UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
OR
For the transition period from ________ to ________
Commission File Number:
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| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
| (Address of principal executive offices) | (Zip Code) |
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Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
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| The (NASDAQ Capital Market) |
Indicate by check mark whether the registrant
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of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
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| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
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The number of shares of common stock outstanding
as of November 12, 2021:
SENESTECH, INC.
FORM 10-Q
For the Quarterly Period Ended September 30, 2021
TABLE OF CONTENTS
i
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SENESTECH, INC.
CONDENSED BALANCE SHEETS
(In thousands, except shares and per share data)
| September 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| ASSETS | (Unaudited) | |||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable trade, net | ||||||||
| Prepaid expenses | ||||||||
| Inventory | ||||||||
| Deposits | ||||||||
| Total current assets | ||||||||
| Right to use asset-operating leases | ||||||||
| Property and equipment, net | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Short-term debt | $ | $ | ||||||
| Accounts payable | ||||||||
| Accrued expenses | ||||||||
| Total current liabilities | ||||||||
| Long-term debt, net | ||||||||
| Operating lease liability | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (See note 12) | ||||||||
| Stockholders’ equity: | ||||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
1
SENESTECH, INC.
CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except shares and per share data)
(Unaudited)
| For the Three Months | For the Nine Months | |||||||||||||||
| Ended September 30, | Ended September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenue: | ||||||||||||||||
| Grant revenue | $ | $ | - | $ | $ | - | ||||||||||
| Sales | ||||||||||||||||
| Total revenue | ||||||||||||||||
| Cost of sales | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Net operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Payroll Protection Program loan forgiveness | ||||||||||||||||
| Other income | ||||||||||||||||
| Total other income | ( | ) | ( | ) | ||||||||||||
| Net loss and comprehensive loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Deemed dividend-warrant price protection-revaluation adjustment | ||||||||||||||||
| Net loss attributable to common shareholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average common shares outstanding - basic and fully diluted | ||||||||||||||||
| Net loss per common share - basic and fully diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The accompanying notes are an integral part of these financial statements.
2
SENESTECH, INC.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
(In thousands, except shares and per share data)
(Unaudited)
For The Three Months Ended September 30, 2020 and 2021
| Additional | Total | |||||||||||||||||||
| Common Stock | Paid-In | Accumulated | Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity (Deficit) | ||||||||||||||||
| Balance, June 30, 2020 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Stock based compensation | - | |||||||||||||||||||
| Offering expenses for June, 2020 share offering | - | ( | ) | ( | ) | |||||||||||||||
| Net loss for the three months ended September 30, 2020 | - | ( | ) | ( | ) | |||||||||||||||
| Balance, September 30, 2020 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Balance, June 30, 2021 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Stock based compensation | - | $ | ||||||||||||||||||
| Issuance of common stock upon exercise of warrants | ||||||||||||||||||||
| Net loss for the three months ended September 30, 2021 | - | ( | ) | ( | ) | |||||||||||||||
| Balance, September 30, 2021 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| For The Nine Months Ended September 30, 2020 and 2021 | ||||||||||||||||||||
| Balance, December 31, 2019 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Stock based compensation | - | |||||||||||||||||||
| Issuance of common stock, sold for cash, net | ||||||||||||||||||||
| Issuance of common stock upon exercise of warrants | ||||||||||||||||||||
| Issuance costs of common stock for services | ||||||||||||||||||||
| Issuance of common stock for fractional shares-20-1 reverse split | ||||||||||||||||||||
| Warrant antidilution price protection adjustment | - | |||||||||||||||||||
| Net loss for the nine months ended September 30, 2020 | - | ( | ) | ( | ) | |||||||||||||||
| Balance, September 30, 2020 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Balance, December 31, 2020 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Stock based compensation | - | |||||||||||||||||||
| Issuance costs of common stock for service | ||||||||||||||||||||
| Issuance of common stock, sold for cash, net | ||||||||||||||||||||
| Issuance of common stock upon exercise of warrants | ||||||||||||||||||||
| Payments for employee withholding taxes related to share based awards | - | ( | ) | ( | ) | |||||||||||||||
| Net loss for the nine months ended September 30, 2021 | - | ( | ) | ( | ) | |||||||||||||||
| Balance, September 30, 2021 | $ | $ | $ | ( | ) | $ | ||||||||||||||
The accompanying notes are an integral part of these financial statements.
3
SENESTECH, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| For the Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2021 | 2020 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Stock-based compensation | ||||||||
| Paycheck Protection Program loan forgiveness | ( | ) | ||||||
| Paycheck Protection Program loan accrued interest forgiveness | ( | ) | ||||||
| Gain on sale of equipment | ( | ) | ( | ) | ||||
| (Increase) decrease in current assets: | ||||||||
| Accounts receivable - trade | ( | ) | ( | ) | ||||
| Accounts receivable - other | ||||||||
| Other assets | ||||||||
| Prepaid expenses | ( | ) | ( | ) | ||||
| Inventory | ( | ) | ||||||
| Increase (decrease) in current liabilities: | ||||||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Cash received on sale of property and equipment | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Net cash provided by (used in) investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from the issuance of common stock, net | ||||||||
| Proceeds from the issuance of notes payable | ||||||||
| Repayments of notes payable | ( | ) | ( | ) | ||||
| Repayments of finance lease obligations | ( | ) | ( | ) | ||||
| Proceeds from the exercise of warrants | ||||||||
| Payment of employee withholding taxes related to share based awards | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| NET CHANGE IN CASH | ||||||||
| CASH AT BEGINNING OF PERIOD | ||||||||
| CASH AT END OF PERIOD | $ | $ | ||||||
| SUPPLEMENTAL INFORMATION: | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Forgiveness of accrual in warrant exercise | $ | $ | ||||||
| Deemed dividend | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
4
SENESTECH, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
(Unaudited)
Note 1 - Organization and Description of Business
SenesTech, Inc. (referred to in this report as “SenesTech,” the “Company,” “we” or “us”) has developed and is commercializing a global, proprietary technology for managing animal pest populations, initially rat populations, through fertility control.
Although there are myriad tools available to control rat populations, most rely on some form of lethal method to achieve effectiveness. Each of these solutions is inherently limited by rat species’ resilience and survival mechanisms as well as their extraordinary rate of reproduction. ContraPest®, our initial product, is unique in the pest control industry in attacking the reproductive systems of both male and female rats, which our field data shows results in a sustained reduction of the rat population.
Rats have plagued humanity throughout history. They pose significant threats to the environment and to the health and food security of many communities. In addition, rodents cause extensive product loss and damage through consumption and contamination. Rats also cause significant damage to critical infrastructure by burrowing beneath foundations and gnawing on electrical wiring, insulation, fire proofing systems, electronics and equipment.
The most prevalent solution to rat infestations is the use of increasingly powerful rodenticides. Although these solutions provide short term results, there are growing concerns about secondary exposure and bioaccumulation of rodenticides in the environment, as well as concerns about rodenticides that have no antidotes. The pest management industry and Pest Management Professionals (“PMPs”) are being asked for new solutions that are both effective and less toxic. Our goal is to provide customers with not only a solution to combat their most difficult rat problems, but also offer an effective, non-lethal option to serve customers that are looking to decrease or remove the amount of rodenticide used in their pest control programs.
ContraPest is a liquid bait containing the active ingredients 4-vinylcyclohexene diepoxide (“VCD”) and triptolide. ContraPest limits reproduction of male and female rats beginning with the first breeding cycle following consumption. ContraPest is being marketed for use in controlling Norway and roof rat populations.
SenesTech began the registration process with the United States Environmental Protection Agency (the “EPA”) for ContraPest on August 23, 2015. On August 2, 2016, the EPA granted an unconditional registration for ContraPest as a Restricted Use Product (“RUP”), due to the need for applicator expertise for deployment. On October 18, 2018, the EPA approved the removal of the RUP designation. We believe ContraPest is the first and only non-lethal, fertility control product approved by the EPA for the management of rodent populations.
In addition to the EPA registration of ContraPest in the United States, ContraPest must obtain registration from the various state regulatory agencies prior to selling in each state. We have received registration for ContraPest in all 50 states and the District of Columbia. The District of Columbia and 48 states have also approved the removal of the RUP designation.
We expect to continue to pursue regulatory approvals and amendments to the existing U.S. registration for ContraPest to broaden the marketability and use of ContraPest, and if ContraPest begins to generate sufficient revenue, regulatory approvals for additional jurisdictions beyond the United States. In certain cases, our EPA and state registrations require completion of additional testing and certifications even though we have received approval for the product or its labelling. We continue to seek to comply with these requirements.
The Company also continues to research and develop enhancements to ContraPest that align with our target verticals and other potential fertility control options for additional species.
5
SENESTECH, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
Note 1 - Organization and Description of Business – (continued)
We were formed in July 2004 and incorporated in the state of Nevada. The Company subsequently reincorporated in the state of Delaware in November 2015. Our corporate headquarters and manufacturing site are in Phoenix, Arizona. On December 8, 2016, we went public and are currently traded on Nasdaq under the symbol SNES.
On February 4, 2020, we amended our amended and restated certificate of incorporation to effect a 1-for-20 reverse split of our issued and outstanding shares of common stock. The accompanying condensed financial statements and notes thereto give retrospective effect to the reverse stock split for all periods presented. All issued and outstanding common stock, options and warrants exercisable for common stock, restricted stock units, preferred stock conversions to common stock and per share amounts contained in our condensed financial statements have been retrospectively adjusted.
Going Concern
Our financial statements as of September 30, 2021, December 31, 2020 and September 30, 2020 have been prepared under the assumption that we will continue as a going concern. Our independent registered public accounting firm included in its opinion for the years ended December 31, 2020 and 2019 an explanatory paragraph referring to our net loss from operations and net capital deficiency and expressing substantial doubt in our ability to continue as a going concern without additional capital becoming available. If we encounter continued issues or delays in the commercialization of ContraPest, our prior losses and expected future losses could have an adverse effect on our financial condition and negatively impact our ability to fund continued operations, obtain additional financing in the future and continue as a going concern. There are no assurances that such financing, if necessary, will be available to us at all or will be available in sufficient amounts or on reasonable terms. Our financial statements do not include any adjustments that may result from the outcome of this uncertainty. If we are unable to generate additional funds in the future through additional financings, sales of our products, licensing fees, royalty payments or from other sources or transactions, we will exhaust our resources and will be unable to continue operations.
Liquidity and Capital Resources
Since our inception, we have sustained significant operating losses in the course of our research and development and commercialization activities and expect such losses to continue for the near future. We have generated limited revenue to date from product sales, research grants and licensing fees received under our former license agreement. We have primarily funded our operations to date through the sale of equity securities, including convertible preferred stock, common stock and warrants to purchase common stock. See Note 10 - Stockholders’ Deficit for a description of our public equity sales.
We have also raised capital through debt financing, consisting primarily of convertible notes and government loan programs, and, to a lesser extent, payments received in connection with product sales, grants and licensing fees.
Through September 30, 2021, we received net proceeds
of $
6
SENESTECH, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
Note 1 - Organization and Description of Business – (continued)
Our ultimate success depends upon the outcome of a combination of factors, including: (i) successful commercialization of ContraPest and maintaining and obtaining regulatory approval of our products and product candidates; (ii) market acceptance, commercial viability and profitability of ContraPest and other products; (iii) the ability to market our products and establish an effective sales force and marketing infrastructure to generate significant revenue; (iv) the success of our research and development; (v) the ability to retain and attract key personnel to develop, operate and grow our business; and (vi) our ability to meet our working capital needs. Based upon our current operating plan, we expect that cash and cash equivalents at September 30, 2021, in combination with anticipated revenue and additional sales of our equity securities, will be sufficient to fund our current operations for at least the next 12 months. We have evaluated and will continue to evaluate our operating expenses and will concentrate our resources toward the successful commercialization of ContraPest in the United States. However, if anticipated revenue targets and margin targets are not achieved or expenses are more than we have budgeted, we may need to raise additional financing before that time. If we need more financing, including within the next 12 months, and we are unable to raise necessary capital through the sale of our securities, we may be required to take other measures that could impair our ability to be successful and operate as a going concern. In any event, we may require additional capital in order to fund our operating losses and research and development activities before we become profitable and may opportunistically raise capital. We may never achieve profitability or generate positive cash flows, and unless and until we do, we will continue to need to raise capital through equity or debt financing. If such equity or debt financing is not available at adequate levels or on acceptable terms, we may need to delay, limit or terminate commercialization and development efforts or discontinue operations.
Basis of Presentation
The accompanying unaudited condensed financial statements of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. In the Company’s opinion, the unaudited condensed financial statements include all material adjustments, all of which are of a normal and recurring nature, necessary to present fairly the Company’s financial position as of September 30, 2021, the Company’s operating results for the three and nine months ended September 30, 2021 and 2020, and the Company’s cash flows for the nine months ended September 30, 2021 and 2020. The accompanying financial information as of December 31, 2020 is derived from audited financial statements. Interim results are not necessarily indicative of results for a full year. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 29, 2021. All amounts shown in these financial statements and accompanying notes are in thousands, except percentages and per share and share amounts.
Note 2 - Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and classification of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. The significant estimates in the Company’s financial statements include the valuation of preferred stock, if issued, common stock and related warrants, and other stock-based awards. Actual results could differ from such estimates.
7
SENESTECH, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
Note 2 - Summary of Significant Accounting Policies – (continued)
Reclassifications
Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no material impact on net earnings, financial position or cash flows.
Cash and Cash Equivalents
The Company considers money market fund investments
to be cash equivalents. The Company had cash equivalents in the form of money market fund investment of $
Accounts Receivable-Trade
Accounts receivable-trade consist primarily of
receivables from customers. The Company provides an allowance for doubtful trade receivables equal to the estimated uncollectible amounts.
That estimate is based on historical collection experience, current economic and market conditions and a review of the current status
of each customer’s trade accounts receivable. The allowance for doubtful trade receivables was $
Inventories
Inventories are stated at the lower of cost or market value, using the first-in, first-out convention. Inventories consist of raw materials, work in progress and finished goods. Raw materials are stocked to reduce the risk of impact on manufacturing for potential supply interruptions due to the COVID-19 pandemic or other supply chain interruptions and long lead times on certain ingredients.
Components of inventory are:
| September 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Raw materials | $ | $ | ||||||
| Work in progress | ||||||||
| Finished goods | ||||||||
| Total inventory | ||||||||
| Less: | ||||||||
| Reserve for obsolete and revaluation | ( | ) | ( | ) | ||||
| Total net inventory | $ | $ | ||||||
Prepaid Expenses
Prepaid expenses consist primarily of payments made for director and officer insurance, marketing services, rent, legal and inventory purchase deposits and seminar/trade show fees to be expensed in the current year.
8
SENESTECH, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
Note 2 - Summary of Significant Accounting Policies – (continued)
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Equipment held under finance leases are stated at the present value of minimum lease payments less accumulated amortization.
Depreciation on property and equipment is computed using the straight-line method over the estimated useful lives of the respective assets. The cost of leasehold improvements is amortized over the life of the improvement or the term of the lease, whichever is shorter. Equipment held under finance leases is amortized over the shorter of the lease term or estimated useful life of the asset. The Company incurs repair and maintenance costs on its major equipment, which are expensed as incurred.
Impairment of Long-Lived Assets
Long-lived assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require long-lived assets or asset groups to be tested for possible impairment, the Company compares the undiscounted cash flows expected to be generated from the use of the asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment charge is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques, such as discounted cash flow models and the use of third-party independent appraisals. The Company has not recorded an impairment of long-lived assets since its inception.
Revenue Recognition
Effective January 1, 2018, the Company adopted Accounting Standards Codification 606 — Revenue from Contracts with Customers (“ASC 606”). Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.
The Company recognizes revenue when product is shipped at a fixed selling price on payment terms of 30 to 120 days from invoicing. The Company recognizes other revenue earned from pilot studies, consulting and implementation services upon the performance of specific services under the respective service contract.
The Company derives revenue primarily from commercial sales of products, net of discounts and promotions, as well as consulting and implementation services provided in conjunction with our product deployments.
Research and Development
Research, and development costs are expensed as incurred. Research and development expenses primarily consist of salaries and benefits for research and development employees, stock-based compensation, consulting fees, lab supplies, costs incurred related to conducting scientific trials and field studies, regulatory compliance costs, as well as manufacturing costs associated with process improvement and other research. Research and development expenses include an allocation of facilities related costs, including depreciation of equipment.
9
SENESTECH, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
Note 2 - Summary of Significant Accounting Policies – (continued)
Stock-based Compensation
Stock-based awards, consisting of stock options and restricted stock units expected to be settled in shares of the Company’s common stock, are recorded as equity awards. The grant date fair value of these awards is measured using
the Black-Scholes option pricing model for stock options and grant date market value for restricted stock units. The Company expenses the grant date fair value of its stock-based awards on a straight-line basis over their respective vesting periods.
The stock-based compensation expense recorded for the three and nine months ended September 30, 2021 and 2020, is as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Research and development | $ | $ | $ | $ | ||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Total stock-based compensation expense | $ | $ | $ | $ | ||||||||||||
See Note 11 for additional discussion on stock-based compensation.
Income Taxes
The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax bases of assets and liabilities and net operating loss carryforwards using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the period that includes the enactment date.
The Company records net deferred tax assets to the extent it believes these assets will more likely than not be realized. These deferred tax assets are subject to periodic assessments as to recoverability and if it is determined that it is more likely than not that the benefits will not be realized, valuation allowances are recorded which would increase the provision for income taxes. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. The Company currently maintains a full valuation allowance against its deferred tax assets.
The Company applies a more-likely-than-not recognition threshold for all tax uncertainties. Only those benefits that have a greater than fifty percent likelihood of being sustained upon examination by the taxing authorities are recognized. Based on its evaluation, the Company has concluded there are no significant uncertain tax positions requiring recognition in its financial statements.
The Company recognizes interest and/or penalties related to uncertain tax positions in income tax expense. There are no uncertain tax positions as of September 30, 2021 or December 31, 2020 and as such, no interest or penalties were recorded in income tax expense.
10
SENESTECH, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
Note 2 - Summary of Significant Accounting Policies – (continued)
Comprehensive Loss
Net loss and comprehensive loss were the same for all periods presented; therefore, a separate statement of comprehensive loss is not included in the accompanying financial statements.
Loss Per Share Attributable to Common Stockholders
Basic loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per share attributable to common stockholders is computed by dividing the loss attributable to common stockholders by the weighted average number of common shares and potentially dilutive securities outstanding for the period determined using the treasury stock and if-converted methods. For purposes of the computation of diluted loss per share attributable to common stockholders, common stock purchase warrants, and common stock options are considered to be potentially dilutive securities but have been excluded from the calculation of diluted loss per share attributable to common stockholders because their effect would be anti-dilutive given the net loss reported for the three and nine months ended September 30, 2021 and 2020. Therefore, basic and diluted loss per share attributable to common stockholders are the same for each period presented.
The following table sets forth the outstanding potentially dilutive securities that have been excluded in the calculation of diluted loss per share attributable to common stockholders (in common stock equivalent shares):
| September 30, | ||||||||
| 2021 | 2020 | |||||||
| Common stock purchase warrants | ||||||||
| Restricted stock units | ||||||||
| Common stock options | ||||||||
| Total | ||||||||
Adoption of New Accounting Standard:
The Company has considered all recently issued accounting pronouncements and has concluded that there are no recently issued accounting pronouncements that we believe may have a material impact on our unaudited condensed interim financial statements.
Note 3 - Fair Value Measurements
The Company issued common stock warrants to purchase shares of common stock in June of 2015 (see Note 9 - Common Stock Warrants and Common Stock Warrant Liability) that expired in June of 2020. These warrants contained a cash settlement provision that resulted in a common stock warrant liability that was revalued at the end of each reporting period.
We valued these warrant derivatives at fair value. The accounting guidance for fair value, among other things, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The framework for measuring fair value consists of a three-level valuation hierarchy that prioritizes the inputs to valuation techniques used to measure fair value based upon whether such inputs are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions made by the reporting entity. The three-level hierarchy for the inputs
11
SENESTECH, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
Note 3 - Fair Value Measurements – (continued)
to valuation techniques is briefly summarized as follows:
Level 1—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at
the measurement date;
Level 2—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and
Level 3—Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.
An asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.
Assets and liabilities measured at fair value are based on one or more of the following three valuation techniques:
| A. | Market approach: Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. | |
| B. | Cost approach: Amount that would be required to replace the service capacity of an asset (replacement cost). | |
| C. | Income approach: Techniques to convert future amounts to a single present amount based upon market expectations, including present value techniques, option-pricing and excess earnings models. |
The Company’s common stock warrant liabilities are classified as Level 3 because there is limited activity or less transparency around the inputs to valuation.
Financial Instruments Not Carried at Fair Value
The carrying amounts of the Company’s financial instruments, including accounts payable and accrued liabilities, approximate fair value due to their short maturities. The estimated fair value of the convertible notes and other notes, not recorded at fair value, are recorded at cost or amortized cost which was deemed to estimate fair value.
Note 4 - Credit Risk
The Company is potentially subject to concentrations
of credit risk in its accounts receivable. Credit risk with respect to receivables is limited due to the number of companies comprising
the Company’s customer base, however the Company did identify a potentially uncollectable account at December 31, 2019 and maintained
a reserve for this receivable balance of $
12
SENESTECH, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
Note 5 - Prepaid Expenses
Prepaid expenses consist of the following:
| September 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Director, officer and other insurance | $ | $ | ||||||
| NASDAQ fees | ||||||||
| Legal retainer | ||||||||
| Marketing programs and conferences | ||||||||
| Professional services retainer | ||||||||
| Rent | - | |||||||
| Engineering, software licenses and other | ||||||||
| Total prepaid expenses | $ | $ | ||||||
Note 6 - Property and Equipment
Property and equipment, net consist of the following:
| Useful | September 30, | December 31, | ||||||||||
| Life | 2021 | 2020 | ||||||||||
| Research and development equipment | $ | $ | ||||||||||
| Office and computer equipment (1) | ||||||||||||
| Autos | ||||||||||||
| Furniture and fixtures | ||||||||||||
| Leasehold improvements | ||||||||||||
| Construction in progress | ||||||||||||
| Less accumulated depreciation and amortization | ( | ) | ( | ) | ||||||||
| Total | $ | $ | ||||||||||
| * | |
| (1) |
Depreciation and amortization expense was approximately
$
13
SENESTECH, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
Note 7 - Accrued Expenses
Accrued expenses consist of the following:
| September 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Compensation and related benefits | $ | $ | ||||||
| Board Compensation | ||||||||
| Personal property and franchise tax | ||||||||
| Legal services | - | |||||||
| Other | ||||||||
| Total accrued expenses | $ | $ | ||||||
Note 8 - Borrowings
A summary of the Company’s borrowings, including finance lease obligations, is as follows:
| September 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Short-term debt: | ||||||||
| Current portion of long-term debt | ||||||||
| Total short-term debt | $ | $ | ||||||
| Long-term debt: | ||||||||
| Finance lease obligations | $ | $ | ||||||
| Other promissory notes | ||||||||
| Total | ||||||||
| Less: current portion of long-term debt | ( | ) | ( | ) | ||||
| Total long-term debt | $ | $ | ||||||
Finance Lease Obligations
Finance lease obligations at September 30, 2021
is for manufacturing equipment leased through ENGS Commercial Finance Co. This finance lease expires on
Other Promissory Notes
Also included in the table above is a note payable
to Fidelity Capital for the financing of a computing fixed asset. This note expires on July 1, 2022 and carries interest rate of
14
SENESTECH, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
Note 9 - Common Stock Warrants and Common Stock Warrant Liability
The table summarizes the common stock warrant activity as of September 30, 2021 as follows:
| Balance | Balance | Balance | ||||||||||||||||||||||||||||||||||||||||||
| Issue Date | Warrant Type | Term Date | Exercise Price | December 31, 2019 | Issued | Exercised | Expired | December 31, 2020 | Issued | Exercised | Expired | September 30, 2021 | ||||||||||||||||||||||||||||||||
| 2016 and prior | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| November 21, 2017 | $ | (1) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| November 21, 2017 | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| June 20, 2018 | $ | |||||||||||||||||||||||||||||||||||||||||||
| August 13, 2018 | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| August 13, 2018 | $ | |||||||||||||||||||||||||||||||||||||||||||
| July 16, 2019 | $ | |||||||||||||||||||||||||||||||||||||||||||
| January 28, 2020 | $ | |||||||||||||||||||||||||||||||||||||||||||
| January 28, 2020 | $ | |||||||||||||||||||||||||||||||||||||||||||
| March 6, 2020 | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| March 6, 2020 | $ | |||||||||||||||||||||||||||||||||||||||||||
| April 21, 2020 | $ | |||||||||||||||||||||||||||||||||||||||||||
| April 24, 2020 | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| October 26, 2020 | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| October 26, 2020 | $ | |||||||||||||||||||||||||||||||||||||||||||
| February 2, 2021 | $ | |||||||||||||||||||||||||||||||||||||||||||
| February 2, 2021 | $ | |||||||||||||||||||||||||||||||||||||||||||
| March 23, 2021 | $ | |||||||||||||||||||||||||||||||||||||||||||
| (1) | The initial exercise price of these warrants was $ |
15
SENESTECH, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
Note 9 - Common Stock Warrants and Common Stock Warrant Liability – (continued)
Outstanding Warrants
As of September 30, 2021, we had
On November 21, 2017, the Company issued a total
of
The exercise price of the warrants was adjusted
downward to $
The exercise price of the warrants was adjusted
downward to $
On June 20, 2018, the Company entered into an
agreement with a holder of
16
SENESTECH, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
Note 9 - Common Stock Warrants and Common Stock Warrant Liability – (continued)
On August 13, 2018, in connection with a Rights
Offering of
In connection with the closing of the Rights Offering,
the Company issued a warrant to purchase
Common Stock Warrant Issued to Underwriter of Common Stock Offering
In July 2019, the Company issued to H.C. Wainwright
& Co., as placement agent, a warrant to purchase
Common Stock Warrants Issued in January and March 2020 Private Placements
In January and March 2020, in separate private
placements concurrent with registered direct offerings (collectively, the “2020 Registered Direct Offerings”) of shares of
the Company’s common stock, the Company also issued warrants to purchase an aggregate of up to
The warrants issued in January 2020 to purchase
The warrants issued in March 2020 to purchase
For so long as the 2020 Warrants remain outstanding, the exercise price and number of shares of common stock issuable upon exercise of the warrants are subject to adjustment as follows: (a) upon payment of a stock dividend or other distribution on a class or series of shares common stock, not including shares issued under this warrant;
17
SENESTECH, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
Note 9 - Common Stock Warrants and Common Stock Warrant Liability – (continued)
(b) upon subdivision (by stock spilt, stock dividend, recapitalization, or otherwise) or combination (by reverse stock split or otherwise) of shares of common stock; or (c) upon the issuance of any shares of capital stock by reclassification of shares of the common stock.
In the event that the Company declares or makes any dividend or other distribution of its assets to holders of its common stock, each 2020 Warrant holder will be entitled to participate in such distribution to the same extent that such holder would have participated therein if the holder had held the number of shares of common stock acquirable upon exercise of the 2020 Warrant.
In the event of a Fundamental Transaction, as
described in the 2020 Warrants and generally including the sale, transfer or other disposition of all or substantially all of our properties
or assets; our consolidation or merger with or into another person or reorganization; a recapitalization, reorganization or reclassification
in which our common stock is converted into other securities, cash or property; or any acquisition of our outstanding common stock that
results in any person or group becoming the beneficial owner of
Any time that the Company grants, issues, or sells any securities pro rata to all of the record holders of the common stock (the “2020 Purchase Right”), each holder of 2020 Warrants will be entitled to acquire the aggregate amount of securities that the holder could have acquired if the holder had held the number of shares of common stock acquirable upon exercise of the applicable 2020 Warrant. However, to the extent that an exercise of a 2020 Purchase Right would exceed the Beneficial Ownership Limitation (defined below), then to such extent the 2020 Purchase Right will be held in abeyance until such time, if ever, that complete exercise of the 2020 Purchase Right would not exceed the Beneficial Ownership Limitation.
After the Initial Exercisability Date (as defined in the 2020 Warrants), the 2020 Warrants will be exercisable, at the option of each holder, in whole or in part, by delivering to us a duly executed exercise notice accompanied by payment in full for the number of shares of our common stock purchased upon such exercise. If, at the time a holder exercises the 2020 Warrant (but not sooner than six months following the date of such warrant), a registration statement registering the issuance of the shares of common stock underlying the 2020 Warrants under the Securities Act is not then effective or available, nor is any current prospectus thereto available, and an exemption from registration under the Securities Act is not available for the issuance of such shares, then in lieu of making the cash payment otherwise contemplated to be made to us upon such exercise in payment of the aggregate exercise price, the holder may elect instead to receive upon such exercise (either in whole or in part) the number of shares of common stock determined according to a formula set forth in the 2020 Warrant.
Limitations on Exercise. A holder (together with its affiliates) may not exercise any portion of the 2020 Warrants to the extent that the holder would own more than 4.99% of the outstanding common stock after exercise (the “Beneficial Ownership Limitation”), except that upon at least 61 days’ prior notice from the holder to us, the holder may increase the Beneficial Ownership Limitation up to 9.99% of the number of shares of our common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the 2020 Warrants. No fractional shares of common stock will be issued in connection with the exercise of a 2020 Warrant. In lieu of fractional shares, we will either pay the holder an amount in cash equal to the fractional amount multiplied by the exercise price or round up to the next whole share.
18
SENESTECH, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
Note 9 - Common Stock Warrants and Common Stock Warrant Liability – (continued)
Except as otherwise provided in the 2020 Warrants or by virtue of such holder’s ownership of shares of our common stock, the holders of the 2020 Warrants do not have the rights or privileges of holders of our common stock, including any voting rights, unless and until they exercise such warrants.
Common Stock Warrants Issued in April 2020 Public Offering
On April 24, 2020, in connection with a previously
announced public offering of
The Common Stock, Pre-Funded Warrants and Warrants sold in this Public Offering were offered and sold pursuant to a registration statement on Form S-1 (File No. 333-236302) initially filed with the SEC on February 7, 2020, as amended (“Registration Statement”), which was declared effective by the SEC on February 14, 2020. The Post-Effective Amendment No. 2 to the Registration Statement was declared effective by the SEC on April 21, 2020.
The Company estimated the fair value of the common
stock warrants, exercisable at $
Common Stock Warrants Issued to Placement Agent in 2020 Registered Direct Offerings and Private Placement
In connection with the separate private placements
concurrent with registered direct offerings of shares of the Company’s common stock in January and March 2020, the Company issued
to H.C. Wainwright & Co., LLC, as placement agent, a warrant to purchase
The Company estimated the fair value of the common
stock warrants issued in January, with an exercise price of $
The Company estimated the fair value of the common
stock warrants issued in March, with an exercise price of $3.7563 per share, to be $
19
SENESTECH, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
Note 9 - Common Stock Warrants and Common Stock Warrant Liability – (continued)
In connection with the public offering of
The Company estimated the fair value of the common
stock warrants issued in April, with an exercise price of $
Common Stock Warrants Issued in October 2020 Private Warrant Inducement
In October 2020, in connection with an inducement
agreement with an existing accredited investor to exercise
In connection with the private warrant inducement
in October 2020 of
The Company estimated the fair value of these
common stock warrants, with an exercise price of $
Common Stock Warrants Issued in February 2021 Private Placement Agreement
In February 2021, in connection with a private
placement agreement with certain institutional and accredited investors, the Company issued common stock warrants to purchase up to an
aggregate of
20
SENESTECH, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
Note 9 - Common Stock Warrants and Common Stock Warrant Liability – (continued)
Common Stock Warrants Issued to Placement Agent in February 2021 Private Placement Agreement
In connection with the private placement in February
2021, the Company issued to H.C. Wainwright & Co., LLC, as placement agent, warrants to purchase up to
Common Stock Warrants Issued to Placement Agent in March 2021 Registered Direct Offering
On March 23, 2021, the Company consummated a registered
direct offering with certain institutional investors and issued an aggregate of
In connection with the registered direct offering
in March 2021, the Company issued to H.C. Wainwright & Co., LLC, as the placement agent, warrants to purchase up to
Deemed Dividend Adjustment-Warrant Modified Terms Revaluation
On March 3, 2020, the Company issued an aggregate
of
On October 26, 2020, in connection with the private
warrant inducement with an existing accredited investor to exercise
Per recent proposed guidance of ASC 260, the
Company determined that this was an exchange of the existing
21
SENESTECH, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
Note 10 - Stockholders’ Deficit
Capital Stock
The Company was organized under the laws of the
state of Nevada on July 27, 2004 and was subsequently reincorporated under the laws of the state of Delaware on November 10, 2015. In
connection with the reincorporation, as approved by the stockholders, the Company changed its authorized capital stock to consist of (i)
Prior to November 10, 2015,
Common Stock
The Company had
During the nine months ended September 30, 2021,
the Company issued
| ● | an aggregate of | |
| ● | an aggregate of | |
| ● | an aggregate of | |
| ● | an aggregate of |
Public Offerings and Registered Direct Offerings
On February 2, 2021, the Company consummated a
private placement agreement with certain institutional and accredited investors and issued an aggregate of
22
SENESTECH, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
Note 10 - Stockholders’ Deficit – (continued)
In connection with the offering, we issued the
placement agent warrants to purchase up to
On March 19, 2021, June 22, 2021 and July 15,
2021, the Company issued an aggregate of and
Note 11 - Stock-based Compensation
Stock Options
Stock options are generally issued with a per
share exercise price equal to no less than fair market value of our common stock on the date of grant.
As of September 30, 2021, the Company had
The Company measures the fair value of stock options with service-based vesting criteria to employees, directors and consultants on the date of grant using the Black-Scholes option pricing model. The Black-Scholes valuation model requires the Company to make certain estimates and assumptions, including assumptions related to the expected price volatility of the Company’s stock, the period during which the options will be outstanding, the rate of return on risk-free investments, and the expected dividend yield for the Company’s stock.
The weighted-average assumptions used in the Black-Scholes option-pricing model used to calculate the fair value of options granted during the nine months ended September 30, 2021 were as follows:
| Expected volatility | % | |||
| Expected dividend yield | ||||
| Expected term (in years) | ||||
| Risk-free interest rate | % |
The weighted average grant date fair value of
options granted during the nine months ended September 30, 2021 was $
23
SENESTECH, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
Note 11 - Stock-based Compensation – (continued)
Due to the Company’s limited operating history and lack of company-specific historical or implied volatility, the expected volatility assumption was determined based on historical volatilities from traded options of biotech companies of comparable size and stability, whose share prices are publicly available. The expected term of options granted to employees is calculated based on the mid-point between the vesting date and the end of the contractual term according to the simplified method as described in SEC Staff Accounting Bulletin 110 because the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term due to the limited period of time its awards have been outstanding. For non-employee options, the expected term of options granted is the contractual term of the options. The risk-free interest rate is determined by reference to the implied yields of U.S. Treasury securities with a remaining term equal to the expected term assumed at the time of grant. The expected dividend assumption is based on the Company’s history and expectation of dividend payouts. The Company has not paid and does not intend to pay dividends.
The following table summarizes the stock option activity for the periods indicated as follows:
| Number of Options | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Term (years) | Aggregate Intrinsic Value (1) | |||||||||||||
| Outstanding at December 31, 2020 | $ | $ | ||||||||||||||
| Granted | $ | $ | ||||||||||||||
| Exercised | $ | $ | ||||||||||||||
| Forfeited | ( | ) | $ | $ | ||||||||||||
| Expired | $ | $ | ||||||||||||||
| Outstanding at September 30, 2021 | $ | $ | ||||||||||||||
| Exercisable at September 30, 2021 | $ | $ | ||||||||||||||
| (1) |
Restricted Stock Units
The following table summarizes restricted stock unit activity for the nine months ended September 30, 2021:
| Number of Units | Weighted Average Grant-Date Fair Value Per Unit | |||||||
| Outstanding as of December 31, 2020 | $ | |||||||
| Granted | $ | |||||||
| Vested | ( | ) | $ | |||||
| Forfeited | $ | |||||||
| Outstanding as of September 30, 2021 | $ | |||||||
24
SENESTECH, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
Note 11 - Stock-based Compensation – (continued)
The stock-based compensation expense was recorded as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Research and development | $ | $ | $ | $ | ||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Total stock-based compensation expense | $ | $ | $ | $ | ||||||||||||
The allocation between research and development and selling, general and administrative expense was based on the department and services performed by the employee or non-employee.
At September 30, 2021, the total compensation
cost related to restricted stock units and unvested options not yet recognized was $
Note 12 - Commitments and Contingencies
Legal Proceedings
The Company may be subject to legal proceedings and claims arising from contracts or other matters from time to time in the ordinary course of business. Management is not aware of any pending or threatened litigation where the ultimate disposition or resolution could have a material adverse effect on its financial position, results of operations or liquidity.
Lease Commitments
In February 2012, the Company entered into an
operating lease for its then corporate headquarters in Flagstaff, Arizona, which expired in December 2019. In December 2019, we extended
the lease for only the manufacturing facilities located in Flagstaff, Arizona, occupying a total of
On November 16, 2016, we leased an additional
On December 1, 2019,
On August 1, 2020,
We believe that our existing facilities are adequate and meet our current needs for business, manufacturing and research.
25
SENESTECH, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
Note 12 - Commitments and Contingencies – (continued)
Rent expense was $
| Years Ending December 31, | Finance Leases | Operating Lease | ||||||
| 2021 | ||||||||
| 2022 | ||||||||
| 2023 | ||||||||
| 2024 | ||||||||
| Total minimum lease payments | $ | $ | ||||||
| Finance Leases | ||||
| Less: amounts representing interest (11.43%) | $ | |||
| Present value of minimum lease payments | ||||
| Less: current installments under finance lease obligations | ||||
| Total long-term portion | $ | |||
Note 13 - Subsequent Events
On October 7, 2021, the Company issued
COVID-19
The travel and other restrictions that began in March 2020 in response to the COVID-19 global pandemic resulted in a significant slowdown in our field studies and sales efforts. We were able to resume some projects by mid-year 2020, however, we still have delays on certain projects that might remain on hold until businesses and government entities return to more normal operations. These continued delays have impacted our results of operations and could impact our results in future quarters. In addition, extended stay at home orders and other social distancing initiatives severely limited our ability to communicate with current and potential commercial and governmental customers. While many restrictions were lifted during our second and third fiscal quarters of 2021, we have not returned to full scope pre-pandemic activities, and are uncertain as to when or if, with potential further restrictions, that may occur. The COVID-19 pandemic is also placing a significant budgetary burden on federal, state and local governments, which may impede or delay their ability to purchase our products.
The Company has evaluated subsequent events from the balance sheet date through November 12, 2021, the date at which the financial statements were issued, and determined that there were no other items that require adjustment to or disclosure in the financial statements.
26
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
As used in this Quarterly Report on Form 10-Q, “SenesTech,” the “Company,” “we,” “us,” or “our” refer to SenesTech, Inc., a Delaware corporation.
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our condensed financial statements and related notes.
Forward-Looking Statements
Some statements and information contained in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, notes to our condensed financial statements and elsewhere in this report are not historical facts but are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and within the meaning of the safe-harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can often be identified by words such as: “expect,” “believe,” “estimate,” “plan,” “strategy,” “future,” “potential,” “continue,” “may,” “should,” “will,” and similar references to future periods. Examples include, among others, statements about:
| ● | The impacts and implications of the COVID-19 pandemic; |
| ● | Our commercialization and promotion strategy and plans, including key elements of our business strategy, how we commercialize, our sales approach, the tools we use, our hiring and retention strategy; our areas and markets of focus, our pricing strategy, our strategic relationships and which geographic markets we target; |
| ● | The success and effectiveness of our products; |
| ● | Our seeking, obtaining or maintaining regulatory approvals for our products and product candidates; |
| ● | Our expectations regarding the potential market size for our products and how the market may develop; |
| ● | Our estimates or expectations related to our revenue, cash flow, expenses, operating results, capital requirements and need for additional financing; |
| ● | Our ability to, and the expected benefits of, improving our cost structure and gross margins, and limiting our cash burn; |
| ● | Our plans for our business, including for research and development; |
| ● | Our ability to enter into strategic arrangements and to achieve the expected results from such arrangements; |
| ● | The adequacy of our facilities to meet our current needs; |
| ● | The initiation, timing, progress and results of field studies and other studies and trials and our research and development programs; |
| ● | Our financial performance, including our ability to fund operations; and |
| ● | Developments and projections relating to our projects, competitors and our industry, including legislative developments and impacts from those developments. |
These forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and situations that are difficult to predict and that may cause our own, or our industry’s, actual results to be materially different from the future results that are expressed or implied by these statements. Accordingly, 27 actual results may differ materially from those anticipated or expressed in such statements as a result of a variety of factors, including those discussed in Item 1A-“Risk Factors” of Part I of our Annual Report on Form 10-K, for the year ended December 31, 2020, filed with the SEC on March 29, 2021, and Item 1A of Part II of this Form 10-Q, in each case entitled “Risk Factors,” and those contained from time to time in our other filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date made. Except as required by law, we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.
27
Overview
Since our inception, we have sustained significant operating losses in the course of our research and development activities and commercialization efforts and expect such losses to continue for the near future. We have generated limited revenue to date from product sales, grants and licensing fees received under a former license. We have primarily funded our operations to date through the sale of equity securities, including convertible preferred stock, common stock and warrants to purchase common stock; and debt financing, consisting primarily of convertible notes.
Through September 30, 2021, we have received net proceeds of $89.3 million from our sales of common stock, preferred stock and warrant exercises and issuance of convertible and other promissory notes, an aggregate of $1.7 million from licensing fees and an aggregate of $1.4 million in net product sales. As of September 30, 2021, we had an accumulated deficit of $110.0 million and cash and cash equivalents of $11.1 million.
On June 18, 2021, the Company received notification from BMO Harris Bank National Association as the lender in a promissory note pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), that a loan to the Company under this program in the amount of $645,700 was forgiven in full under the terms of the program. This loan was originally granted and funded on April 15, 2020.
We have incurred significant operating losses every year since our inception. Our net losses were $2.3 million and $1.9 million for the three months ended September 30, 2021 and 2020, respectively, and $5.8 million and $6.3 million for the nine months ended September 30, 2021 and 2020, respectively. We expect to continue to incur significant expenses and generate operating losses for at least the next 12 months.
We will need additional funding in order to continue to fund our operations and achieve profitability and become cash flow positive and will continue to seek additional financing. If such equity or debt financing is not available at adequate levels or on acceptable terms, we may need to delay, limit or terminate commercialization and development efforts or discontinue operations.
While it is difficult to measure the effect and impact of the COVID-19 pandemic on revenue during the nine months ended September 30, 2021 and September 30, 2020, the travel and other restrictions that started in March 2020 resulted in a significant slowdown in our proof-of-concept field studies and sales efforts. While we were able to resume field studies in some important projects by mid-year 2020 and initially believed that we would re-start all our most significant field studies as we obtained limited waivers of certain travel bans, we still have delays on certain projects that might remain on hold until certain businesses and government entities return to more normal operations. Continued delays or new restrictions on travel or operations as a result of new outbreaks and variants could impact our results in future quarters. Initially, we believed that pest control would continue through the COVID-19 pandemic as a necessity and we were and have been able to maintain our manufacturing with cautionary, best practices put in place. However, we have concerns about distributor, pest control operator and individual consumer spending as restrictive measures related to the COVID-19 pandemic continue. Extended stay at home orders across the world, whether imposed by governments or individual businesses, have impeded our ability to communicate with current and prospective customers, potentially reducing sales until the orders are lifted. In addition, federal, state and municipal budgets continue to be severely strained as a result of the COVID-19 pandemic. This may delay or impede their ability to make near term purchases of our products. While we have stocked certain long lead time inventory raw material ingredients, any prolonged impact on the suppliers we rely on for the purchase of these items by the COVID-19 pandemic could impact future manufacturing operations.
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Components of our Results of Operations
Grant Revenue
Grant revenue is comprised entirely of grant funding provided by the City of Phoenix, Arizona for jobs created and new employee training in the City of Phoenix, Arizona during the calendar year 2021.
Sales
Sales are comprised primarily of sales, net of discounts and promotions, of ContraPest and related components, to our distributors and customers, as well as consulting and implementation services provided in conjunction with ContraPest deployments.
Cost of Sales
Cost of sales consist primarily of cost of products sold, including scrap and reserves for obsolescence. We continue to focus on improving our cost structure, with the goals of shifting resources to commercialization, significantly reducing our year-over-year burn rate and achieving a 50% or greater gross margin. Steps have included relocating to more cost-efficient space, organizational restructuring, improving our manufacturing and supply processes and reducing staffing. We expect to realize the benefits from these steps in the coming quarters.
Operating Expenses
Research and Development Expenses
Research and development expenses consist primarily of costs incurred in connection with the research and development of ContraPest and our other product candidates, which costs include:
| ● | Employee related expenses, including salaries, related benefits, travel and stock-based compensation expense for employees engaged in research and development functions; |
| ● | Expenses incurred in connection with the development of our product candidates [including related regulatory and production expenses]; and |
| ● | Facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance and supplies. |
We expense research and development costs as incurred.
We continue to investigate other applications of our core technology to other product candidates, which includes laboratory tests and academic collaborations. We also continue to develop our supply chain, particularly identifying and improving our sourcing of triptolide, a key active ingredient for our product candidates. At this time, we cannot reasonably estimate the costs for further development of ContraPest or the cost associated with the development of any of our other product candidates.
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist primarily of salaries and related costs, including stock-based compensation, for personnel in executive, finance, sales, marketing and administrative functions. Selling, general and administrative expenses also include direct and allocated facility-related costs as well as professional fees for legal, consulting, accounting and audit services. We plan to continue to utilize various forms of stock-based compensation awards in order to attract and retain qualified employees. As a result, we anticipate that stock-based compensation expense will continue to represent a significant portion of our selling, general and administrative expenses for the foreseeable future.
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Interest Income
Interest income consists primarily of interest income earned on cash and cash equivalents.
Interest Expense
Interest expense consists primarily of interest accrued on our finance lease and note commitments.
Other Income (Expense), Net
Other income (expense), net, consists primarily of any recognized gains or losses related to the sale of fixed assets. In 2021, other income also included the reversal of a payroll benefits accrual from 2019 that was reversed as the liability period had expired.
Income Taxes
Deferred tax assets and liabilities are determined based on differences between the financial statement and tax basis of assets and liabilities, as well as a consideration of net operating loss and credit carry forwards, using enacted tax rates in effect for the period in which the differences are expected to impact taxable income. A valuation allowance is established, when necessary, to reduce deferred tax assets to the amount that is more likely than not to be realized. The Company’s effective tax rate for the nine months ended September 30, 2021, as well as for the year ended December 31, 2020, has been impacted by the full valuation allowance on the Company’s deferred tax assets.
The Company has not recorded any U.S. federal or state income tax benefits for our net operating losses incurred since inception or for our research and development tax credits generated to date, due to the uncertainty regarding our ability to realize a benefit from these tax attributes in the future. Based on tax return activity through December 31, 2020, the Company has federal and state net operating loss carryforwards of approximately $69.1 million and $55.7 million, respectively, not considering any potential Internal Revenue Code of 1986 (“IRC”) Section 382 annual limitation discussed below. The Company is accruing additional net operating losses in calendar year 2021, which will be added to the carryover net operating loss balance once the current year is completed. The federal loss carryforwards begin to expire in 2029, unless previously utilized. The state loss carryforwards begin to expire in 2032, unless previously utilized. Included in the $69.1 million of federal loss carryforwards are approximately $24.7 million of net operating losses that do not expire due to the tax law changes promulgated in conjunction with the Tax Cuts and Jobs Act of 2017.
Additionally, the utilization of the net operating loss carryforwards are subject to an annual limitation under Section 382 and 383 of the Internal Revenue Code od 1986, and similar state tax provisions due to ownership change limitations that have occurred previously or that could occur in the future. These ownership changes limit the amount of net operating loss carryforwards and other deferred tax assets that can be utilized to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382 and 383 results from transactions increasing ownership of certain stockholders or public groups in the stock of the corporation by more than 50 percent points over a three-year period. The Company has not conducted an analysis of an ownership change under section 382. To the extent that a study is completed and an ownership change is deemed to occur, the Company’s net operating losses could be limited.
During the quarter ended June 30, 2021, the Company received notification that a loan to the Company under the Paycheck Protection Program (the “PPP”) in the amount of approximately $646 thousand was forgiven in full pursuant to the PPP program under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). Section 1106(i) of the CARES Act specifically requires taxpayers to exclude canceled indebtedness from PPP loans from gross income, and accordingly, the debt forgiveness amount is nontaxable to the Company. Subsequent to the passage of the CARES Act, the IRS issued Notice 2020-32, which precludes a deduction for an expense that would otherwise be deductible if the payment results in the forgiveness of a loan, thereby preventing entities from claiming a double tax benefit on the qualifying expenses for PPP loans. On December 27, 2020, the Consolidated Appropriations Act (“CAA”) was signed into law, which reverses existing IRS guidance provided in Notice 2020-32 by allowing taxpayers to fully deduct any business expenses, regardless of whether the expense was paid for using forgiven PPP loan proceeds. None of the other provisions of the CARES Act or CAA had a material impact to the Company’s tax accounts.
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Comparison of the Three Months Ended September 30, 2021 and 2020
The following table summarizes our results of operations for the three and nine months ended September 30, 2021 and 2020:
| For the Three Months | For the Nine Months | |||||||||||||||
| Ended September 30, | Ended September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenue: | ||||||||||||||||
| Grant revenue | $ | 24 | $ | - | $ | 24 | $ | - | ||||||||
| Sales | 159 | 77 | 407 | 185 | ||||||||||||
| Total revenue | 183 | 77 | 431 | 185 | ||||||||||||
| Cost of sales | 106 | 41 | 275 | 106 | ||||||||||||
| Gross profit | 77 | 36 | 156 | 79 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 514 | 380 | 1,424 | 902 | ||||||||||||
| Selling, general and administrative | 1,816 | 1,568 | 5,173 | 5,040 | ||||||||||||
| Total operating expenses | 2,330 | 1,948 | 6,597 | 5,942 | ||||||||||||
| Net operating loss | (2,253 | ) | (1,912 | ) | (6,441 | ) | (5,863 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 2 | - | 5 | 2 | ||||||||||||
| Interest expense | (2 | ) | (7 | ) | (10 | ) | (22 | ) | ||||||||
| Payroll Protection Program loan forgiveness | - | - | 650 | - | ||||||||||||
| Other income | - | - | 22 | 18 | ||||||||||||
| Total other income | - | (7 | ) | 667 | (2 | ) | ||||||||||
| Net loss and comprehensive loss | (2,253 | ) | (1,919 | ) | (5,774 | ) | (5,865 | ) | ||||||||
| Deemed dividend-warrant price protection-revaluation adjustment | - | - | - | 414 | ||||||||||||
| Net loss attributable to common shareholders | $ | (2,253 | ) | $ | (1,919 | ) | $ | (5,774 | ) | $ | (6,279 | ) | ||||
| Weighted average common shares outstanding - basic and fully diluted | 12,190,257 | 3,398,832 | 10,850,197 | 2,593,288 | ||||||||||||
| Net loss per common share - basic and fully diluted | $ | (0.18 | ) | $ | (0.56 | ) | $ | (0.53 | ) | $ | (2.42 | ) | ||||
Grant Revenue
Grant revenue for the three months ended September 30, 2021 was $24,000 compared to $0 in the same period of 2020 and was granted for jobs created and related new employee training in the City of Phoenix, Arizona during the three months ended September 30, 2021.
Sales
Sales, shown net of sales discounts and promotions, were $159,000 for the three months ended September 30, 2021, compared to $77,000 for the same period in 2020. Sales increased by $82,000 in the three months ended September 30, 2021 due, in part, to the continued focus on of our internet sales initiatives, augmenting our existing pull through sales strategy, where demand from the consumer market encourages, or pulls, resellers and pest management professionals to offer our products, as well as enhanced strategic partnerships and collaborations with key distributors and PMPs. While these initiatives continue to progress, we believe the benefits of these initiatives continue to be impacted by reduced spending by customers due to the COVID-19 pandemic.
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Cost of Sales
Cost of sales was $106,000 or 66.7% of sales, exclusive of grant revenue, for the three months ended September 30, 2021, compared to $41,000 or 53.2% of sales, exclusive of grant revenue, for the three months ended September 30, 2020. The increase in cost of sales of $65,000 in the three months ended September 30, 2021 is primarily due to higher sales volume as well as the impact of increases in manufacturing scrap associated with manufacturing scale up activities during 2021. The increase in cost of sales as a percentage of sales was primarily due to the impact of increased new customer sales incentives during the quarter ended September 30, 2021 and increases in manufacturing scrap associated with manufacturing scale up activities during 2021 as noted above.
We continue to focus on manufacturing process improvement and efficiencies and anticipate cost of sales as a percentage of sales will improve in the future due to manufacturing efficiencies as a result of scale-up activities.
Gross Profit
Gross profit for the three months ended September 30, 2021 was $77,000 or 42.1% of total revenue, compared to a gross profit of $36,000 or 46.8% of total revenue, for the same period in 2020. The increase in gross profit of $41,000 for the three months ended September 30, 2021 as compared to the same period in 2020 was primarily due to the impact of increased sales volume and the receipt of $24,000 of training grant revenues in the period. The decrease in gross profit as a % of net sales was a direct result of the impact of increased new customer sales incentives during the quarter ended September 30, 2021 as well as the impact of increases in manufacturing scrap associated with manufacturing scale up activities during 2021 noted above.
Research and Development Expenses
| Three Months Ended September 30, | Increase | |||||||||||
| 2021 | 2020 | (Decrease) | ||||||||||
| (in thousands) | ||||||||||||
| Direct research and development expenses: | ||||||||||||
| Personnel related (including stock-based compensation) | $ | 177 | $ | 191 | $ | 14 | ||||||
| Professional fees | 92 | 106 | 14 | |||||||||
| Facility-related | 26 | 46 | 20 | |||||||||
| Other | 219 | 37 | (182 | ) | ||||||||
| Total research and development expenses | $ | 514 | $ | 380 | $ | 134 | ||||||
Research and development expenses were $514,000 for the three months ended September 30, 2021, compared to $380,000 for the same period in 2020. The $134,000 increase in research and development expenses was primarily due to an increase of $182,000 in other research and development costs, offset by a decrease in facility related expenses of $20,000, a decrease in professional fees of $14,000 and a decrease in personnel related expenses of $14,000.
Facility-related expenses decreased $20,000 for the three months ended September 30, 2021, compared to the three months ended September 30, 2020, due primarily to the expiration of a facility lease of 7,632 square feet of manufacturing space in Flagstaff, Arizona at December 31, 2020.
Personnel related expenses decreased $14,000 in the three months ended September 30, 2021 compared to the same period in 2020 due primarily to delays in hiring as a result of employee turnover.
Professional fees decreased $14,000 in the three months ended September 30, 2021 compared to the same period in 2020 due primarily to a decrease in regulatory legal expenses.
The increase in other research and development expenses of $182,000 in the three months ended September 30, 2021 compared to the same period in 2020 was primarily due to increased shipping expenses due to higher sales volume and field and regulatory compliance studies. We also continue to incur expenses in improving our manufacturing process and formulation.
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Selling, General and Administrative Expenses
| Three Months Ended September 30, | Increase | |||||||||||
| 2021 | 2020 | (Decrease) | ||||||||||
| (in thousands) | ||||||||||||
| Direct selling, general and administrative expenses: | ||||||||||||
| Personnel related (including stock-based compensation) | $ | 995 | $ | 809 | $ | (186 | ) | |||||
| Professional fees | 335 | 250 | (85 | ) | ||||||||
| Facility-related | 38 | 44 | 6 | |||||||||
| Other | 448 | 465 | 17 | |||||||||
| Total selling, general and administrative expenses | $ | 1,816 | $ | 1,568 | $ | (248 | ) | |||||
Selling, general and administrative expenses were approximately $1.8 million for the three months ended September 30, 2021, as compared to approximately $1.6 million for the three months ended September 30, 2020. The increase of $200,000 in selling, general and administrative expenses was primarily due to an increase of $186,000 in net salary costs and an increase in professional fees of $85,000, offset by a decrease of $17,000 in other selling, general and administrative expenses and a decrease in facility related expenses of $6,000.
The increase in net salary costs of $186,000 was due primarily to incentive bonuses accruals of $131,000 in the three months ended September 30, 2021, the impact of incremental strategic hiring in the three months ended June 30, 2021 of $50,000 and increased stock compensation due to the issuance of certain common stock option awards. The increase in professional services expenses of $85,000 was primarily due to increased legal expenses incurred in patent registration filings.
The decrease in other selling, general and administrative expenses of $17,000 was primarily due to reduced miscellaneous expenses offset by increased travel expenses and increased selling and marketing initiatives.
The increase in travel expenses was a direct result of eased COVID-19 travel restrictions that were put in place at the end of March 2020. The increase in marketing expenses is a result of costs associated with rebranding activities to highlight the commercial focus of the Company and continued on-line marketing program expansion in the three months ended September 30, 2021.
The decrease in facilities related expenses of $6,000 for the three months ended September 30, 2021 over the same period in 2020 is a direct result of the expiration of a facility lease of 7,632 square feet of manufacturing space in Flagstaff, Arizona at December 31, 2020.
Interest Income/Expense, Net
We recorded interest expense, net of $0 for the three months ended September 30, 2021, as compared to interest expense, net of $7,000 for the same period in 2020. The $7,000 decrease in interest expense, net for the period was a result of decreased interest expense on certain notes payable and finance leases that expired after September 30, 2020 and increased interest income in the three months ended September 30, 2021 as a result of higher investments in cash invested in money market accounts.
Other Income (Expense)
Other income, net, of $0 for the three months ended September 30, 2021 was unchanged as compared to the same period in 2020.
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Nine Months Ended September 30, 2021 compared to Nine Months Ended September 30, 2020:
Grant Revenue
Grant revenue for the nine months ended September 30, 2021 was $24,000 compared to $0 in the same period of 2020 and was granted for jobs created and related new employee training in the City of Phoenix, Arizona during the nine months ended September 30, 2021.
Sales
Sales, shown net of sales discounts and promotions, were $407,000 for the nine months ended September 30, 2021, compared to $185,000 for the same period in 2020. Sales increased by $222,000 in the nine months ended September 30, 2021 due, in part, to the continued focus on of our internet sales initiatives, augmenting our existing pull through sales strategy, where demand from the consumer market encourages, or pulls, resellers and pest management professionals to offer our products, as well as enhanced strategic partnerships and collaborations with key distributors and PMPs. We believe the benefits of these initiatives continue to be impacted by reduced spending by customers due to the COVID-19 pandemic.
Cost of Sales
Cost of sales was $275,000 or 67.6% of sales, exclusive of grant revenue, for the nine months ended September 30, 2021, compared to $106,000 or 57.3% of sales, exclusive of grant revenue, for the nine months ended September 30, 2020. The increase in cost of sales of $169,000 in the nine months ended September 30, 2021 is primarily due to higher sales volume as well as the impact of increases in manufacturing scrap associated with manufacturing scale up activities during 2021. The increase in cost of sales as a percentage of net sales was primarily due to the impact of increased new customer sales incentives during the nine months ended September 30, 2021 and increases in manufacturing scrap associated with manufacturing scale up activities as noted above.
We continue to focus on manufacturing process improvement and efficiencies. We anticipate cost of sales as a percentage of sales will improve in the future due to manufacturing efficiencies as a result of scale-up activities.
Gross Profit
Gross profit for the nine months ended September 30, 2021 was $156,000 or 36.2% of total revenue, compared to a gross profit of $79,000 or 42.7% of total revenuefor the same period in 2020. The increase in gross profit of $77,000 for the nine months ended September 30, 2021 as compared to the same period in 2020 was primarily due to the impact of increased sales volume and the receipt of $24,000 of training grant revenues received. The decrease in gross profit as a % of net sales was a direct result of the impact of increased new customer sales incentives during the nine months ended September 30, 2021 as well as the increased manufacturing scrap discussed above, offset by the gross profit impact of grant revenue.
Research and Development Expenses
| Nine Months Ended September 30, | Increase | |||||||||||
| 2021 | 2020 | (Decrease) | ||||||||||
| (in thousands) | ||||||||||||
| Direct research and development expenses: | ||||||||||||
| Personnel related (including stock-based compensation) | $ | 669 | $ | 414 | $ | (255 | ) | |||||
| Professional fees | 217 | 107 | (110 | ) | ||||||||
| Facility-related | 72 | 122 | 50 | |||||||||
| Other | 466 | 259 | (207 | ) | ||||||||
| Total research and development expenses | $ | 1,424 | $ | 902 | $ | (522 | ) | |||||
Research and development expenses were $1.4 million for the nine months ended September 30, 2021, compared to $902,000 for the same period in 2020. The $500,000 increase in research and development expenses was primarily due to an increase of $255,000 in manufacturing personnel-related costs relative to the same period of 2020, which was impacted by the COVID-19 pandemic, in addition to increases in manufacturing and regulatory headcount to meet current and future demand.
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The increase in professional fee expenses of $110,000 in the nine months ended September 30, 2021 compared to the same period in 2020 was primarily due to increased regulatory legal expenses and expenses related to field and regulatory compliance studies.
The increase in other research and development expenses of $207,000 in the nine months ended September 30, 2021 compared to the same period in 2020 was primarily due to increased expenses related to field and regulatory compliance studies and increased shipping expenses due to higher sales volume during the period.
Facility-related expenses decreased $50,000 for the nine months ended September 30, 2021, compared to the nine months ended September 30, 2020, due primarily to the expiration of a facility lease of 7,632 square feet of manufacturing space in Flagstaff, Arizona at December 31, 2020.
Selling, General and Administrative Expenses
| Nine Months Ended September 30, | Increase | |||||||||||
| 2021 | 2020 | (Decrease) | ||||||||||
| (in thousands) | ||||||||||||
| Direct selling, general and administrative expenses: | ||||||||||||
| Personnel related (including stock-based compensation) | $ | 3,046 | $ | 2,591 | $ | (455 | ) | |||||
| Professional fees | 825 | 1,108 | 283 | |||||||||
| Facility-related | 119 | 130 | 11 | |||||||||
| Other | 1,183 | 1,211 | 28 | |||||||||
| Total selling, general and administrative expenses | $ | 5,173 | $ | 5,040 | $ | (133 | ) | |||||
Selling, general and administrative expenses were approximately $5.2 million for the nine months ended September 30, 2021, as compared to approximately $5.0 million for the nine months ended September 30, 2020. The increase of $200,000 in selling, general and administrative expenses was primarily due to an increase of $455,000 in net salary costs, offset by a decrease of $283,000 in professional service expenses, a decrease in other selling, general and administrative expenses of $28,000 and a decrease in facility related expenses of $11,000.
The increase in net salary costs of $455,000 was due primarily to recognition of incentive compensation expense for employees of $362,000, severance expense of $40,000 for the elimination of in-house marketing program headcount in June 2021 and increased stock compensation due to the issuance of certain common stock option awards of $53,000 in the nine months ended September 30, 2021.
The $283,000 decrease in professional services expenses for the nine months ended September 20, 2021 over the nine months ended September 30, 2020 was primarily due to reduced legal expenses related to a litigation settlement incurred in the nine months ended September 30, 2020 that were not incurred in the same period of 2021, partially offset by an increase in professional services expenses relating to legal patent registration filings in the nine months ended September 30, 2021 that were not incurred in the same period of 2020.
The $28,000 decrease in other selling, general and administrative expenses for the nine months ended September 30, 2021 compared to the same period in 2020 was primarily due to $34,000 of increased marketing expenses is a result of costs associated with rebranding activities to highlight the commercial focus of the Company and on-line marketing program expansion and increase in travel expenses as a direct result of eased COVID-19 travel restrictions that were put in place at the end of March 2020, offset by a $62,000 decrease in transfer agent fees in the nine months ended September 30, 2021 over the same period of 2020 was due to expenses related to a 20-for-1 reverse stock split effected by the Company in February 2020.
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The decrease in facilities related expenses of $11,000 for the nine months ended September 30, 2021 over the same period in 2020 is a direct result of the expiration of a facility lease of 7,632 square feet of manufacturing space in Flagstaff, Arizona at December 31, 2020.
Interest Income/Expense, Net
We recorded interest expense, net of $5,000 for the nine months ended September 30, 2021, as compared to interest expense, net of $20,000 for the same period in 2020. The $15,000 decrease in interest expense, net for the period was a result of decreased interest expense on certain notes payable and finance leases that expired during 2020 and increased interest income as a result of higher investments in cash invested in money market accounts..
Paycheck Protection Program Loan Forgiveness
PPP loan forgiveness income for the nine months ended September 30, 2021 represents the forgiveness of a promissory note pursuant to the PPP under the CARES Act that the Company secured under this program.
Other Income (Expense)
Other income, net, was $22,000 for the nine months ended September 30, 2021 as compared to $18,000 for the period ended September 30, 2020. Other income, net for the nine months ended September 30, 2021 primarily represented a payroll benefits accrual from 2019 that was reversed as the liability period had expired. The $18,000 other income, net for the nine month period ended September 30, 2020 represented recognized gains on the sale of fixed assets during the period.
Liquidity and Capital Resources
Since our inception, we have sustained significant operating losses in the course of our research and development activities and commercialization efforts and expect such losses to continue for the near future. We have generated limited revenue to date from product sales, research grants and licensing fees received under a former license. We have primarily funded our operations to date through the sale of equity securities, including convertible preferred stock, common stock and warrants to purchase common stock; and debt financing, consisting primarily of convertible notes.
Through September 30, 2021, we have received net proceeds of $89.3 million from our sales of common stock, preferred stock and warrant exercises and issuance of convertible and other promissory notes, an aggregate of $1.7 million from licensing fees and an aggregate of $1.4 million in net product sales. As of September 30, 2021, we had an accumulated deficit of $110.0 million and cash and cash equivalents of $11.1 million.
As discussed in Note 8 - Borrowings, of our Notes to Condensed Financial Statements, on April 15, 2020, the Company also received cash proceeds of $645,700 from the PPP of the Coronavirus Aid, Relief, and Economic Security Act. We used the proceeds from the PPP loan to retain employees, maintain payroll and make lease, interest and utility payments. This loan was fully forgiven, under terms of the PPP, on June 14, 2021.
Our ultimate success depends upon the outcome of a combination of factors, including: (i) successful commercialization of ContraPest and maintaining and obtaining regulatory approval of our products and product candidates; (ii) market acceptance, commercial viability and profitability of ContraPest and other products; (iii) the ability to market our products and establish an effective sales force and marketing infrastructure to generate significant revenue; (iv) the success of our research and development; (v) the ability to retain and attract key personnel to develop, operate and grow our business; and (vi) our ability to meet our working capital needs.
Based upon our current operating plan, we expect that cash and cash equivalents at September 30, 2021, in combination with anticipated revenue and additional sales of our equity securities, will be sufficient to fund our current operations for at least the next 12 months. We have evaluated and will continue to evaluate our operating expenses and will concentrate our resources toward the successful commercialization of ContraPest in the United States. However, if anticipated revenue targets and margin targets are not achieved or expenses are more than we have budgeted, we may need to raise additional financing before that time. If we need more financing, including within the next 12 months, and we are unable to raise necessary capital through the sale of our securities, we may be required to take other measures that could impair our ability to be successful and operate as a going concern. In any event, we may require additional capital in order to fund our operating losses and research and development activities before we become profitable and may opportunistically raise capital. We may never achieve profitability or generate positive cash flows, and unless and until we do, we will continue to need to raise capital through equity or debt financing. If such equity or debt financing is not available at adequate levels or on acceptable terms, we may need to delay, limit or terminate commercialization and development efforts or discontinue operations.
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Additional Funding Requirements
We expect our expenses to continue or increase in connection with our ongoing activities, particularly as we focus on marketing and sales of ContraPest. Further, the COVID-19 pandemic will likely continue to delay completion of field studies and achievement of sales, which will further increase our need for financing. In addition, we will continue to incur costs associated with operating as a public company.
In particular, we expect to incur substantial and increased expenses as we:
| ● | Work to maximize market acceptance for, and generate sales of, our products; | |
| ● | Ramp up of our sales, marketing, advertising and distribution expenses of ContraPest and any other product candidates for which we may receive regulatory approval; | |
| ● | Continue the development of ContraPest and our other product candidates, including engaging in any necessary field studies; | |
| ● | Seek additional, and to maintain, regulatory approvals for ContraPest and our other product candidates; | |
| ● | Scale up manufacturing processes and quantities to meet future demand of ContraPest and any other product candidates for which we receive regulatory approval; | |
| ● | Continue product development of ContraPest and advance our research and development activities and advance the research and development programs for other product candidates; | |
| ● | Maintain, expand and protect our intellectual property portfolio; | |
| ● | Add operational, financial and management information systems and personnel, including personnel to support our product development and commercialization efforts and operations as a public company; and | |
| ● | Expand regulatory approvals for ContraPest, with an effort to make the product more user friendly and available for use in an increased number of applications. |
We believe we will need additional financing to fund these continuing and additional expenses.
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Cash Flows
The following table summarizes our sources and uses of cash for each of the periods presented:
| Nine Months Ended September 30, | ||||||||
| 2021 | 2020 | |||||||
| Cash used in operating activities | $ | (6,033 | ) | $ | (5,496 | ) | ||
| Cash used in investing activities | (83 | ) | (4 | ) | ||||
| Cash provided by financing activities | 13,556 | 6,281 | ||||||
| Net increase in cash and cash equivalents | $ | 7,440 | $ | 781 | ||||
Operating Activities.
During the nine months ended September 30, 2021, operating activities used $6.0 million of cash, primarily resulting from our net loss of $5.8 million, changes in our operating assets and liabilities of $387,000, offset by non-cash charges of $128,000, consisting primarily of stock-based compensation, depreciation and amortization and by the Paycheck Protection Program loan forgiveness during the period. Our net loss was primarily attributable to research and development activities and our selling, general and administrative expenses, as we generated limited product revenue during the period. Net cash used by changes in our operating assets and liabilities for the nine months ended September 30, 2021 of $387,000 consisted primarily of an increase in prepaid expenses of $403,000, an increase in inventory of $62,000 and an increase in accounts receivable of $54,000, offset by a net increase in accrued expenses and accounts payable of $121,000 and a decrease in other assets of $11,000.
During the nine months ended September 30, 2020, operating activities used $5.5 million of cash, primarily resulting from our net loss of $5.9 million and by changes in our operating assets and liabilities of $285,000, offset by non-cash charges of $654,000, consisting primarily of stock-based compensation, depreciation and amortization. Our net loss was primarily attributable to research and development activities and our selling, general and administrative expenses, as we generated limited product revenue during the period. Net cash used by changes in our operating assets and liabilities for the nine months ended September 30, 2020, consisted primarily of a net decrease in accrued expenses and accounts payable of $460,000 and an increase in prepaid expenses of $24,000 offset by a decrease in inventory of $78,000, a decrease in receivables of $119,000 and a decrease in other assets of $2,000.
Investing Activities.
For the nine months ended September 30, 2021, net cash used in investing activities was $83,000 due to the purchases of property, plant and equipment and increases in construction in progress of $84,000, offset by proceeds on sale of property and equipment of $1,000.
For the nine months ended September 30, 2020, net cash used in investing activities was $4,000 due to the sale of property and equipment
of $44,000, offset by purchases of property, plant and equipment and construction in progress of $40,000.
Financing Activities.
During the nine months ended September 30, 2021, net cash provided by financing activities was $13.6 million as a result of $12.4 million in net proceeds from the issuance of common stock and net proceeds of $1.2 million from the exercise of warrants, offset by $40,000 related to payments of finance lease obligations, $36,000 related to repayments of notes payable and $17,000 for the payment of employee withholding taxes related to share based awards.
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During the nine months ended September 30, 2020, net cash provided by financing activities was $6.3 million as a result of $5.7 million in net proceeds from the issuance of common stock and net proceeds of $646,000 from the issuance of a note pursuant to the Paycheck Protection Program, offset by $44,000 of repayments related to notes payable and $62,000 in repayments of finance lease obligations.
Critical Accounting Policies and Significant Judgments and Estimates
Our financial statements are prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. The preparation of our financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.
While our significant accounting policies are described in more detail in Note 2 to our financial statements included elsewhere in this Quarterly Report on Form 10-Q, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements.
Revenue Recognition
Effective January 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) 606 — Revenue from Contracts with Customers (“ASC 606”). Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 — Revenue Recognition (“ASC 605”). Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of the fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured. The performance obligations identified by the Company under ASC 606 are straightforward and similar to the unit of account and performance obligation determination under ASC Topic 605, Revenue Recognition.
The Company recognizes revenue when product is shipped at a fixed selling price on payment terms of 30 to 120 days from invoicing. The Company recognizes other revenue earned from pilot studies, consulting and implementation services upon the performance of specific services under the respective service contract.
The Company derives revenue primarily from commercial sales of products, net of discounts and promotions, as well as consulting and implementation services provided in conjunction with our product deployments.
Stock-Based Compensation
We recognize compensation costs related to stock options granted to employees based on the estimated fair value of the awards on the date of grant, net of estimated forfeitures, in accordance with ASC Topic 718 — Stock Compensation. We estimate the grant date fair value of the awards, and the resulting stock-based compensation expense, using the Black-Scholes option-pricing model. The grant date fair value of stock-based awards is expensed on a straight-line basis over the vesting period of the respective award.
We recorded stock-based compensation expense of approximately $214,000 and $162,000 for the three months ended September 30, 2021 and September 30, 2020, respectively, and approximately $550,000 and $453,000 for the nine months ended September 30, 2021 and September 30, 2020, respectively. We expect to continue to grant stock options and other equity-based awards in the future and continue to recognize stock-based compensation expense in future periods.
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The Black-Scholes option-pricing model requires the use of highly subjective and complex assumptions, which determine the fair value of stock-based awards. If we had made different assumptions, our stock-based compensation expense, net loss and loss per share of common stock could have been significantly different. Our assumptions are as follows:
| ● | Expected term. The expected term represents the period that the stock-based awards are expected to be outstanding. Our historical share option exercise experience does not provide a reasonable basis upon which to estimate an expected term because of a lack of sufficient data. Therefore, we estimate the expected term by using the simplified method, which calculates the expected term as the average of the time-to-vesting and the contractual life of the options. | |
| ● | Expected volatility. Expected volatility is derived from the average historical volatilities of publicly traded companies within our industry that we consider to be comparable to our business over a period approximately equal to the expected term. We intend to continue to consistently apply this process using the same or similar public companies unless circumstances change such that the identified companies are no longer similar to us, in which case, more suitable companies whose share prices are publicly available would be utilized in the calculation. | |
| ● | Risk-free interest rate. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for zero coupon U.S. Treasury notes with maturities approximately equal to the expected term. | |
| ● | Expected dividend. The expected dividend is assumed to be zero as we have never paid dividends and have no current plans to pay any dividends on our common stock. | |
| ● | Expected forfeitures. We use historical data to estimate pre-vesting option forfeitures and record stock-based compensation expense only for those awards that are expected to vest. To the extent actual forfeitures differ from the estimates, the difference will be recorded as a cumulative adjustment in the period that the estimates are revised. |
Significant Factors, Assumptions and Methodologies Used in Determining Fair Value of Our Common Stock
As noted above, we are required to estimate the fair value of the common stock underlying our stock-based awards when performing the fair value calculations using the Black-Scholes option-pricing model. In the absence of an active market for our common stock, we utilized methodologies in accordance with the framework of the American Institute of Certified Public Accountants’ Technical Practice Aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation, to estimate the fair value of our common stock. In addition, we have conducted periodic assessments of the valuation of our common stock.
The assumptions underlying these valuations represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgment. If we had made different assumptions than those used, the amount of our stock-based compensation expense, net income and net income per share amounts could have been significantly different. The fair value per share of our common stock for purposes of determining stock-based compensation expense is the closing price of our common stock as reported on the applicable grant date. The compensation cost that has been included in the statements of operations and comprehensive loss for all stock-based compensation arrangements is as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Research and development | $ | 1 | $ | 2 | $ | 2 | $ | 7 | ||||||||
| Selling, general and administrative | 213 | 160 | 548 | 446 | ||||||||||||
| Total stock-based compensation expense | $ | 214 | $ | 162 | $ | 550 | $ | 453 | ||||||||
The intrinsic value of stock options outstanding as of September 30, 2021 was $0.
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Emerging Growth Company Status
The Jumpstart Our Business Startups Act of 2012, or the JOBS Act, permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have irrevocably elected to “opt out” of this provision and, as a result, we intend to comply with new or revised accounting standards when they are required to be adopted by public companies that are not emerging growth companies. We will cease to be an emerging growth company at the end of 2021.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We conducted an evaluation (pursuant to Rule 13a-15(b) of the Exchange Act), under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e)) as of the end of the period covered by this report.
These disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports that are filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Our disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that this information is accumulated and communicated to management, including the principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
Based on the evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures were effective as of the end of the period covered by this report.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the quarter ended September 30, 2021, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
41
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
For information regarding legal proceedings in which we are involved, see Note 12 - Commitments and Contingencies under the subsection titled “Legal Proceedings” in our Notes to Condensed Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Item 1A. Risk Factors
We have not made material changes in the risk factors set forth in Part I, Item 1A, “Risk Factors” in our 2020 Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
There have been no recent sales of unregistered securities not previously disclosed in a Current Report on Form 8-K.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
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Item 6. Exhibits
INDEX TO EXHIBITS
43
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| SENESTECH, INC. (Registrant) | ||
| Dated: November 12, 2021 | By: | /s/ Kenneth Siegel |
| Kenneth Siegel | ||
| Chief Executive Officer | ||
| Dated: November 12, 2021 | By: | /s/ Thomas C. Chesterman |
| Thomas C. Chesterman | ||
| Chief Financial Officer and Treasurer | ||
44
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
RULE 13(a)-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934
I, Kenneth Siegel, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of SenesTech, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Dated: November 12, 2021 | /s/ Kenneth Siegel |
| Kenneth Siegel | |
| Chief Executive Officer |
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
RULE 13(a)-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934
I, Thomas C. Chesterman, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of SenesTech, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Dated: November 12, 2021 | /s/ Thomas C. Chesterman |
| Thomas C. Chesterman | |
| Chief Financial Officer and Treasurer |
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Kenneth Siegel, Chief Executive Officer of SenesTech, Inc., certify that:
1. To my knowledge, this report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. To my knowledge, the information contained in this report fairly presents, in all material respects, the financial condition and results of operations of SenesTech, Inc.
| Dated: November 12, 2021 | /s/ Kenneth Siegel |
| Kenneth Siegel | |
| Chief Executive Officer |
Exhibit 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Thomas C. Chesterman, Chief Financial Officer and Treasurer of SenesTech, Inc., certify that:
1. To my knowledge, this report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. To my knowledge, the information contained in this report fairly presents, in all material respects, the financial condition and results of operations of SenesTech, Inc.
| Dated: November 12, 2021 | /s/ Thomas C. Chesterman |
| Thomas C. Chesterman | |
| Chief Financial Officer and Treasurer |
Condensed Balance Sheets - USD ($) $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Current assets: | ||
| Cash | $ 11,083 | $ 3,643 |
| Accounts receivable trade, net | 79 | 25 |
| Prepaid expenses | 581 | 178 |
| Inventory | 1,007 | 945 |
| Deposits | 22 | 28 |
| Total current assets | 12,772 | 4,819 |
| Right to use asset-operating leases | 551 | 665 |
| Property and equipment, net | 397 | 538 |
| Total assets | 13,720 | 6,022 |
| Current liabilities: | ||
| Short-term debt | 49 | 98 |
| Accounts payable | 267 | 404 |
| Accrued expenses | 550 | 292 |
| Total current liabilities | 866 | 794 |
| Long-term debt, net | 673 | |
| Operating lease liability | 562 | 671 |
| Total liabilities | 1,428 | 2,138 |
| Commitments and contingencies (See note 12) | ||
| Stockholders’ equity: | ||
| Common stock, $0.001 par value, 100,000,000 shares authorized, 12,191,112 and 5,099,512 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively | 12 | 5 |
| Additional paid-in capital | 122,294 | 108,119 |
| Accumulated deficit | (110,014) | (104,240) |
| Total stockholders’ equity | 12,292 | 3,884 |
| Total liabilities and stockholders’ equity | $ 13,720 | $ 6,022 |
Condensed Balance Sheets (Parentheticals) - $ / shares |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Common stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
| Common stock, authorized | 100,000,000 | 100,000,000 |
| Common stock, issued | 12,191,112 | 5,099,512 |
| Common stock, outstanding | 12,191,112 | 5,099,512 |
Organization and Description of Business |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Accounting Policies [Abstract] | |
| Organization and Description of Business | Note 1 - Organization and Description of Business
SenesTech, Inc. (referred to in this report as “SenesTech,” the “Company,” “we” or “us”) has developed and is commercializing a global, proprietary technology for managing animal pest populations, initially rat populations, through fertility control.
Although there are myriad tools available to control rat populations, most rely on some form of lethal method to achieve effectiveness. Each of these solutions is inherently limited by rat species’ resilience and survival mechanisms as well as their extraordinary rate of reproduction. ContraPest®, our initial product, is unique in the pest control industry in attacking the reproductive systems of both male and female rats, which our field data shows results in a sustained reduction of the rat population.
Rats have plagued humanity throughout history. They pose significant threats to the environment and to the health and food security of many communities. In addition, rodents cause extensive product loss and damage through consumption and contamination. Rats also cause significant damage to critical infrastructure by burrowing beneath foundations and gnawing on electrical wiring, insulation, fire proofing systems, electronics and equipment.
The most prevalent solution to rat infestations is the use of increasingly powerful rodenticides. Although these solutions provide short term results, there are growing concerns about secondary exposure and bioaccumulation of rodenticides in the environment, as well as concerns about rodenticides that have no antidotes. The pest management industry and Pest Management Professionals (“PMPs”) are being asked for new solutions that are both effective and less toxic. Our goal is to provide customers with not only a solution to combat their most difficult rat problems, but also offer an effective, non-lethal option to serve customers that are looking to decrease or remove the amount of rodenticide used in their pest control programs.
ContraPest is a liquid bait containing the active ingredients 4-vinylcyclohexene diepoxide (“VCD”) and triptolide. ContraPest limits reproduction of male and female rats beginning with the first breeding cycle following consumption. ContraPest is being marketed for use in controlling Norway and roof rat populations.
SenesTech began the registration process with the United States Environmental Protection Agency (the “EPA”) for ContraPest on August 23, 2015. On August 2, 2016, the EPA granted an unconditional registration for ContraPest as a Restricted Use Product (“RUP”), due to the need for applicator expertise for deployment. On October 18, 2018, the EPA approved the removal of the RUP designation. We believe ContraPest is the first and only non-lethal, fertility control product approved by the EPA for the management of rodent populations.
In addition to the EPA registration of ContraPest in the United States, ContraPest must obtain registration from the various state regulatory agencies prior to selling in each state. We have received registration for ContraPest in all 50 states and the District of Columbia. The District of Columbia and 48 states have also approved the removal of the RUP designation.
We expect to continue to pursue regulatory approvals and amendments to the existing U.S. registration for ContraPest to broaden the marketability and use of ContraPest, and if ContraPest begins to generate sufficient revenue, regulatory approvals for additional jurisdictions beyond the United States. In certain cases, our EPA and state registrations require completion of additional testing and certifications even though we have received approval for the product or its labelling. We continue to seek to comply with these requirements.
The Company also continues to research and develop enhancements to ContraPest that align with our target verticals and other potential fertility control options for additional species.
We were formed in July 2004 and incorporated in the state of Nevada. The Company subsequently reincorporated in the state of Delaware in November 2015. Our corporate headquarters and manufacturing site are in Phoenix, Arizona. On December 8, 2016, we went public and are currently traded on Nasdaq under the symbol SNES.
On February 4, 2020, we amended our amended and restated certificate of incorporation to effect a 1-for-20 reverse split of our issued and outstanding shares of common stock. The accompanying condensed financial statements and notes thereto give retrospective effect to the reverse stock split for all periods presented. All issued and outstanding common stock, options and warrants exercisable for common stock, restricted stock units, preferred stock conversions to common stock and per share amounts contained in our condensed financial statements have been retrospectively adjusted.
Going Concern
Our financial statements as of September 30, 2021, December 31, 2020 and September 30, 2020 have been prepared under the assumption that we will continue as a going concern. Our independent registered public accounting firm included in its opinion for the years ended December 31, 2020 and 2019 an explanatory paragraph referring to our net loss from operations and net capital deficiency and expressing substantial doubt in our ability to continue as a going concern without additional capital becoming available. If we encounter continued issues or delays in the commercialization of ContraPest, our prior losses and expected future losses could have an adverse effect on our financial condition and negatively impact our ability to fund continued operations, obtain additional financing in the future and continue as a going concern. There are no assurances that such financing, if necessary, will be available to us at all or will be available in sufficient amounts or on reasonable terms. Our financial statements do not include any adjustments that may result from the outcome of this uncertainty. If we are unable to generate additional funds in the future through additional financings, sales of our products, licensing fees, royalty payments or from other sources or transactions, we will exhaust our resources and will be unable to continue operations.
Liquidity and Capital Resources
Since our inception, we have sustained significant operating losses in the course of our research and development and commercialization activities and expect such losses to continue for the near future. We have generated limited revenue to date from product sales, research grants and licensing fees received under our former license agreement. We have primarily funded our operations to date through the sale of equity securities, including convertible preferred stock, common stock and warrants to purchase common stock. See Note 10 - Stockholders’ Deficit for a description of our public equity sales.
We have also raised capital through debt financing, consisting primarily of convertible notes and government loan programs, and, to a lesser extent, payments received in connection with product sales, grants and licensing fees.
Through September 30, 2021, we received net proceeds of $89.3 million from our sales of common stock, preferred stock and warrant exercises and issuance of convertible and other promissory notes, an aggregate of $1.7 million from licensing fees and an aggregate of $1.4 million in net product sales and grants. As of September 30, 2021, we had an accumulated deficit of $110.0 million and cash and cash equivalents of $11.1 million.
Our ultimate success depends upon the outcome of a combination of factors, including: (i) successful commercialization of ContraPest and maintaining and obtaining regulatory approval of our products and product candidates; (ii) market acceptance, commercial viability and profitability of ContraPest and other products; (iii) the ability to market our products and establish an effective sales force and marketing infrastructure to generate significant revenue; (iv) the success of our research and development; (v) the ability to retain and attract key personnel to develop, operate and grow our business; and (vi) our ability to meet our working capital needs. Based upon our current operating plan, we expect that cash and cash equivalents at September 30, 2021, in combination with anticipated revenue and additional sales of our equity securities, will be sufficient to fund our current operations for at least the next 12 months. We have evaluated and will continue to evaluate our operating expenses and will concentrate our resources toward the successful commercialization of ContraPest in the United States. However, if anticipated revenue targets and margin targets are not achieved or expenses are more than we have budgeted, we may need to raise additional financing before that time. If we need more financing, including within the next 12 months, and we are unable to raise necessary capital through the sale of our securities, we may be required to take other measures that could impair our ability to be successful and operate as a going concern. In any event, we may require additional capital in order to fund our operating losses and research and development activities before we become profitable and may opportunistically raise capital. We may never achieve profitability or generate positive cash flows, and unless and until we do, we will continue to need to raise capital through equity or debt financing. If such equity or debt financing is not available at adequate levels or on acceptable terms, we may need to delay, limit or terminate commercialization and development efforts or discontinue operations.
Basis of Presentation
The accompanying unaudited condensed financial statements of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. In the Company’s opinion, the unaudited condensed financial statements include all material adjustments, all of which are of a normal and recurring nature, necessary to present fairly the Company’s financial position as of September 30, 2021, the Company’s operating results for the three and nine months ended September 30, 2021 and 2020, and the Company’s cash flows for the nine months ended September 30, 2021 and 2020. The accompanying financial information as of December 31, 2020 is derived from audited financial statements. Interim results are not necessarily indicative of results for a full year. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 29, 2021. All amounts shown in these financial statements and accompanying notes are in thousands, except percentages and per share and share amounts. |
Summary of Significant Accounting Policies |
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Significant Accounting Policies | Note 2 - Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and classification of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. The significant estimates in the Company’s financial statements include the valuation of preferred stock, if issued, common stock and related warrants, and other stock-based awards. Actual results could differ from such estimates.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no material impact on net earnings, financial position or cash flows.
Cash and Cash Equivalents
The Company considers money market fund investments to be cash equivalents. The Company had cash equivalents in the form of money market fund investment of $10,493 and $1,500 at September 30, 2021 and December 31, 2020, respectively, included in cash as reported.
Accounts Receivable-Trade
Accounts receivable-trade consist primarily of receivables from customers. The Company provides an allowance for doubtful trade receivables equal to the estimated uncollectible amounts. That estimate is based on historical collection experience, current economic and market conditions and a review of the current status of each customer’s trade accounts receivable. The allowance for doubtful trade receivables was $0 at September 30, 2021 and December 31, 2020.
Inventories
Inventories are stated at the lower of cost or market value, using the first-in, first-out convention. Inventories consist of raw materials, work in progress and finished goods. Raw materials are stocked to reduce the risk of impact on manufacturing for potential supply interruptions due to the COVID-19 pandemic or other supply chain interruptions and long lead times on certain ingredients.
Components of inventory are:
Prepaid Expenses
Prepaid expenses consist primarily of payments made for director and officer insurance, marketing services, rent, legal and inventory purchase deposits and seminar/trade show fees to be expensed in the current year.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Equipment held under finance leases are stated at the present value of minimum lease payments less accumulated amortization.
Depreciation on property and equipment is computed using the straight-line method over the estimated useful lives of the respective assets. The cost of leasehold improvements is amortized over the life of the improvement or the term of the lease, whichever is shorter. Equipment held under finance leases is amortized over the shorter of the lease term or estimated useful life of the asset. The Company incurs repair and maintenance costs on its major equipment, which are expensed as incurred.
Impairment of Long-Lived Assets
Long-lived assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require long-lived assets or asset groups to be tested for possible impairment, the Company compares the undiscounted cash flows expected to be generated from the use of the asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment charge is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques, such as discounted cash flow models and the use of third-party independent appraisals. The Company has not recorded an impairment of long-lived assets since its inception.
Revenue Recognition
Effective January 1, 2018, the Company adopted Accounting Standards Codification 606 — Revenue from Contracts with Customers (“ASC 606”). Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.
The Company recognizes revenue when product is shipped at a fixed selling price on payment terms of 30 to 120 days from invoicing. The Company recognizes other revenue earned from pilot studies, consulting and implementation services upon the performance of specific services under the respective service contract.
The Company derives revenue primarily from commercial sales of products, net of discounts and promotions, as well as consulting and implementation services provided in conjunction with our product deployments.
Research and Development
Research, and development costs are expensed as incurred. Research and development expenses primarily consist of salaries and benefits for research and development employees, stock-based compensation, consulting fees, lab supplies, costs incurred related to conducting scientific trials and field studies, regulatory compliance costs, as well as manufacturing costs associated with process improvement and other research. Research and development expenses include an allocation of facilities related costs, including depreciation of equipment.
Stock-based Compensation
Stock-based awards, consisting of stock options and restricted stock units expected to be settled in shares of the Company’s common stock, are recorded as equity awards. The grant date fair value of these awards is measured using the Black-Scholes option pricing model for stock options and grant date market value for restricted stock units. The Company expenses the grant date fair value of its stock-based awards on a straight-line basis over their respective vesting periods.
The stock-based compensation expense recorded for the three and nine months ended September 30, 2021 and 2020, is as follows:
See Note 11 for additional discussion on stock-based compensation.
Income Taxes
The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax bases of assets and liabilities and net operating loss carryforwards using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the period that includes the enactment date.
The Company records net deferred tax assets to the extent it believes these assets will more likely than not be realized. These deferred tax assets are subject to periodic assessments as to recoverability and if it is determined that it is more likely than not that the benefits will not be realized, valuation allowances are recorded which would increase the provision for income taxes. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. The Company currently maintains a full valuation allowance against its deferred tax assets.
The Company applies a more-likely-than-not recognition threshold for all tax uncertainties. Only those benefits that have a greater than fifty percent likelihood of being sustained upon examination by the taxing authorities are recognized. Based on its evaluation, the Company has concluded there are no significant uncertain tax positions requiring recognition in its financial statements.
The Company recognizes interest and/or penalties related to uncertain tax positions in income tax expense. There are no uncertain tax positions as of September 30, 2021 or December 31, 2020 and as such, no interest or penalties were recorded in income tax expense.
Comprehensive Loss
Net loss and comprehensive loss were the same for all periods presented; therefore, a separate statement of comprehensive loss is not included in the accompanying financial statements.
Loss Per Share Attributable to Common Stockholders
Basic loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per share attributable to common stockholders is computed by dividing the loss attributable to common stockholders by the weighted average number of common shares and potentially dilutive securities outstanding for the period determined using the treasury stock and if-converted methods. For purposes of the computation of diluted loss per share attributable to common stockholders, common stock purchase warrants, and common stock options are considered to be potentially dilutive securities but have been excluded from the calculation of diluted loss per share attributable to common stockholders because their effect would be anti-dilutive given the net loss reported for the three and nine months ended September 30, 2021 and 2020. Therefore, basic and diluted loss per share attributable to common stockholders are the same for each period presented.
The following table sets forth the outstanding potentially dilutive securities that have been excluded in the calculation of diluted loss per share attributable to common stockholders (in common stock equivalent shares):
Adoption of New Accounting Standard:
The Company has considered all recently issued accounting pronouncements and has concluded that there are no recently issued accounting pronouncements that we believe may have a material impact on our unaudited condensed interim financial statements. |
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Fair Value Measurements |
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| Fair Value Disclosures [Abstract] | ||||||||||||||||
| Fair Value Measurements | Note 3 - Fair Value Measurements
The Company issued common stock warrants to purchase shares of common stock in June of 2015 (see Note 9 - Common Stock Warrants and Common Stock Warrant Liability) that expired in June of 2020. These warrants contained a cash settlement provision that resulted in a common stock warrant liability that was revalued at the end of each reporting period.
We valued these warrant derivatives at fair value. The accounting guidance for fair value, among other things, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The framework for measuring fair value consists of a three-level valuation hierarchy that prioritizes the inputs to valuation techniques used to measure fair value based upon whether such inputs are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions made by the reporting entity. The three-level hierarchy for the inputs
to valuation techniques is briefly summarized as follows:
Level 1—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;
Level 2—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and
Level 3—Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.
An asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.
Assets and liabilities measured at fair value are based on one or more of the following three valuation techniques:
The Company’s common stock warrant liabilities are classified as Level 3 because there is limited activity or less transparency around the inputs to valuation.
Financial Instruments Not Carried at Fair Value
The carrying amounts of the Company’s financial instruments, including accounts payable and accrued liabilities, approximate fair value due to their short maturities. The estimated fair value of the convertible notes and other notes, not recorded at fair value, are recorded at cost or amortized cost which was deemed to estimate fair value. |
Credit Risk |
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| Risks and Uncertainties [Abstract] | |
| Credit Risk | Note 4 - Credit Risk
The Company is potentially subject to concentrations of credit risk in its accounts receivable. Credit risk with respect to receivables is limited due to the number of companies comprising the Company’s customer base, however the Company did identify a potentially uncollectable account at December 31, 2019 and maintained a reserve for this receivable balance of $123. At December 31, 2020, the account was deemed uncollectable and offset against the reserve. The Company did not have any potentially uncollectable account at September 30, 2021 or December 31, 2020 and therefore, did not record a reserve for uncollectable accounts at September 30, 2021 or December 31, 2020. The Company does not require collateral or other securities to support its accounts receivable. |
Prepaid Expenses |
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| Prepaid Expenses Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Prepaid Expenses | Note 5 - Prepaid Expenses
Prepaid expenses consist of the following:
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Property and Equipment |
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| Property and Equipment | Note 6 - Property and Equipment
Property and equipment, net consist of the following:
Depreciation and amortization expense was approximately $78 and $71 for the three months ended September 30, 2021 and 2020, respectively, and $229 and $219 for the nine months ended September 30, 2021 and 2020, respectively. |
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Accrued Expenses |
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| Accrued Expenses | Note 7 - Accrued Expenses
Accrued expenses consist of the following:
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Borrowings |
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| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Borrowings | Note 8 - Borrowings
A summary of the Company’s borrowings, including finance lease obligations, is as follows:
Finance Lease Obligations
Finance lease obligations at September 30, 2021 is for manufacturing equipment leased through ENGS Commercial Finance Co. This finance lease expires on April 18, 2022 and carries an interest rate of 11.4%.
Other Promissory Notes
Also included in the table above is a note payable to Fidelity Capital for the financing of a computing fixed asset. This note expires on July 1, 2022 and carries interest rate of 13.3%.
On June 18, 2021, the Company received notification from BMO Harris Bank National Association as the lender in a promissory note pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), that a loan to the Company under this program in the amount of $646 was forgiven in full under the terms of the program. The forgiveness of this note and related interest was recorded as other income on the Condensed Statements of Operations and Comprehensive Loss for the nine months ended September 30, 2021. |
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Common Stock Warrants and Common Stock Warrant Liability |
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| Warrants Note Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock Warrants and Common Stock Warrant Liability | Note 9 - Common Stock Warrants and Common Stock Warrant Liability
The table summarizes the common stock warrant activity as of September 30, 2021 as follows:
Outstanding Warrants
As of September 30, 2021, we had 4,547,618 shares of common stock issuable upon exercise of outstanding common stock warrants, at a weighted-average exercise price of $3.987 per share.
On November 21, 2017, the Company issued a total of 232,875 detachable common stock warrants issued with the second public offering of 293,000 shares of its common stock at $20.00 per share. The common stock warrant is exercisable until five years from the date of grant. The common shares of the Company’s stock and detachable warrants exist independently as separate securities. As such, the Company estimated the fair value of the common stock warrants, exercisable at $30.00 per share, to be $661 using a lattice model based on the following significant inputs: common stock price of $20.00; comparable company volatility of 73.8%; remaining term 5 years; dividend yield of 0% and risk-free interest rate of 1.87%. The initial exercise price of these warrants was $30.00 per share, which adjusted downward to $29.40 on July 24, 2018, the record date of the Right’s Offering and downward to $19.00 per share on August 13, 2018, the date of the Rights Offering, pursuant to antidilution price adjustment protection contained within these warrants. The exercise price of the warrants was adjusted downward to $7.13 on January 28, 2020 in connection with a private placement of common stock. Per guidance of Accounting Standards Codification (“ASC”) 260, the Company recorded a deemed dividend of $285 on the 143,501 unexercised warrants that contained this antidilution price adjustment protection provision and was calculated as the difference between the fair value of the warrants immediately prior to downward exercise price adjustment and immediately after the adjustment using a Black Scholes model based on the following significant inputs: on January 28, 2020, common stock price of $7.90; comparable company volatility of 73.8%; remaining term 2.82 years; dividend yield of 0% and risk-free interest rate of 1.45%.
The exercise price of the warrants was adjusted downward to $2.1122 on March 4, 2020 in connection with a private placement of common stock. Per guidance of ASC 260, the Company recorded a deemed dividend of $129 on the 143,501 unexercised warrants that contained this antidilution price adjustment protection provision and was calculated as the difference between the fair value of the warrants immediately prior to downward exercise price adjustment and immediately after the adjustment using a Black Scholes model based on the following significant inputs: on March 4, 2020, common stock price of $2.88; comparable company volatility of 74.5%; remaining term 2.71 years; dividend yield of 0% and risk-free interest rate of 0.68%.
The exercise price of the warrants was adjusted downward to $1.3659 on October 26, 2020 in connection with an inducement offering of common stock. Per guidance of ASC 260, the Company recorded a deemed dividend of $22 on the 143,501 unexercised warrants that contained this antidilution price adjustment protection provision and was calculated as the difference between the fair value of the warrants immediately prior to downward exercise price adjustment and immediately after the adjustment using a Black Scholes model based on the following significant inputs: On October 26, 2020, common stock price of $1.47; comparable company volatility of 96.5%; remaining term 2.08 years; dividend yield of 0% and risk-free interest rate of 0.18%.
On June 20, 2018, the Company entered into an agreement with a holder of 56,696 of the November 2017 warrants to exercise its original warrant representing 56,696 shares of common stock for cash at the $30.00 exercise price for gross proceeds of $1.7 million and the Company issued to holder a new warrant to purchase 56,696 shares of common stock at an exercise price of $36.40 per share. The new warrant did not contain the antidilution price adjustment protection that was contained within the exercised warrants. In June 2018, the Company recorded stock compensation expense of $1,700 representing the fair value of the of 56,696 inducement warrants issued. The Company estimated the fair value of the common stock warrants, exercisable at $36.40 per share, to be $1,700 using a Black Scholes model based on the following significant inputs: common stock price of $42.20; comparable company volatility of 72.6%; remaining term 5 years; dividend yield of 0% and risk-free interest rate of 2.8%. Also, in June 2018, an additional 17,088 of the November 8, 2017 warrants that were in the money at the time of exercise, were exercised for gross proceeds of $513.
On August 13, 2018, in connection with a Rights Offering of 267,853 shares of its common stock, the Company issued 267,853 warrants to purchase shares of its common stock at an exercise price of $23.00 per share. The Company estimated the fair value of the common stock warrants, exercisable at $23.00 per share, to be $3,600 using a Monte Carlo model based on the following significant inputs: common stock price of $18.80; comparable company volatility of 159.0%; remaining term 5 years; dividend yield of 0% and risk-free interest rate of 2.77%.
In connection with the closing of the Rights Offering, the Company issued a warrant to purchase 13,393 shares of common stock to Maxim Partners LLC, an affiliate of the dealer-manager of the Rights Offering. The Company estimated the fair value of the common stock warrants, exercisable at $34.50 per share, to be $169 using a using a Monte Carlo model based on the following significant inputs: common stock price of $18.80; comparable company volatility of 159.0%; remaining term 5 years; dividend yield of 0% and risk-free interest rate of 2.77%.
Common Stock Warrant Issued to Underwriter of Common Stock Offering
In July 2019, the Company issued to H.C. Wainwright & Co., as placement agent, a warrant to purchase 8,334 shares of common stock at an exercise price of $33.75 per share as consideration for providing services in connection with a common stock offering in July 2019. The warrant was fully vested and exercisable on the date of issuance. The common stock warrant is exercisable until five years from the date of grant. The Company estimated the fair value of the common stock warrants, exercisable at $33.75 per share, to be $127 using a lattice model based on the following significant inputs: common stock price of $26.80; comparable company volatility of 133.3%; remaining term 5 years; dividend yield of 0% and risk-free interest rate of 2.07%.
Common Stock Warrants Issued in January and March 2020 Private Placements
In January and March 2020, in separate private placements concurrent with registered direct offerings (collectively, the “2020 Registered Direct Offerings”) of shares of the Company’s common stock, the Company also issued warrants to purchase an aggregate of up to 353,872 shares of common stock to certain institutional and accredited investors that participated in the 2020 Registered Direct Offerings (the “2020 Warrants”). The warrants were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) and Rule 506(b) of Regulation D promulgated thereunder. Terms used but not otherwise defined herein will have the meanings given them in the warrants, attached as Exhibit 4.1 to our Form 8-K filed on January 28, 2020, and our Form 8-K filed on March 6, 2020.
The warrants issued in January 2020 to purchase 177,500 shares of common stock have an exercise price of $9.00 per share, are exercisable after July 28, 2020 and will expire July 28, 2025. The Company estimated the fair value of the common stock warrants, exercisable at $9.00 per share, to be $813 using a Black Scholes model based on the following significant inputs: common stock price of $7.90; comparable company volatility of 73.8%; remaining term 5 years; dividend yield of 0% and risk-free interest rate of 1.53%.
The warrants issued in March 2020 to purchase 176,372 shares of common stock have an exercise price of $2.88 per share, are immediately exercisable and will expire September 8, 2025. The Company estimated the fair value of the common stock warrants, exercisable at $2.88 per share, to be $242 using a Black Scholes model based on the following significant inputs: common stock price of $2.35; comparable company volatility of 74.8%; remaining term 5.5 years; dividend yield of 0% and risk-free interest rate of 0.39%.
For so long as the 2020 Warrants remain outstanding, the exercise price and number of shares of common stock issuable upon exercise of the warrants are subject to adjustment as follows: (a) upon payment of a stock dividend or other distribution on a class or series of shares common stock, not including shares issued under this warrant;
(b) upon subdivision (by stock spilt, stock dividend, recapitalization, or otherwise) or combination (by reverse stock split or otherwise) of shares of common stock; or (c) upon the issuance of any shares of capital stock by reclassification of shares of the common stock.
In the event that the Company declares or makes any dividend or other distribution of its assets to holders of its common stock, each 2020 Warrant holder will be entitled to participate in such distribution to the same extent that such holder would have participated therein if the holder had held the number of shares of common stock acquirable upon exercise of the 2020 Warrant.
In the event of a Fundamental Transaction, as described in the 2020 Warrants and generally including the sale, transfer or other disposition of all or substantially all of our properties or assets; our consolidation or merger with or into another person or reorganization; a recapitalization, reorganization or reclassification in which our common stock is converted into other securities, cash or property; or any acquisition of our outstanding common stock that results in any person or group becoming the beneficial owner of 50% of the voting power represented by our outstanding common stock, then the holders of the 2020 Warrants will be entitled to receive upon exercise of such warrants the kind and amount of securities, cash, assets or other property that the holders would have received had they exercised the 2020 Warrants immediately prior to such Fundamental Transaction. Subject to certain limitations, in the event of a Fundamental Transaction the 2020 Warrant holder may at its option require the Company or any Successor Entity to purchase such warrant from the holder by paying to the holder an amount of cash equal to the Black Scholes Value of the remaining unexercised portion of the 2020 Warrant on the date of the consummation of the Fundamental Transaction.
Any time that the Company grants, issues, or sells any securities pro rata to all of the record holders of the common stock (the “2020 Purchase Right”), each holder of 2020 Warrants will be entitled to acquire the aggregate amount of securities that the holder could have acquired if the holder had held the number of shares of common stock acquirable upon exercise of the applicable 2020 Warrant. However, to the extent that an exercise of a 2020 Purchase Right would exceed the Beneficial Ownership Limitation (defined below), then to such extent the 2020 Purchase Right will be held in abeyance until such time, if ever, that complete exercise of the 2020 Purchase Right would not exceed the Beneficial Ownership Limitation.
After the Initial Exercisability Date (as defined in the 2020 Warrants), the 2020 Warrants will be exercisable, at the option of each holder, in whole or in part, by delivering to us a duly executed exercise notice accompanied by payment in full for the number of shares of our common stock purchased upon such exercise. If, at the time a holder exercises the 2020 Warrant (but not sooner than six months following the date of such warrant), a registration statement registering the issuance of the shares of common stock underlying the 2020 Warrants under the Securities Act is not then effective or available, nor is any current prospectus thereto available, and an exemption from registration under the Securities Act is not available for the issuance of such shares, then in lieu of making the cash payment otherwise contemplated to be made to us upon such exercise in payment of the aggregate exercise price, the holder may elect instead to receive upon such exercise (either in whole or in part) the number of shares of common stock determined according to a formula set forth in the 2020 Warrant.
Limitations on Exercise. A holder (together with its affiliates) may not exercise any portion of the 2020 Warrants to the extent that the holder would own more than 4.99% of the outstanding common stock after exercise (the “Beneficial Ownership Limitation”), except that upon at least 61 days’ prior notice from the holder to us, the holder may increase the Beneficial Ownership Limitation up to 9.99% of the number of shares of our common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the 2020 Warrants. No fractional shares of common stock will be issued in connection with the exercise of a 2020 Warrant. In lieu of fractional shares, we will either pay the holder an amount in cash equal to the fractional amount multiplied by the exercise price or round up to the next whole share.
Except as otherwise provided in the 2020 Warrants or by virtue of such holder’s ownership of shares of our common stock, the holders of the 2020 Warrants do not have the rights or privileges of holders of our common stock, including any voting rights, unless and until they exercise such warrants.
Common Stock Warrants Issued in April 2020 Public Offering
On April 24, 2020, in connection with a previously announced public offering of 145,586 Class A Units and 1,428,722 Class B Units, the Company issued warrants to purchase 1,574,308 shares of common stock to the participants in the public offering and have an exercise price of $3.05 per share (the “April 2020 Warrants”). These warrants are immediately exercisable and will expire April 24, 2025.
The Common Stock, Pre-Funded Warrants and Warrants sold in this Public Offering were offered and sold pursuant to a registration statement on Form S-1 (File No. 333-236302) initially filed with the SEC on February 7, 2020, as amended (“Registration Statement”), which was declared effective by the SEC on February 14, 2020. The Post-Effective Amendment No. 2 to the Registration Statement was declared effective by the SEC on April 21, 2020.
The Company estimated the fair value of the common stock warrants, exercisable at $3.05 per share, to be $2,402 using a Black Scholes model based on the following significant inputs: common stock price of $2.40; comparable company volatility of 87.9%; remaining term 5 years; dividend yield of 0% and risk-free interest rate of 0.18%.
Common Stock Warrants Issued to Placement Agent in 2020 Registered Direct Offerings and Private Placement
In connection with the separate private placements concurrent with registered direct offerings of shares of the Company’s common stock in January and March 2020, the Company issued to H.C. Wainwright & Co., LLC, as placement agent, a warrant to purchase 13,228 shares of common stock and a warrant to purchase 13,313 shares of common stock. The warrants were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D promulgated thereunder. These warrants have substantially similar terms as the 2020 Warrants described above, except that the placement agent warrant issued in January 2020 has an exercise price of $10.00 per share, and the placement agent warrant issued in March 2020 has an exercise price of $3.7563 per share.
The Company estimated the fair value of the common stock warrants issued in January, with an exercise price of $10.00 per share, to be $58 using a Black Scholes model based on the following significant inputs: common stock price of $7.90; comparable company volatility of 73.8%; remaining term 5 years; dividend yield of 0% and risk-free interest rate of 1.53%.
The Company estimated the fair value of the common stock warrants issued in March, with an exercise price of $3.7563 per share, to be $17 using a Black Scholes model based on the following significant inputs: common stock price of $2.35; comparable company volatility of 74.8%; remaining term 5.5 years; dividend yield of 0% and risk-free interest rate of 0.39%.
In connection with the public offering of 145,586 Class A Units and 1,428,722 Class B Units on April 24, 2020, the Company issued to H.C. Wainwright & Co., LLC, as placement agent, warrants to purchase 118,073 shares of common stock. The warrants were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D promulgated thereunder. These warrants have substantially similar terms as the April 2020 Warrants described above, except that the placement agent warrant issued has an exercise price of $3.97 per share.
The Company estimated the fair value of the common stock warrants issued in April, with an exercise price of $3.97 per share, to be $167 using a Black Scholes model based on the following significant inputs: common stock price of $2.40; comparable company volatility of 87.9%; remaining term 5.5 years; dividend yield of 0% and risk-free interest rate of 0.18%.
Common Stock Warrants Issued in October 2020 Private Warrant Inducement
In October 2020, in connection with an inducement agreement with an existing accredited investor to exercise 1,700,680 outstanding warrants (the “Original Warrants”) to purchase an equal number of shares of the Company’s common stock, the Company issued new unregistered warrants to purchase up to an aggregate of 1,700,680 shares of common stock at an exercise price of $1.725 per share. The warrants issued were immediately exercisable with an exercise period of five and one-half years from the date of issuance. The Original Warrants were issued on March 6, 2020 and on April 24, 2020. Pursuant to the Letter Agreement, the per share exercise price of the Original Warrants were reduced from $2.88 and $3.05, respectively, to $1.725. The Company estimated the fair value of the common stock warrants, exercisable at $1.725 per share, to be $1,806 using a Black Scholes model based on the following significant inputs: common stock price of $1.47; comparable company volatility of 96.5%; remaining term 5.5 years; dividend yield of 0% and risk-free interest rate of 0.18%.
In connection with the private warrant inducement in October 2020 of 1,700,680 shares of the Company’s common warrants, the Company issued to H.C. Wainwright & Co., LLC, as placement agent, warrants to purchase 85,034 shares of common stock. These warrants have substantially similar terms as the 2020 Warrants described above, except that the placement agent warrant issued in October 2020 has an exercise price of $2.156 per share.
The Company estimated the fair value of these common stock warrants, with an exercise price of $2.156 per share, to be $86 using a Black Scholes model based on the following significant inputs: common stock price of $1.47; comparable company volatility of 96.5%; remaining term 5.5 years; dividend yield of 0% and risk-free interest rate of 0.18%.
Common Stock Warrants Issued in February 2021 Private Placement Agreement
In February 2021, in connection with a private placement agreement with certain institutional and accredited investors, the Company issued common stock warrants to purchase up to an aggregate of 2,194,427 shares of common stock at an exercise price of $2.216 per share. The warrants were exercisable immediately and have an exercise period of five and one-half years from the date of issuance. The warrant holder may not exercise any portion of such holder’s warrants to the extent that the holder, together with its affiliates, would beneficially own more than 4.99% (or, at the election of the holder, 9.99%) of the Company’s outstanding shares of common stock immediately after exercise, except that upon at least 61 days’ prior notice from the holder to the Company, the holder may increase the beneficial ownership limitation to up to 9.99% of the number of shares of common stock outstanding immediately after giving effect to the exercise. The Company estimated the fair value of the common stock warrants, exercisable at $2.216 per share, to be $3,052 using a Black Scholes model based on the following significant inputs: common stock price of $1.93; comparable company volatility of 95.6%; remaining term 5.5 years; dividend yield of 0% and risk-free interest rate of 0.18%.
Common Stock Warrants Issued to Placement Agent in February 2021 Private Placement Agreement
In connection with the private placement in February 2021, the Company issued to H.C. Wainwright & Co., LLC, as placement agent, warrants to purchase up to 329,164 shares of Common Stock with an exercise price of $2.8481 per share. The warrants are exercisable immediately and have an exercise period of five and one-half years from the date of issuance. The Company estimated the fair value of these common stock warrants, with an exercise price of $2.8481 per share, to be $435 using a Black Scholes model based on the following significant inputs: common stock price of $1.93; comparable company volatility of 95.6%; remaining term 5.5 years; dividend yield of 0% and risk-free interest rate of 0.18%.
Common Stock Warrants Issued to Placement Agent in March 2021 Registered Direct Offering
On March 23, 2021, the Company consummated a registered direct offering with certain institutional investors and issued an aggregate of 1,975,000 shares of the Company’s common stock, par value $0.001 per share at a purchase price of $2.00 per share for gross proceeds to the Company of approximately $3.95 million, before deducting fees payable to the placement agent and other estimated offering expenses payable by the Company. The 1,975,000 shares of Common Stock sold in the Offering were offered and sold pursuant to a prospectus, dated August 24, 2018, and a prospectus supplement, dated March 22, 2021, in connection with a takedown from the Company’s shelf registration statement on Form S-3 (File No. 333-225712).
In connection with the registered direct offering in March 2021, the Company issued to H.C. Wainwright & Co., LLC, as the placement agent, warrants to purchase up to 148,125 shares of Common Stock. The Placement Agent Warrants will be exercisable commencing six months following the date of issuance, expire five years following the date of sale and have an exercise price per share of $2.50 per share. The Placement Agent Warrants, and the shares of Common Stock issuable upon exercise thereof, will be issued in reliance on the exemption from registration provided in Section 4(a)(2) under the Securities Act of 1933, as amended, and Regulation D promulgated thereunder. The Company estimated the fair value of these common stock warrants, with an exercise price of $2.50 per share, to be $181 using a Black Scholes model based on the following significant inputs: common stock price of $1.76; comparable company volatility of 100.8%; remaining term 5 years; dividend yield of 0% and risk-free interest rate of 0.31%.
Deemed Dividend Adjustment-Warrant Modified Terms Revaluation
On March 3, 2020, the Company issued an aggregate of 51,414 common shares in a cashless exercise of 56,625 warrants issued in December 2016 and November 2017. Consideration for the exercise of these warrants was the full settlement of an outstanding litigation reserve of $238.
On October 26, 2020, in connection with the private warrant inducement with an existing accredited investor to exercise 1,700,680 Original Warrants, the Company agreed to modify the terms of the Original Warrants that were originally issued on March 6, 2020 and on April 24, 2020. Pursuant to the agreement, the per share exercise price of the Original Warrants were reduced from $2.88 and $3.05, respectively, to $1.725.
Per recent proposed guidance of ASC 260, the Company determined that this was an exchange of the existing 1,700,680 warrants that were affected and the difference between the fair value of the warrants immediately prior to modification of terms and immediately after the adjustment was a cost of raising capital and was recorded as a reduction of equity. The difference between the fair value of the warrants immediately prior to modification of terms and immediately after the adjustment was calculated as $237, using a Black Scholes model based on the following significant inputs: On October 26, 2020: common stock price of $1.47; comparable company volatility of 96.5%; remaining term 4.5-4.8 years; dividend yield of 0% and risk-free interest rate of 0.18%. |
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Stockholders’ Deficit |
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| Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||
| Stockholders’ Deficit | Note 10 - Stockholders’ Deficit
Capital Stock
The Company was organized under the laws of the state of Nevada on July 27, 2004 and was subsequently reincorporated under the laws of the state of Delaware on November 10, 2015. In connection with the reincorporation, as approved by the stockholders, the Company changed its authorized capital stock to consist of (i) 100 million shares of common stock, $.001 par value, and (ii) 2 million shares of preferred stock, $0.001 par value, designated as Series A convertible preferred stock. In December 2015, the Company amended its Certificate of Incorporation to change its authorized capital stock to provide for 15 million authorized shares of preferred stock of which 7,515,000 was designated as Series B convertible preferred stock, par value $.001 per share.
Prior to November 10, 2015, the Company’s authorized capital stock consisted of 100 million shares of common stock, $.001 par value, and 10 million shares of preferred stock, $.001 par value.
Common Stock
The Company had 12,191,112 and 5,099,512 shares of common stock issued and outstanding as of September 30, 2021 and December 31, 2020, respectively.
During the nine months ended September 30, 2021, the Company issued 7,091,600 shares of common stock as follows:
Public Offerings and Registered Direct Offerings
On February 2, 2021, the Company consummated a private placement agreement with certain institutional and accredited investors and issued an aggregate of 3,968,854 shares of its common stock, par value $0.001 per share at a purchase price of $2.2785 per share, pre-funded warrants to purchase up to an aggregate of 420,000 shares of common stock at a purchase price of $2.2775 per pre-funded warrant and associated warrants to purchase up to an aggregate of 2,194,427 shares of common stock, for gross proceeds of approximately $10.0 million, prior to deducting placement agent fees and offering expenses. At March 29, 2021, all 420,000 pre-funded shares had been distributed. In connection with the offering, we issued the placement agent warrants to purchase up to 329,164 shares of Common Stock with an exercise price of $2.8481 per share.
On March 23, 2021, the Company consummated a registered direct offering with certain institutional investors and issued an aggregate of 1,975,000 shares of the Company’s common stock, par value $0.001 per share at a purchase price of $2.00 per share for gross proceeds to the Company of approximately $3.95 million, pursuant to a prospectus, dated August 24, 2018, and a prospectus supplement, dated March 22, 2021, in connection with a takedown from the Company’s shelf registration statement on Form S-3 (File No. 333-225712).
In connection with the offering, we issued the placement agent warrants to purchase up to 148,125 shares of Common Stock at an exercise price per share of $2.50 per share.
On March 19, 2021, June 22, 2021 and July 15, 2021, the Company issued an aggregate of and 5,616 shares of commons stock for the exercise of certain warrants, respectively. The net proceeds to the Company for these exercises was $1,228. |
Stock-based Compensation |
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| Stock-based Compensation | Note 11 - Stock-based Compensation
Stock Options
Stock options are generally issued with a per share exercise price equal to no less than fair market value of our common stock on the date of grant. Options granted under the 2018 Plan generally vest over a twelve- to 36-month period coinciding with their respective service periods. Options under the 2018 Plan generally have a term of five years. Certain stock options provide for accelerated vesting upon a change in control.
As of September 30, 2021, the Company had 2,857,184 shares of common stock available for issuance under the 2018 Plan.
The Company measures the fair value of stock options with service-based vesting criteria to employees, directors and consultants on the date of grant using the Black-Scholes option pricing model. The Black-Scholes valuation model requires the Company to make certain estimates and assumptions, including assumptions related to the expected price volatility of the Company’s stock, the period during which the options will be outstanding, the rate of return on risk-free investments, and the expected dividend yield for the Company’s stock.
The weighted-average assumptions used in the Black-Scholes option-pricing model used to calculate the fair value of options granted during the nine months ended September 30, 2021 were as follows:
The weighted average grant date fair value of options granted during the nine months ended September 30, 2021 was $0.98 per share, as per the table above.
Due to the Company’s limited operating history and lack of company-specific historical or implied volatility, the expected volatility assumption was determined based on historical volatilities from traded options of biotech companies of comparable size and stability, whose share prices are publicly available. The expected term of options granted to employees is calculated based on the mid-point between the vesting date and the end of the contractual term according to the simplified method as described in SEC Staff Accounting Bulletin 110 because the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term due to the limited period of time its awards have been outstanding. For non-employee options, the expected term of options granted is the contractual term of the options. The risk-free interest rate is determined by reference to the implied yields of U.S. Treasury securities with a remaining term equal to the expected term assumed at the time of grant. The expected dividend assumption is based on the Company’s history and expectation of dividend payouts. The Company has not paid and does not intend to pay dividends.
The following table summarizes the stock option activity for the periods indicated as follows:
Restricted Stock Units
The following table summarizes restricted stock unit activity for the nine months ended September 30, 2021:
24 The stock-based compensation expense was recorded as follows:
The allocation between research and development and selling, general and administrative expense was based on the department and services performed by the employee or non-employee.
At September 30, 2021, the total compensation cost related to restricted stock units and unvested options not yet recognized was $782, which will be recognized over a weighted average period of 32 months, assuming the employees and non-employees complete their service period required for vesting. |
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Commitments and Contingencies |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies | Note 12 - Commitments and Contingencies
Legal Proceedings
The Company may be subject to legal proceedings and claims arising from contracts or other matters from time to time in the ordinary course of business. Management is not aware of any pending or threatened litigation where the ultimate disposition or resolution could have a material adverse effect on its financial position, results of operations or liquidity.
Lease Commitments
In February 2012, the Company entered into an operating lease for its then corporate headquarters in Flagstaff, Arizona, which expired in December 2019. In December 2019, we extended the lease for only the manufacturing facilities located in Flagstaff, Arizona, occupying a total of 7,632 square feet of space. The lease for these manufacturing facilities expired in December 2020.
On November 16, 2016, we leased an additional 1,954 square feet of manufacturing, research and development space, also in Flagstaff. This lease expired on November 15, 2018 but was extended for an additional 24 months, through November 2020. A subsequent amendment to the lease allows for the Company to cancel the lease at any time through the lease term with 30 days’ notice. The Company provided a 30-day cancellation notice effective February 2020.
On December 1, 2019, we entered into a lease for our corporate headquarters in Phoenix, Arizona where we lease and occupy approximately 5,529 square feet of office space. This lease expires in November 2024.
On August 1, 2020, we entered into a lease for our manufacturing and research facility in Phoenix, Arizona where we occupy approximately 5,105 square feet of manufacturing and warehouse space. This lease expires on November 30, 2024.
We believe that our existing facilities are adequate and meet our current needs for business, manufacturing and research.
Rent expense was $166 and $202 for the nine months ended September 30, 2021 and 2020, respectively. The future minimum lease payments under non-cancellable operating lease and future minimum finance lease payments as of September 30, 2021 are follows:
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Subsequent Events |
9 Months Ended |
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Sep. 30, 2021 | |
| Subsequent Events [Abstract] | |
| Subsequent Events | Note 13 - Subsequent Events
On October 7, 2021, the Company issued 16,171 shares of common stock in connection with the exercise of common stock warrants generating net proceeds to the Company of approximately $20.
COVID-19
The travel and other restrictions that began in March 2020 in response to the COVID-19 global pandemic resulted in a significant slowdown in our field studies and sales efforts. We were able to resume some projects by mid-year 2020, however, we still have delays on certain projects that might remain on hold until businesses and government entities return to more normal operations. These continued delays have impacted our results of operations and could impact our results in future quarters. In addition, extended stay at home orders and other social distancing initiatives severely limited our ability to communicate with current and potential commercial and governmental customers. While many restrictions were lifted during our second and third fiscal quarters of 2021, we have not returned to full scope pre-pandemic activities, and are uncertain as to when or if, with potential further restrictions, that may occur. The COVID-19 pandemic is also placing a significant budgetary burden on federal, state and local governments, which may impede or delay their ability to purchase our products.
The Company has evaluated subsequent events from the balance sheet date through November 12, 2021, the date at which the financial statements were issued, and determined that there were no other items that require adjustment to or disclosure in the financial statements. |
Accounting Policies, by Policy (Policies) |
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Use of Estimates | Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and classification of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. The significant estimates in the Company’s financial statements include the valuation of preferred stock, if issued, common stock and related warrants, and other stock-based awards. Actual results could differ from such estimates.
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| Reclassifications | Reclassifications
Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no material impact on net earnings, financial position or cash flows.
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| Cash and Cash Equivalents | Cash and Cash Equivalents
The Company considers money market fund investments to be cash equivalents. The Company had cash equivalents in the form of money market fund investment of $10,493 and $1,500 at September 30, 2021 and December 31, 2020, respectively, included in cash as reported.
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| Accounts Receivable-Trade | Accounts Receivable-Trade
Accounts receivable-trade consist primarily of receivables from customers. The Company provides an allowance for doubtful trade receivables equal to the estimated uncollectible amounts. That estimate is based on historical collection experience, current economic and market conditions and a review of the current status of each customer’s trade accounts receivable. The allowance for doubtful trade receivables was $0 at September 30, 2021 and December 31, 2020.
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| Inventories | Inventories
Inventories are stated at the lower of cost or market value, using the first-in, first-out convention. Inventories consist of raw materials, work in progress and finished goods. Raw materials are stocked to reduce the risk of impact on manufacturing for potential supply interruptions due to the COVID-19 pandemic or other supply chain interruptions and long lead times on certain ingredients.
Components of inventory are:
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| Prepaid Expenses | Prepaid Expenses
Prepaid expenses consist primarily of payments made for director and officer insurance, marketing services, rent, legal and inventory purchase deposits and seminar/trade show fees to be expensed in the current year.
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| Property and Equipment | Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Equipment held under finance leases are stated at the present value of minimum lease payments less accumulated amortization.
Depreciation on property and equipment is computed using the straight-line method over the estimated useful lives of the respective assets. The cost of leasehold improvements is amortized over the life of the improvement or the term of the lease, whichever is shorter. Equipment held under finance leases is amortized over the shorter of the lease term or estimated useful life of the asset. The Company incurs repair and maintenance costs on its major equipment, which are expensed as incurred.
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| Impairment of Long-Lived Assets | Impairment of Long-Lived Assets
Long-lived assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require long-lived assets or asset groups to be tested for possible impairment, the Company compares the undiscounted cash flows expected to be generated from the use of the asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment charge is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques, such as discounted cash flow models and the use of third-party independent appraisals. The Company has not recorded an impairment of long-lived assets since its inception.
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| Revenue Recognition | Revenue Recognition
Effective January 1, 2018, the Company adopted Accounting Standards Codification 606 — Revenue from Contracts with Customers (“ASC 606”). Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.
The Company recognizes revenue when product is shipped at a fixed selling price on payment terms of 30 to 120 days from invoicing. The Company recognizes other revenue earned from pilot studies, consulting and implementation services upon the performance of specific services under the respective service contract.
The Company derives revenue primarily from commercial sales of products, net of discounts and promotions, as well as consulting and implementation services provided in conjunction with our product deployments.
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| Research and Development | Research and Development
Research, and development costs are expensed as incurred. Research and development expenses primarily consist of salaries and benefits for research and development employees, stock-based compensation, consulting fees, lab supplies, costs incurred related to conducting scientific trials and field studies, regulatory compliance costs, as well as manufacturing costs associated with process improvement and other research. Research and development expenses include an allocation of facilities related costs, including depreciation of equipment.
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| Stock-based Compensation | Stock-based Compensation
Stock-based awards, consisting of stock options and restricted stock units expected to be settled in shares of the Company’s common stock, are recorded as equity awards. The grant date fair value of these awards is measured using the Black-Scholes option pricing model for stock options and grant date market value for restricted stock units. The Company expenses the grant date fair value of its stock-based awards on a straight-line basis over their respective vesting periods.
The stock-based compensation expense recorded for the three and nine months ended September 30, 2021 and 2020, is as follows:
See Note 11 for additional discussion on stock-based compensation.
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| Income Taxes | Income Taxes
The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax bases of assets and liabilities and net operating loss carryforwards using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the period that includes the enactment date.
The Company records net deferred tax assets to the extent it believes these assets will more likely than not be realized. These deferred tax assets are subject to periodic assessments as to recoverability and if it is determined that it is more likely than not that the benefits will not be realized, valuation allowances are recorded which would increase the provision for income taxes. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. The Company currently maintains a full valuation allowance against its deferred tax assets.
The Company applies a more-likely-than-not recognition threshold for all tax uncertainties. Only those benefits that have a greater than fifty percent likelihood of being sustained upon examination by the taxing authorities are recognized. Based on its evaluation, the Company has concluded there are no significant uncertain tax positions requiring recognition in its financial statements.
The Company recognizes interest and/or penalties related to uncertain tax positions in income tax expense. There are no uncertain tax positions as of September 30, 2021 or December 31, 2020 and as such, no interest or penalties were recorded in income tax expense.
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| Comprehensive Loss | Comprehensive Loss
Net loss and comprehensive loss were the same for all periods presented; therefore, a separate statement of comprehensive loss is not included in the accompanying financial statements.
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| Loss Per Share Attributable to Common Stockholders | Loss Per Share Attributable to Common Stockholders
Basic loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per share attributable to common stockholders is computed by dividing the loss attributable to common stockholders by the weighted average number of common shares and potentially dilutive securities outstanding for the period determined using the treasury stock and if-converted methods. For purposes of the computation of diluted loss per share attributable to common stockholders, common stock purchase warrants, and common stock options are considered to be potentially dilutive securities but have been excluded from the calculation of diluted loss per share attributable to common stockholders because their effect would be anti-dilutive given the net loss reported for the three and nine months ended September 30, 2021 and 2020. Therefore, basic and diluted loss per share attributable to common stockholders are the same for each period presented.
The following table sets forth the outstanding potentially dilutive securities that have been excluded in the calculation of diluted loss per share attributable to common stockholders (in common stock equivalent shares):
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| Adoption of New Accounting Standard | Adoption of New Accounting Standard:
The Company has considered all recently issued accounting pronouncements and has concluded that there are no recently issued accounting pronouncements that we believe may have a material impact on our unaudited condensed interim financial statements. |
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Summary of Significant Accounting Policies (Tables) |
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of inventory |
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| Schedule of employee stock-based compensation expense |
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| Schedule of outstanding potentially dilutive securities calculation of diluted loss per share attributable to common stockholders |
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Prepaid Expenses (Tables) |
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Prepaid Expenses Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of prepaid expenses |
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Property and Equipment (Tables) |
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| Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of property and equipment |
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Accrued Expenses (Tables) |
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| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of accrued expenses |
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Borrowings (Tables) |
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| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of finance lease obligations |
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Common Stock Warrants and Common Stock Warrant Liability (Tables) |
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Warrants Note Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of common stock warrant activity |
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Stock-based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of fair value of options granted |
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| Schedule of stock option activity |
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| Schedule of summarizes restricted stock unit activity |
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| Schedule of stock-based compensation expense |
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Commitments and Contingencies (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of future minimum lease payments under non-cancellable operating lease and future minimum capital lease payments |
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Organization and Description of Business (Details) $ in Millions |
9 Months Ended |
|---|---|
|
Sep. 30, 2021
USD ($)
| |
| Accounting Policies [Abstract] | |
| Net proceeds received | $ 89.3 |
| Proceeds from licensing fees | 1.7 |
| Proceeds from product sales | 1.4 |
| Accumulated deficit | 110.0 |
| Cash and cash equivalents | $ 11.1 |
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Accounting Policies [Abstract] | ||
| Money market fund | $ 10,493 | $ 1,500 |
| Allowance for doubtful trade receivables | $ 0 | $ 0 |
Summary of Significant Accounting Policies (Details) - Schedule of inventory - USD ($) $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Schedule of inventory [Abstract] | ||
| Raw materials | $ 941 | $ 950 |
| Work in progress | 4 | 24 |
| Finished goods | 99 | 94 |
| Total inventory | 1,044 | 1,068 |
| Less: | ||
| Reserve for obsolete and revaluation | (37) | (123) |
| Total net inventory | $ 1,007 | $ 945 |
Summary of Significant Accounting Policies (Details) - Schedule of employee stock-based compensation expense - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
| Total stock-based compensation expense | $ 214 | $ 162 | $ 550 | $ 453 |
| Research and development [Member] | ||||
| Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
| Total stock-based compensation expense | 1 | 2 | 2 | 7 |
| Selling, general and administrative [Member] | ||||
| Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
| Total stock-based compensation expense | $ 213 | $ 160 | $ 548 | $ 446 |
Summary of Significant Accounting Policies (Details) - Schedule of outstanding potentially dilutive securities calculation of diluted loss per share attributable to common stockholders - shares |
9 Months Ended | |
|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total | 5,617,021 | 2,933,501 |
| Common Stock Purchase Warrants [Member] | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total | 4,547,618 | 2,504,597 |
| Restricted Stock Units [Member] | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total | 667 | 1,334 |
| Common Stock Options [Member] | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total | 1,068,736 | 427,570 |
Credit Risk (Details) $ in Thousands |
Dec. 31, 2019
USD ($)
|
|---|---|
| Risks and Uncertainties [Abstract] | |
| Credit risk receivable | $ 123 |
Prepaid Expenses (Details) - Schedule of prepaid expenses - USD ($) $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Schedule of prepaid expenses [Abstract] | ||
| Director, officer and other insurance | $ 192 | $ 18 |
| NASDAQ fees | 15 | |
| Legal retainer | 25 | 25 |
| Marketing programs and conferences | 300 | 106 |
| Professional services retainer | 13 | 8 |
| Rent | 18 | |
| Engineering, software licenses and other | 36 | 3 |
| Total prepaid expenses | $ 581 | $ 178 |
Property and Equipment (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Property, Plant and Equipment [Abstract] | |||||
| Sale of assets | $ 1 | $ 0 | $ 1 | $ 18 | |
| Net proceeds | 1 | $ 0 | 44 | ||
| Depreciation and amortization expense | $ 78 | $ 71 | $ 229 | $ 219 | |
Accrued Expenses (Details) - Schedule of accrued expenses - USD ($) $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Schedule of accrued expenses [Abstract] | ||
| Compensation and related benefits | $ 513 | $ 218 |
| Board Compensation | 3 | |
| Personal property and franchise tax | 57 | |
| Legal services | 22 | |
| Other | 15 | 14 |
| Total accrued expenses | $ 550 | $ 292 |
Borrowings (Details) - USD ($) $ in Thousands |
9 Months Ended | |
|---|---|---|
Jun. 18, 2021 |
Sep. 30, 2021 |
|
| Borrowings (Details) [Line Items] | ||
| Description of borrowings expiration period | On June 18, 2021, the Company received notification from BMO Harris Bank National Association as the lender in a promissory note pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), that a loan to the Company under this program in the amount of $646 was forgiven in full under the terms of the program. | |
| Principal amount | $ 646 | |
| Finance Lease Obligations [Member] | ||
| Borrowings (Details) [Line Items] | ||
| Lease expire date | Apr. 18, 2022 | |
| Minimum [Member] | Finance Lease Obligations [Member] | ||
| Borrowings (Details) [Line Items] | ||
| Interest rate | 11.40% | |
| Maximum [Member] | Other Promissory Notes [Member] | ||
| Borrowings (Details) [Line Items] | ||
| Interest rate | 13.30% |
Borrowings (Details) - Schedule of finance lease obligations - USD ($) $ in Thousands |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Short-term debt: | ||
| Current portion of long-term debt | $ 49 | $ 98 |
| Total short-term debt | 49 | 98 |
| Long-term debt: | ||
| Finance lease obligations | 41 | 79 |
| Other promissory notes | 8 | 692 |
| Total | 49 | 771 |
| Less: current portion of long-term debt | (49) | (98) |
| Total long-term debt | $ 673 |
Common Stock Warrants and Common Stock Warrant Liability (Details) - USD ($) |
1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 26, 2020 |
Mar. 04, 2020 |
Mar. 03, 2020 |
Jan. 28, 2020 |
Aug. 13, 2018 |
Jul. 24, 2018 |
Nov. 21, 2017 |
Jun. 22, 2021 |
Mar. 23, 2021 |
Feb. 28, 2021 |
Oct. 31, 2020 |
Oct. 26, 2020 |
Apr. 24, 2020 |
Mar. 31, 2020 |
Jan. 31, 2020 |
Jan. 28, 2020 |
Jul. 31, 2019 |
Jun. 30, 2018 |
Jun. 20, 2018 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Dec. 31, 2020 |
Mar. 06, 2020 |
|
| Common Stock Warrants and Common Stock Warrant Liability (Details) [Line Items] | |||||||||||||||||||||||||
| Common stock offering warrants issued, value (in Shares) | 5,616 | ||||||||||||||||||||||||
| Deemed dividend (in Dollars) | $ 285,000 | ||||||||||||||||||||||||
| Unexercised warrants (in Shares) | 143,501 | ||||||||||||||||||||||||
| Share price | $ 1.51 | $ 1.51 | $ 1.73 | ||||||||||||||||||||||
| Stock compensation expense (in Dollars) | $ 213,000 | $ 162,000 | $ 550,000 | $ 453,000 | |||||||||||||||||||||
| Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | ||||||||||||||||||||||
| Common stock sold (in Shares) | 4,388,854 | ||||||||||||||||||||||||
| Warrant activity [Member] | |||||||||||||||||||||||||
| Common Stock Warrants and Common Stock Warrant Liability (Details) [Line Items] | |||||||||||||||||||||||||
| Exercise price | $ 2.1122 | $ 19 | $ 29.4 | 30 | $ 30 | ||||||||||||||||||||
| Adjusted exercise price | $ 2.1122 | $ 19 | |||||||||||||||||||||||
| Downward exercise price | 1.3659 | 7.13 | |||||||||||||||||||||||
| Outstanding Warrants [Member] | |||||||||||||||||||||||||
| Common Stock Warrants and Common Stock Warrant Liability (Details) [Line Items] | |||||||||||||||||||||||||
| Exercise price | $ 30 | ||||||||||||||||||||||||
| Downward exercise price | $ 29.4 | ||||||||||||||||||||||||
| Common stock offering warrants issued, value (in Shares) | 4,547,618 | ||||||||||||||||||||||||
| Weighted-average exercise price | $ 3.987 | ||||||||||||||||||||||||
| Common Stock Offering Warrants Issued [Member] | |||||||||||||||||||||||||
| Common Stock Warrants and Common Stock Warrant Liability (Details) [Line Items] | |||||||||||||||||||||||||
| Exercise price | 19 | $ 30 | $ 36.4 | $ 36.4 | |||||||||||||||||||||
| Common stock offering warrants issued, value (in Shares) | 232,875 | ||||||||||||||||||||||||
| Number of warrant purchased (in Shares) | 56,696 | 56,696 | |||||||||||||||||||||||
| Common stock per share | $ 20 | $ 42.2 | |||||||||||||||||||||||
| Warrant term | 5 years | ||||||||||||||||||||||||
| Fair value of common stock warrant (in Dollars) | $ 661,000 | ||||||||||||||||||||||||
| Per share price | $ 20 | ||||||||||||||||||||||||
| Expected volatility rate | 73.80% | 73.80% | 72.60% | ||||||||||||||||||||||
| Expected term | 5 years | 2 years 9 months 25 days | 5 years | ||||||||||||||||||||||
| Expected dividend rate | 0.00% | 0.00% | 0.00% | ||||||||||||||||||||||
| Risk free interest rate | 1.87% | 1.45% | 2.80% | ||||||||||||||||||||||
| Share price | 7.9 | $ 7.9 | |||||||||||||||||||||||
| Stock compensation expense (in Dollars) | $ 1,700,000 | ||||||||||||||||||||||||
| Fair value adjustment of warrants (in Dollars) | $ 1,700,000 | ||||||||||||||||||||||||
| Common Stock Warrant Issued to Underwriter of Common Stock Offering [Member] | |||||||||||||||||||||||||
| Common Stock Warrants and Common Stock Warrant Liability (Details) [Line Items] | |||||||||||||||||||||||||
| Exercise price | $ 7.13 | $ 7.13 | |||||||||||||||||||||||
| Common stock per share | $ 2.156 | ||||||||||||||||||||||||
| Expected volatility rate | 74.50% | 96.50% | |||||||||||||||||||||||
| Expected term | 2 years 8 months 15 days | 2 years 29 days | |||||||||||||||||||||||
| Expected dividend rate | 0.00% | 0.00% | |||||||||||||||||||||||
| Risk free interest rate | 0.68% | 0.18% | |||||||||||||||||||||||
| Deemed dividend (in Dollars) | $ 129,000 | $ 22,000 | |||||||||||||||||||||||
| Share price | $ 1.47 | $ 2.88 | $ 1.47 | ||||||||||||||||||||||
| Warrants exercise price | $ 2.1122 | $ 1.3659 | |||||||||||||||||||||||
| Unexercised warrants (in Shares) | 143,501 | 143,501 | |||||||||||||||||||||||
| November 2017 warrants [Member] | |||||||||||||||||||||||||
| Common Stock Warrants and Common Stock Warrant Liability (Details) [Line Items] | |||||||||||||||||||||||||
| Common stock offering warrants issued, value (in Shares) | 56,696 | ||||||||||||||||||||||||
| Number of warrant purchased (in Shares) | 56,696 | ||||||||||||||||||||||||
| Common stock per share | $ 30 | ||||||||||||||||||||||||
| Gross proceeds (in Dollars) | $ 1,700,000 | ||||||||||||||||||||||||
| New Warrants November 8, 2017 [Member] | |||||||||||||||||||||||||
| Common Stock Warrants and Common Stock Warrant Liability (Details) [Line Items] | |||||||||||||||||||||||||
| Number of warrant purchased (in Shares) | 17,088 | ||||||||||||||||||||||||
| Gross proceeds (in Dollars) | $ 513,000 | ||||||||||||||||||||||||
| Common Stock Warrants Issued to Placement Agent in 2020 Registered Direct Offerings and Private Placement [Member] | |||||||||||||||||||||||||
| Common Stock Warrants and Common Stock Warrant Liability (Details) [Line Items] | |||||||||||||||||||||||||
| Exercise price | $ 23 | $ 34.5 | $ 34.5 | ||||||||||||||||||||||
| Common stock offering warrants issued, value (in Shares) | 267,853 | 13,393 | |||||||||||||||||||||||
| Common stock per share | $ 18.8 | $ 18.8 | |||||||||||||||||||||||
| Fair value of common stock warrant (in Dollars) | $ 3,600,000 | $ 169 | $ 169 | ||||||||||||||||||||||
| Expected volatility rate | 159.00% | 159.00% | |||||||||||||||||||||||
| Expected term | 5 years | 5 years | |||||||||||||||||||||||
| Expected dividend rate | 0.00% | 0.00% | |||||||||||||||||||||||
| Risk free interest rate | 2.77% | 2.77% | |||||||||||||||||||||||
| Share price | $ 23 | ||||||||||||||||||||||||
| Purchase of warrants shares (in Shares) | 267,853 | ||||||||||||||||||||||||
| Common Stock Warrants Issued to Placement Agent in 2020 Registered Direct Offerings and Private Placement [Member] | H.C. Wainwright & Co., LLC [Member] | |||||||||||||||||||||||||
| Common Stock Warrants and Common Stock Warrant Liability (Details) [Line Items] | |||||||||||||||||||||||||
| Exercise price | $ 33.75 | ||||||||||||||||||||||||
| Common stock offering warrants issued, value (in Shares) | 5 | ||||||||||||||||||||||||
| Number of warrant purchased (in Shares) | 8,334 | ||||||||||||||||||||||||
| Common stock per share | $ 33.75 | ||||||||||||||||||||||||
| Fair value of common stock warrant (in Dollars) | $ 127,000 | ||||||||||||||||||||||||
| Expected volatility rate | 133.30% | ||||||||||||||||||||||||
| Expected term | 5 years | ||||||||||||||||||||||||
| Expected dividend rate | 0.00% | ||||||||||||||||||||||||
| Risk free interest rate | 2.07% | ||||||||||||||||||||||||
| Share price | $ 26.8 | ||||||||||||||||||||||||
| Common Stock Warrants Issued in January and March 2020 Private Placements [Member] | |||||||||||||||||||||||||
| Common Stock Warrants and Common Stock Warrant Liability (Details) [Line Items] | |||||||||||||||||||||||||
| Exercise price | $ 2.88 | $ 9 | |||||||||||||||||||||||
| Common stock offering warrants issued, value (in Shares) | 353,872 | 353,872 | |||||||||||||||||||||||
| Number of warrant purchased (in Shares) | 176,372 | 177,500 | |||||||||||||||||||||||
| Expected volatility rate | 74.80% | 73.80% | |||||||||||||||||||||||
| Expected term | 5 years 6 months | 5 years | |||||||||||||||||||||||
| Expected dividend rate | 0.00% | 0.00% | |||||||||||||||||||||||
| Risk free interest rate | 0.39% | 1.53% | |||||||||||||||||||||||
| Common stock warrants, exercisable | $ 2.88 | $ 9 | |||||||||||||||||||||||
| Common stock warrants, exercisable amount (in Dollars) | $ 242 | $ 813 | |||||||||||||||||||||||
| Common stock price | $ 2.35 | $ 7.9 | |||||||||||||||||||||||
| Ownership percentage | 50.00% | 50.00% | |||||||||||||||||||||||
| Common Stock Warrants Issued in April 2020 Public Offering [Member] | |||||||||||||||||||||||||
| Common Stock Warrants and Common Stock Warrant Liability (Details) [Line Items] | |||||||||||||||||||||||||
| Exercise price | $ 3.05 | ||||||||||||||||||||||||
| Number of warrant purchased (in Shares) | 1,574,308 | ||||||||||||||||||||||||
| Expected volatility rate | 87.90% | ||||||||||||||||||||||||
| Expected term | 5 years | ||||||||||||||||||||||||
| Expected dividend rate | 0.00% | ||||||||||||||||||||||||
| Risk free interest rate | 0.18% | ||||||||||||||||||||||||
| Common stock warrants, exercisable | $ 3,050.00 | $ 3,050.00 | |||||||||||||||||||||||
| Common stock warrants, exercisable amount (in Dollars) | $ 2,402 | ||||||||||||||||||||||||
| Common stock price | 2.4 | $ 2.4 | |||||||||||||||||||||||
| Warrant expire date | Apr. 24, 2025 | ||||||||||||||||||||||||
| Common Stock Warrants Issued to Placement Agent in 2020 Registered Direct Offerings and Private Placement [Member] | |||||||||||||||||||||||||
| Common Stock Warrants and Common Stock Warrant Liability (Details) [Line Items] | |||||||||||||||||||||||||
| Exercise price | $ 3.97 | $ 2.35 | $ 7.9 | 2.4 | 2.4 | ||||||||||||||||||||
| Common stock offering warrants issued, value (in Shares) | 13,313 | 13,228 | |||||||||||||||||||||||
| Common stock per share | $ 3.7563 | $ 10 | $ 3.97 | ||||||||||||||||||||||
| Expected volatility rate | 74.80% | 73.80% | 87.90% | ||||||||||||||||||||||
| Expected term | 5 years 6 months | 5 years | 5 years 6 months | ||||||||||||||||||||||
| Expected dividend rate | 0.00% | 0.00% | 0.00% | ||||||||||||||||||||||
| Risk free interest rate | 0.39% | 1.53% | 0.18% | ||||||||||||||||||||||
| Common stock warrants, exercisable | $ 10 | ||||||||||||||||||||||||
| Common stock warrants, exercisable amount (in Dollars) | $ 17 | $ 58 | $ 167 | ||||||||||||||||||||||
| Exercise outstanding warrants (in Shares) | 1,700,680 | ||||||||||||||||||||||||
| Common Stock Warrants Issued to Placement Agent in 2020 Registered Direct Offerings and Private Placement [Member] | H.C. Wainwright & Co., LLC [Member] | |||||||||||||||||||||||||
| Common Stock Warrants and Common Stock Warrant Liability (Details) [Line Items] | |||||||||||||||||||||||||
| Number of warrant purchased (in Shares) | 118,073 | ||||||||||||||||||||||||
| Common Stock Warrants Issued to Placement Agent in October 2020 Inducement Offering [Member] | |||||||||||||||||||||||||
| Common Stock Warrants and Common Stock Warrant Liability (Details) [Line Items] | |||||||||||||||||||||||||
| Exercise price | $ 1.725 | 1.725 | $ 1.725 | ||||||||||||||||||||||
| Adjusted exercise price | 3.05 | ||||||||||||||||||||||||
| Downward exercise price | $ 2.88 | ||||||||||||||||||||||||
| Warrant term | 5 years | ||||||||||||||||||||||||
| Expected volatility rate | 96.50% | ||||||||||||||||||||||||
| Expected term | 5 years 6 months | ||||||||||||||||||||||||
| Expected dividend rate | 0.00% | ||||||||||||||||||||||||
| Risk free interest rate | 0.18% | ||||||||||||||||||||||||
| Share price | 1.47 | $ 1.47 | |||||||||||||||||||||||
| Purchase of warrants shares (in Shares) | 1,700,680 | ||||||||||||||||||||||||
| Common stock warrants, exercisable | 1.725 | $ 1.725 | |||||||||||||||||||||||
| Common stock warrants, exercisable amount (in Dollars) | $ 1,806,000 | ||||||||||||||||||||||||
| Common Stock Warrants Issued to Placement Agent in October 2020 Inducement Offering [Member] | H.C. Wainwright & Co., LLC [Member] | |||||||||||||||||||||||||
| Common Stock Warrants and Common Stock Warrant Liability (Details) [Line Items] | |||||||||||||||||||||||||
| Purchase of warrants shares (in Shares) | 85,034 | ||||||||||||||||||||||||
| Common Stock Warrants Issued to Placement Agent in October 2020 Inducement Offering [Member] | |||||||||||||||||||||||||
| Common Stock Warrants and Common Stock Warrant Liability (Details) [Line Items] | |||||||||||||||||||||||||
| Common stock per share | $ 1.47 | ||||||||||||||||||||||||
| Fair value of common stock warrant (in Dollars) | $ 86,000 | ||||||||||||||||||||||||
| Expected volatility rate | 96.50% | ||||||||||||||||||||||||
| Expected term | 5 years 6 months | ||||||||||||||||||||||||
| Expected dividend rate | 0.00% | ||||||||||||||||||||||||
| Risk free interest rate | 0.18% | ||||||||||||||||||||||||
| Fair value adjustment of warrants (in Dollars) | $ 237,000 | ||||||||||||||||||||||||
| Purchase of warrants shares (in Shares) | 1,700,680 | ||||||||||||||||||||||||
| Common Stock Warrants Issued to Placement Agent in October 2020 Inducement Offering [Member] | H.C. Wainwright & Co., LLC [Member] | |||||||||||||||||||||||||
| Common Stock Warrants and Common Stock Warrant Liability (Details) [Line Items] | |||||||||||||||||||||||||
| Exercise price | $ 2.156 | ||||||||||||||||||||||||
| Common Stock Warrants Issued in February 2021 Private Placement Agreement [Member] | |||||||||||||||||||||||||
| Common Stock Warrants and Common Stock Warrant Liability (Details) [Line Items] | |||||||||||||||||||||||||
| Exercise price | $ 2.216 | 2.216 | $ 2.216 | ||||||||||||||||||||||
| Common stock per share | $ 1.93 | ||||||||||||||||||||||||
| Expected volatility rate | 95.60% | ||||||||||||||||||||||||
| Expected term | 5 years 6 months | ||||||||||||||||||||||||
| Expected dividend rate | 0.00% | ||||||||||||||||||||||||
| Risk free interest rate | 0.18% | ||||||||||||||||||||||||
| Fair value adjustment of warrants (in Dollars) | $ 3,052,000 | ||||||||||||||||||||||||
| Purchase of warrants shares (in Shares) | 2,194,427 | ||||||||||||||||||||||||
| Common Stock Warrants Issued in February 2021 Private Placement Agreement [Member] | H.C. Wainwright & Co., LLC [Member] | |||||||||||||||||||||||||
| Common Stock Warrants and Common Stock Warrant Liability (Details) [Line Items] | |||||||||||||||||||||||||
| Exercise price | $ 2.8481 | ||||||||||||||||||||||||
| Common Stock Warrants Issued to Placement Agent in February 2021 Private Placement Agreement [Member] | |||||||||||||||||||||||||
| Common Stock Warrants and Common Stock Warrant Liability (Details) [Line Items] | |||||||||||||||||||||||||
| Exercise price | 2.8481 | $ 2.8481 | |||||||||||||||||||||||
| Common stock per share | $ 1.93 | ||||||||||||||||||||||||
| Expected volatility rate | 95.60% | ||||||||||||||||||||||||
| Expected term | 5 years 6 months | ||||||||||||||||||||||||
| Expected dividend rate | 0.00% | ||||||||||||||||||||||||
| Risk free interest rate | 0.18% | ||||||||||||||||||||||||
| Fair value adjustment of warrants (in Dollars) | $ 435,000 | ||||||||||||||||||||||||
| Common Stock Warrants Issued to Placement Agent in February 2021 Private Placement Agreement [Member] | H.C. Wainwright & Co., LLC [Member] | |||||||||||||||||||||||||
| Common Stock Warrants and Common Stock Warrant Liability (Details) [Line Items] | |||||||||||||||||||||||||
| Purchase of warrants shares (in Shares) | 329,164 | ||||||||||||||||||||||||
| Common Stock Warrants Issued to Placement Agent in March 2021 Registered Direct Offering [Member] | |||||||||||||||||||||||||
| Common Stock Warrants and Common Stock Warrant Liability (Details) [Line Items] | |||||||||||||||||||||||||
| Exercise price | 2.5 | $ 2.5 | |||||||||||||||||||||||
| Common stock offering warrants issued, value (in Shares) | 1,975,000 | ||||||||||||||||||||||||
| Warrant term | 5 years | ||||||||||||||||||||||||
| Per share price | $ 2.5 | ||||||||||||||||||||||||
| Expected volatility rate | 100.80% | ||||||||||||||||||||||||
| Expected term | 5 years | ||||||||||||||||||||||||
| Expected dividend rate | 0.00% | ||||||||||||||||||||||||
| Risk free interest rate | 0.31% | ||||||||||||||||||||||||
| Share price | $ 2 | $ 1.76 | $ 1.76 | ||||||||||||||||||||||
| Stock compensation expense (in Dollars) | $ 181,000 | ||||||||||||||||||||||||
| Purchase of warrants shares (in Shares) | 148,125 | ||||||||||||||||||||||||
| Common stock, par value | $ 0.001 | ||||||||||||||||||||||||
| Deducting fees payable (in Dollars) | $ 3,950,000 | ||||||||||||||||||||||||
| Common stock sold (in Shares) | 1,975,000 | ||||||||||||||||||||||||
| Deemed Dividend Adjustment-Warrant Modified Terms Revaluation [Member] | |||||||||||||||||||||||||
| Common Stock Warrants and Common Stock Warrant Liability (Details) [Line Items] | |||||||||||||||||||||||||
| Exercise price | $ 1.725 | ||||||||||||||||||||||||
| Common stock offering warrants issued, value (in Shares) | 56,625 | ||||||||||||||||||||||||
| Common stock per share | $ 1.47 | ||||||||||||||||||||||||
| Expected volatility rate | 96.50% | ||||||||||||||||||||||||
| Expected dividend rate | 0.00% | ||||||||||||||||||||||||
| Risk free interest rate | 0.18% | ||||||||||||||||||||||||
| Exercise outstanding warrants (in Shares) | 1,700,680 | ||||||||||||||||||||||||
| Aggregate issued common shares (in Shares) | 51,414 | ||||||||||||||||||||||||
| Outstanding litigation reserve (in Dollars) | $ 238 | ||||||||||||||||||||||||
| Deemed Dividend Adjustment-Warrant Modified Terms Revaluation [Member] | Minimum [Member] | |||||||||||||||||||||||||
| Common Stock Warrants and Common Stock Warrant Liability (Details) [Line Items] | |||||||||||||||||||||||||
| Exercise price | $ 2.88 | ||||||||||||||||||||||||
| Expected term | 4 years 6 months | ||||||||||||||||||||||||
| Deemed Dividend Adjustment-Warrant Modified Terms Revaluation [Member] | Maximum [Member] | |||||||||||||||||||||||||
| Common Stock Warrants and Common Stock Warrant Liability (Details) [Line Items] | |||||||||||||||||||||||||
| Exercise price | $ 3,050.00 | ||||||||||||||||||||||||
| Expected term | 8 years | ||||||||||||||||||||||||
| Public Offering [Member] | |||||||||||||||||||||||||
| Common Stock Warrants and Common Stock Warrant Liability (Details) [Line Items] | |||||||||||||||||||||||||
| Number of warrant purchased (in Shares) | 293,000 | ||||||||||||||||||||||||
| Common Class A [Member] | Common Stock Warrants Issued in April 2020 Public Offering [Member] | |||||||||||||||||||||||||
| Common Stock Warrants and Common Stock Warrant Liability (Details) [Line Items] | |||||||||||||||||||||||||
| Common stock offering warrants issued, value (in Shares) | 145,586 | ||||||||||||||||||||||||
| Common Class A [Member] | Common Stock Warrants Issued to Placement Agent in 2020 Registered Direct Offerings and Private Placement [Member] | |||||||||||||||||||||||||
| Common Stock Warrants and Common Stock Warrant Liability (Details) [Line Items] | |||||||||||||||||||||||||
| Common stock offering warrants issued, value (in Shares) | 145,586 | ||||||||||||||||||||||||
| Common Class B [Member] | Common Stock Warrants Issued in April 2020 Public Offering [Member] | |||||||||||||||||||||||||
| Common Stock Warrants and Common Stock Warrant Liability (Details) [Line Items] | |||||||||||||||||||||||||
| Common stock offering warrants issued, value (in Shares) | 1,428,722 | ||||||||||||||||||||||||
| Common Class B [Member] | Common Stock Warrants Issued to Placement Agent in 2020 Registered Direct Offerings and Private Placement [Member] | |||||||||||||||||||||||||
| Common Stock Warrants and Common Stock Warrant Liability (Details) [Line Items] | |||||||||||||||||||||||||
| Common stock offering warrants issued, value (in Shares) | 1,428,722 | ||||||||||||||||||||||||
Common Stock Warrants and Common Stock Warrant Liability (Details) - Schedule of common stock warrant activity - shares |
9 Months Ended | 12 Months Ended | |
|---|---|---|---|
Sep. 30, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
| Class of Warrant or Right [Line Items] | |||
| Outstanding at beginning | 2,582,697 | 489,176 | |
| Outstanding at ending | 4,547,618 | 2,582,697 | |
| Various [Member] | |||
| Class of Warrant or Right [Line Items] | |||
| Warrant Type | Various | ||
| Term Date | Various-2020/2021 | ||
| Exercise Price | Various | ||
| Outstanding at beginning | 17,059 | ||
| Issued | |||
| Exercised | (9,375) | ||
| Expired | (7,684) | ||
| Outstanding at ending | |||
| Common Stock Offering Warrants [Member] | |||
| Class of Warrant or Right [Line Items] | |||
| Warrant Type | Common Stock Offering Warrants | ||
| Term Date | November 21, 2022 | ||
| Exercise Price | $1.3659 | ||
| Outstanding at beginning | 143,501 | 143,501 | |
| Issued | |||
| Exercised | (5,616) | ||
| Expired | |||
| Outstanding at ending | 137,885 | 143,501 | |
| Dealer Manager Warrants [Member] | |||
| Class of Warrant or Right [Line Items] | |||
| Warrant Type | Dealer Manager Warrants | ||
| Term Date | November 21, 2022 | ||
| Exercise Price | $30.00 | ||
| Outstanding at beginning | 47,250 | ||
| Issued | |||
| Exercised | (47,250) | ||
| Expired | |||
| Outstanding at ending | |||
| Warrant Reissue [Member] | |||
| Class of Warrant or Right [Line Items] | |||
| Warrant Type | Warrant Reissue | ||
| Term Date | December 20, 2023 | ||
| Exercise Price | $36.40 | ||
| Outstanding at beginning | 56,696 | 56,696 | |
| Issued | |||
| Exercised | |||
| Expired | |||
| Outstanding at ending | 56,696 | 56,696 | |
| Rights Offering Warrants [Member] | |||
| Class of Warrant or Right [Line Items] | |||
| Warrant Type | Rights Offering Warrants | ||
| Term Date | July 25, 2023 | ||
| Exercise Price | $23.00 | ||
| Outstanding at beginning | 202,943 | 202,943 | |
| Issued | |||
| Exercised | (499) | ||
| Expired | |||
| Outstanding at ending | 202,444 | 202,943 | |
| Dealer Manager Warrants [Member] | |||
| Class of Warrant or Right [Line Items] | |||
| Warrant Type | Dealer Manager Warrants | ||
| Term Date | August 13, 2023 | ||
| Exercise Price | $34.50 | ||
| Outstanding at beginning | 13,393 | 13,393 | |
| Issued | |||
| Exercised | |||
| Expired | |||
| Outstanding at ending | 13,393 | 13,393 | |
| Dealer Manager Warrants [Member] | |||
| Class of Warrant or Right [Line Items] | |||
| Warrant Type | Dealer Manager Warrants | ||
| Term Date | July 11, 2024 | ||
| Exercise Price | $33.75 | ||
| Outstanding at beginning | 8,334 | 8,334 | |
| Issued | |||
| Exercised | |||
| Expired | |||
| Outstanding at ending | 8,334 | 8,334 | |
| Registered Direct Offering [Member] | |||
| Class of Warrant or Right [Line Items] | |||
| Warrant Type | Registered Direct Offering | ||
| Term Date | July 28, 2025 | ||
| Exercise Price | $9.00 | ||
| Outstanding at beginning | 177,500 | ||
| Issued | 177,500 | ||
| Exercised | |||
| Expired | |||
| Outstanding at ending | 177,500 | 177,500 | |
| Dealer Manager Warrants [Member] | |||
| Class of Warrant or Right [Line Items] | |||
| Warrant Type | Dealer Manager Warrants | ||
| Term Date | July 28, 2025 | ||
| Exercise Price | $10.00 | ||
| Outstanding at beginning | 13,315 | ||
| Issued | 13,315 | ||
| Exercised | |||
| Expired | |||
| Outstanding at ending | 13,315 | 13,315 | |
| Registered Direct Offering [Member] | |||
| Class of Warrant or Right [Line Items] | |||
| Warrant Type | Registered Direct Offering | ||
| Term Date | September 8, 2025 | ||
| Exercise Price | $2.88 | ||
| Outstanding at beginning | |||
| Issued | 176,372 | ||
| Exercised | (176,372) | ||
| Expired | |||
| Outstanding at ending | |||
| Dealer Manager Warrants [Member] | |||
| Class of Warrant or Right [Line Items] | |||
| Warrant Type | Dealer Manager Warrants | ||
| Term Date | March 4, 2025 | ||
| Exercise Price | $3.76 | ||
| Outstanding at beginning | 13,228 | ||
| Issued | 13,228 | ||
| Exercised | |||
| Expired | |||
| Outstanding at ending | 13,228 | 13,228 | |
| Dealer Manager Warrants [Member] | |||
| Class of Warrant or Right [Line Items] | |||
| Warrant Type | Dealer Manager Warrants | ||
| Term Date | April 21, 2025 | ||
| Exercise Price | $3.97 | ||
| Outstanding at beginning | 118,073 | ||
| Issued | 118,073 | ||
| Exercised | |||
| Expired | |||
| Outstanding at ending | 118,073 | 118,073 | |
| Registered Direct Offering [Member[ | |||
| Class of Warrant or Right [Line Items] | |||
| Warrant Type | Registered Direct Offering | ||
| Term Date | April 24, 2025 | ||
| Exercise Price | $3.05 | ||
| Outstanding at beginning | 50,000 | ||
| Issued | 1,574,308 | ||
| Exercised | (1,524,308) | ||
| Expired | |||
| Outstanding at ending | 50,000 | 50,000 | |
| Private Warrant Inducement [Member] | |||
| Class of Warrant or Right [Line Items] | |||
| Warrant Type | Private Warrant Inducement | ||
| Term Date | April 27, 2026 | ||
| Exercise Price | $1.73 | ||
| Outstanding at beginning | 1,700,680 | ||
| Issued | 1,700,680 | ||
| Exercised | (700,680) | ||
| Expired | |||
| Outstanding at ending | 1,000,000 | 1,700,680 | |
| Dealer Manager Warrants [Member] | |||
| Class of Warrant or Right [Line Items] | |||
| Warrant Type | Dealer Manager Warrants | ||
| Term Date | April 27, 2026 | ||
| Exercise Price | $2.16 | ||
| Outstanding at beginning | 85,034 | ||
| Issued | 85,034 | ||
| Exercised | |||
| Expired | |||
| Outstanding at ending | 85,034 | 85,034 | |
| Private Placement Agreement [Member] | |||
| Class of Warrant or Right [Line Items] | |||
| Warrant Type | Private Placement Agreement | ||
| Term Date | August 2, 2026 | ||
| Exercise Price | $2.216 | ||
| Outstanding at beginning | |||
| Issued | 2,194,427 | ||
| Exercised | |||
| Expired | |||
| Outstanding at ending | 2,194,427 | ||
| Dealer Manager Warrants [Member] | |||
| Class of Warrant or Right [Line Items] | |||
| Warrant Type | Dealer Manager Warrants | ||
| Term Date | August 2, 2026 | ||
| Exercise Price | $2.848 | ||
| Outstanding at beginning | |||
| Issued | 329,164 | ||
| Exercised | |||
| Expired | |||
| Outstanding at ending | 329,164 | ||
| Dealer Manager Warrants [Member] | |||
| Class of Warrant or Right [Line Items] | |||
| Warrant Type | Dealer Manager Warrants | ||
| Term Date | March 23, 2026 | ||
| Exercise Price | $2.50 | ||
| Outstanding at beginning | |||
| Issued | 148,125 | ||
| Exercised | |||
| Expired | |||
| Outstanding at ending | 148,125 | ||
Stockholders’ Deficit (Details) - USD ($) |
1 Months Ended | 9 Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 15, 2021 |
Feb. 02, 2021 |
Feb. 02, 2021 |
Nov. 10, 2015 |
Jun. 22, 2021 |
Mar. 31, 2021 |
Mar. 29, 2021 |
Mar. 23, 2021 |
Mar. 19, 2021 |
Feb. 28, 2021 |
Sep. 30, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
Dec. 31, 2018 |
Nov. 21, 2017 |
Dec. 31, 2015 |
|
| Stockholders’ Deficit (Details) [Line Items] | ||||||||||||||||
| Common stock, authorized | 100,000,000 | 100,000,000 | ||||||||||||||
| Preferred stock, authorized | 15,000,000 | |||||||||||||||
| Capital stock, description | the Company’s authorized capital stock consisted of 100 million shares of common stock, $.001 par value, and 10 million shares of preferred stock, $.001 par value. | |||||||||||||||
| Common stock share outstanding | 12,191,112 | 5,099,512 | ||||||||||||||
| Common stock, shares, issued | 12,191,112 | 5,099,512 | ||||||||||||||
| Shares issued in connection with registered direct offering | 4,388,854 | |||||||||||||||
| Sale of Stock, Consideration Received on Transaction (in Dollars) | $ 8,898 | |||||||||||||||
| Aggregate shares | 1,975,000 | |||||||||||||||
| Net proceeds (in Dollars) | $ 20,000 | $ 3,523 | $ 20,951 | |||||||||||||
| Exercise of common stock warrants | 706,795 | |||||||||||||||
| Restricted Stock, Shares Issued Net of Shares for Tax Withholdings | 1,228 | |||||||||||||||
| Warrant to purchase shares | 4,547,618 | 2,582,697 | 489,176 | |||||||||||||
| Common stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 | ||||||||||||||
| Aggregate shares of common stock | 700,680,499 | |||||||||||||||
| Registered direct offering, description | On March 23, 2021, the Company consummated a registered direct offering with certain institutional investors and issued an aggregate of 1,975,000 shares of the Company’s common stock, par value $0.001 per share at a purchase price of $2.00 per share for gross proceeds to the Company of approximately $3.95 million, pursuant to a prospectus, dated August 24, 2018, and a prospectus supplement, dated March 22, 2021, in connection with a takedown from the Company’s shelf registration statement on Form S-3 (File No. 333-225712). | |||||||||||||||
| Shares of commons stock for the exercise | 5,616 | |||||||||||||||
| Placement Agent Warrants [Member] | ||||||||||||||||
| Stockholders’ Deficit (Details) [Line Items] | ||||||||||||||||
| Shares issued in connection with exercise of warrants | 148,125 | |||||||||||||||
| Exercise price per share (in Dollars per share) | $ 2.5 | |||||||||||||||
| Common Stock [Member] | ||||||||||||||||
| Stockholders’ Deficit (Details) [Line Items] | ||||||||||||||||
| Common stock, authorized | 100,000,000 | |||||||||||||||
| Common stock, shares, issued | 7,091,600 | |||||||||||||||
| Private Placement [Member] | ||||||||||||||||
| Stockholders’ Deficit (Details) [Line Items] | ||||||||||||||||
| Warrant to purchase shares | 3,968,854 | 3,968,854 | ||||||||||||||
| Common stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 | ||||||||||||||
| Purchase price per share (in Dollars per share) | 2.2785 | $ 2.2785 | ||||||||||||||
| Aggregate shares of common stock | 420,000 | |||||||||||||||
| Purchase price of pre- funded warrants (in Dollars per share) | $ 2,277.5000 | $ 2,277.5000 | ||||||||||||||
| Shares issued in connection with exercise of warrants | 2,194,427 | 2,194,427 | ||||||||||||||
| Gross proceeds (in Dollars) | $ 10,000,000 | |||||||||||||||
| Exercise price per share, description | all 420,000 pre-funded shares had been distributed. In connection with the offering, we issued the placement agent warrants to purchase up to 329,164 shares of Common Stock with an exercise price of $2.8481 per share. | |||||||||||||||
| Public Offering [Member] | ||||||||||||||||
| Stockholders’ Deficit (Details) [Line Items] | ||||||||||||||||
| Net proceeds (in Dollars) | $ 1,228,000 | |||||||||||||||
| Shares issued in connection with exercise of warrants | 293,000 | |||||||||||||||
| Series A Convertible Preferred Stock [Member] | ||||||||||||||||
| Stockholders’ Deficit (Details) [Line Items] | ||||||||||||||||
| Preferred stock, authorized | 2,000,000 | |||||||||||||||
| Preferred stock, par value (in Dollars per share) | $ 0.001 | |||||||||||||||
| Series B Convertible Preferred Stock [Member] | ||||||||||||||||
| Stockholders’ Deficit (Details) [Line Items] | ||||||||||||||||
| Preferred stock, authorized | 7,515,000 | |||||||||||||||
Stock-based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands |
9 Months Ended | |
|---|---|---|
Sep. 30, 2021 |
Dec. 31, 2020 |
|
| Stock-based Compensation (Details) [Line Items] | ||
| Service period, description | Options granted under the 2018 Plan generally vest over a twelve- to 36-month period coinciding with their respective service periods. | |
| Stock options term | 5 years | |
| Weighted average grant date fair value of options granted | $ 0.98 | |
| Share price | $ 1.51 | $ 1.73 |
| Weighted average grant date | 32 months | |
| Equity Incentive Plan 2018 [Member] | ||
| Stock-based Compensation (Details) [Line Items] | ||
| Common stock available for issuance (in Shares) | 2,857,184 | |
| Restricted Stock Units [Member] | ||
| Stock-based Compensation (Details) [Line Items] | ||
| Compensation cost not yet recognized (in Dollars) | $ 782 |
Stock-based Compensation (Details) - Schedule of fair value of options granted - Employee [Member] |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Stock-based Compensation (Details) - Schedule of fair value of options granted [Line Items] | |
| Expected volatility | 96.50% |
| Expected dividend yield | |
| Expected term (in years) | 2 years 11 months 26 days |
| Risk-free interest rate | 0.44% |
Stock-based Compensation (Details) - Schedule of stock option activity |
9 Months Ended | |||
|---|---|---|---|---|
|
Sep. 30, 2021
USD ($)
$ / shares
shares
| ||||
| Schedule of stock option activity [Abstract] | ||||
| Number of Options, Outstanding at December 31, 2020 (in Shares) | shares | 496,471 | |||
| Weighted Average Exercise Price Per Share, Outstanding at December 31, 2020 | $ 8.63 | |||
| Weighted Average Remaining Contractual Term (years), Outstanding at December 31, 2020 (in Shares) | shares | 3.9 | |||
| Aggregate Intrinsic Value, Outstanding at December 31, 2020 (in Dollars) | $ | [1] | |||
| Number of Options, Granted (in Shares) | shares | 575,565 | |||
| Weighted Average Exercise Price Per Share, Granted | $ 1.65 | |||
| Weighted Average Remaining Contractual Term (years), Granted | 4 years 9 months 18 days | |||
| Aggregate Intrinsic Value, Granted | [1] | |||
| Number of Options, Exercised (in Shares) | shares | ||||
| Weighted Average Exercise Price Per Share, Exercised | ||||
| Exercised (in Dollars) | $ | [1] | |||
| Aggregate Intrinsic Value, Exercised (in Dollars) | $ | [1] | |||
| Number of Options, Forfeited (in Shares) | shares | (3,300) | |||
| Weighted Average Exercise Price Per Share, Forfeited | ||||
| Weighted Average Remaining Contractual Term (years), Forfeited | [1] | |||
| Aggregate Intrinsic Value, Forfeited | [1] | |||
| Number of Options, Expired (in Shares) | shares | ||||
| Weighted Average Exercise Price Per Share, Expired | ||||
| Weighted Average Remaining Contractual Term (years), Expired | [1] | |||
| Aggregate Intrinsic Value, Exercised, Expired | [1] | |||
| Number of Options, Outstanding at September 30, 2021 (in Shares) | shares | 1,068,736 | |||
| Weighted Average Exercise Price Per Share, Outstanding at September 30, 2021 | $ 4.73 | |||
| Weighted Average Remaining Contractual Term (years), Outstanding at September 30, 2021 | 2 years 1 month 6 days | |||
| Aggregate Intrinsic Value, Outstanding at September 30, 2021 (in Dollars) | $ | [1] | |||
| Number of Options, Outstanding, Exercisable at September 30, 2021 (in Shares) | shares | 519,125 | |||
| Weighted Average Exercise Price Per Share, Exercisable at September 30, 2021 | $ 6.95 | |||
| Weighted Average Remaining Contractual Term (years), Exercisable at September 30, 2021 (in Shares) | shares | 1.9 | |||
| Aggregate Intrinsic Value, Outstanding, Exercisable at September 30, 2021 (in Dollars) | $ | [1] | |||
| ||||
Stock-based Compensation (Details) - Schedule of summarizes restricted stock unit activity - Restricted Stock [Member] |
9 Months Ended |
|---|---|
|
Sep. 30, 2021
$ / shares
shares
| |
| Stock-based Compensation (Details) - Schedule of summarizes restricted stock unit activity [Line Items] | |
| Number of Units, Outstanding beginning | shares | 32,072 |
| Weighted Average Grant-Date Fair Value Per Unit, Outstanding beginning | $ / shares | $ 2.01 |
| Number of Units, Granted | shares | |
| Weighted Average Grant-Date Fair Value Per Unit, Granted | $ / shares | |
| Number of Units, Vested | shares | (31,405) |
| Weighted Average Grant-Date Fair Value Per Unit, Vested | $ / shares | $ 1.97 |
| Number of Units, Forfeited | shares | |
| Weighted Average Grant-Date Fair Value Per Unit, Forfeited | $ / shares | |
| Number of Units, Outstanding ending | shares | 667 |
| Weighted Average Grant-Date Fair Value Per Unit, Outstanding ending | $ / shares | $ 1.8 |
Stock-based Compensation (Details) - Schedule of stock-based compensation expense - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Stock-based Compensation (Details) - Schedule of stock-based compensation expense [Line Items] | ||||
| Total stock-based compensation expense | $ 214 | $ 162 | $ 550 | $ 453 |
| Research and development [Member] | ||||
| Stock-based Compensation (Details) - Schedule of stock-based compensation expense [Line Items] | ||||
| Total stock-based compensation expense | 1 | 2 | 2 | 7 |
| Selling, general and administrative [Member] | ||||
| Stock-based Compensation (Details) - Schedule of stock-based compensation expense [Line Items] | ||||
| Total stock-based compensation expense | $ 213 | $ 160 | $ 548 | $ 446 |
Commitments and Contingencies (Details) $ in Thousands |
1 Months Ended | 9 Months Ended | ||||
|---|---|---|---|---|---|---|
Aug. 01, 2020 |
Dec. 02, 2019 |
Nov. 16, 2016
ft²
|
Sep. 30, 2021
USD ($)
|
Sep. 30, 2020
USD ($)
|
Dec. 31, 2019
ft²
|
|
| Commitments and Contingencies (Details) [Line Items] | ||||||
| Area square feet | 7,632 | |||||
| Lease commitments extended, description | we entered into a lease for our manufacturing and research facility in Phoenix, Arizona where we occupy approximately 5,105 square feet of manufacturing and warehouse space. This lease expires on November 30, 2024. | we entered into a lease for our corporate headquarters in Phoenix, Arizona where we lease and occupy approximately 5,529 square feet of office space. This lease expires in November 2024. | ||||
| Rent expense | $ | $ 166 | $ 202 | ||||
| Research and Development Equipment [Member] | ||||||
| Commitments and Contingencies (Details) [Line Items] | ||||||
| Area square feet | 1,954 | |||||
| Lease commitments extended, description | This lease expired on November 15, 2018 but was extended for an additional 24 months, through November 2020. | |||||
Commitments and Contingencies (Details) - Schedule of future minimum lease payments under non-cancellable operating lease and future minimum capital lease payments $ in Thousands |
Sep. 30, 2021
USD ($)
|
|---|---|
| Schedule of future minimum lease payments under non-cancellable operating lease and future minimum capital lease payments [Abstract] | |
| 2021 Finance leases | $ 14 |
| 2021 Operating leases | 48 |
| 2022 Finance leases | 28 |
| 2022 Operating leases | 194 |
| 2023 Finance leases | |
| 2023 Operating leases | 198 |
| 2024 Finance leases | |
| 2024 Operating leases | 186 |
| Total minimum lease payments of Finance leases | 42 |
| Total minimum lease payments of Operating leases | 626 |
| Less: amounts representing interest (ranging from 11.43% to 14.68%) | 2 |
| Present value of minimum lease payments | 40 |
| Less: current installments under finance lease obligations | 40 |
| Total long-term portion |
Subsequent Events (Details) - USD ($) |
1 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Jul. 15, 2021 |
Mar. 31, 2021 |
Feb. 28, 2021 |
Sep. 30, 2021 |
|
| Subsequent Events (Details) [Line Items] | ||||
| Number of common stock issued | 4,388,854 | |||
| Net proceeds | $ 20,000 | $ 3,523 | $ 20,951 | |
| Institutional Investors [Member] | ||||
| Subsequent Events (Details) [Line Items] | ||||
| Number of common stock issued | 16,171 | |||