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What changed in Vyome Holdings, Inc's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Vyome Holdings, Inc's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+605 added−324 removedSource: 10-K (2025-04-04) vs 10-K (2024-04-01)

Top changes in Vyome Holdings, Inc's 2024 10-K

605 paragraphs added · 324 removed · 230 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

116 edited+35 added−43 removed118 unchanged
Biggest changeMarket Opportunity Given the limitations of behavioral modification, pharmaceutical therapy and traditional bariatric surgical approaches, we believe there is a substantial need for patient-friendly, safer, effective and durable solutions that: ● provide proven, long-term weight loss; ● preserve normal anatomy; ● are adjustable in an office setting for individual patient needs and long term efficacy; ● are “non-punitive” in that they support continued ingestion and digestion of foods and micronutrients such as vitamins and minerals found in a typical, healthy diet while allowing the user to modify his or her eating behavior appropriately without inducing punitive physical restrictions that physically force a limitation of food intake; ● diminish undesirable side-effects; 6 Table of Contents ● facilitate outpatient surgical procedures; ● minimize the risks of re-operations, malnutrition and mortality; ● reduce the natural hunger drive of patients; and ● are reversible, if necessary or desired, while preserving anatomy.
Biggest changeThey also compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and subject registration for clinical trials, as well as in acquiring technologies and technology licenses complementary to our programs or advantageous to our business. ​ We believe that the principal competitive factors in our market include: ​ ● acceptance by healthcare professionals, patients and payers; ​ ● published rates of safety and efficacy; ​ ● reliability and high-quality performance; ​ ● effectiveness at controlling and/or resolving comorbidities such as diabetes and hypertension; ​ ● invasiveness and the inherent reversibility of the procedure or device; ​ ● cost and average selling price of products and relative rates of reimbursement; ​ ● effective marketing, training, education, sales and distribution; ​ ● regulatory and reimbursement expertise; ​ ● technological leadership and superiority; ​ ● speed of product innovation and time to market. ​ ​ Many of our competitors are larger than we are, and they may enjoy several competitive advantages over us, including: ​ ● stronger name recognition; ​ ● existing relations with healthcare professionals, customers and third-party payers; ​ ● established distribution networks; ​ ● significant experience in research and development, manufacturing, preclinical testing, clinical trials, obtaining regulatory approvals, obtaining reimbursement and marketing approved products; and ● greater financial and human resources. ​ ​ As a result, we cannot assure you that we will be able to compete effectively against these companies or their products. ​ 9 Table of Contents Market Opportunity ​ Given the limitations of behavioral modification, pharmaceutical therapy and traditional bariatric surgical approaches, we believe there is a substantial need for patient-friendly, safer, effective and durable solutions that: ​ ● provide proven, long-term weight loss; ​ ● preserve normal anatomy; ​ ● are adjustable in an office setting for individual patient needs and long term efficacy; ​ ● are “non-punitive” in that they support continued ingestion and digestion of foods and micronutrients such as vitamins and minerals found in a typical, healthy diet while allowing the user to modify his or her eating behavior appropriately without inducing punitive physical restrictions that physically force a limitation of food intake; ​ ● diminish undesirable side-effects; ​ ● facilitate outpatient surgical procedures; ​ ● minimize the risks of re-operations, malnutrition and mortality; ​ ● reduce the natural hunger drive of patients; and ​ ● are reversible, if necessary or desired, while preserving anatomy. ​ ​ Our Intellectual Property ​ In order to remain competitive, we must develop and maintain protection of the proprietary aspects of our technologies.
Unlike more invasive and anatomy altering surgeries, the Lap-Band 2.0 is adjustable postoperatively to increase or decrease the pressure to the band in order to optimize an individual’s comfort and therapy effectiveness. The Lap-Band 2.0 system includes a reservoir technology designed to minimize postoperative in-office patient band adjustments, thereby potentially improving an individual’s tolerance for the Lap-Band 2.0.
Unlike more invasive and anatomy altering surgeries, the Lap-Band 2.0 is adjustable postoperatively to increase or decrease the pressure to the band in order to optimize an individual’s comfort and therapy effectiveness. The Lap-Band 2.0 system includes a FLEX reservoir technology designed to minimize postoperative in-office patient band adjustments, thereby potentially improving an individual’s tolerance for the Lap-Band 2.0.
Hickey joined ReShape as President and Chief Executive Officer. Under this new leadership, the Company has pivoted its business strategy with the intent of helping to ensure growth and profitability. The Company has executed the following three growth strategies, or pillars for growth: • Growth Pillar I: Executing disciplined, metrics-driven business operations.
Hickey joined ReShape as President and Chief Executive Officer. Under this new leadership, our Company has pivoted its business strategy with the intent of helping to ensure growth and profitability. Our Company has executed the following three growth strategies, or pillars for growth: ● Growth Pillar I: Executing disciplined, metrics-driven business operations.
ReShape Obalon Balloon - The ReShape Obalon® Balloon system is the first and only swallowable, gas filled, FDA-approved balloon system. In 2023 the Company established an OEM partnership with Biorad Medisys (“Biorad”), based in India that will support the successful relaunch and commercialization of the balloon system.
ReShape Obalon Balloon — The ReShape Obalon® Balloon system is the first and only swallowable, gas filled, FDA-approved balloon system. In 2023 our company established an OEM partnership with Biorad Medisys (“Biorad”), based in India that will support the successful relaunch and commercialization of the balloon system.
Lap-Band 2.0 System The Lap-Band 2.0, like the original Lap-Band System, is designed to provide minimally invasive long-term treatment of severe obesity and is an alternative to more invasive surgical stapling procedures such as the gastric bypass or sleeve gastrectomy.
Lap-Band 2.0 FLEX System The Lap-Band 2.0 FLEX, like the original Lap-Band System, is designed to provide minimally invasive long-term treatment of severe obesity and is an alternative to more invasive surgical stapling procedures such as the gastric bypass or sleeve gastrectomy.
The EU allows a transition period from Directive 93/42/EEC and Directive 90/385/EEC to Regulation (EU) 2017/745, that will end 26 May 2024. 12 Table of Contents Article 120(3) of the Medical Device Regulation (EU) 2017/745 (MDR), last amended by Regulation (EU) 2023/607, states that devices which continue to comply with the AIMDD or MDD may be placed on the market or put into service until 31 December 2027 for Class IIb implantable (Lap-Band and Obalon Balloon System), or 31 December 2028 for Class IIa devices (ReShape Calibration Tubes, provided the conditions set out in Article 120(3c) MDR are fulfilled.
The EU allows a transition period from Directive 93/42/EEC and Directive 90/385/EEC to Regulation (EU) 2017/745, that will end 26 May 2024. ​ Article 120(3) of the Medical Device Regulation (EU) 2017/745 (MDR), last amended by Regulation (EU) 2023/607, states that devices which continue to comply with the AIMDD or MDD may be placed on the market or put into service until 31 December 2027 for Class IIb implantable (Lap-Band and Obalon Balloon System), or 31 December 2028 for Class IIa devices (ReShape Calibration Tubes, provided the conditions set out in Article 120(3c) MDR are fulfilled.
DBSN Device - ReShape remains committed to furthering our proprietary Diabetes Bloc-Stim Neuromodulation (DBSN TM ) technology that can potentially reduce the dependence on medications by those with type 2 diabetes. The DBSN TM device is a technology under development as a new treatment for type 2 diabetes mellitus.
DBSN Device — ReShape remains committed to furthering our proprietary Diabetes Bloc-Stim Neuromodulation (DBSNTM) technology that can potentially reduce the dependence on medications by those with type 2 diabetes. The DBSN device is a technology under development as a new treatment for type 2 diabetes mellitus.
Combination therapies comprising GLP-1s and other gastric surgeries, including the Lap-Band, are being prescribed today, to help those who have plateaued with their weight loss. ​ Our Product Portfolio Lap-Band System The Lap-Band System is designed to provide minimally invasive long-term treatment of severe obesity and is an alternative to more invasive surgical stapling procedures such as the gastric bypass or sleeve gastrectomy.
Combination therapies comprising GLP-1s and other gastric surgeries, including the Lap-Band, are being prescribed today, to help those who have plateaued with their weight loss. 3 Table of Contents Our Product Portfolio Lap-Band System The Lap-Band System is designed to provide minimally invasive long-term treatment of severe obesity and is an alternative to more invasive surgical stapling procedures such as the gastric bypass or sleeve gastrectomy.
As regards Article 114 of the Treaty on the Functioning of the European Union (TFEU), this Regulation harmonises the rules for the placing on the market and putting into service of medical devices and their accessories on the Union market thus allowing them to benefit from the principle of free movement of goods.
As regards Article 114 of the Treaty on the Functioning of the European Union (TFEU), this Regulation harmonizes the rules for the placing on the market and putting into service of medical devices and their accessories on the Union market thus allowing them to benefit from the principle of free movement of goods.
Anti-Kickback Statutes The federal Anti-Kickback Statute prohibits persons from (among other things) knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in exchange for or to induce the referral 17 Table of Contents of an individual, or the recommending, furnishing, or arranging for a good or service, for which payment may be made under a federal healthcare program such as Medicare or Medicaid.
Anti-Kickback Statutes The federal Anti-Kickback Statute prohibits persons from (among other things) knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in exchange for or to induce the referral of an individual, or the recommending, furnishing, or arranging for a good or service, for which payment may be made under a federal healthcare program such as Medicare or Medicaid.
The information on, or that may be accessed through, our website is not incorporated by reference into this Annual Report on Form 10-K and should not be considered a part of this Annual Report on Form 10-K. ​ 20 Table of Contents
The information on, or that may be accessed through, our website is not incorporated by reference into this Annual Report on Form 10-K and should not be considered a part of this Annual Report on Form 10-K. ​ 25 Table of Contents
(Regulation (EU) 2023/607) These devices are called ‘legacy devices’ and in line with MDCG Guidance Document 2021-253, ‘legacy devices’ should be understood as devices, which, in accordance with the MDR’s transitional provisions, are placed on the market after the MDR’s date of application (i.e. 26 May 2021) if certain conditions are fulfilled.
(Regulation (EU) 2023/607). 16 Table of Contents These devices are called ‘legacy devices’ and in line with MDCG Guidance Document 2021-253, ‘legacy devices’ should be understood as devices, which, in accordance with the MDR’s transitional provisions, are placed on the market after the MDR’s date of application (i.e. 26 May 2021) if certain conditions are fulfilled.
Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties and private litigation. For example, California enacted legislation, the California Consumer Privacy Act or CCPA, which went into effect January 1, 2020.
Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties and private litigation. 21 Table of Contents For example, California enacted legislation, the California Consumer Privacy Act or CCPA, which went into effect January 1, 2020.
We have never experienced a work stoppage and believe that our relations with our employees are good. Our Corporate Information We were incorporated under the laws of Delaware on January 2, 2008. On June 15, 2021, we completed a merger with ReShape Lifesciences Inc.
We have never experienced a work stoppage and believe that our relations with our employees are good. 24 Table of Contents Our Corporate Information We were incorporated under the laws of Delaware on January 2, 2008. On June 15, 2021, we completed a merger with ReShape Lifesciences Inc.
All of the above-listed devices were approved with post-approval conditions intended to ensure the safety and effectiveness of these devices. ReShape Lifesciences assumed and complies with all post market requirements for the Lap-Band System, the Obalon Navigation system, and Obalon Touch Inflation Dispenser.
All of the above-listed devices were approved with post-approval conditions intended to ensure the safety and effectiveness of these devices. ReShape Lifesciences 19 Table of Contents assumed and complies with all post market requirements for the Lap-Band System, the Obalon Navigation system, and Obalon Touch Inflation Dispenser.
We use BSI as the Notified Body for our CE marking approval process. The Lap-Band 2.0 FLEX system received approval in December 2023. We had our first successful surgeries with this system in early 2024. 15 Table of Contents Continued compliance with CE marking requirements is enforced through periodic facility inspections by the Notified Body, which may be unannounced.
We use BSI as the Notified Body for our CE marking approval process. ​ The Lap-Band 2.0 FLEX system received approval in December 2023. We had our first successful surgeries with this system in early 2024. ​ Continued compliance with CE marking requirements is enforced through periodic facility inspections by the Notified Body, which may be unannounced.
This shift in marketing is 100% aligned with the Company’s focus on expanding Lap-Band use while ensuring a sustainable (profitable) business. The shift to a more 7 Table of Contents targeted and regionalized marketing program allows us to better support interested potential Lap-Band patients while also reducing the overall costs for lead generation programs.
This shift in marketing is 100% aligned with the Company’s focus on expanding Lap-Band use while ensuring a sustainable (profitable) business. The shift to a more targeted and regionalized marketing program allows us to better support interested potential Lap-Band patients while also reducing the overall costs for lead generation programs.
Obalon Balloon simple and convenient placement. The Obalon balloon is placed without anesthesia or an endoscopy through a swallowable capsule that dissolves in the stomach and releases the balloon. These unique features allow patients the flexibility to receive the Obalon balloon discreetly in an outpatient setting.
The Obalon balloon is placed without anesthesia or an endoscopy through a swallowable capsule that dissolves in the stomach and releases the balloon. These unique features allow patients the flexibility to receive the Obalon balloon discreetly in an outpatient setting.
Premarket review and clearance by the FDA for Class II devices is accomplished through the 510(k) premarket notification process. Class III devices include devices deemed by the FDA to pose the greatest risk such as life-supporting or life-sustaining devices, or implantable devices, in addition to those deemed novel and not substantially equivalent following the 510(k) process.
Premarket review and clearance by the FDA for Class II devices is accomplished through the 510(k) premarket notification process. ​ 12 Table of Contents Class III devices include devices deemed by the FDA to pose the greatest risk such as life-supporting or life-sustaining devices, or implantable devices, in addition to those deemed novel and not substantially equivalent following the 510(k) process.
Further, ‘‘business associates,’’ defined as independent contractors or agents of covered entities that create, receive, maintain or transmit protected health information in connection with providing a service for or on behalf of a covered entity, are also subject to certain HIPAA privacy and security standards.
Further, “business associates,” defined as independent contractors or agents of covered entities that create, receive, maintain or transmit protected health information in connection with providing a service for or on behalf of a covered entity, are also subject to certain HIPAA privacy and security standards.
In the United States, the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”), and all regulations promulgated thereunder, collectively HIPAA, imposes privacy, security and breach reporting 16 Table of Contents obligations with respect to individually identifiable health information upon ‘‘covered entities’’ (health plans, health care clearinghouses and certain health care providers), and their respective business associates, individuals or entities that create, receive, maintain or transmit protected health information in connection with providing a service for or on behalf of a covered entity.
In the United States, the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”), and all regulations promulgated thereunder, collectively HIPAA, imposes privacy, security and breach reporting obligations with respect to individually identifiable health information upon “covered entities” ​(health plans, health care clearinghouses and certain health care providers), and their respective business associates, individuals or entities that create, receive, maintain or transmit protected health information in connection with providing a service for or on behalf of a covered entity.
In May 2019, Obalon analyzed data from their commercial registry on 1,411 total patients from 143 treatment sites in the United States. In this data set, for those patients receiving three balloons and at least 20 weeks of therapy, the average weight loss was 21.7 pounds, resulting in a 10.2% reduction in total body weight.
In May 2019, Obalon updated data from their commercial registry to include 1,411 total patients from 143 treatment sites in the United States. In this data set, for those patients receiving three balloons and at least 20 weeks of therapy, the average weight loss was 21.7 pounds, resulting in a 10.2% reduction in total body weight.
Pursuant to the Merger Agreement, a wholly owned subsidiary of Obalon with and into ReShape, with ReShape surviving the merger as a wholly owned subsidiary of Obalon. As a result of the merger, Obalon, the parent company, was renamed “ReShape Lifesciences Inc.” and ReShape was renamed ReShape Weightloss Inc.
Pursuant to the Merger Agreement, Optimus Merger Sub, Inc , a wholly owned subsidiary of Obalon, merged with and into ReShape, with ReShape surviving the merger as a wholly owned subsidiary of Obalon. As a result of the merger, Obalon, the parent company, was renamed “ReShape Lifesciences Inc.” and ReShape was renamed ReShape Weightloss Inc.
We anticipate having access to the Obalon Balloon system later in 2024 for the distribution in the U.S. and other regions globally. In addition, the strategic partnership with Biorad contemplates potential manufacturing transfer of other products to further improve ReShape’s overall gross margin.
We anticipate having access to the Obalon Balloon system late in 2025 for the distribution in the U.S. and other regions globally. In addition, the strategic partnership with Biorad contemplates potential manufacturing transfer of other products to further improve ReShape’s overall gross margin.
Clinical trials must further comply with the FDA’s good clinical practice regulations for institutional review board approval and for informed consent and other human subject protections. 9 Table of Contents Required records and reports are subject to inspection by the FDA.
Clinical trials must further comply with the FDA’s good clinical practice regulations for institutional review board approval and for informed consent and other human subject protections. Required records and reports are subject to inspection by the FDA.
Before approving or denying a PMA, an FDA advisory committee may review the PMA at a public meeting and provide the FDA with the committee’s recommendation on whether the FDA should approve the submission, 10 Table of Contents approve it with specific conditions, or not approve it.
Before approving or denying a PMA, an FDA advisory committee may review the PMA at a public meeting and provide the FDA with the committee’s recommendation on whether the FDA should approve the submission, approve it with specific conditions, or not approve it.
The 2 Table of Contents procedure can normally be performed as an outpatient procedure and patients can go home the day of the procedure without the need for an overnight hospital stay.
The procedure can normally be performed as an outpatient procedure and patients can go home the day of the procedure without the need for an overnight hospital stay.
ReShape Lifesciences’ vBloc neuromodulation system, which was approved by the FDA for treating obesity is no longer commercialized . FDA approved the L ap-Band System in 2001.
ReShape Lifesciences’ vBloc neuromodulation system, which was approved by the FDA for treating obesity is no longer commercialized . ​ FDA approved the Lap-Band System in 2001.
These include: ● The FDA’s QSR, which requires manufacturers, including third party manufacturers, to follow stringent design, testing, production, control, supplier/contractor selection, complaint handling, documentation and other quality assurance procedures during all aspects of the manufacturing process; ● labeling regulations, unique device identification requirements and FDA prohibitions against the promotion of products for uncleared, unapproved or off label uses; 11 Table of Contents ● advertising and promotion requirements; ● restrictions on sale, distribution or use of a device; ● PMA annual reporting requirements; ● PMA approval of product modifications; ● PMA approval of product ● Medical device reporting, or MDR, regulations, which require that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to recur; ● medical device correction and removal reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; ● recall requirements, including a mandatory recall if there is a reasonable probability that the device would cause serious adverse health consequences or death; ● an order of repair, replacement or refund; ● device tracking requirements; and ● post-market surveillance regulations, which apply when necessary to protect the public health or to provide additional safety and effectiveness data for the device.
These include: ​ • The FDA’s QSR, which requires manufacturers, including third party manufacturers, to follow stringent design, testing, production, control, supplier/contractor selection, complaint handling, documentation and other quality assurance procedures during all aspects of the manufacturing process; ​ • labeling regulations, unique device identification requirements and FDA prohibitions against the promotion of products for uncleared, unapproved or off label uses; ​ • advertising and promotion requirements; ​ • restrictions on sale, distribution or use of a device; ​ • PMA annual reporting requirements; ​ • PMA approval of product modifications; ​ • PMA approval of product; ​ • Medical device reporting, or MDR, regulations, which require that manufacturers report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to recur; ​ 15 Table of Contents • medical device correction and removal reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; • recall requirements, including a mandatory recall if there is a reasonable probability that the device would cause serious adverse health consequences or death; ​ • an order of repair, replacement or refund; ​ • device tracking requirements; and ​ • post-market surveillance regulations, which apply when necessary to protect the public health or to provide additional safety and effectiveness data for the device. ​ ​ Since February 2017, the FDA has issued three separate letters to healthcare providers warning of serious adverse events, including deaths, which are specific to liquid-filled intragastric balloons.
Key growth drivers within second growth pillar include: Lap-Band 2.0 FLEX System - N ew product revenues for the Lap-Band 2.0 FLEX system (“Lab-Band 2.0”), for which the Company received FDA approval during December 2023 and completed the first successful surgeries in early 2024.
Key growth drivers within second growth pillar include: Lap-Band 2.0 FLEX System — New product revenues for the Lap-Band 2.0 FLEX system (“Lap-Band 2.0”), for which our Company received FDA approval during December 2023 and completed the first successful surgeries in early 2024.
Many of these state laws apply to claims submitted to any third-party payor and are not limited to claims submitted to a federal healthcare program. 18 Table of Contents Transparency Laws The federal Physician Payment Sunshine Act, or the Sunshine Act, which was enacted as part of the Patient Protection and Affordable Care Act, or the PPACA, generally requires certain manufacturers of a drug, device, biologic or other medical supply that is covered by Medicare, Medicaid or the Children’s Health Insurance Program and applicable group purchasing organizations to report on an annual basis: (i) certain payments and other transfers of value given to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other health care professionals beginning in 2022, and teaching hospitals and (ii) any ownership or investment interest that physicians, or their immediate family members, have in their company.
Transparency Laws The federal Physician Payment Sunshine Act, or the Sunshine Act, which was enacted as part of the Patient Protection and Affordable Care Act, or the PPACA, generally requires certain manufacturers of a drug, device, biologic or other medical supply that is covered by Medicare, Medicaid or the Children’s Health Insurance Program and applicable group purchasing organizations to report on an annual basis: (i) certain payments and other transfers of value given to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other health care professionals beginning in 2022, and teaching hospitals and (ii) any ownership or investment interest that physicians, or their immediate family members, have in their company.
ITEM 1. BUSINESS Our Company ReShape Lifesciences Inc. is a worldwide premier weight-loss solutions company, offering an integrated portfolio of proven products and services that manage and treat obesity and metabolic disease throughout the care continuum.
ITEM 1. BUSINESS Our Company ReShape Lifesciences Inc. is a premier physician-led weight-loss solutions company, offering an integrated portfolio of proven products and services that manage and treat obesity and metabolic disease throughout the care continuum. Our current portfolio includes the U.S.
Despite the growing obesity rate, increasing public interest in the obesity epidemic and significant medical repercussions and economic costs associated with obesity, there continues to be a significant unmet need for effective treatments. The United States Market Obesity has been identified by the U.S. Surgeon General as the fastest growing cause of disease and death in the United States.
Despite the growing obesity rate, increasing public interest in the obesity epidemic and significant medical repercussions and economic costs associated with obesity, there continues to be a significant unmet need for effective treatments. ​ The United States Market ​ Obesity has been identified by the U.S.
Class II devices are those that are subject to the General Controls, and special controls as deemed necessary by the FDA to ensure the safety and effectiveness of the device. These special controls can include performance standards, patient registries, FDA guidance documents and post-market surveillance. Most Class II devices are subject to premarket review and clearance by the FDA.
Most Class I products are exempt from the premarket notification requirements. ​ Class II devices are those that are subject to the General Controls, and special controls as deemed necessary by the FDA to ensure the safety and effectiveness of the device. These special controls can include performance standards, patient registries, FDA guidance documents and post-market surveillance.
Employees As of December 31, 2023, we had 31 employees, all of which 29 were full-time and 2 were part-time. All of these employees are located in the U.S. From time to time we also employ independent contractors, consultants and temporary employees to support our operations. None of our employees are subject to collective bargaining agreements.
Employees As of December 31, 2024, we had 18 employees, of which 17 were full-time and 1 was part-time. All of these employees are located in the U.S. From time to time we also employ independent contractors, consultants and temporary employees to support our operations. None of our employees are subject to collective bargaining agreements.
The SAB is fully engaged in helping validate company strategies to collect and publish data on both our Lap-Band 2.0 and data on Lap-Band patients who are also using GLP-1s as a combination therapy.
The SAB is a valuable resource to help validate company strategies to collect and publish data on both our Lap-Band 2.0 and data on Lap-Band patients who are also using GLP-1s as a combination therapy.
If the FDA determines that the device is not “substantially equivalent” to a predicate device, or if the device is automatically classified into Class III, the device sponsor must then fulfill the much more rigorous premarketing requirements of the PMA approval process, or seek reclassification of the device through the de novo process.
If the FDA agrees that the device is substantially equivalent, it will grant clearance to commercially market the device. ​ If the FDA determines that the device is not “substantially equivalent” to a predicate device, or if the device is automatically classified into Class III, the device sponsor must then fulfill the much more rigorous premarketing requirements of the PMA approval process, or seek reclassification of the device through the de novo process.
The laws of certain foreign countries do not protect our intellectual property rights to the same extent as do the laws of the United States. L ap -B and As of December 31, 2023, we had approximately 50 total patents, 28 U.S. and 22 foreign, related to our Lap-Band System.
The laws of certain foreign countries do not protect our intellectual property rights to the same extent as do the laws of the United States. ​ Lap-Band ​ As of December 31, 2024, we had approximately 34 total patents, 28 U.S. and 6 foreign, related to our Lap-Band System.
In addition, certain state, and non-U.S. laws, such as the European Union General Data Protection Regulation, or GDPR, govern the privacy and security of health information in certain circumstances, some of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
The FTC’s guidance for appropriately securing consumers’ personal information is similar to what is required by the HIPAA security regulations. ​ In addition, certain state, and non-U.S. laws, such as the European Union General Data Protection Regulation, or GDPR, govern the privacy and security of health information in certain circumstances, some of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.
To be “substantially equivalent,” the proposed device must have the same intended use as the predicate device, and either have the same technological characteristics as the predicate device or have different technological characteristics and not raise different questions of safety or effectiveness than the predicate device. Clinical data is sometimes required to support substantial equivalence.
To be “substantially equivalent,” the proposed device must have the same intended use as the predicate device, and either have the same technological characteristics as the predicate device or have different technological characteristics and not raise different questions of safety or effectiveness than the predicate device.
Some Class I devices, also called Class I reserved devices, also require premarket clearance by the FDA through the 510(k) premarket notification process described below. Most Class I products are exempt from the premarket notification requirements.
Some Class I devices, also called Class I reserved devices, also require premarket clearance by the FDA through the 510(k) premarket notification process described below.
HIPAA mandates the reporting of certain breaches of health information to HHS, affected individuals and if the breach is large enough, the media.
HIPAA mandates the reporting of certain breaches of health information to the U.S. Department of Health and Human Services, or HHS, affected individuals and if the breach is large enough, the media.
Our patent applications may not result in issued patents and our patents may not be sufficiently broad to protect our technology. Any patents issued to us may be challenged by third parties as being invalid or unenforceable, or third parties may independently develop similar or competing technology that does not infringe our patents.
Any patents issued to us may be challenged by third parties as being invalid or unenforceable, or third parties may independently develop similar or competing technology that does not infringe our patents.
Prior to the merger, Obalon Therapeutics’ management believed the Obalon Navigation System and the Obalon Touch Inflation Dispenser are Class I products not requiring Notified Body approval. ReShape Lifesciences has engaged with its European Notified Body—British Standards Institute (BSI) to transition our products under EU MDR.
Prior to the merger, Obalon Therapeutics’ management believed the Obalon Navigation System and the Obalon Touch Inflation Dispenser are Class I products not requiring Notified Body approval. ​ ReShape Lifesciences has engaged with its European Notified Body — British Standards Institute (BSI) to transition our products under EU MDR. ​ The ReShape Lap-Band System, The Access Port Kit, and the ReShape Calibration Tubes are certified under Medical Device Regulation (EU) 2017/745 (MDR).
We will be required to file new PMA applications or PMA supplement applications for modifications to our PMA-approved Lap-Band System, Obalon Balloon System and Obalon Navigation System and Dispenser or any of their respective components, including modifications to our manufacturing processes, device labeling and device design, based on the findings of post-approval studies.
We will be required to file new PMA applications or PMA supplement applications for modifications to our PMA-approved Lap-Band System, Obalon Balloon System and Obalon Navigation System and Dispenser or any of their respective components, including modifications to our manufacturing processes, device labeling and device design, based on the findings of post-approval studies. ​ Pervasive and Continuing FDA Regulation ​ After the FDA permits a device to enter commercial distribution, numerous regulatory requirements continue to apply.
Many of our parts are custom designed and require custom tooling and, as a result, we may not be able to quickly qualify and establish additional or replacement suppliers for the components of our products.
Our FDA approval process requires us to name and obtain approval for the suppliers of key components of the Lap-Band System. ​ Many of our parts are custom designed and require custom tooling and, as a result, we may not be able to quickly qualify and establish additional or replacement suppliers for the components of our products.
Most GCC jurisdictions require that the official registered distributor of a product be wholly owned by nationals of that particular GCC jurisdiction. ReShape distributes the Lap-Band System and accessories in the Middle East through a distributor. Product is shipped to the Kingdom of Saudi Arabia (KSA) and the United Arab Emirates (UAE).
Most GCC jurisdictions require that the official registered distributor of a product be wholly owned by nationals of that particular GCC jurisdiction. ​ ReShape distributes the Lap-Band System and accessories in the Middle East through a distributor.
On March 9, 2023, we filed a patent infringement complaint against Allurion Technologies, Inc. in the U.S. District Court for the District of Delaware. The complaint alleged that Allurion is infringing at least two claims of our U.S.
We intend to continue to pursue further intellectual property protection through U.S. and foreign patent applications. ​ On March 9, 2023, we filed a patent infringement complaint against Allurion Technologies, Inc. in the U.S. District Court for the District of Delaware. The complaint alleged that Allurion is infringing at least two claims of our U.S.
In addition to competition from surgical obesity procedures, we compete with several private early-stage companies developing neurostimulation devices for application to the gastric region and related nerves for the treatment of obesity.
Further, we some surgeons will use pharmaceuticals to coincide with a Lap-Band placement. ​ In addition to competition from surgical obesity procedures, we compete with several private early-stage companies developing neurostimulation devices for application to the gastric region and related nerves for the treatment of obesity.
Regulatory system for medical devices in the United States Unless an exemption applies, each new or significantly modified medical device we seek to commercially distribute in the United States will require either a premarket notification to the FDA requesting permission for 8 Table of Contents commercial distribution under Section 510(k) of the Federal Food, Drug and Cosmetic Act, or FFDCA, also referred to as a 510(k) clearance, or approval from the FDA of a premarket approval (“PMA”) application.
Further, we are subject to laws directed at preventing fraud and abuse, which subject our sales and marketing, training and other practices to government scrutiny. ​ Regulatory system for medical devices in the United States ​ Unless an exemption applies, each new or significantly modified medical device we seek to commercially distribute in the United States will require either a premarket notification to the FDA requesting permission for commercial distribution under Section 510(k) of the Federal Food, Drug and Cosmetic Act, or FFDCA, also referred to as a 510(k) clearance, or approval from the FDA of a premarket approval (“PMA”) application.
ReShape Vest As of December 31, 2023, we had four granted U.S. patents and four granted foreign patents in China, Israel, Canada and Australia related to our ReShape Vest. The patents expire between the years 2028 and 2038. We also have U.S. and international trademark applications for the ReShape Vest brand name.
The patents expire between the years 2028 and 2038. ​ We also have U.S. and international trademark applications for the ReShape Vest brand name. ​ Obalon ​ As of December 31, 2024, we had 37 granted U.S. patents and 46 granted foreign patents related to our Obalon portfolio.
There can be no assurance that submission of an IDE will result in the ability to commence clinical trials, and although the FDA’s approval of an IDE allows clinical testing to go forward for a specified number of subjects, it does not bind the FDA to accept the results of the trial as sufficient to prove the product’s safety and efficacy, even if the trial meets its intended success criteria.
There can be no assurance that submission of an IDE will result in the ability to commence clinical trials, and although the FDA’s approval of an IDE allows clinical testing to go forward for a specified number of subjects, it does not bind the FDA to accept the results of the trial as sufficient to prove the product’s safety and efficacy, even if the trial meets its intended success criteria. ​ All clinical trials must be conducted in accordance with the FDA’s IDE regulations that govern investigational device labeling, prohibit promotion and specify an array of recordkeeping, reporting and monitoring responsibilities of study sponsors and study investigators.
Since February 2017, the FDA has issued three separate letters to healthcare providers warning of serious adverse events, including deaths, which are specific to liquid-filled intragastric balloons. We are aware of the filing of additional reports of serious adverse events, including deaths, associated with liquid-filled balloons since the issuance of the FDA letters to healthcare providers.
We are aware of the filing of additional reports of serious adverse events, including deaths, associated with liquid- filled balloons since the issuance of the FDA letters to healthcare providers.
Failure to comply with applicable regulatory requirements can result in enforcement action by the FDA, which may include any of the following sanctions: ● warning letters, fines, injunctions, consent decrees and civil penalties; ● unanticipated expenditures, repair, replacement, refunds, recall or seizure of our products; ● operating restrictions, partial suspension or total shutdown of production; ● the FDA’s refusal of our requests for 510(k) clearance or premarket approval of new products, new intended uses or modifications to existing products; ● FDA’s refusal to issue certificates to foreign governments needed to export products for sale in other countries; ● withdrawing 510(k) clearance or premarket approvals that have already been granted; and ● criminal prosecution.
Medical device manufacturers are subject to unannounced inspections by the FDA and other state, local and foreign regulatory authorities to assess compliance with the QSR and other applicable regulations, and these inspections may include the manufacturing facilities of any suppliers. ​ Failure to comply with applicable regulatory requirements can result in enforcement action by the FDA, which may include any of the following sanctions: ​ • warning letters, fines, injunctions, consent decrees and civil penalties; ​ • unanticipated expenditures, repair, replacement, refunds, recall or seizure of our products; ​ • operating restrictions, partial suspension or total shutdown of production; the FDA’s refusal of our requests for 510(k) clearance or premarket approval of new products, new intended uses or modifications to existing products; ​ • FDA’s refusal to issue certificates to foreign governments needed to export products for sale in other countries; ​ • withdrawing 510(k) clearance or premarket approvals that have already been granted; and ​ • criminal prosecution. ​ ​ Regulatory System for Medical Devices in Europe ​ The European Union (“EU”) consists of member states residing in the European Union and has a coordinated system for the authorization of medical devices.
In this data set, for those patients receiving three balloons and at least 20 weeks of therapy, the average weight loss was 21.7 pounds, resulting in a 10.2% reduction in total body weight. Of note, 50.7% of patients lost 10% or more total body weight and 77.9% lost 5% or more total body weight.
In this data set, for those patients receiving three balloons and at least 20 weeks of therapy, the average weight loss was 21.7 pounds, resulting in a 10.2% reduction in total body weight. ​ Obalon Balloon simple and convenient placement.
After a 510(k) premarket notification is submitted, the FDA determines whether to accept it for substantive review. If it lacks necessary information for substantive review, the FDA will refuse to accept the 510(k) notification. If it is accepted for filing, the FDA begins a substantive review.
Clinical data is sometimes required to support substantial equivalence. ​ 13 Table of Contents After a 510(k) premarket notification is submitted, the FDA determines whether to accept it for substantive review. If it lacks necessary information for substantive review, the FDA will refuse to accept the 510(k) notification. If it is accepted for filing, the FDA begins a substantive review.
Our current portfolio includes the FDA-approved and reimbursed Lap-Band® system, which provides minimally invasive, long-term treatment of obesity and is a safer surgical alternative to more invasive and extreme surgical stapling procedures such as the gastric bypass or sleeve gastrectomy. 1 1 ReShape’s Pillars for Growth In August of 2022, Paul F.
Food and Drug Administration (“FDA”) approved and reimbursed Lap-Band® and the recently approved Lap-Band® 2.0 FLEX systems, which provide minimally invasive, long-term treatment of obesity and is a safer surgical alternative to more invasive and extreme surgical stapling procedures such as the gastric bypass or sleeve gastrectomy. ​ 1 ReShape’s Pillars for Growth In August of 2022, Paul F.
Although many 510(k) premarket notifications are cleared without clinical data, the FDA may require further information, including clinical data, to make a determination regarding substantial equivalence, which may significantly prolong the review process. If the FDA agrees that the device is substantially equivalent, it will grant clearance to commercially market the device.
Although many 510(k) premarket notifications are cleared without clinical data, the FDA may require further information, including clinical data, to make a determination regarding substantial equivalence, which may significantly prolong the review process.
While considered a competitive therapy, we expect that the marketing of these pharmaceuticals will increase awareness and help normalize obesity treatment. Further, we some surgeons will use pharmaceuticals to coincide with a Lap-Band placement.
While considered a competitive therapy, we expect that the marketing of these pharmaceuticals will increase awareness and help normalize obesity treatment.
CE Marks issued by EU-recognized notified bodies will continue to be valid in for medical devices placed on the Great Britain market – England, Scotland, and Wales until December 31, 2024.
As such, processes for compliance and reporting should reflect requirements from regulatory authorities. ​ 18 Table of Contents CE Marks issued by EU-recognized notified bodies will continue to be valid in for medical devices placed on the Great Britain market — England, Scotland, and Wales until December 31, 2024.
Any new approvals of vendors required by the FDA or other regulatory agencies in other international markets for our products as a result of the need to qualify or obtain alternate vendors for any of our components would delay our ability to sell and market our products and could have a material adverse effect on our business.
Any new approvals of vendors required by the FDA or other regulatory agencies in other international markets for our products as a result of the need to qualify or obtain alternate vendors for any of our components would delay our ability to sell and market our products and could have a material adverse effect on our business. ​ 11 Table of Contents We believe that our current manufacturing and supply arrangements will be adequate to continue our ongoing commercial sales and our ongoing and planned clinical trials.
This strategy also aligns with our key surgeon Lap-Band programs across the U.S.; surgeons who participate in local co-op marketing and educational initiatives in their communities. During 2023, our international sales efforts were through a combination of agent and distributor sales channels, with a focus on top Lap-Band customers in Australia, the Middle East, Canada and select countries in Europe.
This strategy also aligns with our key surgeon Lap-Band programs across the U.S.; surgeons who participate in local co-op marketing and educational initiatives in their communities. ​ During 2024, our international sales efforts were through a combination of agent and distributor sales channels, with a focus on top Lap-Band customers in Australia, the Middle East, Canada and select countries in Europe. ​ Our Manufacturers and Suppliers ​ To date, all of the materials and components for our products, as well as any related outside services, are procured from qualified suppliers and contract manufacturers in accordance with our proprietary specifications.
The FDA can delay, limit or deny approval of a PMA application for many reasons, including: ● device may not be shown safe or effective to the FDA’s satisfaction; ● data from pre-clinical studies and/or clinical trials may be found unreliable or insufficient to support approval; ● the manufacturing process or facilities may not meet applicable requirements; and ● changes in FDA approval policies or adoption of new regulations may require additional data.
The FDA can delay, limit or deny approval of a PMA application for many reasons, including: ​ • device may not be shown safe or effective to the FDA’s satisfaction; ​ • data from pre-clinical studies and/or clinical trials may be found unreliable or insufficient to support approval; ​ • the manufacturing process or facilities may not meet applicable requirements; and ​ • changes in FDA approval policies or adoption of new regulations may require additional data. ​ ​ 14 Table of Contents If the FDA evaluation of a PMA is favorable, the FDA will issue either an approval letter, or an approvable letter, the latter of which usually contains several conditions that must be met in order to secure final approval of the PMA.
New PMA applications or PMA supplements are required for modification to the manufacturing process, equipment or facility, quality control procedures, sterilization, packaging, expiration date, labeling, device specifications, ingredients, materials or design of a device that has been approved through the PMA process.
The PMA process can be expensive, uncertain and lengthy and several devices for which the FDA approval has been sought by other companies have never been approved by the FDA for marketing. ​ New PMA applications or PMA supplements are required for modification to the manufacturing process, equipment or facility, quality control procedures, sterilization, packaging, expiration date, labeling, device specifications, ingredients, materials or design of a device that has been approved through the PMA process.
Kingdom of Saudi Arabia, or KSA The most pertinent regulation is the Interim Regulation for Medical Devices, issued by the Saudi Food & Drug Authority, or SFDA, Board of Directors’ Decree number 1-8-1429 dated approximately December 27, 2008, and the implementing regulations of the same.
Product is shipped to the Kingdom of Saudi Arabia (KSA). ​ Obalon Therapeutics ceased distribution of the Obalon System, the Obalon Navigation System and the Obalon Touch Inflation Dispenser in the Middle East prior to the June 16, 2021, merger. ​ Kingdom of Saudi Arabia, or KSA ​ The most pertinent regulation is the Interim Regulation for Medical Devices, issued by the Saudi Food & Drug Authority, or SFDA, Board of Directors’ Decree number 1-8-1429 dated approximately December 27, 2008, and the implementing regulations of the same.
The date CE Marked devices can be placed on the Great Britain market has been extended to December 31, 2027. After this date the UKCA Mark will be required. ​ The UK government proposed to adopt the draft Post-Market Surveillance Requirements Statutory Instrument (PMS SI) in December 2023 and to enforce in June 2024.
The date CE Marked devices can be placed on the Great Britain market has been extended to December 31, 2027. After this date the UKCA Mark will be required. ​ The UK medical device regulator, the Medicines and Healthcare products Regulatory Agency (MHRA) finalized the Post-Market Surveillance statutory instrument (PMS SI) in December 16, 2024.
ReShape’s third growth pillar represents the Company’s commitment to collaborate with healthcare professionals worldwide and further develop evidence supporting ReShape’s portfolio of treatment options. Aligned with goal of pillar three, in early 2023, ReShape established their first-ever global Scientific Advisory Board (SAB) to provide needed expertise and feedback on initiatives related to the Company’s growth pillars.
Aligned with goal of pillar three, in early 2023, ReShape established their first-ever global Scientific Advisory Board (SAB) to provide needed expertise and feedback on initiatives related to our company’s growth pillars.
According to data from the U.S. Department of Health and Human Services, almost 80% of adults with a BMI above 30 have comorbidity, and almost 40% have two or more of these comorbidities.
It is estimated that if obesity rates stay consistent, 51% of the U.S. population will be obese by 2030. According to data from the U.S. Department of Health and Human Services, almost 80% of adults with a BMI above 30 have comorbidity, and almost 40% have two or more of these comorbidities.
The Bariatric Surgical Device market is projected to be a $2.8 billion worldwide market ($1.8 billion in the U.S.) by 2025, the Virtual Healthcare Delivery market is projected to be $95 billion worldwide by 2026, and the Global Weight Loss and Obesity Management market is expected to rise to an estimated value of $300 billion with a compound annual growth rate of 6.7% from 2019 to 2026.
The Bariatric Surgical Device market is projected to be a $2.8 billion worldwide market ($1.8 billion in the U.S.) by 2025, the Virtual Healthcare Delivery market is projected to be $95 billion worldwide by 2026, and the Global Weight Loss and Obesity Management market is expected to rise to an estimated value of $300 billion with a compound annual growth rate of 6.7% from 2019 to 2026. ​ We believe that this epidemic will continue to grow worldwide given dietary trends in developed nations that favor highly processed sugars, larger meals and fattier foods, as well as increasingly sedentary lifestyles.
In approving a PMA application, as a condition of approval, the FDA may also require some form of post-approval study or post-market surveillance, whereby the applicant conducts a follow-up study or follows certain patient groups for several years and makes periodic reports to the FDA on the clinical status of those patients when necessary to protect the public health or to provide additional or longer-term safety and effectiveness data for the device.
PMA supplements often require submission of the same type of information as an initial PMA application, except that the supplement is limited to information needed to support any changes from the device covered by the approved PMA application and may or may not require as extensive technical or clinical data or the convening of an advisory panel, depending on the nature of the proposed change. ​ In approving a PMA application, as a condition of approval, the FDA may also require some form of post-approval study or post-market surveillance, whereby the applicant conducts a follow-up study or follows certain patient groups for several years and makes periodic reports to the FDA on the clinical status of those patients when necessary to protect the public health or to provide additional or longer-term safety and effectiveness data for the device.
The business may be subject to some of these laws. Government officials have focused recent enforcement efforts on the marketing of healthcare services and products, among other activities, and have brought cases against companies, and certain individual sales, marketing and executive personnel, for allegedly offering unlawful inducements to potential or existing customers in an attempt to procure their business.
Government officials have focused recent enforcement efforts on the marketing of healthcare services and products, among other activities, and have brought cases against companies, and certain individual sales, marketing and executive personnel, for allegedly offering unlawful inducements to potential or existing customers in an attempt to procure their business. 22 Table of Contents False Claims Laws The federal False Claims Act imposes liability on any individual or entity that, among other things, knowingly presents, or causes to be presented, a false or fraudulent claim for payment by a federal healthcare program.
Moreover, each state defines the scope of practice of physicians and other healthcare professionals through legislation and through their respective licensing boards, and we will need to comply with laws related to the physician supervision of services and scope of practice requirements.
Violations of these laws could require us to restructure our operations and arrangements and may result in penalties or other adverse action. 23 Table of Contents Moreover, each state defines the scope of practice of physicians and other healthcare professionals through legislation and through their respective licensing boards, and we will need to comply with laws related to the physician supervision of services and scope of practice requirements.
Privacy and Security Laws Medical device companies may be subject to U.S. federal and state and foreign health information privacy, security and data breach notification laws, which may govern the collection, use, disclosure and protection of health-related and other personal information.
Recently approved new products, the Obalon Navigation System and Obalon Touch Inflation Dispenser, are designed to further improve ease of use and convenience of placement. ​ 20 Table of Contents Privacy and Security Laws Medical device companies may be subject to U.S. federal and state and foreign health information privacy, security and data breach notification laws, which may govern the collection, use, disclosure and protection of health-related and other personal information.
After a device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a new or major change in its intended use, will require a new 510(k) clearance or, depending on the modification, could require a PMA application or de novo classification.
A manufacturer can also submit a petition for direct de novo review if the manufacturer is unable to identify an appropriate predicate device and the new device or new use of the device presents a moderate or low risk. ​ After a device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a new or major change in its intended use, will require a new 510(k) clearance or, depending on the modification, could require a PMA application or de novo classification.
Over 75% of hypertension cases are directly 4 Table of Contents linked to obesity, and more than 90% of the approximately 28 million U.S. adults with Type 2 diabetes are overweight or have obesity.
Over 75% of hypertension cases are directly linked to obesity, and more than 90% of the approximately 28 million U.S. adults with Type 2 diabetes are overweight or have obesity. ​ 7 Table of Contents Currently, medical costs associated with obesity in the U.S. are estimated to be up to $210.0 billion per year and nearly 21% of medical costs in the U.S. can be attributed to obesity.
The scope of the FCPA includes interactions with certain healthcare professionals in many countries. 19 Table of Contents International Laws In Europe, and throughout the world, other countries have enacted anti-bribery laws and/or regulations similar to the FCPA.
The scope of the FCPA includes interactions with certain healthcare professionals in many countries. International Laws In Europe, and throughout the world, other countries have enacted anti-bribery laws and/or regulations similar to the FCPA. Violations of any of these anti-bribery laws, or allegations of such violations, could have a negative impact on our business, results of operations and reputation.
Drive the Adoption of Our Portfolio through Obesity Therapy Experts and Patient Ambassadors Our clinical development strategy is to collaborate closely with regulatory bodies, healthcare providers, obesity therapy lifestyle experts and others involved in the obesity management process, patients and their advocates and 3 Table of Contents scientific experts.
We believe that we are well positioned for the existing market and can serve more of the overweight and obese population with our solutions and thereby help expand the addressable market for obesity. ​ Drive the Adoption of Our Portfolio through Obesity Therapy Experts and Patient Ambassadors ​ Our clinical development strategy is to collaborate closely with regulatory bodies, healthcare providers, obesity therapy lifestyle experts and others involved in the obesity management process, patients and their advocates and scientific experts.
Qualified suppliers and contract manufacturers have been and will continue to be selected to supply products on a commercial scale according to our proprietary specifications. Our FDA approval process requires us to name and obtain approval for the suppliers of key components of the Lap-Band System.
Qualified suppliers and contract manufacturers have been and will continue to be selected to supply products on a commercial scale according to our proprietary specifications.
We have established relationships with physicians, obesity therapy experts, patient advocates, media experts and other market drivers we believe will provide important support towards promoting patient awareness and gaining widespread adoption of the L ap -B and , its accessories, Lap-Band 2.0 and the possible re-introduction of the Obalon Balloon System.
We have established relationships with physicians, obesity therapy experts, patient advocates, media experts and other market drivers we believe will provide important support towards promoting patient awareness and gaining widespread adoption of the Lap-Band, its accessories, Lap-Band 2.0 and the possible re-introduction of the Obalon Balloon System. 6 Table of Contents Expand and Protect Our Intellectual Property Position ​ We believe that our issued patents and our patent applications encompass a broad platform of therapies focused on obesity, diabetes, hypertension and other gastrointestinal disorders.
In addition, the Trade Deal between the UK and the EU generally provides for cooperation and exchange of information between the parties in the areas of product safety and compliance, including market surveillance, enforcement activities and measures, standardization related activities, exchanges of officials, and coordinated product recalls. As such, processes for compliance and reporting should reflect requirements from regulatory authorities.
The MHRA plans changes to the UK’s Medical Devices Regulations 2002 as part of a broader transition away from European Union legal and regulatory systems. ​ In addition, the Trade Deal between the UK and the EU generally provides for cooperation and exchange of information between the parties in the areas of product safety and compliance, including market surveillance, enforcement activities and measures, standardization related activities, exchanges of officials, and coordinated product recalls.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe assumptions underlying these activities may prove to be inaccurate, or we may fail to achieve the expected benefits therefrom. ● We may be unable to attract and retain management and other personnel we need to succeed. ● The shares of series C convertible preferred stock issued in connection with our acquisition of ReShape Medical have certain rights and preferences senior to our common stock, including a liquidation preference that is senior to our common stock. ● We cannot assure you that we will ever generate substantial revenue or be profitable. ● Previously, we recorded a non-cash indefinite-lived and definite-lived intangible assets impairment loss, which significantly impacted our results of operations. ● We incur significant costs as a result of operating as a public company, and our management is required to devote substantial time to compliance initiatives. ● We have identified material weaknesses in our internal control over financial reporting and any failure to maintain effective internal control over financial reporting, may have a material and adverse effect on our business, operating results, financial condition and prospects. ● General economic and political conditions could have a material adverse effect on our business. ● We hold our deposit within the U.S. banking system and may incur a loss of our uninsured deposits if there a closure or other event with our bank. ● We face significant uncertainty in the industry due to government healthcare reform. ● Public health crises, such as COVID-19 pandemic, have had, and could in the future have a negative effect on our business. ● We are subject, directly or indirectly, to United States federal and state healthcare fraud and abuse and false claims laws and regulations.
Biggest changeThe assumptions underlying these activities may prove to be inaccurate, or we may fail to achieve the expected benefits therefrom. ● We may be unable to attract and retain management and other personnel we need to succeed. ● We cannot assure you that we will ever generate substantial revenue or be profitable. ● Previously, we recorded a non-cash indefinite-lived intangible and definite-lived assets impairment loss, which significantly impacted our results of operations, and we may be exposed to additional impairment losses that could be material.
Risks Related to Intellectual Property If we are unable to obtain or maintain intellectual property rights relating to our technology and neuroblocking therapy, the commercial value of our technology and any future products will be adversely affected and our competitive position will be harmed.
Risks Related to our Intellectual Property If we are unable to obtain or maintain intellectual property rights relating to our technology and neuroblocking therapy, the commercial value of our technology and any future products will be adversely affected and our competitive position will be harmed.
Our efforts to commercialize these products may not succeed for a number of reasons, including: ● we may not be able to obtain the regulatory approvals required for our DBSN device; ● we may not be able to produce the Obalon Balloon System cost-effectively; ● if we are able to produce the Obalon Balloon System, we may not be able to re-introduce the system into the marketplace; ● our products may not be accepted in the marketplace by physicians, patients and third-party payers; ● the price of our products, associated costs of the surgical procedure and treatment and the availability of sufficient third-party reimbursement for the system implantation and follow-up procedures; ● appropriate reimbursement and/or coding options may not exist to enable billing for the system implantation and follow-up procedures for our DBSN device; ● coverage policies for bariatric surgeries and procedures, including Lap-Band and balloons may be restricted in the future; ● we may not be able to sell our products at a price that allows us to meet the revenue targets necessary to generate enough revenue for profitability; ● the frequency and severity of any side effects of our products; ● physicians and potential patients may not be aware of the perceived effectiveness and sustainability of the results of our products; 29 Table of Contents ● we, or the investigators of our products, may not be able to have information on the outcome of the trials published in medical journals; ● the availability and perceived advantages and disadvantages of alternative treatments, including pharmaceutical treatments; ● any rapid technological change may make our products obsolete; ● we may not be able to have our products manufactured in commercial quantities or at an acceptable cost; ● we may not have adequate financial or other resources to complete the development and commercialization of our products or to develop sales and marketing capabilities for our products; and ● we may be sued for infringement of intellectual property rights and could be enjoined from manufacturing or selling our products. ​ Besides requiring physician adoption, market acceptance of our products will depend on successfully communicating the benefits of our products to three additional constituencies involved in deciding whether to treat a particular patient using our products: (1) the potential patients themselves; (2) institutions such as hospitals, where the procedure would be performed and opinion leaders in these institutions; and (3) third-party payers, such as private healthcare insurers and governmental payers, such as Medicare and Medicaid in the United States, which would ultimately bear most of the costs of the various providers and equipment involved in our Lap-Band System, Obalon Balloon System, and DBSN device (if approved for sale).
Our efforts to commercialize these products may not succeed for a number of reasons, including: ● we may not be able to obtain the regulatory approvals required for our DBSN device; ● we may not be able to produce the Obalon Balloon System cost-effectively; ● if we are able to produce the Obalon Balloon System, we may not be able to re-introduce the system into the marketplace; ● our products may not be accepted in the marketplace by physicians, patients and third-party payers; ● the price of our products, associated costs of the surgical procedure and treatment and the availability of sufficient third-party reimbursement for the system implantation and follow-up procedures; ● appropriate reimbursement and/or coding options may not exist to enable billing for the system implantation and follow-up procedures for our DBSN device; ● coverage policies for bariatric surgeries and procedures, including Lap-Band and balloons may be restricted in the future; ● we may not be able to sell our products at a price that allows us to meet the revenue targets necessary to generate enough revenue for profitability; ● the frequency and severity of any side effects of our products; ● physicians and potential patients may not be aware of the perceived effectiveness and sustainability of the results of our products; ● we, or the investigators of our products, may not be able to have information on the outcome of the trials published in medical journals; ● the availability and perceived advantages and disadvantages of alternative treatments, including pharmaceutical treatments; ● any rapid technological change may make our products obsolete; ● we may not be able to have our products manufactured in commercial quantities or at an acceptable cost; ● we may not have adequate financial or other resources to complete the development and commercialization of our products or to develop sales and marketing capabilities for our products; and ● we may be sued for infringement of intellectual property rights and could be enjoined from manufacturing or selling our products. ​ 54 Table of Contents Besides requiring physician adoption, market acceptance of our products will depend on successfully communicating the benefits of our products to three additional constituencies involved in deciding whether to treat a particular patient using our products: (1) the potential patients themselves; (2) institutions such as hospitals, where the procedure would be performed and opinion leaders in these institutions; and (3) third-party payers, such as private healthcare insurers and governmental payers, such as Medicare and Medicaid in the United States, which would ultimately bear most of the costs of the various providers and equipment involved in our Lap-Band System, Obalon Balloon System, and DBSN device (if approved for sale).
Risks Associated with Development and Commercialization of the Lap-Band System, Lap-Band 2.0 System, Obalon Balloon System, and the DBSN Device Our efforts to increase revenue from our Lap-Band System, Lap-Band 2.0 System, and commercialize our DBSN device and expanded line of bariatric surgical accessories, including ReShape Calibration Tubes, may not succeed or may encounter delays which could significantly harm our ability to generate revenue.
Risks Associated with Development and Commercialization of ReShape’s Lap-Band System, Lap-Band 2.0 System, Obalon Balloon System, and the DBSN Device Our efforts to increase revenue from our Lap-Band System, Lap-Band 2.0 System, and commercialize our DBSN device and expanded line of bariatric surgical accessories, including ReShape Calibration Tubes, may not succeed or may encounter delays which could significantly harm our ability to generate revenue.
All of the currently outstanding shares of our common stock are freely tradable under federal and state securities laws, except for shares held by our directors, officers and certain greater than five percent stockholders, which may be subject to holding period, volume and other limitations under Rule 144.
All of the currently outstanding shares of our common stock are freely tradable under federal and state securities laws, except for shares held by our directors, officers and certain greater than five percent stockholders, which may be subject to holding period, volume and other limitations under Rule 144 of the Securities Act.
These provisions include: ● the ability of our board of directors to create and issue preferred stock without stockholder approval, which could be used to implement anti-takeover devices; ● the authority for our board of directors to issue without stockholder approval up to the number of shares of common stock authorized in our certificate of incorporation, that, if issued, would dilute the ownership of our stockholders; ● the advance notice requirement for director nominations or for proposals that can be acted upon at stockholder meetings; ● a classified and staggered board of directors, which may make it more difficult for a person who acquires control of a majority of our outstanding voting stock to replace all or a majority of our directors; ● the prohibition on actions by written consent of our stockholders; ● the limitation on who may call a special meeting of stockholders; ● the prohibition on stockholders accumulating their votes for the election of directors; and ● the ability of stockholders to amend our bylaws only upon receiving a majority of the votes entitled to be cast by holders of all outstanding shares then entitled to vote generally in the election of directors, voting together as a single class.
These provisions include: ● the ability of the Board to create and issue preferred stock without stockholder approval, which could be used to implement anti-takeover devices; ● the authority for the Board to issue without stockholder approval up to the number of shares of common stock authorized in the charter, that, if issued, would dilute the ownership of our stockholders; ● the advance notice requirement for director nominations or for proposals that can be acted upon at stockholder meetings; ● a classified and staggered board of directors, which may make it more difficult for a person who acquires control of a majority of our outstanding voting stock to replace all or a majority of our directors; ● the prohibition on actions by written consent of our stockholders; ● the limitation on who may call a special meeting of stockholders; ● the prohibition on stockholders accumulating their votes for the election of directors; and ● the ability of stockholders to amend the bylaws only upon receiving a majority of the votes entitled to be cast by holders of all outstanding shares then entitled to vote generally in the election of directors, voting together as a single class.
Any failure to obtain regulatory approvals on a timely basis or the subsequent withdrawal of such approvals could prevent us from successfully marketing our products, which could adversely affect our business and operating results. 30 Table of Contents We depend on clinical investigators and clinical sites to enroll patients in our clinical trials, and on other third parties to manage the trials and to perform related data collection and analysis, and, as a result, we may face costs and delays that are outside of our control.
Any failure to obtain regulatory approvals on a timely basis or the subsequent withdrawal of such approvals could prevent us from successfully marketing our products, which could adversely affect our business and operating results. 55 Table of Contents We depend on clinical investigators and clinical sites to enroll patients in our clinical trials, and on other third parties to manage the trials and to perform related data collection and analysis, and, as a result, we may face costs and delays that are outside of our control.
The payment of dividends on our common stock will depend on our earnings, financial condition and other business and economic factors affecting us at such time as our board of directors may consider relevant.
The payment of dividends on our common stock will depend on our earnings, financial condition and other business and economic factors affecting us at such time as the Board may consider relevant.
If the FDA or any other regulatory body finds their compliance status to be unsatisfactory, our commercialization efforts could be delayed, which would harm our business and our results of operations. 31 Table of Contents Additionally, if the FDA determines that our promotional materials, training or other activities constitute promotion of an unapproved use, we could be subject to significant liability, the FDA could request that we cease, correct or modify our training or promotional materials or subject us to regulatory enforcement actions.
If the FDA or any other regulatory body finds their compliance status to be unsatisfactory, our commercialization efforts could be delayed, which would harm our business and our results of operations. 56 Table of Contents Additionally, if the FDA determines that our promotional materials, training or other activities constitute promotion of an unapproved use, we could be subject to significant liability, the FDA could request that we cease, correct or modify our training or promotional materials or subject us to regulatory enforcement actions.
The assumptions underlying these activities may prove to be inaccurate, or we may fail to achieve the expected benefits therefrom. ​ In light of recent macroeconomic conditions and the impact of GLP-1 prescriptions for weight loss treatment, we announced a 2024 cost reduction plan and reorganization to promote the long-term sustainability and scalability of the Company.
The assumptions underlying these activities may prove to be inaccurate, or we may fail to achieve the expected benefits therefrom. In light of recent macroeconomic conditions and the impact of GLP-1 prescriptions for weight loss treatment, we announced a 2024 cost reduction plan and reorganization to promote the long-term sustainability and scalability of ReShape.
For example, certain therapeutic treatments, such as drugs used to treat weight loss such as GLS-1’s, may enhance patient health. If we do not introduce new products and enhancements in a timely manner, there may be a decrease in the use of certain of our products, in which case our operating results could suffer.
For example, certain therapeutic treatments, such as drugs used to treat weight loss such as GLP-1’s, may enhance patient health. If we do not introduce new products and enhancements in a timely manner, there may be a decrease in the use of certain of our products, in which case our operating results could suffer.
For example, on October 10, 2023, we received a written notice from The Nasdaq Stock Market indicating that we were not in compliance with the $1.00 minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on The Nasdaq Capital Market. The notice provided that we have until April 7, 2024 to regain compliance.
For example, on October 10, 2023, we received a written notice from The Nasdaq Stock Market indicating that we were not in compliance with the $1.00 minimum bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on The Nasdaq Capital Market. The notice provided that we had until April 7, 2024 to regain compliance.
Due to the valuation allowance against deferred tax assets at December 31, 2023, the net effect of any further limitation will have no impact on results of operations. Adverse developments affecting the financial services industry could adversely affect our current and projected business operations and our financial condition and results of operations.
Due to the valuation allowance against deferred tax assets at December 31, 2024, the net effect of any further limitation will have no impact on results of operations. Adverse developments affecting the financial services industry could adversely affect our current and projected business operations and our financial condition and results of operations.
The market price for our common stock will be affected by a number of factors, including: • the denial or delay of regulatory clearances or approvals of our product or receipt of regulatory approval of competing products; • our ability to accomplish clinical, regulatory and other product development milestones and to do so in accordance with the timing estimates we have publicly announced; • changes in policies affecting third-party coverage and reimbursement in the United States and other countries; • changes in government regulations and standards affecting the medical device industry and our product; • ability of our products to achieve market success; • the performance of third-party contract manufacturers and component suppliers; • our ability to develop sales and marketing capabilities; 35 Table of Contents • actual or anticipated variations in our results of operations or those of our competitors; • announcements of new products, technological innovations or product advancements by us or our competitors; • developments with respect to patents and other intellectual property rights; • sales of common stock or other securities by us or our stockholders in the future; • additions or departures of key scientific or management personnel; • disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies; • the trading volume of our common stock; • changes in earnings estimates or recommendations by securities analysts, failure to obtain or maintain analyst coverage of our common stock or our failure to achieve analyst earnings estimates; • public statements by analysts or clinicians regarding their perceptions of our clinical results or the effectiveness of our products; • decreases in market valuations of medical device companies; and • general market conditions and other factors unrelated to our operating performance or the operating performance of our competitors.
The market price for our common stock will be affected by a number of factors, including: ● the denial or delay of regulatory clearances or approvals of our product or receipt of regulatory approval of competing products; ● our ability to accomplish clinical, regulatory and other product development milestones and to do so in accordance with the timing estimates we have publicly announced; ● changes in policies affecting third-party coverage and reimbursement in the United States and other countries; ● changes in government regulations and standards affecting the medical device industry and our product; ● ability of our products to achieve market success; ● the performance of third-party contract manufacturers and component suppliers; ● our ability to develop sales and marketing capabilities; ● actual or anticipated variations in our results of operations or those of our competitors; ● announcements of new products, technological innovations or product advancements by us or our competitors; ● developments with respect to patents and other intellectual property rights; ● sales of common stock or other securities by us or our stockholders in the future; ● additions or departures of key scientific or management personnel; ● disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies; ● the trading volume of our common stock; ● changes in earnings estimates or recommendations by securities analysts, failure to obtain or maintain analyst coverage of our common stock or our failure to achieve analyst earnings estimates; ● public statements by analysts or clinicians regarding their perceptions of our clinical results or the effectiveness of our products; ● decreases in market valuations of medical device companies; ● our pending Merger and Asset Sale; and ● general market conditions and other factors unrelated to our operating performance or the operating performance of our competitors.
We may issue additional shares of our common stock in follow-on offerings to raise additional capital, upon the exercise of options or warrants, or in connection with acquisitions or corporate alliances. We also plan to issue additional shares to our employees, directors or consultants in connection with their services to us.
We may issue additional shares of our common stock in follow-on offerings to raise additional capital, upon the exercise of options or warrants, or in connection with acquisitions or corporate alliances, including the Merger. We also plan to issue additional shares to our employees, directors or consultants in connection with their services to us.
We had insufficient internal resources with appropriate accounting and finance knowledge and expertise to design, implement, document and operate effective internal controls around our financial reporting process. We are currently implementing our remediation plan to address the material weaknesses identified above.
We had insufficient internal resources with appropriate accounting and finance knowledge and expertise to design, implement, document and operate effective internal controls around our financial reporting process. We are currently developing our remediation plan to address the material weaknesses identified above.
We had insufficient internal resources with appropriate accounting and finance knowledge and expertise to design, implement, document and operate effective internal controls around our financial reporting process. We are currently implementing our remediation plan to address the material weaknesses identified above.
We had insufficient internal resources with appropriate accounting and finance knowledge and expertise to design, implement, document and operate effective internal controls around our financial reporting process. We are currently developing our remediation plan to address the material weaknesses identified above.
In the future, we may have additional impairments requiring us to record an impairment loss related to our remaining finite-lived intangible assets, which could also have a material adverse effect on our results of operations. We incur significant costs as a result of operating as a public company, and our management is required to devote substantial time to compliance initiatives.
In the future, we may have additional impairments requiring us to record an impairment loss related to our remaining finite-lived intangible assets, which could also have a material adverse effect on our results of operations. 29 Table of Contents We incur significant costs as a result of operating as a public company, and our management is required to devote substantial time to compliance initiatives.
For example, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023, and determined that our internal control over financial reporting was not effective at a reasonable assurance level due to material weaknesses in our internal control over financial reporting.
For example, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2024, and determined that our internal control over financial reporting was not effective at a reasonable assurance level due to material weaknesses in our internal control over financial reporting.
There was no revenue or gross profit recorded for the DBSN device for the year ended December 31, 2023 and 2022 as this product is still in the research stage of development. There was also no revenue recorded for the Obalon line.
There was no revenue or gross profit recorded for the DBSN device for the year ended December 31, 2024 and 2023 as this product is still in the research stage of development. There was also no revenue recorded for the Obalon line.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023, and determined that our internal control over financial reporting was not effective at a reasonable assurance level due to material weaknesses in our internal control over financial reporting.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2024, and determined that our internal control over financial reporting was not effective at a reasonable assurance level due to material weaknesses in our internal control over financial reporting.
The frequency of filing qui tam actions has increased significantly in recent years, causing greater numbers of medical device, pharmaceutical and healthcare companies to have to defend a False Claim Act action.
The frequency of filing qui tam actions has increased significantly in recent years, causing greater numbers of medical device, pharmaceutical and healthcare companies to have to defend a False Claims Act action.
In addition, federal, state, and international laws and regulations, such as the General Data Protection Regulation adopted by the European Union and EEA countries can expose us to enforcement actions and investigations by regulatory authorities, and potentially result in regulatory penalties and significant legal liability, if our information technology security efforts fail.
In addition, federal, state, and international laws and regulations, such as the General Data Protection Regulation adopted by the European Union and European Economic Area countries can expose us to enforcement actions and investigations by regulatory authorities, and potentially result in regulatory penalties and significant legal liability, if our information technology security efforts fail.
In addition, a 27 Table of Contents variety of our software systems are cloud-based data management applications, hosted by third-party service providers whose security and information technology systems are subject to similar risks. We operate in a highly competitive industry that is subject to rapid change.
In addition, a variety of our software systems are cloud-based data management applications, hosted by third-party service providers whose security and information technology systems are subject to similar risks. We operate in a highly competitive industry that is subject to rapid change.
In the United States, there have been and continue to be a number of legislative initiatives to contain healthcare costs. The Patient Protection and Affordable Care Act, as amended, (the “Affordable Care Act”) as well as any future healthcare reform legislation, may have a significant impact on our business.
In the United States, there have been and continue to be a number of legislative initiatives to contain healthcare costs. The Patient Protection and Affordable Care Act as well as any future healthcare reform legislation, may have a significant impact on our business.
The existence of these provisions could limit the price that investors might be willing to pay in the future for shares of our common stock. Some provisions in our certificate of incorporation and bylaws may deter third parties from acquiring us, which may limit the market price of our common stock.
The existence of these provisions could limit the price that investors might be willing to pay in the future for shares of our common stock. Some provisions in the charter and bylaws may deter third parties from acquiring us, which may limit the market price of our common stock.
We are subject to medical device reporting regulations that require us to report to the FDA, Competent Authorities or other governmental authorities in other countries if our products cause or contribute to a death or serious injury or malfunction in a way that would be reasonably likely to contribute to death or serious injury if the malfunction were to recur.
We are subject to medical device reporting regulations that require us to report to the FDA, national bodies known as Competent Authorities or other governmental authorities in other countries if our products cause or contribute to a death or serious injury or malfunction in a way that would be reasonably likely to contribute to death or serious injury if the malfunction were to recur.
If we are unable to successfully market our Lap-Band System for its 24 Table of Contents indicated use, successfully re-introduce the Obalon Balloon System, or develop and commercialize the DBSN device, we may never become profitable and may have to cease operations as a result.
If we are unable to successfully market our Lap-Band System for its indicated use, successfully re-introduce the Obalon Balloon System, or develop and commercialize the DBSN device, we may never become profitable and may have to cease operations as a result.
In addition to the dilutive effects described above, the perceived risk of dilution as a result of the significant number of outstanding warrants may cause our common stockholders to be more inclined to sell their shares, which would contribute to a downward movement in the price of our common stock.
In addition to the dilutive effects described above, the perceived risk of dilution as a result of the significant number of outstanding warrants may cause common stockholders of the Combined Company to be more inclined to sell their shares, which would contribute to a downward movement in the price of its common stock.
Marketing to each of these constituencies requires a different marketing approach, and we must convince each of these groups of the efficacy and utility of our products to be successful. During the year ended December 31, 2023 and 2022, there was minimal revenue for ReShapeCare and ReShape Marketplace.
Marketing to each of these constituencies requires a different marketing approach, and we must convince each of these groups of the efficacy and utility of our products to be successful. During the years ended December 31, 2024 and 2023, there was minimal revenue for ReShapeCare and ReShape Marketplace.
An adverse determination in any litigation could subject us to significant liabilities 34 Table of Contents to third parties, require us to seek licenses from or pay royalties to third parties or prevent us from manufacturing, selling or using our proposed products, any of which could have a material adverse effect on our business and prospects.
An adverse determination in any litigation could subject us to significant liabilities to third parties, require it to seek licenses from or pay royalties to third parties or prevent it from manufacturing, selling or using our proposed products, any of which could have a material adverse effect on its business and prospects.
Any critical vendor bankruptcy or insolvency, or any breach or default by a critical vendor, or the loss of any significant vendor relationships, may have a material adverse impact on our business.
Any critical vendor bankruptcy or insolvency, or any breach or default by a critical vendor, or the loss of any significant vendor relationships, may have a material adverse impact on the Combined Company’s business.
Moreover, the perceived risk of dilution and the resulting downward pressure on our common stock price could encourage investors to engage in short sales of our common stock, which could further contribute to price declines in our common stock.
Moreover, the perceived risk of dilution and the resulting downward pressure on the Combined Company’s common stock price could encourage investors to engage in short sales of its common stock, which could further contribute to price declines.
We rely on our information technology systems to, among other things, effectively manage sales and marketing data, accounting and financial functions, inventory management, product development tasks, clinical data, customer service and technical support functions.
The operation of our business depend on our information technology systems. We rely on our information technology systems to, among other things, effectively manage sales and marketing data, accounting and financial functions, inventory management, product development tasks, clinical data, customer service and technical support functions.
Substantially all of our cash and cash equivalents were held in accounts with Silicon Valley Bank (SVB) at the time it was closed by state regulators, and the Federal Deposit Insurance Corporation (FDIC) was appointed receiver for 28 Table of Contents SVB, on March 10, 2023.
Substantially all of our cash and cash equivalents were held in accounts with Silicon Valley Bank (“SVB”) at the time it was closed by state regulators, and the Federal Deposit Insurance Corporation (“FDIC”) was appointed receiver for SVB, on March 10, 2023.
Our certificate of incorporation and bylaws and Section 203 of the Delaware General Corporation Law contain provisions that may have the effect of deterring or delaying attempts by our stockholders to remove or replace management, engage in proxy contests and effect changes in control.
The Restated Certificate of Incorporation of ReShape, as amended (our “charter”), and the Amended and Restated Bylaws of ReShape (our “bylaws”) and Section 203 of the Delaware General Corporation Law contain provisions that may have the effect of deterring or delaying attempts by our stockholders to remove or replace management, engage in proxy contests and effect changes in control.
Failure to protect our information technology infrastructure against cyber-based attacks, network security breaches, service interruptions or data corruption could materially disrupt our operations and adversely affect our business. The operation of our business depends on our information technology systems.
Failure to protect the Combined Company’s information technology infrastructure against cyber-based attacks, network security breaches, service interruptions or data corruption could materially disrupt its operations and adversely affect its business. The operation of the Combined Company’s business will depend on our information technology systems.
Our success depends on the services of our senior management and other key employees. The loss of the services of one or more of our officers or key employees could hinder our sales and marketing efforts, or delay or prevent the commercialization of our Lap-Band System, Lap-Band 2.0, the Obalon Balloon System, and the development of our DBSN device.
The loss of the services of one or more of our officers or key employees could hinder our sales and marketing efforts, or delay or prevent the commercialization of our Lap-Band System, Lap-Band 2.0, the Obalon Balloon System, and the development of our DBSN device.
If we are found to be in violation of any of the laws described above or other applicable state and federal fraud and abuse laws, we may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from government healthcare reimbursement programs and the curtailment or restructuring of our operations.
If the Combined Company is found to be in violation of any of the laws described above or other applicable state and federal fraud and abuse laws, it may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from government healthcare reimbursement programs and the curtailment or restructuring of its operations.
If we or our suppliers fail to comply with ongoing regulatory requirements, or if we experience unanticipated product problems, our L ap -B and system could be subject to restrictions or withdrawal from the market.
If we or our suppliers fail to comply with ongoing regulatory requirements, or if we experience unanticipated product problems, our Lap-Band system could be subject to restrictions or withdrawal from the market.
ReShape’s ability to utilize its net operating loss carryforwards, tax credits, and built-in items of deduction, including capitalized start-up costs and research and development costs, has been, and may continue to be substantially limited due to ownership changes.
There are no tax examinations currently in progress. 32 Table of Contents ReShape’s ability to utilize its net operating loss carryforwards, tax credits, and built-in items of deduction, including capitalized start-up costs and research and development costs, has been, and may continue to be substantially limited due to ownership changes.
The issuance of shares of common stock upon the exercise of warrants would dilute the percentage ownership interest of all stockholders, might dilute the book value per share of our common stock and would increase the number of our publicly traded shares, which could depress the market price of our common stock.
The issuance of such shares of common stock upon the exercise of warrants by the Combined Company would dilute the percentage ownership interest of stockholders, might dilute the book value per share of the Combined Company’s common stock and would increase the number of its publicly traded shares, which could depress the market price of its common stock.
Any of these impacts, or any other impacts resulting from the factors described above or other related or similar factors not described above, could have material adverse impacts on our liquidity and our current and/or projected business operations and financial condition and results of operations. ​ In addition, a vendor on which we are reliant could be adversely affected by any of the liquidity or other risks that are described above as factors that could result in material adverse impacts on us, including but not limited to delayed access or loss of access to uninsured deposits or loss of the ability to draw on existing credit facilities involving a troubled or failed financial institution.
In addition, a vendor on which we are reliant could be adversely affected by any of the liquidity or other risks that are described above as factors that could result in material adverse impacts on us, including but not limited to delayed access or loss of access to uninsured deposits or loss of the ability to draw on existing credit facilities involving a troubled or failed financial institution.
Based on our available cash resources, we may not have sufficient cash on hand to fund our current operations for more than 12 months from the date of filing this Form 10-K. This condition raises substantial doubt about our ability to continue as a going concern. Our current business strategy includes identifying strategic merger and acquisition alternatives.
Based on our available cash resources, we do not have sufficient cash on hand to fund our current operations for more than 12 months from the date of filing this Form 10-K. This condition raises substantial doubt about our ability to continue as a going concern.
Patent and Trademark Office (“USPTO”), or under more recently promulgated Inter Partes Review proceedings, depending on when the patent application was filed, and foreign patents may be subject to opposition or comparable proceedings in the corresponding foreign patent offices, which proceedings could result in either loss of the patent or denial of the patent application, or loss or reduction in the scope of one or more of the claims of, the patent or patent application.
U.S. patents and patent applications may also be subject to interference proceedings and U.S. patents may be subject to re-examination proceedings in the USPTO, or under more recently promulgated Inter Partes Review proceedings, depending on when the patent application was filed, and foreign patents may be subject to opposition or comparable proceedings in the corresponding foreign patent offices, which proceedings could result in either loss of the patent or denial of the patent application, or loss or reduction in the scope of one or more of the claims of, the patent or patent application.
With certain exceptions (e.g. the net operating loss carryforwards), ReShape is no longer subject to U.S. federal, state or local examinations by tax authorities for years prior to 2016. There are no tax examinations currently in progress.
Net operating loss carryforwards are subject to review and possible adjustment by the taxing authorities. With certain exceptions (e.g. the net operating loss carryforwards), Reshape is no longer subject to U.S. federal, state or local examinations by tax authorities for years prior to 2016.
We may not complete the current or any cost reduction plan and reorganization on the anticipated timetable, and even if successfully completed, we may not achieve the anticipated cost savings, operating efficiencies or other benefits of such activities. ​ We may be unable to attract and retain management and other personnel we need to succeed.
We may not complete the current or any cost reduction plan and reorganization on the anticipated timetable, and even if successfully completed, we may not achieve the anticipated cost savings, operating efficiencies or other benefits of such activities.
Any such loss or lack of access to these funds could adversely impact our short-term liquidity and ability to meet our operating expense obligations. ​ In addition, widespread investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us to acquire financing on acceptable terms or at all.
In addition, widespread investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us to acquire financing on acceptable terms or at all.
On February 23, 2024, the stockholders of the Company authorized for the Board of Directors, in its discretion but no later than February 23, 2025, to declare a reverse stock split at a ratio in the range of 1-for-10 to 1-for-60, such ratio to be determined by the Board (“Reverse Stock Split”).
In order to regain compliance with the bid price requirement, on February 23, 2024, the stockholders of ReShape authorized for the Board, in its discretion but no later than February 23, 2025, to declare a reverse stock split at a ratio in the range of 1-for-10 to 1-for-60, such ratio to be determined by the Board.
As such, we determined the carrying value of the long-lived assets were impaired and recognized a non-cash impairment charge of approximately $0.8 million on the condensed consolidated balance sheet as of December 31, 2023.
As such, we determined the carrying value of the long-lived assets were fully impaired and recognized a non-cash impairment charge of approximately $0.8 million on the statement of operations for the year ended December 31, 2023.
If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if our stock price appreciates. ​
If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if our stock price appreciates. ​ 64 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable. ​
We are subject, directly or indirectly, to United States federal and state healthcare fraud and abuse and false claims laws and regulations. Prosecutions under such laws have increased in recent years and we may become subject to such litigation. If we are unable to, or have not fully complied with such laws, we could face substantial penalties.
Prosecutions under such laws have increased in recent years and we may become subject to such litigation. If we are unable to, or have not fully complied with such laws, we could face substantial penalties.
Defending a suit, regardless of merit, could be costly, could divert management attention and 32 Table of Contents might result in adverse publicity, which could result in the withdrawal of, or inability to recruit, clinical trial volunteers or result in reduced acceptance of our products in the market.
Defending a suit, regardless of merit, could be costly, could divert management attention and might result in adverse publicity, which could result in the withdrawal of, or inability to recruit, clinical trial volunteers or result in reduced acceptance of our products in the market. 57 Table of Contents We may be subject to product liability claims even if it appears that the claimed injury is due to the actions of others.
The fact that our stockholders and warrant holders can sell substantial amounts of our common stock in the public market, whether or not sales have occurred or are occurring, could make it more difficult for us to raise additional funds through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate, or at all. 36 Table of Contents If we fail to meet all applicable Nasdaq Capital Market requirements, Nasdaq could delist our common stock, which could adversely affect the market liquidity of our common stock and the market price of our common stock could decrease.
The fact that the Combined Company’s stockholders and warrant holders can sell substantial amounts of common stock in the public market, whether or not sales have occurred or are occurring, could make it more difficult for it to raise additional funds through the sale of equity or equity-related securities in the future at a time and price that the Combined Company deems reasonable or appropriate, or at all. 44 Table of Contents The Combined Company’s operating results may fluctuate significantly.
We may lose important patents or patent rights if we do not timely pay required patent fees or annuities. We have, from time to time, experienced delays in the payment of required patent fees or annuities.
If issued, they may not provide us with proprietary protection or competitive advantages against competitors with similar technology. 58 Table of Contents We may lose important patents or patent rights if we do not timely pay required patent fees or annuities. We have, from time to time, experienced delays in the payment of required patent fees or annuities.
We have a significant number of outstanding warrants, which may cause significant dilution to our stockholders, have a material adverse impact on the market price of our common stock and make it more difficult for us to raise funds through future equity offerings. As of December 31, 2023, we had outstanding 23,457,047 shares of common stock.
Post consummation of the Merger, the Combined Company may have outstanding warrants, which may cause dilution to its stockholders, have a material adverse impact on the market price of its common stock and make it more difficult for it to raise funds through future equity offerings.
Risks Related to Our Business and Industry ● If we are unable to either substantially improve our operating results or obtain additional financing, we may be unable to continue as a going concern. ● Our current business strategy includes identifying strategic merger and acquisition alternatives.
Additional risks not currently known to us or that we currently deem immaterial also may impair our business. Risks Related to Our Business and Industry If we are unable to either substantially improve our operating results or obtain additional financing, we may be unable to continue as a going concern.
If we become subject to a lawsuit, we may be required to expend significant financial and other resources and our management’s attention may be diverted from our business. ● We may in the future become involved in lawsuits, to protect or enforce our intellectual property, which can be expensive and time consuming and could result in the diversion of significant resources.
The Combined Company may in the future become involved in lawsuits, to protect or enforce its intellectual property, which can be expensive and time consuming and could result in the diversion of significant resources.
We may be subject to product liability claims even if it appears that the claimed injury is due to the actions of others. For example, we rely on the expertise of surgeons and other associated medical personnel to perform the medical procedure to implant and remove our products and to perform the related therapy.
For example, we rely on the expertise of surgeons and other associated medical personnel to perform the medical procedure to implant and remove our products and to perform the related therapy.
As of December 31, 2023, ReShape had U.S. federal net operating loss carryforwards of $218.9 million. Of the total U.S. federal net operating loss carryforwards at December 31, 2023. Losses generated beginning in 2018 will carryover indefinitely.
As of December 31, 2024, Reshape had U.S. federal net operating loss carryforwards of $227.2 million. All losses have been generated beginning in 2018 and will carryover indefinitely. Reshape had state net operating loss carryforwards of $380.1 million at December 31, 2024 and had foreign net operating loss carryforwards of $0.4 million at December 31, 2024.
Our pending patent applications, those we may file in the future, or those we may license from third parties, may not result in 33 Table of Contents patents being issued. If issued, they may not provide us with proprietary protection or competitive advantages against competitors with similar technology.
Our pending patent applications, those we may file in the future, or those we may license from third parties, may not result in patents being issued.
Our Lap-Band System, Obalon Balloon System or DBSN device may infringe or be claimed to infringe patents that we do not own or license, including patents that may issue in the future based on patent applications of which we are currently aware, as well as applications of which we are unaware.
An adverse determination in any litigation could subject us to significant liabilities to third parties, require us to seek licenses from or pay royalties to third parties or prevent us from manufacturing, selling or using our proposed products, any of which could have a material adverse effect on our business and prospects. 59 Table of Contents Our Lap-Band System, Obalon Balloon System or DBSN device may infringe or be claimed to infringe patents that we do not own or license, including patents that may issue in the future based on patent applications of which we are currently aware, as well as applications of which we are unaware.
Sales of a substantial number of shares of our common stock in the public market by existing stockholders, or the perception that they may occur, could cause our stock price to decline.
If class action litigation is initiated against us, we may incur substantial costs and our management’s attention may be diverted from our operations, which could significantly harm our business. 62 Table of Contents Sales of a substantial number of shares of our common stock in the public market by us or by our existing stockholders, or the perception that they may occur, could cause our stock price to decline.
Such measures include: designing and implementing controls to formalize roles and review responsibilities to align with our team's skills and experience and designing and implementing formalized controls; and designing and implementing formal processes, policies and procedures supporting our financial close process. 25 Table of Contents We have identified material weaknesses in our internal control over financial reporting and any failure to maintain effective internal control over financial reporting, may have a material and adverse effect on our business, operating results, financial condition and prospects.
We have identified material weaknesses in our internal control over financial reporting and any failure to maintain effective internal control over financial reporting, may have a material and adverse effect on our business, operating results, financial condition and prospects.
In addition, our results of operations, financial position and cash flows could be materially adversely affected by changes under the Affordable Care Act and changes under any federal or state legislation adopted in the future. Public health crises, such as the COVID-19 pandemic, have had, and could in the future have, a negative effect on our business.
In addition, our results of operations, financial position and cash flows could be materially adversely affected by changes under the Affordable Care Act and changes under any federal or state legislation adopted in the future. We are subject, directly or indirectly, to United States federal and state healthcare fraud and abuse and false claims laws and regulations.
Prosecutions under such laws have increased in recent years and we may become subject to such litigation.
Prosecutions under such laws have increased in recent years and the Combined Company may become subject to such litigation. If the Combined Company is unable to, or have not fully complied with such laws, it could face substantial penalties.
If we fail to identify, attract, retain and motivate these highly skilled personnel, we may be unable to continue our development and commercialization activities.
If we fail to identify, attract, retain and motivate these highly skilled personnel, we may be unable to continue our development and commercialization activities. In light of our 2024 cost reduction plan, we are unlikely to hire additional management or other personnel. We cannot assure you that we will ever generate substantial revenue or be profitable.
We currently do not generate revenue sufficient to offset operating costs and anticipate such shortfalls to continue, partially due to the introduction of GLP-1 pharmaceuticals and the unpredictability of COVID-19, which has resulted and may continue to result in a slow-down of elective surgeries and restrictions in some locations, and supply chain disruptions.
We currently do not generate revenue sufficient to offset operating costs and anticipate such shortfalls to continue, partially due to the introduction of GLP-1 pharmaceuticals. As of December 31, 2024, we had cash, cash equivalents and restricted cash of $0.8 million and $1.0 million of accounts receivable.
If we are unable to, or have not fully complied with such laws, we could face substantial penalties. ● Failure to protect our information technology information technology infrastructure against cyber-based attacks, network security breaches, service interruptions or data corruption could materially disrupt our operations and adversely affect our business. ● We operate in a highly competitive industry that is subject to rapid change.
If we are found to be in violation of any of the laws described above or other applicable state and federal fraud and abuse laws, we may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from government healthcare reimbursement programs and the curtailment or restructuring of our operations. 31 Table of Contents Failure to protect our information technology infrastructure against cyber-based attacks, network security breaches, service interruptions or data corruption could materially disrupt our operations and adversely affect our business.
Risks Related to Intellectual Property ● If we are unable to obtain or maintain intellectual property rights relating to our technology and neuroblocking therapy, the commercial value of our technology and any future products will be adversely affected, and our competitive position will be harmed. ● We may lose important patent rights if we do not timely pay required patent fees or annuities. ● Many of our competitors have significant resources and incentives to apply for and obtain intellectual property rights that could limit or prevent our ability to commercialize our current or future products in the United States or abroad. ● If we are unable to protect the confidentiality of our proprietary information and know-how, the value of our technology and products could be adversely affected. ● Intellectual property litigation is a common tactic in the medical device industry to gain competitive advantage.
Many of the Combined Company’s competitors may have significant resources and incentives to apply for and obtain intellectual property rights that could limit or prevent its ability to commercialize our current or future products in the United States or abroad.
The shares of series C convertible preferred stock issued in connection with our acquisition of ReShape Medical have certain rights and preferences senior to our common stock, including a liquidation preference that is senior to our common stock.
These securities may have the same rights as shares of common stock of the Combined Company or, alternatively, may have dividend, liquidation or other preferences to shares of common stock of the Combined Company, including shares of common stock of the Combined Company issued in connection with the Merger.
Removed
Merger and acquisition transactions are risky and may harm our business, reputation, operating results and financial condition. ● We have recently undertaken a cost reduction plan and reorganization, and may do so again in the future.
Added
Risks Related to our Business and Industry ● If we are unable to either substantially improve our operating results or obtain additional financing, we may be unable to continue as a going concern. ● If the warrants issued in our February 2025 offering are exercised by way of a “zero exercise price” alternative, especially after the reset date stockholders may suffer substantial dilution. ● We have recently undertaken a cost reduction plan and reorganization, and may do so again in the future.
Removed
If our competitors are able to develop and market products that are safer or more effective than our products, our commercial opportunities will be reduced or eliminated. ● We face external competition from other technologies such as GLP-1’s and alternative medical procedures and we may not be able to compete effectively. ● Our ability to use net operating losses (“NOL”) carryforwards may be limited. ● Adverse developments affecting the financial services industry could adversely affect our current and projected business operations and our financial condition and results of operations.
Added
Risks Related to the Pending Merger ● Fluctuations in the market price of our common stock will affect the value of the Merger Consideration. ● The Exchange Ratio in the Merger Agreement is subject to adjustment based on ReShape’s net cash as of a determination date prior to completion of the Merger, which could dilute further the ownership of either the ReShape or Vyome stockholders in the combined company. ● The ownership percentages of the ReShape and Vyome stockholders, respectively, that will result from the Exchange Ratio in the Merger Agreement are calculated prior to the completion of the Concurrent Financing, which could dilute further the ownership of the ReShape stockholders in the combined company. ● The Merger may not be consummated unless important conditions are satisfied or waived and there can be no assurance that the Merger will be consummated. ● Although an application has been filed to list the ReShape Shares on The Nasdaq Capital Market, there can be no assurance that the common stock will be so listed or, if listed, that the Combined Company will be able to comply with the continued listing standards. ​ Risks Related to the Business of the Combined Company After the Merger ● Combining the two companies may be more difficult, costly or time consuming than expected, and the Combined Company may not realize all of the anticipated benefits of the Merger. ● ReShape and Vyome will incur substantial direct and indirect costs as a result of the Merger and the Combined Company will incur substantial direct and indirect costs following the Merger. ● Both ReShape and Vyome have operated with a loss and negative cash flows for the entirety of their existence and it is expected the Combined Company will have to raise significant capital in the future that could be dilutive to stockholders of the Combined Company. ● If the perceived benefits of the Merger do not meet the expectations of investors or securities analysts, the market price of ReShape’s securities or, following the Merger, Vyome Holdings, Inc. securities, may decline. 26 Table of Contents Risks Related to our Asset Sale ● While the ReShape Asset Sale is pending, it creates unknown impacts on ReShape’s future which could materially and adversely affect its business, financial condition and results of operations. ● The failure to consummate the ReShape Asset Sale may materially and adversely affect ReShape’s business, financial condition and results of operations. ● The Merger may be consummated despite the ReShape Asset Sale not closing under certain circumstances. ● The completion of the Asset Sale is contingent upon completion of the Merger . ​ Risks Associated with Development and Commercialization of ReShape’s Lap-Band System, Lap-Band 2.0 System, Obalon Balloon System, and the DBSN Device ● Our efforts to increase revenue from our Lap-Band System, Lap-Band 2.0 System, Obalon Balloon System, and commercialize our DBSN device and expanded line of bariatric surgical accessories, including ReShape Calibration Tubes, may not succeed or may encounter delays which could significantly harm our ability to generate revenue. ● We may not be able to obtain required regulatory approvals for our DBSN device in a cost-effective manner or at all, which could adversely affect our business and operating results. ● We depend on clinical investigators and clinical sites to enroll patients in our clinical trials, and on other third parties to manage the trials and to perform related data collection and analysis, and, as a result, we may face costs and delays that are outside of our control. ​ Risks Related to our Intellectual Property ● If we are unable to obtain or maintain intellectual property rights relating to our technology and neuroblocking therapy, the commercial value of our technology and any future products will be adversely affected and our competitive position will be harmed. ● We may lose important patents or patent rights if we do not timely pay required patent fees or annuities. ● Many of our competitors have significant resources and incentives to apply for and obtain intellectual property rights that could limit or prevent our ability to commercialize our current or future products in the United States or abroad. ​ Risks Related to Equity Line of Credit ● The sale or issuance of our common stock to Ascent under our proposed equity line of credit transaction may cause dilution and the sale of the shares of common stock acquired by Ascent, or the perception that such sales may occur, could cause the price of our common stock to fall. ● Ascent will pay less than the then-prevailing market price for our common stock, which could cause the price of our common stock to decline. ● It is not possible to predict the actual number of shares we will sell under the Equity Purchase Agreement to Ascent or the actual gross proceeds resulting from those sales. ● Our commitment to issue shares of our common stock pursuant to the terms of the Equity Purchase Agreement could encourage short sales by third parties, which could contribute to the future decline of our stock price. ​ 27 Table of Contents Risks Relating to Ownership of our Common Stock ● The trading price of our common stock has been volatile and is likely to be volatile in the future. ● Sales of a substantial number of shares of our common stock in the public market by existing stockholders, or the perception that they may occur, could cause our stock price to decline. ● We have a significant number of outstanding warrants, which may cause significant dilution to our stockholders, have a material adverse impact on the market price of our common stock and make it more difficult for us to raise funds through future equity offerings. ​ RISK FACTORS ​ An investment in our securities is speculative and involves a high degree of risk and uncertainty.
Removed
Risks Associated with Development and Commercialization of the Lap-Band System, Lap-Band 2.0 System, Obalon Balloon System, DBSN Device 21 Table of Contents ● Our efforts to increase revenue from our L ap -B and System, Lap-Band 2.0 System, Obalon Balloon System, and commercialize our DBSN device and expanded line of bariatric surgical accessories, including ReShape Calibration Tubes, may not succeed or may encounter delays which could significantly harm our ability to generate revenue. ● We may not be able to obtain required regulatory approvals for our DBSN device in a cost-effective manner or at all, which could adversely affect our business and operating results. ● We depend on clinical investigators and clinical sites to enroll patients in our clinical trials, and on other third parties to manage the trials and to perform related data collection and analysis, and, as a result, we may face costs and delays that are outside of our control . ● Modifications to the L ap -B and System and Lap-Band 2.0 may require additional approval from regulatory authorities, which may not be obtained or may delay our commercialization efforts. ● If we or our suppliers fail to comply with ongoing regulatory requirements, or if we experience unanticipated product problems, our L ap -B and system could be subject to restrictions or withdrawal from the market. ● We face the risk of product liability claims that could be expensive, divert management’s attention and harm our reputation and business.
Added
You should carefully consider the risks described below, together with the other information contained in this Annual Report on Form 10-K, including the consolidated financial statements and notes thereto, before deciding to invest in our securities.
Removed
We may not be able to obtain adequate product liability insurance.
Added
The occurrence of any of the events described below could have a material adverse effect on our business, financial condition, results of operations, cash flows, prospects or the value of our common stock. These risks are not the only ones that we face.
Removed
Risks Relating to Ownership of Our Common Stock ● The trading price of our common stock has been volatile and is likely to be volatile in the future. ● Sales of a substantial number of shares of our common stock in the public market by existing stockholders, or the perception that they may occur, could cause our stock price to decline. ● We have a significant number of outstanding warrants, which may cause significant dilution to our stockholders, have a material adverse impact on the market price of our common stock and make it more difficult for us to raise funds through future equity offerings. ● If we fail to meet all applicable Nasdaq Capital Market requirements, Nasdaq could delist our common stock, which could adversely affect the market liquidity of our common stock and the market price of our common stock could decrease. ● There are risks associated with effecting the Reverse Stock Split, if approved by the Board. ● You may experience future dilution as a result of future equity offerings. ● Our organizational documents and Delaware law make a takeover of our company more difficult, which may prevent certain changes in control and limit the market price of our common stock. ● We have not paid dividends in the past and do not expect to pay dividends in the future, and any return on investment may be limited to the value of our common stock. 22 Table of Contents risk factors Risks Related to Our Business and Industry If we are unable to either substantially improve our operating results or obtain additional financing, we may be unable to continue as a going concern.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeIn addition, we stive to minimize cybersecurity risks when we first select or renew a vendor by including cybersecurity risk as part of our overall vendor evaluation and due diligence process. ​ Governance ​ Our Board of Directors and our Audit Committee oversee our enterprise-wide risk management, including with respect to cybersecurity.
Biggest changeIn addition, we strive to minimize cybersecurity risks when we first select or renew a vendor by including cybersecurity risk as part of our overall vendor evaluation and due diligence process.
ITEM 1C. CYBERSECURITY ​ Risk Management and Strategy ​ Our Information and Technology service providers manages the Company’s security program, which is focused on assessing, identifying, and managing cyber risk and information security threats.
ITEM 1C. CYBERSECURITY ​ Risk Management and Strategy ​ Our third party Information and Technology service providers manages the Company’s security program, which is focused on assessing, identifying, and managing cyber risk and information security threats.
We evaluate cybersecurity on an ongoing basis, and it is a risk monitored through our overall enterprise risk management program, including by the executive leadership and board of directors, described below under “Governance.” ​ To proactively manage cybersecurity risk in our organization, our management team has instituted a security policy that is available to all employees. ​ To proactively identify, mitigate, and prepare for potential cybersecurity incidents, we maintain both a business continuity plan and cyber incident response plan.
Our management team, including our Chief Executive Officer and Chief Financial Officer, evaluates cybersecurity on an ongoing basis, and it is a risk monitored through our overall enterprise risk management program, including by the executive leadership and board of directors, described below under “Governance.” ​ To proactively manage cybersecurity risk in our organization, our management team has instituted a security policy that is available to all employees. ​ To proactively identify, mitigate, and prepare for potential cybersecurity incidents, we maintain both a business continuity plan and cyber incident response plan.
Added
We are not aware of any risks from cybersecurity threats have materially affected or are reasonably likely to materially affect the Company, including its business strategy, results of operations, or financial condition as of the date of this Annual Report on Form 10-K. ​ Governance ​ Our Board of Directors and our Audit Committee oversee our enterprise-wide risk management, including with respect to cybersecurity.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe medical device industry in which the Company operates is characterized by frequent claims and litigation, including claims regarding patent and other intellectual property rights as well as improper hiring practices. As a result, the Company may be involved in various legal proceedings from time to time. ​ ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II.
Biggest changeThe medical device industry in which the Company operates is characterized by frequent claims and litigation, including claims regarding patent and other intellectual property rights as well as improper hiring practices. As a result, the Company may be involved in various legal proceedings from time to time. ​ 65 Table of Contents ITEM 4. MINE SAFETY DISCLOSURES Not applicable.
ITEM 3. LEGAL PROCEEDINGS The Company is not currently a party to any material litigation and the Company is not aware of any pending or threatened litigation against it that could have a material adverse effect on the Company’s business, operating results or financial condition.
The Company is not currently a party to any material litigation and the Company is not aware of any other pending or threatened litigation against it that could have a material adverse effect on the Company’s business, operating results or financial condition.
Added
ITEM 3. LEGAL PROCEEDINGS On December 2, 2024, the Company received a notice, dated November 22, 2024, from Rosenberg Law indicating that it is submitting an application to add the Company as a defendant in Canadian litigation (Raymond Edson Marshall v. Allergan Inc., Court File Reference VLC-S-S-151970) concerning the Lap-Band gastric banding device.
Added
According to the notice, the application to add the Company as a defendant was scheduled to be heard at the Vancouver Supreme Court on January 10, 2025.
Added
As of the date of this report, the terms of the order adding ReShape as a party have not yet been finalized and entered with the court registry and ReShape has not been served with the finalized orders confirming its addition as a defendant in the matter.
Added
Based on our analysis to date, there is no legal liability that is probable or reasonably estimable and no implications on the financial statements for the year ended December 31, 2024.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUIT Y, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock trades on the Nasdaq under the symbol “RSLS”. 39 Table of Contents Number of Stockholders As of March 26, 2024, there were approximately 34 holders of record of our common stock.
Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUIT Y, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock trades on the Nasdaq under the symbol “RSLS”. Number of Stockholders As of April 2, 2025, there were approximately 40 holders of record of our common stock.
Dividend Policy We have never paid cash dividends on our common stock. The board of directors presently intends to retain all earnings for use in our business and does not anticipate paying cash dividends in the foreseeable future. We do not have a dividend reinvestment plan or a direct stock purchase plan.
Dividend Policy We have never paid cash dividends on our common stock. The board of directors presently intends to retain all earnings for use in our business and does not anticipate paying cash dividends in the foreseeable future. We do not have a dividend reinvestment plan or a direct stock purchase plan. Issuer Purchases of Equity Securities None. ​
Removed
Issuer Purchases of Equity Securities None. ​ ITEM 6. [RESERVED] ​ 40 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeFinancial Overview Results of Operations The following table sets forth certain data from our operating results from the years ended December 31, 2023 and 2022, expressed as percentages of net revenue (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 ​ ​ 2022 ​ Revenue $ 8,678 ​ 100.0 % ​ $ 11,240 ​ 100.0 % Cost of revenue ​ 3,130 ​ 36.1 % ​ ​ 4,438 ​ 39.5 % Gross profit ​ 5,548 ​ 63.9 % ​ ​ 6,802 ​ 60.5 % Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales and marketing ​ 7,548 ​ 87.0 % ​ ​ 14,093 ​ 125.4 % General and administrative ​ 10,324 ​ 119.0 % ​ ​ 17,250 ​ 153.5 % Research and development ​ 2,315 ​ 26.7 % ​ ​ 2,537 ​ 22.6 % Impairment of long-lived assets ​ 777 ​ 9.0 % ​ ​ 18,744 ​ 166.8 % (Gain) loss on disposal of assets, net ​ (33) ​ (0.4) % ​ ​ 529 ​ 4.7 % Total operating expenses ​ 20,931 ​ 241.3 % ​ ​ 53,153 ​ 473.0 % Operating loss ​ (15,383) ​ (177.4) % ​ ​ (46,351) ​ (412.5) % Other expense (income), net: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest (income) expense, net ​ (26) ​ (0.3) % ​ ​ 113 ​ 1.0 % Gain on changes in fair value of liability warrants ​ (3,878) ​ (44.7) % ​ ​ — ​ — % (Gain) loss on foreign currency exchange, net ​ (22) ​ (0.3) % ​ ​ 141 ​ 1.3 % Other ​ (122) ​ (1.4) % ​ ​ (11) ​ (0.1) % Loss before income tax provision ​ (11,335) ​ (130.7) % ​ ​ (46,594) ​ (414.7) % Income tax expense (benefit) ​ 52 ​ 0.6 % ​ ​ (380) ​ (3.4) % Net loss $ (11,387) ​ (131.2) % ​ $ (46,214) ​ (411.2) % 41 Table of Contents Non-GAAP Disclosures In addition to the financial information prepared in conformity with GAAP, we provide certain historical non-GAAP financial information.
Biggest changeFinancial Overview Results of Operations The following table sets forth certain data from our operating results from the years ended December 31, 2024 and 2023, expressed as percentages of net revenue (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2024 ​ ​ 2023 ​ Revenue $ 8,006 ​ 100.0 % ​ $ 8,678 ​ 100.0 % Cost of revenue ​ 2,949 ​ 36.8 % ​ ​ 3,130 ​ 36.1 % Gross profit ​ 5,057 ​ 63.2 % ​ ​ 5,548 ​ 63.9 % Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales and marketing ​ 2,991 ​ 37.4 % ​ ​ 7,548 ​ 87.0 % General and administrative ​ 6,931 ​ 86.6 % ​ ​ 10,324 ​ 119.0 % Research and development ​ 1,803 ​ 22.5 % ​ ​ 2,315 ​ 26.7 % Transaction costs ​ 1,024 ​ 12.8 % ​ ​ — ​ — % Impairment of long-lived assets ​ 36 ​ 0.4 % ​ ​ 777 ​ 9.0 % Gain on disposal of assets, net ​ — ​ — % ​ ​ (33) ​ (0.4) % Total operating expenses ​ 12,785 ​ 159.7 % ​ ​ 20,931 ​ 241.3 % Operating loss ​ (7,728) ​ (96.5) % ​ ​ (15,383) ​ (177.4) % Other expense (income), net: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense, net ​ (14) ​ (0.2) % ​ ​ (26) ​ (0.3) % Gain on changes in fair value of liability warrants ​ (52) ​ (0.6) % ​ ​ (3,878) ​ — % Gain on extinguishment of debt ​ (429) ​ (5.4) % ​ ​ — ​ — % Loss (gain) on foreign currency exchange, net ​ 51 ​ 0.6 % ​ ​ (22) ​ (0.3) % Other ​ (193) ​ (2.4) % ​ ​ (122) ​ (1.4) % Loss before income tax provision ​ (7,091) ​ (88.5) % ​ ​ (11,335) ​ (175.4) % Income tax expense ​ 39 ​ 0.5 % ​ ​ 52 ​ 0.6 % Net loss $ (7,130) ​ (89.1) % ​ $ (11,387) ​ (131.2) % Non-GAAP Disclosures In addition to the financial information prepared in conformity with GAAP, we provide certain historical non-GAAP financial information.
Net Cash Provided by Financing Net cash provided by financing activities was $17.6 million for the year ended December 31, 2023, as the Company completed multiple public offerings with proceeds of approximately $13.5 million and $4.1 million of warrants exercised during 2023.
Net cash provided by financing activities was $17.6 million for the year ended December 31, 2023, as the Company completed multiple public offerings with proceeds of approximately $13.5 million and $4.1 million of warrants exercised during 2023.
Except as may be required by law, we undertake no obligation to update any forward-looking statement to reflect events after the date of this report. Overview We are the premier global weight-loss solutions company, offering an integrated portfolio of proven products and services that manage and treat obesity and associated metabolic disease.
Except as may be required by law, we undertake no obligation to update any forward-looking statement to reflect events after the date of this report. ​ Overview We are a premier physician-led weight-loss solutions company, offering an integrated portfolio of proven products and services that manage and treat obesity and associated metabolic disease.
This was offset by a positive impact to accounts receivable of $0.1 million and a negative impact to cash from inventory of $0.5 million, prepaid expenses of $0.2 million and accounts payable and accrued liabilities of $3.5 million and a decrease in warranty liabilities of $0.2 million.
This was offset by a positive 72 Table of Contents impact to accounts receivable of $0.1 million and a negative impact to cash from inventory of $0.5 million, prepaid expenses of $0.2 million and accounts payable and accrued liabilities of $3.5 million and a decrease in warranty liabilities of $0.2 million.
Our future capital requirements will depend on many factors, including, but not limited to, the following: ● the cost and timing of establishing sales, marketing and distribution capabilities; ● the cost of establishing clinical and commercial supplies of our DBNS, and any products that we may develop; ● the rate of market acceptance of our DBNS, and any other product candidates; ● the cost of filing and prosecuting patent applications and defending and enforcing our patent and other intellectual property rights; ● the cost of defending, in litigation or otherwise, any claims that we infringe third-party patent or other intellectual property rights; ● the effect of competing products and market developments; 45 Table of Contents ● the cost of explanting clinical devices; ● the terms and timing of any collaborative, licensing or other arrangements that we may establish; ● any revenue generated by sales of our L ap -B and , Obalon Balloon System, DBNS or our future products; ● the scope, rate of progress, results and cost of our clinical trials and other research and development activities; ● the cost and timing of obtaining any further required regulatory approvals; and ● the extent to which we invest in products and technologies, although we currently have no commitments or agreements relating to any of these types of transactions.
Future capital requirements will depend on many factors and will be decided by Biorad, once the pending asset sale is complete. ​ Our future capital requirements will depend on many factors, including, but not limited to, the following: ● the cost and timing of establishing sales, marketing and distribution capabilities; ● the cost of establishing clinical and commercial supplies of our DBNS, and any products that we may develop; ● the rate of market acceptance of our DBNS, and any other product candidates; ● the cost of filing and prosecuting patent applications and defending and enforcing our patent and other intellectual property rights; ● the cost of defending, in litigation or otherwise, any claims that we infringe third-party patent or other intellectual property rights; 73 Table of Contents ● the effect of competing products and market developments; ● the cost of explanting clinical devices; ● the terms and timing of any collaborative, licensing or other arrangements that we may establish; ● any revenue generated by sales of our L ap -B and , Obalon Balloon System, DBNS or our future products; ● the scope, rate of progress, results and cost of our clinical trials and other research and development activities; ● the cost and timing of obtaining any further required regulatory approvals; and ● the extent to which we invest in products and technologies, although we currently have no commitments or agreements relating to any of these types of transactions.
Research and development expenses for the year ended December 31, 2023, decreased by $0.2 million, or 8.8%, to $2.3 million, compared to $2.5 million for the same period in 2022.
Research and development expenses for the year ended December 31, 2024, decreased by $0.5 million, or 22.1%, to $1.8 million, compared to $2.3 million for the same period in 2023.
The following table summarizes our change in cash and cash equivalents (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ ​ 2023 2022 Net cash used in operating activities ​ $ (16,960) ​ $ (21,902) Net cash used in investing activates ​ ​ (10) ​ ​ (92) Net cash provided by financing activities ​ 17,574 ​ 3,130 Effect of exchange rate changes ​ ​ — ​ ​ 4 Net change in cash and cash equivalents and restricted cash ​ $ 604 ​ $ (18,860) Net Cash Used in Operating Activities Net cash used in operating activities was $17.0 million and $21.9 million for the years ended December 31, 2023 and 2022, respectively.
The following table summarizes our change in cash and cash equivalents (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ ​ 2024 2023 Net cash used in operating activities ​ $ (4,427) ​ $ (16,960) Net cash used in investing activates ​ ​ — ​ ​ (10) Net cash provided by financing activities ​ 677 ​ 17,574 Effect of exchange rate changes ​ ​ (16) ​ ​ — Net change in cash and cash equivalents and restricted cash ​ $ (3,766) ​ $ 604 Net Cash Used in Operating Activities Net cash used in operating activities was $4.4 million and $17.0 million for the years ended December 31, 2024 and December 31, 2023, respectively.
Gross profit for the year ended December 31, 2023, was $5.5 million, compared to $6.8 million for the year ended December 31, 2022, a decrease of $1.3 million or 18.4%. Gross profit as a percentage of revenue for the year ended December 31, 2023, was 63.9% compared to 60.5% for the same period in 2022.
Gross profit for the year ended December 31, 2024, was $5.1 million, compared to $5.5 million for the year ended December 31, 2023, a decrease of $0.5 million or 8.9%. Gross profit as a percentage of revenue for the year ended December 31, 2024, was 63.2% compared to 63.9% for the same period in 2023.
The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model. The Black-Scholes models require various highly judgmental assumptions, including stock price volatility, risk-free interest rate, and expected option term. Stock-based compensation expense is recorded net of estimated forfeitures.
The Black-Scholes models require various highly judgmental assumptions, including stock price volatility, risk-free interest rate, and expected option term. Stock-based compensation expense is recorded net of estimated forfeitures.
The following table summarizes our net revenue by geographic location based on the location of customers for the years ended December 31, 2023 and 2022, as well as the percentage by location of total revenue and the amount of change and percentage of change (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ Amount ​ Percentage ​ ​ 2023 ​ ​ 2022 ​ ​ Change ​ Change ​ United States $ 7,134 ​ 82.2 % ​ $ 9,230 ​ 82.2 % ​ $ (2,096) ​ (22.7) % Australia ​ 526 ​ 6.1 % ​ ​ 688 ​ 6.1 % ​ ​ (162) ​ (23.5) % Europe ​ 956 ​ 11.0 % ​ ​ 1,252 ​ 11.1 % ​ ​ (296) ​ (23.6) % Rest of world ​ 62 ​ 0.7 % ​ ​ 70 ​ 0.6 % ​ ​ (8) ​ (11.4) % Total revenue $ 8,678 ​ 100.0 % ​ $ 11,240 ​ 100.0 % ​ $ (2,562) ​ (22.8) % 42 Table of Contents Revenue totaled $8.7 million for the year ended December 31, 2023, which represents a contraction of 22.8%, or $2.6 million compared to the same period in 2022.
The following table summarizes our net revenue by geographic location based on the location of customers for the years ended December 31, 2024 and 2023, as well as the percentage by location of total revenue and the amount of change and percentage of change (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ Amount ​ Percentage ​ ​ 2024 ​ ​ 2023 ​ ​ Change ​ Change ​ United States $ 6,887 ​ 86.0 % ​ $ 7,134 ​ 82.2 % ​ $ (247) ​ (3.5) % Australia ​ 392 ​ 4.9 % ​ ​ 526 ​ 6.1 % ​ ​ (134) ​ (25.5) % Europe ​ 687 ​ 8.6 % ​ ​ 956 ​ 11.0 % ​ ​ (269) ​ (28.1) % Rest of world ​ 40 ​ 0.5 % ​ ​ 62 ​ 0.7 % ​ ​ (22) ​ (35.5) % Total revenue $ 8,006 ​ 100.0 % ​ $ 8,678 ​ 100.0 % ​ $ (672) ​ (7.7) % Revenue totaled $8.0 million for the year ended December 31, 2024, which represents a contraction of 7.7%, or $0.7 million compared to the same period in 2023.
Sales and marketing expenses for the year ended December 31, 2023, decreased by $6.6 million, or 46.8%, to approximately $7.5 million, compared to $14.1 million for the same period in 2022.
Sales and marketing expenses for the year ended December 31, 2024, decreased by $4.6 million, or 60.4%, to approximately $3.0 million, compared to $7.5 million for the same period in 2023.
Because of the numerous risks and uncertainties associated with the development of medical devices, such as our DBSN, we are unable to estimate the exact amounts of capital outlays and operating expenditures necessary to complete the development of the DBNS or other additional products and successfully deliver a commercial product to the market.
This condition raises substantial doubt about our ability to continue as a going concern. ​ Because of the numerous risks and uncertainties associated with the development of medical devices, such as our Diabetes Bloc-Stim Neuromodulation, we are unable to estimate the exact amounts of capital outlays and operating expenditures necessary to complete the development of the Diabetes Bloc-Stim Neuromodulation or other additional products and successfully deliver a commercial product to the market.
The decrease is primarily due to a decrease of $5.2 million in advertising and marketing expenses, including consulting and professional marketing services, as the Company has reevaluated its marketing approach and has moved to a targeted digital marketing campaign, resulting in a significant reduction of costs.
The decrease is primarily due to a decrease of $2.2 million in advertising and marketing expenses, including consulting and professional marketing services, as the Company has continued to scale down its marketing efforts to a targeted digital marketing campaign.
Operating Capital and Capital Expenditure Requirements The Company’s anticipated operations include plans to (i) grow sales and operations of the Company with the Lap-Band product line both domestically and internationally as well as to obtain cost savings synergies, (ii) introduce to the market Lap-Band 2.0 FLEX, (iii) continue development of the Diabetes Bloc-Stim Neuromodulation (“DBSN”) device, (vi) identifying strategic merger and acquisition alternatives, (v) seek opportunities to find strategic partners to leverage our intellectual property portfolio and custom development services to provide third-party sales and licensing opportunities, and (vi) explore and capitalize on synergistic opportunities to expand our portfolio and offer future minimally invasive treatments and therapies in the obesity continuum of care.
Operating Capital and Capital Expenditure Requirements The Company’s anticipated operations include plans to (i) merge with Vyome Therapeutics, Inc and sell certain assets to Biorad, which will continue the operations, (ii) grow sales and operations of the Company with the Lap-Band product line both domestically and internationally as well as to obtain cost savings synergies, (iii) expand sales in the market Lap-Band 2.0 FLEX, (iv) continue development of the Diabetes Bloc-Stim Neuromodulation (“DBSN”) device, and (v) prior to such merger, explore and capitalize on synergistic opportunities to expand our portfolio and offer future minimally invasive treatments and therapies in the obesity continuum of care.
General and administrative expenses for the year ended December 31, 2023, decreased by approximately $7.0 million, or 40.2%, to approximately $10.3 million, compared to $17.3 million for the same period in 2022.
General and administrative expenses for the year ended December 31, 2024, decreased by approximately $3.4 million, or 32.9%, to approximately $6.9 million, compared to $10.3 million for the same period in 2023.
We also had reductions in payroll expenditures, including commissions, travel and stock-based compensation of $1.2 million, due to changes in sales personnel and lower sales. General and Administrative Expense.
We also had reductions in payroll expenditures, including commissions, travel and stock-based compensation of $2.2 million, due to reductions in workforce during the year due to declining revenues. General and Administrative Expense.
The following table contains a reconciliation of GAAP net loss to non-GAAP net loss attributable to common stockholders for the years ended December 31, 2023 and 2022 (in thousands). ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 ​ 2022 GAAP net loss $ (11,387) ​ $ (46,214) Adjustments: ​ ​ ​ ​ ​ Interest (income) expense, net ​ (26) ​ ​ 113 Income tax expense (benefit) ​ 52 ​ ​ (380) Depreciation and amortization ​ 154 ​ ​ 2,153 Stock-based compensation expense ​ 767 ​ ​ 2,087 Impairment of long-lived assets ​ 777 ​ ​ 18,744 (Gain) loss on disposal of assets, net ​ (33) ​ ​ 529 Gain on changes in fair value of liability warrants ​ (3,878) ​ ​ — Adjusted EBITDA $ (13,574) ​ $ (22,968) Comparison of Results of Operations Revenue.
The following table contains a reconciliation of GAAP net loss to non-GAAP net loss attributable to common stockholders for the years ended December 31, 2024 and 2023 (in thousands). ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 ​ 2023 GAAP net loss $ (7,130) ​ $ (11,387) Adjustments: ​ ​ ​ ​ ​ Interest income, net ​ (14) ​ ​ (26) Income tax expense ​ 39 ​ ​ 52 Depreciation and amortization ​ 22 ​ ​ 154 Stock-based compensation expense ​ 184 ​ ​ 766 Transaction costs ​ 1,024 ​ ​ — Impairment of long-lived assets ​ 36 ​ ​ 777 Gain on disposal of assets, net ​ — ​ ​ (33) Gain on changes in fair value of liability warrants ​ (52) ​ ​ (3,878) Gain on extinguishment of debt ​ (429) ​ ​ — Adjusted EBITDA $ (6,320) ​ $ (13,575) Comparison of Results of Operations Revenue.
The Company believes that it has the flexibility to manage the growth of its expenditures and operations depending on the amount of available cash flows, which could include reducing expenditures for marketing, and product development activities.
The Company believes that it has the flexibility to manage the growth of its expenditures and operations depending on the amount of available cash flows, which could include reducing expenditures for marketing and product development activities. ​ In February 2025, the Company raised $4.5 million after costs in a public offering of common shares and stock warrants.
For the year ended December 31, 2022, net cash used in operating activities was primarily the result of our net loss of $46.2 million, partially offset by non-cash adjustments of loss on impairment of intangible assets of $18.7 million, stock-based compensation expense of $2.1 million, amortization of intangible assets of $1.8 million, loss on disposal of assets of $0.5 million, provision for excess and obsolete inventory of $0.6 million, depreciation expense of $0.3 million, offset by non-cash reductions of expense for deferred taxes of $0.4 million.
For the year ended December 31, 2024, net cash used in operating activities was primarily the result of our net loss of $7.1 million, partially offset by non-cash adjustments for stock-based compensation expense of $0.2 million and inventory reserve of $0.4 million and $0.1 million of amortization of deferred interest.
Therefore, investors should consider non-GAAP financial measures in addition to, and not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. Further, the non-GAAP financial measures presented by the Company may be different from similarly named non-GAAP financial measures used by other companies.
Therefore, investors should consider non-GAAP financial measures in addition to, and not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP.
Operating Expenses: The following table summarizes our operating expenses for the years ended December 31, 2023 and 2022, as well as the percentage of total revenue, and the amount of changes and percentage of change (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ Amount ​ Percentage ​ ​ 2023 ​ ​ 2022 ​ ​ Change ​ Change ​ Sales and marketing $ 7,548 ​ 87.0 % ​ $ 14,093 ​ 125.4 % ​ $ (6,545) ​ (46.4) % General and administrative ​ 10,324 ​ 119.0 % ​ ​ 17,250 ​ 153.5 % ​ ​ (6,926) ​ (40.2) % Research and development ​ 2,315 ​ 26.7 % ​ ​ 2,537 ​ 22.6 % ​ ​ (222) ​ (8.8) % Impairment of long-lived assets ​ 777 ​ 9.0 % ​ ​ 18,744 ​ 166.8 % ​ ​ (17,967) ​ (95.9) % (Gain) loss on disposal of assets, net ​ (33) ​ (0.4) % ​ ​ 529.0 ​ 4.7 % ​ ​ (562) ​ (106.2) % Total operating expenses $ 20,931 ​ 241.3 % ​ $ 53,153 ​ 472.9 % ​ $ (32,222) ​ (60.6) % ​ Sales and Marketing Expense.
Operating Expenses: The following table summarizes our operating expenses for the years ended December 31, 2024 and 2023, as well as the percentage of total revenue, and the amount of changes and percentage of change (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ Amount ​ Percentage ​ ​ 2024 ​ ​ 2023 ​ ​ Change ​ Change ​ Sales and marketing $ 2,991 ​ 37.4 % ​ $ 7,548 ​ 87.0 % ​ $ (4,557) ​ (60.4) % General and administrative ​ 6,931 ​ 86.6 % ​ ​ 10,324 ​ 119.0 % ​ ​ (3,393) ​ (32.9) % Research and development ​ 1,803 ​ 22.5 % ​ ​ 2,315 ​ 26.7 % ​ ​ (512) ​ (22.1) % Transaction costs ​ 1,024 ​ 12.8 % ​ ​ — ​ — % ​ ​ 1,024 ​ 100.0 % Impairment of long-lived assets ​ 36 ​ 0.4 % ​ ​ 777 ​ 9.0 % ​ ​ (741) ​ (95.4) % Gain on disposal of assets, net ​ — ​ — % ​ ​ (33) ​ (0.4) % ​ ​ 33 ​ (100.0) % Total operating expenses $ 12,785 ​ 159.7 % ​ $ 20,931 ​ 241.3 % ​ $ (8,146) ​ (38.9) % ​ Sales and Marketing Expense.
Net Cash Used in Investing Activities Net cash used in investing activities for the year ended December 31, 2023, was insignificant as the Company was focused on preserving cash. Net cash used in investing activities for the year ended December 31, 2022, was $0.1 million, primarily related to tooling equipment.
Net Cash Used in Investing Activities Net cash used in investing activities for both the years ended December 31, 2024 and 2023, was insignificant as the Company was focused on preserving cash.
(Gain) loss on disposal of assets, net. During 2023, the Company had a gain of approximately $33 thousand related to the sale of fully depreciated assets. During the year ended December 31, 2022, the Company disposed of $0.5 million, primarily of assets that were acquired from the merger with Obalon.
During the year ended December 31, 2023, the Company recorded an impairment of approximately $0.8 million, consisting of fixed assets and intangible assets due to the overall decline in value of the Company. Gain loss on disposal of assets, net. During 2023, the Company had a gain of approximately $33 thousand related to the sale of fully depreciated assets.
There has been no revenue recorded for the Obalon Balloon System, or the Diabetes Bloc-Stim Neuromodulation as these products are still in the development stage.
There has been no revenue recorded for the Obalon Balloon System, or the Diabetes Bloc-Stim Neuromodulation as these products are still in the development stage. Recent Developments January 13, 2025, the Company and Vyome, provided an update on the definitive merger agreement under which ReShape and Vyome will combine in an all-stock transaction.
Cost of Revenue and Gross Profit: The following table summarizes our cost of goods sold and gross profit for the years ended December 31, 2023 and 2022, as well as percentage of total revenue and the amount of change and percentage of change (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ Amount ​ Percentage ​ ​ 2023 ​ ​ 2022 ​ ​ Change ​ Change ​ Revenue $ 8,678 ​ 100.0 % ​ $ 11,240 ​ 100.0 % ​ $ (2,562) ​ (22.8) % Cost of revenue ​ 3,130 ​ 36.1 % ​ ​ 4,438 ​ 39.5 % ​ ​ (1,308) ​ (29.5) % Gross profit $ 5,548 ​ 63.9 % ​ $ 6,802 ​ 60.5 % ​ $ (1,254) ​ (18.4) % Gross profit.
The Company did increase the price of Lap-Band systems including accessories, which helped revenues not decrease at the same ratio as the decline in unit sales. 70 Table of Contents Cost of Revenue and Gross Profit: The following table summarizes our cost of goods sold and gross profit for the years ended December 31, 2024 and 2023, as well as percentage of total revenue and the amount of change and percentage of change (dollars in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ Amount ​ Percentage ​ ​ 2024 ​ ​ 2023 ​ ​ Change ​ Change ​ Revenue $ 8,006 ​ 100.0 % ​ $ 8,678 ​ 100.0 % ​ $ (672) ​ (7.7) % Cost of revenue ​ 2,949 ​ 36.8 % ​ ​ 3,130 ​ 36.1 % ​ ​ (181) ​ (5.8) % Gross profit $ 5,057 ​ 63.2 % ​ $ 5,548 ​ 63.9 % ​ $ (491) ​ (8.9) % Gross profit.
Therefore, investors should consider non-GAAP financial measures in addition to, and not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP. Further, the non-GAAP financial measures presented by the Company may be different from similarly named non-GAAP financial measures used by other companies.
Further, the non-GAAP financial measures presented by the Company may be different from similarly named non-GAAP financial measures used by other companies.
Adjusted EBITDA Management uses Adjusted EBITDA in its evaluation of the Company’s core results of operations and trends between fiscal periods and believes that these measures are important components of its internal performance measurement process. Adjusted EBITDA is defined as net loss before interest, taxes, depreciation and amortization, stock-based compensation, and other one-time costs.
Further, the non-GAAP financial measures presented by the Company may be different from similarly named non-GAAP financial measures used by other companies. 69 Table of Contents Adjusted EBITDA Management uses Adjusted EBITDA in its evaluation of the Company’s core results of operations and trends between fiscal periods and believes that these measures are important components of its internal performance measurement process.
Net cash provided by financing activities was $3.1 million for the year ended December 31, 2022, primarily due to proceeds of $2.5 million received from the exercises of warrants from an institutional investor and $0.6 million of securities sold to an institutional investor.
Net Cash Provided by Financing Net cash provided by financing activities was $0.7 million for the year ended December 31, 2024, primarily related to net proceeds from the issuance of convertible notes payable.
We show a negative 44 Table of Contents cash impact to inventory of $1.2 million and warranty liability of $0.4 million. This was offset by a positive impact to accounts receivable of $0.7 million, prepaid expenses of $1.1 million and accounts payable and accrued liabilities of $0.5 million.
This was offset by a negative cash impact of $0.4 million related to old accounts payable that have passed their statute of limitations and $0.1 million of gains related to the warrants classified as liabilities. We show a positive cash impact on accounts payable of $0.8 million, inventory of approximately $0.9 million and accounts receivable of $0.6 million.
If managements’ plans don’t develop, and the Company doesn’t get additional cash raises, at the current burn rate, management expects to run out of cash during the third quarter of 2024.
These funds will be used for operations and additional transaction costs. At the current burn rate, management expects to run out of cash during the fourth quarter of 2025.
The impairment reviews require significant estimates about fair value, including estimation of future cash flows, selection of an appropriate discount rate, and estimates of long-term growth rates. Stock-based Compensation We measure and recognize compensation expenses for all stock-based awards based on estimated fair values. Stock-based awards consist of stock options and restricted stock units.
Stock-based Compensation We measure and recognize compensation expenses for all stock-based awards based on estimated fair values. Stock-based awards consist of stock options and restricted stock units. The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model.
Liquidity and Capital Resources We have financed our operations to date principally through the sale of equity securities and debt financings. During the years ended December 31, 2023 and 2022, we received proceeds of $17.6 million and $3.1 million, respectively, from securities sales and exercises of warrants by an institutional investor.
Gain on extinguishment of debt for the year ended December 31, 2024 of $0.4 million is primarily related to the write-off of payables aged beyond the statute of limitation. Liquidity and Capital Resources We have financed our operations to date principally through the sale of equity securities and debt financings.
As of December 31, 2023, we had $4.5 million of cash and cash equivalents, and $100 thousand of restricted cash.
During the years ended December 31, 2024 and 2023, we received proceeds of $0.7 million and $17.6 million, respectively, from convertible notes payable, securities sales and exercises of warrants. As of December 31, 2024, we had $0.7 million of cash and cash equivalents, and $100 thousand of restricted cash.
The decrease is primarily due to a reduction in legal related expenses due to the Company recording $2.6 million in litigation losses during the year ended December 31, 2022. In addition, the Company had a reduction in payroll related expenses including stock-based compensation expense of $2.8 million, due to changes within personnel.
This decrease was primarily driven by a $1.8 million reduction in general legal, audit, and other professional fees, as the Company reduced its reliance on consultants and professional services to conserve cash. In addition, payroll-related expenses, including stock-based compensation, decreased by $1.3 million due to changes in personnel and workforce reductions during the year.
The primary reason for the decrease is due to the introduction of GLP-1 pharmaceuticals within the US. This is also evidenced by a decrease of Lap-Band unit sales of approximately 26.8%.
The primary reason for the decrease is due to the continued popularity of GLP-1 pharmaceuticals within the U.S. With the introduction of Lap-Band 2.0, we did experience a slight growth in units sold of 6.5%, however the Lap-Band accessories units decreased by 26.4% within the U.S. markets. World-wide Lap-Band units decreased by 8.5% and accessories decreased 25.9%.
The increase in gross profit margin is primarily due to the Company allocating resources that were previously primarily focused on inventory to other projects and allocated a larger percentage of these costs to operating expenses in 2023.
The slight reduction in gross profit margin is primarily due to the write off of certain inventories, offset by the Company allocating resources to increase efficiencies and a slight raise in product pricing.
Removed
Recent Developments In February 2024, the Company announced the first surgeries utilizing the Lap-Band 2.0 FLEX mark, not only a seminal moment in the Company’s launch of this enhanced product, but also a leap forward in improving the Lap-Band.
Added
The combined company will focus on advancing the development of Vyome’s immune-inflammatory assets and identifying additional opportunities between the world-class Indian innovation corridor and the U.S. market.
Removed
We had a decrease in intangible asset amortization of $1.8 million, as we impaired our finite intangible assets during the fourth quarter of 2022. We also had a decrease in rent and insurance of $0.7 million due to the lease of our former Carlsbad, CA location expiring. We also had a decrease of $0.3 million related to non-income taxes.
Added
The Company also provided an update on the asset purchase agreement with Biorad Medisys. ​ February 3, 2025, the Company was granted a key international patent from the State of Israel for its Diabetes Neuromodulation technology. This patent for “Simultaneous Multi-Site Vagus Nerve Modulation for Improved Glycemic Control Systems and Methods,” will provide protection until December 4, 2039.
Removed
This was offset by an increase in audit and professional services of approximately $1.2 million, primarily due to the offerings we completed during 2023. 43 Table of Contents Research and Development Expense.
Added
The Diabetes Neuromodulation system utilizes its proprietary vagus nerve block (vBlocTM) technology platform, combined with vagus nerve stimulation, for the treatment of Type 2 diabetes, a prominent disorder associated with obesity. ​ February 15, 2025, the Company entered into a Security Purchase Agreement to issue and sell 2,575,107 shares of common stock and warrants to purchase up to 2,575,107 shares of common stock at an initial price of $5.83 per share, subject to adjustments.
Removed
The decrease is primarily due to a decrease of $0.1 million in payroll expenses, as the Company’s revenue declined, the Company allocated personnel’s time to other research and development projects to utilize the employees and a reduction of depreciation expense of $0.1 million as the Company impaired its fixed assets during 2023. Impairment of Long-Lived Assets.
Added
The securities were at a price of $2.33 per unit. ​ On February 25, 2025, the Company entered into an exclusive distribution agreement with Liaison Medical Ltd. for the Lap-Band® 2.0 FLEX system and Tubing Kit, expanding the Company’s commercial presence into Canada.
Removed
Impairment of long-lived assets decreased by approximately $18.0 million for the year ended December 31, 2023, compared to the same period in the prior year. During the year ended December 31, 2023, the Company impaired approximately $0.8 million, consisting of fixed assets and intangible assets.
Added
Under the terms of the agreement, Liaison Medical was granted the exclusive right to market and distribute the covered products to licensed medical professionals within the Canadian territory.
Removed
During the year ended December 31, 2022, the Company recorded an impairment charge of $7.4 million of in-process IPR&D and trademarks related to the ReShape Vest due to the Company no longer continuing with clinical trials.
Added
The initial term of the agreement runs through December 31, 2028, with automatic one-year renewal periods thereafter unless terminated by either party with at least 90 days’ prior written notice before the end of the then-current term. 67 Table of Contents Equity Line of Credit and Secured Convertible Note ​ On December 19, 2024, the Company entered into a common stock purchase agreement (the “Equity Purchase Agreement ”) with Ascent Partners Fund LLC (“Ascent”) pursuant to which Ascent has agreed to purchase from the Company, at its direction from time to time, in its sole discretion, from and after the effectiveness of the definitive documentation (the “Effective Date”), and until the earlier of (i) the 36-month anniversary of the Effective Date or (ii) the termination of the Equity Purchase Agreement in accordance with the terms thereof (the “Commitment Period”), shares of its common stock having a total maximum aggregate purchase price of $5,000,000 (the “Purchase Shares”), upon the terms and subject to the conditions and limitations set forth therein.
Removed
In addition, due to a reduction in our market capitalization at year end the Company impaired the developed technology and trademarks for both the Lap-Band and Obalon Balloon of $8.9 million and $2.4 million, respectively, due to reduced projected near-term future net cash flows related to the Lap-Band and no near-term revenue for the Obalon Balloon.
Added
See the section titled “Description of Equity Financing Transaction” below for additional information. ​ In a private transaction, on October 16, 2024, the Company entered into a securities purchase agreement (the “SPA”) with Ascent.
Removed
Net cash used in operating activities was $21.9 million and $15.4 million for the years ended December 31, 2022 and 2021, respectively.
Added
Pursuant to the SPA, the Company agreed to issue to Ascent a senior secured convertible note in the aggregate original principal amount of $833,333 (the “Note”), and also issued to Ascent 7,983 shares of common stock as “commitment shares” to Ascent.
Removed
Intangible Assets and Long-Lived Assets We acquire intangible assets in connection with business combinations and asset purchases. The acquired intangible assets are recorded at fair value, which is determined based on a discounted cash flow analysis.
Added
On January 14, 2025, the Company entered into an amendment to the Note with Ascent to (a) extend the maturity date to the earlier of the closing of the Company’s merger with Vyome or 90 days after the date of the amendment, (b) provide that Ascent would not be obligated to convert any part of the Note at the closing of the merger, (c) reduce the mandatory prepayment provision for funds raised by the Company in subsequent financings from 66% to 50%, and (d) require a $45,000 cash extension fee to be paid by the Company at the maturity of the Note.
Removed
The determination of fair value requires significant estimates, including, but not limited to, the amount and timing of projected future cash flows, the discount rate used to discount those cash flows, the assessment of the asset's life cycle, including the timing and expected costs to complete in-process projects, and the consideration of legal, technical, regulatory, economic, and competitive risks.
Added
On February 18, 2025, the Company repaid the Note in full. See the section titled “ Description of Convertible Note Transaction ” below for additional information. ​ Pending Merger and Asset Sale ​ On July 8, 2024, the Company entered into an Agreement and Plan of Merger (“Merger Agreement”) with Vyome Therapeutics, Inc.
Removed
Developed technology acquired in business combinations is reviewed for impairment annually, or whenever an event occurs, or circumstances change that would indicate the carrying amount may be impaired. Additionally, management reviews the carrying amounts of other intangible and long-lived assets whenever events or circumstances indicate that the carrying amounts of an asset may not be recoverable.
Added
(“Vyome”) and Raider Lifesciences Inc., a Delaware corporation, and a direct, wholly owned subsidiary of ReShape (“Merger Sub”). Pursuant to the Merger Agreement, and subject to the satisfaction or waiver of the conditions specified therein, Merger Sub shall be merged with and into Vyome, with Vyome surviving as a subsidiary of ReShape (the “Merger”).
Removed
Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards.
Added
The combined company intends to change its name to Vyome Holdings, Inc. and will focus on Vyome’s business of advancing the development of its immuno- inflammatory assets and on identifying additional opportunities between the world-class Indian innovation corridor and the U.S. market. ​ Simultaneously with the execution of the Merger Agreement, the Company entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Ninjour Health International Limited, a company incorporated under the laws of the United Kingdom (“Ninjour”).
Removed
Deferred 46 Table of Contents tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
Added
Pursuant to the Asset Purchase Agreement, and subject to the satisfaction or waiver of the conditions specified therein, the Company will sell substantially all of its assets (excluding cash) to Ninjour (or an affiliate thereof), and Ninjour will assume substantially all of its liabilities, for a purchase price of $5.16 million in cash, subject to adjustment based on ReShape’s actual accounts receivable and accounts payable at the closing compared to such amounts as of March 31, 2024 (the “Asset Sale”).
Removed
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance for deferred income tax assets is recorded when it is more likely than not that some portion or all of the deferred income tax assets will not be realized.
Added
Ninjour is an affiliate of Biorad Medisys, Pvt.
Removed
The Company’s policy is to classify interest and penalties related to income taxes as income tax expense in the consolidated statements of operations.
Added
Ltd., which is party to a previously disclosed exclusive license agreement, dated September 19, 2023, with ReShape for ReShape’s Obalon ® Gastric Balloon System. ​ On October 1, 2024, the Company filed a Registration Statement on Form S-4 in connection with the Merger and Asset Sale, which the Company anticipates will close in the second quarter of 2025, assuming the conditions to closing are satisfied.
Added
On December 6, 2024, the Company filed an Amendment No. 1 to that Registration Statement on Form S-4 and on January 15, 2025 the Company filed an Amendment No. 2 to that Registration Statement on Form S-4. ​ The Company entered into the Equity Purchase Agreement and Convertible Note transactions in order to fund its operations through the closing of the Merger and Asset Sale.
Added
The description of its business set forth above reflects its current business operations, but if the Merger and Asset Sale are completed, the Company will sell substantially all of its assets to Ninjour Health International Limited (or an affiliate thereof) and the combined company following the Merger intends to focus on Vyome’s business.
Added
However, the completion of the Merger and Asset Sale both remain subject to a number of conditions to closing, including the approval of its stockholders and, with respect to the Merger, the approval of the Nasdaq Stock Market, and there can be no assurance that the Merger and Asset Sale will be consummated.
Added
Failure to complete the Merger and Asset Sale could negatively impact its future operations, financial results and stock price. 68 Table of Contents Reverse Stock Split ​ Effective September 23, 2024, the Company effected a 1-for-58 reverse stock split of its issued and outstanding common stock (the “Reverse Stock Split”).
Added
All references to shares of its common stock in this Annual Report on Form 10-K refer to the number of shares of common stock after giving effect to the Reverse Stock Split and are presented as if the Reverse Stock Split had occurred at the beginning of the earliest period presented.
Added
Adjusted EBITDA is defined as net loss before interest, taxes, depreciation and amortization, stock-based compensation, and other one-time costs. Therefore, investors should consider non-GAAP financial measures in addition to, and not as a substitute for, or as superior to, measures of financial performance prepared in accordance with GAAP.
Added
The Company also recorded a $0.2 million decrease in rent and insurance expense as a result of the lease expiration of its former Carlsbad, CA location in mid-2023. Lastly, there was a $0.2 million reduction in bad debt expense and other miscellaneous items. Research and Development Expense.
Added
The decrease is primarily due to a decrease of $0.3 million in consulting and clinical trials, as the Company halted clinical trials during 2023 and reduced the use of consultants once Lap-Band 2.0 was released early 2024.
Added
We also had reductions in payroll expenditures, including stock-based compensation of $0.2 million, due to reductions in workforce during the year. 71 Table of Contents Transaction Costs . Transaction costs for the year ended December 31, 2024, were $1.0 million.
Added
These expenses primarily consisted of $0.7 million in legal fees and $0.2 million in audit-related fees incurred in connection with the Company’s pending merger and asset sale. Impairment of Long-Lived Assets.
Added
During the year ended December 31, 2024, the Company recognized an impairment charge of $36 thousand related to its ROU asset, as the present value of the expected cash flows from the sublease of its facility in Irvine was lower than the carrying value.
Added
Gain on changes in fair value of liability warrants . Gain on changes in fair value of liability warrants of $52 thousand for the year ended December 31, 2024, and $3.9 million for the year ended December 31, 2023, respectively, are related to warrants issued in a public offering on Feb 8, 2023. Gain on Extinguishment of Debt.
Added
However, based on our available cash resources, we may not have sufficient cash on hand to fund our current operations for more than 12 months from the date of filing this Form 10-K.
Added
Revenue Recognition We recognize revenue when we satisfy a performance obligation by transferring control of the promised goods or services to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Product sales consist of a single performance obligation, which we satisfy at a point in time.

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