The accompanying notes are an integral part of these condensed consolidated financial statements.
The accompanying notes are an integral part of these condensed consolidated financial statements.
The accompanying notes are an integral part of these condensed consolidated financial statements.
The accompanying notes are an integral part of these condensed consolidated financial statements.
Notes to Unaudited Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts)
1. Description of Business
Vapotherm, Inc. (the “Company”) was founded in 1993 and reincorporated under the laws of the State of Delaware in 2013. Since inception, the Company has focused on the development and commercialization of its proprietary Hi-VNI Technology products that are used to treat patients of all ages suffering from respiratory distress. The Company’s Hi-VNI Technology delivers non-invasive ventilatory support by providing heated, humidified and oxygenated air at a high velocity to patients through a comfortable small-bore nasal interface. The Company’s Precision Flow systems, which use Hi-VNI Technology, are clinically validated alternatives to, and address many limitations of, the current standard of care for the treatment of respiratory distress in a hospital setting.
The Company offers four versions of its Precision Flow systems: Precision Flow Hi-VNI, Precision Flow Plus, Precision Flow Classic and Precision Flow Heliox. The Company generates revenue primarily from sales of disposable products utilized with its proprietary Precision Flow systems. The Company also generates revenue from the capital units themselves, and to a lesser extent, sales of its companion products, which include the Vapotherm Transfer Unit 2.0, the Q50 compressor and various adaptors. The Company offers different options to its hospital customers for acquiring Precision Flow capital units, ranging from the purchase of the Precision Flow capital units with payment in full at the time of purchase, to financed purchases of the Precision Flow capital units, to bundled discounts involving the placement of Precision Flow capital units for use by the customer at no upfront charge in connection with the customer’s ongoing purchase of disposable products.
The Company sells Precision Flow systems to hospitals through a direct sales force in the United States and in the United Kingdom and through distributors in select other countries outside of the United States and United Kingdom. In addition, the Company utilizes clinical educators who are typically experienced users of Hi-VNI Technology and who focus on medical education efforts to facilitate adoption and increase utilization. The Company is focused on physicians, respiratory therapists and nurses who work in acute hospital settings, including the emergency department, or ED, and adult, pediatric and neonatal intensive care units (the “ICUs”). The Company’s relationship with these clinicians is particularly important, as it enables its products to follow patients through the care continuum.
The Company’s Hi-VNI Technology is a first-line therapy for treating respiratory distress, which is experienced by many COVID-19 patients. The Journal of the American Medical Association published data from mainland China in April 2020 suggesting that 19% of all COVID-19 patients experience respiratory distress and require some amount of respiratory support. The Company’s hospital customers around the world are using its technology to support the respiratory distress experienced by many COVID-19 patients so that they can triage their sickest patients using the limited number of ventilators. As a result, the Company has seen a significant increase in demand for its products from both new and existing accounts, initially in Europe and the Middle East, and then later during the first quarter of 2020, in the United States.
Since inception, the Company has financed its operations primarily through public offerings of its common stock, private placements of its convertible preferred stock, sales of its Precision Flow systems and amounts borrowed under its credit facilities. The Company has devoted the majority of its resources to research and development activities related to its Precision Flow systems, including regulatory initiatives and sales and marketing activities. The Company has invested heavily in its sales and marketing function by increasing the number of sales representatives and clinical educators to facilitate adoption and increase utilization of its Hi-VNI Technology products and expanded its digital marketing initiatives and medical education programs.
The Company is subject to risks common to companies in the medical device industry, including, but not limited to, the successful development and commercialization of its Precision Flow products, fluctuations in operating results and financial risks, protection of proprietary knowledge and patent risks, dependence on key personnel and collaborative partners, competition, technological and manufacturing risks, customer acceptance and demand, compliance with the Food and Drug Administration and other governmental regulations, management of growth and effectiveness of marketing by the Company and by third parties.
On November 16, 2018, the Company completed an initial public offering of 4,600,000 shares of common stock, which included the full exercise by the underwriters of their option to purchase 600,000 shares of common stock, at a price of $14.00 per share, which raised net proceeds of $57.4 million after deducting the underwriting discount of $4.5 million and offering expenses of $2.5 million.
On February 28, 2019, the Company acquired its United Kingdom based distributor. See Note 3 “Business Combinations” to these condensed consolidated financial statements for details of this transaction.
9
VAPOTHERM, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts)
In August 2019, the Company completed a public offering of 3,570,750 shares of common stock, which included the full exercise by the underwriters of their option to purchase 465,750 shares of common stock, at a price of $14.50 per share, which raised net proceeds of $48.3 million after deducting the underwriting discount of $3.1 million and offering expenses of $0.4 million.
On December 20, 2019, the Company entered into an Open Market Sales Agreement, or the ATM Agreement, with Jefferies LLC, or Jefferies, under which the Company may offer and sell its common stock having aggregate sales proceeds of up to $50.0 million from time to time through Jefferies as its sales agents. Subsequent to March 31, 2020, the Company sold 511,648 shares of common stock pursuant to the ATM Agreement for gross proceeds of $10.2 million, or $9.9 million net of commissions.
2. Summary of Significant Accounting Policies
Basis of Presentation
The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The information included in this Quarterly Report on Form 10-Q should be read in conjunction with our audited consolidated financial statements and the accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Form 10-K”). Our accounting policies are described in the “Notes to Consolidated Financial Statements” in our 2019 Form 10-K and updated, as necessary, in this report. The year-end condensed consolidated balance sheet data presented for comparative purposes was derived from our audited financial statements but does not include all disclosures required by U.S. GAAP.
Principles of Consolidation
These condensed consolidated financial statements include the financial statements of Solus Medical Ltd. (“Solus”), a wholly owned subsidiary of the Company based in the United Kingdom, which was acquired in the first quarter of 2019. All intercompany accounts and transactions have been eliminated upon consolidation.
Segment Information
Operating segments are defined as components of an enterprise for which separate discrete financial information is available and evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company globally manages the business within one reporting segment, Vapotherm, Inc. and two reporting units, Vapotherm and Solus. Segment information is consistent with how management reviews the business, makes investing and resource allocation decisions and assesses operating performance.
The majority of the Company’s long-term assets are located in the United States. Long-term assets located outside the United States total $0.1 million as of each of March 31, 2020 and December 31, 2019.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires the Company to make judgments, assumptions, and estimates that affect the reported amounts of assets, liabilities, revenue and expenses, and the related disclosure of contingent assets and liabilities. The Company evaluates its estimates on an ongoing basis. The Company bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Significant estimates relied upon in preparing these condensed consolidated financial statements include calculation of stock-based compensation, valuation of warrants, fair values of acquired assets and liabilities, including goodwill and intangibles assets, realizability of inventories, allowance for bad debt, accrued expenses and the valuation allowances against deferred income tax assets. Actual results may differ from these estimates.
10
VAPOTHERM, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts)
Unaudited Interim Financial Information
The accompanying condensed consolidated balance sheet as of March 31, 2020, the condensed consolidated statements of comprehensive loss, stockholders’ equity and of cash flows for the three months ended March 31, 2020 and 2019 are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of March 31, 2020 and the results of its operations and its cash flows for the three months ended March 31, 2020 and 2019. The financial data and other information disclosed in these notes related to the three months ended March 31, 2020 and 2019 are also unaudited. The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the operating results for the full year or for any other subsequent interim period.
Reclassification
Certain amounts in 2019 have been reclassified to conform to presentation in 2020.
Concentrations of Credit Risk
As of March 31, 2020, the Company’s financial instruments were comprised of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and debt, the carrying amounts of which approximated fair value due to the short-term nature and market interest rates. All of the Company’s cash and cash equivalents are maintained at creditworthy financial institutions. At March 31, 2020, deposits exceed the amount of any insurance provided.
The Company extends credit to customers in the normal course of business but does not require collateral or any other security to support amounts due. Management performs ongoing credit evaluations of its customers. An allowance for potentially uncollectible accounts is provided based on history, economic conditions, and composition of the accounts receivable aging. In some cases, the Company makes allowances for specific customers based on these and other factors. Provisions for the allowance for doubtful accounts are recorded in general and administrative expenses in the accompanying condensed consolidated statements of comprehensive loss.
Foreign Currency and Foreign Operations
The functional currency of the Company is the currency of the primary economic environment in which the entity operates, which is the U.S. dollar. For our non-U.S. subsidiary that transacts in a functional currency other than the U.S. dollar, assets and liabilities are translated at current rates of exchange at the balance sheet date. Income and expense items are translated at the average foreign currency exchange rates for the period. Adjustments resulting from the translation of the financial statements of its foreign operations into U.S. dollars are excluded from the determination of net loss and are recorded in accumulated other comprehensive income (loss), a separate component of stockholders’ equity.
Realized foreign currency gains or losses arising from transactions denominated in foreign currencies are recorded in other (expense) income in the condensed consolidated statements of comprehensive loss. Unrealized foreign currency gains or losses arising from transactions denominated in foreign currencies are recorded in accumulated other comprehensive income (loss).
Cash, Cash Equivalents, and Restricted Cash
The Company considers all highly liquid temporary investments purchased with original maturities of 90 days or less to be cash equivalents. The Company holds restricted cash related to certificates of deposits and collateral in relation to lease agreements. As of March 31, 2020, $0.3 million of our $62.2 million of cash, cash equivalents and restricted cash balance was located outside the United States.
11
VAPOTHERM, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts)
The following table presents the components of total cash, cash equivalents, and restricted cash as set forth in the Company’s condensed consolidated statements of cash flows:
|
|
March 31,
2020
|
|
|
December 31,
2019
|
|
Cash and cash equivalents
|
|
$
|
60,393
|
|
|
$
|
71,655
|
|
Restricted cash
|
|
|
1,852
|
|
|
|
1,852
|
|
Total cash, cash equivalents, and restricted cash
|
|
$
|
62,245
|
|
|
$
|
73,507
|
|
Product Warranty
The Company provides its customers with a standard one-year warranty on its capital equipment sales. Warranty costs are accrued based on actual historical trends and estimated at time of sale. The warranty liability is included within accrued expenses and other liabilities in the condensed consolidated balance sheets. A roll-forward of the Company’s warranty liability from December 31, 2019 to March 31, 2020 is as follows:
|
|
|
|
|
Balance at December 31, 2019
|
|
$
|
225
|
|
Provisions for warranty obligations
|
|
|
334
|
|
Settlements
|
|
|
(204
|
)
|
Balance at March 31, 2020
|
|
$
|
355
|
|
|
|
|
|
|
Insurance
Effective January 1, 2020, the Company was self-insured for certain obligations related to health insurance. The Company also purchases stop-loss insurance to protect itself from material losses. Judgments and estimates are used in determining the potential value associated with reported claims and for events that have occurred but have not been reported. The Company’s estimates consider expected claim experience and other factors. Receivables for insurance recoveries are recorded as assets, on an undiscounted basis. The Company’s liabilities are based on estimates, and, while the Company believes that its accruals are adequate, the ultimate liability may be significantly different from the amounts recorded. Changes in claims experience, the Company’s ability to settle claims or other estimates and judgments used by management could have a material impact on the amount and timing of expense for any period.
Revenue Recognition
The Company’s revenue consists primarily of the sale of products, leases and services. Product revenue consists of capital equipment and single-use disposables that are shipped and billed to customers both domestically and internationally. The Company’s main capital equipment products are the Precision Flow Hi-VNI, Precision Flow Plus, Precision Flow Classic, Vapotherm Transfer Unit 2.0 and Q50 compressor. The Company’s main disposable products are single-use disposables and nasal interfaces, or cannulas, and adaptors. Lease revenue consists of two components which include capital equipment that the Company leases out to its customers and, in certain situations, an allocation from disposable revenue to other lease revenue upon the sale of disposable products in bundled arrangements involving the placement of Precision Flow capital units for use by the customer at no upfront charge in connection with the customer’s ongoing purchase of disposable products. Service revenue consists of fees associated with routine service of capital units and the sale of extended service contracts and preventative maintenance plans, which are purchased by a small portion of the Company’s customer base. In addition, the Company sells small quantities of component parts in the United States, United Kingdom and to third-party international service centers who provide service on Precision Flow capital units outside of the United States. Freight revenue is based upon actual freight costs plus a percentage markup of such costs associated with the shipment of products domestically, and to a lesser extent, internationally, and is included in service revenue. Rebates and fees consist of contractually obligated administrative fees and percentage-of-sales rebates paid to Group Purchasing Organizations (“GPOs”), Integrated Delivery Networks (“IDNs”) and distributor partners and accounted for as a reduction of service revenue.
12
VAPOTHERM, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts)
Under Financial Accounting Standard Board (“FASB”) Accounting Standards Codifications (“ASC”) 606, Revenue from Contracts with Customers (“ASC 606”), revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and assesses whether each promised good or service is distinct and determines those that are performance obligations. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Sales, value-added, and other taxes collected on behalf of third parties are excluded from revenue. The Company’s standard payment term is generally 30 days from date of sale.
Contracts with customers may contain multiple performance obligations. For such arrangements, the transaction price is allocated to each performance obligation based on the estimated relative stand-alone selling prices of the promised products or services underlying each performance obligation. The Company determines stand-alone selling prices based on the price at which the performance obligation is sold separately. If the stand-alone selling price is not observable through past transactions, the Company estimates the stand-alone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.
When determining the transaction price of a contract, an adjustment is made if payment from a customer occurs either significantly before or significantly after performance, resulting in a significant financing component. Applying the practical expedient in paragraph 606-10-32-18, the Company does not assess whether a significant financing component exists if the period between when the Company performs its obligations under the contract and when the customer pays is one year or less. None of the Company’s contracts contained a significant financing component during the three months ended March 31, 2020 or 2019.
The Company’s contracts with its customers have a duration of less than one year. Therefore, the Company has elected to apply the practical expedient in paragraph ASC 340-40-25-4 and recognizes the incremental costs of obtaining contracts as an expense. These costs are included in sales and marketing expense in the accompanying condensed consolidated statements of comprehensive loss.
Lease Revenue
The Company also enters into agreements to lease its capital equipment. For such sales, the Company accounts for revenue under ASC 840, Leases, and assesses and classifies these transactions as sales-type or operating leases based on whether the lease transfers ownership of the equipment to the lessee by the end of the lease term. This criterion is met in situations in which the lease agreement provides for the transfer of title at or shortly after the end of the lease term. Equipment included in arrangements including transfer of title are accounted for as sales-type leases and the Company recognizes the total value of the lease payments due over the lease term to revenue at the inception of the lease. The Company records the current value of future lease payments under prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets and these amounts totaled $1.0 and $0.9 million at March 31, 2020 and December 31, 2019, respectively. Equipment included in arrangements that do not include the transfer of title, nor any of the capital lease criteria, are accounted for as operating leases and revenue is recognized on a straight-line basis as it becomes receivable monthly over the term of the lease.
The Company also enters into agreements involving the placement of Precision Flow capital units for use by the customer at no upfront charge in connection with the customer’s ongoing purchase of disposable products. In these bundled arrangements, revenue recognized for the sale of the disposables is allocated between disposable revenue and other lease revenue based on the estimated relative stand-alone selling prices of the individual performance obligations.
Shipping and Handling Costs
Amounts billed to customers for shipping and handling are included in service revenue. Shipping and handling costs are included in costs of sales. The total costs of shipping and handling for both the three months ended March 31, 2020 and 2019 was $0.3 million.
13
VAPOTHERM, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts)
Sales and Value-Added Taxes
When required by local jurisdictions, the Company bills its customers for sales tax and value-added tax calculated on each sales invoice and records a liability for the sales and value-added tax payable, which is included in accrued expenses and other liabilities in the condensed consolidated balance sheets. Sales tax and value-added tax billed to a customer is not included in the Company’s revenue.
Timing and Amount of Revenue Recognition
The Company recognizes revenue on product sales and service of its capital equipment and product sales of disposables to its end users. In each instance, revenue is generally recognized when the customer obtains control of the Company’s product, which generally occurs at a point in time upon shipment based on the contractual shipping terms of a contract.
Product and service revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products or services to a customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing the expected value amount method to which the Company expects to be entitled. As such, revenue on sales are recorded net of prompt pay discounts and payments made to GPOs, IDNs and distributors. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the Company’s anticipated performance and all information (historical, current and forecasted) that is reasonably available. The Company believes that the estimates it has established are reasonable based upon current facts and circumstances. Applying different judgments to the same facts and circumstances could result in the estimated amounts to vary.
Stock-Based Compensation
The Company maintains an equity incentive plan to provide long-term incentives for employees, consultants, and members of the board of directors. The plan allows for the issuance of non-statutory and incentive stock options to employees and non-statutory stock options to consultants and non-employee directors. The Company recognizes stock-based compensation expense for awards of equity instruments to employees and non-employees based on the grant date fair value of those awards in accordance with ASC Topic 718, Stock Compensation (ASC 718). ASC 718 requires all equity-based compensation awards, including grants of restricted shares and stock options, to be recognized as expense in the condensed consolidated statements of comprehensive loss based on their grant date fair values.
The fair value of each option grant is estimated on the grant date using the Black-Scholes option pricing model. The fair value is then amortized on a straight-line basis over the requisite service period of the awards, which is generally the vesting period. For performance-based awards, the related compensation cost is amortized over the performance period on an accelerated attribution basis. Compensation cost associated with performance awards is based on fair value on the date of grant and the number of units expected to be earned after assessing the probability that certain performance criteria will be met and the associated targeted payout level that is forecasted will be achieved. Cumulative adjustments are recorded each quarter to reflect estimated outcomes of the performance-related conditions until the results are determined and settled. Use of a valuation model requires management to make certain assumptions with respect to selected model inputs, including the expected life (weighted average period of time that the options granted are expected to be outstanding), the volatility of the Company’s common stock and an assumed risk-free interest rate. Expected volatility is calculated based on historical volatility of a group of publicly traded companies that the Company considers a peer group. The expected life is estimated using the simplified method for “plain vanilla” options. The risk-free interest rate is based on U.S. Treasury rates with a remaining term that approximates the expected life assumed at the date of grant. No dividend yield is assumed as the Company does not pay, and does not expect to pay, dividends on its common stock. The Company estimates forfeitures based on historical experience with pre-vested forfeitures. To the extent actual forfeitures differ from the estimate, the difference is recorded to compensation expense in the period of the forfeiture.
The Company recognizes stock-based expense for shares issued pursuant to its 2018 Employee Stock Purchase Plan (“ESPP”) on a straight-line basis over the related offering period. The Company estimates the fair value of shares to be issued under the ESPP based on a combination of options valued using the Black-Scholes option-pricing model. The expected life is determined based on the contractual term. Dividend yield and forfeiture rates are estimated in a manner similar to option grants described above and expected volatility is based on the Company’s historical volatility.
14
VAPOTHERM, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts)
Income Tax
The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the condensed consolidated financial statements or in the Company’s tax returns. Deferred taxes are determined based on the difference between the financial reporting and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies.
The Company accounts for uncertainty in income taxes recognized in the condensed consolidated financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the condensed consolidated financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate as well as the related net interest and penalties.
The Company’s major tax jurisdictions are the United States, New Hampshire and the United Kingdom. There is no provision or benefit for income taxes for the three months ended March 31, 2020 or 2019 because the Company has historically incurred operating losses and maintains a full valuation allowance against its United States net deferred tax assets.
Utilization of the net operating loss and tax credit carryforwards may be subject to a substantial annual limitation under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, (the “Code”) due to ownership change limitations that have occurred previously or that could occur in the future. These ownership changes may limit the amount of net operating loss and tax credit carryforwards that can be utilized to offset future taxable income and reduce taxes, respectively. The Company has not currently completed an evaluation of ownership changes through March 31, 2020 or December 31, 2019 to assess whether utilization of the Company’s net operating loss and tax credit carryforwards would be subject to an annual limitation under Sections 382 and 383 of the Code. To the extent an ownership change is determined to have occurred under Sections 382 and 383 of the Code, the net operating loss and tax credit carryforwards may be subject to limitation.
Recently Issued Accounting Pronouncements
Leases (Topic 842):
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 establishes a comprehensive new lease accounting model. The new standard clarifies the definitions of a lease, requires a dual approach to lease classification similar to current lease classifications, and causes lessees to recognize leases on the balance sheet as a lease liability with a corresponding right-of-use asset for leases with a lease term of more than twelve months. In July 2018, the FASB issued ASU No. 2018-11 Leases (Topic 842) (“ASU 2018-11”) which provided another transition method in addition to the existing transition method by allowing entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. In November 2019, the FASB issued ASU 2019-10, Financial Instruments-Credit Losses (Topic 326), Derivative and Hedging (Topic 815) and Leases (Topic 842), which defers the effective date for ASU 2016-02 to annual periods beginning after December 15, 2020 and interim periods beginning after December 15, 2021. The new standard originally required a modified retrospective transition for capital or operating leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements, but it does not require transition accounting for leases that expire prior to the date of the initial application. The Company has not yet determined the effects that the adoptions of ASU 2016-02 and ASU 2018-11 may have on its financial position, results of operations, cash flows, or disclosures.
15
VAPOTHERM, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts)
Credit Losses (Topic 326):
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This standard requires that credit losses be reported using an expected losses model rather than the incurred losses model that is currently used and establishes additional disclosures related to credit risks. In November 2019, the FASB issued ASU 2019-10, Financial Instruments-Credit Losses (Topic 326), Derivative and Hedging (Topic 815) and Leases (Topic 842), which defers the effective date for ASU 2016-13 to interim and annual periods beginning after December 15, 2022. The Company has not yet determined the effects, if any, that the adoption of ASU 2016-13 may have on its financial position, results of operations, cash flows, or disclosures.
3. Business Combinations
On February 28, 2019, the Company completed the acquisition of all outstanding equity securities of Solus, whose principal assets included intangible assets related to supplier agreements. The Company undertook the acquisition to accelerate its penetration in the United Kingdom market. The purchase price, net of cash acquired, of $2.0 million was funded with an initial cash payment of approximately $1.6 million and a settlement of a $0.4 million receivable from a preexisting relationship. Additionally, the Company recognized $1.0 million in contingent consideration as compensation expense during 2019 and expects to recognize contingent consideration of $1.2 million as compensation expense in 2020. The acquisition has been accounted for as an acquisition of a business.
The following table summarizes the purchase price allocation that includes the fair values of the separately identifiable assets acquired and liabilities assumed as of February 28, 2019:
|
|
|
|
Cash
|
$
|
466
|
|
Accounts receivable
|
411
|
|
Inventory
|
492
|
|
Prepaids and other assets
|
3
|
|
Property and equipment
|
1
|
|
Goodwill
|
592
|
|
Intangible assets
|
455
|
|
Total assets acquired
|
|
2,420
|
|
Accounts payable and accrued expenses
|
|
(241
|
)
|
Contract liabilities
|
|
(75
|
)
|
Deferred taxes
|
|
(78
|
)
|
Total liabilities assumed
|
|
(394
|
)
|
Total purchase price
|
$
|
2,026
|
|
|
|
|
|
The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill. The fair values assigned to tangible and identifiable intangible assets acquired and liabilities assumed are based on management’s estimates and assumptions.
In determining the purchase price allocation, the Company considered, among other factors, the opportunity provided by a supplier agreement with the National Health Service. The fair value of the intangible assets associated with this agreement were estimated using a discounted cash flow method with the application of the multi-period excess earnings method. Under this method, an intangible asset’s fair value is equal to the present value of the incremental after-tax cash flows attributable to only the subject intangible assets after deducting contributory asset charges. An income and expenses forecast was built based upon specific intangible asset revenue and expense estimates.
The rate used to discount the estimated future net cash flows to their present values for each intangible asset was based upon a weighted average cost of capital calculation. The discount rate was determined after consideration of market rates of return on debt and equity capital, the weighted average return on invested capital and the risk associated with achieving forecasted sales related to the assets acquired from Solus.
16
VAPOTHERM, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts)
The total weighted average amortization period for the intangible assets is approximately 3.83 years. The intangible assets are being amortized on a straight-line basis, which is consistent with the pattern that the economic benefits of the intangible assets are expected to be utilized based upon estimated cash flows generated from such assets. Goodwill associated with the acquisition was primarily attributable to the market expansion opportunity in the United Kingdom. The goodwill attributable to the United Kingdom jurisdiction is not deductible for tax purposes.
The Company has included the financial results of Solus in the condensed consolidated financial statements from the date of acquisition. The transaction costs associated with the acquisition were approximately $0.2 million and were recorded in general and administrative expense as incurred during 2019.
Pro Forma Financial Information
The following unaudited pro forma information for the three months ended March 31, 2019 presents consolidated information as if the Solus acquisition occurred on January 1, 2019, which is the first day of the Company’s fiscal year 2019:
|
|
Three Months Ended March 31,
|
|
|
|
|
2019
|
|
|
Net revenue
|
|
$
|
12,536
|
|
|
Net loss
|
|
$
|
(12,908
|
)
|
|
Net loss per share, basic
|
|
$
|
(0.76
|
)
|
|
4. Fair Value Measurements
In accordance with ASC 820, Fair Value Measurements and Disclosures, the Company generally defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company uses a three-tier fair value hierarchy, which classifies the inputs used in measuring fair values. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements), and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
|
•
|
Level 1 – inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
|
|
•
|
Level 2 – inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability.
|
|
•
|
Level 3 – inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date.
|
The Company’s cash equivalents primarily consist of money market deposits which total approximately $53.3 million at March 31, 2020 and are valued based on Level 1 of the fair value hierarchy. As described in Note 8 “Debt”, during 2019, the Company granted warrants to purchase 19,790 shares of common stock in connection with an amendment to its financing arrangement. These equity-classified warrants were valued using the Black-Scholes pricing model, which falls within Level 3 of the fair value hierarchy.
The assumptions used in the Black-Scholes pricing model were as follows at the date of grant:
Expected dividend yield
|
|
0.0
|
%
|
Risk free interest rate
|
|
2.4
|
%
|
Expected stock price volatility
|
|
60.9
|
%
|
Expected term (years)
|
|
10.0
|
|
17
VAPOTHERM, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts)
5. Accounts Receivable
Accounts receivable consists of the following:
|
|
March 31,
2020
|
|
|
December 31,
2019
|
|
United States
|
|
$
|
8,159
|
|
|
$
|
5,574
|
|
International
|
|
|
4,120
|
|
|
|
2,908
|
|
Total accounts receivable
|
|
|
12,279
|
|
|
|
8,482
|
|
Less: Allowance for doubtful accounts
|
|
|
(331
|
)
|
|
|
(239
|
)
|
Accounts receivable, net of allowance for doubtful
accounts
|
|
$
|
11,948
|
|
|
$
|
8,243
|
|
No individual customer accounted for 10% or more of revenue for the three months ended March 31, 2020 or 2019. No individual customers accounted for 10% or more of total accounts receivable at either March 31, 2020 or December 31, 2019.
6. Inventories
Inventories consist of the following:
|
|
March 31,
2020
|
|
|
December 31,
2019
|
|
Component parts
|
|
$
|
4,723
|
|
|
$
|
4,948
|
|
Finished goods
|
|
|
4,380
|
|
|
|
4,189
|
|
Total inventory
|
|
$
|
9,103
|
|
|
$
|
9,137
|
|
7. Goodwill and Intangible Assets
The changes in the carrying amount of goodwill and intangible assets during 2020 are as follows:
|
|
Goodwill
|
|
|
Intangible Assets
|
|
Balance at December 31, 2019
|
|
$
|
588
|
|
|
$
|
353
|
|
Acquired during the period
|
|
|
-
|
|
|
|
-
|
|
Amortization
|
|
|
-
|
|
|
|
(28
|
)
|
Foreign currency exchange rate changes
|
|
|
(39
|
)
|
|
|
(22
|
)
|
Balance at March 31, 2020
|
|
$
|
549
|
|
|
$
|
303
|
|
The following table presents a summary of acquired intangible assets:
|
|
As of March 31, 2020
|
|
|
|
Period of
amortization
|
|
|
Gross
Carrying
Amount
|
|
|
Accumulated
Amortization
|
|
Customer agreements
|
|
|
3.83
|
|
|
$
|
424
|
|
|
$
|
121
|
|
Total identifiable intangible assets
|
|
|
|
|
|
$
|
424
|
|
|
$
|
121
|
|
18
VAPOTHERM, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts)
8. Debt
Revolving Credit Line
On November 16, 2016, the Company entered a Business Financing Agreement (the “Revolver Agreement”) with Western Alliance Bank, an Arizona Corporation, which replaced its then existing revolving line of credit. The Revolver Agreement made available $7.0 million of revolving credit upon the closing date. Availability under the Revolver Agreement is calculated based upon 80% of the eligible receivables (net of pre-paid deposits, pre-billed invoices, other offsets, and contras related to each specific account debtor). The original maturity date was September 30, 2018. The Company refinanced the Revolver Agreement in April 2018, increasing the credit line to $7.5 million and extending the maturity date to September 30, 2020. The principal is due upon maturity. On March 22, 2019, the Company entered into an amendment to the Revolver Agreement (as amended, the “Amended Revolver Agreement”), which increased the allowable permitted indebtedness under the Amended Revolver Agreement in connection with the Company’s credit card program from $0.3 million to $0.5 million.
At March 31, 2020 the interest rate was 5.25%. The outstanding balance under the Amended Revolver Agreement was $4.5 million at March 31, 2020 and there was $2.3 million remaining availability based on eligible receivables. At December 31, 2019, the interest rate was 6.50%. The outstanding balance under the Revolver Agreement was $3.5 million at December 31, 2019 and the remaining availability based on eligible receivables was $0.8 million. The Amended Revolver Agreement requires the Company to comply with a minimum liquidity covenant at all times. As of March 31, 2020, the Company was in compliance with all covenants.
The Amended Revolving Agreement is secured by substantially all of the Company’s assets, excluding intellectual property.
Term Loans
On April 6, 2018, the Company entered into a Credit Agreement and Guaranty (the “Credit Agreement and Guaranty”) with Perceptive Credit Holdings II, LP (“Perceptive”). Pursuant to the Credit Agreement and Guaranty, a total of $42.5 million was available in three tranches. The first tranche was drawn down in the amount of $20.0 million on the closing date, April 6, 2018, which paid off a former loan agreement in full. In connection with this draw down, the Company granted Perceptive warrants to purchase 37,693 shares of Series D preferred stock which were converted into warrants to purchase shares of common stock at the time of the initial public offering. The warrants have an exercise price of $15.92 per share, were fully vested upon issuance, exercisable at the option of the holder, in whole or in part, and expire in April 2028.
On July 20, 2018, pursuant to the Credit Agreement and Guaranty, the Company drew down the second tranche of $10.0 million. In connection with this draw down, the Company granted Perceptive warrants to purchase 18,846 shares of Series D preferred stock which were converted into warrants to purchase shares of common stock at the time of the initial public offering. The warrants have an exercise price of $15.92 per share, were fully vested upon issuance, exercisable at the option of the holder, in whole or in part, and expire in July 2028.
On September 27, 2018, the Company entered into the first amendment to the Credit Agreement and Guaranty (the “Amendment”, together with the Credit Agreement and Guaranty, the “Amended Credit Agreement and Guaranty”) with Perceptive. Pursuant to the Amended Credit Agreement and Guaranty, the Company was permitted to draw the final $12.5 million of availability at any time through March 31, 2019 and the minimum 2018 revenue requirement of $43.2 million that was required to draw down the final tranche was eliminated. Concurrently with the closing of the Amendment, the Company drew down $2.0 million of the remaining $12.5 million available. In connection with this draw down, the Company granted to Perceptive warrants to purchase 3,769 shares of its Series D preferred stock which were converted into warrants to purchase shares of common stock at the time of the initial public offering. The warrants have an exercise price of $15.92 per share, were fully vested upon issuance, are exercisable at the option of the holder, in whole or in part, and expire in September 2028.
On March 22, 2019, the Company drew the remaining $10.5 million of availability under the Amended Credit Agreement and Guaranty. In connection with this draw down, the Company granted Perceptive warrants to purchase 19,790 shares of common stock. The warrants have an exercise price of $15.92 per share, were fully vested upon issuance, are exercisable at the option of the holder, in whole or in part, and expire in March 2029.
19
VAPOTHERM, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts)
On March 22, 2019, the Company entered into a second amendment to the Amended Credit Agreement and Guaranty increasing the allowable permitted indebtedness in connection with the Company’s credit card program from $0.3 million to $0.5 million.
Pursuant to the Amended Credit Agreement and Guaranty, the outstanding principal amount accrues interest at an annual rate equal to 9.06% plus the greater of (a) one-month LIBOR and (b) 1.75% per year. At March 31, 2020, the interest rate was 10.81%. The outstanding balance, including accretion of the additional final payment due upon maturity and described below, was $42.6 million at March 31, 2020 and there was no remaining availability. The Amended Credit Agreement and Guaranty is secured by substantially all of the Company’s assets, including intellectual property.
On the maturity date, in addition to the payment of principal and accrued interest, the Company will be required to make a payment of 0.5% of the total amount borrowed under the Amended Credit Agreement and Guaranty unless the Company has already made such a payment in connection with an acceleration or prepayment of borrowings under the agreement. In the event the Company prepays all or part of the amounts borrowed under the Amended Credit and Guaranty prior to the maturity date, the Company will be subject to additional prepayment fees which decrease as the time to maturity decreases. The Amended Credit Agreement and Guaranty requires the Company to comply with a minimum liquidity covenant at all times and a minimum revenue covenant measured at the end of each fiscal quarter. As of March 31,2020, the Company was in compliance with all covenants.
The annual principal maturities of the Company’s term loans as of March 31, 2020 are as follows:
2020
|
|
|
-
|
|
2021
|
|
|
-
|
|
2022
|
|
|
-
|
|
2023
|
|
|
42,582
|
|
Less: Discount on loans payable
|
|
|
(724
|
)
|
Long-term loans payable
|
|
$
|
41,858
|
|
9. Commitments and Contingencies
Legal Matters
From time to time, the Company may become involved in various legal proceedings, including those that may arise in the ordinary course of business. On December 16, 2019, the Company settled a litigation with Engineered Medical Systems, Inc., or EMS, a former supplier of a component of our Precision Flow systems, whereby EMS agreed to pay the Company $0.65 million in a series of monthly payments through December 2021, and the both the Company and EMS agreed to release each from any other outstanding claims, which included $0.5 million of accounts payable the Company had previously recorded. The Rockingham Superior Court approved the parties’ stipulation of dismissal with prejudice on January 2, 2020. The Company believes there is no other litigation pending that could have, individually, or in the aggregate, a material adverse effect on the results of its operations or financial condition.
10. Warrants
The Company’s warrant activity is summarized as follows:
|
|
Common Stock Warrants
|
|
|
|
Number of
Shares
|
|
|
Weighted
Average
Exercise
Price
|
|
Outstanding at December 31, 2019
|
|
|
182,076
|
|
|
$
|
14.84
|
|
Warrants granted
|
|
|
-
|
|
|
|
-
|
|
Warrants exercised
|
|
|
-
|
|
|
|
-
|
|
Outstanding at March 31, 2020
|
|
|
182,076
|
|
|
$
|
14.84
|
|
11. Revenue
20
VAPOTHERM, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts)
Disaggregated Revenue
The following table shows the Company’s net revenue disaggregated into categories the Company considers meaningful to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors:
|
|
Three Months Ended March 31,
|
|
|
|
2020
|
|
|
|
US
|
|
|
International
|
|
|
Total
|
|
Net revenue by:
|
|
|
|
|
|
|
|
|
|
|
|
|
Product Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Equipment
|
|
$
|
3,301
|
|
|
$
|
1,697
|
|
|
$
|
4,998
|
|
Disposable
|
|
|
9,694
|
|
|
|
2,736
|
|
|
|
12,430
|
|
Subtotal Product Revenue
|
|
|
12,995
|
|
|
|
4,433
|
|
|
|
17,428
|
|
Lease Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Equipment
|
|
|
627
|
|
|
|
17
|
|
|
|
644
|
|
Other
|
|
|
317
|
|
|
|
75
|
|
|
|
392
|
|
Service and Other Revenue
|
|
|
402
|
|
|
|
249
|
|
|
|
651
|
|
Total Revenue
|
|
$
|
14,341
|
|
|
$
|
4,774
|
|
|
$
|
19,115
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2019
|
|
|
|
US
|
|
|
International
|
|
|
Total
|
|
Net revenue by:
|
|
|
|
|
|
|
|
|
|
|
|
|
Product Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Equipment
|
|
$
|
1,510
|
|
|
$
|
505
|
|
|
$
|
2,015
|
|
Disposable
|
|
|
7,547
|
|
|
|
1,472
|
|
|
|
9,019
|
|
Subtotal Product Revenue
|
|
|
9,057
|
|
|
|
1,977
|
|
|
|
11,034
|
|
Lease Revenue
|
|
|
663
|
|
|
|
-
|
|
|
|
663
|
|
Service and Other Revenue
|
|
|
329
|
|
|
|
273
|
|
|
|
602
|
|
Total Revenue
|
|
$
|
10,049
|
|
|
$
|
2,250
|
|
|
$
|
12,299
|
|
United States and International net revenue is based on the customer location to which the product is shipped. No individual foreign country represents more than 10% of the Company’s total revenue.
Contract Balances from Contracts with Customers
Contract liabilities consist of deferred revenue and other contract liabilities associated with rebates and fees payable to GPOs, IDNs and distributor partners. Deferred revenues are included in accrued expenses and other liabilities in the accompanying consolidated balance sheets. The following table presents changes in contract liabilities during the three months ended March 31, 2020:
|
|
Contract
Liabilities
|
|
|
Deferred
Revenue
|
|
Balance at December 31, 2019
|
|
$
|
137
|
|
|
$
|
344
|
|
Additions
|
|
|
175
|
|
|
|
195
|
|
Subtractions
|
|
|
(137
|
)
|
|
|
(97
|
)
|
Balance at March 31, 2020
|
|
$
|
175
|
|
|
$
|
442
|
|
21
VAPOTHERM, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts)
12. Stock-Based Compensation
Stock-based compensation expense was allocated based on the employees’ and non-employees’ functions as follows:
|
|
Three Months Ended
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Cost of goods sold
|
|
$
|
71
|
|
|
$
|
111
|
|
Research and development
|
|
|
201
|
|
|
|
265
|
|
Sales and marketing
|
|
|
440
|
|
|
|
513
|
|
General and administrative
|
|
|
735
|
|
|
|
1,014
|
|
Total
|
|
$
|
1,447
|
|
|
$
|
1,903
|
|
Stock Options
The Company granted options to purchase 909,960 shares of common stock at exercise prices ranging from $10.60 to $12.28 per share, with a weighted average exercise price of $12.13 per share, during the three months ended March 31, 2020. The Company granted options to purchase 752,346 shares of common stock at exercise prices ranging from $16.34 to $17.15 per share, with a weighted average exercise price of $17.11 per share, during the three months ended March 31, 2019. The weighted average fair value of stock options granted during the three months ended March 31, 2020 and 2019 was $8.93 and $11.59, respectively.
The weighted average assumptions used in the Black-Scholes options pricing model are as follows:
|
|
Three Months Ended March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Expected dividend yield
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
Risk free interest rate
|
|
|
1.8
|
%
|
|
|
2.5
|
%
|
Expected stock price volatility
|
|
|
87.6
|
%
|
|
|
75.5
|
%
|
Expected term (years)
|
|
|
6.1
|
|
|
|
6.1
|
|
Restricted Stock
A summary of restricted stock activity for the three months ended March 31, 2020 is as follows:
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
Grant Date
|
|
|
|
Shares
|
|
|
Fair Value
|
|
Unvested at December 31, 2019
|
|
|
229,913
|
|
|
$
|
3.76
|
|
Granted/purchased
|
|
|
36,367
|
|
|
|
10.40
|
|
Vested
|
|
|
(40,931
|
)
|
|
|
3.30
|
|
Canceled
|
|
|
-
|
|
|
|
-
|
|
Unvested at March 31, 2020
|
|
|
225,349
|
|
|
$
|
4.65
|
|
Employee Stock Purchase Plan
In connection with our initial public offering in November 2018, the Company’s board of directors adopted the ESPP and a total of 166,500 shares of common stock were initially reserved for issuance under the ESPP. The number of shares of common stock available for issuance under the ESPP is increased on the first day of each calendar year beginning January 1, 2019 and each year thereafter until 2028 by the lessor of (i) 1% of the number of shares of common stock issued and outstanding on the immediately preceding December 31, and (ii) the number of shares of common stock determined by the Company’s board of directors up to such an initial maximum of 1,741,300 shares of common stock. The number of shares of common stock reserved under the plan at March 31, 2020 totals 548,437.
22
VAPOTHERM, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts)
The ESPP provides for successive discreet offering periods of approximately six months or as determined by the plan administrator. The first offering period began on January 2, 2020 and has not yet concluded as of March 31, 2020. As a result, the Company has not yet issued any shares of common stock pursuant to the ESPP in any period.
The ESPP permits eligible employees to elect to purchase shares of common stock through fixed whole percentage contributions from eligible compensation during each offering period, not to exceed 10% of the eligible compensation a participant receives during an offering period and not to accrue at a rate which exceeds $25,000 of the fair value of the stock (determined on the grant date(s)) for each calendar year. A participant may purchase the lower of (a) a number of shares of common stock determined by dividing such participant’s accumulated payroll deductions on the exercise date by the option price, (b) 5,000 shares; or (c) such other lesser maximum number of shares as shall have been established by the plan administrator.
Amounts deducted and accumulated by the participant will be used to purchase shares of common stock at the end of each offering period. The purchase price of the shares will be 85% of the lower of the fair value of common stock on the first trading day of each offering period or on the purchase date. Participants may end their participation during an offering period up to ten days in advance of the exercise date and will be paid their accumulated contributions that have not been used to purchase shares of common stock. Participation ends automatically upon termination of employment.
The fair value of the purchase right for the ESPP option is estimated on the date of grant using the Black-Scholes model with the following assumptions for the initial offering period:
Expected dividend yield
|
|
|
0.0
|
%
|
Risk free interest rate
|
|
|
1.6
|
%
|
Expected stock price volatility
|
|
|
107.9
|
%
|
Expected term (years)
|
|
|
0.4
|
|
13. Net Loss Per Share
The Company excluded the following potential common shares, based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:
|
|
As of March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Options to purchase common stock
|
|
|
1,897,617
|
|
|
|
1,515,671
|
|
Warrants to purchase common stock
|
|
|
182,076
|
|
|
|
250,085
|
|
Unvested restricted stock
|
|
|
225,349
|
|
|
|
353,371
|
|
Employee stock purchase plan shares
|
|
|
21,086
|
|
|
-
|
|
|
|
|
2,326,128
|
|
|
|
2,119,127
|
|
14. Related Party Transactions
See Note 8 for a discussion of the Company’s Amended Credit Agreement and Guaranty and related transactions with Perceptive, a holder of more than 5% of the Company’s common stock.
23