Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | May 06, 2019 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | CHF Solutions, Inc. | |
Entity Central Index Key | 0001506492 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 2,268,320 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash and cash equivalents | $ 11,489 | $ 5,480 |
Accounts receivable | 622 | 786 |
Inventory | 1,790 | 1,658 |
Other current assets | 350 | 203 |
Total current assets | 14,251 | 8,127 |
Property, plant and equipment, net | 518 | 536 |
Operating lease right-of-use asset | 574 | 0 |
Other assets | 20 | 113 |
TOTAL ASSETS | 15,363 | 8,776 |
Current liabilities | ||
Accounts payable | 1,202 | 1,133 |
Accrued compensation | 831 | 1,498 |
Current portion of operating lease liability | 171 | 0 |
Other current liabilities | 228 | 209 |
Total current liabilities | 2,432 | 2,840 |
Operating lease liability | 403 | 0 |
Total liabilities | 2,835 | 2,840 |
Commitments and contingencies | ||
Stockholders' equity | ||
Preferred stock | 0 | 0 |
Common stock | 0 | 0 |
Additional paid-in capital | 215,422 | 204,101 |
Accumulated other comprehensive income: | ||
Foreign currency translation adjustment | 1,221 | 1,223 |
Accumulated deficit | (204,115) | (199,388) |
Total stockholders' equity | 12,528 | 5,936 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 15,363 | 8,776 |
Series A Junior Participating Preferred Stock [Member] | ||
Stockholders' equity | ||
Preferred stock | 0 | 0 |
Series F Convertible Preferred Stock [Member] | ||
Stockholders' equity | ||
Preferred stock | 0 | 0 |
Series G Convertible Preferred Stock [Member] | ||
Stockholders' equity | ||
Preferred stock | $ 0 | $ 0 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Mar. 31, 2019 | Dec. 31, 2018 |
Stockholders' equity | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 39,159,323 | 39,969,465 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 2,069,020 | 513,445 |
Common stock, shares outstanding (in shares) | 2,069,020 | 513,445 |
Series A Junior Participating Preferred Stock [Member] | ||
Stockholders' equity | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 30,000 | 30,000 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Series F Convertible Preferred Stock [Member] | ||
Stockholders' equity | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 535 | 535 |
Preferred stock, shares issued (in shares) | 535 | 535 |
Preferred stock, shares outstanding (in shares) | 535 | 535 |
Series G Convertible Preferred Stock [Member] | ||
Stockholders' equity | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 810,142 | 0 |
Preferred stock, shares issued (in shares) | 810,142 | 0 |
Preferred stock, shares outstanding (in shares) | 810,142 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Consolidated Statements of Operations and Comprehensive Loss [Abstract] | ||
Net sales | $ 1,215 | $ 1,037 |
Costs and Expenses: | ||
Cost of goods sold | 612 | 901 |
Selling, general and administrative | 4,018 | 4,011 |
Research and development | 1,310 | 479 |
Total costs and expenses | 5,940 | 5,391 |
Loss from operations | (4,725) | (4,354) |
Loss before income taxes | (4,725) | (4,354) |
Income tax expense | (2) | 0 |
Net loss | $ (4,727) | $ (4,354) |
Basic and diluted loss per share (in dollars per share) | $ (11.47) | $ (15.12) |
Weighted average shares outstanding - basic and diluted (in shares) | 805 | 288 |
Other comprehensive income: | ||
Foreign currency translation adjustments | $ (2) | $ 1 |
Total comprehensive loss | $ (4,729) | $ (4,353) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid in Capital [Member] | Accumulated Other Comprehensive Income [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2017 | $ 0 | $ 197,367 | $ 1,227 | $ (182,356) | $ 16,238 |
Balance (in shares) at Dec. 31, 2017 | 271,357 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | $ 0 | 0 | 0 | (4,354) | (4,354) |
Foreign currency translation adjustment | 0 | 0 | 1 | 0 | 1 |
Stock-based compensation, net | $ 0 | 501 | 0 | 0 | 501 |
Stock-based compensation, net (in shares) | 3 | ||||
Conversion of preferred stock into common stock | $ 0 | 0 | 0 | 0 | 0 |
Conversion of preferred stock into common stock (in shares) | 32,365 | ||||
Balance at Mar. 31, 2018 | $ 0 | 197,868 | 1,228 | (186,710) | 12,386 |
Balance (in shares) at Mar. 31, 2018 | 303,725 | ||||
Balance at Dec. 31, 2018 | $ 0 | 204,101 | 1,223 | (199,388) | 5,936 |
Balance (in shares) at Dec. 31, 2018 | 513,445 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | $ 0 | 0 | 0 | (4,727) | (4,727) |
Foreign currency translation adjustment | 0 | 0 | (2) | 0 | (2) |
Stock-based compensation, net | $ 0 | 362 | 0 | 0 | 362 |
Stock-based compensation, net (in shares) | 3 | ||||
Issuance of common stock, net | $ 0 | 10,959 | 0 | 0 | 10,959 |
Issuance of common stock, net (in shares) | 455,178 | ||||
Conversion of preferred stock into common stock | $ 0 | 0 | 0 | 0 | 0 |
Conversion of preferred stock into common stock (in shares) | 1,100,394 | ||||
Balance at Mar. 31, 2019 | $ 0 | $ 215,422 | $ 1,221 | $ (204,115) | $ 12,528 |
Balance (in shares) at Mar. 31, 2019 | 2,069,020 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Operating Activities: | ||
Net loss | $ (4,727) | $ (4,354) |
Adjustments to reconcile net loss to cash flows used in operating activities: | ||
Depreciation and amortization | 59 | 54 |
Stock-based compensation expense, net | 362 | 500 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 164 | (113) |
Inventories | (132) | (937) |
Other current assets | (147) | 6 |
Other assets and liabilities | 112 | 0 |
Accounts payable and accrued expenses | (598) | (192) |
Net cash used in operating activities | (4,907) | (5,036) |
Investing activities: | ||
Purchases of property and equipment | (41) | (57) |
Net cash used in investing activities | (41) | (57) |
Financing activities: | ||
Net proceeds from public stock offering, net | 10,959 | 0 |
Net cash provided by financing activities | 10,959 | 0 |
Effect of exchange rate changes on cash | (2) | 2 |
Net increase (decrease) in cash and cash equivalents | 6,009 | (5,091) |
Cash and cash equivalents - beginning of period | 5,480 | 15,595 |
Cash and cash equivalents - end of period | 11,489 | 10,504 |
Supplemental cash flow information | ||
Cash paid for income taxes | $ 0 | $ 0 |
Nature of Business and Basis of
Nature of Business and Basis of Presentation | 3 Months Ended |
Mar. 31, 2019 | |
Nature of Business and Basis of Presentation [Abstract] | |
Nature of Business and Basis of Presentation | Note 1 – Nature of Business and Basis of Presentation Nature of Business : Previously, the Company was focused on developing the C-Pulse® Heart Assist System for treatment of Class III and ambulatory Class IV heart failure. In August 2016, the Company acquired the business associated with the Aquadex FlexFlow system (herein referred to as the “Aquadex Business”) from a subsidiary of Baxter International, Inc. (“Baxter”), and refocused its strategy to fully devote its resources to the Aquadex Business. In December 2018, the Company’s stockholders approved a reverse split of its outstanding common stock at a ratio in the range of 1-for-2 to 1-for 14 and, in January 2019, the board of directors approved a 1-for-14 reverse split of the Company’s outstanding common stock that became effective after trading on January 2, 2019. In addition, during 2017, the Company’s stockholders and board of directors approved two reverse stock splits. The first reverse stock split was a 1-for-30 reverse split of the Company’s outstanding common stock that became effective after trading on January 12, 2017. The second reverse stock split was a 1-for-20 reverse split of the Company’s outstanding common stock that became effective after trading on October 12, 2017. These reverse stock splits did not change the par value of the Company’s common stock or the number of common or preferred shares authorized by the Company’s Fourth Amended and Restated Certificate of Incorporation. All share and per-share amounts have been retroactively adjusted to reflect the reverse stock splits for all periods presented. Principles of Consolidation: 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, 2018. Going Concern: The Company became a revenue generating company after acquiring the Aquadex Business in August 2016. The Company expects to incur additional losses in the near-term as it grows the Aquadex Business, including investments in expanding its sales and marketing capabilities, purchasing inventory, manufacturing components, and complying with the requirements related to being a U.S. public company. To become and remain profitable, the Company must succeed in expanding the adoption and market acceptance of the Aquadex FlexFlow. This will require the Company to succeed in training personnel at hospitals and effectively and in efficiently manufacturing, marketing and distributing the Aquadex FlexFlow and related components. There can be no assurance that the Company will succeed in these activities, and it may never generate revenues sufficient to achieve profitability. On April 24, 2017, November 27, 2017, July 3, 2018, and March 12, 2019, the Company closed on underwritten public equity offerings for aggregate net proceeds of approximately $39.8 million after deducting the underwriting discounts and commissions and other costs associated with the offerings (see Note 4 –Equity). The Company will require additional funding to grow its Aquadex Business, which may not be available on terms favorable to the Company, or at all. The Company may receive those funds from the proceeds from future warrant exercises, issuances of equity securities, or other financing transactions. Should warrant exercises not materialize or future capital raising be unsuccessful, the Company may not be able 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 from Contracts with Customers Accounts Receivable Inventories ( in thousands) March 31, 2019 December 31, 2018 Finished Goods $ 623 $ 517 Work in Process 91 34 Raw Materials 1,076 1,107 Total $ 1,790 $ 1,658 Contingent consideration Loss per share: 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 shares underlying outstanding convertible preferred stock, warrants, stock options and other stock-based awards granted under stock-based compensation plans. The following table sets forth the potential shares of common stock that are not included in the calculation of diluted net loss per share because to do so would be anti-dilutive as of the end of each period presented: March 31 2019 2018 Warrants to purchase common stock 5,330,721 608,787 Series G convertible preferred stock 810,142 - Series F convertible preferred stock 102,185 59,432 Stock options 138,104 142,537 Restricted stock units - 12 Total 6,381,152 810,768 The following table reconciles reported net loss with reported net loss per share for the three months ended March 31, 2019: (in thousands, except per share amounts) Three months Net loss $ (4,727 ) Deemed dividend to preferred shareholders (see Note 4) (4,508 ) Net loss after deemed dividend (9,235 ) Weighted average shares outstanding 805 Basic and diluted loss per share $ (11.47 ) New Accounting Pronouncements: In February 2016, the Financial Accounting Standards Board (“FASB”) issued updated guidance to improve financial reporting about leasing transactions. This guidance required organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. The original guidance required application on a modified retrospective basis with the earliest period presented. In August 2018, the FASB issued new guidance which included an option to not restate comparative periods in transition. retrospective adjustments to prior comparative periods assets and in short and long-term liabilities recorded on its March 31, 2019 consolidated balance sheet. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard which allowed it to carry forward the historical lease classification. See Note 7 –Operating Leases for additional qualitative and quantitative disclosures |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2019 | |
Revenue Recognition [Abstract] | |
Revenue Recognition | Note 2 – Revenue Recognition Net Sales The Company sells its products in the United States primarily through a direct sales force. Customers who purchase the Company’s products include hospitals and clinics throughout the United States. In countries outside the United States, the Company sells its products through a limited number of specialty healthcare distributors in the United Kingdom, Italy, Spain, Germany, Southeast Asia, Brazil and India. These distributors resell the Company’s products to hospitals and clinics in their respective geographies. Revenue from product sales are recognized when the customer or distributor obtains control of the product, which occurs at a point in time, most frequently upon shipment of the product or receipt of the product, depending on shipment terms. The Company’s standard shipping terms are FOB shipping point, unless the customer requests that control and title to the inventory transfer upon delivery. Revenue includes shipment and handling fees charged to customers. Revenue is measured as the amount of consideration we expect to receive, adjusted for any applicable estimates of variable consideration and other factors affecting the transaction price, which is based on the invoiced price, in exchange for transferring products. All revenue is recognized when we satisfy our performance obligations under the contract. The majority of our contracts have a single performance obligation and are short term in nature. The Company has entered into extended service plans with customers which are recognized over time. This revenue represents less than 1% of net sales for the three months ended March 31, 2019 and 2018. The unfulfilled performance obligations related to these extended service plans is included in deferred revenue, which is included in other current liabilities on the condensed consolidated balance sheet. The majority of the deferred revenue is expected to be recognized within one year. Sales taxes and value added taxes in foreign jurisdictions that are collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from net sales. Revenue includes shipment and handling fees charged to customers. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of goods sold. Product Returns: believes that future returns of its products will be minimal. Therefore, revenue recognized is not currently impacted by variable consideration related to product returns. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2019 | |
Debt [Abstract] | |
Debt | Note 3 - Debt On August 5, 2016, the Company entered into a loan and security agreement with Silicon Valley Bank (the Bank). Under this agreement, the Bank 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”). Proceeds from the loans were to be used for general corporate and working capital purposes. Advances under the Term Loan were available to the Company until November 30, 2016 and were subject to the Company’s compliance with liquidity covenants. The Term Loan expired unused on November 30, 2016 and the Term Loan is no longer available to be drawn. Advances under the Revolving Line are available to the Company until March 31, 2020 and accrue interest at a floating annual rate equal to 1.75% or 1.0% above the prime rate, depending on liquidity factors. Outstanding borrowings, if any, are collateralized by all of the Company’s assets, excluding intellectual property which is subject to a negative pledge. There were no borrowings outstanding under this facility as of March 31, 2019 or December 31, 2018. |
Equity
Equity | 3 Months Ended |
Mar. 31, 2019 | |
Equity [Abstract] | |
Equity | Note 4 - Equity Series F Convertible Preferred Stock The offering was comprised of Series F convertible preferred stock, convertible into shares of the Company’s common stock at an initial conversion price of $63.00 per share. Each share of Series F preferred stock was accompanied by a Series 1 warrant, which was to expire on the first anniversary of its issuance, to purchase 16 shares of the Company’s common stock at an exercise price of $63.00 per share, and a Series 2 warrant, which expires on the seventh anniversary of its issuance, to purchase 16 shares of the Company’s common stock at an exercise price of $63.00 per share. The Series F preferred stock and the warrants were immediately separable and were issued separately . As noted below, effective July 3, 2018, the conversion price of the Series F convertible preferred stock was reduced from $63.00 to $29.68, the per share price to public in the July 2018 Offering described below. Effective March 12, 2019, the conversion price of the Series F convertible preferred stock was reduced again from $29.68 to $5.25, the per share price to the public of the Series G convertible preferred stock which closed in an underwritten public offering on March 12, 2019, and each share of the remaining Series F convertible preferred stock is convertible into 191 shares of the Company’s common stock. As of March 31, 2019, and December 31, 2018, 535 shares of the Series F convertible preferred stock remained outstanding, respectively. July 2018 Offering: On July 3, 2018, the Company closed on an underwritten public offering of 181,941 shares of its common stock at a public offering price of $29.68 per share, for gross proceeds of $5.4 million, including the full exercise of the underwriters’ over-allotment option to purchase additional shares of the Company’s common stock (the “July 2018 Offering”). deducting underwriting discounts and commissions and offering expenses. In connection with the July 2018 Offering, and to induce certain institutional investors who hold warrants issued by the Company in November 2017 (“November 2017 Warrants”) to participate in the July 2018 Offering, the Company entered into letter agreements with such institutional investors. Pursuant to the terms of these agreements, the Company agreed, effective July 3, 2018, to reduce the per share exercise price of the November 2017 Warrants held by such institutional investors to $29.68 and to extend the expiration date of the warrants that were to expire on November 27, 2018 to November 27, 2019. The number of common shares underlying the warrants that were repriced did not change. The repriced warrants are exercisable for 554,322 shares of common stock in the aggregate, of which, following such amendment, half expire on November 27, 2019 and half expire on November 27, 2024. The repricing of the warrants was accounted as an equity financing cost, with no impact to net proceeds from the offering. As noted above, the Company’s outstanding Series F preferred stock is subject to full-ratchet anti-dilution protection in the event the Company sells any common stock at a price lower than the then-conversion price of the Series F preferred stock. As a result of the July 2018 Offering, effective July 3, 2018, the conversion price of the Series F preferred stock was reduced from $63.00 to $29.68, the per share price to public in the July 2018 Offering. Series G Convertible Preferred Stock and March 2019 Offering . The March 2019 Offering was comprised of 455,178 shares of common stock priced at $5.25 per share and 1,910,536 shares of Series G convertible preferred stock, convertible into common stock at $5.25 per share. Each share of Series G convertible preferred stock and each share of common stock was accompanied by a Series 1 warrant and a Series 2 warrant. The Series 1 warrants are exercisable into 2,365,714 shares of common stock and the Series 2 warrants are exercisable into 2,365,714 shares of common stock. Series 1 warrants expire on the fifth anniversary of the date of issuance and are exercisable at $5.25 to purchase one share of common stock. Series 2 warrants expire on the earlier of: (i) the eighteen-month anniversary of the date of issuance and (ii) the 30th trading day following the public announcement of the receipt from the U.S. Food and Drug Administration of clearance or approval of a modification to the product label for the Aquadex FlexFlow system to include pediatric patients. Series 2 warrants are exercisable at $5.25 per share of common stock. As of March 31, 2019, 1,100,394 shares of the Series G convertible preferred stock had been converted into common stock and 810,142 remained outstanding. As noted above, the Company’s outstanding Series F convertible preferred stock is subject to full-ratchet anti-dilution protection in the event the Company sells any common stock at a price lower than the then-conversion price of the Series F convertible preferred stock. As a result of the March 2019 offering, the conversion price of the Series F convertible preferred stock was reduced from $29.68, to $5.25, the per share price to public of the Series G convertible preferred stock. Placement Agent Fees |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2019 | |
Stock-Based Compensation [Abstract] | |
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: Three-months ended March 31, (in thousands) 2019 2018 Selling, general and administrative expense $ 326 $ 450 Research and development expense 36 50 Total stock-based compensation expense $ 362 $ 500 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value of Financial Instruments [Abstract] | |
Fair Value of Financial Instruments | Note 6 - Fair Value of Financial Instruments The Company’s financial instruments consist of cash and cash equivalents, warrants, and contingent consideration. Pursuant to the requirements of ASC Topic 820 “Fair Value Measurement,” • Level 1 • Level 2 • Level 3 The fair value of the Company's contingent consideration, as described in Note 1, 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 March 31, 2019 and December 31, 2018. The Company believes that the carrying amounts of all remaining financial instruments approximate their fair value due to their relatively short maturities. |
Operating Leases
Operating Leases | 3 Months Ended |
Mar. 31, 2019 | |
Operating Leases [Abstract] | |
Operating Leases | Note 7 – Operating Leases The Company leases office and manufacturing space under a non-cancelable operating lease that expires in March 2022. In August 2018, the Company entered into a third amendment to the lease, extending the term of the lease from March 31, 2019 to March 31, 2022. Beginning on April 1, 2019, the annual base rent is $9.00 per square foot, subject to annual increases of $0.25 per square foot. The cost components of the Company’s operating lease were as follows for the three-month period ended March 31, 2019: (in thousands) Operating lease cost $ 49 Variable lease cost 26 Total $ 75 Variable lease costs consist primarily of taxes, insurance, and common area or other maintenance costs for our leased office and manufacturing space. Maturities of our lease liability for our operating lease are as follows as of March 31, 2019: (in thousands) 2019 $ 157 2020 213 2021 219 2022 55 Total lease payments 644 Less: Interest (70 ) Present value of lease liability $ 574 As of March 31, 2019, the remaining lease term was 3 years and discount rate was 7.5%. For the three months ended March 31, 2019, the operating cash outflows from our operating lease for office and manufacturing space was $49,000. Rent expense related to operating leases for office and manufacturing space and office equipment was approximately $52,000 for the three months ended March 31, 2018. Future minimum lease payments, under non-cancelable operating leases as of December 31, 2018, were approximately $217,000, $220,000, $219,000, $55,000, and $0 for each of the years ended December 31, 2019, through 2023, respectively. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2019 | |
Income Taxes [Abstract] | |
Income Taxes | Note 8 – 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 condensed consolidated financial statements. As of March 31, 2019, 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, 2018. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | Note 9—Commitments and Contingencies Employee Retirement Plan: Contingent Consideration: |
Nature of Business and Basis _2
Nature of Business and Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Nature of Business and Basis of Presentation [Abstract] | |
Principles of Consolidation | Principles of Consolidation: 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, 2018. |
Going Concern | Going Concern: The Company became a revenue generating company after acquiring the Aquadex Business in August 2016. The Company expects to incur additional losses in the near-term as it grows the Aquadex Business, including investments in expanding its sales and marketing capabilities, purchasing inventory, manufacturing components, and complying with the requirements related to being a U.S. public company. To become and remain profitable, the Company must succeed in expanding the adoption and market acceptance of the Aquadex FlexFlow. This will require the Company to succeed in training personnel at hospitals and effectively and in efficiently manufacturing, marketing and distributing the Aquadex FlexFlow and related components. There can be no assurance that the Company will succeed in these activities, and it may never generate revenues sufficient to achieve profitability. On April 24, 2017, November 27, 2017, July 3, 2018, and March 12, 2019, the Company closed on underwritten public equity offerings for aggregate net proceeds of approximately $39.8 million after deducting the underwriting discounts and commissions and other costs associated with the offerings (see Note 4 –Equity). The Company will require additional funding to grow its Aquadex Business, which may not be available on terms favorable to the Company, or at all. The Company may receive those funds from the proceeds from future warrant exercises, issuances of equity securities, or other financing transactions. Should warrant exercises not materialize or future capital raising be unsuccessful, the Company may not be able 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: Revenue from Contracts with Customers |
Accounts Receivable | Accounts Receivable |
Inventories | Inventories ( in thousands) March 31, 2019 December 31, 2018 Finished Goods $ 623 $ 517 Work in Process 91 34 Raw Materials 1,076 1,107 Total $ 1,790 $ 1,658 |
Contingent Consideration | Contingent consideration |
Loss per Share | Loss per share: 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 shares underlying outstanding convertible preferred stock, warrants, stock options and other stock-based awards granted under stock-based compensation plans. The following table sets forth the potential shares of common stock that are not included in the calculation of diluted net loss per share because to do so would be anti-dilutive as of the end of each period presented: March 31 2019 2018 Warrants to purchase common stock 5,330,721 608,787 Series G convertible preferred stock 810,142 - Series F convertible preferred stock 102,185 59,432 Stock options 138,104 142,537 Restricted stock units - 12 Total 6,381,152 810,768 The following table reconciles reported net loss with reported net loss per share for the three months ended March 31, 2019: (in thousands, except per share amounts) Three months Net loss $ (4,727 ) Deemed dividend to preferred shareholders (see Note 4) (4,508 ) Net loss after deemed dividend (9,235 ) Weighted average shares outstanding 805 Basic and diluted loss per share $ (11.47 ) |
New Accounting Pronouncements | New Accounting Pronouncements: In February 2016, the Financial Accounting Standards Board (“FASB”) issued updated guidance to improve financial reporting about leasing transactions. This guidance required organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. The original guidance required application on a modified retrospective basis with the earliest period presented. In August 2018, the FASB issued new guidance which included an option to not restate comparative periods in transition. retrospective adjustments to prior comparative periods assets and in short and long-term liabilities recorded on its March 31, 2019 consolidated balance sheet. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard which allowed it to carry forward the historical lease classification. See Note 7 –Operating Leases for additional qualitative and quantitative disclosures |
Nature of Business and Basis _3
Nature of Business and Basis of Presentation (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Nature of Business and Basis of Presentation [Abstract] | |
Inventories | Inventories consisted of the following: ( in thousands) March 31, 2019 December 31, 2018 Finished Goods $ 623 $ 517 Work in Process 91 34 Raw Materials 1,076 1,107 Total $ 1,790 $ 1,658 |
Potential Shares of Common Stock not Included in Diluted Net Loss Per Share | The following table sets forth the potential shares of common stock that are not included in the calculation of diluted net loss per share because to do so would be anti-dilutive as of the end of each period presented: March 31 2019 2018 Warrants to purchase common stock 5,330,721 608,787 Series G convertible preferred stock 810,142 - Series F convertible preferred stock 102,185 59,432 Stock options 138,104 142,537 Restricted stock units - 12 Total 6,381,152 810,768 |
Reconciliation of Reported Net Loss with Reported Net Loss Per Share | The following table reconciles reported net loss with reported net loss per share for the three months ended March 31, 2019: (in thousands, except per share amounts) Three months Net loss $ (4,727 ) Deemed dividend to preferred shareholders (see Note 4) (4,508 ) Net loss after deemed dividend (9,235 ) Weighted average shares outstanding 805 Basic and diluted loss per share $ (11.47 ) |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Stock-Based Compensation [Abstract] | |
Classification of Stock-Based Compensation Expense | The following table presents the classification of stock-based compensation expense recognized for the periods below: Three-months ended March 31, (in thousands) 2019 2018 Selling, general and administrative expense $ 326 $ 450 Research and development expense 36 50 Total stock-based compensation expense $ 362 $ 500 |
Operating Leases (Tables)
Operating Leases (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Operating Leases [Abstract] | |
Cost Components of Operating Leases | The cost components of the Company’s operating lease were as follows for the three-month period ended March 31, 2019: (in thousands) Operating lease cost $ 49 Variable lease cost 26 Total $ 75 |
Maturities of Lease Liability | Maturities of our lease liability for our operating lease are as follows as of March 31, 2019: (in thousands) 2019 $ 157 2020 213 2021 219 2022 55 Total lease payments 644 Less: Interest (70 ) Present value of lease liability $ 574 |
Nature of Business and Basis _4
Nature of Business and Basis of Presentation, Nature of Business, Going Concern, Accounts Receivable and Inventories (Details) $ in Thousands | Oct. 12, 2017 | Jan. 12, 2017 | Jan. 31, 2019 | Dec. 31, 2018USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($)StockSplit | Mar. 12, 2019USD ($) |
Nature of Business [Abstract] | |||||||
Number of reverse stock split | StockSplit | 2 | ||||||
Reverse stock split ratio | 0.050 | 0.0333 | 0.0714 | ||||
Going Concern [Abstract] | |||||||
Accumulated deficit | $ (199,388) | $ (204,115) | $ (199,388) | ||||
Net proceeds from issuance of convertible preferred stock | $ 39,800 | ||||||
Accounts Receivable [Abstract] | |||||||
Accounts receivables maximum credit period from invoice date | 30 days | ||||||
Allowance for doubtful accounts | 0 | $ 0 | 0 | ||||
Inventories [Abstract] | |||||||
Finished Goods | 517 | 623 | 517 | ||||
Work in Process | 34 | 91 | 34 | ||||
Raw Materials | 1,107 | 1,076 | 1,107 | ||||
Total | $ 1,658 | $ 1,790 | $ 1,658 | ||||
Minimum [Member] | |||||||
Nature of Business [Abstract] | |||||||
Reverse stock split ratio | 0.5000 | ||||||
Maximum [Member] | |||||||
Nature of Business [Abstract] | |||||||
Reverse stock split ratio | 0.0714 |
Nature of Business and Basis _5
Nature of Business and Basis of Presentation, Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Potential shares of common stock that are not included in the calculation of diluted net loss per share [Abstract] | |||
Potential shares of common stock that are not included in the calculation of diluted net loss per share (in shares) | 6,381,152 | 810,768 | |
Reported net loss with reported net loss per share [Abstract] | |||
Net loss | $ (4,727) | $ (4,354) | |
Deemed dividend to preferred shareholders (see Note 4) | (4,508) | ||
Net loss after deemed dividend | $ (9,235) | ||
Weighted average shares outstanding (in shares) | 805,000 | 288,000 | |
Basic and diluted loss per share (in dollars per share) | $ (11.47) | $ (15.12) | |
New Accounting Pronouncement [Abstract] | |||
Operating lease right-of-use asset | $ 574 | $ 0 | |
Operating lease liability | $ 574 | ||
Warrants to Purchase Common Stock [Member] | |||
Potential shares of common stock that are not included in the calculation of diluted net loss per share [Abstract] | |||
Potential shares of common stock that are not included in the calculation of diluted net loss per share (in shares) | 5,330,721 | 608,787 | |
Series G Convertible Preferred Stock [Member] | |||
Potential shares of common stock that are not included in the calculation of diluted net loss per share [Abstract] | |||
Potential shares of common stock that are not included in the calculation of diluted net loss per share (in shares) | 810,142 | 0 | |
Series F Convertible Preferred Stock [Member] | |||
Potential shares of common stock that are not included in the calculation of diluted net loss per share [Abstract] | |||
Potential shares of common stock that are not included in the calculation of diluted net loss per share (in shares) | 102,185 | 59,432 | |
Stock Options [Member] | |||
Potential shares of common stock that are not included in the calculation of diluted net loss per share [Abstract] | |||
Potential shares of common stock that are not included in the calculation of diluted net loss per share (in shares) | 138,104 | 142,537 | |
Restricted Stock Units [Member] | |||
Potential shares of common stock that are not included in the calculation of diluted net loss per share [Abstract] | |||
Potential shares of common stock that are not included in the calculation of diluted net loss per share (in shares) | 0 | 12 | |
ASU 2016-02 [Member] | Adjustments Due to Adoption of ASU 2016-02 [Member] | |||
New Accounting Pronouncement [Abstract] | |||
Operating lease right-of-use asset | $ 600 | ||
Operating lease liability | $ 600 |
Revenue Recognition (Details)
Revenue Recognition (Details) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-07-01 | ||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Abstract] | ||
Expected timing of satisfaction, period | 1 year | |
Sales Revenue [Member] | ASC 606 [Member] | Maximum [Member] | ||
Revenue, Performance Obligation [Abstract] | ||
Percentage of net sales | 1.00% | 1.00% |
Debt (Details)
Debt (Details) - Silicon Valley Bank [Member] - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Line of Credit Facility [Abstract] | ||
Maximum borrowing capacity | $ 5,000 | |
Term Loan [Member] | ||
Line of Credit Facility [Abstract] | ||
Maximum borrowing capacity | $ 4,000 | |
Maturity date | Nov. 30, 2016 | |
Revolving Line [Member] | ||
Line of Credit Facility [Abstract] | ||
Maximum borrowing capacity | $ 1,000 | |
Maturity date | Mar. 31, 2020 | |
Total borrowings outstanding | $ 0 | $ 0 |
Revolving Line [Member] | Floating Annual Rate [Member] | ||
Line of Credit Facility [Abstract] | ||
Interest rate | 1.75% | |
Revolving Line [Member] | Prime Rate [Member] | ||
Line of Credit Facility [Abstract] | ||
Interest rate | 1.00% |
Equity (Details)
Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | Mar. 12, 2019 | Jul. 03, 2018 | Nov. 27, 2017 | Mar. 31, 2019 | Mar. 12, 2019 | Dec. 31, 2018 |
Class of Stock Disclosures [Abstract] | ||||||
Net proceeds from issuance of convertible preferred stock | $ 39,800 | |||||
Preferred stock, shares outstanding (in shares) | 0 | 0 | ||||
July 2018 Offering [Member] | ||||||
Class of Stock Disclosures [Abstract] | ||||||
Issuance of common stock, net (in shares) | 181,941 | |||||
Public offering price (in dollars per share) | $ 29.68 | |||||
Gross proceeds from public stock offering | $ 5,400 | |||||
Net proceeds from public stock offering | $ 4,600 | |||||
Number of shares issuable on the exercise of warrants (in shares) | 554,322 | |||||
March 2019 Offering [Member] | ||||||
Class of Stock Disclosures [Abstract] | ||||||
Issuance of common stock, net (in shares) | 455,178 | |||||
Public offering price (in dollars per share) | $ 5.25 | $ 5.25 | ||||
Series F Convertible Preferred Stock [Member] | ||||||
Class of Stock Disclosures [Abstract] | ||||||
Gross proceeds from issuance of convertible preferred stock | $ 18,000 | |||||
Net proceeds from issuance of convertible preferred stock | $ 16,200 | |||||
Conversion price (in dollars per share) | $ 5.25 | $ 29.68 | $ 63 | $ 5.25 | ||
Number of consecutive trading days considered for expiration | 20 days | |||||
Number of consecutive trading days | 30 days | |||||
Preferred stock issued (in shares) | 18,000 | 535 | 535 | |||
Number of shares issuable on conversion of preferred stock | 191 | 286,714 | 191 | |||
Preferred stock, shares outstanding (in shares) | 535 | 535 | ||||
Aggregate cash placement fee | 8.00% | 9.00% | ||||
Series F Convertible Preferred Stock [Member] | Minimum [Member] | ||||||
Class of Stock Disclosures [Abstract] | ||||||
Percentage of volume weighted average price of common stock | 300.00% | |||||
Trading volume for each trading day | $ 200 | |||||
Series F Convertible Preferred Stock [Member] | Warrants [Member] | ||||||
Class of Stock Disclosures [Abstract] | ||||||
Warrants to purchase shares of common stock (in shares) | 573,310 | |||||
Warrants issued to the placement agent (in shares) | 0 | |||||
Series F Convertible Preferred Stock [Member] | Warrant Series 1 [Member] | ||||||
Class of Stock Disclosures [Abstract] | ||||||
Warrants to purchase shares of common stock (in shares) | 16 | |||||
Exercise price of warrants (in dollars per share) | $ 29.68 | $ 63 | ||||
Series F Convertible Preferred Stock [Member] | Warrant Series 2 [Member] | ||||||
Class of Stock Disclosures [Abstract] | ||||||
Warrants to purchase shares of common stock (in shares) | 16 | |||||
Exercise price of warrants (in dollars per share) | $ 29.68 | $ 63 | ||||
Series G Convertible Preferred Stock [Member] | ||||||
Class of Stock Disclosures [Abstract] | ||||||
Gross proceeds from issuance of convertible preferred stock | $ 12,400 | |||||
Net proceeds from issuance of convertible preferred stock | $ 11,000 | |||||
Conversion price (in dollars per share) | $ 5.25 | $ 5.25 | ||||
Number of consecutive trading days | 30 days | |||||
Preferred stock issued (in shares) | 810,142 | 0 | ||||
Preferred stock, shares outstanding (in shares) | 810,142 | 0 | ||||
Beneficial conversion amount | $ 4,500 | |||||
Beneficial ownership limitation | 4.99% | |||||
Conversion of preferred stock into common stock (in shares) | 1,100,394 | |||||
Series G Convertible Preferred Stock [Member] | March 2019 Offering [Member] | ||||||
Class of Stock Disclosures [Abstract] | ||||||
Number of shares issuable on conversion of preferred stock | 1,910,536 | 1,910,536 | ||||
Series G Convertible Preferred Stock [Member] | Warrant Series 1 [Member] | ||||||
Class of Stock Disclosures [Abstract] | ||||||
Exercise price of warrants (in dollars per share) | $ 5.25 | $ 5.25 | ||||
Number of shares issuable on the exercise of warrants (in shares) | 2,365,714 | 2,365,714 | ||||
Series G Convertible Preferred Stock [Member] | Warrant Series 2 [Member] | ||||||
Class of Stock Disclosures [Abstract] | ||||||
Exercise price of warrants (in dollars per share) | $ 5.25 | $ 5.25 | ||||
Number of shares issuable on the exercise of warrants (in shares) | 2,365,714 | 2,365,714 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Stock-Based Compensation Expense Items [Abstract] | ||
Stock-based compensation expense | $ 362 | $ 500 |
Selling, General and Administrative Expense [Member] | ||
Stock-Based Compensation Expense Items [Abstract] | ||
Stock-based compensation expense | 326 | 450 |
Research and Development Expense [Member] | ||
Stock-Based Compensation Expense Items [Abstract] | ||
Stock-based compensation expense | $ 36 | $ 50 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Fair Value Transfers between levels [Abstract] | ||
Change in fair value | $ 0 | $ 0 |
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 |
Operating Leases (Details)
Operating Leases (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019USD ($)$ / ft² | Mar. 31, 2018USD ($) | |
Operating Leases [Abstract] | ||
Annual base rent (per square foot) | $ / ft² | 9 | |
Annual increase per square foot (in dollars per square foot) | $ / ft² | 0.25 | |
Cost Components of Operating Leases [Abstract] | ||
Operating lease cost | $ 49 | |
Variable lease cost | 26 | |
Total | 75 | |
Maturities of Lease Liability [Abstract] | ||
2019 | 157 | |
2020 | 213 | |
2021 | 219 | |
2022 | 55 | |
Total lease payments | 644 | |
Less: Interest | (70) | |
Present value of lease liability | $ 574 | |
Remaining lease term | 3 years | |
Discount rate | 7.50% | |
Operating cash outflows from operating lease | $ 49 | |
Rent expense | $ 52 | |
Future Minimum Lease Payments [Abstract] | ||
2019 | 217 | |
2020 | 220 | |
2021 | 219 | |
2022 | 55 | |
2023 | $ 0 |
Commitments and Contingencies -
Commitments and Contingencies - (Details) - Aquadex Product Line [Member] $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Contingent Consideration [Abstract] | |
Sale or disposal of business assets threshold for contingent consideration | $ 4,000 |
Percentage of contingent consideration payments on disposal of business assets | 40.00% |
Maximum [Member] | |
Contingent Consideration [Abstract] | |
Contingent consideration period | 3 years |