|
Delaware
|
| |
001-36305
|
| |
26-1367393
|
|
|
(State or Other Jurisdiction
of Incorporation or Organization) |
| |
(Commission
File Number) |
| |
(I.R.S. Employer
Identification No.) |
|
|
Title of each class
|
| |
Name of each exchange on which registered
|
|
|
Common Stock, $0.001 par value
|
| |
OTCQB
|
|
| Large accelerated filer | | | ☐ | | | Accelerated filer | | | ☒ | |
| Non-accelerated filer | | | ☐ | | | Smaller reporting company | | | ☒ | |
| | | | | | | Emerging growth company | | | ☐ | |
| | |
Page
|
| |||
PART I
|
| | | | | | |
| | | | 1 | | | |
| | | | 13 | | | |
| | | | 29 | | | |
| | | | 29 | | | |
| | | | 29 | | | |
| | | | 29 | | | |
PART II
|
| | | | | | |
| | | | 30 | | | |
| | | | 31 | | | |
| | | | 32 | | | |
| | | | 36 | | | |
| | | | 36 | | | |
| | | | 36 | | | |
| | | | 37 | | | |
| | | | 39 | | | |
PART III
|
| | | | | | |
| | | | 40 | | | |
| | | | 43 | | | |
| | | | 47 | | | |
| | | | 49 | | | |
| | | | 50 | | | |
PART IV
|
| | | | | | |
| | | | 51 | | | |
| | | | 52 | | | |
SIGNATURES | | | | | | | |
| | |
High
|
| |
Low
|
| ||||||
Fiscal Year 2019 | | | | | | | | | | | | | |
First Quarter
|
| | | $ | 43.99 | | | | | $ | 32.00 | | |
Second Quarter
|
| | | $ | 49.00 | | | | | $ | 34.07 | | |
Third Quarter
|
| | | $ | 54.50 | | | | | $ | 40.00 | | |
Fourth Quarter
|
| | | $ | 50.00 | | | | | $ | 35.26 | | |
| | |
High
|
| |
Low
|
| ||||||
Fiscal Year 2018 | | | | | | | | | | | | | |
First Quarter
|
| | | $ | 9.60 | | | | | $ | 6.45 | | |
Second Quarter
|
| | | $ | 15.99 | | | | | $ | 7.72 | | |
Third Quarter
|
| | | $ | 36.00 | | | | | $ | 14.80 | | |
Fourth Quarter
|
| | | $ | 40.00 | | | | | $ | 25.50 | | |
Name
|
| |
Age
|
| |
Position
|
| |
Director Since
|
| |
Term
Expires |
|
Douglas Murphy-Chutorian, M.D. | | |
65
|
| | Chief Executive Officer and Director | | | September 2012 | | | 2021 | |
Andrew B. Weinstein | | |
55
|
| | Senior Vice President, Finance and Accounting | | | N/A | | | N/A | |
Daniel E. Conger | | |
43
|
| | Vice President, Finance | | | N/A | | | N/A | |
Arthur “Abbie” Leibowitz, M.D., F.A.A.P.
|
| |
73
|
| | Director | | | June 2014 | | | 2020 | |
Wayne T. Pan, M.D., Ph.D. | | |
56
|
| | Director | | | May 2014 | | | 2022 | |
Name and Principal Position
|
| |
Fiscal
Year |
| |
Salary
($) |
| |
Bonus
($) |
| |
Option
Award(s) ($)(1) |
| |
Non-Equity
Incentive Plan Compensation ($)(2) |
| |
All Other
Compensation ($)(3) |
| |
Total
($) |
| |||||||||||||||||||||
Douglas Murphy-Chutorian, M.D.,
director and chief executive officer |
| | | | 2019 | | | | | $ | 400,000 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 744,708 | | | | | $ | 25,545 | | | | | $ | 1,170,253 | | |
| | | 2018 | | | | | $ | 367,500 | | | | | $ | 0 | | | | | $ | 746,250 | | | | | $ | 448,642 | | | | | $ | 15,975 | | | | | $ | 1,578,367 | | | ||
Andrew B. Weinstein
senior vice president, finance and accounting |
| | | | 2019 | | | | | $ | 265,625 | | | | | $ | 55,000 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 1,686 | | | | | $ | 322,311 | | |
| | | 2018 | | | | | $ | 230,000 | | | | | $ | 46,000 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 979 | | | | | $ | 276,979 | | | ||
Daniel E. Conger,
vice president, finance |
| | | | 2019 | | | | | $ | 200,000 | | | | | $ | 40,000 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 23,058 | | | | | $ | 263,058 | | |
| | | 2018 | | | | | $ | 200,000 | | | | | $ | 40,000 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 22,024 | | | | | $ | 262,024 | | |
Name
|
| |
Number of
Securities Underlying Unexercised Options (#) Exercisable |
| |
Number of
Securities Underlying Unexercised Options (#) Unexercisable |
| |
Option Exercise
Price ($) |
| |
Option
Expiration Date |
| ||||||||||||
Douglas Murphy-Chutorian(1)
|
| | | | 20,000 | | | | | | 0 | | | | | $ | 0.52 | | | | | | 11/21/2022 | | |
Douglas Murphy-Chutorian(1)
|
| | | | 85,000 | | | | | | 0 | | | | | $ | 2.10 | | | | | | 11/08/2024 | | |
Douglas Murphy-Chutorian(1)
|
| | | | 75,000 | | | | | | 0 | | | | | $ | 1.96 | | | | | | 12/31/2024 | | |
Douglas Murphy-Chutorian(1)
|
| | | | 180,000 | | | | | | 0 | | | | | $ | 3.44 | | | | | | 07/20/2025 | | |
Douglas Murphy-Chutorian(1)
|
| | | | 60,000 | | | | | | 0 | | | | | $ | 2.59 | | | | | | 12/31/2025 | | |
Douglas Murphy-Chutorian(2)
|
| | | | 122,569 | | | | | | 2,431 | | | | | $ | 2.23 | | | | | | 02/17/2026 | | |
Douglas Murphy-Chutorian(2)
|
| | | | 93,316 | | | | | | 31,684 | | | | | $ | 1.72 | | | | | | 01/19/2027 | | |
Douglas Murphy-Chutorian(2)
|
| | | | 63,281 | | | | | | 61,719 | | | | | $ | 8.00 | | | | | | 12/31/2027 | | |
Andrew B. Weinstein(2)
|
| | | | 21,271 | | | | | | 8,729 | | | | | $ | 3.15 | | | | | | 03/14/2027 | | |
Daniel E. Conger(1)
|
| | | | 10,000 | | | | | | 0 | | | | | $ | 3.44 | | | | | | 07/20/2025 | | |
Daniel E. Conger(1)
|
| | | | 3,000 | | | | | | 0 | | | | | $ | 2.59 | | | | | | 12/31/2025 | | |
Name
|
| |
Fees Earned or
Paid in Cash ($) |
| |
Total
($) |
| ||||||
Arthur “Abbie” Leibowitz, M.D., F.A.A.P.
|
| | | $ | 67,500 | | | | | $ | 67,500 | | |
Wayne T. Pan, M.D., Ph.D.
|
| | | $ | 70,500 | | | | | $ | 70,500 | | |
Name and Address of Beneficial Owner
|
| |
Number of Shares
Beneficially Owned |
| |
Percentage of Shares
Beneficially Owned |
| ||||||
5% Stockholders: | | | | | | | | | | | | | |
William H.C. Chang(1)
|
| | | | 1,292,323 | | | | | | 19.8% | | |
Park West Asset Management, LLC(2)
|
| | | | 600,000 | | | | | | 9.2% | | |
Eric Semler
|
| | | | 568,221 | | | | | | 8.7% | | |
Executive Officers and Directors: | | | | | | | | | | | | | |
Dr. Arthur N. Leibowitz(3)
|
| | | | 50,000 | | | | | | * | | |
Dr. Douglas Murphy-Chutorian(4)
|
| | | | 862,877 | | | | | | 11.8% | | |
Dr. Wayne T. Pan(5)
|
| | | | 52,474 | | | | | | * | | |
Andrew B. Weinstein(6)
|
| | | | 23,771 | | | | | | * | | |
Daniel E. Conger(7)
|
| | | | 13,000 | | | | | | * | | |
All directors and officers as a group (5 persons)
|
| | | | 1,002,122 | | | | | | 13.4% | | |
Plan Category
|
| |
Number of Securities to
be Issued Upon Exercise of Outstanding Options, Warrants and Rights (#) |
| |
Weighted Average
Exercise Price of Outstanding Options, Warrants and Rights ($) |
| |
Number of Securities
Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (#) |
| |||||||||
| | |
(a)
|
| |
(b)
|
| |
(c)
|
| |||||||||
Equity Compensation Plans Approved by Securityholders:
|
| | | | | | | | | | | | | | | | | | |
2014 Stock Incentive Plan
|
| | | | 1,468,582 | | | | | | 3.30 | | | | | | 997,163(1) | | |
2007 Key Person Stock Option Plan
|
| | | | 113,000 | | | | | | 1.58 | | | | | | 0 | | |
Total | | | | | 1,581,582 | | | | | | 3.23 | | | | | | 997,163 | | |
| | |
Year Ended December 31,
|
| |||||||||
Fee Type
|
| |
2019
|
| |
2018
|
| ||||||
Audit Fees
|
| | | $ | 402,000 | | | | | $ | 200,650 | | |
Audit-Related Fees
|
| | | | 0 | | | | | | 0 | | |
Tax Fees
|
| | | | 27,000 | | | | | | 0 | | |
Total
|
| | | $ | 429,000 | | | | | $ | 200,650 | | |
| | |
Page
|
| |||
Financial Statements: | | | | | | | |
| | | | F-2 | | | |
| | | | F-5 | | | |
| | | | F-6 | | | |
| | | | F-7 | | | |
| | | | F-8 | | | |
| | | | F-9 | | |
| | |
As of December 31
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Assets | | | | | | | | | | | | | |
Current Assets: | | | | | | | | | | | | | |
Cash
|
| | | $ | 7,741 | | | | | $ | 3,284 | | |
Trade accounts receivable, net of allowance for doubtful accounts of $36 and $52 respectively
|
| | | | 3,486 | | | | | | 2,801 | | |
Prepaid expenses and other current assets
|
| | | | 216 | | | | | | 153 | | |
Total current assets
|
| | | | 11,443 | | | | | | 6,238 | | |
Assets for lease, net
|
| | | | 2,079 | | | | | | 1,243 | | |
Property and equipment, net
|
| | | | 249 | | | | | | 223 | | |
Long-term deposits
|
| | | | 15 | | | | | | 15 | | |
Long-term deferred tax assets
|
| | | | 4,501 | | | | | | — | | |
Total assets
|
| | | $ | 18,287 | | | | | $ | 7,719 | | |
Liabilities and Stockholders’ Equity | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable
|
| | | $ | 338 | | | | | $ | 280 | | |
Accrued expenses
|
| | | | 3,914 | | | | | | 2,797 | | |
Deferred revenue
|
| | | | 955 | | | | | | 435 | | |
Total current liabilities
|
| | | | 5,207 | | | | | | 3,512 | | |
Long-term liabilities: | | | | | | | | | | | | | |
Other long-term liabilities
|
| | | | 7 | | | | | | 11 | | |
Total long-term liabilities
|
| | | | 7 | | | | | | 11 | | |
Stockholders’ equity: | | | | | | | | | | | | | |
Common stock, $0.001 par value; 50,000,000 shares authorized; 6,556,221,
and 6,349,985 shares issued, and 6,531,221 and 6,324,985 shares outstanding (treasury shares of 25,000 and 25,000, respectively) |
| | | | 7 | | | | | | 6 | | |
Additional paid-in capital
|
| | | | 19,400 | | | | | | 25,608 | | |
Accumulated deficit
|
| | | | (6,334) | | | | | | (21,418) | | |
Total stockholders’ equity
|
| | | | 13,073 | | | | | | 4,196 | | |
Total liabilities and stockholders’ equity
|
| | | $ | 18,287 | | | | | $ | 7,719 | | |
| | |
For the years ended December 31
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Revenues
|
| | | $ | 32,767 | | | | | $ | 21,491 | | |
Operating expenses: | | | | | | | | | | | | | |
Cost of revenues
|
| | | | 3,661 | | | | | | 2,703 | | |
Engineering and product development
|
| | | | 2,479 | | | | | | 2,085 | | |
Sales and marketing
|
| | | | 8,965 | | | | | | 7,202 | | |
General and administrative
|
| | | | 6,954 | | | | | | 4,159 | | |
Total operating expenses
|
| | | | 22,059 | | | | | | 16,149 | | |
Income from operations
|
| | | | 10,708 | | | | | | 5,342 | | |
Interest income (expense)
|
| | | | 2 | | | | | | (59) | | |
Related party interest expense
|
| | | | — | | | | | | (239) | | |
Other expense
|
| | | | (9) | | | | | | (4) | | |
Other expense
|
| | | | (7) | | | | | | (302) | | |
Pre-tax net income
|
| | | | 10,701 | | | | | | 5,040 | | |
Income tax (benefit) provision
|
| | | | (4,383) | | | | | | 26 | | |
Net income
|
| | | $ | 15,084 | | | | | $ | 5,014 | | |
Net income per share, basic
|
| | | $ | 2.34 | | | | | $ | 0.82 | | |
Weighted average number of shares used in computing basic income per share
|
| | | | 6,440,724 | | | | | | 6,079,326 | | |
Net income per share, diluted
|
| | | $ | 1.88 | | | | | $ | 0.66 | | |
Weighted average number of shares used in computing diluted income per share
|
| | | | 8,029,909 | | | | | | 7,629,523 | | |
| | |
Common Stock
|
| |
Treasury Stock
|
| |
Additional
Paid-In Capital |
| |
Accumulated
Deficit |
| |
Total Stockholder’s
Equity/(Deficit) |
| |||||||||||||||||||||||||||
| | |
Shares Issued
|
| |
Common Stock
Amount |
| |
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||||||
Balance at December 31, 2017
|
| | | | 5,902,244 | | | | | $ | 6 | | | | | | (25,000) | | | | |
$
|
—
|
| | | | $ | 23,843 | | | | | $ | (26,432) | | | | | $ | (2,583) | | |
Issuance of shares to settle related party loan
|
| | | | 12,943 | | | | | | — | | | | | | — | | | | | | — | | | | | | 294 | | | | | | — | | | | | | 294 | | |
Warrant exercises
|
| | | | 212,517 | | | | | | — | | | | | | — | | | | | | — | | | | | | 414 | | | | | | — | | | | | | 414 | | |
Stock option exercises
|
| | | | 222,281 | | | | | | — | | | | | | — | | | | | | — | | | | | | 456 | | | | | | — | | | | | | 456 | | |
Stock-based compensation
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 601 | | | | | | — | | | | | | 601 | | |
Net income
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 5,014 | | | | | | 5,014 | | |
Balance at December 31, 2018
|
| | | | 6,349,985 | | | | | $ | 6 | | | | | | (25,000) | | | | | $ | — | | | | | $ | 25,608 | | | | | $ | (21,418) | | | | | $ | 4,196 | | |
Warrant repurchases
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (6,633) | | | | | | — | | | | | | (6,633) | | |
Warrant exercises
|
| | | | 36,197 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Stock option exercises
|
| | | | 170,039 | | | | | | 1 | | | | | | — | | | | | | — | | | | | | 60 | | | | | | — | | | | | | 61 | | |
Stock-based compensation
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 365 | | | | | | — | | | | | | 365 | | |
Net income
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 15,084 | | | | | | 15,084 | | |
Balance at December 31, 2019
|
| | | | 6,556,221 | | | | | $ | 7 | | | | | | (25,000) | | | | | $ | — | | | | | $ | 19,400 | | | | | $ | (6,334) | | | | | $ | 13,073 | | |
|
| | |
For the years ended December 31
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | | | | |
Net income
|
| | | $ | 15,084 | | | | | $ | 5,014 | | |
Reconciliation of Net Income to Net Cash Provided by Operating Activities:
|
| | | | | | | | | | | | |
Amortization of debt discount
|
| | | | — | | | | | | 22 | | |
Accretion of non-cash interest
|
| | | | — | | | | | | 231 | | |
Depreciation
|
| | | | 632 | | | | | | 503 | | |
Deferred tax benefit
|
| | | | (4,501) | | | | | | — | | |
Loss on disposal of assets for lease
|
| | | | 206 | | | | | | 200 | | |
Allowance for doubtful accounts
|
| | | | 48 | | | | | | 46 | | |
Stock-based compensation expense
|
| | | | 365 | | | | | | 601 | | |
Changes in Operating Assets and Liabilities:
|
| | | | | | | | | | | | |
Trade accounts receivable
|
| | | | (734) | | | | | | (1,503) | | |
Prepaid expenses and other current assets
|
| | | | (63) | | | | | | (42) | | |
Accounts payable
|
| | | | 58 | | | | | | (208) | | |
Accrued expenses
|
| | | | 1,113 | | | | | | (71) | | |
Deferred revenue
|
| | | | 520 | | | | | | (96) | | |
Net Cash Provided by Operating Activities
|
| | | | 12,728 | | | | | | 4,697 | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | | | | |
Additions to property and equipment
|
| | | | (174) | | | | | | (138) | | |
Proceeds from sale of property and equipment
|
| | | | — | | | | | | 1 | | |
Purchase of assets for lease
|
| | | | (1,524) | | | | | | (706) | | |
Net Cash Used in Investing Activities
|
| | | | (1,698) | | | | | | (843) | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | | | | |
Repurchase of warrants
|
| | | | (6,633) | | | | | | — | | |
Proceeds from exercise of warrants
|
| | | | — | | | | | | 414 | | |
Proceeds from exercise of stock options
|
| | | | 60 | | | | | | 456 | | |
Payments of loans payable
|
| | | | — | | | | | | (2,897) | | |
Net Cash Used in Financing Activities
|
| | | | (6,573) | | | | | | (2,027) | | |
INCREASE IN CASH
|
| | | | 4,457 | | | | | | 1,827 | | |
CASH, BEGINNING OF PERIOD
|
| | | | 3,284 | | | | | | 1,457 | | |
CASH, END OF PERIOD
|
| | | $ | 7,741 | | | | | $ | 3,284 | | |
Cash paid for interest
|
| | | $ | — | | | | | $ | 575 | | |
Cash paid for taxes
|
| | | $ | 123 | | | | | $ | 18 | | |
Supplemental disclosure of noncash financing activity: | | | | | | | | | | | | | |
Issuance of shares to settle related party loan
|
| | | $ | — | | | | | $ | 294 | | |
Category Name
|
| |
Description
|
|
Machinery & Equipment | | | Manufacturing, R&D, or other non-office equipment | |
Computer Equipment & Software | | | Software, computers, monitors, printers and other related equipment. | |
Furniture & Fixtures | | | Office equipment and furniture owned by the company | |
Account Name
|
| |
Useful Life
|
|
Machinery & Equipment | | | Five years | |
Computer Equipment & Software | | | Three years | |
Furniture & Fixtures | | | Five years | |
| | |
As of December 31,
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Assets for lease
|
| | | $ | 3,374 | | | | | $ | 2,218 | | |
Less: accumulated depreciation
|
| | | | (1,295) | | | | | | (975) | | |
Assets for lease, net
|
| | | $ | 2,079 | | | | | $ | 1,243 | | |
| | |
As of December 31,
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Capital assets
|
| | | $ | 636 | | | | | $ | 457 | | |
Less: accumulated depreciation
|
| | | | (387) | | | | | | (234) | | |
Capital assets, net
|
| | | $ | 249 | | | | | $ | 223 | | |
| | |
As of December 31,
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Compensation
|
| | | $ | 2,803 | | | | | $ | 2,442 | | |
Accrued Taxes
|
| | | | 66 | | | | | | 81 | | |
Miscellaneous Accruals
|
| | | | 1,045 | | | | | | 354 | | |
Total Accrued Expenses
|
| | | $ | 3,914 | | | | | $ | 2,797 | | |
| | |
Year ended December 31,
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Common stock warrants
|
| | | | 76,875 | | | | | | 276,214 | | |
Stock options
|
| | | | 1,581,582 | | | | | | 1,761,447 | | |
Total
|
| | | | 1,658,457 | | | | | | 2,037,661 | | |
| | |
Options Outstanding
|
| |||||||||||||||||||||
| | |
Number of
Stock Options Outstanding |
| |
Weighted
Average Exercise Price |
| |
Weighted
Average Remaining Contractual Term (In Years) |
| |
Aggregate
Intrinsic Value (In Thousands) |
| ||||||||||||
Balance, December 31, 2017
|
| | | | 1,855,138 | | | | | $ | 2.69 | | | | | | 7.48 | | | | | $ | 9,850 | | |
Options granted
|
| | | | 135,000 | | | | | | 8.00 | | | | | | | | | | | | | | |
Options exercised
|
| | | | (222,281) | | | | | | 2.05 | | | | | | | | | | | | | | |
Options forfeited/cancelled
|
| | | | (6,410) | | | | | | 3.44 | | | | | | | | | | | | | | |
Balance, December 31, 2018
|
| | | | 1,761,447 | | | | | $ | 3.18 | | | | | | 6.84 | | | | | $ | 55,000 | | |
Options exercised
|
| | | | (179,865) | | | | | | 2.72 | | | | | | | | | | | | | | |
Balance, December 31, 2019
|
| | | | 1,581,582 | | | | | $ | 3.23 | | | | | | 5.86 | | | | | $ | 70,827 | | |
Exercisable as of December 31, 2018
|
| | | | 1,481,591 | | | | | $ | 2.83 | | | | | | 6.57 | | | | | $ | 46,780 | | |
Exercisable as of December 31, 2019
|
| | | | 1,477,020 | | | | | $ | 3.06 | | | | | | 5.73 | | | | | $ | 66,389 | | |
| | |
Year ended
December 31, 2018 |
| |||
Expected term (in years)
|
| | | | 5 | | |
Risk-free interest rate
|
| | | | 2.2% | | |
Expected volatility
|
| | | | 99.0% | | |
Expected dividend rate
|
| | | | 0% | | |
| | |
Year ended December 31,
|
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
Cost of Revenues
|
| | | $ | 1 | | | | | $ | 2 | | |
Engineering and Product Development
|
| | | | 16 | | | | | | 36 | | |
Sales and Marketing
|
| | | | 46 | | | | | | 92 | | |
General and Administrative
|
| | | | 302 | | | | | | 471 | | |
Total
|
| | | $ | 365 | | | | | $ | 601 | | |
|
| | |
2019
|
| |
2018
|
| ||||||
Current tax provision: | | | | | | | | | | | | | |
Federal
|
| | | $ | — | | | | | $ | — | | |
State
|
| | | | 118 | | | | | | 26 | | |
Subtotal current tax expense
|
| | | | 118 | | | | | | 26 | | |
Deferred tax provision: | | | | | | | | | | | | | |
Federal
|
| | | | (3,645) | | | | | | — | | |
State
|
| | | | (856) | | | | | | — | | |
Subtotal deferred tax (benefit)
|
| | | | (4,501) | | | | | | — | | |
Total income tax (benefit) expense
|
| | | $ | (4,383) | | | | | $ | 26 | | |
| | |
2019
|
| |
2018
|
| ||||||
Federal statutory rate
|
| | | | 21.00% | | | | | | 21.00% | | |
State income tax rate, net of federal benefit
|
| | | | 1.83% | | | | | | 0.95% | | |
Change in valuation allowance
|
| | | | (49.89)% | | | | | | (2.28)% | | |
Stock-based compensation
|
| | | | (13.12)% | | | | | | (13.61)% | | |
Permanent Items
|
| | | | 0.40% | | | | | | 0.42% | | |
Other
|
| | | | (1.18)% | | | | | | (5.97)% | | |
Effective income tax rate
|
| | | | (40.96)% | | | | | | 0.51% | | |
| | |
2019
|
| |
2018
|
| ||||||
Net operating loss carryforwards
|
| | | | 2,646 | | | | | | 3,864 | | |
Deferred revenue
|
| | | | 233 | | | | | | 106 | | |
Depreciation and amortization
|
| | | | 14 | | | | | | 45 | | |
Stock based compensation
|
| | | | 751 | | | | | | 670 | | |
Accrual and reserves
|
| | | | 145 | | | | | | 119 | | |
Research and development credits, net of tax reserve
|
| | | | 711 | | | | | | 533 | | |
Other
|
| | | | 1 | | | | |
|
—
|
| |
Total gross deferred tax assets
|
| | | | 4,501 | | | | | | 5,337 | | |
Less valuation allowance
|
| | |
|
—
|
| | | | | (5,337) | | |
Net deferred tax assets
|
| | | $ | 4,501 | | | | | $ | — | | |
| | |
Gross
Unrecognized Tax Benefits 2019 |
| |
Gross
Unrecognized Tax Benefits 2018 |
| ||||||
Unrecognized tax benefits – January 1
|
| | | $ | 218 | | | | | $ | 29 | | |
Gross increases related to prior tax positions
|
| | | | — | | | | | | 126 | | |
Gross increases related to current tax positions
|
| | | | 77 | | | | | | 62 | | |
Unrecognized tax benefits – December 31
|
| | | $ | 295 | | | | | $ | 218 | | |
| | |
For the year ended December 31,
|
| |||||||||||||||||||||||||||||||||
| | |
2019
|
| |
2018
|
| ||||||||||||||||||||||||||||||
| | |
Shares
|
| |
Net Income
|
| |
EPS
|
| |
Shares
|
| |
Net Income
|
| |
EPS
|
| ||||||||||||||||||
Basic EPS
|
| | | | 6,440,724 | | | | | $ | 15,084 | | | | | $ | 2.34 | | | | | | 6,079,326 | | | | | $ | 5,014 | | | | | $ | 0.82 | | |
Common stock warrants
|
| | | | 69,068 | | | | | | — | | | | | | | | | | | | 191,445 | | | | | | — | | | | | | | | |
Common stock options
|
| | | | 1,520,117 | | | | | | — | | | | | | | | | | | | 1,358,752 | | | | | | — | | | | | | | | |
Diluted EPS
|
| | | | 8,029,909 | | | | | $ | 15,084 | | | | | $ | 1.88 | | | | | | 7,629,523 | | | | | $ | 5,014 | | | | | $ | 0.66 | | |
| Date: March 9, 2020 | | | Semler Scientific, Inc. | | |||
| | | | By: | | | /s/ Douglas Murphy-Chutorian, M.D. | |
| | | | | | | Douglas Murphy-Chutorian, M.D. | |
| | | | | | | Chief Executive Officer | |
|
Name
|
| |
Title
|
| |
Date
|
|
|
/s/ Douglas Murphy-Chutorian, M.D.
Douglas Murphy-Chutorian, M.D.
|
| | Chief Executive Officer and Director (Principal Executive Officer) |
| |
March 9, 2020
|
|
|
/s/ Andrew B. Weinstein
Andrew B. Weinstein
|
| | Senior Vice President, Finance and Accounting (Principal Financial Officer) | | |
March 9, 2020
|
|
|
/s/ Daniel E. Conger
Daniel E. Conger
|
| | Vice President, Finance (Principal Accounting Officer) |
| |
March 9, 2020
|
|
|
/s/ Arthur N. Leibowitz, M.D., F.A.A.P.
Arthur N. Leibowitz, M.D., F.A.A.P.
|
| | Director | | |
March 9, 2020
|
|
|
/s/ Wayne T. Pan, M.D., Ph.D.
Wayne T. Pan, M.D., Ph.D.
|
| | Director | | |
March 9, 2020
|
|
Exhibit 4.2
DESCRIPTION OF CAPITAL STOCK
The following description of our capital stock is not complete and may not contain all the information you should consider before investing in our capital stock. This description is summarized from, and qualified in its entirety by reference to, our certificate of incorporation and bylaws, both of which have been publicly filed with the Securities and Exchange Commission.
General
Our authorized capital stock consists of 50,000,000 shares of common stock, $0.001 par value.
Holders of our common stock are entitled to one vote per share. Except as otherwise required by law, all stockholder action is taken by the vote of a majority of the outstanding shares of common stock present at a meeting of stockholders at which a quorum consisting of a majority of the outstanding shares of common stock is present in person or by proxy.
Holders of our common stock are entitled to receive ratably dividends when, as, and if declared by our board of directors out of funds legally available for that purpose and, upon our liquidation, dissolution or winding up, are entitled to share ratably in all assets remaining after payment of liabilities. However, the current policy of our board of directors is to retain earnings, if any, for the operation and expansion of our company. The holders of our common stock have no preemptive rights and have no rights to convert their common stock into any other securities. The outstanding common stock is validly authorized and issued, fully-paid and nonassessable. The common stock will not be subject to call or redemption.
Anti-Takeover Effects of Delaware Law and Our Certificate of Incorporation and Bylaws
Some provisions of Delaware law, our certificate of incorporation and our bylaws contain provisions that could make the following transactions more difficult: an acquisition of us by means of a tender offer; an acquisition of us by means of a proxy contest or otherwise; or the removal of our incumbent officers and directors. It is possible that these provisions could make it more difficult to accomplish or could deter transactions that stockholders may otherwise consider to be in their best interest or in our best interests, including transactions that provide for payment of a premium over the market price for our shares.
These provisions, summarized below, are intended to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with our board of directors. We believe that the benefits of the increased protection of our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging these proposals because negotiation of these proposals could result in an improvement of their terms.
Delaware Anti-Takeover Statute
We are subject to the provisions of Section 203 of the Delaware General Corporation Law, or Section 203. Under Section 203, we would generally be prohibited from engaging in any business combination with any interested stockholder for a period of three years following the time that this stockholder became an interested stockholder unless:
· | prior to this time, our board of directors approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; |
· | upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, excluding shares owned by persons who are directors and also officers, and by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or |
· | at or subsequent to such time, the business combination is approved by our board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder. |
Under Section 203, a “business combination” includes:
· | any merger or consolidation involving the corporation and the interested stockholder; |
· | any sale, lease, exchange, mortgage, transfer, pledge or other disposition involving the interested stockholder of assets of 10% or more of the aggregate market value of either all of the assets of the corporation or its outstanding stock; |
· | any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder, subject to limited exceptions; |
· | any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or |
· | the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation. |
In general, Section 203 defines an interested stockholder as an entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation and any entity or person affiliated with or controlling or controlled by such entity or person.
Our Certificate of Incorporation and Bylaws
Our certificate of incorporation and bylaws contain provisions that could have the effect of discouraging potential acquisition proposals or making a tender offer or delaying or preventing a change in control, including changes a stockholder might consider favorable. In particular, our certificate of incorporation and bylaws, as applicable, among other things:
· | provide our board of directors with the ability to alter its bylaws without stockholder approval; |
· | provide that vacancies on our board of directors may be filled by a majority of directors in office, although less than a quorum; |
· | provide that a special meeting of the stockholders may be called only by our board of directors, the chairman of the board of directors or our chief executive officer; and |
· | establish advance notice procedures with respect to stockholder proposals and nomination of candidates for election to our board of directors. |
Such provisions may have the effect of discouraging a third-party from acquiring our company, even if doing so would be beneficial to our stockholders. These provisions are intended to enhance the likelihood of continuity and stability in the composition of our board of directors and in the policies formulated by them, and to discourage some types of transactions that may involve an actual or threatened change in control of our company. These provisions are designed to reduce our vulnerability to an unsolicited acquisition proposal and to discourage some tactics that may be used in proxy fights. We believe that the benefits of increased protection of our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure our company outweigh the disadvantages of discouraging such proposals because, among other things, negotiation of such proposals could result in an improvement of their terms.
Amendment of Charter Provisions
The provisions of Delaware law, our certificate of incorporation and our bylaws could have the effect of discouraging others from attempting hostile takeovers and, as a consequence, they may also inhibit temporary fluctuations in the market price of our common stock that often result from actual or rumored hostile takeover attempts. These provisions may also have the effect of preventing changes in the composition of our board and management. It is possible that these provisions could make it more difficult to accomplish transactions that stockholders may otherwise deem to be in their best interests.
| Date: March 9, 2020 | | |
/s/ Douglas Murphy-Chutorian, M.D.
Douglas Murphy-Chutorian, M.D.
Chief Executive Officer (Principal Executive Officer) |
|
| Date: March 9, 2020 | | |
/s/ Andrew B. Weinstein
Andrew B. Weinstein,
Senior Vice President, Finance and Accounting (Principal Financial Officer) |
|
|
/s/ Douglas Murphy-Chutorian, M.D.
Douglas Murphy-Chutorian, M.D.
Chief Executive Officer Date: March 9, 2020
|
| | | |
|
/s/ Andrew B. Weinstein
Andrew B. Weinstein
Senior Vice President, Finance and Accounting Date: March 9, 2020
|
| | | |
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