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Nature of Business </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">GI Dynamics^&#xae; 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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">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).</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">Being overweight is a condition where the patient&#x2019;s BMI is greater than 25 (kg/m²); obesity is a condition where the patient&#x2019;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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">When considering treatment for type 2 diabetes, it is optimal to address obesity concurrently with diabetes.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in"><b><i>EndoBarrier^&#xae; is intended for the treatment of type 2 diabetes and to reduce obesity in a minimally invasive and reversible manner. </i></b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in"><b><i>The current pharmacological treatment algorithms for type 2 diabetes fall short of ideal, creating a large and unfilled efficacy gap. </i></b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">EndoBarrier^&#xae; 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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Going Concern Evaluation</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">As of December 31, 2019, the Company&#x2019;s primary source of liquidity is its cash, cash equivalents and restricted cash balances. GI Dynamics is currently focused primarily on its 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&#x2019;s product in any market at this time. 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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">GI Dynamics has incurred operating losses since inception and at December 31, 2019, had an accumulated deficit of approximately $284&#xa0;million and a working capital deficit of $3.4 million. The Company expects to incur significant operating losses for the next several years. At December 31, 2019, the Company had approximately $2.5&#xa0;million in cash, cash equivalents and restricted cash.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">The Company will need to restructure the terms of the 2017 Note before March 31, 2020 and raise additional capital before May 1, 2020 in order to continue to pursue its current business objectives as planned and to continue to fund its operations. The Company and Crystal Amber Fund Limited (&#x201c;Crystal Amber&#x201d;, a Related Party for ASX purposes) are currently in final discussions regarding the 2017 Note maturity extension. 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 guarantee that the 2017 Note will not mature on March 31, 2020 and has no guaranteed source of capital that will accommodate repayment of the 2017 Note and sustain operations past March 31, 2020. If the 2017 Note terms are restructured, the Company anticipates operating cash being exhausted by May 1, 2020 and therefore requires additional financing. 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&#x2019;s required timelines and on acceptable terms to 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&#x2019;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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">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&#x2019;s financial condition.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">These factors raise substantial doubt about the Company&#x2019;s ability to continue as a going concern within one year after the date that these consolidated financial statements are issued.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">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, 2019 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&#x2019;s ability to continue as a going concern within one year after the date that these consolidated financial statements are issued.</p><br/> 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). 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. 1 3400000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>2. Summary of Significant Accounting Policies and Basis of Presentation </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Principles of Consolidation </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">The functional currency of GID Europe Holding B.V., GID Europe B.V., GID Germany GmbH and GI Dynamics Australia Pty Ltd is the U.S. dollar. Consolidated balance sheet accounts of the Company&#x2019;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&#x2019; financial statements are included in the determination of net loss.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Segment Reporting</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company has one reportable segment which designs, develops, manufactures and markets medical devices for non-surgical approaches to treating type 2 diabetes.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">GI Dynamics does not report geographic segments as there were no product sales in 2019 or 2018 and at December 31, 2019 and 2018, all long-lived assets comprised of property and equipment were held in the U.S.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Use of Estimates </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">The preparation of consolidated financial statements in accordance with generally accepted accounting principles in the U.S. requires the Company&#x2019;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 revenue recognition, inventory valuation including reserves for excess and obsolete inventory, 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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Cash, Cash Equivalents and Restricted Cash</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">GI Dynamics considers all highly liquid investment instruments with an original maturity when purchased of three months or less to be cash equivalents. Investments qualifying as cash equivalents primarily consist of money market funds and have a carrying amount that approximates fair value. The amount of cash equivalents included in cash and cash equivalents was approximately $0&#xa0;and $1.1&#xa0;million at December 31, 2019 and 2018, respectively.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">At December 31, 2019 and 2018, GI Dynamics had approximately $2 and $0.01 million, respectively, of cash and cash equivalents denominated in Australian dollars or Euros that is subject to foreign currency gain and loss. &#xa0;</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">GI Dynamics has $30 thousand in restricted cash used to secure a corporate credit card account.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Property and Equipment </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">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:</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-weight: bold; border-bottom: Black 1.5pt solid">Asset Description</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Estimated<font style="font-family: Times New Roman, Times, Serif"> </font>Useful<font style="font-family: Times New Roman, Times, Serif">&#xa0;</font>Life</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>(In Years)</b></p></td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 88%; text-align: left">Laboratory and manufacturing equipment</td><td style="width: 1%">&#xa0;</td> <td style="width: 11%; text-align: center">5</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Computer equipment and software</td><td>&#xa0;</td> <td style="text-align: center">3</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Office furniture and equipment</td><td>&#xa0;</td> <td style="text-align: center">5</td></tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">Included in property and equipment are certain costs of software obtained for internal use. Costs incurred during the preliminary project stage are expensed as incurred, while costs incurred during the application development stage are capitalized and amortized over the estimated useful life of the software. GI Dynamics also capitalizes costs related to specific upgrades and enhancements when it is probable the expenditures will result in additional functionality. Maintenance and training costs related to software obtained for internal use are expensed as incurred.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">Leasehold improvements are amortized over the shorter of the estimated useful life of the asset or the remaining lease term. Costs for capital assets not yet placed into service have been capitalized as construction in progress and will be depreciated in accordance with the above guidelines once placed into service. Maintenance and repair costs are expensed as incurred.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Derivative Liabilities</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">GI Dynamics examines all financial instruments to determine if the financial instrument or any component feature is a derivative under ASC 815, <i>Derivatives and Hedging </i>(&#x201c;ASC 815&#x201d;) and therefore requires liability classification. Certain warrants to purchase common stock did not meet the requirements for equity classification and are considered derivative instruments due to their cash settlement features. The derivative warrants are 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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Research and Development Costs </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Patent Costs </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">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, 2019, 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 for each of the years ended December 31, 2019 and 2018.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Stock-Based Compensation </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">GI Dynamics accounts for stock-based compensation in accordance with the Financial Accounting Standards Board, (&#x201c;FASB&#x201d;) Accounting Standards Codification (&#x201c;ASC&#x201d;) 718, <i>Stock Compensation</i>, or ASC 718, which requires that stock-based compensation be measured and recognized as an expense in the financial statements and that such expense be measured at the grant date fair value.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The assumptions used in determining the fair value of stock-based awards represent management&#x2019;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&#x2019;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. Because there was no public market for GI Dynamics common stock prior to its IPO, GI Dynamics lacked company-specific historical and implied volatility information. The Company does have approximately 6 years of historical price volatility since its IPO in September 2011. Therefore, management estimates the expected stock volatility based on the to-date historical 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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">GI Dynamics recognizes the impact of share-based award forfeitures only as they occur rather than by applying an estimated forfeiture rate.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Stock awards to non-employees were accounted for in accordance with ASC 505-50, Equity-Based Payments to Non-Employees (&#x201c;ASC 505-50&#x201d;). The measurement date for non-employee awards was generally the date performance of services required from the non-employee was complete. For non-employee awards that vest based on service conditions, the Company expensed the value of the awards over the related service period, provided the service condition was expected to be met. The Company recorded the expense of services rendered by non- employees based on the estimated fair value of the stock option using the Black-Scholes option pricing model over the contractual term of the non-employee award. At each reporting period, the fair value of unvested non-employee awards was remeasured and expensed on a straight-line basis over the vesting term of the underlying award. In June 2018, the FASB issued ASU No.&#xa0;2018-07, <i>Compensation &#x2013; Stock Compensation (Topic 718: Improvements to nonemployee share-based payment accounting)</i>, or ASU 2018-07, which provides measurement provisions and clarifications for the accounting for Non-employee Share-Based Payments (&#x201c;NESBP&#x201d;). As a result, most of the guidance within ASC 718 associated with employee share-based payments, including most of its requirements related to classification and measurement, applies to NESBP. The Company elects to use the contractual term of each award as the expected term for NESBP awards. The Company adopted ASU 2018-07 as of January 1, 2019 and there was no impact to retained earnings or equity as no uncompleted NESBPs were outstanding when adopted. At December 31, 2019, the Company had options to purchase 120,000 shares of common stock granted to non-employees.&#xa0;</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Impairment of Long-Lived Assets </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">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&#x2019;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 2019 or 2018.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Loss Contingencies </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">In accordance with ASC 450, <i>Contingencies</i>, GI Dynamics accrues anticipated costs of settlement, damages, and losses for loss contingencies based on historical experience or to the extent specific losses are probable and estimable. Otherwise, the Company expenses these costs as incurred. If the estimate of a probable loss is a range, and no amount within the range is more likely, GI Dynamics accrues the minimum amount of the range. No loss contingencies were recorded on the balance sheet as of December 31, 2019 or 2018.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Fraudulent Diversion of Funds and Related Insurance Proceeds </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">In July 2018, after a third-party investigation isolated the activity, an insurance claim was filed for $271 thousand for fraudulent diversion of cash from the Company&#x2019;s account into a personal account that occurred during the years 2016 through 2018.&#xa0; Income in the year ended December 31, 2018 represents net insurance proceeds on the claim less $22 thousand of research and development expense. GI Dynamics has since implemented internal controls to correct the identified control deficiencies associated with the fraud and the employee responsible for the diverted funds is no longer with the Company.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Income Taxes </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">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&#x2019;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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">The Company assesses its income tax positions and records tax benefits based upon management&#x2019;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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Guarantees </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">GI Dynamics has identified the guarantees described below as disclosable, in accordance with ASC 460, <i>Guarantees</i>.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">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&#x2019;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&#x2019; and officers&#x2019; insurance coverage that should limit its exposure and enable it to recover a portion of any future amounts paid.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">As of December 31, 2019, and 2018, 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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Recently Adopted Accounting Pronouncements</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In February 2016, the FASB issued Accounting Standards Update, or ASU No.&#xa0;2016-02, <i>Leases</i> (Topic 842), or ASU 2016-02. ASU 2016-02 requires that most operating leases be recorded on the balance sheet unless the practical expedient is elected for short-term operating leases. The lessee will record a lease liability, which is a lessee&#x2019;s obligation to make lease payments arising from a lease, measured on a discounted basis, and a right-of-use asset, which is an asset representing the lessee&#x2019;s right to use the underlying asset for the lease term. ASU 2016-02 is effective for fiscal years beginning after December&#xa0;15, 2018, including interim periods within those fiscal years, with early adoption permitted. Lessees must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees may not apply a full retrospective transition approach. The Company elected to apply the practical expedient as it relates to short-term leases. The Company adopted ASU 2016-02 on January 1, 2019. There was no impact to retained earnings upon adoption as there were no long-term leases in effect at adoption (see Note&#xa0;10 of the Consolidated Financial Statements for a more complete description of the lease accounting and impacts of adoption).</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In June 2018, the FASB issued ASU No.&#xa0;2018-07, <i>Compensation &#x2013; Stock Compensation (Topic 718: Improvements to nonemployee share-based payment accounting)</i>, or ASU 2018-07, which provides measurement provisions and clarifications for the accounting for Non-employee Share-Based Payments (&#x201c;NESBP&#x201d;). As a result, most of the guidance within ASC 718 associated with employee share-based payments, including most of its requirements related to classification and measurement, applies to NESBP. ASU 2018-07 is effective for public business entities for fiscal years beginning after December&#xa0;15, 2018, including interim periods within those fiscal years, with early adoption permitted but not in advance of adoption of Topic 606. Upon transition, the entity is required to measure and record these nonemployee awards at fair value as of the adoption date without subsequent remeasurement. The Company adopted ASU 2018-07 as of January 1, 2019 and there was no impact to retained earnings or equity as no uncompleted NESBPs were outstanding when adopted. At December 31, 2019, the Company had options to purchase 120,000 shares of common stock granted to non-employees.&#xa0;</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Recently Issued Accounting Pronouncements</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In August 2018, the FASB issued ASU No.&#xa0;2018-13, <i>Fair Value Measurement (Topic 820), Disclosure Framework&#x2014;Changes to the Disclosure Requirements for Fair Value Measurement</i>, 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 is permitted upon issuance of this update, however the Company has declined early adoption. The Company will adopt this ASU in 2020 and expects no impact to its consolidated financial statements on adoption.</p><br/> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Principles of Consolidation </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">The functional currency of GID Europe Holding B.V., GID Europe B.V., GID Germany GmbH and GI Dynamics Australia Pty Ltd is the U.S. dollar. Consolidated balance sheet accounts of the Company&#x2019;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&#x2019; financial statements are included in the determination of net loss.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Segment Reporting</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company has one reportable segment which designs, develops, manufactures and markets medical devices for non-surgical approaches to treating type 2 diabetes.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">GI Dynamics does not report geographic segments as there were no product sales in 2019 or 2018 and at December 31, 2019 and 2018, all long-lived assets comprised of property and equipment were held in the U.S.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Use of Estimates </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">The preparation of consolidated financial statements in accordance with generally accepted accounting principles in the U.S. requires the Company&#x2019;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 revenue recognition, inventory valuation including reserves for excess and obsolete inventory, 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.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Cash, Cash Equivalents and Restricted Cash</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">GI Dynamics considers all highly liquid investment instruments with an original maturity when purchased of three months or less to be cash equivalents. Investments qualifying as cash equivalents primarily consist of money market funds and have a carrying amount that approximates fair value. The amount of cash equivalents included in cash and cash equivalents was approximately $0&#xa0;and $1.1&#xa0;million at December 31, 2019 and 2018, respectively.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">At December 31, 2019 and 2018, GI Dynamics had approximately $2 and $0.01 million, respectively, of cash and cash equivalents denominated in Australian dollars or Euros that is subject to foreign currency gain and loss. &#xa0;</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">GI Dynamics has $30 thousand in restricted cash used to secure a corporate credit card account.</p> 0 1100000 2000000 10000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Property and Equipment </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">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:</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-weight: bold; border-bottom: Black 1.5pt solid">Asset Description</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Estimated<font style="font-family: Times New Roman, Times, Serif"> </font>Useful<font style="font-family: Times New Roman, Times, Serif">&#xa0;</font>Life</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>(In Years)</b></p></td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 88%; text-align: left">Laboratory and manufacturing equipment</td><td style="width: 1%">&#xa0;</td> <td style="width: 11%; text-align: center">5</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Computer equipment and software</td><td>&#xa0;</td> <td style="text-align: center">3</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Office furniture and equipment</td><td>&#xa0;</td> <td style="text-align: center">5</td></tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">Included in property and equipment are certain costs of software obtained for internal use. Costs incurred during the preliminary project stage are expensed as incurred, while costs incurred during the application development stage are capitalized and amortized over the estimated useful life of the software. GI Dynamics also capitalizes costs related to specific upgrades and enhancements when it is probable the expenditures will result in additional functionality. Maintenance and training costs related to software obtained for internal use are expensed as incurred.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">Leasehold improvements are amortized over the shorter of the estimated useful life of the asset or the remaining lease term. Costs for capital assets not yet placed into service have been capitalized as construction in progress and will be depreciated in accordance with the above guidelines once placed into service. Maintenance and repair costs are expensed as incurred.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Derivative Liabilities</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">GI Dynamics examines all financial instruments to determine if the financial instrument or any component feature is a derivative under ASC 815, <i>Derivatives and Hedging </i>(&#x201c;ASC 815&#x201d;) and therefore requires liability classification. Certain warrants to purchase common stock did not meet the requirements for equity classification and are considered derivative instruments due to their cash settlement features. The derivative warrants are 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.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Research and Development Costs </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">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.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Patent Costs </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">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, 2019, 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 for each of the years ended December 31, 2019 and 2018.</p> 200000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Stock-Based Compensation </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">GI Dynamics accounts for stock-based compensation in accordance with the Financial Accounting Standards Board, (&#x201c;FASB&#x201d;) Accounting Standards Codification (&#x201c;ASC&#x201d;) 718, <i>Stock Compensation</i>, or ASC 718, which requires that stock-based compensation be measured and recognized as an expense in the financial statements and that such expense be measured at the grant date fair value.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The assumptions used in determining the fair value of stock-based awards represent management&#x2019;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&#x2019;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. Because there was no public market for GI Dynamics common stock prior to its IPO, GI Dynamics lacked company-specific historical and implied volatility information. The Company does have approximately 6 years of historical price volatility since its IPO in September 2011. Therefore, management estimates the expected stock volatility based on the to-date historical 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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">GI Dynamics recognizes the impact of share-based award forfeitures only as they occur rather than by applying an estimated forfeiture rate.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Stock awards to non-employees were accounted for in accordance with ASC 505-50, Equity-Based Payments to Non-Employees (&#x201c;ASC 505-50&#x201d;). The measurement date for non-employee awards was generally the date performance of services required from the non-employee was complete. For non-employee awards that vest based on service conditions, the Company expensed the value of the awards over the related service period, provided the service condition was expected to be met. The Company recorded the expense of services rendered by non- employees based on the estimated fair value of the stock option using the Black-Scholes option pricing model over the contractual term of the non-employee award. At each reporting period, the fair value of unvested non-employee awards was remeasured and expensed on a straight-line basis over the vesting term of the underlying award. In June 2018, the FASB issued ASU No.&#xa0;2018-07, <i>Compensation &#x2013; Stock Compensation (Topic 718: Improvements to nonemployee share-based payment accounting)</i>, or ASU 2018-07, which provides measurement provisions and clarifications for the accounting for Non-employee Share-Based Payments (&#x201c;NESBP&#x201d;). As a result, most of the guidance within ASC 718 associated with employee share-based payments, including most of its requirements related to classification and measurement, applies to NESBP. The Company elects to use the contractual term of each award as the expected term for NESBP awards. The Company adopted ASU 2018-07 as of January 1, 2019 and there was no impact to retained earnings or equity as no uncompleted NESBPs were outstanding when adopted. At December 31, 2019, the Company had options to purchase 120,000 shares of common stock granted to non-employees.</p> 6 years 0.00 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Recently Adopted Accounting Pronouncements</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In February 2016, the FASB issued Accounting Standards Update, or ASU No.&#xa0;2016-02, <i>Leases</i> (Topic 842), or ASU 2016-02. ASU 2016-02 requires that most operating leases be recorded on the balance sheet unless the practical expedient is elected for short-term operating leases. The lessee will record a lease liability, which is a lessee&#x2019;s obligation to make lease payments arising from a lease, measured on a discounted basis, and a right-of-use asset, which is an asset representing the lessee&#x2019;s right to use the underlying asset for the lease term. ASU 2016-02 is effective for fiscal years beginning after December&#xa0;15, 2018, including interim periods within those fiscal years, with early adoption permitted. Lessees must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees may not apply a full retrospective transition approach. The Company elected to apply the practical expedient as it relates to short-term leases. The Company adopted ASU 2016-02 on January 1, 2019. There was no impact to retained earnings upon adoption as there were no long-term leases in effect at adoption (see Note&#xa0;10 of the Consolidated Financial Statements for a more complete description of the lease accounting and impacts of adoption).</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In June 2018, the FASB issued ASU No.&#xa0;2018-07, <i>Compensation &#x2013; Stock Compensation (Topic 718: Improvements to nonemployee share-based payment accounting)</i>, or ASU 2018-07, which provides measurement provisions and clarifications for the accounting for Non-employee Share-Based Payments (&#x201c;NESBP&#x201d;). As a result, most of the guidance within ASC 718 associated with employee share-based payments, including most of its requirements related to classification and measurement, applies to NESBP. ASU 2018-07 is effective for public business entities for fiscal years beginning after December&#xa0;15, 2018, including interim periods within those fiscal years, with early adoption permitted but not in advance of adoption of Topic 606. Upon transition, the entity is required to measure and record these nonemployee awards at fair value as of the adoption date without subsequent remeasurement. The Company adopted ASU 2018-07 as of January 1, 2019 and there was no impact to retained earnings or equity as no uncompleted NESBPs were outstanding when adopted. At December 31, 2019, the Company had options to purchase 120,000 shares of common stock granted to non-employees.&#xa0;</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Recently Issued Accounting Pronouncements</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In August 2018, the FASB issued ASU No.&#xa0;2018-13, <i>Fair Value Measurement (Topic 820), Disclosure Framework&#x2014;Changes to the Disclosure Requirements for Fair Value Measurement</i>, 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 is permitted upon issuance of this update, however the Company has declined early adoption. The Company will adopt this ASU in 2020 and expects no impact to its consolidated financial statements on adoption.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Impairment of Long-Lived Assets </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">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&#x2019;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 2019 or 2018.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Loss Contingencies </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">In accordance with ASC 450, <i>Contingencies</i>, GI Dynamics accrues anticipated costs of settlement, damages, and losses for loss contingencies based on historical experience or to the extent specific losses are probable and estimable. Otherwise, the Company expenses these costs as incurred. If the estimate of a probable loss is a range, and no amount within the range is more likely, GI Dynamics accrues the minimum amount of the range. No loss contingencies were recorded on the balance sheet as of December 31, 2019 or 2018.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Fraudulent Diversion of Funds and Related Insurance Proceeds </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">In July 2018, after a third-party investigation isolated the activity, an insurance claim was filed for $271 thousand for fraudulent diversion of cash from the Company&#x2019;s account into a personal account that occurred during the years 2016 through 2018.&#xa0; Income in the year ended December 31, 2018 represents net insurance proceeds on the claim less $22 thousand of research and development expense. GI Dynamics has since implemented internal controls to correct the identified control deficiencies associated with the fraud and the employee responsible for the diverted funds is no longer with the Company.</p> 271000 22000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Income Taxes </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">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&#x2019;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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">The Company assesses its income tax positions and records tax benefits based upon management&#x2019;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.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Guarantees </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">GI Dynamics has identified the guarantees described below as disclosable, in accordance with ASC 460, <i>Guarantees</i>.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">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&#x2019;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&#x2019; and officers&#x2019; insurance coverage that should limit its exposure and enable it to recover a portion of any future amounts paid.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">As of December 31, 2019, and 2018, 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.</p> 120000 <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-weight: bold; border-bottom: Black 1.5pt solid">Asset Description</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Estimated<font style="font-family: Times New Roman, Times, Serif"> </font>Useful<font style="font-family: Times New Roman, Times, Serif">&#xa0;</font>Life</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>(In Years)</b></p></td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 88%; text-align: left">Laboratory and manufacturing equipment</td><td style="width: 1%">&#xa0;</td> <td style="width: 11%; text-align: center">5</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Computer equipment and software</td><td>&#xa0;</td> <td style="text-align: center">3</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Office furniture and equipment</td><td>&#xa0;</td> <td style="text-align: center">5</td></tr> </table> P5Y P3Y P5Y <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0"><b>3. Net Loss per Common Share </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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 stock-based awards are excluded, including shares issued as a result of option exercises but which are subject to repurchase by the Company, whose effect would be anti-dilutive from the calculation. 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. During each of the years ended December 31, 2019 and 2018, 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 periods presented.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">The following potentially dilutive securities have been excluded from the computation of diluted weighted- average shares outstanding as of December 31, 2019 and 2018, as they would be anti-dilutive:</p><br/><table style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td style="text-align: center;">&#xa0;</td> <td>&#xa0;</td> <td style="border-bottom: black 1.5pt solid; text-align: center;" colspan="6"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><strong>Years Ended December&#xa0;31,</strong></font></td> <td>&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="text-align: center;">&#xa0;</td> <td>&#xa0;</td> <td style="border-bottom: black 1.5pt solid; text-align: center;" colspan="2"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><strong>2019</strong></font></td> <td>&#xa0;</td> <td>&#xa0;</td> <td style="border-bottom: black 1.5pt solid; text-align: center;" colspan="2"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><strong>2018</strong></font></td> <td>&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: #cceeff;"> <td style="width: 76%;"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Warrants to purchase common stock</font></td> <td style="width: 1%;">&#xa0;</td> <td style="width: 1%;">&#xa0;</td> <td style="width: 9%; text-align: right;"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">28,532</font></td> <td style="width: 1%;">&#xa0;</td> <td style="width: 1%;">&#xa0;</td> <td style="width: 1%;">&#xa0;</td> <td style="width: 9%; text-align: right;"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">1,972,976</font></td> <td style="width: 1%;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Options to purchase common stock and other stock-based awards</font></td> <td>&#xa0;</td> <td style="border-bottom: black 1.5pt solid;">&#xa0;</td> <td style="border-bottom: black 1.5pt solid; text-align: right;"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">3,331,154</font></td> <td>&#xa0;</td> <td>&#xa0;</td> <td style="border-bottom: black 1.5pt solid;">&#xa0;</td> <td style="border-bottom: black 1.5pt solid; text-align: right;"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">1,545,719</font></td> <td>&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: #cceeff;"> <td><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Total</font></td> <td>&#xa0;</td> <td style="border-bottom: black 4.5pt double;">&#xa0;</td> <td style="border-bottom: black 4.5pt double; text-align: right;"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">3,359,686</font></td> <td>&#xa0;</td> <td>&#xa0;</td> <td style="border-bottom: black 4.5pt double;">&#xa0;</td> <td style="border-bottom: black 4.5pt double; text-align: right;"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">3,518,695</font></td> <td>&#xa0;</td> </tr> </table><br/> <table style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif;" cellspacing="0" cellpadding="0"> <tr style="vertical-align: bottom;"> <td style="text-align: center;">&#xa0;</td> <td>&#xa0;</td> <td style="border-bottom: black 1.5pt solid; text-align: center;" colspan="6"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><strong>Years Ended December&#xa0;31,</strong></font></td> <td>&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="text-align: center;">&#xa0;</td> <td>&#xa0;</td> <td style="border-bottom: black 1.5pt solid; text-align: center;" colspan="2"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><strong>2019</strong></font></td> <td>&#xa0;</td> <td>&#xa0;</td> <td style="border-bottom: black 1.5pt solid; text-align: center;" colspan="2"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt;"><strong>2018</strong></font></td> <td>&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: #cceeff;"> <td style="width: 76%;"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Warrants to purchase common stock</font></td> <td style="width: 1%;">&#xa0;</td> <td style="width: 1%;">&#xa0;</td> <td style="width: 9%; text-align: right;"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">28,532</font></td> <td style="width: 1%;">&#xa0;</td> <td style="width: 1%;">&#xa0;</td> <td style="width: 1%;">&#xa0;</td> <td style="width: 9%; text-align: right;"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">1,972,976</font></td> <td style="width: 1%;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Options to purchase common stock and other stock-based awards</font></td> <td>&#xa0;</td> <td style="border-bottom: black 1.5pt solid;">&#xa0;</td> <td style="border-bottom: black 1.5pt solid; text-align: right;"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">3,331,154</font></td> <td>&#xa0;</td> <td>&#xa0;</td> <td style="border-bottom: black 1.5pt solid;">&#xa0;</td> <td style="border-bottom: black 1.5pt solid; text-align: right;"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">1,545,719</font></td> <td>&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: #cceeff;"> <td><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">Total</font></td> <td>&#xa0;</td> <td style="border-bottom: black 4.5pt double;">&#xa0;</td> <td style="border-bottom: black 4.5pt double; text-align: right;"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">3,359,686</font></td> <td>&#xa0;</td> <td>&#xa0;</td> <td style="border-bottom: black 4.5pt double;">&#xa0;</td> <td style="border-bottom: black 4.5pt double; text-align: right;"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt;">3,518,695</font></td> <td>&#xa0;</td> </tr> </table> 28532 1972976 3331154 1545719 3359686 3518695 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>4. Warrants to Purchase Common Stock or CDIs</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">The following series of warrants were outstanding and exercisable at December 31, 2019 and 2018 (warrants to purchase CDIs presented as shares at a 50 CDI per share ratio):</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="white-space: nowrap">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="padding-bottom: 1.5pt; font-weight: bold; text-align: center">Number of underlying</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="padding-bottom: 1.5pt; font-weight: bold; text-align: center">Exercise price</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">Warrant Series</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td style="white-space: nowrap; font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Issue Date</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">shares</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">per share</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 40%; text-align: left">Consultant warrant</td><td style="width: 1%">&#xa0;</td> <td style="width: 11%; text-align: center">May 4, 2016</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">28,532</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">0.64</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">28,532</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">28,532</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 1.5pt">2018 Warrant (1)</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="text-align: center; padding-bottom: 1.5pt">May 24, 2018</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt; text-align: right">1,944,444</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="padding-bottom: 1.5pt; text-align: left">$</td><td style="padding-bottom: 1.5pt; text-align: right">0.72</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,944,444</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 4pt">Total Outstanding and Exercisable</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="text-align: center; padding-bottom: 4pt">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt; text-align: right">&#xa0;</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt; text-align: right">&#xa0;</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">28,532</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">1,972,976</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td>Weighted average exercise price</td><td>&#xa0;</td> <td>&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">0.64</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">0.72</td><td style="text-align: left">&#xa0;</td></tr> </table><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><tr style="vertical-align: top; text-align: justify"> <td style="width: 0"></td><td style="width: 0.25in; text-align: left">(1)</td><td style="text-align: justify">Exercise price was initially $0.90 per share, but was adjusted to $0.72 in November 2018</td> </tr></table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">The following table rolls forward the warrant activity during the year ended December 31, 2019:</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Shares underlying warrants</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted average exercise price per share</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%; text-align: left">Outstanding and Exercisable at December 31, 2018</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">1,972,976</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">0.72</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td>Issuance of March 2019 Warrant</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">1,579,696</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">0.64</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td>Issuance of May 2019 Warrant</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">4,724,409</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">0.64</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td>Exercise of 2018 Warrant</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">(1,944,444</td><td style="text-align: left">)</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">0.72</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td>Exercise of March 2019 Warrant</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">(1,579,696</td><td style="text-align: left">)</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">0.64</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 1.5pt">Exercise of May 2019 Warrant</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(4,724,409</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">0.64</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Outstanding and Exercisable at December 31, 2019</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">28,532</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">0.64</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">On August 21, 2019, GI Dynamics and Crystal Amber entered into a securities purchase agreement (&#x201c;SPA&#x201d;) for a total funding of up to approximately $10 million (the &#x201c;August 2019 SPA&#x201d;) 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 &#x201c;August 2019 Note&#x201d;), which included an agreement to issue a warrant (the &#x201c;August 2019 Warrant&#x201d;) 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.</p><br/> 0.90 0.72 On August 21, 2019, GI Dynamics and Crystal Amber entered into a securities purchase agreement (&#x201c;SPA&#x201d;) for a total funding of up to approximately $10 million (the &#x201c;August 2019 SPA&#x201d;) 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 &#x201c;August 2019 Note&#x201d;), which included an agreement to issue a warrant (the &#x201c;August 2019 Warrant&#x201d;) 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. <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="white-space: nowrap">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="padding-bottom: 1.5pt; font-weight: bold; text-align: center">Number of underlying</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="padding-bottom: 1.5pt; font-weight: bold; text-align: center">Exercise price</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">Warrant Series</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td style="white-space: nowrap; font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Issue Date</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">shares</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">per share</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 40%; text-align: left">Consultant warrant</td><td style="width: 1%">&#xa0;</td> <td style="width: 11%; text-align: center">May 4, 2016</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">28,532</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">0.64</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">28,532</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">28,532</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 1.5pt">2018 Warrant (1)</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="text-align: center; padding-bottom: 1.5pt">May 24, 2018</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt; text-align: right">1,944,444</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="padding-bottom: 1.5pt; text-align: left">$</td><td style="padding-bottom: 1.5pt; text-align: right">0.72</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,944,444</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 4pt">Total Outstanding and Exercisable</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="text-align: center; padding-bottom: 4pt">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt; text-align: right">&#xa0;</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt; text-align: right">&#xa0;</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">28,532</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">1,972,976</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td>Weighted average exercise price</td><td>&#xa0;</td> <td>&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">0.64</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">0.72</td><td style="text-align: left">&#xa0;</td></tr> </table><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><tr style="vertical-align: top; text-align: justify"> <td style="width: 0"></td><td style="width: 0.25in; text-align: left">(1)</td><td style="text-align: justify">Exercise price was initially $0.90 per share, but was adjusted to $0.72 in November 2018</td> </tr></table> May 4, 2016 28532 0.64 28532 28532 May 24, 2018 1944444 0.72 1944444 28532 1972976 0.64 0.72 <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Shares underlying warrants</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="3" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted average exercise price per share</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%; text-align: left">Outstanding and Exercisable at December 31, 2018</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">1,972,976</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">0.72</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td>Issuance of March 2019 Warrant</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">1,579,696</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">0.64</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td>Issuance of May 2019 Warrant</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">4,724,409</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">0.64</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td>Exercise of 2018 Warrant</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">(1,944,444</td><td style="text-align: left">)</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">0.72</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td>Exercise of March 2019 Warrant</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">(1,579,696</td><td style="text-align: left">)</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">0.64</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 1.5pt">Exercise of May 2019 Warrant</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(4,724,409</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">0.64</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Outstanding and Exercisable at December 31, 2019</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">28,532</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">0.64</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> </table> 1972976 1579696 0.64 4724409 0.64 -1944444 0.72 -1579696 0.64 -4724409 0.64 28532 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0"><b>5. Fair Value Measurements </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">The tables below present information about the Company&#x2019;s assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2019 and 2018 and indicates the fair value hierarchy of the valuation techniques the Company used to determine such fair value. In general, fair values determined by Level&#xa0;1 inputs utilize observable inputs such as quoted prices in active markets for identical assets or liabilities. Fair values determined by Level&#xa0;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&#xa0;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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">The following tables present the assets and liabilities the Company has measured at fair value on a recurring basis (in thousands):</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="white-space: nowrap"><font style="font-family: Times New Roman, Times, Serif">&#xa0;</font></td><td style="white-space: nowrap"><font style="font-family: Times New Roman, Times, Serif">&#xa0;</font></td> <td colspan="2" style="white-space: nowrap"><font style="font-family: Times New Roman, Times, Serif">&#xa0;</font></td><td style="white-space: nowrap"><font style="font-family: Times New Roman, Times, Serif">&#xa0;</font></td><td style="white-space: nowrap; font-weight: bold"><font style="font-family: Times New Roman, Times, Serif">&#xa0;</font></td> <td colspan="10" style="white-space: nowrap; font-weight: bold; text-align: center"><font style="font-family: Times New Roman, Times, Serif">Fair Value Measurements at</font></td><td style="white-space: nowrap; font-weight: bold"><font style="font-family: Times New Roman, Times, Serif">&#xa0;</font></td></tr> <tr style="vertical-align: bottom"> <td style="white-space: nowrap"><font style="font-family: Times New Roman, Times, Serif">&#xa0;</font></td><td style="white-space: nowrap; padding-bottom: 1.5pt"><font style="font-family: Times New Roman, Times, Serif">&#xa0;</font></td> <td colspan="2" style="white-space: nowrap"><font style="font-family: Times New Roman, Times, Serif">&#xa0;</font></td><td style="white-space: nowrap; padding-bottom: 1.5pt"><font style="font-family: Times New Roman, Times, Serif">&#xa0;</font></td><td style="white-space: nowrap; font-weight: bold; padding-bottom: 1.5pt"><font style="font-family: Times New Roman, Times, Serif">&#xa0;</font></td> <td colspan="10" style="white-space: nowrap; 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font-weight: bold"><font style="font-family: Times New Roman, Times, Serif">&#xa0;</font></td><td style="white-space: nowrap; font-weight: bold"><font style="font-family: Times New Roman, Times, Serif">&#xa0;</font></td> <td colspan="2" style="white-space: nowrap; font-weight: bold; text-align: center"><font style="font-family: Times New Roman, Times, Serif">Inputs</font></td><td style="white-space: nowrap; font-weight: bold"><font style="font-family: Times New Roman, Times, Serif">&#xa0;</font></td><td style="white-space: nowrap; font-weight: bold"><font style="font-family: Times New Roman, Times, Serif">&#xa0;</font></td> <td colspan="2" style="white-space: nowrap; font-weight: bold; text-align: center"><font style="font-family: Times New Roman, Times, Serif">Inputs</font></td><td style="white-space: nowrap; font-weight: bold"><font style="font-family: Times New Roman, Times, Serif">&#xa0;</font></td></tr> <tr style="vertical-align: bottom"> <td style="white-space: nowrap; font-weight: bold; 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padding-bottom: 1.5pt">Money market funds (included in cash&#xa0;and cash equivalents)</td><td style="width: 1%; padding-bottom: 1.5pt">&#xa0;</td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">1,097</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="width: 1%; padding-bottom: 1.5pt">&#xa0;</td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">1,097</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="width: 1%; padding-bottom: 1.5pt">&#xa0;</td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">&#x2014;</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="width: 1%; 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text-align: right">&#x2014;</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">&#x2014;</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-weight: bold">Liabilities</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 1.5pt">Warrant liability</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">51</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#x2014;</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#x2014;</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">51</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 4pt">Total liabilities</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">51</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">&#x2014;</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">&#x2014;</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">51</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">The assumptions used in the Black-Scholes option pricing model to determine the fair value of the Derivative Warrant Liabilities at December 31, 2019 and 2018 were as follows:</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; 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background-color: rgb(204,238,255)"> <td style="text-align: left">Risk-free interest rate</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">1.59</td><td style="text-align: left">%</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">2.48</td><td style="text-align: left">%</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Expected dividend yield</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;<font style="font-size: 10pt">%</font></td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;<font style="font-size: 10pt">%</font></td><td style="text-align: left">&#xa0;</td></tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">The assumptions used in the Black-Scholes option pricing model to determine the fair value of the Derivative Warrant Liabilities related to the 2019 derivative warrants at each measurement period:</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; 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text-align: center">May 8,</td><td style="font-weight: bold">&#xa0;</td><td style="font-weight: bold">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center">June 28,</td><td style="font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; 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margin: 0pt 0; text-align: justify; text-indent: .5in">The following table rolls forward the fair value of the derivative liabilities, where fair value is determined by Level&#xa0;3 inputs (in thousands):</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 88%; padding-bottom: 4pt">Balance at December&#xa0;31, 2017</td><td style="width: 1%; padding-bottom: 4pt">&#xa0;</td> <td style="width: 1%; border-bottom: Black 4pt double; text-align: left">$</td><td style="width: 9%; border-bottom: Black 4pt double; text-align: right">493</td><td style="width: 1%; padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Decrease in fair value of 2017 Note-related conversion feature upon re-measurement</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">(464</td><td style="text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Decrease in fair value of warrants upon re-measurement</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">(18</td><td style="text-align: left">)</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 1.5pt">Fair value of beneficial conversion feature discount associated with 2017 Note modification</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">40</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 4pt">Balance at December&#xa0;31, 2018</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">51</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Increase in fair value of warrants upon re-measurement</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">1,683</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Fair value of warrants issued with notes to related party</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">4,061</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 1.5pt">Reclassification of warrants to additional paid-in capital</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(5,785</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 4pt">Balance at December&#xa0;31, 2019</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">10</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">Cash, cash equivalents, restricted cash, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses, short-term debt to related party and other current liabilities at December 31, 2019 and 2018 are carried at amounts that approximate fair value due to their short-term maturities and highly liquid nature of these instruments.</p><br/> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; 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padding-bottom: 1.5pt">Money market funds (included in cash&#xa0;and cash equivalents)</td><td style="width: 1%; padding-bottom: 1.5pt">&#xa0;</td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">1,097</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="width: 1%; padding-bottom: 1.5pt">&#xa0;</td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">1,097</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="width: 1%; padding-bottom: 1.5pt">&#xa0;</td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">&#x2014;</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="width: 1%; padding-bottom: 1.5pt">&#xa0;</td> <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">&#x2014;</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 4pt">Total assets</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">1,097</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">1,097</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">&#x2014;</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">&#x2014;</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-weight: bold">Liabilities</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 1.5pt">Warrant liability</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">51</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#x2014;</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#x2014;</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">51</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 4pt">Total liabilities</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">51</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">&#x2014;</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">&#x2014;</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">51</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table> 10000 10000 10000 10000 1097000 1097000 1097000 1097000 51000 51000 51000 51000 <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; 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background-color: rgb(204,238,255)"> <td style="text-align: left">Risk-free interest rate</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">1.59</td><td style="text-align: left">%</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">2.48</td><td style="text-align: left">%</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Expected dividend yield</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;<font style="font-size: 10pt">%</font></td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;<font style="font-size: 10pt">%</font></td><td style="text-align: left">&#xa0;</td></tr> </table><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold">&#xa0;</td> <td colspan="10" style="border-bottom: Black 1.5pt solid; 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text-align: center">June 28,</td><td style="font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 40%; text-align: left">Expected volatility</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">130.7</td><td style="width: 1%; text-align: left">%</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">131.2</td><td style="width: 1%; text-align: left">%</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">134.0</td><td style="width: 1%; text-align: left">%</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">134.0</td><td style="width: 1%; text-align: left">%</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">137.3</td><td style="width: 1%; text-align: left">%</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Expected term (in years)</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">5.00</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">4.97</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">2.35</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">5.00</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">4.87</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Risk-free interest rate</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">2.44</td><td style="text-align: left">%</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">2.34</td><td style="text-align: left">%</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">1.74</td><td style="text-align: left">%</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">2.28</td><td style="text-align: left">%</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">1.74</td><td style="text-align: left">%</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Expected dividend yield</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;<font style="font-size: 10pt">%</font></td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;<font style="font-size: 10pt">%</font></td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;<font style="font-size: 10pt">%</font></td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;<font style="font-size: 10pt">%</font></td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;<font style="font-size: 10pt">%</font></td><td style="text-align: left">&#xa0;</td></tr> </table> 1.300 1.340 P1Y127D P2Y127D 0.0159 0.0248 1.307 1.312 1.340 1.340 1.373 P5Y P4Y354D P2Y127D P5Y P4Y317D 0.0244 0.0234 0.0174 0.0228 0.0174 <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 88%; padding-bottom: 4pt">Balance at December&#xa0;31, 2017</td><td style="width: 1%; padding-bottom: 4pt">&#xa0;</td> <td style="width: 1%; border-bottom: Black 4pt double; text-align: left">$</td><td style="width: 9%; border-bottom: Black 4pt double; text-align: right">493</td><td style="width: 1%; padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Decrease in fair value of 2017 Note-related conversion feature upon re-measurement</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">(464</td><td style="text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Decrease in fair value of warrants upon re-measurement</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">(18</td><td style="text-align: left">)</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 1.5pt">Fair value of beneficial conversion feature discount associated with 2017 Note modification</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">40</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 4pt">Balance at December&#xa0;31, 2018</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">51</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Increase in fair value of warrants upon re-measurement</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">1,683</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Fair value of warrants issued with notes to related party</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">4,061</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 1.5pt">Reclassification of warrants to additional paid-in capital</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(5,785</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 4pt">Balance at December&#xa0;31, 2019</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">10</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table> 493000 -464000 -18000 40000 51000 1683000 4061000 -5785000 10000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>6. Concentrations of Credit Risk, Accounts Receivable and Related Valuation Account</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">Financial instruments that subject GI Dynamics to credit risk primarily consist of cash and cash equivalents, restricted cash and accounts receivable. Cash and cash equivalent balances are all maintained with high quality financial institutions, and consequently, the Company believes that such funds are subject to minimal credit risk. The Company&#x2019;s short-term investments potentially subject the Company to concentrations of credit risk. GI Dynamics has adopted an investment policy that limits the amounts it may invest in any one type of investment and requires all held investments to hold at least an A rating from a recognized credit rating agency, thereby reducing credit risk concentration.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">GI Dynamics reversed a $40 thousand allowance for doubtful accounts balance in 2018, resulting in no accounts receivable and allowance of doubtful accounts balances at December 31, 2019 or 2018. As such, there is no credit risk from receivables.</p><br/> 40000 0 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>7. Property and Equipment </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">Property and equipment consisted of the following (in thousands):</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December&#xa0;31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%; text-align: left">Laboratory and manufacturing equipment</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">591</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">591</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Computer equipment and software</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">1,193</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">1,182</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Office furniture and equipment</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">183</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">183</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td>&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">1,967</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">1,956</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Less accumulated depreciation and amortization</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(1,925</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(1,893</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 4pt">Total</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">42</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">63</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">The Company recorded a loss on disposal of $2 thousand in connection with the expiration of its office lease and the related leasehold improvements on April 13, 2018.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">At December 31, 2019 and 2018, the Company had no property and equipment assets financed in any capital lease arrangement.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">Depreciation and amortization expense of property and equipment totaled approximately $32&#xa0;thousand and $35&#xa0;thousand for the years ended December 31, 2019 and 2018.</p><br/> 2000 <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December&#xa0;31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%; text-align: left">Laboratory and manufacturing equipment</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">591</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">591</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Computer equipment and software</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">1,193</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">1,182</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Office furniture and equipment</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">183</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">183</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td>&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">1,967</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">1,956</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Less accumulated depreciation and amortization</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(1,925</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(1,893</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 4pt">Total</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">42</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">63</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table> 591000 591000 1193000 1182000 183000 183000 1967000 1956000 1925000 1893000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>8. Accrued Expenses </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">Accrued expenses consisted of the following (in thousands):</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%; text-align: left">Payroll and related liabilities</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">531</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">386</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Professional fees</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">335</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">573</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Credit refunds</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">164</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">186</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Interest payable</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">250</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">495</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1.5pt">Other</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">73</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">5</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 4pt">Total</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">1,353</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">1,645</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">In 2017, following the notification by MHRA, 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. No related activity in 2018 and 2019 resulted in the amounts being unchanged and the Company still anticipates claims against these accruals in the future.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">In 2017, the Company recorded $136 thousand of interest payable on the 2017 Note. In 2018, the Company recorded $359 thousand of interest payable on the 2017 and 2018 Notes. In December 2018, the maturity of the 2017 Note was extended to March 31, 2019 in exchange for payment of $394 thousand which was the total accrued interest on the 2017 Note at December 31, 2018.</p><br/> 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 $77 thousand of credit memos granted to customers. 136000 359000 394000 <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%; text-align: left">Payroll and related liabilities</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">531</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">386</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Professional fees</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">335</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">573</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Credit refunds</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">164</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">186</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Interest payable</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">250</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">495</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 1.5pt">Other</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">73</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">5</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 4pt">Total</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">1,353</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">1,645</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table> 531000 386000 335000 573000 164000 186000 250000 495000 73000 5000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>9. Notes Payable</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><i>2017 Convertible Note Financing</i></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On June&#xa0;15, 2017, the Company entered into a Note Purchase Agreement (&#x201c;2017 NPA&#x201d;) 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&#xa0;million (the &#x201c;2017 Note&#x201d;).</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The 2017 Note accrues interest at an annually compounded rate of 5%&#xa0;per annum, other than during the continuance of an event of default, when the 2017 Note accrues interest at a rate of 8%&#xa0;per annum. The entire outstanding principal balance and all unpaid accrued interest thereon was initially due on the original maturity date of December&#xa0;31, 2018, but the maturity date was extended multiple times as described below.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The 2017 Note is secured by a first priority security interest in substantially all tangible and intangible assets of the Company, including intellectual property (the &#x201c;Collateral&#x201d;). In the event of an uncured default, Crystal Amber, is 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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The ASX provided the Company with a waiver to allow all asset liens (the &#x201c;Security&#x201d;) 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. As a result of the waiver, the Security contains a provision that provides that if an event of default occurs and Crystal Amber exercises its rights under the Security, neither Crystal Amber nor any of its associates can acquire any legal or beneficial interest in an asset of the Company or its subsidiaries in full or partial satisfaction of the Company&#x2019;s obligations under the Security, or otherwise deal with the assets of the Company or its subsidiaries, without the Company first having complied with any applicable ASX Listing Rules, including ASX Listing Rule 10.1, other than as required by law or through a receiver, manager, or analogous person appointed by Crystal Amber exercising its power of sale under the Security and selling the assets to an unrelated third party on arm&#x2019;s length commercial terms and conditions and distributing the cash proceeds to Crystal Amber or any of its associates in accordance with their legal entitlements.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The 2017 Note was issued without stockholder approval of certain specific conversion features and as a consequence, Crystal Amber had no right to exercise any note conversion rights until stockholders approved the 2017 Note conversion terms on May 24, 2018. Subsequently, the entire outstanding principal balance under the 2017 Note and all unpaid accrued interest thereon is convertible into CDIs (i)&#xa0;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 of the Company&#x2019;s CDIs traded on the ASX (&#x201c;Optional Conversion Price&#x201d;), or (ii)&#xa0;automatically upon the occurrence of an equity financing in which the Company raises at least $10&#xa0;million (a &#x201c;Qualified Financing&#x201d;) at the price per CDI of the CDIs issued and sold in such financing.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the event that the Company issues additional CDIs in a subsequent equity financing at a price per CDI that is less than the then-effective Optional Conversion Price, Crystal Amber has a 30-day option to convert at an adjusted conversion price reflecting, on a weighted average basis, the lower price per CDI. The number of CDIs that Crystal Amber may acquire upon conversion of the 2017 Note at this adjusted conversion price is limited to the number that maintains Crystal Amber&#x2019;s fully-diluted ownership percentage of the Company at the same level as existed immediately preceding the applicable subsequent equity financing.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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&#x2019;s stockholders receive cash consideration, the Company is obligated under the 2017 Note to pay all accrued and unpaid interest then due plus 110% of the remaining outstanding unconverted principal balance. If the change of control results in non-cash consideration, Crystal Amber may convert the entire outstanding principal balance under the 2017 Note and all unpaid accrued interest then due into CDIs at the abovementioned Optional Conversion Price. Other than as described above, the Company may not prepay the 2017 Note without the consent of Crystal Amber. The Company considers 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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The 2017 NPA contains customary events of default including a failure to perform obligations under the 2017 NPA, bankruptcy, a decision by the board of directors of the Company to wind up the Company, or if the Company otherwise ceases to carry on its ongoing business operations. If a default occurs and is not cured within the applicable cure period or is not waived, any outstanding obligations under the 2017 Note may be accelerated. The 2017 NPA and related 2017 Note documents also contain additional representations and warranties, covenants and conditions, in each case customary for transactions of this type.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company recorded the $5&#xa0;million 2017 Note, net of debt issuance costs of $115 thousand and amortized the debt issuance costs over the life of the 2017 Note.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In December 2018, the maturity date of the 2017 Note was extended to March 31, 2019 in exchange for payment of $394 thousand, which was the total interest accrued on the 2017 Note at December 31, 2018. Payment of this amount was made in January 2019. &#xa0;</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In March 2019, the maturity date of the 2017 Note was extended to May 1, 2019. In April 2019, the maturity date of the 2017 Note was further extended to July 1, 2019. In June 2019, the maturity date of the 2017 Note was further extended to October 1, 2019. On August 21, 2019, the maturity date of the 2017 Note was further extended to March 31, 2020. These extensions of maturity were evaluated under ASC 470 to determine whether debt extinguishment or debt modification accounting applies. 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, 2019 and 2018, the Company recognized interest expense of $248 and $257 thousand and amortization of debt issuance costs of $43 and $0 thousand, respectively, related to the 2017 Note.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>2018 Convertible Note and Warrant Financing</i></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On May 30, 2018, the Company entered into a Note Purchase Agreement (&#x201c;2018 NPA&#x201d;) by and between the Company and Crystal Amber. 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 &#x201c;2018 Note&#x201d;) with a maturity date of May 30, 2023. Interest accrued at an annually compounded rate of 10% per annum.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On May 30, 2018, having secured stockholder pre-approval of the conversion features on May 24, 2018 per ASX Listing Rule 10.11, the entire outstanding principal balance under the 2018 Note and all unpaid accrued interest thereon was immediately convertible into CDIs,&#xa0;at the option of Crystal Amber at an initial conversion price of $0.018 per CDI. Subsequently, the Company issued additional CDIs in an equity financing in September 2018 at a price per CDI of $0.0144, resulting in an adjustment of the conversion price to $0.0144 per CDI. Notice to convert the 2018 Note was provided by Crystal Amber, a Related Party on June 30, 2019. The 2018 Note converted to 134,852,549 CDIs (representing 2,697,050 shares of common stock). The principal of approximately $1.8 million converted to 121,527,778 CDIs (representing 2,430,555 shares of common stock) and the accrued interest of $192 thousand converted to 13,324,772 CDIs (representing 266,495 shares of common stock). As of June 30, 2019, the conversion of the CDIs had been executed, but not yet settled with the CDIs issued and available. The CDIs were issued on July 3, 2019 and have a one-year restriction on trading on the ASX.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On May 30, 2018, having secured stockholder pre-approval of the conversion features on May 24, 2018 per ASX Listing Rule 10.11, GI Dynamics issued to Crystal Amber a warrant (the &#x201c;2018 Warrant&#x201d;) 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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company has evaluated the guidance ASC 480-10&#xa0;<i>Distinguishing Liabilities from Equity, A</i>SC 815-40&#xa0;<i>Contracts in an Entity&#x2019;s Own Equity&#xa0;</i>and ASC 470-20&#xa0;<i>Debt with Conversion and Other Options</i>&#xa0;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, has been 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 is 26.4%.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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 years ended December 31, 2019 and 2018, the Company recorded accrued interest expense of $91 and $102 thousand, debt discount amortization to interest expense of $146 and $168 thousand and interest expense derived from issuance costs of nil and $85 thousand, respectively.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>March 2019 Convertible Note and Warrant Financing</i></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On March 15, 2019, the Company entered into a Note Purchase Agreement (&#x201c;March 2019 NPA&#x201d;) 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 &#x201c;March 2019 Note&#x201d;) 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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">After the Company obtained stockholder approval to enable Crystal Amber&#x2019;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,&#xa0;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 into 81,070,003 CDIs (representing 1,621,400 shares of common stock) with the principal of $1 million converting to 78,740,157 CDIs (representing 1,574,803 shares of common stock) and the accrued interest of approximately $30 thousand converting to 2,329,846 CDIs (representing 46,597 shares of common stock). As of June 30, 2019, notice of the conversion had been provided by Crystal Amber and the CDIs were issued on July 3, 2019 and have a one-year restriction on trading on the ASX.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Per the March 2019 NPA, the Company agreed to issue a warrant (the &#x201c;March 2019 Warrant&#x201d;) 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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company evaluated the guidance ASC 480-10,&#xa0;<i>Distinguishing Liabilities from Equity, </i>ASC 815-40<i>&#xa0;Contracts in an Entity&#x2019;s Own Equity&#xa0;</i>and ASC 470-20<i>&#xa0;Debt with Conversion and Other Options</i>&#xa0;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.&#xa0;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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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&#x2019;s stockholders receive cash consideration, the Company is obligated under the March 2019 Note to pay all accrued and unpaid interest then due plus 110% of the remaining outstanding unconverted principal balance. If the change of control results in non-cash consideration, Crystal Amber may convert the entire outstanding principal balance under the March 2019 Note and all unpaid accrued interest then due into CDIs at the abovementioned Optional Conversion Price. Other than as described above, the Company may not prepay the March 2019 Note without the consent of Crystal Amber. The Company considers 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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>May 2019 Convertible Note and Warrant Financing</i></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On May 8, 2019, the Company entered into a Note Purchase Agreement (&#x201c;May 2019 NPA&#x201d;) 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 &#x201c;May 2019 Note&#x201d;) 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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">After the Company obtained stockholder approval to enable Crystal Amber&#x2019;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,&#xa0;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 into 237,687,411 CDIs (representing 4,753,748 shares of common stock). The principal of $3.0 million converted to 236,220,472 CDIs (representing 4,724,409 shares of common stock) and the accrued interest of approximately $19 thousand converted to 1,466,939 CDIs (representing 29,339 shares of common stock). As of June 30, 2019, notice of the conversion had been provided by Crystal Amber and the CDIs were issued on July 3, 2019 and have a one-year restriction on trading on the ASX.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Per the May 2019 NPA, the Company agreed to issue a warrant (the &#x201c;May 2019 Warrant&#x201d;) 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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company evaluated the guidance ASC 480-10,&#xa0;<i>Distinguishing Liabilities from Equity, </i>ASC 815-40<i>&#xa0;Contracts in an Entity&#x2019;s Own Equity</i>&#xa0;and ASC 470-20<i>&#xa0;Debt with Conversion and Other Options</i>&#xa0;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.&#xa0;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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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&#x2019;s stockholders receive cash consideration, the Company is obligated under the May 2019 Note to pay all accrued and unpaid interest then due plus 110% of the remaining outstanding unconverted principal balance. If the change of control results in non-cash consideration, Crystal Amber may convert the entire outstanding principal balance under the May 2019 Note and all unpaid accrued interest then due into CDIs at the abovementioned Optional Conversion Price. Other than as described above, the Company may not prepay the May 2019 Note without the consent of Crystal Amber. The Company considers 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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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%.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>August 2019 Share Purchase Agreement (&#x201c;SPA&#x201d;)</i></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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 a senior unsecured convertible promissory note in an aggregate principal amount of approximately $4.6 million, or such lesser amount as may be set forth in a notice delivered by the Company to Crystal Amber (the &#x201c;August 2019 Note&#x201d;), to be funded on December&#xa0;6, 2019, or such earlier or later date as may be requested by the Company (the &#x201c;Funding Date&#x201d;). In conjunction with the August 2019 Note, the Company agreed to issue to Crystal Amber a Warrant (the &#x201c;August 2019 Warrant&#x201d;) to purchase CDIs, subject to the receipt of required stockholder approval approving the issuance of the August 2019 Warrant and the funding of the August 2019 Note (For a detailed description of the exercises and the terms of the exiting warrants and for a description of the August 2019 Warrant, see <i>Note 4 Warrants to purchase common stock or CDIs</i>)</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The August 2019 Note accrues interest at a rate equal to 10% per annum from the 2019 Note Funding Date, compounded annually, other than during the continuance of an event of default, when the August 2019 Note accrues interest at a rate of 16% per annum. The entire outstanding principal balance and all unpaid accrued interest thereon is due on the fifth anniversary of the Funding Date. Subject to the receipt of stockholder approval as required by Rule 10.11 of the ASX Listing Rules, the entire outstanding principal balance under the August 2019 Note and all unpaid accrued interest thereon is convertible into CDIs at the option of Crystal Amber at a conversion price equal to US$0.02 per CDI. In the event that the Company issues additional CDIs to a stockholder other than Crystal Amber in a subsequent equity financing at a price per CDI that is less than the conversion price under the August 2019 Note, the conversion price shall 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 may, at its option, demand that the Company prepay all accrued and unpaid interest plus 110% of the remaining outstanding unconverted principal balance. The Company may not 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 are not obtained, the Company is 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 is six months following the date of the stockholder meeting at which the requisite approvals were not obtained.&#xa0;The Company considers 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 value was considered immaterial upon issuance at all subsequent reporting period ends.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The August 2019 SPA contains 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 contain additional representations and warranties, covenants and conditions, in each case customary for transactions of this type.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Prior to December 6, 2019, GI Dynamics 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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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 conversion feature was immediately available to Crystal Amber. On January 13, 2020, GI Dynamics issued to Crystal Amber the 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).</p><br/> 5000000 0.05 0.08 Subsequently, the entire outstanding principal balance under the 2017 Note and all unpaid accrued interest thereon is 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 of the Company&#x2019;s CDIs traded on the ASX (&#x201c;Optional Conversion Price&#x201d;), or (ii) automatically upon the occurrence of an equity financing in which the Company raises at least $10 million (a &#x201c;Qualified Financing&#x201d;) at the price per CDI of the CDIs issued and sold in such financing. 10000000 1.10 5000000 115000 2019-03-31 394000 248000 257000 43000 0 2023-05-30 1800000 0.10 the entire outstanding principal balance under the 2018 Note and all unpaid accrued interest thereon was immediately convertible into CDIs, at the option of Crystal Amber at an initial conversion price of $0.018 per CDI. Subsequently, the Company issued additional CDIs in an equity financing in September 2018 at a price per CDI of $0.0144, resulting in an adjustment of the conversion price to $0.0144 per CDI. Notice to convert the 2018 Note was provided by Crystal Amber, a Related Party on June 30, 2019. The 2018 Note converted to 134,852,549 CDIs (representing 2,697,050 shares of common stock). 0.018 0.0144 0.0144 The principal of approximately $1.8 million converted to 121,527,778 CDIs (representing 2,430,555 shares of common stock) and the accrued interest of $192 thousand converted to 13,324,772 CDIs (representing 266,495 shares of common stock). As of June 30, 2019, the conversion of the CDIs had been executed, but not yet settled with the CDIs issued and available. The CDIs were issued on July 3, 2019 and have a one-year restriction on trading on the ASX. 97222200 1944444 0.018 0.0144 1400000 743000 1200000 1000000 0.264 91000 102000 146000 168000 85000 1000000 0.10 50000 0.0127 81070003 1621400 1000000 78740157 1574803 30000 2329846 46597 78984823 1579696 0.0127 47244119 944882 600000 31740704 634814 400000 850000 623000 129000 1.10 576000 1400000 1000000 0.294 129000 30000 1000000 3000000 0.10 34000 After the Company obtained stockholder approval to enable Crystal Amber&#x2019;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 into 237,687,411 CDIs (representing 4,753,748 shares of common stock). The principal of $3.0 million converted to 236,220,472 CDIs (representing 4,724,409 shares of common stock) and the accrued interest of approximately $19 thousand converted to 1,466,939 CDIs (representing 29,339 shares of common stock). As of June 30, 2019, notice of the conversion had been provided by Crystal Amber and the CDIs were issued on July 3, 2019 and have a one-year restriction on trading on the ASX. 236220472 4724409 0.0127 125739610 2514792 $1.6 78740157 1574803 $1 3200000 $3 200000 2000000 1.10 1100000 4300000 3000000 0.294 19000 3000000 4600000 0.10 0.02 1.10 4600000 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 conversion feature was immediately available to Crystal Amber. On January 13, 2020, GI Dynamics issued to Crystal Amber the 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). 2024-03-15 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt -0.25in; text-align: justify; text-indent: 0.25in"><b>10. Commitments and Contingencies </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Lease Commitments </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">In June 2016, the Company entered into a non-cancelable agreement to lease approximately 4,200 square feet of office space in Boston, Massachusetts. The lease commenced in June 2016 and expired in April 2018. Rent during the term was approximately $12 thousand per month.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In December 2018, the Company entered into a 6-month membership agreement with WeWork for 985 square feet of office space located in Boston, Massachusetts. The committed lease term expired in May 2019 and contained a two-month cancellation provision. The WeWork agreement contained no explicit or guaranteed extension provisions. At December 31, 2018, there remained approximately $91 thousand of lease obligation, assuming the company did not cancel early.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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 contractually commenced June 1, 2019 and expires on May 31, 2022, but the space was available for occupancy on May 1, resulting in an effective period of May 2019 through May 2022, with no rent payment assessed in May 2019. The lease has defined 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 will be amortized to lease expense and the liability will be reduced by the rent payments over the term of the lease.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company&#x2019;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 had no leases currently classified as finance leases or previously classified as capital leases in either reporting period.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company&#x2019;s operating lease is reflected in the balance sheets. The $102 thousand of lease expense included $7 thousand of common area rent. An additional $3 thousand of tax expense was accrued for property taxes associated with the leased facility. Other information related to leases was as follows:</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center">December 31,</td><td style="font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td style="white-space: nowrap">&#xa0;</td><td style="white-space: nowrap; font-weight: bold">&#xa0;</td> <td colspan="2" style="white-space: nowrap; font-weight: bold; text-align: center">(in thousands)</td><td style="white-space: nowrap; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 88%; text-align: left">Operating cash flows from operating leases in lease liability&#xa0;measurement</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">148</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Operating cash flows from short term leases</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">103</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Remaining long-term lease term in years</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">2.4</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Discount rate</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">10</td><td style="text-align: left">%</td></tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The maturity of the Company&#x2019;s operating lease liability as of December 31, 2019 is as follows:</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="text-align: left">&#xa0;</td><td style="font-weight: bold">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center">December 31,</td><td style="font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td style="text-align: left">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td style="white-space: nowrap; text-align: left">&#xa0;</td><td style="white-space: nowrap; font-weight: bold">&#xa0;</td> <td colspan="2" style="white-space: nowrap; font-weight: bold; text-align: center">(in thousands)</td><td style="white-space: nowrap; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 88%; text-align: left">2020</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">178</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">2021</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">182</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">2022</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">76</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Total future minimum lease payments</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">436</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Less: imputed interest</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(50</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 4pt">Total liabilities</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">386</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">Rent expense on non-cancelable operating leases was approximately $200 and $100 thousand for the years ended December 31, 2019 and 2018, respectively.</p><br/> 4200 The lease commenced in June 2016 and expired in April 2018. 12000 985 The committed lease term expired in May 2019 and contained a two-month cancellation provision. 91000 3520 463000 0.10 102000 7000 3000 200000 100000 <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center">December 31,</td><td style="font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td style="white-space: nowrap">&#xa0;</td><td style="white-space: nowrap; font-weight: bold">&#xa0;</td> <td colspan="2" style="white-space: nowrap; font-weight: bold; text-align: center">(in thousands)</td><td style="white-space: nowrap; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 88%; text-align: left">Operating cash flows from operating leases in lease liability&#xa0;measurement</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">148</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Operating cash flows from short term leases</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">103</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Remaining long-term lease term in years</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">2.4</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Discount rate</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">10</td><td style="text-align: left">%</td></tr> </table> 148000 103000 P2Y146D <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="text-align: left">&#xa0;</td><td style="font-weight: bold">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center">December 31,</td><td style="font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td style="text-align: left">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td style="white-space: nowrap; text-align: left">&#xa0;</td><td style="white-space: nowrap; font-weight: bold">&#xa0;</td> <td colspan="2" style="white-space: nowrap; font-weight: bold; text-align: center">(in thousands)</td><td style="white-space: nowrap; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 88%; text-align: left">2020</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">178</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">2021</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">182</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">2022</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">76</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Total future minimum lease payments</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">436</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Less: imputed interest</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(50</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 4pt">Total liabilities</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">386</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table> 178000 182000 76000 436000 -50000 386000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>11. Stockholders&#x2019; Deficit</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">On December 19, 2019, GI Dynamics stockholders approved an increase of its authorized shares of common stock from 50 million to 75 million.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">As of December 31, 2019, the authorized capital stock of the Company consists of 75.5 million shares, of which 75 million shares are designated as common stock and 500 thousand shares are designated as preferred stock.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">In 2018, the Company received commitments for two private placements to sophisticated and professional investors in Australia, the United States and the United Kingdom, consisting of U.S. and non-U.S. persons (as defined in Regulation S (&#x201c;Regulation S&#x201d;) of the Securities Act of 1933 (the &#x201c;Securities Act&#x201d;) to raise up to approximately $6.6&#xa0;million (the &#x201c;2018 Placements&#x201d;).&#xa0;&#xa0;The first placement (&#x201c;First Quarter 2018 Placement&#x201d;) consisted of a total of 58,780,619 fully paid CDIs of the Company (representing 1,175,612 shares of common stock) at an issue price of A$0.035 per CDI. The issue of CDIs under the First Quarter 2018 Placement occurred in two tranches. The first tranche closed on January&#xa0;22, 2018 (US EST), pursuant to which the Company issued 28,467,063 CDIs (representing 569,341 shares of common stock) resulting in gross proceeds of approximately $781 thousand and related issuance costs of $63 thousand.&#xa0;&#xa0;The closing of the second tranche of the First Quarter 2018 Placement resulted in the raising of $824 thousand and related issuance costs of $40 thousand by the issue of 30,313,556 CDIs (representing 606,271 shares) following stockholder approval granted on February 27, 2018. There were two participants in the First Quarter 2018 Placement second tranche; Crystal Amber Fund, a related party for ASX purposes, purchased 27,391,756 CDIs. A Board member of the Company purchased 2,921,800 CDIs.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">The second placement (&#x201c;Autumn 2018 Placement&#x201d;) consisted of a total of 347,222,250 fully paid CDIs of the Company (representing 6,944,445 shares of common stock) at an issue price of A$0.020 per CDI.&#xa0;&#xa0;The investors in the Autumn 2018 Placement included certain existing investors.&#xa0;&#xa0;The issue of these CDIs occurred in two tranches. The first tranche closed on September 20, 2018 (US EST), pursuant to which the Company issued 150,000,000 CDIs (representing 3,000,000 shares of common stock) resulting in gross proceeds of approximately $2.2 million and related issuance costs of $56 thousand. The closing of the second tranche resulted in the raising of $2.8 million and related issuance costs of $12 thousand by the issue of 197,222,250 CDIs (representing 3,944,445 shares of common stock) following stockholder approval at the adjourned Special Meeting of stockholders on October 29, 2018. There were three participants in the second tranche; Crystal Amber Fund, a related party for ASX purposes, purchased 168,194,450 CDIs. Existing investors in the United States and Australia also purchased 23,819,450 and 5,208,350 CDIs, respectively. All second tranche CDIs were allotted to investors in November 2018.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On June 30, 2019, Crystal Amber converted the 2018 Note to 134,852,549 CDIs (representing 2,697,050 shares of common stock).&#xa0;</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On June 30, 2019, Crystal Amber converted the March 2019 Note to 81,070,003 CDIs (representing 1,621,400 shares of common stock).</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On June 30, 2019, Crystal Amber converted the May 2019 Note to 237,687,411 CDIs (representing 4,753,748 shares of common stock). &#xa0;</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On August 25, 2019, Crystal Amber exercised the 2018 Warrant totaling 97,222,200 CDIs (representing 1,944,444 shares of common stock) and a portion of the March 2019 Warrant totaling 47,244,119 CDIs (equivalent to approximately 944,882 shares of common stock) for an aggregate cash payment of $2 million.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On September 30, 2019, Crystal Amber exercised the remaining March 2019 Warrant totaling 31,740,704 CDIs (equivalent to 634,814 shares of common stock) and a portion of the May 2019 Warrant totaling 125,739,610 CDIs (equivalent to 2,514,792 shares of common stock) for an aggregate cash payment of $1.6 million. As of September 30, 2019, this was recorded as common stock &#x2013; subscribed but unissued and the cash was received on October 1, 2019.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On October 31, 2019, Crystal Amber exercised another portion of May 2019 Warrant totaling 78,740,157 CDIs (equivalent to approximately 1,574,803 shares of common stock) for an aggregate cash payment of $1 million. Cash was received on October 31, 2019.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On November 15, 2019, Crystal Amber exercised the final portion of May 2019 Warrant totaling 31,740,704 CDIs (equivalent to approximately 634,814 shares of common stock) for an aggregate cash payment of approximately $403 thousand. Cash was received on November 15, 2019.</p><br/> 50000000 75000000 75500000 500000 2 6600000 58780619 1175612 0.035 28467063 569341 781000 63000 824000 40000 30313556 606271 27391756 2921800 347222250 6944445 0.020 150000000 3000000 2200000 56000 2800000 12000 197222250 3944445 168194450 23819450 5208350 134852549 2697050 81070003 1621400 237687411 4753748 97222200 1944444 47244119 944882 2000000 31740704 634814 125739610 2514792 1600000 78740157 1574803 1000000 31740704 634814 403000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>12. Share-Based Compensation </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">The Company has two stock-based compensation plans. The Board of Directors adopted the 2003 Omnibus Stock Plan (the &#x201c;2003 Plan&#x201d;), which provides for the grant of qualified incentive stock options and nonqualified stock options or other awards to the Company&#x2019;s employees, officers, directors, advisors, and outside consultants to purchase up to an aggregate of 922,086 shares of the Company&#x2019;s common stock.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">In August 2011, the Board of Directors adopted the 2011 Employee, Director and Consultant Equity Incentive Plan (the &#x201c;2011 Plan&#x201d;, together with the 2003 Plan, the &#x201c;Plans&#x201d;) 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. The Company had initially reserved 450 thousand shares of its common stock for issue under the 2011 Plan. Awards that are returned to the Company&#x2019;s 2003 Plan as a result of their forfeiture, expiration or cancellation without delivery of common stock shares or that result in the forfeiture of shares back to the Company on or after August&#xa0;1, 2011, the date the 2011 Plan became effective, are automatically made available for issuance under the 2011 Plan. At August&#xa0;1, 2011, 80,235 shares available for grant under the 2003 Plan were transferred to the 2011 Plan. As of December 31, 2019, an additional 1,173,917 shares of common stock were made available for grant under the Company&#x2019;s 2011 Plan.&#xa0;</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">In addition, the 2011 Plan allows for an annual increase in the number of shares available for issue under the 2011 Plan commencing on the first day of each fiscal year during the period beginning in fiscal year 2012 and ending in fiscal year 2020. The annual increase in the number of shares shall be equal to the lowest of:</p><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><tr style="vertical-align: top; text-align: justify"> <td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><font>&#xb7;</font></td><td style="text-align: justify">500 thousand shares;</td> </tr></table><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><tr style="vertical-align: top; text-align: justify"> <td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><font>&#xb7;</font></td><td style="text-align: justify">4% of the number of common shares outstanding as of such date; and</td> </tr></table><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><tr style="vertical-align: top; text-align: justify"> <td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><font>&#xb7;</font></td><td style="text-align: justify">an amount determined by the Board of Directors or the Company&#x2019;s compensation committee. Accordingly, during year ended December 31, 2019, 500 thousand shares were added to the 2011 Plan. During the year ended December 31, 2018, the board of directors elected to not add shares to the 2011 Plan, thereby reserving shares for other purposes.</td> </tr></table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Stock-Based Compensation </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">Stock-based compensation is reflected in the consolidated statements of operations as follows for the years ended December 31, 2019 and 2018 (in thousands):</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Years Ended <br /> December&#xa0;31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%; text-align: left">Research and development</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">77</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">6</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Sales and marketing</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">23</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">General and administrative</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">311</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">95</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 4pt">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">388</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">124</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">The stock options granted under the Plans generally vest over a four-year period and expire ten years from the date of grant.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">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, 2019 and 2018:</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Years Ended <br /> December&#xa0;31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%; text-align: left">Expected volatility</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">271.0</td><td style="width: 1%; text-align: left">%</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">120.7</td><td style="width: 1%; text-align: left">%</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Expected term (in years)</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">6.05</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">6.05</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Risk-free interest rate</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">1.8</td><td style="text-align: left">%</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">2.6</td><td style="text-align: left">%</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Expected dividend yield</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">0</td><td style="text-align: left">%</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">0</td><td style="text-align: left">%</td></tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Expected Volatility </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">Volatility measures the amount that a stock price has fluctuated or is expected to fluctuate during a period. As the Company was not publicly traded prior to September 2011 and therefore had no trading history, stock price volatility was estimated based on an analysis of historical and implied volatility of comparable public companies. The Company&#x2019;s quoted publicly traded CDI price is used as a basis for calculating estimated volatility when there exists adequate history.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Expected Term </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">The Company has limited historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock option grants. As a result, for stock option grants made during the years ended December 31, 2019 and 2018, the expected term was estimated using the &#x201c;simplified method.&#x201d; The simplified method is based on the average of the contractual term of the option and the weighted-average vesting period of the option. For options granted to non-employees, the Company used the remaining contractual life of the award to estimate the expected term of non-employee awards for the years ended December 31, 2019 and 2018.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Risk-Free Interest Rate </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">The risk-free interest rate used for each grant is based on the US Treasury published rate for a zero-coupon U.S. Treasury instrument with a remaining term similar to the expected term of the stock-based award.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Expected Dividend Yield </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">The Company has not paid and does not anticipate paying cash dividends on its shares of common stock in the foreseeable future; therefore, the expected dividend yield is assumed to be zero.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Stock Options </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">The following table summarizes share-based activity under the Company&#x2019;s stock option plans:</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Shares of<br /> Common<br /> Stock<br /> Attributable<br /> to Options</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted-<br /> Average<br /> Exercise<br /> Price</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted-<br /> Average<br /> Fair Value per Share at Grant date</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted-<br /> Average<br /> Contractual<br /> Life</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Aggregate<br /> Intrinsic<br /> Value</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td>&#xa0;</td> <td colspan="2">&#xa0;</td><td>&#xa0;</td><td>&#xa0;</td> <td colspan="2">&#xa0;</td><td>&#xa0;</td><td style="font-style: italic">&#xa0;</td> <td colspan="2" style="font-style: italic; text-align: center">(in years)</td><td style="font-style: italic">&#xa0;</td><td style="font-style: italic">&#xa0;</td> <td colspan="2" style="font-style: italic; text-align: center">(in years)</td><td style="font-style: italic">&#xa0;</td><td style="font-style: italic">&#xa0;</td> <td colspan="2" style="white-space: nowrap; font-style: italic; text-align: center">(in&#xa0;thousands)</td><td style="font-style: italic">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 40%">Outstanding at December&#xa0;31, 2018</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">1,142,883</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2.24</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2.20</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">8.48</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">&#x2014;</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-left: 0.125in; text-indent: 0">Granted</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">1,994,771</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">1.08</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">0.23</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; text-indent: 0">Exercised</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-left: 0.125in; text-indent: 0">Cancelled</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(41,500</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="padding-bottom: 1.5pt; text-align: left">$</td><td style="padding-bottom: 1.5pt; text-align: right">0.91</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="padding-bottom: 1.5pt; text-align: left">$</td><td style="padding-bottom: 1.5pt; text-align: right">0.91</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt; text-align: right">&#xa0;</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt; text-align: right">&#xa0;</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 4pt">Outstanding at December&#xa0;31, 2019</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">3,096,154</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">1.47</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">1.50</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">8.30</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">&#x2014;</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">Vested or expected to vest at December&#xa0;31, 2019</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">3,096,154</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#xa0;</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#xa0;</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#xa0;</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#x2014;</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 4pt">Exercisable at December&#xa0;31, 2019</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">685,015</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">2.86</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">0.04</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">7.10</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">&#x2014;</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table><br/><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The majority of the Company&#x2019;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 2019 and 2018, was $1.04 and $0.97, respectively. The unrecognized stock compensation expense at December 31, 2019 was $2.4 million and was expected to be recognized over a weighted average period of 3.26 years from December 31, 2019.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Performance Stock Units</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">Each performance stock unit (&#x201c;PSU&#x201d;) represents a contingent right to receive one share of the Company&#x2019;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&#x2019;s common stock. During the years ended December 31, 2019 and 2018, the Company awarded no PSUs to employees and directors of the Company. Due to the resignation of an employee, one grant of 142,659 PSUs was cancelled in 2018.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">The following table summarizes information related to PSU activity during the year ended December 31, 2019:</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Number<br /> of Units</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted-<br /> Average<br /> Contractual<br /> Life</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Aggregate<br /> Intrinsic<br /> Value</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td>&#xa0;</td> <td colspan="2">&#xa0;</td><td>&#xa0;</td><td style="font-style: italic">&#xa0;</td> <td colspan="2" style="font-style: italic; text-align: center">(in years)</td><td style="font-style: italic">&#xa0;</td><td style="font-style: italic">&#xa0;</td> <td colspan="2" style="font-style: italic; text-align: center">(in&#xa0;thousands)</td><td style="font-style: italic">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 64%">Outstanding at December&#xa0;31, 2018</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">250,000</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">7.23</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">141</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-left: 0.125in; text-indent: 0">Granted</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; text-indent: 0">Exercised</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-left: 0.125in; text-indent: 0">Cancelled</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#x2014;</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: right">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#xa0;</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: right">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#xa0;</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 4pt">Outstanding at December&#xa0;31, 2019</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">250,000</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">6.23</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">149</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">The aggregate intrinsic value at December 31, 2019 noted in the table above represents the closing price of the Company&#x2019;s common stock multiplied by the number of PSUs outstanding. The fair value of each PSU award equals the closing price of the Company&#x2019;s common stock on the date of grant.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">At December 31, 2019, 250,000 of the PSUs outstanding vest on the achievement of certain milestones. When achievement of the milestone is deemed probable, the Company will expense the compensation of the respective stock award over the implicit service period.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">During the years ended December 31, 2019 and 2018, the Company recognized no stock-based compensation related to performance-based vesting of PSUs.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">As of December 31, 2019, there was approximately $200 thousand of unrecognized stock-based compensation expense related to non-vested PSU awards that have performance-based vesting.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Non-employee awards </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company has recorded non-employee stock-based compensation expense of approximately $26 thousand and $20 thousand during the years ended December 31, 2019 and 2018, respectively, which is included in the total stock-based compensation expense. The unrecognized compensation expense associated with outstanding non-employee grants was $0 and $180 thousand at December 31, 2019 and 2018, respectively.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On October 29, 2019, the Company&#x2019;s Board of Directors approved, subject to stockholder approval per ASX Listing Rule 10.14, the grant of stock options (&#x201c;NED Options&#x201d;) conferring the right to purchase up to 30,000 shares of the Company&#x2019;s common stock to each of the Company&#x2019;s four non-executive directors pursuant to the Company&#x2019;s 2011 Plan. The exercise price is $1.34 per share of common stock and the NED Options will vest in full on October 29, 2020 if the individual remains a director of the Company through that date. The NED Options will vest immediately on a change in control event. The NED Options are immediately exercisable, subject to repurchase rights if purchased prior to vesting. The NED Options will be cancelled immediately upon termination of service as a director, unless such termination is the result of a defined change in control event, in which case the NED Options will be cancelled 12 months after such termination. On December 16, 2019, stockholders approved the NED Options.</p><br/> 2 922086 450000 80235 1173917 500000 0.04 500000 P10Y 0 0.25 1.04 0.97 2400 P3Y94D 1 142659 250000 200000 26000 20000 0 180000 30000 1.34 <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Years Ended <br /> December&#xa0;31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%; text-align: left">Research and development</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">77</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">6</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Sales and marketing</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">23</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">General and administrative</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">311</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">95</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 4pt">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">388</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">124</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table> 77000 6000 23000 311000 95000 388000 124000 <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Years Ended <br /> December&#xa0;31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%; text-align: left">Expected volatility</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">271.0</td><td style="width: 1%; text-align: left">%</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">120.7</td><td style="width: 1%; text-align: left">%</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Expected term (in years)</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">6.05</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">6.05</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Risk-free interest rate</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">1.8</td><td style="text-align: left">%</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">2.6</td><td style="text-align: left">%</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Expected dividend yield</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">0</td><td style="text-align: left">%</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">0</td><td style="text-align: left">%</td></tr> </table> 2.710 1.207 P6Y18D P6Y18D 0.018 0.026 0.00 0.00 <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Shares of<br /> Common<br /> Stock<br /> Attributable<br /> to Options</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted-<br /> Average<br /> Exercise<br /> Price</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted-<br /> Average<br /> Fair Value per Share at Grant date</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted-<br /> Average<br /> Contractual<br /> Life</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Aggregate<br /> Intrinsic<br /> Value</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td>&#xa0;</td> <td colspan="2">&#xa0;</td><td>&#xa0;</td><td>&#xa0;</td> <td colspan="2">&#xa0;</td><td>&#xa0;</td><td style="font-style: italic">&#xa0;</td> <td colspan="2" style="font-style: italic; text-align: center">(in years)</td><td style="font-style: italic">&#xa0;</td><td style="font-style: italic">&#xa0;</td> <td colspan="2" style="font-style: italic; text-align: center">(in years)</td><td style="font-style: italic">&#xa0;</td><td style="font-style: italic">&#xa0;</td> <td colspan="2" style="white-space: nowrap; font-style: italic; text-align: center">(in&#xa0;thousands)</td><td style="font-style: italic">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 40%">Outstanding at December&#xa0;31, 2018</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">1,142,883</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2.24</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2.20</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">8.48</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">&#x2014;</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-left: 0.125in; text-indent: 0">Granted</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">1,994,771</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">1.08</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">0.23</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; text-indent: 0">Exercised</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-left: 0.125in; text-indent: 0">Cancelled</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(41,500</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="padding-bottom: 1.5pt; text-align: left">$</td><td style="padding-bottom: 1.5pt; text-align: right">0.91</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="padding-bottom: 1.5pt; text-align: left">$</td><td style="padding-bottom: 1.5pt; text-align: right">0.91</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt; text-align: right">&#xa0;</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt; text-align: right">&#xa0;</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 4pt">Outstanding at December&#xa0;31, 2019</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">3,096,154</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">1.47</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">1.50</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">8.30</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">&#x2014;</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">Vested or expected to vest at December&#xa0;31, 2019</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">3,096,154</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#xa0;</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#xa0;</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#xa0;</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#x2014;</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 4pt">Exercisable at December&#xa0;31, 2019</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">685,015</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">2.86</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">0.04</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">7.10</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">&#x2014;</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table> 1142883 2.24 2.20 P8Y175D 1994771 1.08 0.23 -41500 0.91 0.91 3096154 1.47 1.50 P8Y109D 3096154 685015 2.86 0.04 P7Y36D <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Number<br /> of Units</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Weighted-<br /> Average<br /> Contractual<br /> Life</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Aggregate<br /> Intrinsic<br /> Value</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td>&#xa0;</td> <td colspan="2">&#xa0;</td><td>&#xa0;</td><td style="font-style: italic">&#xa0;</td> <td colspan="2" style="font-style: italic; text-align: center">(in years)</td><td style="font-style: italic">&#xa0;</td><td style="font-style: italic">&#xa0;</td> <td colspan="2" style="font-style: italic; text-align: center">(in&#xa0;thousands)</td><td style="font-style: italic">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 64%">Outstanding at December&#xa0;31, 2018</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">250,000</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">7.23</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">141</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-left: 0.125in; text-indent: 0">Granted</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; text-indent: 0">Exercised</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-left: 0.125in; text-indent: 0">Cancelled</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#x2014;</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: right">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#xa0;</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: right">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#xa0;</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 4pt">Outstanding at December&#xa0;31, 2019</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">250,000</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">6.23</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">149</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table> 250000 P7Y83D 141000 250000 P6Y83D 149000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>13. Retirement Plans </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">The Company has a 401(k) retirement and savings plan (&#x201c;401(k) Plan&#x201d;) 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&#x2019;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 $48 and $24 thousand for the years ended December 31, 2019 and 2018, respectively.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">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 $9 and $12 thousand for the years ended December 31, 2019 and 2018, respectively, under this plan. &#xa0;</p><br/> 1.00 48000 24000 1.00 9000 12000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>14. Income Taxes</b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">The components of loss before provision for income taxes consisted of the following (in thousands):</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Years Ended <br /> December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%">Domestic</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(17,376</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(8,054</td><td style="width: 1%; text-align: left">)</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 1.5pt">Foreign</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">88</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">29</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 4pt">Total</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(17,288</td><td style="padding-bottom: 4pt; text-align: left">)</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(8,025</td><td style="padding-bottom: 4pt; text-align: left">)</td></tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">The components of the provision for income taxes in the accompanying consolidated statements of operations consisted of the following (in thousands):</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Years Ended <br /> December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>Current Provision:</td><td>&#xa0;</td> <td colspan="2">&#xa0;</td><td>&#xa0;</td><td>&#xa0;</td> <td colspan="2">&#xa0;</td><td>&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; text-indent: 0">Federal</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-left: 0.125in; text-indent: 0; width: 76%">State</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">1</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">1</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; text-indent: 0">Foreign</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">42</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">13</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 4pt">Total current</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">43</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">14</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td>&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Deferred (Benefit) Provision:</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; text-indent: 0">Federal</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-left: 0.125in; text-indent: 0">State</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; text-indent: 0">Foreign</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">2</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(1</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 1.5pt">Total deferred</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">2</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(1</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 4pt">Total provision</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">45</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">13</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">A reconciliation of the provision for income taxes from operations computed using the U.S. federal statutory rate of 21% to that reflected in operations follows (in thousands):</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Years Ended <br /> December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%; text-align: left">Income tax benefit using U.S. federal statutory rate</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(3,624</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(1,675</td><td style="width: 1%; text-align: left">)</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">State rate, net of federal benefit</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">(631</td><td style="text-align: left">)</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">(438</td><td style="text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Permanent differences</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-left: 0.125in; text-indent: 0">Nondeductible interest</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">1,052</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">36</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; text-indent: 0">Warrants</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">353</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-left: 0.125in; text-indent: 0">GILTI</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">8</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; text-indent: 0">Meals and entertainment</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">6</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">3</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-left: 0.125in; text-indent: 0">Other</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">2</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">1</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Tax credits generated</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">(147</td><td style="text-align: left">)</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">(45</td><td style="text-align: left">)</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Change in valuation allowance</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">2,888</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">2,041</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Foreign rate differential</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">4</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">3</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Other items</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">96</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">63</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Stock compensation</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">38</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">24</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 4pt">Total provision</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">45</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">13</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table><br/><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Significant components of the Company&#x2019;s deferred tax assets and liabilities are as follows (in thousands):</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>Deferred tax assets:</td><td>&#xa0;</td> <td colspan="2" style="text-align: right">&#xa0;</td><td>&#xa0;</td><td>&#xa0;</td> <td colspan="2" style="text-align: right">&#xa0;</td><td>&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; text-indent: 0; width: 76%">Net operating loss carryforwards</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">66,859</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">63,881</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-left: 0.125in; text-indent: 0">Research and development credit carryforwards</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">4,083</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">4,026</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; text-indent: 0">Capitalized research and development costs</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">123</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-left: 0.125in; text-indent: 0">Capitalized start-up expenses</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">2,133</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">2,490</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; text-indent: 0">Depreciation and other</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">635</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">305</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Total deferred tax assets</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">73,710</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">70,825</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Valuation allowance</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(73,703</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(70,815</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 4pt">Net deferred tax asset</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">7</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">10</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">Management of the Company has evaluated the positive and negative evidence bearing upon the realizability of the Company&#x2019;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 $73.7 million and $70.8&#xa0;million was established at December 31, 2019 and 2018, respectively. The valuation allowance increased by approximately $2.9&#xa0;million during the year ended December 31, 2019, primarily due to the benefit of the current year tax loss. During the year ended December 31, 2019, the Company utilized its remaining carryforward net operating losses in the Netherlands. No valuation allowance is recorded against the net deferred tax assets in Australia related to future tax benefits that will offset future taxable income.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">At December 31, 2019, the Company had U.S. federal and state net operating loss carryforwards of approximately $248.8 million and $231.1 million, respectively. These operating loss carryforwards will expire at various times beginning in 2024 through 2038 for federal purposes and begin to expire in 2030 and will continue to expire through 2039 for state purposes. Note that the $25.8 million net operating losses incurred in 2018 and 2019 can be carried forward indefinitely for federal purposes.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">In addition, at December 31, 2019, the Company also has U.S. federal and state research and development tax credit carryforwards (excluding ASC 740, <i>Income Taxes </i>(&#x201c;ASC 740&#x201d;), reserve) of approximately $3.8&#xa0;million and $2.0&#xa0;million, respectively, available to offset future income taxes. These tax credit carryforwards will expire at various times beginning in 2023 through 2038 for federal purposes and will expire at various times beginning in 2019 through 2034 for state purposes.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">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&#x2019;s research and development credit carryforwards. A full valuation allowance has been provided against the Company&#x2019;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.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">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 Sections&#xa0;382 and 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&#xa0;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&#xa0;382 or could result in a change in control in the future. As of December 31, 2019, the Company has not, as yet, conducted an IRC Section&#xa0;382 study, which could impact its ability to utilize net operating loss and tax credit carryforwards annually in the future to offset the Company&#x2019;s taxable income, if any.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">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, 2019 and 2018, the Company had unrecognized tax liabilities of approximately $1.5&#xa0;million and $1.5 million, respectively.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">The following is a roll forward of the Company&#x2019;s unrecognized tax benefits (in thousands):</p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%; text-align: left">Unrecognized tax benefit &#x2013; as of the beginning of the year</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">1,462</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">1,481</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Gross decreases &#x2013; expiration of underlying tax asset</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">(21</td><td style="text-align: left">)</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">(35</td><td style="text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Gross increases &#x2013; current period tax positions</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">39</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">16</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 1.5pt; text-align: left">Unrecognized tax benefits &#x2013; as of the end of the year</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,480</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,462</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">The Company will recognize interest and penalties related to uncertain tax positions, should they be assessed, in income tax expense. As of December 31, 2019, and 2018, the Company had no accrued interest or penalties related to uncertain tax positions, and no amounts have been recognized in the Company&#x2019;s consolidated statements of operations.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: .5in">The statute of limitations for assessment by the Internal Revenue Service (&#x201c;IRS&#x201d;) and state tax authorities is open for tax years ended December 31, 2016&#xa0; through December&#xa0;31, 2019, although carryforward attributes that were generated prior to tax year 2016 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, 2015 through December&#xa0;31, 2019. There are currently no foreign, federal or state audits in progress.</p><br/> 0.21 73700000 70800000 2900000 248800000 231100000 2024 2038 2030 2039 25800000 25800000 3800000 2000000 <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Years Ended <br /> December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%">Domestic</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(17,376</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(8,054</td><td style="width: 1%; text-align: left">)</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 1.5pt">Foreign</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">88</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">29</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 4pt">Total</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(17,288</td><td style="padding-bottom: 4pt; text-align: left">)</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(8,025</td><td style="padding-bottom: 4pt; text-align: left">)</td></tr> </table> -17376000 -8054000 88000 29000 <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Years Ended <br /> December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>Current Provision:</td><td>&#xa0;</td> <td colspan="2">&#xa0;</td><td>&#xa0;</td><td>&#xa0;</td> <td colspan="2">&#xa0;</td><td>&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; text-indent: 0">Federal</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-left: 0.125in; text-indent: 0; width: 76%">State</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">1</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">1</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; text-indent: 0">Foreign</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">42</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">13</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 4pt">Total current</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">43</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">14</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td>&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Deferred (Benefit) Provision:</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; text-indent: 0">Federal</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-left: 0.125in; text-indent: 0">State</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; text-indent: 0">Foreign</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">2</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(1</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 1.5pt">Total deferred</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">2</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(1</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 4pt">Total provision</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">45</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">13</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table> 1000 1000 42000 13000 43000 14000 2000 -1000 2000 -1000 <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Years Ended <br /> December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%; text-align: left">Income tax benefit using U.S. federal statutory rate</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(3,624</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(1,675</td><td style="width: 1%; text-align: left">)</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">State rate, net of federal benefit</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">(631</td><td style="text-align: left">)</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">(438</td><td style="text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Permanent differences</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-left: 0.125in; text-indent: 0">Nondeductible interest</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">1,052</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">36</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; text-indent: 0">Warrants</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">353</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-left: 0.125in; text-indent: 0">GILTI</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">8</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; text-indent: 0">Meals and entertainment</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">6</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">3</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-left: 0.125in; text-indent: 0">Other</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">2</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">1</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Tax credits generated</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">(147</td><td style="text-align: left">)</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">(45</td><td style="text-align: left">)</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Change in valuation allowance</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">2,888</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">2,041</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left">Foreign rate differential</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">4</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">3</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Other items</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">96</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">63</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Stock compensation</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">38</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">24</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 4pt">Total provision</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">45</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">13</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table> -3624000 -1675000 -631000 -438000 1052000 36000 353000 8000 6000 3000 2000 1000 147000 45000 2888000 2041000 4000 3000 96000 63000 38000 24000 <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>Deferred tax assets:</td><td>&#xa0;</td> <td colspan="2" style="text-align: right">&#xa0;</td><td>&#xa0;</td><td>&#xa0;</td> <td colspan="2" style="text-align: right">&#xa0;</td><td>&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; text-indent: 0; width: 76%">Net operating loss carryforwards</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">66,859</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">63,881</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-left: 0.125in; text-indent: 0">Research and development credit carryforwards</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">4,083</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">4,026</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; text-indent: 0">Capitalized research and development costs</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#x2014;</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">123</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-left: 0.125in; text-indent: 0">Capitalized start-up expenses</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">2,133</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">2,490</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; text-indent: 0">Depreciation and other</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">635</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">305</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Total deferred tax assets</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">73,710</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">70,825</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Valuation allowance</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(73,703</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(70,815</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 4pt">Net deferred tax asset</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">7</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">10</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table> 66859000 63881000 4083000 4026000 123000 2133000 2490000 635000 305000 73710000 70825000 73703000 70815000 7000 10000 <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td>&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%; text-align: left">Unrecognized tax benefit &#x2013; as of the beginning of the year</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">1,462</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">1,481</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left">Gross decreases &#x2013; expiration of underlying tax asset</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">(21</td><td style="text-align: left">)</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">(35</td><td style="text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1.5pt">Gross increases &#x2013; current period tax positions</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">39</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">16</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="padding-bottom: 1.5pt; text-align: left">Unrecognized tax benefits &#x2013; as of the end of the year</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,480</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,462</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> </table> 1462000 1481000 -21000 -35000 39000 16000 1480000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>15. Subsequent Events </b></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On January 13, 2020, GI Dynamics received approximately $4.6 million pursuant to the August 2019 Note. On receipt of funds, the August 2019 Note became convertible per the August 2019 Note terms (see Note 9), and GI Dynamics issued the August 2019 Warrant (see Notes 4 and 9).</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On March 11, 2020, the World Health Organization declared the outbreak of a coronavirus (COVID-19) a pandemic. As a result, economic uncertainties have arisen which are likely to negatively impact GI Dynamics short term-operations, for example in delays in timing of regulatory audits and in facing enrollment pauses in clinical trials. If the impacts are limited in duration, the Company anticipates an ability to overcome delays and return to original timing estimates, but there can be no guarantee the impacts will be limited to the degree required. Additionally, market-level impacts may affect the timing or the negotiation of terms in the Company&#x2019;s financing efforts. Other financial impacts could occur though such potential impact is unknown at this time.</p><br/> 4600000