Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2021 | Aug. 12, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2021 | |
Document Transition Report | false | |
Entity File Number | 1-37897 | |
Entity Registrant Name | RESHAPE LIFESCIENCES INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 26-1828101 | |
Entity Address, Address Line One | 1001 Calle Amanecer | |
Entity Address, City or Town | San Clemente | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 92673 | |
City Area Code | (949) | |
Local Phone Number | 429-6680 | |
Title of 12(b) Security | Common stock, $0.001 par value per share | |
Trading Symbol | RSLS | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 15,842,185 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001427570 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 40,163 | $ 2,957 |
Restricted cash | 50 | 50 |
Accounts and other receivables (net of allowance for doubtful accounts of $1,040 and $968 respectively) | 3,422 | 2,620 |
Inventory | 2,894 | 2,244 |
Deferred stock issuance costs | 17,705 | |
Prepaid expenses and other current assets | 1,371 | 1,073 |
Total current assets | 65,605 | 8,944 |
Property and equipment, net | 1,588 | 584 |
Operating lease right-of-use assets | 632 | 465 |
Other intangible assets, net | 28,924 | 27,022 |
Goodwill | 21,623 | |
Other assets | 1,628 | 46 |
Total assets | 120,000 | 37,061 |
Current liabilities: | ||
Accounts payable | 3,095 | 3,655 |
Accrued and other liabilities | 53,333 | 3,630 |
Warranty liability, current | 468 | 397 |
Debt, current portion, net of deferred financing costs | 2,936 | 3,609 |
Operating lease liabilities, current | 664 | 314 |
Total current liabilities | 60,496 | 11,605 |
Debt, noncurrent portion | 9,168 | |
Operating lease liabilities, noncurrent | 163 | |
Warranty liability, noncurrent | 732 | 1,022 |
Deferred income taxes | 615 | 615 |
Other liabilities | 38 | |
Total liabilities | 61,881 | 22,573 |
Commitments, contingencies and subsequent events | ||
Stockholders' equity: | ||
Preferred stock, Value | ||
Common stock, $0.001 par value; 100,000,000 and 275,000,000 shares authorized at June 30, 2021 and December 31, 2020, respectively; 8,168,622 and 6,166,554 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively | 8 | 6 |
Additional paid-in capital | 581,823 | 529,429 |
Accumulated deficit | (523,603) | (514,827) |
Accumulated other comprehensive loss | (109) | (121) |
Total stockholders' equity | 58,119 | 14,488 |
Total liabilities and stockholders' equity | 120,000 | 37,061 |
Series B convertible preferred stock | ||
Stockholders' equity: | ||
Preferred stock, Value | ||
Series C convertible preferred stock | ||
Stockholders' equity: | ||
Preferred stock, Value | $ 1 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Allowance for bad debts | $ 1,040 | $ 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 | 100,000,000 | 275,000,000 |
Common stock, shares issued | 8,168,622 | 6,166,554 |
Common stock, shares outstanding | 8,168,622 | 6,166,554 |
Series B convertible preferred stock | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, issued | 0 | 3 |
Preferred stock outstanding | 0 | 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 | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Condensed Consolidated Statements of Operations | ||||
Revenue | $ 3,529 | $ 1,702 | $ 6,750 | $ 4,491 |
Cost of revenue | 1,376 | 865 | 2,314 | 2,150 |
Gross profit | 2,153 | 837 | 4,436 | 2,341 |
Operating expenses: | ||||
Sales and marketing | 1,441 | 831 | 2,691 | 2,285 |
General and administrative | 4,311 | 2,539 | 7,031 | 5,375 |
Research and development | 103 | 465 | 674 | 1,761 |
Total operating expenses | 5,855 | 3,835 | 10,396 | 9,421 |
Operating loss | (3,702) | (2,998) | (5,960) | (7,080) |
Other expense (income), net: | ||||
Interest expense, net | 172 | 789 | 771 | 893 |
Loss on extinguishment of debt, net | 101 | 2,061 | ||
Loss (gain) on foreign currency exchange, net | (101) | (133) | (69) | 10 |
Loss before income tax provision | (3,874) | (3,654) | (8,723) | (7,983) |
Income tax expense (benefit) | 28 | (50) | 53 | (68) |
Net loss | $ (3,902) | $ (3,604) | $ (8,776) | $ (7,915) |
Net loss per share - basic and diluted: | ||||
Net loss per share - basic and diluted (in dollars per share) | $ (0.47) | $ (0.52) | $ (1.11) | $ (1.15) |
Shares used to compute basic and diluted net loss per share | 8,226,144 | 6,911,497 | 7,928,702 | 6,885,368 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Condensed Consolidated Statements of Comprehensive Loss | ||||
Net loss | $ (3,902) | $ (3,604) | $ (8,776) | $ (7,915) |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation adjustments | (7) | 27 | 12 | (21) |
Other comprehensive income (loss), net of tax | (7) | 27 | 12 | (21) |
Comprehensive loss | $ (3,909) | $ (3,577) | $ (8,764) | $ (7,936) |
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 Income (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 | (7,915) | (7,915) | |||||
Other comprehensive income (loss), net of tax | (21) | (21) | |||||
Reversal of stock compensation | 774 | 774 | |||||
Issuance of warrants | 1,393 | 1,393 | |||||
Institutional exercise of warrants | $ 5 | 605 | 610 | ||||
Institutional exercise of warrants (in shares) | 5,085,834 | ||||||
Cashless exercise of warrants (in shares) | 58,981 | ||||||
Common stock issued for professional services | 205 | 205 | |||||
Common stock issued for professional services (in shares) | 50,000 | ||||||
Balance at Jun. 30, 2020 | $ 1 | $ 5 | 520,288 | (501,112) | (29) | 19,153 | |
Balance (in shares) at Jun. 30, 2020 | 3 | 95,388 | 5,586,554 | ||||
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 | ||||
Changes in Stockholders' (Deficit) Equity | |||||||
Net loss | (3,604) | (3,604) | |||||
Other comprehensive income (loss), net of tax | 27 | 27 | |||||
Reversal of stock compensation | 347 | 347 | |||||
Institutional exercise of warrants | $ 5 | 605 | 610 | ||||
Institutional exercise of warrants (in shares) | 5,085,834 | ||||||
Cashless exercise of warrants (in shares) | 58,981 | ||||||
Common stock issued for professional services | 205 | 205 | |||||
Common stock issued for professional services (in shares) | 50,000 | ||||||
Balance at Jun. 30, 2020 | $ 1 | $ 5 | 520,288 | (501,112) | (29) | 19,153 | |
Balance (in shares) at Jun. 30, 2020 | 3 | 95,388 | 5,586,554 | ||||
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 | (8,776) | (8,776) | |||||
Other comprehensive income (loss), net of tax | 12 | 12 | |||||
Cancellation of common stock pursuant to reverse acquisition | $ (2) | 2 | |||||
Cancellation of common stock pursuant to reverse acquisition (in shares) | (2,680,301) | ||||||
Issuance of common stock pursuant to reverse acquisition | $ (1) | $ 3 | 30,559 | 30,561 | |||
Issuance of common stock pursuant to reverse acquisition (in shares) | (3) | 3,340,035 | |||||
Reversal of stock compensation | (263) | (263) | |||||
Deferred issuance cost for shares held in abeyance | 17,705 | 17,705 | |||||
Issuance of warrants | 2,974 | 2,974 | |||||
Institutional exercise of warrants | $ 1 | 1,202 | 1,203 | ||||
Institutional exercise of warrants (in shares) | 1,250,470 | ||||||
Stock options exercised | 215 | 215 | |||||
Stock options exercised (in shares) | 91,864 | ||||||
Balance at Jun. 30, 2021 | $ 8 | 581,823 | (523,603) | (109) | 58,119 | ||
Balance (in shares) at Jun. 30, 2021 | 95,388 | 8,168,622 | |||||
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 | ||||
Changes in Stockholders' (Deficit) Equity | |||||||
Net loss | (3,902) | (3,902) | |||||
Other comprehensive income (loss), net of tax | (7) | (7) | |||||
Cancellation of common stock pursuant to reverse acquisition | $ (2) | 2 | |||||
Cancellation of common stock pursuant to reverse acquisition (in shares) | (2,680,301) | ||||||
Issuance of common stock pursuant to reverse acquisition | $ (1) | $ 3 | 30,559 | 30,561 | |||
Issuance of common stock pursuant to reverse acquisition (in shares) | (3) | 3,340,035 | |||||
Reversal of stock compensation | (364) | (364) | |||||
Deferred issuance cost for shares held in abeyance | 17,705 | 17,705 | |||||
Institutional exercise of warrants | $ 1 | 1,202 | 1,203 | ||||
Institutional exercise of warrants (in shares) | 1,250,470 | ||||||
Stock options exercised | 215 | 215 | |||||
Stock options exercised (in shares) | 91,864 | ||||||
Balance at Jun. 30, 2021 | $ 8 | $ 581,823 | $ (523,603) | $ (109) | $ 58,119 | ||
Balance (in shares) at Jun. 30, 2021 | 95,388 | 8,168,622 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Cash flows from operating activities: | ||
Net loss | $ (8,776) | $ (7,915) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation expense | 40 | 5 |
Amortization of intangible assets | 828 | 833 |
Noncash interest expense | 78 | 117 |
Loss on extinguishment of debt, net | 2,061 | |
(Reversal) Stock-based compensation | (263) | 774 |
Bad debt expense | 56 | 185 |
Provision for inventory excess and obsolescence | 13 | 188 |
Amortization of debt discount and deferred debt issuance costs | 494 | 756 |
Other noncash items | 15 | 20 |
Change in operating assets and liabilities, net of business combination: | ||
Accounts and other receivables | (859) | 1,028 |
Inventory | 481 | (950) |
Prepaid expenses and other current assets | (267) | (90) |
Accounts payable and accrued liabilities | 1,853 | (958) |
Warranty liability | (219) | 142 |
Other | 316 | 53 |
Net cash used in operating activities | (4,149) | (5,812) |
Cash flows from investing activities: | ||
Capital expenditures | (196) | (82) |
Proceeds received from acquisition | 5,207 | |
Cash provided by (used in) investing activities: | 5,011 | (82) |
Cash flows from financing activities: | ||
Payments of financing costs | (59) | |
Proceeds from institutional exercise of warrants | 45,616 | 610 |
Proceeds from stock options exercised | 216 | |
Proceeds from credit agreement | 1,000 | 3,000 |
Payment of credit agreement | (10,500) | |
Proceeds from PPP loan | 955 | |
Net cash provided by financing activities | 36,332 | 4,506 |
Effect of currency exchange rate changes on cash and cash equivalents | 12 | (21) |
Net increase (decrease) in cash, cash equivalents and restricted cash | 37,206 | (1,409) |
Cash, cash equivalents and restricted cash at beginning of period | 3,007 | 2,985 |
Cash, cash equivalents and restricted cash at end of period | 40,213 | 1,576 |
Supplemental disclosure: | ||
Cash paid for income taxes | 31 | |
Cash paid for interest | 296 | |
Noncash investing and financing activities: | ||
Purchase price, net of cash received | 25,355 | |
Deferred issuance cost related to abeyance of shares | 17,705 | |
Fair value of warrants included as a component of loss on extinguishment of debt | 2,974 | |
Accrued financing costs | 3,234 | |
Capital expenditures accruals | $ 51 | 6 |
Relative fair value of warrants classified as debt issuance costs | $ 1,393 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 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” or “ReShape”) 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. Acquisition The Company accounts for business combinations in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations. The results of businesses acquired in a business combination are included in the Company’s consolidated financial statements from the date of the acquisition. Purchase accounting results in assets and liabilities of an acquired business generally being recorded at their estimated fair values on the acquisition date. Any excess consideration over the fair value of assets acquired and liabilities assumed is recognized as goodwill. Transaction costs associated with business combinations are expensed as incurred and are included in acquisition related costs in the consolidated statements of operations. The Company performs valuations of assets acquired and liabilities assumed and allocates the purchase price to its respective assets and liabilities. Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates Upon completion of the business combination on June 15, 2021 with Obalon Therapeurtics, Inc. (“Obalon”), the transaction was treated as a “reverse acquisition” for financial accounting purposes. As a result of the controlling interest of the former shareholders of ReShape, for financial statement reporting and accounting purposes, ReShape was considered the acquirer under the acquisition method of accounting in accordance with the FASB Accounting Standards Codification (“ASC”) 805-10-55. The reverse acquisition is deemed a capital transaction in substance whereas the historical assets and liabilities of Obalon before the business combination were replaced with the historical financial statements of ReShape in all future filings with the SEC. Goodwill and Long-Lived Assets Goodwill represents the excess of the cost of an acquired business over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. Indefinite-lived intangible assets relate to in-process research and development ("IPR&D") acquired in business combinations. The estimated fair values of IPR&D projects acquired in a business combination which have not reached technological feasibility are capitalized and accounted for as indefinite-lived intangible assets until completion or abandonment of the projects. In accordance with guidance within Financial Accounting Standards Board (FASB) Accounting Standards Codification (“ASC”) 350 “Intangibles - Goodwill and Other,” goodwill and identifiable intangible assets with indefinite lives are not subject to amortization but must be evaluated for impairment. We evaluate long-lived assets, including finite-lived intangible assets, for impairment by comparison of the carrying amounts to future net undiscounted cash flows expected to be generated by such assets when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Should an impairment exist, the impairment loss would be measured based on the excess carrying value of the asset over the asset’s fair value or estimates of future discounted cash flows. For goodwill and indefinite-lived intangible assets, in-process research and development, we review for impairment annually and upon the occurrence of certain events as required by Accounting Standards Codification (“ASC”) Topic 350, “Intangibles — Goodwill and Other.” Goodwill and indefinite-lived intangible assets are tested at least annually for impairment and more frequently if events or changes in circumstances indicate that the asset might be impaired. We review goodwill for impairment by first assessing qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. If we are able to determine that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, we would conclude that goodwill is not impaired. If the carrying amount of a reporting unit is zero or negative, the second step of the impairment test is performed to measure the amount of impairment loss, if any, when it is more likely than not that a goodwill impairment exists. The Company did not record any impairment loss for goodwill or indefinite-lived intangible assets for the three and six months ended June 30, 2021 and 2020. 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 9 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: June 30, 2021 2020 Stock options 256,881 46 Convertible preferred stock 742 1,288 Warrants 6,181,997 8,283,447 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 May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt – Modifications and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718), and Derivatives and Hedging Contracts in Entity’s Own Equity (Subtopic 815-40). In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326) |
Liquidity and Management's Plan
Liquidity and Management's Plans | 6 Months Ended |
Jun. 30, 2021 | |
Liquidity and Management's Plans | |
Liquidity and Management's Plans | (2) Liquidity and Management’s Plans As of June 30, 2021, the Company had net working capital of approximately $5.1 million, primarily due to the cash and cash equivalents of $40.2 million, which includes $5.2 million obtained in connection with the acquisition of Obalon, and $17.7 million of deferred issuance costs offset by an accrual of $43.2 million due to the timing of the issuance of the common shares in connection with the equity transaction. For further details see notes 8 and 9 below. The $17.7 million deferred issuance costs and the $43.2 million share abeyance accrual will be reclassed to equity for the third quarter ending September 30, 2021 as those shares were issued in July 2021. The Company’s principal source of liquidity as of June 30, 2021 consisted of approximately $40.2 million of cash and cash equivalents and restricted cash, and $3.4 million of accounts receivable. In addition, the Company had its PPP loan and accrued interest forgiven in full, and paid back the $10.5 million of debt with an institutional investor. 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 ® care TM care COVID-19 Risk and Uncertainties and CARES Act 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 5 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 | 6 Months Ended |
Jun. 30, 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: June 30, December 31, 2021 2020 Raw materials $ 1,227 $ 174 Sub-assemblies 588 733 Finished goods 1,079 1,337 Total inventory $ 2,894 $ 2,244 Prepaid expenses and other current assets: June 30, December 31, 2021 2020 Prepaid insurance $ 1,114 $ 619 Prepaid contract research organization expenses — 295 Other 257 159 Total prepaid expenses and other current assets $ 1,371 $ 1,073 Accrued and other liabilities: June 30, December 31, 2021 2020 Unissued shares held in abeyance related to the June 2021 exercise of warrants $ 43,218 $ — Accrued professional services 5,904 446 Payroll and benefits 2,276 1,735 Accrued insurance premium 699 272 Customer deposits 518 398 Taxes 455 265 Other 263 514 Total accrued and other liabilities $ 53,333 $ 3,630 On June 28, 2021, the Company entered into a warrant exercise agreement with existing accredited investors. The Company received the proceeds related to this agreement prior to June 30, 2021, however the shares of common stock were issued to the investors in multiple tranches and not all shares were issued as of June 30, 2021. The value related to the shares not issued prior to June 30, 2021 was recorded as an accrual of $43.2 million. The remainder of the shares of common stock related to this accrual were issued during July 2021. Since the shares are in abeyance, the costs associated with the issuance in the amount of $17.7 million were treated as deferred issuance costs, and will be recognized once the shares are issued. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jun. 30, 2021 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | (4) Goodwill and 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 range from 3 In connection with the merger with Obalon, ReShape recorded $2.7 million of intangible assets related to developed technology. The expected life on the intangible assets is estimated to be 15 years and will be amortized on a straight-line basis. The Company also recorded $21.6 million of goodwill. The changes in the carrying amount of goodwill were as follows: Goodwill at December 31, 2020 $ — Goodwill acquired during the year 21,623 Goodwill at June 30, 2021 $ 21,623 |
Debt
Debt | 6 Months Ended |
Jun. 30, 2021 | |
Debt | |
Debt | (5) Debt June 30, December 31, 2021 2020 Asset purchase consideration $ 2,936 $ 2,867 Credit agreement — 9,500 PPP Loan — 955 Total debt 2,936 13,322 Less: unamortized debt discount — 545 Less: current portion of debt 2,936 3,609 Debt, noncurrent portion $ — $ 9,168 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 six months ended June 30, 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 $0.2 million employee retention credit during the three months ended June 30, 2021, and $0.5 million for the six months ended June 30, 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 9 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. On June 28, 2021, the Company entered into a warrant exercise agreement with existing accredited investors, including the Lender, to exercise certain outstanding warrants, for further details on this transaction see Note 9. The Company used some of the proceeds from this transaction to pay off the $10.5 million of debt outstanding under the credit agreement. At June 30, 2021, there was no outstanding amount under the credit agreement. Asset Purchase Consideration Payable The asset purchase consideration payable related to the Company’s December 2018 acquisition of the Lap-Band |
Leases
Leases | 6 Months Ended |
Jun. 30, 2021 | |
Leases | |
Leases | (6) Leases The Company has noncancelable operating leases for office and warehouse space in San Clemente and Carlsbad, California, as well as 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 $0.2 million and $0.1 million for the three months ended June 30, 2021 and 2020, respectively, and $0.3 million and $0.2 million for the six months ended June 30, 2021 and 2020, respectively. Variable lease costs were not material. Supplemental information related to operating leases is as follows: Balance Sheet Information at June 30, 2021 Operating lease ROU assets $ 632 Operating lease liabilities, current portion $ 664 Operating lease liabilities, long-term portion - Total operating lease liabilities $ 664 Cash Flow Information for the Six Months Ended June 30, 2021 Cash paid for amounts included in the measurement of operating leases liabilities $ 165 Maturities of operating lease liabilities were as follows: Twelve months ending June 30, 2022 $ 682 Total lease payments 682 Less: imputed interest 18 Total lease liabilities $ 664 Weighted-average remaining lease term at end of period (in years) 0.9 Weighted-average discount rate at end of period 5.1 |
Acquisition
Acquisition | 6 Months Ended |
Jun. 30, 2021 | |
Acquisition | |
Acquisition | (7) Acquisition On June 15, 2021, the Company completed the previously announced merger with Obalon, which was treated as a reverse acquisition for accounting purposes, for an aggregate purchase price of $30.6 million. This includes the issuance of 3,340,035 shares of common stock valued at $30.6 million at the closing market price of the day of merger and the cancellation of 2,680,301 shares of common stock. As a result of the controlling interest of the former shareholders of ReShape, for financial statement reporting and accounting purposes, ReShape was considered the acquirer under the acquisition method of accounting in accordance with ASC 805-10-55. The reverse acquisition is deemed a capital transaction in substance whereas the historical assets and liabilities of Obalon before the business combination were replaced with the historical financial statements of ReShape in all future filings with the SEC. Acquisition related costs of $2.3 million were recorded in general and administrative expense for the three and six months of June 30, 2021. Tangible and intangible assets acquired were recorded based on their estimated fair values at the acquisition date. The excess of the purchase price over the fair value of the net assets acquired was recorded to goodwill. The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed, primarily related to inventory, developed technology, goodwill (including the deductibility for tax purposes) and income tax related accruals: Current assets $ 6,348 Property and equipment, net 848 Right-of-use assets 335 Other assets 1,898 Goodwill 21,623 Developed technology 2,730 Liabilities assumed (3,220) Total purchase price 30,562 Less: cash acquired (5,207) Total purchase price, net of cash acquired $ 25,355 The size of the Obalon acquisition necessitates use of the allowable measurement period to adequately analyze all the factors used in establishing the asset and liability fair values as of the acquisition date. The preliminary acquisition accounting is based upon the Company’s estimates of fair value. The primary areas of the preliminary acquisition accounting that are not yet finalized include the following: (i) finalizing the review and valuation of property and equipment (including the models, key assumptions, estimates and inputs used), (ii) finalizing the review and valuation of related intangible assets (including key assumptions, inputs and estimates), (iii) finalizing the valuation of certain in-place contracts or contractual relationships (including but not limited to leases), (iv) finalizing our review of certain assets acquired and liabilities assumed, (v) finalizing our estimate of the impact of acquisition accounting on deferred income taxes or liabilities. As the initial acquisition accounting is based on our preliminary assessments, actual values may differ (possibly materially) when final information becomes available that differs from our current estimates. We will continue to evaluate these items, until they are satisfactorily resolved and adjust our acquisition accounting accordingly, within the allowable measurement period (not to exceed one year from the date of acquisition), as defined by ASC 805. Goodwill includes expected synergies and other benefits the Company believes will result from the acquisition. The developed technology has been capitalized at fair value as an intangible asset with an estimated life of 15 years. The developed technology was determined using the income approach. This approach determines fair value based on cash flow projections which are discounted to present value using a risk-adjusted rate of return, using nonrecurring Level 3 inputs. The discount rate used was 22.0%. |
Equity
Equity | 6 Months Ended |
Jun. 30, 2021 | |
Equity | |
Equity | (8) Equity June 2021 Exercises of Warrants for Common Stock On June 28, 2021, the Company entered into a warrant exercise agreement with existing accredited investors to exercise certain outstanding warrants to purchase up to an aggregate of 7.9 million shares of the Company’s common stock, which 7.1 million of the shares were issued in July in accordance with the terms of the warrant exercise agreement. In consideration for the immediate exercise of the existing warrants for cash, the exercising holders received new unregistered warrants to purchase up to an aggregate of 5.9 million shares (equal to 75% of the shares of common stock issued in connection with the exercise) of the Company’s common stock (the “New Warrants”) in a private placement pursuant to Section 4(a)(2) of the Securities Act of 1933 (the “Securities Act”). The investors paid a cash purchase price for the New Warrants equal to $0.09375 per share of common stock underlying the New Warrants. In connection with the exercise, the Company also agreed to reduce the exercise price of certain of the existing warrants to $6.00 , which is equal to the most recent closing price of the Company’s common stock on The Nasdaq Capital Market prior to the execution of the warrant exercise agreement. For further details on the warrants see Note 9 below. The gross proceeds to the Company from the Exercise and the sale of the New Warrants was approximately $45.5 million, prior to deducting placement agent fees and estimated offering expenses. The Company used approximately $10.8 million was used to pay off the credit agreement, including $10.5 million of debt and $0.3 million of accrued interest under its secured credit agreement dated March 25, 2020, as amended, see Note 5 above for further details. The Company intends to use the remainder of the net proceeds for working capital and general corporate purposes. On June 18, 2021, the Company issued 100,000 shares of common stock to two healthcare focused institutional investors, totaling 200,000 shares of common stock and on June 21, 2021, the Company issued 130,445 and 57,229 shares of common stock to two healthcare focused institutional investors totaling 187,674 shares of common stock, as an exercise of pre-funded warrants issued in connection with the September 2019 private placement transactions. The Company received approximately $0.1 million in connection with the exercises. On June 18, 2021, the Company issued 91,864 shares of common stock related to the exercise of previous Obalon employees exercising stock option awards. The Company received $0.2 million related to this exercise. 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 | 6 Months Ended |
Jun. 30, 2021 | |
Warrants. | |
Warrants | (9) Warrants On June 28, 2021, the Company entered into a warrant exercise agreement with existing accredited investors to exercise certain outstanding warrants. As part of this agreement the Company modified the Series E warrants issued September 23, 2019 from an exercise price of $10.64 per share to $6.00 per share, the Series G warrants issued on March 25, 2020 from an exercise price of $6.56 per share to $6.00 per share, the Series G warrants issued on December 17, 2020 from an exercise price of $6.21 per share to $6.00 per share and the Series G warrants issued on January 21, 2021 from an exercise price of $6.21 per share to $6.00 per share. The company issued a total of 7,929,384 shares of common stock in connection with this transaction and issued an additional 5,947,039 new warrants. These new warrants were valued at $18.5 million using the fair value approach at the time of issuance. The fair value the new warrants was determined using a Black Scholes option pricing model using a risk free rate of 0.898%, an expected term of five year; expected dividends of zero and expected volatility of 97.6%. On January 19, 2021, the Company issued 1,000,000 Series G Warrants, pre-merger which were adjusted by the exchange ratio in the merger, 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, pre-merger which were adjusted by the exchange ratio in the merger, 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, pre-merger which were adjusted by the exchange ratio in the merger, 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, pre-merger which were adjusted by the exchange ratio in the merger, 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 | 6 Months Ended |
Jun. 30, 2021 | |
Revenue Disaggregation and Operating Segments | |
Revenue Disaggregation and Operating Segments | (10) 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 Six Months Ended June 30, June 30, 2021 2020 2021 2020 United States $ 2,633 $ 1,458 $ 5,153 $ 3,412 Australia 277 120 570 418 Europe 590 124 969 636 Rest of world 29 — 58 25 Total net revenue $ 3,529 $ 1,702 $ 6,750 $ 4,491 *The next largest individual country outside the United States was the United Kingdom for the three months ended June 30, 2021, which was 4.5% of total revenues, and Australia for the six months ended June 30, 2021, which was 8.5% of total revenues. Australia was the next largest individual country outside the United States for both the three and six months ended June 30, 2020, at 7.0% and 9.3% 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 and six months ended June 30, 2021 and 2020. During the second half of 2020 the Company launched reshape care care |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2021 | |
Income Taxes | |
Income Taxes | (11) 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 and six months ended June 30, 2021, a $28 thousand and $53 thousand, respectively, tax expense was recorded, primarily due to projected income in Australia and Netherlands. During the three and six months ended June 30, 2020, a $50 thousand and $68 thousand, respectively, tax benefit was recorded, primarily related to projected losses in Australia. 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. Additionally, as stated above, upon completion of the business combination on June 16, 2021 with Obalon Therapeutics, Inc. (“Obalon”), the transaction was treated as a “reverse acquisition” for financial accounting purposes. Due to the fact that more than 50% of the former ReShape shareholders retained ownership in the newly consolidated group, it is intended to be treated as a reverse acquisition for tax purposes as well. |
Stock-based Compensation
Stock-based Compensation | 6 Months Ended |
Jun. 30, 2021 | |
Stock-based Compensation | |
Stock-based Compensation | (12) 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 and six months ended June 30, 2021 and 2020 were as follows: Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 General and administrative $ (364) 347 $ (263) $ 774 Total stock-based compensation expense $ (364) $ 347 $ (263) $ 774 As part of the merger agreement with Obalon, all of the outstanding, vested and unvested stock option awards granted by ReShape were forfeited and cancelled. As a result of this the Company reversed the previously recognized expense for the unvested awards at the time the merger was completed. As of June 30, 2021, there are no outstanding awards related to ReShape’s stock incentive plan. There are no unvested shares under the Obalon stock incentive plan. No stock awards have been granted during the three and six months ended June 30, 2021 under either the ReShape or Obalon stock incentive plans. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2021 | |
Commitments and Contingencies | |
Commitments and Contingencies | (13) 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
Subsequent Events | 6 Months Ended |
Jun. 30, 2021 | |
Subsequent Events | |
Subsequent Events | (14) Subsequent Events Exchange Agreement On July 16, 2021, the Company entered into an exchange agreement (the “Exchange Agreement”) with existing institutional investors (the “Investors”) to exchange certain outstanding warrants (the “Exchange Warrants”) for shares of common stock and new warrants to purchase common stock. The investors held common stock purchase warrants issued by the Company prior to the merger with Obalon. The merger constituted a fundamental transaction under the Exchange Warrants and, as a result thereof, pursuant to the terms and conditions of the Exchange Warrants, the investors were entitled to a cash payment equal to the Black Scholes value of the Exchange Warrants, calculated in accordance with the terms of the Exchange Warrants (the “Black Scholes Payment”). Subject to the terms and conditions set forth in the Exchange Agreement and in reliance on Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”), in lieu of the Black Scholes Payment, the Company and the Investors agreed to exchange all of the Exchange Warrants for (a) a total of 504,861 shares of common stock, which was calculated by dividing the Black Scholes Payment by $4.038, which was equal to 95% of the closing market price of the Company’s common stock on The Nasdaq Capital Market on July 16, 2021 and (b) new warrants to purchase up to a total of 400,000 shares of common stock at an exercise price equal to $4.038 with a term of five years. Restricted Stock Unit Grants On July 22, 2021, the Company issued a total of 3,610,572 restricted stock unit (“RSUs”) grants to certain members of the management team and the board of directors. The non-employee board members received a total of 1,244,208 RSUs, 50% of which vested immediately and 50% of which will vest on January 1, 2022. The management team received a total of 2,366,364 RSUs, a portion of which vested immediately based on the grantee’s duration of service with the Company and the remainder of which will vest monthly for up to 36 months. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Basis of Presentation | |
Basis of Presentation | The accompanying interim condensed consolidated financial statements and related disclosures of Reshape Lifesciences Inc. (the “Company” or “ReShape”) 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. |
Acquisition | Acquisition The Company accounts for business combinations in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations. The results of businesses acquired in a business combination are included in the Company’s consolidated financial statements from the date of the acquisition. Purchase accounting results in assets and liabilities of an acquired business generally being recorded at their estimated fair values on the acquisition date. Any excess consideration over the fair value of assets acquired and liabilities assumed is recognized as goodwill. Transaction costs associated with business combinations are expensed as incurred and are included in acquisition related costs in the consolidated statements of operations. The Company performs valuations of assets acquired and liabilities assumed and allocates the purchase price to its respective assets and liabilities. Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates Upon completion of the business combination on June 15, 2021 with Obalon Therapeurtics, Inc. (“Obalon”), the transaction was treated as a “reverse acquisition” for financial accounting purposes. As a result of the controlling interest of the former shareholders of ReShape, for financial statement reporting and accounting purposes, ReShape was considered the acquirer under the acquisition method of accounting in accordance with the FASB Accounting Standards Codification (“ASC”) 805-10-55. The reverse acquisition is deemed a capital transaction in substance whereas the historical assets and liabilities of Obalon before the business combination were replaced with the historical financial statements of ReShape in all future filings with the SEC. |
Goodwill and Long-Lived Assets | Goodwill and Long-Lived Assets Goodwill represents the excess of the cost of an acquired business over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. Indefinite-lived intangible assets relate to in-process research and development ("IPR&D") acquired in business combinations. The estimated fair values of IPR&D projects acquired in a business combination which have not reached technological feasibility are capitalized and accounted for as indefinite-lived intangible assets until completion or abandonment of the projects. In accordance with guidance within Financial Accounting Standards Board (FASB) Accounting Standards Codification (“ASC”) 350 “Intangibles - Goodwill and Other,” goodwill and identifiable intangible assets with indefinite lives are not subject to amortization but must be evaluated for impairment. We evaluate long-lived assets, including finite-lived intangible assets, for impairment by comparison of the carrying amounts to future net undiscounted cash flows expected to be generated by such assets when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Should an impairment exist, the impairment loss would be measured based on the excess carrying value of the asset over the asset’s fair value or estimates of future discounted cash flows. For goodwill and indefinite-lived intangible assets, in-process research and development, we review for impairment annually and upon the occurrence of certain events as required by Accounting Standards Codification (“ASC”) Topic 350, “Intangibles — Goodwill and Other.” Goodwill and indefinite-lived intangible assets are tested at least annually for impairment and more frequently if events or changes in circumstances indicate that the asset might be impaired. We review goodwill for impairment by first assessing qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. If we are able to determine that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, we would conclude that goodwill is not impaired. If the carrying amount of a reporting unit is zero or negative, the second step of the impairment test is performed to measure the amount of impairment loss, if any, when it is more likely than not that a goodwill impairment exists. The Company did not record any impairment loss for goodwill or indefinite-lived intangible assets for the three and six months ended June 30, 2021 and 2020. |
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 9 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: June 30, 2021 2020 Stock options 256,881 46 Convertible preferred stock 742 1,288 Warrants 6,181,997 8,283,447 |
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 May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt – Modifications and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718), and Derivatives and Hedging Contracts in Entity’s Own Equity (Subtopic 815-40). In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326) |
Basis of Presentation (Tables)
Basis of Presentation (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Basis of Presentation | |
Schedule of anti-dilutive securities | June 30, 2021 2020 Stock options 256,881 46 Convertible preferred stock 742 1,288 Warrants 6,181,997 8,283,447 |
Supplemental Balance Sheet In_2
Supplemental Balance Sheet Information (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Supplemental Balance Sheet Information | |
Schedule of components of inventory | June 30, December 31, 2021 2020 Raw materials $ 1,227 $ 174 Sub-assemblies 588 733 Finished goods 1,079 1,337 Total inventory $ 2,894 $ 2,244 |
Schedule of components of prepaid expenses and other current assets | June 30, December 31, 2021 2020 Prepaid insurance $ 1,114 $ 619 Prepaid contract research organization expenses — 295 Other 257 159 Total prepaid expenses and other current assets $ 1,371 $ 1,073 |
Schedule of components of accrued and other liabilities | June 30, December 31, 2021 2020 Unissued shares held in abeyance related to the June 2021 exercise of warrants $ 43,218 $ — Accrued professional services 5,904 446 Payroll and benefits 2,276 1,735 Accrued insurance premium 699 272 Customer deposits 518 398 Taxes 455 265 Other 263 514 Total accrued and other liabilities $ 53,333 $ 3,630 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Goodwill and Intangible Assets | |
Schedule of changes in the carrying amount of goodwill | Goodwill at December 31, 2020 $ — Goodwill acquired during the year 21,623 Goodwill at June 30, 2021 $ 21,623 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Debt | |
Schedule of Long-term Debt Instruments [Table Text Block] | June 30, December 31, 2021 2020 Asset purchase consideration $ 2,936 $ 2,867 Credit agreement — 9,500 PPP Loan — 955 Total debt 2,936 13,322 Less: unamortized debt discount — 545 Less: current portion of debt 2,936 3,609 Debt, noncurrent portion $ — $ 9,168 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Leases | |
Schedule of supplemental information related to operating leases | Balance Sheet Information at June 30, 2021 Operating lease ROU assets $ 632 Operating lease liabilities, current portion $ 664 Operating lease liabilities, long-term portion - Total operating lease liabilities $ 664 Cash Flow Information for the Six Months Ended June 30, 2021 Cash paid for amounts included in the measurement of operating leases liabilities $ 165 |
Schedule of maturities of operating lease liabilities | Twelve months ending June 30, 2022 $ 682 Total lease payments 682 Less: imputed interest 18 Total lease liabilities $ 664 Weighted-average remaining lease term at end of period (in years) 0.9 Weighted-average discount rate at end of period 5.1 |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Acquisition | |
Schedule of fair values of the assets acquired and liabilities assumed | Current assets $ 6,348 Property and equipment, net 848 Right-of-use assets 335 Other assets 1,898 Goodwill 21,623 Developed technology 2,730 Liabilities assumed (3,220) Total purchase price 30,562 Less: cash acquired (5,207) Total purchase price, net of cash acquired $ 25,355 |
Revenue Disaggregation and Op_2
Revenue Disaggregation and Operating Segments (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Revenue Disaggregation and Operating Segments | |
Schedule of revenue disaggregated by product and geography | Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 United States $ 2,633 $ 1,458 $ 5,153 $ 3,412 Australia 277 120 570 418 Europe 590 124 969 636 Rest of world 29 — 58 25 Total net revenue $ 3,529 $ 1,702 $ 6,750 $ 4,491 *The next largest individual country outside the United States was the United Kingdom for the three months ended June 30, 2021, which was 4.5% of total revenues, and Australia for the six months ended June 30, 2021, which was 8.5% of total revenues. Australia was the next largest individual country outside the United States for both the three and six months ended June 30, 2020, at 7.0% and 9.3% respectively, of total revenues. |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Stock-based Compensation | |
Schedule of stock-based compensation expense | Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 General and administrative $ (364) 347 $ (263) $ 774 Total stock-based compensation expense $ (364) $ 347 $ (263) $ 774 |
Basis of Presentation - Anti-di
Basis of Presentation - Anti-dilutive Securities (Details) - shares | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Employees | ||
Anti-dilutive securities | ||
Anti-dilutive securities (in shares) | 256,881 | 46 |
Convertible preferred stock | ||
Anti-dilutive securities | ||
Anti-dilutive securities (in shares) | 742 | 1,288 |
Warrants to purchase common stock | ||
Anti-dilutive securities | ||
Anti-dilutive securities (in shares) | 6,181,997 | 8,283,447 |
Liquidity and Management's Pl_2
Liquidity and Management's Plans (Details) - USD ($) $ in Thousands | Jun. 28, 2021 | Jun. 15, 2021 | Jun. 30, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | Jun. 30, 2020 | Dec. 31, 2019 |
Liquidity, Going Concern and Management's Plans | |||||||
Working capital | $ (5,100) | $ (5,100) | |||||
Equity related transaction accrual | 43,218 | 43,218 | |||||
Deferred issuance cost for shares held in abeyance | 17,705 | 17,705 | |||||
Cash and cash equivalents and restricted cash | 40,213 | 40,213 | $ 3,007 | $ 1,576 | $ 2,985 | ||
Cash and cash equivalents | 40,163 | 40,163 | 2,957 | ||||
Cash acquired | $ 5,207 | 5,200 | |||||
Deferred offering costs | 17,705 | 17,705 | |||||
Accounts receivable | $ 3,422 | 3,422 | $ 2,620 | ||||
Payment of credit agreement | 10,500 | ||||||
Credit agreement | |||||||
Liquidity, Going Concern and Management's Plans | |||||||
Payment of credit agreement | $ 10,500 | $ 10,500 |
Supplemental Balance Sheet In_3
Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Inventory: | ||
Raw materials | $ 1,227 | $ 174 |
Sub-assemblies | 588 | 733 |
Finished goods | 1,079 | 1,337 |
Total inventory | 2,894 | 2,244 |
Prepaid expenses and other current assets: | ||
Prepaid insurance | 1,114 | 619 |
Prepaid contract research organization expenses | 295 | |
Other | 257 | 159 |
Total prepaid expenses and other current assets | 1,371 | 1,073 |
Accrued and other liabilities: | ||
Unissued shares held in abeyance related to the June 2021 exercise of warrants | 43,218 | |
Deferred offering costs | 17,705 | |
Accrued professional services | 5,904 | 446 |
Payroll and benefits | 2,276 | 1,735 |
Accrued insurance premium | 699 | 272 |
Customer deposits | 518 | 398 |
Taxes | 455 | 265 |
Other | 263 | 514 |
Total accrued and other liabilities | $ 53,333 | $ 3,630 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 15, 2021 | |
Acquisition. | |||||
Amortization expense | $ 400 | $ 400 | $ 828 | $ 833 | |
Goodwill | 21,623 | 21,623 | $ 21,623 | ||
Obalon Therapeutics Inc. | |||||
Acquisition. | |||||
Goodwill | $ 21,600 | $ 21,600 | |||
Developed technology | |||||
Acquisition. | |||||
Useful life | 15 years | ||||
Developed technology | Obalon Therapeutics Inc. | |||||
Acquisition. | |||||
Intangible assets acquired | $ 2,700 | ||||
Useful life | 15 years | ||||
Minimum | |||||
Acquisition. | |||||
Useful Life (years) | 3 years | ||||
Maximum | |||||
Acquisition. | |||||
Useful Life (years) | 10 years |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Roll Forward (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2021USD ($) | |
Goodwill [Roll Forward] | |
Goodwill acquired during the year | $ 21,623 |
Goodwill at June 30, 2021 | $ 21,623 |
Debt - Long term debt (Details)
Debt - Long term debt (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 |
Debt Instrument [Line Items] | |||
Total debt | $ 2,936 | $ 13,322 | |
Less: unamortized debt discount | $ 100 | 545 | |
Less: current portion of debt | 2,936 | 3,609 | |
Debt, noncurrent portion | 9,168 | ||
Asset purchase consideration | |||
Debt Instrument [Line Items] | |||
Total debt | $ 2,936 | 2,867 | |
Credit agreement | |||
Debt Instrument [Line Items] | |||
Total debt | 9,500 | ||
PPP Loan | |||
Debt Instrument [Line Items] | |||
Total debt | $ 955 |
Debt - CARES Act (Details)
Debt - CARES Act (Details) - USD ($) $ in Thousands | Apr. 24, 2020 | Jun. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2020 |
Debt Instrument [Line Items] | ||||
Amount received | $ 955 | |||
Gain on extinguishment of debt | $ (101) | $ (2,061) | ||
Employee retention credit | $ 200 | 500 | ||
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 | Jun. 28, 2021 | Jan. 19, 2021 | Dec. 16, 2020 | Sep. 14, 2020 | Jul. 29, 2020 | Jun. 23, 2020 | Apr. 15, 2020 | Mar. 25, 2020 | Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 |
Short-term Debt [Line Items] | |||||||||||||
Amount received | $ 955 | ||||||||||||
Loss on extinguishment of debt, net | $ 101 | $ 2,061 | |||||||||||
Debt discount | $ 100 | $ 545 | |||||||||||
Warrant exercise price (in dollars per share) | $ 0.12 | ||||||||||||
Proceeds from warrant exercises | $ 600 | 45,616 | $ 610 | ||||||||||
Payment of credit agreement | 10,500 | ||||||||||||
Total debt | 2,936 | 2,936 | 13,322 | ||||||||||
Credit agreement | |||||||||||||
Short-term Debt [Line Items] | |||||||||||||
Agreement amount | $ 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 warrant exercises | $ 600 | ||||||||||||
Payment of credit agreement | $ 10,500 | 10,500 | |||||||||||
Total debt | $ 0 | $ 0 | |||||||||||
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% | ||||||||||||
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 | 6 Months Ended | |
Jun. 30, 2021USD ($) | Dec. 31, 2020USD ($) | |
Long-term debt | ||
Total debt | $ 2,936 | $ 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 | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Leases | |||||
Operating lease costs | $ 200 | $ 100 | $ 300 | $ 200 | |
Balance Sheet Information related to operating leases | |||||
Operating lease ROU assets | 632 | 632 | $ 465 | ||
Operating lease liabilities, current | 664 | 664 | 314 | ||
Operating lease liabilities, long-term portion | $ 163 | ||||
Total operating lease liabilities | $ 664 | 664 | |||
Cash Flow Information related to operating leases | |||||
Cash paid for amounts included in the measurement of operating leases liabilities | $ 165 |
Leases - Maturities of Liabilit
Leases - Maturities of Liabilities (Details) $ in Thousands | Jun. 30, 2021USD ($) |
Maturities of operating lease liabilities | |
2022 | $ 682 |
Total lease payments | 682 |
Less: imputed interest | 18 |
Total lease liabilities | $ 664 |
Weighted-average remaining lease term at end of period (in years) | 10 months 24 days |
Weighted-average discount rate at end of period | 5.10% |
Acquisition (Details)
Acquisition (Details) - Obalon Therapeutics Inc. - USD ($) $ in Millions | Jun. 15, 2021 | Jun. 30, 2021 | Jun. 30, 2021 |
Acquisitions | |||
Aggregate purchase price | $ 30.6 | ||
Issuance of shares of common stock | 3,340,035 | ||
Shares issued value | $ 30.6 | ||
Cancellation of shares | 2,680,301 | ||
General and administrative expense | |||
Acquisitions | |||
Acquisition related costs | $ 2.3 | $ 2.3 |
Acquisition - Fair value of ass
Acquisition - Fair value of assets acquired and liabilities assumed (Details) - USD ($) $ in Thousands | Jun. 15, 2021 | Jun. 30, 2021 |
Fair values of the assets acquired and liabilities assumed | ||
Current assets | $ 6,348 | |
Property and equipment, net | 848 | |
Right-of-use assets | 335 | |
Other assets | 1,898 | |
Goodwill | 21,623 | $ 21,623 |
Developed technology | 2,730 | |
Liabilities assumed | (3,220) | |
Total purchase price | 30,562 | |
Less: cash acquired | (5,207) | (5,200) |
Total purchase price, net of cash acquired | $ 25,355 | $ 25,355 |
Acquisition - Narrative (Detail
Acquisition - Narrative (Details) | 6 Months Ended |
Jun. 30, 2021 | |
Developed technology | |
Acquisition. | |
Useful life | 15 years |
Discount rate | Income approach | |
Acquisition. | |
Discount rate | 22 |
Equity - Issuance of stock and
Equity - Issuance of stock and warrants (Details) $ / shares in Units, $ in Thousands | Jun. 28, 2021USD ($)$ / sharesshares | Jun. 21, 2021USD ($)individualshares | Jun. 18, 2021USD ($)individualshares | Dec. 03, 2020USD ($)individualshares | Jun. 23, 2020shares | May 28, 2020USD ($)shares | Apr. 15, 2020USD ($)$ / sharesshares | Jun. 30, 2021shares | Jun. 30, 2020USD ($)shares | Jun. 30, 2021USD ($)shares | Jun. 30, 2020USD ($)shares | Jun. 27, 2021$ / shares |
Equity | ||||||||||||
Cashless exercise of warrants (in shares) | 58,981 | |||||||||||
Common stock issued for professional services (in shares) | 50,000 | |||||||||||
Common stock issued for professional services | $ | $ 200 | $ 205 | $ 205 | |||||||||
Institutional exercise of warrants (in shares) | 5,085,834 | |||||||||||
Warrant exercise price (in dollars per share) | $ / shares | $ 0.12 | |||||||||||
Payment of credit agreement | $ | $ 10,500 | |||||||||||
Proceeds from warrant exercises | $ | $ 600 | 45,616 | $ 610 | |||||||||
Number of healthcare focused institutional investors | individual | 2 | 2 | ||||||||||
Stock issued (in shares) | 100,000 | |||||||||||
Issuance of common stock upon exercise of warrants, net of transaction costs (in shares) | 200,000 | |||||||||||
Stock options exercised (in shares) | 91,864 | |||||||||||
Proceeds from stock options exercised | $ | $ 200 | 216 | ||||||||||
Credit agreement | ||||||||||||
Equity | ||||||||||||
Warrant exercise price (in dollars per share) | $ / shares | $ 0.12 | |||||||||||
Payment of credit agreement | $ | $ 10,500 | $ 10,500 | ||||||||||
Proceeds from warrant exercises | $ | $ 600 | |||||||||||
Number of shares in exchange of warrant exercise | 5,085,834 | |||||||||||
2019 private placement | ||||||||||||
Equity | ||||||||||||
Proceeds from warrant exercises | $ | $ 100 | $ 100 | ||||||||||
Number of healthcare focused institutional investors | individual | 2 | |||||||||||
Stock issued (in shares) | 130,445 | 290,000 | ||||||||||
Issuance of common stock upon exercise of warrants, net of transaction costs (in shares) | 187,674 | 580,000 | ||||||||||
June 2021 warrants | ||||||||||||
Equity | ||||||||||||
Proceeds from warrant exercises | $ | $ 45,500 | |||||||||||
Issuance of common stock upon exercise of warrants, net of transaction costs (in shares) | 7,929,384 | |||||||||||
June 2021 warrants | Credit agreement | ||||||||||||
Equity | ||||||||||||
Payment of credit agreement | $ | $ 10,500 | |||||||||||
Accrued interest | $ | 300 | |||||||||||
Proceeds to repay | $ | $ 10,800 | |||||||||||
Series E warrants | ||||||||||||
Equity | ||||||||||||
Warrant exercise price (in dollars per share) | $ / shares | $ 6 | $ 10.64 | ||||||||||
New Unregistered Warrants | ||||||||||||
Equity | ||||||||||||
Warrant exercise price (in dollars per share) | $ / shares | $ 6 | |||||||||||
Issuance of common stock upon exercise of warrants, net of transaction costs (in shares) | 7,100,000 | |||||||||||
Number of shares in exchange of warrant exercise | 5,947,039 | |||||||||||
Percentage of common stock issued | 75.00% | |||||||||||
Cash purchase price per share | $ / shares | $ 0.09375 | |||||||||||
Common Stock | ||||||||||||
Equity | ||||||||||||
Cashless exercise of warrants (in shares) | 58,981 | 58,981 | ||||||||||
Common stock issued for professional services (in shares) | 50,000 | 50,000 | ||||||||||
Institutional exercise of warrants (in shares) | 1,250,470 | 5,085,834 | 1,250,470 | 5,085,834 | ||||||||
Stock options exercised (in shares) | 91,864 | 91,864 | ||||||||||
Cancellation of shares | 2,680,301 | 2,680,301 | ||||||||||
Common Stock | 2019 private placement | ||||||||||||
Equity | ||||||||||||
Stock issued (in shares) | 57,229 |
Warrants (Details)
Warrants (Details) $ / shares in Units, $ in Millions | Jun. 28, 2021USD ($)Y$ / sharesshares | Jun. 18, 2021shares | Jan. 19, 2021USD ($)Yshares | Dec. 16, 2020USD ($)Yshares | Sep. 14, 2020USD ($)Yshares | Mar. 25, 2020USD ($)Yshares | Jun. 27, 2021$ / shares | Apr. 15, 2020$ / shares |
Class of Warrant or Right [Line Items] | ||||||||
Exercise price of warrants (in dollars per share) | $ 0.12 | |||||||
Issuance of common stock | shares | 200,000 | |||||||
Series E warrants | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Exercise price of warrants (in dollars per share) | $ 6 | $ 10.64 | ||||||
Series G Warrants | ||||||||
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 | ||||
Series G Warrants | Risk Free Rate | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Warrant fair value measurement inputs | 0.0045 | 0.0037 | 0.0027 | 0.0056 | ||||
Series G Warrants | Remaining Life | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Warrant fair value measurement inputs | Y | 5 | 5 | 5 | 5 | ||||
Series G Warrants | Expected dividends | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Warrant fair value measurement inputs | 0 | 0 | 0 | 0 | ||||
Series G Warrants | Volatility | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Warrant fair value measurement inputs | 0.971 | 1.008 | 1.011 | 0.9700 | ||||
Series G Warrants Issued March 25, 2020 | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Exercise price of warrants (in dollars per share) | 6 | 6.56 | ||||||
Series G Warrants Issued December 17, 2020 | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Exercise price of warrants (in dollars per share) | 6 | 6.21 | ||||||
Series G Warrants Issued January 21, 2021 | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Exercise price of warrants (in dollars per share) | $ 6 | $ 6.21 | ||||||
June 2021 warrants | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Issuance of common stock | shares | 7,929,384 | |||||||
New Unregistered Warrants | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Exercise price of warrants (in dollars per share) | $ 6 | |||||||
Issuance of common stock | shares | 7,100,000 | |||||||
Warrants purchased | shares | 5,947,039 | |||||||
Fair value portion of warrants | $ | $ 18.5 | |||||||
New Unregistered Warrants | Risk Free Rate | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Warrant fair value measurement inputs | 0.00898 | |||||||
New Unregistered Warrants | Remaining Life | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Warrant fair value measurement inputs | Y | 5 | |||||||
New Unregistered Warrants | Expected dividends | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Warrant fair value measurement inputs | 0 | |||||||
New Unregistered Warrants | Volatility | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Warrant fair value measurement inputs | 0.976 |
Revenue Disaggregation and Op_3
Revenue Disaggregation and Operating Segments (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021USD ($)item | Jun. 30, 2020USD ($)item | Jun. 30, 2021USD ($)item | Jun. 30, 2020USD ($)item | |
Revenue Recognition | ||||
Revenue | $ 3,529 | $ 1,702 | $ 6,750 | $ 4,491 |
Number of Products in Development Stage | item | 2 | 2 | 2 | 2 |
United States | ||||
Revenue Recognition | ||||
Revenue | $ 2,633 | $ 1,458 | $ 5,153 | $ 3,412 |
Australia | ||||
Revenue Recognition | ||||
Revenue | 277 | 120 | 570 | 418 |
Europe | ||||
Revenue Recognition | ||||
Revenue | 590 | 124 | 969 | 636 |
Rest of world | ||||
Revenue Recognition | ||||
Revenue | 29 | 58 | 25 | |
ReshapeCare product | ||||
Revenue Recognition | ||||
Revenue | 0 | 0 | ||
ReShape Vest and Diabetes Bloc-Stim Neuromodulation Products | ||||
Revenue Recognition | ||||
Revenue | $ 0 | $ 0 | $ 0 | $ 0 |
Revenues | Geographic area | Australia | ||||
Revenue Recognition | ||||
Percentage of total | 7.00% | 8.50% | 9.30% | |
Revenues | Geographic area | Great Britain | ||||
Revenue Recognition | ||||
Percentage of total | 4.50% |
Income Taxes - Income Tax Benef
Income Taxes - Income Tax Benefit (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Income Taxes | ||||
Percentage of shareholders retained ownership | 50.00% | 50.00% | ||
Current: | ||||
Income tax expense (benefit) | $ 28 | $ (50) | $ 53 | $ (68) |
Stock-based Compensation - Expe
Stock-based Compensation - Expense for Stock-Based Awards (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Compensation expense recognized | ||||
Stock-based compensation expense | $ (364) | $ 347 | $ (263) | $ 774 |
Employees | 2003 Stock Incentive Plan, as amended and restated | ||||
Compensation expense recognized | ||||
Outstanding shares | 0 | 0 | ||
Employees | Obalon Stock Incentive Plan | ||||
Compensation expense recognized | ||||
Unvested Shares | 0 | 0 | ||
Employees | Reshape or Obalon Stock Incentive Plan | ||||
Compensation expense recognized | ||||
Options granted (in shares) | 0 | 0 | ||
Stock options granted | 0 | 0 | ||
General and administrative expense | ||||
Compensation expense recognized | ||||
Stock-based compensation expense | $ (364) | $ 347 | $ (263) | $ 774 |
Subsequent Events (Details)
Subsequent Events (Details) - $ / shares | Jul. 22, 2021 | Jul. 16, 2021 | Apr. 15, 2020 |
Subsequent Events | |||
Warrant exercise price (in dollars per share) | $ 0.12 | ||
Subsequent Event | |||
Subsequent Events | |||
Warrants exercise price expressed | 95.00% | ||
Subsequent Event | Restricted Stock Units (RSUs) | |||
Subsequent Events | |||
Restricted stock units | 2,366,364 | ||
Vesting Period | 36 months | ||
Subsequent Event | Restricted Stock Units (RSUs) | Vest immediately | |||
Subsequent Events | |||
Vesting percentage | 50.00% | ||
Subsequent Event | Restricted Stock Units (RSUs) | Vest on January 1, 2022 | |||
Subsequent Events | |||
Vesting percentage | 50.00% | ||
Subsequent Event | Restricted Stock Units (RSUs) | Management Team | |||
Subsequent Events | |||
Restricted stock units | 3,610,572 | ||
Subsequent Event | Restricted Stock Units (RSUs) | Non-employee board members | |||
Subsequent Events | |||
Restricted stock units | 1,244,208 | ||
Subsequent Event | Exchange Warrants | |||
Subsequent Events | |||
Number of shares in exchange of warrant exercise | 504,861 | ||
Warrant exercise price (in dollars per share) | $ 4.038 | ||
Subsequent Event | New Warrants | |||
Subsequent Events | |||
Warrant exercise price (in dollars per share) | $ 4.038 | ||
Warrants term | 5 years | ||
Subsequent Event | Maximum | New Warrants | |||
Subsequent Events | |||
Number of shares in exchange of warrant exercise | 400,000 |