%) | (0.70%) |
Research and development credit | (0.20%) | |
Change in state tax rate | (0.30%) | |
Foreign rate differential | 0.50% | (0.10%) |
Other adjustments | 1.40% | 0.30% |
Change in valuation allowance | (15.20%) | (8.80%) |
Effective income tax rate | 0.80% | 1.20% |
Income Taxes - Components of De
Income Taxes - Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred tax assets (liabilities): | ||
Start-up costs | $ 1,192 | $ 1,208 |
Capitalized research and development costs | 503 | 612 |
Reserves and accruals | 9,235 | 8,180 |
Property and equipment | 133 | 55 |
Research and development credit | 1,194 | 1,194 |
Lease liability | 41 | 118 |
State and local taxes | 2 | 4 |
Net operating loss carryforwards | 30,156 | 27,860 |
Total gross deferred tax assets | 42,456 | 39,231 |
Valuation allowance | (39,803) | (36,349) |
Deferred tax assets, net of valuation allowance | 2,653 | 2,882 |
Intangible assets | (3,151) | (3,396) |
Operating lease right-of-use assets | (117) | (188) |
Total gross deferred tax liabilities | (3,268) | (3,584) |
Net deferred tax liability | $ (615) | $ (702) |
Income Taxes - Carryforwards an
Income Taxes - Carryforwards and Limitations (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Income taxes | ||
Unrecognized tax benefits | $ 0 | |
Unrecognized tax benefits, income tax penalties and interest accrued | $ 0 | |
Minimum | ||
Income taxes | ||
Percentage of change in ownership | 50.00% | |
State | ||
Income taxes | ||
Net operating loss carryforwards amount | $ 222,400 | $ 212,700 |
Foreign | ||
Income taxes | ||
Net operating loss carryforwards amount | 300 | 400 |
U.S. federal | ||
Income taxes | ||
Net operating loss carryforwards amount | $ 77,200 | 68,000 |
Net operating loss carryforwards subject to expiration and IRC Section 382 limitation | $ 1,200 |
Commitments and Contingencies -
Commitments and Contingencies - Litigation (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Employee Arrangements and Other Compensation | ||
Severance benefits payable | $ 1.8 | |
Purchase Commitments | ||
Purchase commitments | 1.7 | |
Accrued Liabilities [Member] | ||
Employee Arrangements and Other Compensation | ||
Accrued performance bonuses | $ 1.3 | $ 0.6 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ / shares in Units, $ in Millions | Mar. 10, 2021 | Jan. 19, 2021 | Mar. 25, 2020 | Sep. 14, 2020 | Apr. 15, 2020 |
Subsequent Events | |||||
Warrant exercise price (in dollars per share) | $ 0.12 | ||||
Credit agreement | |||||
Subsequent Events | |||||
Line of credit | $ 3.5 | ||||
Interest rate per annum | 2.50% | ||||
Additional borrowing amount | $ 1 | $ 2 | |||
Subsequent Events | Credit agreement | |||||
Subsequent Events | |||||
Termination fees | $ 1 | ||||
Line of credit | 15 | ||||
Additional borrowing amount | $ 1 | ||||
Number of shares in exchange of warrant exercise | 1,000,000 | ||||
Warrant exercise price (in dollars per share) | $ 3.50 | ||||
Subsequent Events | Credit agreement | LIBOR | |||||
Subsequent Events | |||||
Interest rate per annum | 2.50% | ||||
Subsequent Events | Credit agreement fifth amendment | |||||
Subsequent Events | |||||
Number of days after the entity completes capital raising transaction | 15 days | ||||
Subsequent Events | Credit agreement fifth amendment | Minimum | |||||
Subsequent Events | |||||
Gross proceeds | $ 15 | ||||
Subsequent Events | Merger Agreement | |||||
Subsequent Events | |||||
Percentage of stock owned by parent | 51.00% | ||||
Subsequent Events | Merger Agreement | Approval Not Obtained Within 30 Days of the Specified Terms [Member] | |||||
Subsequent Events | |||||
Termination fees | $ 1 | ||||
Subsequent Events | Merger Agreement | ReShape Lifesciences Inc | |||||
Subsequent Events | |||||
Ownership percentage | 49.00% |