Document and Entity Information
Document and Entity Information - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 14, 2017 | Jun. 30, 2016 | |
Document And Entity Information | |||
Entity Registrant Name | SECOND SIGHT MEDICAL PRODUCTS INC | ||
Entity Central Index Key | 1,266,806 | ||
Document Type | 10-K | ||
Trading Symbol | EYES | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | No | ||
Entity's Reporting Status Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 61,000 | ||
Entity Common Stock, Shares Outstanding | 56,365,629 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,016 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash | $ 539 | $ 239 |
Money market funds | 10,336 | 15,721 |
Accounts receivable, net | 274 | 1,501 |
Inventories, net | 3,416 | 8,209 |
Prepaid expenses and other current assets | 717 | 1,094 |
Total current assets | 15,282 | 26,764 |
Property and equipment, net | 1,489 | 1,432 |
Deposits and other assets | 39 | 49 |
Total assets | 16,810 | 28,245 |
Current liabilities: | ||
Accounts payable | 1,156 | 710 |
Accrued expenses | 2,088 | 2,068 |
Accrued compensation expense | 1,600 | 2,069 |
Accrued clinical trial expense | 629 | 616 |
Deferred revenue | 85 | 322 |
Deferred grant revenue | 104 | 2,197 |
Total current liabilities | 5,662 | 7,982 |
Stockholders' equity: | ||
Preferred stock, no par value, 10,000 shares authorized; none outstanding | ||
Common stock, no par value; 200,000 shares authorized; shares issued and outstanding: 42,701 and 35,942 at December 31, 2016 and December 31, 2015, respectively | 186,769 | 166,049 |
Common stock to be issued | 153 | 205 |
Additional paid-in capital | 30,697 | 27,277 |
Notes receivable to finance stock option exercises | (2) | (5) |
Accumulated other comprehensive loss | (608) | (581) |
Accumulated deficit | (205,861) | (172,682) |
Total stockholders' equity | 11,148 | 20,263 |
Total liabilities and stockholders' equity | $ 16,810 | $ 28,245 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Preferred stock, no par value (in dollars per share) | $ 0 | $ 0 |
Preferred stock, authorized | 10,000 | 10,000 |
Common stock, no par value (in dollars per share) | $ 0 | $ 0 |
Common stock, authorized | 200,000 | 200,000 |
Common stock, issued | 42,701 | 35,942 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Statement [Abstract] | |||
Net sales | $ 3,985 | $ 8,950 | $ 3,398 |
Cost of sales | 10,076 | 5,293 | 3,558 |
Gross profit (loss) | (6,091) | 3,657 | (160) |
Operating expenses: | |||
Research and development, net of grants | 5,347 | 3,036 | 5,041 |
Clinical and regulatory | 2,703 | 3,510 | 2,622 |
Selling and marketing | 8,989 | 8,935 | 6,845 |
General and administrative | 10,080 | 8,223 | 6,565 |
Total operating expenses | 27,119 | 23,704 | 21,073 |
Loss from operations | (33,210) | (20,047) | (21,233) |
Interest income | 31 | 2 | 9 |
Other income, net | 27 | 12 | |
Interest expense on convertible promissory notes and loan payable | (1,957) | ||
Amortization of discount on convertible promissory notes | (5,077) | ||
Write-off of unamortized discount on conversion of convertible promissory notes | (6,955) | ||
Net loss | $ (33,179) | $ (20,018) | $ (35,201) |
Net loss per common share - basic and diluted (in dollars per share) | $ (0.84) | $ (0.56) | $ (1.41) |
Weighted average shares outstanding - basic and diluted (in shares) | 39,554 | 35,637 | 25,053 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Consolidated Statements Of Comprehensive Loss | |||
Net loss | $ (33,179) | $ (20,018) | $ (35,201) |
Other comprehensive loss: | |||
Foreign currency translation adjustments | (27) | (107) | (207) |
Comprehensive loss | $ (33,206) | $ (20,125) | $ (35,408) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (Deficiency) - USD ($) $ in Thousands | Common Stock [Member] | Common Stock Issuable [Member] | Additional Paid-in Capital [Member] | Notes Receivable for Stock Option Exercises [Member] | Accumulated Other Comprehensive Loss [Member] | Accumulated Deficit [Member] | Total |
Balance beginning at Dec. 31, 2013 | $ 88,311 | $ 20,785 | $ (587) | $ (267) | $ (117,463) | $ (9,221) | |
Balance beginning (in shares) at Dec. 31, 2013 | 23,050 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Exercise of stock options | $ 506 | 506 | |||||
Exercise of stock options (in shares) | 115 | ||||||
Stock-based compensation expense | 1,475 | 1,475 | |||||
Stock issued in connection with professional services | $ 178 | 178 | |||||
Stock issued in connection with professional services (in shares) | 22 | ||||||
Issuance of common stock in connection with warrant exercise | $ 10 | 10 | |||||
Issuance of common stock in connection with warrant exercise (in shares) | 2 | ||||||
Issuance of common stock in connection with private placement | $ 9,099 | 9,099 | |||||
Issuance of common stock in connection with private placement (in shares) | 1,300 | ||||||
Issuance of common stock in connection with initial public offering | $ 36,225 | 36,225 | |||||
Issuance of common stock in connection with initial public offering (in shares) | 4,025 | ||||||
Issuance costs of initial public offering | $ (4,971) | (4,971) | |||||
Fair value of warrants issued in connection with initial public offering | 2,772 | 2,772 | |||||
Issuance of common stock in connection with conversion of convertible promissory notes | $ 33,196 | 33,196 | |||||
Issuance of common stock in connection with conversion of convertible promissory notes (in shares) | 6,639 | ||||||
Finders' fee paid on private placement | $ 451 | (451) | |||||
Finders' fee paid on private placement (in shares) | 64 | ||||||
Common stock cancelled | $ (9) | 9 | |||||
Common stock cancelled (in shares) | (1) | ||||||
Common stock issuable for services | $ 166 | 166 | |||||
Common stock issuable for services (in shares) | 16 | ||||||
Stock grant in connection with services by a director | $ 175 | 175 | |||||
Stock grant in connection with services by a director (in shares) | 25 | ||||||
Repayment of notes receivable for stock option exercises, net | (7) | (7) | |||||
Forgiveness of notes receivable from an officer for stock option exercises | 423 | 423 | |||||
Comprehensive loss: | |||||||
Net loss | (35,201) | (35,201) | |||||
Foreign currency translation adjustment | (207) | (207) | |||||
Comprehensive loss | (207) | (35,201) | (35,408) | ||||
Balance ending at Dec. 31, 2014 | $ 163,171 | $ 166 | 24,590 | (171) | (474) | (152,664) | 34,618 |
Balance ending (in shares) at Dec. 31, 2014 | 35,241 | 16 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of common stock in connection with Employee Stock Purchase Plan | $ 226 | 226 | |||||
Issuance of common stock in connection with Employee Stock Purchase Plan (in shares) | 53 | ||||||
Exercise of stock options | $ 2,782 | 2,782 | |||||
Exercise of stock options (in shares) | 574 | ||||||
Stock-based compensation expense | 2,687 | 2,687 | |||||
Stock issued in connection with professional services | $ 285 | $ 39 | $ 324 | ||||
Stock issued in connection with professional services (in shares) | 23 | 17 | 23,136 | ||||
Issuance of common stock in connection with warrant exercise | $ 702 | $ 702 | |||||
Issuance of common stock in connection with warrant exercise (in shares) | 140 | ||||||
Common stock issuable for services | 285 | ||||||
Stock grant in connection with services by a director | |||||||
Repayment of notes receivable for stock option exercises, net | 166 | 166 | |||||
Issuance of common stock in connection with cashless exercise of warrants | |||||||
Issuance of common stock in connection with cashless exercise of warrants (in shares) | 1 | ||||||
Common stock tendered to exercise stock options | $ (993) | (993) | |||||
Common stock tendered to exercise stock options (in shares) | (78) | ||||||
Common stock tendered to pay taxes on stock option exercise | $ (124) | (124) | |||||
Common stock tendered to pay taxes on stock option exercise (in shares) | (12) | ||||||
Comprehensive loss: | |||||||
Net loss | (20,018) | (20,018) | |||||
Foreign currency translation adjustment | (107) | (107) | |||||
Comprehensive loss | (107) | (20,018) | (20,125) | ||||
Balance ending at Dec. 31, 2015 | $ 166,049 | $ 205 | 27,277 | (5) | (581) | (172,682) | 20,263 |
Balance ending (in shares) at Dec. 31, 2015 | 35,942 | 33 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of common stock and options in connection with rights offering net of expenses | $ 19,430 | 53 | 19,483 | ||||
Issuance of common stock and options in connection with rights offering net of expenses (in shares) | 5,978 | ||||||
Issuance of shares under Long-Term Investor Right | |||||||
Issuance of shares under Long-Term Investor Right (in shares) | 355 | ||||||
Issuance of common stock in connection with Employee Stock Purchase Plan | $ 488 | 488 | |||||
Issuance of common stock in connection with Employee Stock Purchase Plan (in shares) | 189 | ||||||
Exercise of stock options | $ 478 | 3 | 481 | ||||
Exercise of stock options (in shares) | 96 | ||||||
Stock-based compensation expense | 3,367 | 3,367 | |||||
Stock issued in connection with professional services | $ 324 | $ (52) | $ 272 | ||||
Stock issued in connection with professional services (in shares) | 82 | 44 | 82,000 | ||||
Issuance of RSU units | |||||||
Issuance of RSU units (in shares) | 59 | ||||||
Common stock issuable for services | 324 | ||||||
Stock grant in connection with services by a director | |||||||
Comprehensive loss: | |||||||
Net loss | (33,179) | (33,179) | |||||
Foreign currency translation adjustment | (27) | (27) | |||||
Comprehensive loss | (27) | (33,179) | (33,206) | ||||
Balance ending at Dec. 31, 2016 | $ 186,769 | $ 153 | $ 30,697 | $ (2) | $ (608) | $ (205,861) | $ 11,148 |
Balance ending (in shares) at Dec. 31, 2016 | 42,701 | 77 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | |||
Net loss | $ (33,179) | $ (20,018) | $ (35,201) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation and amortization of property and equipment | 432 | 335 | 279 |
Loss on disposal of property and equipment | 2 | ||
Stock-based compensation | 3,367 | 2,687 | 1,475 |
Stock grant in connection with services by a director | 175 | ||
Forgiveness of notes receivable related to stock option exercise | 423 | ||
Amortization of discount on convertible notes payable | 5,077 | ||
Non-cash interest accrued on convertible notes payable | 1,952 | ||
Write off of unamortized discount on conversion of convertible promissory notes | 6,955 | ||
Common stock issued for research and development agreement | 9 | ||
Bad debt expense | 258 | ||
Excess inventory reserve | 4,728 | ||
Common stock issued for services | 272 | 324 | 166 |
Changes in operating assets and liabilities: | |||
Accounts receivable | 955 | (793) | (239) |
Inventories | 10 | (2,488) | (3,375) |
Prepaid expenses and other assets | 378 | (127) | (556) |
Accounts payable | 446 | 197 | 199 |
Accrued expenses | 44 | 656 | 749 |
Accrued compensation expenses | (469) | 707 | 216 |
Accrued clinical trial expenses | 13 | 127 | (2) |
Deferred revenue | (234) | (278) | 531 |
Deferred grant revenue | (2,093) | (1,878) | 4,075 |
Net cash used in operating activities | (25,070) | (20,549) | (17,092) |
Cash flows from investing activities: | |||
Purchases of property and equipment | (490) | (762) | (560) |
Proceeds from (investment in) money market funds | 5,378 | 18,279 | (25,388) |
Net cash provided (used) in investing activities | 4,888 | 17,517 | (25,948) |
Cash flows from financing activities: | |||
Net proceeds from sale of common stock in rights and initial public offering | 19,483 | 43,295 | |
Proceeds from exercise of options, warrants and employee stock purchase plan options | 969 | 2,883 | 509 |
Payment of employment taxes related to stock option exercises | (124) | ||
Net cash provided by financing activities | 20,452 | 2,759 | 43,804 |
Effect of exchange rate changes on cash | 30 | (107) | (207) |
Cash: | |||
Net increase (decrease) | 300 | (380) | 557 |
Balance at beginning of year | 239 | 619 | 62 |
Balance at end of year | 539 | 239 | 619 |
Non-cash financing and investing activities: | |||
Fair value of stock options issued for services rendered in connection with rights offering | $ 53 | ||
Fair value of warrant issued as part of underwriting fee for the Company's initial public offering | 2,772 | ||
Principal and accrued interest on notes payable converted to common stock | 33,196 | ||
Common stock issued in connection with finder fees paid on private placements | 451 | ||
Common stock issued for professional services rendered in connection with initial public offering | $ 170 |
Organization and Business Opera
Organization and Business Operations | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Business Operations | 1. Organization and Business Operations Second Sight Medical Products, Inc. (“Second Sight” or “the Company”), formerly Second Sight LLC, was founded in 1998 as a limited liability company and was subsequently incorporated in the State of California in 2003. Second Sight develops, manufactures and markets implantable prosthetic devices that can restore some functional vision to patients blinded by outer retinal degenerations, such as Retinitis Pigmentosa. In 2007, Second Sight formed Second Sight (Switzerland) Sarl, initially to manage clinical trials for its products in Europe, and later to manage sales and marketing in Europe and the Middle East. As the laws of Switzerland require at least two corporate stockholders, Second Sight (Switzerland) Sarl is 99.5% owned directly by the Company and 0.5% owned by an executive of Second Sight, who is acting as a nominee of the Company. Accordingly, Second Sight (Switzerland) Sarl is considered 100% owned for financial statement purposes and is consolidated with Second Sight for all periods presented. The Company’s current product, the Argus II system, entered clinical trials in 2006, received CE Mark approval for marketing and sales in the European Union (“EU”) in 2011, and approval by the United States Food and Drug Administration (“FDA”) for marketing and sales in the United States in 2013. The Company began selling its product in Europe in 2011, in Saudi Arabia in 2013, in the United States and Canada in 2014, and in Turkey in 2015. Going Concern From inception, the Company’s operations have been funded primarily through the sales of its common stock, as well as from the issuance of convertible debt, research and clinical grants, and limited product revenue generated from the sale of its Argus II System. During the years ended December 31, 2016, 2015 and 2014, the Company funded its business primarily through: • Issuance of common stock in the Company’s Rights Offering to existing shareholders in June 2016, which generated net proceeds of $19.5 million of cash after offering expenses. • Revenue of $4.0 million, $8.9 million, and $3.4 million in 2016, 2015 and 2014, respectively, generated by sales of the Company’s Argus II System, Issuance of common stock in the Company’s initial public offering in November 2014, which generated net proceeds of $34.2 million of cash after offering expenses • A $4.1 million grant under a Joint Research and Development Agreement with The Johns Hopkins University Applied Physics Laboratory in 2014, • Issuance of common stock in a private placement aggregating $9.1 million in 2014. The Company’s financial statements have been presented on the basis that its business is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is subject to the risks and uncertainties associated with a business with one product line and limited commercial product revenues, including limitations on the Company’s operating capital resources and uncertain demand for its product. The Company has incurred recurring operating losses and negative operating cash flows since inception, and it expects to continue to incur operating losses and negative operating cash flows for at least the next few years. As a result, management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern, and the Company’s independent registered public accounting firm, in its report on the Company’s 2016 consolidated financial statements, has raised substantial doubt about the Company’s ability to continue as a going concern. As fully described in Note 9, in March 2017, the Company successfully completed a Rights Offering to existing stockholders, raising proceeds of approximately $19.7 million net of cash offering costs. The Company believes that it does not have sufficient funds to support its operations through the end of the first quarter of 2018. In order to continue business operations past that point, the Company currently anticipates that it will need to raise additional debt and/or equity capital during the next several months. However, there can be no assurances that the Company will be able to secure any such additional financing on acceptable terms and conditions, or at all. If cash resources become insufficient to satisfy the Company's ongoing cash requirements, the Company would be required to scale back or discontinue its technology and product development programs and/or clinical trials, or obtain funds, if available (although there can be no certainty), through strategic alliances that may require the Company to relinquish rights to its products, or to discontinue its operations entirely. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Principles of Consolidation The accompanying consolidated financial statements include the financial statements of Second Sight and Second Sight Switzerland. Intercompany balances and transactions have been eliminated in consolidation. Accounts receivable Trade accounts receivable are stated net of an allowance for doubtful accounts. The Company performs ongoing credit evaluations of its customers’ financial condition and generally requires no collateral from its customers or interest on past due amounts. Management estimates the allowance for doubtful accounts based on review and analysis of specific customer balances that may not be collectible and how recently payments have been received. Accounts are considered for write-off when they become past due and when it is determined that the probability of collection is remote. Allowance for doubtful accounts amounted to approximately $213,000 at December 31, 2016. There was no allowance for doubtful accounts at December 31, 2015. Inventories Inventories are stated at the lower of cost or market, determined by the first-in, first-out method. Inventories consist primarily of raw materials, work in progress and finished goods, which includes all direct material, labor and other overhead costs. The Company establishes a reserve to mark down its inventory for estimated unmarketable inventory equal to the difference between the cost of inventory and the estimated net realizable value based on assumptions about the usability of the inventory, future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory reserve may be required. Property and Equipment Property and equipment are recorded at historical cost less accumulated depreciation and amortization. Improvements are capitalized, while expenditures for maintenance and repairs are charged to expense as incurred. Upon disposal of depreciable property, the appropriate property accounts are reduced by the related costs and accumulated depreciation. The resulting gains and losses are reflected in the consolidated statements of operations. Depreciation is provided for using the straight-line method in amounts sufficient to relate the cost of assets to operations over their estimated service lives. Leasehold improvements are amortized over the shorter of the life of the asset or the related lease term. Estimated useful lives of the principal classes of assets are as follows: Lab equipment 5 – 7 years Computer hardware and software 3 – 7 years Leasehold improvements 2 – 5 years or the term of the lease, if shorter Furniture, fixtures and equipment 5 – 10 years The Company reviews its property and equipment for impairment annually or whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. There were no impairment losses recognized in 2016, 2015, and 2014. Depreciation and amortization of property and equipment amounted to $432,000, $335,000 and $279,000 for the years ended December 31, 2016, 2015 and 2014, respectively. Research and Development Research and development costs are charged to operations in the period incurred and amounted to $5.3 million, $3.0 million and $5.0 million net of grant revenue, for the years ended December 31, 2016, 2015 and 2014, respectively. Patent Costs The Company has 381 domestic and foreign patents at December 31, 2016. Due to the uncertainty associated with the successful development of one or more commercially viable products based on Company’s research efforts and any related patent applications, all patent costs, including patent-related legal, filing fees and other costs, including internally generated costs, are expensed as incurred. Patent costs were $652,000, $679,000 and $666,000 for the years ended December 31, 2016, 2015 and 2014, respectively, and are included in general and administrative expenses in the consolidated statements of operations. Revenue Recognition The Company’s revenue is derived primarily from the sale of its Argus II retinal implant, which is implanted during retinal surgery to restore some functional vision to patients blinded by Retinitis Pigmentosa. The Company sells to a variety of customers including university hospitals, large medical centers and distributors. Revenue is recognized when persuasive evidence of an arrangement exists, the fee is fixed or determinable, collectability is probable, and delivery has occurred. Revenue is generated under sales agreements with multiple deliverables (multiple-element arrangements), comprising the following deliverables: Hospital start up kits (one per site), Surgical support, Training, and The Argus II System The deliverables may vary by transaction. The Company evaluates each deliverable in a multiple-element arrangement to determine whether it represents a separate unit of accounting. An element constitutes a separate unit of accounting when the delivered item has standalone value and delivery of the undelivered element is probable and within the Company's control. The Company has determined that the elements listed above do not have standalone value to the customer until delivery of all components has occurred. Accordingly, revenue from multiple-element arrangements is recognized when delivery of all of deliverables has taken place and all other revenue recognition criteria have been met. Generally, revenue recognition occurs at the time of implantation, but revenue recognition can be delayed if certain training has not been delivered to the implanting sites, or if other revenue recognition criteria have not been met. In the United States, the amount of revenue recognized per unit has been limited in some situations due to the uncertainties of the reimbursement environment and payment terms. In such cases, revenue is not recognized until the consideration becomes fixed, generally when paid to the Company. In order to determine whether collection is reasonably assured, the Company assesses a number of factors, including creditworthiness of the customer and medical insurance coverage. The Company may periodically grant extended payment terms to customers. In such situations, the Company defers the recognition of revenue until collection becomes probable, which is generally upon receipt of payment. The Company also sells surgical supplies to customers and recognizes revenue on these products when they are shipped and other revenue recognition criteria have been met. The Company sells through distributors in certain countries. The Company provides these distributors with clinical start-up kits, surgical supplies and the Argus II System, as well as training them to provide pre- and post-surgical support. The Company monitors the surgery. Other than surgical support which is provided by the Company, the distributor is responsible for delivering products and services to its customers. In the past, the Company has allowed distributors to return or exchange products in certain situations. Due to the Company’s continuing involvement and its returns policy, the Company recognizes revenue from distributors when the implantation procedure has been performed by the distributor’s customer, and all other revenue recognition criteria between the Company and the distributor have been met. Grant Receipts and Liabilities From time to time, the Company receives grants that help fund specific development programs. Any amounts received pursuant to grants are offset against the related operating expenses as the costs are incurred. During the years ended December 31, 2016, 2015 and 2014 grants offset against operating expenses were $2,366,000, $1,878,000 and $19,000, respectively. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ materially from those estimates. Concentration of Risk Credit Risk Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash, money market funds, and trade accounts receivable. The Company maintains cash and money market funds with financial institutions that management deems reputable, and at times, cash balances may be in excess of FDIC and SIPC insurance limits of $250,000 and $500,000 (including cash of $250,000), respectively. The Company extends differing levels of credit to customers, and typically does not require collateral. The Company also maintains a cash balance at a bank in Switzerland. Accounts at such bank are insured up to an amount specified by the deposit insurance agency of Switzerland. Customer Concentration During the years ended December 31, 2016, 2015 and 2014, the following customers comprised more than 10% of revenues : 2016 2015 2014 Customer 1 13 % 14 % 7 % Customer 2 3 % 4 % 10 % Customer 3 2 % 7 % 21 % As of December 31, 2016 and 2015, the following customers comprised more than 10% accounts receivable: 2016 2015 Customer 1 34 % 1 % Customer 2 34 % 0 % Customer 3 29 % 0 % Customer 4 0 % 19 % Customer 5 0 % 17 % Customer 6 0 % 10 % Customer 7 0 % 10 % Customer 8 0 % 10 % Geographic Concentration During the years ended December 31, 2016, 2015 and 2014, regional revenue, based on customer locations which comprised more than 10% of revenues, consisted of the following: 2016 2015 2014 United States 47 % 46 % 47 % Italy 17 % 20 % 8 % Germany 12 % 6 % 16 % France 9 % 16 % 3 % Canada 3 % 5 % 10 % Sources of Supply Several of the components, materials and services used in the Company’s current Argus II product are available from only one supplier, and substitutes for these items cannot be obtained easily or would require substantial design or manufacturing modifications. Any significant problem experienced by one of the Company’s sole source suppliers could result in a delay or interruption in the supply of components to the Company until that supplier cures the problem or an alternative source of the component is located and qualified. Even where the Company could qualify alternative suppliers, the substitution of suppliers may be at a higher cost and cause time delays that impede the commercial production of the Argus II, reduce gross profit margins and impact the Company’s abilities to deliver its products as may be timely required to meet demand. Foreign Operations The accompanying consolidated financial statements as of December 31, 2016 and 2015 include assets amounting to approximately $1.7 million and $3.0 million, respectively, relating to operations of the Company in Switzerland. It is always possible unanticipated events in foreign countries could disrupt the Company’s operations. Fair Value of Financial Instruments The authoritative guidance with respect to fair value establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels, and requires that assets and liabilities carried at fair value be classified and disclosed in one of three categories, as presented below. Disclosure as to transfers in and out of Levels 1 and 2, and activity in Level 3 fair value measurements, is also required. Level 1. Observable inputs such as quoted prices in active markets for an identical asset or liability that the Company has the ability to access as of the measurement date. Financial assets and liabilities utilizing Level 1 inputs include active-exchange traded securities and exchange-based derivatives. Level 2. Inputs, other than quoted prices included within Level 1, which are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. Financial assets and liabilities utilizing Level 2 inputs include fixed income securities, non-exchange based derivatives, mutual funds, and fair-value hedges. Level 3. Unobservable inputs in which there is little or no market data for the asset or liability which requires the reporting entity to develop its own assumptions. Financial assets and liabilities utilizing Level 3 inputs include infrequently-traded non-exchange-based derivatives and commingled investment funds, and are measured using present value pricing models. The Company determines the level in the fair value hierarchy within which each fair value measurement falls in its entirety, based on the lowest level input that is significant to the fair value measurement in its entirety. In determining the appropriate levels, the Company performs an analysis of the assets and liabilities at each reporting period end. Money market funds are the only financial instrument that is measured and recorded at fair value on the Company’s balance sheet, and they are considered Level 1 valuation securities in both 2016 and 2015. Stock-Based Compensation Pursuant to Financial Accounting Standards Board (“FASB”) ASC 718 Share-Based Payment (“ASC 718”), the Company records stock-based compensation expense for all stock-based awards. Under ASC 718, the Company estimates the fair value of stock options granted using the Black-Scholes option pricing model. The fair value for awards that are expected to vest is then amortized on a straight-line basis over the requisite service period of the award, which is generally the option vesting term. The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option valuation model. The assumptions used in the Black-Scholes valuation model are as follows: The grant price of the issuances, is determined based on the fair value of the shares at the date of grant. The risk free interest rate for periods within the contractual life of the option is based on the U.S. treasury yield in effect at the time of grant. As permitted by SAB 107, due to the Company’s insufficient history of option activity, management utilizes the simplified approach to estimate the options expected term, which represents the period of time that options granted are expected to be outstanding. Volatility is determined based on average historical volatilities of comparable companies in similar industry. Expected dividend yield is based on current yield at the grant date or the average dividend yield over the historical period. The Company has never declared or paid dividends and has no plans to do so in the foreseeable future. Long Term Investor Right Each beneficial owner (“IPO Shareholder”) of the Company’s common stock, who purchased shares directly in the offering (“IPO Shares”), was eligible to receive up to one additional share of common stock from the Company for each share purchased in the offering (“IPO Supplemental Shares”) pursuant to the Long Term Investor Right that was included with each IPO Share. To receive IPO Supplemental Shares, within 90 days following the closing date of the offering, or by February 22, 2015, an IPO Shareholder was required to take action to become the direct registered owner of its IPO Shares. Furthermore, IPO Shareholders were required to hold their IPO Shares in their own name and not place them in “street name” or trade them at any time during the 24 month period immediately following the IPO closing date. This Long Term Investors Right was non-detachable and transferable only in limited circumstances. The Company issued IPO Supplemental Shares to IPO Shareholders who did not otherwise forfeit their Long Term Investor Right since, during the two-year period immediately following the IPO closing date, the Company’s common stock did not trade at or above $18.00 per share (200% of the IPO price per share) for any five consecutive day period. If the Company’s common stock had traded on its principal exchange at 200% of the IPO price per share or greater on five consecutive trading days during the two years after the IPO closing date, the Long Term Investor Right would have terminated. The formula to determine the number of IPO Supplemental Shares issued on a trigger of the Long Term Investor Right was: (i) $18.00 minus (ii) the average of the highest consecutive closing prices in any 90 day trading period on the principal exchange during the two years after the Closing Date (the “Measurement Average”) divided by the Measurement Average. Fractional shares issuable to a qualifying IPO Shareholder resulting from the calculation were rounded up to the next whole share of Common Stock, taking into account the aggregate number of Long Term Investor Rights of a holder. Since the highest average of consecutive closing prices over any 90 calendar day period was $13.96 per share, each Long-Term Investor Right was entitled to 0.2894 additional shares of common stock, which is calculated as: ($18.00 - $13.96)/$13.96. The amount of IPO Supplemental Shares issued was computed by an independent public accountant as soon as practicable following the second anniversary of the Closing Date. The determination was made by such independent public accountant and all qualifying IPO Shareholders had certificates evidencing the additional shares delivered to them totaling 355,095 shares. The Long Term Investor Right was an equity instrument that was accounted for as a component of the actual price per common share paid by the investor in the IPO. For basic earnings per share, the common shares associated with the Long Term Investor Right were treated as contingently issuable shares and were not included in basic earnings per share until the actual number of shares were issued which occurred in November 2016. Convertible Promissory Notes and Warrants Warrants and embedded beneficial conversion feature of convertible promissory notes are classified as equity under FASB ASC Topic 815-40 “Derivatives and Hedging — Contracts in Entity’s Own Equity”. The Company allocates the proceeds of the convertible promissory notes between convertible promissory notes and the financial instruments related to warrants associated with convertible promissory notes based on their relative fair values at the commitment date. The fair value of the financial instruments related to warrants associated with convertible promissory notes is determined utilizing the Black-Scholes option pricing model and the respective allocated proceeds to the warrants is recorded in additional paid-in capital. The Company utilized the Black-Scholes option valuation model using the same valuation assumptions as described herein for Stock Based Compensation. The embedded beneficial conversion feature associated with convertible promissory notes is recognized and measured by allocating a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in capital in accordance with ASC Topic 470-20 “Debt — Debt with Conversion and Other Options.” The portion of debt discount resulting from the allocation of proceeds to the financial instruments related to warrants associated with convertible promissory notes is being amortized over the life of the convertible promissory notes. That portion of debt discount resulting from the allocation of proceeds to the beneficial conversion feature is amortized over the term of the notes from the respective dates of issuance. Comprehensive Income or Loss The Company complies with provisions of FASB ASC 220, Comprehensive Income, which requires companies to report all changes in equity during a period, except those resulting from investment by owners and distributions to owners, for the period in which they are recognized. Comprehensive income is defined as the change in equity during a period from transactions and other events from non-owner sources. Comprehensive and other comprehensive income (loss) is reported on the face of the financial statements. For the years ended December 31, 2016, 2015 and 2014 comprehensive income (loss) is the total of net income (loss) and other comprehensive income (loss) which, for the Company, consists entirely of foreign currency translation adjustments and there were no material reclassifications from other comprehensive loss to net loss during the years ended December 31, 2016, 2015 and 2014. Foreign Currency Translation and Transactions The financial statements and transactions of the subsidiary’s operations are reported in the local (functional) currency of Swiss francs (CHF) and translated into US dollars in accordance with U.S. GAAP. Assets and liabilities of those operations are translated at exchange rates in effect at the balance sheet date. The resulting gains and losses from translating foreign currency financial statements are recorded as other comprehensive income (loss). Revenues and expenses are translated at the average exchange rate for the reporting period. Foreign currency transaction gains (losses) resulting from exchange rate fluctuations on transactions denominated in a currency other than the foreign operations’ functional currencies are included in expenses in the consolidated statements of operations. Income Taxes The Company accounts for income taxes under an asset and liability approach for financial accounting and reporting for income taxes. Accordingly, the Company recognizes deferred tax assets and liabilities for the expected impact of differences between the financial statements and the tax basis of assets and liabilities. The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. In the event the Company was to determine that it would be able to realize its deferred tax assets in the future in excess of its recorded amount, an adjustment to the deferred tax assets would be credited to operations in the period such determination was made. Likewise, should the Company determine that it would not be able to realize all or part of its deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to operations in the period such determination was made. The Company has incurred losses for tax purposes since inception and has significant tax losses and tax credit carryforwards. These amounts are subject to valuation allowances as it is not likely that they will be realized in the next few years. Product Warranties The Company’s policy is to warrant all shipped products against defects in materials and workmanship for up to two years by replacing failed parts. The Company also provides a three-year manufacturer’s warranty covering implant failure by providing a functionally-equivalent replacement implant. Accruals for product warranties are estimated based on historical warranty experience and current product performance trends, and are recorded at the time revenue is recognized as a component of cost of sales. The warranty liabilities are reduced by material and labor costs used to replace parts over the warranty period in the periods in which the costs are incurred. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary. Although any such adjustments were not material in the years ended December 31, 2016, 2015 and 2014, any such adjustments could be material in the future if estimates differ significantly from actual warranty expense. The warranty liabilities are included in accrued expenses in the consolidated balance sheets. Presentation of sales and value added taxes The Company collects value added tax on its sales in Europe and certain states in the United Sates impose a sales tax on the Company’s sales to nonexempt customers. The Company collects that valued added and sales tax from customers and remits the entire amount to the respective authorities. The Company’s accounting policy is to exclude the tax collected and remitted to the authorities from revenues and cost of revenues. Net Loss per Share The Company’s computation of earnings per share (“EPS”) includes basic and diluted EPS. Basic EPS is measured as the income (loss) available to common shareholders divided by the weighted average number of common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible notes payable, convertible preferred stock, preferred stock warrants and common stock options) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. Loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the respective periods. Basic and diluted loss per common share is the same for all periods presented because all convertible notes payable, common stock warrants and common stock options outstanding were anti-dilutive. At December 31, 2016, 2015 and 2014, the Company excluded the outstanding securities summarized below, which entitle the holders thereof to ultimately acquire shares of common stock, from its calculation of earnings per share, as their effect would have been anti-dilutive (in thousands). 2016 2015 2014 Long Term Investor Rights — 400 1,021 Underwriter’s warrants 802 802 805 Warrants associated with convertible debt 1,039 1,039 1,179 Common stock options 3,667 3,472 3,251 Restricted stock units 131 190 — Employee stock purchase plan 206 93 — Total 5,845 5,996 6,256 Recently Adopted Accounting Standards In August 2014, the FASB issued Accounting Standards Update No. 2014-15 (ASU 2014-15), Presentation of Financial Statements — Going Concern (Subtopic 205-10). ASU 2014-15 provided guidance as to management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. In connection with preparing these financial statement management evaluated whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. As fully described in Note 1, the Company believes that it does not have sufficient funds to support its operations through the end of first quarter of 2018. Recent Accounting Pronouncements In November 2015, the FASB issued Accounting Standards Update No. 2015-17 (ASU 2015-17), Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. ASU 2015-17 requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. ASU 2015-17 is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Earlier application is permitted as of the beginning of an interim or annual reporting period. The adoption of ASU 2015-17 is not expected to have any impact on Company’s financial statement presentation or disclosures. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes all existing guidance on accounting for leases in ASC Topic 840. ASU 2016-02 is intended to provide enhanced transparency and comparability by requiring lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet. ASU 2016-02 will continue to classify leases as either finance or operating, with classification affecting the pattern of expense recognition in the statement of income. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. ASU 2016-02 is required to be applied with a modified retrospective approach to each prior reporting period presented with various optional practical expedients. We are currently assessing the potential impact of adopting ASU 2016-02 on our financial statements and related disclosures. In March 2016, the FASB issued ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 changes how companies account for certain aspects of share-based payment awards to employees, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 is effective for annual periods beginning after December 15, 2016, including interim periods within those annual periods. If an entity early adopts in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period and the entity must adopt all of the amendments from ASU 2016-09 in the same period. Management has determined that the impact of this standard when adopted in 2017 will not be material to the financial statements and related disclosures. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 refines how companies classify certain aspects of the cash flow statement in regards to debt prepayment, settlement of debt instruments, contingent consideration payments, proceeds from insurance claims and life insurance policies, distribution from equity method investees, beneficial interests in securitization transactions and separately identifiable cash flows. ASU 2016-15 is effective for annual periods beginning after December 15, 2017, and interim periods within those fiscal years. No early adoption is permitted. Management is currently assessing the potential impact of adopting ASU 2016-15 on the financial statements and related disclosures. In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory, which reduces the complexity in the accounting standards by allowing the recognition of current and deferred income taxes for an intra-entity asset transfer, other than inventory, when the transfer occurs. Historically, recognition of the income tax consequence was not recognized until the asset was sold to an outside party. This amendment should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. ASU 2016-16 is effective for annual periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities as of the beginning of an annual reporting period for which financial statements (interim or annual) have not been issued or made available for issuance. That is, earlier adoption should be in the first interim period if an entity issues interim financial statements. Management is currently evaluating the impact of ASU 2016-16 on our consolidated financial statements and related disclosures. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (ASC 606) - Revenue from Contracts with Customers (“ASU 2014-09”), which provides guidance for revenue recognition. This ASU will supersede the revenue recognition requirements in Topic 605, and most industry specific guidance. The standard's core principle is that revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: Step 1: Identify the contract(s) with a customer Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate the transaction price to the performance obligations in the contract. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. The guidance in ASU 2014-09 also specifies the accounting for some costs to obtain or fulfill a contract with a customer. ASC 606 requires the Company to make significant judgments and estimates. ASC 606 also requires more extensive disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has also issued several additional ASUs whic |
Money Market Funds
Money Market Funds | 12 Months Ended |
Dec. 31, 2016 | |
Cash and Cash Equivalents [Abstract] | |
Money Market Funds | 3. Money Market Funds Money market funds at December 31, 2016 totaled $10,336,000 and consisted of $218,000 in the City National Rochdale Government Fund Class S, $9,995,000 in the FFI Institutional Fund, and $123,000 held in a deposit account in Switzerland as security for the performance of contracts. Money market funds at December 31, 2015 totaled $15,721,000 and consisted of $555,000 in the City National Rochdale Government Fund Class S, $14,948,000 in the FFI Institutional Fund, and $218,000 held in a deposit account in Switzerland as security for the performance of a contract. The investment objective of the City National Rochdale Government Money Market Fund is to preserve principal and maintain a high degree of liquidity while providing current income through a portfolio of liquid, high quality, short-term U.S. Government bonds and notes, at least 80% of which is in U.S. Government securities. The City National Rochdale Government Money Market Fund is managed by City National Rochdale, LLC. The investment objective of the FFI Institutional Fund, managed by Merrill Lynch, is to seek maximum current income consistent with liquidity and the maintenance of a portfolio of high-quality, short-term money market securities. The following table presents money market funds at their level within the fair value hierarchy at December 31, 2016 and 2015 (in thousands). Total Level 1 Level 2 Level 3 December 31, 2016: Money market funds $ 10,336 $ 10,336 $ — $ — December 31, 2015: Money market funds $ 15,721 $ 15,721 $ — $ — |
Selected Balance Sheet Detail
Selected Balance Sheet Detail | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Selected Balance Sheet Detail | 4. Selected Balance Sheet Detail Inventories, net Inventories consisted of the following at December 31, 2016 and 2015 (in thousands): 2016 2015 Raw materials $ 477 $ 575 Work in process 5,032 5,028 Finished goods 3,284 3,156 8,793 8,759 Allowance for excess and obsolescence (5,377 ) (550 ) Inventories, net $ 3,416 $ 8,209 During the year-ended December 31, 2016, the Company recorded a charge of $4.7 million for excess inventory determined by management based on projected sales volumes in 2017. Property and equipment, net of accumulated depreciation and amortization Property and equipment consisted of the following at December 31, 2016 and 2015 (in thousands): 2016 2015 Laboratory equipment $ 2,300 $ 3,369 Computer hardware and software 1,220 1,960 Leasehold improvements 288 508 Furniture, fixtures and equipment 45 135 3,853 5,972 Accumulated depreciation and amortization (2,364 ) (4,540 ) Property and equipment, net $ 1,489 $ 1,432 Fully depreciated assets no longer in use were written off in the fourth quarter of 2016 along with the accumulated depreciation and amounted to $2.6 million. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 5. Related Party Transactions Alfred E. Mann, who was the largest stockholder and until August 2015 chairman of the Company, was also a substantial contributor to the Alfred E. Mann Foundation for Scientific Research (the “Foundation”). Beginning February 2007, an officer of the Company also became Chairman of the Board of the Foundation. The Company and the Foundation share certain limited administrative and engineering employees. The shared employees make an allocation of their time between the Company and the Foundation. There are also various other costs shared between the Company and the Foundation. In connection with these shared costs, the Company owed the Foundation $1,000 as of December 31, 2016 and 2015. On May 31, 2011, the Company’s current Chairman, and then Chief Executive Officer, entered into a loan agreement with the Company to finance the exercise of stock options to purchase 100,000 shares for $319,000, with a maturity date of May 31, 2016 and interest accruing at 2.26% per annum. On December 11, 2013, the same individual entered into a second loan agreement with the Company to finance the exercise of stock options to purchase 200,000 shares of common stock for $100,000, with a maturity date of December 31, 2018 and interest accruing at 1.64% per annum. As of December 31, 2013, the balance outstanding pursuant to the two loans, including accrued interest, was $423,000. These loans receivable were recorded in the Company’s financial statements as an offset to stockholders’ equity. In July 2014, the Company’s Board of Directors approved forgiving this note receivable and related accrued interest of $423,000, which amount is included in general and administrative expenses in the Company’s statement of operations for the year ended December 31, 2014. |
Grants
Grants | 12 Months Ended |
Dec. 31, 2016 | |
Grants | |
Grants | 6. Grants In April 2010, the Company was awarded a development and testing grant of $3.0 million from the Department of Health and Human Services, National Institutes of Health (NIH). The grant was for three years commencing in May 2010. The grant included managing various subcontracts with designated individuals and their respective institutions. The grant reimburses research costs to develop technology for the prevention, cure and amelioration of the loss of eyesight and other neurologic applications. The Company recorded funding under the grant as an offset to research and development expenses. In 2016, 2015 and 2014, research and development expenses were offset by $0, $0 and $19,000, respectively. In September 2014, the Company entered into a Joint Research and Development Agreement or JRDA with The Johns Hopkins University Applied Physics Laboratory or APL. The JRDA includes a subcontract to do research under a grant received by APL. Under the JRDA, the Company has agreed to perform research regarding integration of APL research in to a visual prosthesis system. In October, 2014, APL paid the Company $4.1 million in one lump sum to conduct its portion of the research. The JRDA also includes a license from APL to the Company, for the life of any patents resulting from APL’s portion of the research. The APL portion of the research includes image processing enhancements for a visual prosthesis. In exchange for the license, the Company issued 1,000 shares of its common stock to APL , |
Convertible Promissory Notes an
Convertible Promissory Notes and Warrants | 12 Months Ended |
Dec. 31, 2016 | |
Convertible Promissory Notes And Warrants | |
Convertible Promissory Notes and Warrants | 7. Convertible Promissory Notes and Warrants During 2010 and 2011, the Company borrowed money in a series of financing rounds by issuing $15.4 million of convertible notes (the “2010 - 2011 Notes”) primarily to existing stockholders. The notes accrued interest at 7.5% per annum and had a variety of maturity dates. During 2011, all but two of the 2010 and 2011 Notes, with a combined face value $47,000, were converted into 3.2 million shares of the Company’s common stock at $5.00 per share. In March 2013, the Company redeemed the remaining two notes for $54,000 in cash. During 2012 and 2013, the Company borrowed money primarily from existing investors in three separate rounds through the issuance of convertible promissory notes (collectively, the “Convertible Notes”) totaling $29.5 million. The first round of Convertible Notes in the amount of $5.0 million was issued from July through November 2012 (the “July 2012 Notes). The second round of Convertible Notes in the amount of $5.0 million was issued from October through December 2012 (the “October 2012 Notes”). The third round of Convertible Notes in the amount of $19.5 million was issued from February through December 2013 (the “February 2013 Notes”). There were no placement fees associated with the Convertible Notes, and other administrative costs were nominal and were expensed as incurred. The July 2012 Notes and the October 2012 Notes had maturity dates of July 31, 2015. The February 2013 Notes had a maturity date of February 28, 2016. The Convertible Notes accrued interest at the rate of 7.5% per annum, which is added to the principal amounts. For the year ended December 31, 2014, the annualized effective interest rate on the July 2012 Notes, the October 2012 Notes and the February 2013 Notes were 18.6%, 19.2%, and 63.3%, respectively. The Convertible Notes were due on their respective maturity dates or convertible into the Company’s common stock upon the occurrence of a “capital event,” which is defined as (i) a sale of stock to a third party, excluding existing shareholders, of not less than $15.0 million, (ii) an initial public offering, or (iii) a “qualifying reorganization event” as defined in the Convertible Promissory Note agreement. The Convertible Promissory Note agreement contained a beneficial conversion feature that provided that if the notes were converted due to a capital event then all outstanding principal and interest would be converted into shares of common stock at the lower of the purchase price paid pursuant to the capital event, or at $5.00 per share. If no capital event occurred before the maturity date, the Convertible Promissory Note agreement provided that, at the election of the holder, all outstanding principal and interest could be converted to shares of common stock at $5.00 per share. In connection with the Convertible Notes, the Company issued warrants to purchase 1,180,766 shares of the Company’s common stock. The warrants grant the holder the right to purchase additional shares of common stock of the Company equal to the product of (a) twenty percent, multiplied by (b) the face amount of the convertible note divided by $5.00. The exercise price for each share purchased under the warrant is $5.00. Until their expiration date, the warrants may be exercised at any time, and from time to time, in whole or in part. As originally issued, the warrants expired on the earlier of their expiration dates, upon a change in control event, or within 30 days of prior written notice of a pending IPO. In June 2014, the board of directors amended the warrants to provide that they will not expire on the occurrence of an IPO. The warrants associated with the July 2012 Notes and the October 2012 Notes have an expiration date of July 31, 2017. The warrants associated with the February 2013 Notes have an expiration date of February 28, 2018. As of December 31, 2016, there were outstanding warrants associated with the Convertible Notes to purchase 1,038,403 shares of the Company’s common stock, with a weighted average remaining contractual life of 0.96 years. During the fourth quarter of 2014, because of the successful completion of the Company’s IPO, the Company’s Convertible Notes were automatically converted into 6,639,137 shares of the Company’s common stock, and the unamortized discount on the Convertible Notes of approximately $7.0 million was written off. A summary of warrant activity for the years ended December 31, 2016, 2015 and 2014 is presented below (in thousands, except per share and contractual life data): Number of Shares Weighted Average Weighted Average Warrants outstanding at December 31, 2013 1,181 $ 5.00 Granted 805 11.25 Exercised (2 ) 5.00 Forfeited or expired — — Warrants outstanding at December 31, 2014 1,984 $ 5.00 Granted — — Exercised (144 ) 5.13 Forfeited or expired — — Warrants outstanding at December 31, 2015 1,840 $ 7.72 Granted — — Exercised — — Forfeited or expired — — Warrants outstanding at December 31, 2016 1,840 $ 7.72 1.80 Warrants exercisable at December 31, 2016 1,840 $ 7.72 1.80 The estimated aggregate intrinsic value of warrants exercisable at December 31, 2016 and 2015 was approximately $0 and $924,000, respectively. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
Employee Benefit Plans | 8. Employee Benefit Plans The Company has a 401(k) Savings Retirement Plan that covers substantially all full-time employees who meet the plan’s eligibility requirements and provides for an employee elective contribution. The Plan provides for employer matching contributions. Employer contributions are discretionary and determined annually by the Board of Directors. For the years ended December 31, 2016, 2015 and 2014, employer contributions to the Plan totaled $147,000, $137,000 and $127,000, respectively. At December 31, 2016, included in accrued expenses is an unpaid amount of $77,000 for prior years employer contributions. The Company is required to contribute to a government-sponsored pension plan for the employees of its Switzerland-based subsidiary. For the years ended December 31, 2016, 2015 and 2014, the employer’s portion of the amounts contributed to the subsidiary’s pension plan on behalf of those employees was $132,000, $134,000 and $101,000, respectively. |
Equity Securities
Equity Securities | 12 Months Ended |
Dec. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
Equity Securities | 9. Equity Securities In June 2014, the Company’s articles of incorporation were amended to increase authorized common shares to 200,000,000, no par value, and to authorize 10,000,000 shares of preferred stock, no par value. The Company’s consolidated financial statements have been retroactively restated to reflect this amendment. The Board of Directors has the authority to establish the rights, preferences, privileges and restrictions granted to and imposed upon the holders of preferred stock and common stock. November 2014 IPO On November 18, 2014, the Company sold 4,025,000 shares of common stock in an IPO, including 525,000 shares sold upon exercise of the underwriter’s over-allotment option. Net proceeds to the Company totaled approximately $34.2 million, net of offering costs of approximately $5.0 million, including approximately $2.9 million for the fair value of warrants and common stock issued in connections with services rendered. The proceeds from the IPO were used by the Company to invest in its business to expand sales and marketing efforts, enhance current product, gain regulatory approvals for additional indications, and continue research and development into next generation technology. Underwriter’s Warrant As a component of the IPO underwriting fee, the Company granted the underwriter a warrant to purchase 805,000 shares of the Company’s common stock at an exercise price of $11.25 per share, which was 25 percent above the offering price to the investors. The warrant is exercisable, in whole or in part, for a period commencing 180 days after the effective date of the registration statement (November 18, 2014) and ending on the fifth anniversary date of the effective date of the registration statement. The fair value of the warrant issued as part of underwriting fee for the Company’s IPO was estimated to be $2,772,000, using the Black-Scholes option-pricing model with the following assumptions: Risk-free rate of return 1.63 % Expected dividend yield 0 % Expected volatility 49.92 % Expected term 5 years Long Term Investor Right Subsequent to November 24, 2016, the two-year anniversary of the Company’s IPO, the Company distributed 355,095 shares of its common stock to IPO investors who met the qualifying terms of the Long Term Investor Right (LTIR). The shares distributed in connection with the LTIR have been accounted for as an equity transaction in the Company’s Consolidated Statement of Stockholders’ Equity and had no impact on the Consolidated Statements of Operations. As of November 24, 2016, the Company identified investors who had perfected and maintained Long Term Investor Rights in an aggregate of 1,226,854 shares of common stock that were acquired as part of the Company’s IPO. The highest average closing price for the Company’s common stock on Nasdaq during any consecutive 90 day period ended on or before November 24, 2016 was $13.96. Based on this average closing stock price, an investor who purchased shares as part of the IPO, and who has perfected its Long Term Investor Right, was entitled to 0.2894 shares for each share purchased in the IPO, rounded up to the next whole share, which represents an aggregate of 355,095 shares. 2014 Private Placement During 2014, the Company sold 1,299,853 shares of its common stock to new investors at $7.00 per share in a private placement, raising a total of $9.1 million. Related to this stock placement, the Company paid a finder’s fee of 26,785 shares of common stock to Mendelsohn Investment Services, LLC, an entity affiliated with Aaron Mendelsohn, a member of the Company’s Board of Directors. The Company paid an additional finder’s fee of 37,599 shares of common stock to an existing shareholder in connection with this stock placement. Common Stock Issuable Beginning with services rendered in 2014, and with the first payment in June 2015, non-employee members of the Board of Directors were paid for their services in common stock on June 1 of each year based on the average closing prices for the immediately preceding twenty trading days. For 2016, for these services the Company issued 82,000 shares with a value of $324,000 and accrued $153,000, which equates to 77,000 shares based on the average closing price of $1.98 for the Company’s common stock during last 20 trading days as of December 31, 2016.For 2015, for these services the Company issued 23,136 shares with a value of $285,000 and accrued $205,000, which equates to 33,293 shares based on the average closing price of $6.15 for the Company’s common stock during last 20 trading days as of December 31, 2015. The shares, which have not yet been issued, are excluded from the calculation of weighted average common shares outstanding for EPS purposes. For 2014, the Company accrued $166,000 for these services, which equates to 16,204 shares based on the $10.26 closing price for the Company’s common stock on December 31, 2014. Rights Offerings In June 2016, the Company completed a Rights Offering to existing stockholders, raising proceeds of $19.5 million net of cash offering costs, and selling 5,978,465 shares of common stock at $3.315 per share, representing 85% of the Company’s stock price at the close of the rights offering. The Company evaluated the financial impact of FASB ASC 260, "Earnings per Share," which states, among other things, that if a rights issue is offered to all existing stockholders at an exercise price that is less than the fair value of the stock, then the weighted average shares outstanding and basic and diluted earnings per share shall be adjusted retroactively to reflect the bonus element of the rights offering for all periods presented. The Company determined that the application of this specific provision of ASC 260 was immaterial to previously issued financial statements and, therefore, did not retroactively adjust previously reported weighted average shares outstanding and basic and diluted earnings per share. On March 6, 2017, the Company completed a registered Rights Offering to existing stockholders in which it sold 13.7 million Units at $1.47 per Unit, which was the closing price of the Company common stock on that date. Each Unit consisted of a share of the Company’s common stock and a warrant to purchase an additional share of the Company’s stock for $1.47. The warrants have a five-year life and have been approved for trading on Nasdaq under the symbol EYESW. At the Company’s discretion, the warrants are redeemable on 30 days’ notice (i) at any time 24 months after the date of issuance, (ii) if the shares of the Company’s common stock are trading at $2.94, which is 200% of the Subscription Price, for 15 consecutive trading days and (iii) if all of the independent directors vote in favor of redeeming the warrants. Holders may be able to sell or exercise warrants prior to any announced redemption date and the Company will redeem outstanding warrants not exercised by the announced redemption date for a nominal amount of $0.01 per Warrant. The Company intends to use the proceeds from this rights offering to invest in its business to expand sales and marketing efforts, enhance current products, gain regulatory approvals for additional indications, and continue research and development into next generation technology. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | 10. Stock-Based Compensation Under the 2003 Plan, as restated in June 2011, the Company was authorized to issue options covering up to 3,500,000 common stock shares. Effective June 1, 2011, the Company adopted the 2011 Equity Incentive Plan (the “2011 Plan”). The maximum number of shares with respect to which options may be granted under the 2011 Plan is 7,500,000 shares, which is offset and reduced by options previously granted under the 2003 Plan. The option price is determined by the Board of Directors but cannot be less than the fair value of the shares at the grant date. Generally, the options vest ratably over either four or five years and expire ten years from the grant date. Both plans provide for accelerated vesting if there is a change of control, as defined in the plans. On May 15, 2015 shareholders approved (1) an increase of 2,000,000 shares in the number of shares available for option awards under the 2011 Equity Incentive Plan, and (2) an Employee Stock Purchase Plan, with an initial 250,000 shares with annual increases of shares available equal to the lesser of (i) 1% of outstanding shares or (ii) 100,000 shares. On May 10, 2016 shareholders approved an increase of 1,500,000 shares in the number of shares available for option awards under the 2011 Equity Incentive Plan. No option shall be granted under the 2011 Plan after May 31, 2021. The Company recognized stock-based compensation cost of $3,367,000, $2,687,000 and $1,475,000 during 2016, 2015 and 2014, respectively. The calculated value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions: 2016 2015 2014 Risk-free interest rate 1.40% – 2.03% 1.93% – 2.21% 0.3–2.2% Expected dividend yield 0% 0% 0% Expected volatility 47.6% – 48.2% 47.5% – 50.4% 50.0%–61.2% Expected term 6.25 years 6.25 – 6.5 years 1.5–6.5 years Weighted-average grant date calculated fair value $ 1.97 $ 6.17 $ 4.73 As the Company has limited stock trading history, the expected volatility is based on the historical volatility of similar companies that have a trading history. The expected term represents the estimated average period of time that the options are expected to remain outstanding. Since the Company does not have sufficient historical data on the exercise of stock options, the expected term is based on the “simplified” method that measures the expected term as the average of the vesting period and the contractual term. The risk free rate of return reflects the grant date interest rate offered for zero coupon U.S. Treasury bonds over the expected term of the options. A summary of stock option activity for the years ended December 31, 2016, 2015 and 2014 is presented below (in thousands, except per share and contractual life data): Number of Shares Weighted Average Weighted Average Options outstanding at December 31, 2013 2,241 $ 4.84 Granted 1,378 7.62 Exercised (115 ) 4.40 Forfeited or expired (252 ) 4.44 Options outstanding at December 31, 2014 3,252 $ 6.07 Granted 998 12.29 Exercised (574 ) 4.85 Forfeited or expired (204 ) 7.08 Options outstanding at December 31, 2015 3,472 $ 8.01 Granted 745 4.18 Exercised (96 ) 5.00 Forfeited or expired (454 ) 8.66 Options outstanding at December 31, 2016 3,667 $ 7.23 6.27 Options exercisable at December 31, 2016 1,954 $ 6.66 4.29 The exercise prices of common stock options outstanding and exercisable are as follows at December 31, 2016 (in thousands): Exercise Price Options Outstanding (Shares) Options Exercisable (Shares) $ 2.34 to 4.25 627 125 $ 4.88 to 5.23 1,430 1,168 $ 7.00 to 9.01 842 415 $ 12.43 to 14.06 768 246 3,667 1,954 The estimated aggregate intrinsic value of stock options exercisable at December 31, 2016 and 2015 was approximately $0 and $1,294,000, respectively. As of December 31, 2016, there was $6,240,000 of total unrecognized compensation cost related to the outstanding stock options that will be recognized over a weighted average period of 2.62 years. During the first quarter of 2016, the Company recorded a charge of $55,000 to extend the exercise period of 98,681 vested options for one employee who resigned and became a consultant for the Company. All unvested options for this employee were terminated when this employee ceased full-time employment with the Company. During the year ended December 31, 2016, the Company granted stock options to purchase 30,000 shares of common stock to an outside attorney in connection with his services relating to the Company’s rights offering to stockholders. The options have fully vested and are exercisable for a period of four years from the date of grant at a price of $5.23 per share, which was 125% of the fair value of the Company’s common stock on the grant date of January 14, 2016. The fair value of these options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $53,000 ($1.77 per share). Assumptions used in the model were an expected term of 6.25 years, volatility of 48.2%, a risk-free interest rate of 1.87%, and an expected dividend rate of 0%. The cost of these shares was treated as an issuance cost of the offering and was deducted from the gross proceeds of the offering. On January 1, 2015, the Company’s current Chairman, who at that time was the Chief Executive Officer, exercised stock options expiring on that date on a cashless basis to purchase 59,063 shares of common stock at an exercise price of $4.75 per share. Based on the closing market price of the Company’s common stock of $10.26 on December 31, 2014, the Chief Executive Officer tendered 27,344 shares of common stock that he owned to satisfy the aggregate exercise price and surrendered 12,055 shares of common stock to satisfy the related $124,000 of income and payroll tax withholding amounts related to the transaction. In June 2015 the Company’s current Chairman, who at that time was the Chief Executive Officer, exercised stock options on a cashless basis to purchase 150,000 shares of common stock at an exercise price of $4.75 per share. Related to these exercises, the Chief Executive Officer tendered 50,753 shares of common stock that he owned to satisfy the aggregate exercise price. In January 2014, the Company granted a stock option to its current Chairman, who at that time was the Chief Executive Officer, to purchase 125,000 shares of common stock at an exercise price of $4.25 per share, exercisable for a period of three years from the date of grant. The stock option grant was fully vested on the date of issuance and was intended to replace an earlier stock option grant with the same exercise price that had expired in January 2014. The stock option was not granted pursuant to the 2011 Plan. The grant date fair value of the stock option, calculated pursuant to the Black-Scholes option-pricing model utilizing a volatility factor of 50% and a dividend rate of 0%, was determined to be $393,000, which was charged to operations as general and administrative expense in the year ended December 31, 2014. During the year ended December 31, 2014, the Company recorded a charge of $235,000 to extend the exercise period of 232,003 options for four employees who resigned and became consultants for the Company. All unvested options for employees were terminated when they ceased full-time employment with the Company. The Company adopted an employee stock purchase plan in June, 2015 for all eligible employees. Under the plan, shares of the Company's common stock may be purchased at six-month intervals at 85% of the lower of the closing fair market value of the common stock (i) on the first trading day of the offering period or (ii) on the last trading day of the purchase period. An employee may purchase in any one calendar year shares of common stock having an aggregate fair market value of up to $25,000 determined as of the first trading day of the offering period. Additionally, a participating employee may not purchase more than 100,000 shares of common stock in any one offering period. At December 31, 2016, 241,714 shares were issued under the stock purchase plan. The following table presented below summarizes Restricted Stock Unit (RSU) activity for the years ended December 31, 2016 and 2015 (in thousands, except per share data): Number Weighted Average Outstanding as of December 31, 2014 - $ - Awarded 190 12.43 Vested - - Forfeited/canceled - - Outstanding as of December 31, 2015 190 $ 12.43 Awarded - - Vested 59 12.43 Forfeited/canceled - - Outstanding as of December 31, 2016 131 $ 12.43 As of December 31, 2016, there was $1,551,000 of total unrecognized compensation cost related to the outstanding RSUs that will be recognized over a weighted average period of 2.63 years. The total stock-based compensation recognized for stock-based awards granted in the consolidated statements of operations for the years ended December 31, 2016, 2015 and 2014 is as follows (in thousands): 2016 2015 2014 Cost of sales $ 312 $ 279 $ 192 Research and development 303 208 293 Clinical and regulatory 173 235 113 Selling and marketing 104 442 141 General and administrative 2,475 1,523 736 Total $ 3,367 $ 2,687 $ 1,475 From time to time, the Company has extended full-recourse loans to certain non-officer employees for the purpose of financing stock option exercises. These loans bear interest ranging from 1.27% to 1.91% per annum and are payable over three years in monthly installments of principal and interest. At December 31, 2016, and 2015 the outstanding balance of such loans, including accrued interest, was $2,000 and $5,000, respectively. These loans receivable are recorded in the Company’s consolidated financial statements as an offset to stockholders’ equity. Stock Awards In July 2014, the Company awarded Alfred E. Mann, who at the time was the Chairman of the Board of Directors, 25,000 shares of common stock in recognition of services rendered to the Company since inception. These shares were valued at $175,000, or $7.00 per share, and were charged to general and administrative expense in 2014. In 2014, the Company awarded 21,215 shares to an outside attorney and his staff as part of the fee paid for drafting the Company’s prospectus and S-1 filing. These shares were valued at $170,000, with 10,715 shares valued at $7.00 per shares and the balance valued at $9.00 per share. The cost of these shares was treated as an issuance cost of the Company’s initial public offering and was deducted from the gross proceeds from the offering. Employment Agreement On June 19, 2015 the Company entered into an at will employment agreement with Will McGuire to become the Company’s President and Chief Executive Officer. The Company has agreed to pay Mr. McGuire an annual salary of $390,000 and he will also be entitled to receive performance bonuses which will be based on performance standards and goals established by the Company’s Board of Directors. Upon termination without cause, Mr. McGuire will be entitled to receive severance consisting of his salary for a period of 12 months following such termination and his pro-rated target bonus through the balance of the calendar year in which such termination occurs. As part of the agreement, the Company agreed to grant Mr. McGuire, effective on his official start date as an employee, options to purchase 420,000 shares of the Company’s common stock, the fair value of which was determined to be $2,574,000, of which $645,000 and $240,000 was recognized during the years ended December 31, 2016 and 2015, respectively, and 190,000 RSUs the fair value of which was determined to be $2,362,000, of which $591,000 and $220,000 was recognized during the years ended December 31, 2016 and 2015, respectively. The fair value of the RSUs and the exercise price of the options were both marked at $12.43 which was the closing price of the Company’s stock on Nasdaq on August 17, 2015. The options and RSUs vest over four years, with 25% vesting on the first anniversary of the grant date, and the remainder vesting thereafter in twelve equal installments of 6.25% on the quarterly anniversaries of the grant date. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 11. Income Taxes Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets as of December 31, 2016 and 2015 are summarized below (in thousands): 2016 2015 Stock-based compensation $ 4,135 $ 2,825 Research credits 5,493 5,401 Depreciation (36 ) (12 ) Net operating loss carryforwards 54,509 47,261 Inventory reserve 1,958 203 Other 847 845 Total deferred tax assets 66,906 56,523 Valuation allowance (66,906 ) (56,523 ) Net deferred tax assets $ — $ — In assessing the potential realization of these deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the Company attaining future taxable income during the periods in which those temporary differences become deductible. As of December 31, 2016 and 2015, management was unable to determine if it is more likely than not that the Company’s deferred tax assets will be realized, and has therefore recorded an appropriate valuation allowance against deferred tax assets at such dates. In accordance with the reporting requirements under ASC 718, the Company did not include excess windfall benefits resulting from stock option exercises as components of the Company's gross deferred tax assets and corresponding valuation allowance disclosures, as the tax attributes related to those windfall tax benefits should not be recognized until they result in a reduction of taxes payable. The tax-effected amount of gross unrealized net operating loss carryforwards excluded under ASC 718 was approximately $1.2 million at December 31, 2016. When realized, those excess windfall benefits are credited to additional paid-in capital. The Company utilizes the with-and-without allocation method to determine when such net operating loss carryforwards have been realized. No federal tax provision has been provided for the years ended December 31, 2016, 2015 and 2014 due to the losses incurred during such periods. The Company’s effective tax rate is different from the federal statutory rate of 34% due primarily to operating losses that receive no tax benefit as a result of a valuation allowance recorded for such losses. As of December 31, 2016, the Company had federal and state income tax net operating loss carryforwards, which may be applied to future taxable income, of approximately $142.3 million and $93.8 million, respectively. The federal net operating loss carryforwards will expire at various dates from 2023 through 2036. The state net operating loss carryforwards began to expire at various dates from 2016 through 2036. The Company also has a federal and state research and development tax credit carryforwards totaling approximately $3,242,000 and $3,410,000, respectively. The federal research and development tax credit carryforwards will expire at various dates from 2023 through 2036. The state research and development tax credit carryforwards do not expire. Pursuant to Internal Revenue Code Sections 382 and 383, use of the Company’s net operating loss and credit carryforwards may be limited if a cumulative change in ownership of more than 50% occurs within any three-year period since the last ownership change. The Company may have had a change in control under these Sections. However, the Company does not anticipate performing a complete analysis of the limitation on the annual use of the net operating loss and tax credit carryforwards until the time that it projects it will be able to utilize these tax attributes. The Company files income tax returns in the U.S. federal jurisdiction and various states and is subject to income tax examinations by federal tax authorities for tax years ended 2013 and later and by state authorities for tax years ended 2012 and later. The Company currently is not under examination by any tax authority. The Company’s policy is to record interest and penalties on uncertain tax positions as income tax expense. As of December 31, 2016 and 2015, the Company has no accrued interest or penalties related to uncertain tax positions. Second Sight Switzerland, the Company’s foreign subsidiary, has not had any taxable income in the prior and current years. |
Product Warranties
Product Warranties | 12 Months Ended |
Dec. 31, 2016 | |
Product Warranties Disclosures [Abstract] | |
Product Warranties | 12. Product Warranties A summary of activity in the Company’s warranty liabilities, which are included in accrued expenses in the accompanying consolidated balance sheets, for the years ended December 31, 2016, 2015 and 2014 is presented below (in thousands): 2016 2015 2014 Balance, beginning of year $ 1,066 $ 556 $ 253 Additional accruals 727 991 415 Payments (268 ) (443 ) (112 ) Adjustments and other — (38 ) — Total $ 1,525 $ 1,066 $ 556 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 13. Commitments and Contingencies Lease Commitment Effective August 2012, the Company entered into a lease agreement (the “Sylmar Lease”) with a company owned by the major stockholder of the Company for office space for a term of five years that was initially set to expire on February 28, 2017. The Sylmar Lease included rental of additional space commencing January 1, 2013 and a five year option to renew. The lease requires the Company to pay real estate taxes, insurance and common area maintenance each year, and is subject to periodic cost of living adjustments. In April 2014, the Sylmar Lease was renegotiated with the term ending on February 28, 2022, and a five year option to renew. The new lease also requires the Company to pay real estate taxes, insurance and common area maintenance each year and includes automatic increases in base rent each year. In November 2014, the property underlying the Sylmar lease was sold to an unrelated party. The current base rent at this facility is $34,500 per month. Second Sight Switzerland rents office space in Switzerland on a month-to-month basis for CHF 8,200 (approximately $8,200, at December 31, 2016) per month. Total rent expense was approximately $1,050,000, $954,000 and $1,007,000 for the years ended December 31, 2016, 2015 and 2014, respectively, and is allocated based on square footage to general and administrative and manufacturing costs in the accompanying consolidated statement of operations. Rent expense for 2014 includes $652,000 charged by a company owned by the major stockholder of the company. Future minimum rental payments required under the operating leases are as follows for the years ended December 31 (in thousands). Years Amount 2017 $ 833 2018 858 2019 884 2020 910 2021 937 Thereafter 158 Total $ 4,580 License Agreements The Company has exclusive licensing agreements to utilize certain patents. These patents are related to the technology for visual prostheses. There are currently two such agreements that the Company has determined there is a reasonable likelihood of future royalty payments. The Company has agreed to pay the licensors’ royalties for licensed products sold or leased by the Company. The royalty rates range from 0.5% to 3.25%, based on related net sales of the patented portion of licensed products, less a credit for royalties paid to others. The 3.25% rate does not reflect a .25% credit for royalties paid to others. Additional discounts may be possible if the Company enters into additional licenses. One of the licensing agreements requires the Company to pay the licensors a $5,000 annual maintenance fee for the first seven years and a $10,000 annual maintenance fee each year thereafter for as long as the agreement has not been terminated by the Company. The second of these agreements has no stipulated fees. Pursuant to these agreements, the Company has incurred costs of approximately $74,000, $93,000 and $45,000 for the years ended December 31, 2016, 2015 and 2014, respectively. Clinical Trial Agreements Based upon FDA approval, which was obtained in February 2013, the Company is required to collect follow-up data from subjects enrolled in its pre-approval trial for a period of up to ten years post-implant, which extends this trial through the year 2019. In addition, the Company is conducting three post-market studies to comply with US FDA, French, and European post-market surveillance regulations and requirements. The Company has contracted with various universities, hospitals, and medical practices to provide these services. Payments are based on procedures performed for each subject and are charged to clinical and regulatory expense as incurred. Total amounts charged to expense for the years ended December 31, 2016, 2015 and 2014 were $786,000, $1,409,000 and $602,000, respectively. Litigation, Claims and Assessments Eighteen oppositions have been filed by a third-party in the European Patent Office, each challenging the validity of a European patent owned or exclusively licensed by the Company. The outcome of the challenges is not certain, however, if successful, they may affect the Company’s ability to block competitors from utilizing its patented technology. Management of the Company believes a successful challenge will not have a material effect on its ability to manufacture and sell its products, or otherwise have a material effect on its operations. The Company is party to litigation arising in the ordinary course of business. It is management’s opinion that the outcome of such matters will have not have a material effect on the Company’s financial statements. |
Quarterly Financial Summary (un
Quarterly Financial Summary (unaudited) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Summary (unaudited) | 14. Quarterly Financial Summary (unaudited) Quarters Ended (in thousands, except per share data) December 31, September 30, June 30, March 31, Product sales $ 715 $ 1,180 $ 1,037 $ 1,053 Gross profit (loss) $ (2,593 ) $ (1,435 ) $ (2,204 ) $ 141 Operating loss $ (10,383 ) $ (8,499 ) $ (8,507 ) $ (5,821 ) Net loss $ (10,370 ) $ (8,489 ) $ (8,504 ) $ (5,816 ) Net loss per share – basic and diluted $ (0.24 ) $ (0.20 ) $ (0.23 ) $ (0.16 ) Quarters Ended December 31, September 30, June 30, March 31, Product sales $ 2,362 $ 2,227 $ 2,661 $ 1,700 Gross profit (loss) $ 691 $ 1,470 $ 1,092 $ 404 Operating loss $ (5,477 ) $ (4,662 ) $ (4,947 ) $ (4,961 ) Net loss $ (5,474 ) $ (4,666 ) $ (4,922 ) $ (4,956 ) Net loss per share – basic and diluted $ (0.15 ) $ (0.13 ) $ (0.14 ) $ (0.14 ) |
Subsequent Event
Subsequent Event | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Event | 15. Subsequent Events Stock Option Grants In January 2017, the Company granted stock options to purchase 2,151,402 shares of common stock to employees, including 1,698,260 options that were granted to senior management of the Company. The options are exercisable for a period of ten years from the date of grant with exercise prices ranging from $1.53 to $1.97 per share. The options vest over a four year term, of which one-fourth vests on the one year anniversary of the date of grant and the remaining options vest quarterly over three years thereafter. The fair value of these options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $2,012,162 (a weighted average of $0.94 per share). On March 6, 2017, the Company granted options to purchase 40,000 shares of its common stock to an outside attorney in connection with its Rights Offering completed in March 2017. The options are exercisable for a period of 4 years from the date of grant at an exercise price of $1.76, which was 120% of the closing price of the Company’s common stock on March 6, 2017. The options vested immediately upon grant. The fair value of these options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $19,600 (or $0.49 per share). |
Summary of Significant Accoun23
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the financial statements of Second Sight and Second Sight Switzerland. Intercompany balances and transactions have been eliminated in consolidation. |
Accounts receivable | Accounts receivable Trade accounts receivable are stated net of an allowance for doubtful accounts. The Company performs ongoing credit evaluations of its customers’ financial condition and generally requires no collateral from its customers or interest on past due amounts. Management estimates the allowance for doubtful accounts based on review and analysis of specific customer balances that may not be collectible and how recently payments have been received. Accounts are considered for write-off when they become past due and when it is determined that the probability of collection is remote. Allowance for doubtful accounts amounted to approximately $213,000 at December 31, 2016. There was no allowance for doubtful accounts at December 31, 2015. |
Inventories | Inventories Inventories are stated at the lower of cost or market, determined by the first-in, first-out method. Inventories consist primarily of raw materials, work in progress and finished goods, which includes all direct material, labor and other overhead costs. The Company establishes a reserve to mark down its inventory for estimated unmarketable inventory equal to the difference between the cost of inventory and the estimated net realizable value based on assumptions about the usability of the inventory, future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory reserve may be required. |
Property and Equipment | Property and Equipment Property and equipment are recorded at historical cost less accumulated depreciation and amortization. Improvements are capitalized, while expenditures for maintenance and repairs are charged to expense as incurred. Upon disposal of depreciable property, the appropriate property accounts are reduced by the related costs and accumulated depreciation. The resulting gains and losses are reflected in the consolidated statements of operations. Depreciation is provided for using the straight-line method in amounts sufficient to relate the cost of assets to operations over their estimated service lives. Leasehold improvements are amortized over the shorter of the life of the asset or the related lease term. Estimated useful lives of the principal classes of assets are as follows: Lab equipment 5 – 7 years Computer hardware and software 3 – 7 years Leasehold improvements 2 – 5 years or the term of the lease, if shorter Furniture, fixtures and equipment 5 – 10 years The Company reviews its property and equipment for impairment annually or whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. There were no impairment losses recognized in 2016, 2015, and 2014. Depreciation and amortization of property and equipment amounted to $432,000, $335,000 and $279,000 for the years ended December 31, 2016, 2015 and 2014, respectively. |
Research and Development | Research and Development Research and development costs are charged to operations in the period incurred and amounted to $5.3 million, $3.0 million and $5.0 million net of grant revenue, for the years ended December 31, 2016, 2015 and 2014, respectively. |
Patent Costs | Patent Costs The Company has 381 domestic and foreign patents at December 31, 2016. Due to the uncertainty associated with the successful development of one or more commercially viable products based on Company’s research efforts and any related patent applications, all patent costs, including patent-related legal, filing fees and other costs, including internally generated costs, are expensed as incurred. Patent costs were $652,000, $679,000 and $666,000 for the years ended December 31, 2016, 2015 and 2014, respectively, and are included in general and administrative expenses in the consolidated statements of operations. |
Revenue Recognition | Revenue Recognition The Company’s revenue is derived primarily from the sale of its Argus II retinal implant, which is implanted during retinal surgery to restore some functional vision to patients blinded by Retinitis Pigmentosa. The Company sells to a variety of customers including university hospitals, large medical centers and distributors. Revenue is recognized when persuasive evidence of an arrangement exists, the fee is fixed or determinable, collectability is probable, and delivery has occurred. Revenue is generated under sales agreements with multiple deliverables (multiple-element arrangements), comprising the following deliverables: Hospital start up kits (one per site), Surgical support, Training, and The Argus II System The deliverables may vary by transaction. The Company evaluates each deliverable in a multiple-element arrangement to determine whether it represents a separate unit of accounting. An element constitutes a separate unit of accounting when the delivered item has standalone value and delivery of the undelivered element is probable and within the Company's control. The Company has determined that the elements listed above do not have standalone value to the customer until delivery of all components has occurred. Accordingly, revenue from multiple-element arrangements is recognized when delivery of all of deliverables has taken place and all other revenue recognition criteria have been met. Generally, revenue recognition occurs at the time of implantation, but revenue recognition can be delayed if certain training has not been delivered to the implanting sites, or if other revenue recognition criteria have not been met. In the United States, the amount of revenue recognized per unit has been limited in some situations due to the uncertainties of the reimbursement environment and payment terms. In such cases, revenue is not recognized until the consideration becomes fixed, generally when paid to the Company. In order to determine whether collection is reasonably assured, the Company assesses a number of factors, including creditworthiness of the customer and medical insurance coverage. The Company may periodically grant extended payment terms to customers. In such situations, the Company defers the recognition of revenue until collection becomes probable, which is generally upon receipt of payment. The Company also sells surgical supplies to customers and recognizes revenue on these products when they are shipped and other revenue recognition criteria have been met. The Company sells through distributors in certain countries. The Company provides these distributors with clinical start-up kits, surgical supplies and the Argus II System, as well as training them to provide pre- and post-surgical support. The Company monitors the surgery. Other than surgical support which is provided by the Company, the distributor is responsible for delivering products and services to its customers. In the past, the Company has allowed distributors to return or exchange products in certain situations. Due to the Company’s continuing involvement and its returns policy, the Company recognizes revenue from distributors when the implantation procedure has been performed by the distributor’s customer, and all other revenue recognition criteria between the Company and the distributor have been met. |
Grant Receipts and Liabilities | Grant Receipts and Liabilities From time to time, the Company receives grants that help fund specific development programs. Any amounts received pursuant to grants are offset against the related operating expenses as the costs are incurred. During the years ended December 31, 2016, 2015 and 2014 grants offset against operating expenses were $2,366,000, $1,878,000 and $19,000, respectively. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ materially from those estimates. |
Concentration of Risk | Concentration of Risk Credit Risk Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash, money market funds, and trade accounts receivable. The Company maintains cash and money market funds with financial institutions that management deems reputable, and at times, cash balances may be in excess of FDIC and SIPC insurance limits of $250,000 and $500,000 (including cash of $250,000), respectively. The Company extends differing levels of credit to customers, and typically does not require collateral. The Company also maintains a cash balance at a bank in Switzerland. Accounts at such bank are insured up to an amount specified by the deposit insurance agency of Switzerland. Customer Concentration During the years ended December 31, 2016, 2015 and 2014, the following customers comprised more than 10% of revenues : 2016 2015 2014 Customer 1 13 % 14 % 7 % Customer 2 3 % 4 % 10 % Customer 3 2 % 7 % 21 % As of December 31, 2016 and 2015, the following customers comprised more than 10% accounts receivable: 2016 2015 Customer 1 34 % 1 % Customer 2 34 % 0 % Customer 3 29 % 0 % Customer 4 0 % 19 % Customer 5 0 % 17 % Customer 6 0 % 10 % Customer 7 0 % 10 % Customer 8 0 % 10 % Geographic Concentration During the years ended December 31, 2016, 2015 and 2014, regional revenue, based on customer locations which comprised more than 10% of revenues, consisted of the following: 2016 2015 2014 United States 47 % 46 % 47 % Italy 17 % 20 % 8 % Germany 12 % 6 % 16 % France 9 % 16 % 3 % Canada 3 % 5 % 10 % Sources of Supply Several of the components, materials and services used in the Company’s current Argus II product are available from only one supplier, and substitutes for these items cannot be obtained easily or would require substantial design or manufacturing modifications. Any significant problem experienced by one of the Company’s sole source suppliers could result in a delay or interruption in the supply of components to the Company until that supplier cures the problem or an alternative source of the component is located and qualified. Even where the Company could qualify alternative suppliers, the substitution of suppliers may be at a higher cost and cause time delays that impede the commercial production of the Argus II, reduce gross profit margins and impact the Company’s abilities to deliver its products as may be timely required to meet demand. |
Foreign Operations | Foreign Operations The accompanying consolidated financial statements as of December 31, 2016 and 2015 include assets amounting to approximately $1.7 million and $3.0 million, respectively, relating to operations of the Company in Switzerland. It is always possible unanticipated events in foreign countries could disrupt the Company’s operations. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The authoritative guidance with respect to fair value establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels, and requires that assets and liabilities carried at fair value be classified and disclosed in one of three categories, as presented below. Disclosure as to transfers in and out of Levels 1 and 2, and activity in Level 3 fair value measurements, is also required. Level 1. Observable inputs such as quoted prices in active markets for an identical asset or liability that the Company has the ability to access as of the measurement date. Financial assets and liabilities utilizing Level 1 inputs include active-exchange traded securities and exchange-based derivatives. Level 2. Inputs, other than quoted prices included within Level 1, which are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. Financial assets and liabilities utilizing Level 2 inputs include fixed income securities, non-exchange based derivatives, mutual funds, and fair-value hedges. Level 3. Unobservable inputs in which there is little or no market data for the asset or liability which requires the reporting entity to develop its own assumptions. Financial assets and liabilities utilizing Level 3 inputs include infrequently-traded non-exchange-based derivatives and commingled investment funds, and are measured using present value pricing models. The Company determines the level in the fair value hierarchy within which each fair value measurement falls in its entirety, based on the lowest level input that is significant to the fair value measurement in its entirety. In determining the appropriate levels, the Company performs an analysis of the assets and liabilities at each reporting period end. Money market funds are the only financial instrument that is measured and recorded at fair value on the Company’s balance sheet, and they are considered Level 1 valuation securities in both 2016 and 2015. |
Stock-Based Compensation | Stock-Based Compensation Pursuant to Financial Accounting Standards Board (“FASB”) ASC 718 Share-Based Payment (“ASC 718”), the Company records stock-based compensation expense for all stock-based awards. Under ASC 718, the Company estimates the fair value of stock options granted using the Black-Scholes option pricing model. The fair value for awards that are expected to vest is then amortized on a straight-line basis over the requisite service period of the award, which is generally the option vesting term. The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option valuation model. The assumptions used in the Black-Scholes valuation model are as follows: The grant price of the issuances, is determined based on the fair value of the shares at the date of grant. The risk free interest rate for periods within the contractual life of the option is based on the U.S. treasury yield in effect at the time of grant. As permitted by SAB 107, due to the Company’s insufficient history of option activity, management utilizes the simplified approach to estimate the options expected term, which represents the period of time that options granted are expected to be outstanding. Volatility is determined based on average historical volatilities of comparable companies in similar industry. Expected dividend yield is based on current yield at the grant date or the average dividend yield over the historical period. The Company has never declared or paid dividends and has no plans to do so in the foreseeable future. |
Long Term Investor Right | Long Term Investor Right Each beneficial owner (“IPO Shareholder”) of the Company’s common stock, who purchased shares directly in the offering (“IPO Shares”), was eligible to receive up to one additional share of common stock from the Company for each share purchased in the offering (“IPO Supplemental Shares”) pursuant to the Long Term Investor Right that was included with each IPO Share. To receive IPO Supplemental Shares, within 90 days following the closing date of the offering, or by February 22, 2015, an IPO Shareholder was required to take action to become the direct registered owner of its IPO Shares. Furthermore, IPO Shareholders were required to hold their IPO Shares in their own name and not place them in “street name” or trade them at any time during the 24 month period immediately following the IPO closing date. This Long Term Investors Right was non-detachable and transferable only in limited circumstances. The Company issued IPO Supplemental Shares to IPO Shareholders who did not otherwise forfeit their Long Term Investor Right since, during the two-year period immediately following the IPO closing date, the Company’s common stock did not trade at or above $18.00 per share (200% of the IPO price per share) for any five consecutive day period. If the Company’s common stock had traded on its principal exchange at 200% of the IPO price per share or greater on five consecutive trading days during the two years after the IPO closing date, the Long Term Investor Right would have terminated. The formula to determine the number of IPO Supplemental Shares issued on a trigger of the Long Term Investor Right was: (i) $18.00 minus (ii) the average of the highest consecutive closing prices in any 90 day trading period on the principal exchange during the two years after the Closing Date (the “Measurement Average”) divided by the Measurement Average. Fractional shares issuable to a qualifying IPO Shareholder resulting from the calculation were rounded up to the next whole share of Common Stock, taking into account the aggregate number of Long Term Investor Rights of a holder. Since the highest average of consecutive closing prices over any 90 calendar day period was $13.96 per share, each Long-Term Investor Right was entitled to 0.2894 additional shares of common stock, which is calculated as: ($18.00 - $13.96)/$13.96. The amount of IPO Supplemental Shares issued was computed by an independent public accountant as soon as practicable following the second anniversary of the Closing Date. The determination was made by such independent public accountant and all qualifying IPO Shareholders had certificates evidencing the additional shares delivered to them totaling 355,095 shares. The Long Term Investor Right was an equity instrument that was accounted for as a component of the actual price per common share paid by the investor in the IPO. For basic earnings per share, the common shares associated with the Long Term Investor Right were treated as contingently issuable shares and were not included in basic earnings per share until the actual number of shares were issued which occurred in November 2016. |
Convertible Promissory Notes and Warrants | Convertible Promissory Notes and Warrants Warrants and embedded beneficial conversion feature of convertible promissory notes are classified as equity under FASB ASC Topic 815-40 “Derivatives and Hedging — Contracts in Entity’s Own Equity”. The Company allocates the proceeds of the convertible promissory notes between convertible promissory notes and the financial instruments related to warrants associated with convertible promissory notes based on their relative fair values at the commitment date. The fair value of the financial instruments related to warrants associated with convertible promissory notes is determined utilizing the Black-Scholes option pricing model and the respective allocated proceeds to the warrants is recorded in additional paid-in capital. The Company utilized the Black-Scholes option valuation model using the same valuation assumptions as described herein for Stock Based Compensation. The embedded beneficial conversion feature associated with convertible promissory notes is recognized and measured by allocating a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in capital in accordance with ASC Topic 470-20 “Debt — Debt with Conversion and Other Options.” The portion of debt discount resulting from the allocation of proceeds to the financial instruments related to warrants associated with convertible promissory notes is being amortized over the life of the convertible promissory notes. That portion of debt discount resulting from the allocation of proceeds to the beneficial conversion feature is amortized over the term of the notes from the respective dates of issuance. |
Comprehensive Income or Loss | Comprehensive Income or Loss The Company complies with provisions of FASB ASC 220, Comprehensive Income, which requires companies to report all changes in equity during a period, except those resulting from investment by owners and distributions to owners, for the period in which they are recognized. Comprehensive income is defined as the change in equity during a period from transactions and other events from non-owner sources. Comprehensive and other comprehensive income (loss) is reported on the face of the financial statements. For the years ended December 31, 2016, 2015 and 2014 comprehensive income (loss) is the total of net income (loss) and other comprehensive income (loss) which, for the Company, consists entirely of foreign currency translation adjustments and there were no material reclassifications from other comprehensive loss to net loss during the years ended December 31, 2016, 2015 and 2014. |
Foreign Currency Translation and Transactions | Foreign Currency Translation and Transactions The financial statements and transactions of the subsidiary’s operations are reported in the local (functional) currency of Swiss francs (CHF) and translated into US dollars in accordance with U.S. GAAP. Assets and liabilities of those operations are translated at exchange rates in effect at the balance sheet date. The resulting gains and losses from translating foreign currency financial statements are recorded as other comprehensive income (loss). Revenues and expenses are translated at the average exchange rate for the reporting period. Foreign currency transaction gains (losses) resulting from exchange rate fluctuations on transactions denominated in a currency other than the foreign operations’ functional currencies are included in expenses in the consolidated statements of operations. |
Income Taxes | Income Taxes The Company accounts for income taxes under an asset and liability approach for financial accounting and reporting for income taxes. Accordingly, the Company recognizes deferred tax assets and liabilities for the expected impact of differences between the financial statements and the tax basis of assets and liabilities. The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. In the event the Company was to determine that it would be able to realize its deferred tax assets in the future in excess of its recorded amount, an adjustment to the deferred tax assets would be credited to operations in the period such determination was made. Likewise, should the Company determine that it would not be able to realize all or part of its deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to operations in the period such determination was made. The Company has incurred losses for tax purposes since inception and has significant tax losses and tax credit carryforwards. These amounts are subject to valuation allowances as it is not likely that they will be realized in the next few years. |
Product Warranties | Product Warranties The Company’s policy is to warrant all shipped products against defects in materials and workmanship for up to two years by replacing failed parts. The Company also provides a three-year manufacturer’s warranty covering implant failure by providing a functionally-equivalent replacement implant. Accruals for product warranties are estimated based on historical warranty experience and current product performance trends, and are recorded at the time revenue is recognized as a component of cost of sales. The warranty liabilities are reduced by material and labor costs used to replace parts over the warranty period in the periods in which the costs are incurred. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary. Although any such adjustments were not material in the years ended December 31, 2016, 2015 and 2014, any such adjustments could be material in the future if estimates differ significantly from actual warranty expense. The warranty liabilities are included in accrued expenses in the consolidated balance sheets. |
Presentation of sales and value added taxes | Presentation of sales and value added taxes The Company collects value added tax on its sales in Europe and certain states in the United Sates impose a sales tax on the Company’s sales to nonexempt customers. The Company collects that valued added and sales tax from customers and remits the entire amount to the respective authorities. The Company’s accounting policy is to exclude the tax collected and remitted to the authorities from revenues and cost of revenues. |
Net Loss per Share | Net Loss per Share The Company’s computation of earnings per share (“EPS”) includes basic and diluted EPS. Basic EPS is measured as the income (loss) available to common shareholders divided by the weighted average number of common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible notes payable, convertible preferred stock, preferred stock warrants and common stock options) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. Loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the respective periods. Basic and diluted loss per common share is the same for all periods presented because all convertible notes payable, common stock warrants and common stock options outstanding were anti-dilutive. At December 31, 2016, 2015 and 2014, the Company excluded the outstanding securities summarized below, which entitle the holders thereof to ultimately acquire shares of common stock, from its calculation of earnings per share, as their effect would have been anti-dilutive (in thousands). 2016 2015 2014 Long Term Investor Rights — 400 1,021 Underwriter’s warrants 802 802 805 Warrants associated with convertible debt 1,039 1,039 1,179 Common stock options 3,667 3,472 3,251 Restricted stock units 131 190 — Employee stock purchase plan 206 93 — Total 5,845 5,996 6,256 |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards In August 2014, the FASB issued Accounting Standards Update No. 2014-15 (ASU 2014-15), Presentation of Financial Statements — Going Concern (Subtopic 205-10). ASU 2014-15 provided guidance as to management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. In connection with preparing these financial statement management evaluated whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. As fully described in Note 1, the Company believes that it does not have sufficient funds to support its operations through the end of first quarter of 2018. Recent Accounting Pronouncements In November 2015, the FASB issued Accounting Standards Update No. 2015-17 (ASU 2015-17), Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. ASU 2015-17 requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. ASU 2015-17 is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Earlier application is permitted as of the beginning of an interim or annual reporting period. The adoption of ASU 2015-17 is not expected to have any impact on Company’s financial statement presentation or disclosures. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes all existing guidance on accounting for leases in ASC Topic 840. ASU 2016-02 is intended to provide enhanced transparency and comparability by requiring lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet. ASU 2016-02 will continue to classify leases as either finance or operating, with classification affecting the pattern of expense recognition in the statement of income. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. ASU 2016-02 is required to be applied with a modified retrospective approach to each prior reporting period presented with various optional practical expedients. We are currently assessing the potential impact of adopting ASU 2016-02 on our financial statements and related disclosures. In March 2016, the FASB issued ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 changes how companies account for certain aspects of share-based payment awards to employees, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 is effective for annual periods beginning after December 15, 2016, including interim periods within those annual periods. If an entity early adopts in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period and the entity must adopt all of the amendments from ASU 2016-09 in the same period. Management has determined that the impact of this standard when adopted in 2017 will not be material to the financial statements and related disclosures. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 refines how companies classify certain aspects of the cash flow statement in regards to debt prepayment, settlement of debt instruments, contingent consideration payments, proceeds from insurance claims and life insurance policies, distribution from equity method investees, beneficial interests in securitization transactions and separately identifiable cash flows. ASU 2016-15 is effective for annual periods beginning after December 15, 2017, and interim periods within those fiscal years. No early adoption is permitted. Management is currently assessing the potential impact of adopting ASU 2016-15 on the financial statements and related disclosures. In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory, which reduces the complexity in the accounting standards by allowing the recognition of current and deferred income taxes for an intra-entity asset transfer, other than inventory, when the transfer occurs. Historically, recognition of the income tax consequence was not recognized until the asset was sold to an outside party. This amendment should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. ASU 2016-16 is effective for annual periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities as of the beginning of an annual reporting period for which financial statements (interim or annual) have not been issued or made available for issuance. That is, earlier adoption should be in the first interim period if an entity issues interim financial statements. Management is currently evaluating the impact of ASU 2016-16 on our consolidated financial statements and related disclosures. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 (ASC 606) - Revenue from Contracts with Customers (“ASU 2014-09”), which provides guidance for revenue recognition. This ASU will supersede the revenue recognition requirements in Topic 605, and most industry specific guidance. The standard's core principle is that revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: Step 1: Identify the contract(s) with a customer Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate the transaction price to the performance obligations in the contract. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. The guidance in ASU 2014-09 also specifies the accounting for some costs to obtain or fulfill a contract with a customer. ASC 606 requires the Company to make significant judgments and estimates. ASC 606 also requires more extensive disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has also issued several additional ASUs which amend ASU 2014-09. The amendments do not change the core principle of the guidance in ASC 606. Public business entities are required to apply the guidance of ASC 606 to annual reporting periods beginning after December 15, 2017 (2018 for calendar year end reporting companies), including interim reporting periods within that reporting period. Accordingly, the Company will adopt ASU 606 in the first quarter of 2018. An entity should apply ASC 606 using one of the following two transition methods: Retrospective approach: Retrospectively to each prior reporting period presented and the entity may elect certain practical expedients. Modified retrospective approach: Retrospectively with the cumulative effect of initially applying ASC 606 recognized at the date of initial application. If an entity elects this transition method it also is required to provide the additional disclosures in reporting periods that include the date of initial application of (a) the amount by which each financial statement line item is affected in the current reporting period by the application ASU 606 as compared to the guidance that was in effect before the change, and (b) an explanation of the reasons for significant changes. The Company expects that it will adopt ASC 606 following the modified retrospective approach. The Company has completed an initial assessment of adoption of ASC 606, but has additional steps to complete in its assessment phase. The Company will continue to assess all potential impacts of the standard, and currently believes the most significantly impacted areas are the following: The requirement to estimate and include variable consideration in the transaction price will accelerate the recognition of revenue related to sales of Argus II systems to customers covered under private insurance. Under existing generally accepted accounting principles, the Company defers revenue in these sales until the ultimate amount of revenues to be collected is determinable. For future products that may have software upgrades available, the Company may begin estimating and deferring a portion of the transaction price to when-and-if available software updates related to the Argus II system. The Company has not yet estimated the financial statement impact of the expected changes. The Company will continue to assess the impact of 606 as it works through the adoption in 2017, and there remain areas still to be fully concluded upon. Further, there remain ongoing interpretive reviews, which may alter the Company's conclusions and the financial impact of Topic 606. Management believes that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would not have a material impact on the Company’s financial statement presentation or disclosures. |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Schedule of estimated useful life of property and equipment | Estimated useful lives of the principal classes of assets are as follows: Lab equipment 5 – 7 years Computer hardware and software 3 – 7 years Leasehold improvements 2 – 5 years or the term of the lease, if shorter Furniture, fixtures and equipment 5 – 10 years |
Schedule of customer concentration of risk in revenue | During the years ended December 31, 2016, 2015 and 2014, the following customers comprised more than 10% of revenues : 2016 2015 2014 Customer 1 13 % 14 % 7 % Customer 2 3 % 4 % 10 % Customer 3 2 % 7 % 21 % |
Schedule of customer concentration of risk in accounts receivable | As of December 31, 2016 and 2015, the following customers comprised more than 10% accounts receivable: 2016 2015 Customer 1 34 % 1 % Customer 2 34 % 0 % Customer 3 29 % 0 % Customer 4 0 % 19 % Customer 5 0 % 17 % Customer 6 0 % 10 % Customer 7 0 % 10 % Customer 8 0 % 10 % |
Schedule of geographic concentration of risk in revenue | During the years ended December 31, 2016, 2015 and 2014, regional revenue, based on customer locations which comprised more than 10% of revenues, consisted of the following: 2016 2015 2014 United States 47 % 46 % 47 % Italy 17 % 20 % 8 % Germany 12 % 6 % 16 % France 9 % 16 % 3 % Canada 3 % 5 % 10 % |
Schedule of net loss per share | At December 31, 2016, 2015 and 2014, the Company excluded the outstanding securities summarized below, which entitle the holders thereof to ultimately acquire shares of common stock, from its calculation of earnings per share, as their effect would have been anti-dilutive (in thousands). 2016 2015 2014 Long Term Investor Rights — 400 1,021 Underwriter’s warrants 802 802 805 Warrants associated with convertible debt 1,039 1,039 1,179 Common stock options 3,667 3,472 3,251 Restricted stock units 131 190 — Employee stock purchase plan 206 93 — Total 5,845 5,996 6,256 |
Money Market Funds (Tables)
Money Market Funds (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Cash and Cash Equivalents [Abstract] | |
Schedule of money market funds | The following table presents money market funds at their level within the fair value hierarchy at December 31, 2016 and 2015 (in thousands). Total Level 1 Level 2 Level 3 December 31, 2016: Money market funds $ 10,336 $ 10,336 $ — $ — December 31, 2015: Money market funds $ 15,721 $ 15,721 $ — $ — |
Selected Balance Sheet Detail (
Selected Balance Sheet Detail (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of inventories | Inventories consisted of the following at December 31, 2016 and 2015 (in thousands): 2016 2015 Raw materials $ 477 $ 575 Work in process 5,032 5,028 Finished goods 3,284 3,156 8,793 8,759 Allowance for excess and obsolescence (5,377 ) (550 ) Inventories, net $ 3,416 $ 8,209 |
Schedule of property and equipment | Property and equipment consisted of the following at December 31, 2016 and 2015 (in thousands): 2016 2015 Laboratory equipment $ 2,300 $ 3,369 Computer hardware and software 1,220 1,960 Leasehold improvements 288 508 Furniture, fixtures and equipment 45 135 3,853 5,972 Accumulated depreciation and amortization (2,364 ) (4,540 ) Property and equipment, net $ 1,489 $ 1,432 |
Convertible Promissory Notes 27
Convertible Promissory Notes and Warrants (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Convertible Promissory Notes And Warrants | |
Schedule of warrant activity | A summary of warrant activity for the years ended December 31, 2016, 2015 and 2014 is presented below (in thousands, except per share and contractual life data): Number of Shares Weighted Average Weighted Average Warrants outstanding at December 31, 2013 1,181 $ 5.00 Granted 805 11.25 Exercised (2 ) 5.00 Forfeited or expired — — Warrants outstanding at December 31, 2014 1,984 $ 5.00 Granted — — Exercised (144 ) 5.13 Forfeited or expired — — Warrants outstanding at December 31, 2015 1,840 $ 7.72 Granted — — Exercised — — Forfeited or expired — — Warrants outstanding at December 31, 2016 1,840 $ 7.72 1.80 Warrants exercisable at December 31, 2016 1,840 $ 7.72 1.80 |
Equity Securities (Tables)
Equity Securities (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
Schedule of potentially dilutive securities | The fair value of the warrant issued as part of underwriting fee for the Company’s IPO was estimated to be $2,772,000, using the Black-Scholes option-pricing model with the following assumptions: Risk-free rate of return 1.63 % Expected dividend yield 0 % Expected volatility 49.92 % Expected term 5 years |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of option grant | The calculated value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions: 2016 2015 2014 Risk-free interest rate 1.40% – 2.03% 1.93% – 2.21% 0.3–2.2% Expected dividend yield 0% 0% 0% Expected volatility 47.6% – 48.2% 47.5% – 50.4% 50.0%–61.2% Expected term 6.25 years 6.25 – 6.5 years 1.5–6.5 years Weighted-average grant date calculated fair value $ 1.97 $ 6.17 $ 4.73 |
Schedule of stock option activity | A summary of stock option activity for the years ended December 31, 2016, 2015 and 2014 is presented below (in thousands, except per share and contractual life data): Number of Shares Weighted Average Weighted Average Options outstanding at December 31, 2013 2,241 $ 4.84 Granted 1,378 7.62 Exercised (115 ) 4.40 Forfeited or expired (252 ) 4.44 Options outstanding at December 31, 2014 3,252 $ 6.07 Granted 998 12.29 Exercised (574 ) 4.85 Forfeited or expired (204 ) 7.08 Options outstanding at December 31, 2015 3,472 $ 8.01 Granted 745 4.18 Exercised (96 ) 5.00 Forfeited or expired (454 ) 8.66 Options outstanding at December 31, 2016 3,667 $ 7.23 6.27 Options exercisable at December 31, 2016 1,954 $ 6.66 4.29 |
Schedule of exercise prices of common stock options outstanding and exercisable | The exercise prices of common stock options outstanding and exercisable are as follows at December 31, 2016 (in thousands): Exercise Price Options Options $ 2.34 to 4.25 627 125 $ 4.88 to 5.23 1,430 1,168 $ 7.00 to 9.01 842 415 $ 12.43 to 14.06 768 246 3,667 1,954 |
Schedule of restricted stock unit (RSU) activity | The following table presented below summarizes Restricted Stock Unit (RSU) activity for the years ended December 31, 2016 and 2015 (in thousands, except per share data): Number Weighted Average Outstanding as of December 31, 2014 - $ - Awarded 190 12.43 Vested - - Forfeited/canceled - - Outstanding as of December 31, 2015 190 $ 12.43 Awarded - - Vested 59 12.43 Forfeited/canceled - - Outstanding as of December 31, 2016 131 $ 12.43 |
Schedule of stock-based compensation | The total stock-based compensation recognized for stock-based awards granted in the consolidated statements of operations for the years ended December 31, 2016, 2015 and 2014 is as follows (in thousands): 2016 2015 2014 Cost of sales $ 312 $ 279 $ 192 Research and development 303 208 293 Clinical and regulatory 173 235 113 Selling and marketing 104 442 141 General and administrative 2,475 1,523 736 Total $ 3,367 $ 2,687 $ 1,475 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of deferred tax assets | Significant components of the Company’s deferred tax assets as of December 31, 2016 and 2015 are summarized below (in thousands): 2016 2015 Stock-based compensation $ 4,135 $ 2,825 Research credits 5,493 5,401 Depreciation (36 ) (12 ) Net operating loss carryforwards 54,509 47,261 Inventory reserve 1,958 203 Other 847 845 Total deferred tax assets 66,906 56,523 Valuation allowance (66,906 ) (56,523 ) Net deferred tax assets $ — $ — |
Product Warranties (Tables)
Product Warranties (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Product Warranties Disclosures [Abstract] | |
Schedule of activity in the Company's warranty liabilities | A summary of activity in the Company’s warranty liabilities, which are included in accrued expenses in the accompanying consolidated balance sheets, for the years ended December 31, 2016, 2015 and 2014 is presented below (in thousands): 2016 2015 2014 Balance, beginning of year $ 1,066 $ 556 $ 253 Additional accruals 727 991 415 Payments (268 ) (443 ) (112 ) Adjustments and other — (38 ) — Total $ 1,525 $ 1,066 $ 556 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule future minimum rental payments | Future minimum rental payments required under the operating leases are as follows for the years ended December 31 (in thousands). Years Amount 2017 $ 833 2018 858 2019 884 2020 910 2021 937 Thereafter 158 Total $ 4,580 |
Quarterly Financial Summary (33
Quarterly Financial Summary (unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial | Quarters Ended (in thousands, except per share data) December 31, September 30, June 30, March 31, Product sales $ 715 $ 1,180 $ 1,037 $ 1,053 Gross profit (loss) $ (2,593 ) $ (1,435 ) $ (2,204 ) $ 141 Operating loss $ (10,383 ) $ (8,499 ) $ (8,507 ) $ (5,821 ) Net loss $ (10,370 ) $ (8,489 ) $ (8,504 ) $ (5,816 ) Net loss per share – basic and diluted $ (0.24 ) $ (0.20 ) $ (0.23 ) $ (0.16 ) Quarters Ended December 31, September 30, June 30, March 31, Product sales $ 2,362 $ 2,227 $ 2,661 $ 1,700 Gross profit (loss) $ 691 $ 1,470 $ 1,092 $ 404 Operating loss $ (5,477 ) $ (4,662 ) $ (4,947 ) $ (4,961 ) Net loss $ (5,474 ) $ (4,666 ) $ (4,922 ) $ (4,956 ) Net loss per share – basic and diluted $ (0.15 ) $ (0.13 ) $ (0.14 ) $ (0.14 ) |
Organization and Business Ope34
Organization and Business Operations (Details Narrative) - USD ($) $ in Thousands | Jun. 30, 2016 | Jun. 30, 2016 | Nov. 30, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2007 |
Revenue | $ 4,000 | $ 8,900 | $ 3,400 | ||||
Research and development grant | $ 5,347 | $ 3,036 | 5,041 | ||||
Issuance of common stock in a private placements | $ 9,100 | ||||||
Proceeds from issuance of common stock | $ 34,200 | ||||||
Right Offering [Member] | |||||||
Proceeds from issuance of common stock | $ 19,500 | $ 19,500 | |||||
Second Sight (Switzerland) Sarl [Member] | |||||||
Ownership percentage by parent | 99.50% | 100.00% | |||||
Second Sight (Switzerland) Sarl [Member] | Executive Officer [Member] | |||||||
Ownership percentage by noncontrolling interest | 0.50% |
Summary of Significant Accoun35
Summary of Significant Accounting Policies (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Lab Equipment [Member] | Minimum [Member] | |
Estimated useful lives | 5 years |
Lab Equipment [Member] | Maximum [Member] | |
Estimated useful lives | 7 years |
Computer Hardware and Software [Member] | Minimum [Member] | |
Estimated useful lives | 3 years |
Computer Hardware and Software [Member] | Maximum [Member] | |
Estimated useful lives | 7 years |
Leasehold Improvements [Member] | Minimum [Member] | |
Estimated useful lives | 2 years |
Leasehold Improvements [Member] | Maximum [Member] | |
Estimated useful lives | 5 years |
Furniture, Fixtures and Equipment [Member] | Minimum [Member] | |
Estimated useful lives | 5 years |
Furniture, Fixtures and Equipment [Member] | Maximum [Member] | |
Estimated useful lives | 10 years |
Summary of Significant Accoun36
Summary of Significant Accounting Policies (Details 1) - Sales Revenue, Net [Member] | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Customer 1 [Member] | |||
Customer concentration | 13.00% | 14.00% | 7.00% |
Customer 2 [Member] | |||
Customer concentration | 3.00% | 4.00% | 10.00% |
Customer 3 [Member] | |||
Customer concentration | 2.00% | 7.00% | 21.00% |
Summary of Significant Accoun37
Summary of Significant Accounting Policies (Details 2) - Accounts Receivable [Member] | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Customer 1 [Member] | ||
Customer concentration | 34.00% | 1.00% |
Customer 2 [Member] | ||
Customer concentration | 34.00% | 0.00% |
Customer 3 [Member] | ||
Customer concentration | 29.00% | 0.00% |
Customer 4 [Member] | ||
Customer concentration | 0.00% | 19.00% |
Customer 5 [Member] | ||
Customer concentration | 0.00% | 17.00% |
Customer 6 [Member] | ||
Customer concentration | 0.00% | 10.00% |
Customer 7 [Member] | ||
Customer concentration | 0.00% | 10.00% |
Customer 8 [Member] | ||
Customer concentration | 0.00% | 10.00% |
Summary of Significant Accoun38
Summary of Significant Accounting Policies (Details 3) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
UNITED STATES | |||
Geographic concentration | 47.00% | 46.00% | 47.00% |
ITALY | |||
Geographic concentration | 17.00% | 20.00% | 8.00% |
GERMANY | |||
Geographic concentration | 12.00% | 6.00% | 16.00% |
FRANCE | |||
Geographic concentration | 9.00% | 16.00% | 3.00% |
CANADA | |||
Geographic concentration | 3.00% | 5.00% | 10.00% |
Summary of Significant Accoun39
Summary of Significant Accounting Policies (Details 4) - shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Calculation of earnings per share common stock anti-dilutive securities | 5,845 | 5,996 | 6,256 |
Long Term Investor Rights [Member] | |||
Calculation of earnings per share common stock anti-dilutive securities | 400 | 1,021 | |
Underwriter's Warrants [Member] | |||
Calculation of earnings per share common stock anti-dilutive securities | 802 | 802 | 805 |
Warrants Associated with Convertible Debt [Member] | |||
Calculation of earnings per share common stock anti-dilutive securities | 1,039 | 1,039 | 1,179 |
Common Stock Options [Member] | |||
Calculation of earnings per share common stock anti-dilutive securities | 3,667 | 3,472 | 3,251 |
Restricted Stock Units [Member] | |||
Calculation of earnings per share common stock anti-dilutive securities | 131 | 190 | |
Employee Stock Purchase Plan [Member] | |||
Calculation of earnings per share common stock anti-dilutive securities | 206 | 93 |
Summary of Significant Accoun40
Summary of Significant Accounting Policies (Details Narrative) $ / shares in Units, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016USD ($)Patent$ / sharesshares | Dec. 31, 2015USD ($)shares | Dec. 31, 2014USD ($) | Oct. 31, 2014shares | |
Allowance for doubtful accounts | $ 213 | $ 0 | ||
Depreciation and amortization of property and equipment | 432 | 335 | $ 279 | |
Research and development costs | 5,347 | 3,036 | 5,041 | |
Patent costs | 652 | 679 | 666 | |
Grants offset against operating expenses | 2,366 | 1,878 | $ 19 | |
FDIC insured amount | 250 | |||
SPIC insured amount | 500 | |||
Assets | $ 16,810 | $ 28,245 | ||
Long Term Investor Right, Description. | The formula to determine the number of IPO Supplemental Shares to issue on a trigger of the Long Term Investor Right was: (i) $18.00 minus (ii) the average of the highest consecutive closing prices in any 90 day trading period on the principal exchange during the two years after the Closing Date (the “Measurement Average”) divided by the Measurement Average. Fractional shares issuable to a qualifying IPO Shareholder resulting from the calculation were rounded up to the next whole share of common stock, taking into account the aggregate number of Long Term Investor Rights of a holder. Since the highest average of consecutive closing prices over any 90 calendar day period was $13.96 per share, each Long-Term Investor Right was entitled to 0.2894 additional shares of common stock, which is calculated as: ($18.00 - $13.96)/$13.96. | |||
Common stock issuable under outstanding | shares | 42,701 | 35,942 | 1,000 | |
SWITZERLAND | ||||
Number of domestic and foreign patents | Patent | 380 | |||
Assets | $ 1,700 | $ 3,000 | ||
Long Term Investor Rights [Member] | ||||
IPO common stock price (in dollars per share) | $ / shares | $ 18 | |||
Common stock issuable under outstanding | shares | 355,095 |
Money Market Funds (Details)
Money Market Funds (Details) - Money Market Funds [Member] - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Money market funds | $ 10,336 | $ 15,721 |
Level 1 [Member] | ||
Money market funds | 10,336 | 15,721 |
Level 2 [Member] | ||
Money market funds | ||
Level 3 [Member] | ||
Money market funds |
Money Market Funds (Details Nar
Money Market Funds (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Money market funds | $ 10,336 | $ 15,721 |
Deposit account | 123 | 218 |
City National Rochdale Government Fund Class S [Member] | ||
Money market funds | 218 | 555 |
FFI Institutional Fund [Member] | ||
Money market funds | $ 9,995 | $ 14,948 |
Selected Balance Sheet Detail43
Selected Balance Sheet Detail (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Raw materials | $ 477 | $ 575 |
Work in process | 5,032 | 5,028 |
Finished goods | 3,284 | 3,156 |
Inventory, gross | 8,793 | 8,759 |
Allowance for excess and obsolescence | (5,377) | (550) |
Inventories, net | $ 3,416 | $ 8,209 |
Selected Balance Sheet Detail44
Selected Balance Sheet Detail (Details 1) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Property and equipment, gross | $ 3,853 | $ 5,972 |
Accumulated depreciation and amortization | (2,364) | (4,540) |
Property and equipment, net | 1,489 | 1,432 |
Laboratory Equipment [Member] | ||
Property and equipment, gross | 2,300 | 3,369 |
Computer Hardware and Software [Member] | ||
Property and equipment, gross | 1,220 | 1,960 |
Leasehold Improvements [Member] | ||
Property and equipment, gross | 288 | 508 |
Furniture, Fixtures and Equipment [Member] | ||
Property and equipment, gross | $ 45 | $ 135 |
Selected Balance Sheet Detail45
Selected Balance Sheet Detail (Details Narrative) $ in Thousands | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Charge for excess inventory | $ 4,700 |
Depreciation | $ 2,600 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) $ in Thousands | Dec. 11, 2013 | May 31, 2011 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Scientific research cost | $ 1 | $ 1 | ||||
Exercise of stock options to purchase shares amount | $ 481 | $ 2,782 | $ 506 | |||
Forgiveness of notes receivable from an officer for stock option exercises | $ 423 | $ 423 | ||||
Robert J. Greenberg [Member] | ||||||
Exercise of stock options to purchase shares | 200,000 | 100,000 | ||||
Exercise of stock options to purchase shares amount | $ 100 | $ 319 | ||||
Exercise of stock options to purchase shares expiration date | Dec. 31, 2018 | May 31, 2016 | ||||
Exercise of stock options to purchase shares interest rate | 1.64% | 2.26% |
Grants (Details Narrative)
Grants (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Oct. 31, 2014 | Apr. 30, 2010 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Development and testing grant | $ 3,000 | ||||
Development and testing grant duration | 3 years | ||||
Research and development expenses offset | $ 0 | $ 19 | $ 175 | ||
Lump sum amount paid for research by APL | $ 4,100 | ||||
Common shares issued to APL, | 1,000 | 42,701 | 35,942 | ||
Royalty of net sales of licensed products | 0.25% | ||||
APL [Member] | |||||
Research and development expenses offset | $ 2,100 | $ 1,900 |
Convertible Promissory Notes 48
Convertible Promissory Notes and Warrants (Details) - Warrant [Member] - $ / shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |||
Options outstanding at beginning | 1,840 | 1,984 | 1,181 |
Granted | 805 | ||
Exercised | (144) | (2) | |
Forfeited or expired | |||
Options outstanding at ending | 1,840 | 1,840 | 1,984 |
Options exercisable at ending | 1,840 | ||
Share Based Compensation Arrangement By Share Based Payment Award Other Than Options Outstanding Weighted Average Exercise Price [Roll Forward] | |||
Options outstanding at beginning | $ 7.72 | $ 5 | $ 5 |
Granted | 11.25 | ||
Exercised | 5.13 | 5 | |
Forfeited or expired | |||
Outstanding, ending | 7.72 | $ 7.72 | $ 5 |
Options exercisable at ending | $ 7.72 | ||
Share Based Compensation Arrangement By Share Based Payment Award Other Than Options Outstanding Weighted Average Remaining Contractual Life [Roll Forward] | |||
Options outstanding at ending | 1 year 9 months 18 days | ||
Options exercisable at ending | 1 year 9 months 18 days |
Convertible Promissory Notes 49
Convertible Promissory Notes and Warrants (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 5 Months Ended | 11 Months Ended | 12 Months Ended | |||||
Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2012 | Nov. 30, 2012 | Dec. 31, 2013 | Dec. 31, 2016 | Dec. 31, 2014 | Dec. 31, 2011 | Dec. 31, 2010 | Dec. 31, 2015 | |
Borrowed fund by issuing convertible notes | $ 29,500 | $ 29,500 | $ 15,400 | $ 15,400 | ||||||
Borrowed fund interest rate | 7.50% | |||||||||
Combined face value of the 2010 and 2011 Notes | $ 47 | |||||||||
Face value converted into shares of common stock | 6,639,137 | 3,200,000 | ||||||||
Common stock conversion price per share | $ 5 | $ 5 | ||||||||
Convertible notes redeemed | $ 54 | |||||||||
Weighted average remaining contractual life | 11 months 16 days | |||||||||
Warrant outstanding | $ 1,038,403 | |||||||||
Unamortized discount | $ 7,000 | $ 7,000 | ||||||||
Warrant [Member] | ||||||||||
Warrants to purchase shares of common stock | 1,180,766 | |||||||||
Warrants to purchase shares of common stock per share | $ 5 | |||||||||
Intrinsic value of warrants exercisable | $ 0 | $ 924 | ||||||||
July 2012 Notes [Member] | ||||||||||
Borrowed fund interest rate | 7.50% | |||||||||
Convertible notes isuued | $ 5,000 | |||||||||
Maturity dates | Jul. 31, 2015 | |||||||||
Effective interest rate | 18.60% | |||||||||
October 2012 Notes [Member] | ||||||||||
Borrowed fund interest rate | 7.50% | |||||||||
Convertible notes isuued | $ 5,000 | |||||||||
Maturity dates | Jul. 31, 2015 | |||||||||
Effective interest rate | 19.20% | |||||||||
February 2013 Notes [Member] | ||||||||||
Borrowed fund interest rate | 7.50% | |||||||||
Convertible notes isuued | $ 19,500 | |||||||||
Maturity dates | Feb. 28, 2016 | |||||||||
Effective interest rate | 63.30% |
Employee Benefit Plans (Details
Employee Benefit Plans (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Compensation and Retirement Disclosure [Abstract] | |||
Employer contributions to plan | $ 147 | $ 137 | $ 127 |
Pension plan for the employees | 132 | $ 134 | $ 101 |
Accrued expenses | $ 77 |
Equity Securities (Details)
Equity Securities (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
Risk-free rate of return | 1.63% |
Expected dividend yield | 0.00% |
Expected volatility | 49.92% |
Expected term | 5 years |
Equity Securities (Details Narr
Equity Securities (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Mar. 06, 2017 | Nov. 24, 2016 | Jun. 30, 2016 | Nov. 18, 2014 | Jun. 30, 2016 | Nov. 30, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Oct. 31, 2014 | Jun. 30, 2014 |
Net proceeds from sale of common stock | $ 34,200 | ||||||||||
Purchase of common stock by underwriter, granted | 805,000 | ||||||||||
Exercise price | $ 11.25 | ||||||||||
Exercise price above offering price | 25.00% | ||||||||||
Warrant exercisable period after effective date of registration | 180 days | ||||||||||
Warrant exercisable ending period from effective date of registration | 5 years | ||||||||||
Fair value of warrant issued of underwriting fee | $ 2,772 | ||||||||||
Common stock issuable under outstanding | 42,701 | 35,942 | 1,000 | ||||||||
Perfectly maintained Long Term Investor Rights aggregate common stock | 1,226,854 | ||||||||||
Highest average closing price on NASDAQ | $ 13.96 | ||||||||||
Share entitlement price for perfectly maintained Long Term Investor Right | $ 0.2894 | ||||||||||
Rounded up of next whole share aggregate maximum shares | 355,095 | ||||||||||
Number of shares issued for services | 82,000 | 23,136 | |||||||||
Shares issued for services to directors, amount | $ 324 | $ 285 | $ 166 | ||||||||
Accrued services, shares | 77,000 | 33,293 | 16,204 | ||||||||
Accrued services, Closing price per share | $ 1.98 | $ 6.15 | $ 10.26 | ||||||||
Accrued services | $ 153 | $ 205 | $ 166 | ||||||||
Long Term Investor Rights [Member] | |||||||||||
Common stock issuable under outstanding | 355,095 | ||||||||||
Share price (in dollars per share) | $ 18 | ||||||||||
November 2014 IPO [Member] | |||||||||||
Sale of common stock to new investors | 4,025,000 | ||||||||||
Sale of common stock upon exercise of underwriter's over-allotment option | 525,000 | ||||||||||
Net proceeds from sale of common stock | $ 34,200 | ||||||||||
Net offering costs | 5,000 | ||||||||||
Fair value of net offering cost from warrants and common stock | $ 2,900 | ||||||||||
2014 Private Placement [Member] | |||||||||||
Sale of common stock to new investors | 1,299,853 | ||||||||||
Net proceeds from sale of common stock | $ 9,100 | ||||||||||
Exercise price | $ 7 | ||||||||||
2014 Private Placement [Member] | Mendelsohn Investment Services, LLC [Member] | |||||||||||
Payment of finder's fee shares of common stock | $ 26,785 | ||||||||||
Payment of additional finder's fee shares of common stock | $ 37,599 | ||||||||||
Right Offering [Member] | |||||||||||
Proceeds from issuance or sale of shares | $ 19,500 | $ 19,500 | |||||||||
Number of shares issued upon right offering | 5,978,465 | ||||||||||
Share price (in dollars per share) | $ 3.315 | $ 3.315 | |||||||||
Percentage of company's stock price at the close of the rights offering | 85.00% | ||||||||||
Right Offering [Member] | Subsequent Event [Member] | |||||||||||
Proceeds from issuance or sale of shares | $ 19,700 | ||||||||||
Number of shares issued upon right offering | 13,700,000 | ||||||||||
Share price (in dollars per share) | $ 1.47 | ||||||||||
Additional share price | $ 1.47 | ||||||||||
Term of warrants | 5 years | ||||||||||
Description for redemption of warrants | The warrants are redeemable on 30 days’ notice (i) at any time 24 months after the date of issuance, (ii) if the shares of the Company’s common stock are trading at $2.94, which is 200% of the Subscription Price, for 15 consecutive trading days and (iii) if all of the independent directors vote in favor of redeeming the warrants. Holders may be able to sell or exercise warrants prior to any announced redemption date and the Company will redeem outstanding warrants not exercised by the announced redemption date for a nominal amount of $0.01 per Warrant. | ||||||||||
Common Stock [Member] | |||||||||||
Increase authorized shares | 200,000,000 | ||||||||||
Par value | $ 0 | ||||||||||
Number of shares issued for services | 82 | 23 | 22 | ||||||||
Shares issued for services to directors, amount | |||||||||||
Preferred Stock [Member] | |||||||||||
Increase authorized shares | 10,000,000 | ||||||||||
Par value | $ 0 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Risk-free interest rate | 2.16% | ||
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Expected term | 6 years 3 months | ||
Weighted-average grant date calculated fair value | $ 1.97 | $ 6.17 | $ 4.73 |
Minimum [Member] | |||
Risk-free interest rate | 1.40% | 1.93% | 0.30% |
Expected volatility | 47.60% | 47.50% | 50.00% |
Expected term | 6 years 3 months | 1 year 6 months | |
Maximum [Member] | |||
Risk-free interest rate | 2.03% | 2.21% | 2.20% |
Expected volatility | 48.20% | 50.40% | 61.20% |
Expected term | 6 years 6 months | 6 years 6 months |
Stock-Based Compensation (Det54
Stock-Based Compensation (Details 1) - $ / shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Life (in Years) [Roll Forward] | |||
Options outstanding at ending | 11 months 16 days | ||
Stock Option Grants [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Options outstanding at beginning | 3,472 | 3,252 | 2,241 |
Granted | 745 | 998 | 1,378 |
Exercised | (96) | (574) | (115) |
Forfeited or expired | (454) | (204) | (252) |
Options outstanding at ending | 3,667 | 3,472 | 3,252 |
Options exercisable at ending | 1,954 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | |||
Options outstanding at beginning | $ 8.01 | $ 6.07 | $ 4.84 |
Granted | 4.18 | 12.29 | 7.62 |
Exercised | 5 | 4.85 | 4.40 |
Forfeited or expired | 8.66 | 7.08 | 4.44 |
Options outstanding at ending | 7.23 | $ 8.01 | $ 6.07 |
Options exercisable at ending | $ 6.66 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Life (in Years) [Roll Forward] | |||
Options outstanding at ending | 6 years 3 months 7 days | ||
Options exercisable at ending | 4 years 3 months 14 days |
Stock-Based Compensation (Det55
Stock-Based Compensation (Details 2) | Dec. 31, 2016shares |
Exercise Price Range $2.34 to $4.25 [Member] | |
Options Outstanding (in shares) | 627 |
Options Exercisable (in shares) | 125 |
Exercise Price Range $2.34 to $4.25 [Member] | Minimum [Member] | |
Exercise Price | 2.34 |
Exercise Price Range $2.34 to $4.25 [Member] | Maximum [Member] | |
Exercise Price | 4.25 |
Exercise Price Range $4.88 to $5.23 [Member] | |
Options Outstanding (in shares) | 1,430 |
Options Exercisable (in shares) | 1,168 |
Exercise Price Range $4.88 to $5.23 [Member] | Minimum [Member] | |
Exercise Price | 4.88 |
Exercise Price Range $4.88 to $5.23 [Member] | Maximum [Member] | |
Exercise Price | 5.23 |
Exercise Price Range $7.00 to $9.01 [Member] | |
Options Outstanding (in shares) | 842 |
Options Exercisable (in shares) | 415 |
Exercise Price Range $7.00 to $9.01 [Member] | Minimum [Member] | |
Exercise Price | 7 |
Exercise Price Range $7.00 to $9.01 [Member] | Maximum [Member] | |
Exercise Price | 9.01 |
Exercise Price Range $12.43 to $14.06 [Member] | |
Options Outstanding (in shares) | 768 |
Options Exercisable (in shares) | 246 |
Exercise Price Range $12.43 to $14.06 [Member] | Minimum [Member] | |
Exercise Price | 12.43 |
Exercise Price Range $12.43 to $14.06 [Member] | Maximum [Member] | |
Exercise Price | 14.06 |
Exercise Price Range [Member] | |
Options Outstanding (in shares) | 3,667 |
Options Exercisable (in shares) | 1,954 |
Stock-Based Compensation (Det56
Stock-Based Compensation (Details 3) - Restricted Stock Units [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | ||
Outstanding at beginning | 190 | |
Awarded | 190 | |
Vested | 59 | |
Forfeited/canceled | ||
Outstanding at ending | 131 | 190 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Weighted Average Grant Date Fair Value [Roll Forward] | ||
Outstanding at beginning | $ 12.43 | |
Awarded | 12.43 | |
Vested | 12.43 | |
Forfeited/canceled | ||
Outstanding at ending | $ 12.43 | $ 12.43 |
Stock-Based Compensation (Det57
Stock-Based Compensation (Details 4) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Total | $ 3,367 | $ 2,687 | $ 1,475 |
Cost Of Sales [Member] | |||
Total | 312 | 279 | 192 |
Research And Development [Member] | |||
Total | 303 | 208 | 293 |
Clinical And Regulatory [Member] | |||
Total | 173 | 235 | 113 |
Selling And Marketing [Member] | |||
Total | 104 | 442 | 141 |
General And Administrative [Member] | |||
Total | $ 2,475 | $ 1,523 | $ 736 |
Stock-Based Compensation (Det58
Stock-Based Compensation (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | May 10, 2016 | Jun. 19, 2015 | May 15, 2015 | Jan. 02, 2015 | Jun. 30, 2015 | Jul. 31, 2014 | Jan. 31, 2014 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Description of plan | Shareholders approved an increase of 1,500,000 shares in the number of shares available for option awards under the 2011 Equity Incentive Plan. | Shareholders approved (1) an increase of 2,000,000 shares in the number of shares available for option awards under the 2011 Equity Incentive Plan, and (2) an Employee Stock Purchase Plan, with an initial 250,000 shares with annual increases of shares available equal to the lesser of (i) 1% of outstanding shares or (ii) 100,000 shares. | |||||||||
Stock-based compensation | $ 3,367 | $ 2,687 | $ 1,475 | ||||||||
Expected terms (in years) | 6 years 3 months | ||||||||||
Risk-free interest rate | 2.16% | ||||||||||
Expected dividend rate | 0.00% | 0.00% | 0.00% | ||||||||
Outstanding balance, loan | $ 2 | $ 5 | |||||||||
Issued common stock for services, shares | 82,000 | 23,136 | |||||||||
Issued common stock for services, amount | $ 272 | $ 324 | $ 178 | ||||||||
General And Administrative [Member] | |||||||||||
Stock-based compensation | $ 2,475 | $ 1,523 | $ 736 | ||||||||
Minimum [Member] | |||||||||||
Expected terms (in years) | 6 years 3 months | 1 year 6 months | |||||||||
Volatility rate | 47.60% | 47.50% | 50.00% | ||||||||
Risk-free interest rate | 1.40% | 1.93% | 0.30% | ||||||||
Loans bear interest | 1.27% | ||||||||||
Maximum [Member] | |||||||||||
Expected terms (in years) | 6 years 6 months | 6 years 6 months | |||||||||
Volatility rate | 48.20% | 50.40% | 61.20% | ||||||||
Risk-free interest rate | 2.03% | 2.21% | 2.20% | ||||||||
Loans bear interest | 1.91% | ||||||||||
Restricted Stock Units [Member] | |||||||||||
Period of recognized compensation cost | 2 years 7 months 17 days | ||||||||||
Total non vested unrecognized compensation cost | $ 1,551 | ||||||||||
Consultant [Member] | |||||||||||
Stock-based compensation | $ 55 | $ 235 | |||||||||
Number of vested shares | 98,681 | 232,003 | |||||||||
Description of vesting terms | All unvested options for this employee were terminated when this employee ceased full-time employment with the Company. | All unvested options for employees were terminated when they ceased full-time employment with the Company. | |||||||||
Outside Attorney [Member] | |||||||||||
Number of options granted | 30,000 | ||||||||||
Exercisable terms | 4 years | ||||||||||
Exercise price (in dollars per share) | $ 5.23 | ||||||||||
Percentage of fair value common stock granted | 125.00% | ||||||||||
Fair value of options | $ 53 | ||||||||||
Share price (in dollars per share) | $ 1.77 | ||||||||||
Expected terms (in years) | 6 years 3 months | ||||||||||
Volatility rate | 48.20% | ||||||||||
Risk-free interest rate | 1.87% | ||||||||||
Expected dividend rate | 0.00% | ||||||||||
Issued common stock for services, shares | 21,215 | ||||||||||
Issued common stock for services, amount | $ 170 | ||||||||||
Issued common stock for services, per share | $ 7 | ||||||||||
Balance common stock for services, per share | $ 9 | ||||||||||
Mr. Jonathan Will McGuire [Member] | |||||||||||
Stock-based compensation | $ 390 | ||||||||||
Period of recognized compensation cost | 3 years | ||||||||||
Number of options granted | 50,753 | 125,000 | 27,344 | ||||||||
Exercise price (in dollars per share) | $ 4.75 | $ 4.75 | $ 4.25 | ||||||||
Fair value of options | $ 393 | ||||||||||
Share price (in dollars per share) | $ 10.26 | ||||||||||
Volatility rate | 50.00% | ||||||||||
Expected dividend rate | 0.00% | ||||||||||
Exercise of stock options to purchase shares | 59,063 | 150,000 | |||||||||
Number of shares surrendered | 12,055 | ||||||||||
Value of shares surrendered | $ 124 | ||||||||||
Mr. Jonathan Will McGuire [Member] | Employment Agreement [Member] | |||||||||||
Number of options granted | 420,000 | ||||||||||
Fair value of stock option granted | $ 2,574 | ||||||||||
Stock option recognized | $ 645 | $ 240 | |||||||||
Mr. Jonathan Will McGuire [Member] | Employment Agreement [Member] | Restricted Stock Units [Member] | |||||||||||
Description of vesting terms | With 25% vesting on the first anniversary of the grant date, and the remainder vesting thereafter in twelve equal installments of 6.25% on the quarterly anniversaries of the grant date. | ||||||||||
Number of options granted | 190,000 | ||||||||||
Fair value of stock option granted | $ 2,362 | ||||||||||
Stock option recognized | $ 591 | 220 | |||||||||
Exercise price of the options (in dollars per share) | $ 12.43 | ||||||||||
Vesting period | 4 years | ||||||||||
Robert J. Greenberg [Member] | General And Administrative [Member] | |||||||||||
Issued common stock for services, shares | 25,000 | ||||||||||
Issued common stock for services, amount | $ 175 | ||||||||||
Issued common stock for services, per share | $ 7 | ||||||||||
2011 Equity Incentive Plan [Member] | |||||||||||
Number of shares authorized | 3,500,000 | ||||||||||
Number of shares options granted | 7,500,000 | ||||||||||
Aggregate exercisable intrinsic value | $ 0 | $ 1,294 | |||||||||
Total unrecognized compensation cost of options | $ 6,240 | ||||||||||
Period of recognized compensation cost | 2 years 7 months 13 days | ||||||||||
Exercisable terms | 10 years | ||||||||||
Employee Stock Purchase Plan [Member] | |||||||||||
Description of plan | Under the plan, shares of the Company's common stock may be purchased at six-month intervals at 85% of the lower of the closing fair market value of the common stock (i) on the first trading day of the offering period or (ii) on the last trading day of the purchase period. An employee may purchase in any one calendar year shares of common stock having an aggregate fair market value of up to $25,000 determined as of the first trading day of the offering period. Additionally, a participating employee may not purchase more than 100,000 shares of common stock in any one offering period. | ||||||||||
Number of shares issued | 241,714 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Income Tax Disclosure [Abstract] | ||
Stock-based compensation | $ 4,135 | $ 2,825 |
Research credits | 5,493 | 5,401 |
Depreciation of property and equipment | (36) | (12) |
Net operating loss carryforwards | 54,509 | 47,261 |
Inventory reserve | 1,958 | 203 |
Other | 847 | 845 |
Total deferred tax assets | 66,906 | 56,523 |
Valuation allowance | (66,906) | (56,523) |
Net deferred tax assets |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) $ in Thousands | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Effective federal statutory rate | 34.00% |
Gross tax-effected unrealized net operating loss carryforwards | $ 1,200 |
Federal [Member] | |
Net operating loss carryforwards | $ 142,300 |
Net operating loss carryforwards expired | 2023 through 2036 |
Research and development tax credit carryforwards | $ 3,242 |
Research and development tax credit carryforwards expired | 2023 through 2036 |
State [Member] | |
Net operating loss carryforwards | $ 938,000 |
Net operating loss carryforwards expired | 2016 through 2036 |
Research and development tax credit carryforwards | $ 3,410 |
Product Warranties (Details)
Product Warranties (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Product Warranties Disclosures [Abstract] | |||
Balance, beginning of year | $ 1,066 | $ 556 | $ 253 |
Additional accruals | 727 | 991 | 415 |
Payments | (268) | (443) | (112) |
Adjustments and other | (38) | ||
Total | $ 1,525 | $ 1,066 | $ 556 |
Commitments and Contingencies62
Commitments and Contingencies (Details) $ in Thousands | Dec. 31, 2016USD ($) |
Future minimum rental payments | |
2,017 | $ 833 |
2,018 | 858 |
2,019 | 884 |
2,020 | 910 |
2,021 | 937 |
Thereafter | 158 |
Total | $ 4,580 |
Commitments and Contingencies63
Commitments and Contingencies (Details Narrative) | 1 Months Ended | 12 Months Ended | ||||
Apr. 30, 2014USD ($) | Aug. 31, 2012 | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2016CHF (SFr) | |
Lease rent expense | $ 1,050,000 | $ 954,000 | $ 1,007,000 | |||
License fee | 74,000 | 93,000 | 45,000 | |||
Clinical and regulatory expense | $ 786,000 | $ 1,409,000 | 602,000 | |||
Annual maintenance fee term | 7 years | |||||
Charges for major stockholder | $ 652,000 | |||||
Minimum [Member] | ||||||
License royalty rates range | 0.50% | |||||
Maintenance fee | $ 5,000 | |||||
Maximum [Member] | ||||||
License royalty rates range | 3.25% | |||||
License royalty rates paid to other | 0.25% | |||||
Maintenance fee | $ 10,000 | |||||
CHF | ||||||
Lease commitment | SFr | SFr 8,200 | |||||
Sylmar Lease [Member] | ||||||
Lease rent expense | $ 34,500 | |||||
Lease agreement term | 5 years | |||||
Lease agreement maturity date | Feb. 28, 2022 | Feb. 28, 2017 | ||||
Lease agreement renew term | 5 years | 5 years |
Quarterly Financial Summary (64
Quarterly Financial Summary (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Product sales | $ 715 | $ 1,180 | $ 1,037 | $ 1,053 | $ 2,362 | $ 2,227 | $ 2,661 | $ 1,700 | $ 3,985 | $ 8,950 | $ 3,398 |
Gross profit (loss) | (2,593) | (1,435) | (2,204) | 141 | 691 | 1,470 | 1,092 | 404 | (6,091) | 3,657 | (160) |
Operating loss | (10,383) | (8,499) | (8,507) | (5,821) | (5,477) | (4,662) | (4,947) | (4,961) | (33,210) | (20,047) | (21,233) |
Net loss | $ (10,370) | $ (8,489) | $ (8,504) | $ (5,816) | $ (5,474) | $ (4,666) | $ (4,922) | $ (4,956) | $ (33,179) | $ (20,018) | $ (35,201) |
Net loss per share - basic and diluted (in dollars per share) | $ (0.24) | $ (0.20) | $ (0.23) | $ (0.16) | $ (0.15) | $ (0.13) | $ (0.14) | $ (0.14) | $ (0.84) | $ (0.56) | $ (1.41) |
Subsequent Event (Details Narra
Subsequent Event (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Mar. 06, 2017 | Jan. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Outside Attorney [Member] | |||||
Exercise price (in dollars per share) | $ 5.23 | ||||
Exercisable terms | 4 years | ||||
Fair value of options | $ 53 | ||||
Stock Option Grants [Member] | |||||
Exercise price (in dollars per share) | $ 5 | $ 4.85 | $ 4.40 | ||
Subsequent Event [Member] | Stock Option Grants [Member] | |||||
Exercise price (in dollars per share) | $ 1.76 | $ 0.94 | |||
Percentage of closing price | 120.00% | ||||
Vesting period | 4 years | ||||
Exercisable terms | 4 years | 10 years | |||
Fair value of options | $ 19,600 | $ 2,012,162 | |||
Subsequent Event [Member] | Stock Option Grants [Member] | Minimum [Member] | |||||
Exercise price (in dollars per share) | $ 1.53 | ||||
Subsequent Event [Member] | Stock Option Grants [Member] | Maximum [Member] | |||||
Exercise price (in dollars per share) | $ 1.97 | ||||
Subsequent Event [Member] | Stock Option Grants [Member] | Employee [Member] | |||||
Number of shares options granted | 2,151,402 | ||||
Subsequent Event [Member] | Stock Option Grants [Member] | Outside Attorney [Member] | |||||
Number of shares options granted | 40,000 | ||||
Subsequent Event [Member] | Stock Option Grants [Member] | Senior Management [Member] | |||||
Number of shares options granted | 1,698,260 |