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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

OR

TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to

Commission file number: 1-37897

RESHAPE LIFESCIENCES INC.

(Exact name of registrant as specified in its charter)

Delaware

26-1828101

(State or other jurisdiction
of incorporation or organization)

(IRS Employer
Identification No.)

18 Technology Dr, Suite 110, Irvine, California 92618
(Address of principal executive offices, including zip code)

(949) 429-6680
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

    

Trading Symbol

Name of Each Exchange on which Registered

Common stock, $0.001 par value per share

RSLS

The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

Accelerated Filer

Non-accelerated Filer

  

Smaller Reporting Company

Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of November 3, 2023, 13,135,478 shares of the registrant’s Common Stock were outstanding.

Table of Contents

INDEX

PART I – FINANCIAL INFORMATION

Item 1.

Condensed Consolidated Financial Statements (unaudited)

3

Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022

3

Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022

4

Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2023 and 2022

5

Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2023 and 2022

6

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022

7

Notes to Condensed Consolidated Financial Statements

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

26

Item 4.

Controls and Procedures

26

PART II – OTHER INFORMATION

Item 1.

Legal Proceedings

27

Item 1A.

Risk Factors

28

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

28

Item 3.

Defaults Upon Senior Securities

28

Item 4.

Mine Safety Disclosures

28

Item 5.

Other Information

28

Item 6.

Exhibits

29

SIGNATURES

30

2

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1.        CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

RESHAPE LIFESCIENCES INC.

Condensed Consolidated Balance Sheets

(unaudited)

(dollars in thousands, except per share amounts)

September 30, 

December 31, 

    

2023

    

2022

ASSETS

Current assets:

Cash and cash equivalents

$

1,449

 

$

3,855

Restricted cash

100

100

Accounts and other receivables (net of allowance for doubtful accounts of $859 and $410 respectively)

 

2,153

 

 

2,180

Inventory

 

3,204

 

 

3,611

Prepaid expenses and other current assets

 

493

 

 

165

Total current assets

 

7,399

 

 

9,911

Property and equipment, net

 

70

 

 

698

Operating lease right-of-use assets

274

171

Deferred tax asset, net

55

56

Other intangible assets, net

260

Other assets

 

29

 

 

46

Total assets

$

7,827

 

$

11,142

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

1,462

 

$

1,926

Accrued and other liabilities

 

2,734

 

 

5,040

Warranty liability, current

163

344

Operating lease liabilities, current

110

171

Total current liabilities

 

4,469

 

 

7,481

Operating lease liabilities, noncurrent

175

Common stock warrant liability

100

Total liabilities

4,744

 

7,481

Commitments and contingencies (Note 13)

Stockholders’ equity:

Preferred stock, 10,000,000 shares authorized:

Series C convertible preferred stock, $0.001 par value; 95,388 shares issued and outstanding at September 30, 2023 and December 31, 2022

Common stock, $0.001 par value; 300,000,000 shares authorized at September 30, 2023 and December 31, 2022; 3,452,841 and 519,219 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

 

3

 

 

1

Additional paid-in capital

 

637,050

 

 

627,935

Accumulated deficit

 

(633,876)

 

 

(624,187)

Accumulated other comprehensive loss

(94)

(88)

Total stockholders’ equity

 

3,083

 

 

3,661

Total liabilities and stockholders’ equity

$

7,827

 

$

11,142

See accompanying notes to Condensed Consolidated Financial Statements.

3

Table of Contents

RESHAPE LIFESCIENCES INC.

Condensed Consolidated Statements of Operations

(unaudited)

(dollars in thousands, except per share amounts)

Three Months Ended September 30, 

Nine Months Ended September 30, 

2023

2022

    

2023

2022

Revenue

$

2,155

$

2,798

$

6,696

$

8,130

Cost of revenue

867

 

697

 

2,990

 

2,928

Gross profit

1,288

 

2,101

 

3,706

 

5,202

Operating expenses:

Sales and marketing

1,791

 

2,605

 

6,150

 

11,936

General and administrative

2,058

3,784

8,724

13,037

Research and development

542

 

583

 

1,576

 

2,075

Impairment of long-lived assets

777

7,429

777

7,429

(Gain) loss on disposal of assets, net

1

(33)

383

Total operating expenses

5,168

 

14,402

 

17,194

 

34,860

Operating loss

(3,880)

 

(12,301)

 

(13,488)

 

(29,658)

Other expense (income), net:

Interest income, net

(5)

(31)

(9)

(47)

Gain on changes in fair value of liability warrants

(412)

(3,850)

Loss on foreign currency exchange, net

68

279

47

467

Other

(8)

(9)

Loss before income tax provision

(3,531)

(12,549)

(9,668)

(30,069)

Income tax expense (benefit)

3

(363)

21

(324)

Net loss

$

(3,534)

$

(12,186)

$

(9,689)

$

(29,745)

Net loss per share - basic and diluted:

Net loss per share - basic and diluted

$

(1.02)

$

(27.01)

$

(3.45)

$

(73.79)

Shares used to compute basic and diluted net loss per share

3,452,672

 

451,202

 

2,809,748

 

403,122

See accompanying notes to Condensed Consolidated Financial Statements.

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RESHAPE LIFESCIENCES INC.

Condensed Consolidated Statements of Comprehensive Loss

(unaudited)

(dollars in thousands)

Three Months Ended September 30, 

Nine Months Ended September 30, 

2023

    

2022

    

2023

2022

Net loss

$

(3,534)

$

(12,186)

$

(9,689)

$

(29,745)

Foreign currency translation adjustments

1

4

(6)

24

Other comprehensive income, net of tax

1

4

(6)

24

Comprehensive loss

$

(3,533)

$

(12,182)

$

(9,695)

$

(29,721)

See accompanying notes to Condensed Consolidated Financial Statements.

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RESHAPE LIFESCIENCES INC.

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited)

(dollars in thousands)

Three Months Ended September 30, 2023

Series C Convertible

Additional

Accumulated Other

Total

Preferred Stock

Common Stock

Paid-in

Accumulated

Comprehensive

Stockholders’

    

Shares

    

Amount

    

Shares

    

Amount

     

Capital

    

Deficit

    

Loss

     

Equity

Balance June 30, 2023

95,388

$

3,452,169

$

3

$

637,172

$

(630,342)

$

(95)

$

6,738

Net loss

(3,534)

(3,534)

Other comprehensive income, net of tax

1

1

Stock compensation

216

216

Common stock purchased

Equity issuance costs

(338)

(338)

Issuance of stock from RSUs

672

Exercise of warrants

Balance September 30, 2023

95,388

$

3,452,841

$

3

$

637,050

$

(633,876)

$

(94)

$

3,083

Nine Months Ended September 30, 2023

Series C Convertible

Additional

Accumulated Other

Total

Preferred Stock

Common Stock

Paid-in

Accumulated

Comprehensive

Stockholders’

    

Shares

    

Amount

    

Shares

    

Amount

     

Capital

    

Deficit

    

Loss

     

Equity

Balance December 31, 2022

95,388

$

519,219

$

1

$

627,935

$

(624,187)

$

(88)

$

3,661

Net loss

(9,689)

(9,689)

Other comprehensive income, net of tax

(6)

(6)

Issuance of common stock pursuant to reverse stock split

18,399

Stock compensation

656

656

Common stock purchased

1,476,395

1

894

895

Equity issuance costs

(247)

(247)

Issuance of stock from RSUs

2,340

Exercise of warrants

1,436,488

1

7,812

7,813

Balance September 30, 2023

95,388

$

3,452,841

$

3

$

637,050

$

(633,876)

$

(94)

$

3,083

Three Months Ended September 30, 2022

Series C Convertible

Additional

Accumulated

Total

Preferred Stock

Common Stock

Paid-in

Accumulated

Comprehensive

Stockholders’

Shares

    

Amount

    

Shares

    

Amount

     

Capital

    

Deficit

Income (Loss)

     

Equity

Balance June 30, 2022

95,388

$

392,598

$

$

626,380

$

(595,532)

$

(72)

$

30,776

Net loss

(12,186)

(12,186)

Other comprehensive income, net of tax

4

4

Stock compensation

359

359

Issuance of stock from RSUs

2,321

Exercise of warrants

57,000

Balance September 30, 2022

95,388

$

451,919

$

$

626,739

$

(607,718)

$

(68)

$

18,953

Nine Months Ended September 30, 2022

Series C Convertible

Additional

Accumulated Other

Total

Preferred Stock

Common Stock

Paid-in

Accumulated

Comprehensive

Stockholders’

Shares

    

Amount

    

Shares

    

Amount

     

Capital

    

Deficit

Loss

     

Equity

Balance December 31, 2021

95,388

$

356,641

$

$

622,399

$

(577,973)

$

(92)

$

44,334

Net loss

(29,745)

(29,745)

Other comprehensive income, net of tax

24

24

Stock compensation

1,848

1,848

Issuance of stock from RSUs

20,505

Exercise of warrants

74,773

2,492

2,492

Balance September 30, 2022

95,388

$

451,919

$

$

626,739

$

(607,718)

$

(68)

$

18,953

See accompanying Notes to Condensed Consolidated Financial Statements.

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RESHAPE LIFESCIENCES INC.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(dollars in thousands)

Nine Months Ended September 30, 

2023

2022

Cash flows from operating activities:

    

Net loss

$

(9,689)

$

(29,745)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation expense

 

114

 

271

Amortization of intangible assets

33

1,367

Impairment of long-lived assets

777

7,429

(Gain) loss on disposal of assets, net

(33)

383

Stock-based compensation

656

1,847

Bad debt expense

450

(72)

Provision for inventory excess and obsolescence

101

148

Deferred income tax

1

(368)

Gain on changes in fair value of liability warrants

(3,850)

Offering cost

298

Other noncash items

12

(21)

Change in operating assets and liabilities:

 

 

Accounts and other receivables

 

(422)

 

657

Inventory

 

307

 

(1,317)

Prepaid expenses and other current assets

 

(329)

 

696

Accounts payable and accrued liabilities

(2,764)

(51)

Warranty liability

 

(182)

 

(297)

Other

 

17

 

Net cash used in operating activities

(14,503)

(19,073)

Cash flows from investing activities:

Capital expenditures

(43)

(52)

Proceeds from sale of capital assets

33

39

Cash used in investing activities:

(10)

(13)

Cash flows from financing activities:

Proceeds from sale and issuance of securities

12,451

Payments of equity issuance costs

(338)

Proceeds from warrants exercised

2,492

Net cash provided by financing activities

12,113

2,492

Effect of currency exchange rate changes on cash and cash equivalents

 

(6)

 

24

Net decrease in cash, cash equivalents and restricted cash

 

(2,406)

 

(16,570)

Cash, cash equivalents and restricted cash at beginning of period

3,955

22,815

Cash, cash equivalents and restricted cash at end of period

$

1,549

$

6,245

Supplemental disclosure:

Cash paid for income taxes

$

2

$

Cash paid for interest

Noncash investing and financing activities:

Capital expenditures accruals

$

$

79

See accompanying notes to Condensed Consolidated Financial Statements.

 

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ReShape Lifesciences Inc.

Notes to Condensed Consolidated Financial Statements

(dollars in thousands, except per share amounts; unaudited)

(1)  Basis of Presentation

The accompanying interim condensed consolidated financial statements and related disclosures of Reshape Lifesciences Inc. (the “Company” or “ReShape”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed on April 17, 2023. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") have been condensed or omitted.

In the opinion of management, the interim consolidated condensed financial statements reflect all adjustments considered necessary for a fair statement of the interim periods. All such adjustments are of a normal, recurring nature. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year.

Reverse Stock Split and Merger Exchange Ratio

On December 23, 2022, at the commencement of trading, the Company effected a 1-for-50 reverse stock split. Accordingly, all share and per share amounts for the periods presented in the accompanying consolidated financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect the reverse stock split. No fractional shares were issued in connection with the reverse stock split.

Summary of Significant Accounting Policies

The Company’s significant accounting policies are described in Note 4 to its audited consolidated financial statements for the year ended December 31, 2022, which are included in the Company’s Annual Report on Form 10-K which was filed with the SEC on April 17, 2023.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may materially differ from these estimates. The Company reviews its estimates on an ongoing basis or as new information becomes available to ensure that these estimates appropriately reflect changes in its business.

Long-Lived Assets

We assess the potential impairment of long-lived assets, principally property and equipment and finite-lived intangible assets, whenever events or changes in circumstances indicate that the carrying value of the asset group may not be fully recoverable. If an indicator of impairment exists for any of its asset groups, an estimate of undiscounted future cash flows, over the life of the primary asset for each asset group is compared to that long-lived asset group's carrying value. If the carrying value of the asset group is greater than the estimated future undiscounted cash flow, the Company then determines the fair value of the assets, and if an asset is determined to be impaired, the impairment loss is measured by the excess of the carrying amount of the asset over its fair value.

During the quarter ended September 30, 2023, the Company determined the carrying value of the property, plant and equipment had been impaired due to the current financial condition of the Company and recognized a non-cash impairment charge of $0.5 million, which reduced the residual value of these assets to $0.1 million, on the consolidated

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balance sheet as of September 30, 2023. The fair value was determined by estimating the amount the Company could receive if they were to sell the assets. In addition, the Company also impaired its remaining intangible assets, for further details see Note 4.

Fair Value of Financial Instruments

The carrying amounts of cash equivalents, accounts receivable, accounts payable and certain accrued and other liabilities approximate fair value due to their short-term maturities. Refer to Note 7 regarding fair value measurements and inputs of warrants.

Net Loss Per Share

The following table sets forth the potential shares of common stock that are not included in the calculation of diluted net loss per share because to do so would be anti-dilutive as of the end of each period presented:

September 30, 

    

2023

    

2022

Stock options

 

17,634

 

22,819

Unvested restricted stock units

2,598

5,782

Convertible preferred stock

10

10

Warrants

 

1,632,514

 

139,047

Recent Accounting Pronouncements

New accounting standards adopted are discussed below.

In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which is intended to provide financial statement users with more useful information about expected credit losses on financial assets held by a reporting entity at each reporting date. In May 2019, the FASB issued ASU No. 2019-05, which amended the new standard by providing targeted transition relief. The new guidance replaces the existing incurred loss impairment methodology with a methodology that requires consideration of a broader range of reasonable and supportable forward-looking information to estimate all expected credit losses. In November 2019, the FASB issued ASU No. 2019-11, which amended the new standard by providing additional clarification. This guidance became effective on January 1, 2023 and did not have a material impact to the consolidated financial statements.

(2)  Liquidity and Management’s Plans

The Company currently does not generate revenue sufficient to offset operating costs and anticipates such shortfalls to continue as the Company has modified its strategy to a metrics-driven approach through a sustainable and scalable business model, via a digital lead generation and re-engagement strategy. As of September 30, 2023, the Company had net working capital of approximately $2.9 million, primarily due to cash and cash equivalents and restricted cash of $1.5 million, and $2.2 million of accounts receivable. The Company has raised gross proceeds of $13.7 million between the public offerings that occurred on February 8, 2023, April 24, 2023 and October 3, 2023. Based on its available cash resources, the Company may not have sufficient cash on hand to fund its current operations for more than twelve months from the date of filing this Quarterly Report on Form 10-Q. This condition raises substantial doubt about the Company’s ability to continue as a going concern.

The Company’s anticipated operations include plans to (i) grow sales and operations of the Company with the Lap-Band product line both domestically and internationally as well as to obtain cost savings synergies, (ii) introduce to the market place ReShapeCare and ReShape Marketplace as an extension, (iii) marketing efforts to increase brand recognition, create customer awareness and increase the patient demand, (iv) continue development of the Diabetes Bloc-Stem Neuromodulation (DBSN) device, (v) seek opportunities to leverage our intellectual property portfolio and custom development services to provide third-party sales and licensing opportunities, and (vi) explore and capitalize on synergistic opportunities to expand our portfolio and offer future minimally invasive treatments and therapies in the obesity continuum of care, including Lap-Band 2.0. The Company believes that it has the flexibility to manage the growth of its expenditures and operations depending on the amount of available cash flows, which could include reducing expenditures for marketing, clinical and product development activities.

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Table of Contents

The Company may be required to raise additional capital, however, there can be no assurance as to whether additional financing will be available on terms acceptable to the Company, if at all. If sufficient funds on acceptable terms are not available when needed, it would have a negative impact on the Company’s financial condition and could force the Company to delay, limit, reduce, or terminate product development or future commercialization efforts or grant rights to develop and market product candidates or testing products that the Company would otherwise plan to develop.

Therefore, the plans cannot be deemed probable of being implemented. As a result, the Company’s plans do not alleviate substantial doubt about our ability to continue as a going concern.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above.

COVID-19 Risk

The impact of COVID-19 has subsided substantially in the U.S. but continues to result in reduced activity levels outside of the U.S., such as continued restrictions on travel and business operations and advising or requiring individuals to limit or forego their time outside of their homes or places of business.

(3)  Supplemental Balance Sheet Information

Components of selected captions in the condensed consolidated balance sheets consisted of the following:

Inventory:

September 30, 

December 31,

2023

    

2022

Raw materials

$

902

$

832

Sub-assemblies

1,053

864

Finished goods

 

1,249

 

1,915

Total inventory

$

3,204

$

3,611

Prepaid expenses and other current assets:

September 30, 

December 31,

2023

    

2022

Prepaid insurance

$

259

$

78

Patents

38

Prepaid advertising and marketing

47

3

Taxes

55

Other current assets

94

84

Total prepaid expenses and other current assets

$

493

$

165

Accrued and other liabilities:

September 30, 

December 31,

2023

    

2022

Payroll and benefits

$

1,014

$

1,829

Accrued legal settlements

400

1,775

Customer deposits

657

510

Taxes

54

119

Accrued professional

504

316

Other liabilities

 

105

 

491

Total accrued and other liabilities

$

2,734

$

5,040

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(4) Intangible Assets

The Company’s finite-lived intangible assets consists of developed technology, and trademarks and tradenames. The estimated useful lives of these finite-lived intangible assets is 10 years. The amortization expenses for the three months ended September 30, 2023 and 2022, were $11 thousand and $0.5 million, respectively, and the nine months ended September 30, 2023 and 2022, were $33 thousand and $1.4 million, respectively.

Impairment of In-Process Research and Development

During the quarter ended September 30, 2023, the Company determined the carrying value of the developed technology and trademarks/tradenames had been fully impaired due to the current financial condition of the Company and recognized a non-cash impairment charge of $0.2 million on the consolidated balance sheet as of September 30, 2023, which reduced the value of these assets to zero.

During the quarter ended September 30, 2022, the Company determined that it was stopping the clinical trials for the ReShape Vest and was closing out the previous trials that occurred, as significant additional clinical work and cost would be required to achieve regulatory approval for the ReShape Vest. As such, we determined the carrying value of the IPR&D asset was impaired and recognized a non-cash impairment charge of approximately $6.9 million on the condensed consolidated balance sheet as of September 30, 2022, which reduced the value of this asset to zero.

December 31, 2022

    

Weighted Average Useful Life (years)

    

Gross Carrying Amount

    

Accumulated Amortization

    

Net Book Value

Finite-lived intangible assets:

Developed technology

10.0

$

5,989

$

(5,805)

$

184

Trademarks/Tradenames

10.0

462

(386)

76

Total

$

6,451

$

(6,191)

$

260

(5) Leases

The Company had a noncancelable operating lease for office and warehouse space in San Clemente, which expired June 30, 2023. The Company also had an operating lease and warehouse space in Carlsbad, California, which expired June 30, 2022. On March 13, 2023, the Company entered into a lease for approximately 5,038 square feet of office and warehouse space at 18 Technology Drive, Suite 110, Irvine, California 92618 and relocated our principal executive offices from our former San Clemente, California location to the Irvine, California location. The Irvine California lease has a term of 36 months commencing on May 1, 2023.

The Company does not have any short-term leases or financing lease arrangements. Lease and non-lease components are accounted for separately.

Operating lease costs were $16 thousand and $0.1 million for the three months ended September 30, 2023 and 2022, respectively, and $0.3 million and $0.6 million for the nine months ended September 30, 2023 and 2022, respectively. Variable lease costs were not material.

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Supplemental information related to operating leases is as follows:

September 30,

December 31,

Balance Sheet information

2023

2022

Operating lease ROU assets

$

274

$

171

Operating lease liabilities, current portion

$

110

$

171

Operating lease liabilities, long-term portion

175

Total operating lease liabilities

$

285

$

171

Cash flow information for the nine months ended September 30,

2023

2022

Cash paid for amounts included in the measurement of operating leases liabilities

$

201

$

473

Maturities of operating lease liabilities were as follows as of September 30, 2023:

Remainder of 2023

27

2024

111

2025

115

2026

59

Total lease payments

312

Less: imputed interest

27

Total lease liabilities

$

285

Weighted-average remaining lease term at end of period (in years)

2.7

Weighted-average discount rate at end of period

6.9

%

(6)  Equity

Common Stock Issued Related to Restricted Stock Units

During the three months ended September 30, 2023 and 2022, the Company issued 672 shares of common stock and 2,321 shares of common stock, respectively, subject to vesting of the restricted stock units. During the nine months ended September 30, 2023 and 2022, the Company issued 2,340 shares of common stock and 20,505 shares of common stock, respectively, subject to vesting of the restricted stock units. For further details see Note 10.

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Table of Contents

April Securities Offering

On April 20, 2023, the Company entered into a Securities Purchase Agreement with a certain institutional investor, pursuant to which the Company agreed to issue and sell to the Investor in a registered direct offering  (i) 291,395 shares of the Company’s common stock, par value $0.001 per share, and (ii) pre-funded warrants to purchase an aggregate of 509,300 shares of Common Stock. Each share of common stock was sold at a price of $3.07 per share and each Pre-funded Warrant was sold at an offering price of $3.069 per share underlying such Pre-funded Warrants, for aggregate gross proceeds of approximately $2.5 million before deducting the placement agent’s fees and the offering expenses. The Company has been using the net proceeds of this offering to continue implementation of its growth strategies, for working capital and general corporate purposes. In addition, under the Purchase Agreement, the Company also agreed to issue and sell to the Investor in a concurrent private placement warrants to purchase an aggregate of 800,695 shares of common stock.

In connection with the Offering, the Company also agreed that certain existing warrants to purchase up to an aggregate of 164,656 shares of Common Stock that were issued to the Investor, at an exercise price of $15.00 per share, were amended effective upon the closing of the Offering so that the amended warrants have an exercise price of $3.07.

The Company’s exclusive placement agent in connection with the Offering, Maxim Group LLC, received a cash fee equal to 7.0% of the gross proceeds received by the Company from the sale of the securities in Offering, as well as reimbursement for certain expenses, and warrants to purchase up to 40,035 shares of Common Stock, which is equal to 5.0% of the aggregate amount of shares of Common Stock issued in the Offering, at an exercise price of $3.38 per share.

The offering closed April 24, 2023.

February Public Offering of Common Stock and Warrants

On February 8, 2023, the Company closed a public offering of 1,275,000 units, with each consisting of one share of its common stock, or one pre-funded warrant to purchase one share of its common stock, and one warrant to purchase one and one-half shares of its common stock. Each unit was sold at public offering price of $8.00. The warrants in the units are immediately exercisable at a price of $8.00 per share and expire five years from the date of issuance. Alternatively, each warrant can be exercised pursuant to the “alternative cashless exercise” provision, to which the holders would receive an aggregate number of shares of common stock equal the product of (x) the aggregate number of shares of common stock that would be issuable upon a cash exercise and (y) 0.50. For purposes of clarity, one common warrant to purchase one and one-half shares would be exercisable for 0.75 shares under this alternative cashless exercise provision. The shares of common stock (or pre-funded warrants in lieu thereof) and accompanying warrants were only purchasable together in this offering but were issued separately and immediately separable upon issuance. As of September 30, 2023, warrants to purchase 1,674,376 shares of common stock have been exercised under the alternative cashless exercise for a total of 835,313 shares of common stock.

Gross proceeds, before deducting underwriting discounts and commissions and estimated offering expenses, are approximately $10.2 million. The Company has been using the net proceeds of this offering to continue implementation of its growth strategies, for working capital and general corporate purposes.

The Company also granted the underwriters an option to purchase an additional 191,250 shares of common stock and/or additional warrants to purchase up to 286,875 shares of common stock, to cover over-allotments, of which Maxim Group LLC exercised its option to purchase additional warrants to purchase 286,875 share