The following discussion should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10­K. The following discussion contains forward-looking statements that involve risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by such forward­looking statements as a result of many important factors, including those set forth in Part I of this Annual Report on Form 10­K under the caption "Risk Factors". Please see also the "Special Note Regarding Forward-Looking Statements" in Part I above. We do not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Annual Report on Form 10-K.

All share amounts presented in this Item 7 give effect to the 1-for-25 reverse stock split of our outstanding shares of Common Stock that occurred on April 16, 2018 and the 1-for-30 reverse stock split of our outstanding shares of Common Stock that occurred on February 11, 2020.





Introduction


This Management's Discussion and Analysis of our financial condition and results of operations is based on our financial statements, which management has prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during the reporting periods. On an ongoing basis, we evaluate such estimates and judgments, including those described in greater detail below. We base our estimates on historical experience and on various other factors that management believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.





Business Overview


We are a research and clinical-stage biomaterials and biotechnology company with a focus on treatment of spinal cord injuries, or SCIs. Our approach to treating acute SCIs is based on our investigational Neuro-Spinal Scaffold™ implant, a bioresorbable polymer scaffold that is designed for implantation at the site of injury within a spinal cord and is intended to treat acute SCI. The Neuro-Spinal Scaffold implant incorporates intellectual property licensed under an exclusive, worldwide license from BCH and MIT. We also plan to evaluate other technologies and therapeutics that may be complementary to our development of the Neuro-Spinal Scaffold implant or offer the potential to bring us closer to our goal of redefining the life of the SCI patient.

Overall, we expect our research and development expenses to be substantial and to increase for the foreseeable future as we continue the development and clinical investigation of our current and future products. However, expenditures on research and development programs are subject to many uncertainties, including whether we develop our products with a partner or independently, or whether we acquire products from third parties. At this time, due to the uncertainties and inherent risks involved in our business, we cannot estimate in a meaningful way the duration of, or the costs to complete, our research and development programs or whether, when or to what extent we will generate revenues or cash inflows from the commercialization and sale of any of our products. While we are currently focused on advancing our Neuro-Spinal Scaffold implant, our future research and development expenses will depend on the determinations we make as to the scientific and clinical prospects of each product candidate, as well as our ongoing assessment of regulatory requirements and each product's commercial potential. In addition, we may make acquisitions of businesses, technologies or intellectual property rights that we believe would be necessary, useful or complementary to our current business. Any investment made in a potential acquisition could affect our results of operations and reduce our limited capital resources, and any issuance of equity securities in connection with a potential acquisition could be substantially dilutive to our stockholders.





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There can be no assurance that we will be able to successfully develop or acquire any product, or that we will be able to recover our development or acquisition costs, whether upon commercialization of a developed product or otherwise. We cannot provide assurance that any of our programs under development or any acquired technologies or products will result in products that can be marketed or marketed profitably. If our development­stage programs or any acquired products or technologies do not result in commercially viable products, our results of operations could be materially adversely affected.

We were incorporated on April 2, 2003, under the name of Design Source, Inc. On October 26, 2010, we acquired the business of InVivo Therapeutics Corporation, which was founded in 2005, and continued the existing business operations of InVivo Therapeutics Corporation as our wholly­owned subsidiary.

Critical Accounting Policies and Estimates

Our consolidated financial statements, which appear in Item 8 of this Annual Report on Form 10­K, have been prepared in accordance with accounting principles generally accepted in the United States, which require that our management make certain assumptions and estimates and, in connection therewith, adopt certain accounting policies. Our significant accounting policies are set forth in Note 2, "Significant Accounting Policies", in the Notes to Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K. Of those policies, we believe that the policies discussed below may involve the highest degree of judgment and may be the most critical to an accurate reflection of our financial condition and results of operations.





Stock­Based Compensation


Our stock options are granted with an exercise price set at the fair market value of our Common Stock on the date of grant. Our stock options generally expire 10 years from the date of grant and vest upon terms determined by our Board of Directors.

We recognize compensation costs resulting from the issuance of stock-based awards to employees, non-employees and directors as an expense in our statement of operations over the service period based on a measure of fair value for each stock-based award. The fair value of each option grant is estimated as of the date of grant using the Black-Scholes option pricing model and the fair value of each restricted stock award or restricted stock unit, which we refer to collectively as restricted securities, is determined based on the fair market value of our Common Stock on the date of grant. The fair value is amortized as a compensation cost on a straight-line basis over the requisite service period of the award, which is generally the vesting period. The expected term of any options granted under our stock plans is based on the average of the contractual term (generally, 10 years) and the vesting period (generally, 48 months). The risk-free rate is based on the yield of a U.S. Treasury security with a term consistent with the expected term of the option. The restricted securities generally vest over a three-year period, contingent on the recipient's continued employment. See Note 11, "Shared-Based Compensation, Stock Options and Restricted Securities," in the Notes to Consolidated Financial Statements in Item 8 of this Annual Report on Form 10 K for more information about the assumptions underlying these estimates.





Derivative Instruments


Certain of our issued and outstanding warrants to purchase Common Stock previously contained anti­dilution provisions. These warrants did not meet the requirements for classification as equity and were thus recorded as derivative warrant liabilities. We used valuation methods and assumptions that considered, among other factors, the fair value of the underlying stock, risk­free interest rate, volatility, expected life and dividend rates consistent with those discussed in Note 10, "Derivative Instruments", in the Notes to Consolidated Financial Statements in Item 8 of this Annual Report on Form 10­K, in estimating the fair value for these warrants. Such derivative warrant liabilities were initially recorded at fair value, with subsequent changes in fair value charged (credited) to operations during each reporting period. The fair value of such derivative warrant liabilities was most sensitive to changes in the fair value of the underlying Common Stock and the estimated volatility of our Common Stock. As of December 31, 2019, we did not have any liability classified warrants. See Note 10, "Derivative Instruments," in the Notes to Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K for more information about the derivative activity during the year.





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Research and Development Expense

Our research and development expenses consist primarily of costs incurred for the development of our product candidates, which include:

· employee related expenses, including salaries, benefits, travel, and stock


    based compensation expense;



· expenses incurred under agreements with contract research organization


    ("CROs"), and clinical sites that conduct our clinical studies;



· facilities, depreciation, and other expenses, which include direct and


    allocated expenses for rent and maintenance of facilities, insurance, and other
    supplies;



· costs associated with our research platform and preclinical activities;

· costs associated with our regulatory, quality assurance, and quality control


    operations; and



· amortization of intangible assets.

Our research and development costs are expensed as incurred. We are required to estimate our accrued research and development expenses. This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated costs incurred for the services when we have not yet been invoiced or otherwise notified of the actual costs. We make estimates of our accrued expenses as of each balance sheet date in our consolidated financial statements based on facts and circumstances known to us at that time. If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrued expense accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in us reporting amounts that are too high or too low in any particular period. To date, we have not made any material adjustments to our prior estimates of accrued research and development expenses.

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842). The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance leases or operating leases, with classification affecting the pattern of expense recognition in the statement of operations. In January, July and December 2018, the FASB issued ASU No's. 2018-01, 2018-10, 2018-11, 2018-20 and 2019-01, which were targeted improvements to ASU No. 2016-02 (collectively, with ASU No. 2016-02, "ASC 842") and provided entities with an additional (and optional) transition method to adopt the new lease standard, and provided clarifications to address potential narrow-scope implementation issues. We adopted ASU No. 2016- 02 effective January 1, 2019 and elected the optional transition method for adoption. We also took advantage of the transition package of practical expedients permitted within ASU No. 2016-02, which among other things, allowed us to carryforward historical lease classifications. We also elected to keep leases with an initial term of 12 months or less off of the balance sheet as a policy election and will recognize those lease payments in the consolidated statements of operations on a straight-line basis over the lease term. As of the adoption date, we identified one operating lease arrangement in which we are a lessee. The adoption of this standard resulted in the recognition of operating lease liabilities and right-of-use assets of $1.5 million and $1.5 million, respectively, on our balance sheet as of January 1, 2019. The adoption of the standard did not have a material effect on our consolidated statements of operations or statements of cash flows.

In February 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This ASU relates to the impacts of the tax legislation commonly referred to as the Tax Reform Act. The guidance permits the reclassification of certain income tax effects of the Tax Reform Act from other comprehensive income to retained earnings (stranded tax effects). The guidance also requires certain new disclosures. The guidance was effective for annual periods beginning after December 15, 2018, and interim periods within those reporting periods. Early adoption



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was permitted. Entities may adopt the guidance using 1 of 2 transition methods: retrospective to each period (or periods) in which the income tax effects of the Tax Reform Act related to the items remaining in other comprehensive income are recognized or at the beginning of the period of adoption. We adopted ASU No. 2018-02 on January 1, 2019 and it did not have a material effect on our financial position, results of operations or disclosures.

In June 2018, the FASB issued ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting which is intended to reduce cost and complexity and to improve financial reporting for nonemployee share-based payments. The amendment is effective for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. Early adoption was permitted, but no earlier than an entity's adoption date of ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606). We adopted ASU No. 2018-07 on January 1, 2019 and it did not have a material effect on our financial position, results of operations or disclosures.

In July 2018, the FASB issued ASU No. 2018-09, Codification Improvements which clarifies, corrects errors in, and makes improvements to several Codification Topics, including to:

· Clarify when excess tax benefits should be recognized for share-based


    compensation awards



· Remove inconsistent guidance in income tax accounting for business combinations

· Clarify the circumstances when derivatives may be offset

· Clarify the measurement of liability or equity-classified financial instruments


    when an identical asset is held as an asset



· Allow portfolios of financial instruments and nonfinancial instruments


    accounted for as derivatives to use the portfolio exception to valuation



The transition and effective date guidance is based on the facts and circumstances of each amendment. Some of the amendments in this ASU do not require transition guidance and were effective upon issuance of this ASU. However, many of the amendments in this ASU do have transition guidance with effective dates for annual periods beginning after December 15, 2018. We adopted ASU No. 2018-09 on January 1, 2019, and it did not have a material effect on our financial position, results of operations or disclosures.

In August 2018, the FASB issued ASU No. 2018-13 - Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement which improves the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement. The amendments in this ASU are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted upon issuance of this ASU. The Company does not expect the adoption of this ASU to have a material effect on its consolidated financial statements.

In July 2019, the FASB issued ASU No. 2019-07, Codification Updates to SEC Sections. This ASU amends various SEC paragraphs pursuant to the issuance of SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization. One of the changes in the ASU requires a presentation of changes in stockholders' equity in the form of a reconciliation, either as a separate financial statement or in the notes to the financial statements, for the current and comparative year-to-date interim periods. We presented changes in stockholders' equity as separate financial statements for the current and comparative year-to-date periods. The additional elements of the ASU did not have a material impact on our consolidated financial statements. This guidance was effective immediately upon issuance.

In November 2019, the FASB issued ASU No. 2019-08 "Compensation - Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Codification Improvements - Share-Based Consideration Payable to a Customer." ASU No. 2019-08 amends and clarifies ASU No. 2018-07, which we adopted on January 1, 2019, to



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require that an entity measure and classify share-based payment awards granted to a customer by applying the guidance in Topic 718. For entities that have already adopted the amendments in ASU No. 2018-07, the amendments in this ASU are effective for fiscal years beginning after December 15, 2019, and for interim periods within those fiscal years, with early adoption permitted. This guidance is applicable to the us in the fiscal year beginning January 1, 2020. We are currently evaluating the effects of this pronouncement on our consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes," which is intended to simplify various aspects related to accounting for income taxes. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. ASU No. 2019-12 is effective for us beginning in fiscal 2021. We are currently in the process of evaluating the effects of this pronouncement on our financial statements.





Results of Operations



Comparison of the Years Ended December 31, 2019 and 2018

Research and Development Expenses

Research and development expenses increased by $0.7 million to $5.6 million for the year ended December 31, 2019 from $4.9 million for the year ended December 31, 2018. The increase in research and development expenses for the year ended December 31, 2019 is attributable to an increase clinical trial costs and scaffold manufacturing costs of $692 thousand and $354 thousand respectively, related to the opening up of new clinical trial sites in 2019, an increase in facilities and rent expense of $211 thousand and an increase in legal costs of $104 thousand. These increases were offset by a decrease in consulting costs of $235 thousand, a decrease in administrative and operating costs of $145 thousand as a result of cost cutting measures initiated in 2018, decreases in compensation related and stock compensation expense of $121 thousand and $89 thousand respectively, driven by fewer employees in 2019, a decrease in depreciation expense of $68 thousand and a decrease in recruiting costs of $30 thousand.

General and Administrative Expenses

General and administrative expenses decreased by $1.9 million to $5.9 million for the year ended December 31, 2019 from $7.8 million for year ended December 31, 2018. This decrease in general and administrative expenses is attributable to a decrease in compensation related and stock compensation expense of $612 thousand and $260 thousand respectively, driven by fewer employees in 2019, a decrease in legal fees of $374 thousand, a decrease in consulting costs of $241 thousand, a decrease in accounting fees of $197 thousand, a decrease in administrative and operating costs of $183 thousand as a result of cost cutting measures initiated in 2018, a decrease in facilities and rent expense of $151 thousand and a decrease in recruiting costs of $120 thousand. The decreases were partially offset by an increase in investor relations costs of $179 thousand.

Interest Income / (Expense), Net

Interest income, net increased by $48 thousand to $254 thousand for the year ended December 31, 2019 from $206 thousand for the year ended December 31, 2018.

This increase is attributed to lower interest expense in the current year as a result of early payment of a loan, partially offset by lower average balance of funds in our cash and cash equivalents balances in 2019.





Warrant Modification Expense


During the year ended December 31, 2019 the Company incurred $666 thousand in expense related to the Second Ladenburg Warrant Amendment (defined below). During the year ended December 31, 2018 the Company incurred of $765 thousand in expense related to the May 2018 and September 2018 amendment of warrants.





Derivatives Gain / (Loss)


The Company did not incur any derivative gains or losses in 2019. During the year ended December 31, 2018 the Company incurred a loss of $11.4 million attributed to the issuance of the liability classified warrants in 2018 and the subsequent change in fair value through the date of warrant exercises or reclassification to equity.



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Other Income / (Expense)


Other expense for the year ended December 31, 2019 was $79 thousand. Other income for the year ended December 31, 2018 was $1.3 million primarily due to a settlement agreement with a former vendor.

Liquidity and Capital Resources

Since inception, we have devoted substantially all of our efforts to business planning, research and development, recruiting management and technical staff, acquiring operating assets, and raising capital. At December 31, 2019, our accumulated deficit was $219.2 million.

At December 31, 2019, we had total assets of $9.3 million, total liabilities of $3.7 million, and total stockholders' equity of $5.6 million. We recorded a net loss of $11.8 million for the year ended December 31, 2019. We have not achieved profitability and may not be able to realize sufficient revenue to achieve or sustain profitability in the future. We do not expect to be profitable in the next several years, but rather expect to incur additional operating losses. The financings we closed in June 2018 and November 2019, described in more detail below, will provide necessary funding to fund operations into the second quarter of 2020. We have limited liquidity and capital resources and must obtain significant additional capital resources in order to fund our operations and sustain our product development efforts, for acquisition of technologies and intellectual property rights, for preclinical and clinical testing of our anticipated products, pursuit of regulatory approvals, acquisition of capital equipment, laboratory and office facilities, establishment of production capabilities, for selling, general and administrative expenses and for other working capital requirements. We will need to raise additional capital through a combination of equity offerings, debt financings, other third party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements. Based on these factors, management determined that there is substantial doubt regarding the Company's ability to continue as a going concern.





Financings Transactions


In November 2019, we closed a public offering of an aggregate of 233,341 shares of our Common Stock, at an offering price of $3.60 per share (the offering, the "2019 Offering"). The net proceeds to us after deducting the placement agent fees and other offering expenses, were $367 thousand. In connection with the 2019 Offering, we issued to designees of H.C. Wainwright & Co., LLC ("Wainwright"), the placement agent for the 2019 Offering, warrants (the "Placement Agent Warrants") to purchase an aggregate of 15,168 shares of our Common Stock. The Placement Agent Warrants have an exercise price of $4.50 per share, are immediately exercisable and expire in November 2024.

In June 2018, we closed an underwritten public offering of an aggregate of 45,950 Common Units, at an offering price of $60.00 each, each comprised of 1 share of our Common Stock, par value and 1 Series A warrant to purchase 1 share of Common Stock. The public offering also included 208,096 pre-funded units at an offering price of $59.70 each, each comprised of 1 pre-funded Series B Warrant and 1 Series A warrant to purchase 1 share of Common Stock. Each Series A warrant had an exercise price of $60.00 per share, was exercisable immediately from the date of issuance and expired 5 years from the date of issuance. Each Series B warrant had an exercise price of $0.30 per share, was exercisable immediately and would have expired 20 years from the date of issuance. The net proceeds to us, after deducting the underwriting discounts and commissions and other offering expenses, were $13.5 million. During the year ended December 31, 2018, we issued an aggregate of 208,096 and 1,150 shares of Common Stock upon the exercise of Series B and Series A warrants respectively for aggregate proceeds of $131 thousand. There were no outstanding Series B warrants as of either December 31, 2019 or December 31, 2018. During the year ended December 31, 2019, we did not issue any shares as a result of warrant exercise activity.

In September 2018, we entered into an Amendment to Warrant Agency Agreement and Warrants, or the Ladenburg Warrant Amendment, with Continental Stock Transfer & Trust Company, or Continental, that amended the Warrant Agency Agreement, by and between us and Continental, as Warrant Agent, dated June 25, 2018, and the Series A Common Stock Purchase Warrant, and the Series B Pre-Funded Common Stock Purchase Warrant both dated June 25, 2018, and we refer to the Series A and Series B Warrant collectively as the 2018 Warrants. See Notes 9, 10 and 12 to our Consolidated Financial Statements for more information about the Ladenburg Warrant Amendment.





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In November 2019, we entered into a Second Amendment to Warrant Agency Agreement and Warrants, ("the Second Ladenburg Warrant Amendment"), by and between us and Continental, as Warrant Agent, dated November 21, 2019, that amended the Series A warrants to reflect a reduced exercise price per share of $6.98 from $60.00. See Notes 9, 10 and 12 to our Consolidated Financial Statements for more information about the Second Ladenburg Warrant Amendment.

In January 2018, we entered into a purchase agreement (the "Purchase Agreement") and a registration rights agreement (the "RRA") with Lincoln Park Capital Fund, LLC, which we refer to as Lincoln Park, under which we had the right to sell up to $15 million in shares of our Common Stock to Lincoln Park over a 24-month period, subject to certain limitations and conditions set forth in the Purchase Agreement and RRA. On May 30, 2018 at our Annual Meeting of Stockholders, our stockholders approved an increase to the number of shares of Common Stock available for issuance and sale by us to Lincoln Park, including our prior issuances and sales of shares of Common Stock to Lincoln Park since January 2018, up to 40,000 shares of Common Stock. In accordance with the terms of the Purchase Agreement, at the time we signed the Purchase Agreement and the RRA, we issued 574 shares to Lincoln Park as consideration for its commitment to purchase shares of our Common Stock under the purchase agreement and recorded $627 thousand in deferred offering costs of which the full amount was capitalized into additional paid-in capital as of December 31, 2018. During the year ended December 31, 2018 we sold an aggregate of 8,561 shares to Lincoln Park, for aggregate proceeds of $3.1 million net of issuance costs. During the year ended December 31, 2019, we did not sell any shares to Lincoln Park. In May 2019, we terminated the Purchase Agreement with Lincoln Park

Facility Changes

In May 2018, we assigned our commercial lease for 26,342 square feet in Cambridge, Massachusetts (the "Cambridge Lease") to a third party, who assumed from us all of our remaining rights and obligations under the lease. Concurrently with the lease assignment, we entered into a sublease for 5,104 square feet of the space, originally part of the Cambridge Lease, from the third party to which we assigned the lease. The sublease ends on October 31, 2023 and contains rent holidays and rent escalation clauses. In order to obtain the consent of our lender for these facility changes and the sale of certain assets, we repaid $300 thousand of principal on our loan and recorded an impairment charge of $48 thousand. On January 1, 2019 we adopted ASU No. 2016-02, Leases (Topic 842). The adoption of this standard resulted in the recognition of operating lease liabilities and right-of-use assets of $1.5 million and $1.5 million, respectively, on our balance sheet. For more information, see Note 7 and Note 15 to the notes to our Consolidated Financial Statements in Item 8 of this report.

We expect to pursue various other dilutive and non-dilutive funding alternatives to raise additional capital to proceed with development of some or all of our product candidates on expected timelines. The source, timing and availability of any future financing will depend principally upon market conditions and the status of our clinical development programs. Funding may not be available when needed, at all, or on terms acceptable to us. Lack of necessary funds may require us to, among other things, delay, scale back or eliminate some or all of our research and product development programs, planned clinical trials, and capital expenditures, to license our potential products or technologies to third parties or to cease our operations entirely. We may alternatively engage in cost-cutting measures in an attempt to extend our cash resources as long as possible. If we are unable to raise additional capital, we may be forced to cease operations entirely.

Net cash used in operating activities is comprised of our net losses, adjusted for non-cash expenses, and working capital requirements. Net cash used in operating activities for the year ended December 31, 2019 was $10.3 million compared to $12.3 million for the year ended December 31, 2018. The change in net cash used in operating activities for the year ended December 31, 2019 as compared to the same period in the prior year was primarily due to a decrease in our net loss of $11.6 million, a decrease in derivative loss of $11.4 million, a decrease in share-based compensation expense of $0.4 million. These decreases were offset by an increase in the change in other assets of $0.9 million, change in gain on lease assignment of $0.6 million, change in warrant modification expense of $0.1 million, an increase in the change in accrued expenses and other liabilities of $0.3 million, an increase in the change in accounts payable of $0.3 million and an increase in the amortization of operating lease right-of-use assets of $0.3 million.

Net cash used in investing activities for the years ended December 31, 2019 and 2018, was $12 thousand and $65 thousand, respectively attributable to purchases of capital equipment.





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Net cash provided by financing activities for the year ended December 31, 2019 was $268 thousand consisting primarily of $367 thousand in proceeds from the issuance of Common Stock associated with the November 2019 underwritten public offering, offset by $100 thousand in loan repayments. This compares to net cash of $15.9 million provided by financing activities for the year ended December 31, 2018 consisting primarily of $16.5 million in proceeds from the issuance of common stock associated with the June 2018 underwritten public offering and the Lincoln Park financing agreement, $0.1 million in proceeds from exercise of warrants offset by $0.8 million in loan repayments and $14 thousand for the repurchase of warrants.

Off Balance Sheet Arrangements

We do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.





Inflation and Changing Prices


We do not believe that inflation has had, or will have, a material impact on our operating costs and earnings.





Commitments


See Note 15, "Commitments and Contingencies," in the Notes to Consolidated Financial Statements in Item 8 of this Annual Report on Form 10­K for information regarding our commitments.

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