|
Delaware
|
| |
3841
|
| |
20-1828101
|
|
|
(State or Other Jurisdiction of
Incorporation or Organization) |
| |
(Primary Standard Industrial
Classification Code Number) |
| |
(I.R.S. Employer
Identification Number) |
|
|
B. Shayne Kennedy
Daniel Rees Latham & Watkins LLP 650 Town Center Drive, 20th Floor Costa Mesa, California 92626 (714) 540-1235 |
| |
Barton P. Bandy
President and Chief Executive Officer ReShape Lifesciences Inc. 1001 Calle Amanecer San Clemente, California 92673 (949) 429-6680 |
| |
Brett Hanson
Fox Rothschild LLP 222 South Ninth Street, Suite 2000, Minneapolis, Minnesota 55402 (612) 607-7000 |
|
|
Large accelerated filer
☐
|
| |
Accelerated filer
☐
|
|
|
Non-accelerated filer
☒
|
| |
Smaller reporting company
☒
|
|
| | | |
Emerging growth company
☒
|
|
| | ||||||||||||||||
Title Of Each Class Of
Securities To Be Registered |
| | |
Amount
To Be Registered(1) |
| | |
Proposed
Maximum Offering Price Per Unit |
| | |
Proposed
Maximum Aggregate Offering Price(2) |
| | |
Amount Of
Registration Fee(3) |
|
Common Stock, par value $0.001 per share(4)
|
| | |
36,279,329
|
| | |
$3.11
|
| | |
$112,828,713.19
|
| | |
$12,309.62 (5)
|
|
|
|
| |
|
|
|
Dan W. Gladney
Chair of the Board ReShape Lifesciences Inc. |
| |
Kim Kamdar, Ph.D.
Chair of the Board Obalon Therapeutics, Inc. |
|
|
ReShape Lifesciences Inc.
1001 Calle Amanecer San Clemente, California 92673 Attention: Investor Relations Telephone: (949) 429-6680 https://ir.reshapelifesciences.com/ |
| |
Obalon Therapeutics, Inc.
5421 Avenida Encinas, Suite F Carlsbad, California 92008 Attention: Nooshin Hussainy, Chief Financial Officer and Corporate Secretary Telephone: (760) 607-5164 https://investor.obalon.com/
or
|
|
| | | |
|
|
| | | |
1407 Broadway, 27th Floor
New York, NY 10018 Toll-Free: (800) 322-2885 Email: proxy@mackenziepartners.com |
|
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| | | | | F-1 | | | |
| | | | | F-33 | | | |
| | | | | A-1 | | |
A:
|
1.
|
ReShape Merger Proposal: Approval of the ReShape Merger Proposal requires the affirmative vote of the holders of a majority of all outstanding shares of ReShape Common Stock entitled to vote at the ReShape Special Meeting. For the ReShape Merger Proposal, an abstention or a failure to vote (i.e., a failure to submit a proxy card or vote virtually) will have the same effect as a vote cast “AGAINST” this proposal. |
A:
|
1.
|
Obalon Share Issuance Proposal: To be approved, the Obalon Share Issuance Proposal requires the affirmative vote of the holders of a majority of the votes cast affirmatively or negatively thereon at the Obalon Special Meeting. For the Obalon Share Issuance Proposal, an abstention or a failure to vote (i.e., a failure to submit a proxy card or vote virtually at the Obalon Special Meeting) |
| | |
April 7,
2021 |
| |
1-for-3
|
| |
1-for-5
|
| |
1-for-7
|
| |
1-for-10
|
| |||||||||||||||
| | | | | | | |||||||||||||||||||||||||
Number of authorized shares of Common Stock
|
| | | | 100,000,000 | | | | | | 100,000,000 | | | | | | 100,000,000 | | | | | | 100,000,000 | | | | | | 100,000,000 | | |
Number of outstanding shares of
Common Stock |
| | | | 10,021,568 | | | | | | 3,340,523 | | | | | | 2,004,314 | | | | | | 1,431,653 | | | | | | 1,002,157 | | |
Number of shares of Common Stock reserved for issuance upon exercise of outstanding stock options
|
| | | | 1,099,855 | | | | | | 366,619 | | | | | | 219,971 | | | | | | 157,123 | | | | | | 109,986 | | |
Number of shares of Common Stock reserved for issuance in connection with vesting of restricted stock awards
|
| | | | 1,500 | | | | | | 500 | | | | | | 300 | | | | | | 215 | | | | | | 150 | | |
Number of shares of Common
Stock reserved for issuance for future awards under our Amended and Restated 2016 Equity Incentive Plan |
| | | | 376,329 | | | | | | 125,443 | | | | | | 75,266 | | | | | | 53,762 | | | | | | 37,633 | | |
Number of shares of Common
Stock reserved for issuance for future awards under our 2016 Employee Stock Purchase Plan, as amended |
| | | | 190,220 | | | | | | 63,407 | | | | | | 38,044 | | | | | | 27,175 | | | | | | 19,022 | | |
Number of authorized and
unreserved shares of Common Stock not outstanding |
| | | | 2,776,022 | | | | | | 925,341 | | | | | | 555,205 | | | | | | 396,575 | | | | | | 277,603 | | |
| | |
2021
|
| |
2022
|
| |
2023
|
| |
2024
|
| |
2025
|
| |
2026
|
| |
2027
|
| |
2028
|
| |
2029
|
| |
2030
|
| ||||||||||||||||||||||||||||||
Net Revenue
|
| | | | 22,053 | | | | | | 32,380 | | | | | | 40,670 | | | | | | 63,746 | | | | | | 79,159 | | | | | | 101,732 | | | | | | 116,211 | | | | | | 131,763 | | | | | | 149,662 | | | | | | 170,306 | | |
Net Income (Loss)
|
| | | | (7,143) | | | | | | (2,493) | | | | | | 1,381 | | | | | | 11,474 | | | | | | 15,832 | | | | | | 22,381 | | | | | | 25,566 | | | | | | 28,988 | | | | | | 32,926 | | | | | | 37,467 | | |
| | |
2021
|
| |
2022
|
| |
2023
|
| |
2024
|
| |
2025
|
| |
2026
|
| |
2027
|
| |
2028
|
| |
2029
|
| |
2030
|
| ||||||||||||||||||||||||||||||
Net Revenue
|
| | | | 1,000 | | | | | | 9,000 | | | | | | 12,000 | | | | | | 16,000 | | | | | | 21,500 | | | | | | 24,683 | | | | | | 27,637 | | | | | | 30,901 | | | | | | 34,508 | | | | | | 38,491 | | |
Net Income
|
| | | | (4,500) | | | | | | (1,620) | | | | | | 120 | | | | | | 800 | | | | | | 2,580 | | | | | | 3,456 | | | | | | 3,869 | | | | | | 4,326 | | | | | | 4,831 | | | | | | 5,389 | | |
Selected Company
|
| |
EV
($mm) |
| |
EV/2020LTM
Revenue |
| |
EV/2021E
Revenue |
| |||||||||
LENSAR, Inc.
|
| | | $ | 36.8 | | | | | | 1.4x | | | | | | N/A | | |
Electromed, Inc.
|
| | | $ | 73.3 | | | | | | 2.3x | | | | | | 2.2x | | |
Nephros, Inc.
|
| | | $ | 78.0 | | | | | | 8.3x | | | | | | 5.5x | | |
Conformis, Inc.
|
| | | $ | 70.6 | | | | | | 1.0x | | | | | | 0.9x | | |
STRATA Skin Sciences, Inc.
|
| | | $ | 51.6 | | | | | | 2.0x | | | | | | 1.7x | | |
Ekso Bionics Holdings, Inc.
|
| | | $ | 66.1 | | | | | | 6.4x | | | | | | 4.4x | | |
Myomo, Inc.
|
| | | $ | 28.1 | | | | | | 5.3x | | | | | | 2.4x | | |
BIOLASE, Inc.
|
| | | $ | 98.7 | | | | | | 4.0x | | | | | | 2.6x | | |
CHF Solutions, Inc.
|
| | | $ | 6.0 | | | | | | 0.9x | | | | | | 0.6x | | |
Allied Healthcare Products, Inc.
|
| | | $ | 26.0 | | | | | | 0.8x | | | | | | N/A | | |
ThermoGenesis Holdings, Inc.
|
| | | $ | 23.1 | | | | | | 2.4x | | | | | | 1.3x | | |
Dynatronics Corporation
|
| | | $ | 26.1 | | | | | | 0.5x | | | | | | 0.5x | | |
Viveve Medical, Inc.
|
| | | $ | 28.6 | | | | | | 5.7x | | | | | | 2.8x | | |
|
2021
|
| |
2022
|
| |
2023
|
| |
2024
|
| |
2025
|
| |
2026
|
| |
2027
|
| |
2028
|
| |
2029
|
| |
2030
|
| |||||||||||||||||||||||||||
| (5,127) | | | | | (324) | | | | | | 4,509 | | | | | | 13,213 | | | | | | 18,679 | | | | | | 24,096 | | | | | | 25,520 | | | | | | 26,121 | | | | | | 28,963 | | | | | | 32,259 | | |
|
2021
|
| |
2022
|
| |
2023
|
| |
2024
|
| |
2025
|
| |
2026
|
| |
2027
|
| |
2028
|
| |
2029
|
| |
2030
|
| |||||||||||||||||||||||||||
| (3,850) | | | | | (820) | | | | | | 1,120 | | | | | | 1,900 | | | | | | 3,779 | | | | | | 4,701 | | | | | | 5,163 | | | | | | 5,671 | | | | | | 6,229 | | | | | | 6,841 | | |
Selected Company
|
| |
Other Party
|
| |
Closing Date
|
| |
Enterprise Value of
Selected Company (in millions) |
|
Spring Bank Pharmaceuticals, Inc.
|
| | F-Star Therapeutics, Inc. | | |
November 2020
|
| |
$13.6
|
|
Rexahn Pharmaceuticals, Inc. | | | Ocuphire Pharma, Inc. | | |
November 2020
|
| |
20.0
|
|
Miragen Therapeutics, Inc. | | | Viridian Therapeutics, Inc. | | |
October 2020
|
| |
15.0
|
|
Novus Therapeutics, Inc. | | | Anelixis Therapeutics, LLC | | |
September 2020
|
| |
10.0
|
|
Unum Therapeutics, Inc. | | | Kiq LLC | | |
July 2020
|
| |
34.0
|
|
Tocagen Inc. | | | Forte Biosciences, Inc. | | |
June 2020
|
| |
15.0
|
|
Zafgen, Inc. | | | Larimar Therapeutics, Inc. | | |
May 2020
|
| |
45.0
|
|
Conatus Pharmaceuticals Inc. | | | Histogen Inc. | | |
May 2020
|
| |
35.14
|
|
BioPharmX Corporation | | | Timber Pharmaceuticals, Inc. | | |
May 2020
|
| |
10.0
|
|
Chanticlear Holdings, Inc. | | | Sonnet BioTherapeutics | | |
April 2020
|
| |
15.91
|
|
Proteon Therapeutics, Inc. | | | Protara Therapeutics, Inc. | | |
January 2020
|
| |
7.3
|
|
|
ReShape Transaction Valuation
|
| | | | |
Combined ReShape Valuation Methodology
|
| ||||||
| Pro Forma ReShape Equity Value(i)(ii) | | |
$19.0 Million
|
| | | | |
DCF Implied Enterprise Value(iii)
|
| |
$5.8 Million
|
|
| Less: Cash(iv) | | |
$4.0 Million
|
| | | | |
+
|
| |
+
|
|
| Plus: Debt(v) | | |
$13.3 Million
|
| | | | |
Public Comparable
Company Analysis(vi) |
| |
$21.8 Million
|
|
| | | | | | | | | |
=
|
| |
=
|
|
| Enterprise Value | | |
$28.3 Million
|
| |
>
|
| |
Implied Enterprise Value
|
| |
$27.6 million
|
|
|
Obalon Transaction Valuation
|
| | | | |
Combined Obalon Valuation Methodology
|
| | ||||||||
| Pro Forma Obalon Equity Value(i)(ii) | | |
$18.2 Million
|
| | | | |
DCF Implied Enterprise Value(vii)
|
| |
$11.6 Million
|
| | | |
| Less: Cash(iv) | | |
$3.9 Million
|
| | | | |
+
|
| |
+
|
| | | |
| Plus Debt(v) | | |
$0.43 Million
|
| | | | |
Precedent Transaction Analysis(viii)
|
| |
$17.5 Million
|
| | | |
| | | | | | | | | |
=
|
| |
=
|
| | ||
|
Enterprise Value
|
| |
$14.8 Million
|
| |
<
|
| |
Implied Enterprise Value
|
| |
$29.1 Million
|
| |
| | |
2021
|
| |
2022
|
| |
2023
|
| |
2024
|
| |
2025
|
| |
2026
|
| |
2027
|
| |
2028
|
| |
2029
|
| |
2030
|
| ||||||||||||||||||||||||||||||
ReShape Revenue
|
| | | $ | 22,037 | | | | | $ | 32,338 | | | | | $ | 40,512 | | | | | $ | 59,346 | | | | | $ | 74,080 | | | | | $ | 95,314 | | | | | $ | 112,007 | | | | | $ | 129,835 | | | | | $ | 149,073 | | | | | $ | 169,060 | | |
Net Income
|
| | | $ | (9,712) | | | | | $ | (4,943) | | | | | $ | (1,346) | | | | | $ | 4,454 | | | | | $ | 11,243 | | | | | $ | 14,465 | | | | | $ | 18,996 | | | | | $ | 24,089 | | | | | $ | 28,292 | | | | | $ | 27,881 | | |
Unlevered Free Cash Flow
|
| | | $ | (6,604) | | | | | $ | (1,946) | | | | | $ | 2,923 | | | | | $ | 7,818 | | | | | $ | 14,471 | | | | | $ | 17,807 | | | | | $ | 22,910 | | | | | $ | 28,092 | | | | | $ | 32,117 | | | | | $ | 31,768 | | |
Announcement Date
|
| |
Public Company
|
| |
Private Company
|
|
12/17/20 | | | Seneca Biopharma, Inc. | | | Leading BioSciences, Inc. | |
12/15/20 | | | Anchiano Therapeutics Ltd. | | | Chemomab Ltd. | |
10/20/20 | | | Cleveland BioLabs, Inc. | | | Cytocom, Inc. | |
8/24/20 | | | Cancer Genetics, Inc. | | | StemoniX Inc. | |
6/18/20 | | | Rexahn Pharmaceuticals, Inc. | | | Ocuphire Pharma, Inc. | |
2/19/20 | | | Tocagen Inc. | | | Forte Biosciences, Inc. | |
1/28/20 | | | BioPharmX Corporation | | | Timber Pharmaceuticals, Inc. | |
10/10/19 | | | Chanticleer Holdings, Inc. | | | Sonnet BioTherapeutics, Inc. | |
9/23/19 | | | Proteon Therapeutics, Inc. | | | ArTara Therapeutics, Inc. | |
7/24/19 | | | Gemphire Therapeutics Inc. | | |
NeuroBo Pharmaceuticals, Inc.
|
|
4/8/19 | | | Histogenics Corporation | | | Ocugen, Inc. | |
1/4/19 | | |
AmpliPhi Biosciences Corporation
|
| | C3J Therapeutics, Inc. | |
1/3/19 | | | Ohr Pharmaceutical, Inc. | | | NeuBase Therapeutics, Inc. | |
11/19/18 | | | Bioblast Pharma Ltd. | | | Enlivex Therapeutics Ltd. | |
7/30/18 | | | Apricus Biosciences, Inc. | | | Seelos Therapeutics, Inc. | |
5/15/18 | | | TapImmune Inc. | | | Marker Therapeutics, Inc. | |
Selected Company
|
| |
CY2020E TEV/Revenue
|
| |
CY2021P TEV/Revenue
|
| |
CY2022P TEV/Revenue
|
| |||||||||
InMode Ltd.
|
| | | | 11.79x | | | | | | 9.24x | | | | | | 7.79x | | |
Establishment Labs Holdings Inc.
|
| | | | 14.57x | | | | | | 11.14x | | | | | | 8.71x | | |
Cutera, Inc.
|
| | | | 2.91x | | | | | | 2.27x | | | | | | 2.00x | | |
Sientra, Inc.
|
| | | | 3.74x | | | | | | 2.97x | | | | | | 2.36x | | |
Apollo Endosurgery, Inc.
|
| | | | 4.64x | | | | | | 3.58x | | | | | | 2.68x | | |
Venus Concept Inc.
|
| | | | 2.10x | | | | | | 1.59x | | | | | | 1.34x | | |
Obalon Therapeutics, Inc.
|
| | | | 4.74x | | | | | | N/A | | | | | | N/A | | |
Financial Statistic
|
| |
Multiple Range
|
| |
Implied Price Per ReShape Share
|
| ||||||
CY2020E TEV/Revenue
|
| | | | 4.64x – 6.36x | | | | | $ | 2.88 – $4.31 | | |
CY2021P TEV/Revenue
|
| | | | 3.28x – 5.13x | | | | | $ | 3.96 – $6.21 | | |
CY2022P TEV/Revenue
|
| | | | 2.52x – 4.14x | | | | | $ | 4.48 – $7.19 | | |
| | |
Implied Exchange
Ratio |
| |||
Current (as of January 15, 2021)
|
| | | | 2.56x | | |
30-day Average
|
| | | | 2.60x | | |
90-day Average
|
| | | | 3.88x | | |
12-month Average
|
| | | | 4.43x | | |
12-month High
|
| | | | 9.15x | | |
| | |
Implied Exchange
Ratio |
| |||
12-month Low
|
| | | | 1.84x | | |
Name
|
| |
Grant
Date |
| |
Number of
Obalon Shares Underlying Unvested Equity Awards(#) |
| |
Option
Exercise Price ($) |
| |||||||||
Andrew Rasdal, President, Chief Executive Officer and Executive Chairman of the Board
|
| | | | 6/23/2020 | | | | | | 151,390 | | | | | $ | 0.73 | | |
Nooshin Hussainy, Chief Financial Officer
|
| | | | 1/2/2018 | | | | | | 836 | | | | | $ | 71.50 | | |
| | | | | 1/2/2019 | | | | | | 2,089 | | | | | $ | 23.00 | | |
| | | | | 10/25/2019 | | | | | | 12,497 | | | | | $ | 1.75 | | |
| | | | | 6/23/2020 | | | | | | 151,390 | | | | | $ | 0.73 | | |
Mark Brister, Former Chief Technology Officer
|
| | | | 1/2/2019 | | | | | | 4,169 | | | | | $ | 23.00 | | |
| | | | | 10/25/2019 | | | | | | 7,855 | | | | | $ | 1.75 | | |
Name
|
| |
Grant
Date |
| |
Number of
Obalon Shares Underlying Unvested Equity Awards(#) |
| |
Option
Exercise Price ($) |
| |||||||||
Amy Vandenberg, Former Chief Quality Assurance, Clinical
and Regulatory Affairs Officer |
| | | | 1/2/2018 | | | | | | 1,500(1) | | | | | | — | | |
| | | | | 1/2/2019 | | | | | | 4,175 | | | | | $ | 23.00 | | |
| | | | | 10/25/2019 | | | | | | 6,042 | | | | | $ | 1.75 | | |
William Plovanic, Director
|
| | | | 1/2/2019 | | | | | | 4,172 | | | | | $ | 23.00 | | |
| | | | | 7/23/2019 | | | | | | 15,002 | | | | | $ | 9.60 | | |
| | | | | 10/25/2019 | | | | | | 6,042 | | | | | $ | 1.75 | | |
| | | | | 9/16/2020 | | | | | | 42,390 | | | | | $ | 0.77 | | |
Kim Kamdar, Ph.D., Director
|
| | | | 9/16/2020 | | | | | | 42,390 | | | | | $ | 0.77 | | |
Raymond Dittamore, Director
|
| | | | 9/16/2020 | | | | | | 42,390 | | | | | $ | 0.77 | | |
Douglas Fisher, M.D., Director
|
| | | | 9/16/2020 | | | | | | 42,390 | | | | | $ | 0.77 | | |
Les Howe, Director
|
| | | | 9/16/2020 | | | | | | 42,390 | | | | | $ | 0.77 | | |
Sharon Stevenson, DVM Ph.D., Director
|
| | | | 9/16/2020 | | | | | | 42,390 | | | | | $ | 0.77 | | |
Weight Loss Metric Per Protocol Cohort
|
| |
Obalon
Treatment Group (N = 185) |
| |
Sham-Control
Group (N = 181) |
| |
Difference
|
| |
p-value
|
| |||||||||
Percent TBL
|
| | | | -6.86 | | | | | | -3.59 | | | | | | -3.28 | | | |
0.0261
|
|
Percent EWL
|
| | | | -25.05 | | | | | | -12.95 | | | | | | -12.09 | | | |
< 0.0001
|
|
Weight Loss (lbs.)
|
| | | | -15.06 | | | | | | -7.77 | | | | | | -7.28 | | | |
< 0.0001
|
|
|
Main Analysis of -5% TBL Responder Rate
|
| |
Estimate
|
|
|
Obalon Treatment Group – Per Protocol Cohort*
|
| |
120 / 185 (64.9)%
|
|
|
Sham-Control Group
|
| |
58 / 181 (32.0)%
|
|
|
Difference (Treatment less Control)
|
| |
32.8%
|
|
Responder Rate Threshold (-%TBL)
|
| |
Obalon Treatment
Group |
| |
Sham-Control
Group |
|
-6%
|
| |
98 / 185 (53.0)%
|
| |
47 / 181 (26.0)%
|
|
-7%
|
| |
81 / 185 (43.8)%
|
| |
38 / 181 (21.0)%
|
|
-8%
|
| |
68 / 185 (36.8)%
|
| |
35 / 181 (19.3)%
|
|
-9%
|
| |
55 / 185 (29.7)%
|
| |
29 / 181 (16.0)%
|
|
-10%
|
| |
49 / 185 (26.5)%
|
| |
23 / 181 (12.7)%
|
|
Weight Loss Metric
|
| |
Mean
|
| |
Average
Top 25% |
| |
Average
Worst 25% |
| |
Single
Best |
| ||||||||||||
Percent TBL
|
| | | | -6.9% | | | | | | -10.2% | | | | | | -3.6% | | | | | | -19.3% | | |
Percent EWL
|
| | | | -25.1% | | | | | | -36.3% | | | | | | -12.3% | | | | | | -80.7% | | |
Weight Loss (lbs.)
|
| | | | -15.1 | | | | | | -21.8 | | | | | | -7.4 | | | | | | -49.7 | | |
BMI Change
|
| | | | -2.4 | | | | | | -3.6 | | | | | | -1.3 | | | | | | -7.1 | | |
Name and principal position
|
| |
Year
|
| |
Salary
($)(1) |
| |
Bonus
($) |
| |
Stock
Awards ($)(2) |
| |
Option
Awards ($)(3) |
| |
Non-equity
incentive plan compensation |
| |
All other
compensation ($)(4) |
| |
Total ($)
|
| ||||||||||||||||||||||||
Andrew Rasdal(5)
President and Chief Executive Officer and Executive Chairman of the Board |
| | | | 2020 | | | | | | 159,639(6) | | | | | | — | | | | | | — | | | | | | 75,153 | | | | | | — | | | | | | 675 | | | | | | 235,467 | | |
| | | 2019 | | | | | | 325,000 | | | | | | — | | | | | | 200,001 | | | | | | — | | | | | | — | | | | | | 994 | | | | | | 525,995 | | | ||
William Plovanic(7)
Director, Former President and Chief Executive Officer |
| | | | 2020 | | | | | | 167,330 | | | | | | — | | | | | | 119,104 | | | | | | 38,790(8) | | | | | | — | | | | | | 236 | | | | | | 325,460 | | |
| | | 2019 | | | | | | 422,917 | | | | | | 241,000 | | | | | | — | | | | | | 290,708 | | | | | | — | | | | | | 994 | | | | | | 955,619 | | | ||
Nooshin Hussainy
Chief Financial Officer |
| | | | 2020 | | | | | | 139,635 | | | | | | — | | | | | | 22,056 | | | | | | 75,153 | | | | | | — | | | | | | 657 | | | | | | 237,501 | | |
Mark Brister(9)
Former Chief Technology Officer |
| | | | 2020 | | | | | | 138,877 | | | | | | — | | | | | | 27,570 | | | | | | — | | | | | | — | | | | | | 80,843 | | | | | | 247,290 | | |
| | | 2019 | | | | | | 367,500 | | | | | | 35,000 | | | | | | — | | | | | | 139,180 | | | | | | — | | | | | | 994 | | | | | | 542,674 | | | ||
Amy Vandenberg(10)
Former Chief Quality Assurance, Clinical and Regulatory Affairs Officer |
| | | | 2020 | | | | | | 138,407 | | | | | | — | | | | | | 22,056 | | | | | | — | | | | | | — | | | | | | 97,982 | | | | | | 258,445 | | |
| | | 2019 | | | | | | 367,500 | | | | | | 35,000 | | | | | | — | | | | | | 136,028 | | | | | | — | | | | | | 994 | | | | | | 539,522 | | |
Name
|
| |
Grant Date
|
| |
Number of
Options (#)(1) |
| |
Option
Exercise Price ($) |
| |||||||||
Andrew Rasdal
|
| | | | 6/23/2020 | | | | | | 218,000 | | | | | $ | 0.73 | | |
Nooshin Hussainy
|
| | | | 6/23/2020 | | | | | | 218,000 | | | | | $ | 0.73 | | |
Name
|
| |
Grant Date
|
| |
Number of
Restricted Stock Units (#) |
| ||||||
William Plovanic
|
| | | | 1/24/2020 | | | | | | 441,125 | | |
Nooshin Hussainy
|
| | | | 1/24/2020 | | | | | | 88,225 | | |
Mark Brister
|
| | | | 1/24/2020 | | | | | | 110,281 | | |
Amy Vandenberg
|
| | | | 1/24/2020 | | | | | | 88,225 | | |
| | |
Option Awards
|
| |
Stock Awards
|
| ||||||||||||||||||||||||||||||||||||||||||
Name
|
| |
Grant
date |
| |
Vesting
commencement date |
| |
Number of
securities underlying unexercised options (#) exercisable |
| |
Number of
securities underlying unexercised options (#) unexercisable |
| |
Option
exercise price ($) |
| |
Option
expiration date |
| |
Number of
shares or units of stock that have not vested (#) |
| |
Market value
of shares or units of stock that have not vested ($) |
| ||||||||||||||||||||||||
Andrew Rasdal
|
| | | | 8/14/2012 | | | | | | 6/14/2012 | | | | | | 8,994 | | | | | | — | | | | | $ | 18.30 | | | | | | 8/14/2022 | | | | | | — | | | | | | — | | |
| | | | | 2/12/2015 | | | | | | 1/1/2015 | | | | | | 14,293 | | | | | | — | | | | | $ | 7.60 | | | | | | 2/12/2025 | | | | | | — | | | | | | — | | |
| | | | | 5/11/2016 | | | | | | 5/11/2016 | | | | | | 14,655 | | | | | | — | | | | | $ | 17.70 | | | | | | 5/11/2026 | | | | | | — | | | | | | — | | |
| | | | | 11/9/2016 | | | | | | 11/9/2016 | | | | | | 30,000 | | | | | | — | | | | | $ | 87.40 | | | | | | 11/9/2026 | | | | | | — | | | | | | — | | |
| | | | | 6/23/2020 | | | | | | 6/23/2020 | | | | | | 36,332 | | | | | | 181,668(1)(2) | | | | | $ | 0.73 | | | | | | 6/23/2030 | | | | | | — | | | | | | — | | |
| | |
Option Awards
|
| |
Stock Awards
|
| ||||||||||||||||||||||||||||||||||||||||||
Name
|
| |
Grant
date |
| |
Vesting
commencement date |
| |
Number of
securities underlying unexercised options (#) exercisable |
| |
Number of
securities underlying unexercised options (#) unexercisable |
| |
Option
exercise price ($) |
| |
Option
expiration date |
| |
Number of
shares or units of stock that have not vested (#) |
| |
Market value
of shares or units of stock that have not vested ($) |
| ||||||||||||||||||||||||
William Plovanic
|
| | | | 11/9/2016 | | | | | | 3/7/2016 | | | | | | 550 | | | | | | — | | | | | $ | 87.40 | | | | | | 11/9/2026 | | | | | | — | | | | | | — | | |
| | | | | 1/2/2019 | | | | | | 1/2/2019 | | | | | | 4,784 | | | | | | 5,216(3) | | | | | $ | 23.00 | | | | | | 1/2/2029 | | | | | | — | | | | | | — | | |
| | | | | 7/23/2019 | | | | | | 5/20/2019 | | | | | | 11,873 | | | | | | 18,127(3) | | | | | $ | 9.60 | | | | | | 7/23/2029 | | | | | | — | | | | | | — | | |
| | | | | 10/25/2019 | | | | | | 5/20/2019 | | | | | | 2,916 | | | | | | 7,084(4) | | | | | $ | 1.75 | | | | | | 10/25/2029 | | | | | | — | | | | | | — | | |
| | | | | 9/16/2020 | | | | | | 9/16/2020 | | | | | | 4,540 | | | | | | 49,960(5) | | | | | $ | 0.77 | | | | | | 9/16/2030 | | | | | | — | | | | | | — | | |
Nooshin Hussainy
|
| | | | 2/10/2013 | | | | | | — | | | | | | 453 | | | | | | — | | | | | $ | 26.10 | | | | | | 2/10/2023 | | | | | | — | | | | | | — | | |
| | | | | 2/12/2015 | | | | | | — | | | | | | 1,616 | | | | | | — | | | | | $ | 7.60 | | | | | | 2/12/2025 | | | | | | — | | | | | | — | | |
| | | | | 5/11/2016 | | | | | | — | | | | | | 1,724 | | | | | | — | | | | | $ | 17.70 | | | | | | 5/11/2026 | | | | | | — | | | | | | — | | |
| | | | | 11/9/2016 | | | | | | — | | | | | | 4,000 | | | | | | — | | | | | $ | 87.40 | | | | | | 11/9/2026 | | | | | | — | | | | | | — | | |
| | | | | 1/2/2018 | | | | | | 1/2/2018 | | | | | | 3,644 | | | | | | 1,356(3) | | | | | $ | 71.50 | | | | | | 1/2/2028 | | | | | | — | | | | | | — | | |
| | | | | 1/2/2019 | | | | | | 1/2/2019 | | | | | | 2,392 | | | | | | 2,608(3) | | | | | $ | 23.00 | | | | | | 1/2/2029 | | | | | | — | | | | | | — | | |
| | | | | 10/25/2019 | | | | | | 10/25/2019 | | | | | | 2,625 | | | | | | 6,375(3) | | | | | $ | 1.75 | | | | | | 10/25/2029 | | | | | | — | | | | | | — | | |
| | | | | 10/25/2019 | | | | | | 10/19/2019 | | | | | | 3,406 | | | | | | 8,276(4) | | | | | $ | 1.75 | | | | | | 10/25/2029 | | | | | | — | | | | | | — | | |
| | | | | 6/23/2020 | | | | | | 6/23/2020 | | | | | | 36,332 | | | | | | 181,668(1)(2) | | | | | $ | 0.73 | | | | | | 6/23/2030 | | | | | | — | | | | | | — | | |
Mark Brister
|
| | | | 2/12/2015 | | | | | | 1/1/2015 | | | | | | 4,072 | | | | | | — | | | | | $ | 7.60 | | | | | | 2/12/2025 | | | | | | — | | | | | | — | | |
| | | | | 5/11/2016 | | | | | | 5/11/2016 | | | | | | 3,966 | | | | | | — | | | | | $ | 17.70 | | | | | | 5/11/2026 | | | | | | — | | | | | | — | | |
| | | | | 11/9/2016 | | | | | | 11/9/2016 | | | | | | 9,000 | | | | | | — | | | | | $ | 87.40 | | | | | | 11/9/2026 | | | | | | — | | | | | | — | | |
| | | | | 1/2/2019 | | | | | | 1/2/2019 | | | | | | 4,791 | | | | | | 5,209(3) | | | | | $ | 23.00 | | | | | | 1/2/2029 | | | | | | — | | | | | | — | | |
| | | | | 10/25/2019 | | | | | | 10/25/2019 | | | | | | 3,791 | | | | | | 9,209(3) | | | | | $ | 1.75 | | | | | | 10/25/2029 | | | | | | — | | | | | | — | | |
Amy Vandenberg
|
| | | | 7/27/2011 | | | | | | 7/13/2011 | | | | | | 977 | | | | | | — | | | | | $ | 13.10 | | | | | | 7/27/2021 | | | | | | — | | | | | | — | | |
| | | | | 4/10/2012 | | | | | | 2/13/2012 | | | | | | 1,045 | | | | | | — | | | | | $ | 13.10 | | | | | | 4/10/2022 | | | | | | — | | | | | | — | | |
| | | | | 8/14/2012 | | | | | | 6/14/2012 | | | | | | 3,391 | | | | | | — | | | | | $ | 18.30 | | | | | | 8/14/2022 | | | | | | — | | | | | | — | | |
| | | | | 12/19/2014 | | | | | | 11/17/2014 | | | | | | 1,221 | | | | | | — | | | | | $ | 7.60 | | | | | | 12/19/2024 | | | | | | — | | | | | | — | | |
| | | | | 2/12/2015 | | | | | | 1/1/2015 | | | | | | 5,298 | | | | | | — | | | | | $ | 7.60 | | | | | | 2/12/2025 | | | | | | — | | | | | | — | | |
| | | | | 5/11/2016 | | | | | | 5/11/2016 | | | | | | 3,448 | | | | | | | | | | | $ | 17.70 | | | | | | 5/11/2026 | | | | | | — | | | | | | — | | |
| | | | | 11/9/2016 | | | | | | 11/9/2016 | | | | | | 3,000 | | | | | | | | | | | $ | 87.40 | | | | | | 11/9/2026 | | | | | | — | | | | | | — | | |
| | | | | 1/2/2018 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,000(6) | | | | | $ | 4,500(7) | | |
| | | | | 1/2/2019 | | | | | | 1/2/2019 | | | | | | 4,791 | | | | | | 5,209(3) | | | | | $ | 23.00 | | | | | | 1/2/2029 | | | | | | — | | | | | | — | | |
| | | | | 10/25/2019 | | | | | | 10/25/2019 | | | | | | 2,916 | | | | | | 7,084(3) | | | | | $ | 1.75 | | | | | | 10/25/2029 | | | | | | — | | | | | | — | | |
Cash Compensation
|
| | | | | | |
Board of Directors annual retainer
|
| | | $ | 35,000 | | |
Incremental annual retainer for the Chairman
|
| | | $ | 25,000 | | |
Committee Chair annual retainers | | | | | | | |
Audit
|
| | | $ | 17,500 | | |
Compensation
|
| | | $ | 12,500 | | |
Nominating and Corporate Governance
|
| | | $ | 7,500 | | |
Committee member annual retainers | | | | | | | |
Audit
|
| | | $ | 7,500 | | |
Compensation
|
| | | $ | 5,000 | | |
Nominating and Corporate Governance
|
| | | $ | 5,000 | | |
Name(1)
|
| |
Fees Earned or
Paid in Cash ($)(2) |
| |
Option Awards ($)(3)
|
| |
Total
($) |
| |||||||||
Kim Kamdar, Ph.D.
|
| | | $ | 35,625 | | | | | $ | 38,790 | | | | | $ | 74,415 | | |
Raymond Dittamore
|
| | | $ | 41,250 | | | | | $ | 38,790 | | | | | $ | 80,040 | | |
Douglas Fisher, M.D.
|
| | | $ | 30,000 | | | | | $ | 38,790 | | | | | $ | 68,790 | | |
Les Howe
|
| | | $ | 43,125 | | | | | $ | 38,790 | | | | | $ | 81,915 | | |
David Moatazedi(4)
|
| | | $ | 35,625 | | | | | | — | | | | | $ | 35,625 | | |
Sharon Stevenson, DVM Ph.D.
|
| | | $ | 31,875 | | | | | $ | 38,790 | | | | | $ | 70,665 | | |
Name
|
| |
Age
|
| |
Position(s)
|
| |||
Bart Bandy
|
| | | | 60 | | | | President, Chief Executive Officer and Director | |
Thomas Stankovich
|
| | | | 60 | | | | Chief Financial Officer | |
Dan Gladney
|
| | | | 68 | | | | Director | |
Gary Blackford
|
| | | | 64 | | | | Director | |
Lori McDougal
|
| | | | 60 | | | | Director | |
Arda Minocherhomjee
|
| | | | 68 | | | | Director | |
| | |
Target %
|
| |||
Dan Gladney
|
| | | | 2.00% | | |
Gary Blackford
|
| | | | 1.00% | | |
Lori McDougal
|
| | | | 1.00% | | |
Arda Minocherhomjee
|
| | | | 1.00% | | |
Name(1)
|
| |
Fees Earned or
Paid in Cash ($)(2) |
| |
Total ($)
|
| ||||||
Dan Gladney
|
| | | | 60,500 | | | | | | 60,500 | | |
Gary Blackford
|
| | | | 59,000 | | | | | | 59,000 | | |
Lori McDougal
|
| | | | 57,500 | | | | | | 57,500 | | |
Arda Minocherhomjee
|
| | | | 51,000 | | | | | | 51,000 | | |
Name
|
| |
Vested Options
|
| |
Unvested Options
|
| ||||||
Dan Gladney
|
| | | | 17 | | | | | | 4 | | |
Gary Blackford
|
| | | | — | | | | | | — | | |
Lori McDougal
|
| | | | — | | | | | | — | | |
Arda Minocherhomjee
|
| | | | — | | | | | | — | | |
Name
|
| |
Age
|
| |
Position
|
|
Barton P. Bandy
|
| |
60
|
| |
President and Chief Executive Officer
|
|
Thomas Stankovich
|
| |
60
|
| | Chief Financial Officer | |
Name and
Principal Position |
| |
Year
|
| |
Salary ($)
|
| |
Bonus
($) |
| |
Option
Awards ($) |
| |
Non-
equity Incentive Plan Compensation ($) |
| |
All Other
Compensation ($)(6) |
| |
Total ($)
|
| |||||||||||||||||||||
Bart Bandy(1)
President and Chief Executive Officer |
| | | | 2020 | | | | | | 377,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 377,000 | | |
| | | 2019 | | | | | | 292,500 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 292,500 | | | ||
Thomas Stankovich(2)
Chief Financial Officer |
| | | | 2020 | | | | | | 290,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 290,000 | | |
| | | 2019 | | | | | | 53,461 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 53,461 | | |
| | |
Year ended December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Consolidated statements of operations data: | | | | | | | | | | | | | |
Revenue
|
| | | $ | 1,588 | | | | | $ | 3,281 | | |
Cost of revenue
|
| | | | 1,004 | | | | | | 2,950 | | |
Gross profit
|
| | | | 584 | | | | | | 331 | | |
Operating expenses: | | | | | | | | | | | | | |
Research and development
|
| | | | 2,450 | | | | | | 6,893 | | |
Selling, general and administrative
|
| | | | 8,776 | | | | | | 16,668 | | |
Asset impairment and other charges
|
| | | | 1,310 | | | | | | — | | |
Total operating expenses
|
| | | | 12,536 | | | | | | 23,561 | | |
Loss from operations
|
| | | | (11,952) | | | | | | (23,230) | | |
Interest income (expense), net
|
| | | | 29 | | | | | | (385) | | |
| | |
Year ended
December 31, |
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Other expense, net
|
| | | | (411) | | | | | | (61) | | |
Net loss
|
| | | | (12,334) | | | | | | (23,676) | | |
Other comprehensive income (loss)
|
| | | | — | | | | | | — | | |
Net loss and comprehensive loss
|
| | | $ | (12,334) | | | | | $ | (23,676) | | |
|
| | |
Year ended December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Net cash (used in) provided by: | | | | | | | | | | | | | |
Operating activities
|
| | | $ | (10,409) | | | | | | (22,866) | | |
Investing activities
|
| | | | (171) | | | | | | 2,356 | | |
Financing activities
|
| | | | 430 | | | | | | 13,378 | | |
Net (decrease) increase in cash and cash equivalents
|
| | | $ | (10,150) | | | | | $ | (7,132) | | |
| | |
Year Ended December 31,
|
| |||||||||||||||||||||
| | |
2020
|
| |
2019
|
| ||||||||||||||||||
Revenue
|
| | | $ | 11,299 | | | | | | 100.0% | | | | | $ | 15,089 | | | | | | 100.0% | | |
Cost of goods sold
|
| | | | 5,037 | | | | | | 44.6% | | | | | | 5,784 | | | | | | 38.3% | | |
Gross profit
|
| | | | 6,262 | | | | | | 55.4% | | | | | | 9,305 | | | | | | 61.7% | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | |
Sales and marketing
|
| | | | 4,694 | | | | | | 41.5% | | | | | | 4,847 | | | | | | 32.1% | | |
General and administrative
|
| | | | 10,527 | | | | | | 93.2% | | | | | | 17,224 | | | | | | 114.1% | | |
Research and development
|
| | | | 3,498 | | | | | | 31.0% | | | | | | 3,121 | | | | | | 20.7% | | |
Impairment of intangible assets
|
| | | | — | | | | | | —% | | | | | | 6,588 | | | | | | 43.7% | | |
Loss on litigation settlement
|
| | | | — | | | | | | —% | | | | | | 1,500 | | | | | | 9.9% | | |
Loss on disposal of assets
|
| | | | — | | | | | | —% | | | | | | 486 | | | | | | 3.2% | | |
Total operating expenses
|
| | | | 18,719 | | | | | | 165.7% | | | | | | 33,766 | | | | | | 223.8% | | |
Operating loss
|
| | | | (12,457) | | | | | | (110.2)% | | | | | | (24,461) | | | | | | (162.1)% | | |
Other expense (income), net: | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest expense, net
|
| | | | 2,049 | | | | | | 18.1% | | | | | | 451 | | | | | | 3.0% | | |
Loss on extinguishment of debt
|
| | | | 7,715 | | | | | | 68.3% | | | | | | 71 | | | | | | 0.5% | | |
Warrant expense
|
| | | | — | | | | | | —% | | | | | | 49,027 | | | | | | 324.9% | | |
(Gain) loss on foreign currency
|
| | | | (410) | | | | | | (3.6)% | | | | | | (247) | | | | | | (2)% | | |
Other, net
|
| | | | — | | | | | | —% | | | | | | 1,337 | | | | | | 8.9% | | |
Loss from continuing operations before income taxes
|
| | | | (21,811) | | | | | | (193.0)% | | | | | | (75,100) | | | | | | (497.7)% | | |
Income tax benefit
|
| | | | (181) | | | | | | (1.6)% | | | | | | (893) | | | | | | (5.9)% | | |
Net loss
|
| | | $ | (21,630) | | | | | | (191.4)% | | | | | $ | (74,207) | | | | | | (491.8)% | | |
| | |
Years Ended December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
GAAP net loss attributable to common stockholders
|
| | | $ | (21,630) | | | | | $ | (74,207) | | |
Adjustments: | | | | | | | | | | | | | |
Interest expense, net:
|
| | | | 2,049 | | | | | | 451 | | |
Income tax benefit
|
| | | | (181) | | | | | | (893) | | |
Depreciation and amortization
|
| | | | 1,667 | | | | | | 1,706 | | |
Stock-based compensation expense
|
| | | | 1,323 | | | | | | 2,311 | | |
Loss on extinguishment of debt
|
| | | | 7,715 | | | | | | 71 | | |
Warrant expense
|
| | | | — | | | | | | 49,027 | | |
Loss on litigation settlement
|
| | | | — | | | | | | 1,500 | | |
Impairment of intangible assets and goodwill
|
| | | | — | | | | | | 6,588 | | |
Loss on disposal of assets
|
| | | | — | | | | | | 486 | | |
Other, net
|
| | | | — | | | | | | 1,337 | | |
Non-GAAP loss
|
| | | $ | (9,057) | | | | | $ | (11,623) | | |
| | |
Year Ended December 31,
|
| |
Amount
Change |
| |
Percentage
Change |
| |||||||||||||||||||||||||||
| | |
2020
|
| |
2019
|
| ||||||||||||||||||||||||||||||
United States
|
| | | $ | 8,275 | | | | | | 73.2% | | | | | $ | 13,309 | | | | | | 88.2% | | | | | $ | (5,034) | | | | | | (37.8)% | | |
Australia
|
| | | | 1,086 | | | | | | 9.6% | | | | | | 1,167 | | | | | | 7.7% | | | | | | (81) | | | | | | (6.9)% | | |
Europe
|
| | | | 1,824 | | | | | | 16.1% | | | | | | 613 | | | | | | 4.1% | | | | | | 1,211 | | | | | | 197.6% | | |
Rest of World
|
| | | | 114 | | | | | | 1.0% | | | | | | — | | | | | | —% | | | | | | 114 | | | | | | 100.0% | | |
Total net revenue
|
| | | $ | 11,299 | | | | | | 100.0% | | | | | $ | 15,089 | | | | | | 100.0% | | | | | $ | (3,790) | | | | | | (25.1)% | | |
| | |
Year Ended December 31,
|
| |
Amount
Change |
| |
Percentage
Change |
| |||||||||||||||||||||||||||
| | |
2020
|
| |
2019
|
| ||||||||||||||||||||||||||||||
Revenue
|
| | | $ | 11,299 | | | | | | 100.0% | | | | | $ | 15,089 | | | | | | 100.0% | | | | | $ | (3,790) | | | | | | (25.1)% | | |
Cost of goods sold
|
| | | | 5,037 | | | | | | 44.6% | | | | | | 5,784 | | | | | | 38.3% | | | | | | (747) | | | | | | (12.9)% | | |
Gross profit
|
| | | $ | 6,262 | | | | | | 55.4% | | | | | $ | 9,305 | | | | | | 61.7% | | | | | $ | (3,043) | | | | | | (32.7)% | | |
| | |
Year Ended December 31,
|
| |
Amount
Change |
| |
Percentage
Change |
| |||||||||||||||||||||||||||
| | |
2020
|
| |
2019
|
| ||||||||||||||||||||||||||||||
Sales and marketing
|
| | | $ | 4,694 | | | | | | 41.5% | | | | | $ | 4,847 | | | | | | 32.1% | | | | | $ | (153) | | | | | | (3.2)% | | |
General and administrative
|
| | | | 10,527 | | | | | | 93.2% | | | | | | 17,224 | | | | | | 114.1% | | | | | | (6,697) | | | | | | (38.9)% | | |
Research and development
|
| | | | 3,498 | | | | | | 31.0% | | | | | | 3,121 | | | | | | 20.7% | | | | | | 377 | | | | | | 12.1% | | |
Impairment of intangible assets
|
| | | | — | | | | | | —% | | | | | | 6,588 | | | | | | 43.7% | | | | | | (6,588) | | | | | | (100.0)% | | |
| | |
Year Ended December 31,
|
| |
Amount
Change |
| |
Percentage
Change |
| |||||||||||||||||||||||||||
| | |
2020
|
| |
2019
|
| ||||||||||||||||||||||||||||||
Loss on litigation settlement
|
| | | | — | | | | | | —% | | | | | | 1,500 | | | | | | 9.9% | | | | | | (1,500) | | | | | | (100.0)% | | |
Loss on disposal of assets
|
| | | | — | | | | | | —% | | | | | | 486 | | | | | | 3.2% | | | | | | (486) | | | | | | (100.0)% | | |
Total operating expenses
|
| | | $ | 18,719 | | | | | | 165.7% | | | | | $ | 33,766 | | | | | | 223.8% | | | | | $ | (15,047) | | | | | | (44.6)% | | |
|
| | |
Year Ended
December 31, |
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Net cash used in operating activities
|
| | | $ | (8,550) | | | | | $ | (14,200) | | |
Net cash used in investing activates
|
| | | | (2,390) | | | | | | (2,014) | | |
Net cash provided in financing activities
|
| | | | 11,075 | | | | | | 13,659 | | |
Effect of exchange rate changes
|
| | | | (113) | | | | | | (8) | | |
Net change in cash and cash equivalents
|
| | | $ | 22 | | | | | $ | (2,563) | | |
| | | |
Rights of Obalon Stockholders
|
| |
Rights of ReShape Stockholders
|
|
|
Authorized Capital
|
| | The authorized capital stock of Obalon consists of 100,000,000 shares of common stock, $0.001 par value per share, and 10,000,000 shares of preferred stock, $0.001 par value per share. | | | The authorized capital stock of ReShape consists of 275,000,000 shares of common stock, $0.001 par value per share, and 5,000,000 shares of preferred stock, $0.001 par value per share. | |
|
Outstanding Capital Stock
|
| | As of the record date for the Obalon Special Meeting, Obalon had 10,020,068 shares of common stock issued and outstanding, and no shares of preferred stock issued and outstanding. | | | As of the record date for the ReShape Special Meeting, ReShape had 6,166,554 shares of common stock issued and outstanding, and 95,391 shares of preferred stock issued and outstanding, which are convertible into 1,288 shares of common stock. | |
|
Number of Directors
|
| | The Obalon charter provides that the number of directors is to be fixed by resolution adopted by a majority of the Obalon Board, subject to the rights of the holders of any series of Obalon preferred stock to elect additional directors. The Obalon bylaws provide that the number of directors shall be fixed as set forth in the charter. Obalon currently has eight authorized directors on its board. | | | The ReShape charter provides that, subject to the rights of holders of any series of preferred stock to elect directors, the number of directors of ReShape shall be established by the ReShape Board. The ReShape bylaws provide that the number of directors shall be fixed from time to time exclusively by the ReShape Board pursuant to a resolution adopted by a majority of the total number of authorized directors. ReShape currently has five authorized directors on its board. | |
|
Election of Directors
|
| | The Obalon charter provides that directors are elected by a plurality of the votes cast by the stockholders entitled to vote thereon. The Obalon charter provides for a classified Obalon Board with three classes of directors. Approximately one-third of the Obalon Board is elected each year and board members stand for re-election in the third year after the year of their election. Obalon stockholders do not have cumulative voting rights. | | | The ReShape bylaws provide that directors are elected by a plurality of the votes cast by the stockholders entitled to vote thereon. The ReShape charter and bylaws provide for a classified ReShape Board with three classes of directors. Approximately one-third of the ReShape Board is elected each year, and board members stand for re-election in the third year after the year of their election. ReShape stockholders do not have cumulative voting rights. | |
|
Removal of Directors
|
| | The Obalon charter provides that subject to the special rights of the holders of any series of preferred stock to elect directors, Obalon directors may be removed only for cause by the affirmative vote of the holders of at least two-thirds of the voting power of the then-outstanding shares of capital stock of Obalon entitled to vote generally in the election of directors, voting together as a single class. | | | The ReShape charter and bylaws provide that, subject to the rights of the holders of any series of preferred stock then outstanding, any director may be removed from office at any time, only for cause, and only by the affirmative vote of the holders of at least a majority of the voting power of the then outstanding shares of ReShape’s stock entitled to vote generally in the election of directors, voting together as a single class. | |
| | | |
Rights of Obalon Stockholders
|
| |
Rights of ReShape Stockholders
|
|
|
Vacancies on the Board
|
| |
The Obalon charter provides that subject to the rights of the holders of any series of preferred stock, vacancies and newly-created directorships on the Obalon Board shall be filled exclusively by vote of a majority of the directors then in office, even if less than a quorum, or by a sole remaining director.
A director elected to fill a vacancy shall be elected for the unexpired term of his or her predecessor in office, and a director chosen to fill a position resulting from an increase in the number of directors shall hold office until the next election of the class for which such director shall have been chosen, subject to the election and qualification of his or her successor and to his or her earlier death, resignation or removal.
|
| |
The ReShape charter and bylaws provide that, subject to the rights of the holders of any series of preferred stock then outstanding, newly created directorships resulting from any increase in the authorized number of directors or any vacancies on the ReShape Board may be filled only by a majority vote of the directors then in office, even if less than a quorum, and shall not be filled by the stockholders.
A director elected to fill a vacancy shall serve for the remainder of the term of the director being replaced or, in the case of an additional director, for the remainder of the term of the class to which the director has been assigned.
|
|
|
Advance Notice Requirements for holder Nominations and Other Proposals
|
| |
The Obalon charter provides that the advance notice requirements are to be provided in the Obalon bylaws. The Obalon bylaws provide that, except as otherwise required by law, a stockholder who wishes to nominate persons for election to the Obalon Board or propose business to be considered by the stockholders at a meeting must be a stockholder of record at the time of giving notice and must be entitled to vote at the meeting. Such stockholder must provide notice to the Secretary of Obalon in advance of the meeting and in accordance with the Obalon bylaws.
In the case of an annual meeting, an Obalon stockholder wishing to nominate a director or raise another proposal must deliver a stockholder’s notice to the Secretary of Obalon at the principal executive offices of Obalon on a date not later than the close of business on the 75th day nor earlier than the close of business on the 105th day prior to the first anniversary of the preceding year’s annual meeting or, if the date of the current year’s annual meeting is more than 30 days before or more than 60 days after the anniversary date of the prior year’s annual meeting, then notice must be delivered no earlier than the close of business on the 105th day prior to currently proposed annual meeting
|
| |
The ReShape bylaws provide that a stockholder may propose business to be considered by the stockholders at an annual or special meeting of the stockholders only if the stockholder has given timely notice thereof in writing to the Secretary of ReShape. In the case of an annual meeting, a ReShape stockholder’s notice must be received by ReShape no less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting; provided, however, that in the event that no annual meeting was held in the previous year or the annual meeting is called for a date that is not within 30 days from the anniversary date of the preceding year’s annual meeting, written notice must be received not later than the 10th day following the day on which the first public disclosure of the date of the annual meeting was made. In the case of a special meeting, notice must be received 10 days prior to the date of such meeting.
The ReShape bylaws provide that any stockholder entitled to vote in the election of directors generally who complies with the advance notice procedures set forth in the bylaws may nominate persons for election to the ReShape Board. In the case of an annual meeting, a ReShape stockholder’s notice
|
|
| | | |
Rights of Obalon Stockholders
|
| |
Rights of ReShape Stockholders
|
|
| | | |
and no later than the close of business on the later of the 75th day prior to such annual meeting on or by the 10th day following the date on which the current year’s annual meeting is first disclosed in a public announcement. In the case of a special meeting of stockholders called for the purpose of electing one or more directors to the Obalon Board, an Obalon stockholder wishing to nominate a director must deliver a stockholder’s notice to the Secretary of Obalon at the principle executive offices of Obalon on a date not earlier than the close of business on the 105th day nor later than the close of business on the 75th day prior to such special meeting or the tenth day following the day on which the date of the special meeting, and the board’s proposed nominees for election, are first disclosed in a public announcement.
The notice must contain specific information concerning the person to be nominated or matters to be brought before the meeting, as well as specific information concerning the stockholder making the nomination or submitting the proposal.
|
| |
must be received by ReShape not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting; provided, however, that in the event that no annual meeting was held in the previous year or the annual meeting is called for a date that is not within 30 days from the anniversary date of the preceding year’s annual meeting, written notice by a stockholder in order to be timely must be received not later than the 10th day following the day on which the first public disclosure of the date of the annual meeting was made. In the case of a special meeting, the notice must be received by the close of business on the 10th day following the date on which the first public disclosure of the date of the special meeting was made.
Notice provided by a ReShape stockholder must contain the information called for in ReShape’s bylaws.
|
|
|
Notice of Special Meeting
|
| |
The Obalon bylaws generally provide that notice of a stockholder meeting must be given to each stockholder of record entitled to vote at such meeting not less than ten days nor more than 60 days before the date of the meeting.
Any notice of a special meeting must include the place, if any, date, time, means of remote communication, if any, by which stockholders and proxyholders may be deemed to be present and purpose for which the meeting is called.
|
| |
The ReShape bylaws generally provide that written notice of the place, date, and time of all meetings of the stockholders, and the means of remote communication, shall be given not less than 10 nor more than 60 days before the date on which the meeting is to be held to each stockholder of record entitled to vote at such meeting.
Any notice of a special meeting must also include the purpose or purposes for which the meeting is called.
|
|
|
Amendments to the Charter
|
| | Under the DGCL, an amendment to the certificate of incorporation requires (1) the approval of the board of directors, (2) the approval of a majority of the outstanding stock entitled to vote upon the proposed amendment, and (3) the approval of the holders of a majority of the outstanding stock of each class entitled to vote thereon as a class. The Obalon charter provides that Obalon may amend, alter or repeal any provision of the charter in any manner | | | Under the DGCL, an amendment to the certificate of incorporation requires (1) the approval of the board of directors, (2) the approval of a majority of the outstanding stock entitled to vote upon the proposed amendment, and, (3) the approval of the holders of a majority of the outstanding stock of each class entitled to vote thereon as a class. ReShape’s charter provides that ReShape may amend, alter, change or repeal any provision contained in the | |
| | | |
Rights of Obalon Stockholders
|
| |
Rights of ReShape Stockholders
|
|
| | | | prescribed by the DGCL, and additionally provides that the affirmative vote of the holders of at least two-thirds of the voting power of all of the then-outstanding shares of the capital stock of Obalon entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend or repeal any provision of the Obalon charter, unless two-thirds of the Obalon board has approved such amendment or repeal, in which case only the affirmative vote of the holders of at least a majority of the voting power of all of the then-outstanding shares of the capital stock of Obalon entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend or repeal such provisions of the charter. | | | charter, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders in the charter are granted subject to this reservation; provided, however, that no preferred stock designation shall be amended after the issuance of any shares of the series of preferred stock created hereby, except in accordance with the terms of such preferred stock designation and the requirements of applicable law. | |
|
Amendments to Bylaws
|
| | The Obalon charter provides that the Obalon bylaws may be adopted, amended or repealed by the Obalon Board subject to the power of the stockholders of Obalon entitled to vote generally in the election of directors to adopt, amend or repeal the bylaws. The affirmative vote of the holders of at least two-thirds of the voting power of the outstanding Obalon Shares entitled to vote generally in the election of directors, voting together as a single class, is required to adopt, amend or repeal the Obalon bylaws. | | | The ReShape charter provides that the ReShape Board may adopt, amend, repeal or otherwise alter the bylaws without any action on the part of the stockholders in accordance with the bylaws; provided, however, that any bylaws made by the ReShape Board and any and all powers conferred by any of said bylaws may be amended, altered or repealed by the affirmative vote of the holders of at least a majority of the voting power of the then outstanding shares of ReShape stock entitled to vote generally in the election of directors, voting together as a single class. | |
|
Special Meeting of Stockholders
|
| | The Obalon charter provides that special meetings may be called only by or at the direction of the Obalon Board pursuant to a resolution adopted by a majority of the total number of directors which Obalon would have if there were no vacancies. | | | The ReShape charter provides that special meetings may be called by the ReShape Board pursuant to a resolution adopted by a majority of the total authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any such resolution is presented to the ReShape Board for adoption) or the Chairman of the ReShape Board. | |
| | | |
Rights of Obalon Stockholders
|
| |
Rights of ReShape Stockholders
|
|
|
Forum Selection
|
| | The Obalon charter designates the Court of Chancery of the State of Delaware (subject to certain exceptions) as the sole and exclusive forum, unless Obalon consents in writing to the selection of one or more alternative forums, for (i) any derivative action or proceeding brought on behalf of Obalon; (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of Obalon to Obalon or Obalon’s stockholders; (iii) any action asserting a claim against Obalon arising pursuant to any provision of the DGCL or Obalon charter or bylaws; (iv) any action to interpret, apply, enforce or determine the validity of the Obalon charter or bylaws; or (v) any action asserting a claim against Obalon governed by the internal affairs doctrine. | | | The ReShape charter does not include a forum selection provision. | |
Name and Address of Beneficial Owner(1)
|
| |
Amount and
Nature of Beneficial Ownership |
| |
Percent of Class
|
| ||||||
5% Stockholders | | | | | | | | | | | | | |
Armistice Capital, LLC(2)
510 Madison Avenue, 7th Floor New York, New York 10022 |
| | | | 17,980,277 | | | | | | 95.6% | | |
Bigger Capital Fund, LP(3)
175 W. Carver Street Huntington, NY 11743 |
| | | | 2,833,340 | | | | | | 33.8% | | |
Directors and Executive Officers
|
| | | | | | | | | | * | | |
Bart Bandy
|
| | | | 0 | | | | | | * | | |
Thomas Stankovich
|
| | | | 4,635 | | | | | | * | | |
Dan Gladney(4)
|
| | | | 22 | | | | | | * | | |
Gary Blackford
|
| | | | 0 | | | | | | * | | |
Arda Minocherhomjee
|
| | | | 0 | | | | | | * | | |
Lori McDougal
|
| | | | 0 | | | | | | * | | |
All directors and executive officers as a group (6 persons)(4)
|
| | | | 4,657 | | | | | | * | | |
Name and Address of Beneficial Owner
|
| |
Number of Obalon
Shares Beneficially Owned |
| |
Percentage of Obalon
Shares Beneficially Owned |
| ||||||
5% or Greater Stockholders:
|
| | | | | | | | | | | | |
Armistice Capital, LLC(1)
|
| | | | 1,100,000 | | | | | | 10.4% | | |
Entities affiliated with Domain Partners (2)
|
| | | | 1,005,890 | | | | | | 9.9% | | |
Directors and Named Executive Officers
|
| | | | | | | | | | | | |
Andrew Rasdal(3)
|
| | | | 221,719 | | | | | | 2.2% | | |
William Plovanic(4)
|
| | | | 158,784 | | | | | | 1.6% | | |
Mark Brister(5)
|
| | | | 70,837 | | | | | | * | | |
Amy Vandenberg(6)
|
| | | | 42,011 | | | | | | * | | |
Dittamore Community Property Trust Dated August 31, 2016(7)
|
| | | | 41,253 | | | | | | * | | |
Douglas Fisher, MD(8)
|
| | | | 38,505 | | | | | | * | | |
Les Howe (9)
|
| | | | 52,190 | | | | | | * | | |
Kim Kamdar, Ph.D.(10)
|
| | | | 67,215 | | | | | | * | | |
Sharon Stevenson, DVM Ph.D .(11)
|
| | | | 54,378 | | | | | | * | | |
All Executive Officers and Directors as a group (10 persons) (12)
|
| | | | 856,853 | | | | | | 8.6% | | |
| | |
December 31,
2020 |
| |
December 31,
2020 |
| |
Pro Forma
Adjustments Note 5 |
| | | | |
Pro Forma
Combined |
| | | ||||||||||||||||
| | |
ReShape
|
| |
Obalon
|
| | | |||||||||||||||||||||||||
ASSETS | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
Current assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
Cash and cash equivalents
|
| | | $ | 2,957 | | | | | $ | 3,905 | | | | | $ | 4,114 | | | |
5(a)
|
| | | $ | 10,976 | | | | | ||||
Restricted cash
|
| | | | 50 | | | | | | — | | | | | | — | | | | | | | | | 50 | | | | | | | ||
Accounts and other receivables (net of allowance for doubtful
accounts) |
| | | | 2,620 | | | | | | — | | | | | | — | | | | | | | | | 2,620 | | | | | | | ||
Inventory
|
| | | | 2,244 | | | | | | — | | | | | | — | | | | | | | | | 2,244 | | | | | | | ||
Prepaid expenses and other current assets
|
| | | | 1,073 | | | | | | 3,930 | | | | | | — | | | | | | | | | 5,003 | | | | | | | ||
Total current assets
|
| | | | 8,944 | | | | | | 7,835 | | | | | | 4,114 | | | | | | | | | 20,893 | | | | | | | ||
Property and equipment, net
|
| | | | 584 | | | | | | 957 | | | | | | — | | | | | | | | | 1,541 | | | | | | | ||
Operating lease right-of-use assets
|
| | | | 465 | | | | | | 521 | | | | | | — | | | | | | | | | 986 | | | | | | | ||
Goodwill
|
| | | | — | | | | | | — | | | | | | 26,214 | | | |
5(b)
|
| | | | 26,214 | | | | | ||||
Other intangible assets, net
|
| | | | 27,022 | | | | | | — | | | | | | — | | | | | | | | | 27,022 | | | | | | | ||
Other assets
|
| | | | 46 | | | | | | 1,304 | | | | | | — | | | | | | | | | 1,350 | | | | | ||||
TOTAL ASSETS
|
| | | $ | 37,061 | | | | | $ | 10,617 | | | | | $ | 30,328 | | | | | | | | $ | 78,006 | | | | | | | ||
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERENCE SHARES, REDEEMABLE CONVERTIBLE PREFERRED STOCK, STOCKHOLDERS’ (DEFICIT) EQUITY AND SHAREHOLDERS’ (DEFICIT) EQUITY
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
Accounts payable
|
| | | $ | 3,655 | | | | | $ | 615 | | | | | $ | (615) | | | |
5(c)
|
| | | $ | 3,655 | | | | | ||||
Accrued liabilities
|
| | | | 3,630 | | | | | | 65 | | | | | | (65) | | | |
5(c)
|
| | | | 3,630 | | | | | ||||
Warranty liability, current
|
| | | | 397 | | | | | | — | | | | | | — | | | | | | | | | 397 | | | | | | | ||
Debt, current portion, net of deferred financing costs
|
| | | | 3,609 | | | | | | — | | | | | | — | | | | | | | | | 3,609 | | | | | | | ||
Operating lease liabilities, current
|
| | | | 314 | | | | | | 564 | | | | | | — | | | | | | | | | 878 | | | | | | | ||
Other current liabilities
|
| | | | — | | | | | | 3,802 | | | | | | — | | | | | | | | | 3,802 | | | | | ||||
Total current liabilities
|
| | | | 11,605 | | | | | | 5,046 | | | | | | (680) | | | | | | | | | 15,971 | | | | | | | ||
Debt, noncurrent portion
|
| | | | 9,168 | | | | | | 430 | | | | | | (430) | | | | | | | | | 9,168 | | | | | | | ||
Operating lease liabilities, noncurrent
|
| | | | 163 | | | | | | 438 | | | | | | — | | | | | | | | | 601 | | | | | | | ||
Warranty liability, noncurrent
|
| | | | 1,022 | | | | | | — | | | | | | — | | | | | | | | | 1,022 | | | | | | | ||
Deferred income taxes
|
| | | | 615 | | | | | | — | | | | | | — | | | | | | | | | 615 | | | | | | | ||
Other long-term liabilities
|
| | | | — | | | | | | 38 | | | | | | — | | | | | | | | | 38 | | | | | | | ||
TOTAL LIABILITIES
|
| | | | 22,573 | | | | | | 5,952 | | | | | | (1,110) | | | | | | | | | 27,415 | | | | | | | ||
Commitments and contingencies | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
Convertible preference shares
|
| | | | — | | | | | | — | | | | | | — | | | | | | | | | — | | | | | | | ||
Redeemable convertible preferred stock
|
| | | | 1 | | | | | | — | | | | | | (1) | | | | | | | | | — | | | | | | | | |
Shareholders’ (deficit) equity and Stockholders’ (deficit) equity:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
Ordinary shares
|
| | | | — | | | | | | — | | | | | | | | | | | | | | | | | | | | ||||
Common stock
|
| | | | 6 | | | | | | 8 | | | | | | 6 | | | |
5(d)
|
| | | | 20 | | | | | ||||
Treasury shares
|
| | | | — | | | | | | — | | | | | | — | | | | | | | | | — | | | | | | | ||
Additional paid-in capital
|
| | | | 529,429 | | | | | | 189,421 | | | | | | (147,324) | | | |
5(d)
|
| | | | 571,526 | | | | | ||||
Accumulated other comprehensive loss
|
| | | | (121) | | | | | | — | | | | | | — | | | | | | | | | (121) | | | | | | | ||
Accumulated deficit
|
| | | | (514,827) | | | | | | (184,764) | | | | | | 178,757 | | | |
5(e)
|
| | | | (520,834) | | | | | ||||
Total shareholders’ (deficit) equity / stockholders’ (deficit) equity
|
| | | | 14,488 | | | | | | 4,665 | | | | | | 31,438 | | | | | | | | | 50,591 | | | | | | | ||
Total liabilities, redeemable convertible preference shares and stock, and shareholders’ (deficit) equity and stockholders’ (deficit) equity
|
| | | $ | 37,061 | | | | | $ | 10,617 | | | | | $ | 30,328 | | | | | | | | $ | 78,006 | | | | |
| | |
Historical
|
| |
Pro Forma
Adjustments Note 6 |
| | | | |
Pro Forma
Combined |
| |||||||||||||||
| | |
12 months ended
|
| ||||||||||||||||||||||||
| | |
December 31,
2020 |
| |
December 31,
2020 |
| |||||||||||||||||||||
| | |
ReShape
|
| |
Obalon
|
| |||||||||||||||||||||
Revenue
|
| | | $ | 11,299 | | | | | $ | 1,588 | | | | | $ | — | | | | | | | | $ | 12,887 | | |
Cost of revenue
|
| | | | 5,037 | | | | | | 1,004 | | | | | | — | | | | | | | | | 6,041 | | |
Gross profit
|
| | | | 6,262 | | | | | | 584 | | | | | | — | | | | | | | | | 6,846 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Selling, General and Administrative
|
| | | | 15,221 | | | | | | 8,776 | | | | | | 2,358 | | | |
6(a),6(b)
|
| | | | 26,355 | | |
Research and development
|
| | | | 3,498 | | | | | | 2,450 | | | | | | — | | | | | | | | | 5,948 | | |
Impairment of assets
|
| | | | — | | | | | | 1,310 | | | | | | — | | | | | | | | | 1,310 | | |
Total operating expenses
|
| | | | 18,719 | | | | | | 12,536 | | | | | | 2,358 | | | | | | | | | 33,613 | | |
Operating loss
|
| | | | (12,457) | | | | | | (11,952) | | | | | | (2,358) | | | | | | | | | (26,767) | | |
Other expense (income), net: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest expense, net
|
| | | | 2,049 | | | | | | (29) | | | | | | — | | | | | | | | | 2,020 | | |
Loss on extinguishment of debt
|
| | | | 7,715 | | | | | | — | | | | | | — | | | | | | | | | 7,715 | | |
Gain on foreign currency exchange
|
| | | | (410) | | | | | | — | | | | | | — | | | | | | | | | (410) | | |
Other, net
|
| | | | — | | | | | | 411 | | | | | | 3,652 | | | |
6(c)
|
| | | | 4,063 | | |
Loss before income tax provision
|
| | | | (21,811) | | | | | | (12,334) | | | | | | (6,010) | | | | | | | | | (40,155) | | |
Income tax benefit
|
| | | | (181) | | | | | | — | | | | | | — | | | | | | | | | (181) | | |
Net loss attributable to common shareholders
|
| | | $ | (21,630) | | | | | $ | (12,334) | | | | | $ | (6,010) | | | | | | | | $ | (39,974) | | |
Net loss per share — basic and diluted:
|
| | | $ | (3.12) | | | | | $ | (1.59) | | | | | | | | | |
6(d)
|
| | | $ | (1.95) | | |
Weighted-average shares used to compute
net loss per share attributable to ordinary shareholders |
| | | | 6,927,021 | | | | | | 7,738,355 | | | | | | | | | | | | | | | 20,452,180 | | |
| | |
Shares Issued
|
| |
Per Share Price
|
| |
Amount
|
| |||||||||
| | |
(in thousands)
|
| | | | | | | | | | | | | |||
Estimated cash to be paid for debt settlement
|
| | | | | | | | | | | | | | | $ | 1,114 | | |
Estimated Obalon common shares to be issued to ReShape common and preferred stockholders and warrant holders
|
| | | | 10,431 | | | | | $ | 2.96 | | | | | | 30,875 | | |
Total Estimated Preliminary Merger Consideration
|
| | | | | | | | | | | | | | | $ | 31,989 | | |
| | |
Obalon’s share
price |
| |
Purchase price
(equity portion) |
| ||||||
As presented
|
| | | $ | 2.96 | | | | | $ | 30,875 | | |
10% increase
|
| | | | 3.26 | | | | | | 33,962 | | |
10% decrease
|
| | | | 2.66 | | | | | | 27,787 | | |
| | |
Amount
|
| |||
| | |
(in thousands)
|
| |||
Cash and cash equivalents
|
| | | $ | 3,905 | | |
Other current assets
|
| | | | 3,930 | | |
Lease right-of-use assets
|
| | | | 521 | | |
Property and equipment
|
| | | | 957 | | |
Intangible assets
|
| | | | — | | |
Clinical-use assets
|
| | | | 1,304 | | |
Accounts payable
|
| | | | — | | |
Accrued expenses
|
| | | | — | | |
Other current liabilities
|
| | | | (3,802) | | |
Lease liabilities
|
| | | | (1,002) | | |
Other liabilities, non-current
|
| | | | (38) | | |
Goodwill(1) | | | | | 26,214 | | |
| | | | $ | 31,989 | | |
| | |
Amount
|
| |||
| | |
(in thousands)
|
| |||
Cash proceeds from warrant exercises(1)
|
| | | $ | 9,500 | | |
Cash paid for debt(2)
|
| | | | (430) | | |
Cash paid for third party expenses(3)
|
| | | | (4,341) | | |
Cash paid for accounts payable(4)
|
| | | | (615) | | |
Total pro forma adjustment to cash and cash equivalents
|
| | | $ | 4,114 | | |
| | |
Amount
|
| |||
| | |
(in thousands)
|
| |||
Elimination of historical APIC balance(1)
|
| | | $ | (189,421) | | |
Elimination of unvested ReShape stock options(2)
|
| | | | (203) | | |
Issuance of common shares as part of estimated preliminary merger
consideration(3) |
| | | | 30,864 | | |
Acceleration of equity awards held by certain Obalon equity holders(4)
|
| | | | 1,936 | | |
Cash proceeds from warrant exercises(5)
|
| | | | 9,500 | | |
| | | | $ | (147,324) | | |
| | |
Amount
|
| |||
| | |
(in thousands)
|
| |||
Elimination of historical accumulated deficit of Obalon(1)
|
| | | $ | 184,764 | | |
Adjustment for retention bonus(2)
|
| | | | (500) | | |
Adjustment for transaction cost incurred post year end(3)
|
| | | | (3,774) | | |
Elimination of unvested ReShape stock options(3)
|
| | | | 203 | | |
Adjustment for one time stock-based compensation expense(4)
|
| | | | (1,936) | | |
Total adjustments to Accumulated Deficit
|
| | | $ | 178,757 | | |
| | |
Year Ended
December 31, 2020 |
| |||
| | |
Acceleration
of Unvested Awards |
| |||
| | |
(in thousands)
|
| |||
Research and development
|
| | | | — | | |
General and administrative
|
| | | | 1,936 | | |
Total stock-based compensation expense adjustment
|
| | | $ | 1,936 | | |
| | |
Pro Forma For
the Year Ended December 31, 2020 |
| |||
| | |
(in thousands)
|
| |||
Numerator for basic earnings per share calculation: | | | | | | | |
Pro Forma loss (for basic and diluted EPS)
|
| | | $ | (39,974) | | |
Denominator for basic and diluted earnings per share calculation:
|
| | | | | | |
Weighted-average Obalon’s outstanding common stock
|
| | | | 7,738,355 | | |
Common stock issued in connection with the Merger
|
| | | | 12,713,825 | | |
Pro Forma weighted average shares (basic and diluted)
|
| | | | 20,452,180 | | |
Pro Forma earnings per share (basic and diluted)
|
| | | $ | (1.95) | | |
| | |
Page
|
| |||
Consolidated Financial Statements: | | | |||||
| | | | F-2 | | | |
| | | | F-4 | | | |
| | | | F-5 | | | |
| | | | F-6 | | | |
| | | | F-7 | | | |
| | | | F-8 | | |
| | |
December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Assets | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 3,905 | | | | | $ | 14,055 | | |
Accounts receivable, net
|
| | | | — | | | | | | 285 | | |
Inventory
|
| | | | — | | | | | | 1,936 | | |
Other current assets
|
| | | | 3,930 | | | | | | 1,959 | | |
Total current assets
|
| | | | 7,835 | | | | | | 18,235 | | |
Lease right-of-use assets
|
| | | | 521 | | | | | | 1,077 | | |
Property and equipment, net
|
| | | | 957 | | | | | | 1,081 | | |
Clinical-use assets
|
| | | | 1,304 | | | | | | — | | |
Total assets
|
| | | $ | 10,617 | | | | | $ | 20,393 | | |
Liabilities and Stockholders’ Equity | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable
|
| | | $ | 615 | | | | | $ | 648 | | |
Accrued compensation
|
| | | | 65 | | | | | | 820 | | |
Deferred revenue
|
| | | | — | | | | | | 424 | | |
Other current liabilities
|
| | | | 3,802 | | | | | | 1,524 | | |
Current portion of lease liabilities
|
| | | | 564 | | | | | | 561 | | |
Total current liabilities
|
| | | | 5,046 | | | | | | 3,977 | | |
Lease liabilities, long-term
|
| | | | 438 | | | | | | 567 | | |
Long-term debt
|
| | | | 430 | | | | | | — | | |
Other long-term liabilities
|
| | | | 38 | | | | | | — | | |
Total liabilities
|
| | | | 5,952 | | | | | | 4,544 | | |
Commitments and contingencies (See Note 10) | | | | | | | | | | | | | |
Stockholders’ equity: | | | | | | | | | | | | | |
Common stock, $0.001 par value; 100,000,000 shares authorized as of December 31, 2020 and December 31, 2019; 7,770,698 and 7,724,100 shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively
|
| | | | 8 | | | | | | 8 | | |
Additional paid-in capital
|
| | | | 189,421 | | | | | | 188,271 | | |
Accumulated deficit
|
| | | | (184,764) | | | | | | (172,430) | | |
Total stockholders’ equity
|
| | | | 4,665 | | | | | | 15,849 | | |
Total liabilities and stockholders’ equity
|
| | | $ | 10,617 | | | | | $ | 20,393 | | |
| | |
Year ended December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Revenue: | | | | | | | | | | | | | |
Revenue
|
| | | $ | 1,588 | | | | | $ | 3,281 | | |
Total revenue
|
| | | | 1,588 | | | | | | 3,281 | | |
Cost of revenue
|
| | | | 1,004 | | | | | | 2,950 | | |
Gross profit
|
| | | | 584 | | | | | | 331 | | |
Operating expenses: | | | | | | | | | | | | | |
Research and development
|
| | | | 2,450 | | | | | | 6,893 | | |
Selling, general and administrative
|
| | | | 8,776 | | | | | | 16,668 | | |
Asset impairment and other charges
|
| | | | 1,310 | | | | | | — | | |
Total operating expenses
|
| | | | 12,536 | | | | | | 23,561 | | |
Loss from operations
|
| | | | (11,952) | | | | | | (23,230) | | |
Interest income (expense), net
|
| | | | 29 | | | | | | (385) | | |
Other expense
|
| | | | (411) | | | | | | (61) | | |
Net loss
|
| | | | (12,334) | | | | | | (23,676) | | |
Other comprehensive income
|
| | | | — | | | | | | — | | |
Net loss and comprehensive loss
|
| | | $ | (12,334) | | | | | $ | (23,676) | | |
Net loss per share, basic and diluted
|
| | | $ | (1.59) | | | | | $ | (5.03) | | |
Weighted-average common shares outstanding, basic and diluted
|
| | | | 7,738,355 | | | | | | 4,706,775 | | |
| | |
Common stock
|
| |
Additional
paid-in capital |
| |
Accumulated
deficit |
| |
Total
stockholders’ equity |
| ||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||
Balance at December 31, 2018
|
| | | | 2,351,333 | | | | | $ | 2 | | | | | $ | 161,859 | | | | | $ | (148,754) | | | | | $ | 13,107 | | |
Stock-based compensation
|
| | | | — | | | | | | — | | | | | | 2,983 | | | | | | — | | | | | | 2,983 | | |
Issuance of common stock for cash upon exercise of
stock options |
| | | | 119 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Vesting of early exercised stock options
|
| | | | — | | | | | | — | | | | | | 58 | | | | | | — | | | | | | 58 | | |
Issuance of common stock and warrants, net of issuance costs
|
| | | | 3,661,238 | | | | | | 4 | | | | | | 23,362 | | | | | | — | | | | | | 23,366 | | |
Exercise of warrants for the purchase of common stock
|
| | | | 1,735,000 | | | | | | 2 | | | | | | — | | | | | | — | | | | | | 2 | | |
Cancellation of restricted stock awards
|
| | | | (26,910) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Issuance of round up common stock for reverse stock split
|
| | | | 3,320 | | | | | | — | | | | | | 9 | | | | | | — | | | | | | 9 | | |
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | (23,676) | | | | | | (23,676) | | |
Balance at December 31, 2019
|
| | | | 7,724,100 | | | | | | 8 | | | | | | 188,271 | | | | | | (172,430) | | | | | | 15,849 | | |
Stock-based compensation
|
| | | | — | | | | | | — | | | | | | 1,089 | | | | | | — | | | | | | 1,089 | | |
Vesting of stock awards, net of cancellations
|
| | | | 7,533 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Vesting of early exercised stock options
|
| | | | — | | | | | | — | | | | | | 16 | | | | | | — | | | | | | 16 | | |
Issuance of warrants for the purchase of common stock
|
| | | | — | | | | | | — | | | | | | 45 | | | | | | — | | | | | | 45 | | |
Vesting of restricted stock, net of cancellations
|
| | | | 39,065 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | (12,334) | | | | | | (12,334) | | |
Balance at December 31, 2020
|
| | | | 7,770,698 | | | | | $ | 8 | | | | | $ | 189,421 | | | | | $ | (184,764) | | | | | $ | 4,665 | | |
| | |
Year ended December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Operating activities: | | | | | | | | | | | | | |
Net loss
|
| | | $ | (12,334) | | | | | $ | (23,676) | | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | | |
Depreciation
|
| | | | 340 | | | | | | 479 | | |
Stock-based compensation
|
| | | | 1,089 | | | | | | 2,983 | | |
Fair value of cash-settled options
|
| | | | 38 | | | | | | — | | |
Issuance of warrants
|
| | | | 45 | | | | | | — | | |
Amortization of right-of-use assets
|
| | | | 503 | | | | | | 415 | | |
Loss on disposal of fixed asset
|
| | | | — | | | | | | 128 | | |
Accretion of investment discount, net
|
| | | | — | | | | | | (2) | | |
Amortization of debt discount
|
| | | | — | | | | | | 70 | | |
Impairment of long-lived assets and other charges
|
| | | | 1,257 | | | | | | — | | |
Impairment of inventory
|
| | | | 53 | | | | | | — | | |
Change in operating assets and liabilities:
|
| | | | | | | | | | | | |
Accounts receivable, net
|
| | | | 285 | | | | | | 585 | | |
Inventory
|
| | | | (525) | | | | | | 12 | | |
Other current assets
|
| | | | (1,804) | | | | | | 411 | | |
Accounts payable
|
| | | | (33) | | | | | | (543) | | |
Accrued compensation
|
| | | | (740) | | | | | | (2,985) | | |
Deferred revenue
|
| | | | (424) | | | | | | 72 | | |
Lease liabilities, net
|
| | | | (427) | | | | | | (364) | | |
Other current and long-term liabilities
|
| | | | 2,268 | | | | | | (451) | | |
Net cash used in operating activities
|
| | | | (10,409) | | | | | | (22,866) | | |
Investing activities: | | | | | | | | | | | | | |
Maturities of short-term investments
|
| | | | — | | | | | | 2,550 | | |
Purchases of property and equipment
|
| | | | (171) | | | | | | (194) | | |
Net cash (used in) provided by investing activities
|
| | | | (171) | | | | | | 2,356 | | |
Financing activities: | | | | | | | | | | | | | |
Proceeds from issuance of common stock and warrants, net of issuance costs
|
| | | | — | | | | | | 23,377 | | |
Proceeds from long-term loan, net of issuance costs
|
| | | | 430 | | | | | | 10,000 | | |
Repayments of long-term loans
|
| | | | — | | | | | | (20,000) | | |
Proceeds from sale of common stock upon exercise of stock options
|
| | | | — | | | | | | 1 | | |
Net cash provided by financing activities
|
| | | | 430 | | | | | | 13,378 | | |
Net (decrease) increase in cash and cash equivalents
|
| | | | (10,150) | | | | | | (7,132) | | |
Cash and cash equivalents at beginning of period
|
| | | | 14,055 | | | | | | 21,187 | | |
Cash and cash equivalents at end of period
|
| | | $ | 3,905 | | | | | $ | 14,055 | | |
Supplemental cash flow information: | | | | | | | | | | | | | |
Interest paid
|
| | | $ | — | | | | | $ | 719 | | |
Income taxes paid
|
| | | $ | — | | | | | $ | — | | |
Property and equipment in accounts payable
|
| | | $ | — | | | | | $ | 32 | | |
| | |
Year ended December 31,
|
| |||||||||
Revenue
|
| |
2020
|
| |
2019
|
| ||||||
Customer A
|
| | | | —% | | | | | | 19.7% | | |
Customer B
|
| | | | 0.2% | | | | | | 17.9% | | |
Customer C
|
| | | | 30.2% | | | | | | 9.1% | | |
Accounts Receivable
|
| |
December 31,
2020 |
| |
December 31,
2019 |
| ||||||
Customer A
|
| | | | —% | | | | | | 20.8% | | |
|
Computer hardware
|
| |
3 years
|
|
|
Computer software
|
| |
3 years
|
|
|
Leasehold improvements
|
| |
Shorter of lease term or useful life
|
|
|
Furniture and fixtures
|
| |
5 years
|
|
|
Scientific equipment
|
| |
5 years
|
|
| | | | | | | | |
Fair value measurements at reporting date using
|
| |||||||||||||||
| | |
Balance as of
December 31, 2020 |
| |
Quoted prices in
active markets for identical assets (Level 1) |
| |
Significant other
observable inputs (Level 2) |
| |
Significant
unobservable inputs (Level 3) |
| ||||||||||||
Assets: | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash
|
| | | $ | 823 | | | | | $ | 823 | | | | | | — | | | | | | — | | |
Cash Equivalents: | | | | | | | | | | | | | | | | | | | | | | | | | |
Money Market Funds
|
| | | | 3,082 | | | | | | 3,082 | | | | | $ | — | | | | | $ | — | | |
Total assets
|
| | | $ | 3,905 | | | | | $ | 3,905 | | | | | $ | — | | | | | $ | — | | |
| | |
December 31, 2020
|
|
Assumed risk-free interest rate
|
| |
0.38% – 0.44%
|
|
Assumed volatility
|
| |
69.86% – 70.84%
|
|
Expected life
|
| |
6.10 years
|
|
Expected dividend yield
|
| |
—%
|
|
| | |
Fair value
measurements at reporting date using significant unobservable inputs (Level 3) |
| |||
Balance as of December 31, 2019
|
| | | $ | — | | |
Issuance of cash settled equity awards
|
| | | | 5 | | |
Change in fair value of warrant and cash settled award liabilities
|
| | | | 33 | | |
Balance as of December 31, 2020
|
| | | $ | 38 | | |
| | |
Year ended December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Net loss
|
| | | $ | (12,334) | | | | | $ | (23,676) | | |
Weighted-average common shares outstanding, basic and diluted
|
| | | | 7,738,355 | | | | | | 4,706,775 | | |
Net loss per share, basic and diluted
|
| | | $ | (1.59) | | | | | $ | (5.03) | | |
| | |
Year ended December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Stock options to purchase common stock
|
| | | | 1,099,855 | | | | | | 518,468 | | |
Warrants to purchase common stock
|
| | | | 3,371,875 | | | | | | 3,271,875 | | |
Total
|
| | | | 4,471,730 | | | | | | 3,790,343 | | |
| | |
December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Raw materials
|
| | | $ | — | | | | | $ | 1,835 | | |
Work in process
|
| | | | — | | | | | | 12 | | |
Finished goods
|
| | | | — | | | | | | 89 | | |
Total
|
| | | $ | — | | | | | $ | 1,936 | | |
| | |
December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Prepaid expenses
|
| | | $ | 599 | | | | | $ | 1,890 | | |
Insurance receivable
|
| | | | 3,150 | | | | | | — | | |
Other assets
|
| | | | 181 | | | | | | 69 | | |
Total
|
| | | $ | 3,930 | | | | | $ | 1,959 | | |
| | |
December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Computer hardware
|
| | | $ | 261 | | | | | $ | 263 | | |
Computer software
|
| | | | 274 | | | | | | 291 | | |
Leasehold improvements
|
| | | | 427 | | | | | | 497 | | |
Furniture and fixtures
|
| | | | 179 | | | | | | 247 | | |
Scientific equipment
|
| | | | 2,013 | | | | | | 1,999 | | |
Construction in progress, or CIP
|
| | | | 407 | | | | | | 110 | | |
| | | | | 3,561 | | | | | | 3,407 | | |
Less: accumulated depreciation
|
| | | | (2,604) | | | | | | (2,326) | | |
Total
|
| | | $ | 957 | | | | | $ | 1,081 | | |
| | |
December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Accrued legal and professional fees
|
| | | $ | 529 | | | | | $ | 412 | | |
Accrued customer incentives
|
| | | | — | | | | | | 198 | | |
Accrued litigation
|
| | | | 3,150 | | | | | | — | | |
Accrued sales and other taxes
|
| | | | — | | | | | | 107 | | |
Returns reserve liability
|
| | | | — | | | | | | 315 | | |
Other accrued expenses
|
| | | | 123 | | | | | | 492 | | |
Total
|
| | | $ | 3,802 | | | | | $ | 1,524 | | |
| | |
Year ended December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Cost of revenue
|
| | | $ | — | | | | | $ | (21) | | |
Research and development
|
| | | | 276 | | | | | | 739 | | |
Selling, general and administrative
|
| | | | 813 | | | | | | 2,265 | | |
Total
|
| | | $ | 1,089 | | | | | $ | 2,983 | | |
| | |
Year ended December 31,
|
| |||
| | |
2020
|
| |
2019
|
|
Assumed risk-free interest rate(1)
|
| |
0.38% – 0.44%%
|
| |
1.67% – 2.58%
|
|
Assumed volatility(2)
|
| |
69.86% – 70.84%
|
| |
55.07% – 65.21%
|
|
Expected option life(3)
|
| |
6.10 years
|
| |
6.1 years
|
|
Expected dividend yield(4)
|
| |
—%
|
| |
—%
|
|
| | |
Number of
shares |
| |
Weighted-average
exercise price per share |
| |
Weighted-average
remaining contractual life (in years) |
| |
Aggregate
intrinsic value (in thousands) |
| ||||||||||||||||||
Outstanding at December 31, 2019
|
| | | | 518,468 | | | | | | 38.64 | | | | | | 39.42 | | | | | | 6.8 | | | | | | 12 | | |
Options granted
|
| | | | 790,000 | | | | | | | | | | | | 0.79 | | | | | | | | | | | | | | |
Options exercised
|
| | | | — | | | | | | | | | | | | — | | | | | | | | | | | | | | |
Options canceled
|
| | | | (208,613) | | | | | | | | | | | | 37.74 | | | | | | | | | | | | | | |
Outstanding at December 31, 2020
|
| | | | 1,099,855 | | | | | $ | | | | | | | 11.97 | | | | | | 8.70 | | | | | $ | — | | |
Vested and expected to vest at December 31, 2020
|
| | | | 1,099,855 | | | | | $ | | | | | | | 11.97 | | | | | | 8.70 | | | | | $ | — | | |
Vested and exercisable at December 31, 2020
|
| | | | 357,787 | | | | | $ | | | | | | | 40.31 | | | | | | 6.47 | | | | | $ | — | | |
| | |
Number of
awards |
| |
Weighted-average
grant date fair value |
| ||||||
Outstanding at December 31, 2019
|
| | | | 29,524 | | | | | $ | 39.64 | | |
Awards granted
|
| | | | — | | | | | | — | | |
Awards released
|
| | | | (26,524) | | | | | | 36.03 | | |
Awards canceled
|
| | | | — | | | | | | — | | |
Outstanding at December 31, 2020
|
| | | | 3,000 | | | | | $ | 71.50 | | |
| | |
Number of
shares |
| |
Weighted-average
grant date fair value |
| |
Aggregate
intrinsic value (in thousands) |
| |||||||||
Outstanding at December 31, 2019
|
| | | | 55,574 | | | | | $ | 11.70 | | | | | | 106 | | |
Awards granted
|
| | | | 816,081 | | | | | | 1.88 | | | | | | | | |
Awards released
|
| | | | (47,761) | | | | | | 12.04 | | | | | | | | |
Awards canceled
|
| | | | (823,894) | | | | | | 1.95 | | | | | | | | |
Outstanding at December 31, 2020
|
| | | | — | | | | | $ | — | | | | | $ | — | | |
Vested and expected to vest at December 31, 2020
|
| | | | — | | | | | $ | — | | | | | $ | — | | |
|
Stock options issued and outstanding
|
| | | | 1,099,855 | | |
|
Restricted stock units issued and outstanding
|
| | | | 3,000 | | |
|
Warrants for the purchase of common stock
|
| | | | 3,371,875 | | |
|
Authorized for future option and ongoing vesting of award grants
|
| | | | 163,512 | | |
|
Authorized for future issuance under ESPP
|
| | | | 190,222 | | |
|
Total
|
| | | | 4,828,464 | | |
| | |
Year ended December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Current: | | | | | | | | | | | | | |
Federal
|
| | | $ | — | | | | | $ | — | | |
State
|
| | | | — | | | | | | 14 | | |
Total current provision
|
| | | | — | | | | | | 14 | | |
Deferred: | | | | | | | | | | | | | |
Federal
|
| | | | — | | | | | | — | | |
State
|
| | | | — | | | | | | — | | |
Total deferred provision
|
| | | | — | | | | | | — | | |
Income tax provision
|
| | | $ | — | | | | | $ | 14 | | |
| | |
Year ended December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Federal provision (benefit) | | | | | | | | | | | | | |
At statutory rates
|
| | | $ | (2,525) | | | | | $ | (4,971) | | |
Uncertain tax positions
|
| | | | 5,690 | | | | | | 507 | | |
Other
|
| | | | (101) | | | | | | (2,471) | | |
Change in valuation allowance
|
| | | | (3,064) | | | | | | 6,949 | | |
Income tax provision
|
| | | $ | — | | | | | $ | 14 | | |
| | |
Year ended December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Deferred tax assets: | | | | | | | | | | | | | |
Net operating losses
|
| | | $ | 37,777 | | | | | $ | 35,252 | | |
Tax credits
|
| | | | — | | | | | | 5,493 | | |
Capitalized research and development costs
|
| | | | 1,864 | | | | | | 2,401 | | |
Other
|
| | | | 3,014 | | | | | | 2,724 | | |
Total gross deferred tax assets
|
| | | | 42,655 | | | | | | 45,870 | | |
Less valuation allowance
|
| | | | (42,514) | | | | | | (45,578) | | |
Total deferred tax assets
|
| | | $ | 141 | | | | | $ | 292 | | |
Deferred tax liabilities: | | | | | | | | | | | | | |
Other
|
| | | $ | (141) | | | | | $ | (292) | | |
Total deferred tax liabilities
|
| | | $ | — | | | | | $ | — | | |
| | |
Year ended December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Balance at January 1
|
| | | $ | 4,250 | | | | | $ | 3,609 | | |
Additions based on tax positions related to current year
|
| | | | 250 | | | | | | 643 | | |
Additions based on tax positions related to prior years
|
| | | | 6,049 | | | | | | — | | |
Reductions for tax positions related to prior years
|
| | | | — | | | | | | (2) | | |
Balance at December 31
|
| | | $ | 10,549 | | | | | $ | 4,250 | | |
| Operating leases: | | | | | | | |
|
2021
|
| | | $ | 564 | | |
|
2022
|
| | | | 219 | | |
|
2023
|
| | | | 105 | | |
|
2024
|
| | | | 108 | | |
|
2025
|
| | | | 61 | | |
|
Total undiscounted lease payments – operating leases
|
| | | | 1,057 | | |
|
Less: imputed interest
|
| | | | (55) | | |
|
Lease liability
|
| | | | 1,002 | | |
|
Less: current portion of lease liability
|
| | | | (564) | | |
|
Lease liability, less current portion
|
| | | $ | 438 | | |
| | |
Year Ended
December 31, 2019 |
| |||
Employee separation costs
|
| | | $ | 1,008 | | |
Asset disposals
|
| | | | 91 | | |
Total
|
| | | $ | 1,099 | | |
| | |
Year Ended
December 31, 2019 |
| |||
Cost of revenue
|
| | | $ | 53 | | |
Research and development
|
| | | | 370 | | |
Selling, general and administrative
|
| | | | 676 | | |
Total
|
| | | $ | 1,099 | | |
| | |
Employee
separation costs |
| |||
Reserve balance at December 31, 2018
|
| | | $ | — | | |
2019: | | | | | | | |
Restructuring charges
|
| | | | 1,099 | | |
Cash payments
|
| | | | (819) | | |
Reserve balance at December 31, 2019
|
| | | $ | 280 | | |
| | |
Page
|
| |||
Consolidated Financial Statements: | | | |||||
| | | | F-34 | | | |
| | | | F-36 | | | |
| | | | F-38 | | | |
| | | | F-39 | | | |
| | | | F-40 | | | |
| | | | F-41 | | |
| | |
December 31,
2020 |
| |
December 31,
2019 |
| ||||||
ASSETS
|
| ||||||||||||
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 2,957 | | | | | $ | 2,935 | | |
Restricted cash
|
| | | | 50 | | | | | | 50 | | |
Accounts and other receivables (net of allowance for doubtful accounts of $968 and $709 respectively)
|
| | | | 2,620 | | | | | | 4,096 | | |
Inventory
|
| | | | 2,244 | | | | | | 1,317 | | |
Prepaid expenses and other current assets
|
| | | | 1,073 | | | | | | 1,711 | | |
Total current assets
|
| | | | 8,944 | | | | | | 10,109 | | |
Property and equipment, net
|
| | | | 584 | | | | | | 16 | | |
Operating lease right-of-use assets
|
| | | | 465 | | | | | | 758 | | |
Other intangible assets, net
|
| | | | 27,022 | | | | | | 28,674 | | |
Other assets
|
| | | | 46 | | | | | | 99 | | |
Total assets
|
| | | $ | 37,061 | | | | | $ | 39,656 | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
| ||||||||||||
Current liabilities: | | | | | | | | | | | | | |
Accounts payable
|
| | | $ | 3,655 | | | | | $ | 4,263 | | |
Accrued and other liabilities
|
| | | | 3,630 | | | | | | 3,821 | | |
Warranty liability, current
|
| | | | 397 | | | | | | 105 | | |
Debt, current portion, net of deferred financing costs
|
| | | | 12,565 | | | | | | 1,909 | | |
Operating lease liabilities, current
|
| | | | 314 | | | | | | 291 | | |
Total current liabilities
|
| | | | 20,561 | | | | | | 10,389 | | |
Debt, noncurrent portion
|
| | | | 212 | | | | | | 2,728 | | |
Operating lease liabilities, noncurrent
|
| | | | 163 | | | | | | 477 | | |
Warranty liability, noncurrent
|
| | | | 1,022 | | | | | | 1,253 | | |
Deferred income taxes
|
| | | | 615 | | | | | | 702 | | |
Total liabilities
|
| | | | 22,573 | | | | | | 15,549 | | |
Commitments, contingencies | | | | | | | | | | | | | |
Stockholders’ equity: | | | | | | | | | | | | | |
Preferred stock, 5,000,000 shares authorized:
|
| | | | | | | | | | | | |
Series B convertible preferred stock, $0.001 par value; 3 issued and outstanding at December 31, 2020 and December 31, 2019, respectively
|
| | | | — | | | | | | — | | |
Series C convertible preferred stock, $0.001 par value; 95,388 shares issued and
outstanding at December 31, 2020 and December 31, 2019 |
| | | | 1 | | | | | | 1 | | |
Common stock, $0.001 par value; 275,000,000 shares authorized at December 31, 2020 and December 31, 2019; 6,166,554 and 391,739 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively
|
| | | | 6 | | | | | | — | | |
Additional paid-in capital
|
| | | | 529,429 | | | | | | 517,311 | | |
Accumulated deficit
|
| | | | (514,827) | | | | | | (493,197) | | |
Accumulated other comprehensive loss
|
| | | | (121) | | | | | | (8) | | |
Total stockholders’ equity
|
| | | | 14,488 | | | | | | 24,107 | | |
Total liabilities and stockholders’ equity
|
| | | $ | 37,061 | | | | | $ | 39,656 | | |
| | |
Year Ended December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Revenue
|
| | | $ | 11,299 | | | | | $ | 15,089 | | |
Cost of revenue
|
| | | | 5,037 | | | | | | 5,784 | | |
Gross profit
|
| | | | 6,262 | | | | | | 9,305 | | |
Operating expenses: | | | | | | | | | | | | | |
Sales and marketing
|
| | | | 4,694 | | | | | | 4,847 | | |
General and administrative
|
| | | | 10,527 | | | | | | 17,224 | | |
Research and development
|
| | | | 3,498 | | | | | | 3,121 | | |
Impairment of intangible assets
|
| | | | — | | | | | | 6,588 | | |
Loss on litigation settlement
|
| | | | — | | | | | | 1,500 | | |
Loss on disposal of assets
|
| | | | — | | | | | | 486 | | |
Total operating expenses
|
| | | | 18,719 | | | | | | 33,766 | | |
Operating loss
|
| | | | (12,457) | | | | | | (24,461) | | |
Other expense (income), net: | | | | | | | | | | | | | |
Interest expense, net
|
| | | | 2,049 | | | | | | 451 | | |
Loss on extinguishment of debt
|
| | | | 7,715 | | | | | | 71 | | |
Warrant expense
|
| | | | — | | | | | | 49,027 | | |
Gain on foreign currency exchange
|
| | | | (410) | | | | | | (247) | | |
Other, net
|
| | | | — | | | | | | 1,337 | | |
Loss before income tax provision
|
| | | | (21,811) | | | | | | (75,100) | | |
Income tax benefit
|
| | | | (181) | | | | | | (893) | | |
Net loss attributable to common shareholders
|
| | | $ | (21,630) | | | | | $ | (74,207) | | |
Net loss per share – basic and diluted: | | | | | | | | | | | | | |
Net loss per share – basic and diluted
|
| | | $ | (3.12) | | | | | $ | (42.93) | | |
Shares used to compute basic and diluted net loss per share
|
| | | | 6,927,021 | | | | | | 1,728,722 | | |
| | |
Year Ended December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Net loss
|
| | | $ | (21,630) | | | | | $ | (74,207) | | |
Foreign currency translation adjustments
|
| | | | (113) | | | | | | (8) | | |
Other comprehensive loss, net of tax
|
| | | | (113) | | | | | | (8) | | |
Comprehensive loss
|
| | | $ | (21,743) | | | | | $ | (74,215) | | |
| | |
Series B Convertible
Preferred Stock |
| |
Series C Convertible
Preferred Stock |
| |
Series E Convertible
Preferred Stock |
| |
Common Stock
|
| |
Additional
Paid-in Capital |
| |
Accumulated
Deficit |
| |
Accumulated
Other Comprehensive Income (Loss) |
| |
Total
Stockholders’ Equity |
| ||||||||||||||||||||||||||||||||||||||||||||||||
| | |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
Balance December 31, 2018
|
| | | | 159 | | | | | $ | — | | | | | | 95,388 | | | | | $ | 1 | | | | | | — | | | | | $ | — | | | | | | 73,092 | | | | | $ | — | | | | | $ | 450,652 | | | | | $ | (418,990) | | | | | $ | — | | | | | $ | 31,663 | | |
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (74,207) | | | | | | — | | | | | | (74,207) | | |
Other comprehensive income (loss), net of tax
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (8) | | | | | | (8) | | |
Stock-based compensation expense, net
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,311 | | | | | | — | | | | | | — | | | | | | 2,311 | | |
Warrant expense
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 130 | | | | | | — | | | | | | — | | | | | | 130 | | |
Sales of common stock and warrants, net of
issuance and other costs |
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 199,167 | | | | | | — | | | | | | 434 | | | | | | — | | | | | | — | | | | | | 434 | | |
Warrant adjustment
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (312) | | | | | | — | | | | | | — | | | | | | (312) | | |
Conversion of common stock into convertible preferred stock
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,192,000 | | | | | | 12 | | | | | | (9,933) | | | | | | — | | | | | | (12) | | | | | | — | | | | | | — | | | | | | — | | |
Conversion of convertible preferred stock into common stock
|
| | | | (156) | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,192,000) | | | | | | (12) | | | | | | 10,973 | | | | | | — | | | | | | 12 | | | | | | — | | | | | | — | | | | | | — | | |
Warrant liability reclassified to equity
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 63,954 | | | | | | — | | | | | | — | | | | | | 63,954 | | |
Issuance of common stock upon exercise of warrants, net of transaction costs
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 118,440 | | | | | | — | | | | | | 142 | | | | | | — | | | | | | — | | | | | | 142 | | |
Balance December 31, 2019
|
| | | | 3 | | | | | $ | — | | | | | | 95,388 | | | | | $ | 1 | | | | | | — | | | | | $ | — | | | | | | 391,739 | | | | | $ | — | | | | | $ | 517,311 | | | | | $ | (493,197) | | | | | $ | (8) | | | | | $ | 24,107 | | |
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (21,630) | | | | | | — | | | | | | (21,630) | | |
Other comprehensive income (loss), net of tax
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (113) | | | | | | (113) | | |
Stock-based compensation expense, net
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,323 | | | | | | — | | | | | | — | | | | | | 1,323 | | |
Issuance of warrants
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 9,917 | | | | | | — | | | | | | — | | | | | | 9,917 | | |
Institutional exercise of warrants
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 5,665,834 | | | | | | 6 | | | | | | 673 | | | | | | — | | | | | | — | | | | | | 679 | | |
Cashless exercise of warrants
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 58,981 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Common stock issued for professional services
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 50,000 | | | | | | — | | | | | | 205 | | | | | | — | | | | | | — | | | | | | 205 | | |
Balance December 31, 2020
|
| | | | 3 | | | | | $ | — | | | | | | 95,388 | | | | | $ | 1 | | | | | | — | | | | | $ | — | | | | | | 6,166,554 | | | | | $ | 6 | | | | | $ | 529,429 | | | | | $ | (514,827) | | | | | $ | (121) | | | | | $ | 14,488 | | |
| | |
Year Ended December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Cash flows from operating activities: | | | | | | | | | | | | | |
Net loss
|
| | | $ | (21,630) | | | | | $ | (74,207) | | |
Adjustments to reconcile net loss to net cash used in operating activities:
|
| | | | | | | | | | | | |
Depreciation expense
|
| | | | 15 | | | | | | 40 | | |
Amortization of intangible assets
|
| | | | 1,652 | | | | | | 1,666 | | |
Impairment of intangible assets
|
| | | | — | | | | | | 6,588 | | |
Noncash interest expense
|
| | | | 230 | | | | | | 451 | | |
Loss on extinguishment of debt
|
| | | | 7,715 | | | | | | 71 | | |
Stock-based compensation
|
| | | | 1,323 | | | | | | 2,311 | | |
Bad debt expense
|
| | | | 259 | | | | | | 439 | | |
Provision for inventory excess and obsolescence
|
| | | | 248 | | | | | | — | | |
Warrant expense
|
| | | | — | | | | | | 49,027 | | |
Amortization of debt discount and deferred debt issuance costs
|
| | | | 1,697 | | | | | | — | | |
Deferred income tax benefit
|
| | | | (86) | | | | | | (1,143) | | |
Loss on disposal of asset
|
| | | | — | | | | | | 486 | | |
Common stock warrant liability issuance costs
|
| | | | — | | | | | | 1,442 | | |
Other noncash items
|
| | | | 20 | | | | | | 57 | | |
Change in operating assets and liabilities:
|
| | | | | | | | | | | | |
Accounts and other receivables
|
| | | | 1,217 | | | | | | (3,619) | | |
Inventory
|
| | | | (1,175) | | | | | | (332) | | |
Prepaid expenses and other current assets
|
| | | | 843 | | | | | | (442) | | |
Accounts payable and accrued liabilities
|
| | | | (992) | | | | | | 1,629 | | |
Warranty liability
|
| | | | 61 | | | | | | 1,358 | | |
Other
|
| | | | 52 | | | | | | (22) | | |
Net cash used in operating activities
|
| | | | (8,551) | | | | | | (14,200) | | |
Cash flows from investing activities: | | | | | | | | | | | | | |
Capital expenditures
|
| | | | (390) | | | | | | (14) | | |
Acquisition of LAP-BAND product line assets
|
| | | | (2,000) | | | | | | (2,000) | | |
Cash used in investing activities:
|
| | | | (2,390) | | | | | | (2,014) | | |
Cash flows from financing activities: | | | | | | | | | | | | | |
Proceeds from issuance of subordinated convertible debentures
|
| | | | — | | | | | | 2,000 | | |
Payments of financing costs
|
| | | | (59) | | | | | | (21) | | |
Repayment of subordinated convertible debentures
|
| | | | — | | | | | | (2,200) | | |
Proceeds from sale and issuance of equity securities
|
| | | | — | | | | | | 478 | | |
Proceeds from issuance of common stock warrant liabilities, net of issuance costs of $1,442
|
| | | | — | | | | | | 13,304 | | |
Payments of equity issuance costs
|
| | | | — | | | | | | (44) | | |
Proceeds from institutional exercise of warrants
|
| | | | 680 | | | | | | 142 | | |
Proceeds from credit agreement
|
| | | | 9,500 | | | | | | — | | |
Proceeds from PPP loan
|
| | | | 955 | | | | | | — | | |
Net cash provided by financing activities
|
| | | | 11,076 | | | | | | 13,659 | | |
Effect of currency exchange rate changes on cash and cash equivalents
|
| | | | (113) | | | | | | (8) | | |
Net increase (decrease) in cash, cash equivalents and restricted cash
|
| | | | 22 | | | | | | (2,563) | | |
Cash, cash equivalents and restricted cash at beginning of period
|
| | | | 2,985 | | | | | | 5,548 | | |
Cash, cash equivalents and restricted cash at end of period
|
| | | $ | 3,007 | | | | | $ | 2,985 | | |
Supplemental disclosure: | | | | | | | | | | | | | |
Cash paid for income taxes
|
| | | $ | 40 | | | | | $ | — | | |
Noncash investing and financing activities: | | | | | | | | | | | | | |
Relative fair value of warrants classified as debt issuance costs
|
| | | $ | 1,393 | | | | | $ | — | | |
Fair value of warrants included as a component of loss on extinguishment of debt
|
| | | | 8,523 | | | | | | — | | |
Capital expenditures accruals
|
| | | | 193 | | | | | | — | | |
Common stock warrant liabilities reclassified to equity
|
| | | | — | | | | | | 63,954 | | |
Conversion of common stock to convertible preferred stock
|
| | | | — | | | | | | (1) | | |
| | |
December 31,
2020 |
| |
December 31,
2019 |
| ||||||
Cash and cash equivalents
|
| | | $ | 2,957 | | | | | $ | 2,935 | | |
Restricted cash
|
| | | | 50 | | | | | | 50 | | |
Total cash, cash equivalents, and restricted cash in the consolidated statement of cash flows
|
| | | $ | 3,007 | | | | | $ | 2,985 | | |
| | |
December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Stock options
|
| | | | 40 | | | | | | 155 | | |
Convertible preferred stock
|
| | | | 1,288 | | | | | | 1,288 | | |
Warrants
|
| | | | 13,483,446 | | | | | | 13,647,740 | | |
| | |
December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Raw materials
|
| | | $ | 174 | | | | | $ | — | | |
Sub-assemblies
|
| | | | 733 | | | | | | — | | |
Finished goods
|
| | | | 1,337 | | | | | | 1,317 | | |
Total inventory
|
| | | $ | 2,244 | | | | | $ | 1,317 | | |
| | |
December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Prepaid insurance
|
| | | $ | 619 | | | | | $ | 190 | | |
Prepaid contract research organization expenses
|
| | | | 295 | | | | | | 1,356 | | |
Other
|
| | | | 159 | | | | | | 165 | | |
Total prepaid expenses and other current assets
|
| | | $ | 1,073 | | | | | $ | 1,711 | | |
| | |
December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Payroll and benefits
|
| | | $ | 1,735 | | | | | $ | 1,021 | | |
Accrued professional services
|
| | | | 446 | | | | | | 1,432 | | |
Customer deposits
|
| | | | 398 | | | | | | 202 | | |
Accrued insurance premium
|
| | | | 272 | | | | | | 87 | | |
Taxes
|
| | | | 265 | | | | | | 373 | | |
Equity transaction related liability
|
| | | | — | | | | | | 211 | | |
Other
|
| | | | 514 | | | | | | 495 | | |
Total accrued and other liabilities
|
| | | $ | 3,630 | | | | | $ | 3,821 | | |
| | |
December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Machinery and equipment
|
| | |
$
|
179
|
| | | |
$
|
—
|
| |
Furniture and equipment
|
| | | | 83 | | | | | | 83 | | |
Computer hardware and software
|
| | | | 78 | | | | | | 78 | | |
Leasehold improvements
|
| | | | 19 | | | | | | 19 | | |
Construction in progress
|
| | | | 404 | | | | | | — | | |
| | | | | 763 | | | | | | 180 | | |
Less accumulated depreciation and amortization
|
| | | | (179) | | | | | | (164) | | |
Property and equipment, net
|
| | | $ | 584 | | | | | $ | 16 | | |
| | |
December 31, 2020
|
| |||||||||||||||||||||
| | |
Weighted
Average Useful Life (years) |
| |
Gross
Carrying Amount |
| |
Accumulated
Amortization |
| |
Net Book
Value |
| ||||||||||||
Finite-lived intangible assets: | | | | | | | | | | | | | | | | | | | | | | | | | |
Developed technology
|
| | | | 10.0 | | | | | $ | 14,362 | | | | | $ | (2,933) | | | | | $ | 11,429 | | |
Trademarks/Tradenames
|
| | | | 10.0 | | | | | | 2,045 | | | | | | (585) | | | | | | 1,460 | | |
Covenant not to compete
|
| | | | 3.0 | | | | | | 76 | | | | | | (76) | | | | | | 0 | | |
| | | | | 10.0 | | | | | | 16,483 | | | | | | (3,594) | | | | | | 12,889 | | |
Indefinite-lived intangible assets: | | | | | | | | | | | | | | | | | | | | | | | | | |
In-process research and development
|
| |
indefinite
|
| | | | 14,133 | | | | | | — | | | | | | 14,133 | | | |||
Total
|
| | | | | | | | | $ | 30,616 | | | | | $ | (3,594) | | | | | $ | 27,022 | | |
| | |
December 31, 2019
|
| |||||||||||||||||||||
| | |
Weighted
Average Useful Life (years) |
| |
Gross
Carrying Amount |
| |
Accumulated
Amortization |
| |
Net Book
Value |
| ||||||||||||
Finite-lived intangible assets: | | | | | | | | | | | | | | | | | | | | | | | | | |
Developed technology
|
| | | | 10.0 | | | | | $ | 14,362 | | | | | $ | (1,496) | | | | | $ | 12,866 | | |
Trademarks/Tradenames
|
| | | | 10.0 | | | | | | 2,045 | | | | | | (381) | | | | | | 1,664 | | |
Covenant not to compete
|
| | | | 3.0 | | | | | | 76 | | | | | | (65) | | | | | | 11 | | |
| | | | | 10.0 | | | | | | 16,483 | | | | | | (1,942) | | | | | | 14,541 | | |
Indefinite-lived intangible assets: | | | | | | | | | | | | | | | | | | | | | | | | | |
In-process research and development
|
| |
indefinite
|
| | | | 14,133 | | | | | | — | | | | | | 14,133 | | | |||
Total
|
| | | | | | | | | $ | 30,616 | | | | | $ | (1,942) | | | | | $ | 28,674 | | |
| | |
December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Gross amount
|
| | | $ | 20,721 | | | | | $ | 20,721 | | |
Accumulated impairment loss
|
| | | | (6,588) | | | | | | (6,588) | | |
Indefinite-lived intangible assets, net
|
| | | $ | 14,133 | | | | | $ | 14,133 | | |
| | |
December 31,
2020 |
| |
December 31,
2019 |
| ||||||
Asset purchase consideration
|
| | | $ | 2,867 | | | | | $ | 4,637 | | |
Credit agreement
|
| | | | 9,500 | | | | | | — | | |
PPP Loan
|
| | | | 955 | | | | | | — | | |
Total debt
|
| | | | 13,322 | | | | | | 4,637 | | |
Less: unamortized debt discount
|
| | | | 545 | | | | | | — | | |
Less: current portion of debt
|
| | | | 12,565 | | | | | | 1,909 | | |
Debt, noncurrent portion
|
| | | $ | 212 | | | | | $ | 2,728 | | |
Balance Sheet Information at December 31, 2020
|
| | | | | | |
Operating lease ROU assets
|
| | | $ | 465 | | |
Operating lease liabilities, current portion
|
| | | $ | 314 | | |
Operating lease liabilities, long-term portion
|
| | | | 163 | | |
Total operating lease liabilities
|
| | | $ | 477 | | |
Cash Flow Information for the Year Ended December 31, 2020
|
| | | | | | |
Cash paid for amounts included in the measurement of operating leases liabilities
|
| | | $ | 323 | | |
Twelve months ending December 31,
|
| | | | | | |
2021
|
| | | $ | 331 | | |
2022
|
| | | | 166 | | |
2023
|
| | | | — | | |
Total lease payments
|
| | | | 497 | | |
Less: imputed interest
|
| | | | 20 | | |
Total lease liabilities
|
| | | $ | 477 | | |
Weighted-average remaining lease term at end of period (in years)
|
| | | | 1.7 | | |
Weighted-average discount rate at end of period
|
| | | | 5.1% | | |
| | |
Shares
|
| |||
Balance December 31, 2018
|
| | | | 127,540 | | |
Issued
|
| | | | 16,934,170(1) | | |
Exercised
|
| | | | (3,451,642)(2) | | |
Cancelled
|
| | | | (139) | | |
Balance December 31, 2019
|
| | | | 13,609,929 | | |
Issued
|
| | | | 6,400,000(3) | | |
Exercised
|
| | | | (5,724,815)(4) | | |
Cancelled
|
| | | | (1) | | |
Balance December 31, 2020
|
| | | | 14,285,113 | | |
| | |
Warrants
Outstanding |
| |
Strike Price
|
| |
Volatility
|
| |
Remaining Life
|
| |
Risk Free Rate
|
| |||||||||||||||
First Issuance
|
| | | | 1,200,000 | | | | | | 3.70 | | | | | | 97.0% | | | | | | 5.0 | | | | | | 0.56% | | |
Second Issuance
|
| | | | 1,200,000 | | | | | | 3.25 | | | | | | 101.1% | | | | | | 5.0 | | | | | | 0.27% | | |
Third Issuance
|
| | | | 4,000,000 | | | | | | 3.50 | | | | | | 100.8% | | | | | | 5.0 | | | | | | 0.37% | | |
| | |
Strike Price
|
| |
Volatility
|
| |
Remaining Life
|
| |||||||||
Series A
|
| | | $ | 2.64 | | | | | | 164.1% | | | | | | 5.22 | | |
Series B
|
| | | $ | 2.40 | | | | | | 164.1% | | | | | | 1.22 | | |
Series E
|
| | | $ | 6.00 | | | | | | 93.2% | | | | | | 5.11 | | |
Series F
|
| | | $ | 0.12 | | | | | | 93.2% | | | | | | 5.11 | | |
| | |
Warrants
Outstanding |
| |
Strike Price
|
| |
Volatility
|
| |
Remaining Life
|
| |
Risk Free Rate
|
| |||||||||||||||
Series A
|
| | | | 3,333,333 | | | | | $ | 2.64 | | | | | | 93.5% | | | | | | 5.1 | | | | | | 1.73% | | |
Placement Agent – June
|
| | | | 233,334 | | | | | $ | 3.00 | | | | | | 93.5% | | | | | | 4.7 | | | | | | 1.73% | | |
Series E
|
| | | | 3,333,334 | | | | | $ | 6.00 | | | | | | 93.5% | | | | | | 5.1 | | | | | | 1.73% | | |
Series F
|
| | | | 3,264,167 | | | | | $ | 0.12 | | | | | | 93.5% | | | | | | 5.1 | | | | | | 1.73% | | |
Placement Agent – September
|
| | | | 233,334 | | | | | $ | 6.00 | | | | | | 93.5% | | | | | | 4.9 | | | | | | 1.73% | | |
| | |
Year Ended
December 31, |
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
United States
|
| | | $ | 8,275 | | | | | $ | 13,309 | | |
Australia
|
| | | | 1,086 | | | | | | 1,167 | | |
Europe
|
| | | | 1,824 | | | | | | 613 | | |
Rest of world
|
| | | | 114 | | | | | | — | | |
Total net revenue
|
| | | $ | 11,299 | | | | | $ | 15,089 | | |
| | |
Shares
|
| |
Weighted
Average Exercise Price Per Share |
| |
Weighted
Average Remaining Contractual Life (years) |
| |||||||||
Outstanding at December 31, 2018
|
| | | | 28 | | | | | $ | 2,957,210.16 | | | | | | | | |
Shares reserved
|
| | | | — | | | | | | — | | | | | | | | |
Options granted
|
| | | | — | | | | | | — | | | | | | | | |
Options exercised
|
| | | | — | | | | | | — | | | | | | | | |
Options cancelled
|
| | | | — | | | | | | — | | | | | | | | |
Outstanding at December 31, 2019
|
| | | | 28 | | | | | | 2,957,210.16 | | | | | | | | |
Options granted
|
| | | | — | | | | | | — | | | | | | | | |
Options exercised
|
| | | | — | | | | | | — | | | | | | | | |
Options cancelled
|
| | | | (3) | | | | | | 500,506.83 | | | |
|
| |||
Outstanding at December 31, 2020
|
| | | | 25 | | | | | | 3,264,298.08 | | | | | | 6.8 | | |
Exercisable at December 31, 2020
|
| | | | 21 | | | | | | 3,884,244.46 | | | | | | 6.8 | | |
Vested and expected to vest at December 31, 2020
|
| | | | 25 | | | | | | 3,884,244.46 | | | | | | 6.9 | | |
| | |
Shares
|
| |
Weighted
Average Exercise Price Per Share |
| |
Weighted
Average Remaining Contractual Life (years) |
| |||||||||
Outstanding at December 31, 2018
|
| | | | 18 | | | | | $ | 352,876.06 | | | | | | | | |
Options granted
|
| | | | — | | | | | | — | | | | | | | | |
Options exercised
|
| | | | — | | | | | | — | | | | | | | | |
Options cancelled
|
| | | | — | | | | | | — | | | | | | | | |
Outstanding at December 31, 2019
|
| | | | 18 | | | | | | 352,876.06 | | | | | | | | |
Options granted
|
| | | | — | | | | | | — | | | | | | | | |
Options exercised
|
| | | | — | | | | | | — | | | | | | | | |
Options cancelled
|
| | | | (3) | | | | | | 532,766.92 | | | | | | | | |
Outstanding at December 31, 2020
|
| | | | 15 | | | | | | 316,897.88 | | | | | | 7.1 | | |
Exercisable at December 31, 2020
|
| | | | 15 | | | | | | 316,897.88 | | | | | | 7.1 | | |
Vested and expected to vest at December 31, 2020
|
| | | | 15 | | | | | | 316,897.88 | | | | | | 7.1 | | |
| | |
Year Ended
December 31, |
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Sales and marketing
|
| | | $ | — | | | | | $ | 151 | | |
General and administrative
|
| | | | 1,323 | | | | | | 2,115 | | |
Research and development
|
| | | | — | | | | | | 45 | | |
Total stock-based compensation expense
|
| | | $ | 1,323 | | | | | $ | 2,311 | | |
| | |
Year ended December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Deferred: | | | | | | | | | | | | | |
Federal
|
| | | $ | (84) | | | | | $ | (276) | | |
State
|
| | | | (2) | | | | | | (867) | | |
Deferred income tax provision (benefit)
|
| | | | (86) | | | | | | (1,143) | | |
Current: | | | | | | | | | | | | | |
Federal
|
| | | | — | | | | | | — | | |
State
|
| | | | 1 | | | | | | 18 | | |
Foreign
|
| | | | (96) | | | | | | 232 | | |
Total income tax provision (benefit), net
|
| | | $ | (181) | | | | | $ | (893) | | |
| | |
Year ended December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Income tax benefit at U.S. federal statutory rate
|
| | | | 21.0% | | | | | | 21.0% | | |
State income tax benefit, net of federal benefit
|
| | | | 4.2% | | | | | | 3.9% | | |
Other permanent differences
|
| | | | (10.8)% | | | | | | (14.9)% | | |
Research and development credit
|
| | | | —% | | | | | | (0.2)% | | |
Change in state tax rate
|
| | | | (0.3)% | | | | | | —% | | |
Foreign rate differential
|
| | | | 0.5% | | | | | | (0.1)% | | |
Other adjustments
|
| | | | 1.4% | | | | | | 0.3% | | |
Change in valuation allowance
|
| | | | (15.2)% | | | | | | (8.8)% | | |
Effective income tax rate
|
| | | | 0.8% | | | | | | 1.2% | | |
| | |
December 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Deferred tax assets: | | | | | | | | | | | | | |
Start-up costs
|
| | | $ | 1,192 | | | | | $ | 1,208 | | |
Capitalized research and development costs
|
| | | | 503 | | | | | | 612 | | |
Reserves and accruals
|
| | | | 9,235 | | | | | | 8,180 | | |
Property and equipment
|
| | | | 133 | | | | | | 55 | | |
Research and development credit
|
| | | | 1,194 | | | | | | 1,194 | | |
Lease liability
|
| | | | 41 | | | | | | 118 | | |
State and local taxes
|
| | | | 2 | | | | | | 4 | | |
Net operating loss carryforwards
|
| | | | 30,156 | | | | | | 27,860 | | |
Total gross deferred tax assets
|
| | | | 42,456 | | | | | | 39,231 | | |
Valuation allowance
|
| | | | (39,803) | | | | | | (36,349) | | |
Deferred tax assets, net of valuation allowance
|
| | | | 2,653 | | | | | | 2,882 | | |
Intangible assets
|
| | | | (3,151) | | | | | | (3,396) | | |
Operating lease right-of-use assets
|
| | | | (117) | | | | | | (188) | | |
Total gross deferred tax liabilities
|
| | | | (3,268) | | | | | | (3,584) | | |
Net deferred tax liability
|
| | | $ | (615) | | | | | $ | (702) | | |
| | | | | A-6 | | | |
| | | | | A-6 | | | |
| | | | | A-14 | | | |
| | | | | A-15 | | | |
| | | | | A-15 | | | |
| | | | | A-15 | | | |
| | | | | A-15 | | | |
| | | | | A-15 | | | |
| | | | | A-15 | | | |
| | | | | A-15 | | | |
| | | | | A-15 | | | |
| | | | | A-17 | | | |
| | | | | A-17 | | | |
| | | | | A-18 | | | |
| | | | | A-19 | | | |
| | | | | A-19 | | | |
| | | | | A-19 | | | |
| | | | | A-19 | | | |
| | | | | A-19 | | | |
| | | | | A-19 | | | |
| | | | | A-19 | | | |
| | | | | A-20 | | | |
| | | | | A-20 | | | |
| | | | | A-21 | | | |
| | | | | A-21 | | | |
| | | | | A-21 | | | |
| | | | | A-21 | | | |
| | | | | A-22 | | | |
| | | | | A-22 | | | |
| | | | | A-23 | | | |
| | | | | A-24 | | | |
| | | | | A-25 | | | |
| | | | | A-27 | | | |
| | | | | A-27 | | | |
| | | | | A-27 | | | |
| | | | | A-28 | | | |
| | | | | A-29 | | | |
| | | | | A-29 | | | |
| | | | | A-29 | | | |
| | | | | A-30 | | | |
| | | | | A-32 | | | |
| | | | | A-32 | | |
| | | | | A-32 | | | |
| | | | | A-32 | | | |
| | | | | A-32 | | | |
| | | | | A-33 | | | |
| | | | | A-33 | | | |
| | | | | A-33 | | | |
| | | | | A-33 | | | |
| | | | | A-34 | | | |
| | | | | A-34 | | | |
| | | | | A-34 | | | |
| | | | | A-34 | | | |
| | | | | A-35 | | | |
| | | | | A-36 | | | |
| | | | | A-37 | | | |
| | | | | A-37 | | | |
| | | | | A-39 | | | |
| | | | | A-40 | | | |
| | | | | A-41 | | | |
| | | | | A-41 | | | |
| | | | | A-41 | | | |
| | | | | A-42 | | | |
| | | | | A-42 | | | |
| | | | | A-43 | | | |
| | | | | A-43 | | | |
| | | | | A-45 | | | |
| | | | | A-45 | | | |
| | | | | A-45 | | | |
| | | | | A-46 | | | |
| | | | | A-46 | | | |
| | | | | A-46 | | | |
| | | | | A-46 | | | |
| | | | | A-46 | | | |
| | | | | A-48 | | | |
| | | | |||||
| | | | | A-50 | | | |
| | | | | A-50 | | | |
| | | | | A-51 | | | |
| | | | | A-51 | | | |
| | | | | A-52 | | | |
| | | | | A-55 | | | |
| | | | | A-56 | | | |
| | | | | A-56 | | | |
| | | | | A-58 | | |
| | | | | A-58 | | | |
| | | | | A-58 | | | |
| | | | | A-58 | | | |
| | | | | A-58 | | | |
| | | | | A-59 | | | |
| | | | | A-59 | | | |
| | | | | A-59 | | | |
| | | | | A-59 | | | |
| | | | | A-59 | | | |
| | | | | A-59 | | | |
| | | | | A-59 | | | |
| | | | | A-60 | | | |
| | | | | A-60 | | | |
| | | | | A-61 | | | |
| | | | | A-61 | | | |
| | | | | A-61 | | | |
| | | | | A-63 | | | |
| | | | | A-63 | | | |
| | | | | A-63 | | | |
| | | | | A-63 | | | |
| | | | | A-64 | | | |
| | | | | A-64 | | | |
| | | | | A-64 | | | |
| | | | | A-64 | | | |
| | | | | A-64 | | | |
| | | | | A-65 | | | |
| | | | | A-65 | | | |
| | | | | A-65 | | | |
| | | | | A-65 | | | |
| | | | | A-66 | | | |
| | | | | A-66 | | |
| Schedule 1 — Stockholders Delivering Support Agreements | | | | |
| Schedule 2 — Knowledge Individuals | | | | |
| Schedule 2.06 — Directors and Officers of Surviving Corporation | | | | |
| Schedule 2.15 — Obalon Board of Directors after the Effective Time | | | | |
| Exhibit A — Form of Obalon Support Agreement | | | | |
| Exhibit B — Form of ReShape Support Agreement | | | | |
|
Acceptable Confidentiality Agreement
|
| | | | 57 | | |
|
Activities
|
| | | | 54 | | |
|
Agreement
|
| | | | 1 | | |
|
Book-Entry Share
|
| | | | 15 | | |
|
Certificate of Merger
|
| | | | 13 | | |
|
Closing Date
|
| | | | 13 | | |
|
D&O Insurance
|
| | | | 62 | | |
|
Dissenting Shares
|
| | | | 17 | | |
|
Effective Time
|
| | | | 13 | | |
|
Exchange Agent
|
| | | | 15 | | |
|
Exchange Fund
|
| | | | 15 | | |
|
Excluded Shares
|
| | | | 14 | | |
|
Forum
|
| | | | 70 | | |
|
Indemnified Parties
|
| | | | 61 | | |
|
Joint Proxy Statement
|
| | | | 55 | | |
|
Measurement Date
|
| | | | 19 | | |
|
Merger
|
| | | | 13 | | |
|
Merger Sub
|
| | | | 1 | | |
|
Obalon
|
| | | | 1 | | |
|
Obalon Adverse Recommendation Change
|
| | | | 59 | | |
|
Obalon Disclosure Schedule
|
| | | | 34 | | |
|
Obalon Intellectual Property
|
| | | | 42 | | |
|
Obalon Licenses
|
| | | | 46 | | |
|
Obalon Material Contracts
|
| | | | 42 | | |
|
Obalon Notice of Change
|
| | | | 59 | | |
|
Obalon Real Property
|
| | | | 38 | | |
|
Obalon Recommendation
|
| | | | 1 | | |
|
Obalon SEC Documents
|
| | | | 36 | | |
|
Obalon Stockholders’ Meeting
|
| | | | 56 | | |
|
Obalon Support Agreement
|
| | | | 1 | | |
|
Obalon Support Agreement Parties
|
| | | | 1 | | |
|
Pre-Closing Period
|
| | | | 49 | | |
|
Prohibited Payment
|
| | | | 29 | | |
|
Registration Statement
|
| | | | 55 | | |
|
ReShape
|
| | | | 1 | | |
|
ReShape Adverse Recommendation Change
|
| | | | 57 | | |
|
ReShape Disclosure Schedule
|
| | | | 18 | | |
|
ReShape Intellectual Property
|
| | | | 27 | | |
|
ReShape Licenses
|
| | | | 31 | | |
|
ReShape Material Contracts
|
| | | | 26 | | |
|
ReShape Notice of Change
|
| | | | 58 | | |
|
ReShape Real Property
|
| | | | 23 | | |
|
ReShape Recommendation
|
| | | | 1 | | |
|
ReShape SEC Documents
|
| | | | 20 | | |
|
ReShape Stock Certificate
|
| | | | 15 | | |
|
ReShape Stockholders’ Meeting
|
| | | | 56 | | |
|
ReShape Support Agreement
|
| | | | 2 | | |
|
ReShape Support Agreement Parties
|
| | | | 2 | | |
|
Surviving Corporation
|
| | | | 13 | | |
|
Termination Date
|
| | | | 68 | | |
|
WARN
|
| | | | 30 | | |
|
Exhibit
|
| |
Description
|
|
| 10.4†‡ | | | | |
| 10.5†‡ | | | | |
| 10.6†‡ | | | | |
| 10.7†‡ | | | | |
| 10.8†‡ | | | | |
| 10.9†‡ | | | | |
| 10.10†‡ | | | | |
| 10.11†‡ | | | | |
| 10.12†‡ | | | | |
| 10.13†‡ | | | | |
| 10.14†‡ | | | | |
| 10.15†‡ | | | | |
| 10.16†‡ | | | | |
| 10.17†‡ | | | | |
| 10.18†‡ | | | | |
| 10.19†‡ | | | | |
| 10.20†‡ | | | |
|
Exhibit
|
| |
Description
|
|
| 10.21†‡ | | | | |
| 10.22†‡ | | | | |
| 10.23†‡ | | | | |
| 10.24†‡ | | | | |
| 10.25†‡ | | | | |
| 10.26†‡ | | | | |
| 10.27†‡ | | | | |
| 10.28† | | | | |
| 10.29† | | | | |
| 10.30† | | | | |
| 10.31† | | | | |
| 10.32† | | | | |
| 10.33† | | | | |
| 10.34** | | | | |
| 10.35** | | | | |
| 10.36** | | | |
|
Exhibit
|
| |
Description
|
|
| 10.37** | | | | |
| 10.38** | | | | |
| 10.39** | | | | |
| 10.40** | | | | |
| 10.41** | | | | |
| 10.42** | | | | |
| 10.43** | | | | |
| 10.44** | | | | |
| 10.45** | | | | |
| 21.1** | | | | |
| 23.1± | | | | |
| 23.2± | | | | |
| 23.3± | | | | |
| 23.4± | | | | |
| 23.5± | | | | |
| 24.1 | | | | |
| 99.1± | | | | |
| 99.2± | | | | |
| 99.3± | | | | |
| 99.4± | | | | |
| 99.5† | | | | |
| 99.6† | | | | |
| 99.7** | | | | |
| 99.8** | | | | |
| 99.9** | | | | |
| 99.10** | | | | |
| 99.11** | | | | |
| 101.INS | | | XBRL Instance Document | |
| 101.SCH | | | XBRL Taxonomy Extension Schema Document | |
| 101.CAL | | | XBRL Taxonomy Extension Calculation Linkbase Document | |
|
Exhibit
|
| |
Description
|
|
| 101.DEF | | | XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | | | XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | | | XBRL Taxonomy Extension Presentation Linkbase Document | |
|
Signatures
|
| |
Capacity
|
| |
Dates
|
|
|
/s/ Andrew Rasdal
Andrew Rasdal
|
| |
President and Chief Executive Officer
(Principal Executive Officer) |
| |
April 9, 2021
|
|
|
/s/ Nooshin Hussainy
Nooshin Hussainy
|
| |
Chief Financial Officer
(Principal Financial and Accounting Officer) |
| |
April 9, 2021
|
|
|
*
Kim Kamdar, Ph.D.
|
| |
Chairperson of the Board
|
| |
April 9, 2021
|
|
|
*
William Plovanic
|
| |
Director
|
| |
April 9, 2021
|
|
|
*
Ray Dittamore
|
| |
Director
|
| |
April 9, 2021
|
|
|
*
Douglas Fisher, M.D.
|
| |
Director
|
| |
April 9, 2021
|
|
|
*
Les Howe
|
| |
Director
|
| |
April 9, 2021
|
|
|
*
Sharon Stevenson, DVM Ph.D.
|
| |
Director
|
| |
April 9, 2021
|
|
|
*By:
/s/ Andrew Rasdal
Andrew Rasdal
Attorney-in-fact |
| | | | | | |
Exhibit 5.1
650 Town Center Drive, 20th Floor Costa Mesa, California 92626-1925 Tel: +1.714.540.1235 Fax: +1.714.755.8290 www.lw.com |
Carlsbad, California 92008
Re: | Registration Statement on Form S-4; Shares of common stock, par value $0.001 per share, of Obalon Therapeutics, Inc. |
Ladies and Gentlemen:
We have acted as special counsel to Obalon Therapeutics, Inc., a Delaware corporation (the “Company”), in connection with the proposed issuance of up to 36,279,329 shares of common stock, par value $0.001 per share (the “Shares”), pursuant to the Agreement and Plan of Merger, dated as of January 19, 2021, by and among the Company, ReShape Lifesciences Inc., a Delaware corporation (“ReShape”), and Optimus Merger Sub, Inc., a Delaware corporation (the “Merger Agreement”). The Shares are included in a registration statement on Form S-4 under the Securities Act of 1933, as amended (the “Act”), filed with the Securities and Exchange Commission (the “Commission”) on April 9, 2021 (the “Registration Statement”). This opinion is being furnished in connection with the requirements of Item 601(b)(5) of Regulation S-K under the Act, and no opinion is expressed herein as to any matter pertaining to the contents of the Registration Statement or related Prospectus, other than as expressly stated herein with respect to the issue of the Shares.
As such counsel, we have examined such matters of fact and questions of law as we have considered appropriate for purposes of this letter. With your consent, we have relied upon certificates and other assurances of officers of the Company and others as to factual matters without having independently verified such factual matters. We are opining herein as to General Corporation Law of the State of Delaware (the “DGCL”), and we express no opinion with respect to any other laws.
April 9, 2021 Page 2 |
Subject to the foregoing and the other matters set forth herein, it is our opinion that, as of the date hereof, when the Shares shall have been duly registered on the books of the transfer agent and registrar therefor in the name or on behalf of the applicable ReShape stockholders, and have been issued by the Company against payment therefor (not less than par value) in the circumstances contemplated by the Registration Statement and the Merger Agreement, the issue and sale of the Shares will have been duly authorized by all necessary corporate action of the Company, and the Shares will be validly issued, fully paid and nonassessable. In rendering the foregoing opinion, we have assumed that the Company will comply with all applicable notice requirements regarding uncertificated shares provided in the DGCL.
In rendering the foregoing opinion, we have assumed that (i) prior to the delivery of any Shares, the Registration Statement will have been declared effective under the Act and that the registration will apply to all of the Shares and will not have been modified or rescinded and that there will not have occurred any change in law affecting the validity of the issuance of such Shares, and (ii) the Company will comply with all applicable notice requirements regarding uncertificated shares provided in the DGCL.
This opinion is for your benefit in connection with the Registration Statement and may be relied upon by you and by persons entitled to rely upon it pursuant to the applicable provisions of the Act. We consent to your filing this opinion as an exhibit to the Registration Statement and to the reference to our firm in the Prospectus under the heading “Legal Matters.” We further consent to the incorporation by reference of this letter and consent into any registration statement or post-effective amendment to the Registration Statement filed pursuant to Rule 462(b) with respect to the Shares. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission thereunder.
Very truly yours, |
/s/ Latham & Watkins LLP |
Exhibit 8.1
Two22 Building
Tel (612) 607-7000 Fax (612) 607-7100 www.foxrothschild.com |
April 9, 2021
ReShape Lifesciences Inc.
1001 Calle Amanecer
San Clemente, CA 92673
Re: | Agreement and Plan of Merger, dated as of January 19, 2021 |
Ladies and Gentlemen:
We have acted as special tax counsel to ReShape Lifesciences Inc., a Delaware corporation (“ReShape”), in connection with the proposed merger (the “Merger”) of Optimus Merger Sub, Inc., a Delaware corporation (“Merger Sub”) and wholly-owned subsidiary of Obalon Therapeutics, Inc., a Delaware corporation (“Obalon”), with and into ReShape, as contemplated by the Agreement and Plan of Merger, dated as of January 19, 2021, by and among Obalon, Merger Sub and ReShape (the “Merger Agreement”).
This opinion is being delivered in connection with the Registration Statement (File No. 333-254841) on Form S-4 originally filed on March 30, 2021 with the Securities and Exchange Commission, including the Joint Proxy Statement/Prospectus, and as amended and supplemented through the date hereof (collectively, the “Registration Statement”), as described in Section 6.02 of the Merger Agreement. Capitalized terms not defined herein have the meanings specified in the Merger Agreement unless otherwise indicated.
In rendering our opinion, we have examined and, with your consent, are expressly relying upon (without any independent investigation or review thereof) the truth and accuracy of the factual statements, representations, covenants and warranties contained in (i) the Merger Agreement (including any Exhibits and Schedules thereto), (ii) the Registration Statement, (iii) the respective tax representation letters of Obalon, Merger Sub and ReShape, each dated as of the date hereof and delivered to us for purposes of this opinion (the “Representation Letters”) and (iv) such other documents and corporate records as we have deemed necessary or appropriate for purposes of our opinion.
|
|
ReShape Lifesciences Inc.
Page 2 |
In addition, we have assumed, with your consent, that:
1. | Original documents (including signatures) are authentic, documents submitted to us as copies conform to the original documents, and there has been (or will be by the Effective Time) execution and delivery of all documents where execution and delivery are prerequisites to the effectiveness thereof; |
2. | The Merger will be consummated in the manner contemplated by, and in accordance with the provisions of, the Merger Agreement and the Registration Statement, and the Merger will be effective under the laws of the State of Delaware; |
3. | All factual statements, descriptions and representations contained in any of the documents referred to herein or otherwise made to us are true, complete and correct in all respects and will remain true, complete and correct in all respects up to and including the Effective Time, and no actions have been taken or will be taken which are inconsistent with such factual statements, descriptions or representations or which make any such factual statements, descriptions or representations untrue, incomplete or incorrect at the Effective Time; |
4. | Any statements made in any of the documents referred to herein “to the knowledge of” or similarly qualified or that are based upon any person’s “belief,” “expectation” or similar qualification are true, complete and correct in all respects and will continue to be true, complete and correct in all respects up to and including the Effective Time, in each case without such qualification; and |
5. | The parties have complied with and, if applicable, will continue to comply with, the covenants contained in the Merger Agreement and the Registration Statement. |
Based upon and subject to the foregoing, and subject to the qualifications, exceptions, assumptions and limitations stated in the Registration Statement, we are of the opinion that the Merger, as of the Effective Time, will qualify for U.S. federal income tax purposes as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”).
In addition to the matters set forth above, this opinion is subject to the exceptions, limitations and qualifications set forth below.
1. | This opinion represents our best judgment regarding the application of U.S. federal income tax laws arising under the Code, judicial decisions, administrative regulations and published rulings and procedures, but does not address all of the U.S. federal income tax consequences of the Merger. We express no opinion as to U.S. federal, state, local, foreign, or other tax consequences, other than as set forth herein. Our opinion is not binding upon the Internal Revenue Service or the courts, and there is no assurance that the Internal Revenue Service will not assert a contrary position. Furthermore, no assurance can be given that future legislative, judicial or administrative changes, on either a prospective or retroactive basis, would not adversely affect the validity of the conclusions stated herein. Nevertheless, we undertake no responsibility to advise you of any new developments in the application or interpretation of the U.S. federal income tax laws. |
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ReShape Lifesciences Inc.
Page 3 |
2. | No opinion is expressed as to any transaction other than the Merger as described in the Merger Agreement or to any matter whatsoever, including the Merger, if, to the extent relevant to our opinion, either all the transactions described in the Merger Agreement are not consummated in accordance with the terms of the Merger Agreement and without waiver or breach of any provisions thereof or all of the factual statements, representations, warranties and assumptions upon which we have relied, including in the Registration Statement and the Representation Letters, are not true and accurate at all relevant times. |
We are furnishing this opinion in connection with the filing of the Registration Statement, and this opinion is not to be relied upon for any other purpose without our prior written consent. We consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to our firm name therein under the caption “Legal Matters.” In giving this consent, we do not admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules or regulations of the Securities and Exchange Commission promulgated thereunder.
Very truly yours, | |
/s/ Fox Rothschild LLP | |
FOX ROTHSCHILD LLP |
Exhibit 23.3
Consent of Independent Registered Public Accounting Firm
The Board of Directors
Obalon Therapeutics, Inc.:
We consent to the use of our report dated February 27, 2020, with respect to the consolidated balance sheet of Obalon Therapeutics, Inc. as of December 31, 2019, the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for the year ended December 31, 2019, and the related notes (collectively, the “financial statements”), included herein and to the reference to our firm under the heading “Experts” in the joint proxy statement/prospectus. Our report dated February 27, 2020 contains an explanatory paragraph that states that the Company has suffered recurring losses from operations and has a net capital deficiency, which raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of that uncertainty.
/s/ KPMG LLP
San Diego, California
April 9, 2021
Exhibit 23.4
Consent of Independent Registered Public Accounting Firm
Obalon Therapeutics, Inc.
Carlsbad, California
We hereby consent to the use in the joint proxy statement/prospectus constituting a part of this Registration Statement of our report dated March 12, 2021, relating to the consolidated financial statements of Obalon Therapeutics, Inc., which is contained in that joint proxy statement/prospectus.
We also consent to the reference to us under the caption “Experts” in the Prospectus.
/s/ BDO USA, LLP
Costa Mesa, California
April 9, 2021
Exhibit 23.5
Consent of Independent Registered Public Accounting Firm
ReShape Lifesciences Inc.
San Clemente, California
We hereby consent to the use in the joint proxy statement/prospectus constituting a part of this Registration Statement of our report dated March 10, 2021, relating to the consolidated financial statements of ReShape Lifesciences Inc., which is contained in that joint proxy statement/prospectus.
We also consent to the reference to us under the caption “Experts” in the Prospectus.
/s/ BDO USA, LLP
Costa Mesa, California
April 9, 2021
Exhibit 99.1
VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. OBALON THERAPEUTICS, INC. 5421 AVENIDA ENCINAS, SUITE F CARLSBAD, CALIFORNIA 92008 During The Meeting - Go to www.virtualshareholdermeeting.com/OBLN2021SM You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D39698-TBD KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. OBALON THERAPEUTICS, INC. The Board of Directors recommends you vote FOR the following proposals: For Against Abstain ! ! ! 1. Obalon Share Issuance Proposal. To approve the issuance of shares of common stock, par value $0.001 per share, of Obalon (“Obalon Shares”) in connection with the merger of Optimus Merger Sub, Inc., a wholly owned subsidiary of Obalon Therapeutics, Inc. ("Obalon"), with and into ReShape LifeSciences Inc. ("ReShape"), with ReShape surviving as a wholly owned subsidiary of Obalon (the “Obalon Share Issuance Proposal”); ! ! ! 2. Obalon Reverse Stock Split Proposal. To approve the authorization of Obalon’s Board of Directors, in its discretion but in no event later than the date of the 2021 annual meeting of stockholders, to amend Obalon’s Restated Certificate of Incorporation, as amended, to effect a reverse stock split of Obalon Shares, at a ratio in the range of 1-for-3 to 1-for-10, such ratio to be determined by Obalon's Board of Directors and included in a public announcement (the “Obalon Reverse Stock Split Proposal”); and ! ! ! 3. Obalon Adjournment Proposal. To approve adjournments of the Obalon Special Meeting from time to time, if necessary or appropriate, including to solicit additional proxies in favor of the Obalon Share Issuance Proposal if there are insufficient votes at the time of such adjournment to approve such proposal. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date |
Important Notice Regarding the Availability of Proxy Materials for the Special Meeting: The joint proxy statement/prospectus is available at www.proxyvote.com. D39699-TBD Obalon Therapeutics, Inc. Proxy for Special Meeting of Stockholders on May 13, 2021 This proxy is solicited by the Board of Directors. The undersigned hereby appoints Andrew Rasdal and Nooshin Hussainy, and each of them, with full power of substitution and power to act alone as proxies to vote all the shares of common stock which the undersigned would be entitled to vote if personally present and acting at the Special Meeting of Stockholders of Obalon Therapeutics, Inc., to be held at 8:30 am Pacific Time virtually by means of remote communication on May 13, 2021, and at any adjournment, continuation or postponement thereof as follows: THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED STOCKHOLDER(S). IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE PROPOSALS NUMBERED 1 AND 2, AND IF APPLICABLE, 3. |
Exhibit 99.2
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Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. D39715-TBD 1. ReShape Merger Proposal. To adopt the Merger Agreement, a copy of which is attached as Annex A to the accompanying joint proxy statement/ prospectus, and thereby approve the Merger and other transactions contemplated thereby (the “ReShape Merger Proposal”); and 2. ReShape Adjournment Proposal. To approve adjournments of the ReShape Special Meeting from time to time, if necessary or appropriate to solicit additional proxies in favor of the ReShape Merger Proposal if there are insufficient votes at the time of such adjournment to approve such proposal (the “ReShape Adjournment Proposal”). The Board of Directors recommends you vote FOR the following proposals: For Against Abstain ! ! ! ! ! ! RESHAPE LIFESCIENCES INC. RESHAPE LIFESCIENCES INC. 1001 CALLE AMANECER SAN CLEMENTE, CALIFORNIA 92673 VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting - Go to www.virtualshareholdermeeting.com/RSLS2021SM You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
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Important Notice Regarding the Availability of Proxy Materials for the Special Meeting: The joint proxy statement/prospectus is available at www.proxyvote.com. D39716-TBD ReShape Lifesciences Inc. Proxy for Special Meeting of Stockholders on May 13, 2021 This proxy is solicited by the Board of Directors. The undersigned hereby appoints Bart Bandy and Tom Stankovich, and each of them, with full power of substitution and power to act alone as proxies to vote all the shares of common stock which the undersigned would be entitled to vote if personally present and acting at the Special Meeting of Stockholders of ReShape Lifesciences Inc., to be held at 8:30 a.m. Pacific Time virtually by means of remote communication on May 13, 2021, and at any adjournment, continuation or postponement thereof as follows: THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED STOCKHOLDER(S). IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE PROPOSALS NUMBERED 1 AND IF APPLICABLE, 2. |
Exhibit 99.3
Canaccord Genuity LLC
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T1:
1.212.389.8000
cgf.com
Consent of Canaccord Genuity LLC
Board of Directors
Obalon Therapeutics, Inc.
5421 Avenida Encinas, Suite F
Carlsbad, California 92008
The Board of Directors:
We hereby consent to the inclusion of our opinion letter, dated January 18, 2021, to the Board of Directors of Obalon Therapeutics, Inc. (“Obalon”) as Annex C to, and reference thereto under the headings “Summary—The Merger— Opinion of Obalon’s Financial Advisor—Canaccord Genuity LLC”, “Risk Factors—Risks Related to the Merger”, “The Merger—Background of the Merger”, “The Merger—Obalon’s Reasons for the Merger; Recommendation of the Obalon Board” and “The Merger—Opinion of Obalon’s Financial Advisor—Canaccord Genuity LLC” in, the joint proxy statement/prospectus of Obalon and ReShape Lifesciences, Inc., which joint proxy statement/prospectus forms a part of Amendment No. 1 to the Registration Statement on Form S-4 of Obalon (the “Registration Statement”). By giving such consent, we do not thereby admit that we are experts with respect to any part of such Registration Statement within the meaning of the term “expert” as used in, or that we come within the category of persons whose consent is required under, the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission promulgated thereunder.
Very truly yours, | |
/s/ Canaccord Genuity LLC | |
CANACCORD GENUITY LLC |
April 9, 2021
Member FINRA/SIPC
Exhibit 99.4
CONSENT OF MAXIM GROUP LLC
April 9, 2021
We hereby consent to (i) the inclusion of our opinion letter, dated January 18, 2021, to the Board of Directors of ReShape Lifesciences Inc. (“ReShape”) as Annex B to the joint proxy statement/prospectus which forms a part of the Registration Statement on Form S-4 of Obalon Therapeutics, Inc. (“Obalon”) filed with the Securities and Exchange Commission on March 22, 2021 relating to the proposed merger of ReShape and Optimus Merger Sub, Inc., a wholly owned subsidiary of Obalon and (ii) the references to such opinion in such joint proxy statement/prospectus. In giving such consent, we do not admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder, nor do we hereby admit that we are experts with respect to any part of such Registration Statement within the meaning of the term “experts” as used in the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder.
Very truly yours, | |
/s/ Maxim Group LLC | |
MAXIM GROUP LLC |
Exhibit 99.7
Consent of Person Named as About to Become Director
April 9, 2021
Pursuant to Rule 438 promulgated under the Securities Act of 1933, as amended, I hereby consent to my being named in the Registration Statement on Form S-4 of Obalon Therapeutics, Inc., and all amendments thereto (the “Registration Statement”), and any related prospectus filed pursuant to Rule 424 promulgated under the Securities Act of 1933, as amended, or related proxy statement filed pursuant to Section 14(a) of the Securities Exchange Act of 1934, as amended (including any amendments or supplements thereto), as a person anticipated to become a director of Obalon Therapeutics, Inc. upon completion of the merger described therein, and to the filing of this consent as an exhibit to the Registration Statement.
Sincerely, | |
/s/ Bart Bandy | |
Name: Bart Bandy |
Exhibit 99.8
Consent of Person Named as About to Become Director
April 9, 2021
Pursuant to Rule 438 promulgated under the Securities Act of 1933, as amended, I hereby consent to my being named in the Registration Statement on Form S-4 of Obalon Therapeutics, Inc., and all amendments thereto (the “Registration Statement”), and any related prospectus filed pursuant to Rule 424 promulgated under the Securities Act of 1933, as amended, or related proxy statement filed pursuant to Section 14(a) of the Securities Exchange Act of 1934, as amended (including any amendments or supplements thereto), as a person anticipated to become a director of Obalon Therapeutics, Inc. upon completion of the merger described therein, and to the filing of this consent as an exhibit to the Registration Statement.
Sincerely, | |
/s/ Dan Gladney | |
Name: Dan Gladney |
Exhibit 99.9
Consent of Person Named as About to Become Director
April 9, 2021
Pursuant to Rule 438 promulgated under the Securities Act of 1933, as amended, I hereby consent to my being named in the Registration Statement on Form S-4 of Obalon Therapeutics, Inc., and all amendments thereto (the “Registration Statement”), and any related prospectus filed pursuant to Rule 424 promulgated under the Securities Act of 1933, as amended, or related proxy statement filed pursuant to Section 14(a) of the Securities Exchange Act of 1934, as amended (including any amendments or supplements thereto), as a person anticipated to become a director of Obalon Therapeutics, Inc. upon completion of the merger described therein, and to the filing of this consent as an exhibit to the Registration Statement.
Sincerely, | |
/s/ Gary Blackford | |
Name: Gary Blackford |
Exhibit 99.10
Consent of Person Named as About to Become Director
April 9, 2021
Pursuant to Rule 438 promulgated under the Securities Act of 1933, as amended, I hereby consent to my being named in the Registration Statement on Form S-4 of Obalon Therapeutics, Inc., and all amendments thereto (the “Registration Statement”), and any related prospectus filed pursuant to Rule 424 promulgated under the Securities Act of 1933, as amended, or related proxy statement filed pursuant to Section 14(a) of the Securities Exchange Act of 1934, as amended (including any amendments or supplements thereto), as a person anticipated to become a director of Obalon Therapeutics, Inc. upon completion of the merger described therein, and to the filing of this consent as an exhibit to the Registration Statement.
Sincerely, | |
/s/ Lori McDougal | |
Name: Lori McDougal |
Exhibit 99.11
Consent of Person Named as About to Become Director
April 9, 2021
Pursuant to Rule 438 promulgated under the Securities Act of 1933, as amended, I hereby consent to my being named in the Registration Statement on Form S-4 of Obalon Therapeutics, Inc., and all amendments thereto (the “Registration Statement”), and any related prospectus filed pursuant to Rule 424 promulgated under the Securities Act of 1933, as amended, or related proxy statement filed pursuant to Section 14(a) of the Securities Exchange Act of 1934, as amended (including any amendments or supplements thereto), as a person anticipated to become a director of Obalon Therapeutics, Inc. upon completion of the merger described therein, and to the filing of this consent as an exhibit to the Registration Statement.
Sincerely, | |
/s/ Arda Minocherhomjee | |
Name: Arda Minocherhomjee |