Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2021 | May 14, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2021 | |
Entity Registrant Name | RESHAPE LIFESCIENCES INC. | |
Title of 12(b) Security | Common stock | |
Trading Symbol | RSLS | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Interactive Data Current | Yes | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 6,166,554 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0001371217 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 896 | $ 2,957 |
Restricted cash | 1,050 | 50 |
Accounts and other receivables (net of allowance for doubtful accounts of $442 and $968 respectively) | 3,373 | 2,620 |
Inventory | 2,095 | 2,244 |
Prepaid expenses and other current assets | 836 | 1,073 |
Total current assets | 8,250 | 8,944 |
Property and equipment, net | 718 | 584 |
Operating lease right-of-use assets | 390 | 465 |
Other intangible assets, net | 26,612 | 27,022 |
Other assets | 46 | 46 |
Total assets | 36,016 | 37,061 |
Current liabilities: | ||
Accounts payable | 3,637 | 3,655 |
Accrued and other liabilities | 4,017 | 3,630 |
Warranty liability, current | 390 | 397 |
Debt, current portion, net of deferred financing costs | 13,268 | 3,609 |
Operating lease liabilities, current | 320 | 314 |
Total current liabilities | 21,632 | 11,605 |
Debt, noncurrent portion | 9,168 | |
Operating lease liabilities, noncurrent | 82 | 163 |
Warranty liability, noncurrent | 979 | 1,022 |
Deferred income taxes | 615 | 615 |
Total liabilities | 23,308 | 22,573 |
Commitments, contingencies and subsequent events | ||
Stockholders’ equity: | ||
Common stock, $0.001 par value; 275,000,000 shares authorized at March 31, 2021 and December 31, 2020; 6,166,554 shares issued and outstanding at both March 31, 2021 and December 31, 2020 | 6 | 6 |
Additional paid-in capital | 532,504 | 529,429 |
Accumulated deficit | (519,701) | (514,827) |
Accumulated other comprehensive loss | (102) | (121) |
Total stockholders’ equity | 12,708 | 14,488 |
Total liabilities and stockholders’ equity | 36,016 | 37,061 |
Series B convertible preferred stock | ||
Stockholders’ equity: | ||
Preferred stock, 5,000,000 shares authorized: | ||
Series C convertible preferred stock | ||
Stockholders’ equity: | ||
Preferred stock, 5,000,000 shares authorized: | $ 1 | $ 1 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Allowance for bad debts | $ 442 | $ 968 |
Preferred stock, authorized | 5,000,000 | 5,000,000 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 275,000,000 | 275,000,000 |
Common stock, shares issued | 6,166,554 | 6,166,554 |
Common stock, shares outstanding | 6,166,554 | 6,166,554 |
Series B convertible preferred stock | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, issued | 3 | 3 |
Preferred stock outstanding | 3 | 3 |
Series C convertible preferred stock | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, issued | 95,388 | 95,388 |
Preferred stock outstanding | 95,388 | 95,388 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Condensed Consolidated Statements of Operations | ||
Revenue | $ 3,221 | $ 2,789 |
Cost of revenue | 937 | 1,285 |
Gross profit | 2,284 | 1,504 |
Operating expenses: | ||
Sales and marketing | 1,250 | 1,454 |
General and administrative | 2,720 | 2,836 |
Research and development | 571 | 1,295 |
Total operating expenses | 4,541 | 5,585 |
Operating loss | (2,257) | (4,081) |
Other expense (income), net: | ||
Interest expense, net | 599 | 104 |
Loss on extinguishment of debt, net | 1,960 | |
Loss on foreign currency exchange | 33 | 144 |
Loss before income tax provision | (4,849) | (4,329) |
Income tax expense (benefit) | 25 | (18) |
Net loss | $ (4,874) | $ (4,311) |
Net loss per share - basic and diluted: | ||
Net loss per share - basic and diluted (in dollars per share) | $ (0.70) | $ (0.63) |
Shares used to compute basic and diluted net loss per share | 6,968,221 | 6,859,240 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Condensed Consolidated Statements of Comprehensive Loss | ||
Net loss | $ (4,874) | $ (4,311) |
Other comprehensive income (loss), net of tax: | ||
Foreign currency translation adjustments | 19 | (48) |
Other comprehensive income (loss), net of tax | 19 | (48) |
Comprehensive loss | $ (4,855) | $ (4,359) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Preferred StockSeries B convertible preferred stock | Preferred StockSeries C convertible preferred stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total |
Balance at Dec. 31, 2019 | $ 1 | $ 517,311 | $ (493,197) | $ (8) | $ 24,107 | ||
Balance (in shares) at Dec. 31, 2019 | 3 | 95,388 | 391,739 | ||||
Changes in Stockholders' (Deficit) Equity | |||||||
Net loss | (4,311) | (4,311) | |||||
Other comprehensive income (loss), net of tax | (48) | (48) | |||||
Stock-based compensation expense | 427 | 427 | |||||
Issuance of warrants | 1,393 | 1,393 | |||||
Balance at Mar. 31, 2020 | $ 1 | 519,131 | (497,508) | (56) | 21,568 | ||
Balance (in shares) at Mar. 31, 2020 | 3 | 95,388 | 391,739 | ||||
Balance at Dec. 31, 2020 | $ 1 | $ 6 | 529,429 | (514,827) | (121) | 14,488 | |
Balance (in shares) at Dec. 31, 2020 | 3 | 95,388 | 6,166,554 | ||||
Changes in Stockholders' (Deficit) Equity | |||||||
Net loss | (4,874) | (4,874) | |||||
Other comprehensive income (loss), net of tax | 19 | 19 | |||||
Stock-based compensation expense | 101 | 101 | |||||
Issuance of warrants | 2,974 | 2,974 | |||||
Balance at Mar. 31, 2021 | $ 1 | $ 6 | $ 532,504 | $ (519,701) | $ (102) | $ 12,708 | |
Balance (in shares) at Mar. 31, 2021 | 3 | 95,388 | 6,166,554 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash flows from operating activities: | ||
Net loss | $ (4,874) | $ (4,311) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation expense | 7 | 4 |
Amortization of intangible assets | 411 | 417 |
Noncash interest expense | 43 | 58 |
Loss on extinguishment of debt, net | 1,960 | |
Stock-based compensation | 101 | 427 |
Bad debt expense | 27 | 149 |
Provision for inventory excess and obsolescence | 1 | |
Amortization of debt discount and deferred debt issuance costs | 461 | 47 |
Other noncash items | 17 | 18 |
Change in operating assets and liabilities: | ||
Accounts and other receivables | (780) | 848 |
Inventory | 182 | 60 |
Prepaid expenses and other current assets | 237 | (274) |
Accounts payable and accrued liabilities | 296 | (865) |
Warranty liability | (50) | 173 |
Other | 4 | |
Net cash used in operating activities | (1,961) | (3,245) |
Cash flows from investing activities: | ||
Capital expenditures | (119) | |
Cash used in investing activities: | (119) | |
Cash flows from financing activities: | ||
Proceeds from credit agreement | 1,000 | 2,500 |
Payments of financing costs | (25) | |
Net cash provided by financing activities | 1,000 | 2,475 |
Effect of currency exchange rate changes on cash and cash equivalents | 19 | (48) |
Net increase (decrease) in cash, cash equivalents and restricted cash | (1,061) | (818) |
Cash, cash equivalents and restricted cash at beginning of period | 3,007 | 2,985 |
Cash, cash equivalents and restricted cash at end of period | 1,946 | 2,167 |
Supplemental disclosure: | ||
Cash paid for income taxes | 31 | |
Noncash investing and financing activities: | ||
Fair value of warrants included as a component of loss on extinguishment of debt | 2,974 | |
Relative fair value of warrants classified as debt issuance costs | $ 1,393 | |
Capital expenditures accruals | $ 141 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2021 | |
Basis of Presentation | |
Basis of Presentation | (1) Basis of Presentation The accompanying interim condensed consolidated financial statements and related disclosures of Reshape Lifesciences Inc. (the “Company”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed on March 11, 2021. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") have been condensed or omitted. In the opinion of management, the interim consolidated condensed financial statements reflect all adjustments considered necessary for a fair statement of the interim periods. All such adjustments are of a normal, recurring nature. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year. Fair Value of Financial Instruments The carrying amounts of cash equivalents, accounts receivable, accounts payable and certain accrued and other liabilities approximate fair value due to their short-term maturities. Refer to Note 5 regarding the fair value of debt instruments and Note 8 regarding fair value measurements and inputs of warrants. Net Loss Per Share The following table sets forth the potential shares of common stock that are not included in the calculation of diluted net loss per share because to do so would be anti-dilutive as of the end of each period presented: March 31, 2021 2020 Stock options 40 46 Convertible preferred stock 1,288 1,288 Warrants 14,483,446 8,342,428 Recent Accounting Pronouncements New accounting standards adopted by the Company in 2021 are discussed below or in the related notes, where appropriate. In December 2019, the FASB issued authoritative guidance intended to simplify the accounting for income taxes: ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This guidance eliminates certain exceptions to the general approach to the income tax accounting model and adds new guidance to reduce the complexity in accounting for income taxes. The adoption of this guidance on January 1, 2021 did not have a material impact on the Company’s consolidated financial statements. New accounting standards not yet adopted are discussed below. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326) : Measurement of Credit Losses on Financial Instruments, which is intended to provide financial statement users with more useful information about expected credit losses on financial assets held by a reporting entity at each reporting date. In May 2019, the FASB issued ASU No. 2019-05, which amended the new standard by providing targeted transition relief. The new guidance replaces the existing incurred loss impairment methodology with a methodology that requires consideration of a broader range of reasonable and supportable forward-looking information to estimate all expected credit losses. In November 2019, the FASB issued ASU No. 2019-11, which amended the new standard by providing additional clarification. This guidance is effective for the fiscal years and interim periods within those years beginning after December 15, 2022. The Company is currently evaluating the impact the guidance will have on its consolidated financial statements. |
Liquidity and Management_s Plan
Liquidity and Management’s Plans | 3 Months Ended |
Mar. 31, 2021 | |
Liquidity and Management’s Plans | |
Liquidity and Management’s Plans | (2) Liquidity and Management’s Plans The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company currently does not generate revenue sufficient to offset operating costs and anticipates such shortfalls to continue in the short-term. The Company’s history of operating losses and limited cash resources and lack of certainty regarding obtaining significant third-party reimbursement of its products, raise substantial doubt about its ability to continue as a going concern. As of March 31, 2021, the Company had net negative working capital of approximately $13.4 million. The Company’s principal source of liquidity as of March 31, 2021 consisted of approximately $1.9 million of cash and cash equivalents and restricted cash, and $3.4 million of accounts receivable. During January 2021, the Company entered into a $15.0 million Line of Credit with an institutional investor, which has not been drawn upon as of March 31, 2021. For further details see Note 5. The Company’s anticipated operations include plans to (i) manufacture, and promote the sales and operations of the LAP-BAND ® product line in order to expand sales domestically and internationally as well as to obtain cost savings synergies, (ii) introduce to the market place reshape care TM , (iii) continue clinical testing of the ReShape Vest, (iv) continue development of the Diabetes Bloc-Stim Neuromodulation, (v) seek opportunities to leverage our intellectual property portfolio and custom development services to provide third-party sales and licensing opportunities, and (vi) explore and capitalize on synergistic opportunities to expend our portfolio and offer future minimally invasive treatments and therapies in the obesity continuum of care, which includes the pending merger with Obalon Therapeutics, Inc. pursuant to the merger agreement that was entered into with Obalon on January 19, 2021, for further details see Note 13. The Company believes that it has the flexibility to manage the growth of its expenditures and operations depending on the amount of available cash flows, which could include reducing expenditures for marketing, clinical and product development activities. However, the Company will ultimately need to achieve sufficient revenues from product sales and obtain additional debt or equity financing to support its operations. COVID-19 Risk and Uncertainties and CARES Act Additionally, on January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally and on March 13, 2020, the United States declared a national emergency with respect to the coronavirus outbreak. This outbreak has severely impacted global economic activity, and many countries and many states in the United States have reacted to the outbreak by instituting quarantines, mandating business and school closures and restricting travel. These mandated business closures have at times included the cessation of non-elective surgeries in Australia, Europe and the United States for all but emergency procedures. As a result of these mandates, on April 16, 2020, the Company implemented various short-term cost reductions and cash flow improvement actions, such as reducing the compensation for executives, management and key employees and decreasing operating expenses where possible. In addition, the Company identified temporary headcount reductions and made the decision to furlough a portion of its workforce. During the second quarter of 2020, the mandated closures began to ease in many areas throughout the world and within the United States. As a result of this, elective surgeries started back up again through various parts of the world, which led to improved sales progressing through the third quarter. Even after the COVID-19 outbreak has subsided, the Company may continue to experience materially adverse impact on its financial condition and results of operation. Additionally, on June 15, 2020, the Company ended the temporary pay reductions and the furloughed employees returned to work. The full impact of the COVID-19 outbreak continues to evolve and it is uncertain as to the full magnitude that the pandemic will have on the Company’s financial condition, liquidity, and future results of operations. Management is actively monitoring the impact of the global situation on the Company’s financial condition, liquidity, operations, suppliers, industry, and workforce and has taken actions to mitigate the impact including among other things, temporary reductions in pay, and furloughs of certain positions along with deferrals in payment for cash preservation. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, the Company is not able to estimate the effects of the COVID-19 outbreak on its results of operations, financial condition, or liquidity for fiscal year 2021. On March 27, 2020, President Trump signed into law the “Coronavirus Aid, Relief, and Economic Security (CARES) Act.” The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, increased limitations on qualified charitable contributions, and technical corrections to tax depreciation methods for qualified improvement property. The CARES Act established the Paycheck Protection Program (“PPP”) under which the Company received a PPP loan described in more detail in Note 8 below. On February 3, 2021, the Company submitted the application for PPP loan forgiveness according to the terms and conditions of the SBA’s Loan Forgiveness Application (Revised June 24, 2002). On March 1, 2021, the Company received confirmation from the SBA that, the PPP Loan had been forgiven in full including all interest incurred. For further details, see Note 5. |
Supplemental Balance Sheet Info
Supplemental Balance Sheet Information | 3 Months Ended |
Mar. 31, 2021 | |
Supplemental Balance Sheet Information | |
Supplemental Balance Sheet Information | (3) Supplemental Balance Sheet Information Components of selected captions in the condensed consolidated balance sheets consisted of the following: Inventory: March 31, December 31, 2021 2020 Raw materials $ 214 $ 174 Sub-assemblies 749 733 Finished goods 1,132 1,337 Total inventory $ 2,095 $ 2,244 Prepaid expenses and other current assets: March 31, December 31, 2021 2020 Prepaid insurance $ 381 $ 619 Prepaid contract research organization expenses 214 295 Other 241 159 Total prepaid expenses and other current assets $ 836 $ 1,073 Accrued and other liabilities: March 31, December 31, 2021 2020 Payroll and benefits $ 2,106 $ 1,735 Accrued professional services 556 446 Customer deposits 397 398 Taxes 358 265 Accrued insurance premium 287 272 Other 313 514 Total accrued and other liabilities $ 4,017 $ 3,630 |
Intangible Assets
Intangible Assets | 3 Months Ended |
Mar. 31, 2021 | |
Intangible Assets | |
Intangible Assets | (4) Intangible Assets Indefinite-lived intangible assets consist of in-process research and development (“IPR&D”) for the ReShape Vest recorded in connection with the Company’s acquisition of BarioSurg, Inc. The Company’s finite-lived intangible assets consists of developed technology, trademarks and tradenames, and covenant not compete. The estimated useful lives of these finite-lived intangible assets ranges from 3 to 10 years. The amortization expenses for both the three months ended March 31, 2021 and 2020 was $0.4 million. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2021 | |
Debt | |
Debt | (5) Debt March 31, December 31, 2021 2020 Asset purchase consideration $ 2,902 $ 2,867 Credit agreement 10,500 9,500 PPP Loan — 955 Total debt 13,402 13,322 Less: unamortized debt discount 134 545 Less: current portion of debt 13,268 3,609 Debt, noncurrent portion $ — $ 9,168 Credit Facility On January 19, 2021, the Company entered into a $15.0 million Line of Credit with an institutional investor that the Company may access from time to time until December 31, 2022. As of March 31, 2021, the Company has not drawn down any amounts under the Credit Facility. Any advances would bear interest at a rate per annum equal to the LIBOR rate plus 2.5% and would be subject to the Guarantee and Collateral Agreement between the Company and the institutional investor dated March 25, 2020. CARES Act On April 24, 2020, the Company entered into a PPP Loan agreement with Silicon Valley Bank (“SVB”) under the PPP, which is part of the CARES Act administered by the United States Small Business Administration (“SBA”). As part of the application for these funds, the Company in good faith, has certified that the current economic uncertainty made the loan request necessary to support the ongoing operations of the Company. This certification further requires the Company to take into account our current business activity and our ability to access other sources of liquidity sufficient to support ongoing operations in a manner that is not significantly detrimental to the business. Under this program, the Company received proceeds of $1.0 million from the PPP Loan. In accordance with the requirements of the PPP, the Company intends to use proceeds from the PPP Loan primarily for payroll costs, rent and utilities. The PPP Loan has a 1.00% interest rate per annum, matures on April 24, 2022 and is subject to the terms and conditions applicable to loans administered by the SBA under the PPP. On February 23, 2021, the Company submitted the application for PPP loan forgiveness, in accordance with the terms and conditions of the SBA’s Loan Forgiveness Application (revised June 24, 2020). On March 1, 2021, the Company received confirmation from the SBA that the PPP Loan was forgiven in full including all interest incurred, which resulted in a gain on debt extinguishment of $1.0 million, during the three months ended March 31, 2021. Under the provisions of the CARES Act, the Company is eligible for a refundable employee retention credit subject to certain criteria. The Company recognized a $0.3 million employee retention credit during the three months ended March 31, 2021. Credit Agreement On March 25, 2020, the Company executed a credit agreement up to $3.5 million, with an institutional investor (the “Lender”), who holds warrants in connection with the June 2019 and September 2019 transactions. On the day of closing, the Company received $2.5 million and the additional $1.0 million may be drawn from time to time 30 days after the closing date but prior to five months after the closing date, in $500 thousand increments per draw. On June 23, 2020, the Company made the first additional draw of $500 thousand and on July 29, 2020 the second $500 thousand draw was made. As required by the terms of this credit agreement, the lender exercised its warrants to purchase an aggregate of 5,085,834 shares of common stock with a current exercise price of $0.12 per warrant on April 15, 2020, in which the Company received net proceeds of $0.6 million. In addition, the Company issued to the lender 1,200,000 Series G warrants to purchase an aggregate of 1,200,000 shares of common stock. As an inducement to the Lender to enter into the amendment and make the additional loans contemplated thereby, the Company issued to the Lender an additional 1,200,000 Series G warrants dated September 14, 2020 to purchase an aggregate of 1,200,000 shares of common stock. The original Series G warrants were valued using the relative fair value basis and the amount was recorded as part of the debt issuance costs, see Note 8 for additional details. On September 14, 2020, the Company and the Lender entered into an amendment to the credit agreement that increased the amount available under delayed draw term loans by $2.0 million. The Company borrowed $1.0 million of the available amount immediately and the remaining $1.0 million will be available in increments of least $500 thousand with at least 30 days between borrowings and issued an additional 1,200,000 Series G Warrants. The Company evaluated the accounting related to the amendment and in conjunction with the warrants issued. Based on this analysis the Company determined the agreements are substantially different and extinguished the original credit agreement and recorded the amended credit agreement as a new debt at a fair value of $3.9 million. As a result in 2020, the Company recorded a debt discount of approximately $0.6 million and a $2.4 million loss on extinguishment of debt which is comprised of the fair value of the warrants and unamortized debt issuance cost with the original credit agreement, offset by the debt discount. Pursuant to the amendment of the credit agreement, the maturity date of the loans was March 31, 2021 and the loans bear interest at LIBOR plus 2.5%. On December 16, 2020, the Company and the Lender entered into the third amendment to the credit agreement that increased the amount available under delayed draw term loans by an additional $4.0 million. The Company borrowed the entire $4.0 million of the available amount immediately and issued an additional 4,000,000 Series G Warrants. The Company evaluated the accounting related to the amendment and in conjunction with the warrants issued. Based on this analysis the Company determined the agreements are substantially different and extinguished the original credit agreement and recorded the amended credit agreement as a new debt at a fair value of $8.9 million. As a result in 2020, the Company recorded a debt discount of approximately $0.6 million and a $5.3 million loss on extinguishment of debt which is comprised of the fair value of the warrants and unamortized debt discount cost with the original credit agreement, offset by the debt discount related to the new debt. At December 31, 2020 there was approximately $0.5 million of unamortized debt discount. Pursuant to the amendment of the credit agreement, the maturity date of the loan was March 31, 2021 and the loans bear interest at LIBOR plus 2.5%. On January 19, 2021, the Company and the Lender entered into an amendment to the credit agreement that increased the amount available under delayed draw term loans by $1.0 million, which was used to fund the $1.0 million escrow fund securing the termination fee under the Merger Agreement and issued an additional 1,000,000 Series G Warrants. The Company evaluated the accounting related to the amendment and in conjunction with the warrants issued. Based on this analysis the Company determined the agreements are substantially different and extinguished the original credit agreement and recorded the amended credit agreement as a new debt at a fair value of $10.0 million. As a result, during the three months ended March 31, 2021, the Company recorded a debt discount of approximately $0.5 million and a $3.0 million loss on extinguishment of debt, which is comprised of the fair value of the warrants and unamortized debt issuance cost with the original credit agreement, offset by the debt discount. At March 31, 2021, there was approximately $0.1 million of unamortized debt discount. Pursuant to the amendment of the credit agreement, the maturity date of the loans are March 31, 2021 and the loans bear interest at LIBOR plus 2.5%. On March 10, 2021, the Company and the Lender entered into an amendment to the credit agreement that extended the maturity date from March 31, 2021 to March 31, 2022. The Company has accounted for this amendment as a debt modification. The associated unamortized debt discount on the January 19, 2021 amendment of $0.1 million, will be amortized as interest expense over the term of the amended credit agreement. Asset Purchase Consideration Payable The asset purchase consideration payable related to the Company’s December 2018 acquisition of the Lap-Band product line from Apollo Endosurgery, Inc. (“Apollo”), was initially recorded at net present value using a discount rate of 5.1%. The asset purchase consideration payable was originally secured by a first security interest in substantially all of the Company’s assets, but that security interest terminated in accordance with its terms in October 2019. At March 31, 2021, the aggregate carrying value of the current asset purchase consideration payable of approximately $2.9 million, as adjusted for accretion of interest of approximately $0.6 million. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2021 | |
Leases | |
Leases | (6) Leases The Company has a noncancelable operating lease for office and warehouse space in San Clemente, California and noncancelable operating leases for certain office equipment that expire at various dates through 2022. The Company does not have any short-term leases or financing lease arrangements and the effects of any lease modifications have not been material. Certain of the Company’s equipment leases include variable lease payments that are adjusted periodically based on actual usage. Lease and non-lease components are accounted for separately. Operating lease costs was $0.1 million for both the three months ended March 31, 2021 and 2022. Variable lease costs were not material. Supplemental information related to operating leases is as follows: Balance Sheet Information at March 31, 2021 Operating lease ROU assets $ 390 Operating lease liabilities, current portion $ 320 Operating lease liabilities, long-term portion 82 Total operating lease liabilities $ 402 Cash Flow Information for the Three Months Ended March 31, 2021 Cash paid for amounts included in the measurement of operating leases liabilities $ 81 Maturities of operating lease liabilities were as follows: Twelve months ending March 31, 2022 $ 333 2023 83 2024 — Total lease payments 416 Less: imputed interest 14 Total lease liabilities $ 402 Weighted-average remaining lease term at end of period (in years) 1.2 Weighted-average discount rate at end of period |
Equity
Equity | 3 Months Ended |
Mar. 31, 2021 | |
Equity | |
Equity | (7) Equity December 2020 Exercise of Warrants for Common Stock On December 3, 2020, the Company issued 290,000 shares of common stock to two healthcare focused institutional investors, totaling 580,000 shares of common stock, as an exercise of pre-funded warrants issued in connection with the June 2019 and September 2019 private placement transactions. The Company received approximately $0.1 million in connection with these exercises. June 2020 Cashless Exercise of Warrants for Common Stock On June 23, 2020, the Company issued 58,981 shares of common stock as a cashless exercise of warrants issued to the placement agents in connection with the June 2019 private placement with healthcare focused institutional investors. May 2020 Common Stock Issued for Professional Services On May 28, 2020, the Company issued 50,000 shares of common stock, having an aggregate fair value of $0.2 million for ongoing professional services. The $0.2 million was recorded as a prepaid asset and will be amortized over the minimum life of the agreement. April 2020 Exercise of Warrants for Common Stock As discussed in Note 5 above, in connection with the credit agreement, the lender exercised its Series C and Series F warrants to purchase an aggregate of 5,085,834 shares of common stock with a current exercise price of $0.12 per warrant on April 15, 2020, in which the Company received net proceeds of $0.6 million. |
Warrants
Warrants | 3 Months Ended |
Mar. 31, 2021 | |
Warrants. | |
Warrants | (8) Warrants On January 19, 2021, the Company issued 1,000,000 Series G Warrants to an institutional investor in connection with an amendment to the credit agreement. The Series G Warrants were valued at $3.0 million using the fair value approach at the time of issuance and was recorded as a component of the loss on extinguishment of debt during the three months ended March 31, 2021, see Note 5 above for details. The fair value of the Series G Warrants was determined using a Black Scholes option pricing model using a risk free rate of 0.45%, an expected term of five years; expected dividends of zero and expected volatility of 97.1%. On December 16, 2020, the Company issued 4,000,000 Series G Warrants to an institutional investor in connection with an amendment to the credit agreement. The Series G Warrants were valued at $5.6 million using the fair value approach at the time of issuance and was recorded as a component of the loss on extinguishment of debt in 2020, see Note 5 above for details. The fair value of the Series G Warrants was determined using a Black Scholes option pricing model using a risk free rate of 0.37%, an expected term of five years; expected dividends of zero and expected volatility of 100.8%. On September 14, 2020, the Company issued 1,200,000 Series G Warrants to an institutional investor in connection with an amendment to the credit agreement. The Series G Warrants were valued at $2.9 million using the fair value approach at the time of issuance and was recorded as a component of the loss on extinguishment of debt in 2020, see Note 5 above for details. The fair value of the Series G Warrants was determined using a Black Scholes option pricing model using a risk-free interest rate of 0.27%, an expected term of five years; expected dividends of zero and expected volatility of 101.1%. On March 25, 2020, the Company issued 1,200,000 Series G Warrants to an institutional investor in connection with the credit agreement, see Note 5 above for details. The Series G Warrants were valued at $1.4 million using the relative fair value approach at the time of issuance and was recorded as deferred debt issuance cost in 2020. The relative fair value of the Series G Warrants was determined using a Black Scholes option pricing model using a risk-free interest rate of 0.56%; an expected term of five years; expected dividends of zero and expected volatility of 97.00%. |
Revenue Disaggregation and Oper
Revenue Disaggregation and Operating Segments | 3 Months Ended |
Mar. 31, 2021 | |
Revenue Disaggregation and Operating Segments | |
Revenue Disaggregation and Operating Segments | (9) Revenue Disaggregation and Operating Segments The Company conducts operations worldwide and has sales in the following regions: United States, Australia, Europe and Rest of World. For the three months ended March 31, 2021 and 2020, the Company primarily only sold the LAP-BAND product line. The following table presents the Company’s revenue disaggregated by geography: Three Months Ended March 31, 2021 2020 United States $ 2,520 $ 1,954 Australia 293 298 Europe 379 537 Rest of world 29 — Total net revenue $ 3,221 $ 2,789 *The next largest individual country outside the United States was Australia for the three months ended March 31, 2021 and 2020 which was 9.1% and 10.7%, respectively, of total revenues. Operating Segments The Company conducts operations worldwide and is managed in the following geographical regions: United States, Australia, Europe and the Rest of World (primarily in The Middle East). All regions sell the LAP-BAND product line, which consisted of nearly all our revenue and gross profit for the three months ended March 31, 2021 and 2020. During the second half of 2020 the Company launched reshape care , which had minimal revenue for the three months ended March 31, 2021 and no revenue for the three months ended March 31, 2020. The Company anticipates generating more reshape care revenue late in the second quarter and in to the second half of the year. There was no revenue or gross profit recorded for the ReShape Vest or Diabetes Bloc-Stim Neuromodulation for the three months ended March 31, 2021 and 2020 as these two products are still in the development stage. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2021 | |
Income Taxes | |
Income Taxes | (10) Income Taxes The Company’s tax provision for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items arising in that quarter. In each quarter the Company updates its estimate of the annual effective tax rate. The Company’s quarter tax provision, and quarterly estimate of annual effective tax rate, are subject to significant volatility due to several factors, including the Company’s ability to accurately predict pre-tax income and loss. During the three months ended March 31, 2021, a $25 thousand tax expense was recorded, primarily due to projected income in Australia and Netherlands. During the three months ended March 31, 2020, an $18 thousand tax benefit was recorded, due to the valuation allowance on deferred tax assets. In assessing the realization of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. Based on the level of historical losses, projections of losses in future periods and potential limitations pursuant to changes in ownership under Internal Revenue Code (“IRC”) Section 382, the Company provided a valuation allowance at both March 31, 2021 and December 31, 2020. |
Stock-based Compensation
Stock-based Compensation | 3 Months Ended |
Mar. 31, 2021 | |
Stock-based Compensation | |
Stock-based Compensation | (11) Stock-based Compensation Stock-based compensation expense related to stock options issued under the ReShape Lifesciences Inc. Second Amended and Restated 2003 Stock Incentive Plan (the “Plan”) and as inducement grants for the three months ended March 31, 2021 and 2020 were as follows: Three Months Ended March 31, 2021 2020 General and administrative $ 101 $ 427 Total stock-based compensation expense $ 101 $ 427 As of March 31, 2021, there was approximately $0.1 million of total unrecognized compensation costs related to unvested stock option awards, which are to be recognized over a weighted-average period of 0.9 years. There were no stock options granted during both the three months ended March 31, 2021 and 2020. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies | |
Commitments and Contingencies | (12) Commitments and Contingencies Litigation The Company is not currently a party to any material litigation and the Company is not aware of any pending or threatened litigation against it that could have a material adverse effect on the Company’s business, operating results or financial condition. The medical device industry in which the Company operates is characterized by frequent claims and litigations, including claims regarding patent and other intellectual property rights as well as improper hiring practices. As a result, the Company may be involved in various legal proceedings from time to time. Product Liability Claims The Company is exposed to product liability claims that are inherent in the testing, production, marketing and sale of medical devices. Management believes any losses that may occur from these matters are adequately covered by insurance, and the ultimate outcome of these matters will not have a material effect on the Company’s financial position or results of operations. The Company is not currently a party to any product liability litigation and is not aware of any pending or threatened product liability litigation that is reasonably possible to have a material adverse effect on the Company’s business, operating results or financial condition. |
Subsequent Events and Merger
Subsequent Events and Merger | 3 Months Ended |
Mar. 31, 2021 | |
Subsequent Events and Merger | |
Subsequent Events and Merger | (13) Subsequent Events and Merger On January 19, 2021, the Company entered into an agreement and plan of merger with Obalon Therapeutics, Inc., a Delaware corporation (“Obalon”) and Optimus Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Obalon (“Merger Sub”), pursuant to which Merger Sub will merge with and into ReShape as the surviving corporation and a wholly-owned subsidiary of Obalon (the “Merger”). As a result of the Merger, Obalon will be renamed “ReShape Lifesciences Inc.” Subject to the terms and conditions of the Merger Agreement, at the closing of the Merger, each outstanding share of ReShape common stock and series B convertible preferred stock will be converted into the right to receive shares of common stock of Obalon (“Obalon Shares”) based on the exchange ratio set forth in the Merger Agreement. Upon completion of the Merger, ReShape stockholders will own approximately 51% of the combined company’s outstanding common stock and Obalon stockholders will own approximately 49%, subject to the terms of the Merger Agreement. Obalon will, at the effective time of the Merger, assume the outstanding warrants and series C convertible preferred stock of ReShape, subject to the terms of the Merger Agreement. All outstanding stock options of ReShape will be cancelled and terminated at the effective time of the Merger without any right to receive any consideration. No fractional shares will be issued in connection with the Merger and Obalon will pay cash in lieu of any such fractional shares. The Merger is intended to qualify for federal income tax purposes as a tax-free reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended. Consummation of the Merger is subject to certain closing conditions, including, among other things, approval by the stockholders of ReShape and Obalon and the NASDAQ Stock Market’s approval of (i) the Listing of Additional Shares Notice covering the Obalon Shares to be issued in the Merger and (ii) the continued listing of the combined company following completion of the Merger ((i) and (ii) together, the “NASDAQ Approvals”). Pursuant to the Merger Agreement, ReShape has agreed to exercise its reasonable best efforts to take all necessary steps to obtain the NASDAQ Approvals following the execution of the Merger Agreement, which may include procuring additional equity or debt investments, financings or other capital raising efforts. The Merger Agreement contains specified termination rights for both ReShape and Obalon. If Obalon terminates the Merger Agreement as a result of ReShape’s breach of its covenant to use its reasonable best efforts to obtain the NASDAQ Approvals, or if either party terminates the Merger Agreement because the NASDAQ Approvals have not been obtained within 30 days following the later of the Obalon Stockholders’ Meeting and the ReShape Stockholders’ Meeting, then ReShape will be required to pay Obalon a $1.0 million termination fee, which has been deposited with a third-party escrow agent. At the effective time of the Merger, the Board of Directors of the combined company is expected to consist of the five current members of the Board of Directors of ReShape, and the executive officers of the combined company will be the current executive officers of ReShape In addition, under the terms of the Merger Agreement, Obalon has agreed to file with NASDAQ a Listing of Additional Shares Notice covering the Obalon shares to be issued in connection with the Merger on the NASDAQ Stock Market and to seek approval of NASDAQ to change its name to ReShape Lifesciences Inc. and its trading symbol for its shares of common stock to “RSLS” upon the effective time of the Merger. The Merger Agreement contains customary representations, warranties and covenants by ReShape and Obalon. ReShape and Obalon have agreed, among other things, subject to certain exceptions, not to (1) directly or indirectly initiate, seek, or solicit, or knowingly encourage or facilitate any offer or alternative proposal for specified alternative transactions, or (2) participate or engage in discussions or negotiations regarding such an offer or proposal with, or furnish any nonpublic information regarding such an offer or proposal to, any person that has made or, to ReShape’s or Obalon’s knowledge, is considering making such an offer or proposal, (3) terminate, amend, modify, or waive any standstill or similar obligation (subject to certain conditions), or (4) enter into any agreement with respect to an alternative proposal. In addition, certain covenants require each of the parties to use, subject to the terms and conditions of the Merger Agreement, their commercially reasonable efforts to cause the Merger to be consummated as promptly as practicable. Subject to certain exceptions, the Merger Agreement also requires each of ReShape and Obalon to call and hold stockholders’ meetings and requires the board of directors of each of ReShape and Obalon to recommend approval of the Merger. On April 13, 2021, the Company filed with the SEC the Definitive Proxy Statement regarding the merger proposal with Obalon. The Company held a Special Stockholders Meeting on May 13, 2021, in which the shareholders of the Company approved the merger. Obalon concurrently held a Special stockholders Meeting on May 13, 2021. To achieve a quorum for Obalon’s Special Meeting, a majority of voting power must be present or represented by proxy and as of May 13, 2021, approximately 45.5% of such shares were present or represented and approximately 96% had voted in for of the proposals. In the absence of quorum and votes necessary to approve the proposals in connection with the Merger, Obalon adjourned the meeting until May 25, 2021 in order to solicit additional votes. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Basis of Presentation | |
Basis of Presentation | Basis of Presentation The accompanying interim condensed consolidated financial statements and related disclosures of Reshape Lifesciences Inc. (the “Company”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed on March 11, 2021. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") have been condensed or omitted. In the opinion of management, the interim consolidated condensed financial statements reflect all adjustments considered necessary for a fair statement of the interim periods. All such adjustments are of a normal, recurring nature. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of cash equivalents, accounts receivable, accounts payable and certain accrued and other liabilities approximate fair value due to their short-term maturities. Refer to Note 5 regarding the fair value of debt instruments and Note 8 regarding fair value measurements and inputs of warrants. |
Net Loss Per Share | Net Loss Per Share The following table sets forth the potential shares of common stock that are not included in the calculation of diluted net loss per share because to do so would be anti-dilutive as of the end of each period presented: March 31, 2021 2020 Stock options 40 46 Convertible preferred stock 1,288 1,288 Warrants 14,483,446 8,342,428 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements New accounting standards adopted by the Company in 2021 are discussed below or in the related notes, where appropriate. In December 2019, the FASB issued authoritative guidance intended to simplify the accounting for income taxes: ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This guidance eliminates certain exceptions to the general approach to the income tax accounting model and adds new guidance to reduce the complexity in accounting for income taxes. The adoption of this guidance on January 1, 2021 did not have a material impact on the Company’s consolidated financial statements. New accounting standards not yet adopted are discussed below. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326) : Measurement of Credit Losses on Financial Instruments, which is intended to provide financial statement users with more useful information about expected credit losses on financial assets held by a reporting entity at each reporting date. In May 2019, the FASB issued ASU No. 2019-05, which amended the new standard by providing targeted transition relief. The new guidance replaces the existing incurred loss impairment methodology with a methodology that requires consideration of a broader range of reasonable and supportable forward-looking information to estimate all expected credit losses. In November 2019, the FASB issued ASU No. 2019-11, which amended the new standard by providing additional clarification. This guidance is effective for the fiscal years and interim periods within those years beginning after December 15, 2022. The Company is currently evaluating the impact the guidance will have on its consolidated financial statements. |
Basis of Presentation (Tables)
Basis of Presentation (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Basis of Presentation | |
Schedule of anti-dilutive securities | March 31, 2021 2020 Stock options 40 46 Convertible preferred stock 1,288 1,288 Warrants 14,483,446 8,342,428 |
Supplemental Balance Sheet In_2
Supplemental Balance Sheet Information (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Supplemental Balance Sheet Information | |
Schedule of components of inventory | March 31, December 31, 2021 2020 Raw materials $ 214 $ 174 Sub-assemblies 749 733 Finished goods 1,132 1,337 Total inventory $ 2,095 $ 2,244 |
Schedule of components of prepaid expenses and other current assets | March 31, December 31, 2021 2020 Prepaid insurance $ 381 $ 619 Prepaid contract research organization expenses 214 295 Other 241 159 Total prepaid expenses and other current assets $ 836 $ 1,073 |
Schedule of components of accrued and other liabilities | March 31, December 31, 2021 2020 Payroll and benefits $ 2,106 $ 1,735 Accrued professional services 556 446 Customer deposits 397 398 Taxes 358 265 Accrued insurance premium 287 272 Other 313 514 Total accrued and other liabilities $ 4,017 $ 3,630 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Debt | |
Summary of long term debt | March 31, December 31, 2021 2020 Asset purchase consideration $ 2,902 $ 2,867 Credit agreement 10,500 9,500 PPP Loan — 955 Total debt 13,402 13,322 Less: unamortized debt discount 134 545 Less: current portion of debt 13,268 3,609 Debt, noncurrent portion $ — $ 9,168 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Leases | |
Schedule of supplemental information related to operating leases | Balance Sheet Information at March 31, 2021 Operating lease ROU assets $ 390 Operating lease liabilities, current portion $ 320 Operating lease liabilities, long-term portion 82 Total operating lease liabilities $ 402 Cash Flow Information for the Three Months Ended March 31, 2021 Cash paid for amounts included in the measurement of operating leases liabilities $ 81 |
Schedule of maturities of operating lease liabilities | Twelve months ending March 31, 2022 $ 333 2023 83 2024 — Total lease payments 416 Less: imputed interest 14 Total lease liabilities $ 402 Weighted-average remaining lease term at end of period (in years) 1.2 Weighted-average discount rate at end of period |
Revenue Disaggregation and Op_2
Revenue Disaggregation and Operating Segments (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Revenue Disaggregation and Operating Segments | |
Schedule of revenue disaggregated by product and geography | Three Months Ended March 31, 2021 2020 United States $ 2,520 $ 1,954 Australia 293 298 Europe 379 537 Rest of world 29 — Total net revenue $ 3,221 $ 2,789 *The next largest individual country outside the United States was Australia for the three months ended March 31, 2021 and 2020 which was 9.1% and 10.7%, respectively, of total revenues. |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Stock-based Compensation | |
Schedule of stock-based compensation expense | Three Months Ended March 31, 2021 2020 General and administrative $ 101 $ 427 Total stock-based compensation expense $ 101 $ 427 |
Basis of Presentation - Anti-di
Basis of Presentation - Anti-dilutive Securities (Details) - shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Stock options | ||
Anti-dilutive securities | ||
Anti-dilutive securities (in shares) | 40 | 46 |
Convertible preferred stock | ||
Anti-dilutive securities | ||
Anti-dilutive securities (in shares) | 1,288 | 1,288 |
Warrants | ||
Anti-dilutive securities | ||
Anti-dilutive securities (in shares) | 14,483,446 | 8,342,428 |
Liquidity and Management_s Pl_2
Liquidity and Management’s Plans (Details) - USD ($) $ in Thousands | 1 Months Ended | ||||
Jan. 31, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | |
Liquidity and Management’s Plans | |||||
Working capital | $ (13,400) | ||||
Cash and cash equivalents and restricted cash | 1,946 | $ 3,007 | $ 2,167 | $ 2,985 | |
Accounts receivable | $ 3,373 | $ 2,620 | |||
Line of credit | $ 15,000 |
Supplemental Balance Sheet In_3
Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Inventory: | ||
Raw materials | $ 214 | $ 174 |
Sub-assemblies | 749 | 733 |
Finished goods | 1,132 | 1,337 |
Total inventory | 2,095 | 2,244 |
Prepaid expenses and other current assets: | ||
Prepaid insurance | 381 | 619 |
Prepaid contract research organization expenses | 214 | 295 |
Other | 241 | 159 |
Total prepaid expenses and other current assets | 836 | 1,073 |
Accrued and other liabilities: | ||
Payroll and benefits | 2,106 | 1,735 |
Accrued professional services | 556 | 446 |
Customer deposits | 397 | 398 |
Taxes | 358 | 265 |
Accrued insurance premium | 287 | 272 |
Other | 313 | 514 |
Total accrued and other liabilities | $ 4,017 | $ 3,630 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Indefinite-lived Intangible Assets [Line Items] | ||
Amortization expense | $ 411 | $ 417 |
Minimum | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Useful Life (years) | 3 years | |
Maximum | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Useful Life (years) | 10 years |
Debt - Long term debt (Details)
Debt - Long term debt (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Debt Instrument [Line Items] | ||
Total debt | $ 13,402 | $ 13,322 |
Less: unamortized debt discount | 134 | 545 |
Less: current portion of debt | 13,268 | 3,609 |
Debt, noncurrent portion | 9,168 | |
Asset purchase consideration | ||
Debt Instrument [Line Items] | ||
Total debt | 2,902 | 2,867 |
Credit agreement | ||
Debt Instrument [Line Items] | ||
Total debt | $ 10,500 | 9,500 |
PPP Loan | ||
Debt Instrument [Line Items] | ||
Total debt | $ 955 |
Debt - CARES Act (Details)
Debt - CARES Act (Details) - USD ($) $ in Thousands | Apr. 24, 2020 | Mar. 31, 2021 |
Debt Instrument [Line Items] | ||
Gain on extinguishment of debt | $ (1,960) | |
Employee retention credit | 300 | |
PPP Loan | ||
Debt Instrument [Line Items] | ||
Amount received | $ 1,000 | |
Discount rate (as a percent) | 1.00% | |
Gain on extinguishment of debt | $ 1,000 |
Debt - Credit agreement (Detail
Debt - Credit agreement (Details) - USD ($) $ / shares in Units, $ in Thousands | Jan. 19, 2021 | Dec. 16, 2020 | Sep. 14, 2020 | Jul. 29, 2020 | Jun. 23, 2020 | Apr. 15, 2020 | Mar. 25, 2020 | Mar. 31, 2021 | Dec. 31, 2020 |
Short-term Debt [Line Items] | |||||||||
Loss on extinguishment of debt, net | $ 1,960 | ||||||||
Debt discount | 134 | $ 545 | |||||||
Warrant exercise price (in dollars per share) | $ 0.12 | ||||||||
Proceeds from exercise of warrants | $ 600 | ||||||||
Credit agreement | |||||||||
Short-term Debt [Line Items] | |||||||||
Agreement amount | $ 15,000 | $ 3,500 | |||||||
Amount received | $ 500 | $ 500 | 2,500 | ||||||
Additional borrowing amount | 1,000 | $ 2,000 | $ 1,000 | ||||||
Termination fees | 1,000 | ||||||||
Closing period | 30 days | ||||||||
Threshold period to draw additional amount | 5 months | ||||||||
Maximum amount per draw | $ 500 | ||||||||
New debt fair value | 10,000 | ||||||||
Loss on extinguishment of debt, net | (3,000) | ||||||||
Debt discount | $ 500 | ||||||||
Credit facility bear interest | 2.50% | ||||||||
Other Noncash Expense | $ 100 | ||||||||
Number of shares in exchange of warrant exercise | 5,085,834 | ||||||||
Warrant exercise price (in dollars per share) | $ 0.12 | ||||||||
Proceeds from exercise of warrants | $ 600 | ||||||||
Credit agreement | Series G Warrants | |||||||||
Short-term Debt [Line Items] | |||||||||
Warrants issued | 1,200,000 | ||||||||
Number of shares in exchange of warrant exercise | 1,000,000 | 1,200,000 | |||||||
Credit agreement | LIBOR | |||||||||
Short-term Debt [Line Items] | |||||||||
Credit facility bear interest | 2.50% | 2.50% | |||||||
Credit agreement third amendment | |||||||||
Short-term Debt [Line Items] | |||||||||
Amount received | 1,000 | ||||||||
Additional borrowing amount | 1,000 | ||||||||
Minimum amount per draw | $ 500 | ||||||||
Minimum number of days between borrowings | 30 days | ||||||||
New debt fair value | $ 3,900 | ||||||||
Loss on extinguishment of debt, net | 2,400 | ||||||||
Debt discount | $ 600 | ||||||||
Credit agreement third amendment | Series G Warrants | |||||||||
Short-term Debt [Line Items] | |||||||||
Warrants issued | 1,200,000 | ||||||||
Number of shares in exchange of warrant exercise | 1,200,000 | ||||||||
Credit agreement fourth amendment | |||||||||
Short-term Debt [Line Items] | |||||||||
Amount received | $ 4,000 | ||||||||
Additional borrowing amount | 4,000 | ||||||||
New debt fair value | 8,900 | ||||||||
Loss on extinguishment of debt, net | 5,300 | ||||||||
Debt discount | $ 600 | $ 500 | |||||||
Credit agreement fourth amendment | Series G Warrants | |||||||||
Short-term Debt [Line Items] | |||||||||
Warrants issued | 4,000,000 |
Debt - Asset Purchase Considera
Debt - Asset Purchase Consideration Payable (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021USD ($) | Dec. 31, 2020USD ($) | |
Long-term debt | ||
Total debt | $ 13,402 | $ 13,322 |
Secured debt | ||
Long-term debt | ||
Total debt | 2,900 | |
Accretion of interest | $ 600 | |
Secured debt | Discount rate | ||
Long-term debt | ||
Debt fair value measurement input | 0.051 |
Leases - Supplemental Informati
Leases - Supplemental Information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Leases | |||
Operating lease costs | $ 100 | $ 100 | |
Balance Sheet Information related to operating leases | |||
Operating lease ROU assets | 390 | $ 465 | |
Operating lease liabilities, current | 320 | 314 | |
Operating lease liabilities, long-term portion | 82 | $ 163 | |
Total operating lease liabilities | 402 | ||
Cash Flow Information related to operating leases | |||
Cash paid for amounts included in the measurement of operating leases liabilities | $ 81 |
Leases - Maturities of Liabilit
Leases - Maturities of Liabilities (Details) $ in Thousands | Mar. 31, 2021USD ($) |
Maturities of operating lease liabilities | |
2022 | $ 333 |
2023 | 83 |
Total lease payments | 416 |
Less: imputed interest | 14 |
Total lease liabilities | $ 402 |
Weighted-average remaining lease term at end of period (in years) | 1 year 2 months 12 days |
Weighted-average discount rate at end of period | 5.10% |
Equity - Issuance of stock and
Equity - Issuance of stock and warrants (Details) - USD ($) $ / shares in Units, $ in Millions | Dec. 03, 2020 | Jun. 23, 2020 | May 28, 2020 | Apr. 15, 2020 |
Equity | ||||
Cashless exercise of warrants (Shares) | 58,981 | |||
Common stock issued for professional services (Shares) | 50,000 | |||
Common stock issued for professional services | $ 0.2 | |||
Institutional exercise of warrants (Shares) | 5,085,834 | |||
Warrant exercise price (in dollars per share) | $ 0.12 | |||
Proceeds from exercise of warrants | $ 0.6 | |||
2019 private placement | ||||
Equity | ||||
Proceeds from exercise of warrants | $ 0.1 | |||
Stock issued (in shares) | 290,000 | |||
Issuance of common stock upon exercise of warrants, net of transaction costs (in shares) | 580,000 |
Warrants (Details)
Warrants (Details) - Series G Warrants $ in Millions | Jan. 19, 2021USD ($)Yshares | Dec. 16, 2020USD ($)Yshares | Sep. 14, 2020USD ($)Yshares | Mar. 25, 2020USD ($)Yshares |
Class of Warrant or Right [Line Items] | ||||
Number of warrants issued | shares | 1,000,000 | 4,000,000 | 1,200,000 | 1,200,000 |
Value of warrants issued | $ | $ 3 | $ 5.6 | $ 2.9 | $ 1.4 |
Risk Free Rate | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs | 0.0045 | 0.0037 | 0.0027 | 0.0056 |
Remaining Life | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs | Y | 5 | 5 | 5 | 5 |
Expected dividends | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs | 0 | 0 | 0 | 0 |
Volatility | ||||
Class of Warrant or Right [Line Items] | ||||
Warrant fair value measurement inputs | 0.971 | 1.008 | 1.011 | 0.9700 |
Revenue Disaggregation and Op_3
Revenue Disaggregation and Operating Segments (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021USD ($)item | Mar. 31, 2020USD ($)item | |
Revenue Recognition | ||
Revenue | $ 3,221 | $ 2,789 |
Number of Products in Development Stage | item | 2 | 2 |
United States | ||
Revenue Recognition | ||
Revenue | $ 2,520 | $ 1,954 |
Australia | ||
Revenue Recognition | ||
Revenue | 293 | 298 |
Europe | ||
Revenue Recognition | ||
Revenue | 379 | 537 |
Rest of world | ||
Revenue Recognition | ||
Revenue | 29 | |
ReshapeCare product | ||
Revenue Recognition | ||
Revenue | 0 | |
ReShape Vest and Diabetes Bloc-Stim Neuromodulation Products | ||
Revenue Recognition | ||
Revenue | $ 0 | $ 0 |
Revenues | Geographic area | Australia | ||
Revenue Recognition | ||
Percentage of total | 9.10% | 10.70% |
Income Taxes - Income Tax Benef
Income Taxes - Income Tax Benefit (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Current: | ||
Income tax expense (benefit) | $ 25 | $ (18) |
Stock-based Compensation - Expe
Stock-based Compensation - Expense for Stock-Based Awards (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Compensation expense recognized | ||
Stock-based compensation expense | $ 101 | $ 427 |
Total unrecognized compensation costs related to unvested awards | $ 100 | |
Weighted-average period of recognition for unrecognized compensation costs related to unvested awards | 10 months 24 days | |
Options granted (in shares) | 0 | 0 |
General and Administrative | ||
Compensation expense recognized | ||
Stock-based compensation expense | $ 101 | $ 427 |
Subsequent Events and Merger (D
Subsequent Events and Merger (Details) - Merger Agreement $ in Millions | Jan. 19, 2021USD ($) |
Subsequent Events | |
Percentage of stock owned by parent | 51.00% |
Approval Not Obtained Within 30 Days of the Specified Terms [Member] | |
Subsequent Events | |
Termination fees | $ 1 |
ReShape Lifesciences Inc | |
Subsequent Events | |
Ownership percentage | 49.00% |