Supplemental Balance Sheet Disclosures

9 Months Ended

Sep. 30, 2022

Supplemental Balance Sheet Disclosures

Supplemental Balance Sheet Disclosures

6.    SUPPLEMENTAL BALANCE SHEET DISCLOSURES

The unaudited condensed consolidated balance sheets include financial instruments for which the fair market value of such instruments may differ from amounts reflected on a historical cost basis. The carrying value of cash and cash equivalents, accounts and other receivables, accounts payable and certain accrued liabilities generally approximate fair value due to their short-term nature.

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

Accounts receivable, net

Accounts receivable from product sales are net of allowance for doubtful accounts of $330 thousand and $355 thousand as of September 30, 2022 and December 31, 2021, respectively.

Inventory, net (in thousands)

	September 30,		December 31,
	2022		2021
Raw materials	$	300	$	171
Work-in-process		318		528
Finished goods		48		32
Inventory, gross	$	666	$	731
Inventory reserve		(57)		(255)
Inventory, net	$	609	$	476

During the nine months ended September 30, 2022 existing reserves of $161 thousand were charged against work-in-process inventory and inventory reserves were decreased by $37 thousand.

Accrued expenses (in thousands)

	September 30,		December 31,
	2022		2021
Employees benefits	$	437	$	712
Professional services		16		174
Legal fees		14		23
Royalty fees		8		10
Franchise fees		30		193
Severance		—		258
Other		46		63
Total accrued expenses	$	551	$	1,433

Deferred revenue

Collaborative Arrangement

The Company recorded deferred license fee revenue in connection with a Clinical Research and Co-Promotion Agreement with Health Tech Connex Inc. (“HTC”) (the “Co-Promotion Agreement”), as more fully described in the 2021 10-K. Deferred revenue as of both September 30, 2022 and December 31, 2021 included approximately $200 thousand of license fees not yet recognized under the Co-Promotion Agreement. License fee revenue recognized is included in other revenue in the unaudited condensed consolidated statements of operations and comprehensive loss. On January 31, 2022, the Company notified HTC of its material breaches under the Co-Promotion Agreement which HTC failed to cure under the terms of the Co-Promotion Agreement. As such it is the Company’s position that this exclusivity

right is no longer in effect. The Company and HTC have been discussing opportunities to work together moving forward.

Noncash Consideration in Acquisition

Deferred revenue as of December 31, 2021 included approximately $100 thousand for the fair value of the remaining 16 PoNS devices to be transferred that had been included as noncash consideration in the Company’s acquisition of Heuro Canada, Inc. (“Heuro”). During the nine months ended September 30, 2022, the remaining 16 PoNS devices were transferred and the remaining $100 thousand of deferred revenue was recognized in Product Sales in the unaudited condensed consolidated statements of operations and comprehensive loss. During the nine months ended September 30, 2021, there were four PoNS devices transferred which resulted in the recognition of $30 thousand of deferred revenue in Product Sales in the unaudited condensed consolidated statements of operations and comprehensive loss.

Cash, Cash Equivalents and Restricted Cash (in thousands)

	September 30,		December 31,
	2022		2021
Cash and cash equivalents	$	16,658	$	11,005
Restricted cash included in prepaid expenses and other current assets		30		—
Total cash, cash equivalents and restricted cash	$	16,688	$	11,005

Cash equivalents as of September 30, 2022 consist of an investment of excess cash in an unrestricted money market savings account.

Restricted cash as of September 30, 2022 is related to a money market savings account maintained by the Company as collateral in connection with corporate credit cards.