CORINDUS VASCULAR ROBOTICS, INC., 10-Q filed on 8/8/2018
Quarterly Report
v3.10.0.1
Document and Entity Information - shares
6 Months Ended
Jun. 30, 2018
Aug. 07, 2018
Document And Entity Information    
Entity Registrant Name Corindus Vascular Robotics, Inc.  
Entity Central Index Key 0001528557  
Document Type 10-Q  
Trading Symbol CVRS  
Document Period End Date Jun. 30, 2018  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Voluntary Filers No  
Entity's Reporting Status Current Yes  
Entity Filer Category Accelerated Filer  
Entity Common Stock, Shares Outstanding   188,962,741
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2018  
v3.10.0.1
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Jun. 30, 2018
Dec. 31, 2017
Current Assets:    
Cash and cash equivalents $ 34,315 $ 17,458
Accounts receivable 1,820 2,863
Inventories, net 2,801 2,103
Prepaid expenses and other current assets 806 539
Total current assets 39,742 22,963
Property and equipment, net 1,782 1,452
Deposits and other assets 516 151
Total assets 42,040 24,566
Current Liabilities:    
Accounts payable 2,524 2,416
Accrued expenses 2,820 3,637
Customer deposits   93
Deferred revenue 540 339
Current portion of capital lease obligation 53 49
Total current liabilities 5,937 6,534
Long-term Liabilities    
Deferred revenue, net of current portion 211 342
Long-term capital lease obligation, net of current portion 75 102
Other liabilities 83 73
Long-term debt 11,580  
Warrant liability 110  
Total long-term liabilities 12,059 517
Total liabilities 17,996 7,051
Commitments and Contingencies  
Preferred stock:    
Series A convertible preferred stock, $0.0001 par value; 1,000,000 shares designated, issued and outstanding at June 30, 2018 and none designated, issued or outstanding at December 31, 2017; Series A-1 convertible preferred stock, $0.0001 par value; 1,000,000 shares designated and 10,400 issued and outstanding at June 30, 2018 and none designated, issued or outstanding at December 31, 2017 21,442
Stockholders' equity:    
Preferred stock, $0.0001 par value; 10,000,000 shares authorized; 2,000,000 shares designated at June 30, 2018 and none designated, issued or outstanding at December 31, 2017  
Common stock, $0.0001 par value; 350,000,000 shares authorized; 188,887,817 shares issued and outstanding at June 30, 2018 and 188,764,851 shares issued and outstanding at December 31, 2017 19 19
Additional paid-in capital 202,943 198,337
Accumulated deficit (200,360) (180,841)
Total stockholders' equity 2,602 17,515
Total liabilities, preferred stock and stockholders' equity 42,040 $ 24,566
Series A Preferred Stock [Member]    
Preferred stock:    
Series A convertible preferred stock, $0.0001 par value; 1,000,000 shares designated, issued and outstanding at June 30, 2018 and none designated, issued or outstanding at December 31, 2017; Series A-1 convertible preferred stock, $0.0001 par value; 1,000,000 shares designated and 10,400 issued and outstanding at June 30, 2018 and none designated, issued or outstanding at December 31, 2017 20,564  
Series A-1 Preferred Stock [Member]    
Preferred stock:    
Series A convertible preferred stock, $0.0001 par value; 1,000,000 shares designated, issued and outstanding at June 30, 2018 and none designated, issued or outstanding at December 31, 2017; Series A-1 convertible preferred stock, $0.0001 par value; 1,000,000 shares designated and 10,400 issued and outstanding at June 30, 2018 and none designated, issued or outstanding at December 31, 2017 $ 878  
v3.10.0.1
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
Jun. 30, 2018
Dec. 31, 2017
Preferred stock, par value (in dollars per share) $ 0.0001 $ 0.0001
Preferred stock, authorized shares 10,000,000 10,000,000
Preferred stock, designated shares 2,000,000  
Common stock, par value (in dollars per share) $ 0.0001 $ 0.0001
Common stock, authorized shares 350,000,000 350,000,000
Common stock, issued shares 188,887,817 188,764,851
Common stock, outstanding shares 188,887,817 188,764,851
Series A Preferred Stock [Member]    
Series Preferred stock, par value (in dollars per share) $ 0.0001  
Series Preferred stock, issued shares 1,000,000  
Series Preferred stock, outstanding shares 1,000,000  
Preferred stock, designated shares 1,000,000  
Series A-1 Preferred Stock [Member]    
Series Preferred stock, par value (in dollars per share) $ 0.0001  
Series Preferred stock, issued shares 10,400  
Series Preferred stock, outstanding shares 10,400  
Preferred stock, designated shares 1,000,000  
v3.10.0.1
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Income Statement [Abstract]        
Revenue $ 1,665 $ 2,258 $ 3,150 $ 3,035
Cost of revenue 2,151 2,200 4,080 4,092
Gross profit (loss) (486) 58 (930) (1,057)
Operating expenses:        
Research and development 2,000 2,489 4,135 5,053
Selling, general and administrative 6,874 5,906 14,329 11,978
Restructuring charge 349   349  
Total operating expense 9,223 8,395 18,813 17,031
Operating loss (9,709) (8,337) (19,743) (18,088)
Other income (expense):        
Warrant revaluation 70   100  
Interest, net (270) (77) (316) (211)
Total other income (expense), net (200) (77) (216) (211)
Net loss (9,909) (8,414) (19,959) (18,299)
Accretion of beneficial conversion feature of Series A preferred stock     (5,236)  
Accrued dividends on Series A preferred stock (493)   (618)  
Issuance of Series A-1 preferred stock as dividends on Series A preferred stock (260) (260)
Net loss attributable to common stockholders $ (10,662) $ (8,414) $ (26,073) $ (18,299)
Net loss per share attributable to common stockholders--basic and diluted (in dollars per share) $ (0.06) $ (0.04) $ (0.14) $ (0.11)
Weighted-average common shares used in computing net loss per share attributable to common stockholders--basic and diluted (in shares) 188,833,877 187,190,228 188,802,720 159,687,997
Comprehensive loss:        
Net loss $ (9,909) $ (8,414) $ (19,959) $ (18,299)
Comprehensive loss $ (9,909) $ (8,414) $ (19,959) $ (18,299)
v3.10.0.1
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF PREFERRED STOCK AND STOCKHOLDERS' EQUITY (Unaudited) - 6 months ended Jun. 30, 2018 - USD ($)
$ in Thousands
Preferred Stock [Member]
Common Stock [Member]
Additional Paid-in Capital [Member]
Accumulated Deficit [Member]
Total
Beginning balance at Dec. 31, 2017   $ 19 $ 198,337 $ (180,841) $ 17,515
Beginning balance, (in shares) at Dec. 31, 2017   188,764,851     188,764,851
Cumulative effect of a change in accounting principles       440 $ 440
Stock-based compensation expense     1,305   1,305
Issuance of Series A preferred stock in connection with private placement, net of issuance costs of $329 $ 20,564        
Issuance of Series A preferred stock in connection with private placement, net of issuance costs of $329 (in shares) 1,000,000        
Issuance of warrants in connection with private placement     4,108   4,108
Beneficial conversion feature of Series A preferred stock $ (5,236)   5,236   5,236
Accretion of beneficial conversion feature of Series A preferrred stock 5,236   (5,236)   (5,236)
Accrued dividends on Series A preferred stock 618   (618)   (618)
Issuance of Series A-1 preferred stock as dividends on Series A preferred stock $ 260   (260)   (260)
Issuance of Series A-1 preferred stock as dividends on Series A preferred stock (in shares) 10,400        
Issuance of common stock upon vesting of restricted stock units (in shares)   30,119      
Issuance of common stock upon exercise of stock options     65   65
Issuance of common stock upon exercise of stock options (in shares)   87,507      
Issuance of common stock     6   6
Issuance of common stock (in shares)   5,340      
Net loss       (19,959) (19,959)
Ending balance at Jun. 30, 2018 $ 21,442 $ 19 $ 202,943 $ (200,360) $ 2,602
Ending balance, (in shares) at Jun. 30, 2018 1,010,400 188,887,817     188,887,817
v3.10.0.1
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF PREFERRED STOCK AND STOCKHOLDERS' EQUITY (Parenthetical)
$ in Thousands
6 Months Ended
Jun. 30, 2018
USD ($)
Statement of Stockholders' Equity [Abstract]  
Issuance costs $ 329
v3.10.0.1
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Operating activities    
Net loss $ (19,959) $ (18,299)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization 331 368
Stock-based compensation expense 1,311 1,578
Accretion of interest expense 116 91
Write down of inventories 317 260
Warrant liability revaluation (100)  
Loss on disposal of property and equipment 59
Changes in operating assets and liabilities:    
Accounts receivable 1,043 (58)
Due from related party   250
Prepaid expenses and other current assets (229) 18
Inventories (1,397) (1,596)
Deposits and other assets 4 1
Accounts payable, accrued expenses, and other liabilities (698) (173)
Customer deposits (93) 1,038
Deferred revenue 151 269
Net cash used in operating activities (19,144) (16,253)
Investing activities    
Purchase of property and equipment (338) (47)
Collection of notes receivable 71
Net cash provided by (used in) investing activities (338) 24
Financing activities    
Proceeds from issuance of Series A preferred stock and warrants, net of issuance costs 24,671  
Proceeds from issuance of long-term debt and warrants, net of deferred financing costs and discounts 11,626  
Payments on capital lease obligation (23)  
Proceeds from issuance of common stock, net of issuance costs   44,611
Proceeds from exercise of stock options 65 49
Payments on debt   (2,370)
Net cash provided by financing activities 36,339 42,290
Net increase in cash and cash equivalents 16,857 26,061
Cash and cash equivalents at beginning of period 17,458 9,183
Cash and cash equivalents at end of period 34,315 35,244
Supplemental Disclosure of Cash Flow Information:    
Fair value of warrants issued with Series A Preferred Stock 4,162  
Fair value of warrants issued with long-term debt 210  
Transfer from inventories to property and equipment in the field 382 248
Accrued dividend on Series A preferred stock 618  
Issuance of Series A-1 preferred stock as dividends on Series A preferred stock 260  
Interest paid $ 286 $ 126
v3.10.0.1
Nature of Operations
6 Months Ended
Jun. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Nature of Operations
Note 1 Nature of Operations
 

The Company

 

Corindus Vascular Robotics, Inc. (the “Company”), a Delaware corporation, has its corporate headquarters, manufacturing and a research and development facility in Waltham, Massachusetts and the Company is engaged in the design, manufacture and sales of precision vascular robotic-assisted systems (“CorPath System”) for use in interventional vascular procedures.

 

The Company’s future capital requirements will depend upon many factors, including progress with developing, manufacturing and marketing its technologies, the time and costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims and other proprietary rights, its ability to establish collaborative arrangements, marketing activities and competing technological and market developments, including regulatory changes affecting medical procedure reimbursement, and overall economic conditions in the Company’s target markets.

 

Liquidity

 

On March 16, 2018, the Company closed on a private placement of convertible preferred stock for net proceeds of $24,671. The preferred stock is convertible into an aggregate of 20,000,000 shares of common stock and is entitled to receive non-compounding dividends in additional shares of preferred stock, at the rate of 12% per annum, subject to reduction in the event certain milestones are achieved. The preferred stock purchasers were also issued warrants to purchase an aggregate of 8,750,000 shares of common stock at an exercise price of $1.40 per share, exercisable either for cash or on a cashless basis. See Note 5 for additional details.

 

On March 16, 2018, the Company also completed a financing arrangement with two lenders which provides for borrowings of up to $26,000 in the form of up to $23,000 in term loans and up to a $3,000 revolving line-of-credit through March 2022. The Company received $11,626 in net proceeds under the term loan facility and $0 in principal under the revolving loan facility. An additional $5,500 in term loans may become available in the future provided the Company has achieved a specified gross profit milestone prior to January 1, 2019, and an additional $5,500 may become available provided the Company receives net cash proceeds of $30,000 from a future sale of the Company’s equity securities prior to July 1, 2019 and achieves a specified gross profit milestone prior to September 1, 2019. Until such time that the Company achieves the specified criteria, the additional term loans are not available to the Company. As of June 30, 2018, the Company has not achieved the gross profit or equity financing milestones, and the Company can provide no assurance that it will achieve the gross profit or equity financing milestones that will trigger the Company’s ability to further draw the term loan facility. The revolving line-of-credit also has various clauses which restrict its availability and for which the Company currently does not meet such restrictions. See Note 4 for additional details.

 

As of June 30, 2018, the Company had an accumulated deficit of $200,360, cash and cash equivalents of $34,315, and working capital of $33,805. The Company has evaluated whether or not its cash and cash equivalents on hand at August 8, 2018 would be sufficient to sustain projected operating activities through the twelve months from the filing of the Form 10-Q (the “evaluation period”) as required by Accounting Standards Codification (ASC) 205-40 Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern. Based on its current forecasts, the Company anticipates that these resources will not be sufficient to meet the Company’s cash requirements during the evaluation period. However, the Company expects it would be able to raise future non-dilutive and/or dilutive financings, could implement contingency plans to mitigate the risk and extend cash resources through the evaluation period, and may be able to generate incremental revenue beyond those forecasted during the evaluation period. Since these mitigating factors are not considered probable under current accounting standards, they are not considered in the evaluation of available resources and the Company’s plans at August 8, 2018. Therefore, substantial doubt exists about the Company’s ability to continue as a going concern.

 

As the Company continues to incur losses, its transition to profitability is dependent upon achieving a level of revenues adequate to support its cost structure. The Company may never achieve profitability, and unless and until doing so, the Company intends to fund future operations through additional non-dilutive or dilutive financings. There can be no assurances, however, that additional funding will be available on terms acceptable to the Company, if at all.

v3.10.0.1
Significant Accounting Policies
6 Months Ended
Jun. 30, 2018
Accounting Policies [Abstract]  
Significant Accounting Policies
Note 2 Significant Accounting Policies

 

Basis of Presentation

 

In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the Company’s financial statements for interim periods in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The information included in this quarterly report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and the accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (“2017 Form 10-K”). The Company’s accounting policies are described in the “Notes to Consolidated Financial Statements” in the 2017 Form 10-K and are updated, as necessary, in this Form 10-Q. The year-end condensed consolidated balance sheet data presented for comparative purposes was derived from the audited financial statements, but does not include all disclosures required by U.S. GAAP. The results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the operating results for the full year or for any other subsequent interim period.

 

Principles of Consolidation

 

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Corindus, Inc. and Corindus Security Corporation. All intercompany transactions and balances have been eliminated in consolidation. The functional currency of both wholly-owned subsidiaries is the U.S. dollar and, therefore, the Company has not recorded any currency translation adjustments.

 

In the fourth quarter of 2014, the Company participated in the formation of a not-for-profit, which was established to generate awareness of the health risks linked to the use of fluoroscopy in hospital catheterization. As of June 30, 2018, the Company’s Chief Executive Officer and one of its senior executives represented two of the three voting members of the board of directors of the entity. As a result, under the voting model used for the consolidation of related parties which are controlled by a company, the Company has consolidated the financial statements of the entity and recognized expenses of $6 and $34 for the three months ended June 30, 2018 and 2017, respectively, and $11 and $46 for the six months ended June 30, 2018 and 2017, respectively, and other income of $40 and $40 for the three and six months ended June 30, 2018, respectively, and $0 and $15 for the three and six months ended June 30, 2017, respectively. The entity had assets and liabilities of $43 and $2, respectively, on the Company's condensed consolidated balance sheet at June 30, 2018 and had assets and liabilities of $15 and $7, respectively, on the Company’s consolidated balance sheet at December 31, 2017.

 

Segment Information

 

The Company operates in one business segment, which is the design, manufacture and sales of precision vascular robotic-assisted systems for use in interventional vascular procedures. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. To date, the chief operating decision-maker has made such decisions and assessed performance at the company level, as one segment. The Company’s chief operating decision-maker is the Chief Executive Officer.

 

Use of Estimates

 

The process of preparing financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the date of the financial statements. Such management estimates include those relating to revenue recognition, inventory valuation, assumptions used in the valuation of the Company’s preferred stock and warrants, valuation of stock-based awards, and valuation allowances against deferred income tax assets. Actual results could differ from those estimates.

 

Significant Customers

 

The table below sets forth the Company's customers that accounted for greater than 10% of its revenues for the three and six-month periods ended June 30, 2018 and 2017, respectively:

 

     

Three Months Ended 

June 30, 

   

Six Months Ended 

June 30, 

 
Customer     2018     2017     2018     2017  
A       29 %     %     15 %     %
B       24 %     %     13 %     %
C       22 %     29 %     12 %     22 %
D       10 %     1 %     6 %     1 %
E       1 %     1 %     23 %     9 %
F       %     %     16 %     %
G       1 %     34 %     1 %     25 %
H       1 %     14 %     %     10 %

 

Customers A, C and E accounted for 28%, 18% and 40%, respectively, of the Company's accounts receivable balance at June 30, 2018. Given the current revenue levels, in a period in which a customer purchases a CorPath System, that customer is likely to represent a significant customer.

 

Revenues from domestic customers were $1,285 and $1,578 for the three months ended June 30, 2018 and 2017, respectively, and $2,716 and $2,331 for the six months ended June 30, 2018 and 2017, respectively. Revenues from international customers were $380 and $680 for the three months ended June 30, 2018 and 2017, respectively, and $434 and $704 for the six months ended June 30, 2018 and 2017, respectively.

 

Off-Balance Sheet Arrangements

 

The Company has no significant off-balance sheet risk such as foreign exchange contracts, option contracts, or other hedging arrangements.

 

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.

 

At June 30, 2018, the Company had two items, its cash equivalents and warrant liability, measured at fair value on a recurring basis. At December 31, 2017, the Company had no assets that were measured at fair value on a recurring basis. The Company had cash equivalents totaling $33,829 and $0 at June 30, 2018 and December 31, 2017, respectively, which were valued based on Level 1 inputs. The warrant liability relates to warrants to purchase shares of the Company’s common stock that were issued to the Company’s lenders in connection with a debt financing arrangement executed on March 16, 2018. See Note 4 for additional details. The fair value of these warrants was determined based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy.

 

In order to determine the fair value of these warrants, the Company utilized a Monte-Carlo simulation in combination with a Black-Scholes option model. Estimates and assumptions impacting the fair value measurement include the fair value of the underlying shares of common stock, the remaining contractual term of the warrant, risk-free interest rate, expected dividend yield, expected volatility of the price of the underlying preferred stock and management’s assessment of the probability of additional borrowing on the credit facility. Due to the available public market information for the Company’s common stock for only a limited period of time, the Company estimates its expected stock volatility based on the historical volatility of publicly traded guideline companies for a term equal to the estimated remaining contractual term of the warrants. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve for time periods approximately equal to the remaining contractual term of the warrants. The Company estimated no expected dividend yield based on the fact that the Company has never paid or declared dividends and does not intend to do so in the foreseeable future. The Company also estimated the number of shares issuable under the warrant based upon its assessment of the timing and amounts of future advances drawn under the financing arrangement.

 

The assumptions that the Company used to determine the fair value of these warrants are as follows:

 

   

March 16, 2018  

(Date of Issuance)

 

June 30, 2018 

 
Volatility   75% to 83%   70% to 81%  
Risk-free interest rate   2.8%   2.8% to 2.9%  
Estimate term (in years)   8.5 to 10   8.6 to 9.7  

 

The following table sets forth a summary of changes in the fair value of the Company’s common stock warrant based on Level 3 inputs:

 

Balance at December 31, 2017   $  
Issuance of warrants in connection with debt financing arrangement     210  
Revaluation of warrants     (100 )
Balance at June 30, 2018   $ 110  

 

The Company’s financial instruments of deposits and other assets are carried at cost and approximate their fair values given the liquid nature of such items. The fair value of the Company’s long-term debt and capital lease obligation approximates their carrying values due to their recent negotiation and variable market rate for the long-term debt.

 

Cash Equivalents

 

The Company considers highly liquid short-term investments, which consists of money market funds, to be cash equivalents. From time to time, the Company’s cash balances may exceed federal deposit insurance limits.

 

Inventories

 

Inventories are valued at the lower of cost or net realizable value using the first-in, first-out (FIFO) method. The Company routinely monitors the recoverability of its inventory and records the lower of cost or net realizable value reserves based on current selling prices and reserves for excess and obsolete inventory based on historical and forecasted usage, as required. Scrap and excess manufacturing costs are charged to cost of revenue as incurred and not capitalized as part of inventories. The Company only capitalizes pre-launch inventories when purchased for commercial use and it deems regulatory approval to be probable.

 

Customer Deposits

 

Customer deposits represent cash received from customers for whom related products have not been delivered or services have not yet been performed.

 

Revenue from Contracts with Customers

 

Adoption of ASC Topic 606, Revenue from Contracts with Customers

 

The Company adopted Topic 606 on January 1, 2018, using the modified retrospective method for all contracts not completed as of the date of adoption. The reported results for 2018 reflect the application of Topic 606 guidance while the reported results for 2017 were prepared under the guidance of ASC 605, Revenue Recognition (ASC 605), which is also referred to herein as “legacy GAAP” or the “previous guidance.” The adoption of Topic 606 resulted in a cumulative impact of $353 related to revenue and $87 related to capitalized contract costs as of adoption date. The adoption of Topic 606 represents a change in accounting principle that will more closely align revenue recognition with the delivery of the Company’s products to its customers and will provide financial statement readers with enhanced disclosures.

 

Financial Statement Impact of Adopting Topic 606

 

The cumulative effect of applying the new guidance to all contracts with customers that were not completed as of December 31, 2017, was recorded as an adjustment to accumulated deficit as of the adoption date. As a result of applying the modified retrospective method to adopt the new revenue guidance, the following adjustments were made to accounts on the condensed consolidated balance sheet as of January 1, 2018:

 

    As Reported at December 31, 2017    

Adjustments Due to Topic 606 

   

Balance at January 1, 2018 

 
Assets:                        
   Prepaid expenses and other current assets   $ 539     $ 38     $ 577  
   Deposits and other assets   $ 151     $ 321     $ 472  
                         
Liabilities:                        
   Deferred revenue   $ 339     $ (68 )   $ 271  
   Deferred revenue, net of current portion   $ 342     $ (13 )   $ 329  
                         
Stockholders’ equity:                        
   Accumulated deficit   $ (180,841 )   $ 440     $ (180,401 )

 

The following tables compare the reported condensed consolidated balance sheet and statement of operations, as of and for the three and six months ended June 30, 2018, to the pro-forma amounts as if the previous guidance had been in effect:

 

    As of June 30, 2018  

Balance Sheet 

 

As Reported 

    Pro-forma as if the previous guidance was in effect  
Assets:            
   Prepaid expenses and other current assets   $ 806     $ 749  
   Deposits and other assets   $ 516     $ 203  
                 
Liabilities:                
   Deferred revenue   $ 540     $ 587  
   Deferred revenue, net of current portion   $ 211     $ 207  
                 
Stockholders’ equity:                
   Accumulated deficit   $ (200,360 )   $ (200,775 )

 

   

Three Months Ended 

June 30, 2018 

   

Six Months Ended 

June 30, 2018 

 

Statement of Operations

 

As reported

    Pro-forma as if the previous guidance was
in effect
   

As reported

    Pro-forma as if the previous guidance was
in effect
 
Revenue   $ 1,665     $ 1,666     $ 3,150     $ 3,162  
Selling, general and administrative     6,874       6,867       14,329       14,317  
Net loss   $ (9,909 )   $ (9,900 )   $ (19,959 )   $ (19,934 )
                                 
Net loss attributable to common  stockholders   $ (10,662 )   $ (10,653 )   $ (26,073 )   $ (26,048 )
                                 
Net loss per share attributable to  common stockholders-basic and diluted   $ (0.06 )   $ (0.06 )   $ (0.14 )   $ (0.14 )

 

The most significant impact was the recognition pattern for promised goods and services related to the Company’s service plans. The new standard requires revenues to be estimated and recognized upon transfer of the promised goods and services, which resulted in a cumulative adjustment of approximately $353. Under the new standard, the Company was able to recognize limited revenues upon delivery of certain promised goods, prior to the customers being invoiced based on the contractual arrangement with the Company. Specifically, the Company sells certain extended service plans which may include a specified upgrade or an unspecified upgrade right. Under legacy GAAP, the Company recognized revenue for service plans ratably over the term of the services to be provided. Under the new standard, the Company concluded that the service plans and upgrade rights were distinct performance obligations, and therefore would be recognized as the individual components of the service were delivered. The Company determined that the service component of the plans would continue to be recognized ratably over the term of the agreement, whereas the unspecified upgrade component would be recognized ratably over the term of the unspecified upgrade right, and the specified upgrade component would be recognized at a point in time upon delivery. The change in the timing of revenue recognition is primarily related to the impact associated with the accelerated recognition of specified upgrades. Another impact relates to the requirement to capitalize incremental costs to acquire new contracts, which consist of sales commissions. During previous periods, these costs were expensed as incurred. Adoption of the new standard resulted in the capitalization of $87 of such incremental costs.

 

Revenue Recognition

 

The Company generates revenues primarily from the sale of the CorPath System, CorPath Cassettes, accessories and service contracts. Revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration which the entity 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 the new revenue recognition accounting standard, the Company performs the following five steps: (i) identifies the contract with a customer; (ii) identifies the performance obligations in the contract; (iii) determines the transaction price; (iv) allocates the transaction price to the performance obligations in the contract; and (v) recognizes 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, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. 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.

 

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 method to which it expects to be entitled. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the Company's anticipated performance and all information (historical, current and forecasted) that is reasonably available. Sales, value add, and other taxes collected on behalf of third parties are excluded from revenue.

 

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. The Company does not assess whether a significant financing component exists if the period between when it performs its obligations under the contract and when the customer pays is one year or less. For contracts where the period between performance and payment is greater than one year, the Company assesses whether a significant financing component exists, by applying a discount rate to the expected cash collections. If this difference is significant, the Company will conclude that a significant financing component exists. The Company identified a small number of contracts where the period between performance and payment was greater than one year; however, none of the Company's contracts contained a significant financing component as of June 30, 2018.

 

Contracts that are modified to account for changes in contract specifications and requirements are assessed to determine if the modification either creates new or changes the existing enforceable rights and obligations. Generally, contract modifications are for products or services that are not distinct from the existing contract due to the inability to use, consume or sell the products or services on their own to generate economic benefits and are accounted for as if they were part of that existing contract. The effect of a contract modification on the transaction price and measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis.

 

Revenue is generally recognized when the customer obtains control of our product, which occurs at a point in time, and may be upon shipment or upon delivery based on the contractual shipping terms of a contract, or upon installation when the combined performance obligation is not distinct within the context of the contract. Service revenue is generally recognized over time as the services are delivered to the customer based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. Services are expected to be delivered to the customer throughout the term of the contract and the Company believes recognizing revenue ratably over the term of the contract best depicts the transfer of value to the customer.

 

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. The Company enters into certain contracts that have multiple performance obligations, one or more of which may be delivered subsequent to the delivery of other performance obligations. These performance obligations may include installation, training, maintenance and support services, and cassettes. The Company allocates the transaction price based on the estimated relative standalone selling prices of the promised products or services underlying each performance obligation. The Company determines standalone selling prices based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price considering available information such as market conditions and internally approved pricing guidelines related to the performance obligations. Revenue is then allocated to the performance obligations using the relative selling prices of each of the performance obligations in the contract.

 

For all performance obligations, the Company determines the revenue for each deliverable based on its relative selling price in the contract and recognizes revenue upon delivery of the product or service, assuming all other revenue recognition criteria have been met. Revenue for equipment is recognized when the equipment has been delivered, and installation and training have been completed. Revenue for cassettes and option equipment is recognized when the goods have been delivered. Revenue for maintenance and support services is recognized ratably over the term of the service contract.

 

Contract Assets

 

Contract assets include unbilled amounts for primarily maintenance and support service and future cassette purchases where revenue recognized exceeds the amount billed to the customer, and the Company's right to bill is not until the maintenance and support service period commence or the cassettes are delivered. Amounts may not exceed their net realizable value. Short-term contract assets are included in prepaid expenses and other current assets on the Company's consolidated balance sheets in 2018. Long-term contract assets are included in deposits and other assets on the Company's consolidated balance sheets in 2018.

 

Deferred Commissions

 

The Company’s incremental direct costs of obtaining a contract, which consist of sales commissions, are deferred and amortized over the period of contract performance. Applying the practical expedient, the Company recognizes sales commission expense when incurred if the amortization period of the assets that it otherwise would have recognized in one year or less. At June 30, 2018 and January 1, 2018, the Company had $75 and $87 of deferred commissions, respectively. Deferred commissions are included in deposits and other assets on the Company’s consolidated balance sheets in 2018. The Company had $7 and $12, respectively, of amortization of deferred commissions during the three and six months ended June 30, 2018. These costs are included in selling, general and administrative expenses on the Company’s consolidated statement of operations.

 

Contract Liabilities

 

The Company’s contract liabilities consist of advance payments and billings in excess of revenue recognized (deferred revenue and customer deposits). The Company’s contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. The Company classifies deferred revenue as current or noncurrent based on the timing of when it expects to recognize revenue. In order to determine revenue recognized in the period from contract liabilities, the Company first allocates revenue to the individual contract liability balance outstanding at the beginning of the period until the revenue exceeds that balance. If additional advances are received on those contracts in subsequent periods, the Company assumes all revenue recognized in the reporting period first applies to the beginning contract liability as opposed to a portion applying to the new advances for the period.

 

Disaggregation of Revenue

 

The following table summarizes revenue by revenue source for the three- and six-month periods ended June 30, 2018:

 

   

Three Months Ended  

June 30, 2018 

   

Six Months Ended 

June 30, 2018 

 
Major Products/ Service Lines                
     Product revenue   $ 1,538     $ 2,919  
     Service revenue     127       231  
  Total   $ 1,665     $ 3,150  
                 
Timing of Revenue Recognition                
     Products transferred at a point in time   $ 1,538     $ 2,919  
     Services transferred over time     127       231  
  Total   $ 1,665     $ 3,150  

 

Product Revenue

 

The Company generates revenue through the commercial production and sale of precision vascular robotic-assisted systems, and the single use accessories used in conjunction with such systems.

 

Revenue from the sale of products is recognized at a point in time when the customer obtains control of the product. The Company recognizes system revenue when the CorPath System is delivered and installed and accepted by the end user customer. The Company recognizes cassette revenue when the related cassettes have been delivered to the end customer. All costs related to product sales are recognized at time of delivery. The Company does not provide for rights of return to customers on product sales and, therefore, does not record a provision for returns.

 

Service Revenue

 

Revenue generated from maintenance and support service contracts is typically recognized ratably over the term of the service contract.

 

Deferred Revenues

 

The Company records deferred revenues when cash payments are received or due in advance of performance. Amounts received prior to satisfying the related performance obligations are recorded as deferred revenue in the accompanying balance sheets.

 

Transaction Price Allocated to Future Performance Obligations

 

Topic 606 requires that the Company disclose the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied as of June 30, 2018.

 

The following table includes estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially satisfied) as of June 30, 2018:

 

   

Less than 

1 year 

   

Greater than 

1 year 

   

Total 

 
     Product revenue   $ 282     $ 312     $ 594  
     Service and other revenue     529       623       1,152  
Total   $ 811     $ 935     $ 1,746  

 

Contract Balances from Contracts with Customers

 

Contract assets consist of unbilled amounts at the reporting date and are transferred to accounts receivable when the rights become unconditional. Contract liabilities consist of deferred revenue and customer deposits. The following table presents changes in contract assets and contract liabilities during the six months ended June 30, 2018:

 

    Balance at Beginning of Period    

Additions 

   

Subtractions 

   

Balance at  

End of 

Period 

 
Contract assets   $ 272     $ 33     $ (19 )   $ 286  
Contract acquisition and fulfillment costs:                                
     Deferred commissions   $ 87     $     $ (12 )   $ 75  
Contract liabilities:                                
     Deferred revenue   $ 693     $ 245     $ (187 )   $ 751  

 

During the three and six months ended June 30, 2018, the Company recognized the following revenues as a result of changes in the contract asset and the contract liability balances in the respective periods:

 

   

Three Months Ended 

June 30, 2018 

   

Six Months Ended 

June 30, 2018 

 
Revenue recognized in the period from:                
  Amounts included in the contract liability at the beginning of the period   $ 107     $ 187  
  Performance obligations satisfied in previous periods            

 

The timing of revenue recognition, billings and cash collections results in billed receivables, contract assets and contract liabilities on the consolidated balance sheet.

 

When consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded. Contract liabilities are recognized as revenue after control of the goods or services is transferred to the customer and all revenue recognition criteria have been met.

 

Costs to Obtain or Fulfill a Customer Contract

 

Prior to the adoption of Topic 606, the Company expensed incremental commissions paid to sales representatives for obtaining product sales as well as service contracts. Under Topic 606, the Company currently capitalizes these incremental costs of obtaining customer contracts unless the capitalization and amortization of such costs are not expected to have a material impact on the financial statements. Capitalized commissions are amortized based on the transfer of the products or services to which the assets relate. Applying the practical expedient in paragraph ASC 340-40-25-4, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. These costs are included in selling, general, and administrative expenses. The Company accounts for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the associated products.

 

Warrants to Purchase Common Stock

 

The Company reviews the terms of warrants issued in connection with the applicable accounting guidance and classifies warrants as a long-term liability on the consolidated balance sheets if the warrants do not meet the equity criteria when the number of shares issuable are variable. Warrants to purchase shares of common stock issued in connection with the Company’s long-term debt agreement met these criteria because the number of shares will vary with additional draws on the debt and therefore required liability classification. Liability-classified warrants are subject to re-measurement at each balance sheet date, and any change in fair value is recognized as a component of other income (expense) in the consolidated statements of operations. The Company estimated the fair value of these warrants at issuance and each balance sheet date thereafter using the Black-Scholes Model based on the estimated market value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrant, risk-free interest rates, expected dividends and expected volatility of the price of the underlying common stock.

 

The Company classifies warrants within stockholders’ equity on the consolidated balance sheets if the warrants are considered to be indexed to the Company’s own capital stock, and otherwise would be recorded in stockholders’ equity. Warrants to purchase common stock issued in connection with the Company’s private placement of convertible preferred stock met these criteria and, therefore, were equity classified.

 

The table below is a summary of the Company’s warrant activity during the six months ended June 30, 2018:

 

     

Number of Warrants

    Weighted Average Exercise Price  
Outstanding at December 31, 2017       355,028     $ 1.41  
  Granted       8,891,287     1.40  
  Exercised              
  Expired              
Outstanding at June 30, 2018       9,246,315     $ 1.40  

 

Stock-Based Compensation

 

The Company recognizes compensation costs resulting from the issuance of service stock-based awards to employees and directors as an expense in the consolidated statements of operations over the requisite service period based on a measurement of fair value for each stock award. The awards issued to date have primarily been stock options with service-based vesting periods over two or four years, restricted stock units with service-based vesting periods of one year, and shares of common stock. The Company recognizes compensation costs resulting from the issuance of stock-based awards to non-employees as an expense in the consolidated statements of operations over the service period based on a measurement of fair value for each stock award at each performance date and period end. During 2016, the Company also issued certain stock-based awards that contain both performance and service-based vesting conditions which vested over 25 months. The Company records expense on these awards when it becomes probable that the performance condition and requisite service will be met.

 

Upon vesting of the restricted stock units, the Company issues shares of its common stock which have a required holding period of 36 months from the date of grant of the restricted stock unit. As a result, the Company values the restricted stock units based on the closing price of the Company’s common stock on the date of grant less a discount for lack of marketability during the holding period.

 

During 2018, the Company issued certain stock-based awards that contain both market and service-based vesting conditions.  Each of these stock-based awards is contingent on the recipient still providing services to the Company or its affiliates on the date of such achievement. Portions of the awards vest upon the company’s stock price achieving certain targets for a period of at least twenty consecutive trading days at any time before May 31, 2021.  The Company estimated the fair value of these market condition stock-based awards using a Monte Carlo simulation model, which involves a series of random scenarios that may take different future price paths over the award’s contractual life. The grant date fair value is determined by taking the average of the grant date fair values under each of many Monte Carlo simulations. The determination of the fair value is affected by the Company’s stock price, as well as assumptions regarding a number of complex and subjective variables including its expected stock price volatility over the expected term of the awards, and risk-free interest rate. The total number of shares of common stock that are subject to issuance under these market condition stock-based awards is 5,183,322 shares.  The Company records expense on these stock-based awards ratably over the expected term of the award.

 

Research and Development

 

Costs for research and development are expensed as incurred. Research and development expense consists primarily of salaries, salary related expenses and costs of contractors and materials. Cash receipts from collaboration agreements accounted for under ASC 808, Collaborative Arrangements, are netted against the related research and development expenses in the period received and totaled $347 and $492, respectively, for the three and six months ended June 30, 2018. There were no such items during the three and six months ended June 30, 2017.

 

Income Taxes

 

The Company accounts for income taxes using the liability method, whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to amounts that are realizable. Consistent with all prior periods, the Company did not record any income tax benefit for its operating losses for the three or six months ended June 30, 2018 and 2017 due to the uncertainty regarding future taxable income.

 

On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”), which allows the recording of provisional amounts during a measurement period not to extend beyond one year of the enactment date. The final impact may differ from this provisional amount due to, among other things, changes in interpretations and assumptions the Company has made thus far and the issuance of additional regulatory or other guidance. The Company expects to complete the final impact within the measurement period. As of June 30, 2018, we have not recorded incremental accounting adjustments related to the SAB 118 as we continue to consider interpretations of its application.

 

Net Loss per Share

 

Basic net loss per share is computed using the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed using the sum of the weighted-average number of common shares outstanding during the period and, if dilutive, the weighted-average number of potential common shares, including the assumed exercise of share options.

 

The Company applies the two-class method to calculate its basic and diluted net loss per share attributable to common stockholders, as its Series A and Series A-1 preferred shares are participating securities. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to common stockholders. However, for the periods presented, the two-class method does not impact the net loss per common share as the Company was in a net loss position for each of the periods presented and holders of Series A and Series A-1 preferred shares do not participate in losses.

 

The Company’s Series A and Series A-1 preferred shares contractually entitle the holders of such shares to participate in dividends but do not contractually require the holders of such shares to participate in losses of the Company. Accordingly, for periods in which the Company reports a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

 

Recent Accounting Pronouncements

 

In February 2016, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842), which amends leasing accounting requirements. The new standard requires lessee recognition on the balance sheet of a right-of-use asset and a lease liability, initially measured at the present value of the lease payments. It further requires recognition in the income statement of a single lease cost, calculated so that the cost of the lease is allocated over the lease term generally on a straight-line basis. Finally, it requires classification of all cash payments within operating activities in the statement of cash flows. It is effective for fiscal years commencing after December 15, 2018 and early adoption is permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements.

  

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments, which reduces diversity in how certain cash receipts and cash payments are presented and classified in the Consolidated Statements of Cash Flows. It is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 and will be required to be applied retrospectively, with early adoption permitted. The Company adopted this update on January 1, 2018 and the adoption had no impact to the Company’s consolidated financial statements.

 

In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718) - Scope of Modification Accounting, which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. It is effective prospectively for annual periods beginning on or after December 15, 2017, with early adoption permitted. The Company adopted this update on January 1, 2018 and the adoption had no impact to the Company’s consolidated financial statements.

 

In June 2018, the FASB issued ASU 2018-07, to expand the scope of ASC Topic 718, Compensation - Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact of this pronouncement on its consolidated financial statements.

 

v3.10.0.1
Inventories
6 Months Ended
Jun. 30, 2018
Inventory Disclosure [Abstract]  
Inventories
Note 3 Inventories
 

Inventories are valued at the lower of cost or net realizable value using the FIFO method and consist of the following:

 

   

June 30, 

2018 

    December 31, 2017  
Raw material   $ 1,185     $ 945  
Work in progress     578       310  
Finished goods     1,038       848  
     Total   $ 2,801     $ 2,103  

 

The Company wrote down inventories by $125 and $59 during the three months ended June 30, 2018 and 2017, respectively, and by $317 and $260 during the six months ended June 30, 2018 and 2017, respectively, to properly state amounts at the lower of cost or net realizable value.

v3.10.0.1
Long-Term Debt
6 Months Ended
Jun. 30, 2018
Debt Disclosure [Abstract]  
Long-Term Debt
Note 4 Long-Term Debt

 

On March 16, 2018, the Company completed a financing arrangement with two lenders which provides for borrowings of up to $26,000 in the form of up to $23,000 in term loans and up to a $3,000 revolving line-of-credit through March 2022.

 

Term Loan.

 

As of June 30, 2018, the Company had $12,000 in principal outstanding under the term loan facility and $0 in principal outstanding under the revolving loan facility. The initial term loan was made on March 16, 2018 in the amount of $12,000 (Term A Loan) and is repayable in equal monthly installments of principal and interest over 30 months beginning on October 1, 2019. Prior to October 1, 2019, the Company is required to make interest only payments. Term A Loan bears interest at a rate equal to the greater of (a) the ICE Benchmark LIBOR Rate plus 7.25% or (b) 8.83%. The interest rate in effect on Term A Loan was 9.2% at June 30, 2018.

 

An additional $5,500 in term loans may become available in the future provided the Company has achieved a specified gross profit milestone prior to January 1, 2019, and an additional $5,500 may become available provided the Company draws on the first $5,500 term loan, receives net cash proceeds of $30,000 from a future sale of the Company’s equity prior to July 1, 2019 and achieves a specified gross profit milestone prior to September 1, 2019. Until such time that the Company achieves the specified criteria, the additional term loans are not available to the Company. The Company can provide no assurances that it will achieve the gross profit or equity financing milestones that will trigger the Company’s ability to further draw the term loan facility. The outstanding principal under the revolving line bears interest at a floating rate per annum equal to the greater of (i) 5.0% and (ii) the sum of (a) the “prime rate,” as reported in the Wall Street Journal, plus (b) 0.5%, which interest is payable monthly. Both loan facilities are secured by substantially all of the Company’s personal property other than the Company’s intellectual property. Both loan facilities include customary affirmative and negative covenants. Upon the earlier of the second advance under the term loan facility or the first advance under the revolving loan facility, the Company must also achieve minimum revenue on a monthly basis measured against a percentage of the Company’s Board of Directors-approved projections for the applicable fiscal year. The Company’s failure to satisfy the revenue, or any other, covenant could result in an event of default under the loan facilities. At the Company’s option, the Company may prepay the outstanding principal balance of any term loan in whole but not in part, subject to a prepayment fee of 2.5% of any amount prepaid if the prepayment occurs through and including the first anniversary of the term loan being issued, 1.5% of the amount prepaid if the prepayment occurs after the first anniversary of the term loan being issued through and including the second anniversary of the term loan being issued, or 1.0% of the amount prepaid if the prepayment occurs after the second anniversary of the Effective Date through and including the third anniversary of the term loan being issued. The Company is also required to make a final payment to the lenders equal to 6.0% of the original principal amount of term loans funded. The Company recognizes the final payment using the effective interest method over the term of each term loan.

 

Revolving Loan Facility. 

The Company also has a revolving line-of-credit with the lenders, pursuant to which the lenders agreed to make a revolving line-of-credit available to the Company in an aggregate amount of up to the lesser of (i) $3,000 or (ii) a borrowing base equal to 80% of the Company’s eligible accounts receivable. The revolving line-of-credit also has various clauses which restrict its availability and, as such, the Company is not currently eligible to draw down on the revolving line-of-credit. Proceeds from the revolving line-of-credit may be used for working capital and general business purposes.

 

The principal amount outstanding under the revolving line bears interest at a floating rate per annum equal to the greater of (i) 5.0% and (ii) the sum of (a) the “prime rate,” as reported in The Wall Street Journal, plus (b) 0.5%, which interest is payable monthly. Principal amounts borrowed under the revolving line of credit may be repaid and, prior to the maturity date, re-borrowed, subject to the terms and conditions set forth in the Revolving Loan Facility. The revolving line terminates, and all unpaid principal and accrued and unpaid interest with respect thereto is due and payable in full, on March 1, 2022. The Company is also required to pay an annual facility fee on the revolving line of $15 on each anniversary of the Effective Date, a termination fee of $22 if the revolving line is terminated prior to the maturity date for any reason, and an unused revolving line facility fee in an amount equal to 0.5% per annum of the average unused portion of the revolving line payable monthly.

 

Both loan facilities also include other events of default, the occurrence and continuation of which could cause interest to be charged at the rate that is otherwise applicable plus 5.0% and would provide the collateral agent under the term loan facility or the lender under the revolving loan facility, as applicable, with the right to exercise remedies against the Company and the collateral securing the loan facilities. These events of default include, among other things, any failure by the Company to pay principal or interest due under the loan facilities, a breach of certain covenants under the loan facilities, the Company’s insolvency, a material adverse change, the occurrence of any default under certain other indebtedness in an amount greater than $250, one or more judgments against the Company in an amount greater than $250 individually or in the aggregate, and any default under the other loan facility. The Company was not in default on any conditions of the loan facilities at June 30, 2018.

 

In connection with Term A Loan, the Company issued the lenders, warrants to purchase 141,287 shares of the Company’s common stock at an exercise price of $1.27 per share. The fair value of the warrants issued were determined to be $210 at the date of issuance and $110 at June 30, 2018 (see Note 2), and were recorded as a liability in the accompanying consolidated balance sheet. The Company also incurred costs of $373 related to the issuance of the credit facility. After allocating the costs between the Term Loan and the revolving line-of-credit the Company recorded a debt discount of $532 to the Term loan which is being amortized to interest expense using the effective interest method and $51 of costs allocated to the revolving line of credit were recorded in other assets and are being recognized as interest expense on a straight-line basis.

 

Future principal payments under the term loan facility as of June 30, 2018 are as follows:

 

Year Ending December 31,    

Amount 

 
2018     $  
2019       1,200  
2020       4,800  
2021       4,800  
2022       1,200  
      $ 12,000  
v3.10.0.1
Stockholders' Equity
6 Months Ended
Jun. 30, 2018
Equity [Abstract]  
Stockholders' Equity
Note 5 Stockholders' Equity

 

Common Stock

 

On April 10, 2018, the Board of Directors authorized the amendment of the Company's Certificate of Incorporation to increase the number of authorized shares of common stock from 250,000,000 to 350,000,000. This amendment was approved by the Company's stockholders on May 31, 2018. There was no change in the stated par value of the shares as a result of this amendment.

 

Preferred Stock

 

The Company is authorized to issue 10,000,000 shares, $0.0001 par value per share, preferred stock. Of these shares, 1,000,000 shares of preferred stock have been designated as Series A Preferred Stock and 1,000,000 shares have been designated as Series A-1 Preferred Stock (Series A Preferred Stock and the Series A-1 Preferred Stock are collectively referred to as “Preferred Stock”).

 

On March 16, 2018, the Company issued 1,000,000 shares of Series A Preferred Stock along with warrants to purchase up to 8,750,000 shares of the Company’s common stock at an exercise price per share of $1.40 for proceeds of $24,671, net of issuance costs of $329. The Preferred Stock is classified outside of stockholders’ equity because the shares contain certain redemption features which require redemption upon a change in control of the Company. The warrants were determined to be equity classified and are recorded in additional paid in capital. The Company recorded the Series A Preferred Stock and the warrants at their relative fair values which were $20,838 and $4,162, respectively. The conversion option was determined to have a beneficial conversion feature which was valued at $5,236 and was recorded to additional paid-in capital and as a discount to the Series A Preferred Stock. This resulting discount was immediately amortized as the Series A Preferred Stock has no set redemption date but is currently convertible.

 

The Company estimated the fair value of the warrants at issuance using the Black-Scholes Model based on the estimated market value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrants, risk-free interest rates, expected dividends and expected volatility of the price of the underlying common stock. The fair value of these warrants were determined based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy.

 

The Company used the following assumptions for the valuation of these warrants at the issuance date.

 

Risk-free interest rate     2.9 %
Dividend yield     0.0 %
Expected volatility     61.6 %
Expected term (years)     10.0  

 

The Company estimated the fair value of the Series A Preferred Stock using a Monte Carlo simulation to determine the applicable dividend rate for each respective period based on the financial performance milestone and market condition milestone, as well as to determine the ultimate settlement method of the Series A Preferred Stock. The fair value of the Series A Preferred Stock was determined based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy.

 

The Company used the following assumptions utilized in the valuation of the Series A Preferred Stock at the issuance date:

 

Expected volatility of future equity     45.9 %
Estimated timing of Series A Preferred Stock liquidity event (years)     3.8  

 

Once the fair value of both the Series A Preferred Stock and warrants described above were determined, a relative fair value calculation was performed to allocate the gross proceeds from the transaction to each component.

 

Dividends. Shares of the Series A Preferred Stock are entitled to receive non-compounding dividends in additional shares of preferred stock, at the rate of 12% per annum, subject to reduction in the event certain milestones are achieved, whether or not declared by the Board of Directors of the Company. Dividends on the Series A Preferred Stock are payable in shares of the Company’s Series A-1 Convertible Preferred Stock, par value $0.0001 per share, equal to the quotient of (x) the dividend amount divided by (y) the applicable conversion price. The dividend rate may be reduced to (i) 8.00% in the event the Company achieves at least $50,000 of revenue, other than any one-time license or similar fees, for any period of twelve consecutive months, or (ii) 6.00% if the Common Stock trading price exceeds $3.00 per share (as equitably adjusted for stock splits, stock dividends, combinations, recapitalizations and the like after the date hereof) for a period of 90 consecutive trading days (a “Trading Price Dividend Rate Adjustment”); provided that in the event the dividend rate is reduced to 8.00% pursuant to clause (i) before the occurrence of a Trading Price Dividend Rate Adjustment, the dividend rate shall be permanently fixed at 8.00% and clause (ii) shall cease to be applicable notwithstanding any future achievement of a Common Stock trading price in excess of $3.00 per share (as equitably adjusted for stock splits, stock dividends, combinations, recapitalizations and the like after the date hereof) for a period of 90 consecutive trading days. Shares of Series A-1 Preferred Stock do not have Accrued Dividends.

 

Voting Rights. For so long as Hudson Executive Capital beneficially owns at least a majority of the outstanding Preferred Stock, the preferred stockholders will be entitled to vote with the shares of Common Stock and not as a separate class, at any annual or special meeting of shareholders of the Company upon the following basis: each holder shall be entitled to a number of votes in respect of the shares of Preferred Stock owned of record by it equal to the number of shares of Common Stock determined by dividing (x) the number of shares of Preferred Stock held by such holder by (y) $1.29, the closing price per share of the Common Stock on the NYSE American on March 15, 2018, as of the record date for the determination of stockholders entitled to vote on such matters or, if no such record date is established, as of the date such vote is taken or any written consent of stockholders is solicited. For so long as at least 10% of the shares of Preferred Stock purchased under the Purchase Agreement remains outstanding the Company may not directly or indirectly (i) amend, alter, repeal or otherwise modify any provision of the Certificate of Incorporation, the Certificate of Designation or the Bylaws in a manner that would alter or change the terms or the powers, preferences, rights or privileges of the Preferred Stock as to affect them adversely, (ii) create (by reclassification or otherwise) or authorize any senior securities or any parity securities, or (iii) issue, or authorize for issuance, any new shares of Preferred Stock without the prior affirmative vote or written consent of the holders of at least a majority of the then-issued and outstanding shares of Preferred Stock. For so long as Hudson Executive Capital holds at least a majority of the outstanding shares of Preferred Stock, the Company may not directly or indirectly (a) incur or guarantee, assume or suffer to exist any indebtedness (other than permitted indebtedness), (b) sell, lease, license, assign, transfer, spin-off, splitoff, close, convey, encumber, pledge or otherwise dispose of any intellectual property owned whether in a single transaction or a series of related transactions to any person(s), other than pursuant to permitted indebtedness; (c) engage in any material line of business substantially different from those lines of business conducted by or publicly contemplated to be conducted by the Company on the initial issuance date unless such engagement in the line of business has received the prior approval of the Board; (d) modify its corporate structure, unless such modification has received the prior approval of the Board; or (e) enter into any agreement with respect to the foregoing without the affirmative vote or written consent of the holders representing at least a majority of the then-issued and outstanding shares of Preferred Stock. In the election of directors to the Company, for so long as the holders of Preferred Stock hold at least 25% of the shares of Preferred Stock purchased under the Purchase Agreement, the holders of the Preferred Stock, voting as a separate class, shall be entitled to elect by majority vote one individual to the Company’s Board.

 

Rank. Each share of Preferred Stock shall rank equally in all respects. With respect to distributions upon Liquidation (as defined below), the Preferred Stock rank senior to the Common Stock and to each other class of the Company’s capital stock existing now or hereafter created that are not specifically designated as ranking senior to the Preferred Stock.

 

Liquidation Preference. In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Company or such subsidiaries the assets of which constitute all or substantially all of the assets of the business of the Company and its subsidiaries, taken as a whole (“Liquidation”), each holder of Preferred Stock shall be entitled to receive liquidating distributions out of the assets of the Company legally available for distribution to its stockholders, before any payment or distribution of any assets of the Company shall be made or set apart for holders of any junior securities, including the Common Stock, for such holder’s shares of Preferred Stock in an amount equal to the greater of (i) the sum of (A) the aggregate Liquidation Preference ($25.00 per share of Preferred Stock) and (B) the aggregate Accrued Dividends of such shares as of the date of the Liquidation (as such terms are defined in the Certificate of Designation) and (ii) the amount such holder would have received had such shares of Preferred Stock, immediately prior to such Liquidation, been converted into shares of Common Stock.

 

Conversion. Each Holder of shares of Preferred Stock shall have the right (the “Conversion Right”), at any time and from time to time, at such holder’s option, to convert all or any portion of such holder’s shares of Preferred Stock into fully paid and non-assessable shares of Common Stock. Upon a holder’s election to exercise its Conversion Right, each share of Preferred Stock for which the Conversion Right is exercised shall be converted into such number of shares of Common Stock equal to the quotient of (A) the sum of (1) the Liquidation Preference and (2) the Accrued Dividends on such share as of the conversion date, divided by (B) the Conversion Price of such share in effect at the time of conversion.

 

Forced Conversion. If (a) at any time after the original issuance date, the Common Stock trading price exceeds $4.00 per share (as equitably adjusted for stock splits, stock dividends, combinations, recapitalizations and the like after the date hereof) for a 30 consecutive trading day period and (b) the Company, at its option, delivers a written notice to the holders of the Preferred Stock within 10 business days of the conclusion of such period, then each share of Preferred Stock outstanding shall be converted into such number of fully paid and nonassessable shares of Common Stock equal to the quotient of (A) the sum of (1) the Liquidation Preference and (2) the Accrued Dividends on such share, divided by (B) the conversion price of such share in effect as of the business day immediately prior to the date of the Company’s notice to the holder.

 

As of June 30, 2018, the redemption value and Liquidation Preference of the Preferred Stock was $25,260 and it was convertible into 20,208,000 shares of the Company’s Common Stock. On April 16, 2018 and July 16, 2018 (the Series A dividend payment dates), the Company issued 10,400 and 30,000 shares, respectively, of Series A-1 Preferred Stock to the holders of Series A Preferred Stock to fulfill the dividend payment obligation.

v3.10.0.1
Stock-Based Compensation
6 Months Ended
Jun. 30, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-Based Compensation
Note 6 Stock-based Compensation

 

Stock-based compensation expense was allocated based on the employees’ or non-employees’ function as follows:

 

   

Three Months Ended 

June 30, 

   

Six Months Ended 

June 30, 

 
    2018     2017     2018     2017  
Cost of revenue   $ 31     $     $ 59     $  
Research and development     56       61       117       117  
Selling, general and administrative     550       725       1,135       1,461  
     Total   $ 637     $ 786     $ 1,311     $ 1,578  

 

The Company granted options to purchase 9,189,322 shares of common stock at exercise price ranging from $0.75 to $1.05 per share during the six months ended June 30, 2018. The weighted-average fair value of the stock options granted was $0.38 per share for the six months ended June 30, 2018. The Company granted options to purchase 1,442,326 shares of common stock at exercise prices ranging from $1.17 to $1.85 per share during the six months ended June 30, 2017. The weighted-average fair value of the stock options granted was $0.81 per share for the six months ended June 30, 2017.

 

The following assumptions were used to estimate the fair value of stock options granted using the Black-Scholes option-pricing model:

 

 

Six Months Ended 

June 30, 

  2018   2017
Risk-free interest 2.69%-2.86%   1.87%-2.38%
Expected term in years 6.25-10 years   6-10 years
Expected volatility 64%-71%   55%-63%
Expected dividend yield 0%   0%

 

The following table summarizes the activities for the Company’s unvested restricted stock units for the six months ended June 30, 2018:

 

        Unvested Restricted Stock Units  
        Number of Shares        Weighted-average Grant Date
Fair Value
 
Unvested as of December 31, 2017       42,406     $ 0.87  
   Granted       334,955     $ 0.65  
   Vested       (30,119 )   $ 0.91  
   Forfeited/Cancelled       (16,036 )   $ 0.87  
Unvested as of June 30, 2018       331,206     $ 0.64  
v3.10.0.1
Net Loss per Share
6 Months Ended
Jun. 30, 2018
Earnings Per Share [Abstract]  
Net Loss per Share
Note 7 Net Loss per Share
 

The following common stock equivalents were excluded from the calculation of diluted net loss per share for the periods indicated because including them would have had an anti-dilutive effect:

 

    As of June 30,  
    2018     2017  
Options to purchase common stock     25,532,850       18,595,647  
Warrants to purchase common stock     9,246,315       5,083,219  
Restricted stock units     331,206        
Series A Preferred Stock     1,000,000        
Series A-1 Preferred Stock     10,400        
v3.10.0.1
Restructuring Charge
6 Months Ended
Jun. 30, 2018
Restructuring and Related Activities [Abstract]  
Restructuring Charge
Note 8 Restructuring Charge

 

In May 2018, the Company undertook cost cutting initiatives which included a reduction in force from each functional area of the Company's operations. Accordingly, the Company recorded a restructuring charge of approximately $349 relating to severance-related costs. As of June 30, 2018, $256 of this amount had been paid. The remaining $93 of accrued restructuring costs have been included in accounts payable and accrued expenses in the accompanying consolidated balance sheet.

v3.10.0.1
Significant Accounting Policies (Policies)
6 Months Ended
Jun. 30, 2018
Accounting Policies [Abstract]  
Basis of Presentation

Basis of Presentation

 

In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the Company’s financial statements for interim periods in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The information included in this quarterly report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and the accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (“2017 Form 10-K”). The Company’s accounting policies are described in the “Notes to Consolidated Financial Statements” in the 2017 Form 10-K and are updated, as necessary, in this Form 10-Q. The year-end condensed consolidated balance sheet data presented for comparative purposes was derived from the audited financial statements, but does not include all disclosures required by U.S. GAAP. The results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the operating results for the full year or for any other subsequent interim period.

Principles of Consolidation

Principles of Consolidation

 

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Corindus, Inc. and Corindus Security Corporation. All intercompany transactions and balances have been eliminated in consolidation. The functional currency of both wholly-owned subsidiaries is the U.S. dollar and, therefore, the Company has not recorded any currency translation adjustments.

 

In the fourth quarter of 2014, the Company participated in the formation of a not-for-profit, which was established to generate awareness of the health risks linked to the use of fluoroscopy in hospital catheterization. As of June 30, 2018, the Company’s Chief Executive Officer and one of its senior executives represented two of the three voting members of the board of directors of the entity. As a result, under the voting model used for the consolidation of related parties which are controlled by a company, the Company has consolidated the financial statements of the entity and recognized expenses of $6 and $34 for the three months ended June 30, 2018 and 2017, respectively, and $11 and $46 for the six months ended June 30, 2018 and 2017, respectively, and other income of $40 and $40 for the three and six months ended June 30, 2018, respectively, and $0 and $15 for the three and six months ended June 30, 2017, respectively. The entity had assets and liabilities of $43 and $2, respectively, on the Company's condensed consolidated balance sheet at June 30, 2018 and had assets and liabilities of $15 and $7, respectively, on the Company’s consolidated balance sheet at December 31, 2017.

Segment Information

Segment Information

 

The Company operates in one business segment, which is the design, manufacture and sales of precision vascular robotic-assisted systems for use in interventional vascular procedures. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. To date, the chief operating decision-maker has made such decisions and assessed performance at the company level, as one segment. The Company’s chief operating decision-maker is the Chief Executive Officer.

Use of Estimates

Use of Estimates

 

The process of preparing financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the date of the financial statements. Such management estimates include those relating to revenue recognition, inventory valuation, assumptions used in the valuation of the Company’s preferred stock and warrants, valuation of stock-based awards, and valuation allowances against deferred income tax assets. Actual results could differ from those estimates.

Significant Customers

Significant Customers

 

The table below sets forth the Company's customers that accounted for greater than 10% of its revenues for the three and six-month periods ended June 30, 2018 and 2017, respectively:

 

     

Three Months Ended 

June 30, 

   

Six Months Ended 

June 30, 

 
Customer     2018     2017     2018     2017  
A       29 %     %     15 %     %
B       24 %     %     13 %     %
C       22 %     29 %     12 %     22 %
D       10 %     1 %     6 %     1 %
E       1 %     1 %     23 %     9 %
F       %     %     16 %     %
G       1 %     34 %     1 %     25 %
H       1 %     14 %     %     10 %

 

Customers A, C and E accounted for 28%, 18% and 40%, respectively, of the Company's accounts receivable balance at June 30, 2018. Given the current revenue levels, in a period in which a customer purchases a CorPath System, that customer is likely to represent a significant customer.

 

Revenues from domestic customers were $1,285 and $1,578 for the three months ended June 30, 2018 and 2017, respectively, and $2,716 and $2,331 for the six months ended June 30, 2018 and 2017, respectively. Revenues from international customers were $380 and $680 for the three months ended June 30, 2018 and 2017, respectively, and $434 and $704 for the six months ended June 30, 2018 and 2017, respectively.

Off-Balance Sheet Arrangements

Off-Balance Sheet Arrangements

 

The Company has no significant off-balance sheet risk such as foreign exchange contracts, option contracts, or other hedging arrangements.

Fair Value Measurements

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.

 

At June 30, 2018, the Company had two items, its cash equivalents and warrant liability, measured at fair value on a recurring basis. At December 31, 2017, the Company had no assets that were measured at fair value on a recurring basis. The Company had cash equivalents totaling $33,829 and $0 at June 30, 2018 and December 31, 2017, respectively, which were valued based on Level 1 inputs. The warrant liability relates to warrants to purchase shares of the Company’s common stock that were issued to the Company’s lenders in connection with a debt financing arrangement executed on March 16, 2018. See Note 4 for additional details. The fair value of these warrants was determined based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy.

 

In order to determine the fair value of these warrants, the Company utilized a Monte-Carlo simulation in combination with a Black-Scholes option model. Estimates and assumptions impacting the fair value measurement include the fair value of the underlying shares of common stock, the remaining contractual term of the warrant, risk-free interest rate, expected dividend yield, expected volatility of the price of the underlying preferred stock and management’s assessment of the probability of additional borrowing on the credit facility. Due to the available public market information for the Company’s common stock for only a limited period of time, the Company estimates its expected stock volatility based on the historical volatility of publicly traded guideline companies for a term equal to the estimated remaining contractual term of the warrants. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve for time periods approximately equal to the remaining contractual term of the warrants. The Company estimated no expected dividend yield based on the fact that the Company has never paid or declared dividends and does not intend to do so in the foreseeable future. The Company also estimated the number of shares issuable under the warrant based upon its assessment of the timing and amounts of future advances drawn under the financing arrangement.

 

The assumptions that the Company used to determine the fair value of these warrants are as follows:

 

   

March 16, 2018  

(Date of Issuance)

 

June 30, 2018 

 
Volatility   75% to 83%   70% to 81%  
Risk-free interest rate   2.8%   2.8% to 2.9%  
Estimate term (in years)   8.5 to 10   8.6 to 9.7  

 

The following table sets forth a summary of changes in the fair value of the Company’s common stock warrant based on Level 3 inputs:

 

Balance at December 31, 2017   $  
Issuance of warrants in connection with debt financing arrangement     210  
Revaluation of warrants     (100 )
Balance at June 30, 2018   $ 110  

 

The Company’s financial instruments of deposits and other assets are carried at cost and approximate their fair values given the liquid nature of such items. The fair value of the Company’s long-term debt and capital lease obligation approximates their carrying values due to their recent negotiation and variable market rate for the long-term debt.

 

Cash Equivalents

Cash Equivalents

 

The Company considers highly liquid short-term investments, which consists of money market funds, to be cash equivalents. From time to time, the Company’s cash balances may exceed federal deposit insurance limits.

Inventories

Inventories

 

Inventories are valued at the lower of cost or net realizable value using the first-in, first-out (FIFO) method. The Company routinely monitors the recoverability of its inventory and records the lower of cost or net realizable value reserves based on current selling prices and reserves for excess and obsolete inventory based on historical and forecasted usage, as required. Scrap and excess manufacturing costs are charged to cost of revenue as incurred and not capitalized as part of inventories. The Company only capitalizes pre-launch inventories when purchased for commercial use and it deems regulatory approval to be probable.

Customer Deposits

Customer Deposits

 

Customer deposits represent cash received from customers for whom related products have not been delivered or services have not yet been performed.

Revenue from Contracts with Customers

Revenue from Contracts with Customers

 

Adoption of ASC Topic 606, Revenue from Contracts with Customers

 

The Company adopted Topic 606 on January 1, 2018, using the modified retrospective method for all contracts not completed as of the date of adoption. The reported results for 2018 reflect the application of Topic 606 guidance while the reported results for 2017 were prepared under the guidance of ASC 605, Revenue Recognition (ASC 605), which is also referred to herein as “legacy GAAP” or the “previous guidance.” The adoption of Topic 606 resulted in a cumulative impact of $353 related to revenue and $87 related to capitalized contract costs as of adoption date. The adoption of Topic 606 represents a change in accounting principle that will more closely align revenue recognition with the delivery of the Company’s products to its customers and will provide financial statement readers with enhanced disclosures.

 

Financial Statement Impact of Adopting Topic 606

 

The cumulative effect of applying the new guidance to all contracts with customers that were not completed as of December 31, 2017, was recorded as an adjustment to accumulated deficit as of the adoption date. As a result of applying the modified retrospective method to adopt the new revenue guidance, the following adjustments were made to accounts on the condensed consolidated balance sheet as of January 1, 2018:

 

    As Reported at December 31, 2017     Adjustments Due to Topic 606      Balance at January 1, 2018   
Assets:                        
   Prepaid expenses and other current assets   $ 539     $ 38     $ 577  
   Deposits and other assets   $ 151     $ 321     $ 472  
                         
Liabilities:                        
   Deferred revenue   $ 339     $ (68 )   $ 271  
   Deferred revenue, net of current portion   $ 342     $ (13 )   $ 329  
                         
Stockholders’ equity:                        
   Accumulated deficit   $ (180,841 )   $ 440     $ (180,401 )

 

The following tables compare the reported condensed consolidated balance sheet and statement of operations, as of and for the three and six months ended June 30, 2018, to the pro-forma amounts as if the previous guidance had been in effect:

 

    As of June 30, 2018  
Balance Sheet    As Reported      Pro-forma as if the previous guidance was in effect  
Assets:            
   Prepaid expenses and other current assets   $ 806     $ 749  
   Deposits and other assets   $ 516     $ 203  
                 
Liabilities:                
   Deferred revenue   $ 540     $ 587  
   Deferred revenue, net of current portion   $ 211     $ 207  
                 
Stockholders’ equity:                
   Accumulated deficit   $ (200,360 )   $ (200,775 )

 

   

Three Months Ended 

June 30, 2018 

   

Six Months Ended 

June 30, 2018 

 

Statement of Operations

 

 

As reported

 

    Pro-forma as if the previous guidance was
in effect
   

As reported

 

    Pro-forma as if the previous guidance was
in effect
 
Revenue   $ 1,665     $ 1,666     $ 3,150     $ 3,162  
Selling, general and administrative     6,874       6,867       14,329       14,317  
Net loss   $ (9,909 )   $ (9,900 )   $ (19,959 )   $ (19,934 )
                                 
Net loss attributable to common  stockholders   $ (10,662 )   $ (10,653 )   $ (26,073 )   $ (26,048 )
                                 
Net loss per share attributable to  common stockholders-basic and diluted   $ (0.06 )   $ (0.06 )   $ (0.14 )   $ (0.14 )

 

The most significant impact was the recognition pattern for promised goods and services related to the Company’s service plans. The new standard requires revenues to be estimated and recognized upon transfer of the promised goods and services, which resulted in a cumulative adjustment of approximately $353. Under the new standard, the Company was able to recognize limited revenues upon delivery of certain promised goods, prior to the customers being invoiced based on the contractual arrangement with the Company. Specifically, the Company sells certain extended service plans which may include a specified upgrade or an unspecified upgrade right. Under legacy GAAP, the Company recognized revenue for service plans ratably over the term of the services to be provided. Under the new standard, the Company concluded that the service plans and upgrade rights were distinct performance obligations, and therefore would be recognized as the individual components of the service were delivered. The Company determined that the service component of the plans would continue to be recognized ratably over the term of the agreement, whereas the unspecified upgrade component would be recognized ratably over the term of the unspecified upgrade right, and the specified upgrade component would be recognized at a point in time upon delivery. The change in the timing of revenue recognition is primarily related to the impact associated with the accelerated recognition of specified upgrades. Another impact relates to the requirement to capitalize incremental costs to acquire new contracts, which consist of sales commissions. During previous periods, these costs were expensed as incurred. Adoption of the new standard resulted in the capitalization of $87 of such incremental costs.

Revenue Recognition

Revenue Recognition

 

The Company generates revenues primarily from the sale of the CorPath System, CorPath Cassettes, accessories and service contracts. Revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration which the entity 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 the new revenue recognition accounting standard, the Company performs the following five steps: (i) identifies the contract with a customer; (ii) identifies the performance obligations in the contract; (iii) determines the transaction price; (iv) allocates the transaction price to the performance obligations in the contract; and (v) recognizes 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, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. 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.

 

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 method to which it expects to be entitled. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the Company's anticipated performance and all information (historical, current and forecasted) that is reasonably available. Sales, value add, and other taxes collected on behalf of third parties are excluded from revenue.

 

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. The Company does not assess whether a significant financing component exists if the period between when it performs its obligations under the contract and when the customer pays is one year or less. For contracts where the period between performance and payment is greater than one year, the Company assesses whether a significant financing component exists, by applying a discount rate to the expected cash collections. If this difference is significant, the Company will conclude that a significant financing component exists. The Company identified a small number of contracts where the period between performance and payment was greater than one year; however, none of the Company's contracts contained a significant financing component as of June 30, 2018.

 

Contracts that are modified to account for changes in contract specifications and requirements are assessed to determine if the modification either creates new or changes the existing enforceable rights and obligations. Generally, contract modifications are for products or services that are not distinct from the existing contract due to the inability to use, consume or sell the products or services on their own to generate economic benefits and are accounted for as if they were part of that existing contract. The effect of a contract modification on the transaction price and measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis.

 

Revenue is generally recognized when the customer obtains control of our product, which occurs at a point in time, and may be upon shipment or upon delivery based on the contractual shipping terms of a contract, or upon installation when the combined performance obligation is not distinct within the context of the contract. Service revenue is generally recognized over time as the services are delivered to the customer based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. Services are expected to be delivered to the customer throughout the term of the contract and the Company believes recognizing revenue ratably over the term of the contract best depicts the transfer of value to the customer.

 

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. The Company enters into certain contracts that have multiple performance obligations, one or more of which may be delivered subsequent to the delivery of other performance obligations. These performance obligations may include installation, training, maintenance and support services, and cassettes. The Company allocates the transaction price based on the estimated relative standalone selling prices of the promised products or services underlying each performance obligation. The Company determines standalone selling prices based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price considering available information such as market conditions and internally approved pricing guidelines related to the performance obligations. Revenue is then allocated to the performance obligations using the relative selling prices of each of the performance obligations in the contract.

 

For all performance obligations, the Company determines the revenue for each deliverable based on its relative selling price in the contract and recognizes revenue upon delivery of the product or service, assuming all other revenue recognition criteria have been met. Revenue for equipment is recognized when the equipment has been delivered, and installation and training have been completed. Revenue for cassettes and option equipment is recognized when the goods have been delivered. Revenue for maintenance and support services is recognized ratably over the term of the service contract.

Contract Assets

Contract Assets

 

Contract assets include unbilled amounts for primarily maintenance and support service and future cassette purchases where revenue recognized exceeds the amount billed to the customer, and the Company's right to bill is not until the maintenance and support service period commence or the cassettes are delivered. Amounts may not exceed their net realizable value. Short-term contract assets are included in prepaid expenses and other current assets on the Company's consolidated balance sheets in 2018. Long-term contract assets are included in deposits and other assets on the Company's consolidated balance sheets in 2018.

Deferred Commissions

Deferred Commissions

 

The Company’s incremental direct costs of obtaining a contract, which consist of sales commissions, are deferred and amortized over the period of contract performance. Applying the practical expedient, the Company recognizes sales commission expense when incurred if the amortization period of the assets that it otherwise would have recognized in one year or less. At June 30, 2018 and January 1, 2018, the Company had $75 and $87 of deferred commissions, respectively. Deferred commissions are included in deposits and other assets on the Company’s consolidated balance sheets in 2018. The Company had $7 and $12, respectively, of amortization of deferred commissions during the three and six months ended June 30, 2018. These costs are included in selling, general and administrative expenses on the Company’s consolidated statement of operations.

Contract Liabilities

Contract Liabilities

 

The Company’s contract liabilities consist of advance payments and billings in excess of revenue recognized (deferred revenue and customer deposits). The Company’s contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. The Company classifies deferred revenue as current or noncurrent based on the timing of when it expects to recognize revenue. In order to determine revenue recognized in the period from contract liabilities, the Company first allocates revenue to the individual contract liability balance outstanding at the beginning of the period until the revenue exceeds that balance. If additional advances are received on those contracts in subsequent periods, the Company assumes all revenue recognized in the reporting period first applies to the beginning contract liability as opposed to a portion applying to the new advances for the period.

Disaggregation of Revenue

Disaggregation of Revenue

 

The following table summarizes revenue by revenue source for the three- and six-month periods ended June 30, 2018:

 

   

Three Months Ended  

June 30, 2018 

   

Six Months Ended 

June 30, 2018 

 
Major Products/ Service Lines                
     Product revenue   $ 1,538     $ 2,919  
     Service revenue     127       231  
  Total   $ 1,665     $ 3,150  
                 
Timing of Revenue Recognition                
     Products transferred at a point in time   $ 1,538     $ 2,919  
     Services transferred over time     127       231  
  Total   $ 1,665     $ 3,150  

 

Product Revenue

 

The Company generates revenue through the commercial production and sale of precision vascular robotic-assisted systems, and the single use accessories used in conjunction with such systems.

 

Revenue from the sale of products is recognized at a point in time when the customer obtains control of the product. The Company recognizes system revenue when the CorPath System is delivered and installed and accepted by the end user customer. The Company recognizes cassette revenue when the related cassettes have been delivered to the end customer. All costs related to product sales are recognized at time of delivery. The Company does not provide for rights of return to customers on product sales and, therefore, does not record a provision for returns.

 

Service Revenue

 

Revenue generated from maintenance and support service contracts is typically recognized ratably over the term of the service contract.

 

Deferred Revenues

 

The Company records deferred revenues when cash payments are received or due in advance of performance. Amounts received prior to satisfying the related performance obligations are recorded as deferred revenue in the accompanying balance sheets.

Transaction Price Allocated to Future Performance Obligations

Transaction Price Allocated to Future Performance Obligations

 

Topic 606 requires that the Company disclose the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied as of June 30, 2018.

 

The following table includes estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially satisfied) as of June 30, 2018:

 

   

Less than 

1 year 

   

Greater than 

1 year 

    Total   
     Product revenue   $ 282     $ 312     $ 594  
     Service and other revenue     529       623       1,152  
Total   $ 811     $ 935     $ 1,746  
Contract Balances from Contracts with Customers

Contract Balances from Contracts with Customers

 

Contract assets consist of unbilled amounts at the reporting date and are transferred to accounts receivable when the rights become unconditional. Contract liabilities consist of deferred revenue and customer deposits. The following table presents changes in contract assets and contract liabilities during the six months ended June 30, 2018:

 

    Balance at Beginning of Period     Additions      Subtractions     

Balance at  

End of 

Period 

 
Contract assets   $ 272     $ 33     $ (19 )   $ 286  
Contract acquisition and fulfillment costs:                                
     Deferred commissions   $ 87     $     $ (12 )   $ 75  
Contract liabilities:                                
     Deferred revenue   $ 693     $ 245     $ (187 )   $ 751  

 

During the three and six months ended June 30, 2018, the Company recognized the following revenues as a result of changes in the contract asset and the contract liability balances in the respective periods:

 

   

Three Months Ended 

June 30, 2018 

   

Six Months Ended 

June 30, 2018 

 
Revenue recognized in the period from:                
  Amounts included in the contract liability at the beginning of the period   $ 107     $ 187  
  Performance obligations satisfied in previous periods            

 

The timing of revenue recognition, billings and cash collections results in billed receivables, contract assets and contract liabilities on the consolidated balance sheet.

 

When consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded. Contract liabilities are recognized as revenue after control of the goods or services is transferred to the customer and all revenue recognition criteria have been met.

Costs to Obtain or Fulfill a Customer Contract

Costs to Obtain or Fulfill a Customer Contract

 

Prior to the adoption of Topic 606, the Company expensed incremental commissions paid to sales representatives for obtaining product sales as well as service contracts. Under Topic 606, the Company currently capitalizes these incremental costs of obtaining customer contracts unless the capitalization and amortization of such costs are not expected to have a material impact on the financial statements. Capitalized commissions are amortized based on the transfer of the products or services to which the assets relate. Applying the practical expedient in paragraph ASC 340-40-25-4, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that the Company otherwise would have recognized is one year or less. These costs are included in selling, general, and administrative expenses. The Company accounts for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the associated products.

Warrants to Purchase Common Stock

Warrants to Purchase Common Stock

 

The Company reviews the terms of warrants issued in connection with the applicable accounting guidance and classifies warrants as a long-term liability on the consolidated balance sheets if the warrants do not meet the equity criteria when the number of shares issuable are variable. Warrants to purchase shares of common stock issued in connection with the Company’s long-term debt agreement met these criteria because the number of shares will vary with additional draws on the debt and therefore required liability classification. Liability-classified warrants are subject to re-measurement at each balance sheet date, and any change in fair value is recognized as a component of other income (expense) in the consolidated statements of operations. The Company estimated the fair value of these warrants at issuance and each balance sheet date thereafter using the Black-Scholes Model based on the estimated market value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrant, risk-free interest rates, expected dividends and expected volatility of the price of the underlying common stock.

 

The Company classifies warrants within stockholders’ equity on the consolidated balance sheets if the warrants are considered to be indexed to the Company’s own capital stock, and otherwise would be recorded in stockholders’ equity. Warrants to purchase common stock issued in connection with the Company’s private placement of convertible preferred stock met these criteria and, therefore, were equity classified.

 

The table below is a summary of the Company’s warrant activity during the six months ended June 30, 2018:

 

     

Number of Warrants

 

    Weighted Average Exercise Price  
Outstanding at December 31, 2017       355,028     $ 1.41  
  Granted       8,891,287       1.40  
  Exercised              
  Expired              
Outstanding at June 30, 2018       9,246,315     $ 1.40  
Stock-Based Compensation

Stock-Based Compensation

 

The Company recognizes compensation costs resulting from the issuance of service stock-based awards to employees and directors as an expense in the consolidated statements of operations over the requisite service period based on a measurement of fair value for each stock award. The awards issued to date have primarily been stock options with service-based vesting periods over two or four years, restricted stock units with service-based vesting periods of one year, and shares of common stock. The Company recognizes compensation costs resulting from the issuance of stock-based awards to non-employees as an expense in the consolidated statements of operations over the service period based on a measurement of fair value for each stock award at each performance date and period end. During 2016, the Company also issued certain stock-based awards that contain both performance and service-based vesting conditions which vested over 25 months. The Company records expense on these awards when it becomes probable that the performance condition and requisite service will be met.

 

Upon vesting of the restricted stock units, the Company issues shares of its common stock which have a required holding period of 36 months from the date of grant of the restricted stock unit. As a result, the Company values the restricted stock units based on the closing price of the Company’s common stock on the date of grant less a discount for lack of marketability during the holding period.

 

During 2018, the Company issued certain stock-based awards that contain both market and service-based vesting conditions.  Each of these stock-based awards is contingent on the recipient still providing services to the Company or its affiliates on the date of such achievement. Portions of the awards vest upon the company’s stock price achieving certain targets for a period of at least twenty consecutive trading days at any time before May 31, 2021.  The Company estimated the fair value of these market condition stock-based awards using a Monte Carlo simulation model, which involves a series of random scenarios that may take different future price paths over the award’s contractual life. The grant date fair value is determined by taking the average of the grant date fair values under each of many Monte Carlo simulations. The determination of the fair value is affected by the Company’s stock price, as well as assumptions regarding a number of complex and subjective variables including its expected stock price volatility over the expected term of the awards, and risk-free interest rate. The total number of shares of common stock that are subject to issuance under these market condition stock-based awards is 5,183,322 shares.  The Company records expense on these stock-based awards ratably over the expected term of the award.

Research and Development

Research and Development

 

Costs for research and development are expensed as incurred. Research and development expense consists primarily of salaries, salary related expenses and costs of contractors and materials. Cash receipts from collaboration agreements accounted for under ASC 808, Collaborative Arrangements, are netted against the related research and development expenses in the period received and totaled $347 and $492, respectively, for the three and six months ended June 30, 2018. There were no such items during the three and six months ended June 30, 2017.

Income Taxes

Income Taxes

 

The Company accounts for income taxes using the liability method, whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to amounts that are realizable. Consistent with all prior periods, the Company did not record any income tax benefit for its operating losses for the three or six months ended June 30, 2018 and 2017 due to the uncertainty regarding future taxable income.

 

On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”), which allows the recording of provisional amounts during a measurement period not to extend beyond one year of the enactment date. The final impact may differ from this provisional amount due to, among other things, changes in interpretations and assumptions the Company has made thus far and the issuance of additional regulatory or other guidance. The Company expects to complete the final impact within the measurement period. As of June 30, 2018, we have not recorded incremental accounting adjustments related to the SAB 118 as we continue to consider interpretations of its application.

Net Loss per Share

Net Loss per Share

 

Basic net loss per share is computed using the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed using the sum of the weighted-average number of common shares outstanding during the period and, if dilutive, the weighted-average number of potential common shares, including the assumed exercise of share options.

 

The Company applies the two-class method to calculate its basic and diluted net loss per share attributable to common stockholders, as its Series A and Series A-1 preferred shares are participating securities. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to common stockholders. However, for the periods presented, the two-class method does not impact the net loss per common share as the Company was in a net loss position for each of the periods presented and holders of Series A and Series A-1 preferred shares do not participate in losses.

 

The Company’s Series A and Series A-1 preferred shares contractually entitle the holders of such shares to participate in dividends but do not contractually require the holders of such shares to participate in losses of the Company. Accordingly, for periods in which the Company reports a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

 

In February 2016, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842), which amends leasing accounting requirements. The new standard requires lessee recognition on the balance sheet of a right-of-use asset and a lease liability, initially measured at the present value of the lease payments. It further requires recognition in the income statement of a single lease cost, calculated so that the cost of the lease is allocated over the lease term generally on a straight-line basis. Finally, it requires classification of all cash payments within operating activities in the statement of cash flows. It is effective for fiscal years commencing after December 15, 2018 and early adoption is permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements.

  

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments, which reduces diversity in how certain cash receipts and cash payments are presented and classified in the Consolidated Statements of Cash Flows. It is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017 and will be required to be applied retrospectively, with early adoption permitted. The Company adopted this update on January 1, 2018 and the adoption had no impact to the Company’s consolidated financial statements.

 

In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718) - Scope of Modification Accounting, which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. It is effective prospectively for annual periods beginning on or after December 15, 2017, with early adoption permitted. The Company adopted this update on January 1, 2018 and the adoption had no impact to the Company’s consolidated financial statements.

 

In June 2018, the FASB issued ASU 2018-07, to expand the scope of ASC Topic 718, Compensation - Stock Compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact of this pronouncement on its consolidated financial statements.

v3.10.0.1
Significant Accounting Policies (Tables)
6 Months Ended
Jun. 30, 2018
Accounting Policies [Abstract]  
Schedule of significant customers

The table below sets forth the Company's customers that accounted for greater than 10% of its revenues for the three and six-month periods ended June 30, 2018 and 2017, respectively:

 

     

Three Months Ended 

June 30, 

   

Six Months Ended 

June 30, 

 
Customer     2018     2017     2018     2017  
A       29 %     %     15 %     %
B       24 %     %     13 %     %
C       22 %     29 %     12 %     22 %
D       10 %     1 %     6 %     1 %
E       1 %     1 %     23 %     9 %
F       %     %     16 %     %
G       1 %     34 %     1 %     25 %
H       1 %     14 %     %     10 %
Schedule of assumptions used for fair value of warrants

The assumptions that the Company used to determine the fair value of these warrants are as follows:

 

   

March 16, 2018  

(Date of Issuance)

 

June 30, 2018 

 
Volatility   75% to 83%   70% to 81%  
Risk-free interest rate   2.8%   2.8% to 2.9%  
Estimate term (in years)   8.5 to 10   8.6 to 9.7  

 

The following table sets forth a summary of changes in the fair value of the Company’s common stock warrant based on Level 3 inputs:

 

Balance at December 31, 2017   $  
Issuance of warrants in connection with debt financing arrangement     210  
Revaluation of warrants     (100 )
Balance at June 30, 2018   $ 110  

Schedule of fair value common stock warrant based on Level 3 inputs

As a result of applying the modified retrospective method to adopt the new revenue guidance, the following adjustments were made to accounts on the condensed consolidated balance sheet as of January 1, 2018:

 

    As Reported at December 31, 2017     Adjustments Due to Topic 606      Balance at January 1, 2018   
Assets:                        
   Prepaid expenses and other current assets   $ 539     $ 38     $ 577  
   Deposits and other assets   $ 151     $ 321     $ 472  
                         
Liabilities:                        
   Deferred revenue   $ 339     $ (68 )   $ 271  
   Deferred revenue, net of current portion   $ 342     $ (13 )   $ 329  
                         
Stockholders’ equity:                        
   Accumulated deficit   $ (180,841 )   $ 440     $ (180,401 )
Schedule of changes for retrospective method to adopt new revenue guidance

The following tables compare the reported condensed consolidated balance sheet and statement of operations, as of and for the three and six months ended June 30, 2018, to the pro-forma amounts as if the previous guidance had been in effect:

 

    As of June 30, 2018  
Balance Sheet    As Reported      Pro-forma as if the previous guidance was in effect  
Assets:            
   Prepaid expenses and other current assets   $ 806     $ 749  
   Deposits and other assets   $ 516     $ 203  
                 
Liabilities:                
   Deferred revenue   $ 540     $ 587  
   Deferred revenue, net of current portion   $ 211     $ 207  
                 
Stockholders’ equity:                
   Accumulated deficit   $ (200,360 )   $ (200,775 )

 

   

Three Months Ended 

June 30, 2018 

   

Six Months Ended 

June 30, 2018 

 

Statement of Operations

 

 

As reported

 

    Pro-forma as if the previous guidance was
in effect
   

As reported

 

    Pro-forma as if the previous guidance was
in effect
 
Revenue   $ 1,665     $ 1,666     $ 3,150     $ 3,162  
Selling, general and administrative     6,874       6,867       14,329       14,317  
Net loss   $ (9,909 )   $ (9,900 )   $ (19,959 )   $ (19,934 )
                                 
Net loss attributable to common  stockholders   $ (10,662 )   $ (10,653 )   $ (26,073 )   $ (26,048 )
                                 
Net loss per share attributable to  common stockholders-basic and diluted   $ (0.06 )   $ (0.06 )   $ (0.14 )   $ (0.14 )
Schedule of disaggregation of revenue

The following table summarizes revenue by revenue source for the three- and six-month periods ended June 30, 2018:

 

   

Three Months Ended  

June 30, 2018 

   

Six Months Ended 

June 30, 2018 

 
Major Products/ Service Lines                
     Product revenue   $ 1,538     $ 2,919  
     Service revenue     127       231  
  Total   $ 1,665     $ 3,150  
                 
Timing of Revenue Recognition                
     Products transferred at a point in time   $ 1,538     $ 2,919  
     Services transferred over time     127       231  
  Total   $ 1,665     $ 3,150
Schedule of estimated revenues expected for performance obligations

The following table includes estimated revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially satisfied) as of June 30, 2018:

 

   

Less than 

1 year 

   

Greater than 

1 year 

    Total   
     Product revenue   $ 282     $ 312     $ 594  
     Service and other revenue     529       623       1,152  
Total   $ 811     $ 935     $ 1,746  
Schedule of changes in contract assets and contract liabilities

The following table presents changes in contract assets and contract liabilities during the six months ended June 30, 2018:

 

    Balance at Beginning of Period     Additions      Subtractions     

Balance at  

End of 

Period 

 
Contract assets   $ 272     $ 33     $ (19 )   $ 286  
Contract acquisition and fulfillment costs:                                
     Deferred commissions   $ 87     $     $ (12 )   $ 75  
Contract liabilities:                                
     Deferred revenue   $ 693     $ 245     $ (187 )   $ 751  

 

   

Three Months Ended 

June 30, 2018 

   

Six Months Ended 

June 30, 2018 

 
Revenue recognized in the period from:                
  Amounts included in the contract liability at the beginning of the period   $ 107     $ 187  
  Performance obligations satisfied in previous periods            
Schedule of rollforward of warrant activity

The table below is a summary of the Company’s warrant activity during the six months ended June 30, 2018:

 

     

Number of Warrants

 

    Weighted Average Exercise Price  
Outstanding at December 31, 2017       355,028     $ 1.41  
  Granted       8,891,287       1.40  
  Exercised              
  Expired              
Outstanding at June 30, 2018       9,246,315     $ 1.40  
v3.10.0.1
Inventories (Tables)
6 Months Ended
Jun. 30, 2018
Inventory Disclosure [Abstract]  
Schedule of inventories

Inventories are valued at the lower of cost or net realizable value using the FIFO method and consist of the following:

 

   

June 30, 

2018 

    December 31, 2017  
Raw material   $ 1,185     $ 945  
Work in progress     578       310  
Finished goods     1,038       848  
     Total   $ 2,801     $ 2,103  
v3.10.0.1
Long-Term Debt (Tables)
6 Months Ended
Jun. 30, 2018
Debt Disclosure [Abstract]  
Schedule of future principal payments

Future principal payments under the term loan facility as of June 30, 2018 are as follows:

 

Year Ending December 31,    

Amount

 

 
2018     $  
2019       1,200  
2020       4,800  
2021       4,800  
2022       1,200  
      $ 12,000  
v3.10.0.1
Stockholders' Equity (Tables)
6 Months Ended
Jun. 30, 2018
Equity [Abstract]  
Schedule of assumptions for fair value

The Company used the following assumptions for the valuation of these warrants at the issuance date.

 

Risk-free interest rate     2.9 %
Dividend yield     0.0 %
Expected volatility     61.6 %
Expected term (years)     10.0  

 

Expected volatility of future equity     45.9 %
Estimated timing of Series A Preferred Stock liquidity event (years)     3.8  
v3.10.0.1
Stock-Based Compensation (Tables)
6 Months Ended
Jun. 30, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Schedule of stock-based compensation expense

Stock-based compensation expense was allocated based on the employees’ or non-employees’ function as follows:

 

   

Three Months Ended 

June 30, 

   

Six Months Ended 

June 30, 

 
    2018     2017     2018     2017  
Cost of revenue   $ 31     $     $ 59     $  
Research and development     56       61       117       117  
Selling, general and administrative     550       725       1,135       1,461  
     Total   $ 637     $ 786     $ 1,311     $ 1,578  
Schedule of assumptions used for fair value of stock options

The following assumptions were used to estimate the fair value of stock options granted using the Black-Scholes option-pricing model:

 

 

Six Months Ended 

June 30, 

  2018   2017
Risk-free interest 2.69%-2.86%   1.87%-2.38%
Expected term in years 6.25-10 years   6-10 years
Expected volatility 64%-71%   55%-63%
Expected dividend yield 0%   0%
Schedule of activity unvested restricted stock units

The following table summarizes the activities for the Company’s unvested restricted stock units for the six months ended June 30, 2018:

 

        Unvested Restricted Stock Units  
        Number of Shares        Weighted-average Grant Date
Fair Value
 
Unvested as of December 31, 2017       42,406     $ 0.87  
   Granted       334,955     $ 0.65  
   Vested       (30,119 )   $ 0.91  
   Forfeited/Cancelled       (16,036 )   $ 0.87  
Unvested as of June 30, 2018       331,206     $ 0.64  
v3.10.0.1
Net Loss per Share (Tables)
6 Months Ended
Jun. 30, 2018
Earnings Per Share [Abstract]  
Schedule of securities excluded from the calculation of diluted net loss per share

The following common stock equivalents were excluded from the calculation of diluted net loss per share for the periods indicated because including them would have had an anti-dilutive effect:

 

    As of June 30,  
    2018     2017  
Options to purchase common stock     25,532,850       18,595,647  
Warrants to purchase common stock     9,246,315       5,083,219  
Restricted stock units     331,206        
Series A Preferred Stock     1,000,000        
Series A-1 Preferred Stock     10,400        

 

v3.10.0.1
Nature of Operations (Details Narrative) - USD ($)
$ / shares in Units, $ in Thousands
6 Months Ended
Mar. 16, 2018
Jun. 30, 2018
Jan. 02, 2018
Dec. 31, 2017
Jun. 30, 2017
Dec. 31, 2016
Cash and cash equivalents   $ 34,315   $ 17,458 $ 35,244 $ 9,183
Accumulated deficit   (200,360) $ (180,401) $ (180,841)    
Working capital   $ 33,805        
Financing Arrangement [Member]            
Default basis spread on variable interest rate 5.00%          
Financing Arrangement [Member] | Term Loans [Member]            
Basis spread on variable interest rate 7.25%          
Description of variable interest rate base ICE Benchmark LIBOR          
Financing Arrangement [Member] | Revolving Credit Facility [Member]            
Basis spread on variable interest rate 0.50%          
Description of variable interest rate base Prime Rate          
Financing Arrangement [Member] | Two Lenders [Member]            
Debt facility maximum capacity $ 26,000          
Financing Arrangement [Member] | Two Lenders [Member] | Term Loans [Member]            
Debt facility maximum capacity 23,000          
Additional debt facility capacity available with gross profit milestone 5,500          
Additional debt facility capacity available after equity sales 5,500          
Net cash proceeds from future sale of equity securities 30,000          
Financing Arrangement [Member] | Two Lenders [Member] | Revolving Credit Facility [Member]            
Debt facility maximum capacity $ 3,000          
Credit facility, expiration year 2022          
Series A Preferred Stock [Member]            
Number of common stock issued against convertible shares   20,208,000        
Percentage of dividend   12.00%        
Private Placement [Member] | Convertible Preferred Stock [Member]            
Number of common stock issued against convertible shares 20,000,000          
Private Placement [Member] | Series A Preferred Stock [Member]            
Net proceeds from stock issuance $ 24,671          
Percentage of dividend 12.00%          
Number of warrants issued $ 8,750,000          
Warrants exercise price (in dollars per share) $ 1.40          
Minimum [Member] | Financing Arrangement [Member] | Term Loans [Member]            
Interest rate 8.83%          
Minimum [Member] | Financing Arrangement [Member] | Revolving Credit Facility [Member]            
Interest rate 5.00%          
v3.10.0.1
Significant Accounting Policies (Details) - Sales Revenue, Net [Member]
3 Months Ended 6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Customer A [Member]        
Concentration percentage 29.00%   15.00%  
Customer B [Member]        
Concentration percentage 24.00%   13.00%  
Customer C [Member]        
Concentration percentage 22.00% 29.00% 12.00% 22.00%
Customer D [Member]        
Concentration percentage 10.00% 1.00% 6.00% 1.00%
Customer E [Member]        
Concentration percentage 1.00% 1.00% 23.00% 9.00%
Customer F [Member]        
Concentration percentage     16.00%  
Customer G [Member]        
Concentration percentage 1.00% 34.00% 1.00% 25.00%
Customer H [Member]        
Concentration percentage 1.00% 14.00%   10.00%
v3.10.0.1
Significant Accounting Policies (Details 1) - Warrant [Member]
Jun. 30, 2018
Number
Mar. 16, 2018
Number
Volatility [Member]    
Fair Value Measurement Inputs and Valuation Techniques [Line Items]    
Measurement input   0.616
Volatility [Member] | Minimum [Member]    
Fair Value Measurement Inputs and Valuation Techniques [Line Items]    
Measurement input .70 .75
Volatility [Member] | Maximum [Member]    
Fair Value Measurement Inputs and Valuation Techniques [Line Items]    
Measurement input .81 .83
Risk-Free Interest Rate [Member]    
Fair Value Measurement Inputs and Valuation Techniques [Line Items]    
Measurement input   0.028
Risk-Free Interest Rate [Member] | Minimum [Member]    
Fair Value Measurement Inputs and Valuation Techniques [Line Items]    
Measurement input .028  
Risk-Free Interest Rate [Member] | Maximum [Member]    
Fair Value Measurement Inputs and Valuation Techniques [Line Items]    
Measurement input .029  
Expected Term [Member]    
Fair Value Measurement Inputs and Valuation Techniques [Line Items]    
Estimate term (in years)   10 years
Expected Term [Member] | Minimum [Member]    
Fair Value Measurement Inputs and Valuation Techniques [Line Items]    
Estimate term (in years) 8 years 6 months 8 years 2 months 6 days
Expected Term [Member] | Maximum [Member]    
Fair Value Measurement Inputs and Valuation Techniques [Line Items]    
Estimate term (in years) 10 years 9 years 10 months 24 days
v3.10.0.1
Significant Accounting Policies (Details 2) - Warrant [Member]
$ in Thousands
6 Months Ended
Jun. 30, 2018
USD ($)
Beginning Balance
Issuance of warrants in connection with debt financing arrangement 210
Revaluation of warrants (100)
Ending Balance $ 110
v3.10.0.1
Significant Accounting Policies (Details 3) - USD ($)
$ in Thousands
Jun. 30, 2018
Jan. 02, 2018
Dec. 31, 2017
Assets:      
Prepaid expenses and other current assets $ 806 $ 577 $ 539
Deposits and other assets 516 472 151
Liabilities:      
Deferred revenue 540 271 339
Deferred revenue, net of current portion 211 329 342
Stockholders' equity:      
Accumulated deficit (200,360) $ (180,401) (180,841)
Pro-forma as if the Previous Accounting Was In Effect [Member]      
Assets:      
Prepaid expenses and other current assets 749    
Deposits and other assets 203    
Liabilities:      
Deferred revenue 587    
Deferred revenue, net of current portion 207    
Stockholders' equity:      
Accumulated deficit $ (200,775)    
Adjustments Due to Topic 606 [Member]      
Assets:      
Prepaid expenses and other current assets     38
Deposits and other assets     321
Liabilities:      
Deferred revenue     (68)
Deferred revenue, net of current portion     (13)
Stockholders' equity:      
Accumulated deficit     $ 440
v3.10.0.1
Significant Accounting Policies (Details 4) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Revenue $ 1,665   $ 3,150  
Selling, general and administrative 6,874 $ 5,906 14,329 $ 11,978
Net loss (9,909) (8,414) (19,959) (18,299)
Net loss attributable to common stockholders $ (10,662) $ (8,414) $ (26,073) $ (18,299)
Net loss per share attributable to common stockholders--basic and diluted (in dollars per share) $ (0.06) $ (0.04) $ (0.14) $ (0.11)
Pro-forma as if the Previous Accounting Was In Effect [Member]        
Revenue $ 1,666   $ 3,162  
Selling, general and administrative 6,867   14,317  
Net loss (9,900)   (19,934)  
Net loss attributable to common stockholders $ (10,653)   $ (26,048)  
Net loss per share attributable to common stockholders--basic and diluted (in dollars per share) $ (0.06)   $ (0.14)  
v3.10.0.1
Significant Accounting Policies (Details 5) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2018
Jun. 30, 2018
Revenue $ 1,665 $ 3,150
Products Transferred at Point in Time [Member]    
Revenue 1,538 2,919
Services Transferred over Time [Member]    
Revenue 127 231
Product Revenue [Member]    
Revenue 1,538 2,919
Service Revenue [Member]    
Revenue $ 127 $ 231
v3.10.0.1
Significant Accounting Policies (Details 6)
$ in Thousands
Jun. 30, 2018
USD ($)
Estimated revenues $ 1,746
Less than 1 Year [Member]  
Estimated revenues 811
Greater than 1 Year [Member]  
Estimated revenues 935
Product Revenue [Member]  
Estimated revenues 594
Product Revenue [Member] | Less than 1 Year [Member]  
Estimated revenues 282
Product Revenue [Member] | Greater than 1 Year [Member]  
Estimated revenues 312
Service Revenue [Member]  
Estimated revenues 1,152
Service Revenue [Member] | Less than 1 Year [Member]  
Estimated revenues 529
Service Revenue [Member] | Greater than 1 Year [Member]  
Estimated revenues $ 623
v3.10.0.1
Significant Accounting Policies (Details 7)
$ in Thousands
6 Months Ended
Jun. 30, 2018
USD ($)
Change in Contract with Customer, Asset [Abstract]  
Balance at Beginning of Period $ 272
Additions 33
Subtractions (19)
Balance at End of Period 286
Deferred commissions [Member]  
Change in Contract with Customer, Asset [Abstract]  
Balance at Beginning of Period 87
Additions
Subtractions (12)
Balance at End of Period 75
Deferred Revenue [Member]  
Change in Contract with Customer, Liability [Abstract]  
Balance at Beginning of Period 693
Additions 245
Subtractions (187)
Balance at End of Period $ 751
v3.10.0.1
Significant Accounting Policies (Details 8) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2018
Jun. 30, 2018
Revenue recognized in the period from:    
Amounts included in the contract liability at the beginning of the period $ 107 $ 187
Performance obligations satisfied in previous periods $ 0 $ 0
v3.10.0.1
Significant Accounting Policies (Details 9) - Warrant [Member]
6 Months Ended
Jun. 30, 2018
$ / shares
shares
Number of Warrants  
Outstanding Beginning | shares 355,028
Granted | shares 8,891,287
Outstanding Ending | shares 9,246,315
Weighted Average Exercise Price  
Outstanding Beginning | $ / shares $ 1.41
Granted | $ / shares 1.4
Outstanding Ending | $ / shares $ 1.4
v3.10.0.1
Significant Accounting Policies (Details Narrative)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2018
USD ($)
shares
Jun. 30, 2017
USD ($)
Jun. 30, 2018
USD ($)
Number
shares
Jun. 30, 2017
USD ($)
Jan. 02, 2018
USD ($)
Dec. 31, 2017
USD ($)
Number of segments | Number     1      
Assets $ 42,040   $ 42,040     $ 24,566
Liabilities 17,996   17,996     7,051
Revenue 1,665   3,150      
Adoption of Topic 606 resulted in a cumulative impact to revenue     353      
Adoption of Topic 606 resulted in a cumulative impact to capitalized contract costs 87   87      
Amortization of deferred commissions 7   12      
Deferred commissions 75   75   $ 87  
Fair Value, Level 1 [Member]            
Cash equivalents 33,829   33,829     0
Collaborative Arrangement [Member] | Research and Development Expense [Member]            
Collaborative arrangements 347   492      
Domestic Customers [Member]            
Revenue 1,285 $ 1,578 2,716 $ 2,331    
International Customers [Member]            
Revenue 380 680 $ 434 704    
Accounts Receivable [Member] | Customer A [Member]            
Concentration percentage     28.00%      
Accounts Receivable [Member] | Customer C [Member]            
Concentration percentage     18.00%      
Accounts Receivable [Member] | Customer E [Member]            
Concentration percentage     40.00%      
Not-For-Profit Subsidiary [Member]            
Recognized expenses 6 34 $ 11 46    
Other income 40 $ 0 40 $ 15    
Assets 43   43     15
Liabilities $ 2   $ 2     $ 7
Stock Options [Member] | Market Condition Vesting [Member]            
Number of stock-based awards granted that contain market-based vesting (shares) | shares 5,183,322   5,183,322      
v3.10.0.1
Inventories (Details) - USD ($)
$ in Thousands
Jun. 30, 2018
Dec. 31, 2017
Inventory Disclosure [Abstract]    
Raw material $ 1,185 $ 945
Work in progress 578 310
Finished goods 1,038 848
Inventories, net $ 2,801 $ 2,103
v3.10.0.1
Inventories (Details Narrative) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Inventory Disclosure [Abstract]        
Inventory write-down $ 125 $ 59 $ 317 $ 260
v3.10.0.1
Long-Term Debt (Details) - Financing Arrangement [Member] - Term Loans [Member]
$ in Thousands
Jun. 30, 2018
USD ($)
Year Ending December 31,  
2018 $ 0
2019 1,200
2020 4,800
2021 4,800
2022 1,200
Future principal payments under the term loan facility $ 12,000
v3.10.0.1
Long-Term Debt (Details Narrative) - USD ($)
$ / shares in Units, $ in Thousands
1 Months Ended 6 Months Ended
Mar. 16, 2018
Mar. 16, 2018
Jun. 30, 2018
Jun. 30, 2018
Dec. 31, 2017
Fair value of the warrants     $ 110 $ 110  
Warrant [Member]          
Number of warrants issued       $ 1.4  
Warrants exercise price (in dollars per share)     $ 1.4 $ 1.4 $ 1.41
Financing Arrangement [Member]          
Default basis spread on variable interest rate   5.00%      
Financing Arrangement [Member] | Minimum [Member]          
Event of default amount as defined in agreement     $ 250 $ 250  
Financing Arrangement [Member] | Two Lenders [Member]          
Debt facility maximum capacity $ 26,000 $ 26,000      
Financing Arrangement [Member] | Term Loan A [Member]          
Principle amount outstanding 12,000 12,000      
Basis spread on variable interest rate     7.25%    
Description of variable interest rate base     ICE Benchmark LIBOR    
Effective interest rate     9.20% 9.20%  
Debt discount $ 532 532      
Financing Arrangement [Member] | Term Loan A [Member] | Warrant [Member]          
Number of warrants issued $ 141,287        
Warrants exercise price (in dollars per share)     $ 1.27 $ 1.27  
Fair value of the warrants $ 210 $ 210 $ 110 $ 110  
Financing Arrangement [Member] | Term Loans [Member]          
Principle amount outstanding     $ 12,000 $ 12,000  
Basis spread on variable interest rate   7.25%      
Description of variable interest rate base   ICE Benchmark LIBOR      
Debt final payment fee (percent)     6.00%    
Financing Arrangement [Member] | Term Loans [Member] | Year One of Loan Issuance [Member]          
Debt prepayment fee (percent)     2.50%    
Financing Arrangement [Member] | Term Loans [Member] | Year 2 of Loan Issuance [Member]          
Debt prepayment fee (percent)     1.50%    
Financing Arrangement [Member] | Term Loans [Member] | Year 3 of Loan Issuance [Member]          
Debt prepayment fee (percent)     1.00%    
Financing Arrangement [Member] | Term Loans [Member] | Minimum [Member]          
Interest rate 8.83% 8.83%      
Financing Arrangement [Member] | Term Loans [Member] | Two Lenders [Member]          
Debt facility maximum capacity $ 23,000 $ 23,000      
Additional debt facility capacity available with gross profit milestone 5,500 5,500      
Additional debt facility capacity available after equity sales 5,500 5,500      
Net cash proceeds from future sale of equity securities   30,000      
Financing Arrangement [Member] | Revolving Credit Facility [Member]          
Principle amount outstanding 0 $ 0      
Basis spread on variable interest rate   0.50%      
Description of variable interest rate base   Prime Rate      
Annual facility fee   $ 15      
Termination fee   $ 22      
Unused revolving line facility fee (percent)   0.50%      
Deferred financing costs $ 51 $ 51      
Financing costs incurred   $ 373      
Financing Arrangement [Member] | Revolving Credit Facility [Member] | Minimum [Member]          
Interest rate 5.00% 5.00%      
Financing Arrangement [Member] | Revolving Credit Facility [Member] | Two Lenders [Member]          
Debt facility maximum capacity $ 3,000 $ 3,000      
Credit facility, expiration year   2022      
Borrowing base of revolving facility (percent) 80.00% 80.00%      
Description of borrowing base of revolving facility   Accounts Receivable      
v3.10.0.1
Stockholders' Equity (Details)
Mar. 16, 2018
Number
Volatility [Member] | Series A Preferred Stock [Member]  
Preferred stock measurement input 0.459
Expected Term [Member] | Series A Preferred Stock [Member]  
Preferred stock estimate term (in years) 3 years 9 months 24 days
Warrant [Member] | Risk-Free Interest Rate [Member]  
Warrant measurement input 0.028
Warrant [Member] | Volatility [Member]  
Warrant measurement input 0.616
Warrant [Member] | Expected Term [Member]  
Warrant estimate term (in years) 10 years
Warrant [Member] | Expected Dividend Rate [Member]  
Warrant measurement input 0
v3.10.0.1
Stockholders' Equity (Details Narrative) - USD ($)
$ / shares in Units, $ in Thousands
6 Months Ended
Jul. 16, 2018
Apr. 16, 2018
Mar. 16, 2018
Jun. 30, 2018
May 31, 2018
Apr. 09, 2018
Dec. 31, 2017
Preferred stock, authorized shares       10,000,000     10,000,000
Common stock, par value (in dollars per share)       $ 0.0001     $ 0.0001
Common stock, authorized shares       350,000,000 350,000,000 250,000,000 350,000,000
Series A-1 Preferred Stock [Member]              
Preferred stock, par value (in dollars per share)       $ 0.0001      
Issuance of shares for dividend payment (shares) 30,000 10,400          
Series A Preferred Stock [Member]              
Preferred stock, par value (in dollars per share)       0.0001      
Preferred stock liquidation preference       $ 25.00      
Preferred stock redemption value       $ 25,260      
Convertible into common shares       20,208,000      
Number of shares issued     1,000,000        
Fair value of preferred stock       $ 4,162      
Fair value of the warrants       $ 20,838      
Beneficial conversion feature     $ 5,236        
Percentage of dividend       12.00%      
Series A Preferred Stock [Member] | Private Placement [Member]              
Number of warrants issued     $ 8,750,000        
Warrants exercise price (in dollars per share)     $ 1.40        
Net proceeds from stock issuance     $ 24,671        
Percentage of dividend     12.00%        
Financing costs incurred     $ 329        
v3.10.0.1
Stock-Based Compensation (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Jun. 30, 2018
Jun. 30, 2017
Stock-based compensation expense $ 637 $ 786 $ 1,311 $ 1,578
Cost of revenue [Member]        
Stock-based compensation expense 31   59  
Research and Development Expense [Member]        
Stock-based compensation expense 56 61 117 117
Selling General And Administrative Expense [Member]        
Stock-based compensation expense $ 550 $ 725 $ 1,135 $ 1,461
v3.10.0.1
Stock-Based Compensation (Details 1) - Stock Options [Member]
6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Expected dividend yield 0.00% 0.00%
Minimum [Member]    
Risk-free interest rate 2.69% 1.87%
Expected term in years 6 years 3 months 6 years
Expected volatility 64.00% 55.00%
Maximum [Member]    
Risk-free interest rate 2.86% 2.90%
Expected term in years 10 years 10 years
Expected volatility 71.00% 61.60%
v3.10.0.1
Stock-Based Compensation (Details 2) - Restricted Common Stock [Member]
6 Months Ended
Jun. 30, 2018
$ / shares
shares
Number of shares  
Unvested Beginning | shares 42,406
Granted | shares 334,955
Vested | shares (30,119)
Forfeited/Cancelled | shares (16,036)
Unvested Ending | shares 331,206
Weighted-average Grant-Date Fair Value  
Unvested Beginning | $ / shares $ 0.87
Granted | $ / shares 0.65
Vested | $ / shares 0.91
Forfeited/Cancelled | $ / shares 0.87
Unvested Ending | $ / shares $ 0.64
v3.10.0.1
Stock-Based Compensation (Details Narrative) - $ / shares
3 Months Ended 6 Months Ended
Jun. 30, 2018
Jun. 30, 2018
Numbers of option granted 9,189,322 1,442,326
Option weighted-average fair value (in dollars per share) $ 0.38 $ 0.81
Minimum [Member]    
Option weighted average exercise price (in dollars per share) 0.75 1.17
Maximum [Member]    
Option weighted average exercise price (in dollars per share) $ 1.05 $ 1.85
v3.10.0.1
Net Loss per Share (Details) - shares
6 Months Ended
Jun. 30, 2018
Jun. 30, 2017
Stock Options [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Number of anti-dilutive securities 25,532,850 18,595,647
Warrant [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Number of anti-dilutive securities 9,246,315 5,083,219
Restricted Stock Units [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Number of anti-dilutive securities 331,206  
Series A preferred stock [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Number of anti-dilutive securities 1,000,000  
Series A-1 preferred stock [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]    
Number of anti-dilutive securities 10,400  
v3.10.0.1
Restructuring Charge (Details Narrative) - USD ($)
$ in Thousands
1 Months Ended 3 Months Ended 6 Months Ended
May 31, 2018
Jun. 30, 2018
Jun. 30, 2018
Restructuring and Related Activities [Abstract]      
Restructuring charge $ 349 $ 349 $ 349
Payment of restructuring     256
Accounts payable and accrued expenses   $ 93 $ 93