UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 000-55195
GI DYNAMICS, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 84-1621425 | |
|
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) | |
| 320 Congress Street, 3rd Floor | ||
| Boston, Massachusetts | 02210 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
(781) 357-3300
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act: Common Stock, $0.01 par value per share
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes ☐ No ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files): Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Accelerated filer ☐ | |
| Large accelerated filer ☐ | Smaller reporting company ☒ |
| Non-accelerated filer ☒ | Emerging growth company ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): ☐ Yes ☒ No
The registrant’s common stock, in the form of CHESS Depositary Interests (“CDI” in singular, “CDIs” in plural), each CDI represented 1/50th of one share of common stock computed by reference to the price at which the CDIs were last sold on June 30, 2020, the last business day of the registrant’s most recently completed second quarter, as reported on the Australian Securities Exchange (“ASX”), was $3,767,612 (A$5,489,744).
On July 22, 2020, the registrant’s common stock was removed from the Official List of the Australian Securities Exchange and the CHESS Depository Trust was dissolved and all CDIs were automatically converted to shares of common stock, with fractional shares being redeemed for cash payment. The total number of shares of the registrant’s common stock outstanding on May 15, 2021 was 88,095,659.
DOCUMENTS INCORPORATED BY REFERENCE
None.
EXPLANATORY NOTE
GI Dynamics, Inc. (the “Company”) is filing this Amendment No. 1 to Annual Report on Form 10-K/A (the “Amendment”) to amend its Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as filed by the Company with the Securities and Exchange Commission (the “SEC”) on March 12, 2021 (the “Original Form 10-K”). The purpose of this Amendment is to amend Part III, Items 10 through 14 of the Original Form 10-K to include information previously omitted from the Original Form 10-K in reliance on General Instruction G(3) to Form 10-K. Accordingly, Part III of the Original Form 10-K is hereby amended and restated as set forth below and the reference on the cover page of the Original Form 10-K to the incorporation by reference of the Company’s definitive proxy statement into Part III of the Original Form 10-K is hereby deleted. In addition, as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), new certifications by the Company’s principal executive officer and principal financial officer are filed as exhibits to this Amendment.
No attempt has been made in this Amendment to modify or update the other disclosures presented in the Original Form 10-K. This Amendment does not reflect events occurring after the filing of the original report (i.e., those events occurring after March 12, 2021) or modify or update those disclosures that may be affected by subsequent events. Accordingly, this Amendment should be read in conjunction with the Original Form 10-K and the Company’s other filings with the SEC.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements as defined in Section 27A of the United States Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. Throughout this Annual Report on Form 10-K, all references to the “Company” or “GI Dynamics” unless where the context requires otherwise, refers to the consolidated entity of GI Dynamics, Inc. These forward-looking statements concern the Company’s business, operations, financial performance and condition as well as plans, objectives and expectations for the Company’s business, operations and financial performance and condition. Any statements contained in this Annual Report on Form 10-K that are not of historical facts may be deemed to be forward-looking statements. The forward-looking statements are contained principally in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements include, but are not limited to, statements about the Company’s:
| ● | expectations with respect to the Company’s intellectual property position; |
| ● | expectations with respect to clinical trials for EndoBarrier®; |
| ● | expectations with respect to regulatory submissions and receipt and maintenance of regulatory approvals; |
| ● | the impact of the ongoing COVID-19 pandemic on the Company’s clinical trials, business plan and the global economy; | |
| ● | ability to commercialize products; |
| ● | ability to develop and commercialize new products; |
| ● | expectation with regard to product manufacture and inventory; and |
| ● | estimates regarding capital requirements and need for additional financing. |
In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “aims,” “assumes,” “goal,” “intends,” “objective,” “potential,” “positioned,” “target,” “continue,” “seek,” “vision,” or the negative thereof and similar expressions intended to identify forward-looking statements.
These forward-looking statements are based on current expectations, estimates, forecasts and projections about the Company’s business and the industry in which it operates and management’s beliefs and assumptions. These forward-looking statements are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond the Company’s control. As a result, any or all forward-looking statements in this Annual Report on Form 10-K may later become inaccurate. The Company may not actually achieve the plans, intentions or expectations disclosed in any forward-looking statements, and actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements made by the Company. The Company has included important factors in the cautionary statements included in this Annual Report on Form 10-K, particularly in the “Risk Factors” section, that could cause actual results or events to differ materially from the forward-looking statements made.
You are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on the forward-looking statements. You should read this Annual Report on Form 10-K and the documents that the Company has filed as exhibits to the GI Dynamics Form 10-K completely and with the understanding that actual future results may be materially different from what the Company expects. These forward-looking statements speak only as at the date of this Annual Report on Form 10-K. Unless required by law, the Company does not intend to publicly update or revise any forward-looking statements to reflect new information or future events or otherwise. You should, however, review the factors and risks described in the reports the Company will file from time to time with the SEC after the date of this Annual Report on Form 10-K.
i
TABLE OF CONTENTS
| Page | ||
| PART III | ||
| Item 10. | Directors, Executive Officers and Corporate Governance | 1 |
| Item 11. | Executive Compensation | 6 |
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 12 |
| Item 13. | Certain Relationships and Related Transactions, and Director Independence | 13 |
| Item 14. | Principal Accountant Fees and Services | 15 |
| PART IV | ||
| Item 15. | Exhibits and Financial Statement Schedules | 17 |
| Signatures | 21 | |
ii
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Board of Directors and Risk Oversight
The following information includes information that the Company’s directors and executive officers have given the Company about their age; their positions held, principal occupation and business experience for the past five years; and other publicly-held companies at which they serve or have served as a director during the past five years.
The specific experience, qualifications, attributes and skills listed below for each director led the Company’s Board of Directors, or the Board, to the conclusion that such individuals should serve on the Board. This conclusion is also based on the Board’s belief that each of the Company’s directors has a reputation for integrity, honesty and adherence to high ethical standards, and has demonstrated business acumen, an ability to exercise sound judgment, and commitment to Gi Dynamics and the Company’s Board.
There are no family relationships among any of the directors or executive officers of GI Dynamics.
The responsibilities of the board are set down in the Company’s Board Charter which is available on the Company’s website at www.gidynamics.com.
| Name | Age | Position | ||
| Mark Lerdal | 62 | Non-executive Chairman of the Board | ||
| Ginger Glaser | 53 | Non-executive Director | ||
| Joseph Virgilio | 47 | Non-executive Director |
All three directors are members of the audit committee, the compensation committee, and the nominating and corporate governance committee. At May 15, 2021, none of the committees have elected a specific chairperson.
Mark Lerdal has served as the Chairman of the Board of Directors of GI Dynamics since August 2020. Mr. Lerdal’s extensive knowledge and experience as a board director in financial and business development, as well as a proven track record leading multiple mergers and acquisitions, makes him qualified to serve on the Company’s board of directors.
Mr. Lerdal founded KC Holdings, Inc., a company formed to take KENETECH Corporation private through a management buyout. Mr. Lerdal previously held the position as President and CEO of KENETECH Corporation, one of the world’s largest developer, constructor and operator of wind energy plants.
Mr. Lerdal currently serves as Chairman of the Board for Leaf Clean Energy since April 2014, and Empower Energies, Inc., since October 2019. Mr. Lerdal also sits on the Board of Directors for Southern Current since January 2020, Allied Minds, PLC (LSE:ALM) since December 2019, and serves as director and consultant to Northleaf Capital Partners since July [2016. Mr. Lerdal previously served on the Board of Directors as chairman of Element Markets, LLC from January 2017 to January 2021 and as director of Onsite Energy Corporation from January 2010 to June 2020, Medley Capital Corporation from August 2017 to Marc 2019, Trading Emissions, PLC from January 2013 to January 2019, TerraForm Power, Inc. from July 2014 to November 2015 and TerraForm Global, Inc. from July 2015 to November 2015 and again from October 2016 to December 2017.
Mr. Lerdal graduated Cum Laude from Northwestern University School of Law and earned his Bachelor of Arts in Economics from Stanford University.
Ginger Glaser has been a director of GI Dynamics since October 2020. Ms. Glaser’s 25 years of quality and regulatory experience, proven leadership of successful medical device organizations, as well as her breadth of knowledge in clinical affairs and engineering makes her qualified to serve on the Company’s board of directors.
Ms. Glaser currently is the Principal for G2 Consulting Services since October 2020. Ms. Glaser was the Chief Technology Officer for Monteris Medical from November 2017 to December 2020 and held vice president positions between January 2016 and November 2017. Ms. Glaser held vice president roles with Boston Scientific (NYSE:BSX) from August 2015 to December 2015 and American Medical Systems from January 2012 to August 2015, prior to its acquisition by Boston Scientific (NYSE:BSX).
1
Ms. Glaser has a strong understanding of FDA processes and culture. She has led industry-wide task forces and helped numerous organizations obtain global regulatory approvals, including “first in the world” achievements.
Ms. Glaser graduated Cum Laude from Texas A&M University, where she earned her B.S. in Bioengineering and M.S. in Biomedical Engineering.
Joseph Virgilio has been a director and the Company’s chief executive officer since November 2020. Mr. Virgilio’s more than 20 years of sales, marketing, and general management experience in the medical device industry makes him qualified to serve on the Company’s board of directors. Mr. Virgilio possesses a proven track record of aggressive revenue growth through the development and execution of strategic sales and marketing plans with demonstrated abilities to recruit, train, and motivate a highly effective and specialized cross-functional team. His areas of expertise also include GPO/IDN contracting, organizational development and restructuring, corporate partnerships, and distribution strategies. Additionally, Mr. Virgilio possesses broad experience leading organizational turn-around and integration activities.
Prior to joining GI Dynamics, Mr. Virgilio served as the President and General Manager of Amann Girrbach, AG, an innovator and preferred full-service provider in digital dental prosthetics, from September 2018 until April 2020. From April 2016 until February 2018, Mr. Virgilio served as the Vice President of Sales, The Americas at Surgical Specialties Corp, a manufacturer and distributer of medical products. Prior to Surgical Specialties Corp, Mr. Virgilio served as the Vice President of Sales and Global Marketing of Aptus Endosystems ,a medical device company focused on developing advanced technology for endovascular aneurysm repair (EVAR) and thoracic endovascular aneurysm repair, from October 2013 until September 2015 when it was acquired by Medtronic plc. Mr. Virgilio has also held positions with Medtronic, MDT (March 2005-October 2013), Boston Scientific, BSX (March 2001- February 2005) and Constellation Brands, STZ (October 1999- March 2001).
Mr. Virgilio holds a Bachelor of Arts degree from Colgate University and earned continued education credits from the University of Pennsylvania, Wharton School of Business and from the University of North Carolina, Chapel Hill, Kenan-Flagler School of Business.
Director Independence
As of May 15, 2021, the GI Dynamics board of directors consists of three (3) members: Mark Lerdal, Ginger Glaser, and Joseph Virgilio. The Company’s board of directors has determined that all directors are “independent,” except for Mr. Virgilio due to his role as an executive officer. We consider that a director is an “independent” director where that director is free from any business or other relationship that could materially interfere, or be perceived to interfere with, the independent exercise of the director’s judgment. We have assessed the independence of the Company’s directors with respect to the definition of independence prescribed by Nasdaq. There are no family relationships among the Company’s officers and directors, nor are there any arrangements or understandings between any of the Company’s directors or officers or any other person pursuant to which any officer or director was, or is, to be selected as an officer or director.
Committees of the Board of Directors and Meetings
As of May 15, 2021, the board of directors has the following three standing committees to facilitate and assist the board in fulfilling its responsibilities: (1) an audit committee, (2) a compensation committee and (3) a nominating and corporate governance committee. The board may also establish other committees from time to time to assist in the discharge of its responsibilities.
Meeting Attendance. During the fiscal year ended December 31, 2020, there were forty (40) meetings of the Company’s board of directors, with 38 occurring prior to August 10, 2020, when the prior board members resigned and two (2) times under the current board member(s). The various committees of the board met a total of ten (10) times. All directors attended 100% of the total number of meetings of the board and of committees of the board on which he or she served during their Board term during fiscal 2020.
2
Audit Committee. The Company’s audit committee met four (4) times in 2020. The audit committee had two (2) members, Juliet Thompson (chair) and Timothy J. Barberich prior to Mr. Barberich’s resignation on March 28, 2020. Praveen Tyle was appointed to the audit committee and served with Ms. Thompson until their resignations on August 10, 2020. From Mark Lerdal’s appointment on August 10, 2020, the audit committee increased from one member to three members as Ginger Glaser and Joseph Virgilio joined the board. All members of the audit committee, except Mr. Virgilio, satisfy the current independence standards promulgated by the Securities and Exchange Commission (“SEC”); and by The Nasdaq Stock Market, as such standards apply specifically to members of audit committees. The Company’s board of directors has determined that Mark Lerdal is an “audit committee financial expert,” as the SEC has defined that term. The Company’s audit committee’s role and responsibilities are set forth in the audit committee’s written charter, a copy of which is publicly available on the Company’s website at www.gidynamics.com. The audit committee, among other things, oversees the Company’s corporate accounting and financial reporting, including auditing of the Company’s financial statements, reviewing the performance of the Company’s internal audit function and the qualifications, independence, performance and terms of engagement of the Company’s external auditor.
Compensation Committee. The Company’s compensation committee met two (2) times in 2020. The compensation committee had two (2) members, Dr. Oern Stuge and Timothy J. Barberich (chair) prior to Mr. Barberich’s resignation on March 28, 2020. On March 28, 2020, Praveen Tyle was appointed Chair of the compensation committee and served with Dr. Stuge until their resignations on August 10, 2020. From Mark Lerdal’s appointment on August 10, 2020, the Audit Committee increased from one member to three members as Ginger Glaser and Joseph Virgilio joined the board. All members of the compensation committee, except Mr. Virgilio, qualify as independent under the current definition promulgated by The Nasdaq Stock Market. All members of the compensation committee qualify as independent under the current definition promulgated by the ASX. The Company’s compensation committee’s role and responsibilities are set forth in the compensation committee’s written charter, a copy of which is publicly available on the Company’s website at www.gidynamics.com. The compensation committee, among other things, establishes, amends, reviews and approves the compensation and benefit plans with respect to the Company’s senior management and employees including determining individual elements of total compensation of the Company’s chief executive officer and other members of senior management. The compensation committee is also responsible for reviewing the performance of the Company’s executive officers with respect to these elements of compensation.
Nominating and Corporate Governance Committee. The Company’s nominating and corporate governance committee met one (1) time in 2020. The nominating and corporate governance committee had two (2) members, Daniel Moore (chair) and, Oern R. Stuge prior to their resignations on August 10, 2020. The nominating and corporate governance committee increased from one member, Mark Lerdal, to three members as the current members joined the board. All members of the nominating and corporate governance committee, except Joseph Virgilio, qualify as independent, under the current definition promulgated by The Nasdaq Stock Market. The nominating and corporate governance committee’s role and responsibilities are set forth in the nominating and corporate governance committee’s written charter, a copy of which is publicly available on the Company’s website at www.gidynamics.com. The nominating and corporate governance committee, among other things, recommends the director nominees for each annual meeting and ensures that the audit, compensation and nominating and corporate governance committees of the board have the benefit of qualified and experienced independent directors.
In addition, under the Company’s current Board Charter, the nominating and corporate governance committee will review annually the results of the evaluation of the board and its committees, and the needs of the board for various skills, experience, expected contributions and other characteristics in determining the director candidates to be nominated at the annual meeting. The nominating and corporate governance committee will evaluate candidates for directors proposed by directors, stockholders or management in light of the committee’s views of the current needs of the board for certain skills, experience or other characteristics, the candidate’s background, skills, experience, other characteristics and expected contributions and the qualification standards established from time to time by the nominating and corporate governance committee. If the nominating and corporate governance committee believes that the board requires additional candidates for nomination, the committee may engage, as appropriate, a third-party search firm to assist in identifying qualified candidates. All nominees for director positions will submit a completed form of directors’ and officers’ questionnaire as part of the nominating process. The process may also include interviews and additional background and reference checks for nonincumbent nominees, at the discretion of the nominating and corporate governance committee.
3
The nominating and corporate governance committee will review a reasonable number of candidates for director recommended by a single stockholder who has held over 5% of the Company’s common stock for over one year and who satisfies the notice, information and consent provisions set forth in the Company’s bylaws. Candidates so recommended will be reviewed using the same process and standards for reviewing board recommended candidates. If a stockholder wishes to nominate a candidate for director, it must follow the procedures described in the Company’s bylaws and in “Stockholder Proposals for 2021 Annual Meeting” at the end of the Company’s most recent proxy statement.
Code of Business Conduct and Ethics
GI Dynamics has adopted a code of business conduct and ethics applicable to directors, executive officers and all other employees. A copy of that code is available on the Company’s corporate website at http://www.gidynamics.com. Any amendments to the code of business conduct and ethics, and any waivers thereto involving the Company executive officers, also will be available on the corporate website. A printed copy of these documents will be made available upon request. The content on the Company website is not incorporated by reference into this Annual Report on Form 10-K.
Stockholder Communications to the Board
Communications to directors must be in writing and sent in care of the Company’s corporate secretary to GI Dynamics, Inc., 320 Congress Street, Boston, Massachusetts 02210, U.S.A., Attention: Corporate Secretary or delivered via e-mail to corporatesecretary@gidynamics.com. The name(s) of any specific intended board recipient(s) should be noted in the communication.
A copy of each communication received since the date of the last board meeting shall be distributed to each director in advance of each regularly scheduled board meeting, except items that are unrelated to the duties and responsibilities of the board, such as: spam, junk mail and mass mailings, business solicitations and advertisements, and communications that advocate the Company’s engaging in illegal activities or that, under community standards, contain offensive, scurrilous or abusive content.
The Company’s corporate secretary shall be responsible for and oversee the receipt and processing of stockholder communications to board members. An acknowledgement of receipt shall be sent by the corporate secretary or assistant secretary to each stockholder submitting a communication. The Company’s corporate secretary shall retain a copy of each communication for one year from the date of its receipt by the Company. The board of directors or individual directors so addressed shall be advised of any communication withheld for safety or security reasons as soon as practicable. The corporate secretary shall relay all communications to directors absent safety or security issues.
4
Executive Officers
The following is certain information as of May 15, 2021 regarding the Company’s executive officers who are not also directors.
| Name | Age | Position | ||
| Joseph Virgilio | 47 | President and Chief Executive Officer and Director | ||
| Charles Carter | 54 | Chief Financial Officer | ||
| Stephen Linhares | 64 | Vice President of Clinical and Regulatory Affairs |
Joseph Virgilio – President and Chief Executive Officer
For a brief biography of Mr. Virgilio, see “Board of Directors and Risk Oversight” under this Item 10 above.
Charles Carter – Chief Financial Officer
Charles Carter has served as the Company’s chief financial officer since December 2018. Mr. Carter brings over 15 years of experience as a finance executive in the medical industry, having worked with a wide variety of life sciences, therapeutics, and medical device companies. Mr. Carter was previously a consulting finance executive with Danforth Advisors, LLC from February 2018 until December 2018 and from 2012 to 2015, and served as a consulting senior finance executive for Marina Biotech (NASDAQ: MRNA), Interleukin Genetics (NASDAQ: ILGN) and numerous private life science companies. From 2015 to February 2018, Mr. Carter was CFO of The Guild for Human Services, a not-for-profit community-based residential school and program for special needs students and adults. Before joining Danforth and the Guild, Mr. Carter held positions as CFO for Aeris Therapeutics, Inc., and Intelligent Medical Devices, Inc. and served various other companies as an independent consultant. From 2003 to 2005, Mr. Carter was Vice President of Finance for Adnexus Therapeutics, Inc., and from 2001 to 2003, he was Senior Director, Financial Planning and Analysis for Transkaryotic Therapies, Inc./Shire, PLC. (NASDAQ: TKT; NASDAQ: SHPG). Prior to TKT, Mr. Carter was a partner with Mercer Management Consulting, Inc. Mr. Carter holds an M.B.A. and an M.S. in Molecular Genetics from the University of Chicago and a B.A. in Biology from Colgate University.
Stephen Linhares – Vice President of Clinical and Regulatory Affairs
Stephen Linhares has served as the Company’s vice president of clinical and regulatory affairs since January of 2019. Before joining GI Dynamics, Mr. Linhares was consulting with start-up companies helping them with clinical, quality and regulatory affairs, establishing systems and compiling regulatory submissions. He was Vice President of Clinical, Regulatory and Quality at Neograft Technologies, Inc., a cardiac device company, from October of 2010 to June of 2017 where he build the quality, clinical and regulatory departments and developed and implemented regulatory and clinical strategies. From 2008 to 2010, Mr. Linhares was the director of Clinical, Regulatory and Quality at Insulet Corporation, an insulin pump manufacturer, where he worked to obtain the CE Mark for the Omnipod and other FDA and international approvals. Prior to that Mr. Linhares held various executive positions at Boston Scientific, and Phase Forward. Prior to that Mr. Linhares was the Vice President of R&D and Clinical Affairs at PLC Medical Systems, manufacturer of state-of-the-art medical lasers, where he was responsible for multiple FDA and International submissions and approvals, he held various positions at PLC Medical from 1983 to 1999. Mr. Linhares earned a Bachelor of Science Degree in Physics from Bridgewater State University.
The Company has an employment agreement in place with Joseph Virgilio. The Company has a consulting agreement in place with Charles Carter. Stephen Linhares is an at-will employee.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires the Company’s directors and executive officers and persons who own more than 10% of a registered class of the Company’s equity securities to file various reports with the SEC concerning their holdings of, and transactions in, securities of the Company. Copies of these filings must be furnished to the Company.
To the Company’s knowledge, based solely on its review of the copies of the Section 16(a) reports furnished to the Company and any written representations to the Company, that no other reports were required, the Company believes that all individual filing requirements applicable to the Company’s directors and executive officers were complied with under Section 16(a) during the year ended December 31, 2020, except as follows: Joseph Virgilio’s Form 3 was filed late and Ginger Glaser did not file a Form 3 with respect to her election to the Company’s board of directors, effective as of October 20, 2020:
5
ITEM 11. EXECUTIVE COMPENSATION
The following table shows the total compensation paid during the fiscal years ended December 31, 2020 and December 31, 2019 to (1) the Company’s current president and chief executive officer, and (2) the Company’s prior president and chief executive officer, and (3) the Company’s next most highly compensated executive officers who earned more than $100,000 during the fiscal year ended December 31, 2020 and were serving as executive officers as of such date.
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Option
Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | Total ($) | ||||||||||||||||
| Joseph Virgilio | 2020 | 76,950 | 28,125 | $ | - | $ | - | $ | 105,075 | |||||||||||||
| President and Chief Executive Officer | ||||||||||||||||||||||
| Scott W. Schorer | 2020 | $ | 356,250 | $ | 755,807 | $ | - | $ | - | $ | 1,112,057 | |||||||||||
| President and Chief Executive Officer (3) | 2019 | $ | 414,699 | $ | - | $ | 1,309,890 | $ | 200,000 | $ | 1,924,589 | |||||||||||
| Charles Carter | 2020 | $ | 300,000 | $ | 29,587 | $ | - | $ | - | $ | 329,587 | |||||||||||
| Chief Financial Officer and Secretary (4) | 2019 | $ | 100,000 | $ | - | $ | 431,453 | $ | - | $ | 531,453 | |||||||||||
| Stephen Linares | 2020 | $ | 250,000 | $ | 48.349 | $ | - | $ | - | $ | 298,349 | |||||||||||
| Vice President of Clinical and Regulatory Affairs (5) | 2019 | $ | 228,258 | $ | - | $ | 105,600 | $ | - | $ | 333,858 | |||||||||||
| (1) | The amounts in the “Option Awards” column represent the aggregate grant date fair value for option awards awarded during fiscal years 2020 and 2019 computed in accordance with the provisions of FASB ASC Topic 718, excluding the impact of estimated forfeitures related to service-based vesting conditions. A discussion of the assumptions used in determining grant date fair value may be found in “Note 14 – Share Based Compensation” in the notes to the Company’s Financial Statements included in the Company’s Annual Report on Form 10-K. |
| (2) | Payments listed in the “Non-Equity Incentive Plan Compensation” column reflect discretionary performance-based awards made by the Company’s board for the named executive officers. |
| (3) | In September 2019, Mr. Schorer’s offer letter agreement was revised to include a new base salary of $450,000 and a grant of 1,169,545 stock options. On July 23, 2020, the Company entered into a retention bonus agreement with Mr. Schorer and paid a total of $609,447, which became fully earned November 2, 2020. |
| (4) | Mr. Carter was hired as the Company’s Chief Financial Officer in September 2019 at an annual base salary of $300,000 per year. In connection with Mr. Carter’s appointment, he was granted 385,226 stock options. |
| (5) | Mr. Linhares was hired as the Company’s Vice President of Clinical and Regulatory Affairs in January 2019 at an annual base salary of $230,000 per year. In connection with Mr. Linhares’s appointment, he was granted 160,000 stock options. In January 2020, Mr. Linhares’s annual base salary increased to $250,000, retroactive to September 2019. |
6
Narrative Disclosure To Summary Compensation Table
Employment Agreements, Offer Letters and Separation Agreements
The following section summarizes the employment agreements, offer letters and separation agreements we have entered into with the Company’s named executive officers. For purposes of the employment agreements and offer letters, we use the following terms:
(i) “cause” to mean termination of employment as a result of the employee’s conviction of a crime involving moral turpitude, any material act of dishonesty by the employee involving the Company or a breach by the employee of his or her obligations under the terms of the non-competition, non-solicitation or non-disclosure agreements with the Company; and (ii) “constructive termination” to mean a material diminution in the employee’s title, responsibilities or duties, a material breach of the offer letter by us, a material reduction in the employee’s compensation or the relocation of the Company’s office beyond a 25-mile radius from its current location.
Scott Schorer
In March 2016, we entered into an executive employment agreement with Mr. Schorer to serve as the Company’s president and chief executive officer. We amended Mr. Schorer’s employment agreement in January 2017. Mr. Schorer’s agreement provided for, among other things: (i) an initial annual base salary of $400 thousand, subject to review by the board, (ii) eligibility to receive an annual bonus at a target amount of 30% of his base salary if approved in the sole discretion of the Company’s board, which bonus, if any, shall be paid within 45 days after the end of the fiscal year to which it relates. The most recent adjustment effective January 2017 increased Mr. Schorer’s potential annual bonus to 40% of his base salary. We further amended Mr. Schorer’s employment agreement in September 2019. Mr. Schorer’s agreement provided for, among other things: (i) an initial annual base salary of $450 thousand, subject to review by the board, (ii) eligibility to receive an annual bonus at a target amount of 50% of his base salary if approved in the sole discretion of the Company’s board, which bonus, if any, shall be paid within 45 days after the end of the fiscal year to which it relates.
Under the terms of the employment agreement, upon his Commencement Date, Mr. Schorer was granted 250,000 stock options. The stock options are exercisable at a price equal to the closing price on the Commencement Date and will vest as to 25% of the shares on the first anniversary of the Commencement Date, and equally over each successive quarter thereafter for three years, provided that he remains employed by the Company on the vesting dates. Upon the Commencement Date, the Company also granted Mr. Schorer PSUs equal to 250,000 shares of the Company’s common stock. The shares underlying these PSUs will be issued to Mr. Schorer according to certain performance targets as detailed in the Employment Agreement. One quarter of the PSUs will lapse if they have not vested by June 30, 2019, an additional one quarter of the PSUs will lapse if they have not vested by June 30, 2020, and the remainder of the PSUs will lapse if they have not vested by January 30, 2021. None of the shares underlying these PSUs have been issued as of May 19, 2019. Under the terms of the September 2019 amended employment agreement, Mr. Schorer was granted 1,169,545 stock options under similar terms as the agreement made upon his Commencement Date.
The employment agreement provides that if Mr. Schorer’s employment with the Company is terminated by the Company without Cause (as defined in the employment agreement) or by Mr. Schorer for Good Reason (as defined in the employment agreement), subject to his execution of a release of claims agreement acceptable to the Company, he will be entitled to continuation of salary for up to 12 months, and payment of health insurance premiums necessary to continue health insurance coverage under COBRA for up to 12 months.
In addition, if a Change of Control (as defined in the employment agreement) takes place, upon the consummation of such Change of Control, 100% of Mr. Schorer’s unvested stock options and PSUs shall vest and become immediately exercisable.
7
On July 23, 2020, the Company entered into a Retention Bonus Agreement and Amendment (the “Retention Agreement”) with Scott Schorer, the Chief Executive Officer of the Company (“CEO”), which set forth the terms of Mr. Schorer’s continued services as the Company’s CEO through at least December 31, 2020 (the “Retention Date”). The Retention Agreement was be effective through the Retention Date or the last date of Mr. Schorer’s employment, if different (the “Retention Period”).
Pursuant to the terms and conditions of the Retention Agreement, Mr. Schorer received a one-time cash bonus of $609,557 (the “Retention Bonus”), subject to tax withholding under applicable law, which was be paid within seven days following the Effective Date. The Retention Bonus was in lieu of any other severance benefits that Mr. Schorer may have been eligible to receive under Section 7 of Mr. Schorer’s Amended and Restated Offer Letter Agreement with the Company, dated September 19, 2019 (the “Offer Letter”). Additional terms included certain repayment terms such that if Mr. Schorer departed the company prior to the end of the Retention Period, the Company could reclaim a portion of the Retention Bonus. The Retention Bonus Agreement additionally detailed milestone-based bonus opportunities and a subsequent consulting obligation and rate for Mr. Schorer were he to be terminated for any reason after the date of the Retention Bonus Agreement. On November 2, 2020 Mr. Schorer departed the Company and the entire Retention Bonus was fully earned and no longer subject to any repayment.
Charles Carter
In September 2019, the Company entered into an executive employment agreement with Mr. Carter to serve as the Company’s chief financial officer. Mr. Carter’s agreement provided for, among other things: an initial annual base salary of $300,000, subject to review by the board, (ii) eligibility to receive an annual bonus at a target amount of 35% of his base salary if approved in the sole discretion of the Company’s board, which bonus, if any, shall be paid within 45 days after the end of the fiscal year to which it relates. Under the terms of the employment agreement, upon his Commencement Date, Mr. Carter was awarded 385,226 stock options. The stock options are exercisable at a price equal to the closing price on the Commencement Date and will vest as to 25% of the shares on the first anniversary of the Commencement Date, and equally over each successive quarter thereafter for three years, provided that he remains employed by the Company on the vesting dates.
The employment agreement provides that if Mr. Carter’s employment with the Company is terminated by the Company without Cause (as defined in the employment agreement) or by Mr. Carter for Good Reason (as defined in the employment agreement), subject to his execution of a release of claims agreement acceptable to the Company, he will be entitled to continuation of salary for up to 6 months, and payment of health insurance premiums necessary to continue health insurance coverage under COBRA for up to 6 months.
On December 31, 2020, GI Dynamics entered into a Retention Bonus and Consulting Agreement with Mr. Carter. Under the Agreement, Mr. Carter would provide at least a minimum number of consulting hours to the Company at a rate of $250 per hour. Mr. Carter received the Retention Bonus payment of $208,685 in January 2021. The Bonus was subject to certain payback conditions, all of which lapsed and the bonus became fully earned on March 31, 2021. Mr. Carter continues to serve the Company as a consultant.
Stephen Linhares
In January 2019, the Company hired Mr. Linhares to serve as its vice president of clinical and regulatory affairs. Mr. Linhares’s offer letter provided for, among other things: an initial annual base salary of $230,000, subject to review by the board, (ii) eligibility to receive an annual bonus at a target amount of 30% of his base salary if approved in the sole discretion of the Company’s board, which bonus, if any, shall be paid within 45 days after the end of the fiscal year to which it relates. Under the terms of the offer letter, upon his Commencement Date, Mr. Linhares was awarded 160,000 stock options. The stock options are exercisable at a price equal to the closing price on the Commencement Date and will vest as to 25% of the shares on the first anniversary of the Commencement Date, and equally over each successive quarter thereafter for three years, provided that he remains employed by the Company on the vesting dates. On January 1, 2020, Mr. Linhares’s base salary was increased to $250,000, retroactive to September 1, 2019.
8
Outstanding Equity Awards at 2020 Fiscal Year-End
The following table shows all outstanding equity awards for the named executive officers in the Summary Compensation Table as of December 31, 2020.
| Option Awards | Stock Awards | |||||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Stock Options (#) Exercisable | Number of Securities Underlying Unexercised Stock Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | ||||||||||||||||||||
| Joseph Virgilio President and Chief Executive Officer | (1) | 2020 | — | — | $ | — | — | — | $ | — | ||||||||||||||||
| Scott W. Schorer | ||||||||||||||||||||||||||
| President and Chief Executive Officer | (2) | 2020 | — | — | $ | — | — | — | $ | — | ||||||||||||||||
| 2019 | — | 1,169,545 | $ | 1.12 | 9/16/2029 | — | $ | — | ||||||||||||||||||
| 2018 | 75,000 | 225,000 | $ | 0.72 | 11/15/2028 | — | $ | — | ||||||||||||||||||
| 2017 | 117,282 | 53,318 | $ | 0.78 | 1/12/2027 | — | $ | — | ||||||||||||||||||
| 2016 | 234,375 | 265,625 | $ | 0.80 | 3/26/2026 | — | $ | — | ||||||||||||||||||
| Charles Carter Chief Financial Officer | (3) | 2020 | — | — | $ | — | — | — | $ | — | ||||||||||||||||
| 2019 | — | 385,226 | $ | 1.12 | 9/16/2029 | — | $ | — | ||||||||||||||||||
| Stephen Linhares Vice President of Clinical and Regulatory Affairs | (4) | 2020 | ||||||||||||||||||||||||
| 2019 | — | 160,000 | $ | 0.66 | 1/3/2029 | — | $ | — | ||||||||||||||||||
| (1) | Mr. Virgilio was hired on October 8, 2020, and the Company entered into an Employment Agreement that included a grant of 4% of the then issued and outstanding stock. The grant was not approved by the board of directors until January 28, 2021, when Mr. Virgilio was granted an option to purchase 11,075,869 shares of common stock at a price of $0.06 per share, subject to certain vesting conditions. |
| (2) |
The option and stock awards shown for Mr. Schorer were issued consistent with the terms of his Employment Agreement. The stock options granted in 2016 vest as to 25% of the shares on the first anniversary of the grant date, and equally over each successive quarter thereafter for three years, provided that he remains employed by the Company on the vesting dates. The stock options granted in 2017 will vest quarterly over four years, provided that he remains employed by the Company on the vesting dates. The stock options granted in 2018 will vest quarterly over four years, provided that he remains employed by the Company on the vesting dates. The stock options granted in 2019 will vest quarterly over four years, provided that he remains employed by the Company on the vesting dates.
As part of Mr. Schorer’s Separation Agreement effective November 2, 2020, Mr. Schorer forfeited all rights to all equity awards, vested or unvested. |
| (3) |
The stock options shown for Mr. Carter were issued consistent with the terms of his Employment Agreement. The stock options granted in 2019 will vest quarterly over four years, provided that he remains employed by the Company on the vesting dates. In 2018, Mr. Carter was a consultant and was not issued stock options or other stock awards.
As part of Mr. Carter’s Retention Bonus Agreement effective December 31, 2020, Mr. Carter forfeited all rights to all equity awards, vested or unvested. |
| (4) |
The stock options shown for Mr. Linhares were issued consistent with the terms of his offer letter. The stock options granted in 2019 will vest quarterly over four years, provided that he remains employed by the Company on the vesting dates.
On January 28, 2021, Mr. Linhares was granted an option to purchase 2,608,967 shares of common stock at a price of $0.06 per share, subject to certain vesting conditions. |
9
Pension Benefits
We do not have any plans that provide for payments or other benefits at, following or in connection with the retirement of the Company’s employees, other than the Company’s 401(k) retirement plan which is available for all of the Company’s employees, including the Company’s named executive officers.
Nonqualified Deferred Compensation
We do not have any nonqualified defined contribution plans or other deferred compensation plan.
Potential Payments upon Termination or Change of Control
Upon termination of employment without cause or a resignation for good reason, the Company’s current chief executive officer, Joseph Virgilio, is entitled to receive certain severance payments and other benefits. In determining whether to approve and in setting the terms of such severance arrangements, the Company’s compensation committee and the Company’s board recognize that executives, especially highly-ranked executives, often face challenges securing new employment following termination. We have agreed to provide severance benefits to the Company’s current chief executive officer, as described below.
Joseph Virgilio. Severance amounts for termination without cause or a resignation for good reason for Mr. Virgilio include:
| ● | On termination without Good Cause or Resignation for Good Reason not in connection to a Change in Control and employed less than one year, |
| a. | 75% of Mr. Virgilio’s salary then in effect; and |
| b. | 75% of Mr. Virgilio’s target bonus, pro-rated for actual number of days employed; and |
| c. | All accrued but unpaid benefits owed Mr. Virgilio at the time of termination; and |
| d. | COBRA reimbursement for period of nine months. |
| ● | On termination without good cause or Resignation for Good Reason not in connection to a Change in Control and employed longer than one year, |
| a. | 100% of Mr. Virgilio’s salary then in effect; and |
| b. | 100% of Mr. Virgilio’s target bonus, pro-rated for actual number of days employed; and |
| c. | All accrued but unpaid benefits owed Mr. Virgilio at the time of termination; and |
| d. | COBRA reimbursement for period of nine months. |
| ● | On termination without Cause, or Resignation for Good Reason in Connection with a Change of Control (within 3 months before and 12 months after) |
| a. | 75% of Mr. Virgilio’s salary then in effect; and |
| b. | Immediate vesting of all unvested equity awards outstanding. |
Charles Carter. On entry into the Retention Bonus Agreement and Consulting Agreement as of December 31, 2020, Mr. Carter forfeited any post-termination rights.
Stephen Linhares. Mr. Linhares is an at-will employee and has no severance terms defined in his offer letter. Severance payments are determined by the Company on a case-by-case basis and not guaranteed.
We believe that the Company’s current chief executive officer’s severance packages are in line with severance packages offered to executive officers of similar rank at companies of similar size to GI Dynamics in the Company’s industry.
10
Director Compensation
The following table shows the total compensation paid or accrued during the fiscal year ended December 31, 2020 to each of the Company’s non-employee directors who received compensation for their service as directors.
| Name | Fees Earned or Paid in Cash ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | ||||||||||||||||||
| Daniel J. Moore | $ | 46,467 | $ | - | $ | - | $ | - | $ | - | $ | 46,467 | ||||||||||||
| Timothy J. Barberich | $ | 15,750 | $ | - | $ | - | $ | - | $ | - | $ | 15,750 | ||||||||||||
| Oern R. Stuge, M.D. | $ | 34,851 | $ | - | $ | - | $ | - | $ | - | $ | 34,851 | ||||||||||||
| Juliet Thompson | $ | 39,741 | $ | - | $ | - | $ | - | $ | - | $ | 39,741 | ||||||||||||
| Praveen Tyle, Ph.D. | $ | 26,935 | $ | - | - | $ | - | $ | - | $ | 26,935 | |||||||||||||
| Mark Lerdal | $ | 29,348 | $ | - | $ | - | $ | - | $ | - | $ | 29,348 | ||||||||||||
| Ginger Glaser | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||
In August 2011, the Company’s board adopted a non-executive director compensation policy, which was amended in May 2014 and further amended in January 2017, pursuant to which the non-executive directors will be compensated for their service on the Company’s board including as members of the various committees of the Company’s board. The number of directors on the Company’s board is determined from time to time by the Company’s board, up to a maximum of ten directors. The material terms of the policy are as follows:
| ● | each non-executive director will receive an annual fee of $50,000 payable for the director’s service during the year; | |
| ● | the chairman of the Company’s board will receive an additional annual fee of $25,000 payable for that director’s service during the year; | |
| ● | each non-executive director who serves as either a member or chair of certain committees of the Company’s board will receive an additional annual fee for their work on such committee as either a member or chair as follows: |
| ● | audit committee: chair ($15,000) and member ($3,000); | |
| ● | compensation committee: chair ($10,000) and member ($2,000); and | |
| ● | nominating and corporate governance committee: chair ($5,000) and member ($1,000). |
These fees are payable quarterly in arrears as of the last day of each fiscal quarter. Each director is also entitled to be reimbursed for reasonable travel and other expenses incurred in connection with attending meetings of the Company’s board and any committee on which he or she serves.
All prior equity awards granted to the board members who resigned on August 10, 2020 were cancelled and forfeited prior to December 31, 2020.
On January 28, 2021, Mark Lerdal was granted an option to purchase up to 1,384,483 shares of Common Stock for $0.06 per share. The option vests annually in three equal portions beginning on January 28, 2022.
On January 28, 2021, Ginger Glaser was granted an option to purchase up to 1,384,483 shares of Common Stock for $0.06 per share. The option vests annually in three equal portions beginning on January 28, 2022.
11
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth, as of May 15, 2021, information regarding beneficial ownership of the Company’s common stock by the following:
| ● | each person, or group of affiliated persons, who is known by GI Dynamics to beneficially own 5% or more of any class of the Company’s voting securities; | |
| ● | each of the Company’s directors; | |
| ● | each of the Company’s named executive officers; and | |
| ● | all current directors and executive officers as a group. |
Beneficial ownership is determined according to the rules of the SEC. Beneficial ownership generally includes voting or investment power of a security and includes shares underlying stock options that are currently exercisable or exercisable within 60 days of May 15, 2021. This table is based on information supplied by officers, directors and principal stockholders. Except as otherwise indicated, we believe that the beneficial owners of the CDIs and common stock listed below, based on the information each of them has given to us, have sole investment and voting power with respect to their shares, except where community property laws may apply.
Percentage of ownership is based on 88,095,659 shares of outstanding common stock outstanding on May 15,2021. Unless otherwise indicated, we deem shares subject to stock options that are exercisable within 60 days of May 15, 2021, to be outstanding and beneficially owned by the person holding the stock options for the purpose of computing percentage ownership of that person, but we do not treat them as outstanding for the purpose of computing the ownership percentage of any other person.
Unless otherwise indicated in the table, the address of each of the individuals named below is: c/o GI Dynamics, Inc., 320 Congress Street, Boston, MA 02210, U.S.A.
| Name and Address of Beneficial Owner | Number of Shares of Common Stock | Percentage of Common Stock | ||||||
| 5% Shareholders | ||||||||
| Crystal Amber Fund Limited(1) | 79,032,962 | 89.7 | % | |||||
| Directors and Named Executive Officers | ||||||||
| Mark Lerdal (2) | 0 | * | ||||||
| Ginger Glaser (2) | 0 | * | ||||||
| Joseph Virgilio (2) | 0 | * | ||||||
| Scott Schorer (3) | 0 | * | ||||||
| Charles Carter (4) | 0 | * | ||||||
| Stephen Linhares (5) | 100,000 | * | ||||||
| All directors and executive officers as a group | 100,000 | * | ||||||
| * | Indicates less than 1% |
| (1) |
Based upon the Company’s corporate records and upon the information provided by Crystal Amber Fund Limited, (“CAFL”), in a Notice of Change of Interests of Substantial Holder (Form 604) filed with the ASX on 3 February 2020, reporting as of 3 February 2020. The address for CAFL is P.O. Box 286, Floor 2, Trafalgar Court, Les Banques, St Peter Port, Guernsey GY14LY U.K.
Excludes shares that may be issued in the future upon the conversion of the 2020 Note (as defined below). |
| (2) | Options were granted to Mr. Lerdal, Ms. Glaser, Mr. Virgilio, and Mr. Linhares on January 28, 2021 with the earliest portion of each grant not vesting within the 60 days following May 15, 2021. |
| (3) | Scott Schorer was the former President and CEO, who resigned and forfeited all outstanding vested equity awards effective November 2, 2020. |
| (4) | Mr. Carter forfeited all outstanding vested equity awards as of December 31, 2020. |
| (5) | Includes 90,000 shares vested as of May 15, 2021, and an additional 10,000 vesting within 60 days of May 15, 2021. |
12
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Certain Relationships and Related Party Transactions
There are no existing agreements or arrangements and there are no currently proposed transactions in which the Company was, or is to be, a participant, in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years and in which any current director, executive officer, beneficial owner of more than 5% of the Company’s common stock, or entities affiliated with them, had or will have a material interest since January 1, 2019, except that
| (i) | in June 2017, the Company issued a convertible term promissory note (the “2017 Note”) in the aggregate principal amount of $5.0 million to Crystal Amber Fund Limited, the Company’s largest shareholder, which note accrued interest at 5% per annum compounded annually and was secured by substantially all of the Company’s personal property. On July 13, 2020, Crystal Amber converted the note into 2,574,873,400 CHESS Depositary Interests (“CDIs”), representing 51,497,468 shares of the Company’s common stock. On July 13, 2020, the Company issued 1,920,085,200 CDIs, representing 38,401,704 shares of common stock to Crystal Amber with the remaining 13,095,764 shares of the Company’s common stock that were due in connection with the conversion of the June 2017 Note being issued September 10, 2020. The Note was considered paid in full on July 13, 2020. | |
| (ii) | in May 2018, we issued a convertible term promissory note in the aggregate principal amount of $1.75 million to Crystal Amber Fund Limited, the Company’s largest shareholder, which note accrued interest at 10% per annum compounded annually, matured on the fifth anniversary of the issuance date, and contained certain provisions for conversion during the term of the note. On June 30, 2019, the $1.75 million of principal and approximately $192 thousand of accrued interest was converted into 134,852,549 CDIs, and | |
| (v) | in May 2018, we issued a warrant to Crystal Amber Fund Limited, the Company’s largest shareholder, to purchase up to 97,222,200 CDIs prior to expiration on the fifth anniversary of issuance for an initial exercise price of $0.014 per CDI, subject to subsequent anti-dilution price adjustments, and | |
| (vii) | in March 2019, we issued a convertible term promissory note in the aggregate principal amount of $1.0 million to Crystal Amber Fund Limited, the Company’s largest shareholder, which note accrued interest at 10% per annum compounded annually, matured on the fifth anniversary of the issuance date, and contingent on obtaining shareholder approval, which was granted June 30, 2019, contained certain provisions for conversion during the term of the note. On June 30, 2019, the $1.0 million of principal and approximately $30 thousand of accrued interest was converted into 81,070,003 CDIs, and | |
| (viii) | in March 2019, we issued a warrant to Crystal Amber Fund Limited, the Company’s largest shareholder, to purchase up to 78,984,823 CDIs prior to expiration on the fifth anniversary of issuance for an initial exercise price of $0.0127 per CDI, subject to subsequent anti-dilution price adjustments, and | |
| (ix) | in May 2019, we issued a convertible term promissory note in the aggregate principal amount of $3.0 million to Crystal Amber Fund Limited, the Company’s largest shareholder, which note accrued interest at 10% per annum compounded annually, matured on the fifth anniversary of the issuance date, and contingent on obtaining shareholder approval, which was granted June 30, 2019, contained certain provisions for conversion during the term of the note. On June 30, 2019, the $3.0 million of principal approximately $19 thousand of accrued interest was converted into 237,687,411 CDIs, and | |
| (x) | in May 2019, we issued a warrant to Crystal Amber Fund Limited, the Company’s largest shareholder, to purchase up to 236,220,472 CDIs prior to expiration on the fifth anniversary of issuance for an initial exercise price of $0.0127 per CDI, subject to subsequent anti-dilution price adjustments, and |
13
| (xi) | in August 2019, we issued a convertible term promissory note in the aggregate principal amount of up to approximately $4.6 million to Crystal Amber Fund Limited, the Company’s largest shareholder, which note accrued interest at 10% per annum compounded annually, matured on the fifth anniversary of the issuance date, and contained certain provisions for conversion during the term of the note. The note was funded to the maximum amount of approximately $4.6 million on January 13, 2020, and | |
| (xii) |
in January 2020, we issued a warrant to Crystal Amber Fund Limited (as part of the issue of the note in paragraph xi), the Company’s largest shareholder, to purchase up to 229,844,650 CDIs prior to expiration on the fifth anniversary of issuance for an initial exercise price of $0.02 per CDI, subject to subsequent anti-dilution price adjustments.
| |
| (xiii) |
On September 4, 2020 we sold to Crystal Amber an aggregate 60,085,583 shares of Series A Preferred Stock, par value $0.01 per share, at a purchase price of $0.08863 per share, for gross proceeds to the Company of approximately $5.0 million, pursuant to an initial closing of a private placement offering for up to $10.0 million of Series A Preferred Stock The gross proceeds from the Initial Closing included the conversion of $1.25 million in principal plus accrued but unpaid interest from outstanding convertible promissory notes that were converted into shares of Series A Preferred Stock at a per share conversion price equal to 80% of the Purchase Price. The net proceeds from the Initial Closing of approximately $4.7 million will be used for product development and other general corporate purposes.
The Initial Closing was conditioned on the sale of a minimum of 59,343,599 shares of Series A Preferred Stock. Crystal Amber agreed to purchase any shares not subscribed for by other investors, up to the remaining offering amount of approximately $5.0 million, on or before October 31, 2020. The second closing date was subsequently postponed into 2021.
| |
| (xiv) | On September 4, 2020, we entered into a note cancellation and exchange agreement with Crystal Amber which extinguished the August 2019 Note and Warrant and issued a Note with a principal amount of $4.9 million, which note accrues interest at 5% per annum compounded annually, matures on January 30, 2022, and contains certain provisions for conversion into shares of Common Stock at a conversion price of $0.17726 during the term of the note. |
Policies and Procedures for Review and Approval of Related Party Transactions
We have adopted a policy and procedure for related party transactions. The Company’s audit committee is responsible for reviewing and approving all transactions in which we are a participant and in which any parties related to us, including the Company’s executive officers, directors, beneficial owners of more than 5% of the Company’s common stock, immediate family members of the foregoing persons and any other persons whom the board determines may be considered related parties of the Company, has or will have a direct or indirect material interest. The audit committee or its chairman, as the case may be, will only approve those related party transactions that are determined to be in, or are not inconsistent with, the best interests of the Company and its stockholders, after taking into account all available facts and circumstances as the audit committee or the chairman determines in good faith to be necessary.
14
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Fees Paid to Independent Registered Public Accounting Firm
The following table provides information regarding the fees billed by Wolf & Company, P.C. (“Wolf”) for the fiscal year ended December 31, 2020, inclusive of out-of-pocket expenses.
| 2020 | 2019 | |||||||
| Audit fees | $ | 139,763 | $ | 86,395 | ||||
| Audit-related fees | - | 12,200 | ||||||
| Tax fees | 15,500 | - | ||||||
| Total | $ | 155,263 | $ | 98,595 | ||||
Fees Paid to Prior Independent Registered Public Accounting Firm
The following table provides information regarding the fees billed by the Company’s previous independent registered public accounting firm, Moody, Famiglietti & Andronico, LLP (“MFA”) for the fiscal year ended December 31, 2019, inclusive of out-of-pocket expenses.
| 2019 | ||||
| Audit fees | $ | 51,000 | ||
| Audit-related fees | 22,500 | |||
| Tax fees | — | |||
| All other fees | — | |||
| Total | $ | 73,500 | ||
Audit and Audit-Related Fees
Audit fees of Wolf in 2020 and 2019 and MFA during the 2019 fiscal years include the aggregate fees incurred for the audits of the annual consolidated financial statements and the review of each of the quarterly consolidated financial statements included in Quarterly Reports on Form 10-Q.
Audit-related fees of Wolf during the 2019 and 2020 fiscal year include out of scope fees related to the potential restatement of prior filings and research. Audit-related fees of MFA during the 2019 fiscal year includes professional services rendered to consent to the inclusion of the audit of the Company’s financial statements for the fiscal years ended December 31, 2019 and 2018 and other fees that were out of scope.
Tax Fees
Tax fees of MFA for the fiscal year ended December 31, 2020 primarily include tax compliance and return preparation.
Policy Regarding Pre-Approval of Audit and Permissible Non-audit Services Provided by the Independent Public Accountant
The audit committee is responsible for approving in advance the engagement of the independent auditor for all audit services and non-audit services, based on independence, qualifications and, if applicable, performance, and approving the fees and other terms of any such engagement. Of the services described above performed by Wolf in 2020 and Wolf and MFA in 2019, all were pre-approved by the audit committee and no fees were paid under a de minimus exception that waives pre-approval for certain non-audit services.
15
REPORT OF AUDIT COMMITTEE
The audit committee of the board of directors, which consists entirely of directors who meet the independence and experience requirements of the ASX, has furnished the following report:
The audit committee assists the board in overseeing and monitoring the integrity of the Company’s financial reporting process, compliance with legal and regulatory requirements and the quality of internal and external audit processes. This committee’s role and responsibilities are set forth in the Company’s charter adopted by the board, which is available on the Company’s website at www.gidynamics.com. This committee reviews and reassesses the Company’s charter annually and recommends any changes to the board for approval. The audit committee is responsible for overseeing the Company’s overall financial reporting process, and for the appointment, compensation, retention, and oversight of the work of Wolf & Company, P.C. and Moody, Famiglietti & Andronico, LLP. In fulfilling its responsibilities for the financial statements for fiscal year 2020, the audit committee took the following actions:
| ● | Reviewed and discussed the audited financial statements for the fiscal year ended December 31, 2020 with management and Wolf & Company, P.C., the Company’s independent registered public accounting firm; | |
| ● | Discussed with Wolf & Company, P.C. the matters required to be discussed in accordance with Auditing Standard No. 16—Communications with Audit Committees; and | |
| ● | Received written disclosures and the letter from Wolf & Company, P.C. regarding its independence as required by applicable requirements of the Public Company Accounting Oversight Board regarding Wolf & Company, P.C. communications with the audit committee and the audit committee further discussed with Wolf & Company, P.C. their independence. The audit committee also considered the status of pending litigation, taxation matters and other areas of oversight relating to the financial reporting and audit process that the committee determined appropriate. |
Based on the audit committee’s review of the audited financial statements and discussions with management and Wolf & Company, P.C., the audit committee recommended to the board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 for filing with the SEC.
Members of the GI Dynamics, Inc. Audit Committee
Mark Lerdal
Ginger Glaser
Joseph Virgilio
16
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
| (a) | List of documents filed as part of this Annual Report on Form 10-K |
| (1) | Exhibits |
| The exhibits listed in the accompanying Exhibit Index are filed or incorporated by reference as part of this Annual Report on Form 10-K. |
17
18
19
| * | Filed as an exhibit to the 10-K, filed with the SEC on March 27, 2020. |
| ** | Filed herewith |
| ‡ | Furnished as an exhibit to the 10-K, filed with the SEC on March 27, 2020. |
| † | Management contract or compensatory plan or arrangement. |
20
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, hereunto duly authorized.
| GI Dynamics, Inc. | ||
Date: June 11, 2021 |
By: | /s/ Joseph Virgilio |
| Name: | Joseph Virgilio | |
| Title: | President, Chief Executive Officer | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons in the capacities and on the dates indicated.
| Signature | Title | Date | ||
| /s/ JOSEPH VIRGILIO | President, Chief Executive Officer and Director | June 11, 2021 | ||
| Joseph Virgilio | (Principal Executive Officer) | |||
| /s/ CHARLES CARTER | Chief Financial Officer, Secretary | June 11, 2021 | ||
| Charles Carter | (Principal Financial and Accounting Officer) | |||
| /s/ MARK LERDAL | Chairman and Director | June 11, 2021 | ||
| Mark Lerdal | ||||
| /s/ GINGER GLASER | Director | June 11, 2021 | ||
| Ginger Glaser |
21
Exhibit 31.3
Certification Pursuant to Section 302
Of the Sarbanes-Oxley Act of 2002
For the President and Chief Executive Officer
I, Joseph Virgilio, certify that:
| 1. | I have reviewed this Amendment No. 1 to the Annual Report on Form 10-K of GI Dynamics, Inc.; and |
| 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. |
Date: June 11, 2021 |
By: | /s/ Joseph Virgilio |
| Name: | Joseph Virgilio | |
| Title: | President and Chief Executive Officer | |
| (Principal Executive Officer) |
Exhibit 31.4
Certification Pursuant to Section 302
Of the Sarbanes-Oxley Act of 2002
For the Chief Financial Officer
I, Charles Carter, certify that:
| 1. | I have reviewed this Amendment No. 1 to the Annual Report on Form 10-K of GI Dynamics, Inc.; and | ||
| 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. | ||
Date: June 11, 2021 |
By: |
/s/ Charles Carter |
| Name: | Charles Carter | |
| Title: | Chief Financial Officer | |
| (Principal Financial and Accounting Officer) |
Document And Entity Information - USD ($) |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2020 |
Mar. 05, 2021 |
Jun. 30, 2020 |
|
| Document Information Line Items | |||
| Entity Registrant Name | GI DYNAMICS, INC. | ||
| Document Type | 10-K/A | ||
| Current Fiscal Year End Date | --12-31 | ||
| Entity Common Stock, Shares Outstanding | 88,095,659 | ||
| Entity Public Float | $ 3,767,612 | ||
| Amendment Flag | true | ||
| Amendment Description | GI Dynamics, Inc. (the “Company”) is filing this Amendment No. 1 to Annual Report on Form 10-K/A (the “Amendment”) to amend its Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as filed by the Company with the Securities and Exchange Commission (the “SEC”) on March 12, 2021 (the “Original Form 10-K”). The purpose of this Amendment is to amend Part III, Items 10 through 14 of the Original Form 10-K to include information previously omitted from the Original Form 10-K in reliance on General Instruction G(3) to Form 10-K. Accordingly, Part III of the Original Form 10-K is hereby amended and restated as set forth below and the reference on the cover page of the Original Form 10-K to the incorporation by reference of the Company’s definitive proxy statement into Part III of the Original Form 10-K is hereby deleted. In addition, as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), new certifications by the Company’s principal executive officer and principal financial officer are filed as exhibits to this Amendment. No attempt has been made in this Amendment to modify or update the other disclosures presented in the Original Form 10-K. This Amendment does not reflect events occurring after the filing of the original report (i.e., those events occurring after March 12, 2021) or modify or update those disclosures that may be affected by subsequent events. Accordingly, this Amendment should be read in conjunction with the Original Form 10-K and the Company’s other filings with the SEC. | ||
| Entity Central Index Key | 0001245791 | ||
| Entity Current Reporting Status | Yes | ||
| Entity Voluntary Filers | No | ||
| Entity Filer Category | Non-accelerated Filer | ||
| Entity Well-known Seasoned Issuer | No | ||
| Document Period End Date | Dec. 31, 2020 | ||
| Document Fiscal Year Focus | 2020 | ||
| Document Fiscal Period Focus | FY | ||
| Entity Small Business | true | ||
| Entity Emerging Growth Company | false | ||
| Entity Shell Company | false | ||
| Entity File Number | 000-55195 | ||
| Entity Incorporation, State or Country Code | DE | ||
| Entity Interactive Data Current | Yes |
Consolidated Balance Sheets (Parentheticals) - $ / shares |
Dec. 31, 2020 |
Dec. 31, 2019 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Preferred stock, shares authorized | 118,000,000 | |
| Preferred stock, shares issued | 60,085,583 | |
| Preferred stock, shares outstanding | 60,085,583 | |
| Common stock, par value (in Dollars per share) | $ 0.01 | $ 0.01 |
| Common stock, shares authorized | 280,000,000 | 75,000,000 |
| Common stock, shares issued | 88,095,659 | 36,598,291 |
| Common stock, shares outstanding | 88,095,659 | 36,598,291 |
Consolidated Statements of Operations - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
| Operating expenses: | ||
| Research and development | $ 3,484 | $ 4,225 |
| Sales and marketing | 22 | |
| General and administrative | 5,621 | 5,295 |
| Total operating expenses | 9,105 | 9,542 |
| Loss from operations | (9,105) | (9,542) |
| Other income (expense): | ||
| Interest income | 3 | |
| Interest expense | (1,547) | (6,178) |
| Foreign exchange gain (loss) | (18) | 11 |
| Loss on extinguishment of debt | (678) | |
| Re-measurement of derivative liabilities | (1,683) | |
| Gain on write-off of accounts payable | 101 | |
| Other income | 236 | |
| Other expense, net | (2,007) | (7,746) |
| Loss before income tax expense | (11,112) | (17,288) |
| Income tax expense | 24 | 45 |
| Net loss | $ (11,136) | $ (17,333) |
| Basic and diluted net loss per common share (in Dollars per share) | $ (0.19) | $ (0.67) |
| Weighted-average number of common shares used in basic and diluted net loss per common share (in Shares) | 58,858,758 | 25,886,615 |
Nature of Business |
12 Months Ended | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 | ||||||||||||||||||||||
| Accounting Policies [Abstract] | ||||||||||||||||||||||
| Nature of Business | 1. Nature of Business GI Dynamics® is a clinical stage medical device company focused on the development and commercialization of EndoBarrier, a medical device intended to treat patients with type 2 diabetes and to reduce obesity. Diabetes mellitus type 2 (also known as type 2 diabetes) is a long-term progressive metabolic disorder characterized by high blood sugar, insulin resistance, and reduced insulin production. People with type 2 diabetes represent 90-95% of the worldwide diabetes population; only 5-10% of this population is diagnosed with type 1 diabetes (a form of diabetes mellitus wherein little to no insulin is produced). Being overweight is a condition where the patient’s BMI is greater than 25 (kg/m2); obesity is a condition where the patient’s BMI is greater than 30. Obesity and its comorbidities contribute to the progression of type 2 diabetes. Many experts believe obesity contributes to higher levels of insulin resistance, which creates a feedback loop that increases the severity of type 2 diabetes. When considering treatment for type 2 diabetes, it is optimal to address obesity concurrently with diabetes. EndoBarrier® is intended for the treatment of type 2 diabetes and to reduce obesity in a minimally invasive and reversible manner. The current treatment paradigm for type 2 diabetes is lifestyle therapy combined with pharmacological treatment, whereby treating clinicians prescribe a treatment regimen of one to four concurrent medications that could include insulin for patients with higher levels of blood sugar. Insulin carries a significant risk of increased mortality and may contribute to weight gain, which in turn may lead to higher levels of insulin resistance and increased levels of blood sugar. Fewer than 50% of patients treated pharmacologically for type 2 diabetes are adequately managed, meaning that medication does not lower blood sugar adequately and does not halt the progressive nature of diabetes of these patients. The current pharmacological treatment algorithms for type 2 diabetes fall short of ideal, creating a large and unfilled efficacy gap. The GI Dynamics vision is to make EndoBarrier the essential nonpharmacological and non-anatomy-altering treatment for patients with type 2 diabetes. The Company intends to achieve this vision by providing a safe and effective device, focusing on optimal patient care, supporting treating clinicians, adding to the extensive body of clinical evidence around EndoBarrier, gaining appropriate regulatory approvals, continuing to improve its products and systems, operating the Company in a lean fashion, and maximizing stockholder value. EndoBarrier® is intended for the treatment of type 2 diabetes and to reduce obesity in a minimally invasive and reversible manner and is designed to mimic the mechanism of action of duodenal-jejunal exclusion created by gastric bypass surgery. Since incorporation, the Company has devoted substantially all of its efforts to product commercialization, research and development, business planning, recruiting management and technical staff, acquiring operating assets, and raising capital. The Company currently operates in one reportable business segment. COVID-19 Pandemic and Impacts to Business Operations In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China. In January 2020, this coronavirus spread to other parts of the world, including the United States and Europe, and efforts to contain the spread of this coronavirus intensified. In March 2020, the World Health Organization declared the Coronavirus (“SARS-CoV-2”) outbreak a “pandemic.” The Company operations experienced significant restrictions and delays in 2020, including the following operational impacts:
As of March 2021, various vaccines are being administered at differential rates in global communities and while the spread of SARS-CoV-2 is being impacted positively, a state of global economic and public health safety uncertainty remains as SARS-CoV-2 variants have emerged. Currently, the existing vaccines provide protection against the known variants, but the emergence of a variant for which the current vaccines are not effective may occur. If such a variant does emerge, the same effects experienced in 2020 may be repeated as restrictions are again required to minimize the impact of the re-emergent pandemic. Going Concern Evaluation As of December 31, 2020, the Company’s primary source of liquidity is its cash and restricted cash balances. GI Dynamics is currently focused on obtaining an EndoBarrier CE mark and enrolling the Company’s clinical trials, which will support future regulatory submissions and potential commercialization activities. Until the Company is successful in gaining regulatory approvals, it is unable to sell the Company’s product in any market. Without revenues, GI Dynamics is reliant on funding obtained from investment in the Company to maintain business operations until the Company can generate positive cash flows from operations. The Company cannot predict the extent of future operating losses and accumulated deficit, and it may never generate sufficient revenues to achieve or sustain profitability. The Company has incurred operating losses since inception and at December 31, 2020 had an accumulated deficit of approximately $296 million. The Company expects to incur significant operating losses for the next several years. At December 31, 2020, the Company had approximately $1.2 million in cash and restricted cash. The Company will need to arrange additional financing before August 1, 2021 in order to continue to pursue its current business objectives as planned and to continue to fund its operations. The Company is looking to raise additional funds through any combination of additional equity and debt financings or from other sources, however, the Company has no guaranteed source of capital that will sustain operations past August 1, 2021. There can be no assurance that any such potential financing opportunities will be available on acceptable terms, if at all. If the Company is unable to raise sufficient capital on the Company’s required timelines and on acceptable terms to existing stockholders and the Board of Directors, it could be forced to cease operations, including activities essential to support regulatory applications to commercialize EndoBarrier. If access to capital is not achieved in the near term, it will materially harm the Company’s business, financial condition and results of operations to the extent that the Company may be required to cease operations altogether, file for bankruptcy, or undertake any combination of the foregoing. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that these Consolidated Financial Statements are issued. In addition, if the Company does not meet its payment obligations to third parties as they become due, the Company may be subject to litigation claims and its credit worthiness would be adversely affected. Even if the Company is successful in defending these claims, litigation could result in substantial costs and would be a distraction to management and may have other unfavorable results that could further adversely impact the Company’s financial condition. As a result of the factors described above, the Company’s Consolidated Financial Statements include a going-concern disclosure. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” for further information regarding the Company’s funding requirements. The accompanying Consolidated Financial Statements have been prepared assuming GI Dynamics will continue as a going concern, which contemplates the realization of assets and liabilities and commitments in the normal course of business. The Consolidated Financial Statements for the year ended December 31, 2020 do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from uncertainty related to the Company’s ability to continue as a going concern within one year after the date that these Consolidated Financial Statements are issued. |
Summary of Significant Accounting Policies and Basis of Presentation |
12 Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 | |||||||||||||
| Accounting Policies [Abstract] | |||||||||||||
| Summary of Significant Accounting Policies and Basis of Presentation | 2. Summary of Significant Accounting Policies and Basis of Presentation Principles of Consolidation The accompanying Consolidated Financial Statements include the accounts of GI Dynamics, Inc. and its wholly owned subsidiaries. All intercompany transactions and balances are eliminated in consolidation. The functional currency of GID Europe Holding B.V., GID Europe B.V., GID Germany GmbH and GI Dynamics Australia Pty Ltd, each wholly-owned subsidiaries of the Company, is the U.S. dollar. Consolidated balance sheet accounts of the Company’s subsidiaries are remeasured into U.S. dollars using the exchange rate in effect at the consolidated balance sheet date while expenses are remeasured using the average exchange rate in effect during the period. Gains and losses arising from remeasurement of the wholly owned subsidiaries’ financial statements are included in the determination of net loss. Segment Reporting The Company has one reportable segment which designs, develops, manufactures and markets medical devices for non-surgical approaches to treating type 2 diabetes. GI Dynamics does not report geographic segments as there were no product sales in 2020 or 2019 and at December 31, 2020 and 2019, all long-lived assets comprised of property and equipment were held in the U.S. Use of Estimates The preparation of Consolidated Financial Statements in accordance with generally accepted accounting principles in the U.S. requires the Company’s management to make estimates and judgments that may affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates its estimates, including those related to the impairment of long-lived assets, income taxes including the valuation allowance for deferred tax assets, research and development, contingencies, valuation of warrant and other derivative liabilities, estimates used to assess its ability to continue as a going concern and stock-based compensation. GI Dynamics bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. Changes in estimates are reflected in reported results in the period in which they become known. Cash and Cash Equivalents and Restricted Cash At December 31, 2020 and 2019, GI Dynamics had approximately $0.03 million and $0.01 million, respectively, of cash and cash equivalents denominated in Australian dollars that is subject to foreign currency gain and loss. GI Dynamics has $30 thousand in restricted cash used to secure a corporate credit card account. Property and Equipment Property and equipment, are recorded at cost and are depreciated when placed in service using the straight-line method based on their estimated useful lives as follows:
Maintenance and repair costs for fixed assets are expensed as incurred. Derivative Liabilities GI Dynamics examines all financial instruments to determine if the financial instrument or any component feature is a derivative under Financial Accounting Standards Board, (“FASB”) Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging (“ASC 815”) and therefore requires liability classification. Certain warrants to purchase common stock did not meet the requirements for equity classification and were considered derivative instruments due to their cash settlement features. The derivative warrants were initially recorded at fair value with subsequent changes in fair value recorded in other income (expense) in the statements of operations. The Company estimates fair value using the Black-Scholes option pricing model. See Note 5 for inputs and assumptions used in the determination of the fair value. If the derivative instruments subsequently meet the requirements for classification as equity, the Company reclassifies the then fair value of the instrument to equity. If multiple outcomes are probable, management assigns probability adjustments to determine the most likely probability adjusted fair value. Research and Development Costs Research and development costs are expensed when incurred. Research and development costs include costs of all basic research activities as well as other research, engineering, and technical effort required to develop a new product or service or make significant improvement to an existing product or manufacturing process. Research and development costs also include preapproval regulatory and clinical trial expenses. Patent Costs GI Dynamics expenses as incurred all costs, including legal expenses, associated with obtaining patents until the patented technology becomes feasible. All costs incurred after the patented technology is feasible will be capitalized as an intangible asset. As of December 31, 2020, no such costs had been capitalized since inception of the Company. GI Dynamics has expensed approximately $200 thousand of patent costs within general and administrative expenses in the consolidated statements of operations in each of the years ended December 31, 2020 and 2019. Stock-Based Compensation GI Dynamics accounts for stock-based compensation in accordance with ASC 718, Stock Compensation (“ASC 718”), which requires that stock-based compensation be measured at the grant date fair value and recognized as an expense in the financial statements. . For awards that vest based on service conditions, GI Dynamics uses the straight-line method to allocate compensation expense to reporting periods. The grant date fair value of options granted is calculated using the Black-Scholes option pricing model, which requires the use of subjective assumptions including volatility, expected term and the fair value of the underlying common stock, among others. The assumptions used in determining the fair value of stock-based awards represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change, and management uses different assumptions, the Company’s stock-based compensation could be materially different in the future. The risk-free interest rate used for each grant is based on a zero-coupon U.S. Treasury instrument with a remaining term similar to the expected term of the stock-based award. Because GI Dynamics does not have a sufficient stable history to estimate the expected term, it uses the simplified method for estimating the expected term. The simplified method is based on the average of the vesting tranches and the contractual life of each grant. Prior to delisting from the ASX in July 2020, the Company estimated the expected stock volatility at the grant date based on the appropriate historical ASX price volatility. GI Dynamics has not paid and does not anticipate paying cash dividends on its shares of common stock; therefore, the expected dividend yield is assumed to be zero. GI Dynamics recognizes the impact of share-based award forfeitures only as they occur rather than by applying an estimated forfeiture rate. GI Dynamics periodically issues performance-based awards. For these awards, vesting will occur upon the achievement of certain milestones. When achievement of the milestone is deemed probable, the Company records as compensation expense, the value of the respective stock award over the implicit remaining service period. Stock awards to non-employees are also accounted for in accordance with ASC 718.. The Company elects to use the contractual term of each award as the expected term for NESBP awards. Impairment of Long-Lived Assets GI Dynamics regularly reviews the carrying amount of its long-lived assets to determine whether indicators of impairment may exist that merit adjustments to carrying values or estimated useful lives. If indications of impairment exist, projected future undiscounted cash flows associated with the asset are compared to the carrying amount to determine whether the asset’s value is recoverable. If the carrying value of the asset exceeds such projected undiscounted cash flows, the asset will be written down to its estimated fair value. No such impairments were recorded in 2020 or 2019. Income Taxes GI Dynamics uses the asset and liability method of accounting for income taxes. The Company records deferred tax assets and liabilities for the expected future tax consequences of temporary differences between its financial reporting and the tax bases of assets and liabilities measured using the enacted tax rates in effect in the years in which the differences are expected to reverse. The Company regularly assesses the need for a valuation allowance against its deferred tax assets. Future realization of the Company’s deferred tax assets ultimately depends on the existence of sufficient taxable income within the available carryback or carryforward periods. Sources of taxable income include taxable income in prior carryback years, future reversals of existing taxable temporary differences, tax planning strategies, and future taxable income. The Company records a valuation allowance to reduce its deferred tax assets to an amount it believes is more-likely-than-not to be realized. Deferred tax assets are reduced by a valuation allowance to reflect the uncertainty associated with their ultimate realization. The Company assesses its income tax positions and records tax benefits based upon management’s evaluation of the facts, circumstances, and information available at the reporting date. For those tax positions where it is more-likely-than-not that a tax benefit will be sustained, the Company records the largest amount of tax benefit with a greater than 50 percent likelihood of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information. For those income tax positions where it is not more-likely-than-not that a tax benefit will be sustained, no tax benefit is recognized in the financial statements. The Company classifies interest and penalties on uncertain tax positions as income tax expense. Concentrations of Credit Risk Financial instruments that subject GI Dynamics to credit risk primarily consist of cash and restricted cash. Cash balances are all maintained with high quality financial institutions, and consequently, the Company believes that such funds are subject to minimal credit risk. Guarantees GI Dynamics has identified the guarantees described below as disclosable, in accordance with ASC 460, Guarantees. As permitted under Delaware law, GI Dynamics indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company’s request in such capacity. The maximum potential amount of future payments the Company could be required to make is unlimited; however, the Company maintains directors’ and officers’ insurance coverage that should limit its exposure and enable it to recover a portion of any future amounts paid. GI Dynamics is a party to a number of agreements entered into in the ordinary course of business that contain typical provisions that obligate it to indemnify the other parties to such agreements upon the occurrence of certain events. Such indemnification obligations are usually in effect from the date of execution of the applicable agreement for a period equal to the applicable statute of limitations. The aggregate maximum potential future liability of the Company under such indemnification provisions is uncertain. As of December 31, 2020, and 2019, GI Dynamics had not experienced any material losses related to these indemnification obligations, and no material claims with respect thereto were outstanding. The Company does not expect significant claims related to these indemnification obligations and, consequently, concluded that the fair value of these obligations is negligible. As a result, no related reserves have been established. Leases The Company applies ASC 842, Leases, which requires that most operating leases be recorded on the balance sheet unless the practical expedient is elected for short-term operating leases. The Company elected to apply the practical expedient as it relates to short-term leases. For other leases subject to this guidance, the Company will record a lease liability, which is the Company’s obligation to make lease payments arising from its leases, measured on a discounted basis, and a right-of-use asset, which is an asset representing the Company’s right to use the underlying asset for the lease term. Recently Adopted Accounting Pronouncements In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, or ASU 2018-13, which provides guidance focused on the disclosure requirements for disclosing fair value estimates, assumptions, and methodology. Requirements removed include the requirement to disclose details around amount and reasoning for level 1 to level 2 transfers, timing policies for transfer between levels and the valuation processes for level 3 fair value measurements. Modified requirements include details regarding net asset redemption restrictions and timing related to uncertainty disclosures. Requirements added include disclosures of changes in unrealized gains and losses for recurring level 3 measurements held as of the reporting date and disclosures around the range and weighted average of significant inputs used to develop level 3 fair value measurements. These amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption was permitted, however the Company declined early adoption and adopted this ASU effective January 1, 2020. The adoption had no impact to its consolidated financial statements. Recently Issued Accounting Pronouncements In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes, or ASU 2019-12, which changes the treatment for a number of specific situations, with the most relevant topic being the tax effects of items not included in continuing operations when reporting a loss from continuing operations for the period. The guidance is effective for public business entities for fiscal years beginning after December 15, 2020, and for interim periods within those fiscal years. The Company has elected not to adopt ASU 2019-12 early and is evaluating the potential impact of adoption to its consolidated financial statements. In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, or ASU 2020-06, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. The changes include the accounting for beneficial conversion features and will result in less debt discount interest expense amortization. There are also reduced requirements for equity classification of contracts in an entity’s own equity. Additionally, expanded disclosures will be required for convertible debt instruments. These changes may have impact on earnings per share calculations. A full or modified retrospective approach can be adopted and ASU 2020-06 must be adopted by smaller reporting companies for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company has elected not to adopt ASU 2020-06 early and is evaluating the potential impact of adoption to its consolidated financial statements. |
Net Loss per Common Share |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Net Loss per Common Share | 3. Net Loss per Common Share Basic net loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Potential common stock equivalents are determined using the treasury stock method. For diluted net loss per share purposes, stock options and other share-based awards are excluded as inclusion would have an anti-dilutive effect in periods in which a net loss is reported. Likewise, for diluted net loss per share purposes, warrants conferring the right to purchase common shares and because CDIs and common shares are interchangeable at the election of the stockholder, warrants conferring the right to purchase CDIs are excluded from diluted net loss per share calculations as inclusion would have an anti-dilutive effect in periods in which a net loss is reported. Shares of preferred stock that are convertible into shares of common stock are excluded from diluted net loss per share calculations as inclusion would also have an anti-dilutive effect. During each of the years ended December 31, 2020 and 2019, common stock equivalents were excluded from the calculation of diluted net loss per common share, as their effect was anti-dilutive due to the net loss incurred. Therefore, basic and diluted net loss per share was the same in all years presented. The following potentially dilutive securities have been excluded from the computation of diluted weighted- average shares outstanding as of December 31, 2020 and 2019, as they would be anti-dilutive:
|
|||||||||||||||||||||||||||||||||||||||||||||
Warrants to Purchase Common Stock or CDIs |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Warrants to Purchase Common Stock or CDIs | 4. Warrants to Purchase Common Stock or CDIs There was one warrant outstanding and exercisable at December 31, 2020 and 2019. On May 4, 2016, the Company entered into a consulting agreement pursuant to which a consulting firm provides strategic advisory, finance, accounting, human resources and administrative functions, including chief financial officer services, to the Company. In connection with the consulting agreement, the Company granted the consulting firm a warrant (“Consultant Warrant”) to purchase up to 28,532 shares of the Company’s common stock at an exercise price per share equal to $0.64. The Consultant Warrant is fully vested and expires on May 4, 2021. As of December 31, 2020, the Consultant Warrants had not been exercised. The following table rolls forward the warrant activity during the year ended December 31, 2020:
On August 21, 2019, GI Dynamics and Crystal Amber entered into a securities purchase agreement (“SPA”) for a total funding of up to approximately $10 million (the “August 2019 SPA”) comprised of the scheduled exercise of the 2018 Warrant, the March 2019 Warrant, and the May 2019 Warrant as detailed above and the sale of an Unsecured Convertible Note for up to approximately $4.6 million (the “August 2019 Note”), which included an agreement to issue a warrant (the “August 2019 Warrant”) to purchase up to 229,844,650 CDIs (representing 4,596,893 shares of common stock) for an exercise price of $0.02 per CDI. On December 16, 2019, stockholder approval for the warrant to be issued was obtained and it was issued on January 13, 2020. The August 2019 Warrant was issued on January 13, 2020 and estimated fair value was determined to allocate relative fair values of the August 2019 Note and the August 2019 Warrant. The assumptions used to estimate the fair value of $2.3 million included an expected volatility of approximately 141%, an expected term of 5 years, a risk-free interest rate of 1.65%, and no dividend yield. On September 4, 2020, the Company and Crystal Amber executed financing documents (the “September 2020 Financing”) that included the sale of up to $10 million of shares of Series A Preferred Stock, the cancellation of the August 2019 Warrants, and the restructuring of the August 2019 Note (described more fully in Notes 8 and 11 of the consolidated financial statements). |
|||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements |
12 Months Ended |
|---|---|
Dec. 31, 2020 | |
| Fair Value Disclosures [Abstract] | |
| Fair Value Measurements | 5. Fair Value Measurements Information about the Company’s assets and liabilities that are measured at fair value initially or on a recurring basis as of December 31, 2020 and 2019 is provided below and includes the fair value hierarchy of the valuation techniques the Company used to determine such fair value. In general, fair values determined by Level 1 inputs utilize observable inputs such as quoted prices in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize data points that are either directly or indirectly observable, such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs utilize unobservable data points in which there is little or no market data, requiring the Company to develop its own assumptions for the asset or liability. On March 31, 2020, the derivative liability classification of the Consultant Warrant was re-evaluated, and the Company re-classified it as an equity instrument. On March 31, 2020, this reclassification resulted in an immaterial credit to Other Income. On June 18, 2020 and on August 4, 2020, convertible notes were issued to Crystal Amber, the terms of which included a mandatory conversion of outstanding principal and interest into shares issued in the next Qualified Financing, which was the September 2020 Financing, at a conversion price equal to 80% of the price per share of Series A Preferred Stock. The fair value of each the June 2020 Note and the August 2020 Note at issuance was determined using directly observable Level 2 inputs including the time period to the Proposed Offering, accrued interest and the fixed conversion premium. The Company elected the interest method of accretion to approximate fair value, so the June 2020 Note was only remeasured at August 1, 2020 when the timing and conversion discount methodology was clarified to be different from the original assumptions. The August 2020 Note applied the same methodology with known values for valuation variables. The June 2020 and the August 2020 Notes were converted into shares of Series A Preferred Stock on September 4, 2020 as part of the September 2020 financing. Cash, restricted cash, prepaid expenses and other current assets, accounts payable, accrued expenses, short-term debt and other current liabilities at September 30, 2020 and December 31, 2019 are carried at amounts that approximate fair value due to their short-term maturities and the highly liquid nature of these instruments. At December 31, 2020, there are no assets or liabilities that require remeasurement of fair value on a recurring basis. |
Prepaid Expenses and Other Current Assets |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Prepaid Expenses And Other Current Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Prepaid Expenses and Other Current Assets | 6. Prepaid Expenses and Other Current Assets Prepaid expenses consisted of the following (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property and Equipment | 7. Property and Equipment Property and equipment consisted of the following (in thousands):
At December 31, 2020 and 2019, the Company had no property and equipment assets financed in any capital lease arrangement. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accrued Expenses | 8. Accrued Expenses Accrued expenses consisted of the following (in thousands):
In 2017, following the notification by the United Kingdom’s Medicines and Healthcare products Regulatory Agency, the Company notified its customers to return their inventory on hand. The Company calculated an estimate for returns, reversed its revenue and recorded an accrued expense estimate of $202 thousand of product return related costs in addition to $77 thousand of credit memos granted to customers. Through December 31, 2019, accumulated returns had reduced the reserve total to approximately $164 thousand. Given the Company’s expectation that there will not be additional valid claims now that all product has fully expired, the reserves were reversed to income in 2020. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Payable |
12 Months Ended |
|---|---|
Dec. 31, 2020 | |
| Debt Disclosure [Abstract] | |
| Notes Payable | 9. Notes Payable 2017 Convertible Note Financing On June 15, 2017, the Company entered into a Note Purchase Agreement (“2017 NPA”) by and between the Company and Crystal Amber, a Related Party. Pursuant to the 2017 NPA, the Company issued and sold to Crystal Amber, a Senior Secured Convertible Promissory Note in an aggregate original principal amount of $5.0 million (the “2017 Note”). The 2017 Note accrued interest at an annually compounded rate of 5% per annum, other than during the continuance of an event of default, when the 2017 Note would accrue interest at a rate of 8% per annum. The entire outstanding principal balance and all unpaid accrued interest thereon was initially due on the original maturity date of December 31, 2018, and, as announced on July 1, 2020, was most recently amended to extend the maturity date to July 31, 2020. The 2017 Note was secured by a first priority security interest in substantially all tangible and intangible assets of the Company, including intellectual property (the “Collateral”). In the event of an uncured default, Crystal Amber, was authorized to sell, transfer, assign or otherwise deal in or with the Collateral or the proceeds thereof or any related goods securing the Collateral, as fully and effectually as if Crystal Amber were the absolute owner thereof. The ASX provided the Company with a waiver to allow all asset liens (the “Security”) to be granted to Crystal Amber, without the customary requirement of having to obtain stockholder approval for the grant of a security to a Related Party of the Company. The entire outstanding principal balance under the 2017 Note and all unpaid accrued interest thereon was convertible into CDIs (i) prior to the maturity date, at the option of Crystal Amber at a conversion price calculated based on the five-day volume weighted average price (“VWAP”) of the Company’s CDIs traded on the ASX (“Optional Conversion Price”), or (ii) automatically upon the occurrence of an equity financing in which the Company raises at least $10 million (a “Qualified Financing”) at the price per CDI of the CDIs issued and sold in such financing. On July 13, 2020, Crystal Amber provided the Company with a notice of optional conversion of the 2017 Note. On the conversion date, the principal of $5 million and the accrued and unpaid interest of $390 thousand totaling $5,390,240 was converted into 2,574,873,400 CDIs, which was equivalent to 51,497,468 shares of Common Stock. The conversion price equaled the 5-day VWAP per CDI for the 5 trading days immediately preceding the date of notice, which equaled $0.002093 per CDI or $0.10467 per share of Common Stock. On receipt of the notice of conversion, the Company did not have sufficient authorized shares to issue to CHESS Depository Nominees, Ltd. (“CDN”) to enable the required number of CDIs to be allotted to Crystal Amber. The available 38,401,704 shares were issued to CDN, allowing the allotment of 1,920,085,200 CDIs to Crystal Amber. The Company and Crystal Amber executed a Right to Shares and Waiver Agreement in which the Company agreed to issue the remaining 13,095,764 shares of Common Stock owed under the conversion when the Company filed an amended and restated certification of incorporation with the Delaware Secretary of State after the Company was delisted from the ASX and in connection with the consummation of the September 2020 Financing. On July 22, 2020, the Company was removed from the Official List of the ASX (“Delisted”) and the CDN trust was subsequently dissolved, causing all CDIs to automatically convert to shares of Common Stock. The remaining 13,095,764 shares of Common Stock owed under the conversion were issued as shares of Common Stock immediately after Shareholders approved the increase in the authorized shares of common stock to 280,000,000 shares at the Special Meeting of Shareholders held on September 3, 2020. The original debt discount associated with the 2017 Note had been fully amortized prior to December 31, 2018. The Company recorded a debt discount related to the initial maturity extension to March 31, 2019 and amortized over that period. Subsequent maturity date extensions were evaluated under ASC 470 to determine whether debt extinguishment or debt modification accounting applied and the Company concluded that the maturity extensions did not meet the characteristics of debt extinguishments under ASC 470 and no accounting recognition was required. For the years ended December 31, 2020 and 2019, the Company recognized interest expense related to the 2017 Note of $206 and $248 thousand and amortization of debt issuance costs of $0 and $43 thousand, respectively. 2018 Convertible Note and Warrant Financing On May 30, 2018, the Company entered into a Note Purchase Agreement (“2018 NPA”) by and between the Company and Crystal Amber, a Related Party. Pursuant to the 2018 NPA, the Company issued and sold to Crystal Amber a Senior Unsecured Convertible Promissory Note in an aggregate original principal amount of approximately $1.8 million (the “2018 Note”) with a maturity date of May 30, 2023. Interest accrued at an annually compounded rate of 10% per annum. Due to a subsequent equity financing in September 2018, the conversion price adjusted to $0.0144 per CDI. During 2019, Crystal Amber submitted notice to convert the 2018 Note consisting of approximately $1.8 million in principal and $192 thousand of accrued interest into 134,852,549 CDIs (representing 2,697,050 shares of common stock). In connection with the 2018 NPA, GI Dynamics issued to Crystal Amber a warrant (the “2018 Warrant”) to purchase 97,222,200 CDIs (representing 1,944,444 shares of common stock) at an initial exercise price of $0.018 per CDI. As per the 2018 Note conversion price, the warrant exercise price was subsequently adjusted to $0.0144 per CDI. The 2018 Warrant was exercised in full on August 25, 2019 for $1.4 million. The Company evaluated the guidance ASC 480-10 Distinguishing Liabilities from Equity, ASC 815-40 Contracts in an Entity’s Own Equity and ASC 470-20 Debt with Conversion and Other Options to determine the appropriate classification of the 2018 Note and 2018 Warrant. On issuance, having already obtained the required stockholder approval to reserve the CDIs underlying the conversion feature and the warrant, the 2018 Warrant was determined to be a freestanding instrument meeting the requirements for equity classification. Accordingly, the fair value estimated for the 2018 Warrant, totaling approximately $743 thousand, was recorded as a discount to the debt with the offset to additional paid-in capital. The 2018 Note was also evaluated for a BCF subsequent to the allocation of proceeds among the 2018 Note and 2018 Warrant. Based upon the effective conversion price of the 2018 Note after considering the stock price at the date of issuance and the allocation of estimated fair value to the 2018 Warrant, it was determined that the 2018 Note contained a BCF. The value of the BCF was computed to be approximately $1.2 million but was capped at approximately $1 million so as to not exceed the total proceeds from the 2018 Note after deducting the value allocated to the 2018 Note and 2018 Warrant. The effective interest rate on the note after the discounts was 26.4%. The Company recorded the 2018 Note at issuance, net of the total debt discount of $1.8 million and amortized the debt discount over the life of the 2018 Note. For the year ended December 31, 2019, the Company recorded accrued interest expense of $91 thousand and debt discount amortization to interest expense of $146 thousand prior to conversion. March 2019 Convertible Note and Warrant Financing On March 15, 2019, the Company entered into a Note Purchase Agreement (“March 2019 NPA”) by and between the Company and Crystal Amber. Pursuant to the March 2019 NPA, the Company issued and sold to Crystal Amber a Senior Unsecured Convertible Promissory Note in an aggregate original principal amount of $1 million (the “March 2019 Note”) with a maturity date of March 15, 2024. Interest accrued at an annually compounded rate of 10% per annum and issuance costs related to the March 2019 NPA were $50 thousand. After the Company obtained stockholder approval to enable Crystal Amber’s conversion right under the March 2019 Note on June 30, 2019, the entire outstanding principal balance under the March 2019 Note and all unpaid accrued interest thereon was convertible into CDIs, at the option of Crystal Amber at a conversion price of $0.0127 per CDI. On June 30, 2019, Crystal Amber elected to convert the March 2019 Note consisting of $1 million of principal and accrued interest of $30 thousand into 81,070,003 CDIs (representing 1,621,400 shares of common stock). Per the March 2019 NPA, the Company agreed to issue a warrant (the “March 2019 Warrant”) to Crystal Amber, pending stockholder approval, to purchase 78,984,823 CDIs (representing 1,579,696 shares of common stock) at an initial exercise price of $0.0127 per CDI. The issue of the March 2019 Warrant required the approval of stockholders and was not exercisable until its issue was approved on June 30, 2019. On August 25, 2019, a portion of the March 2019 Warrant totaling 47,244,119 CDIs (equivalent to approximately 944,882 shares of common stock) was exercised for $600 thousand. The remaining portion of the March 2019 Warrant, totaling 31,740,704 CDIs (equivalent to 634,814 shares of common stock) was exercised for approximately $400 thousand on September 30, 2019. The Company evaluated the guidance ASC 480-10, Distinguishing Liabilities from Equity, ASC 815-40 Contracts in an Entity’s Own Equity and ASC 470-20 Debt with Conversion and Other Options to determine the appropriate classification of the March 2019 Note and March 2019 Warrant. On the date of the issuance of the March 2019 Note, the March 2019 Warrant was determined to be a freestanding instrument meeting the requirements for liability classification due to a cash settlement recourse available on the condition of not obtaining stockholder approval. Accordingly, the fair value estimated for the March 2019 Warrant, totaling approximately $850 thousand, was recorded as a discount to the March 2019 Note with the offset to derivative liabilities. The Company then evaluated the March 2019 Note for a BCF. Based upon the effective conversion price of the March 2019 Note after considering the stock price at the commitment date and the allocation of estimated fair value to the March 2019 Warrant, it was determined that the March 2019 Note contained a contingent BCF. The value of the BCF was computed to be approximately $623 thousand but was capped at approximately $129 thousand so as to not exceed the total proceeds from the March 2019 Note after deducting the value allocated to the March 2019 Warrant. In addition, upon a change of control of the Company (other than a change of control resulting from a Qualified Financing) in which the Company’s stockholders receive cash consideration, the Company was obligated under the March 2019 Note to pay all accrued and unpaid interest then due plus 110% of the remaining outstanding unconverted principal balance. The Company considered the change in control premium as a cash settleable feature, thereby requiring derivative liability classification. On applying a probability adjusted present value of the premium, the fair value was considered immaterial upon issuance and at all subsequent reporting period ends until converted. Upon approval of the conversion features of the March 2019 Note and issuance of the March 2019 Warrants on June 30, 2019, the Company remeasured the warrant liability and recorded a $576 thousand remeasurement loss to the consolidated statement of operations and then reclassified $1.4 million of fair value of March 2019 Warrant from derivative liability to equity as the warrant became immediately exercisable. The total debt discount on the March 2019 Note upon stockholder approval of its conversion feature was $1 million. The effective interest rate on the Note after the discounts was 29.4%. Upon conversion of the 2019 March Note on June 30, 2019, the Company recorded the contingent beneficial conversion feature of $129 thousand as non-cash interest expense and additional paid-in capital. For the year ended December 31, 2019, the Company accrued interest expense of $30 thousand and recorded debt discount amortization to interest expense of $1 million. May 2019 Convertible Note and Warrant Financing On May 8, 2019, the Company entered into a Note Purchase Agreement (“May 2019 NPA”) by and between the Company and Crystal Amber. Pursuant to the May 2019 NPA, the Company issued and sold to Crystal Amber a Senior Unsecured Convertible Promissory Note in an aggregate original principal amount of $3.0 million (the “May 2019 Note”) with a maturity date of May 8, 2024. Interest accrued at an annually compounded rate of 10% per annum and issuance costs related to the May 2019 NPA were $34 thousand. After the Company obtained stockholder approval to enable Crystal Amber’s, a Related Party, conversion rights under the May 2019 Note on June 30, 2019, the entire outstanding principal balance under the May 2019 Note and all unpaid accrued interest thereon was convertible into CDIs, at the option of Crystal Amber at a conversion price of $0.0127 per CDI. On June 30, 2019, Crystal Amber elected to convert the May 2019 Note consisting of approximately $3.0 million of principal and accrued interest of $19 thousand into 237,687,411 CDIs (representing 4,753,748 shares of common stock). Per the May 2019 NPA, the Company agreed to issue a warrant (the “May 2019 Warrant”) to Crystal Amber, pending stockholder approval, to purchase 236,220,472 CDIs (representing 4,724,409 shares of common stock) at an initial exercise price of $0.0127 per CDI. The issue of the May 2019 Warrant required the approval of stockholders and was not exercisable until its issue was approved on June 30, 2019. A portion of the May 2019 Warrant totaling 125,739,610 CDIs (equivalent to 2,514,792 shares of common stock) was exercised by Crystal Amber for approximately $1.6 million on September 30, 2019. Another portion of the May 2019 Warrant totaling 78,740,157 CDIs (equivalent to 1,574,803 shares of common stock) was exercised by Crystal Amber for approximately $1 million on October 31, 2019. The Company evaluated the guidance ASC 480-10, Distinguishing Liabilities from Equity, ASC 815-40 Contracts in an Entity’s Own Equity and ASC 470-20 Debt with Conversion and Other Options to determine the appropriate classification of the May 2019 Note and May 2019 Warrant. On the date of the issuance of the May 2019 Note, the May 2019 Warrant was determined to be a freestanding instrument meeting the requirements for liability classification due to a cash settlement recourse available on the condition of not obtaining stockholder approval. Accordingly, the fair value estimated for the May 2019 Warrant, totaling approximately $3.2 million, was recorded to derivative liabilities with offsets of $3 million to a discount on the May 2019 Note and $200 thousand to derivative loss on the consolidated statements of operations. The Company then evaluated the May 2019 Note for a BCF. Based upon the effective conversion price of the May 2019 Note after considering the stock price at commitment date and the allocation of estimated fair value to the May 2019 Warrant, it was determined that the May 2019 Note contained a BCF. The value of the BCF was computed to be approximately $2 million but was not recorded as doing so would exceed the total proceeds from the May 2019 Note after recording the fair value of the May 2019 Warrant. In addition, upon a change of control of the Company (other than a change of control resulting from a Qualified Financing) in which the Company’s stockholders receive cash consideration, the Company was obligated under the May 2019 Note to pay all accrued and unpaid interest then due plus 110% of the remaining outstanding unconverted principal balance. The Company considered the change in control premium as a cash settleable feature, thereby requiring derivative liability classification. On applying a probability adjusted present value of the premium, the fair value was considered immaterial upon issuance and at all subsequent reporting period ends. Upon approval of the conversion features of the May 2019 Note and issuance of the May 2019 Warrant on June 30, 2019, the Company revalued the warrant liability and recorded a $1.1 million remeasurement loss to the consolidated statements of operations and then reclassified approximately $4.3 million of fair value of May 2019 Warrant from derivative liabilities to equity as the May 2019 Warrant became immediately exercisable. The total debt discount on the May 2019 Note upon stockholder approval was $3 million. The effective interest rate on the May 2019 Note after the discounts is 29.4%. For the year ended December 31, 2019, the Company accrued interest expense of $19 thousand and recorded debt discount amortization to interest expense of $3 million. August 2019 Securities Purchase Agreement (“SPA”) On August 21, 2019, the Company entered into the August 2019 SPA by and between the Company and Crystal Amber. The August 2019 SPA detailed a timeline wherein Crystal Amber would exercise the 2018 Warrant, the March 2019 Warrant, and the May 2019 Warrant. Additionally, pursuant to the August 2019 SPA, the Company issued and sold to Crystal Amber the August 2019 Note in an aggregate principal amount of up to approximately $4.6 million to be funded on December 6, 2019, or such earlier or later date as may be requested by the Company (the “Funding Date”). In conjunction with the August 2019 Note, the Company agreed to issue to Crystal Amber the August 2019 Warrant (see Notes 4 and 9 of the consolidated financial statements) conferring the right to purchase 229,844,650 CDIs (representing 4,596,893 shares of common stock), with warrant issuance subject to the funding of the August 2019 Note and the receipt of required stockholder approval to issue the August 2019 Warrant. The August 2019 Note accrued interest at a rate equal to 10% per annum from the August 2019 Note Funding Date, compounded annually, other than during the continuance of an event of default, when the August 2019 Note would accrue interest at a rate of 16% per annum. The entire outstanding principal balance and all unpaid accrued interest thereon would become due on the fifth anniversary of the Funding Date. The entire outstanding principal balance under the August 2019 Note and all unpaid accrued interest thereon was immediately convertible into CDIs at the option of Crystal Amber at a conversion price equal to $0.02 per CDI (representing $1.00 per share of Common Stock). In the event that the Company issued additional CDIs to a stockholder other than Crystal Amber in a subsequent equity financing at a price per CDI that was less than the conversion price under the August 2019 Note, the conversion price was to be reduced to the lowest such price per CDI. In addition, upon a change of control of the Company resulting in cash proceeds, Crystal Amber could, at its option, demand that the Company prepay all accrued and unpaid interest plus 110% of the remaining outstanding unconverted principal balance. The Company was unable to prepay the August 2019 Note without the consent of Crystal Amber, a Related Party. If the stockholder approvals required to issue the August 2019 Warrant or to approve the conversion rights under the August 2019 Note were not obtained, the Company was obligated to prepay all accrued and unpaid interest plus 110% of the remaining outstanding unconverted principal balance on the earlier of the Funding Date or the date that was six months following the date of the stockholder meeting at which the requisite approvals were not obtained. The Company considered the change in control premium and the stockholder approval premium to each represent a cash settleable feature, thereby requiring derivative liability classification. On applying a probability adjusted present value of the premiums, the fair values of these features were considered immaterial upon issuance. The August 2019 SPA contained customary events of default. If a default occurs and is not cured within the applicable cure period or is not waived, any outstanding obligations under the August 2019 Note may be accelerated. The August 2019 SPA and related August 2019 Note and August 2019 Warrant documents also contained additional representations and warranties, covenants and conditions, in each case customary for transactions of this type. Prior to December 6, 2019, the Company notified Crystal Amber that it had elected to receive the full amount of approximately $4.6 million under the August 2019 Note, but agreed to timing extensions. On December 16, 2019, stockholder approval was obtained pursuant to ASX Listing Rule 10.11, for the August 2019 Note conversion feature and the issuance of the August 2019 Warrant, contingent on receipt of the August 2019 Note proceeds. On January 13, 2020, the full amount of approximately $4.6 million was received as proceeds from the August 2019 Note. On receipt of funds, the August 2019 Note was immediately convertible. On January 13, 2020, the Company issued to Crystal Amber an immediately exercisable August 2019 Warrant to purchase 229,844,650 CDIs (representing 4,596,893 shares of common stock) for an exercise price of $0.02 per CDI (see Note 4 of the consolidated financial statements). On issuance, having already obtained the required stockholder approval to reserve the CDIs underlying the conversion feature and the August 2019 Warrant, the August 2019 Warrant was determined to be a freestanding instrument meeting the requirements for equity classification in accordance with ASC 480-10 Distinguishing Liabilities from Equity, ASC 815-40 Contracts in an Entity’s Own Equity and ASC 470-20 Debt with Conversion and Other Options. Accordingly, proceeds from the August 2019 SPA were allocated to the August 2019 Note and Warrant based on their relative fair values. The relative fair value of the August 2019 Warrant of approximately $2.3 million was recorded as a debt discount with the offset to additional paid-in capital. Additionally, the Company analyzed the conversion features of the August 2019 Note to determine whether a beneficial conversion feature (BCF) existed. The Company determined a BCF with a value of $435 thousand existed and was recorded as a debt discount with the offset to additional paid-in capital. The total debt discount was to be amortized to interest expense through the January 2025 maturity of the August 2019 Note. On September 4, 2020, the Company executed a series of financing-related agreements (“the September 2020 Financing”) which included the cancellation of the August 2019 Warrant, the restructuring of the August 2019 Note into the September 2020 Note (see below for a detailed description of the September 2020 Note and the accounting classification of the August 2019 Note restructuring into the September 2020 Note), the conversion of the June and August 2020 Convertible Notes into shares of Series A Preferred Stock (see below for a detailed description of the June and August 2020 Notes and Note 10 for a description of the Series A Preferred Stock), and the sale of $8.75 million of Series A Preferred Stock to Crystal Amber under the Series A Preferred Stock Purchase Agreement (the “Series A SPA”, see Note 11 of the Consolidated Financial Statements for a description of the Series A SPA terms). The Initial Close of the September 2020 Financing occurred on September 4, 2020, and included all components of the September 2020 Financing, except that $5 million of the total Series A Preferred Stock sale was originally deferred to October 31, 2020 (the “Second Close” of the September 2020 Financing, see Note 11 of the Consolidated Financial Statements for a description of the Series A SPA terms). For the year ended December 31, 2020, the Company recognized interest expense of approximately $300 thousand and amortization of debt issuance costs of $395 thousand related to the August 2019 Note, and interest expense of approximately $80 thousand and amortization of debt issuance costs of $305 thousand related to the September 2020 Note. Paycheck Protection Program (“PPP”) Loan On March 27, 2020, the CARES Act was signed into law in the United States providing economic assistance for American workers and families, small businesses, and preserves jobs for American industries. On April 4, 2020, GI Dynamics submitted an application to a lending institution for a loan of approximately $200 thousand under the Paycheck Protection Program. In accordance with the provisions of the PPP, the loan accrues interest at a rate of 1% and all or a portion of the loan may be forgiven if it is used to pay for qualifying costs such as payroll, rent and utilities. Amounts that are not forgiven will be repaid 2 years from the date of the loan. The loan was granted by the lending institution on May 8, 2020 and funds were received into the Company’s bank account on May 11, 2020. The Company believes expenditures of the loan proceeds are fully compliant with the terms for loan forgiveness and while legislation passed in late December 2020 caused a hold on forgiveness applications at most lending institutions, the Company anticipates applying for loan forgiveness after resumption of lender acceptance of forgiveness applications. June 2020 Convertible Note and August 2020 Convertible Note On June 18, 2020, the Company entered into a Note Purchase Agreement (“June 2020 NPA”) by and between the Company and Crystal Amber. Pursuant to the June 2020 NPA, the Company issued and sold to Crystal Amber, a Convertible Promissory Note in an aggregate original principal amount of $750 thousand (the “June 2020 Note”). On August 4, 2020, the Company entered into Note Purchase Agreement (“August 2020 NPA”) by and between the Company and Crystal Amber that was identical to the June 2020 Note in all terms except the principal amount. Pursuant to the August 2020 NPA, the Company issued and sold to Crystal Amber, a Convertible Promissory Note in an aggregate original principal amount of $500 thousand (the “August 2020 Note”). The Company received $250 thousand on August 3, 2020 and the remaining $250 thousand on August 6, 2020. The June and August 2020 Notes accrued interest at an annually compounded rate of 5% per annum, other than during the continuance of an event of default, when the June and August 2020 Notes would accrue interest at a rate of 8% per annum. The entire outstanding principal balance and all unpaid accrued interest thereon could become immediately due and payable at the sole discretion of Crystal Amber any time after December 18, 2020 and February 4, 2021, respectively. The entire outstanding principal balance and all unpaid accrued interest under the June and August 2020 Notes mandatorily converted at the Initial Close of the September 2020 Financing into shares of Series A Preferred Stock at a conversion price of $0.0709 per share, which was equal to 80% of the price per share of Series A Preferred Stock sold in the September 2020 Financing. At issuance, the Company analyzed the June and August 2020 Notes and their settlement features under ASC 480-10 Distinguishing Liabilities from Equity. Having determined that the predominant settlement feature for both notes was the mandatory conversion into shares of Series A Preferred Stock at the close of the September 2020 Financing, the June and August 2020 Notes and settlement features were recorded at fair value as a liability. The Company initially recorded the fair value of the June and August 2020 Notes at the principal value and subsequently used the effective interest rate method to accrete the value of the conversion premium, recorded as a debt discount, and nominal interest over the period to expected conversion. While the June 2020 and August 2020 Notes were still outstanding, if a Company change of control event had generated cash proceeds for the Company, Crystal Amber could, at its option, demand that the Company pay all accrued and unpaid interest plus 110% of the remaining outstanding unconverted principal balance. The Company could not prepay the June and August 2020 Notes without the consent of Crystal Amber. The Company considered the change in control premium to represent a cash settleable feature, thereby requiring derivative liability classification. On applying a probability-adjusted present value of the premiums, the fair value of the cash settleable feature was considered immaterial. On August 1, 2020, the assumed values used in determining the fair value of the June 2020 Note became known and the debt was revalued as of August 1. The change in terms used to value the debt were analyzed under ASC 470-60 Troubled Debt Restructurings by Debtors and the lack of a concession by the Creditor led the Company to conclude the changes did not constitute a Troubled Debt Restructuring. Further analysis under ASC 470-50 Debt Modifications and Extinguishments showed insufficient changes to result in extinguishment accounting, so the debt was treated as a modification and recorded as an approximately $40 thousand increase to the note and debt discount. On September 4, 2020, as part of the September 2020 Financing, the June 2020 Note and August 2020 Note with an aggregate principal of $1.25 million and $10 thousand of accrued interest were converted into approximately 17.7 million shares of Series A Preferred Stock. For the year ended December 31, 2020, the Company accrued interest expense of $10 thousand and $315 thousand for amortization of the debt discount related to the conversion premium. September 2020 Note and the Debt Restructuring Transaction On September 4, 2020, as part of the September 2020 Financing, the August 2019 Warrant was cancelled, the August 2019 Note was extinguished and a new convertible note (the “September 2020 Note”) was issued with a principal amount of approximately $4.9 million, which was the sum of the outstanding principal and accrued interest from the August 2019 Note as of September 4, 2020. The September 2020 Note accrues annually compounded interest at 5% per annum and matures on June 30, 2022. On the continuation of an event of default, the outstanding principal and any accrued and unpaid interest shall be immediately payable in cash. The September 2020 Note can be optionally converted at any time prior to maturity and at the sole discretion of Crystal Amber. On election to convert, the entirety of the outstanding principal and all accrued but unpaid interest (the “Outstanding Amount’) is convertible into the number of shares of common stock equal to the quotient obtained by dividing the Outstanding Amount by $0.17726 (the “Conversion Price”). The conversion price represents 200% of the initial purchase price per share in the September 2020 Financing with gross proceeds of not less than $10 million in the aggregate, pursuant to the terms and subject to the conditions of the September 2020 Preferred Stock Purchase Agreement. The Company analyzed the combined August 2019 Warrant cancellation and the August 2019 Note restructuring for the classification of a Troubled Debt Restructuring under ASC 470-60 Troubled Debt Restructurings by Debtors. The Company concluded that the restructuring was not a Troubled Debt Restructuring as the effective interest rate of the new debt exceeded the effective interest rate of the old debt, so the Creditor did not provide a concession. The Company then analyzed the old and new debt to determine whether the restructuring should be treated as a modification or an extinguishment under ASC 470-50 Debt Modifications and Extinguishments. Any restructuring representing a greater than 10% change in the present value of the new debt cash flows relative to the present value of the old debt cash flows requires the old debt to be extinguished and the new debt to be issued in the period of restructuring by adjusting the carrying amount of the old debt to the fair value of the new debt with the adjustment being reflected as a gain or loss. The difference in the present value of the cash flows of the September 2020 Note relative to the present value of the remaining cash flows for the August 2019 Note was more than 10%, therefore, the restructuring requires extinguishment accounting. The September 2020 Note has an interest rate of 5% and no inducements, therefore, the Company considered the equivalent arms-length placement to a third-party investor highly unlikely given the Company’s risk position. The present value of the September 2020 Note cash flows was therefore calculated using a discount rate equal to the effective interest rate of the August 2019 Note as it contained a higher nominal interest rate and 100% warrant coverage as inducements. Based on this analysis, the Company estimated that the fair value of the September 2020 Note was approximately $3.2 million upon issuance. The September 4, 2020 extinguishment of the August 2019 Note and issuance of the September 2020 Note resulted in a decrease in accrued interest and an increase to long term debt of approximately $0.3 million, a decrease in the related debt discount of approximately $0.7 million for a change in the carrying value of the debt of approximately $1.0 million. A loss on debt extinguishment of approximately $0.7 million was recorded on the consolidated statements of operations for the year ended December 31, 2020. For the year ended December 31, 2020, the Company accrued interest expense of $10 thousand and recorded $316 thousand for amortization of the debt discount related to the September 2020 Note. |
Commitments |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments | 10. Commitments Lease Commitment From December 2018 to May 2019, the Company operated under a 6-month membership agreement with WeWork for office space located in Boston, Massachusetts. On April 22, 2019, the Company entered into a right-of-use lease for 3,520 square feet of office space in Boston, Massachusetts. The lease period commenced May 1, 2019 and expires on May 31, 2022. The lease had a one-month rent-free period, has escalating rent payments and contains no extension or expansion rights. On lease execution, the Company recorded the approximately $463 thousand present value of the lease liability in short-term and long-term liabilities and recorded a related right-of-use asset. The right-of-use asset is amortizing to lease expense and the liability is be reduced by the rent payments over the term of the lease. The Company’s leases generally do not provide an implicit interest rate and therefore the Company uses 10% as an estimate of its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease in a similar economic environment. The Company’s operating lease is reflected in the balance sheets. Lease expense totaled $175 thousand and $102 thousand for the years ended December 31, 2020 and 2019, respectively. Other information related to leases was as follows:
The maturity of the Company’s operating lease liability as of December 31, 2020 is as follows:
Rent expense on non-cancelable operating leases was approximately $175 and $102 thousand for the years ended December 31, 2020 and 2019, respectively. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Deficit |
12 Months Ended |
|---|---|
Dec. 31, 2020 | |
| Stockholders' Equity Note [Abstract] | |
| Stockholders’ Deficit | 11. Stockholders’ Deficit On December 19, 2019, GI Dynamics stockholders approved an increase of its authorized shares of common stock from 50 million to 75 million. On May 26, 2020, the Company filed a definitive proxy statement and Notice of Stockholder Meeting with the Securities and Exchange Commission in the United States (the “SEC”) and with ASX in Australia. The proposal to be voted by shareholders was to formally apply for removal from the Official List of the ASX (the “Delisting”). On June 20, 2020, stockholders approved the Delisting and notice was given to the market that a formal Delisting application had been submitted to ASX. The Company was not offering any share purchase facilities under the Delisting plan. After a 30-day trading period ending 4:00 p.m. July 22, 2020 Australian Eastern Standard Time, the Company was delisted. All CDIs were converted to shares of Common Stock before the CDN trust was dissolved. Registered holders converting CDIs such that a fractional common share was generated received cash payment for such fractional share. The Company’s SEC reporting requirements are still in effect, even though the Company’s securities are not listed on any exchange. As described in Note 8, Crystal Amber provided the Company with a notice of optional conversion of the 2017 Note in July 2019 and converted the principal and accrued interest into Common Stock. On September 3, 2020, GI Dynamics stockholders approved an increase of its authorized shares of common stock from 75 million to 280 million shares and approved the authorization of 118 million shares of Series A Convertible Preferred Stock (“Series A Preferred”), a newly created class of capital stock with the following rights and privileges. Voting and Director Nomination Rights Holders of shares of Series A Preferred will generally be entitled to vote with the holders of shares of common stock, at any stockholder meeting or by written consent in lieu of such meeting. Except as required by applicable law or provided in the Restated Certificate, holders of Series A Preferred will vote together with the holders of common stock as a single class and on an as-converted to common stock basis. Holders of Series A Preferred will have the right, exclusively and as a separate class, to (a) designate 2 members of the Board, (b) remove such designees from the Board without cause and (c) fill any vacancies with respect to those directorships. Protective Provisions In addition to the foregoing director nomination rights, at any time when at least 5 million shares of Series A Preferred are outstanding, holders of at least a majority of the outstanding shares of Series A Preferred, voting separately as a single class, must approve certain significant actions of the Company, including, among others: (a) the liquidation, dissolution or winding up of the affairs of the Company; (b) any Deemed Liquidation 122 Event (as defined in the Restated Certificate); (c) amendments to the Restated Certificate or the Company’s bylaws, which would adversely affected the rights and privileges of the Series A Preferred; (d) any issuance or authorization of an additional class or series of capital stock of the Company that does not rank junior to the Series A Preferred with respect certain rights and privileges; (e) any reclassification of an existing security of the Company that renders such security senior to the Series A Preferred with respect to certain rights and privileges; and (f) any increase or decrease in the authorized number of members of the Board. Conversion Rights and Anti-Dilution Adjustments The Holders of shares of Series A Preferred will have the right to convert such shares into shares of common stock on a 1-for-1 basis, at a conversion price equal to the per share issue price of the Series A Preferred, which initially under the Series A SPA, will be $0.08863 per share. Shares of Series A Preferred will be convertible both at the option of the holder and mandatorily upon either (a) the closing of a Qualified IPO or (b) the date and time, or the occurrence of an event, specified by vote or written consent of the holders of a majority of the then outstanding shares of Series A Preferred. The Company will be required, at all times, to reserve and keep available out of its authorized and unissued shares of common stock the number of shares that would be issuable upon conversion of all outstanding shares of Series A Preferred. If this reserve is not sufficient at any point to allow for full conversion, the Company must act to sufficiently increase its pool of authorized but unissued shares of common stock. The conversion price of the Series A Preferred and the number of shares of common stock to be delivered upon conversion of the Series A Preferred will be subject to certain customary anti-dilution protections for certain events, such as (a) stock splits, subdivisions, or combinations of common stock, (b) certain dividends or distributions on shares of common stock and (c) certain mergers, reorganizations, reclassifications, recapitalizations and consolidations of the Company. Preferential Payments In the event of a voluntary or involuntary liquidation, dissolution or winding up of the Company, holders of the Series A Preferred then outstanding will be entitled to receive, before any distribution of the assets of the Company to the holders of common stock, an amount per share equal to 1.2 times the original issue price per share in the Series A Preferred financing, plus any declared but unpaid dividends. Holders of Series A Preferred will also be entitled to the same preferential rights upon a Deemed Liquidation Event (as defined in the Restated Certificate), except that in such case, the distributions to holders of Series A Preferred shall be in the form of payments from the proceeds of the transaction constituting such Deemed Liquidation Event. Dividends Holders of Series A Preferred will entitled to receive dividends, when and if declared by the Company on any shares of its capital stock (other than on dividends on shares of common stock payable in shares of common stock), prior to or at the same time of the payment of such declared dividends. In such case, the minimum dividend amount payable on shares of Series A Preferred will be determined either on an as-converted to common stock basis or on the basis of the issue price of the capital stock, and will be calculated based on the formulas set forth in the Restated Certificate. On September 3, 2020, after stockholders authorized the increase in shares of Common Stock, the Company issued the remaining 13,095,764 shares of Common Stock due to Crystal Amber in full satisfaction of the Right to Shares and Waiver Agreement (see Note 9 of the consolidated financial statements)). On September 4, 2020, as part of the September 2020 Financing, Crystal Amber converted the amounts owed related the June and August 2020 Notes, which totaled an outstanding principal amount of $1.25 million and a total of approximately $10 thousand of unpaid accrued interest, into 17,774,853 shares of Series A Preferred Stock. On September 4, 2020, the Company executed a series of financing-related agreements (“the September 2020 Financing”) which included the cancellation of the August 2019 Warrant, the restructuring of the August 2019 Note into the September 2020 Note (see below for a detailed description of the September 2020 Note and the accounting classification of the August 2019 Note restructuring into the September 2020 Note), the conversion of the June and August 2020 Convertible Notes into shares of Series A Preferred Stock (see below for a detailed description of the June and August 2020 Notes and Note 11 for a description of the Series A Preferred Stock), and the sale of $8.75 million of Series A Preferred Stock to Crystal Amber under the Series A Preferred Stock Purchase Agreement (the “Series A SPA”, see Note 11 of the Consolidated Financial Statements for a description of the Series A SPA terms). The Initial Close of the September 2020 Financing occurred on September 4, 2020, and included all components of the September 2020 Financing, including the Crystal Amber purchase of 42,310,730 shares of Series A Preferred Stock for gross proceeds of $3.75. Pursuant to the Series A SPA and subsequent amendments, the Second Close was originally to occur on October 31, 2020 but through a series of extensions, was extended until February 24, 2021. On February 24, 2021, an individual investor closed the purchase of 600,000 shares of Series A Preferred Stock for approximate proceeds of $53 thousand. Effective February 24, 2021, Crystal Amber executed a contract amendment restructuring the Second Close to include the sale of 16,924,292 shares of Series A Preferred Stock for proceeds of $1.5 million to close on March 4, 2021, the sale of 11,282,861 shares of Series A Preferred Stock for proceeds of $1.0 million to close no later than March 25, 2021, and the remaining 27,607,153 shares of Series A Preferred Stock for proceeds of $2.45 million to close no later than May 28, 2021. |
Share-Based Compensation |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Compensation | 12. Share-Based Compensation The Company has three stock-based compensation plans. The Board of Directors adopted the 2003 Omnibus Stock Plan (the “2003 Plan”), which provided for the grant of qualified incentive stock options and nonqualified stock options or other awards to the Company’s employees, officers, directors, advisors, and outside consultants to purchase up to an aggregate of 922,086 shares of the Company’s common stock. At December 31, 2020, one fully vested grant remained outstanding conferring the right to purchase 5,000 shares for $8.20 per share with an expiry of April 2021. In August 2011, the Board of Directors adopted the 2011 Employee, Director and Consultant Equity Incentive Plan (the “2011 Plan”) as the successor to the 2003 Plan. Under the 2011 Plan, the Company may grant incentive stock options, nonqualified stock options, restricted and unrestricted stock awards and other stock-based awards. As of August 20, 2020, the date of the adoption of the 2020 Plan detailed below, 863,307 shares of common stock were available for grant under the Company’s 2011 Plan. Existing, outstanding grants issued under the 2011 Plan will remain active unless they are exercised or cancelled due to forfeiture or expiry. The Board of Directors have disallowed the granting of any new awards using shares available under the 2011 Plan. In August 2020, the Board of Directors adopted the 2020 Employee, Director and Consultant Equity Incentive Plan (the “2020 Plan”) as the successor to the 2011 and 2003 Plans. On September 3, 2020, shareholders approved the adoption of the 2020 Plan. Under the 2020 Plan, the Company may grant incentive stock options, nonqualified stock options, restricted and unrestricted stock awards and other stock-based awards up to a total of 41,710,968 shares. The 2003 Plan, 2011 Plan and 2020 Plan are collectively referred to herein as the “Plans”. As of December 31, 2020, 41,710,968 shares of common stock were available for grant under the Company’s 2020 Plan. On January 28, 2021, the Board of Directors granted 15 option awards to employees, board members, and a consultant, representing the right to purchase a total of 24,484,059 shares of common stock for a strike price of $0.06, which is the fair value determined by the Board of Directors. Stock-Based Compensation Stock-based compensation is reflected in the consolidated statements of operations as follows for the years ended December 31, 2020 and 2019 (in thousands):
The stock options granted under the Plans generally vest over a four-year period and expire ten years from the date of grant. The weighted-average assumptions used to estimate the fair value of employee stock options using the Black-Scholes option-pricing model were as follows for the years ended December 31, 2020 and 2019:
Stock Options The following table summarizes share-based activity under the Plans:
The majority of the Company’s option grants vest 25% on the first anniversary of the grant date, and in a quarterly straight-line rate thereafter until fully vested on the fourth anniversary of the grant date. The weighted average grant date fair value for options granted in 2020 and 2019, was $0.18 and $1.04, respectively. The unrecognized stock compensation expense at December 31, 2020 was $123 thousand and was expected to be recognized over a weighted average period of 2.08 years from December 31, 2020. Performance Stock Units Each performance stock unit (“PSU”) represents a contingent right to receive one share of the Company’s common stock. There is no consideration payable on the vesting of PSUs issued under the Plans. Upon vesting, the PSUs are exercised automatically and settled in shares of the Company’s common stock. During the years ended December 31, 2020 and 2019, the Company awarded no PSUs to employees and directors of the Company. Due to the resignation of an employee, all PSUs were cancelled in November 2020. The following table summarizes information related to PSU activity during the year ended December 31, 2020:
The aggregate intrinsic value at December 31, 2019 noted in the table above represents the closing price of the Company’s common stock multiplied by the number of PSUs outstanding. During the years ended December 31, 2020 and 2019, the Company recognized no stock-based compensation related to performance-based vesting of PSUs. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Plans |
12 Months Ended |
|---|---|
Dec. 31, 2020 | |
| Retirement Benefits [Abstract] | |
| Retirement Plans | 13. Retirement Plans The Company has a 401(k) retirement and savings plan (“401(k) Plan”) covering all qualified U.S. employees. The 401(k) Plan is a defined contribution plan and allows each participant to contribute up to 100% of the participant’s base wages up to an amount not to exceed an annual statutory maximum. The Company has made discretionary contributions to the 401(k) Plan and recorded expenses of approximately $68 and $48 thousand for the years ended December 31, 2020 and 2019, respectively. The Company maintains a defined contribution plan for certain international employees. The Company contributes 100% of the cost of the defined contribution. The Company recorded expenses of approximately $3 and $9 thousand for the years ended December 31, 2020 and 2019, respectively, under this plan. |
Income Taxes |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Taxes | 14. Income Taxes Income (loss) before provision for income taxes consisted of the following (in thousands):
The provision for income taxes in the accompanying consolidated statements of operations consisted of the following (in thousands):
A reconciliation of income taxes from operations computed using the U.S. federal statutory rate of 21% to that reflected in operations follows (in thousands):
Components of the Company’s deferred tax assets and liabilities are as follows (in thousands):
Management of the Company has evaluated the positive and negative evidence bearing upon the realizability of the Company’s deferred tax assets and determined that it is more likely than not that the Company will not recognize the benefits of the deferred tax assets related to the U.S. As a result, a valuation allowance of approximately $76.3 million and $73.7 million was established at December 31, 2020 and 2019, respectively. The valuation allowance increased by approximately $2.6 million during the year ended December 31, 2020, primarily due to the current year change in temporary tax items. As of December 31, 2020, there was a net deferred tax asset in Australia related to future tax benefits which will offset future taxable income. At December 31, 2020, the Company had U.S. federal and state net operating loss carryforwards of approximately $260 million and $242.5 million, respectively. These operating loss carryforwards will expire at various times beginning in 2024 through 2037 for federal purposes except for $37 million that were generated between 2018 and 2020 that can be carried forward indefinitely. For state purposes the net operating losses begin to expire in 2030 and will continue to expire through 2040. In addition, at December 31, 2020, the Company also has U.S. federal and state research and development tax credit carryforwards (excluding ASC 740, Income Taxes (“ASC 740”), reserve) of approximately $4 million and $2.0 million, respectively, to offset future income taxes. These tax credit carryforwards will expire at various times beginning in 2023 through 2040 for federal purposes and will expire at various times beginning in 2019 through 2035 for state purposes. Utilization of net operating loss carryforwards and research and development credit carryforwards may be subject to a substantial annual limitation due to ownership change limitations that have occurred previously or that could occur in the future in accordance with Section 382 of the Internal Revenue Code of 1986 (“IRC Section 382”) and with Section 383 of the Internal Revenue Code of 1986, as well as similar state provisions. These ownership changes may limit the amount of net operating loss carryforwards and research and development credit carryforwards that can be utilized annually to offset future taxable income and taxes, respectively. In general, an ownership change, as defined by IRC Section 382, results from transactions increasing the ownership of certain stockholders or public groups in the stock of a corporation by more than 50 percentage points over a three-year period. The Company has completed several financings since its inception, which may have resulted in a change in control as defined by IRC Section 382 or could result in a change in control in the future. As of December 31, 2020, the Company has not, as yet, conducted an IRC Section 382 study, which could impact its ability to utilize net operating loss and tax credit carryforwards annually in the future to offset the Company’s taxable income, if any. The Company applies ASC 740-10, which provides guidance on the accounting for uncertainty in income taxes recognized in financial statements and requires the impact of a tax position to be recognized in the financial statements if that position is more likely than not of being sustained by the taxing authority. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. At December 31, 2020 and 2019, the Company had unrecognized tax liabilities of approximately $1.5 million and $1.5 million, respectively. The following is a roll forward of the Company’s unrecognized tax benefits (in thousands):
The Company will recognize interest and penalties related to uncertain tax positions, should they be assessed, in income tax expense. As of December 31, 2020, and 2019, the Company had no accrued interest or penalties related to uncertain tax positions, and no amounts have been recognized in the Company’s consolidated statements of operations. The statute of limitations for assessment by the Internal Revenue Service (“IRS”) and state tax authorities is open for tax years ended December 31, 2017 through December 31, 2020, although carryforward attributes that were generated prior to tax year 2017 may still be adjusted upon examination by the IRS or state tax authorities if they either have been or will be used in a future period. The statute of limitations for assessment by foreign tax authorities is open for tax years ended December 31, 2016 through December 31, 2020. There are currently no federal or state audits in progress. The Company has not yet completed a study of its research and development credit carryforwards. Once completed, this study may result in an adjustment to the Company’s research and development credit carryforwards. A full valuation allowance has been provided against the Company’s research and development credits, and if an adjustment is required at the time the study is completed, this adjustment would be offset by an adjustment to the deferred tax asset established for the research and development credit carryforward and the valuation allowance. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Subsequent Events |
12 Months Ended |
|---|---|
Dec. 31, 2020 | |
| Subsequent Events [Abstract] | |
| Subsequent Events | 15. Subsequent Events As discussed in Note 11 to the Consolidated Financial Statements, pursuant to the Series A SPA and subsequent amendments, the Second Close of the Series A Preferred Stock offering was originally to occur on October 31, 2020 but through a series of extensions, was extended until February 24, 2021. On February 24, 2021, an individual investor closed the purchase of 600,000 shares of Series A Preferred Stock for approximate proceeds of $53 thousand. Effective February 24, 2021, Crystal Amber executed a contract amendment restructuring the Second Close to include the sale of 16,924,292 shares of Series A Preferred Stock for proceeds of $1.5 million to close on March 4, 2021, the sale of 11,282,861 shares of Series A Preferred Stock for proceeds of $1.0 million to close no later than March 25, 2021, and the remaining 27,607,153 shares of Series A Preferred Stock for proceeds of $2.45 million to close no later than May 28, 2021. As discussed in Notes 2 and 12 to the Consolidated Financial Statements, On January 28, 2021, the Board of Directors granted 15 option awards to employees, board members, and a consultant, representing the right to purchase a total of 24,484,059 shares of common stock for a strike price of $0.06 per share, which is the fair value determined by the Board of Directors. |
Accounting Policies, by Policy (Policies) |
12 Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 | |||||||||||||
| Accounting Policies [Abstract] | |||||||||||||
| Principles of Consolidation | Principles of Consolidation The accompanying Consolidated Financial Statements include the accounts of GI Dynamics, Inc. and its wholly owned subsidiaries. All intercompany transactions and balances are eliminated in consolidation. The functional currency of GID Europe Holding B.V., GID Europe B.V., GID Germany GmbH and GI Dynamics Australia Pty Ltd, each wholly-owned subsidiaries of the Company, is the U.S. dollar. Consolidated balance sheet accounts of the Company’s subsidiaries are remeasured into U.S. dollars using the exchange rate in effect at the consolidated balance sheet date while expenses are remeasured using the average exchange rate in effect during the period. Gains and losses arising from remeasurement of the wholly owned subsidiaries’ financial statements are included in the determination of net loss. |
||||||||||||
| Segment Reporting | Segment Reporting The Company has one reportable segment which designs, develops, manufactures and markets medical devices for non-surgical approaches to treating type 2 diabetes. GI Dynamics does not report geographic segments as there were no product sales in 2020 or 2019 and at December 31, 2020 and 2019, all long-lived assets comprised of property and equipment were held in the U.S. |
||||||||||||
| Use of Estimates | Use of Estimates The preparation of Consolidated Financial Statements in accordance with generally accepted accounting principles in the U.S. requires the Company’s management to make estimates and judgments that may affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates its estimates, including those related to the impairment of long-lived assets, income taxes including the valuation allowance for deferred tax assets, research and development, contingencies, valuation of warrant and other derivative liabilities, estimates used to assess its ability to continue as a going concern and stock-based compensation. GI Dynamics bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. Changes in estimates are reflected in reported results in the period in which they become known. |
||||||||||||
| Cash, Cash Equivalents and Restricted Cash | Cash and Cash Equivalents and Restricted Cash At December 31, 2020 and 2019, GI Dynamics had approximately $0.03 million and $0.01 million, respectively, of cash and cash equivalents denominated in Australian dollars that is subject to foreign currency gain and loss. GI Dynamics has $30 thousand in restricted cash used to secure a corporate credit card account. |
||||||||||||
| Property and Equipment | Property and Equipment Property and equipment, are recorded at cost and are depreciated when placed in service using the straight-line method based on their estimated useful lives as follows:
Maintenance and repair costs for fixed assets are expensed as incurred. |
||||||||||||
| Derivative Liabilities | Derivative Liabilities GI Dynamics examines all financial instruments to determine if the financial instrument or any component feature is a derivative under Financial Accounting Standards Board, (“FASB”) Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging (“ASC 815”) and therefore requires liability classification. Certain warrants to purchase common stock did not meet the requirements for equity classification and were considered derivative instruments due to their cash settlement features. The derivative warrants were initially recorded at fair value with subsequent changes in fair value recorded in other income (expense) in the statements of operations. The Company estimates fair value using the Black-Scholes option pricing model. See Note 5 for inputs and assumptions used in the determination of the fair value. If the derivative instruments subsequently meet the requirements for classification as equity, the Company reclassifies the then fair value of the instrument to equity. If multiple outcomes are probable, management assigns probability adjustments to determine the most likely probability adjusted fair value. |
||||||||||||
| Research and Development Costs | Research and Development Costs Research and development costs are expensed when incurred. Research and development costs include costs of all basic research activities as well as other research, engineering, and technical effort required to develop a new product or service or make significant improvement to an existing product or manufacturing process. Research and development costs also include preapproval regulatory and clinical trial expenses. |
||||||||||||
| Patent Costs | Patent Costs GI Dynamics expenses as incurred all costs, including legal expenses, associated with obtaining patents until the patented technology becomes feasible. All costs incurred after the patented technology is feasible will be capitalized as an intangible asset. As of December 31, 2020, no such costs had been capitalized since inception of the Company. GI Dynamics has expensed approximately $200 thousand of patent costs within general and administrative expenses in the consolidated statements of operations in each of the years ended December 31, 2020 and 2019. |
||||||||||||
| Stock-Based Compensation | Stock-Based Compensation GI Dynamics accounts for stock-based compensation in accordance with ASC 718, Stock Compensation (“ASC 718”), which requires that stock-based compensation be measured at the grant date fair value and recognized as an expense in the financial statements. . For awards that vest based on service conditions, GI Dynamics uses the straight-line method to allocate compensation expense to reporting periods. The grant date fair value of options granted is calculated using the Black-Scholes option pricing model, which requires the use of subjective assumptions including volatility, expected term and the fair value of the underlying common stock, among others. The assumptions used in determining the fair value of stock-based awards represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change, and management uses different assumptions, the Company’s stock-based compensation could be materially different in the future. The risk-free interest rate used for each grant is based on a zero-coupon U.S. Treasury instrument with a remaining term similar to the expected term of the stock-based award. Because GI Dynamics does not have a sufficient stable history to estimate the expected term, it uses the simplified method for estimating the expected term. The simplified method is based on the average of the vesting tranches and the contractual life of each grant. Prior to delisting from the ASX in July 2020, the Company estimated the expected stock volatility at the grant date based on the appropriate historical ASX price volatility. GI Dynamics has not paid and does not anticipate paying cash dividends on its shares of common stock; therefore, the expected dividend yield is assumed to be zero. GI Dynamics recognizes the impact of share-based award forfeitures only as they occur rather than by applying an estimated forfeiture rate. GI Dynamics periodically issues performance-based awards. For these awards, vesting will occur upon the achievement of certain milestones. When achievement of the milestone is deemed probable, the Company records as compensation expense, the value of the respective stock award over the implicit remaining service period. Stock awards to non-employees are also accounted for in accordance with ASC 718.. The Company elects to use the contractual term of each award as the expected term for NESBP awards. |
||||||||||||
| Impairment of Long-Lived Assets | Impairment of Long-Lived Assets GI Dynamics regularly reviews the carrying amount of its long-lived assets to determine whether indicators of impairment may exist that merit adjustments to carrying values or estimated useful lives. If indications of impairment exist, projected future undiscounted cash flows associated with the asset are compared to the carrying amount to determine whether the asset’s value is recoverable. If the carrying value of the asset exceeds such projected undiscounted cash flows, the asset will be written down to its estimated fair value. No such impairments were recorded in 2020 or 2019. |
||||||||||||
| Income Taxes | Income Taxes GI Dynamics uses the asset and liability method of accounting for income taxes. The Company records deferred tax assets and liabilities for the expected future tax consequences of temporary differences between its financial reporting and the tax bases of assets and liabilities measured using the enacted tax rates in effect in the years in which the differences are expected to reverse. The Company regularly assesses the need for a valuation allowance against its deferred tax assets. Future realization of the Company’s deferred tax assets ultimately depends on the existence of sufficient taxable income within the available carryback or carryforward periods. Sources of taxable income include taxable income in prior carryback years, future reversals of existing taxable temporary differences, tax planning strategies, and future taxable income. The Company records a valuation allowance to reduce its deferred tax assets to an amount it believes is more-likely-than-not to be realized. Deferred tax assets are reduced by a valuation allowance to reflect the uncertainty associated with their ultimate realization. The Company assesses its income tax positions and records tax benefits based upon management’s evaluation of the facts, circumstances, and information available at the reporting date. For those tax positions where it is more-likely-than-not that a tax benefit will be sustained, the Company records the largest amount of tax benefit with a greater than 50 percent likelihood of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information. For those income tax positions where it is not more-likely-than-not that a tax benefit will be sustained, no tax benefit is recognized in the financial statements. The Company classifies interest and penalties on uncertain tax positions as income tax expense. |
||||||||||||
| Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that subject GI Dynamics to credit risk primarily consist of cash and restricted cash. Cash balances are all maintained with high quality financial institutions, and consequently, the Company believes that such funds are subject to minimal credit risk. |
||||||||||||
| Guarantees | Guarantees GI Dynamics has identified the guarantees described below as disclosable, in accordance with ASC 460, Guarantees. As permitted under Delaware law, GI Dynamics indemnifies its officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company’s request in such capacity. The maximum potential amount of future payments the Company could be required to make is unlimited; however, the Company maintains directors’ and officers’ insurance coverage that should limit its exposure and enable it to recover a portion of any future amounts paid. GI Dynamics is a party to a number of agreements entered into in the ordinary course of business that contain typical provisions that obligate it to indemnify the other parties to such agreements upon the occurrence of certain events. Such indemnification obligations are usually in effect from the date of execution of the applicable agreement for a period equal to the applicable statute of limitations. The aggregate maximum potential future liability of the Company under such indemnification provisions is uncertain. As of December 31, 2020, and 2019, GI Dynamics had not experienced any material losses related to these indemnification obligations, and no material claims with respect thereto were outstanding. The Company does not expect significant claims related to these indemnification obligations and, consequently, concluded that the fair value of these obligations is negligible. As a result, no related reserves have been established. |
||||||||||||
| Leases | Leases The Company applies ASC 842, Leases, which requires that most operating leases be recorded on the balance sheet unless the practical expedient is elected for short-term operating leases. The Company elected to apply the practical expedient as it relates to short-term leases. For other leases subject to this guidance, the Company will record a lease liability, which is the Company’s obligation to make lease payments arising from its leases, measured on a discounted basis, and a right-of-use asset, which is an asset representing the Company’s right to use the underlying asset for the lease term. |
||||||||||||
| Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, or ASU 2018-13, which provides guidance focused on the disclosure requirements for disclosing fair value estimates, assumptions, and methodology. Requirements removed include the requirement to disclose details around amount and reasoning for level 1 to level 2 transfers, timing policies for transfer between levels and the valuation processes for level 3 fair value measurements. Modified requirements include details regarding net asset redemption restrictions and timing related to uncertainty disclosures. Requirements added include disclosures of changes in unrealized gains and losses for recurring level 3 measurements held as of the reporting date and disclosures around the range and weighted average of significant inputs used to develop level 3 fair value measurements. These amendments are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption was permitted, however the Company declined early adoption and adopted this ASU effective January 1, 2020. The adoption had no impact to its consolidated financial statements. Recently Issued Accounting Pronouncements In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes, or ASU 2019-12, which changes the treatment for a number of specific situations, with the most relevant topic being the tax effects of items not included in continuing operations when reporting a loss from continuing operations for the period. The guidance is effective for public business entities for fiscal years beginning after December 15, 2020, and for interim periods within those fiscal years. The Company has elected not to adopt ASU 2019-12 early and is evaluating the potential impact of adoption to its consolidated financial statements. In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, or ASU 2020-06, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. The changes include the accounting for beneficial conversion features and will result in less debt discount interest expense amortization. There are also reduced requirements for equity classification of contracts in an entity’s own equity. Additionally, expanded disclosures will be required for convertible debt instruments. These changes may have impact on earnings per share calculations. A full or modified retrospective approach can be adopted and ASU 2020-06 must be adopted by smaller reporting companies for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company has elected not to adopt ASU 2020-06 early and is evaluating the potential impact of adoption to its consolidated financial statements. |
Summary of Significant Accounting Policies and Basis of Presentation (Tables) |
12 Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 | |||||||||||||
| Accounting Policies [Abstract] | |||||||||||||
| Schedule of property and equipment useful lives |
|
Net Loss per Common Share (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of potentially dilutive securities excluded from computation of diluted weighted average shares |
|
|||||||||||||||||||||||||||||||||||||||||||||
Warrants to Purchase Common Stock or CDIs (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Stockholders' Equity Note, Warrants or Rights |
|
|||||||||||||||||||||||||||||||||||||||||||||
Prepaid Expenses and Other Current Assets (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Prepaid Expenses And Other Current Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of prepaid expenses |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of property and equipment |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of accrued expenses |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of other information related to leases |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of maturity of operating lease liability |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of stock-based compensation |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of weighted-average assumptions used to estimate fair value of employee stock options |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of share-based activity |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of performance stock units activity |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Income before Income Tax, Domestic and Foreign [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Components of Income Tax Expense (Benefit) [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Deferred Tax Assets and Liabilities [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Unrecognized Tax Benefits Roll Forward [Table Text Block] |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nature of Business (Details) $ in Millions |
12 Months Ended |
|---|---|
|
Dec. 31, 2020
USD ($)
| |
| Nature of Business (Details) [Line Items] | |
| Types of diabetes population, description | Diabetes mellitus type 2 (also known as type 2 diabetes) is a long-term progressive metabolic disorder characterized by high blood sugar, insulin resistance, and reduced insulin production. People with type 2 diabetes represent 90-95% of the worldwide diabetes population; only 5-10% of this population is diagnosed with type 1 diabetes (a form of diabetes mellitus wherein little to no insulin is produced). |
| Number of reportable segments | 1 |
| Accumulated deficit | $ (296.0) |
| Cash and restricted cash | $ 1.2 |
| Type 2 Diabetes [Member] | |
| Nature of Business (Details) [Line Items] | |
| Types of diabetes population, description | Fewer than 50% of patients treated pharmacologically for type 2 diabetes are adequately managed, meaning that medication does not lower blood sugar adequately and does not halt the progressive nature of diabetes of these patients. |
Summary of Significant Accounting Policies and Basis of Presentation (Details) $ in Thousands, $ in Thousands |
12 Months Ended | |||
|---|---|---|---|---|
|
Dec. 31, 2020
USD ($)
|
Dec. 31, 2019
USD ($)
|
Dec. 31, 2020
AUD ($)
|
Dec. 31, 2019
AUD ($)
|
|
| Summary of Significant Accounting Policies and Basis of Presentation (Details) [Line Items] | ||||
| Cash and cash equivalents | $ 1,159 | $ 2,499 | ||
| Restricted cash | 30 | 30 | ||
| General and administrative expenses | 5,621 | $ 5,295 | ||
| Cash and Cash Equivalents [Member] | ||||
| Summary of Significant Accounting Policies and Basis of Presentation (Details) [Line Items] | ||||
| Cash and cash equivalents | $ 30 | $ 10 | ||
| Patents [Member] | ||||
| Summary of Significant Accounting Policies and Basis of Presentation (Details) [Line Items] | ||||
| General and administrative expenses | $ 200 | |||
Summary of Significant Accounting Policies and Basis of Presentation (Details) - Schedule of property and equipment useful lives |
12 Months Ended |
|---|---|
Dec. 31, 2020 | |
| Laboratory and manufacturing equipment [Member] | |
| Public Utility, Property, Plant and Equipment [Line Items] | |
| Estimated useful life (in years) | 5 years |
| Computer equipment and software [Member] | |
| Public Utility, Property, Plant and Equipment [Line Items] | |
| Estimated useful life (in years) | 3 years |
| Office furniture and equipment [Member] | |
| Public Utility, Property, Plant and Equipment [Line Items] | |
| Estimated useful life (in years) | 5 years |
Net Loss per Common Share (Details) - Schedule of potentially dilutive securities excluded from computation of diluted weighted average shares - shares |
12 Months Ended | |
|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Antidilutive securities excluded from computation of diluted weighted-average shares outstanding | 491,636 | 3,359,686 |
| Warrants to purchase common stock [Member] | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Antidilutive securities excluded from computation of diluted weighted-average shares outstanding | 28,532 | 28,532 |
| Options to purchase common stock and other stock-based awards [Member] | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Antidilutive securities excluded from computation of diluted weighted-average shares outstanding | 463,104 | 3,331,154 |
Warrants to Purchase Common Stock or CDIs (Details) - USD ($) $ / shares in Units, $ in Millions |
1 Months Ended | 12 Months Ended | |
|---|---|---|---|
Sep. 04, 2020 |
Aug. 21, 2019 |
Dec. 31, 2020 |
|
| Warrants to Purchase Common Stock or CDIs (Details) [Line Items] | |||
| Number of underlying shares | 28,532 | ||
| Exercise price per share | $ 0.64 | ||
| Warrant expires date | May 04, 2021 | ||
| Warrants description | GI Dynamics and Crystal Amber entered into a securities purchase agreement (“SPA”) for a total funding of up to approximately $10 million (the “August 2019 SPA”) comprised of the scheduled exercise of the 2018 Warrant, the March 2019 Warrant, and the May 2019 Warrant as detailed above and the sale of an Unsecured Convertible Note for up to approximately $4.6 million (the “August 2019 Note”), which included an agreement to issue a warrant (the “August 2019 Warrant”) to purchase up to 229,844,650 CDIs (representing 4,596,893 shares of common stock) for an exercise price of $0.02 per CDI. On December 16, 2019, stockholder approval for the warrant to be issued was obtained and it was issued on January 13, 2020. The August 2019 Warrant was issued on January 13, 2020 and estimated fair value was determined to allocate relative fair values of the August 2019 Note and the August 2019 Warrant. | ||
| Estimated fair value | $ 2.3 | ||
| Expected volatility | 141.00% | ||
| Expected term | 5 years | ||
| Risk-free interest rate | 1.65% | ||
| Series A Preferred Stock [Member] | |||
| Warrants to Purchase Common Stock or CDIs (Details) [Line Items] | |||
| Sale of stock | $ 10.0 |
Warrants to Purchase Common Stock or CDIs (Details) - Schedule of Stockholders' Equity Note, Warrants or Rights |
12 Months Ended |
|---|---|
|
Dec. 31, 2020
$ / shares
shares
| |
| Schedule of Stockholders' Equity Note, Warrants or Rights [Abstract] | |
| Outstanding and Exercisable at December 31, 2019 | shares | 28,532 |
| Outstanding and Exercisable at December 31, 2019 | $ / shares | $ 0.64 |
| Issuance of August 2019 Warrant | shares | 4,596,893 |
| Issuance of August 2019 Warrant | $ / shares | $ 1.00 |
| Cancellation of August 2019 Warrant | shares | (4,596,893) |
| Cancellation of August 2019 Warrant | $ / shares | $ 1.00 |
| Outstanding and Exercisable at December 31, 2020 | shares | 28,532 |
| Outstanding and Exercisable at December 31, 2020 | $ / shares | $ 0.64 |
Fair Value Measurements (Details) |
12 Months Ended |
|---|---|
Dec. 31, 2020 | |
| Fair Value Disclosures [Abstract] | |
| Fair value measurements,description | September 2020 Financing, at a conversion price equal to 80% of the price per share of Series A Preferred Stock. |
Prepaid Expenses and Other Current Assets (Details) - Schedule of prepaid expenses - USD ($) $ in Thousands |
Dec. 31, 2020 |
Dec. 31, 2019 |
|---|---|---|
| Schedule of prepaid expenses [Abstract] | ||
| Prepaid insurance | $ 1,426 | $ 293 |
| Escrowed severance reserves | 544 | |
| Prepaid clinical trial expenses | 489 | 488 |
| Prepaid corporate identity project | 165 | 134 |
| Other | 405 | 315 |
| Total | $ 3,029 | $ 1,230 |
Property and Equipment (Details) - Schedule of property and equipment - USD ($) $ in Thousands |
Dec. 31, 2020 |
Dec. 31, 2019 |
|---|---|---|
| Property, Plant and Equipment [Line Items] | ||
| Property plant and equipment gross | $ 1,967 | $ 1,967 |
| Less accumulated depreciation and amortization | (1,953) | (1,925) |
| Total | 14 | 42 |
| Laboratory and manufacturing equipment [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property plant and equipment gross | 591 | 591 |
| Computer equipment and software [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property plant and equipment gross | 1,193 | 1,193 |
| Office furniture and equipment [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property plant and equipment gross | $ 183 | $ 183 |
Accrued Expenses (Details) - USD ($) $ in Thousands |
1 Months Ended | 12 Months Ended |
|---|---|---|
Dec. 31, 2107 |
Dec. 31, 2019 |
|
| Payables and Accruals [Abstract] | ||
| Accrued expenses, description | the Company notified its customers to return their inventory on hand. The Company calculated an estimate for returns, reversed its revenue and recorded an accrued expense estimate of $202 thousand of product return related costs in addition to $77 thousand of credit memos granted to customers. | |
| Accumulated returns | $ 164 |
Accrued Expenses (Details) - Schedule of accrued expenses - USD ($) $ in Thousands |
Dec. 31, 2020 |
Dec. 31, 2019 |
|---|---|---|
| Schedule of accrued expenses [Abstract] | ||
| Payroll and related liabilities | $ 203 | $ 531 |
| Professional fees | 177 | 335 |
| Credit refunds | 164 | |
| Interest payable | 80 | 250 |
| Other | 123 | 73 |
| Total | $ 583 | $ 1,353 |
Commitments (Details) $ in Thousands |
1 Months Ended | 12 Months Ended | |
|---|---|---|---|
|
Apr. 22, 2019
USD ($)
m²
|
Dec. 31, 2020
USD ($)
|
Dec. 31, 2019
USD ($)
|
|
| Commitments and Contingencies Disclosure [Abstract] | |||
| Rentable area of leased premises (in Square Meters) | m² | 3,520 | ||
| Present value of the lease liability in short-term and long-term liabilities and recorded a related right-of-use asset | $ 463 | ||
| Incremental borrowing rate as discount rate to measure operating lease liabilities | 10.00% | ||
| Operating lease, expense | $ 175 | $ 102 | |
| Rent expense | $ 175 | $ 102 | |
| Operating lease term | The lease period commenced May 1, 2019 and expires on May 31, 2022. | ||
Commitments (Details) - Schedule of other information related to leases - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
| Schedule of other information related to leases [Abstract] | ||
| Operating cash flows from operating leases in lease liability measurement | $ 178 | $ 148 |
| Operating cash flows from short term leases | $ 103 | |
| Remaining long-term lease term in years | 1 year 146 days | 2 years 146 days |
Commitments (Details) - Schedule of maturity of operating lease liability $ in Thousands |
Dec. 31, 2020
USD ($)
|
|---|---|
| Schedule of maturity of operating lease liability [Abstract] | |
| 2021 | $ 182 |
| 2022 | 76 |
| Total future minimum lease payments | 258 |
| Less: imputed interest | (19) |
| Total liabilities | $ 239 |
Share-Based Compensation (Details) - Schedule of stock-based compensation - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
| Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
| Stock-based compensation expense | $ 605 | $ 388 |
| Research and Development Expense [Member] | ||
| Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
| Stock-based compensation expense | 63 | 77 |
| Selling and Marketing Expense [Member] | ||
| Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
| Stock-based compensation expense | ||
| General and Administrative Expense [Member] | ||
| Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
| Stock-based compensation expense | $ 542 | $ 311 |
Share-Based Compensation (Details) - Schedule of weighted-average assumptions used to estimate fair value of employee stock options |
12 Months Ended | |
|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
| Schedule of weighted-average assumptions used to estimate fair value of employee stock options [Abstract] | ||
| Expected volatility | 164.90% | 271.00% |
| Expected term (in years) | 5 years 306 days | 6 years 18 days |
| Risk-free interest rate | 0.90% | 1.80% |
| Expected dividend yield | 0.00% | 0.00% |
Share-Based Compensation (Details) - Schedule of performance stock units activity shares in Thousands, $ in Thousands |
12 Months Ended |
|---|---|
|
Dec. 31, 2020
USD ($)
shares
| |
| Schedule of performance stock units activity [Abstract] | |
| Number of units, outstanding, beginning balance | shares | 250,000 |
| Weighted- Average Contractual Life, beginning balance | 6 years 83 days |
| Aggregate Intrinsic Value, beginning balance | $ | $ 149 |
| Number of units, outstanding, ending balance | shares | |
| Weighted- Average Contractual Life, ending balance | |
| Aggregate Intrinsic Value, ending balance | $ | |
| Number of Units, Cancelled | shares | 250,000 |
| Weighted- Average Contractual Life, Cancelled | 5 years 83 days |
| Aggregate Intrinsic Value, Cancelled | $ | $ 15 |
Retirement Plans (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
| Retirement Plans (Details) [Line Items] | ||
| Defined contribution plan company contribution percentage | 100.00% | |
| Defined contribution plan cost recognized | $ 68 | $ 48 |
| International employees [Member] | ||
| Retirement Plans (Details) [Line Items] | ||
| Defined contribution plan company contribution percentage | 100.00% | |
| Defined contribution plan cost recognized | $ 3 | $ 9 |
Income Taxes (Details) - Schedule of Income (loss) before provision for income taxes - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
| Schedule of Income (loss) before provision for income taxes [Abstract] | ||
| Domestic | $ (11,291) | $ (17,376) |
| Foreign | 179 | 88 |
| Total | $ (11,112) | $ (17,288) |
Income Taxes (Details) - Schedule of provision for income taxes in the accompanying consolidated statements of operations - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
| Current Provision: | ||
| Federal | ||
| State | 1 | 1 |
| Foreign | 20 | 42 |
| Total | 21 | 43 |
| Deferred Provision: | ||
| Federal | ||
| State | ||
| Foreign | 3 | 2 |
| Total | 3 | 2 |
| Total provision | $ 24 | $ 45 |
Income Taxes (Details) - Schedule of reconciliation of income taxes from operations computed using U.S. federal statutory rate - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
| Schedule of reconciliation of income taxes from operations computed using U.S. federal statutory rate [Abstract] | ||
| Income tax benefit using U.S. federal statutory rate | $ (2,334) | $ (3,624) |
| State rate, net of federal benefit | (644) | (631) |
| Permanent differences | 159 | 1,422 |
| Tax credits generated | (131) | (147) |
| Change in valuation allowance | 2,595 | 2,888 |
| Foreign rate differential | (11) | 3 |
| Other items | 122 | 96 |
| Stock compensation | 268 | 38 |
| Total income tax expense | $ 24 | $ 45 |
Income Taxes (Details) - Schedule of Company's deferred tax assets and liabilities - USD ($) $ in Thousands |
Dec. 31, 2020 |
Dec. 31, 2019 |
|---|---|---|
| Deferred tax assets: | ||
| Net operating loss carryforwards | $ 69,942 | $ 66,859 |
| Research and development credit carryforwards | 4,150 | 4,083 |
| Capitalized start-up expenses | 1,778 | 2,133 |
| Depreciation and other | 431 | 635 |
| Total deferred tax assets | 76,302 | 73,710 |
| Valuation allowance | (76,298) | (73,703) |
| Net deferred tax asset | $ 4 | $ 7 |
Income Taxes (Details) - Schedule of unrecognized tax benefits - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
| Schedule of unrecognized tax benefits [Abstract] | ||
| Unrecognized tax benefit – as of the beginning of the year | $ 1,480 | $ 1,462 |
| Gross decreases – provision to return tax positions of the prior periods | (13) | (21) |
| Gross increases – current period tax positions | 35 | 39 |
| Unrecognized tax benefits – as of the end of the year | $ 1,502 | $ 1,480 |
R?--:_^!3O6#@ ->4HCZR?@L+_@]+%_4TCO1K9.
MC9*&L;1..YI-S6::UX*Y*8 XZ$MKP1N #8N]A [A+*\318QKB.]-:=$T0>%6
M^\R!<"O/Y,P3X6D2 N>2WC2LZ9/98&("9Y0H<5D]SUBS%1([4R'8L;3&))05
M6/!?Q-?)N-C>'\90GJ7%NY+@