Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2024 | May 15, 2024 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Interactive Data Current | Yes | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2024 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 | |
Entity Information [Line Items] | ||
Entity Registrant Name | ENVOY MEDICAL, INC. | |
Entity Central Index Key | 0001840877 | |
Entity File Number | 001-40133 | |
Entity Tax Identification Number | 86-1369123 | |
Entity Incorporation, State or Country Code | DE | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Contact Personnel [Line Items] | ||
Entity Address, Address Line One | 4875 White Bear Parkway | |
Entity Address, City or Town | White Bear Lake | |
Entity Address, State or Province | MN | |
Entity Address, Postal Zip Code | 55110 | |
Entity Phone Fax Numbers [Line Items] | ||
City Area Code | (877) | |
Local Phone Number | 900-3277 | |
Entity Listings [Line Items] | ||
Entity Common Stock, Shares Outstanding | 19,599,982 | |
Class A common stock, par value $0.0001 per share | ||
Entity Listings [Line Items] | ||
Title of 12(b) Security | Class A Common Stock, par value $0.0001 per share | |
Trading Symbol | COCH | |
Security Exchange Name | NASDAQ | |
Redeemable Warrants, each exercisable for one share of Class A common stock at an exercise price of $11.50 per share | ||
Entity Listings [Line Items] | ||
Title of 12(b) Security | Redeemable Warrants, each exercisable for one share of Class A Common Stock at an exercise price of $11.50 per share | |
Trading Symbol | COCHW | |
Security Exchange Name | NASDAQ |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Current assets: | ||
Cash | $ 4,945 | $ 4,218 |
Accounts receivable | 189 | 70 |
Other receivables | 32 | 176 |
Inventories | 1,455 | 1,404 |
Prepaid expenses and other current assets | 1,109 | 957 |
Total current assets | 7,730 | 6,825 |
Property and equipment, net | 317 | 351 |
Total assets | 8,480 | 7,640 |
Current liabilities: | ||
Accounts payable | 913 | 1,554 |
Accrued expenses | 5,621 | 4,613 |
Product warranty liability, current portion | 305 | 311 |
Total current liabilities | 6,996 | 6,636 |
Product warranty liability, net of current portion | 1,923 | 1,923 |
Publicly traded warrant liability | 1,509 | 332 |
Forward purchase agreement put option liability | 103 | |
Forward purchase agreement warrant liability | 266 | 4 |
Total liabilities | 15,893 | 9,402 |
Commitments and contingencies (see Note 14) | ||
Stockholders’ deficit: | ||
Additional paid-in capital | 257,581 | 255,596 |
Accumulated deficit | (264,877) | (257,242) |
Accumulated other comprehensive loss | (119) | (118) |
Total stockholders’ deficit | (7,413) | (1,762) |
Total liabilities and stockholders’ deficit | 8,480 | 7,640 |
Related Party | ||
Current assets: | ||
Operating lease right-of-use assets (related party) | 433 | 464 |
Current liabilities: | ||
Operating lease liabilities (related party), current portion | 157 | 158 |
Term loan payable (related party) | 4,821 | |
Operating lease liabilities (related party), net of current portion | 378 | 404 |
Series A Preferred Stock | ||
Stockholders’ deficit: | ||
Series A Preferred Stock, $0.0001 par value; 10,000,000 shares authorized as of March 31, 2024 and December 31, 2023, respectively; 4,500,000 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively | ||
Class A Common Stock | ||
Stockholders’ deficit: | ||
Class A Common Stock, $0.0001 par value; 400,000,000 shares authorized as of March 31, 2024 and December 31, 2023 respectively; 19,599,982 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively | $ 2 | $ 2 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - $ / shares | Mar. 31, 2024 | Dec. 31, 2023 |
Series A Preferred Stock | ||
Preferred stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 4,500,000 | 4,500,000 |
Preferred stock, shares outstanding | 4,500,000 | 4,500,000 |
Class A Common Stock | ||
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 400,000,000 | 400,000,000 |
Common stock, shares issued | 19,599,982 | 19,599,982 |
Common stock, shares outstanding | 19,599,982 | 19,599,982 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Income Statement [Abstract] | ||
Net revenues | $ 59 | $ 78 |
Cost and operating expenses: | ||
Cost of goods sold | 153 | 175 |
Research and development | 2,360 | 1,927 |
Sales and marketing | 325 | 371 |
General and administrative | 2,119 | 1,376 |
Total costs and operating expenses | 4,957 | 3,849 |
Operating loss | (4,898) | (3,771) |
Other income (expense): | ||
Loss from changes in fair value of convertible notes payable (related party) | (9,377) | |
Change in fair value of forward purchase agreement put option liability | 103 | |
Change in fair value of forward purchase agreement warrant liability | (262) | |
Change in fair value of publicly traded warrant liability | (1,177) | |
Interest expense, related party | (36) | |
Other expense | (105) | |
Total other expense, net | (1,372) | (9,482) |
Net loss | (6,270) | (13,253) |
Net loss attributable to common stockholders, basic | $ (6,270) | $ (13,253) |
Net loss per share attributable to common stockholders, basic (in Dollars per share) | $ (0.32) | $ (1.31) |
Weighted-average common stock outstanding, basic (in Shares) | 19,599,982 | 10,122,581 |
Other comprehensive loss: | ||
Foreign currency translation adjustment | $ (1) | $ 1 |
Other comprehensive loss | (1) | |
Comprehensive loss | $ (6,271) | $ (13,253) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) (Parentheticals) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Income Statement [Abstract] | ||
Net loss attributable to common stockholders, diluted | $ (6,270) | $ (13,253) |
Net loss per share attributable to common stockholders, diluted | $ (0.32) | $ (1.31) |
Weighted-average common stock outstanding, diluted | 19,599,982 | 10,122,581 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders’ Deficit (Unaudited) - USD ($) $ in Thousands | Preferred Stock Series A | Common Stock Class A | Additional Paid In Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total |
Balance at Dec. 31, 2022 | $ 1 | $ 189,904 | $ (225,985) | $ (115) | $ (36,195) | |
Balance (in Shares) at Dec. 31, 2022 | 10,122,581 | |||||
Deemed capital contribution from related party | 1,952 | 1,952 | ||||
Foreign currency translation adjustment | 1 | 1 | ||||
Net loss | (13,253) | (13,253) | ||||
Balance at Mar. 31, 2023 | $ 1 | 191,856 | (239,238) | (114) | (47,495) | |
Balance (in Shares) at Mar. 31, 2023 | 10,122,581 | |||||
Balance at Dec. 31, 2023 | $ 2 | 255,596 | (257,242) | (118) | (1,762) | |
Balance (in Shares) at Dec. 31, 2023 | 4,500,000 | 19,599,982 | ||||
Dividends on Series A Preferred Stock | (1,365) | (1,365) | ||||
Sale of common stock associated with forward purchase agreement | 1,683 | 1,683 | ||||
Stock-based compensation | 123 | 123 | ||||
Issuance of warrants associated with 2024 Term Loan | 179 | 179 | ||||
Foreign currency translation adjustment | (1) | (1) | ||||
Net loss | (6,270) | (6,270) | ||||
Balance at Mar. 31, 2024 | $ 2 | $ 257,581 | $ (264,877) | $ (119) | $ (7,413) | |
Balance (in Shares) at Mar. 31, 2024 | 4,500,000 | 19,599,982 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Cash flows from operating activities | ||
Net loss | $ (6,270) | $ (13,253) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 34 | 27 |
Stock-based compensation | 123 | |
Change in fair value of convertible notes payable (related party) | 9,377 | |
Change in fair value of warrant liability (related party) | 104 | |
Change in fair value of publicly traded warrant liability | 1,177 | |
Change in fair value of forward purchase agreement warrant liability | 262 | |
Change in fair value of forward purchase agreement put option liability | (103) | |
Change in operating lease right-of-use assets (related party) | 31 | 22 |
Change in inventory reserve | 89 | (14) |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (119) | (22) |
Other receivables | 144 | 28 |
Inventories | (140) | |
Prepaid expenses and other current assets | (43) | (37) |
Accounts payable | (641) | 1,018 |
Operating lease liabilities (related party) | (27) | (19) |
Accrued expenses | (357) | (180) |
Product warranty liability | (6) | (62) |
Net cash used in operating activities | (5,846) | (3,011) |
Cash flows from investing activities | ||
Purchases of property and equipment | (59) | |
Deposit on equipment not yet placed in service | (109) | |
Net cash used in investing activities | (109) | (59) |
Cash flows from financing activities | ||
Proceeds from the issuance of convertible notes payable (related party) | 4,000 | |
Proceeds from the issuance of term loan (related party) | 5,000 | |
Proceeds from the sale of common stock associated with the forward purchase agreement, net of transaction costs | 1,683 | |
Net cash provided by financing activities | 6,683 | 4,000 |
Effect of exchange rate changes on cash | (1) | 1 |
Net increase in cash | 727 | 931 |
Cash, beginning of year | 4,218 | 183 |
Cash, end of year | 4,945 | 1,114 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | ||
Cash paid for income taxes | ||
Non-cash investing and financing activities: | ||
Deemed capital contribution from related party | 1,952 | |
Dividends on Series A Preferred Shares | $ 1,365 |
Nature of the Business and Basi
Nature of the Business and Basis of Presentation | 3 Months Ended |
Mar. 31, 2024 | |
Nature of the Business and Basis of Presentation [Abstract] | |
Nature of the Business and Basis of Presentation | 1. Nature of the Business and Basis of Presentation Envoy Medical, Inc. (“Envoy Medical” or the “Company”) is a hearing health company focused on providing innovative medical technologies across the hearing loss spectrum. Envoy Medical’s technologies are designed to shift the paradigm within the hearing industry and bring both providers and patients the hearing devices they desire. The Company’s first commercial product, the Esteem® Fully Implanted Active Middle Ear Implant (“Esteem FI-AMEI”), is a fully implanted active middle ear hearing device. The Esteem FI-AMEI was approved for sale in 2010 by the United States Food and Drug Administration (“FDA”). Envoy Medical believes the fully implanted Acclaim® Cochlear Implant (“Acclaim CI”) is a first-of-its-kind cochlear implant. Envoy Medical’s fully implanted technology includes a sensor designed to leverage the natural anatomy of the ear instead of a microphone to capture sound. The Acclaim CI is designed to address severe to profound sensorineural hearing loss that is not adequately addressed by hearing aids. The Acclaim CI will only be indicated for adults who have been deemed adequate candidates by a qualified physician. The Acclaim CI received the Breakthrough Device Designation from the FDA in 2019. On September 29, 2023 (the “Closing Date”), a merger transaction between Envoy Medical Corporation, Anzu Special Acquisition Corp I (“Anzu”) and Envoy Merger Sub, Inc., a directly, wholly owned subsidiary of Anzu (“Merger Sub”) was completed (hereinafter, the “Merger” or “Business Combination”, see Note 3) pursuant to the business combination agreement, dated as of April 17, 2023 (as amended, the “Business Combination Agreement”) . In connection with the closing of the Merger (the “Closing”), Merger Sub merged with Envoy Medical Corporation, with Envoy Medical Corporation surviving the merger as a wholly owned subsidiary of Anzu. In connection with the Closing, Anzu changed its name to Envoy Medical, Inc. The Company’s Class A common stock, par value $0.0001 per share (“Common Stock”), and the Company’s warrants commenced trading on the Nasdaq Stock Market LLC (“Nasdaq”) on October 2, 2023 under the symbols “COCH” and “COCHW,” respectively. On April 17, 2023, prior to entering into the Business Combination Agreement, Anzu and Envoy Medical Corporation entered into an agreement (as amended to date, the “Forward Purchase Agreement”) with Meteora Special Opportunity Fund I, LP (“MSOF”), Meteora Capital Partners, LP (“MCP”), Meteora Select Trading Opportunities Master, LP (“MSTO”) and Meteora Strategic Capital, LLC (“MSC” and, collectively with MSOF, MCP and MSTO, the “Sellers” or “Meteora parties”) for an over-the-counter equity prepaid forward transaction. Pursuant to the terms of the Forward Purchase Agreement, on the Closing Date, the Sellers purchased 425,606 shares of our Common Stock (the “Recycled Shares”) directly from the redeeming stockholders of Anzu. Also, effective upon on the Closing Date, the Company paid to the Sellers a prepayment amount of $4.5 million required under the Forward Purchase Agreement directly from the trust account and transferred to the Sellers 8,512 shares of Common Stock (the “Share Consideration”). During the three months ended March 31, 2024, the Sellers sold the full amount of the Recycled Shares, and, pursuant to the Forward Purchase Agreement, the Company received $4.00 per share sold, approximately $1.7 million. In addition, pursuant to the subscription agreement, dated April 17, 2023 (as amended to date, the “Subscription Agreement”), by and between Anzu and Anzu SPAC GP I LLC (the “Sponsor”), the Company issued, and certain affiliates of the Sponsor purchased, concurrently with the Closing, an aggregate of 1,000,000 shares of the Company’s Series A preferred stock, par value $0.0001 per share (“Series A Preferred Stock”) in a private placement (the “PIPE Transaction”) at a price of $10.00 per share for an aggregate purchase price of $10.0 million. Pursuant to the convertible promissory note, dated April 17, 2023, between Envoy Medical Corporation and GAT Funding, LLC (as amended to date, the “Envoy Bridge Note”), the Company issued 1,000,000 shares of the Company’s Series A Preferred Stock to GAT Funding, LLC in exchange for the conversion of the Envoy Bridge Note in full, concurrently with the Closing. The unaudited condensed consolidated financials include the accounts of Envoy Medical and its wholly-owned subsidiaries Envoy Medical Corporation and Envoy Medical GmbH (Ansbach) (GmbH), which operates a sales office in Germany. All intercompany accounts and transactions have been eliminated in consolidation. Unaudited financial information The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial reporting and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Pursuant to these rules and regulations, they do not include all information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair statement of the Company’s financial condition and results of operations have been included. Operating results for the periods presented are not necessarily indicative of the results that might be expected for the full year. As such, the information included in this report should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2023, which is included in the Company’s Form 10-K, dated and filed with the SEC on April 1, 2024, which is accessible on the SEC’s website at www.sec.gov. The condensed consolidated balance sheet at December 31, 2023 has been derived from the audited consolidated financial statements of the Company, but does not include all the disclosures required by U.S. GAAP. During the three months ended March 31, 2024, there were no changes to the Company’s significant accounting policies as described in the Company’s audited consolidated financial statements as of and for the year ended December 31, 2023. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2024 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Going Concern Since inception, the Company has incurred cumulative losses from operations and has an accumulated deficit of $264.9 million at March 31, 2024. The Company has funded its operations and capital needs primarily through net proceeds from the issuances of term debt, convertible debt, the sale of Envoy Medical’s Common Stock, and the sale of Envoy Medical’s Series A Preferred Stock. In February 2024, the Company received $5.0 million as an initial advance from a $10.0 million term loan provided by a related party (see Note 9). In February 2024 the Company received net proceeds of $1.7 million from the sale of 425,606 shares held by Meteora parties (see Note 1). In September 2023, the Company received $11.7 in million proceeds from the Business Combination, Forward Purchase Agreement, and the PIPE Transaction, net of transaction costs. The Company had cash of $4.9 million as of March 31, 2024. Management believes that its existing cash balances combined with future capital raises, and cash receipts from product sales will be sufficient to fund ongoing operations through at least one year from the date the unaudited condensed consolidated financial statements are issued. However, there can be no assurance that the Company will be successful in achieving its strategic plans, that the Company’s cash balances and future capital raises will be sufficient to support its ongoing operations, or that any additional financing will be available in a timely manner or on acceptable terms, if at all. If the Company is unable to raise sufficient financing when needed or events or circumstances occur such that the Company does not meet its strategic plans, the Company may be required to reduce certain of its discretionary spending. The Company may be unable to develop new or enhanced production methods, or be unable to fund capital expenditures, which could have a material adverse effect on the Company’s financial position, results of operations, cash flows, and ability to achieve its intended business objectives. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern and do not include adjustments to reflect the possible effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty. Use of Estimates The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates and assumptions reflected in these unaudited condensed consolidated financial statements include but are not limited to the useful lives of property and equipment, inventory reserves, warranty liability, stock-based compensation expense, the fair value of forward purchase agreement put option liability, the fair value of forward purchase agreement warrant liability and the outcome of litigation. Estimates and assumptions are reviewed periodically and the effect of changes, if any, are reflected in the unaudited condensed consolidated statements of operations and comprehensive loss. Reclassification Certain items in prior financial statements have been reclassified to conform to the current presentation. Concentration of Credit Risk and Significant Customers Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and accounts receivable, net. Periodically, the Company maintains deposits in accredited financial institutions in excess of federally insured limits. The Company maintains its cash with financial institutions that management believes to be of high credit quality. The Company has not experienced any losses on such accounts and does not believe it is exposed to any unusual credit risk beyond the normal credit risk associated with commercial banking relationships. With respect to accounts receivable, the Company performs credit evaluations of its customers and does not require collateral. There have been no material losses on the Company’s accounts receivable. There were no customers that accounted for 10.0% or more of sales for the three months ended March 31, 2024 and 2023, respectively. There were no customers that accounted for 10.0% or more of the accounts receivable balance as of March 31, 2024 and December 31, 2023, respectively. Cash and Restricted Cash The Company maintains cash balances in bank accounts which, at times, may exceed federally insured limits. The Company is required to maintain an amount equal to the first-year dividend payments defined under the terms of the Series A Preferred Stock. As of March 31, 2024 and December 31, 2023 the Company was unable to comply with this requirement (see Note 5). Accounts Receivable Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company grants credit to customers in the normal course of business, but generally does not require collateral or other security to support amounts due. Accounts receivable are presented net of an allowance for credit losses. Management performs ongoing credit evaluations of its customers based on financial information provided by the customer. Accounts receivable outstanding longer than the contractual payment terms are considered past due. The Company estimates its allowance for credit losses by considering numerous factors, including delinquency trends along with ongoing customer credit evaluations. The Company writes off accounts receivable when they become uncollectible. Payments subsequently received on such receivables are credited to the allowance for credit losses. The Company had no material bad debt expense for the three months ended March 31, 2024 and the year ended December 31, 2023; there were no material contract assets as of March 31, 2024 and December 31, 2023. The allowance for credit losses was not material for the three months March 31, 2024 and the year ended December 31, 2023. Inventories Inventories are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method. The Company records write-downs of inventories which are obsolete or in excess of anticipated demand or net realizable value based on a consideration of marketability and product life cycle stage, historical net sales and demand forecasts which consider the assumptions about future demand and market conditions. Inventory on hand that is not expected to be sold or utilized is considered excess, and the Company recognizes the write-down in cost of revenue at the time of such determination. The write-down is determined by the excess of cost over net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable cost of completion, disposal and transportation. At the time of loss recognition, a new cost basis is established and subsequent changes in facts and circumstances would not result in an increase in the cost basis. Property and Equipment, Net Property and equipment are stated at cost, net of accumulated depreciation. Additions and improvements that extend the lives of the assets are capitalized, while expenditures for repairs and maintenance are expensed as incurred. When assets are retired or otherwise disposed of, their costs and related accumulated depreciation are removed from the accounts and resulting gains or losses are included in operating results. Depreciation is calculated using the straight-line method over the estimated useful life of the asset, which ranges from three seven Operating Leases The Company determines if an agreement is a lease at inception. The Company elected not to recognize the right to use an underlying asset (right-of-use “ROU” asset) and lease liabilities for short-term leases, which are those that have a lease term of twelve months or less, and includes renewal options in the measurement of lease liabilities only when the option to purchase or renew lease for the underlying asset is reasonably certain to be exercised. The Company has elected as an accounting policy to account for lease components and associated non-lease components as a single component. The Company leases its headquarters office space under an operating lease with a related party. The Company also leases office space in Germany under an operating lease (see Note 7). The determination of whether an arrangement is, or contains, a lease is performed at the inception of the arrangement and as necessary at modification. Operating leases are recorded on the consolidated balance sheets with operating lease assets representing the right to use the ROU asset for the lease term and lease liabilities representing the obligation to make lease payments arising from the lease. The Company excludes variable lease payments in measuring ROU assets and lease liabilities, other than those that depend on an index, a rate or are in-substance fixed payments. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. In addition, ROU assets include initial direct costs incurred by the lessee as well as any lease payments made at or before the commencement date and exclude lease incentives. The discount rate implicit within the Company’s leases is generally not determinable; therefore, the Company determines the discount rate using its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Impairment of Long-Lived Assets Long-lived assets held and used by the Company, including equipment and ROU assets, are reviewed for impairment whenever events or changes in business circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is recognized when estimated future undiscounted cash flows related to the assets are less than its carrying value. The amount of the impairment loss to be recorded, if any, is calculated by the excess of the asset’s carrying value over its fair value. The Company did not incur any impairment charges during the three months ended March 31, 2024 and 2023. Fair Value of Financial Instruments The Company calculates the fair value of its assets and liabilities which qualify as financial instruments and includes this additional information in the notes to the unaudited condensed consolidated financial statements when the fair value is different than the carrying value of these financial instruments. The estimated fair value of cash, accounts receivable, accounts payable and accrued expenses, and term loan payable approximate their carrying amounts due to the relatively short maturity of these instruments. The carrying value of the operating lease liabilities also approximates fair value since the instrument bears market rates of interest. None of these instruments are held for trading purposes. Fair Value Measurement The Company determines the fair value of financial assets and liabilities using the fair value hierarchy established in Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement ● Level 1 ● Level 2 ● Level 3 A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Company had elected the fair value option for the convertible notes payable (related party) under ASC Topic 825, Financial Instruments, Derivative Financial Instruments The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign-currency risks. The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in other income (expense) in the Company’s unaudited condensed consolidated statements of operations and comprehensive loss. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the condensed consolidated balance sheets as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. The Company accounts for its publicly traded warrant liability in accordance with ASC 815-40. Accordingly, the Company recognized the warrant instruments as a liability at fair value and adjusts the instruments to fair value at each reporting period. The publicly traded warrant liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in other income (expense) in the Company’s unaudited condensed consolidated statements of operations and comprehensive loss. The Company accounts for its Forward Purchase Agreement in accordance with ASC 815-40. Accordingly, the Company recognized the forward purchase agreement put option liability and the forward purchase agreement warrant liability at fair value at each reporting period. The forward agreement put option liability and the forward purchase agreement warrant liability are subject to re-measurement at each balance sheet date, and any change in fair value is recognized in other income (expense) in the Company’s unaudited condensed consolidated statements of operations and comprehensive loss. As of March 31, 2024, the Company no longer had a forward purchase agreement put option liability. SPAC Excise Tax Liability The Company recognized an excise tax liability of approximately $2.2 million upon completion of the Company’s Business Combination as an incremental cost to repurchase the Company’s treasury shares, with an offsetting tax liability recognized. The SPAC excise tax liability was recorded in accrued expenses in the Company’s unaudited condensed consolidated balance sheets. Revenue Recognition The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers ● identify the contract with a customer; ● identify the performance obligations in the contract; ● determine the transaction price; ● allocate the transaction price to the performance obligations in the contract; and ● recognize revenue when or as performance obligations are satisfied. Revenue is recognized as performance obligations under the terms of a contract are satisfied, which generally occurs as control of the promised products or services is transferred to customers. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or services to a customer (“transaction price”). To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price using either the expected value or most likely amount method. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the Company’s anticipated performance and all information that is reasonably available. The Company primarily derives revenue from the sale of its hearing device products. Revenue from product sales is recognized upon transfer of control of the product to a customer, which occurs at a point in time, at the time the Company is notified the product has been implanted or used by the customer in a surgical procedure. The Company also sells extended warranty plans on a limited basis. Revenue from extended warranty plans is recognized ratably over time and was immaterial for each of the three months ended March 31, 2024 and 2023. Amounts received from a customer prior to fulfillment of the performance obligation are included as accrued expenses on the condensed consolidated balance sheets and are immaterial as of March 31, 2024 and December 31, 2023. The Company has elected to account for shipping and handling activities performed as activities to fulfill the promise to transfer the products; therefore these activities are not assessed as a separate performance obligation to its customers. Revenue is measured as the amount of consideration the Company expects to receive, which is based on the invoiced price. The majority of the Company’s contracts have a single performance obligation and are short term in nature. The Company’s contracts do not include variable consideration. Payment terms differ by geography and customer, but payment is generally required within 30 days from the date of product utilization. The Company also offers extended payment plans on a limited basis. Amounts due to the Company under payment plans that extend beyond 12 months are immaterial as of March 31, 2024 and December 31, 2023, therefore the Company does not adjust the promised amount of consideration for the effects of a significant financing component. Cost of Goods Sold Cost of goods sold is comprised of the costs of merchandise sold, as well as the related inbound freight costs and labor directly attributable to bringing certain goods to a saleable condition. In categorizing costs, the Company captures applicable depreciation and costs to maintain and run revenue generating technology, equipment related costs and any personnel-related costs as cost of goods sold. Product Warranty The Company provides a limited warranty for its implantable components. At the time product revenue is recognized, the Company reserves for estimated future costs that may be incurred under its warranties based on historical experience. The limited warranty liability is recorded in accrued expenses in the condensed consolidated balance sheets. As of March 31, 2024, and December 31, 2023, the amount of accrued limited warranty was immaterial and the Company’s warranty payments were immaterial. During 2013, the Company offered a lifetime warranty to clinical trial patients to cover batteries and surgery related costs. The Company estimates the costs that may be incurred under this lifetime warranty and records a liability in the amount of such costs at its present value. The lifetime warranty is recorded in warranty liability in the consolidated balance sheets. As of March 31, 2024 and December 31, 2023, the aggregate product warranty liability was $2.2 million and $2.2 million, respectively, of which $0.3 million and $0.3 million, respectively, was classified as a current liability in the Company’s condensed consolidated balance sheets. Patents All patent-related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery of the expenditure. Amounts incurred are classified as general and administrative expenses. Research and Development Costs Expenditures for research and development activities are charged to operations as incurred. Research and development costs include salaries, employee benefits and laboratory testing expenses. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax base and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company has recorded a full valuation allowance against the net deferred tax asset due to the uncertainty of realizing the related benefits. The Company recognizes the financial statement benefit of a tax position only to the extent the position is more-likely-than-not to be sustained upon audit based on the technical merits of the position. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the Company’s unaudited condensed consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company has elected to recognize interest and penalties related to uncertain tax positions in the provision for income taxes. Foreign Currency Translation The Euro is the functional currency for the Company’s foreign subsidiary in Germany. The assets and liabilities of the Company’s foreign operations are translated into U.S. dollars at the end-of-the-period exchange rates, and the revenues and expenses are translated at weighted-average rates for the respective reporting period. Unrealized translation gains and losses are recorded as a translation adjustment, which is included in the Company’s unaudited condensed consolidated statements of stockholders’ deficit as well as a component of accumulated other comprehensive loss on the Company’s unaudited condensed consolidated statements of operations and comprehensive loss. Net Loss per Share The Company’s Series A Preferred Stock certificate of designation entitles the holders to participate in dividends on an as converted basis when declared on Common Stock. As a result, the Series A Preferred Stock meets the definition of a participating security, which requires the Company to apply the two-class method to compute both basic and diluted earnings per share attributable to common stockholders. The two-class method is an earnings allocation formula that treats participating securities as having rights to earnings that would otherwise have been available to common stockholders. The two-class method requires income available to holders of the Company’s Common Stock for the period to be allocated between common and participating securities based upon their respective rights to share in the earnings as if all income for the period had been distributed. In periods where there is a net loss, no allocation of undistributed net loss to Series A Preferred Stock is performed as the holders of the Series A Preferred Stock are not contractually obligated to participate in the Company’s losses. The Company reported net losses of $6.3 million and $13.3 million attributable to the shareholders of the Company’s common stock for the three months ended March 31, 2024, and 2023, respectively. Basic net loss per share of common stock is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares outstanding, plus the impact of potential common shares, if dilutive, resulting from the potential exercise of warrants or options, and the potential conversion of preferred stock, into common stock, under the if-converted method. Due to the net losses for the three-month periods ended March 31, 2024 and 2023, basic and dilutive net loss per share were the same, as the effect of potentially dilutive securities would have been anti-dilutive. Stock-based Compensation Stock-based compensation is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite service period. The fair value of stock-based payment awards is estimated using the Black-Scholes option model with a volatility figure derived from using a determined peer group of other companies’ stock prices since the trading history of the Company’s stock is too short to provide accurate data. The Company accounts for the expected term of options in accordance with the “simplified” method, which is used for “plain-vanilla” options, as defined in ASC 718, “ Share-based payment” The Company has adopted the guidance from Accounting Standards Update (“ASU”) 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Compensation Accounting, Segments Operating segments are identified as components of enterprise about which discrete financial information is available for evaluation by the chief operating decision-maker (“CODM”) in deciding resource allocation and assessing performance. The Company has determined that its CODM is its Chief Executive Officer. The Company’s CODM reviews financial information presented on a consolidated basis for the purposes of making decisions, allocating resources and evaluating performance. Consequently, the Company has determined it operates in one operating and reportable segment. Recently Adopted Accounting Pronouncements and Accounting Pronouncements Not Yet Effective In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, “ Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures In December 2023, the FASB issued ASU 2023-09, “ Income Taxes (Topic 740): Improvements to Income Tax Disclosures Other than the item noted above, there have been no new accounting pronouncements not yet effective or adopted in the current year that have a significant impact, or potential significant impact, to our unaudited condensed consolidated financial statements. |
Merger
Merger | 3 Months Ended |
Mar. 31, 2024 | |
Merger [Abstract] | |
Merger | 3. Merger As discussed in Note 1 – Nature of the Business and Basis of Presentation, ● each share of Envoy Common Stock immediately prior to the Business Combination was automatically cancelled and converted into the right to receive 0.063603 shares of Common Stock resulting in the issuance of 14,999,990 shares of Common Stock; ● each share of outstanding Envoy Common Stock, which totaled 139,153,144 was cancelled and converted into 8,850,526 shares of Common Stock; ● each outstanding warrant to purchase Envoy Common Stock, depending on the applicable exercise price, was automatically cancelled or exercised on a net exercise basis and converted into 2,702 shares of Common Stock; ● the outstanding Convertible Notes, as defined in Note 9, were automatically converted into 4,874,707 shares of Common Stock; ● each share of Envoy redeemable convertible preferred stock, par value $0.01 per share, issued and outstanding immediately prior to the Closing (“Envoy Preferred Stock”), which totaled 4,000,000 shares, were converted into 20,000,000 shares of Envoy Common Stock and subsequently exchanged for 1,272,055 shares of Common Stock; ● each outstanding option to purchase shares of Envoy Common Stock outstanding as of immediately prior to the Business Combination was cancelled in exchange for nominal consideration; ● each share of Merger Sub’s common stock, par value $0.0001 per share, issued and outstanding immediately prior to the Business Combination was converted into and exchanged for one share of Common Stock; ● the Sponsor forfeited 5,510,000 shares of Anzu’s Class B common stock, par value $0.0001 per share (“Anzu Class B Common Stock”), and all 12,500,000 private placement warrants pursuant to the Sponsor Support Agreement; ● all of Anzu’s outstanding 14,166,666 public placement warrants were exchanged for warrants each exercisable for a share of Common Stock at a price of $11.50 per share; ● the Sponsor exchanged 2,500,000 shares of Anzu Class B Common Stock for 2,500,000 shares of Series A Preferred Stock pursuant to the sponsor support and forfeiture agreement dated April 17, 2023 by and between Anzu, Envoy and the Sponsor, as amended or modified from time to time (the “Sponsor Support Agreement”); ● an aggregate of 2,615,000 shares of Anzu Class B Common Stock held by the Sponsor and Anzu’s former independent directors automatically converted into an equal number of shares of Common Stock; ● pursuant to the legacy forward purchase agreements and the extension support agreements of Anzu, the Sponsor transferred an aggregate of 490,000 shares of Common Stock to the parties to the legacy forward purchase agreements and the extension support agreements; ● the Company issued an aggregate of 8,512 shares of Common Stock as Share Consideration pursuant to the Forward Purchase Agreement; ● the Sellers in its sole discretion may request warrants of the Company exercisable for shares of Common Stock (the “Shortfall Warrants”) in an amount equal to 3,874,394 based on the terms of Forward Purchase Agreement; ● the Company issued, and certain affiliates of the Sponsor purchased, concurrently with the Closing, an aggregate of 1,000,000 shares of Series A Preferred Stock in the PIPE Transaction at a price of $10.00 per share for an aggregate purchase price of $10 million; and ● pursuant to the Envoy Bridge Note, the Company issued 1,000,000 shares of Series A Preferred Stock to GAT Funding, LLC concurrently with the Closing. The proceeds received by the Company from the Merger, the PIPE Transaction, and the Forward Purchase Agreement, net of transaction costs, totaled $11.7 million. The Merger was accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, Anzu was treated as the acquired company for financial reporting purposes. Accordingly, for accounting purposes, the Merger was treated as the equivalent of the Company issuing shares for the net assets of Anzu, accompanied by a recapitalization. The net assets of Anzu were stated at historical cost with no goodwill or other intangible assets recorded. The following table presents the total shares of Common Stock and Series A Preferred Stock outstanding immediately after the Closing: Class A Common Stock Number of Exchange of Anzu Class A Common Stock subject to possible redemption that was not redeemed for Common Stock 1,500,874 Conversion of Anzu Class B Common Stock held by the Sponsor and Anzu’s former independent director into Common Stock* 2,615,000 Subtotal - Merger, net of redemptions 4,115,874 Exchange of Envoy Common Stock for Common Stock 8,850,526 Exchange of Envoy Preferred Stock for Common Stock 1,272,055 Conversion of Convertible Notes as of September 29, 2023 into Common Stock 4,874,707 Net exercise of Envoy Warrants 2,702 Issuance of share consideration to Meteora parties 8,512 Shares recycled by Meteora parties 425,606 19,549,982 * 1,000,000 shares of the Common Stock are unvested and subject to restrictions and forfeitures per the Sponsor Support Agreement. These shares will vest upon the FDA approval of Acclaim CI or upon a change of control of the Company (see Note 10) Series A Preferred Stock Number of Exchange of Anzu Class B Common Stock for Series A Preferred Stock 2,500,000 Issuance of Series A Preferred Stock in connection with the PIPE Transaction 1,000,000 Issuance of Series A Preferred Stock in connection with the conversion of the Envoy Bridge Note 1,000,000 4,500,000 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2024 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | 4. Fair Value Measurements The following tables provide information related to the Company’s liabilities measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023, respectively, (in thousands): March 31, 2024 Level 1 Level 2 Level 3 Total Liabilities: Forward purchase agreement warrant liability $ — $ — $ 266 $ 266 Forward purchase agreement put option liability — — — — Publicly traded warrant liability 1,509 — — 1,509 $ 1,509 $ — $ 266 $ 1,775 December 31, 2023 Level 1 Level 2 Level 3 Total Liabilities: Forward purchase agreement warrant liability $ — $ — $ 4 $ 4 Forward purchase agreement put option liability — — 103 103 Publicly traded warrant liability 332 — — 332 $ 332 $ — $ 107 $ 439 The fair values of the forward purchase agreement warrant liability and the forward purchase agreement put option liability were estimated using Monte Carlo Simulation models, which are Level 3 fair value measurement. The following table presents the quantitative information regarding Level 3 fair value measurements of the forward purchase agreement warrant liability at March 31, 2024 and the forward purchase agreement warrant liability and forward purchase agreement put option liability at December 31, 2023: March 31, December 31, Stock price $ 3.92 $ 1.81 Initial exercise price $ 10.46 $ 10.46 Remaining term (in years) 0.50 0.75 Risk-free rate 5.24 % 4.9 % The Company has classified the publicly traded warrant liability within Level 1 of the hierarchy as the warrant liability is separately listed and traded in an active market. The publicly traded warrant liability’s listed price in an active market was used as the fair value. The following table summarizes the activity for the Company’s Level 3 instruments measured at fair value on a recurring basis (in thousands): Forward Forward Balance as of December 31, 2023 $ 4 $ 103 Change in fair value 262 (103 ) Balance as of March 31, 2024 $ 266 $ — There were no transfers between Level 1 and Level 2, nor into and out of Level 3, during the periods presented. |
Cash Available for Dividend Pay
Cash Available for Dividend Payments | 3 Months Ended |
Mar. 31, 2024 | |
Cash Available for Dividend Payments [Abstract] | |
Cash available for dividend payments | 5. Cash Available for Dividend Payments Pursuant to the certificate of designation of the Series A Preferred Stock, the Company is required to maintain the funds allocated for the first four (4) quarterly dividend payments in a separate account, for a total of $5.4 million, for use in the payment of dividends to holders of the Series A Preferred Stock. In the event the Company does not remit a required dividend payment, an additional dividend on the amount of the unpaid portion of the dividend will automatically accrue at the regular dividend rate of 12%. As of March 31, 2024 and December 31, 2023 the Company was unable to maintain this balance and continue funding normal operations. Notwithstanding its inability to maintain funds in a separate account, as of March 31, 2024 and December 31, 2023 the Company had accrued all dividend payments required under the certificate of designation of the Series A Preferred Stock which are included in accrued expenses on the Company’s condensed consolidated balance sheets. As of May 15, 2024 the Company had paid all dividend payments required under the certificate of designation of the Series A Preferred Stock. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2024 | |
Inventories [Abstract] | |
Inventories | 6. Inventories Inventories, consisted of the following (in thousands): March 31, December 31, Raw materials $ 1,244 $ 1,162 Work-in-progress 105 158 Finished goods 106 84 $ 1,455 $ 1,404 |
Operating Leases
Operating Leases | 3 Months Ended |
Mar. 31, 2024 | |
Operating Leases [Abstract] | |
Operating Leases | 7. Operating Leases The Company leases its headquarters office space in Minnesota and leases office space in Germany. The lease for the Company’s headquarters office space expires at the end of 2027. This headquarters office space lease is with a stockholder, which is considered a related party. The lease of the office space in Germany is not with a related party and is immaterial. The components of leases and lease costs were as follows (in thousands): March 31, December 31, Operating lease right-of-use assets (related party) $ 433 $ 464 Operating lease liabilities (related party), current portion $ 157 $ 158 Operating lease liabilities (related party), net of current portion 378 404 $ 535 $ 562 Three Months Ended 2024 2023 Operating lease cost $ 97 $ 97 Other supplemental information of lease amounts recognized in the unaudited condensed consolidated financial statements is summarized as follows: Three Months Ended 2024 2023 Cash paid for amounts included in the measurement of operating lease liabilities $ 113 $ 111 March 31, December 31, Weighted-average remaining lease term (in years) 3.6 3.9 Weighted-average discount rate 5.0 % 5.0 % Future minimum lease payments associated with these leases were as follows as of March 31, 2024 (in thousands): Amount 2024 (remaining) $ 135 2025 154 2026 155 2027 99 543 Less: Imputed interest (8 ) $ 535 |
Product Warranty Liability
Product Warranty Liability | 3 Months Ended |
Mar. 31, 2024 | |
Product Warranty Liability [Abstract] | |
Product Warranty Liability | 8. Product Warranty Liability Changes in warranty liability were as follows (in thousands): Amount Balance as of December 31, 2023 $ 2,234 Utilization (6 ) Balance as of March 31, 2024 $ 2,228 The assumptions utilized in developing the liability as of March 31, 2024, include an estimated cost per unit of $6 thousand, an average battery life of 5 years, inflationary increase of 3.6%, and an average patient life calculated based on probabilities outlined in the PRI-2012 mortality tables, published from the Society of Actuaries. Additionally, a discount rate of 5.0% was used in the calculation as of March 31, 2024. |
Debt (Related Party)
Debt (Related Party) | 3 Months Ended |
Mar. 31, 2024 | |
Debt (Related Party) [Abstract] | |
Debt (Related Party) | 9. Debt (Related Party) Convertible Notes The Company received several loan financings from stockholders from 2012 to 2024. During the year ended December 31, 2023, the 2012 Convertible Note, the 2013 Convertible Notes, and the 2023 Convertible Note (collectively the “Convertible Notes”) were all converted into equity at the Closing of the Business Combination. During the quarter ended March 31, 2024 the Company and a single stockholder entered into the 2024 Term Loan described below. The Company elected the fair value option for the Convertible Notes and the Envoy Bridge Note under ASC Topic 825, Financial Instruments, 2024 Term Loan In the first quarter of 2024, the Company issued a promissory note (the “2024 Term Loan”) with a principal amount of up to $10,000,000 to GAT Funding, LLC (“GAT”), an entity controlled by a member of the Company’s board of directors and a controlling stockholder of the Company. Upon meeting certain conditions, the Company may draw funds in $2,500,000 tranches under the 2024 Term Loan up to $10,000,000 until the second anniversary of the 2024 Term Loan. The 2024 Term Loan has a five-year term and matures on February 27, 2029. The principal amount drawn bears interest at a rate of 8.0% per annum and is paid quarterly in arrears after the second anniversary of the 2024 Term Loan. Interest will accrue and is not payable for the first two years of the term and will compound and be added to the principal balance of the 2024 Term Loan both on the first and second anniversary of the 2024 Term Loan. The Company may prepay the accrued interest and principal of the 2024 Term Loan without penalty, with 10 days’ notice. At closing, the Company drew $5,000,000 in principal from the 2024 Term Loan. As a commitment fee, the Company is required to issue GAT warrants to purchase 250,000 shares of its Common Stock for each $2,500,000 of principal funded under the 2024 Term Loan. The warrants will have an exercise price equal to the closing price on the date of funding of the applicable tranche and a termination date as of the third anniversary of the initial closing for all warrants. At closing of the initial funding, the Company issued GAT warrants to purchase 500,000 shares of Common Stock at an exercise price of $1.24 per share. The 2024 Term Loan was accounted for as a conventional debt instrument and is accounted for in accordance with ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815- 40). |
Common Stock
Common Stock | 3 Months Ended |
Mar. 31, 2024 | |
Common Stock [Abstract] | |
Common Stock | 10. Common Stock As of March 31, 2024 and December 31, 2023, the Company was authorized to issue 400,000,000 shares of Common Stock. The voting, dividend and liquidation rights of the holders of the Company’s stock are subject to and qualified by the rights, powers and preferences of the holders of the Series A Preferred Stock (see Note 11). Contingent Sponsor Shares Pursuant to the Sponsor Support Agreement, 1,000,000 shares of Common Stock held by the Sponsor shall be unvested and subject to the restrictions and forfeiture provisions set forth in the Sponsor Support Agreement (the “Contingent Sponsor Shares”). The Contingent Sponsor Shares shall vest upon the FDA’s approval of the Acclaim CI (the “FDA Approval”). If a change of control of the Company shall occur following the Closing, then the conditions for vesting of any Contingent Sponsor Shares that remain unvested as of immediately prior to the consummation of the change of control shall be deemed to have been achieved and such Contingent Sponsor Shares shall immediately vest as of immediately prior to the consummation of such change of control. The Contingent Sponsor Shares meets the definition of a derivative, but meets the criteria to be considered indexed to the Company’s stock and the equity-classification criteria. Accordingly, the Contingent Sponsor Shares are classified as permanent equity. Common Stock Warrants (Related Party) On February 27, 2024 the Company issued warrants to purchase 500,000 shares of its Common Stock to a related party in conjunction with the 2024 Term Loan (see Note 9). |
Series A Preferred Stock
Series A Preferred Stock | 3 Months Ended |
Mar. 31, 2024 | |
Series A Preferred Stock [Abstract] | |
Series A Preferred Stock | 11. Series A Preferred Stock As of March 31, 2024 and December 31, 2023, the Company’s certificate of incorporation, as amended and restated, authorized the Company to issue 100,000,000 shares of $0.0001 par value preferred stock, of which 10,000,000 shares have been designated as Series A Preferred Stock. Pursuant to the Envoy Bridge Note, the Sponsor Support Agreement and the Subscription Agreement, the Company has outstanding an aggregate of 4,500,000 shares of Series A Preferred Stock (see Note 3) as of March 31, 2024. The holders of the Series A Preferred Stock have the following rights and preferences: Voting Rights The holders of the Series A Preferred Stock are not entitled to vote or receive notice of any meeting of stockholders, except in the case that the Company creates any equity or debt instrument that ranks senior or pari passu to the rights of the Series A Preferred Stock or in the case of any adverse change to the powers, preferences or special rights of the Series A Preferred Stock. Conversion Rights Each share of Series A Preferred Stock shall be convertible, at the option of the holder, at any time after the date of issuance into such number of shares of Common Stock as determined by dividing the issuance price of the shares of Series A Preferred Stock of $10.00, by the conversion price, which was $11.50 per share as of March 31, 2024 and is adjustable for certain dilutive events. At any time from and after 90 days following the Merger, if the closing price per share of Common Stock is greater than $15.00 for any twenty trading days within a period of thirty trading days, the Company may elect, in its discretion, to convert all, but not less than all, of the then outstanding shares of Series A Preferred Stock into shares of Common Stock. In this case, each share of Series A Preferred Stock then outstanding shall be converted into the number of shares of Common Stock equal to the quotient of i) $10.00 divided by ii) $15.00. Redemption The holders of Series A Preferred Stock are not entitled to any redemption rights, other than those under their liquidation rights discussed below. The Company does not have the option to redeem the Series A Preferred Stock. Dividend Rights The holders of Series A Preferred Stock are entitled to a cumulative dividend which accrues at the rate of 12% of the original issuance price of $10.00 per annum. The dividend accrues on a daily basis from and including the issuance date of such shares, whether or not declared, and will be payable in cash on a quarterly basis. With respect to the first four (4) dividends, the Company shall maintain the funds allocated for such dividends in a separate account. If the Company fails to pay the dividends on the dividend payment date, then an additional dividend on the amount of the unpaid portion shall automatically accrue at 12% (see Note 5). There were no Liquidation Preference In the event of any liquidation, deemed liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, the holders of the Series A Preferred Stock are entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the Company to the holders of any security of the Company that ranks junior to the Series A Preferred Stock, including, but not limited to, the Common Stock, an amount per share of Series A Preferred Stock equal to the greater of i) $10.00 plus any unpaid cash dividends and ii) the amount the holder would have received, would such holder, immediately prior to such involuntary liquidation, dissolution or winding up of Company, have converted such shares of Series A Preferred Stock into Common Stock. |
Stock Options
Stock Options | 3 Months Ended |
Mar. 31, 2024 | |
Stock Options [Abstract] | |
Stock Options | 12. Stock Options The Company had a stock incentive plan (the “2003 Stock Option Plan”) that provided for the granting of stock options or other stock incentives to employees, officers, directors and consultants. In March 2013, the Company and its stockholders adopted a new plan (the “2013 Stock Option Plan”) on substantially the same terms and conditions of the 2003 Stock Option Plan. The Company and its stockholders reserved a total of 7,000,000 shares of Envoy Common Stock for issuance under the 2013 Stock Option Plan and reduced the number of shares of Envoy Common Stock available for issuance under the 2003 Stock Option Plan from 6,400,000 to 552,000. As of April 2013, the 2003 Stock Option Plan expired and no further stock options or shares may be granted under that plan. On April 17, 2023, the Company and the stock option holders agreed that the stock options will be cancelled and terminated for no consideration upon completion of the Merger. On April 17, 2023, the Company’s board of directors adopted a new equity incentive plan, and the plan was approved by the stockholders on September 27, 2023 (hereinafter, the “2023 Equity Incentive Plan”). An aggregate of 4,000,000 shares of Common Stock are reserved and may be issued under the 2023 Equity Incentive Plan, provided that until such time as certain milestones are achieved. The aggregate number of shares of Common Stock that may be issued pursuant to the 2023 Equity Incentive Plan is 2,500,000 shares. As of March 31, 2024, there are 1,999,689 options outstanding under the 2023 Equity Incentive Plan. The Company initially values options at fair value on the grant date. For awards with periodic vesting, the Company recognizes the related expense on a straight-line basis over the requisite service period for the entire award, generally vesting based on continued service over four years and expire ten years from the date of grant, subject to periodic adjustments to ensure that the cumulative amount of expense recognized through the end of any reporting period is at least equal to the portion of the grant date value of the award that has vested through that date. Certain stock options granted in 2023 under the 2023 Equity Incentive Plan have a certain percentage that are exercisable at any time following the date of grant and then vest based on continuous service over three years and expire ten years from the date of grant. On October 15, 2023, the Company granted 2,085,034 stock options to certain employees and directors with an exercise price of $2.40 per share, out of which, 720,505 stock options were fully unvested on the grant date. For any employee or director that received stock options that are fully unvested on the grant date, the vesting conditions are that one-fourth (25%) of these stock options vest on the first anniversary of the grant date and the remaining portion (75%) of these stock options will be vested ratably, on a monthly basis, over a 36-month vesting period. For any employee or director that received stock options that are 25%, 50% or 75% vested on the grant date based on service period, the vesting conditions are that the stock options will vest ratably, on a monthly basis, over a 36-month vesting period. On December 11, 2023, the Company granted 146,625 stock options to a certain employee with an exercise price of $2.19 per share. One-fourth (25%) of these stock options vest on the first anniversary of the grant date and the remaining portion (75%) of these stock options will be vested ratably, on a monthly basis, over a 36-month vesting period. During the period ended March 31, 2024, the Company granted 31,955 stock options to certain employees with an exercise price of $1.35 per share. One-fourth (25%) of these stock options vest on the first anniversary of the grant date and the remaining portion (75%) of these stock options will be vested ratably, on a monthly basis, over a 36-month vesting period. The following table summarizes the Company’s stock option activity for the three months ended March 31, 2024: Options Weighted- Weighted- Aggregate Outstanding at December 31, 2023 1,967,734 $ 2.38 n/a $ - Granted 31,955 $ 1.35 n/a $ n/a Outstanding at March 31, 2024 1,999,689 $ 2.37 9.57 $ 3,103,871 Exercisable and vested at March 31, 2024 934,673 $ 2.40 9.55 $ 1,420,703 |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2024 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 13. Related Party Transactions The Company leases its headquarters office space in Minnesota from a stockholder, which is considered a related party (see Note 7). The lease is considered a common control leasing arrangement. The lease liability due to the stockholder was approximately $0.5 million at each of March 31, 2024 and December 31, 2023, respectively. The rent expense was immaterial for both the three months ended March 31, 2024 and 2023. The Company received several loan financings from stockholders between 2012 to 2024 (see Note 9). |
Commitment and Contingencies
Commitment and Contingencies | 3 Months Ended |
Mar. 31, 2024 | |
Commitments and Contingencies [Abstract] | |
Commitment and Contingencies | 14. Commitment and Contingencies The Company is party to various litigation matters arising from time to time in the ordinary course of business. On November 14, 2023, the Company, Whitney Haring-Smith (the former chief executive officer and a current director of the Company), Daniel Hirsch (the former chief financial officer of the Company), and Anzu SPAC GP I LLC were named as defendants in a complaint filed by Atlas Merchant Capital SPAC Fund I LP (“Atlas”) in the Delaware Court of Chancery (the “Atlas Complaint”). The Atlas Complaint alleges that Atlas properly requested redemption of its shares of the Company’s Common Stock in connection with the Company’s business combination transaction and was prevented from redeeming such shares by the Company and the other defendants. Atlas seeks redemption of the shares of Common Stock in the amount of approximately $9,400,000, pre- and post-judgment interest, costs, and reasonable attorneys’ fees. The Company has standard indemnification obligations to Dr. Haring-Smith and Mr. Hirsch. The Company believes that the lawsuit is meritless and has been defending this matter vigorously. The Company is unable to predict the outcome of this legal proceeding. The Company has business liability insurance to cover litigation costs exceeding $50 thousand. As of March 31, 2024 and December 31, 2023, the Company has not recorded any accruals for potential losses related to any existing or pending litigation claims as the Company’s management determined that there are no matters where a potential loss is probable and reasonably estimable. |
Net Loss per Share
Net Loss per Share | 3 Months Ended |
Mar. 31, 2024 | |
Net Loss per Share [Abstract] | |
Net Loss per Share | 15. Net Loss per Share The following table sets forth the computation of basic and diluted loss per share (in thousands, except share and per share amounts): Three Months Ended 2024 2023 Numerator: Net loss attributable to common stockholders, basic $ (6,270 ) $ (13,253 ) Net loss $ (6,270 ) $ (13,253 ) Less: Undistributed earnings allocated to participating securities, diluted — — Net loss attributable to common stockholders, diluted $ (6,270 ) $ (13,253 ) Denominator: Weighted average common stock outstanding, basic 19,599,982 10,122,581 Net loss per share attributable to common stockholders, basic $ (0.32 ) $ (1.31 ) Weighted average common stock outstanding, diluted 19,599,982 10,122,581 Net loss per share attributable to common stockholders, diluted $ (0.32 ) $ (1.31 ) The Company’s potentially dilutive securities have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted-average number of shares of Common Stock outstanding used to calculate both basic and diluted net loss per share attributable to stockholders of Common Stock is the same. The Company excluded the following potential shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to stockholders for the periods indicated because including them would have had an anti-dilutive effect: Three Months Ended 2024 2023 Stock options 1,999,689 263,000 Series A Preferred Stock (as converted to common stock) 3,913,043 — Warrants to purchase common stock 14,166,666 — Contingent Sponsor Shares 1,000,000 — 21,079,398 263,000 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2024 | |
Subsequent Events [Abstract] | |
Subsequent Events | 16. Subsequent Events The Company has evaluated all events occurring through May 15, 2024, the date on which these unaudited condensed consolidated financial statements were issued, and during which time, nothing has occurred outside the normal course of business operations that would require disclosure. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Pay vs Performance Disclosure | ||
Net Income (Loss) | $ (6,270) | $ (13,253) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Mar. 31, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Summary of Significant Accounting Policies [Abstract] | |
Going Concern | Going Concern Since inception, the Company has incurred cumulative losses from operations and has an accumulated deficit of $264.9 million at March 31, 2024. The Company has funded its operations and capital needs primarily through net proceeds from the issuances of term debt, convertible debt, the sale of Envoy Medical’s Common Stock, and the sale of Envoy Medical’s Series A Preferred Stock. In February 2024, the Company received $5.0 million as an initial advance from a $10.0 million term loan provided by a related party (see Note 9). In February 2024 the Company received net proceeds of $1.7 million from the sale of 425,606 shares held by Meteora parties (see Note 1). In September 2023, the Company received $11.7 in million proceeds from the Business Combination, Forward Purchase Agreement, and the PIPE Transaction, net of transaction costs. The Company had cash of $4.9 million as of March 31, 2024. Management believes that its existing cash balances combined with future capital raises, and cash receipts from product sales will be sufficient to fund ongoing operations through at least one year from the date the unaudited condensed consolidated financial statements are issued. However, there can be no assurance that the Company will be successful in achieving its strategic plans, that the Company’s cash balances and future capital raises will be sufficient to support its ongoing operations, or that any additional financing will be available in a timely manner or on acceptable terms, if at all. If the Company is unable to raise sufficient financing when needed or events or circumstances occur such that the Company does not meet its strategic plans, the Company may be required to reduce certain of its discretionary spending. The Company may be unable to develop new or enhanced production methods, or be unable to fund capital expenditures, which could have a material adverse effect on the Company’s financial position, results of operations, cash flows, and ability to achieve its intended business objectives. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern and do not include adjustments to reflect the possible effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty. |
Use of Estimates | Use of Estimates The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates and assumptions reflected in these unaudited condensed consolidated financial statements include but are not limited to the useful lives of property and equipment, inventory reserves, warranty liability, stock-based compensation expense, the fair value of forward purchase agreement put option liability, the fair value of forward purchase agreement warrant liability and the outcome of litigation. Estimates and assumptions are reviewed periodically and the effect of changes, if any, are reflected in the unaudited condensed consolidated statements of operations and comprehensive loss. |
Reclassification | Reclassification Certain items in prior financial statements have been reclassified to conform to the current presentation. |
Concentration of Credit Risk and Significant Customers | Concentration of Credit Risk and Significant Customers Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and accounts receivable, net. Periodically, the Company maintains deposits in accredited financial institutions in excess of federally insured limits. The Company maintains its cash with financial institutions that management believes to be of high credit quality. The Company has not experienced any losses on such accounts and does not believe it is exposed to any unusual credit risk beyond the normal credit risk associated with commercial banking relationships. With respect to accounts receivable, the Company performs credit evaluations of its customers and does not require collateral. There have been no material losses on the Company’s accounts receivable. There were no customers that accounted for 10.0% or more of sales for the three months ended March 31, 2024 and 2023, respectively. There were no customers that accounted for 10.0% or more of the accounts receivable balance as of March 31, 2024 and December 31, 2023, respectively. |
Cash and Restricted Cash | Cash and Restricted Cash The Company maintains cash balances in bank accounts which, at times, may exceed federally insured limits. The Company is required to maintain an amount equal to the first-year dividend payments defined under the terms of the Series A Preferred Stock. As of March 31, 2024 and December 31, 2023 the Company was unable to comply with this requirement (see Note 5). |
Accounts Receivable | Accounts Receivable Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company grants credit to customers in the normal course of business, but generally does not require collateral or other security to support amounts due. Accounts receivable are presented net of an allowance for credit losses. Management performs ongoing credit evaluations of its customers based on financial information provided by the customer. Accounts receivable outstanding longer than the contractual payment terms are considered past due. The Company estimates its allowance for credit losses by considering numerous factors, including delinquency trends along with ongoing customer credit evaluations. The Company writes off accounts receivable when they become uncollectible. Payments subsequently received on such receivables are credited to the allowance for credit losses. The Company had no material bad debt expense for the three months ended March 31, 2024 and the year ended December 31, 2023; there were no material contract assets as of March 31, 2024 and December 31, 2023. The allowance for credit losses was not material for the three months March 31, 2024 and the year ended December 31, 2023. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method. The Company records write-downs of inventories which are obsolete or in excess of anticipated demand or net realizable value based on a consideration of marketability and product life cycle stage, historical net sales and demand forecasts which consider the assumptions about future demand and market conditions. Inventory on hand that is not expected to be sold or utilized is considered excess, and the Company recognizes the write-down in cost of revenue at the time of such determination. The write-down is determined by the excess of cost over net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable cost of completion, disposal and transportation. At the time of loss recognition, a new cost basis is established and subsequent changes in facts and circumstances would not result in an increase in the cost basis. |
Property and Equipment, Net | Property and Equipment, Net Property and equipment are stated at cost, net of accumulated depreciation. Additions and improvements that extend the lives of the assets are capitalized, while expenditures for repairs and maintenance are expensed as incurred. When assets are retired or otherwise disposed of, their costs and related accumulated depreciation are removed from the accounts and resulting gains or losses are included in operating results. Depreciation is calculated using the straight-line method over the estimated useful life of the asset, which ranges from three seven |
Operating Leases | Operating Leases The Company determines if an agreement is a lease at inception. The Company elected not to recognize the right to use an underlying asset (right-of-use “ROU” asset) and lease liabilities for short-term leases, which are those that have a lease term of twelve months or less, and includes renewal options in the measurement of lease liabilities only when the option to purchase or renew lease for the underlying asset is reasonably certain to be exercised. The Company has elected as an accounting policy to account for lease components and associated non-lease components as a single component. The Company leases its headquarters office space under an operating lease with a related party. The Company also leases office space in Germany under an operating lease (see Note 7). The determination of whether an arrangement is, or contains, a lease is performed at the inception of the arrangement and as necessary at modification. Operating leases are recorded on the consolidated balance sheets with operating lease assets representing the right to use the ROU asset for the lease term and lease liabilities representing the obligation to make lease payments arising from the lease. The Company excludes variable lease payments in measuring ROU assets and lease liabilities, other than those that depend on an index, a rate or are in-substance fixed payments. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. In addition, ROU assets include initial direct costs incurred by the lessee as well as any lease payments made at or before the commencement date and exclude lease incentives. The discount rate implicit within the Company’s leases is generally not determinable; therefore, the Company determines the discount rate using its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Long-lived assets held and used by the Company, including equipment and ROU assets, are reviewed for impairment whenever events or changes in business circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is recognized when estimated future undiscounted cash flows related to the assets are less than its carrying value. The amount of the impairment loss to be recorded, if any, is calculated by the excess of the asset’s carrying value over its fair value. The Company did not incur any impairment charges during the three months ended March 31, 2024 and 2023. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company calculates the fair value of its assets and liabilities which qualify as financial instruments and includes this additional information in the notes to the unaudited condensed consolidated financial statements when the fair value is different than the carrying value of these financial instruments. The estimated fair value of cash, accounts receivable, accounts payable and accrued expenses, and term loan payable approximate their carrying amounts due to the relatively short maturity of these instruments. The carrying value of the operating lease liabilities also approximates fair value since the instrument bears market rates of interest. None of these instruments are held for trading purposes. |
Fair Value Measurement | Fair Value Measurement The Company determines the fair value of financial assets and liabilities using the fair value hierarchy established in Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement ● Level 1 ● Level 2 ● Level 3 A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Company had elected the fair value option for the convertible notes payable (related party) under ASC Topic 825, Financial Instruments, |
Derivative Financial Instruments | Derivative Financial Instruments The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign-currency risks. The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in other income (expense) in the Company’s unaudited condensed consolidated statements of operations and comprehensive loss. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the condensed consolidated balance sheets as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. The Company accounts for its publicly traded warrant liability in accordance with ASC 815-40. Accordingly, the Company recognized the warrant instruments as a liability at fair value and adjusts the instruments to fair value at each reporting period. The publicly traded warrant liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in other income (expense) in the Company’s unaudited condensed consolidated statements of operations and comprehensive loss. The Company accounts for its Forward Purchase Agreement in accordance with ASC 815-40. Accordingly, the Company recognized the forward purchase agreement put option liability and the forward purchase agreement warrant liability at fair value at each reporting period. The forward agreement put option liability and the forward purchase agreement warrant liability are subject to re-measurement at each balance sheet date, and any change in fair value is recognized in other income (expense) in the Company’s unaudited condensed consolidated statements of operations and comprehensive loss. As of March 31, 2024, the Company no longer had a forward purchase agreement put option liability. |
SPAC Excise Tax Liability | SPAC Excise Tax Liability The Company recognized an excise tax liability of approximately $2.2 million upon completion of the Company’s Business Combination as an incremental cost to repurchase the Company’s treasury shares, with an offsetting tax liability recognized. The SPAC excise tax liability was recorded in accrued expenses in the Company’s unaudited condensed consolidated balance sheets. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers ● identify the contract with a customer; ● identify the performance obligations in the contract; ● determine the transaction price; ● allocate the transaction price to the performance obligations in the contract; and ● recognize revenue when or as performance obligations are satisfied. Revenue is recognized as performance obligations under the terms of a contract are satisfied, which generally occurs as control of the promised products or services is transferred to customers. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or services to a customer (“transaction price”). To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price using either the expected value or most likely amount method. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the Company’s anticipated performance and all information that is reasonably available. The Company primarily derives revenue from the sale of its hearing device products. Revenue from product sales is recognized upon transfer of control of the product to a customer, which occurs at a point in time, at the time the Company is notified the product has been implanted or used by the customer in a surgical procedure. The Company also sells extended warranty plans on a limited basis. Revenue from extended warranty plans is recognized ratably over time and was immaterial for each of the three months ended March 31, 2024 and 2023. Amounts received from a customer prior to fulfillment of the performance obligation are included as accrued expenses on the condensed consolidated balance sheets and are immaterial as of March 31, 2024 and December 31, 2023. The Company has elected to account for shipping and handling activities performed as activities to fulfill the promise to transfer the products; therefore these activities are not assessed as a separate performance obligation to its customers. Revenue is measured as the amount of consideration the Company expects to receive, which is based on the invoiced price. The majority of the Company’s contracts have a single performance obligation and are short term in nature. The Company’s contracts do not include variable consideration. Payment terms differ by geography and customer, but payment is generally required within 30 days from the date of product utilization. The Company also offers extended payment plans on a limited basis. Amounts due to the Company under payment plans that extend beyond 12 months are immaterial as of March 31, 2024 and December 31, 2023, therefore the Company does not adjust the promised amount of consideration for the effects of a significant financing component. |
Cost of Goods Sold | Cost of Goods Sold Cost of goods sold is comprised of the costs of merchandise sold, as well as the related inbound freight costs and labor directly attributable to bringing certain goods to a saleable condition. In categorizing costs, the Company captures applicable depreciation and costs to maintain and run revenue generating technology, equipment related costs and any personnel-related costs as cost of goods sold. |
Product Warranty | Product Warranty The Company provides a limited warranty for its implantable components. At the time product revenue is recognized, the Company reserves for estimated future costs that may be incurred under its warranties based on historical experience. The limited warranty liability is recorded in accrued expenses in the condensed consolidated balance sheets. As of March 31, 2024, and December 31, 2023, the amount of accrued limited warranty was immaterial and the Company’s warranty payments were immaterial. During 2013, the Company offered a lifetime warranty to clinical trial patients to cover batteries and surgery related costs. The Company estimates the costs that may be incurred under this lifetime warranty and records a liability in the amount of such costs at its present value. The lifetime warranty is recorded in warranty liability in the consolidated balance sheets. As of March 31, 2024 and December 31, 2023, the aggregate product warranty liability was $2.2 million and $2.2 million, respectively, of which $0.3 million and $0.3 million, respectively, was classified as a current liability in the Company’s condensed consolidated balance sheets. |
Patents | Patents All patent-related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery of the expenditure. Amounts incurred are classified as general and administrative expenses. |
Research and Development Costs | Research and Development Costs Expenditures for research and development activities are charged to operations as incurred. Research and development costs include salaries, employee benefits and laboratory testing expenses. |
Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax base and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company has recorded a full valuation allowance against the net deferred tax asset due to the uncertainty of realizing the related benefits. The Company recognizes the financial statement benefit of a tax position only to the extent the position is more-likely-than-not to be sustained upon audit based on the technical merits of the position. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the Company’s unaudited condensed consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company has elected to recognize interest and penalties related to uncertain tax positions in the provision for income taxes. |
Foreign Currency Translation | Foreign Currency Translation The Euro is the functional currency for the Company’s foreign subsidiary in Germany. The assets and liabilities of the Company’s foreign operations are translated into U.S. dollars at the end-of-the-period exchange rates, and the revenues and expenses are translated at weighted-average rates for the respective reporting period. Unrealized translation gains and losses are recorded as a translation adjustment, which is included in the Company’s unaudited condensed consolidated statements of stockholders’ deficit as well as a component of accumulated other comprehensive loss on the Company’s unaudited condensed consolidated statements of operations and comprehensive loss. |
Net Loss per Share | Net Loss per Share The Company’s Series A Preferred Stock certificate of designation entitles the holders to participate in dividends on an as converted basis when declared on Common Stock. As a result, the Series A Preferred Stock meets the definition of a participating security, which requires the Company to apply the two-class method to compute both basic and diluted earnings per share attributable to common stockholders. The two-class method is an earnings allocation formula that treats participating securities as having rights to earnings that would otherwise have been available to common stockholders. The two-class method requires income available to holders of the Company’s Common Stock for the period to be allocated between common and participating securities based upon their respective rights to share in the earnings as if all income for the period had been distributed. In periods where there is a net loss, no allocation of undistributed net loss to Series A Preferred Stock is performed as the holders of the Series A Preferred Stock are not contractually obligated to participate in the Company’s losses. The Company reported net losses of $6.3 million and $13.3 million attributable to the shareholders of the Company’s common stock for the three months ended March 31, 2024, and 2023, respectively. Basic net loss per share of common stock is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares outstanding, plus the impact of potential common shares, if dilutive, resulting from the potential exercise of warrants or options, and the potential conversion of preferred stock, into common stock, under the if-converted method. Due to the net losses for the three-month periods ended March 31, 2024 and 2023, basic and dilutive net loss per share were the same, as the effect of potentially dilutive securities would have been anti-dilutive. |
Stock-based Compensation | Stock-based Compensation Stock-based compensation is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the requisite service period. The fair value of stock-based payment awards is estimated using the Black-Scholes option model with a volatility figure derived from using a determined peer group of other companies’ stock prices since the trading history of the Company’s stock is too short to provide accurate data. The Company accounts for the expected term of options in accordance with the “simplified” method, which is used for “plain-vanilla” options, as defined in ASC 718, “ Share-based payment” The Company has adopted the guidance from Accounting Standards Update (“ASU”) 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Compensation Accounting, |
Segments | Segments Operating segments are identified as components of enterprise about which discrete financial information is available for evaluation by the chief operating decision-maker (“CODM”) in deciding resource allocation and assessing performance. The Company has determined that its CODM is its Chief Executive Officer. The Company’s CODM reviews financial information presented on a consolidated basis for the purposes of making decisions, allocating resources and evaluating performance. Consequently, the Company has determined it operates in one operating and reportable segment. |
Recently Adopted Accounting Pronouncements and Accounting Pronouncements Not Yet Effective | Recently Adopted Accounting Pronouncements and Accounting Pronouncements Not Yet Effective In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, “ Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures In December 2023, the FASB issued ASU 2023-09, “ Income Taxes (Topic 740): Improvements to Income Tax Disclosures Other than the item noted above, there have been no new accounting pronouncements not yet effective or adopted in the current year that have a significant impact, or potential significant impact, to our unaudited condensed consolidated financial statements. |
Merger (Tables)
Merger (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Merger [Abstract] | |
Schedule of Common Stock and Series A Preferred Stock Outstanding | The following table presents the total shares of Common Stock and Series A Preferred Stock outstanding immediately after the Closing: Class A Common Stock Number of Exchange of Anzu Class A Common Stock subject to possible redemption that was not redeemed for Common Stock 1,500,874 Conversion of Anzu Class B Common Stock held by the Sponsor and Anzu’s former independent director into Common Stock* 2,615,000 Subtotal - Merger, net of redemptions 4,115,874 Exchange of Envoy Common Stock for Common Stock 8,850,526 Exchange of Envoy Preferred Stock for Common Stock 1,272,055 Conversion of Convertible Notes as of September 29, 2023 into Common Stock 4,874,707 Net exercise of Envoy Warrants 2,702 Issuance of share consideration to Meteora parties 8,512 Shares recycled by Meteora parties 425,606 19,549,982 * 1,000,000 shares of the Common Stock are unvested and subject to restrictions and forfeitures per the Sponsor Support Agreement. These shares will vest upon the FDA approval of Acclaim CI or upon a change of control of the Company (see Note 10) Series A Preferred Stock Number of Exchange of Anzu Class B Common Stock for Series A Preferred Stock 2,500,000 Issuance of Series A Preferred Stock in connection with the PIPE Transaction 1,000,000 Issuance of Series A Preferred Stock in connection with the conversion of the Envoy Bridge Note 1,000,000 4,500,000 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Fair Value Measurements [Abstract] | |
Schedule of Company’s Liabilities Measured at Fair Value on a Recurring Basis | The following tables provide information related to the Company’s liabilities measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023, respectively, (in thousands): March 31, 2024 Level 1 Level 2 Level 3 Total Liabilities: Forward purchase agreement warrant liability $ — $ — $ 266 $ 266 Forward purchase agreement put option liability — — — — Publicly traded warrant liability 1,509 — — 1,509 $ 1,509 $ — $ 266 $ 1,775 December 31, 2023 Level 1 Level 2 Level 3 Total Liabilities: Forward purchase agreement warrant liability $ — $ — $ 4 $ 4 Forward purchase agreement put option liability — — 103 103 Publicly traded warrant liability 332 — — 332 $ 332 $ — $ 107 $ 439 |
Schedule of Fair Value Measurements of Forward Purchase Agreement Liability | The following table presents the quantitative information regarding Level 3 fair value measurements of the forward purchase agreement warrant liability at March 31, 2024 and the forward purchase agreement warrant liability and forward purchase agreement put option liability at December 31, 2023: March 31, December 31, Stock price $ 3.92 $ 1.81 Initial exercise price $ 10.46 $ 10.46 Remaining term (in years) 0.50 0.75 Risk-free rate 5.24 % 4.9 % |
Schedule of Measured at Fair Value on a Recurring Basis | The following table summarizes the activity for the Company’s Level 3 instruments measured at fair value on a recurring basis (in thousands): Forward Forward Balance as of December 31, 2023 $ 4 $ 103 Change in fair value 262 (103 ) Balance as of March 31, 2024 $ 266 $ — |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Inventories [Abstract] | |
Schedule of Inventories | Inventories, consisted of the following (in thousands): March 31, December 31, Raw materials $ 1,244 $ 1,162 Work-in-progress 105 158 Finished goods 106 84 $ 1,455 $ 1,404 |
Operating Leases (Tables)
Operating Leases (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Operating Leases [Abstract] | |
Schedule of Operating Lease Cost | The components of leases and lease costs were as follows (in thousands): March 31, December 31, Operating lease right-of-use assets (related party) $ 433 $ 464 Operating lease liabilities (related party), current portion $ 157 $ 158 Operating lease liabilities (related party), net of current portion 378 404 $ 535 $ 562 |
Schedule of Operating Lease Cost | Three Months Ended 2024 2023 Operating lease cost $ 97 $ 97 |
Schedule of Other Supplemental Information | Other supplemental information of lease amounts recognized in the unaudited condensed consolidated financial statements is summarized as follows: Three Months Ended 2024 2023 Cash paid for amounts included in the measurement of operating lease liabilities $ 113 $ 111 |
Schedule of Weighted Average | March 31, December 31, Weighted-average remaining lease term (in years) 3.6 3.9 Weighted-average discount rate 5.0 % 5.0 % |
Schedule of Future Lease Payments | Future minimum lease payments associated with these leases were as follows as of March 31, 2024 (in thousands): Amount 2024 (remaining) $ 135 2025 154 2026 155 2027 99 543 Less: Imputed interest (8 ) $ 535 |
Product Warranty Liability (Tab
Product Warranty Liability (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Product Warranty Liability [Abstract] | |
Schedule of Changes in Warrant Liability | Changes in warranty liability were as follows (in thousands): Amount Balance as of December 31, 2023 $ 2,234 Utilization (6 ) Balance as of March 31, 2024 $ 2,228 |
Stock Options (Tables)
Stock Options (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Stock Options [Abstract] | |
Schedule of Stock Option Activity | The following table summarizes the Company’s stock option activity for the three months ended March 31, 2024: Options Weighted- Weighted- Aggregate Outstanding at December 31, 2023 1,967,734 $ 2.38 n/a $ - Granted 31,955 $ 1.35 n/a $ n/a Outstanding at March 31, 2024 1,999,689 $ 2.37 9.57 $ 3,103,871 Exercisable and vested at March 31, 2024 934,673 $ 2.40 9.55 $ 1,420,703 |
Net Loss per Share (Tables)
Net Loss per Share (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Net Loss per Share [Abstract] | |
Schedule of Basic and Diluted Loss Per Share | The following table sets forth the computation of basic and diluted loss per share (in thousands, except share and per share amounts): Three Months Ended 2024 2023 Numerator: Net loss attributable to common stockholders, basic $ (6,270 ) $ (13,253 ) Net loss $ (6,270 ) $ (13,253 ) Less: Undistributed earnings allocated to participating securities, diluted — — Net loss attributable to common stockholders, diluted $ (6,270 ) $ (13,253 ) Denominator: Weighted average common stock outstanding, basic 19,599,982 10,122,581 Net loss per share attributable to common stockholders, basic $ (0.32 ) $ (1.31 ) Weighted average common stock outstanding, diluted 19,599,982 10,122,581 Net loss per share attributable to common stockholders, diluted $ (0.32 ) $ (1.31 ) |
Schedule of Potentially Dilutive Securities Have Been Excluded from the Computation of Diluted Net | The Company excluded the following potential shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to stockholders for the periods indicated because including them would have had an anti-dilutive effect: Three Months Ended 2024 2023 Stock options 1,999,689 263,000 Series A Preferred Stock (as converted to common stock) 3,913,043 — Warrants to purchase common stock 14,166,666 — Contingent Sponsor Shares 1,000,000 — 21,079,398 263,000 |
Nature of the Business and Ba_2
Nature of the Business and Basis of Presentation (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |||
Apr. 17, 2023 | Mar. 31, 2024 | Dec. 31, 2023 | Sep. 29, 2023 | |
Nature of the Business and Basis of Presentation [Line Items] | ||||
Purchased shares | 425,606 | |||
Prepayment amount | $ 4.5 | |||
Shares issued | 8,512 | |||
Price per share | $ 4 | |||
Purchase Agreement | $ 1.7 | |||
Preferred stock par value | $ 0.0001 | |||
Aggregate purchase price | $ 10 | |||
Class A Common Stock [Member] | ||||
Nature of the Business and Basis of Presentation [Line Items] | ||||
Common stock par value | $ 0.0001 | |||
Series A Preferred Stock [Member] | ||||
Nature of the Business and Basis of Presentation [Line Items] | ||||
Shares issued | 1,000,000 | |||
Aggregate number of shares | 1,000,000 | |||
Preferred stock par value | $ 0.0001 | $ 0.0001 | ||
Preferred Stock [Member] | Series A Preferred Stock [Member] | ||||
Nature of the Business and Basis of Presentation [Line Items] | ||||
Preferred stock par value | $ 0.0001 | |||
Sponsor [Member] | ||||
Nature of the Business and Basis of Presentation [Line Items] | ||||
Purchased shares | 1,000,000 | |||
Shares issued | 2,500,000 | |||
Sponsor [Member] | Series A Preferred Stock [Member] | ||||
Nature of the Business and Basis of Presentation [Line Items] | ||||
Price per share | $ 10 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Details) $ in Thousands | 3 Months Ended | ||||
Feb. 29, 2024 USD ($) shares | Mar. 31, 2024 USD ($) shares | Mar. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) | Sep. 30, 2023 USD ($) | |
Summary of Significant Accounting Policies [Line Items] | |||||
Accumulated deficit | $ 264,900 | ||||
Advance from related party | $ 5,000 | ||||
Net proceeds | $ 1,700 | ||||
Sale of shares held (in Shares) | shares | 8,512 | ||||
Purchase agreement | $ 11,700 | ||||
Cash | $ 4,945 | $ 4,218 | |||
Excise tax liability | 2,200 | ||||
Warranty liability | 2,200 | 2,200 | |||
Current liability | $ 300 | $ 300 | |||
Description of likelihood in income taxes | greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority | ||||
Net losses | $ (6,270) | $ (13,253) | |||
Operating segment | 1 | ||||
Reportable segment | 1 | ||||
Meteora parties [Member] | |||||
Summary of Significant Accounting Policies [Line Items] | |||||
Sale of shares held (in Shares) | shares | 425,606 | ||||
Related Party [Member] | |||||
Summary of Significant Accounting Policies [Line Items] | |||||
Advance from related party | $ 10,000 | ||||
Maximum [Member] | |||||
Summary of Significant Accounting Policies [Line Items] | |||||
Useful life property and equipment | 3 years | ||||
Minimum [Member] | |||||
Summary of Significant Accounting Policies [Line Items] | |||||
Useful life property and equipment | 7 years |
Merger (Details)
Merger (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |||
Apr. 17, 2023 | Mar. 31, 2024 | Dec. 31, 2023 | Oct. 15, 2023 | |
Merger [Line Items] | ||||
Preferred stock, par value (in Dollars per share) | $ 0.0001 | |||
Warrant exercisable price (in Dollars per share) | $ 1.24 | |||
Exchanged shares | 8,512 | |||
Share consideration | 8,512 | |||
Warrant exercisable shares | 934,673 | |||
Purchase transaction price (in Dollars per share) | $ 10 | |||
Purchase cost (in Dollars) | $ 10 | |||
Preferred stock shares issued | 100,000,000 | |||
Unvested shares | 720,505 | |||
Public Placement Warrants [Member] | ||||
Merger [Line Items] | ||||
Warrant shares | 14,166,666 | |||
Sponsor [Member] | Private Placement Warrants [Member] | ||||
Merger [Line Items] | ||||
Warrant shares | 12,500,000 | |||
Business Combination Agreement [Member] | ||||
Merger [Line Items] | ||||
Business combination shares | 14,999,990 | |||
Net of transaction costs (in Dollars) | $ 11.7 | |||
Common Stock [Member] | ||||
Merger [Line Items] | ||||
Common stock, par value (in Dollars per share) | $ 0.0001 | |||
Number of exchanged shares | 1 | |||
Warrant exercisable price (in Dollars per share) | $ 11.5 | |||
Forward purchase shares | 490,000 | |||
Warrant exercisable shares | 3,874,394 | |||
Unvested shares | 1,000,000 | |||
Common Stock [Member] | Business Combination Agreement [Member] | ||||
Merger [Line Items] | ||||
Business combination shares | 0.063603 | |||
Envoy Common Stock [Member] | ||||
Merger [Line Items] | ||||
Share Outstanding | 139,153,144 | |||
Converted shares | 8,850,526 | |||
Envoy Common Stock [Member] | Warrant [Member] | ||||
Merger [Line Items] | ||||
Converted shares | 2,702 | |||
Redeemable Convertible Preferred Stock [Member] | ||||
Merger [Line Items] | ||||
Preferred stock, par value (in Dollars per share) | $ 0.01 | |||
Envoy Preferred Stock [Member] | ||||
Merger [Line Items] | ||||
Convertible preferred stock share | 4,000,000 | |||
Envoy Common Stock [Member] | ||||
Merger [Line Items] | ||||
Converted shares | 20,000,000 | |||
Shares of new envoy | 1,272,055 | |||
Common Class B [Member] | ||||
Merger [Line Items] | ||||
Converted shares | 2,615,000 | |||
Common stock, par value (in Dollars per share) | $ 0.0001 | |||
Sponsor forfeited shares | 5,510,000 | |||
Series A Preferred Stock [Member] | ||||
Merger [Line Items] | ||||
Preferred stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 | ||
Sponsor forfeited shares | 2,500,000 | |||
Exchanged shares | 1,000,000 | |||
Aggregate shares | 1,000,000 | |||
Preferred stock shares issued | 4,500,000 | 4,500,000 | ||
Series A Preferred Stock [Member] | GAT Funding LLC [Member] | ||||
Merger [Line Items] | ||||
Preferred stock shares issued | 1,000,000 | |||
Convertible Notes [Member] | Envoy Common Stock [Member] | ||||
Merger [Line Items] | ||||
Converted shares | 4,874,707 | |||
Sponsor [Member] | ||||
Merger [Line Items] | ||||
Exchanged shares | 2,500,000 |
Merger (Details) - Schedule of
Merger (Details) - Schedule of Common Stock and Series A Preferred Stock Outstanding | 3 Months Ended | |
Mar. 31, 2024 shares | ||
Class A Common Stock [Member] | ||
Common Stock and Series A Preferred Stock Outstanding [Line Items] | ||
Subtotal - Merger, net of redemptions | 4,115,874 | |
Total common stock outstanding | 19,549,982 | |
Class A Common Stock [Member] | Exchange of Anzu Class A Common Stock subject to possible redemption that was not redeemed for Common Stock [Member] | ||
Common Stock and Series A Preferred Stock Outstanding [Line Items] | ||
Subtotal - Merger, net of redemptions | 1,500,874 | |
Class A Common Stock [Member] | Conversion of Anzu Class B Common Stock held by the Sponsor and Anzu’s former independent director into Common Stock [Member] | ||
Common Stock and Series A Preferred Stock Outstanding [Line Items] | ||
Subtotal - Merger, net of redemptions | 2,615,000 | [1] |
Class A Common Stock [Member] | Exchange of Envoy Common Stock for Common Stock [Member] | ||
Common Stock and Series A Preferred Stock Outstanding [Line Items] | ||
Total common stock outstanding | 8,850,526 | |
Class A Common Stock [Member] | Exchange of Envoy Preferred Stock for Common Stock [Member] | ||
Common Stock and Series A Preferred Stock Outstanding [Line Items] | ||
Total common stock outstanding | 1,272,055 | |
Class A Common Stock [Member] | Conversion of Convertible Notes as of September 29, 2023 into Common Stock [Member] | ||
Common Stock and Series A Preferred Stock Outstanding [Line Items] | ||
Total common stock outstanding | 4,874,707 | |
Class A Common Stock [Member] | Net exercise of Envoy Warrants [Member] | ||
Common Stock and Series A Preferred Stock Outstanding [Line Items] | ||
Total common stock outstanding | 2,702 | |
Class A Common Stock [Member] | Issuance of share consideration to Meteora parties [Member] | ||
Common Stock and Series A Preferred Stock Outstanding [Line Items] | ||
Total common stock outstanding | 8,512 | |
Class A Common Stock [Member] | Shares recycled by Meteora parties [Member] | ||
Common Stock and Series A Preferred Stock Outstanding [Line Items] | ||
Total common stock outstanding | 425,606 | |
Series A Preferred Stock [Member] | ||
Common Stock and Series A Preferred Stock Outstanding [Line Items] | ||
Total preferred stock outstanding | 4,500,000 | |
Series A Preferred Stock [Member] | Exchange of Anzu Class B Common Stock for Series A Preferred Stock [Member] | ||
Common Stock and Series A Preferred Stock Outstanding [Line Items] | ||
Total preferred stock outstanding | 2,500,000 | |
Series A Preferred Stock [Member] | Issuance of Series A Preferred Stock in connection with the PIPE Transaction [Member] | ||
Common Stock and Series A Preferred Stock Outstanding [Line Items] | ||
Total preferred stock outstanding | 1,000,000 | |
Series A Preferred Stock [Member] | Issuance of Series A Preferred Stock in connection with the conversion of the Envoy Bridge Note [Member] | ||
Common Stock and Series A Preferred Stock Outstanding [Line Items] | ||
Total preferred stock outstanding | 1,000,000 | |
[1] 1,000,000 shares of the Common Stock are unvested and subject to restrictions and forfeitures per the Sponsor Support Agreement. These shares will vest upon the FDA approval of Acclaim CI or upon a change of control of the Company (see Note 10) |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Schedule of Company’s Liabilities Measured at Fair Value on a Recurring Basis - Fair Value, Recurring [Member] - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Liabilities: | ||
Forward purchase agreement warrant liability | $ 266 | $ 4 |
Forward purchase agreement put option liability | 103 | |
Publicly traded warrant liability | 1,509 | 332 |
Liabilities measured at fair value | 1,775 | 439 |
Level 1 [Member] | ||
Liabilities: | ||
Forward purchase agreement warrant liability | ||
Forward purchase agreement put option liability | ||
Publicly traded warrant liability | 1,509 | 332 |
Liabilities measured at fair value | 1,509 | 332 |
Level 2 [Member] | ||
Liabilities: | ||
Forward purchase agreement warrant liability | ||
Forward purchase agreement put option liability | ||
Publicly traded warrant liability | ||
Liabilities measured at fair value | ||
Level 3 [Member] | ||
Liabilities: | ||
Forward purchase agreement warrant liability | 266 | 4 |
Forward purchase agreement put option liability | 103 | |
Publicly traded warrant liability | ||
Liabilities measured at fair value | $ 266 | $ 107 |
Fair Value Measurements (Deta_2
Fair Value Measurements (Details) - Schedule of Fair Value Measurements of Forward Purchase Agreement Liability - Level 3 [Member] | Mar. 31, 2024 | Dec. 31, 2023 |
Stock price [Member] | ||
Schedule of Fair Value Measurements of Forward Purchase Agreement Liability [Line Items] | ||
Warrant liability measurement | 3.92 | 1.81 |
Initial exercise price [Member] | ||
Schedule of Fair Value Measurements of Forward Purchase Agreement Liability [Line Items] | ||
Warrant liability measurement | 10.46 | 10.46 |
Remaining term [Member] | ||
Schedule of Fair Value Measurements of Forward Purchase Agreement Liability [Line Items] | ||
Warrant liability measurement | 0.5 | 0.75 |
Risk-free rate [Member] | ||
Schedule of Fair Value Measurements of Forward Purchase Agreement Liability [Line Items] | ||
Warrant liability measurement | 5.24 | 4.9 |
Fair Value Measurements (Deta_3
Fair Value Measurements (Details) - Schedule of Measured at Fair Value on a Recurring Basis $ in Thousands | 3 Months Ended |
Mar. 31, 2024 USD ($) | |
Forward Purchase Agreement Warrant Liability [Member] | |
Schedule of Measured at Fair Value on a Recurring Basis [Line items] | |
Balance as of December 31, 2023 | $ 4 |
Change in fair value | 262 |
Balance as of March 31, 2024 | 266 |
Forward Purchase Agreement Put Option Liability [Member] | |
Schedule of Measured at Fair Value on a Recurring Basis [Line items] | |
Balance as of December 31, 2023 | 103 |
Change in fair value | (103) |
Balance as of March 31, 2024 |
Cash Available for Dividend P_2
Cash Available for Dividend Payments (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2024 USD ($) | |
Cash available for dividend payments [Line Items] | |
Dividend rate | 12% |
Series A Preferred Stock [Member] | |
Cash available for dividend payments [Line Items] | |
Dividend payments | $ 5.4 |
Dividend rate | 12% |
Inventories (Details) - Schedul
Inventories (Details) - Schedule of Inventories - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Schedule of Inventories [Abstract] | ||
Raw materials | $ 1,244 | $ 1,162 |
Work-in-progress | 105 | 158 |
Finished goods | 106 | 84 |
Total | $ 1,455 | $ 1,404 |
Operating Leases (Details) - _S
Operating Leases (Details) - Schedule of Lease Costs - Related Party [Member] - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Schedule of Lease Costs [Line Items] | ||
Operating lease right-of-use assets (related party) | $ 433 | $ 464 |
Operating lease liabilities (related party), current portion | 157 | 158 |
Operating lease liabilities (related party), net of current portion | 378 | 404 |
Total | $ 535 | $ 562 |
Operating Leases (Details) - Sc
Operating Leases (Details) - Schedule of Operating Lease Cost - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Schedule of Operating Lease Cost [Abstract] | ||
Operating lease cost | $ 97 | $ 97 |
Operating Leases (Details) - _2
Operating Leases (Details) - Schedule of Other Supplemental Information - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Schedule of Other Supplemental Information [Abstract] | ||
Cash paid for amounts included in the measurement of operating lease liabilities | $ 113 | $ 111 |
Operating Leases (Details) - _3
Operating Leases (Details) - Schedule of Weighted Average | Mar. 31, 2024 | Dec. 31, 2023 |
Schedule of Weighted Average [Abstract] | ||
Weighted-average remaining lease term (in years) | 3 years 7 months 6 days | 3 years 10 months 24 days |
Weighted-average discount rate | 5% | 5% |
Operating Leases (Details) - _4
Operating Leases (Details) - Schedule of Future Lease Payments - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Schedule of Future Lease Payments [Abstract] | ||
2024 (remaining) | $ 135 | |
2025 | 154 | |
2026 | 155 | |
2027 | 99 | |
Total | 543 | $ 500 |
Less: Imputed interest | (8) | |
Total | $ 535 |
Product Warranty Liability (Det
Product Warranty Liability (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2024 USD ($) | |
Product Warranty Liability [Abstract] | |
Estimated cost (in Dollars) | $ 6 |
Average battery life | 5 years |
Percentage of average patient life | 3.60% |
Discount rate | 5% |
Product Warranty Liability (D_2
Product Warranty Liability (Details) - Schedule of Changes in Warrant Liability $ in Thousands | 3 Months Ended |
Mar. 31, 2024 USD ($) | |
Schedule of Changes in Warrant Liability [Abstract] | |
Balance as of December 31, 2023 | $ 2,234 |
Utilization | (6) |
Balance as of March 31, 2024 | $ 2,228 |
Debt (Related Party) (Details)
Debt (Related Party) (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Feb. 27, 2022 | |
Debt (Related Party) [Line Items] | |||
Expense related to the conversion of convertible notes | $ 105,000 | ||
Withdrawn amount | $ 5,000,000 | ||
Warrants purchase (in Shares) | 500,000 | ||
Exercise price (in Dollars per share) | $ 1.24 | ||
Warrants expire date | Feb. 27, 2027 | ||
Additional paid-in capita | $ 179,380 | ||
Envoy Bridge Note [Member] | |||
Debt (Related Party) [Line Items] | |||
Expense related to the conversion of convertible notes | 9,400,000 | ||
2024 Term Loan [Member] | |||
Debt (Related Party) [Line Items] | |||
Principal amount | 10,000,000 | ||
Withdrawn amount | 2,500,000 | ||
Loan amount | $ 10,000,000 | ||
Maturity date | Feb. 27, 2029 | ||
Percentage of interest per annum | 8% | ||
Principal funded | $ 2,500,000 | ||
Common Stock [Member] | |||
Debt (Related Party) [Line Items] | |||
Warrants purchase (in Shares) | 500,000 | ||
Warrant [Member] | |||
Debt (Related Party) [Line Items] | |||
Purchase of shares (in Shares) | 250,000 |
Common Stock (Details)
Common Stock (Details) - shares | 3 Months Ended | ||
Mar. 31, 2024 | Dec. 31, 2023 | Feb. 27, 2022 | |
Common Stock [Line Items] | |||
Aggregate number of shares issued | 425,606 | ||
Warrants purchase | 500,000 | ||
Class A Common Stock [Member] | |||
Common Stock [Line Items] | |||
Common stock, authorized | 400,000,000 | 400,000,000 | |
Sponsor [Member] | |||
Common Stock [Line Items] | |||
Aggregate number of shares issued | 1,000,000 |
Series A Preferred Stock (Detai
Series A Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Dec. 31, 2023 | |
Series A Preferred Stock [Line Items] | ||
Shares issued (in Shares) | 100,000,000 | |
Preferred stock par value | $ 0.0001 | |
Preferred stock, conversion price | 11.5 | |
Conversion of outstanding stock | $ 15 | |
Percentage of dividend | 12% | |
Dividends declared | ||
Additional capital (in Dollars) | $ 10 | |
Unpaid dividend (in Dollars) | $ 1.5 | $ 0.8 |
Unpaid cash dividend per share | $ 10 | |
Series A Preferred Stock [Member] | ||
Series A Preferred Stock [Line Items] | ||
Shares issued (in Shares) | 4,500,000 | 4,500,000 |
Preferred stock par value | $ 0.0001 | $ 0.0001 |
Preferred stock authorized (in Shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares outstanding (in Shares) | 4,500,000 | 4,500,000 |
Preferred stock, conversion price | $ 10 | |
Percentage of dividend | 12% | |
Original issuance price | $ 10 | |
Common Stock [Member] | ||
Series A Preferred Stock [Line Items] | ||
Price per share | 15 | |
Conversion of outstanding stock | $ 10 |
Stock Options (Details)
Stock Options (Details) - $ / shares | 3 Months Ended | |||||
Dec. 11, 2023 | Oct. 15, 2023 | Apr. 17, 2023 | Mar. 31, 2024 | Dec. 31, 2023 | Mar. 31, 2013 | |
Stock Options [Line Items] | ||||||
Stock options outstanding | 1,999,689 | 1,967,734 | ||||
Expire term | 10 years | |||||
Granted stock options | 31,955 | |||||
Stock option exercise price (in Dollars per share) | $ 2.4 | |||||
Fully unvested stock options | 720,505 | |||||
Stock options vested | 50% | |||||
Maximum [Member] | ||||||
Stock Options [Line Items] | ||||||
Stock options vested | 75% | 75% | 75% | |||
Minimum [Member] | ||||||
Stock Options [Line Items] | ||||||
Stock options vested | 25% | 25% | 25% | |||
Director [Member] | ||||||
Stock Options [Line Items] | ||||||
Granted stock options | 2,085,034 | |||||
Employee [Member] | ||||||
Stock Options [Line Items] | ||||||
Granted stock options | 146,625 | 31,955 | ||||
Stock option exercise price (in Dollars per share) | $ 2.19 | $ 1.35 | ||||
Employee [Member] | Maximum [Member] | ||||||
Stock Options [Line Items] | ||||||
Stock options vested | 75% | |||||
Employee [Member] | Minimum [Member] | ||||||
Stock Options [Line Items] | ||||||
Stock options vested | 25% | |||||
2013 Stock Option Plan [Member] | ||||||
Stock Options [Line Items] | ||||||
Reserved shares | 7,000,000 | |||||
2003 Stock Option Plan [Member] | Maximum [Member] | ||||||
Stock Options [Line Items] | ||||||
Common Stock available for issuance | 6,400,000 | |||||
2003 Stock Option Plan [Member] | Minimum [Member] | ||||||
Stock Options [Line Items] | ||||||
Common Stock available for issuance | 552,000 | |||||
2023 Equity Incentive Plan [MEmber] | ||||||
Stock Options [Line Items] | ||||||
Reserved shares | 4,000,000 | |||||
Common Stock available for issuance | 2,500,000 | |||||
Stock options outstanding | 1,999,689 | |||||
Expire term | 10 years |
Stock Options (Details) - Sched
Stock Options (Details) - Schedule of Stock Option Activity - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Dec. 31, 2023 | Mar. 31, 2024 | |
Schedule of Stock Option Activity [Abstract] | ||
Options Outstanding Ending (in Shares) | 1,967,734 | 1,999,689 |
Weighted-average Exercise Price per Option Outstanding Ending | $ 2.38 | $ 2.37 |
Weighted-average Remaining Contractual Term (Years) Outstanding Ending | 9 years 6 months 25 days | |
Aggregate Intrinsic Value Outstanding Ending (in Dollars) | $ 3,103,871 | |
Options Exercisable and vested (in Shares) | 934,673 | |
Weighted-average Exercise Price per Option Exercisable and vested | $ 2.4 | |
Weighted-average Remaining Contractual Term (Years) Exercisable and vested | 9 years 6 months 18 days | |
Aggregate Intrinsic Value Exercisable and vested (in Dollars) | $ 1,420,703 | |
Options Granted (in Shares) | 31,955 | |
Weighted-average Exercise Price per Option Granted | $ 1.35 | |
Weighted-average Remaining Contractual Term (Years) Granted | ||
Aggregate Intrinsic Value Granted |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Related Party Transactions [Abstract] | ||
Lease liability due | $ 543 | $ 500 |
Commitment and Contingencies (D
Commitment and Contingencies (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Nov. 14, 2023 | Mar. 31, 2024 | Dec. 31, 2023 | |
Commitment and Contingencies [Line Items] | |||
Litigation costs | $ 50,000 | $ 50,000 | |
Class A Common Stock [Member] | |||
Commitment and Contingencies [Line Items] | |||
Common stock redemption value | $ 9,400,000 |
Net Loss per Share (Details) -
Net Loss per Share (Details) - Schedule of Basic and Diluted Loss Per Share - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Numerator: | ||
Net loss attributable to common stockholders, basic | $ (6,270) | $ (13,253) |
Net loss | (6,270) | (13,253) |
Less: Undistributed earnings allocated to participating securities, diluted | ||
Net loss attributable to common stockholders, diluted | $ (6,270) | $ (13,253) |
Denominator: | ||
Weighted average common stock outstanding, basic (in Shares) | 19,599,982 | 10,122,581 |
Net loss per share attributable to common stockholders, basic (in Dollars per share) | $ (0.32) | $ (1.31) |
Weighted average common stock outstanding, diluted (in Shares) | 19,599,982 | 10,122,581 |
Net loss per share attributable to common stockholders, diluted (in Dollars per share) | $ (0.32) | $ (1.31) |
Net Loss per Share (Details) _2
Net Loss per Share (Details) - Schedule of Potentially Dilutive Securities Have Been Excluded from the Computation of Diluted Net - shares | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Schedule of Potentially Dilutive Securities Have Been Excluded From the Computation of Diluted Net [Line Items] | ||
Total excluded potential shares | 21,079,398 | 263,000 |
Stock options [Member] | ||
Schedule of Potentially Dilutive Securities Have Been Excluded From the Computation of Diluted Net [Line Items] | ||
Total excluded potential shares | 1,999,689 | 263,000 |
Series A Preferred Stock (as converted to common stock) [Member] | ||
Schedule of Potentially Dilutive Securities Have Been Excluded From the Computation of Diluted Net [Line Items] | ||
Total excluded potential shares | 3,913,043 | |
Warrants to purchase common stock [Member] | ||
Schedule of Potentially Dilutive Securities Have Been Excluded From the Computation of Diluted Net [Line Items] | ||
Total excluded potential shares | 14,166,666 | |
Contingent Sponsor Shares [Member] | ||
Schedule of Potentially Dilutive Securities Have Been Excluded From the Computation of Diluted Net [Line Items] | ||
Total excluded potential shares | 1,000,000 |