Nuwellis (NUWE) 10-Q 14 Nov 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 10, 2016
Document and Entity Information
Entity Registrant Name	Sunshine Heart, Inc.
Entity Central Index Key	1,506,492
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		20,895,278
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q3

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Current assets
Cash and cash equivalents	$ 792	$ 23,113
Accounts receivable	111
Inventory	202
Other current assets	223	479
Total current assets	1,328	23,592
Property, plant and equipment, net	597	535
Intangible assets, net	4,399
Goodwill	268
Other Assets	29	323
TOTAL ASSETS	6,621	24,450
Current liabilities
Current portion of long-term debt		3,798
Accounts payable and accrued expenses	2,169	2,832
Accrued compensation	629	1,368
Total current liabilities	2,798	7,998
Long-term debt, net of discount and financing fees		3,881
Common stock warrant liability	1,237
Other Liabilities	126	400
Total liabilities	4,161	12,279
Commitments and contingencies
Stockholders' equity
Common stock as of September 30, 2016 and December 31, 2015, par value $0.0001 per share; authorized 100,000,000 shares: issued and outstanding 20,866,217 and 18,344,478, respectively	2	2
Additional paid-in capital	167,297	164,105
Accumulated other comprehensive income:
Foreign currency translation adjustment	1,234	1,246
Accumulated deficit	(166,073)	(153,182)
Total stockholders' equity	2,460	12,171
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	6,621	24,450
Series A junior participating preferred stock
Stockholders' equity
Preferred stock
Preferred stock
Stockholders' equity
Preferred stock

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2016	Dec. 31, 2015
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	20,866,217	18,344,478
Common stock, shares outstanding	20,866,217	18,344,478
Series A junior participating preferred stock
Preferred Stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred Stock, shares authorized	30,000	30,000
Preferred Stock, Shares outstanding	0	0
Series B convertible preferred stock.
Preferred Stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred Stock, shares authorized	3,468	3,468
Preferred Stock, Shares Issued	2,227	0
Preferred Stock, Shares outstanding	2,227	0
Preferred stock
Preferred Stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred Stock, shares authorized	39,966,532	39,966,532
Preferred Stock, Shares outstanding	0	0

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Consolidated Statements of Operations and Comprehensive Loss
Net sales	$ 543		$ 543	$ 59
Costs and Expenses:
Cost of goods sold	187		187
Selling, general and administrative	2,683	$ 1,725	5,444	6,259
Research and development	1,735	4,548	7,511	13,404
Total costs and expenses	4,605	6,273	13,142	19,663
Loss from operations	(4,062)	(6,273)	(12,599)	(19,604)
Other income (expense):
Interest expense	(68)	(280)	(504)	(498)
Loss on early retirement of long-term debt	(500)		(500)
Other income (expense), net	2	(2)	2	(1)
Change in fair value of warrant liability	646		646
Total other income (expense)	80	(282)	(356)	(499)
Loss before income taxes	(3,982)	(6,555)	(12,955)	(20,103)
Income tax benefit (expense), net	65	(3)	64	124
Net loss	$ (3,917)	$ (6,558)	$ (12,891)	$ (19,979)
Basic and diluted loss per share (in dollars per share)	$ (0.27)	$ (0.36)	$ (0.76)	$ (1.11)
Weighted average shares outstanding - basic and diluted (in shares)	19,974	18,330	18,910	18,045
Other comprehensive income:
Foreign currency translation adjustments	$ (6)	$ (16)	$ (12)	$ (22)
Total comprehensive loss	$ (3,923)	$ (6,574)	$ (12,903)	$ (20,001)

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Consolidated Statements of Cash Flows
Net loss	$ (12,891)	$ (19,979)
Adjustments to reconcile net loss to cash flows used in operating activities:
Depreciation and amortization expense	457	241
Stock-based compensation expense, net	764	1,811
Amortization of debt discount and financing fees	187	102
Loss on early retirement of debt	500
Change in fair value of warrant liability	(646)
Changes in operating assets and liabilities
Accounts receivable	(111)	59
Inventory	(202)
Other current assets	256	(406)
Other assets and liabilities	(471)	(108)
Accounts payable and accrued expenses	(1,406)	48
Net cash used in operations	(13,563)	(18,232)
Investing Activities:
Purchases of property and equipment	(110)	(175)
Acquisition of Aquadex product line	(4,000)
Net cash used in investing activities	(4,110)	(175)
Financing Activities:
Net proceeds from the sale of preferred stock and common stock	3,362	7,055
Proceeds from (repayments on) borrowings on long-term debt	(8,000)	8,000
Net cash (used in) provided by financing activities	(4,638)	15,055
Effect of exchange rate changes on cash	(10)	(42)
Net (decrease) in cash and cash equivalents	(22,321)	(3,394)
Cash and cash equivalents-beginning of period	23,113	31,293
Cash and cash equivalents-end of period	792	27,899
Supplement schedule of non-cash activities
Warrants issued in connection with debt financing		355
Common stock issued for business acquisition	950
Supplemental cash flow information
Cash paid for interest	840	$ 247
Cash paid for income taxes	$ 47

Nature of Business and Basis of

Nature of Business and Basis of Presentation	9 Months Ended
	Sep. 30, 2016
Nature of Business and Basis of Presentation
Nature of Business and Basis of Presentation	Note 1 — Nature of Business and Basis of Presentation Nature of Business: Sunshine Heart, Inc. (the “Company”) is an early-stage medical device company focused on developing and commercializing a product portfolio to treat moderate to severe heart failure and related conditions. The Company’s commercial product, the Aquadex FlexFlow System (Aquadex) is indicated for temporary (up to eight hours) ultrafiltration treatment of patients with fluid overload who have failed diuretic therapy, and extended (longer than 8 hours) ultrafiltration treatment of patients with fluid overload who have failed diuretic therapy and require hospitalization. Sunshine Heart is a Delaware corporation headquartered in Minneapolis with wholly owned subsidiaries in Australia and Ireland. The Company has been listed on the NASDAQ Capital Market since February 2012. On March 3, 2016, the Company announced that it was no longer enrolling patients in the Company’s OPTIONS HF or COUNTER HF clinical studies, which were designed to prove the benefits of counterpulsation for heart failure patients, and that it would pursue a new strategic direction. On July 11, 2016, the Company announced that it was moving forward with a therapeutic strategy focused on neuromodulation rather than counterpulsation. On September 29, 2016, the Company announced a strategic refocus of its near term strategy that includes pausing clinical evaluations of the neuromodulation technology to fully focus the Company’s resources on its recently acquired Aquadex system, taking actions to reduce its cash burn in connection with such strategic refocus and reviewing potential strategic alliances and financing alternatives. Principles of Consolidation: The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S.) (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information necessary for a fair presentation of results of operations, comprehensive income, financial condition, and cash flows in conformity with U.S. GAAP. In the opinion of management, the condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the results of the Company for the periods presented. Operating results for interim periods are not necessarily indicative of results that may be expected for the year as a whole. The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures at the date of the financial statements and during the reporting period. Actual results could materially differ from these estimates. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. Going Concern: The Company’s financial statements have been prepared and presented on a basis assuming it continues as a going concern. During the years ended December 31, 2015 and 2014 and through September 30, 2016, the Company incurred losses from operations and net cash outflows from operating activities as disclosed in the consolidated statements of operations and cash flows, respectively. At September 30, 2016, the Company had an accumulated deficit of $166.1 million and it expects to incur losses for the foreseeable future. To date, the Company has been funded by debt and equity financings, and although the Company believes that it will be able to successfully fund its operations, there can be no assurance that it will be able to do so or that it will ever operate profitably. The Company’s ability to continue as a going concern is dependent on the Company’s ability to raise additional capital based on the achievement of existing milestones as and when required. Should future capital raising be unsuccessful, the Company may not be able to continue as a going concern. Furthermore, the ability of the Company to continue as a going concern is subject to the ability of the Company to successfully commercialize its Aquadex products. If the Company is unable to obtain such funding of an amount and timing necessary to meet its future operational plans, or to successfully commercialize its products, the Company may be unable to continue as a going concern. No adjustments have been made relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company not continue as a going concern. Revenue Recognition: The Company recognizes revenues from product sales when earned. Specifically, revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable, and collectability is reasonably assured. Revenue is not recognized until title and risk of loss have transferred to the customer. The shipping terms for the Company’s revenue arrangements are FOB shipping point. Accounts Receivable : The Company’s accounts receivable have terms that require payment in 30 days. No allowance for doubtful accounts has been established at September 30, 2016 as all amounts were subsequently collected. Inventories : Inventories represent finished goods purchased from the Company’s supplier and are recorded as the lower of cost or market using the first-in-first out method. Intangible assets : The Company’s intangible assets consist of customer relationships, developed technology, and trademarks and tradenames. All intangible assets recognized by the Company result from the acquisition of the Aquadex business. All amounts are provisional until final valuation reports for the acquired intangible assets are received. All intangible assets are estimated to have a useful life of 5-7 years. The company reviews its definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable through the estimated undiscounted future cash flows derived from such assets. In cases where the carrying value exceeds the undiscounted cash flows, the carrying value is written down to its fair value, using a discounted cash flow analysis. No impairments have been identified or recorded in the periods presented. Goodwill: Goodwill is the cost of an acquisition in excess of the fair value of acquired assets and liabilities and is recorded as an asset on the balance sheet. Goodwill is not subject to amortization but must be tested for impairment at least annually. This test requires the Company to determine if the implied fair value of the goodwill is less than its carrying amount. The Company evaluates goodwill for impairment annually on November 1 st of each calendar year, or to the extent events or conditions indicate a risk of possible impairment during the interim periods prior to its annual impairment test. Generally, the evaluation of goodwill for impairment involves a two-step test, although under certain circumstance an initial qualitative evaluation may be sufficient to conclude that goodwill is not impaired without conducting the quantitative test. Step 1 involves comparing the estimated fair value of each respective reporting unit to its carrying value, including goodwill. If the estimated fair value exceeds the carrying value, the reporting unit’s goodwill is not considered impaired. If the carrying value exceeds the estimated fair value, step 2 must be performed to determine whether goodwill is impaired and, if so, the amount of the impairment. Step 2 involves calculating an implied fair value of goodwill by performing a hypothetical allocation of the estimated fair value of the reporting unit determined in step 1 to the respective tangible and intangible net assets of the reporting unit. The remaining implied goodwill is then compared to the actual carrying amount of the goodwill for the reporting unit. To the extent the carrying amount of goodwill exceeds the implied goodwill, the difference is the amount of the goodwill impairment. No impairments have been identified or recorded in the periods presented. Contingent consideration : In connection with the Company’s purchase of Aquadex, the Company has an obligation to pay additional consideration that is contingent upon the occurrence of certain future events. Contingent consideration is recognized at the acquisition date at the estimated fair value of the contingent milestone payments. The fair value of the contingent consideration is remeasured to its estimated fair value at the end of each reporting period, with changes recorded to earnings. Common stock warrant liability : The Company records its common stock warrant liability at fair value at the date of issuance using primarily a Monte Carlo valuation model. The fair value is remeasured to its estimated fair value at the end of each reporting period with changes recorded to earnings. Earnings per share: Basic earnings per share is computed based on the net loss allocable to common stockholders for each period divided by the weighted average number of common shares outstanding. The net loss allocable to common stockholders for the three and nine month periods ending September 30, 2016 reflects a $1.4 million increase for the deemed dividend to preferred shareholders provided in connection with the third quarter 2016 Series B convertible preferred stock offering (see Note 4). Diluted earnings per share is computed based on the net loss allocable to common stockholders for each period divided by the weighted average number of common shares outstanding, increased by the number of additional shares that would have been outstanding had the potentially dilutive common shares been issued, and reduced by the number of shares the Company could have repurchased from the proceeds from issuance of the potentially dilutive shares. Potentially dilutive shares of common stock include warrants, stock options and other stock-based awards granted under stock-based compensation plans. These potentially dilutive shares were excluded from the computation of loss per share as their effect was antidilutive due to the Company’s net loss in each of those periods. The following table sets forth the potential shares of common stock that are not included in the calculation of diluted net loss per share because to do so would be anti-dilutive as of the end of each period presented: September 30, 2016 2015 Stock options Restricted stock units Warrants to purchase common stock Series B convertible preferred stock — Total New Accounting Pronouncements: In April 2015, the Financial Accounting Standards Board (FASB) issued amended guidance concerning debt issuance costs in relation to a recognized debt liability to require it be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This guidance is effective for the Company’s interim and annual reporting periods beginning January 1, 2016. In connection with the adoption of this standard, the Company reclassified $120,000 of debt issuance costs that were previously reported as current assets and other assets on the December 31, 2015 balance sheet, to an offset to current and long-term debt. In May 2014, August 2015, March 2016, April 2016 and May 2016, the FASB issued amended revenue recognition guidance to clarify the principles for recognizing revenue from contracts with customers. The guidance requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. The guidance also requires expanded disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required about customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. The standard allows the Company to transition to the new model using either a full or modified retrospective approach, and early adoption is not permitted. This guidance will be effective for the Company’s interim and annual periods beginning January 1, 2018. The Company is currently evaluating the impact that this standard will have on its business practices, financial condition, results of operations and disclosures. In August 2014, the FASB amended guidance relating to the presentation and disclosure of the uncertainties of an entity’s ability to continue as a going concern. This guidance explicitly requires management of a company to evaluate whether there is substantial doubt about a company’s ability to continue as a going concern and to provide related footnote disclosure in certain circumstances. This guidance is effective for the Company’s interim and annual reporting periods beginning January 1, 2017, with early adoption permitted. The Company is evaluating the impact that the adoption of this standard will have, if any, on its financial statements and disclosures. In November 2015, the FASB issued amended guidance concerning the classification of deferred taxes on the balance sheet to require that deferred tax assets and deferred tax liabilities be presented as noncurrent in a classified balance sheet. The amendment is effective for our annual and interim reporting periods beginning January 1, 2017, with early adoption permitted. The adoption of this standard will not have an impact on the Company’s consolidated financial statements as all deferred tax assets are fully reserved. In February 2016, the FASB issued updated guidance to improve financial reporting about leasing transactions. This guidance will require organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. This guidance is effective for the Company’s annual reporting period beginning January 1, 2020, and for interim periods beginning January 1, 2021. The Company is evaluating the impact that the adoption of this standard will have, if any, on its financial statements and disclosures.

Aquadex Acquisition

Aquadex Acquisition	9 Months Ended
	Sep. 30, 2016
Aquadex Acquisition
Aquadex Acquisition	Note 2 — Aquadex Acquisition On August 5, 2016, the Company completed the acquisition of certain assets used in the production and sale of the Aquadex product line from an indirect subsidiary of Baxter International Inc. (the “Seller”). The acquisition of these assets meets the criteria for the purchase of a business, and has been accounted for in accordance with Accounting Standards Codification (ASC) 805, Business Combinations , with identifiable assets acquired and liabilities assumed recorded at their estimated fair values on the acquisition date. A valuation of the assets and liabilities from the business acquisition was performed utilizing cost, income and market approaches resulting in $5,076 allocated to identifiable net assets. The Company completed the acquisition in order to strengthen its presence in the heart failure market. Purchase Consideration: Total purchase consideration for the Aquadex business is as follows: (in thousands) Cash consideration $ Common stock consideration Fair value of contingent consideration Total purchase consideration $ · Common Stock Consideration: The common stock consideration consisted of 1 million shares of the Company’s common stock, worth $0.95 million based on the closing market value of $0.95 per share on August 5, 2016. · Contingent Consideration: In connection with the acquisition of the Aquadex product line, the Company agreed to pay the Seller 40% of any proceeds in excess of $4.0 million related to the sale or disposal of the Aquadex assets within three years of the close of the transaction. The fair value of this contingent consideration was calculated based on the estimated likelihood of occurrence of this event in the timeframe provided by the agreement. Purchase price consideration does not include expenses of $0.9 million for accounting, audit, legal, and valuation services that were incurred as part of the transaction and were expensed as incurred. The acquisition was recorded by recognizing the assets acquired at their estimated fair value at the acquisition date. The excess of the cost of the acquisition over the fair value of the assets acquired was recorded as goodwill. The preliminary fair values were based on management’s analysis, including work performed by third-party valuation specialists. The initial accounting for the acquisition is not complete because certain information and analysis that may impact our initial valuations are still being obtained or reviewed as a result of the short time period since the closing of the acquisition. The following presents the provisional amounts recognized for the assets acquired on August 5, 2016 (in thousands): Capital lease asset $ Intangible assets Total identifiable assets acquired Goodwill Total purchase consideration $ Any subsequent changes to the provisional amounts recognized during the measurement period will be recorded in the reporting period in which the adjustment amounts are determined. The goodwill is primarily attributable to new and/or future customer relationships that were not acquired in the transaction. The fair value of the capital lease asset utilized a combination of the cost and market approaches, depending on the characteristics of the asset classification. Of the $4.2 million of acquired intangible assets, $2.4 million was assigned to customer relationships, $1.8 million was assigned to developed technology, and $0.3 million was assigned to trademarks and tradename. All intangible assets are estimated to have a useful life of 5-7 years. Pro Forma Condensed Combined Financial Information (Unaudited) The following unaudited pro forma combined financial information summarizes the results of operations for the periods indicated as if the acquisition of Aquadex had been completed on of January 1, 2015. Pro forma information reflects adjustments that are expected to have a continuing impact on our results of operations and are directly attributable to the acquisition. The unaudited pro forma results include adjustments to reflect, among other things, direct transaction costs relating to the acquisition, the difference in intangible asset amortization to be incurred based on the preliminary values of each identifiable intangible asset, and the difference in depreciation expense to be incurred based on preliminary value of the capital lease asset. The pro forma amounts do not purport to be indicative of the results that would have actually been obtained if the acquisition had occurred as of January 1, 2015 or that may be obtained in the future, and do not reflect future synergies, integration costs, or other such costs or savings. Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Pro forma net sales $ $ $ $ Pro forma net loss from operations ) ) ) ) Pro forma basic and diluted net loss per share $ ) $ ) $ ) $ )

Debt

Debt	9 Months Ended
	Sep. 30, 2016
Debt
Debt	Note 3 - Debt Prior Loan Agreement : On February 18, 2015, the Company entered into a loan and security agreement with Silicon Valley Bank (the Bank) for proceeds of up to $10.0 million at an annual interest rate of 7.0%. Under this agreement, a $6.0 million term loan was funded at closing and an additional term loan in the amount of $2.0 million was funded on June 26, 2015. The proceeds from the term loans were used for general corporate and working capital purposes. Commencing on January 1, 2016, the Company began repaying the advances made in twenty-four consecutive equal monthly installments. On August 4, 2016, the Company repaid all amounts outstanding under its existing debt facility of $5.5 million, and incurred a $0.5 million loss on early extinguishment of debt, including the accelerated write-off of unamortized warrants and debt issuance costs. Total borrowings outstanding under this agreement totaled $8.0 million as of December 31, 2015. Warrants: In connection with funding of the first term loan for $6.0 million, the Company issued 68,996 warrants at an exercise price of $5.22 per share to the Bank and one of its affiliates. The Company valued these warrants at $3.86 per share utilizing the Black Scholes valuation model and the following assumptions: an expected dividend yield of 0%, an expected stock price volatility of 88.07%, a risk-free interest rate of 1.86%, and an expected life of 6.25 years. In connection with the funding of the second term loan for $2.0 million, the Company issued 32,609 warrants at an exercise price of $3.68 per share to Silicon Valley Bank and one of its affiliates. The Company valued these warrants at $2.71 per share utilizing the Black Scholes valuation model and the following assumptions: an expected dividend yield of 0%, an expected stock price volatility of 87.04%, a risk-free interest rate of 2.20%, and an expected life of 6.25 years. All warrants have a life of ten years and were fully vested at the date of grant. The value of these warrants were recorded as debt discount in the accompanying balance sheet and were amortized to interest expense over the term of the debt agreement using the effective interest rate method. As of December 31, 2015, $201,000 of unamortized debt discount was netted against long-term debt in the accompanying condensed consolidated balance sheet. In connection with the repayment of the debt on August 4, 2016, the Company wrote off the remaining unamortized value of the warrants totaling $113,000. New Loan Agreement: On August 5, 2016, the Company entered into a new loan and security agreement with the Bank (the “New Loan Agreement”). Under the New Loan Agreement, the Bank has agreed to provide the Company with up to $5.0 million in debt financing, consisting of a term loan in an aggregate original principal amount not to exceed $4.0 million (the “Term Loan”) and a revolving line of credit in an aggregate principal amount not to exceed $1.0 million outstanding at any time (the “Revolving Line”; together with the Term Loan, the “Loans”). Proceeds from the Loans, if any, will be used for general corporate and working capital purposes. Any advances under the Term Loan accrue interest at a floating annual rate equal to 2.50% above the prime rate. Any advances under the Revolving Line will accrue interest at a floating annual rate equal to 1.75% or 1.0% above the prime rate, depending on liquidity factors. Advances under the Loans are available to the Company until November 30, 2016, subject to compliance with liquidity covenants which the Company does not currently meet. There were no borrowings outstanding under this facility as of September 30, 2016.

Equity

Equity	9 Months Ended
	Sep. 30, 2016
Equity
Equity	Note 4 - Equity ATM Sales: In March 2014, the Company entered into a sales agreement with Cowen and Company LLC to sell from time to time, in “at the market” offerings, shares of its common stock having an aggregate offering price of up to $40.0 million. There were no issuances of common stock under this facility in the nine months ended September 30, 2016. During the nine months ended September 30, 2015, the Company sold 1,256,380 shares of common stock for net proceeds of $7.1 million after stock issuance costs of $0.2 million. As of September 30, 2016, the Company had a total of $32.6 million available for future sales under the sales agreement. Series B Convertible Preferred Stock : On July 20, 2016, the Company entered into a securities purchase agreement with an investor for an offering of shares of convertible preferred stock with gross proceeds of approximately $3.5 million in a registered direct offering. The transaction closed on July 26, 2016, and the Company issued 3,468 shares of Series B Convertible Preferred Stock. The Series B Convertible Preferred Stock is non-voting and convertible into a total of 3,689,361 shares of common stock at the holder’s election at any time at a conversion price of $0.94 per share. Approximately $1.6 million of the proceeds were allocated to the preferred stock, representing the residual proceeds after the warrants (described below) were recorded at fair value. The preferred stock includes a beneficial conversion amount of $1.4 million, representing the intrinsic value of the stock at the time of issuance, which has an effect on earnings per share allocable to common shareholders. As of September 30, 2016, 1,241 shares of the Series B Convertible Preferred Stock had been converted into 1,320,000 shares of common stock, and 2,227 shares remained outstanding. In connection with the transaction, the Company paid the placement agent an aggregate cash placement fee equal to 6% of the aggregate gross proceeds raised in the offering and issued the warrants described below. Warrants : Concurrently, in a private placement, the investor received warrants to purchase 3,689,361 shares of common stock at an exercise price of $0.94 at no additional cost. The warrants are exercisable for 36 months commencing six months from the closing date. In addition, the Company issued 221,362 warrants to the placement agent to purchase shares of common stock, or 6% of the shares of common stock sold to investors in the offering at no additional cost. These warrants were immediately exercisable at an exercise price of $1.35 per share and will be exercisable for five years after the closing of the offering. The warrants issued to the investor (but not the ones issued to the placement holder) are subject to a reduction of the exercise price if the Company subsequently issues common stock or equivalents at an effective price less than the current exercise price of such warrants. Both the investor and placement agent warrants are accounted for as a liabilities and were recorded at fair value on the date of issuance. Changes in the fair value of these warrants must be measured and recorded for each subsequent reporting period that the warrants remain outstanding, and changes in fair value must be recognized in the statement of operations. These warrants were valued at $1.8 million on the date of issuance and at $1.2 million as of September 30, 2016. The change in fair value of $0.6 million was reflected as an unrealized gain in the accompanying statement of operations. Transaction Costs: The Company incurred approximately $0.4 million of cash and non-cash transaction costs which were allocated to the preferred stock and investor warrants on a relative fair value basis. The $0.2 million allocated to the preferred stock was recorded as a reduction of additional paid-in-capital, while the $0.2 million allocated to the investor warrants was expensed as incurred.

Stock-Based Compensation

Stock-Based Compensation	9 Months Ended
	Sep. 30, 2016
Stock-Based Compensation
Stock-Based Compensation	Note 5 - Stock-Based Compensation Under the fair value recognition provisions of U.S. GAAP for accounting for stock-based compensation, the Company measures stock-based compensation expense at the grant date based on the fair value of the award and recognizes the compensation expense over the requisite service period, which is generally the vesting period. The following table presents the classification of stock-based compensation expense recognized for the periods below: Nine months ended September 30, (in thousands) 2016 2015 Selling, general and administrative expense $ $ Research and development expense Total stock-based compensation expense $ $

Fair Value of Financial Instrum

Fair Value of Financial Instruments	9 Months Ended
	Sep. 30, 2016
Fair Value of Financial Instruments
Fair Value of Financial Instruments	Note 6 - Fair Value of Financial Instruments The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, warrants, contingent consideration and debt. Pursuant to the requirements of ASC Topic 820 “Fair Value Measurement,” the Company’s financial assets and liabilities measured at fair value on a recurring basis are classified and disclosed in one of the following three categories: · Level 1 - Financial instruments with unadjusted quoted prices listed on active market exchanges. · Level 2 - Financial instruments lacking unadjusted, quoted prices from active market exchanges, including over the counter traded financial instruments. The prices for the financial instruments are determined using prices for recently traded financial instruments with similar underlying terms as well as directly or indirectly observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. · Level 3 - Financial instruments that are not actively traded on a market exchange. This category includes situations where there is little, if any, market activity for the financial instrument. The prices are determined using significant unobservable inputs or valuation techniques. The fair value of the Company’s common stock warrant liability is calculated using a Monte Carlo valuation model and is classified as Level 3 in the fair value hierarchy. The common stock warrants issued July 26, 2016 had a fair value of $1.8 million on the date of issuance and $1.2 million on September 30, 2016. Fair values were calculated using the following assumptions: July 26, 2016 Sept 30, 2016 Risk-free interest rates, adjusted for continuous compounding % % Term (years) Expected volatility % % Dates and probability of future equity raises various various During the three months ended September 30, 2016, the Company recognized unrealized gains of $0.6 million in the condensed consolidated statements of operations from changes in fair value of the warrant liability. The fair value of the Company’s contingent consideration, as described in Note 2, was initially measured based on the consideration expected to be transferred (probability-weighted), discounted back to present value, and it is considered a Level 3 instrument. The discount rate used was determined at the time of measurement in accordance with accepted valuation methods. The Company measures the liability on a recurring basis using Level 3 inputs including probabilities of payment and projected payment dates. Changes to any of the inputs may result in significantly higher or lower fair value measurements. There were no changes in the fair value of the contingent consideration subsequent to the initial measurement. All cash equivalents are considered Level 1 measurements for all periods presented. The Company does not have any financial instruments classified as Level 2 or any other classified as Level 3 and there were no movements between these categories during the periods ended September 30, 2016 and December 31, 2015.

Income Taxes

Income Taxes	9 Months Ended
	Sep. 30, 2016
Income Taxes
Income Taxes	Note 7 — Income Taxes The Company provides for a valuation allowance when it is more likely than not that it will not realize a portion of the deferred tax assets. The Company has established a full valuation allowance for U.S. and foreign deferred tax assets due to the uncertainty that enough taxable income will be generated in those taxing jurisdictions to utilize the assets. Therefore, the Company has not reflected any benefit of such deferred tax assets in the accompanying financial statements. As of September 30, 2016, there were no material changes to what the Company disclosed regarding tax uncertainties or penalties in its Annual Report on Form 10-K for the year ended December 31, 2015.

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 30, 2016
Commitments and Contingencies.
Commitments and Contingencies	Note 8—Commitments and Contingencies Leases: The Company leases office space under a non-cancelable operating lease that expires in March 2019. The lease contains provisions for future annual inflationary adjustments. Rent expense is recognized using the straight-line method over the term of the lease. Employee Retirement Plan: The Company has a 401(k) profit sharing plan that provides retirement benefit to substantially all full-time U.S. employees. Eligible employees may contribute a percentage of their annual compensation, subject to IRS limitations, with the Company matching a portion of the employee’s contributions at the discretion of the Company. Inventory Purchase Commitments : In connection with the acquisition of the Aquadex product line, the Company entered into a manufacturing and supply agreement with the Seller that will expire within a period not to exceed 18 months from the close of the transaction. Upon termination of this agreement, the Company has an obligation to purchase the remaining Aquadex inventory. We estimate that this amount will not exceed $2.5 million. Contingent Consideration: As described on Note 2, the Company agreed that if it disposes of any of the Aquadex assets for a price that exceeds $4.0 million within three years of the closing, it will pay the Seller 40% of the amount of such excess. In addition, it also agreed that if shares of its common stock cease to be publicly traded on the Nasdaq Capital Market, the Seller has the option to require the Company to repurchase, in cash, all or any part of the common shares held by the Seller at a price equal to their fair market value, as determined by a third-party appraiser.

Subsequent Events

Subsequent Events	9 Months Ended
	Sep. 30, 2016
Subsequent Events
Subsequent Events	Note 9 — Subsequent Events On October 30, 2016, the Company entered into an exchange agreement with the holders of its Series B Convertible Preferred Stock and agreed to issue such holders 2,227 shares of the Company’s Series B-1 Convertible Preferred Stock in exchange for the cancellation of all shares of Series B Convertible Preferred Stock held by such holders. The Series B-1 Convertible Preferred Stock has the same terms as the Series B Convertible Preferred Stock, except that the initial conversion price of the Series B-1 Convertible Preferred Stock is $0.17 per share and the Series B-1 Convertible Preferred Stock is subject to a limitation on conversion so that, if and until the receipt of stockholder approval, the holders cannot convert shares of Series B-1 Convertible Preferred Stock into shares of common stock if such conversion would cause the number of shares of common stock issued upon the conversion of the Series B Convertible Preferred Stock and Series B-1 Convertible Preferred Stock to exceed 19.9% of the number of shares of common stock outstanding on the trading day immediately prior to the date that the securities purchase agreement for the Series B Convertible Preferred Stock was executed. Also, on October 30, 2016, the Company entered into securities purchase agreements with an institutional investor for shares of convertible preferred stock and warrants with an aggregate purchase price of $3.8 million in a registered direct offering and simultaneous private placement. The first closing of the transaction occurred on November 3, 2016, whereby the Company received $3.6 million in gross proceeds and issued and sold and issued 2,900 shares of Series C Convertible Preferred Stock, 700 shares of Series D Convertible Preferred Stock, both at $0.17 per share, and warrants to purchase an aggregate of 21,176,471 shares of its common stock at an exercise price equal to $0.18 per share. At the second closing, which is subject to the Company receiving shareholder approval of the transactions, the Company expects to issue and sell 200 shares of Series D Convertible Preferred Stock and warrants to purchase an aggregate of 1,176,471 shares of common stock for a gross purchase price of $0.2 million. In connection with the registered direct offering and the private placement, the Company paid the placement agent an aggregate cash placement fee equal to 6% of the aggregate gross proceeds raised in the offering and issued 1,270,588 warrants to purchase its common stock at an exercise price of $0.21 per share. The Company is required under the securities purchase agreement to file a proxy statement with the SEC for the purposes of holding a special meeting of its stockholders to vote on a proposal to approve the issuance of the shares of common stock underlying the Series C Convertible Preferred Stock, Series D Convertible Preferred Stock and warrants issued in connection with the offering and private placement. No shares of common stock are issuable upon conversion of the Series C Convertible Preferred Stock or Series D Convertible Preferred Stock or upon exercise of the warrants issued to the investors and to the placement agent until shareholder approval has been received.

Nature of Business and Basis 15

Nature of Business and Basis of Presentation (Policies)	9 Months Ended
	Sep. 30, 2016
Nature of Business and Basis of Presentation
Nature of Business	Nature of Business: Sunshine Heart, Inc. (the “Company”) is an early-stage medical device company focused on developing and commercializing a product portfolio to treat moderate to severe heart failure and related conditions. The Company’s commercial product, the Aquadex FlexFlow System (Aquadex) is indicated for temporary (up to eight hours) ultrafiltration treatment of patients with fluid overload who have failed diuretic therapy, and extended (longer than 8 hours) ultrafiltration treatment of patients with fluid overload who have failed diuretic therapy and require hospitalization. Sunshine Heart is a Delaware corporation headquartered in Minneapolis with wholly owned subsidiaries in Australia and Ireland. The Company has been listed on the NASDAQ Capital Market since February 2012. On March 3, 2016, the Company announced that it was no longer enrolling patients in the Company’s OPTIONS HF or COUNTER HF clinical studies, which were designed to prove the benefits of counterpulsation for heart failure patients, and that it would pursue a new strategic direction. On July 11, 2016, the Company announced that it was moving forward with a therapeutic strategy focused on neuromodulation rather than counterpulsation. On September 29, 2016, the Company announced a strategic refocus of its near term strategy that includes pausing clinical evaluations of the neuromodulation technology to fully focus the Company’s resources on its recently acquired Aquadex system, taking actions to reduce its cash burn in connection with such strategic refocus and reviewing potential strategic alliances and financing alternatives.
Principles of Consolidation	Principles of Consolidation: The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S.) (U.S. GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information necessary for a fair presentation of results of operations, comprehensive income, financial condition, and cash flows in conformity with U.S. GAAP. In the opinion of management, the condensed consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the results of the Company for the periods presented. Operating results for interim periods are not necessarily indicative of results that may be expected for the year as a whole. The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures at the date of the financial statements and during the reporting period. Actual results could materially differ from these estimates. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.
Going Concern	Going Concern: The Company’s financial statements have been prepared and presented on a basis assuming it continues as a going concern. During the years ended December 31, 2015 and 2014 and through September 30, 2016, the Company incurred losses from operations and net cash outflows from operating activities as disclosed in the consolidated statements of operations and cash flows, respectively. At September 30, 2016, the Company had an accumulated deficit of $166.1 million and it expects to incur losses for the foreseeable future. To date, the Company has been funded by debt and equity financings, and although the Company believes that it will be able to successfully fund its operations, there can be no assurance that it will be able to do so or that it will ever operate profitably. The Company’s ability to continue as a going concern is dependent on the Company’s ability to raise additional capital based on the achievement of existing milestones as and when required. Should future capital raising be unsuccessful, the Company may not be able to continue as a going concern. Furthermore, the ability of the Company to continue as a going concern is subject to the ability of the Company to successfully commercialize its Aquadex products. If the Company is unable to obtain such funding of an amount and timing necessary to meet its future operational plans, or to successfully commercialize its products, the Company may be unable to continue as a going concern. No adjustments have been made relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company not continue as a going concern.
Revenue Recognition	Revenue Recognition: The Company recognizes revenues from product sales when earned. Specifically, revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable, and collectability is reasonably assured. Revenue is not recognized until title and risk of loss have transferred to the customer. The shipping terms for the Company’s revenue arrangements are FOB shipping point.
Accounts Receivable	Accounts Receivable : The Company’s accounts receivable have terms that require payment in 30 days. No allowance for doubtful accounts has been established at September 30, 2016 as all amounts were subsequently collected.
Inventories	Inventories : Inventories represent finished goods purchased from the Company’s supplier and are recorded as the lower of cost or market using the first-in-first out method.
Intangible assets	Intangible assets : The Company’s intangible assets consist of customer relationships, developed technology, and trademarks and tradenames. All intangible assets recognized by the Company result from the acquisition of the Aquadex acquisition. All amounts are provisional until final valuation reports for the acquired intangible assets are received. All intangible assets are estimated to have a useful life of 5-7 years. The company reviews its definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that carrying amount of the assets may not be recoverable through the estimated undiscounted future cash flows derived from such assets. In cases where the carrying value exceeds the undiscounted cash flows, the carrying value is written down to its fair value, using a discounted cash flow analysis. No impairments have been identified or recorded in the periods presented.
Goodwill	Goodwill: Goodwill is the cost of an acquisition in excess of the fair value of acquired assets and liabilities and is recorded as an asset on the balance sheet. Goodwill is not subject to amortization but must be tested for impairment at least annually. This test requires the Company to determine if the implied fair value of the goodwill is less than its carrying amount. The Company evaluates goodwill for impairment annually on November 1 st of each calendar year, or to the extent events or conditions indicate a risk of possible impairment during the interim periods prior to its annual impairment test. Generally, the evaluation of goodwill for impairment involves a two-step test, although under certain circumstance an initial qualitative evaluation may be sufficient to conclude that goodwill is not impaired without conducting the quantitative test. Step 1 involves comparing the estimated fair value of each respective reporting unit to its carrying value, including goodwill. If the estimated fair value exceeds the carrying value, the reporting unit’s goodwill is not considered impaired. If the carrying value exceeds the estimated fair value, step 2 must be performed to determine whether goodwill is impaired and, if so, the amount of the impairment. Step 2 involves calculating an implied fair value of goodwill by performing a hypothetical allocation of the estimated fair value of the reporting unit determined in step 1 to the respective tangible and intangible net assets of the reporting unit. The remaining implied goodwill is then compared to the actual carrying amount of the goodwill for the reporting unit. To the extent the carrying amount of goodwill exceeds the implied goodwill, the difference is the amount of the goodwill impairment. No impairments have been identified or recorded in the periods presented.
Contingent consideration	Contingent consideration : In connection with the Company’s purchase of Aquadex, the Company has an obligation to pay additional consideration that is contingent upon the occurrence of certain future events. Contingent consideration is recognized at the acquisition date at the estimated fair value of the contingent milestone payments. The fair value of the contingent consideration is remeasured to its estimated fair value at the end of each reporting period, with changes recorded to earnings.
Common stock warrant liability	Common stock warrant liability : The Company records its common stock warrant liability at fair value at the date of issuance using primarily a Monte Carlo valuation model. The fair value is remeasured to its estimated fair value at the end of each reporting period with changes recorded to earnings.
Earnings per share	Earnings per share: Basic earnings per share is computed based on the net loss allocable to common stockholders for each period divided by the weighted average number of common shares outstanding. The net loss allocable to common stockholders for the three and nine month periods ending September 30, 2016 reflects a $1.4 million increase for the deemed dividend to preferred shareholders provided in connection with the third quarter 2016 Series B convertible preferred stock offering (see Note 4). Diluted earnings per share is computed based on the net loss allocable to common stockholders for each period divided by the weighted average number of common shares outstanding, increased by the number of additional shares that would have been outstanding had the potentially dilutive common shares been issued, and reduced by the number of shares the Company could have repurchased from the proceeds from issuance of the potentially dilutive shares. Potentially dilutive shares of common stock include warrants, stock options and other stock-based awards granted under stock-based compensation plans. These potentially dilutive shares were excluded from the computation of loss per share as their effect was antidilutive due to the Company’s net loss in each of those periods. The following table sets forth the potential shares of common stock that are not included in the calculation of diluted net loss per share because to do so would be anti-dilutive as of the end of each period presented: September 30, 2016 2015 Stock options Restricted stock units Warrants to purchase common stock Series B convertible preferred stock — Total
New Accounting Pronouncements	New Accounting Pronouncements: In April 2015, the Financial Accounting Standards Board (FASB) issued amended guidance concerning debt issuance costs in relation to a recognized debt liability to require it be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This guidance is effective for the Company’s interim and annual reporting periods beginning January 1, 2016. In connection with the adoption of this standard, the Company reclassified $120,000 of debt issuance costs that were previously reported as current assets and other assets on the December 31, 2015 balance sheet, to an offset to current and long-term debt. In May 2014, August 2015, March 2016, April 2016 and May 2016, the FASB issued amended revenue recognition guidance to clarify the principles for recognizing revenue from contracts with customers. The guidance requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. The guidance also requires expanded disclosures relating to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required about customer contracts, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. The standard allows the Company to transition to the new model using either a full or modified retrospective approach, and early adoption is not permitted. This guidance will be effective for the Company’s interim and annual periods beginning January 1, 2018. The Company is currently evaluating the impact that this standard will have on its business practices, financial condition, results of operations and disclosures. In August 2014, the FASB amended guidance relating to the presentation and disclosure of the uncertainties of an entity’s ability to continue as a going concern. This guidance explicitly requires management of a company to evaluate whether there is substantial doubt about a company’s ability to continue as a going concern and to provide related footnote disclosure in certain circumstances. This guidance is effective for the Company’s interim and annual reporting periods beginning January 1, 2017, with early adoption permitted. The Company is evaluating the impact that the adoption of this standard will have, if any, on its financial statements and disclosures. In November 2015, the FASB issued amended guidance concerning the classification of deferred taxes on the balance sheet to require that deferred tax assets and deferred tax liabilities be presented as noncurrent in a classified balance sheet. The amendment is effective for our annual and interim reporting periods beginning January 1, 2017, with early adoption permitted. The adoption of this standard will not have an impact on the Company’s consolidated financial statements as all deferred tax assets are fully reserved. In February 2016, the FASB issued updated guidance to improve financial reporting about leasing transactions. This guidance will require organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. This guidance is effective for the Company’s annual reporting period beginning January 1, 2020, and for interim periods beginning January 1, 2021. The Company is evaluating the impact that the adoption of this standard will have, if any, on its financial statements and disclosures.

Nature of Business and Basis 16

Nature of Business and Basis of Presentation (Tables)	9 Months Ended
	Sep. 30, 2016
Nature of Business and Basis of Presentation
Schedule of the potential shares of common stock that are not included in the calculation of diluted net loss per share because to do so would be anti-dilutive	September 30, 2016 2015 Stock options Restricted stock units Warrants to purchase common stock Series B convertible preferred stock — Total

Aquadex Acquisition (Tables)

Aquadex Acquisition (Tables)	9 Months Ended
	Sep. 30, 2016
Aquadex Acquisition
Schedule of total purchase consideration for the Aquadex business	(in thousands) Cash consideration $ Common stock consideration Fair value of contingent consideration Total purchase consideration $
Schedule of provisional amounts recognized for the assets acquired	The following presents the provisional amounts recognized for the assets acquired on August 5, 2016 (in thousands): Capital lease asset $ Intangible assets Total identifiable assets acquired Goodwill Total purchase consideration $
Schedule of pro forma amounts	Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Pro forma net sales $ $ $ $ Pro forma net loss from operations ) ) ) ) Pro forma basic and diluted net loss per share $ ) $ ) $ ) $ )

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	9 Months Ended
	Sep. 30, 2016
Stock-Based Compensation
Summary of classification of stock-based compensation expense	Nine months ended September 30, (in thousands) 2016 2015 Selling, general and administrative expense $ $ Research and development expense Total stock-based compensation expense $ $

Fair Value of Financial Instr19

Fair Value of Financial Instruments (Tables)	9 Months Ended
	Sep. 30, 2016
Fair Value of Financial Instruments
Schedule of fair value assumptions used in calculation of the Monte Carlo Simulation model	July 26, 2016 Sept 30, 2016 Risk-free interest rates, adjusted for continuous compounding % % Term (years) Expected volatility % % Dates and probability of future equity raises various various

Nature of Business and Basis 20

Nature of Business and Basis of Presentation - (Details) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Going Concern
Retained Earnings (Accumulated Deficit)	$ (166,073,000)	$ (166,073,000)		$ (153,182,000)
Accounts Receivable
Allowance for doubtful accounts	0	0
Intangible assets
Intangible assets	4,399,000	4,399,000
Goodwill and Intangible assets impairments identified or recorded		$ 0
Earnings per share
Potential shares of common stock that are not included in the calculation of diluted net loss per share		9,859,062	2,481,013
Minimum
Intangible assets
Useful life (in years)		5 years
Maximum
Intangible assets
Useful life (in years)		7 years
Accounting Standards update April 2015
New Accounting Pronouncements
Unamortized debt issuance costs (assets)				(120,000)
Unamortized debt issuance costs (liability)				$ 120,000
Stock Options
Earnings per share
Potential shares of common stock that are not included in the calculation of diluted net loss per share		2,919,245	2,141,536
Restricted stock units
Earnings per share
Potential shares of common stock that are not included in the calculation of diluted net loss per share		438,953	18,135
Warrants
Earnings per share
Potential shares of common stock that are not included in the calculation of diluted net loss per share		4,131,503	321,342
Series B convertible preferred stock
Earnings per share
Deemed dividend to preferred shareholders	$ 1,400,000	$ 1,400,000
Potential shares of common stock that are not included in the calculation of diluted net loss per share		2,369,361

Aquadex Acquisition - (Details)

Aquadex Acquisition - (Details) - Aquadex product line - USD ($) $ / shares in Units, $ in Thousands	Aug. 05, 2016	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Business Acquisition [Line Items]
Cash consideration	$ 4,000
Common stock consideration	950
Fair value of contingent consideration	126
Total purchase consideration	$ 5,076
Common Stock Consideration
Common stock issued in acquisition (in shares)	1,000,000
Closing Market Value (price per share)	$ 0.95
Additional payments on disposes of business assets (as a percent)	40.00%
Limit on disposes of business assets	$ 4,000
Maximum period on disposes of business assets (in years)	3 years
Accounting, audit, legal and valuation services	$ 900
Purchase price consideration to assets acquired
Capital lease asset	307
Intangible assets	4,501
Total identifiable assets acquired	4,808
Goodwill	268
Total purchase consideration	5,076
Pro Forma Condensed Combined Financial Information
Pro forma net sales		$ 791	$ 1,188	$ 2,414	$ 3,193
Pro forma net loss from operations		$ (3,146)	$ (19,658)	$ (12,519)	$ (33,319)
Pro forma basic and diluted net loss per share		$ (0.23)	$ (1.02)	$ (0.72)	$ (1.75)
Trademarks and Trade Names
Purchase price consideration to assets acquired
Intangible assets	300
Customer Relationships
Purchase price consideration to assets acquired
Intangible assets	2,400
Developed Technology
Purchase price consideration to assets acquired
Intangible assets	$ 1,800
Minimum
Purchase price consideration to assets acquired
Useful life (in years)	5 years
Maximum
Purchase price consideration to assets acquired
Useful life (in years)	7 years

Debt (Details)

Debt (Details)	Aug. 05, 2016USD ($)	Aug. 04, 2016USD ($)	Jan. 01, 2016installment	Jun. 26, 2015USD ($)$ / sharesshares	Feb. 18, 2015USD ($)$ / sharesshares	Sep. 30, 2016USD ($)	Sep. 30, 2016USD ($)	Jul. 26, 2016$ / shares	Dec. 31, 2015USD ($)
Debt Disclosure
Loss on early retirement of long-term debt						$ (500,000)	$ (500,000)
Warrants
Debt Disclosure
Exercise price of warrants (in dollars per share) | $ / shares								$ 1.35
Prior Loan Agreement
Debt Disclosure
Maximum borrowing capacity					$ 10,000,000
Fixed interest rate					7.00%
Proceeds from loan				$ 2,000,000
Number of consecutive equal monthly installments of principal and interest repayment | installment			24
Outstanding Principle		$ 5,500,000
Loss on early retirement of long-term debt		(500,000)
Total borrowings outstanding									$ 8,000,000
Prior Loan Agreement | Warrants
Debt Disclosure
Risk-free interest rate				2.20%	1.86%
Term of warrants					10 years
Unamortized debt discount									$ 201,000
Write off unamortized value		$ 113,000
Prior Loan Agreement | Available at closing
Debt Disclosure
Proceeds from loan					$ 6,000,000
New Loan Agreement
Debt Disclosure
Maximum borrowing capacity	$ 5,000,000
New Loan Agreement | Revolving Line
Debt Disclosure
Maximum borrowing capacity	1,000,000
Total borrowings outstanding	0
New Loan Agreement | Term Loan
Debt Disclosure
Maximum borrowing capacity	$ 4,000,000
New Loan Agreement | Term Loan | Prime rate
Debt Disclosure
Interest rate (as a percent)	2.50%
First Term Loan
Debt Disclosure
Proceeds from loan					$ 6,000,000
First Term Loan | Warrants
Debt Disclosure
Warrants issued | shares					68,996
Exercise price of warrants (in dollars per share) | $ / shares					$ 5.22
Value of warrants (in dollars per share) | $ / shares					$ 3.86
Expected dividend yield					0.00%
Expected stock price volatility					88.07%
Risk-free interest rate					1.86%
Expected warrant option life					6 years 3 months
Second Term Loan
Debt Disclosure
Maximum borrowing capacity				$ 2,000,000
Second Term Loan | Warrants
Debt Disclosure
Warrants issued | shares				32,609
Exercise price of warrants (in dollars per share) | $ / shares				$ 3.68
Value of warrants (in dollars per share) | $ / shares				$ 2.71
Expected dividend yield				0.00%
Expected stock price volatility				87.04%
Risk-free interest rate					2.20%
Expected warrant option life				6 years 3 months
Maximum | New Loan Agreement | Revolving Line
Debt Disclosure
Interest rate (as a percent)	1.75%
Minimum | New Loan Agreement | Revolving Line | Prime rate
Debt Disclosure
Interest rate (as a percent)	1.00%

Equity (Details)

Equity (Details) $ / shares in Units, $ in Thousands	Jul. 26, 2016USD ($)$ / sharesshares	Mar. 31, 2014USD ($)	Sep. 30, 2016USD ($)shares	Sep. 30, 2016USD ($)shares	Sep. 30, 2015USD ($)shares
Equity
Proceeds, net of transaction costs				$ 3,362	$ 7,055
Common stock warrants fair value					$ 355
Fair Value Adjustment of Warrants			$ (646)	(646)
Transaction costs			400	400
Warrants
Equity
Price Per Share | $ / shares	$ 1.35
Percentage of placement fee offered in cash	0.06
Number of shares of common stock that outstanding warrants can purchase | shares	221,362
Exercise price of warrants (in dollars per share) | $ / shares	$ 1.35
Warrants become exercisable for period after closing date	5 years
Common stock warrants fair value	$ 1,800			1,200
Warrant Exercisable Commencement Period	5 years
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 1.35
Transaction costs			200	200
Additional Paid in Capital
Equity
Transaction costs			$ 200	$ 200
Private placement
Equity
Percentage of placement fee offered in cash	0.06
Private placement | Warrants
Equity
Price Per Share | $ / shares	$ 0.94
Number of shares of common stock that outstanding warrants can purchase | shares	3,689,361
Exercise price of warrants (in dollars per share) | $ / shares	$ 0.94
Period range, exercisable	36 months
Warrants become exercisable for period after closing date	6 months
Warrant Exercisable Commencement Period	6 months
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 0.94
Series B convertible preferred stock
Equity
Proceeds from issuance of convertible preferred stock	$ 3,500
Shares Issued Series B Convertible Preferred Stock | shares	3,468
Shares authorized for Series B Convertible Preferred Stock | shares	3,689,361
Conversion price (in dollars per share) | $ / shares	$ 0.94
Residual proceeds	$ 1,600
Beneficial conversion amount	$ 1,400
Number of shares of convertible preferred stock (in shares) | shares				1,241
Shares of converted common stock | shares			1,320,000	1,320,000
Shares outstanding | shares				2,227
Cowen
Equity
Aggregate offering price of shares of common stock		$ 40,000
Common stock sold (in shares) | shares				0	1,256,380
Proceeds, net of transaction costs					$ 7,100
Stock issuance cost					$ 200
Value of common stock available for future sale				$ 32,600

Stock-Based Compensation - (Det

Stock-Based Compensation - (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Stock-based compensation
Compensation expense	$ 820	$ 2,094
Selling, general and administrative expense.
Stock-based compensation
Compensation expense	506	1,400
Research and development expense.
Stock-based compensation
Compensation expense	$ 314	$ 694

Fair Value of Financial Instr25

Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Jul. 26, 2016	Jul. 20, 2016	Sep. 30, 2016	Sep. 30, 2016	Sep. 30, 2015
Common stock warrants fair value					$ 355
Risk-free interest rate (as a percent)		0.94%		0.92%
Expected life		3 years 6 months		3 years 3 months 26 days
Expected volatility (as a percent)		0.78%		0.80%
Change in fair value of warrant liability			$ 646	$ 646
Fair Value Transfers between levels
Level 1 to Level 2 Asset Transfers			0	0
Level 2 to Level 1 Asset Transfers			0	0
Level 1 to Level 2 Liability Transfers			0	0
Level 2 to Level 1 Liability Transfers			$ 0	0
Level 3
Common stock warrants fair value	$ 1,800			$ 1,200

Commitments and Contingencies (

Commitments and Contingencies (Details) - Aquadex product line - Manufacturing and Supply Agreement $ in Millions	9 Months Ended
	Sep. 30, 2016USD ($)
Agreement Term	18 months
Remaining Inventory Obligation	$ 2.5

Subsequent Events (Details)

Subsequent Events (Details) $ / shares in Units, $ in Millions	Nov. 03, 2016USD ($)$ / sharesshares	Oct. 30, 2016USD ($)$ / sharesshares	Jul. 26, 2016USD ($)$ / sharesshares
Warrants
Subsequent Event
Price Per Share | $ / shares			$ 1.35
Warrants issued (in shares)			221,362
Percentage of Placement Fee Based on Gross Proceeds Raised in Offering			0.06
Private placement
Subsequent Event
Percentage of Placement Fee Based on Gross Proceeds Raised in Offering			0.06
Private placement | Warrants
Subsequent Event
Price Per Share | $ / shares			$ 0.94
Warrants issued (in shares)			3,689,361
Series B convertible preferred stock
Subsequent Event
Shares Issued			3,468
Conversion price (in dollars per share) | $ / shares			$ 0.94
Proceeds from issuance of stock | $			$ 3.5
Subsequent event | Securities purchase agreement
Subsequent Event
Proceeds from issuance of stock | $		$ 3.8
Subsequent event | Warrants | Securities purchase agreement
Subsequent Event
Price Per Share | $ / shares	$ 0.18
Warrants issued (in shares)	21,176,471
Subsequent event | Warrants | Placement Agent
Subsequent Event
Warrants issued (in shares)		1,270,588
Subsequent event | Private placement | Placement Agent
Subsequent Event
Price Per Share | $ / shares		$ 0.21
Percentage of Placement Fee Based on Gross Proceeds Raised in Offering		0.06
Subsequent event | Series B convertible preferred stock
Subsequent Event
Shares Issued		2,227
Conversion price (in dollars per share) | $ / shares		$ 0.17
Limitation percentage		19.9
Subsequent event | Series C Convertible Preferred Stock | Securities purchase agreement
Subsequent Event
Shares Issued	2,900
Proceeds from issuance of stock | $	$ 3.6
Subsequent event | Series D Convertible Preferred Stock | Securities purchase agreement
Subsequent Event
Shares Issued	700
Price Per Share | $ / shares	$ 0.17
Subsequent event | Series D Convertible Preferred Stock | Warrants
Subsequent Event
Proceeds from issuance of stock | $		$ 0.2
Subsequent event | Series D Convertible Preferred Stock | Warrants | Securities purchase agreement | Subject to shareholder approval
Subsequent Event
Shares Issued		200
Warrants issued (in shares)		1,176,471