QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
The |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☒ | Smaller reporting company | ||||
Emerging growth company |
Page |
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PART I—FINANCIAL INFORMATION |
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Item 1. |
Financial Statements |
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3 |
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4 |
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5 |
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6 |
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7 |
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Item 2. |
19 |
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Item 4. |
23 |
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Item 1. |
24 |
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Item 6. |
25 |
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26 |
June 30, 2022 |
December 31, 2021 |
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Assets |
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Current assets |
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Cash and cash equivalents |
$ | $ | ||||||
Restricted cash |
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Accounts receivable, net |
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Inventories |
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Prepaid expenses and other current assets |
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Total current assets |
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Property, plant and equipment, net |
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Right-of-use |
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Total assets |
$ | $ | ||||||
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Liabilities and Stockholders’ Equity (Deficit) |
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Current liabilities |
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Accounts payable |
$ | $ | ||||||
Accrued expenses |
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Deferred revenue |
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Lease liabilities |
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Loan payable, current |
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Total current liabilities |
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Lease liabilities, non-current |
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Loan payable, non-current |
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Convertible notes payable, non-current |
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Total liabilities |
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Commitments and contingencies |
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Stockholders’ equity (Deficit) |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
( |
) | ( |
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Accumulated other comprehensive (loss) income |
( |
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Total stockholders’ equity (deficit) |
( |
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Total liabilities and stockholders’ equity |
$ | $ | ||||||
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Three months ended June 30, |
Six months ended June 30, |
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2022 |
2021 |
2022 |
2021 |
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Product revenue |
$ | $ | $ | $ | ||||||||||||
Other revenue |
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Cost of goods sold |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
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Gross profit |
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Operating expenses: |
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Research and development expenses |
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Selling, general and administrative expenses |
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Total operating expenses |
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Operating loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Interest expense, net |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Other (loss) income |
( |
) | ( |
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Net loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Other comprehensive income: |
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Foreign currency translation adjustments |
( |
) | ( |
) | ( |
) | ||||||||||
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Total other comprehensive loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
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Common share data: |
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Basic and diluted loss per common share |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
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Weighted average number of basic and diluted shares outstanding |
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Preferred Stock $0.01 Par Value |
Common Stock $0.01 Par Value |
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No. of Shares |
Amount |
No. of Shares |
Amount |
Additional Paid in Capital |
Accumulated Deficit |
Accumulated Other Comprehensive Income (Loss) |
Total |
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Balance at January 1, 2022 |
$ | — | $ | $ | $ | ( |
) | $ | $ | |||||||||||||||||||||||
Compensation expense for issuance of stock options |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | ( |
) | — | ( |
) | ||||||||||||||||||||||
Total comprehensive income |
— | — | — | — | — | — | ||||||||||||||||||||||||||
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Balance at March 31, 2022 |
— | ( |
) | |||||||||||||||||||||||||||||
Compensation expense for issuance of stock options |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | ( |
) | — | ( |
) | ||||||||||||||||||||||
Total comprehensive loss |
— | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||
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Balance at June 30, 2022 |
$ | — | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||||||||||
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Preferred Stock $0.01 Par Value |
Common Stock $0.01 Par Value |
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No. of Shares |
Amount |
No. of Shares |
Amount |
Additional Paid in Capital |
Accumulated Deficit |
Accumulated Other Comprehensive (Loss) |
Total |
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Balance at January 1, 2021 |
$ | — | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||
Compensation expense for issuance of stock options |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Shares settled for services |
— | — | — | — | — | |||||||||||||||||||||||||||
Conversion of Preferred stock into common stock |
( |
) | — | — | — | — | — | — | ||||||||||||||||||||||||
Exercise of warrants into common stock |
— | — | — | — | ||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | ( |
) | — | ( |
) | ||||||||||||||||||||||
Total comprehensive income |
— | — | — | — | — | — | ||||||||||||||||||||||||||
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Balance at March 31, 2021 |
— | ( |
) | ( |
) | |||||||||||||||||||||||||||
Compensation expense for issuance of stock options |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Conversion of Preferred stock into common stock |
( |
) | ( |
) | — | — | ||||||||||||||||||||||||||
Exercise of warrants into common stock |
— | — | ||||||||||||||||||||||||||||||
Net loss |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||||||||||
Total comprehensive loss |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||||
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Balance at June 30, 2021 |
$ | — | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||||||||
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Six months ended June 30, |
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2022 |
2021 |
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Cash flows from operating activities: |
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Net loss |
$ | ( |
) | $ | ( |
) | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
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Stock option compensation expense |
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Depreciation expense |
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Non-cash lease expense |
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Amortization of debt discount |
— | |||||||
Interest expense accrued related to convertible notes |
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Changes in assets and liabilities: |
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Decrease in prepaid expenses and other assets |
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Increase in accounts receivable |
( |
) | ( |
) | ||||
Increase in inventories |
( |
) | ( |
) | ||||
Increase (decrease) in accounts payable and accrued expenses |
( |
) | ||||||
Decrease in lease liabilities |
( |
) | ( |
) | ||||
Decrease in deferred revenue |
( |
) | ( |
) | ||||
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Net cash used in operating activities |
( |
) | ( |
) | ||||
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Cash flows from investing activities: |
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Purchase of property, plant and equipment |
( |
) | ( |
) | ||||
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Net cash used in investing activities |
( |
) | ( |
) | ||||
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Cash flows from financing activities: |
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Net proceeds from the exercise of warrants |
— | |||||||
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Net cash provided by financing activities |
— | |||||||
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Foreign currency effects on cash |
( |
) | ||||||
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Net decrease in total cash |
( |
) | ( |
) | ||||
Total Cash: |
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Beginning of period |
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End of period |
$ | $ | ||||||
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Cash, Cash Equivalents and Restricted Cash consisted of the following: |
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Cash |
$ | $ | ||||||
Restricted Cash |
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Total |
$ | $ | ||||||
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Six months ended June 30, |
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2022 |
2021 |
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Supplemental Disclosure of Cash Flow Information: |
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Cash paid during the periods for: |
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Interest expense |
$ | $ | ||||||
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Supplemental Disclosure of Non-Cash Investing and Financing Activities: |
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Conversions of preferred stock into common stock |
$ | — | $ | |||||
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Issuance of restricted stock for accrued fees due to a former board member |
$ | — | $ | |||||
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(1) |
General |
(2) |
Cash, Cash Equivalents and Restricted Cash |
June 30, 2022 |
December 31, 2021 |
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Cash and cash equivalents |
$ | $ | ||||||
Restricted balance for loan agreement |
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Letters of credit |
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Security for credit cards |
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Total cash, cash equivalents and restricted cash |
$ | $ | ||||||
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(3) |
Inventories |
June 30, 2022 |
December 31, 2021 |
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Raw materials |
$ | $ | ||||||
Work-in-process |
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Finished goods |
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Total inventories |
$ | $ | ||||||
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(4) |
Prepaid Expenses and Other Current Assets |
June 30, 2022 |
December 31, 2021 |
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Clinical trial expenses |
$ | $ | ||||||
Insurance premiums |
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Professional services |
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Other |
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Total prepaid expenses and other current assets |
$ | $ | ||||||
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(5) |
Property, Plant, and Equipment |
June 30, 2022 |
December 31, 2021 |
Estimated Useful Life |
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Buildings and land |
$ | $ | ||||||||||
Enterprise hardware and software |
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Leaseholds |
estimated useful life |
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Equipment |
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Furniture |
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Property, plant and equipment, gross |
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Accumulated depreciation |
( |
) | ( |
) | ||||||||
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Property, plant and equipment, net |
$ | $ | ||||||||||
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(6) |
Accrued Expenses |
June 30, 2022 |
December 31, 2021 |
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Clinical expenses |
$ | $ | ||||||
Compensation, excluding taxes |
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Short-term financing |
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Professional fees |
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Interest on convertible note |
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Other |
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Total accrued expenses |
$ | $ | ||||||
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(7) |
Leases |
U.S. |
Ireland |
Total |
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Lease cost |
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Operating lease cost |
$ | $ | $ | |||||||||
Other information |
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Operating cash flows out from operating leases |
( |
) | ( |
) | ( |
) | ||||||
Weighted average remaining lease term |
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Weighted average discount rate - operating leases |
% | % |
U.S. |
Ireland |
Total |
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Six Months Remaining December 31, 2022 |
$ | $ | $ | |||||||||
Year ended December 31, 2023 |
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Year ended December 31, 2024 |
— | |||||||||||
Year ended December 31, 2025 |
— | |||||||||||
Year ended December 31, 2026 |
— | |||||||||||
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Total |
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Less present value discount |
( |
) | ( |
) | ( |
) | ||||||
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Operating lease liabilities included in the condensed consolidated balance sheets at June 30, 2022 |
$ | $ | $ | |||||||||
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(8) |
Loans and Convertible Notes Payable |
June 30, 2022 |
December 31, 2021 |
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(in thousands) |
Gross |
Discount |
Net |
Gross |
Discount |
Net |
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Loan - Avenue [1] |
( |
) | ( |
) | ||||||||||||||||||||
Loan - Avenue [1] - Less Current Portion |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
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Total - Loans Payable, Non-Current |
$ | $ | ( |
) | $ | $ | $ | ( |
) | $ | ||||||||||||||
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Convertible Note Payable - Rosalind |
— | — | ||||||||||||||||||||||
Convertible Portion of Loan Payable - Avenue |
( |
) | ( |
) | ||||||||||||||||||||
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Total - Convertible Notes Payable - Non-Current |
$ | $ | ( |
) | $ | $ | $ | ( |
) | $ | ||||||||||||||
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[1] |
The gross amount includes the |
Loans |
Convertible Notes |
Total |
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Year ended December 31, 2022 |
$ | $ | — | $ | ||||||||
Year ended December 31, 2023 |
— | |||||||||||
Year ended December 31, 2024 |
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Total |
$ | $ | $ | |||||||||
August 6, 2021 |
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Contractual term (years) |
||||
Expected volatility |
% | |||
Risk-free interest rate |
% | |||
Expected dividends |
% |
(9) |
Stockholders’ Equity (Deficit) |
Six months ended June 30, | ||||
2022 |
2021 | |||
Expected terms (years) |
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Expected volatility |
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Risk-free interest rate |
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Expected dividends |
Number of Options |
Weighted Average Exercise Price Per Share |
Weighted Average Remaining Contractual Term (in years) |
Aggregate Intrinsic Value |
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Outstanding at January 1, 2022 |
$ | |||||||||||||||
Granted |
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Expired |
( |
) | ||||||||||||||
Cancelled/Forfeited |
( |
) | ||||||||||||||
Outstanding at June 30, 2022 |
$ | $ | ||||||||||||||
Exercisable at June, 2022 |
$ | $ | ||||||||||||||
Options Exercisable |
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Range of Exercise Prices |
Outstanding Number of Options |
Weighted Average Remaining Option Term (in years) |
Number of Options |
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$6.24 - $53.85 |
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$53.85+ |
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Three months ended J ne 30u , |
Six months ended June 30, |
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2022 |
2021 |
2022 |
2021 |
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Selling, general and administrative |
$ | $ | $ | $ | ||||||||||||
Research and development |
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Cost of goods sold |
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Total |
$ | $ | $ | $ | ||||||||||||
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Warrants |
Weighted Average Exercise Price |
Weighted Average Remaining Life (in years) |
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Outstanding at January 1, 2022 |
$ | |||||||||||
Warrants issued |
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Warrants exercised |
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Warrants expired |
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Outstanding at June 30, 2022 |
$ | |||||||||||
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Exercisable at June 30, 2022 |
$ | |||||||||||
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Warrants Exercisable |
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Range of Exercise Prices |
Outstanding Number of Warrants |
Weighted Average Remaining Warrant Term (in years) |
Number of Warrants |
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$0.01 |
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$10.00 |
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(10) |
Net Loss per Common Share |
June 30, |
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2022 |
2021 |
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Common stock warrants - equity |
||||||||
Assumed conversion of Series E and Series E-1 Preferred Stock |
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Assumed conversion of convertible notes |
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Stock options |
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Total |
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Six months ended June 30, |
Three months ended June 30, |
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2022 |
2021 |
2022 |
2021 |
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Weighted average shares issued |
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Weighted average pre-funded warrants |
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Weighted average shares outstanding |
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(11) |
Income Taxes |
(12) |
Commitments and Contingencies |
• | our estimates regarding sufficiency of our cash resources, anticipated capital requirements and our need for additional financing; |
• | the commencement of future clinical trials and the results and timing of those clinical trials; |
• | our ability to successfully commercialize CHEMOSAT and HEPZATO, generate revenue and successfully obtain reimbursement for the procedure and system; |
• | the progress and results of our research and development programs; |
• | submission and timing of applications for regulatory approval and approval thereof; |
• | our ability to successfully source certain components of CHEMOSAT and HEPZATO and enter into supplier contracts; |
• | our ability to successfully manufacture CHEMOSAT and HEPZATO; |
• | our ability to successfully negotiate and enter into agreements with distribution, strategic and corporate partners; and |
• | our estimates of potential market opportunities and our ability to successfully realize these opportunities. |
* | Filed herewith. |
** | This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any filing, except to the extent the Company specifically incorporates it by reference. |
DELCATH SYSTEMS, INC. | ||||||
August 8, 2022 | /s/ Gerard Michel | |||||
Gerard Michel | ||||||
Chief Executive Officer (Principal Executive Officer) | ||||||
August 8, 2022 | /s/ Anthony Dias | |||||
Anthony Dias | ||||||
Principal Accounting Officer |