Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 14, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | MARRONE BIO INNOVATIONS INC | |
Entity Central Index Key | 1,441,693 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 31,350,877 | |
Trading Symbol | MBII | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,017 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 3,737 | $ 9,609 |
Restricted cash, current portion | 933 | 1,444 |
Accounts receivable | 1,869 | 3,592 |
Inventories, net | 9,333 | 8,482 |
Deferred cost of product revenues | 2,943 | 2,688 |
Prepaid expenses and other current assets | 641 | 1,060 |
Total current assets | 19,456 | 26,875 |
Property, plant and equipment, net | 16,155 | 17,343 |
Restricted cash, less current portion | 1,560 | 1,560 |
Other assets | 224 | 205 |
Total assets | 37,395 | 45,983 |
Current liabilities: | ||
Accounts payable | 2,692 | 1,385 |
Accrued liabilities | 8,296 | 5,508 |
Accrued interest due to related parties | 815 | 1,618 |
Deferred revenue, current portion | 5,698 | 5,647 |
Capital lease obligations, current portion | 839 | |
Debt due to related parties, current portion | 8,882 | |
Debt, current portion | 1,692 | 252 |
Total current liabilities | 28,075 | 15,249 |
Deferred revenue, less current portion | 2,077 | 1,787 |
Debt, less current portion | 21,004 | 21,083 |
Debt due to related parties, less current portion | 28,649 | 36,667 |
Other liabilities | 1,250 | 1,381 |
Total liabilities | 81,055 | 76,167 |
Commitments and contingencies (Note 9) | ||
Stockholders’ deficit: | ||
Preferred stock: $0.00001 par value; 20,000 shares authorized and no shares issued or outstanding at September 30, 2017 and December 31, 2016 | ||
Common stock: $0.00001 par value; 250,000 shares authorized, 31,351 shares issued and outstanding as of September 30, 2017 and 24,661 as of December 31, 2016 | ||
Additional paid in capital | 214,531 | 204,463 |
Accumulated deficit | (258,191) | (234,647) |
Total stockholders’ deficit | (43,660) | (30,184) |
Total liabilities and stockholders’ deficit | $ 37,395 | $ 45,983 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 31,351,000 | 24,661,000 |
Common stock, shares outstanding | 31,351,000 | 24,661,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenues: | ||||
Product | $ 4,161 | $ 3,549 | $ 14,675 | $ 11,083 |
License | 58 | 85 | 174 | 269 |
Total revenues | 4,219 | 3,634 | 14,849 | 11,352 |
Cost of product revenues | 2,492 | 2,493 | 8,737 | 7,880 |
Gross profit | 1,727 | 1,141 | 6,112 | 3,472 |
Operating Expenses: | ||||
Research, development and patent | 3,152 | 2,662 | 8,449 | 7,297 |
Selling, general and administrative | 5,174 | 3,754 | 15,590 | 13,796 |
Total operating expenses | 8,326 | 6,416 | 24,039 | 21,093 |
Loss from operations | (6,599) | (5,275) | (17,927) | (17,621) |
Other income (expense): | ||||
Interest income | 8 | 1 | 33 | |
Interest expense | (804) | (755) | (2,309) | (2,264) |
Interest expense to related parties | (1,098) | (1,099) | (3,257) | (3,265) |
Other income (expense), net | (29) | (81) | (52) | (144) |
Total other expense, net | (1,931) | (1,927) | (5,617) | (5,640) |
Loss before income taxes | (8,530) | (7,202) | (23,544) | (23,261) |
Income taxes | ||||
Net loss | $ (8,530) | $ (7,202) | $ (23,544) | $ (23,261) |
Basic and diluted net loss per common share | $ (0.27) | $ (0.29) | $ (0.83) | $ (0.95) |
Weighted-average shares outstanding used in computing net loss per common share | 31,351 | 24,460 | 28,507 | 24,603 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (8,530) | $ (7,202) | $ (23,544) | $ (23,261) |
Other comprehensive loss | ||||
Comprehensive loss | $ (8,530) | $ (7,202) | $ (23,544) | $ (23,261) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities | ||
Net loss | $ (23,544) | $ (23,261) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 1,540 | 1,696 |
Loss (gain) on disposal of equipment, net | 365 | 135 |
Share-based compensation | 1,724 | 2,025 |
Non-cash interest expense | 1,130 | 990 |
Net changes in operating assets and liabilities: | ||
Accounts receivable | 1,723 | 292 |
Inventories | (851) | 659 |
Prepaid expenses and other assets | 420 | 172 |
Deferred cost of product revenues | (255) | (88) |
Accounts payable | 1,282 | 223 |
Accrued and other liabilities | 2,491 | (1,555) |
Accrued interest due to related parties | (803) | (362) |
Deferred revenue | 341 | 892 |
Deferred revenue from related parties | (168) | |
Net cash used in operating activities | (14,437) | (18,350) |
Cash flows from investing activities | ||
Purchases of property, plant and equipment | (391) | (169) |
Sale of property, plant and equipment | 15 | |
Net cash used in investing activities | (376) | (169) |
Cash flows from financing activities | ||
Proceeds from issuance of common stock, net of offering costs | 8,188 | |
Repayment of debt | (340) | (195) |
Proceeds from secured borrowings | 7,831 | |
Reductions in secured borrowings | (6,631) | |
Financing costs | (215) | |
Repayment of capital leases | (420) | (549) |
Change in restricted cash | 511 | 15,412 |
Exercise of stock options | 17 | 26 |
Net cash provided by financing activities | 8,941 | 14,694 |
Net decrease in cash and cash equivalents | (5,872) | (3,825) |
Cash and cash equivalents, beginning of period | 9,609 | 19,838 |
Cash and cash equivalents, end of period | 3,737 | 16,013 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 5,231 | 4,881 |
Supplemental disclosure of non-cash investing and financing activities | ||
Property, plant and equipment included in accounts payable and accrued liabilities | 331 | 21 |
Equipment acquired under capital leases | 1,586 | |
Equipment acquired with debt | $ 495 |
Summary of Business, Basis of P
Summary of Business, Basis of Presentation and Liquidity | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Business, Basis of Presentation and Liquidity | 1. Summary of Business, Basis of Presentation and Liquidity Marrone Bio Innovations, Inc. (“Company”), formerly Marrone Organic Innovations, Inc., was incorporated under the laws of the State of Delaware on June 15, 2006, and is located in Davis, California. In July 2012, the Company formed a wholly-owned subsidiary, Marrone Michigan Manufacturing LLC (“MMM LLC”), which holds the assets of a manufacturing plant the Company purchased in July 2012. These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation. The Company makes bio-based pest management and plant health products. The Company targets the major markets that use conventional chemical pesticides, including certain agricultural and water markets where its bio-based products are used as alternatives for, or mixed with, conventional chemical pesticides. The Company also targets new markets for which (i) there are no available conventional chemical pesticides or (ii) the use of conventional chemical pesticides may not be desirable or permissible either because of health and environmental concerns (including for organically certified crops) or because the development of pest resistance has reduced the efficacy of conventional chemical pesticides. The Company delivers EPA-approved and registered biopesticide products and other bio-based products that address the global demand for effective, safe and environmentally responsible products. In April 2017, the Company completed an underwritten public offering of 6,571,000 registered shares of its common stock (inclusive of The total gross proceeds to the Company from the offering were approximately $9,200,000, and after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company, the aggregate net proceeds to the Company totaled approximately $8,200,000. The Company is an early stage company with a limited operating history and has a limited number of commercialized products. As of September 30, 2017, the Company had an accumulated deficit of $258,191,000, has incurred significant losses since inception and expects to continue to incur losses for the foreseeable future. The Company has funded operations primarily with net proceeds from public offerings of common stock, private placements of convertible preferred stock, convertible notes, and promissory notes and term loans, as well as with the proceeds from the sale of its products and payments under strategic collaboration and distribution agreements and government grants. The Company will need to generate significant revenue growth to achieve and maintain profitability. As of September 30, 2017, the Company had negative working capital of $8,619,000, including cash and cash equivalents of $3,737,000. In addition, as of September 30, 2017, the Company had a total of $2,493,000 of restricted cash relating to a debt agreement (see Note 6). As of September 30, 2017, the Company had debt and debt due to related parties of $22,696,000 and $37,531,000, respectively, for which the underlying debt agreements contain various financial and non-financial covenants, as well as a material adverse change clause. The Company believes that its existing cash and cash equivalents of $3,737,000 at September 30, 2017, expected revenues and incremental borrowings, if any, from LSQ Financing (as defined and discussed in Note 6) will not be sufficient to fund operations as currently planned through one year from the date of the issuance of these financial statements, which raises substantial doubt as to the Company’s ability to continue as a going concern. The Company has based this belief on assumptions and estimates that may prove to be wrong, and the Company could spend its available financial resources less or more rapidly than currently expected. The Company will continue to require additional sources of cash for general corporate purposes, which may include operating expenses, working capital to improve and promote its commercially available products, advance product candidates, expand international presence and commercialization, general capital expenditures and satisfaction of debt obligations. Management intends to seek additional capital through equity and/or debt financings, collaborative or other funding arrangements with partners, or through other sources of financing. Should the Company seek additional financing from outside sources, the Company may not be able to raise such financing on terms acceptable to the Company or at all. If the Company is unable to raise additional capital when required or on acceptable terms, the Company may be required to scale back or to discontinue the promotion of currently available products, scale back or discontinue the advancement of product candidates, reduce headcount, sell assets, file for bankruptcy, reorganize, merge with another entity, or cease operations. Additionally, if the Company breaches any of the covenants contained within the debt agreements or if the material adverse change clause is triggered, the entire unpaid principal and interest balances would be due and payable upon demand. Without entering into a continuation of its current waiver, which expires October 1, 2018, entering into strategic agreements that include significant cash payments upfront, significantly increasing revenues from sales or raising additional capital through the issuance of equity, the Company expects it will exceed its maximum debt-to-worth requirement under a promissory note with Five Star Bank. Further, a violation of a covenant in one debt agreement will cause the Company to be in violation of certain covenants under each of its other debt agreements. Breach of covenants included in the Company’s debt agreements, which could result in the lenders demanding payment of the unpaid principal and interest balances, will have a material adverse effect upon the Company and would likely require the Company to seek to renegotiate these debt arrangements with the lenders. If such negotiations are unsuccessful, the Company may be required to seek protection from creditors through bankruptcy proceedings. The Company’s inability to maintain compliance with its debt covenants could have a negative impact on the Company’s financial condition and ability to continue as a going concern. The June 2014 Secured Promissory Note (as defined in Note 6) contains a material adverse change clause that could be invoked by the lender as a result of the uncertainty related to the Company’s ability to continue as a going concern. If the lender were to declare an event of default, the entire amount of borrowings related to all debt agreements at that time would have to be reclassified as current in the financial statements. The lender has waived its right to deem recurring losses, liquidity, going concern, and financial condition a material adverse change through October 1, 2018. As a result, none of the long term portion of the Company’s outstanding debt has been reclassified to current in these financial statements as of September 30, 2017. The Company participates in a heavily regulated and highly competitive crop protection industry and believes that adverse changes in any of the following areas could have a material effect on the Company’s future financial position, results of operations or cash flows: inability to obtain regulatory approvals, increased competition in the pesticide market, market acceptance of the Company’s products, weather and other seasonal factors beyond the Company’s control, litigation or claims against the Company related to intellectual property, patents, products or governmental regulation, and the Company’s ability to support increased growth. Although the Company recognizes that it will likely need to raise additional funds in the future, there can be no assurance that such efforts will be successful or that, in the event that they are successful, the terms and conditions of such financing will not be unfavorable. Any future equity financing is expected to result in dilution to existing stockholders and any debt financing is expected to include additional restrictive covenants. Any failure to obtain additional financing or to achieve the revenue growth necessary to fund the Company with cash flows from operations will have a material adverse effect upon the Company and will likely result in a substantial reduction in the scope of the Company’s operations and impact the Company’s ability to achieve its planned business objectives. The accompanying financial statements have been prepared under the assumption that the Company will continue to operate as a going concern, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts of liabilities that may result from the Company’s inability to continue as a going concern. If the Company becomes unable to continue as a going concern, the Company may have to liquidate its assets, and might realize significantly less than the values at which they are carried on its financial statements, and stockholders may lose all or part of their investment in the Company’s common stock. |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | 2. Significant Accounting Policies Basis of Presentation The accompanying financial information as of September 30, 2017, and for the three and nine months ended September 30, 2017 and 2016, have been prepared by the Company, without audit, in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such SEC rules and regulations and accounting principles applicable for interim periods. However, the Company believes that the disclosures are adequate to make the information presented not misleading. The information included in this Quarterly Report on Form 10-Q should be read in connection with the consolidated financial statements and accompanying notes included in the Company’s Annual Report filed on Form 10-K, for the fiscal year ended December 31, 2016. In the opinion of management, the condensed consolidated financial statements as of September 30, 2017, and for the three and nine months ended September 30, 2017 and 2016, reflect all adjustments, which are normal recurring adjustments, necessary to present a fair statement of financial position, results of operations, comprehensive loss and cash flows. The results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the operating results for the full fiscal year or any future periods. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents. Cash and cash equivalents consists of cash on deposit, money market funds and certificates of deposit accounts with United States (“U.S.”) financial institutions. The Company is exposed to credit risk in the event of default by financial institutions to the extent that cash and cash equivalents balances with financial institutions are in excess of amounts that are insured by the Federal Deposit Insurance Corporation. The Company has not experienced any losses on these deposits. Restricted Cash The Company’s restricted cash consists of cash that the Company is contractually obligated to maintain in accordance with the terms of its June 2014 Secured Promissory Note (as defined in Note 6). See Note 6 for further discussion. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, accounts receivable and debt. The Company deposits its cash and cash equivalents with high credit quality domestic financial institutions with locations in the U.S. Such deposits may exceed federal deposit insurance limits. The Company believes the financial risks associated with these financial instruments are minimal. The Company’s customer base is dispersed across many different geographic areas, and currently most customers are pest management distributors in the U.S. Generally, receivables are due up to 120 days from the invoice date and are considered past due after this date, although the Company may offer extended terms from time to time. Revenues generated from international customers were, for the three months ended September 30, 2017 and 2016, 4% and 8%, respectively. Revenues generated from international customers were, for the nine months ended September 30, 2017 and 2016, 9% and 5%, respectively. The Company’s principal sources of revenues are its Regalia, Grandevo and Venerate product lines. These three product lines accounted for 87% and 91% of the Company’s total revenues for the three months ended September 30, 2017 and 2016, respectively, and 87% and 88% for the nine months ended September 30, 2017 and 2016, respectively. Customers to which 10% or more of the Company’s total revenues are attributable for any one of the periods presented consist of the following: CUSTOMER A CUSTOMER B Three months ended September 30, 2017 20 % 16 % 2016 25 % — Nine months ended September 30, 2017 25 % 4 % 2016 30 % — Customers to which 10% or more of the Company’s outstanding accounts receivable are attributable as of either September 30, 2017 or December 31, 2016 consist of the following: CUSTOMER A CUSTOMER B CUSTOMER C CUSTOMER D CUSTOMER E CUSTOMER F September 30, 2017 12 % 14 % — 33 % 14 % 11 % December 31, 2016 21 % 10 % 14 % — — — Concentrations of Supplier Dependence The active ingredient in the Company’s Regalia product line is derived from the giant knotweed plant, which the Company obtains from China. The Company currently has one supplier of this plant. Such single supplier acquires raw knotweed from numerous regional sources and performs an extraction process on this plant, creating a dried extract that is shipped to the Company’s manufacturing plant. While the Company does not have a long-term supply contract with this supplier, the Company does have a long term business relationship with this supplier. The Company maintains 6 months of knotweed extract at any given time, but an unexpected disruption in supply could have an effect on Regalia supply and revenues. Although the Company has identified additional sources of raw knotweed, there can be no assurance that the Company will continue to be able to obtain dried extract from China at a competitive price. Inventories Inventories are stated at the lower of cost and net realizable value. Cost is determined on the first in, first out basis. The Company provides for inventory reserves when conditions indicate that the selling price may be less than cost due to physical deterioration, obsolescence, changes in price levels or other factors. Additionally, the Company provides reserves for excess and slow-moving inventory on hand that is not expected to be sold to reduce the carrying amount of excess and slow-moving inventory to its estimated net realizable value. The reserves are based upon estimates about future demand from the Company’s customers and distributors as well as market conditions. Deferred Cost of Product Revenues Deferred cost of product revenues are stated at the lower of cost or net realizable value and include product sold where title has transferred but the criteria for revenue recognition have not been met. As of September 30, 2017 and December 31, 2016, the Company recorded deferred cost of product revenues of $2,943,000 and $2,688,000 respectively. Property, Plant and Equipment During the three and nine months ended September 30, 2017, the Company identified certain equipment that it disposed of, or intends to dispose of or sell. The Company has committed to sell or dispose of this equipment with an estimated total realizable fair value, less costs to sell, of approximately $20,000. Assets held for sale are included in prepaid expenses and other current assets. The fair value measurements were based on the sales value received subsequent to September 30, 2017. The Company recognized a combined loss on disposals or impairment charge totaling $369,000 for the three and nine months ended September 30, 2017 on these disposed or held for sale assets. The Company included the loss on disposal or impairment charge in selling, general and administrative expenses. Revenue Recognition The Company recognizes revenues when persuasive evidence of an arrangement exists, transfer of title has occurred or services have been rendered, the price is fixed or determinable and collectability is reasonably assured. If contractual obligations, acceptance provisions or other contingencies exist which indicate that the price is not fixed or determinable, revenue is recognized after such obligations or provisions are fulfilled or expire. Product revenues consist of revenues generated from sales of the Company’s products to distributors and direct customers, net of rebates and cash discounts. For sales of products made to distributors, the Company recognizes revenue either on a sell-in or sell-through basis depending on the specific facts and circumstances of the transaction(s) with the distributor. Factors considered include, but are not limited to, whether the payment terms offered to the distributor are structured to correspond to when product is resold, the distributor history of adhering to the terms of its contractual arrangements with the Company, whether the Company has a pattern of granting concessions for the benefit of the distributor and whether there are other conditions that may indicate that the sale to the distributor is not substantive. In some cases, the Company recognizes distributor revenue as title and risk of loss passes, provided all other revenue recognition criteria have been satisfied (the “sell-in” method). For certain sales to certain distributors, the revenue recognition criteria for distributor sales are not satisfied at the time title and risk of loss passes to the distributor; for example, in instances where “inventory protection” arrangements were historically offered to distributors that permitted these distributors to return to the Company certain unsold products, the Company considers future arrangements with that distributor not to be fixed or determinable, and accordingly, revenue with that distributor is deferred until products are resold to customers of the distributor (the “sell-through” method). As of September 30, 2017 and December 31, 2016, the Company recorded current deferred product revenues of $5,438,000 and $5,411,000, respectively. In addition, the Company had $490,000 in deferred product revenue that was classified as long-term as of September 30, 2017. There was no deferred product revenues classified as long term as of December 31, 2016. Included in deferred revenue as of September 30, 2017 and December 31, 2016 but excluded from deferred product revenues is deferred revenue related to license revenues. As of September 30, 2017, the Company recorded current and non-current deferred revenues of $260,000 and $1,588,000, respectively, related to payments received under licensing agreements as discussed further below. As of December 31, 2016, the Company recorded current and non-current deferred revenues of $236,000 and $1,787,000, respectively, related to payments received under licensing agreements as discussed further below. The cost of product revenues associated with such deferrals are also deferred and classified as deferred cost of product revenues in the consolidated balance sheets. Cash received from customers related to delivered product that may not represent a true sale is classified as customer refund liabilities in the consolidated balance sheets and the related cost of inventory remains in inventory in the consolidated balance sheets until the product is returned or is resold to customers of the distributor and revenue is recognized. During the three months ended September 30, 2017 and 2016, 41% and 44%, respectively, and for the nine months ended September 30, 2017 and 2016, 41% and 46%, respectively, of total revenues were recognized on a sell-through basis. From time to time, the Company offers certain product rebates and incentives to its distributors and growers, which are estimated and recorded as reductions to product revenues when the revenue is recognized. The accrued liability associated with rebate and incentives is recorded at the time the liability is incurred. The Company recognizes license revenues pursuant to strategic collaboration and distribution agreements under which the Company receives payments for the achievement of certain testing validation, regulatory progress and commercialization events. As these activities and payments are associated with exclusive rights that the Company provides in connection with strategic collaboration and distribution agreements over the term of the agreements, revenues related to the payments received are deferred and recognized over the term of the exclusive distribution period of the respective agreement. No payments were received under these agreements for the three and nine months ended September 30, 2017. For the three and nine months ended September 30, 2016, the Company had received payments totaling $300,000 under these agreements. For the three months ended September 30, 2017 and 2016, the Company recognized $58,000 and $85,000, respectively, as license revenues. For the nine months ended September 30, 2017 and 2016, the Company recognized $174,000 and $269,000, respectively, as license revenues. Research, Development and Patent Expenses Research and development expenses include payroll-related expenses, field trial costs, toxicology costs, regulatory costs, consulting costs and lab costs. Patent expenses include legal costs relating to the patents and patent filing costs. These costs are expensed to operations as incurred. For the three months ended September 30, 2017 and 2016, research and development expenses totaled $2,890,000 and $2,393,000, respectively, and patent expenses totaled $262,000 and $269,000, respectively. For the nine months ended September 30, 2017 and 2016, research and development expenses totaled $7,881,000 and $6,550,000, respectively, and patent expenses totaled $568,000 and $747,000, respectively. Net Loss per Share Net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding for the period. The calculation of basic and diluted net loss per share is the same for all periods presented as the effect of the potential common stock equivalents, which consist of stock options and warrants to purchase common stock, are anti-dilutive due to the Company’s net loss position. Anti-dilutive common stock equivalents are excluded from diluted net loss per share. The following table sets forth the potential shares of common stock as of the end of each period presented that are not included in the calculation of diluted net loss per share because to do so would be anti-dilutive (in thousands): SEPTEMBER 30, 2017 2016 Stock options outstanding 3,198 3,056 Warrants to purchase common stock 4,232 4,027 Restricted stock units outstanding 672 415 Recently Adopted Accounting Pronouncements In November 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2015-17, Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”), which amends the current requirement for organizations to present deferred tax assets and liabilities as current and noncurrent in a classified balance sheet. Organizations will now be required to classify all deferred tax assets and liabilities as noncurrent. ASU 2015-17 is effective for public companies for financial statements issued for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The amendments may be applied prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company adopted ASU 2015-17 effective January 1, 2017. Adoption of this standard did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows. In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). The amendments are effective for public companies for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. The Company adopted ASU 2016-09 effective January 1, 2017. Adoption of this standard did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows. In July 2015, the FASB issued Accounting Standards Update No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory (“ASU 2015-11”), which applies guidance on the subsequent measurement of inventory. ASU 2015-11 states that an entity should measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonable predictable costs of completion, disposal and transportation. The guidance excludes inventory measured using last-in, first-out or the retail inventory method. ASU 2015-11 is effective for interim and annual reporting periods beginning after December 15, 2016 including interim periods within those fiscal years. Early adoption is permitted. The Company did not early adopt ASU 2015-11. The Company adopted ASU 2015-11 effective January 1, 2017. Adoption of this standard did not have a material impact on the Company’s consolidated financial position, results of operations or cash flow. Recently Issued Accounting Pronouncements In August 2016, the FASB issued Accounting Standards Update No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). The amendments in this update clarify how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU No. 2016-15 will be effective for fiscal years beginning after December 15, 2017, with early adoption permitted. The Company has not elected to early adopt this guidance and is currently evaluating ASU 2016-15 to determine the impact to its consolidated financial statements. In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 introduces a new forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables. The estimate of expected credit losses will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. ASU 2016-13 also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. For public business entities that meet the definition of a Securities and Exchange Commission filer, ASU 2016-13 is effective for annual and interim reporting periods beginning after December 15, 2019, and the guidance is to be applied using the modified-retrospective approach. Earlier adoption is permitted for annual and interim reporting periods beginning after December 15, 2018. The Company is currently evaluating ASU 2016-13 to determine the impact to its consolidated financial statements and related disclosures. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) Leases: Amendments to the FASB Accounting Standards Codifications (“ASU 2016-02”), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 is effective for public companies for financial statements issued for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. Companies must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The Company is currently evaluating ASU 2016-02 to determine the potential impact to its consolidated financial statements and related disclosures. In January 2016, the FASB issued Accounting Standards Update 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). ASU 2016-01 applies to all entities that hold financial assets or owe financial liabilities and is intended to provide more useful information on the recognition, measurement, presentation and disclosure of financial instruments. Among other things, ASU 2016-01 (i) requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; (iii) eliminates the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities; (iv) eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; (v) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (vi) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; (vii) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; and (viii) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. For public business entities, ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating ASU 2016-01 to determine the potential impact to its consolidated financial statements and related disclosures. In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 and its related amendments provide new, globally applicable converged guidance concerning recognition and measurement of revenue. The new guidance requires the application of a five-step model to determine the amount and timing of revenue to be recognized. The underlying principle is that revenue is to be recognized for the transfer of goods or services to customers that reflects the amount of consideration that the Company expects to be entitled to in exchange for those goods or services. Additionally, significant additional disclosures are required about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The new guidance is effective for annual and interim periods beginning on or after December 15, 2017. ASU 2014-09 allows for either full retrospective or modified retrospective adoption. The full retrospective method requires ASU 2014-09 be applied to each prior period presented in the year of adoption and the cumulative effect of adoption would be reflected at the beginning of the year of adoption. The modified retrospective method has the cumulative effect of applying ASU 2014-09 at the beginning of the year of adoption. The Company is currently evaluating the transition method that will be elected and the potential effects of adopting the provisions of ASU 2014-09. The Company is continuing to assess the impact of the new guidance on its accounting policies and procedures and is evaluating the new requirements as applied to existing revenue contracts. Although the Company is continuing to assess the impact of the new guidance, the Company believes the most significant impact will relate to the recognition of product sales made to distributors. The Company currently recognizes revenue from the sale of products made to distributors on either a sell-in or sell-through basis depending on the specific circumstances of the arrangement. The new guidance will likely result in an acceleration of revenue as under the new standard, the Company may no longer be required to defer revenues related to distributors that are currently recognized on the sell-through basis. In addition, the new guidance will likely also result in expanded disclosures related to the variable consideration and the judgments used to estimate it. This change will also impact our balance sheet presentation with an expected decrease in deferred revenues, deferred cost of product revenues and net period-specific increases to retained earnings for the change in revenue recognition for current sell-through basis contracts. The Company is reviewing its revenue contracts and working on its plan for implementation of the new guidance which it will adopt beginning in the first quarter of 2018. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 3. Fair Value Measurements Accounting Standards Codification (“ASC”) 820, Fair Value Measurements ASC 820 requires that the valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820 establishes a three tier value hierarchy, which prioritizes inputs that may be used to measure fair value as follows: ● Level 1—Quoted prices in active markets for identical assets or liabilities. ● Level 2—Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. ● Level 3—Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. The following table presents the Company’s financial assets measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016 (in thousands): SEPTEMBER 30, 2017 TOTAL LEVEL 1 LEVEL 2 LEVEL 3 Assets Money market funds $ — $ — $ — $ — DECEMBER 31, 2016 TOTAL LEVEL 1 LEVEL 2 LEVEL 3 Assets Money market funds $ 3,752 $ 3,752 $ — $ — The Company’s money market funds are held at registered investment companies. As of December 31, 2016, the money market funds were in active markets and, therefore, are measured based on the Level 1 valuation hierarchy. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | 4. Inventories Inventories, net consist of the following (in thousands): As of September 30, 2017 and December 31, 2016, the Company had $270,000 and $127,000, respectively, in reserves against its inventories. SEPTEMBER 30, DECEMBER 31, 2017 2016 Raw materials $ 2,238 $ 3,491 Work in progress 2,110 2,044 Finished goods 4,985 2,947 $ 9,333 $ 8,482 |
Accrued Liabilities
Accrued Liabilities | 9 Months Ended |
Sep. 30, 2017 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | 5. Accrued Liabilities Accrued liabilities consist of the following (in thousands): SEPTEMBER 30, 2017 DECEMBER 31, 2016 Accrued customer incentives $ 2,473 $ 639 Accrued compensation 1,511 1,403 Accrued legal costs 854 569 Accrued warranty costs 578 754 Accrued liabilities, other 2,880 2,143 $ 8,296 $ 5,508 The Company warrants the specifications and/or performance of its products through implied product warranties and has extended product warranties to qualifying customers on a contractual basis. The Company estimates the costs that may be incurred during the warranty period and records a liability in the amount of such costs at the time product is shipped. The Company’s estimate is based on historical experience and estimates of future warranty costs as a result of increasing usage of the Company’s products. During the nine months ended September 30, 2017, the Company recognized $153,000 in warranty expense associated with product shipments for the period. This expense was reduced by $319,000 as a result of the historical usage of warranty reserves being lower than previously estimated. The Company periodically assesses the adequacy of its recorded warranty liability and adjusts the amount as necessary. Changes in the Company’s accrued warranty costs during the period are as follows (in thousands): Balance at December 31, 2016 $ 754 Warranties issued (released) during the period (166 ) Settlements made during the period (10 ) Balance at September 30, 2017 $ 578 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt | 6. Debt Debt, including debt due to related parties, consists of the following (in thousands): SEPTEMBER 30, 2017 DECEMBER 31, 2016 Secured promissory notes (“October 2012 and April 2013 Secured Promissory Notes”) bearing interest at 14.00% per annum, payable monthly through October 2018, collateralized by substantially all of the Company’s assets, net of unamortized debt discount as of September 30, 2017 and December 31, 2016 of $135 and $228, respectively, with an imputed interest rate of 15.5% $ 12,315 $ 12,222 Secured promissory note (“June 2014 Secured Promissory Note”) bearing interest at prime plus 2% (6.25% as of September 30, 2017) per annum, payable monthly through June 2036, collateralized by certain of the Company’s deposit accounts and MMM LLC’s inventories, chattel paper, accounts, equipment and general intangibles, net of unamortized debt discount as of September 30, 2017 and December 31, 2016 of $231 and $247, respectively, with an imputed interest rate of 6.5% 8,931 9,113 Secured revolving borrowing (“LSQ Financing”) bearing interest at (12.8% annually) payable through the lenders direct collection of certain accounts receivable through March 2018, collateralized by substantially all of the Company’s personal property, net of unamortized debt discount as of September 30, 2017 and December 31, 2016 of $108 and $0, respectively, with an imputed interest rate of 105% 1,096 — Secured equipment financing agreement (“Equipment Financing Agreement”) no stated interest rate, payable monthly through December 2017, net of an imputed interest discount as of September 30, 2017 and December 31, 2016 of $73 and $0, respectively with an imputed interest rate of 176% 354 — Senior secured promissory notes due to related parties (“August 2015 Senior Secured Promissory Notes”) bearing interest at 8% per annum, interest is payable biannually with principal payments due in increments at three, four and five years from the closing date, collateralized by substantially all of the Company’s assets, net of unamortized discount as of September 30, 2017 and December 31, 2016 of $2,469 and $3,333, respectively with an imputed interest rate of 10.8% (see Note 10) 37,531 36,667 Debt, including debt due to related parties 60,227 58,002 Less debt due to related parties (37,531 ) (36,667 ) Less current portion (1,692 ) (252 ) $ 21,004 $ 21,083 The fair value of the Company’s outstanding debt obligations as of September 30, 2017 and December 31, 2016 was $21,498,000 and $21,611,000, respectively, which was estimated based on a discounted cash flow model using an estimated market rate of interest of 15% for the fixed rate debt and 6% for the variable rate debt, and is classified as Level 3 within the fair value hierarchy. October 2012 and April 2013 Secured Promissory Notes On October 2, 2012, the Company borrowed $7,500,000 pursuant to senior notes (“October 2012 Secured Promissory Notes”) with a group of lenders. On April 10, 2013 (“Conversion Date”), the Company entered into an amendment to increase, by up to $5,000,000, the amount available under the terms of the loan agreement with respect to the October 2012 Secured Promissory Notes. Under this amendment, an additional $4,950,000 was issued in partial consideration for $3,700,000 in cash received and in partial conversion for the cancellation of a $1,250,000 subordinated convertible note (collectively, “April 2013 Secured Promissory Notes”). The total amount borrowed under the amended loan agreement for the October 2012 Secured Promissory Notes and the April 2013 Secured Promissory Notes increased from $7,500,000 to $12,450,000 as of the Conversion Date. The October 2012 and April 2013 Secured Promissory Notes bear interest at 14% at September 30, 2017. This loan is collateralized by substantially all of the Company’s assets. June 2014 Secured Promissory Note In June 2014, the Company borrowed $10,000,000 pursuant to a business loan agreement and promissory note (“June 2014 Secured Promissory Note”) with Five Star Bank (“Lender”) which bears interest at 6.25% as of September 30, 2017. The interest rate is subject to change and is based on the prime rate plus 2.00% per annum. The June 2014 Secured Promissory Note is repayable in monthly payments of $69,721 and adjusted from time-to-time as the interest rate changes, with the final payment due in June 2036. Certain of the Company’s deposit accounts and MMM LLC’s inventories, chattel paper, accounts, equipment and general intangibles have been pledged as collateral for the promissory note. The Company is required to maintain a deposit balance with the Lender of $1,560,000, which is recorded as restricted cash included in non-current assets. In addition, until the Company provides documentation that the proceeds were used for construction of the Company’s manufacturing plant, proceeds from the loan will be maintained in a restricted deposit account with the Lender. As of September 30, 2017, the Company had $933,000 remaining in this restricted deposit account, which is recorded as restricted cash included in current assets. LSQ Financing On March 24, 2017, the Company entered into an Invoice Purchase Agreement (the “LSQ Financing”) with LSQ Funding Group, L.C. (“LSQ”), pursuant to which LSQ may elect to purchase up to $7,000,000 of eligible customer invoices from the Company. The Company’s obligations under the LSQ Financing are secured by a lien on substantially all of the Company’s personal property; such lien is first priority with respect to the Company’s accounts receivable, inventory, and related property, pursuant to an intercreditor agreement, dated March 22, 2017 (the “Three Party Intercreditor Agreement”), with administrative agents for the October 2012 and April 2013 Secured Promissory Notes holders and the August 2015 Senior Secured Promissory Notes holders. Advances by LSQ may be made at an advance rate of up to 80% of the face value of the receivables being sold. Upon the sale of the receivable, we will not maintain servicing. LSQ may require us to repurchase accounts receivable if (i) the payment is disputed by the account debtor, with the purchaser being under no obligation to determine the bona fides of such dispute, (ii) the account debtor has become insolvent or (iii) upon the effective date of the termination of the LSQ Financing. LSQ will retain its security interest in any accounts repurchased by the Company. The Company pays to LSQ (i) an invoice purchase fee equal to 1% of the face amount of each purchased invoice, at the time of the purchase, and (ii) a funds usage fee equal to 0.035%, payable monthly in arrears. An aging and collection fee is charged at the time when the purchased invoice is collected, calculated as a percentage of the face amount of such invoice while unpaid (which percentage ranges from 0% to 0.35% depending upon the duration the invoice remains outstanding). The LSQ Financing will be effective for one year with automatic one year renewals thereafter unless terminated by the Company at least 60 and not greater than 90 days from the end of the then-effective term; a termination fee is due upon early termination by the Company if such termination is not requested within such 30-day window. LSQ may terminate this agreement with 30 days written notice at which time the LSQ Financing will be terminated at the earlier of the 30-day period, the end of the current term, or the end of the then renewal term. The events of default under the LSQ Financing include failure to pay amounts due, failure to turn over amounts due to LSQ within a cure period, breach of covenants, falsity of representations, and certain insolvency events. The Company incurred $215,000 in financing-related costs as part of the LSQ Financing that were recorded as a debt discount and amortized to interest expenses over the initial one-year term. The unamortized portion of these financing costs is $108,000 as of September 30, 2017. In April 2017, the Company began receiving advances under the LSQ Financing. The Company accounted for sales of accounts receivable under the LSQ Financing as a secured borrowing in accordance with ASC 860, Transfers and Servicing. Upon sale of the receivable, the Company may elect to set up a reserve where upon the cash for the sale remains with LSQ and the Company can draw on the available amount on the reserve account at any time. As of September 30, 2017, the Company had $1,512,000 included in accounts receivable that were transferred under this arrangement and had $25,000 in excess funds available on the reserve account. Equipment Financing On August 22, 2017, the Company signed an equipment financing agreement (“Equipment Financing Agreement”) to purchase certain equipment it had leased under a capital lease. The total borrowed under the Equipment Financing Agreement was $496,000. Principal payments of $142,000 had been made under the Equipment Financing Agreement as of September 30, 2017. Additional monthly principal payments totaling $354,000 are due through December 1, 2017. The Company will acquire title to the equipment once all payments have been made in accordance with the Equipment Financing Agreement. In the event the Company does not make all payments in accordance with Equipment Financing Agreement, the Equipment Financing Agreement will terminate and the lease schedule under which this equipment was originally acquired will resume. The Equipment Financing Agreement has no stated interest rate. The Company recorded imputed interest on this agreement of $69,000 for the three and nine months ended September 30, 2017. |
Share-Based Plans
Share-Based Plans | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Plans | 7. Share-Based Plans As of September 30, 2017, there were 3,198,000 options outstanding, 672,000 restricted stock units outstanding and 2,416,000 share-based awards available for grant under the outstanding equity incentive plans. For the three months ended September 30, 2017 and 2016, the Company recognized share-based compensation of $555,000 and $698,000, respectively. For the nine months ended September 30, 2017 and 2016, the Company recognized share-based compensation of $1,724,000 and $2,025,000, respectively. During the three months ended September 30, 2017 and 2016, the Company granted 29,000 and 308,000 options, respectively, at a weighted-average exercise price of $1.18 and $0.91, respectively. During the nine months ended September 30, 2017 and 2016, 85,000 and 1,261,000 options, respectively, were granted at a weighted-average exercise price of $1.56 and $1.12 per share, respectively. No options were exercised during the three months ended September 30, 2017. During the three months ended September 30, 2016, 8,000 options were exercised at a weighted average exercise price of $1.19 per share. During the nine months ended September 30, 2017, 14,000 and 45,000 options were exercised at a weighted-average exercise price of $1.21 and $0.56 per share, respectively. The following table summarizes the activity of restricted stock units from December 31, 2016 to September 30, 2017 (in thousands, except weighted average grant date fair value): WEIGHTED AVERAGE GRANT SHARES DATE FAIR OUTSTANDING VALUE Nonvested at December 31, 2016 350 $ 0.75 Granted 257 $ 1.14 Vested (395 ) $ 0.88 Forfeited — — Nonvested at September 30, 2017 212 $ 0.98 |
Capital Leases
Capital Leases | 9 Months Ended |
Sep. 30, 2017 | |
Leases [Abstract] | |
Capital Leases | 8. Capital Leases Capital Lease Termination Until July 31, 2017, the capital lease termination date, the Company accounted for certain equipment acquired under financing arrangements as capital leases. On August 22, 2017, the Company signed the Equipment Financing Agreement to purchase certain equipment it was leasing under a capital lease as further discussed in Note 6. The Company had no outstanding capital leases as of September 30, 2017. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 9. Commitments and Contingencies Operating Leases In September 2013 and then amended in April 2014, the Company entered into a lease agreement for approximately 27,300 square feet of office and laboratory space located in Davis, California. The initial term of the lease is for a period of 60 months and commenced in August 2014. The monthly base rent is $44,000 per month for the first 12 months with a 3% increase each year thereafter. Concurrent with this amendment, in April 2014, the Company entered into a lease agreement with an affiliate of the landlord to lease approximately 17,400 square feet of office and laboratory space in the same building complex in Davis, California. The initial term of the lease is for a period of 60 months and commenced in August 2014. The monthly base rent is $28,000 with a 3% increase each year thereafter. On January 19, 2016, the Company entered into an agreement with a sublessee to sublease approximately 3,800 square feet of vacant office space located in Davis, California pursuant to the terms of its lease agreement. The initial term of the sublease is for a period of approximately 43 months and commenced on February 1, 2016. The monthly base rent is approximately $5,000 per month for the first 12 months with a 5% increase each year thereafter. On July 21, 2017, the Company entered into an agreement with a sublessee to sublease approximately 2,500 square feet of vacant office space located in Davis, California pursuant to the terms of its lease agreement. The initial term of the sublease is for a period of approximately 17 months and commenced on August 1, 2017. The monthly base rent for the term of the lease is approximately $3,000 per month. Litigation On September 5, 2014, September 8, 2014, September 11, 2014, September 15, 2014 and November 3, 2014, the Company, along with certain of its current and former officers and directors and others were named as defendants in putative securities class action lawsuits filed in the U.S. District Court for the Eastern District of California. On February 13, 2015, these actions were consolidated as Special Situations Fund III QP, L.P. et al v. Marrone Bio Innovations, Inc. et al On September 9, 2014 and November 25, 2014, shareholder derivative actions were filed in the Superior Court of California, County of Yolo (Case No. CV14-1481) and the U.S. District Court for the Eastern District of California (Case No. 1:14-cv-02779-JAM-CKD), purportedly on the Company’s behalf, against certain current and former officers and members of its board of directors (the “2014 Derivative Actions”). The plaintiffs in the 2014 Derivative Actions alleged that the defendants breached their fiduciary duties, committed waste, were unjustly enriched and aided and abetted breaches of fiduciary duty by causing the Company to issue allegedly false and misleading statements. On October 14, 2015, a shareholder derivative action was filed in the Superior Court of California, County of Yolo (Case No. CV15-1423), purportedly on the Company’s behalf, against certain current and former officers and members of the Company’s board of directors and the Company’s independent registered public accounting firm (the “2015 Derivative Action,” and with the 2014 Derivative Actions, the “Derivative Actions”). The plaintiff in the 2015 Derivative Action alleged that the director and officer defendants breached their fiduciary duties, committed waste and were unjustly enriched by causing the Company to issue allegedly false and misleading statements and that the Company’s independent registered public accounting firm committed professional negligence and malpractice. The issues in the 2014 Derivative Actions and 2015 Derivative Action overlap substantially with those at issue in the Class Action described above. On November 15, 2016, the Company, in its capacity as a nominal defendant, entered into a stipulation of settlement (the “Stipulation”) in the Derivative Actions. On January 11, 2017, the Superior Court of California, County of Yolo entered an order preliminarily approving the settlement set forth in the Stipulation, and on April 5, 2017, it entered the final order and judgment approving the settlement set forth in the Stipulation. The Stipulation provides for dismissal of the shareholder derivative actions as to the Company, the certain current and former officers and members of the board of directors and the Company’s independent registered public accounting firm, and the Company agrees to adopt or maintain certain corporate governance reforms for at least four years. The Stipulation also provides for attorneys’ fees and expenses to be paid by the Company’s insurers to plaintiffs’ counsel. On June 22, 2017, plaintiffs in the derivative action in the U.S. District Court for the Eastern District of California filed a Notice of Voluntary Dismissal with Prejudice. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 10. Related Party Transactions August 2015 Senior Secured Promissory Notes On August 20, 2015, the Company entered into a purchase agreement with Ivy Science & Technology Fund, Waddell & Reed Advisors Science & Technology Fund and Ivy Funds VIP Science and Technology, each an affiliate of Waddell & Reed, which is a beneficial owner of more than 5% of the Company’s common stock. Pursuant to such purchase agreement, the Company sold to such affiliates senior secured promissory notes (“August 2015 Senior Secured Promissory Notes”) in the aggregate principal amount of $40,000,000. The August 2015 Senior Secured Promissory Notes bear interest at a rate of 8% per annum payable semi-annually on June 30 or December 31 of each year, commencing on December 31, 2015, with $10,000,000 payable three years from the closing, $10,000,000 payable four years from the closing and $20,000,000 payable five years from the closing. On May 31, 2016, the terms of the August 2015 Secured Promissory Notes were amended to remove the provisions that had required the Company to maintain a $15 million minimum cash balance. Debt due to related parties as of September 30, 2017 was $37,531,000, net of unamortized debt discount of $2,469,000. The fair value of the Company’s debt due to related parties was $38,141,000 and $38,120,000 as of September 30, 2017 and December 31, 2016, respectively, which was estimated based on a discounted cash flow model using an estimated market rate of interest of 11.25%, and is classified as Level 3 within the fair value hierarchy. Accrued interest due to related parties was $815,000 and $1,618,000 as of September 30, 2017 and December 31, 2016, respectively. |
Subsequent Event
Subsequent Event | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Event | 11. Subsequent Event October 2017 Convertible Note On October 12, 2017, the Company and Dwight W. Anderson (the “Lender”) entered into a convertible promissory note, which was restated in its entirety by a convertible promissory note entered into by the Company and the Lender on October 23, 2017, (the “October 2017 Convertible Note”). The October 2017 Convertible Note is an unsecured promissory note in the aggregate principal amount of up to $6,000,000, due on October 23, 2020 (the “Maturity Date”). The initial funding of $1,000,000 of the principal amount of the October 2017 Convertible Note occurred on October 12, 2017, and a second closing of an additional $1,000,000 of the principal amount of the October 2017 Convertible Note was funded on October 23, 2017. Pursuant to the terms of the October 2017 Convertible Note, the Lender may, in his sole discretion, fund an additional $2,000,000 of principal under the October 2017 Convertible Note on each of November 3, 2017 and December 3, 2017. The Company had not received the second discretionary payment under the October 2017 Convertible Note in the amount of $2,000,000 as of November 14, 2017. From the date of the closing through December 31, 2017, the October 2017 Convertible Note will bear interest at a rate of 1% per annum, payable in arrears on the Maturity Date, unless earlier converted into shares of the Company’s common stock as described below. Thereafter, beginning January 1, 2018, the October 2017 Convertible Note will bear interest at a rate of 10% per annum, payable in arrears on the Maturity Date, unless earlier converted into shares of the Company’s common stock as described below. Any or all of the principal or accrued interest under the October 2017 Convertible Note may be converted into shares of the Company’s common stock at a rate of one share of common stock per $1.00 of converting principal or interest, rounded down to the nearest share with any fractional amounts cancelled, at the election of the Lender by delivery of written notice to the Company. In addition, upon the consummation of a qualified equity financing of the Company prior to the Maturity Date, the aggregate outstanding principal balance of the October 2017 Convertible Note and all accrued and unpaid interest thereon may convert, at the option of the Lender, into that number of the securities issued and sold in such financing, determined by dividing (a) such aggregate principal and accrued interest amounts, by (b) the purchase price per share or unit paid by the purchasers of the Company’s securities issued and sold in such financing. Notwithstanding the foregoing, Lender’s ability to affect any such conversions will be limited by applicable provisions governing issuances of shares of the Company’s common stock under the rules of The Nasdaq Capital Market, subject to the Company’s receipt of any applicable waivers thereof, and any amounts not issuable to the Lender in the Company’s equity securities as a result of this limitation will be payable in cash. The Company has not yet determined the potential impact of the October 2017 Convertible Note to its consolidated financial statements and related disclosures. |
Significant Accounting Polici18
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying financial information as of September 30, 2017, and for the three and nine months ended September 30, 2017 and 2016, have been prepared by the Company, without audit, in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such SEC rules and regulations and accounting principles applicable for interim periods. However, the Company believes that the disclosures are adequate to make the information presented not misleading. The information included in this Quarterly Report on Form 10-Q should be read in connection with the consolidated financial statements and accompanying notes included in the Company’s Annual Report filed on Form 10-K, for the fiscal year ended December 31, 2016. In the opinion of management, the condensed consolidated financial statements as of September 30, 2017, and for the three and nine months ended September 30, 2017 and 2016, reflect all adjustments, which are normal recurring adjustments, necessary to present a fair statement of financial position, results of operations, comprehensive loss and cash flows. The results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the operating results for the full fiscal year or any future periods. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents. Cash and cash equivalents consists of cash on deposit, money market funds and certificates of deposit accounts with United States (“U.S.”) financial institutions. The Company is exposed to credit risk in the event of default by financial institutions to the extent that cash and cash equivalents balances with financial institutions are in excess of amounts that are insured by the Federal Deposit Insurance Corporation. The Company has not experienced any losses on these deposits. |
Restricted Cash | Restricted Cash The Company’s restricted cash consists of cash that the Company is contractually obligated to maintain in accordance with the terms of its June 2014 Secured Promissory Note (as defined in Note 6). See Note 6 for further discussion. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, accounts receivable and debt. The Company deposits its cash and cash equivalents with high credit quality domestic financial institutions with locations in the U.S. Such deposits may exceed federal deposit insurance limits. The Company believes the financial risks associated with these financial instruments are minimal. The Company’s customer base is dispersed across many different geographic areas, and currently most customers are pest management distributors in the U.S. Generally, receivables are due up to 120 days from the invoice date and are considered past due after this date, although the Company may offer extended terms from time to time. Revenues generated from international customers were, for the three months ended September 30, 2017 and 2016, 4% and 8%, respectively. Revenues generated from international customers were, for the nine months ended September 30, 2017 and 2016, 9% and 5%, respectively. The Company’s principal sources of revenues are its Regalia, Grandevo and Venerate product lines. These three product lines accounted for 87% and 91% of the Company’s total revenues for the three months ended September 30, 2017 and 2016, respectively, and 87% and 88% for the nine months ended September 30, 2017 and 2016, respectively. Customers to which 10% or more of the Company’s total revenues are attributable for any one of the periods presented consist of the following: CUSTOMER A CUSTOMER B Three months ended September 30, 2017 20 % 16 % 2016 25 % — Nine months ended September 30, 2017 25 % 4 % 2016 30 % — Customers to which 10% or more of the Company’s outstanding accounts receivable are attributable as of either September 30, 2017 or December 31, 2016 consist of the following: CUSTOMER A CUSTOMER B CUSTOMER C CUSTOMER D CUSTOMER E CUSTOMER F September 30, 2017 12 % 14 % — 33 % 14 % 11 % December 31, 2016 21 % 10 % 14 % — — — |
Concentrations of Supplier Dependence | Concentrations of Supplier Dependence The active ingredient in the Company’s Regalia product line is derived from the giant knotweed plant, which the Company obtains from China. The Company currently has one supplier of this plant. Such single supplier acquires raw knotweed from numerous regional sources and performs an extraction process on this plant, creating a dried extract that is shipped to the Company’s manufacturing plant. While the Company does not have a long-term supply contract with this supplier, the Company does have a long term business relationship with this supplier. The Company maintains 6 months of knotweed extract at any given time, but an unexpected disruption in supply could have an effect on Regalia supply and revenues. Although the Company has identified additional sources of raw knotweed, there can be no assurance that the Company will continue to be able to obtain dried extract from China at a competitive price. |
Inventories | Inventories Inventories are stated at the lower of cost and net realizable value. Cost is determined on the first in, first out basis. The Company provides for inventory reserves when conditions indicate that the selling price may be less than cost due to physical deterioration, obsolescence, changes in price levels or other factors. Additionally, the Company provides reserves for excess and slow-moving inventory on hand that is not expected to be sold to reduce the carrying amount of excess and slow-moving inventory to its estimated net realizable value. The reserves are based upon estimates about future demand from the Company’s customers and distributors as well as market conditions. |
Deferred Cost of Product Revenues | Deferred Cost of Product Revenues Deferred cost of product revenues are stated at the lower of cost or net realizable value and include product sold where title has transferred but the criteria for revenue recognition have not been met. As of September 30, 2017 and December 31, 2016, the Company recorded deferred cost of product revenues of $2,943,000 and $2,688,000 respectively. |
Property, Plant and Equipment | Property, Plant and Equipment During the three and nine months ended September 30, 2017, the Company identified certain equipment that it disposed of, or intends to dispose of or sell. The Company has committed to sell or dispose of this equipment with an estimated total realizable fair value, less costs to sell, of approximately $20,000. Assets held for sale are included in prepaid expenses and other current assets. The fair value measurements were based on the sales value received subsequent to September 30, 2017. The Company recognized a combined loss on disposals or impairment charge totaling $369,000 for the three and nine months ended September 30, 2017 on these disposed or held for sale assets. The Company included the loss on disposal or impairment charge in selling, general and administrative expenses. |
Revenue Recognition | Revenue Recognition The Company recognizes revenues when persuasive evidence of an arrangement exists, transfer of title has occurred or services have been rendered, the price is fixed or determinable and collectability is reasonably assured. If contractual obligations, acceptance provisions or other contingencies exist which indicate that the price is not fixed or determinable, revenue is recognized after such obligations or provisions are fulfilled or expire. Product revenues consist of revenues generated from sales of the Company’s products to distributors and direct customers, net of rebates and cash discounts. For sales of products made to distributors, the Company recognizes revenue either on a sell-in or sell-through basis depending on the specific facts and circumstances of the transaction(s) with the distributor. Factors considered include, but are not limited to, whether the payment terms offered to the distributor are structured to correspond to when product is resold, the distributor history of adhering to the terms of its contractual arrangements with the Company, whether the Company has a pattern of granting concessions for the benefit of the distributor and whether there are other conditions that may indicate that the sale to the distributor is not substantive. In some cases, the Company recognizes distributor revenue as title and risk of loss passes, provided all other revenue recognition criteria have been satisfied (the “sell-in” method). For certain sales to certain distributors, the revenue recognition criteria for distributor sales are not satisfied at the time title and risk of loss passes to the distributor; for example, in instances where “inventory protection” arrangements were historically offered to distributors that permitted these distributors to return to the Company certain unsold products, the Company considers future arrangements with that distributor not to be fixed or determinable, and accordingly, revenue with that distributor is deferred until products are resold to customers of the distributor (the “sell-through” method). As of September 30, 2017 and December 31, 2016, the Company recorded current deferred product revenues of $5,438,000 and $5,411,000, respectively. In addition, the Company had $490,000 in deferred product revenue that was classified as long-term as of September 30, 2017. There was no deferred product revenues classified as long term as of December 31, 2016. Included in deferred revenue as of September 30, 2017 and December 31, 2016 but excluded from deferred product revenues is deferred revenue related to license revenues. As of September 30, 2017, the Company recorded current and non-current deferred revenues of $260,000 and $1,588,000, respectively, related to payments received under licensing agreements as discussed further below. As of December 31, 2016, the Company recorded current and non-current deferred revenues of $236,000 and $1,787,000, respectively, related to payments received under licensing agreements as discussed further below. The cost of product revenues associated with such deferrals are also deferred and classified as deferred cost of product revenues in the consolidated balance sheets. Cash received from customers related to delivered product that may not represent a true sale is classified as customer refund liabilities in the consolidated balance sheets and the related cost of inventory remains in inventory in the consolidated balance sheets until the product is returned or is resold to customers of the distributor and revenue is recognized. During the three months ended September 30, 2017 and 2016, 41% and 44%, respectively, and for the nine months ended September 30, 2017 and 2016, 41% and 46%, respectively, of total revenues were recognized on a sell-through basis. From time to time, the Company offers certain product rebates and incentives to its distributors and growers, which are estimated and recorded as reductions to product revenues when the revenue is recognized. The accrued liability associated with rebate and incentives is recorded at the time the liability is incurred. The Company recognizes license revenues pursuant to strategic collaboration and distribution agreements under which the Company receives payments for the achievement of certain testing validation, regulatory progress and commercialization events. As these activities and payments are associated with exclusive rights that the Company provides in connection with strategic collaboration and distribution agreements over the term of the agreements, revenues related to the payments received are deferred and recognized over the term of the exclusive distribution period of the respective agreement. No payments were received under these agreements for the three and nine months ended September 30, 2017. For the three and nine months ended September 30, 2016, the Company had received payments totaling $300,000 under these agreements. For the three months ended September 30, 2017 and 2016, the Company recognized $58,000 and $85,000, respectively, as license revenues. For the nine months ended September 30, 2017 and 2016, the Company recognized $174,000 and $269,000, respectively, as license revenues. |
Research, Development and Patent Expenses | Research, Development and Patent Expenses Research and development expenses include payroll-related expenses, field trial costs, toxicology costs, regulatory costs, consulting costs and lab costs. Patent expenses include legal costs relating to the patents and patent filing costs. These costs are expensed to operations as incurred. For the three months ended September 30, 2017 and 2016, research and development expenses totaled $2,890,000 and $2,393,000, respectively, and patent expenses totaled $262,000 and $269,000, respectively. For the nine months ended September 30, 2017 and 2016, research and development expenses totaled $7,881,000 and $6,550,000, respectively, and patent expenses totaled $568,000 and $747,000, respectively. |
Net Loss Per Share | Net Loss per Share Net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding for the period. The calculation of basic and diluted net loss per share is the same for all periods presented as the effect of the potential common stock equivalents, which consist of stock options and warrants to purchase common stock, are anti-dilutive due to the Company’s net loss position. Anti-dilutive common stock equivalents are excluded from diluted net loss per share. The following table sets forth the potential shares of common stock as of the end of each period presented that are not included in the calculation of diluted net loss per share because to do so would be anti-dilutive (in thousands): SEPTEMBER 30, 2017 2016 Stock options outstanding 3,198 3,056 Warrants to purchase common stock 4,232 4,027 Restricted stock units outstanding 672 415 |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In November 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2015-17, Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”), which amends the current requirement for organizations to present deferred tax assets and liabilities as current and noncurrent in a classified balance sheet. Organizations will now be required to classify all deferred tax assets and liabilities as noncurrent. ASU 2015-17 is effective for public companies for financial statements issued for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. The amendments may be applied prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company adopted ASU 2015-17 effective January 1, 2017. Adoption of this standard did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows. In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). The amendments are effective for public companies for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. The Company adopted ASU 2016-09 effective January 1, 2017. Adoption of this standard did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows. In July 2015, the FASB issued Accounting Standards Update No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory (“ASU 2015-11”), which applies guidance on the subsequent measurement of inventory. ASU 2015-11 states that an entity should measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonable predictable costs of completion, disposal and transportation. The guidance excludes inventory measured using last-in, first-out or the retail inventory method. ASU 2015-11 is effective for interim and annual reporting periods beginning after December 15, 2016 including interim periods within those fiscal years. Early adoption is permitted. The Company did not early adopt ASU 2015-11. The Company adopted ASU 2015-11 effective January 1, 2017. Adoption of this standard did not have a material impact on the Company’s consolidated financial position, results of operations or cash flow. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In August 2016, the FASB issued Accounting Standards Update No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). The amendments in this update clarify how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU No. 2016-15 will be effective for fiscal years beginning after December 15, 2017, with early adoption permitted. The Company has not elected to early adopt this guidance and is currently evaluating ASU 2016-15 to determine the impact to its consolidated financial statements. In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 introduces a new forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables. The estimate of expected credit losses will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. ASU 2016-13 also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. For public business entities that meet the definition of a Securities and Exchange Commission filer, ASU 2016-13 is effective for annual and interim reporting periods beginning after December 15, 2019, and the guidance is to be applied using the modified-retrospective approach. Earlier adoption is permitted for annual and interim reporting periods beginning after December 15, 2018. The Company is currently evaluating ASU 2016-13 to determine the impact to its consolidated financial statements and related disclosures. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) Leases: Amendments to the FASB Accounting Standards Codifications (“ASU 2016-02”), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. ASU 2016-02 is effective for public companies for financial statements issued for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. Companies must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The Company is currently evaluating ASU 2016-02 to determine the potential impact to its consolidated financial statements and related disclosures. In January 2016, the FASB issued Accounting Standards Update 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). ASU 2016-01 applies to all entities that hold financial assets or owe financial liabilities and is intended to provide more useful information on the recognition, measurement, presentation and disclosure of financial instruments. Among other things, ASU 2016-01 (i) requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; (iii) eliminates the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities; (iv) eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; (v) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (vi) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; (vii) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; and (viii) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. For public business entities, ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating ASU 2016-01 to determine the potential impact to its consolidated financial statements and related disclosures. In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 and its related amendments provide new, globally applicable converged guidance concerning recognition and measurement of revenue. The new guidance requires the application of a five-step model to determine the amount and timing of revenue to be recognized. The underlying principle is that revenue is to be recognized for the transfer of goods or services to customers that reflects the amount of consideration that the Company expects to be entitled to in exchange for those goods or services. Additionally, significant additional disclosures are required about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The new guidance is effective for annual and interim periods beginning on or after December 15, 2017. ASU 2014-09 allows for either full retrospective or modified retrospective adoption. The full retrospective method requires ASU 2014-09 be applied to each prior period presented in the year of adoption and the cumulative effect of adoption would be reflected at the beginning of the year of adoption. The modified retrospective method has the cumulative effect of applying ASU 2014-09 at the beginning of the year of adoption. The Company is currently evaluating the transition method that will be elected and the potential effects of adopting the provisions of ASU 2014-09. The Company is continuing to assess the impact of the new guidance on its accounting policies and procedures and is evaluating the new requirements as applied to existing revenue contracts. Although the Company is continuing to assess the impact of the new guidance, the Company believes the most significant impact will relate to the recognition of product sales made to distributors. The Company currently recognizes revenue from the sale of products made to distributors on either a sell-in or sell-through basis depending on the specific circumstances of the arrangement. The new guidance will likely result in an acceleration of revenue as under the new standard, the Company may no longer be required to defer revenues related to distributors that are currently recognized on the sell-through basis. In addition, the new guidance will likely also result in expanded disclosures related to the variable consideration and the judgments used to estimate it. This change will also impact our balance sheet presentation with an expected decrease in deferred revenues, deferred cost of product revenues and net period-specific increases to retained earnings for the change in revenue recognition for current sell-through basis contracts. The Company is reviewing its revenue contracts and working on its plan for implementation of the new guidance which it will adopt beginning in the first quarter of 2018. |
Significant Accounting Polici19
Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Risk Percentage | Customers to which 10% or more of the Company’s total revenues are attributable for any one of the periods presented consist of the following: CUSTOMER A CUSTOMER B Three months ended September 30, 2017 20 % 16 % 2016 25 % — Nine months ended September 30, 2017 25 % 4 % 2016 30 % — Customers to which 10% or more of the Company’s outstanding accounts receivable are attributable as of either September 30, 2017 or December 31, 2016 consist of the following: CUSTOMER A CUSTOMER B CUSTOMER C CUSTOMER D CUSTOMER E CUSTOMER F September 30, 2017 12 % 14 % — 33 % 14 % 11 % December 31, 2016 21 % 10 % 14 % — — — |
Schedule of Anti-dilutive Securities Excluded from Computation of Diluted Net Loss Per Share | The following table sets forth the potential shares of common stock as of the end of each period presented that are not included in the calculation of diluted net loss per share because to do so would be anti-dilutive (in thousands): SEPTEMBER 30, 2017 2016 Stock options outstanding 3,198 3,056 Warrants to purchase common stock 4,232 4,027 Restricted stock units outstanding 672 415 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Assets and Liabilities Measured at Fair Value on Recurring Basis | The following table presents the Company’s financial assets measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016 (in thousands): SEPTEMBER 30, 2017 TOTAL LEVEL 1 LEVEL 2 LEVEL 3 Assets Money market funds $ — $ — $ — $ — DECEMBER 31, 2016 TOTAL LEVEL 1 LEVEL 2 LEVEL 3 Assets Money market funds $ 3,752 $ 3,752 $ — $ — |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories, Net | As of September 30, 2017 and December 31, 2016, the Company had $270,000 and $127,000, respectively, in reserves against its inventories. SEPTEMBER 30, DECEMBER 31, 2017 2016 Raw materials $ 2,238 $ 3,491 Work in progress 2,110 2,044 Finished goods 4,985 2,947 $ 9,333 $ 8,482 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Liabilities | Accrued liabilities consist of the following (in thousands): SEPTEMBER 30, 2017 DECEMBER 31, 2016 Accrued customer incentives $ 2,473 $ 639 Accrued compensation 1,511 1,403 Accrued legal costs 854 569 Accrued warranty costs 578 754 Accrued liabilities, other 2,880 2,143 $ 8,296 $ 5,508 |
Schedule of Changes in Accrued Warranty Costs | Changes in the Company’s accrued warranty costs during the period are as follows (in thousands): Balance at December 31, 2016 $ 754 Warranties issued (released) during the period (166 ) Settlements made during the period (10 ) Balance at September 30, 2017 $ 578 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Debt Including Debt to Related Parties | Debt, including debt due to related parties, consists of the following (in thousands): SEPTEMBER 30, 2017 DECEMBER 31, 2016 Secured promissory notes (“October 2012 and April 2013 Secured Promissory Notes”) bearing interest at 14.00% per annum, payable monthly through October 2018, collateralized by substantially all of the Company’s assets, net of unamortized debt discount as of September 30, 2017 and December 31, 2016 of $135 and $228, respectively, with an imputed interest rate of 15.5% $ 12,315 $ 12,222 Secured promissory note (“June 2014 Secured Promissory Note”) bearing interest at prime plus 2% (6.25% as of September 30, 2017) per annum, payable monthly through June 2036, collateralized by certain of the Company’s deposit accounts and MMM LLC’s inventories, chattel paper, accounts, equipment and general intangibles, net of unamortized debt discount as of September 30, 2017 and December 31, 2016 of $231 and $247, respectively, with an imputed interest rate of 6.5% 8,931 9,113 Secured revolving borrowing (“LSQ Financing”) bearing interest at (12.8% annually) payable through the lenders direct collection of certain accounts receivable through March 2018, collateralized by substantially all of the Company’s personal property, net of unamortized debt discount as of September 30, 2017 and December 31, 2016 of $108 and $0, respectively, with an imputed interest rate of 105% 1,096 — Secured equipment financing agreement (“Equipment Financing Agreement”) no stated interest rate, payable monthly through December 2017, net of an imputed interest discount as of September 30, 2017 and December 31, 2016 of $73 and $0, respectively with an imputed interest rate of 176% 354 — Senior secured promissory notes due to related parties (“August 2015 Senior Secured Promissory Notes”) bearing interest at 8% per annum, interest is payable biannually with principal payments due in increments at three, four and five years from the closing date, collateralized by substantially all of the Company’s assets, net of unamortized discount as of September 30, 2017 and December 31, 2016 of $2,469 and $3,333, respectively with an imputed interest rate of 10.8% (see Note 10) 37,531 36,667 Debt, including debt due to related parties 60,227 58,002 Less debt due to related parties (37,531 ) (36,667 ) Less current portion (1,692 ) (252 ) $ 21,004 $ 21,083 |
Share-Based Plans (Tables)
Share-Based Plans (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Restricted Stock Units Activity | The following table summarizes the activity of restricted stock units from December 31, 2016 to September 30, 2017 (in thousands, except weighted average grant date fair value): WEIGHTED AVERAGE GRANT SHARES DATE FAIR OUTSTANDING VALUE Nonvested at December 31, 2016 350 $ 0.75 Granted 257 $ 1.14 Vested (395 ) $ 0.88 Forfeited — — Nonvested at September 30, 2017 212 $ 0.98 |
Summary of Business, Basis of25
Summary of Business, Basis of Presentation and Liquidity (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 9 Months Ended | |||
Apr. 30, 2017 | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Dec. 31, 2015 | |
Date of incorporation | Jun. 15, 2006 | ||||
Number of common stock shares issued | 857,000 | ||||
Proceeds from issuance of offering | $ 8,200 | ||||
Debt agreements financial and non-financial covenants | As of September 30, 2017, the Company had an accumulated deficit of $258,008,000, has incurred significant losses since inception and expects to continue to incur losses for the foreseeable future. The Company has funded operations primarily with net proceeds from public offerings of common stock, private placements of convertible preferred stock, convertible notes, and promissory notes and term loans, as well as with the proceeds from the sale of its products and payments under strategic collaboration and distribution agreements and government grants. The Company will need to generate significant revenue growth to achieve and maintain profitability. As of September 30, 2017, the Company had working capital of $8,436,000, including cash and cash equivalents of $3,737,000. In addition, as of September 30, 2017, the Company had a total of $2,493,000 of restricted cash relating to a debt agreement (see Note 6). | ||||
Accumulated deficit | $ 258,191 | $ 234,647 | |||
Working capital | 8,619 | ||||
Cash and cash equivalents | 3,737 | 9,609 | $ 16,013 | $ 19,838 | |
Restricted cash | 2,493 | ||||
Debt excluding related parties | 22,696 | ||||
Debt due to related parties | $ 28,649 | $ 36,667 | |||
IPO [Member] | |||||
Number of common stock shares issued | 6,571,000 | ||||
Sale of stock price per share | $ 1.40 | ||||
Proceeds from issuance of offering | $ 9,200 |
Significant Accounting Polici26
Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Concentration risk, supplier | The active ingredient in the Companys Regalia product line is derived from the giant knotweed plant, which the Company obtains from China. The Company currently has one supplier of this plant. Such single supplier acquires raw knotweed from numerous regional sources and performs an extraction process on this plant, creating a dried extract that is shipped to the Companys manufacturing plant. While the Company does not have a long-term supply contract with this supplier, the Company does have a long term business relationship with this supplier. The Company maintains 6 months of knotweed extract at any given time, but an unexpected disruption in supply could have an effect on Regalia supply and revenues. Although the Company has identified additional sources of raw knotweed, there can be no assurance that the Company will continue to be able to obtain dried extract from China at a competitive price. | ||||
Deferred cost of product revenues | $ 2,943 | $ 2,943 | $ 2,688 | ||
Equipment held for sale | 20 | 20 | |||
Impairment charge | 369 | 369 | |||
Current deferred product revenues | 5,698 | 5,698 | 5,647 | ||
Non-current deferred revenues | $ 2,077 | $ 2,077 | 1,787 | ||
Percentage of total revenue recognized on sell-through basis | 41.00% | 44.00% | 41.00% | 46.00% | |
Deferred payments received | $ 300 | $ 300 | |||
Recognized license revenues | 58 | 85 | 174 | 269 | |
Research and development expenses | 2,890 | 2,393 | 7,881 | 6,550 | |
Patent expenses | 262 | $ 269 | 568 | $ 747 | |
Strategic Collaboration And Distribution Agreements [Member] | |||||
Current deferred product revenues | 260 | 260 | 236 | ||
Non-current deferred revenues | 1,588 | 1,588 | 1,787 | ||
Revenue Recognized In [Member] | |||||
Current deferred product revenues | 5,438 | 5,438 | 5,411 | ||
Non-current deferred revenues | $ 490 | $ 490 | $ 0 | ||
Sales Revenue Net [Member] | Customer Concentration Risk [Member] | |||||
Customers accounted for percentage of company's total revenues | 10.00% | ||||
Sales Revenue Net [Member] | Customer Concentration Risk [Member] | International [Member] | |||||
Customers accounted for percentage of company's total revenues | 4.00% | 8.00% | 9.00% | 5.00% | |
Sales Revenue Net [Member] | Product Concentration Risk [Member] | |||||
Customers accounted for percentage of company's total revenues | 87.00% | 91.00% | 87.00% | 88.00% | |
Maximum [Member] | |||||
Receivables due period | 120 days |
Significant Accounting Polici27
Significant Accounting Policies - Schedule of Risk Percentage (Details) - Customer Concentration Risk [Member] | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Sales Revenue Net [Member] | |||||
Customers accounted for percentage of company's total revenues and accounts receivable | 10.00% | ||||
Accounts Receivable [Member] | |||||
Customers accounted for percentage of company's total revenues and accounts receivable | 10.00% | ||||
Customer A [Member] | Sales Revenue Net [Member] | |||||
Customers accounted for percentage of company's total revenues and accounts receivable | 20.00% | 25.00% | 25.00% | 30.00% | |
Customer A [Member] | Accounts Receivable [Member] | |||||
Customers accounted for percentage of company's total revenues and accounts receivable | 12.00% | 21.00% | |||
Customer B [Member] | Sales Revenue Net [Member] | |||||
Customers accounted for percentage of company's total revenues and accounts receivable | 16.00% | 0.00% | 4.00% | 0.00% | |
Customer B [Member] | Accounts Receivable [Member] | |||||
Customers accounted for percentage of company's total revenues and accounts receivable | 14.00% | 10.00% | |||
Customer C [Member] | Accounts Receivable [Member] | |||||
Customers accounted for percentage of company's total revenues and accounts receivable | 0.00% | 14.00% | |||
Customer D [Member] | Accounts Receivable [Member] | |||||
Customers accounted for percentage of company's total revenues and accounts receivable | 33.00% | 0.00% | |||
Customer E [Member] | Accounts Receivable [Member] | |||||
Customers accounted for percentage of company's total revenues and accounts receivable | 14.00% | 0.00% | |||
Customer F [Member] | Accounts Receivable [Member] | |||||
Customers accounted for percentage of company's total revenues and accounts receivable | 11.00% | 0.00% |
Significant Accounting Polici28
Significant Accounting Policies - Schedule of Anti-dilutive Securities Excluded from Computation of Diluted Net Loss Per Share (Details) - shares shares in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Employee Stock Option [Member] | ||
Anti-dilutive securities excluded from computation of earning per share | 3,198 | 3,056 |
Warrants To Purchase Common Stock [Member] | ||
Anti-dilutive securities excluded from computation of earning per share | 4,232 | 4,027 |
Restricted Stock Units RSU [Member] | ||
Anti-dilutive securities excluded from computation of earning per share | 672 | 415 |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - Money Market Funds [Member] - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Assets at fair value | $ 3,752 | |
Quoted Prices in Active Markets for Identical Assets or Liabilities Level 1 [Member] | ||
Assets at fair value | 3,752 | |
Observable Inputs Other Than Quoted Prices in Active Markets for Identical Assets and Liabilities Level 2 [Member] | ||
Assets at fair value | ||
Unobservable Inputs Level 3 [Member] | ||
Assets at fair value |
Inventories (Details Narrative)
Inventories (Details Narrative) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Reserves against inventories | $ 270 | $ 127 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventories, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 2,238 | $ 3,491 |
Work in progress | 2,110 | 2,044 |
Finished goods | 4,985 | 2,947 |
Inventories, total | $ 9,333 | $ 8,482 |
Accrued Liabilities (Details Na
Accrued Liabilities (Details Narrative) $ in Thousands | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Payables and Accruals [Abstract] | |
Warranty expense | $ 153 |
Reduction of warrant expense due to historical usage of warrant reserve | $ 319 |
Accrued Liabilities - Schedule
Accrued Liabilities - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Payables and Accruals [Abstract] | ||
Accrued customer incentives | $ 2,473 | $ 639 |
Accrued compensation | 1,511 | 1,403 |
Accrued legal costs | 854 | 569 |
Accrued warranty costs | 578 | 754 |
Accrued liabilities, other | 2,880 | 2,143 |
Accrued liabilities, total | $ 8,296 | $ 5,508 |
Accrued Liabilities - Schedul34
Accrued Liabilities - Schedule of Changes in Accrued Warranty Costs (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Payables and Accruals [Abstract] | |
Beginning Balance | $ 754 |
Warranties issued (released) during the period | (166) |
Settlements made during the period | (10) |
Ending Balance | $ 578 |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) | Mar. 24, 2017 | Apr. 10, 2013 | Oct. 02, 2012 | Jun. 30, 2014 | Sep. 30, 2017 | Dec. 31, 2016 | Aug. 22, 2017 |
Required deposit balance | $ 1,560,000 | $ 1,560,000 | |||||
Restricted cash, current portion | 933,000 | $ 1,444,000 | |||||
Invoice purchase fee percentage | 1.00% | ||||||
Additional monthly funds usage rate | 0.035% | ||||||
Automatic renewal receivable financing agreement duration | 1 year | ||||||
Financing-related costs incurred | 215,000 | ||||||
Unamortized debt discount, current | 108,000 | ||||||
Accounts receivable | 1,512,000 | ||||||
Reserve amount available to draw | 25,000 | ||||||
Equipment Financing Agreement [Member] | |||||||
Amount borrowed under amended loan agreement | $ 496,000 | ||||||
Payment principal | 142,000 | ||||||
Imputed interest | 69,000 | ||||||
Equipment Financing Agreement [Member] | Due through December 1, 2017 [Member] | |||||||
Payment principal | $ 354,000 | ||||||
LSQ Funding Group L C [Member] | |||||||
Sale of certain accounts receivable to third-party | $ 7,000,000 | ||||||
Advancement rate of receivables face value | 80.00% | ||||||
Revolving Credit Facility [Member] | |||||||
Line of credit facility maximum borrowing limit | $ 10,000,000 | ||||||
Maximum [Member] | |||||||
Aging collection fee percentage | 0.00% | ||||||
Notice period to cancel receivable financing agreement | 60 days | ||||||
Minimum [Member] | |||||||
Aging collection fee percentage | 0.35% | ||||||
Notice period to cancel receivable financing agreement | 90 days | ||||||
Secured Debt [Member] | |||||||
Debt issued in partial consideration, cash | $ 3,700,000 | ||||||
October 2012 Secured Promissory Notes [Member] | Secured Debt [Member] | |||||||
Debt instrument borrowing amount | $ 7,500,000 | ||||||
October 2012 Secured Promissory Notes [Member] | Secured Debt [Member] | Maximum [Member] | |||||||
Increase in amount available under loan agreement | 5,000,000 | ||||||
April 2013 Secured Promissory Notes [Member] | Secured Debt [Member] | |||||||
Additional debt issued under amendment | 4,950,000 | ||||||
Debt issued in cash consideration and in partial conversion for cancellation of principal balance | 1,250,000 | ||||||
Debt instrument, interest rate | 14.00% | ||||||
April 2013 Secured Promissory Notes [Member] | Secured Debt [Member] | Maximum [Member] | |||||||
Amount borrowed under amended loan agreement | 12,450,000 | ||||||
October 2012 Subordinated Convertible Notes [Member] | Secured Debt [Member] | |||||||
Debt instrument, interest rate | 14.00% | ||||||
October 2012 Subordinated Convertible Notes [Member] | Secured Debt [Member] | Minimum [Member] | |||||||
Amount borrowed under amended loan agreement | $ 7,500,000 | ||||||
Secured Promissory Note Interest Rate At Prime Plus 2% Through June 2036 [Member] | Secured Debt [Member] | |||||||
Debt instrument, interest rate | 6.25% | ||||||
Debt instrument, prime rate | 2.00% | 2.00% | 2.00% | ||||
Debt instrument description | Promissory note (June 2014 Secured Promissory Note) with Five Star Bank (Lender) which bears interest at 6.25% as of September 30, 2017. The interest rate is subject to change and is based on the prime rate plus 2.00% per annum. | ||||||
Debt instrument monthly payment | $ 69,721 | ||||||
Debt instrument, maturity date | Jun. 30, 2036 | ||||||
Unobservable Inputs Level 3 [Member] | |||||||
Fair value of debt | $ 21,498,000 | $ 21,611,000 | |||||
Unobservable Inputs Level 3 [Member] | Fixed Income Interest Rate [Member] | |||||||
Estimated market rate of interest | 15.00% | 15.00% | |||||
Unobservable Inputs Level 3 [Member] | Variable Income Interest Rate [Member] | |||||||
Estimated market rate of interest | 6.00% | 6.00% |
Debt - Schedule of Debt Includi
Debt - Schedule of Debt Including Debt to Related Parties (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Debt, including debt due to related parties | $ 61,223 | $ 58,002 |
Less debt due to related parties | (28,649) | (36,667) |
Less current portion | (1,692) | (252) |
Debt | 21,004 | 21,083 |
Secured Debt [Member] | Secured Promissory Notes Interest Rate At 14.00% Through October 2018 [Member] | ||
Debt, including debt due to related parties | 12,315 | 12,222 |
Secured Debt [Member] | Secured Promissory Note Interest Rate At Prime Plus 2% Through June 2036 [Member] | ||
Debt, including debt due to related parties | 8,931 | 9,113 |
Secured Debt [Member] | Secured Revolving Borrowing Interest Rate At 12.8% Through March 2018 [Member] | ||
Debt, including debt due to related parties | 1,096 | |
Secured Debt [Member] | Senior Secured Promissory No Stated Interest Rate [Member] | ||
Debt, including debt due to related parties | 354 | |
Secured Debt [Member] | Senior Secured Promissory Note Interest Rate At 8% [Member] | ||
Debt, including debt due to related parties | $ 37,531 | $ 36,667 |
Debt - Schedule of Debt Inclu37
Debt - Schedule of Debt Including Debt to Related Parties (Details) (Parenthetical) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | 12 Months Ended |
Jun. 30, 2014 | Sep. 30, 2017 | Dec. 31, 2016 | |
Equipment Financing Agreement [Member] | |||
Imputed interest discount | $ 73 | $ 0 | |
Secured Debt [Member] | Secured Promissory Notes Interest Rate At 14.00% Through October 2018 [Member] | |||
Debt instrument, interest rate | 14.00% | 14.00% | |
Debt instrument, payment terms | Payable monthly through October 2018 | Payable monthly through October 2018 | |
Unamortized debt discount | $ 135 | $ 228 | |
Debt instrument, imputed interest rate | 15.50% | 15.50% | |
Secured Debt [Member] | October 2012 Secured Promissory Notes [Member] | |||
Debt instrument, interest rate | 14.00% | ||
Secured Debt [Member] | April 2013 Secured Promissory Notes [Member] | |||
Debt instrument, interest rate | 14.00% | ||
Secured Debt [Member] | Secured Promissory Note Interest Rate At Prime Plus 2% Through June 2036 [Member] | |||
Debt instrument, interest rate | 6.25% | ||
Debt instrument, payment terms | Payable monthly through June 2036 | Payable monthly through June 2036 | |
Unamortized debt discount | $ 231 | $ 247 | |
Debt instrument, imputed interest rate | 6.50% | 6.50% | |
Debt instrument, prime rate | 2.00% | 2.00% | 2.00% |
Secured Debt [Member] | Secured Revolving Borrowing Interest Rate At 12.8% Through March 2018 [Member] | |||
Debt instrument, interest rate | 12.80% | 12.80% | |
Debt instrument, payment terms | through March 2018 | through March 2018 | |
Unamortized debt discount | $ 108 | $ 0 | |
Debt instrument, imputed interest rate | 105.00% | 105.00% | |
Secured Debt [Member] | Senior Secured Promissory No Stated Interest Rate [Member] | |||
Debt instrument, payment terms | Payable monthly through December 2017 | Payable monthly through December 2017 | |
Debt instrument, imputed interest rate | 176.00% | 176.00% | |
Secured Debt [Member] | Senior Secured Promissory Note Interest Rate At 8% [Member] | |||
Debt instrument, interest rate | 8.00% | 8.00% | |
Debt instrument, payment terms | Payable biannually with principal payments due in increments at three, four and five years from the closing date | Payable biannually with principal payments due in increments at three, four and five years from the closing date | |
Unamortized debt discount | $ 2,469 | $ 3,333 | |
Debt instrument, imputed interest rate | 10.80% | 10.80% |
Share-Based Plans (Details Narr
Share-Based Plans (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Stock options outstanding | 3,198 | 3,198 | ||
Share-based awards available for grant | 2,416,000 | 2,416,000 | ||
Share-based compensation expense | $ 555 | $ 698 | $ 1,724 | $ 2,025 |
Number of options granted | 29,000 | 308,000 | 85,000 | 1,261,000 |
Number of options exercised | 0 | 8,000 | 14,000 | 45,000 |
Weighted average exercise price granted | $ 1.18 | $ 0.91 | $ 1.56 | $ 1.12 |
Weighted average exercise price exercised | $ 1.19 | $ 1.21 | $ .56 | |
Restricted Stock Units RSU [Member] | ||||
Number of restricted stock units outstanding | 672 | 672 |
Share-Based Plans - Summary of
Share-Based Plans - Summary of Restricted Stock Units Activity (Details) - Restricted Stock Units RSU [Member] | 9 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Shares outstanding, Beginning balance | shares | 350 |
Shares outstanding, Granted | shares | 257 |
Shares outstanding, Vested | shares | (395) |
Shares outstanding, Forfeited | shares | |
Shares outstanding, Ending balance | shares | 212 |
Weighted average grant date fair value, Beginning balance | $ / shares | $ 0.75 |
Weighted average grant date fair value, Granted | $ / shares | 1.14 |
Weighted average grant date fair value, Vested | $ / shares | 0.88 |
Weighted average grant date fair value, Forfeited | $ / shares | |
Weighted average grant date fair value, Ending balance | $ / shares | $ 0.98 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | Jul. 21, 2017USD ($)ft² | Apr. 05, 2017 | May 25, 2016USD ($) | Jan. 19, 2016USD ($)ft² | Apr. 30, 2014USD ($)ft² | Sep. 30, 2013USD ($)ft² | Sep. 30, 2017 |
Litigation settlement | $ 12,000,000 | ||||||
Minimum period to maintain certain corporate governance reforms per the Stipulation | 4 years | ||||||
California [Member] | |||||||
Percentage of annual increase in base rent | 5.00% | ||||||
Area of vacant office space subleased | ft² | 3,800 | ||||||
Sublease description | The initial term of the sublease is for a period of approximately 43 months and commenced on February 1, 2016. The monthly base rent is approximately $5,000 per month for the first 12 months with a 5% increase each year thereafter | ||||||
Sublease term | 43 months | ||||||
Sublease agreement, monthly base rent | $ 5,000 | ||||||
Sub lease commenced date | Feb. 1, 2016 | ||||||
Office And Laboratory Space [Member] | |||||||
Lease start date | Sep. 30, 2013 | ||||||
Lease commenced date | Aug. 31, 2014 | ||||||
Office And Laboratory Space One [Member] | |||||||
Office facility lease agreement | ft² | 27,300 | ||||||
Lease agreement period | 60 months | ||||||
Monthly base rent | $ 44,000 | ||||||
Initial base rent term | 12 months | ||||||
Percentage of annual increase in base rent | 3.00% | ||||||
Office And Laboratory Space Two [Member] | |||||||
Lease commenced date | Aug. 31, 2014 | ||||||
Office facility lease agreement | ft² | 17,400 | ||||||
Lease agreement period | 60 months | ||||||
Monthly base rent | $ 28,000 | ||||||
Percentage of annual increase in base rent | 3.00% | ||||||
Vacant Office Space [Member] | |||||||
Lease commenced date | Aug. 1, 2017 | ||||||
Office facility lease agreement | ft² | 2,500 | ||||||
Lease agreement period | 17 months | ||||||
Monthly base rent | $ 3,000 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Dec. 31, 2016 | May 31, 2016 | Aug. 20, 2015 | |
Debt due to related parties | $ 28,649 | $ 36,667 | ||
Accrued interest due to related parties | $ 815 | 1,618 | ||
Beneficial Owner [Member] | ||||
Affiliate revenues percent | 5.00% | |||
Beneficial Owner [Member] | Senior Secured Promissory [Member] | ||||
Debt instrument to be issued, principal amount | $ 40,000 | |||
Debt instrument, interest rate | 8.00% | |||
Debt instrument principal amount, payable two years | $ 100,000 | |||
Debt instrument principal amount, payable three years | 100,000 | |||
Debt instrument principal amount, payable four years | $ 200,000 | |||
Beneficial Owner [Member] | Senior Secured Promissory Note Interest Rate At 8% [Member] | ||||
Debt instrument, frequency of periodic payment of interest | semi-annually | |||
Minimum cash balance not required to maintain | $ 15,000 | |||
Debt due to related parties | $ 37,531 | |||
Unamortized debt discount | 2,469 | |||
Debt due to related parties, fair value | $ 38,141 | $ 38,120 | ||
Beneficial Owner [Member] | Senior Secured Promissory Note Interest Rate At 8% [Member] | Unobservable Inputs Level 3 [Member] | ||||
Estimated market rate of interest | 11.25% | 11.25% |
Subsequent Event (Details Narra
Subsequent Event (Details Narrative) - Subsequent Event [Member] - USD ($) | 1 Months Ended | |||||
Oct. 31, 2017 | Nov. 14, 2017 | Nov. 03, 2017 | Oct. 23, 2017 | Oct. 12, 2017 | Sep. 30, 2017 | |
Through December 31, 2017 [Member] | ||||||
Debt instrument, interest rate | 1.00% | |||||
January 1, 2018 [Member] | ||||||
Debt instrument, interest rate | 10.00% | |||||
October 2017 Convertible Note [Member] | ||||||
Aggregate principal amount | $ 2,000,000 | $ 2,000,000 | $ 1,000,000 | $ 1,000,000 | ||
Debt instrument, maturity date | Oct. 23, 2020 | |||||
Debt instrument, interest rate terms | From the date of the closing through December 31, 2017, the October 2017 Convertible Note will bear interest at a rate of 1% per annum, payable in arrears on the Maturity Date, unless earlier converted into shares of the Companys common stock as described below. Thereafter, beginning January 1, 2018, the October 2017 Convertible Note will bear interest at a rate of 10% per annum, payable in arrears on the Maturity Date, unless earlier converted into shares of the Companys common stock | |||||
Conversion of stock, description | October 2017 Convertible Note may be converted into shares of the Companys common stock at a rate of one share of common stock per $1.00 of converting principal or interest, rounded down to the nearest share with any fractional amounts cancelled, at the election of the Lender by delivery of written notice to the Company. | |||||
Debt instrument, conversion price | $ 1 | |||||
October 2017 Convertible Note [Member] | December 3, 2017 [Member] | ||||||
Aggregate principal amount | $ 2,000,000 | |||||
October 2017 Convertible Note [Member] | Maximum [Member] | ||||||
Aggregate principal amount | $ 6,000,000 |