Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2024 | May 10, 2024 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2024 | |
Document Transition Report | false | |
Entity File Number | 001-41567 | |
Entity Registrant Name | PROSOMNUS, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 88-2978216 | |
Entity Address, Address Line One | 5675 Gibraltar Drive | |
Entity Address, City or Town | Pleasanton | |
Entity Address State Or Province | CA | |
Entity Address, Postal Zip Code | 94588 | |
City Area Code | 844 | |
Local Phone Number | 537-5337 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 17,394,064 | |
Entity Central Index Key | 0001934064 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --12-31 | |
Amendment Flag | false | |
Common Stock | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Common Stock, par value $0.0001 per share | |
Trading Symbol | OSA | |
Security Exchange Name | NASDAQ | |
Warrant | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Warrants, each whole warrant exercisable for one share of Common Stock for $11.50 per share | |
Trading Symbol | OSAAW | |
Security Exchange Name | NASDAQ |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Current assets: | ||
Cash | $ 3,477 | $ 6,363 |
Restricted cash | 700 | 700 |
Accounts receivable, net | 4,339 | 3,839 |
Inventory | 2,023 | 2,039 |
Prepaid expenses and other current assets | 1,111 | 1,369 |
Total current assets | 11,650 | 14,310 |
Property and equipment, net | 3,166 | 3,358 |
Finance lease right-of-use assets | 3,603 | 3,265 |
Operating lease right-of-use assets | 4,981 | 5,069 |
Other assets | 479 | 285 |
Total assets | 23,879 | 26,287 |
Current liabilities: | ||
Accounts payable | 4,532 | 4,047 |
Accrued expenses and other current liabilities | 5,646 | 6,756 |
Equipment financing obligation | 59 | 57 |
Finance lease liabilities | 1,117 | 1,052 |
Operating lease liabilities | 318 | 304 |
Senior Convertible Notes at fair value, current portion | 12,734 | 2,125 |
Subordinated Convertible Notes at fair value | 14,551 | |
Total current liabilities | 38,957 | 14,341 |
Equipment financing obligation, net of current portion | 113 | 129 |
Finance lease liabilities, net of current portion | 2,256 | 2,009 |
Operating lease liabilities, net of current portion | 5,134 | 5,221 |
Senior Convertible Notes at fair value, net of current portion | 12,152 | |
Subordinated Convertible Notes at fair value | 18,320 | |
Earnout and warrant liability | 168 | 716 |
Total liabilities | 46,628 | 52,888 |
Commitments and contingencies | ||
Redeemable Convertible Series A Preferred Stock, $0.0001 par value, stated value $1,000; 25,000 shares designated at March 31, 2024 and December 31, 2023; 9,436 shares issued and outstanding at March 31, 2024 and December 31, 2023; liquidation preference of $14,154 at March 31, 2024 and December 31, 2023 | 11,555 | 11,555 |
Stockholders' deficit: | ||
Preferred stock, $0.0001 par value, 1,500,000 shares authorized at March 31, 2024 and December 31, 2023; no shares issued or outstanding | ||
Common Stock, $0.0001 par value, 150,000,000 shares authorized at March 31, 2024 and December 31, 2023; 17,394,064 and 17,388,599 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively | 2 | 2 |
Additional paid-in capital | 197,142 | 196,731 |
Accumulated deficit | (231,448) | (234,889) |
Total stockholders' deficit | (34,304) | (38,156) |
Total liabilities, redeemable convertible preferred stock and stockholders' deficit | 23,879 | 26,287 |
Series A Redeemable Convertible Preferred Stock | ||
Current liabilities: | ||
Redeemable Convertible Series A Preferred Stock, $0.0001 par value, stated value $1,000; 25,000 shares designated at March 31, 2024 and December 31, 2023; 9,436 shares issued and outstanding at March 31, 2024 and December 31, 2023; liquidation preference of $14,154 at March 31, 2024 and December 31, 2023 | $ 11,555 | $ 11,555 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Redeemable Series A convertible preferred stock, shares outstanding | 9,436 | 9,436 |
Redeemable Series A convertible preferred stock, liquidation preference | $ 14,200,000 | $ 14,200,000 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 1,500,000 | 1,500,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 17,394,064 | 17,388,599 |
Common stock, shares outstanding | 17,394,064 | 17,388,599 |
Series A Redeemable Convertible Preferred Stock | ||
Redeemable Series A convertible preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Redeemable Series A convertible preferred stock, stated value (in dollars per share) | $ 1,000 | $ 1,000 |
Redeemable Series A convertible preferred stock, shares authorized | 25,000 | 25,000 |
Redeemable Series A convertible preferred stock, shares issued | 9,436 | 9,436 |
Redeemable Series A convertible preferred stock, shares outstanding | 9,436 | 9,436 |
Redeemable Series A convertible preferred stock, liquidation preference | $ 14,154 | $ 14,154 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||
Revenue | $ 7,458 | $ 5,808 |
Operating expenses: | ||
Cost of revenue | 3,833 | 2,756 |
Sales and marketing | 1,976 | 2,824 |
General and administrative | 2,485 | 3,353 |
Research and development | 955 | 1,019 |
Total operating expenses | 9,249 | 9,952 |
Net loss from operations | (1,791) | (4,144) |
Other income (expense) | ||
Interest expense, net | (1,146) | (1,172) |
Change in fair value of earnout liability | 490 | 1,500 |
Change in fair value of debt | 5,885 | (1,827) |
Change in fair value of warrant liability | 58 | (843) |
Other expense, net | (55) | (406) |
Total other income (expense), net | 5,232 | (2,748) |
Net income (loss) | $ 3,441 | $ (6,892) |
Net income (loss) per share attributable to common stockholders, basic | $ 0.20 | $ (0.43) |
Net income (loss) per share attributable to common stockholders, diluted | $ (0.02) | $ (0.43) |
Weighted average shares of Common Stock, basic | 17,392,983 | 16,041,464 |
Weighted-average common shares outstanding - Diluted | 64,618,931 | 16,041,464 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT - USD ($) $ in Thousands | Series A Redeemable Convertible Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning balance at Dec. 31, 2022 | $ 2 | $ 190,299 | $ (210,795) | $ (20,494) | |
Beginning balance (in shares) at Dec. 31, 2022 | 16,041,464 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Stock-based compensation expense | 226 | 226 | |||
Net Income (Loss) | (6,892) | (6,892) | |||
Ending balance at Mar. 31, 2023 | $ 2 | 190,525 | (217,687) | (27,160) | |
Ending balance (in shares) at Mar. 31, 2023 | 16,041,464 | ||||
Beginning balance at Dec. 31, 2023 | $ 11,555 | $ 11,555 | |||
Beginning balance (in shares) at Dec. 31, 2023 | 9,436 | 9,436 | |||
Ending balance at Mar. 31, 2024 | $ 11,555 | $ 11,555 | |||
Ending balance (in shares) at Mar. 31, 2024 | 9,436 | 9,436 | |||
Beginning balance at Dec. 31, 2023 | $ 2 | 196,731 | (234,889) | $ (38,156) | |
Beginning balance (in shares) at Dec. 31, 2023 | 17,388,599 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Issuance costs - ProSomnus Inc. | (3) | (3) | |||
Issuance of shares, net (in shares) | 5,465 | ||||
Stock-based compensation expense | 414 | 414 | |||
Net Income (Loss) | 3,441 | 3,441 | |||
Ending balance at Mar. 31, 2024 | $ 2 | $ 197,142 | $ (231,448) | $ (34,304) | |
Ending balance (in shares) at Mar. 31, 2024 | 17,394,064 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ 3,441 | $ (6,892) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Depreciation and amortization | 226 | 167 |
Amortization of assets obtained under finance leases | 265 | 180 |
Amortization of operating right-of-use assets | 88 | 136 |
Noncash interest | 572 | 1,101 |
Allowance for credit losses | 32 | 139 |
Stock-based compensation | 414 | 226 |
Change in fair value of earnout liability | (490) | (1,500) |
Change in fair value of debt | (5,885) | 1,827 |
Change in fair value of warrant liability | (58) | 843 |
Loss on disposal of property and equipment | 117 | |
Right-of-use asset impairment | 0 | 274 |
Other non-cash operating expense | 23 | 100 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (532) | 41 |
Inventory | 16 | (118) |
Prepaid expenses and other current assets | 258 | 276 |
Other assets | (194) | |
Accounts payable | 485 | (792) |
Accrued expenses and other current liabilities | (1,110) | 708 |
Operating lease liabilities | (73) | 75 |
Net cash used in operating activities | (2,522) | (3,092) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment | (34) | (975) |
Net cash used in investing activities | (34) | (975) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Principal payments on finance lease obligations | (316) | (274) |
Principal payments on equipment financing obligation | (14) | (15) |
Net cash used in financing activities | (330) | (289) |
Net change in cash and restricted cash | (2,886) | (4,356) |
Cash and restricted cash at beginning of period | 7,063 | 15,916 |
Cash and restricted cash at end of period | 4,177 | $ 11,560 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 457 | |
Supplemental disclosure of noncash investing and financing activities: | ||
ROU assets obtained in exchange for finance lease obligations | $ 628 |
DESCRIPTION OF THE BUSINESS
DESCRIPTION OF THE BUSINESS | 3 Months Ended |
Mar. 31, 2024 | |
DESCRIPTION OF THE BUSINESS | |
DESCRIPTION OF THE BUSINESS | NOTE 1 — DESCRIPTION OF THE BUSINESS Company Organization ProSomnus, Inc., and its wholly owned subsidiaries, ProSomnus Holdings, Inc. and ProSomnus Sleep Technologies, Inc. (collectively, the “Company”) is an innovative medical technology company that develops, manufactures, and markets its proprietary line of precision intraoral medical devices for treating and managing patients with obstructive sleep apnea (“OSA”). The Company is located in Pleasanton, California and was incorporated as a Delaware company on May 3, 2022. Its accounting predecessor company, ProSomnus Sleep Technologies, Inc. was incorporated as a Delaware company on March 2, 2016. On December 6, 2022, Lakeshore Acquisition I Corp. (“Lakeshore”) consummated a series of transactions that resulted in the combination (the “Business Combination”) of Lakeshore with ProSomnus Holdings, Inc. and its wholly-owned subsidiary, ProSomnus Sleep Technologies, Inc., pursuant to an Agreement and Plan of Merger, dated May 9, 2022. Pursuant to the Merger Agreement, Lakeshore merged with and into ProSomnus Holdings, and changed its name to ProSomnus, Inc. The transaction was accounted for as a reverse recapitalization with ProSomnus Sleep Technologies, Inc. being the accounting acquirer and Lakeshore as the acquired Company for accounting purposes. Accordingly, all historical financial information presented in the consolidated financial statements represents the accounts of ProSomnus Sleep Technologies, Inc. |
BASIS OF ACCOUNTING AND SIGNIFI
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2024 | |
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES | |
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 — BASIS OF ACCOUNTING AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed consolidated financial statements were prepared in accordance with generally accepted accounting principles in the United States of America (“U.S GAAP”). The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or any future periods. The condensed consolidated balance sheet as of December 31, 2023 has been derived from audited financial statements at that date but does not include all of the information required by GAAP for complete financial statements. Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. Liquidity and Management’s Plans The Company has incurred recurring losses from operations and recurring negative cash flows from operating activities. The Company expects operating losses and negative cash flows from operations to continue for the foreseeable future. As discussed further in Note 14- Subsequent Events, on May 7, 2024 (the “Petition Date”), the Company voluntarily entered into a Restructuring Support Agreement (including all exhibits thereto, collectively, the “RSA”) with (i) certain of its existing affiliates and subsidiaries (as set forth in the RSA, and together with the Company, the “Company Parties”); and (ii) certain sponsoring Senior Noteholders and Subordinated Noteholders (the “Sponsoring Noteholders”). The Company commenced a voluntary petition (the “Chapter 11 Cases”) under Chapter 11 of the U.S. Bankruptcy Code (the “Bankruptcy Code”) in the U.S. Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). Pursuant to Section 362 of the Bankruptcy Code, the filing of the Chapter 11 Cases automatically stayed most actions against the Company, including actions to collect indebtedness incurred prior to the Petition Date or to exercise control over the Company property. In accordance with ASC Subtopic 205-40, Presentation of Financial Statements-Going Concern The accompanying financial statements have been prepared in accordance with U.S. GAAP assuming that the Company will continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern. Management’s Plans Related to Going Concern The Company’s ability to continue as a going concern depends principally on its ability to successfully exit the Chapter 11 Cases, including the completion of the financings proposed within the RSA. Upon the successful exit from the Chapter 11 Cases, the Company’s ability to continue as a going concern will depend upon its ability to execute on its plans to achieve revenue growth forecast, control operating costs, and obtain additional financing. The Company’s successful exit from the Chapter 11 Cases, the outcome of such exit, and the Company’s post exit operating plans are subject to many factors currently unknown and there can be no assurance that the current operating plan or cash flow break-even plan will be achieved in the time frame anticipated by the Company. The Company has entered into a RSA with certain of its Sponsoring Noteholders. The material terms include an aggregate of $20.0 million of potential capital to the Company, including through a debtor-in-possession credit facility and potential new-money equity. The Sponsoring Noteholders have committed to provide an $13.0 million credit facility, of which $6.5 million has been provided, and to consummate a new-money equity capital raise in an amount of at least $9.0 million to be funded upon exit from the Chapter 11 Cases. Although the Company intends to pursue the RSA in accordance with the stated terms; there can be no assurance that the Company will be successful in completing the Restructuring, whether on the same or different terms than those provided in the RSA. In addition to the Chapter 11 Cases, based on the Company’s current level of expenditures and future cash flow projections, the Company believes it’s current unrestricted cash balance will not be sufficient for the Company to continue operations as a going concern for at least one year from the issuance date of these condensed consolidated financial statements. Additionally, the indentures governing the Company’s Senior Convertible Notes and Subordinated Convertible Notes (as defined below and, collectively the “Convertible Notes”) contain monthly and quarterly financial covenants. Failure to comply with the covenants or obtain a waiver and extension from the holders of each series of our Convertible Notes could result in an event of default under each of the indentures governing our Convertible Notes and result in an acceleration of the Convertible Notes. The Company believes these factors raise substantial doubt about its ability to continue as a going concern. Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and disclosure of contingent assets and liabilities. Though macroeconomic factors such as inflation, exchange rate fluctuations and concerns about an economic downturn present additional uncertainty, the Company continues to use the best information available to form its critical accounting estimates. Actual results could differ from these estimates, and such differences could materially affect the results of operations reported in future periods. The Company’s significant estimates in these consolidated financial statements relate to the fair values, and the underlying assumptions used to formulate such fair values, of its Series A Preferred Stock, Convertible Notes, earn-out liability, and warrants. Estimates also include the provision for credit losses, warranty and earned discount accruals, measurements of tax assets and liabilities and stock-based compensation. Concentrations, Credit Risk and Market Risk Financial instruments that potentially subject the Company to a concentration of credit risk principally consist of accounts receivable and cash. The Company sells its products to customers primarily in North America and Europe. To reduce credit risk, management performs periodic credit evaluations of its customers’ financial condition. No customers exceeded more than 10% of the Company’s revenue or accounts receivables as of and for the three months ended March 31, 2024 and December 31, 2023. The Company maintains its cash in bank accounts which, at times, may exceed federally insured limits as guaranteed by the Federal Deposit Insurance Corporation (“FDIC”). As of March 31, 2024 and December 31, 2023, the Company had $3.9 million and $6.8 million in excess of the FDIC insured limit, respectively. The Company’s investment policy, which is predicated on capital preservation and liquidity, limits investments to instruments denominated and payable in US dollars. The Company believes its credit risk is mitigated due to the high quality of the banks in which it places its deposits. Historically, the Company has not experienced significant credit losses from financial instruments. Fair Value of Financial Instruments The accounting standard for fair value measurements provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. Fair value is defined as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. This accounting standard establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs that may be used to measure fair value: Level 1 Inputs — Level 2 Inputs — Level 3 Inputs — no Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate. The Company’s financial instruments consist primarily of cash, accounts receivable (net of allowance for doubtful accounts), accounts payable and accrued expenses, long-term debt instruments, earnout and warrant liabilities. The carrying amounts of financial instruments such as cash, restricted cash, accounts receivable, prepaid expenses and other current assets, accounts payable, and accrued expenses approximate the related fair values due to the short-term maturities of these instruments. The carrying value of the Company’s equipment financing obligation is considered to approximate its fair value because the interest rate is comparable to current rates for financing available to the Company. Under the fair value option as prescribed by FASB Accounting Standards Codification (“ASC”) 825, Financial Instruments The following tables provide a summary of the financial instruments that are measured at fair value on a recurring basis (in thousands): March 31, 2024 Fair Value Level 1 Level 2 Level 3 Senior Convertible Notes $ 12,734 $ — $ — $ 12,734 Subordinated Convertible Notes 14,551 — — 14,551 Earnout liability 130 — — 130 Warrant liability 38 — — 38 December 31, 2023 Fair Value Level 1 Level 2 Level 3 Senior Convertible Notes $ 14,277 $ — $ — $ 14,277 Subordinated Convertible Notes 18,320 — — 18,320 Earnout liability 620 — — 620 Warrant liability 96 — — 96 A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash and cash equivalents. At March 31, 2024 and December 31, 2023, the Company had no cash equivalents. Restricted Cash The Company’s restricted cash as of March 31, 2024 and December 31, 2023 of $0.7 million consisted of a letter of credit on hand w ith the Company ' s financial institution as collateral for an office lease Impairment of Long-Lived Assets The Company’s long-lived assets primarily include property and equipment and finance and operating right-of-use assets. The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured at the amount by which the carrying amount of the asset exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of carrying amount or the fair value less costs to sell. During 2023, the Company moved to its new headquarters and principal manufacturing facility. Upon moving, the Company expensed a total of $0.3 million relating to the carrying value of the remaining leasehold improvements and amounts due under the remaining lease term of the previous facility. The right-of-use asset and leasehold improvements charge was recorded in other expense, net in the consolidated statements of operations for the year ended December 31, 2023. Senior and Subordinated Convertible Notes The Company accounts for its Notes, as derivatives in accordance with, ASC 815, Derivatives and Hedging , depending on the nature of the derivative instrument. ASC 815 requires each contract that is not a derivative in its entirety be assessed to determine whether it contains embedded derivatives that are required to be bifurcated and accounted for as a derivative financial instrument. The embedded derivative is bifurcated from the host contract and accounted for as a freestanding derivative if the combined instrument is not accounted for in its entirety at fair value with changes in fair value recorded in earnings, the terms of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract, and a separate instrument with the same terms as the embedded derivative would qualify as a derivative instrument. Embedded derivatives are measured at fair value and remeasured at each subsequent reporting period, and recorded within Convertible Notes, net on the accompanying condensed consolidated balance sheets and changes in fair value recorded in other expense within the condensed consolidated statements of operations. Debt discounts under these arrangements are amortized to interest expense using the interest method over the earlier of the term of the related debt or their earliest date of redemption. The Company has analyzed the redemption, conversion, settlement, and other derivative instrument features of its Convertible Notes. ● The Company identified that the (i) redemption features, (ii) Lender’s Optional Conversion feature, (iii) Lender’s Optional Conversion upon Merger Event feature and (iv) additional interest rate upon certain events feature meet the definition of a derivative. The Company analyzed the scope exception for all the above features under ASC 815-10-15-74(a). ● Based on the further analysis, the Company identified that the (i) Lender’s Optional Conversion feature, (ii) Lender’s Optional Conversion upon Merger Event feature and (iii) additional interest rate upon certain events feature, do not meet the settlement criteria to be considered indexed to equity. The Company concluded that each of these features should be classified as a derivative liability measured at fair value with the changes in fair value in the condensed consolidated statement of operations. ● The Company also identified that the redemption features are settled in cash and do not meet the indexed to equity and the equity classification scope exception, thus, they must be bifurcated from the Convertible Notes and accounted for separately at fair value on a recurring basis reflecting the changes in fair value in the condensed consolidated statement of operations. The Company determined the Convertible Notes contained multiple embedded derivatives that are required to be bifurcated, two of which are conversion features. As per ASC 815, the fair value election is allowable provided the debt was not issued at a substantial premium. The Company concluded that the Convertible Notes were not issued at a premium and hence the Company elected the fair value option under ASC 815-15-25. The Company elected to record changes in fair value through the condensed consolidated statement of operations as a fair value adjustment of the convertible debt at each reporting period (with the portion of the change that results from a change in the instrument-specific credit risk recorded separately in other comprehensive income, if applicable). The Company has elected to separately present interest expense related to the Convertible Notes within the condensed consolidated statement of operations. Thus, the multiple embedded derivatives do not need to be separately bifurcated and fair valued. The Convertible Notes are reflected at their respective fair values on the condensed consolidated balance sheets. Warrants The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity Derivatives and Hedging For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and then remeasured at fair value at each balance sheet date thereafter. Changes in the estimated fair value of the liability classified warrants are recognized as other income or expense on the condensed consolidated statements of operations. Revenue Recognition The Company creates customized precision milled intraoral medical devices and recognizes revenue upon meeting the following criteria: ● Identifying the contract with a customer: Customers submit an order in the form of a prescription and oral scan to the Company. ● Identifying the performance obligations within the contract: The sole performance obligation is the delivery of a completed customized intraoral device. ● Determining the transaction price: Prices are determined by standardized pricing sheets and adjusted for discounts, allowances and remakes. ● Allocating the transaction price to the performance obligations: The full transaction price is allocated to the completed intraoral device as it is the only element in the transaction. ● Recognizing revenue as the performance obligation is satisfied at a point in time: revenue is recognized upon transfer of control which occurs upon shipment of the product. The Company does not require collateral or any other form of security from customers. Inbound shipping and handling costs related to sales are billed to customers. The Company charges for inbound shipping/handling and the costs are classified as Cost of Revenue. Outbound shipping costs are not billed to customers and are included in sales and marketing expenses. Taxes collected from customers and remitted to governmental authorities are excluded from revenue. Standalone selling price for the various intraoral device models are determined using the Company’s standard pricing sheet. The Company invoices customers upon shipment of the product and invoices are due within 30 days. Amounts that have been invoiced are recorded in accounts receivable and revenue as all revenue recognition criteria have been met. The Company does not have a financing component related to its revenue arrangements. The Company utilizes the practical expedient which permits expensing of costs to obtain a contract when the expected amortization period is one year or less. Accordingly, the Company expenses employee sales commissions when incurred as the period over which the sales commission asset that would have been recognized is less than one year. Leases The Company assesses at contract inception whether a contract is, or contains, a lease. Generally, the Company determines that a lease exists when (1) the contract involves the use of a distinct identified asset, (2) the Company obtains the right At the lease commencement date, the Company recognizes a right-of-use (“ROU”) asset and a lease liability for all leases, except short term leases with an original term of twelve months or less. The ROU asset represents the right to use the leased asset for the lease term. The lease liability represents the present value of the lease payments under the lease. The ROU asset is initially measured at cost, which primarily comprises the initial amount of the lease liability, less any lease incentives received. All ROU assets are periodically reviewed for impairment in accordance with standards that apply to long-lived assets. The lease liability is initially measured at the present value of the lease payments, discounted using an estimate of the Company’s incremental borrowing rate for a collateralized loan with the same term as the underlying leases for operating leases and the implied rate in the lease agreement for finance leases. Lease payments included in the measurement of lease liabilities consist of (1) fixed lease payments for the noncancelable lease term, (2) fixed lease payments for optional renewal periods where it is reasonably certain the renewal option will be exercised, and (3) variable lease payments that depend on an underlying index or rate, based on the index or rate in effect at lease commencement. The Company’s real estate operating lease agreement requires variable lease payments that do not depend on an underlying index or rate established at lease commencement. Such payments and changes in payments are recognized in operating expenses when incurred. Lease expense for operating leases consists of the fixed lease payments recognized on a straight-line basis over the lease term plus variable lease payments as incurred. Lease expense for finance leases consists of the amortization of assets obtained under finance leases on a straight-line basis over the lease term and interest expense on the lease liability based on the discount rate at lease commencement. Net income (Loss) per Share Attributable to Common Stockholders Basic net income (loss) per share attributable to Common Stockholders is calculated by dividing the net income (loss) attributable to Common Stockholders by the weighted average number of shares of Common Stock outstanding during the period, without consideration of potentially dilutive securities. Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock and potentially dilutive securities outstanding for the period. For the purposes of the diluted net income (loss) per share calculation, common stock options, RSU awards, Convertible Series A Preferred Stock, warrants to purchase common stock, earnout shares, and convertible notes are considered to be potentially dilutive securities. For the periods presented that the Company has reported a net loss, diluted net loss per common share is the same as basic net loss per common share for those periods. Recent Accounting Pronouncements During November 2023, the FASB issued ASU 2023-07, Segment Reporting-Improvements to Reportable Segment Disclosures definition of a segment, the method for determining segments, or the criteria for aggregating operating segments into reportable segments. The FASB issued the new guidance primarily to provide financial statements users with more disaggregated expense information about a public entity’s reportable segments. The ASU is effective for public entities for fiscal years beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024. The guidance is effective for the Company’s 2024 Form 10-K. The Company is currently evaluating the impact of adoption on the Company’s consolidated financial statements and its related disclosures. In December 2023, the FASB released ASU 2023-09, titled "Enhancements to Income Tax Disclosures," with the aim of improving the clarity and usefulness of income tax disclosures. The update focuses primarily on enhancing disclosures related to rate reconciliation and income taxes paid. ASU 2023-09 becomes effective for annual reporting periods starting after December 15, 2024, with early adoption permitted. While the changes prescribed by ASU 2023-09 are implemented prospectively, retrospective application is also allowed. The Company has chosen not to early adopt this standard and is currently evaluating the impact of adoption on the Company’s consolidated financial statements and its related disclosures. The Company continues to monitor new accounting pronouncements issued by the FASB and does not believe any other accounting pronouncements issued through the date of this report will have a material impact on the Company's consolidated financial statements. |
INVENTORY
INVENTORY | 3 Months Ended |
Mar. 31, 2024 | |
INVENTORY | |
INVENTORY | NOTE 3 — INVENTORY Inventory consists of the following March 31, December 31, 2024 2023 Raw materials $ 1,861 $ 1,967 Work-in-process 162 72 $ 2,023 $ 2,039 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 3 Months Ended |
Mar. 31, 2024 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | NOTE 4 — PROPERTY AND EQUIPMENT Property and equipment consist of the following (in thousands): March 31, December 31, 2024 2023 Manufacturing equipment $ 4,042 $ 4,042 Computers and software 1,213 1,200 Construction in progress 20 — Leasehold improvements 846 846 6,121 6,088 Less: accumulated depreciation (2,955) (2,730) Property and equipment, net $ 3,166 $ 3,358 Depreciation and amortization expense for property and equipment was $0.2 million for both the three months ended March 31, 2024 and 2023, respectively. The Company disposed property and equipment assets of $0.7 million which had an accumulated depreciation of $0.6 million during the three months ended March 31, 2023. The resulting $0.1 million loss on disposal is reflected in the condensed consolidated statement of operations as other expense. |
ACCRUED EXPENSES
ACCRUED EXPENSES | 3 Months Ended |
Mar. 31, 2024 | |
ACCRUED EXPENSES | |
ACCRUED EXPENSES | NOTE 5 — ACCRUED EXPENSES Accrued expenses consist of the following (in thousands): March 31, December 31, 2024 2023 Compensation related accruals $ 2,397 $ 3,387 Marketing programs 1,293 934 Interest 695 382 Warranty 465 465 Professional fees 635 632 Inventory purchases and freight — 613 Other 161 343 $ 5,646 $ 6,756 |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2024 | |
LEASES | |
LEASES | NOTE 6 — LEASES The Company has entered into four equipment leases during the three months ended March 31, 2024, which have been classified as finance leases. The lease terms for these leases range from three On May 17, 2022, the Company signed a ten-year lease for the Company’s corporate headquarters. The lease commenced on December 15, 2022 and resulted in the recognition of $5.4 million of operating ROU asset and lease liability. The monthly payment is approximately $0.1 million and is subject to stated annual escalations. The Company received five months free rent. For the corporate headquarters lease, the Company provided a $0.3 million security deposit, which is recorded in other assets on the accompanying condensed consolidated balance sheets. The Company's largest investor initially guaranteed $1.7 million for the lease agreement, followed by a rolling one-year guarantee. The Company replaced the guarantee with a letter of credit of $0.7 million secured by a certificate of a deposit for the same amount that is recorded as restricted cash on the accompanying condensed consolidated balance sheet. On February 28, 2023, the Company vacated its previous corporate office premises with a remaining lease term of approximately ten months. Since there was no new cash inflow generated or expected from the sale or sublease of property and leasehold improvements at the location, the Company recorded an impairment loss on the ROU operating lease assets and leasehold improvements of $0.3 million and $0.1 million, respectively. The Company also accrued liabilities of $0.1 million in anticipation of expected common area maintenance payments on the remainder of the lease. The impairment loss and the accrued expenses are reflected as other expense in the consolidated statements of operations as of December 31, 2023. No such impairment loss The Company’s finance leases consist of various machinery, equipment, computer-related equipment, or software and have remaining terms from less than one year to five years. The components of the Company’s lease cost, weighted average lease terms and discount rates are presented in the tables below (in thousands, except lease term and discount rate): Three months ended March 31, 2024 2023 Operating lease expense: Operating lease cost $ 223 $ 265 Finance lease expense: Amortization of assets obtained under finance leases 265 180 Interest on lease liabilities 90 78 Variable lease expense 3 — Total expense $ 581 $ 523 March 31, December 31, Operating leases: 2024 2023 Weighted average remaining lease term (in years) 8.75 9.0 Weighted average discount rate 10.00 % 10.00 % Finance leases: Weighted average remaining lease term (in years) 3.12 3.0 Weighted average discount rate 10.48 % 10.21 % Three Months Ended March 31, 2024 2023 Supplemental cash flow information related to operating leases was as follows (in thousands): Operating cash flows from operating leases $ 209 $ 47 Operating cash flows from finance leases (interest) 79 81 Right-of-use assets consisted of the following (in thousands) : March 31, December 31, 2024 2023 Manufacturing equipment $ 5,866 $ 5,237 Computers and software 686 700 Leasehold improvements 218 218 Total 6,770 6,155 Less accumulated amortization (3,167) (2,890) ROU assets for finance leases 3,603 3,265 ROU assets for operating leases 4,981 5,069 Total ROU assets $ 8,584 $ 8,334 At March 31, 2024, the following table presents maturities of the Company’s finance and operating lease liabilities Three Months Ended March 31, 2024 Finance Operating 2024 (remaining 9 months) $ 1,071 $ 628 2025 1,286 861 2026 983 887 2027 430 914 2028 168 941 Thereafter 14 4,056 Total minimum lease payments 3,952 8,287 Less amount representing interest (579) (2,835) Present value of minimum lease payments 3,373 5,452 Less current portion (1,117) (318) Lease obligations, less current portion $ 2,256 $ 5,134 |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2024 | |
DEBT | |
DEBT | NOTE 7 — DEBT Equipment Financing Obligation At March 31, 2024, the Company’s future principal maturities under the equipment financing obligations are summarized as follows (in thousands) Three Months Ended March 31, 2024 Amount 2024 (remaining 9 months) $ 43 2025 64 2026 65 Total principal maturities 172 Less: current portion (59) Equipment financing obligation, net of current portion $ 113 Convertible Debt Agreements Senior Convertible Notes On December 6, 2022, the Company entered into the Indenture for Senior Secured Convertible Notes due December 6, 2025, dated December 6, 2022 by and among the Company, ProSomnus Holdings and ProSomnus Sleep Technologies, as guarantors, and Wilmington Trust, National Association, as trustee and collateral agent (as amended, the “Senior Indenture”), and issued Senior Secured Convertible Notes, due December 6, 2025 (the “Existing Senior Convertible Notes”), with an aggregate principal amount of $17.0 million, pursuant to the senior securities purchase agreement, dated August 26, 2022. In connection with the closing of the offering of the Existing Senior Convertible Notes, the Company issued 36,469 shares of Common Stock and 169,597 warrants (the “Existing Senior Convertible Notes Warrants”) to purchase Common Stock. The Existing Senior Convertible Notes Warrants entitle the note holders to purchase shares of Common Stock, subject to adjustment, at a purchase price per share of $11.50. The debt bears interest at 9% per annum. Interest is payable in cash quarterly. On June 29, 2023, the Company entered into the First Supplemental Indenture, dated as of June 29, 2023, by and among the Company, ProSomnus Holdings and ProSomnus Sleep Technologies, as guarantors, and Wilmington Trust, National Association On September 20, 2023, the Company entered into the Second Supplemental Indenture (the “Second Senior Supplemental Indenture”) to the Senior Indenture, by and among the Company, , as guarantors, and Wilmington Trust, National Association, as trustee and collateral agent. The Second Senior Supplemental Indenture amends the Senior Indenture to, among other things, permit the sale of the securities underlying the convertible debt (the “Securities”) and the Exchanges. Subordinated Convertible Notes On December 6, 2022, the Company entered into that certain Indenture for Subordinated Secured Convertible Notes due April 6, 2026, dated December 6, 2022 by and among the Company, ProSomnus Holdings and ProSomnus Sleep Technologies, as guarantors, and Wilmington Trust, National Association, as trustee and collateral agent (as amended, the “Subordinated Indenture”), and issued the Subordinated Secured Convertible Notes due April 6, 2026 (“Existing Subordinated Convertible Notes” and, together with the Existing Senior Convertible Notes, the “Existing Convertible Notes”), with an aggregate principal amount of approximately $17.5 million, pursuant to the previously disclosed Subordinated Securities Purchase Agreement, dated August 26, 2022. In connection with the closing of the offering, the Company issued 290,244 shares of Common Stock and 1,745,310 warrants (“Subordinated Convertible Notes Warrants” and, together with the Senior Convertible Notes Warrants, the “Convertible Notes Warrants”) to purchase Common Stock to certain Convertible Debt holders. The debt has an interest rate of Prime Rate plus an additional 9% per annum with a term of 3 years. Interest is due quarterly in cash or in kind at the option of the Company. On June 6, 2023, in accordance with the Subordinated Indenture, the conversion rate of the Subordinated Convertible Notes increased from approximately 86.95665 shares of common stock per $1,000 of the sum of the principal amount of the Subordinated Convertible Notes to approximately 192.3808 shares of common stock per $1,000 of the sum of the principal amount of the Subordinated Convertible Notes. On June 29, 2023, the Company entered into the First Supplemental Indenture, dated as of June 29, 2023, by and among the Company, ProSomnus Holdings and ProSomnus Sleep Technologies, as guarantors, and Wilmington Trust, National Association First Subordinated Supplemental Indenture”) On September 8, 2023, the Company issued 230,494 shares of Common Stock in connection with a notice of conversion from a holder of the Company’s Subordinated Convertible Notes, pursuant to which such holder irrevocably exercised its right to convert $1.0 million principal amount. The Company recorded the fair value of the principal amount and accrued interest converted of $0.9 million as Common Stock and additional paid-in capital. On September 20, 2023, the Company entered into the Second Supplemental Indenture (the “Second Subordinated Supplemental Indenture”) to the Subordinated Indenture, pursuant to which the Company issued the Existing Subordinated Convertible Notes. The Second Subordinated Supplemental Indenture amends the Subordinated Indenture to, among other things, permit the sale of the Securities and the Exchanges. On December 6, 2023, in accordance with the Subordinated Indenture, the conversion rate of the Subordinated Convertible Notes increased from approximately 192.3808 shares of common stock per $1,000 of the sum of the principal amount of the Subordinated Convertible Notes to approximately 222.22222 shares of common stock per $1,000 of the sum of the principal amount of the Subordinated Convertible Notes. The Convertible Notes include the following embedded features: Embedded Feature Nature Description Optional redemption – Election of Company Redemption feature (embedded call option) At any time after the later of (i) the eighteen-month anniversary of the initial issue date and (ii) the date that the Senior Debt is no longer outstanding, if the daily volume weighted-average price of the Company’s Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days exceeds $18.00, the Company may redeem a portion of or all of the principal amount (including accrued and unpaid interest), plus any liquidated damages and any other amounts due in respect of the Notes redeemable in cash. Mandatory redemption – Events of Default Redemption feature (embedded contingent call option) The Company is required to prepay all of the outstanding principal balance and accrued and unpaid interest upon bankruptcy-related events of default. Lenders’ Optional redemption – Events of Default Redemption feature (embedded contingent call option) Holders of at least 25% aggregate principal amount of the Notes can require the Company to pay all of the outstanding principal balance and accrued and unpaid interest upon any event of default that is not bankruptcy related. Lender’s Optional Conversion Conversion feature At each Lenders’ option, subject to specific conditions, it may convert all or any portion of its Notes at an initial conversion rate, which is reduced (and only reduced) at various dates and subject to certain adjustments to the conversion rate in the case of specified events. If a note is converted, the Company will adjust the conversion rate to account for any accrued and unpaid interest on such note plus any Make-Whole Amount related to such note. Lenders’ Optional Conversion Upon Merger Event Other feature Upon a merger event, Note holders of each $1,000 principal amount of Notes are entitled to convert such notes plus accrued interest, plus the Make-Whole Amount related to the in kind and amount of reference property that a holder of a number of shares of Common Stock equal to the conversion rate in effect immediately prior to such event would have owned or been entitled to receive upon such event. Additional interest rate upon certain non-credit related events Other feature Upon an event of default, additional interest will be incurred. Additional interest will also be incurred if the Notes are not freely tradeable. Ability to pay interest in kind (PIK Interest)* Other feature The Company has the election to pay interest in cash or in-kind. *The PIK interest feature is only present in the Subordinated Convertible Note, and not available in the Senior Convertible Notes. The Company assessed the embedded features within these Convertible Note and determined the following: ● The Optional Redemption feature (1), the Mandatory redemption feature (2) and the Lender’s Optional redemption feature (3) met the definition of a derivative and were not clearly and closely related to the host contract and required separate accounting. Further, the redemption features are settled in cash and would therefore not meet the indexed to equity and equity classification scope exception. Thus, these redemption features were concluded to be embedded derivatives that should be bifurcated from the loan and accounted for separately at fair value on a recurring basis. ● The Lender’s Optional Conversion feature (4) and the Lender’s Optional Conversion Upon Merger (5) event features also met the definition of a derivative and were not clearly and closely related to the host contract and required separate accounting. The economic characteristics of the Lender’s Optional Conversion feature (4) and the Make Whole premium on Lenders’ Optional Conversion Upon Merger Event (5) were based on fair value of the underlying shares. The settlement amount of the interest make-whole is not indexed to the issuer’s equity but is based on stated interest cash flows. The Lenders Optional Conversion Upon Merger event feature is contingent on merger event. This exercise contingency is allowable as it is not based on market or an observable index. The Company noted that features (4) and (5) did not meet the indexed to equity and equity classification scope exception. Therefore, these conversion features were concluded to be embedded derivatives that should be bifurcated from the loan and accounted for separately at fair value on a recurring basis through the consolidated statements of operations. ● The additional interest rate upon certain non-credit related events (6) are triggered based on timely filing of financial information and the tradability of the Notes, these are not related to the economic characteristics of debt. Therefore, this feature is not clearly and closely related to the debt host. The additional interest payment is settled in cash and hence did not meet the derivative scope exception. However, since the probability of the Convertibles Notes being freely tradeable or Company’s failure to timely file is estimated to be less than 5% , the Company concluded that the fair value of this feature is not material. Thus, even though this additional interest feature was concluded to be an embedded derivative, it was not fair valued separately. ● The ability to pay PIK interest feature is clearly and closely related to the debt, and was not be evaluated separately as a derivative feature. The Company determined the Notes contained multiple embedded derivatives that are required to be bifurcated, two of which are conversion features. As per ASC 815, if there is a conversion feature that is required to be bifurcated, the cash conversion feature and beneficial conversion feature guidance is not applicable to such conversion feature and the fair value election is allowable provided the debt was not issued at a substantial premium. As the proceeds received at issuance from these Convertible Notes do not exceed the principal amount that will be paid at maturing, there is no substantial premium. Further, ASC 815-15-25 provides that if an entity has a hybrid financial instrument that would require bifurcation of embedded derivatives under ASC 815, the entity may irrevocably elect to initially and subsequently measure a hybrid financial instrument in its entirety at fair value with changes in fair value recognized in earnings. The Company elected to measure the Senior and Subordinated Convertible Notes in their entirety at fair value with changes in fair value recognized as non-operating gain or loss in the consolidated statements of operations at each balance sheet date in accordance with ASC 815-15-25. Financing Transaction (the “Securities Purchase Agreement”, and the transactions contemplated by the Securities Purchase Agreement, the “Financing Transaction”) with certain third-party and related party investors (the “Investors”), pursuant to which the Company issued (i) an aggregate of 10,426 shares of the Company’s Series A Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), for an aggregate purchase price of $10.4 million at a per share purchase price of $1,000 , and (ii) (A) with respect to Investors that held the Existing Convertible Notes, new convertible notes on substantially similar terms to such Noteholder Investor’s Existing Convertible Notes other than that such new notes will be convertible into shares of Common Stock, at a conversion price of $1.00 per share subject to the terms and conditions of the applicable new indenture pursuant to which the applicable series of New Notes have been issued by the Company (the “New Notes”), in exchange for such Noteholder Investor’s portion of the principal amount outstanding of the Existing Convertible Notes (the “Exchanges”) pursuant to exchange agreements entered into between the Company and each of the Noteholder Investors (together, the “Exchange Agreements”) and/or (B) warrants to purchase shares of Common Stock at an exercise price of $1.00 per share (such warrants, the “Transaction Warrants”) Fair Value Election The Company has elected to measure the Convertible Notes, including the New Notes, in their entirety at fair value with changes in fair value recognized as non-operating gain or loss in the condensed consolidated statements of operations (with the portion of the change that results from a change in the instrument-specific credit risk recorded separately in other comprehensive income, if applicable). The estimated fair values of the convertible debt were determined using a Monte Carlo Simulation method. The Company simulated the stock price using a Geometric Brownian Motion until maturity. For each simulation path the Company calculated the convertible bond value at maturity and then discount that back to the valuation date. Finally, the value of the convertible bond is determined by averaging the discounted cash flows of all the simulated paths. The following assumptions were used as of March 31, 2024 and December 31, 2023: Monte Carlo Simulation Assumptions Asset Risky Expected Risk-Free As of March 31, 2024 Price Yield Volatility Interest Rate Senior Convertible Notes $ 0.57 29.20 % 65 % 4.73 % Subordinated Convertible Notes 0.57 38.50 % 70 % 4.59 % Monte Carlo Simulation Assumptions Asset Risky Expected Risk-Free As of December 31, 2023 Price Yield Volatility Interest Rate Senior Convertible Notes $ 0.98 25.00 % 65 % 4.27 % Subordinated Convertible Notes 0.98 34.30 % 55 % 4.17 % The following is a summary of changes in fair value of the Convertible Notes for three months ended March 31, 2024 and 2023 (in thousands): Senior Convertible Notes Subordinated Convertible Notes Beginning fair value, December 31, 2023 $ 14,277 $ 18,320 Paid-in-kind interest — 572 Change in fair value of debt (1,543) (4,341) Ending fair value, March 31, 2024 $ 12,734 $ 14,551 Senior Convertible Notes Subordinated Convertible Notes Beginning fair value, December 31, 2022 $ 13,651 $ 10,356 Paid-in-kind interest — 724 Change in fair value of debt 827 1,000 Ending fair value, March 31, 2023 $ 14,478 $ 12,080 |
COMMON STOCK WARRANTS
COMMON STOCK WARRANTS | 3 Months Ended |
Mar. 31, 2024 | |
COMMON STOCK WARRANTS | |
COMMON STOCK WARRANTS | NOTE 8 – COMMON STOCK WARRANTS As of March 31, 2024 and December 31, 2023, the Company has 11,966,611 warrants outstanding. The following is a summary of the Company’s liability classified and equity classified warrant activity as of March 31, 2024: Outstanding Outstanding Issuance December 31, March 31, Liability Classified Warrants Period 2023 Granted Exercised Cancelled 2024 Expiration Convertible Notes Warrants - Senior Debt Dec-22 169,597 — — — 169,597 Dec-27 Convertible Notes Warrants - Subordinated Debt Dec-22 1,745,310 — — — 1,745,310 Dec-27 1,914,907 — — — 1,914,907 Outstanding Outstanding Issuance December 31, March 31, Equity Classified Warrants Period 2023 Granted Exercised Cancelled 2024 Expiration Private Warrants Dec-22 196,256 — — — 196,256 Dec-27 Additional Private Warrants Dec-22 300,685 — — — 300,685 Dec-27 Public Warrants Dec-22 4,100,239 — — — 4,100,239 Dec-27 Transaction Warrants Sep-Oct -23 5,454,524 — — — 5,454,524 Sep-28 10,051,704 — — — 10,051,704 Estimated Fair Value of Outstanding Warrants Classified as Liabilities The estimated fair value of outstanding warrants classified as liabilities is determined at each consolidated balance sheet date. Any decrease or increase in the estimated fair value of the warrant liability since the most recently reported balance sheet date is recorded in the condensed consolidated statements of operations as a change in fair value of warrant liability. The fair value of the outstanding warrants accounted for as liabilities as of March 31, 2024 and December 31, 2023 use Level 3 inputs and are calculated using the Black-Scholes option pricing model with the following assumptions: Exercise Asset Dividend Expected Risk-Free Expected As of March 31, 2024 Price Price Yield Volatility Interest Rate Life Convertible Notes Warrants $ 11.50 $ 0.57 0 % 70 % 4.30 % 3.68 years Exercise Asset Dividend Expected Risk-Free Expected As of December 31, 2023 Price Price Yield Volatility Interest Rate Life Convertible Notes Warrants $ 11.50 $ 0.98 0 % 65 % 3.90 % 3.93 years The changes in fair value of the outstanding warrants classified as liabilities for the three months ended March 31, 2024 and 2023 are as follows (in thousands): Convertible Notes Warrants - Senior Debt Convertible Notes Warrants - Subordinated Debt Total Warrant liability, December 31, 2023 $ 9 $ 87 $ 96 Change in fair value (5) (53) (58) Warrant liability, March 31, 2024 $ 4 $ 34 $ 38 Convertible Notes Warrants - Senior Debt Convertible Notes Warrants - Subordinated Debt Total Warrant liability, December 31, 2022 $ 177 $ 1,815 $ 1,992 Change in fair value 75 768 843 Warrant liability, March 31, 2023 $ 252 $ 2,583 $ 2,835 |
COMMON STOCK
COMMON STOCK | 3 Months Ended |
Mar. 31, 2024 | |
COMMON STOCK | |
COMMON STOCK | NOTE 9 – COMMON STOCK The Company has authorized for issuance of 150,000,000 shares of Common Stock at par value of $0.0001 per share as of March 31, 2024 and December 31, 2023. The Company has reserved shares of Common Stock for the following as of March 31, 2024 and December 31, 2023: March 31, December 31, 2024 2023 2022 Equity Incentive Plan reserve 5,889,525 5,889,525 Reserve for earn-out shares 3,000,000 3,000,000 Reserve for exercise of Public Warrants 4,100,239 4,100,250 Reserve for exercise of Private and Additional Private Warrants 496,941 496,941 Reserve for Transaction Warrants 5,454,524 5,454,524 Reserve for exercise of SPA warrants 2,262,585 2,262,585 Reserve for convertible debt 15,761,044 15,766,509 Employee stock purchase plan 500,000 500,000 Reserve for convertible Series A Preferred Stock 9,436,000 9,436,000 Total 46,900,858 46,906,334 |
PREFERRED STOCK
PREFERRED STOCK | 3 Months Ended |
Mar. 31, 2024 | |
PREFERRED STOCK. | |
PREFERRED STOCK | NOTE 10 – PREFERRED STOCK The Company has authorized the issuance of 1,500,000 shares of preferred stock at a par value of $0.0001 per share as of March 31, 2024 and December 31, 2023. The Company’s Board of Directors has designated 25,000 shares of preferred stock as Series A Preferred Stock. The Series A Preferred Stock has no maturity and is not subject to any sinking fund or redemption and will remain outstanding indefinitely unless and until converted by the holder or the Company redeems or otherwise repurchases the Series A Preferred Stock. During the three months ended March 31, 2024 and 2023 there were no issuances of preferred stock. As of March 31, 2024 and December 31, 2023, the Company had 9,436 shares of Series A Preferred Stock outstanding with a liquidation preference of $14.2 million. Dividends Dividends on each share of Series A Preferred Stock are payable at the rate of 8% (the “Dividend Rate”) of the purchase price of $1,000.00 per share (the “Stated Value”). March 15 and September 15 of each year, respectively, with the first payment date being March 15, 2024, the dividend for which reflects the period from closing through March 15, 2024. Dividends are payable in shares of Common Stock (a “PIK Dividend”). The number of dividend shares is equal to the Stated Value of each such share of Series A Preferred Stock multiplied by the dividend rate of 8.0% per annum and divided by $1.00, as adjusted from time to time for any stock split, stock dividend, recapitalization or otherwise, computed on the basis of a 360-day year and twelve 30-day months. Any fractional shares of a PIK Dividend will be rounded to the nearest whole share. All shares of Common Stock issued in payment of a PIK Dividend will be duly authorized, validly issued, fully paid and non-assessable. Dividends will accumulate whether or not the Company has earnings, there are funds legally available for the payment of those dividends and whether or not those dividends are declared by the Company’s Board of Directors. Pursuant to the terms of the Certificate of Designations of Series A Preferred Stock, in the event the Company is unable to issue the PIK Dividend as scheduled, the conversion ratio of the Series A Preferred Stock into Common Stock will be adjusted to reflect the Common Stock that would have otherwise been issued. Due to the Company’s negative net stockholder’s value as of March 1, 2024, among other considerations, including applicable Delaware Law, the Company was unable to issue the March 1, 2024 PIK Dividend. As a result the conversion ratio of the Series A Preferred Stock into Common Stock was updated in accordance with the terms of the Series A Preferred Stock. Conversion Features Each share of Series A Preferred Stock is convertible at any time and in the sole discretion of the holder, into shares of Common Stock at a conversion rate of $1.00 per share (the “Conversion Rate”) plus any accrued but unissued PIK Dividends, when converted, subject to certain restrictions on conversion prior to the Company obtaining stockholder approval. If the Company issues or sells Common Stock at a price below the current conversion rate of $1.00 per share, the conversion rate will be adjusted downward immediately following the dilutive issuance. The new conversion rate will be calculated based on a formula that takes into account the previous conversion rate, number of shares outstanding before and after issuance, and the consideration received by the Company in connection with the dilutive issuance. Certain types of agreements to sell Common Stock at market pricing will be evaluated on a quarterly basis or immediately prior to a Liquidation Event for purposes of determining if they collectively constitute a dilutive issuance. The Company can initiate a mandatory conversion at any time when the resale of issued Common Stock is covered under an effective registration statement or can be sold without volume limitations under Rule 144 (or successor rule), as determined by the counsel to the Company. The Series A Preferred Stock will automatically convert into shares of Common Stock at the Conversion Rate, as follows: (i) 50% of the issued and outstanding Series A Preferred Stock will convert into shares of Common Stock if the Volume-weighted average price (VWAP) trading price for the shares of Common Stock are trading on a national exchange is greater than $4.50 per share for twenty of any thirty consecutive trading days, and (ii) the remaining issued and outstanding Series A Preferred Stock will convert into shares of Common Stock if the VWAP trading price for the shares of Common Stock are trading on a national exchange greater than $6.00 per share for twenty of any thirty consecutive trading days. The Company analyzed the embedded conversion options for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the conversion options are equity classified. Voting Rights Liquidation Preferences and Redemption Rights The Series A Preferred Stock has senior ranking over Common Stock of the Company, and junior to the Company’s indebtedness, in each case for purposes of dividends, distributions, and payments in a liquidation event. In the event of a liquidation event, holders of Series A Preferred Stock are entitled to receive in cash out of the assets of the Company legally available, whether from capital or from earnings available for distribution to its stockholders, before any amount shall be paid to the holders of Common Stock, an amount in cash per share of Series A Preferred Stock equal to the greater of: (i) 150% of the Stated Value and The Series A Preferred Stock are redeemable upon the occurrence of any transaction or series of related transactions pursuant to which the Company effects (i) any merger or consolidation of the Company where the Company is not the surviving entity, (ii) any sale of all or substantially all of its assets, or (iii) any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (a “Fundamental Transaction”). In the event of a Fundamental Transaction, holders of Series A Preferred Stock are entitled to receive in cash the greatest of: (i) 150% of the Stated Value, As part of the Company’s analysis of the classification of the Series A Preferred Stock, the Company considered the guidance in ASC 480-10-S99-3A and in particular paragraphs 2 and 3f, which require preferred securities that are redeemable for cash or other assets to be classified outside of permanent equity if they are redeemable upon the occurrence of an event that is not solely within the control of the issuer. Due to the consideration payable upon a Fundamental Transaction and the liquidation preferences of the Series A Preferred Stock providing for payout on the Series A Preferred Stock prior to payment to the Common Stockholders, the Company cannot avail itself of the limited exception of paragraph ASC 480-10-S99-3A-3f. As a result, the Company concluded that the Series A Preferred Stock are subject to ASR 268, Presentation in Financial Statements of “Redeemable Preferred Stocks,” and should be classified outside of permanent equity. |
EARN-OUT SHARES
EARN-OUT SHARES | 3 Months Ended |
Mar. 31, 2024 | |
EARN-OUT SHARES | |
EARN-OUT SHARES | NOTE 11 - EARN-OUT SHARES In connection with the Business Combination, certain of the Company’s original stockholders are entitled to receive up to 3,000,000 Earn-out shares in three tranches: (1) the first tranche of 1,000,000 Earn-out shares will be issued when the volume-weighted average price per share of the Company’s Common Stock is $12.50 or greater for 20 trading days in any consecutive 30 trading day period commencing 6 months after the Closing and ending at the third anniversary of the Closing; (2) the second tranche of 1,000,000 Earn-out shares will be issued when the volume-weighted average price per share of the Company’s Common Stock is $15.00 or greater for 20 trading days in any consecutive 30 trading day period commencing 6 months after the Closing and ending at the third anniversary of the Closing; and · (3) the third tranche of 1,000,000 Earn-out shares will be issued when the volume-weighted average price per share of the Company’s Common Stock is $17.50 or greater for 20 trading days in any consecutive 30 trading day period commencing 6 months after the Closing and ending at the third anniversary of the Closing. The Earn-out shares will be allocated among the Company’s stockholders in proportion to the number of shares issued to them at the closing that continue to be held by them. Due to the variability in the number of Earn-out shares at settlement which could change upon a control event, the Earn-out arrangement contains a settlement provision that violates the indexation guidance under ASC 815-40 and liability classification is required. The Company recorded the earnout liability initially at fair value, and subsequently remeasures the liability with changes in fair value recorded in the condensed consolidated statement of operations at each reporting period. The changes in fair value of the earnout liability for the three months ended March 31, 2024 and 2023 are as follows: Amount Earnout liability, December 31, 2023 $ 620 Change in fair value (490) Earnout liability, March 31, 2024 $ 130 Amount Earnout liability, December 31, 2022 $ 12,810 Change in fair value (1,500) Earnout liability, March 31, 2023 $ 11,310 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2024 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | NOTE 12 — STOCK-BASED COMPENSATION During May 2023, the Company issued 20,000 shares of Common Stock to a consultant for services received. The fair value of the shares issued of $0.2 million was recognized as a selling, general and administrative expense with a corresponding credit to additional paid-in capital. 2022 Equity Incentive Plan During 2022, the Company established the 2022 Equity Incentive Stock Plan (the "2022 Plan"), which authorizes the issuance of incentive and nonqualified stock options and restricted stock units (“RSUs”) for the acquisition of shares of Common Stock, as well as grants of restricted Common Stock units to employees, officers, directors, and consultants of the Company. The 2022 Plan provides that the exercise price of incentive stock options cannot be less than 100% of the fair market value of the Common Stock on the date of the award for participants who own less than 10% of the total combined voting power of stock of the Company, and not less than 110% for participants who own more than 10% of the Company’s voting power. The vesting period for the option is outlined in percentage installments on the grant notice. The option can only be exercised to the extent that it is vested and exercisable. The grantee has the right to exercise the option until it expires or is terminated, as long as it is vested and exercisable. The stock options generally expire not more than ten years from the date of grant, who own less than 10% of the total combined voting power of stock of the Company and the expiration note more than 5 years from the date of grant, who own more than 10% of the Company’s voting power. As of March 31, 2024, there were 6,000,000 shares reserved and 5,889,525 available for future grants under the 2022 Plan. Stock option activity for the three months ended March 31, 2024 was as follows: Weighted-Average Stock-Based Compensation Number of Weighted-Average Remaining Aggregate Options Exercise Price Contractual Term Intrinsic Value Outstanding at December 31, 2023 1,562,497 $ 4.67 9.2 years $ 35 Granted — — Exercised — — Cancelled (8,186) 5.20 Outstanding at March 31, 2024 1,554,311 $ 4.67 8.9 years $ — Exercisable at March 31, 2024 — — Vested and expected to vest as of March 31, 2024 1,554,311 $ 4.67 8.9 years $ — As of March 31, 2024, unamortized compensation expense related to unvested stock options was $2.9 million, which is expected to be recognized over a weighted average period of 2.86 years. Dividend Rate Expected Volatility Risk-Free Interest Rate Expected Term Forfeiture Rate The Company’s 2022 Plan has a “clawback policy” based on which the Company may recover from a participant any compensation received from any stock right (whether or not settled) or cause a participant to forfeit any such stock right in the event that the Company’s clawback policy then in effect is triggered. The Company’s clawback policy is compliant with provisions of applicable law, including the requirements set forth in Listing Rule 5608 of the corporate governance rules of the Nasdaq Stock Market. Restricted Stock Units During October 2023 and February 2024, the Company granted 736,250 and 2,653,067, respectively, RSUs to certain employees under the 2022 Plan. Of the RSUs granted in October 2023, 543,750 cliff vest on October 25, 2025, and the remaining 192,500 fully vested on the grant date. The RSUs granted in February 2024 vest over a period of two RSU activity for the three months ended March 31, 2024, was as follows: Number of Weighted-Average Units Exercise Price Unvested at December 31, 2023 543,750 $ 0.86 Granted 2,653,067 0.73 Vested — — Forfeited — — Unvested balance at March 31, 2024 3,196,817 $ 0.75 The Company has recorded stock-based compensation expense for the three months ended March 31, 2024 related to the grants of stock option awards to employees and nonemployees in the condensed consolidated statement of operations as follows (in thousands): Three months ended March 31 2024 2023 Cost of revenue $ (5) $ — Sales and marketing 56 27 Research and development 93 47 General and administrative 270 152 $ 414 $ 226 For the three months ended March 31, 2024, the Company recorded stock-based compensation expense related to the vested RSUs of $0.2 million. As of March 31, 2024, unamortized compensation expense related to unvested stock options was $2.2 million, which is expected to be recognized over a weighted average period of 2.2 years. For the three months ended March 31, 2023, share-based compensation expense was nil relating to restricted common C shares. The Company did not recognize any tax benefits related to stock-based compensation expense during the three months ended March 31, 2024 and 2023. 2023 Employee Stock Purchase Plan The Company’s Board of Directors previously adopted, and the Company's stockholders approved, the Company’s 2023 Employee Stock Purchase Plan (the “2023 ESPP”). The 2023 ESPP is a broad-based plan that provides employees of the Company and its designated affiliates with the opportunity to become stockholders through periodic payroll deductions that are applied towards the purchase of shares of the Company’s Common Stock at a discount from the then-current market price. Subject to adjustment in the case of certain capitalization events, a total of 500,000 shares of Common Stock were available for purchase at adoption of the 2023 ESPP. The first offering period under the plan commenced on June 15, 2023 . The Company estimates the fair value of ESPP grants on their grant date using the Black-Scholes option pricing model. The estimated fair value of ESPP grants is amortized on a straight-line basis over the requisite service period of the grants. The Company reviews, and when deemed appropriate, updates the assumptions used on a periodic basis. The Company utilizes its estimated volatility in the Black-Scholes option pricing model to determine the fair value of ESPP grants. ESPP compensation expense for the three months ended March 31, 2024 was nil since the 2023 ESPP was terminated by the Company during the three months ended March 31, 2024. The Company refunded all cash received back to the employees prior to issuing any shares. |
NET INCOME (LOSS) ATTRIBUTABLE
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | 3 Months Ended |
Mar. 31, 2024 | |
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | |
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | NOTE 13 — NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS The following table sets forth the computation of the basic and diluted net loss per share attributable to Common Stockholders for the three months ended March 31, 2024 and 2023 (in thousands, except shares and per share amounts): Three months ended March 31 2024 2023 Numerator: Net income (loss) attributable to common stockholders - Basic $ 3,441 $ (6,892) Interest expense and remeasurement of senior and subordinated convertible notes liability (4,931) — Net loss attributable to common stockholders - Diluted $ (1,490) $ (6,892) Denominator: Weighted-average common shares outstanding - Basic 17,392,983 16,041,464 Convertible Series A Preferred Stock 9,436,000 — Senior convertible notes 16,959,807 — Subordinated convertible notes 20,830,141 — Weighted-average common shares outstanding - Diluted 64,618,931 16,041,464 Net income (loss) per share - Basic $ 0.20 $ (0.43) Net loss per share - Diluted $ (0.02) $ (0.43) Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity. As of March 31, 2024 and 2023, earnout shares for 3,000,000 shares of common stock were excluded from diluted earnings per share as they are subject to performance or market conditions that were not achieved at the reporting date. The potential shares of Common Stock that were excluded from the computation of diluted net loss per share attributable to Common Stockholders for the three ended March 31, 2024 and 2023 because including them would have been antidilutive are as follows: Three months ended March 31 2024 2023 Outstanding RSUs 3,196,817 — Warrants to purchase common stock 11,966,611 6,512,087 Options to purchase common stock 1,554,311 — Senior and Subordinated convertible notes — 3,179,410 16,717,739 9,691,497 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2024 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 14 — SUBSEQUENT EVENTS Voluntary Petition for Reorganization On May 7, 2024, the Company voluntarily entered into a RSA with (i) certain of its existing affiliates and subsidiaries (as set forth in the RSA, and together with the Company, the “Company Parties”); and (ii) certain Sponsoring Noteholders. As set forth in the RSA, the Company and the Sponsoring Noteholders have agreed to the principal terms of a voluntary restructuring of the Company (the “Restructuring”) and the filing of a pre-negotiated chapter 11 plan of reorganization (the “Plan”). Although the Company intends to pursue the Restructuring in accordance with the terms set forth in the RSA, there can be no assurance that the Company will be successful in completing the Restructuring, whether on the same or different terms than those provided in the RSA. The Company will continue to manage their business and properties as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. On the Petition Date, the Company filed certain motions with the Court generally designed to facilitate the Company Parties’ Chapter 11 Cases. These motions seek authority from the Court for the Company to obtain debtor-in-possession financing and make payments upon, or otherwise honor, certain obligations that arose prior to the Petition Date, including obligations related to employee wages, salaries and benefits, taxes, and certain vendors and other providers of goods and services that were, and in some cases continue to be, essential to the Company businesses. Delisting of our Common Stock from NASDAQ As previously disclosed, the Company was notified by the Nasdaq Global Market (“Nasdaq”) that the Company was not in compliance with Nasdaq’s minimum market value of listed securities of $50,000,000, Nasdaq’s minimum market value of publicly held shares of $15,000,000, or Nasdaq’s minimum bid price requirement of $1.00, each of which was required for continued listing on Nasdaq. Due to such noncompliance, Nasdaq notified the Company that it would be subject to delisting. After the Company requested an appeal hearing, which stayed the delisting action, the Company continued to evaluate its options to remain listed on Nasdaq and ultimately determined to withdraw the hearing request. Thereafter, the Company received a letter from Nasdaq that trading of its common stock and warrants would be suspended at the open of business on April 18, 2024. On April 25, 2024, Nasdaq filed a Form 25 with the SEC notifying the SEC of Nasdaq’s determination to remove the Company’s securities from listing on Nasdaq. Senior Secured Convertible Notes On April 17, 2024, the Company issued and sold to certain existing ProSomnus investors $2,000,000 aggregate principal amount of the Company’s Senior Secured Convertible Notes due December 6, 2025, and on April 29, 2024, the Company issued and sold to such investors an additional $2,000,000 aggregate principal amount of such notes (together, “Additional Notes”) related to the Senior Indenture, as supplemented. In connection with the issuance of the Additional Notes, the Company entered into agreements with certain of the holders of its other series of existing convertible notes to, among other things, consent to the issuance of such Additional Notes. DIP Credit Agreement Subject to the approval of the Court, the Company, as borrower, and certain of the Company’s direct and debtor-subsidiaries, as guarantors (together with the Company, the “DIP Loan Parties”), expect to enter into that certain senior subordinate secured debtor-in-possession term loan agreement (the “DIP Credit Agreement”) with the lenders from time to time party thereto (the “DIP Lenders”) and Wilmington Savings Fund Society, F.S.B., as administrative agent and collateral agent, on the terms and conditions set forth therein. Pursuant to the DIP Credit Agreement, the DIP Lenders have agreed, upon the terms and conditions set forth therein, including the approval of the Court, to make available to the Company a senior subordinate secured debtor-in-possession term loan credit facility in the aggregate principal amount of $13 million, as described above. Borrowings under the DIP Credit Agreement will be used to (a) fund the Chapter 11 Cases, (b) make certain other payments as more fully provided in the Court orders relating to the approval of the DIP Credit Agreement, and (c) provide working capital for the DIP Loan Parties during the pendency of the Chapter 11 Cases, all in accordance with an approved budget (subject to the permitted variances) and as otherwise provided therein. The obligations under the DIP Credit Agreement will be secured by liens on substantially all of the real and personal property of the DIP Loan Parties (the “DIP Liens”), subject to certain exceptions. The DIP Liens will be senior to the liens securing the Subordinated Notes obligations and junior to the liens securing the Senior Notes obligations. Borrowings under the DIP Credit Agreement will be due on November 7, 2024, or the earliest to occur of certain specified termination events. The interest rate on borrowings under the DIP Credit Agreement will be the prime rate plus 9.00%. The DIP Credit Agreement includes customary negative covenants for debtor-in-possession loan agreements of this type, including covenants limiting the Company and its restricted subsidiaries’ ability to, among other things, incur additional indebtedness, create liens on assets, make investments, loans, advances or guarantees, engage in mergers, consolidations, sales of assets and acquisitions and pay dividends and distributions, in each case subject to customary exceptions for debtor-in-possession loan agreements of this type. The DIP Credit Agreement also includes customary representations and warranties, affirmative covenants and events of default. Certain restructuring-related events are also events of default, including, but not limited to, the dismissal by the Court of any of the Chapter 11 Cases, the conversion of any of the Chapter 11 Cases to a case under chapter 7 of the Code, the appointment of a trustee pursuant to chapter 11 of the Code, and certain other events related to the impairment of the DIP Lenders’ rights or liens granted under the DIP Credit Agreement. |
BASIS OF ACCOUNTING AND SIGNI_2
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements were prepared in accordance with generally accepted accounting principles in the United States of America (“U.S GAAP”). The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or any future periods. The condensed consolidated balance sheet as of December 31, 2023 has been derived from audited financial statements at that date but does not include all of the information required by GAAP for complete financial statements. |
Principles of Consolidation | Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. |
Liquidity and Management's Plans | Liquidity and Management’s Plans The Company has incurred recurring losses from operations and recurring negative cash flows from operating activities. The Company expects operating losses and negative cash flows from operations to continue for the foreseeable future. As discussed further in Note 14- Subsequent Events, on May 7, 2024 (the “Petition Date”), the Company voluntarily entered into a Restructuring Support Agreement (including all exhibits thereto, collectively, the “RSA”) with (i) certain of its existing affiliates and subsidiaries (as set forth in the RSA, and together with the Company, the “Company Parties”); and (ii) certain sponsoring Senior Noteholders and Subordinated Noteholders (the “Sponsoring Noteholders”). The Company commenced a voluntary petition (the “Chapter 11 Cases”) under Chapter 11 of the U.S. Bankruptcy Code (the “Bankruptcy Code”) in the U.S. Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). Pursuant to Section 362 of the Bankruptcy Code, the filing of the Chapter 11 Cases automatically stayed most actions against the Company, including actions to collect indebtedness incurred prior to the Petition Date or to exercise control over the Company property. In accordance with ASC Subtopic 205-40, Presentation of Financial Statements-Going Concern The accompanying financial statements have been prepared in accordance with U.S. GAAP assuming that the Company will continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern. Management’s Plans Related to Going Concern The Company’s ability to continue as a going concern depends principally on its ability to successfully exit the Chapter 11 Cases, including the completion of the financings proposed within the RSA. Upon the successful exit from the Chapter 11 Cases, the Company’s ability to continue as a going concern will depend upon its ability to execute on its plans to achieve revenue growth forecast, control operating costs, and obtain additional financing. The Company’s successful exit from the Chapter 11 Cases, the outcome of such exit, and the Company’s post exit operating plans are subject to many factors currently unknown and there can be no assurance that the current operating plan or cash flow break-even plan will be achieved in the time frame anticipated by the Company. The Company has entered into a RSA with certain of its Sponsoring Noteholders. The material terms include an aggregate of $20.0 million of potential capital to the Company, including through a debtor-in-possession credit facility and potential new-money equity. The Sponsoring Noteholders have committed to provide an $13.0 million credit facility, of which $6.5 million has been provided, and to consummate a new-money equity capital raise in an amount of at least $9.0 million to be funded upon exit from the Chapter 11 Cases. Although the Company intends to pursue the RSA in accordance with the stated terms; there can be no assurance that the Company will be successful in completing the Restructuring, whether on the same or different terms than those provided in the RSA. In addition to the Chapter 11 Cases, based on the Company’s current level of expenditures and future cash flow projections, the Company believes it’s current unrestricted cash balance will not be sufficient for the Company to continue operations as a going concern for at least one year from the issuance date of these condensed consolidated financial statements. Additionally, the indentures governing the Company’s Senior Convertible Notes and Subordinated Convertible Notes (as defined below and, collectively the “Convertible Notes”) contain monthly and quarterly financial covenants. Failure to comply with the covenants or obtain a waiver and extension from the holders of each series of our Convertible Notes could result in an event of default under each of the indentures governing our Convertible Notes and result in an acceleration of the Convertible Notes. The Company believes these factors raise substantial doubt about its ability to continue as a going concern. |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and disclosure of contingent assets and liabilities. Though macroeconomic factors such as inflation, exchange rate fluctuations and concerns about an economic downturn present additional uncertainty, the Company continues to use the best information available to form its critical accounting estimates. Actual results could differ from these estimates, and such differences could materially affect the results of operations reported in future periods. The Company’s significant estimates in these consolidated financial statements relate to the fair values, and the underlying assumptions used to formulate such fair values, of its Series A Preferred Stock, Convertible Notes, earn-out liability, and warrants. Estimates also include the provision for credit losses, warranty and earned discount accruals, measurements of tax assets and liabilities and stock-based compensation. |
Concentrations, Credit Risk and Market Risk | Concentrations, Credit Risk and Market Risk Financial instruments that potentially subject the Company to a concentration of credit risk principally consist of accounts receivable and cash. The Company sells its products to customers primarily in North America and Europe. To reduce credit risk, management performs periodic credit evaluations of its customers’ financial condition. No customers exceeded more than 10% of the Company’s revenue or accounts receivables as of and for the three months ended March 31, 2024 and December 31, 2023. The Company maintains its cash in bank accounts which, at times, may exceed federally insured limits as guaranteed by the Federal Deposit Insurance Corporation (“FDIC”). As of March 31, 2024 and December 31, 2023, the Company had $3.9 million and $6.8 million in excess of the FDIC insured limit, respectively. The Company’s investment policy, which is predicated on capital preservation and liquidity, limits investments to instruments denominated and payable in US dollars. The Company believes its credit risk is mitigated due to the high quality of the banks in which it places its deposits. Historically, the Company has not experienced significant credit losses from financial instruments. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The accounting standard for fair value measurements provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. Fair value is defined as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. This accounting standard establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs that may be used to measure fair value: Level 1 Inputs — Level 2 Inputs — Level 3 Inputs — no Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate. The Company’s financial instruments consist primarily of cash, accounts receivable (net of allowance for doubtful accounts), accounts payable and accrued expenses, long-term debt instruments, earnout and warrant liabilities. The carrying amounts of financial instruments such as cash, restricted cash, accounts receivable, prepaid expenses and other current assets, accounts payable, and accrued expenses approximate the related fair values due to the short-term maturities of these instruments. The carrying value of the Company’s equipment financing obligation is considered to approximate its fair value because the interest rate is comparable to current rates for financing available to the Company. Under the fair value option as prescribed by FASB Accounting Standards Codification (“ASC”) 825, Financial Instruments The following tables provide a summary of the financial instruments that are measured at fair value on a recurring basis (in thousands): March 31, 2024 Fair Value Level 1 Level 2 Level 3 Senior Convertible Notes $ 12,734 $ — $ — $ 12,734 Subordinated Convertible Notes 14,551 — — 14,551 Earnout liability 130 — — 130 Warrant liability 38 — — 38 December 31, 2023 Fair Value Level 1 Level 2 Level 3 Senior Convertible Notes $ 14,277 $ — $ — $ 14,277 Subordinated Convertible Notes 18,320 — — 18,320 Earnout liability 620 — — 620 Warrant liability 96 — — 96 A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. |
Cash and Cash Equivalents and Restricted Cash | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash and cash equivalents. At March 31, 2024 and December 31, 2023, the Company had no cash equivalents. Restricted Cash The Company’s restricted cash as of March 31, 2024 and December 31, 2023 of $0.7 million consisted of a letter of credit on hand w ith the Company ' s financial institution as collateral for an office lease |
Long-lived Assets | Impairment of Long-Lived Assets The Company’s long-lived assets primarily include property and equipment and finance and operating right-of-use assets. The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured at the amount by which the carrying amount of the asset exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of carrying amount or the fair value less costs to sell. During 2023, the Company moved to its new headquarters and principal manufacturing facility. Upon moving, the Company expensed a total of $0.3 million relating to the carrying value of the remaining leasehold improvements and amounts due under the remaining lease term of the previous facility. The right-of-use asset and leasehold improvements charge was recorded in other expense, net in the consolidated statements of operations for the year ended December 31, 2023. |
Senior and Subordinated Convertible Notes | Senior and Subordinated Convertible Notes The Company accounts for its Notes, as derivatives in accordance with, ASC 815, Derivatives and Hedging , depending on the nature of the derivative instrument. ASC 815 requires each contract that is not a derivative in its entirety be assessed to determine whether it contains embedded derivatives that are required to be bifurcated and accounted for as a derivative financial instrument. The embedded derivative is bifurcated from the host contract and accounted for as a freestanding derivative if the combined instrument is not accounted for in its entirety at fair value with changes in fair value recorded in earnings, the terms of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract, and a separate instrument with the same terms as the embedded derivative would qualify as a derivative instrument. Embedded derivatives are measured at fair value and remeasured at each subsequent reporting period, and recorded within Convertible Notes, net on the accompanying condensed consolidated balance sheets and changes in fair value recorded in other expense within the condensed consolidated statements of operations. Debt discounts under these arrangements are amortized to interest expense using the interest method over the earlier of the term of the related debt or their earliest date of redemption. The Company has analyzed the redemption, conversion, settlement, and other derivative instrument features of its Convertible Notes. ● The Company identified that the (i) redemption features, (ii) Lender’s Optional Conversion feature, (iii) Lender’s Optional Conversion upon Merger Event feature and (iv) additional interest rate upon certain events feature meet the definition of a derivative. The Company analyzed the scope exception for all the above features under ASC 815-10-15-74(a). ● Based on the further analysis, the Company identified that the (i) Lender’s Optional Conversion feature, (ii) Lender’s Optional Conversion upon Merger Event feature and (iii) additional interest rate upon certain events feature, do not meet the settlement criteria to be considered indexed to equity. The Company concluded that each of these features should be classified as a derivative liability measured at fair value with the changes in fair value in the condensed consolidated statement of operations. ● The Company also identified that the redemption features are settled in cash and do not meet the indexed to equity and the equity classification scope exception, thus, they must be bifurcated from the Convertible Notes and accounted for separately at fair value on a recurring basis reflecting the changes in fair value in the condensed consolidated statement of operations. The Company determined the Convertible Notes contained multiple embedded derivatives that are required to be bifurcated, two of which are conversion features. As per ASC 815, the fair value election is allowable provided the debt was not issued at a substantial premium. The Company concluded that the Convertible Notes were not issued at a premium and hence the Company elected the fair value option under ASC 815-15-25. The Company elected to record changes in fair value through the condensed consolidated statement of operations as a fair value adjustment of the convertible debt at each reporting period (with the portion of the change that results from a change in the instrument-specific credit risk recorded separately in other comprehensive income, if applicable). The Company has elected to separately present interest expense related to the Convertible Notes within the condensed consolidated statement of operations. Thus, the multiple embedded derivatives do not need to be separately bifurcated and fair valued. The Convertible Notes are reflected at their respective fair values on the condensed consolidated balance sheets. |
Warrants | Warrants The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity Derivatives and Hedging For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and then remeasured at fair value at each balance sheet date thereafter. Changes in the estimated fair value of the liability classified warrants are recognized as other income or expense on the condensed consolidated statements of operations. |
Revenue Recognition | Revenue Recognition The Company creates customized precision milled intraoral medical devices and recognizes revenue upon meeting the following criteria: ● Identifying the contract with a customer: Customers submit an order in the form of a prescription and oral scan to the Company. ● Identifying the performance obligations within the contract: The sole performance obligation is the delivery of a completed customized intraoral device. ● Determining the transaction price: Prices are determined by standardized pricing sheets and adjusted for discounts, allowances and remakes. ● Allocating the transaction price to the performance obligations: The full transaction price is allocated to the completed intraoral device as it is the only element in the transaction. ● Recognizing revenue as the performance obligation is satisfied at a point in time: revenue is recognized upon transfer of control which occurs upon shipment of the product. The Company does not require collateral or any other form of security from customers. Inbound shipping and handling costs related to sales are billed to customers. The Company charges for inbound shipping/handling and the costs are classified as Cost of Revenue. Outbound shipping costs are not billed to customers and are included in sales and marketing expenses. Taxes collected from customers and remitted to governmental authorities are excluded from revenue. Standalone selling price for the various intraoral device models are determined using the Company’s standard pricing sheet. The Company invoices customers upon shipment of the product and invoices are due within 30 days. Amounts that have been invoiced are recorded in accounts receivable and revenue as all revenue recognition criteria have been met. The Company does not have a financing component related to its revenue arrangements. The Company utilizes the practical expedient which permits expensing of costs to obtain a contract when the expected amortization period is one year or less. Accordingly, the Company expenses employee sales commissions when incurred as the period over which the sales commission asset that would have been recognized is less than one year. |
Leases | Leases The Company assesses at contract inception whether a contract is, or contains, a lease. Generally, the Company determines that a lease exists when (1) the contract involves the use of a distinct identified asset, (2) the Company obtains the right At the lease commencement date, the Company recognizes a right-of-use (“ROU”) asset and a lease liability for all leases, except short term leases with an original term of twelve months or less. The ROU asset represents the right to use the leased asset for the lease term. The lease liability represents the present value of the lease payments under the lease. The ROU asset is initially measured at cost, which primarily comprises the initial amount of the lease liability, less any lease incentives received. All ROU assets are periodically reviewed for impairment in accordance with standards that apply to long-lived assets. The lease liability is initially measured at the present value of the lease payments, discounted using an estimate of the Company’s incremental borrowing rate for a collateralized loan with the same term as the underlying leases for operating leases and the implied rate in the lease agreement for finance leases. Lease payments included in the measurement of lease liabilities consist of (1) fixed lease payments for the noncancelable lease term, (2) fixed lease payments for optional renewal periods where it is reasonably certain the renewal option will be exercised, and (3) variable lease payments that depend on an underlying index or rate, based on the index or rate in effect at lease commencement. The Company’s real estate operating lease agreement requires variable lease payments that do not depend on an underlying index or rate established at lease commencement. Such payments and changes in payments are recognized in operating expenses when incurred. Lease expense for operating leases consists of the fixed lease payments recognized on a straight-line basis over the lease term plus variable lease payments as incurred. Lease expense for finance leases consists of the amortization of assets obtained under finance leases on a straight-line basis over the lease term and interest expense on the lease liability based on the discount rate at lease commencement. |
Net income (Loss) per Share Attributable to Common Stockholders | Net income (Loss) per Share Attributable to Common Stockholders Basic net income (loss) per share attributable to Common Stockholders is calculated by dividing the net income (loss) attributable to Common Stockholders by the weighted average number of shares of Common Stock outstanding during the period, without consideration of potentially dilutive securities. Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock and potentially dilutive securities outstanding for the period. For the purposes of the diluted net income (loss) per share calculation, common stock options, RSU awards, Convertible Series A Preferred Stock, warrants to purchase common stock, earnout shares, and convertible notes are considered to be potentially dilutive securities. For the periods presented that the Company has reported a net loss, diluted net loss per common share is the same as basic net loss per common share for those periods. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements During November 2023, the FASB issued ASU 2023-07, Segment Reporting-Improvements to Reportable Segment Disclosures definition of a segment, the method for determining segments, or the criteria for aggregating operating segments into reportable segments. The FASB issued the new guidance primarily to provide financial statements users with more disaggregated expense information about a public entity’s reportable segments. The ASU is effective for public entities for fiscal years beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024. The guidance is effective for the Company’s 2024 Form 10-K. The Company is currently evaluating the impact of adoption on the Company’s consolidated financial statements and its related disclosures. In December 2023, the FASB released ASU 2023-09, titled "Enhancements to Income Tax Disclosures," with the aim of improving the clarity and usefulness of income tax disclosures. The update focuses primarily on enhancing disclosures related to rate reconciliation and income taxes paid. ASU 2023-09 becomes effective for annual reporting periods starting after December 15, 2024, with early adoption permitted. While the changes prescribed by ASU 2023-09 are implemented prospectively, retrospective application is also allowed. The Company has chosen not to early adopt this standard and is currently evaluating the impact of adoption on the Company’s consolidated financial statements and its related disclosures. The Company continues to monitor new accounting pronouncements issued by the FASB and does not believe any other accounting pronouncements issued through the date of this report will have a material impact on the Company's consolidated financial statements. |
BASIS OF ACCOUNTING AND SIGNI_3
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES | |
Summary of the financial instruments that are measured at fair value on a recurring basis | The following tables provide a summary of the financial instruments that are measured at fair value on a recurring basis (in thousands): March 31, 2024 Fair Value Level 1 Level 2 Level 3 Senior Convertible Notes $ 12,734 $ — $ — $ 12,734 Subordinated Convertible Notes 14,551 — — 14,551 Earnout liability 130 — — 130 Warrant liability 38 — — 38 December 31, 2023 Fair Value Level 1 Level 2 Level 3 Senior Convertible Notes $ 14,277 $ — $ — $ 14,277 Subordinated Convertible Notes 18,320 — — 18,320 Earnout liability 620 — — 620 Warrant liability 96 — — 96 |
INVENTORY (Tables)
INVENTORY (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
INVENTORY | |
Schedule of Inventory | Inventory consists of the following March 31, December 31, 2024 2023 Raw materials $ 1,861 $ 1,967 Work-in-process 162 72 $ 2,023 $ 2,039 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
PROPERTY AND EQUIPMENT | |
Schedule of Property and equipment | Property and equipment consist of the following (in thousands): March 31, December 31, 2024 2023 Manufacturing equipment $ 4,042 $ 4,042 Computers and software 1,213 1,200 Construction in progress 20 — Leasehold improvements 846 846 6,121 6,088 Less: accumulated depreciation (2,955) (2,730) Property and equipment, net $ 3,166 $ 3,358 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
ACCRUED EXPENSES | |
Schedule of accrued compensation and other accrued expenses | Accrued expenses consist of the following (in thousands): March 31, December 31, 2024 2023 Compensation related accruals $ 2,397 $ 3,387 Marketing programs 1,293 934 Interest 695 382 Warranty 465 465 Professional fees 635 632 Inventory purchases and freight — 613 Other 161 343 $ 5,646 $ 6,756 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
LEASES | |
Schedule of components of lease cost, weighted average lease terms and discount rates | The components of the Company’s lease cost, weighted average lease terms and discount rates are presented in the tables below (in thousands, except lease term and discount rate): Three months ended March 31, 2024 2023 Operating lease expense: Operating lease cost $ 223 $ 265 Finance lease expense: Amortization of assets obtained under finance leases 265 180 Interest on lease liabilities 90 78 Variable lease expense 3 — Total expense $ 581 $ 523 March 31, December 31, Operating leases: 2024 2023 Weighted average remaining lease term (in years) 8.75 9.0 Weighted average discount rate 10.00 % 10.00 % Finance leases: Weighted average remaining lease term (in years) 3.12 3.0 Weighted average discount rate 10.48 % 10.21 % Three Months Ended March 31, 2024 2023 Supplemental cash flow information related to operating leases was as follows (in thousands): Operating cash flows from operating leases $ 209 $ 47 Operating cash flows from finance leases (interest) 79 81 |
Schedule of right-of-use assets | Right-of-use assets consisted of the following (in thousands) : March 31, December 31, 2024 2023 Manufacturing equipment $ 5,866 $ 5,237 Computers and software 686 700 Leasehold improvements 218 218 Total 6,770 6,155 Less accumulated amortization (3,167) (2,890) ROU assets for finance leases 3,603 3,265 ROU assets for operating leases 4,981 5,069 Total ROU assets $ 8,584 $ 8,334 |
Schedule of maturities of finance lease liabilities | At March 31, 2024, the following table presents maturities of the Company’s finance and operating lease liabilities Three Months Ended March 31, 2024 Finance Operating 2024 (remaining 9 months) $ 1,071 $ 628 2025 1,286 861 2026 983 887 2027 430 914 2028 168 941 Thereafter 14 4,056 Total minimum lease payments 3,952 8,287 Less amount representing interest (579) (2,835) Present value of minimum lease payments 3,373 5,452 Less current portion (1,117) (318) Lease obligations, less current portion $ 2,256 $ 5,134 |
Schedule of future minimum rental payments required under operating lease | Three Months Ended March 31, 2024 Finance Operating 2024 (remaining 9 months) $ 1,071 $ 628 2025 1,286 861 2026 983 887 2027 430 914 2028 168 941 Thereafter 14 4,056 Total minimum lease payments 3,952 8,287 Less amount representing interest (579) (2,835) Present value of minimum lease payments 3,373 5,452 Less current portion (1,117) (318) Lease obligations, less current portion $ 2,256 $ 5,134 |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
DEBT | |
Schedule of convertible note | The Convertible Notes include the following embedded features: Embedded Feature Nature Description Optional redemption – Election of Company Redemption feature (embedded call option) At any time after the later of (i) the eighteen-month anniversary of the initial issue date and (ii) the date that the Senior Debt is no longer outstanding, if the daily volume weighted-average price of the Company’s Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days exceeds $18.00, the Company may redeem a portion of or all of the principal amount (including accrued and unpaid interest), plus any liquidated damages and any other amounts due in respect of the Notes redeemable in cash. Mandatory redemption – Events of Default Redemption feature (embedded contingent call option) The Company is required to prepay all of the outstanding principal balance and accrued and unpaid interest upon bankruptcy-related events of default. Lenders’ Optional redemption – Events of Default Redemption feature (embedded contingent call option) Holders of at least 25% aggregate principal amount of the Notes can require the Company to pay all of the outstanding principal balance and accrued and unpaid interest upon any event of default that is not bankruptcy related. Lender’s Optional Conversion Conversion feature At each Lenders’ option, subject to specific conditions, it may convert all or any portion of its Notes at an initial conversion rate, which is reduced (and only reduced) at various dates and subject to certain adjustments to the conversion rate in the case of specified events. If a note is converted, the Company will adjust the conversion rate to account for any accrued and unpaid interest on such note plus any Make-Whole Amount related to such note. Lenders’ Optional Conversion Upon Merger Event Other feature Upon a merger event, Note holders of each $1,000 principal amount of Notes are entitled to convert such notes plus accrued interest, plus the Make-Whole Amount related to the in kind and amount of reference property that a holder of a number of shares of Common Stock equal to the conversion rate in effect immediately prior to such event would have owned or been entitled to receive upon such event. Additional interest rate upon certain non-credit related events Other feature Upon an event of default, additional interest will be incurred. Additional interest will also be incurred if the Notes are not freely tradeable. Ability to pay interest in kind (PIK Interest)* Other feature The Company has the election to pay interest in cash or in-kind. *The PIK interest feature is only present in the Subordinated Convertible Note, and not available in the Senior Convertible Notes. |
Schedule of assumption used for debt instrument | Monte Carlo Simulation Assumptions Asset Risky Expected Risk-Free As of March 31, 2024 Price Yield Volatility Interest Rate Senior Convertible Notes $ 0.57 29.20 % 65 % 4.73 % Subordinated Convertible Notes 0.57 38.50 % 70 % 4.59 % Monte Carlo Simulation Assumptions Asset Risky Expected Risk-Free As of December 31, 2023 Price Yield Volatility Interest Rate Senior Convertible Notes $ 0.98 25.00 % 65 % 4.27 % Subordinated Convertible Notes 0.98 34.30 % 55 % 4.17 % |
Schedule of fair value of convertible notes on issuance | The following is a summary of changes in fair value of the Convertible Notes for three months ended March 31, 2024 and 2023 (in thousands): Senior Convertible Notes Subordinated Convertible Notes Beginning fair value, December 31, 2023 $ 14,277 $ 18,320 Paid-in-kind interest — 572 Change in fair value of debt (1,543) (4,341) Ending fair value, March 31, 2024 $ 12,734 $ 14,551 Senior Convertible Notes Subordinated Convertible Notes Beginning fair value, December 31, 2022 $ 13,651 $ 10,356 Paid-in-kind interest — 724 Change in fair value of debt 827 1,000 Ending fair value, March 31, 2023 $ 14,478 $ 12,080 |
Equipment Financing Obligation | |
DEBT | |
Schedule of payments | At March 31, 2024, the Company’s future principal maturities under the equipment financing obligations are summarized as follows (in thousands) Three Months Ended March 31, 2024 Amount 2024 (remaining 9 months) $ 43 2025 64 2026 65 Total principal maturities 172 Less: current portion (59) Equipment financing obligation, net of current portion $ 113 |
COMMON STOCK WARRANTS (Tables)
COMMON STOCK WARRANTS (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
COMMON STOCK WARRANTS | |
Schedule of warrant activity | Outstanding Outstanding Issuance December 31, March 31, Liability Classified Warrants Period 2023 Granted Exercised Cancelled 2024 Expiration Convertible Notes Warrants - Senior Debt Dec-22 169,597 — — — 169,597 Dec-27 Convertible Notes Warrants - Subordinated Debt Dec-22 1,745,310 — — — 1,745,310 Dec-27 1,914,907 — — — 1,914,907 Outstanding Outstanding Issuance December 31, March 31, Equity Classified Warrants Period 2023 Granted Exercised Cancelled 2024 Expiration Private Warrants Dec-22 196,256 — — — 196,256 Dec-27 Additional Private Warrants Dec-22 300,685 — — — 300,685 Dec-27 Public Warrants Dec-22 4,100,239 — — — 4,100,239 Dec-27 Transaction Warrants Sep-Oct -23 5,454,524 — — — 5,454,524 Sep-28 10,051,704 — — — 10,051,704 |
Schedule of assumptions for fair value of the outstanding warrants classified as liabilities | Exercise Asset Dividend Expected Risk-Free Expected As of March 31, 2024 Price Price Yield Volatility Interest Rate Life Convertible Notes Warrants $ 11.50 $ 0.57 0 % 70 % 4.30 % 3.68 years Exercise Asset Dividend Expected Risk-Free Expected As of December 31, 2023 Price Price Yield Volatility Interest Rate Life Convertible Notes Warrants $ 11.50 $ 0.98 0 % 65 % 3.90 % 3.93 years |
Schedule of change in fair value of the outstanding warrants classified as liabilities | The changes in fair value of the outstanding warrants classified as liabilities for the three months ended March 31, 2024 and 2023 are as follows (in thousands): Convertible Notes Warrants - Senior Debt Convertible Notes Warrants - Subordinated Debt Total Warrant liability, December 31, 2023 $ 9 $ 87 $ 96 Change in fair value (5) (53) (58) Warrant liability, March 31, 2024 $ 4 $ 34 $ 38 Convertible Notes Warrants - Senior Debt Convertible Notes Warrants - Subordinated Debt Total Warrant liability, December 31, 2022 $ 177 $ 1,815 $ 1,992 Change in fair value 75 768 843 Warrant liability, March 31, 2023 $ 252 $ 2,583 $ 2,835 |
COMMON STOCK (Tables)
COMMON STOCK (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
COMMON STOCK | |
Schedule of reserved shares of Common Stock | March 31, December 31, 2024 2023 2022 Equity Incentive Plan reserve 5,889,525 5,889,525 Reserve for earn-out shares 3,000,000 3,000,000 Reserve for exercise of Public Warrants 4,100,239 4,100,250 Reserve for exercise of Private and Additional Private Warrants 496,941 496,941 Reserve for Transaction Warrants 5,454,524 5,454,524 Reserve for exercise of SPA warrants 2,262,585 2,262,585 Reserve for convertible debt 15,761,044 15,766,509 Employee stock purchase plan 500,000 500,000 Reserve for convertible Series A Preferred Stock 9,436,000 9,436,000 Total 46,900,858 46,906,334 |
EARN-OUT SHARES (Tables)
EARN-OUT SHARES (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
EARN-OUT SHARES | |
Schedule of changes in fair value of the earnout liability | The changes in fair value of the earnout liability for the three months ended March 31, 2024 and 2023 are as follows: Amount Earnout liability, December 31, 2023 $ 620 Change in fair value (490) Earnout liability, March 31, 2024 $ 130 Amount Earnout liability, December 31, 2022 $ 12,810 Change in fair value (1,500) Earnout liability, March 31, 2023 $ 11,310 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
STOCK-BASED COMPENSATION | |
Summary of stock option activity | Weighted-Average Stock-Based Compensation Number of Weighted-Average Remaining Aggregate Options Exercise Price Contractual Term Intrinsic Value Outstanding at December 31, 2023 1,562,497 $ 4.67 9.2 years $ 35 Granted — — Exercised — — Cancelled (8,186) 5.20 Outstanding at March 31, 2024 1,554,311 $ 4.67 8.9 years $ — Exercisable at March 31, 2024 — — Vested and expected to vest as of March 31, 2024 1,554,311 $ 4.67 8.9 years $ — |
Summary of stock-based compensation expense | Three months ended March 31 2024 2023 Cost of revenue $ (5) $ — Sales and marketing 56 27 Research and development 93 47 General and administrative 270 152 $ 414 $ 226 |
Summary of non-vested restricted common C shares | Number of Weighted-Average Units Exercise Price Unvested at December 31, 2023 543,750 $ 0.86 Granted 2,653,067 0.73 Vested — — Forfeited — — Unvested balance at March 31, 2024 3,196,817 $ 0.75 |
NET INCOME (LOSS) ATTRIBUTABL_2
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | |
Schedule of computation of the basic and diluted net loss per share attributable to common stockholders | Three months ended March 31 2024 2023 Numerator: Net income (loss) attributable to common stockholders - Basic $ 3,441 $ (6,892) Interest expense and remeasurement of senior and subordinated convertible notes liability (4,931) — Net loss attributable to common stockholders - Diluted $ (1,490) $ (6,892) Denominator: Weighted-average common shares outstanding - Basic 17,392,983 16,041,464 Convertible Series A Preferred Stock 9,436,000 — Senior convertible notes 16,959,807 — Subordinated convertible notes 20,830,141 — Weighted-average common shares outstanding - Diluted 64,618,931 16,041,464 Net income (loss) per share - Basic $ 0.20 $ (0.43) Net loss per share - Diluted $ (0.02) $ (0.43) |
Schedule of potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders because including them would have been antidilutive | Three months ended March 31 2024 2023 Outstanding RSUs 3,196,817 — Warrants to purchase common stock 11,966,611 6,512,087 Options to purchase common stock 1,554,311 — Senior and Subordinated convertible notes — 3,179,410 16,717,739 9,691,497 |
BASIS OF ACCOUNTING AND SIGNI_4
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES (Details) | 3 Months Ended | ||
Mar. 31, 2024 USD ($) $ / shares | Dec. 31, 2023 USD ($) $ / shares | Mar. 31, 2023 $ / shares | |
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES | |||
Cash | $ 3,477,000 | $ 6,363,000 | |
Cash equivalents | 0 | ||
Restricted Cash | $ 700,000 | $ 700,000 | |
Number of customers exceeded 10% of sales / accounts receivable | 0 | ||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Invoices customers upon shipment product period | 30 days | ||
Lease, Cost | $ 300,000 | ||
Potential capital | 23,879,000 | $ 26,287,000 | |
New-money equity capital raise | 9,000,000 | ||
Reorganization, Chapter 11, Debtor-in-Possession | Reorganization, Chapter 11, Discharge of Debt Adjustment | |||
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES | |||
Potential capital | 20,000,000 | ||
Noteholder Investor | Reorganization, Chapter 11, Debtor-in-Possession | Reorganization, Chapter 11, Discharge of Debt Adjustment | |||
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES | |||
Total credit facility to provide | 13,000,000 | ||
Credit facility provided | $ 6,500,000 |
BASIS OF ACCOUNTING AND SIGNI_5
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES - Fair value of Financial Instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES | ||
Cash, Uninsured Amount | $ 3,900 | $ 6,800 |
Convertible notes payable | Recurring | ||
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES | ||
Fair value | 12,734 | 14,277 |
Subordinated convertible notes | Recurring | ||
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES | ||
Fair value | 14,551 | 18,320 |
Earn-out liability | Recurring | ||
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES | ||
Fair value | 130 | 620 |
Warrant liability | Recurring | ||
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES | ||
Fair value | 38 | 96 |
Level 3 | Convertible notes payable | Recurring | ||
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES | ||
Fair value | 12,734 | 14,277 |
Level 3 | Subordinated convertible notes | Recurring | ||
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES | ||
Fair value | 14,551 | 18,320 |
Level 3 | Earn-out liability | Recurring | ||
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES | ||
Fair value | 130 | 620 |
Level 3 | Warrant liability | Recurring | ||
BASIS OF ACCOUNTING AND SIGNIFICANT ACCOUNTING POLICIES | ||
Fair value | $ 38 | $ 96 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
INVENTORY | ||
Raw Materials | $ 1,861 | $ 1,967 |
Work in progress | 162 | 72 |
Inventory net | $ 2,023 | $ 2,039 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
PROPERTY AND EQUIPMENT | |||
Property and equipment, gross | $ 6,121 | $ 6,088 | |
Less accumulated depreciation and amortization | (2,955) | (2,730) | |
Total property and equipment, net | 3,166 | 3,358 | |
Depreciation expense | 226 | $ 167 | |
Disposals of Property, Plant and Equipment, | 700 | ||
Accumulated Depreciation on Disposal of Property, Plant and Equipment | 600 | ||
Loss on disposal of property and equipment | $ 117 | ||
Manufacturing equipment | |||
PROPERTY AND EQUIPMENT | |||
Property and equipment, gross | 4,042 | 4,042 | |
Computers and software | |||
PROPERTY AND EQUIPMENT | |||
Property and equipment, gross | 1,213 | 1,200 | |
Construction in progress | |||
PROPERTY AND EQUIPMENT | |||
Property and equipment, gross | 20 | ||
Leasehold Improvements | |||
PROPERTY AND EQUIPMENT | |||
Property and equipment, gross | $ 846 | $ 846 |
ACCRUED EXPENSES - Components (
ACCRUED EXPENSES - Components (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Accrued compensation | ||
Compensation related accruals | $ 2,397 | $ 3,387 |
Marketing programs | 1,293 | 934 |
Interest | 695 | 382 |
Warranty | 465 | 465 |
Professional fees | 635 | 632 |
Inventory purchases and freight | 613 | |
Other | 161 | 343 |
Accrued expenses | $ 5,646 | $ 6,756 |
LEASES - General (Details)
LEASES - General (Details) | 3 Months Ended | ||||||
Feb. 28, 2023 USD ($) | Dec. 15, 2022 USD ($) | Mar. 31, 2024 USD ($) agreement | Mar. 31, 2023 USD ($) | Feb. 28, 2024 | Dec. 31, 2023 USD ($) | May 17, 2022 | |
LEASES | |||||||
Operating lease, Remaining term (in months) | 10 months | ||||||
Monthly payment | $ 100,000 | ||||||
Impairment loss on the ROU | $ 300,000 | $ 5,400,000 | $ 0 | $ 274,000 | |||
Impairment of leasehold | $ 100,000 | 0 | |||||
Accrued liabilities | 100,000 | ||||||
Security deposit | 300,000 | ||||||
Amount of guarantee received | $ 1,700,000 | ||||||
Number of years rolling guarantee received | 1 year | ||||||
Letter of credit | $ 700,000 | ||||||
Total minimum lease payments | 3,952,000 | ||||||
ROU assets obtained in exchange for finance lease obligations | 628,000 | ||||||
Operating lease right-of-use assets | 4,981,000 | $ 5,069,000 | |||||
Operating lease liabilities | $ 5,452,000 | ||||||
Minimum | |||||||
LEASES | |||||||
Finance lease, Remaining term (in years) | 1 year | ||||||
Maximum | |||||||
LEASES | |||||||
Finance lease, Remaining term (in years) | 5 years | ||||||
Lease for corporate headquarters | |||||||
LEASES | |||||||
Operating lease, Lease term (in years) | 10 years | ||||||
Manufacturing equipment | |||||||
LEASES | |||||||
Number of finance leases entered | agreement | 4 | ||||||
Total minimum lease payments | $ 28,000 | ||||||
ROU assets obtained in exchange for finance lease obligations | $ 600,000 | ||||||
Manufacturing equipment | Minimum | |||||||
LEASES | |||||||
Finance lease, Remaining term (in years) | 3 years | ||||||
Manufacturing equipment | Maximum | |||||||
LEASES | |||||||
Finance lease, Remaining term (in years) | 5 years |
LEASES - Components of lease co
LEASES - Components of lease cost, weighted average lease terms and discount rates (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Lease Cost: | |||
Operating lease cost | $ 223 | $ 265 | |
Finance lease cost: | |||
Amortization of assets obtained under finance leases | 265 | 180 | |
Interest on lease liabilities | 90 | 78 | |
Variable lease expense | 3 | ||
Total expense | $ 581 | 523 | |
Weighted average remaining lease term: | |||
Operating leases | 8 years 9 months | 9 years | |
Finance leases | 3 years 1 month 13 days | 3 years | |
Weighted average discount rate: | |||
Operating leases | 10% | 10% | |
Finance leases | 10.48% | 10.21% | |
Cash paid for amounts included in the measurement of lease liabilities: | |||
Operating cash flows from operating leases | $ 209 | 47 | |
Operating cash flows from finance leases (interest) | $ 79 | $ 81 |
LEASES - Right-of-use assets (D
LEASES - Right-of-use assets (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
LEASES | ||
Total | $ 6,770 | $ 6,155 |
Less accumulated amortization | (3,167) | (2,890) |
Right-of-use assets for finance leases | $ 3,603 | $ 3,265 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Right-of-use assets for finance leases | Right-of-use assets for finance leases |
Right-of-use assets for operating leases | $ 4,981 | $ 5,069 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Right-of-use assets for operating leases | Right-of-use assets for operating leases |
Total right-of-use assets | $ 8,584 | $ 8,334 |
Manufacturing equipment | ||
LEASES | ||
Total | 5,866 | 5,237 |
Computers and software | ||
LEASES | ||
Total | 686 | 700 |
Leasehold Improvements | ||
LEASES | ||
Total | $ 218 | $ 218 |
LEASES - Maturities of finance
LEASES - Maturities of finance lease liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Years ending December 31 | ||
2024 (remaining 9 months) | $ 1,071 | |
2025 | 1,286 | |
2026 | 983 | |
2027 | 430 | |
2028 | 168 | |
Thereafter | 14 | |
Total minimum lease payments | 3,952 | |
Less amount representing interest | (579) | |
Present value of minimum lease payments | 3,373 | |
Less current portion | (1,117) | $ (1,052) |
Finance lease liabilities, less current portion | $ 2,256 | $ 2,009 |
LEASES - Maturities of operatin
LEASES - Maturities of operating lease liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Year ending December 31 | ||
2024 (remaining 9 months) | $ 628 | |
2025 | 861 | |
2026 | 887 | |
2027 | 914 | |
2028 | 941 | |
Thereafter | 4,056 | |
Total minimum lease payments | 8,287 | |
Less amount representing interest | (2,835) | |
Present value of minimum lease payments | 5,452 | |
Less current portion | (318) | $ (304) |
Operating lease liabilities, less current portion | $ 5,134 | $ 5,221 |
DEBT - Equipment Financing Obli
DEBT - Equipment Financing Obligation (Details) $ in Thousands | Mar. 31, 2024 USD ($) |
Future principal maturities under the equipment financing obligation | |
2024 (remaining 9 months) | $ 43 |
2025 | 64 |
2026 | 65 |
Total principal maturities | 172 |
Less current portion | (59) |
Equipment financing obligation, net of current portion | $ 113 |
DEBT - Convertible debt agreeme
DEBT - Convertible debt agreements (Details) | 3 Months Ended | |||||||||||||
Dec. 06, 2023 | Dec. 05, 2023 | Sep. 20, 2023 USD ($) $ / shares shares | Sep. 08, 2023 USD ($) shares | Jun. 29, 2023 USD ($) | Jun. 06, 2023 | Jun. 05, 2023 | Mar. 25, 2023 USD ($) | Dec. 06, 2022 $ / shares shares | Mar. 31, 2024 USD ($) $ / shares | Apr. 17, 2024 USD ($) | Dec. 31, 2023 $ / shares | Jul. 01, 2023 USD ($) | Aug. 26, 2022 USD ($) | |
DEBT | ||||||||||||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | ||||||||||||
Threshold trading days | 20 | |||||||||||||
Threshold consecutive trading days | 30 | |||||||||||||
Convertible stock price trigger | $ / shares | $ 18 | |||||||||||||
Principal amount | $ 1,000 | |||||||||||||
Aggregate principal amount | 25% | |||||||||||||
Compensating cash balance | $ 4,500,000 | |||||||||||||
Series A Redeemable Convertible Preferred Stock | ||||||||||||||
DEBT | ||||||||||||||
Conversion price per share | $ / shares | $ 1 | |||||||||||||
Share price | $ / shares | $ 1 | |||||||||||||
Securities Purchase Agreement | ||||||||||||||
DEBT | ||||||||||||||
Conversion price per share | $ / shares | $ 1 | |||||||||||||
Exercise price of warrants | $ / shares | $ 1 | |||||||||||||
Securities Purchase Agreement | Series A Redeemable Convertible Preferred Stock | ||||||||||||||
DEBT | ||||||||||||||
Issuance of Common Stock - PIPE Equity | $ 10,400,000 | |||||||||||||
Issuance of Common Stock - PIPE Equity (in shares) | shares | 10,426 | |||||||||||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.0001 | |||||||||||||
Shares issued price per share | $ / shares | $ 1,000 | |||||||||||||
Convertible notes | ||||||||||||||
DEBT | ||||||||||||||
Compensating cash balance | $ 2,500,000 | |||||||||||||
Debt, covenant description | On March 25, 2024, the lenders agreed to (i) provide waiver the minimum cash covenant for the period commencing on March 1, 2024 through and including June 30, 2024 provided that the Company’s cash balance remains above $2.5 million during such period; and (ii) waive any default under the indentures resulting from any breach by the Company that may have arisen up to March 1, 2024. | |||||||||||||
Convertible notes | Maximum | ||||||||||||||
DEBT | ||||||||||||||
Percent probability of the Convertibles Notes being freely tradeable or Company failure to timely file | 5% | |||||||||||||
Convertible notes | Minimum | ||||||||||||||
DEBT | ||||||||||||||
Maturity | 18 months | |||||||||||||
Senior secured convertible notes | Subsequent Event [Member] | ||||||||||||||
DEBT | ||||||||||||||
Equipment financing arrangements to purchase capital equipment | $ 2,000,000 | |||||||||||||
Senior Convertible Notes | ||||||||||||||
DEBT | ||||||||||||||
Equipment financing arrangements to purchase capital equipment | $ 17,000,000 | |||||||||||||
Issuance of Common Stock - PIPE Equity (in shares) | shares | 36,469 | |||||||||||||
Interest rate per annum | 9% | |||||||||||||
Frequency of periodic payment | quarterly | |||||||||||||
Debt installment payments | $ 800,000 | |||||||||||||
Debt repayment commencement date | Oct. 01, 2024 | |||||||||||||
Senior Convertible Notes | Senior Convertible Notes warrants | ||||||||||||||
DEBT | ||||||||||||||
Number of common stock shares, called by warrants | shares | 169,597 | |||||||||||||
Exercise price of warrants | $ / shares | $ 11.50 | |||||||||||||
Senior Convertible Notes | Measurement Input, Asset Price [Member] | ||||||||||||||
DEBT | ||||||||||||||
Debt instrument, measurement input | $ / shares | 0.57 | 0.98 | ||||||||||||
Senior Convertible Notes | Measurement Input, Risky Yield [Member] | ||||||||||||||
DEBT | ||||||||||||||
Debt instrument, measurement input | 0.2920 | 0.2500 | ||||||||||||
Senior Convertible Notes | Expected Volatility | ||||||||||||||
DEBT | ||||||||||||||
Debt instrument, measurement input | 0.65 | 0.65 | ||||||||||||
Senior Convertible Notes | Risk-Free Interest Rate | ||||||||||||||
DEBT | ||||||||||||||
Debt instrument, measurement input | 0.0473 | 0.0427 | ||||||||||||
Subordinated Convertible Notes | ||||||||||||||
DEBT | ||||||||||||||
Equipment financing arrangements to purchase capital equipment | $ 17,500,000 | |||||||||||||
Maturity | 3 years | |||||||||||||
Issuance of Common Stock - PIPE Equity (in shares) | shares | 290,244 | |||||||||||||
Spread on interest rate | 9% | |||||||||||||
Convertible conversion ratio | 222.22222 | 192.3808 | 192.3808 | 86.95665 | ||||||||||
Shares issued in debt conversion | shares | 230,494 | |||||||||||||
Conversion of Subordinated Convertible Notes to Common Stock | $ 1,000,000 | |||||||||||||
Fair value of debt converted | $ 900,000 | |||||||||||||
Subordinated Convertible Notes | Senior Convertible Notes warrants | ||||||||||||||
DEBT | ||||||||||||||
Number of common stock shares, called by warrants | shares | 1,745,310 | |||||||||||||
Subordinated Convertible Notes | Measurement Input, Asset Price [Member] | ||||||||||||||
DEBT | ||||||||||||||
Debt instrument, measurement input | $ / shares | 0.57 | 0.98 | ||||||||||||
Subordinated Convertible Notes | Measurement Input, Risky Yield [Member] | ||||||||||||||
DEBT | ||||||||||||||
Debt instrument, measurement input | 0.3850 | 0.3430 | ||||||||||||
Subordinated Convertible Notes | Expected Volatility | ||||||||||||||
DEBT | ||||||||||||||
Debt instrument, measurement input | 0.70 | 0.55 | ||||||||||||
Subordinated Convertible Notes | Risk-Free Interest Rate | ||||||||||||||
DEBT | ||||||||||||||
Debt instrument, measurement input | 0.0459 | 0.0417 |
DEBT - Fair Value of Convertibl
DEBT - Fair Value of Convertible Notes (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 USD ($) $ / shares | Mar. 31, 2023 USD ($) | Dec. 31, 2023 $ / shares | |
DEBT | |||
Fair Value, Liability, Recurring Basis, Unobservable Input Reconciliation, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Fair Value Adjustment of Debt | ||
Senior Convertible Notes | |||
DEBT | |||
Convertible notes, beginning balance | $ 14,277 | $ 13,651 | |
Change in fair value of debt | $ (1,543) | 827 | |
Fair Value, Liability, Recurring Basis, Unobservable Input Reconciliation, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Fair Value Adjustment of Debt | ||
Convertible notes, ending balance | $ 12,734 | 14,478 | |
Subordinated Convertible Notes | |||
DEBT | |||
Convertible notes, beginning balance | 18,320 | 10,356 | |
Paid-in-kind interest | 572 | 724 | |
Change in fair value of debt | (4,341) | 1,000 | |
Convertible notes, ending balance | $ 14,551 | $ 12,080 | |
Measurement Input, Asset Price [Member] | Senior Convertible Notes | |||
DEBT | |||
Debt instrument, measurement input | $ / shares | 0.57 | 0.98 | |
Measurement Input, Asset Price [Member] | Subordinated Convertible Notes | |||
DEBT | |||
Debt instrument, measurement input | $ / shares | 0.57 | 0.98 | |
Measurement Input, Risky Yield [Member] | Senior Convertible Notes | |||
DEBT | |||
Debt instrument, measurement input | 0.2920 | 0.2500 | |
Measurement Input, Risky Yield [Member] | Subordinated Convertible Notes | |||
DEBT | |||
Debt instrument, measurement input | 0.3850 | 0.3430 | |
Expected Volatility | Senior Convertible Notes | |||
DEBT | |||
Debt instrument, measurement input | 0.65 | 0.65 | |
Expected Volatility | Subordinated Convertible Notes | |||
DEBT | |||
Debt instrument, measurement input | 0.70 | 0.55 | |
Risk-Free Interest Rate | Senior Convertible Notes | |||
DEBT | |||
Debt instrument, measurement input | 0.0473 | 0.0427 | |
Risk-Free Interest Rate | Subordinated Convertible Notes | |||
DEBT | |||
Debt instrument, measurement input | 0.0459 | 0.0417 |
COMMON STOCK WARRANTS (Details)
COMMON STOCK WARRANTS (Details) - shares | Mar. 31, 2024 | Dec. 31, 2023 |
COMMON STOCK WARRANTS | ||
Warrant outstanding | 11,966,611 | 11,966,611 |
COMMON STOCK WARRANTS - Warrant
COMMON STOCK WARRANTS - Warrant Activity (Details) | Mar. 31, 2024 shares |
COMMON STOCK WARRANTS | |
Warrants Outstanding | 11,966,611 |
Warrants Outstanding | 11,966,611 |
COMMON STOCK WARRANTS - Black-S
COMMON STOCK WARRANTS - Black-Scholes Option Pricing Assumptions (Details) - Convertible Notes Warrants | Mar. 31, 2024 USD ($) $ / shares | Dec. 31, 2023 USD ($) $ / shares |
COMMON STOCK WARRANTS | ||
Exercise Price | $ 11.50 | $ 11.50 |
Asset Price | ||
COMMON STOCK WARRANTS | ||
Measurement input | 0.57 | 0.98 |
Dividend Yield | ||
COMMON STOCK WARRANTS | ||
Measurement input | 0 | 0 |
Expected Volatility | ||
COMMON STOCK WARRANTS | ||
Measurement input | 0.70 | 0.65 |
Risk-Free Interest Rate | ||
COMMON STOCK WARRANTS | ||
Measurement input | 0.0430 | 0.0390 |
Expected Life | ||
COMMON STOCK WARRANTS | ||
Measurement input | $ | 3.68 | 3.93 |
COMMON STOCK WARRANTS - Fair Va
COMMON STOCK WARRANTS - Fair Value of Outstanding Warrants (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Change in fair value of the outstanding warrants classified as liabilities | ||
Warrant liability, beginning | $ 96 | $ 1,992 |
Change in fair value | (58) | 843 |
Warrant liability, ending | 38 | 2,835 |
Convertible Notes Warrants - Senior Debt | ||
Change in fair value of the outstanding warrants classified as liabilities | ||
Warrant liability, beginning | 9 | 177 |
Change in fair value | (5) | 75 |
Warrant liability, ending | 4 | 252 |
Convertible Notes Warrants - Subordinated Debt | ||
Change in fair value of the outstanding warrants classified as liabilities | ||
Warrant liability, beginning | 87 | 1,815 |
Change in fair value | (53) | 768 |
Warrant liability, ending | $ 34 | $ 2,583 |
COMMON STOCK - Schedule of comm
COMMON STOCK - Schedule of common stock (Details) - shares | Mar. 31, 2024 | Dec. 31, 2023 | Jun. 15, 2023 |
Class of Stock [Line Items] | |||
Total | 46,900,858 | 46,906,334 | |
Reserve for convertible Series A Preferred Stock | |||
Class of Stock [Line Items] | |||
Total | 9,436,000 | 9,436,000 | |
Reserve for exercise of Public Warrants | |||
Class of Stock [Line Items] | |||
Total | 4,100,239 | 4,100,250 | |
Reserve for exercise of Private and Additional Private Warrants | |||
Class of Stock [Line Items] | |||
Total | 496,941 | 496,941 | |
Reserve for Transaction Warrants | |||
Class of Stock [Line Items] | |||
Total | 5,454,524 | 5,454,524 | |
Reserve for exercise of SPA warrants | |||
Class of Stock [Line Items] | |||
Total | 2,262,585 | 2,262,585 | |
Reserve for convertible debt | |||
Class of Stock [Line Items] | |||
Total | 15,761,044 | 15,766,509 | |
Reserve for earn-out shares | |||
Class of Stock [Line Items] | |||
Total | 3,000,000 | 3,000,000 | |
2022 Equity Incentive Plan reserve | |||
Class of Stock [Line Items] | |||
Total | 5,889,525 | 5,889,525 | |
Employee stock purchase plan | |||
Class of Stock [Line Items] | |||
Total | 500,000 | 500,000 | 500,000 |
COMMON STOCK (Details)
COMMON STOCK (Details) - $ / shares | Mar. 31, 2024 | Dec. 31, 2023 | Mar. 31, 2023 |
Class of Stock [Line Items] | |||
Common stock, shares authorized | 150,000,000 | 150,000,000 | |
Par value per share | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Common Stock | |||
Class of Stock [Line Items] | |||
Common stock, shares authorized | 150,000,000 | 150,000,000 | |
2022 Equity Incentive Plan reserve | |||
Class of Stock [Line Items] | |||
Number of shares authorized | 6,000,000 | ||
Number of shares available for grant | 5,889,525 |
PREFERRED STOCK (Details)
PREFERRED STOCK (Details) | 3 Months Ended | ||
Mar. 31, 2024 USD ($) D $ / shares shares | Dec. 31, 2023 USD ($) $ / shares shares | Mar. 31, 2023 shares | |
Temporary Equity [Line Items] | |||
Preferred stock, shares authorized | shares | 1,500,000 | 1,500,000 | |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |
Preferred stock, shares issued | shares | 0 | 0 | 0 |
Shares outstanding | shares | 9,436 | 9,436 | |
Liquidation amount | $ | $ 14,200,000 | $ 14,200,000 | |
Series A Redeemable Convertible Preferred Stock | |||
Temporary Equity [Line Items] | |||
Shares Authorized | shares | 25,000 | 25,000 | |
Shares outstanding | shares | 9,436 | 9,436 | |
Liquidation amount | $ | $ 14,154 | $ 14,154 | |
Convertible preferred stock dividend rate | 8% | ||
Redeemable Series A convertible preferred stock, par value (in dollars per share) | $ 1,000 | ||
Share Price | 1 | ||
Conversion rate | $ 1 | ||
Percentage of shares to be automatically converted | 50% | ||
Trading days | D | 30 | ||
Consecutive trading days | D | 30 | ||
Voting right conversion price | $ 1.04 | ||
Liquidation preference percentage | 150% | ||
Series A Redeemable Convertible Preferred Stock | Price greater than $4.50 per share | |||
Temporary Equity [Line Items] | |||
Stock price | $ 4.50 | ||
Series A Redeemable Convertible Preferred Stock | Price greater than $6 per share | |||
Temporary Equity [Line Items] | |||
Stock price | $ 6 |
EARN-OUT SHARES (Details)
EARN-OUT SHARES (Details) - PubCo Merger | May 09, 2022 tranche $ / shares shares |
Common Stock | |
Maximum number of shares entitled to receive | 3,000,000 |
Number of tranches | tranche | 3 |
First tranche | |
Common Stock | |
Number of shares issued | 1,000,000 |
Share price | $ / shares | $ 12.50 |
Trading period | 20 days |
Consecutive trading period | 30 days |
Term of issuance | 6 months |
Second tranche | |
Common Stock | |
Number of shares issued | 1,000,000 |
Share price | $ / shares | $ 15 |
Trading period | 20 days |
Consecutive trading period | 30 days |
Term of issuance | 6 months |
Third tranche | |
Common Stock | |
Number of shares issued | 1,000,000 |
Share price | $ / shares | $ 17.50 |
Trading period | 20 days |
Consecutive trading period | 30 days |
Term of issuance | 6 months |
EARN-OUT SHARES - Schedule of c
EARN-OUT SHARES - Schedule of changes in fair value of the earnout liability (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Business Acquisition, Contingent Consideration [Line Items] | ||
Change in fair value | $ (490) | $ (1,500) |
PubCo Merger | ||
Business Acquisition, Contingent Consideration [Line Items] | ||
Earning liability beginning balance | 620 | 12,810 |
Change in fair value | (490) | (1,500) |
Earnout liability, ending balance | $ 130 | $ 11,310 |
STOCK-BASED COMPENSATION Stock
STOCK-BASED COMPENSATION Stock option activity - (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Number of Options Outstanding | ||
Options outstanding, beginning of period (in shares) | 1,562,497 | |
Cancelled (in shares) | (8,186) | |
Options outstanding, end of period (in shares) | 1,554,311 | 1,562,497 |
Vested and expected to vest, end of period (in shares) | 1,554,311 | |
Weighted-average Exercise Price | ||
Options outstanding, beginning of period (in dollars per share) | $ 4.67 | |
Cancelled (in dollars per share) | 5.20 | |
Options outstanding, end of period (in dollars per share) | 4.67 | $ 4.67 |
Options vested and expected to vest, end of period (in dollars per share) | $ 4.67 | |
Weighted average Remaining Contractual Life and intrinsic value | ||
Weighted-average remaining life, Options outstanding | 9 years 2 months 12 days | |
Weighted-average remaining life, Option exercisable, end of period | 8 years 10 months 24 days | |
Weighted-average remaining life, Options vested and expected to vest, end of period | 8 years 10 months 24 days | |
Intrinsic value, Options outstanding, beginning of period | $ 35 | |
Intrinsic value, Options outstanding, end of period | $ 35 | |
Unamortized compensation expense | $ 2,900 | |
Unrecognized compensation expense recognized over a weighted-average period | 2 years 10 months 9 days |
STOCK-BASED COMPENSATION - 2022
STOCK-BASED COMPENSATION - 2022 Equity Incentive Plan (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Oct. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2023 | |
SHARE BASED PAYMENTS | |||||
Unvested restricted stock outstanding | 3,196,817 | 543,750 | |||
Tax benefits related to stock-based compensation expense | $ 0 | $ 0 | |||
2022 Equity Incentive Plan reserve | |||||
SHARE BASED PAYMENTS | |||||
Number of shares authorized | 6,000,000 | ||||
Number of shares available for grant | 5,889,525 | ||||
2022 Equity Incentive Plan reserve | More than 10% voting power | |||||
SHARE BASED PAYMENTS | |||||
Percent of exercise price of stock options | 110% | ||||
2022 Equity Incentive Plan reserve | More than 10% voting power | Maximum | |||||
SHARE BASED PAYMENTS | |||||
Expiration period of stock options | 5 years | ||||
2022 Equity Incentive Plan reserve | Less than 10% voting power | |||||
SHARE BASED PAYMENTS | |||||
Percent of exercise price of stock options | 100% | ||||
2022 Equity Incentive Plan reserve | Less than 10% voting power | Maximum | |||||
SHARE BASED PAYMENTS | |||||
Expiration period of stock options | 10 years | ||||
Restricted stock units | |||||
SHARE BASED PAYMENTS | |||||
Vested | 192,500 | ||||
Unvested restricted stock outstanding | 543,750 |
STOCK-BASED COMPENSATION - Non-
STOCK-BASED COMPENSATION - Non-vested restricted stock units (Details) - $ / shares | 1 Months Ended | 2 Months Ended | 3 Months Ended | |
Feb. 29, 2024 | Oct. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2024 | |
Restricted common C shares | ||||
Outstanding at the beginning | 543,750 | |||
Granted | 2,653,067 | |||
Outstanding at the end | 3,196,817 | 3,196,817 | ||
Weighted-Average Grant Date Fair Value Per Share | ||||
Outstanding at the beginning (in dollars per share) | $ 0.86 | |||
Granted (in dollars per share) | 0.73 | |||
Outstanding at the end (in dollars per share) | $ 0.75 | $ 0.75 | ||
Unrecognized compensation expense related to unvested restricted common C shares recognized over a weighted-average period | 2 years 10 months 9 days | |||
Unvested restricted stock outstanding | 3,196,817 | 3,196,817 | ||
Restricted stock units | ||||
Restricted common C shares | ||||
Granted | 2,653,067 | 736,250 | ||
Vested | (192,500) | |||
Outstanding at the end | 543,750 | 543,750 | ||
Weighted-Average Grant Date Fair Value Per Share | ||||
Number of shares granted, period of cliff after vesting | 60 days | |||
Unrecognized compensation expense related to unvested restricted common C shares recognized over a weighted-average period | 2 years 2 months 12 days | |||
Unvested restricted stock outstanding | 543,750 | 543,750 | ||
Restricted stock units | Minimum | ||||
Weighted-Average Grant Date Fair Value Per Share | ||||
Vesting period | 2 years | |||
Restricted stock units | Maximum | ||||
Weighted-Average Grant Date Fair Value Per Share | ||||
Vesting period | 3 years |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock-based compensation expense (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Stock-based compensation expense | $ 414 | $ 226 |
Unamortized compensation expense | $ 2,900,000 | |
Unrecognized compensation expense recognized over a weighted-average period | 2 years 10 months 9 days | |
Restricted stock units | ||
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Stock-based compensation expense | $ 200,000 | 0 |
Unamortized compensation expense | $ 2,200,000 | |
Unrecognized compensation expense recognized over a weighted-average period | 2 years 2 months 12 days | |
Cost of revenue | ||
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Stock-based compensation expense | $ (5,000) | |
Sales and marketing | ||
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Stock-based compensation expense | 56,000 | 27,000 |
Research and development | ||
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Stock-based compensation expense | 93,000 | 47,000 |
General and administrative | ||
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Stock-based compensation expense | $ 270,000 | $ 152,000 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | |
May 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
STOCK-BASED COMPENSATION | |||
Issuance of Common Stock - services (in shares) | 20,000 | ||
Issuance of Common Stock - services | $ 0.2 | ||
Tax benefits related to stock-based compensation expense | $ 0 | $ 0 | |
Dividend yield | 0% | ||
Common stock dividends paid | $ 0 | ||
Common stock dividends declared | $ 0 |
STOCK-BASED COMPENSATION - 2023
STOCK-BASED COMPENSATION - 2023 Employee Stock Purchase Plan (Details) - USD ($) | 3 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Jun. 15, 2023 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Number of shares available for purchase | 46,900,858 | 46,906,334 | ||
Number of shares issued | 0 | |||
Stock-based compensation expense | $ 414 | $ 226 | ||
2023 ESPP | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Number of shares available for purchase | 500,000 | 500,000 | 500,000 | |
Stock-based compensation expense | $ 0 |
NET INCOME (LOSS) ATTRIBUTABL_3
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Numerator: | ||
Net income (loss) attributable to common stockholders - Basic | $ 3,441 | $ (6,892) |
Interest expense and remeasurement of senior and subordinated convertible notes liability | (4,931) | |
Net loss attributable to common stockholders - Diluted | $ (1,490) | $ (6,892) |
Denominator: | ||
Weighted-average common shares outstanding, basic | 17,392,983 | 16,041,464 |
Shares excluded from diluted earnings per share due to their anti-dilutive effect | 16,717,739 | 9,691,497 |
Weighted-average common shares outstanding - Diluted | 64,618,931 | 16,041,464 |
Net income (loss) per share attributable to Common Stockholders, basic | $ 0.20 | $ (0.43) |
Net loss per share attributable to Common Stockholders, diluted | $ (0.02) | $ (0.43) |
Senior and Subordinated Convertible Notes | ||
Denominator: | ||
Shares excluded from diluted earnings per share due to their anti-dilutive effect | 3,179,410 | |
Senior Convertible Notes | ||
Denominator: | ||
Shares excluded from diluted earnings per share due to their anti-dilutive effect | 16,959,807 | |
Subordinated Convertible Notes | ||
Denominator: | ||
Shares excluded from diluted earnings per share due to their anti-dilutive effect | 20,830,141 | |
Convertible Series A Preferred Stock | ||
Denominator: | ||
Shares excluded from diluted earnings per share due to their anti-dilutive effect | 9,436,000 |
NET INCOME (LOSS) ATTRIBUTABL_4
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS - Potential Shares of Common Stock Excluded From The Computation Of Diluted Net Loss Per Share (Details) - shares | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Antidilutive securities | ||
Potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders because including them would have been antidilutive | 16,717,739 | 9,691,497 |
Options to purchase common stock | ||
Antidilutive securities | ||
Potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders because including them would have been antidilutive | 1,554,311 | |
Outstanding RSUs | ||
Antidilutive securities | ||
Potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders because including them would have been antidilutive | 3,196,817 | |
Senior and Subordinated Convertible Notes | ||
Antidilutive securities | ||
Potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders because including them would have been antidilutive | 3,179,410 | |
Senior Convertible Notes | ||
Antidilutive securities | ||
Potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders because including them would have been antidilutive | 16,959,807 | |
Subordinated Convertible Notes | ||
Antidilutive securities | ||
Potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders because including them would have been antidilutive | 20,830,141 | |
Warrants to purchase Common Stock | ||
Antidilutive securities | ||
Potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders because including them would have been antidilutive | 11,966,611 | 6,512,087 |
Convertible Series A Preferred Stock | ||
Antidilutive securities | ||
Potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders because including them would have been antidilutive | 9,436,000 | |
Earnout shares | ||
Antidilutive securities | ||
Potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders because including them would have been antidilutive | 3,000,000 | 3,000,000 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) | May 07, 2024 | Apr. 17, 2024 | Dec. 06, 2022 | Apr. 29, 2024 | Aug. 26, 2022 |
Senior Convertible Notes | |||||
Subsequent Event [Line Items] | |||||
Aggregate amount borrowed | $ 17,000,000 | ||||
Subordinated Convertible Notes | |||||
Subsequent Event [Line Items] | |||||
Aggregate amount borrowed | $ 17,500,000 | ||||
Spread on interest rate | 9% | ||||
Subsequent Event [Member] | Senior secured convertible notes | |||||
Subsequent Event [Line Items] | |||||
Aggregate amount borrowed | $ 2,000,000 | ||||
Debt instrument, maturity date | Dec. 06, 2025 | ||||
Subsequent Event [Member] | Additional Senior Secured Convertible Notes [Member] | |||||
Subsequent Event [Line Items] | |||||
Aggregate amount borrowed | $ 2,000,000 | ||||
Subsequent Event [Member] | DIP Credit Agreement [Member] | |||||
Subsequent Event [Line Items] | |||||
Aggregate amount borrowed | $ 13,000,000 | ||||
Debt instrument, maturity date | Nov. 07, 2024 | ||||
Subsequent Event [Member] | Prime Rate [Member] | DIP Credit Agreement [Member] | |||||
Subsequent Event [Line Items] | |||||
Spread on interest rate | 9% |
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) | $ 3,441 | $ (6,892) |
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 |