Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Oct. 30, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | Echo Therapeutics, Inc. | |
Entity Central Index Key | 1,031,927 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Trading Symbol | ECTE | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 12,004,308 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,016 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Current Assets: | ||
Cash and cash equivalents | $ 172,725 | $ 56,210 |
Prepaid and other | 229,229 | 244,534 |
Total current assets | 401,954 | 300,744 |
Property and equipment, net | 188,936 | 267,671 |
Other Assets: | ||
Cash restricted pursuant to letters of credit | 217,556 | 236,425 |
Capitalized software development costs | 267,811 | 0 |
Other | 250 | 250 |
Total other assets | 485,617 | 236,675 |
Total assets | 1,076,507 | 805,090 |
Current Liabilities: | ||
Accounts payable | 1,851,043 | 2,176,083 |
Accrued and other | 884,253 | 602,345 |
Secured convertible notes, net | 3,248,731 | 0 |
Bridge loans | 250,000 | 330,000 |
Premium financing | 22,638 | 0 |
Derivative liabilities | 1,010,694 | 127,000 |
Total current liabilities | 7,267,359 | 3,235,428 |
Deferred revenue, net | 95,535 | 95,535 |
Total liabilities | 7,362,894 | 3,330,963 |
Commitments and contingencies | ||
Stockholders' deficit: | ||
Common stock, $0.01 par value; 150,000,000 shares authorized; issued and outstanding 11,512,586 and 11,124,496 shares, respectively | 116,358 | 111,243 |
Additional paid-in capital | 148,414,835 | 147,412,559 |
Accumulated deficit | (154,897,838) | (150,129,933) |
Total stockholders' deficit | (6,286,387) | (2,525,873) |
Total liabilities and stockholders' deficit | 1,076,507 | 805,090 |
Series C Preferred Stock [Member] | ||
Stockholders' deficit: | ||
Preferred Stock, $0.01 par value; 40,000,000 shares authorized: Convertible Series C, D, E, F | 10 | 10 |
Series D Preferred Stock [Member] | ||
Stockholders' deficit: | ||
Preferred Stock, $0.01 par value; 40,000,000 shares authorized: Convertible Series C, D, E, F | 10,000 | 10,000 |
Series E Preferred Stock [Member] | ||
Stockholders' deficit: | ||
Preferred Stock, $0.01 par value; 40,000,000 shares authorized: Convertible Series C, D, E, F | 17,486 | 17,486 |
Series F Preferred Stock [Member] | ||
Stockholders' deficit: | ||
Preferred Stock, $0.01 par value; 40,000,000 shares authorized: Convertible Series C, D, E, F | $ 52,762 | $ 52,762 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 |
Stockholders' Equity: | ||
Convertible Preferred Stock, par value | $ 0.01 | $ 0.01 |
Convertible Preferred Stock, authorized | 40,000,000 | 40,000,000 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, authorized | 150,000,000 | 150,000,000 |
Common stock, outstanding | 11,635,915 | 11,124,496 |
Common stock, Share Issued | 11,635,915 | 11,124,496 |
Series C Preferred Stock [Member] | ||
Stockholders' Equity: | ||
Convertible Preferred Stock, par value | $ 0.01 | $ 0.01 |
Convertible Preferred Stock, authorized | 10,000 | 10,000 |
Convertible Preferred Stock, outstanding | 1,000 | 1,000 |
Convertible Preferred Stock, Share Issued | 1,000 | 1,000 |
Series D Preferred Stock [Member] | ||
Stockholders' Equity: | ||
Convertible Preferred Stock, par value | $ 0.01 | $ 0.01 |
Convertible Preferred Stock, authorized | 3,600,000 | 3,600,000 |
Convertible Preferred Stock, outstanding | 1,000,000 | 1,000,000 |
Convertible Preferred Stock, Share Issued | 1,000,000 | 1,000,000 |
Series E Preferred Stock [Member] | ||
Stockholders' Equity: | ||
Convertible Preferred Stock, par value | $ 0.01 | $ 0.01 |
Convertible Preferred Stock, authorized | 1,748,613 | 1,748,613 |
Convertible Preferred Stock, outstanding | 1,748,613 | 1,748,613 |
Convertible Preferred Stock, Share Issued | 1,748,613 | 1,748,613 |
Series F Preferred Stock [Member] | ||
Stockholders' Equity: | ||
Convertible Preferred Stock, par value | $ 0.01 | $ 0.01 |
Convertible Preferred Stock, authorized | 6,000,000 | 6,000,000 |
Convertible Preferred Stock, outstanding | 5,276,180 | 5,276,180 |
Convertible Preferred Stock, Share Issued | 5,276,180 | 5,276,180 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income Statement [Abstract] | ||||
Licensing revenue | $ 0 | $ 0 | $ 0 | $ 0 |
Total revenues | 0 | 0 | 0 | 0 |
Operating Expenses: | ||||
Research and development | 588,551 | 558,995 | 1,943,287 | 2,027,896 |
Selling, general and administrative | 1,198,328 | 820,662 | 2,927,716 | 3,815,746 |
Impairment charge | 0 | 0 | 0 | 9,625,000 |
Loss (gain) on disposal of property and equipment | 0 | 39,382 | (4,000) | 278,816 |
Depreciation and amortization | 26,925 | 39,171 | 85,090 | 487,491 |
Total operating expenses | 1,813,804 | 1,458,210 | 4,952,093 | 16,234,949 |
Loss from operations | (1,813,804) | (1,458,210) | (4,952,093) | (16,234,949) |
Other Income (Expense): | ||||
Gain (loss) on revaluation of derivative liabilities | 3,675,826 | (54,000) | 4,437,776 | (61,845) |
Financing loss | 0 | (263,000) | 0 | (4,620,000) |
Loss on early extinguishment of bridge loans | 0 | 0 | (2,143,960) | 0 |
Amortization of debt discount | (934,794) | 0 | (1,830,012) | 0 |
Interest expense | (133,057) | (212) | (279,616) | (4,938) |
Other income (expense), net | 2,607,975 | (317,212) | 184,188 | (4,686,783) |
Net income (loss) | 794,171 | (1,775,422) | (4,767,905) | (20,921,732) |
Deemed dividend on beneficial conversion feature of preferred stock | 0 | 0 | (6,460,818) | 0 |
Net income (loss) applicable to common shareholders | $ 794,171 | $ (1,775,422) | $ (11,228,773) | $ (20,921,732) |
Net loss per common share, basic | $ 0.07 | $ (0.16) | $ (0.98) | $ (1.86) |
Net loss per common share, diluted | $ (.11) | $ (0.16) | $ (.98) | $ (1.86) |
Basic weighted average common shares outstanding | 11,603,868 | 11,127,475 | 11,418,653 | 11,266,571 |
Diluted weighted average common shares outstanding | 17,261,692 | 11,127,475 | 11,418,653 | 11,266,571 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (Unaudited) - 9 months ended Sep. 30, 2016 - USD ($) | Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning Balance, Shares at Dec. 31, 2015 | 8,025,793 | 11,124,496 | |||
Beginning Balance, Amount at Dec. 31, 2015 | $ 80,258 | $ 111,243 | $ 147,412,559 | $ 150,129,933 | $ (2,525,873) |
Share-based compensation, net of restricted stock cancellations, Shares | 275,695 | ||||
Share-based compensation, net of restricted stock cancellations, Amount | $ 2,757 | 700,106 | 702,863 | ||
Exercise of stock options, Shares | 2,246 | ||||
Exercise of stock options, Amount | $ 23 | (23) | 0 | ||
Settlement of account payable, Shares | 57,121 | ||||
Settlement of account payable, Amount | $ 571 | 93,079 | 0 | 93,650 | |
Payment of interest, Shares | 101,357 | ||||
Payment of interest, Amount | $ 1,014 | 130,614 | 0 | 131,628 | |
Payment of investor relations, Shares | 75,000 | ||||
Payment of investor relations, Amount | $ 750 | 78,500 | 79,250 | ||
Net loss | (4,767,905) | (4,767,905) | |||
Ending Balance, Shares at Sep. 30, 2016 | 8,025,793 | 11,635,915 | |||
Ending balance, Amount at Sep. 30, 2016 | $ 80,258 | $ 116,358 | $ 148,414,835 | $ 154,897,838 | $ (6,286,387) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash Flows From Operating Activities: | ||
Net loss | $ (4,767,905) | $ (20,921,732) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 85,090 | 487,491 |
Amortization of debt discount | 1,830,012 | 0 |
Share-based compensation, net | 702,863 | 798,250 |
Loss on early extinguishment of bridge loans | 2,143,960 | 0 |
(Gain) loss on revaluation of derivative liabilities | (4,437,776) | 61,845 |
Warrant repricing charged to legal expense | 0 | 328,000 |
(Gain) Loss on disposal of assets | (4,000) | 278,816 |
Impairment charge | 0 | 9,625,000 |
Financing loss | 0 | 4,620,000 |
Changes in assets and liabilities: | ||
Prepaid and other | 15,318 | (4,853) |
Accounts payable | (152,154) | 395,973 |
Accrued and other | 417,156 | (100,836) |
Net cash used in operating activities | (4,167,436) | (4,432,046) |
Cash Flows from Investing Activities: | ||
Purchase of property and equipment | (6,354) | (55,836) |
Decrease in restricted cash | 18,869 | (183,938) |
Capitalization of software development costs | (267,811) | 0 |
Proceeds on disposal of property and equipment | 4,000 | 126,082 |
Net cash used ininvesting activities | (251,296) | (113,692) |
Cash Flows From Financing Activities: | ||
Proceeds from secured convertible notes, net of related costs | 2,512,609 | 0 |
Proceeds from bridge loans | 2,000,000 | 0 |
Proceeds from equity financing | 0 | 3,181,500 |
Proceeds from premium financing | 199,671 | 272,622 |
Principal payments from premium financing | (177,033) | (243,420) |
Capital contribution | 0 | 59,325 |
Net cash provided by financing activities | 4,535,247 | 3,270,027 |
Net increase in cash and cash equivalents | 116,515 | (1,275,711) |
Beginning of period | 56,210 | 1,278,941 |
End of period | 172,725 | 3,230 |
Supplemental disclosure of cash flow information: | ||
Interest | 15,709 | 5,043 |
Income taxes | 2,761 | 0 |
Supplemental disclosure of non-cash financing transactions: | ||
Deemed dividend on beneficial conversion feature of convertible preferred stock | 6,460,818 | 0 |
Directors fees payable offset against prepaid insurance | 0 | 272,200 |
Security deposit offset against accounts payable | 0 | 9,740 |
Accrued legal fees settled with stock | 0 | 550,000 |
Bridge loans exchanged for secured convertible notes | 2,080,000 | 0 |
Derivatives offset against secured convertible notes | 5,321,470 | 0 |
Conversion of convertible preferred stock into Common Stock at par value | 0 | 15,000 |
Accrued interest settled with stock | 131,628 | 0 |
Account payable settled with stock | 172,900 | 0 |
Subscriptions receivable for Series F Preferred Stock | $ 0 | $ 300,000 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BASIS OF PRESENTATION | Echo Therapeutics, Inc. (the "Company") is a medical device company with expertise in advanced skin permeation technology. The Company is developing its non-invasive, wireless continuous glucose monitoring (CGM) system with potential use in the outpatient diabetes market. A significant opportunity may also exist in the wearable-health consumer market and in the hospital setting. Echo has also developed its needle-free skin preparation device as a platform technology that allows for enhanced skin permeation enabling extraction of analytes, such as glucose, enhanced delivery of topical pharmaceuticals and other applications. The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Sontra Medical, Inc., a Delaware corporation. All significant intercompany balances and transactions have been eliminated in consolidation. These financial statements have been prepared in conformity with generally accepted accounting principles (“GAAP”) in the United States consistent with those applied in, and should be read in conjunction with, the Company’s audited consolidated financial statements and related footnotes for the year ended December 31, 2015 included in the Company’s Annual Report on Form 10-K as filed with the United States Securities and Exchange Commission (“SEC”) on March 30, 2016. These financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the Company’s financial position as of September 30, 2016 and its results of operations and cash flows for the interim periods presented and are not necessarily indicative of results for subsequent interim periods or for the full year. These interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements as allowed by the relevant SEC rules and regulations; however, the Company believes that its disclosures are adequate to ensure that the information presented is not misleading. Certain amounts in prior periods have been reclassified to conform to the current presentation. |
LIQUIDITY AND MANAGEMENT'S PLAN
LIQUIDITY AND MANAGEMENT'S PLANS | 9 Months Ended |
Sep. 30, 2016 | |
Liquidity And Managements Plans | |
LIQUIDITY AND MANAGEMENT'S PLANS | The accompanying financial statements have been prepared on a basis that assumes that the Company will continue as a going concern and that contemplates the continuity of operations, the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. As of September 30, 2016, the Company had cash of $172,725, working capital deficit of ($6,865,405) |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | The principal categories and estimated useful lives of property and equipment were: 09/30/16 12/31/15 Estimated Useful Lives Computer equipment $ 335,298 $ 332,764 3 Office and laboratory equipment 603,226 628,726 3-5 Furniture and fixtures 228,099 228,099 7 Manufacturing equipment 65,819 61,998 5 Leasehold improvements 41,968 41,968 3-7 Total property and equipment 1,274,410 1,293,555 Less accumulated depreciation and amortization 1,085,474 1,025,884 Property and equipment, net $ 188,936 $ 267,671 |
CAPITALIZED SOFTWARE DEVELOPMEN
CAPITALIZED SOFTWARE DEVELOPMENT COSTS | 9 Months Ended |
Sep. 30, 2016 | |
Capitalized Software Development Costs | |
CAPITALIZED SOFTWARE DEVELOPMENT COSTS | Software development costs associated with the planning and designing phase of software development, including coding and testing activities necessary to establish technological feasibility, are expensed as incurred. Once technological feasibility has been determined, a portion of the costs incurred in development, including coding, testing, and quality assurance, are capitalized. $25,170 and $267,811 of costs associated with the application programming of the Company’s smartphone application for its CGM were capitalized in the quarter and nine months ended September 30, 2016, respectively. |
FINANCING TRANSACTIONS
FINANCING TRANSACTIONS | 9 Months Ended |
Sep. 30, 2016 | |
Financing Transactions | |
FINANCING TRANSACTIONS | On January 29, 2016, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with certain institutional and other accredited investors (the “Investors”) pursuant to which the Company agreed to issue up to $5,148,620 principal amount of 10% senior secured convertible notes of the Company (the “Notes”) and related common stock purchase warrants (the “Warrants”) in two tranches. The Notes are secured by substantially all of the assets of the Company pursuant to a Security Agreement, dated January 29, 2016 (the “Security Agreement”). The initial closing of $1,787,000 occurred on January 29, 2016. The second tranche of the financing, or $3,361,620, was subject to the Company obtaining shareholder approval which occurred on April 14, 2016. The Notes and Warrants are subject to customary antidilution provisions. With stockholder approval, the conversion price for the Notes is subject to a reset to eighty percent (80%) of the average of the ten lowest closing prices of the Common Stock less than $1.50 , subject to equitable adjustment, if any, as reported by Bloomberg LP for the principal market on which the Common Stock then trades during the ninety (90) days following the first effective date of a registration statement filed pursuant to the Registration Rights Agreement, but in no event less than $.80, subject to equitable adjustment. For the first closing, bridge notes in the principal amount of $680,000 were surrendered to the Company as payment by certain Investors. This was inclusive of $330,000 of bridge notes outstanding at December 31, 2015 and a $350,000 of promissory notes received at various dates in January 2016 from Beijing Yi Tang Bio Science & Technology, Ltd. (BYT). The Company recorded a loss on early extinguishment of these bridge loans of $415,725, representing the excess value of the consideration consisting of the $680,000 secured convertible note, and a proportional amount of the Warrants totaling $320,761 and the embedded conversion feature of the Notes totaling $94,964, exchanged for certain bridge loans to cancel them. Fees aggregating $368,080 were paid to the placement agent and others. The Notes issued in the first closing are initially convertible into 1,191,333 shares of common stock, par value $.01 per share, of the Company (the “Common Stock”), at $1.50 per share. In connection with the initial closing, the Company issued five-year Class A warrants to purchase 1,274,280 shares of Common Stock, inclusive of Class A warrants to purchase 82,947 share of Common Stock issued to the placement agent, at an exercise price of $1.50 per share, which are not exercisable for six months. These Warrants, whose exercise price is subject to adjustments should the Company consummate a future financing at a price less than $1.50, are considered a derivative. The initial value of these derivative warrants was $901,631 which was determined utilizing a Monte Carlo Binomial Model. The assumptions utilized for these derivative warrants, as well as embedded conversion feature, described hereafter, are disclosed in Note 10. Additionally the Notes contain an embedded conversion feature which adjusts the conversion price should the Company have a price reset during the ninety days after April 29, 2016 (the effective date of the Company’s registration) or consummate a future financing at a price less than $1.50, and is also considered a derivative. A price reset to $0.91 occurred on July 29, 2016 as is further described below. The initial value of the embedded conversion feature within the Notes was $249,559 which was also determined utilizing a Monte Carlo Binomial Model. On February 4, 2016, the Company issued a promissory note to BYT in the aggregate principal amount of $300,000 in respect of a bridge loan made by such party. On February 11, 2016, the Company issued a promissory note to Platinum Partners Value Arbitrage Fund L.P. (“PPVA”) in the aggregate principal amount of $100,000 in respect of a bridge loan made by such party. On March 21, 2016, the Company issued a promissory note to PPVA in the aggregate principal amount of $150,000 in respect of a bridge loan made by such party. On April 4, 2016, the Company issued a promissory note to PPVA in the aggregate principal amount of $350,000 in respect of a bridge loan made by such party. On April 18, 2016, the Company issued a promissory note to PPVA in the aggregate principal amount of $450,000 in respect of a bridge loan made by such party. On April 29, 2016, the Company issued a promissory note to BYT in the aggregate principal amount of $50,000 in respect of a bridge loan made by such party. These promissory notes, aggregating $1,400,000, which bore interest at the prime rate (or 3.5%), were exchanged for the May 3, 2016 second tranche financing of the Notes described below. On April 14, 2016, the Company held a Special Meeting of Stockholders. Of the 11,124,496 shares of common stock outstanding and entitled to vote, 6,197,024 shares, or 56%, were represented at the meeting in person or by proxy. On May 3, 2016, the Company closed the second tranche of the Note financing and issued Notes in an aggregate principal amount of $3,361,620, inclusive of $3,620 of interest due on bridge loans. In exchange for the Notes, the Company received $1,188,000 in gross cash proceeds, a note receivable, payable in 30 days and bearing interest at 12%, of $770,000, from BYT, and $1,400,000 of bridge notes were cancelled. The Company recorded a loss on early extinguishment of these bridge loans of $1,728,235, representing the excess value of the consideration consisting of the $1,400,000 secured convertible note, and a proportional amount of the Warrants totaling $510,348 and the embedded conversion feature of the Notes totaling $1,217,887, exchanged for certain bridge loans to cancel them. The Company incurred placement, legal and other fees aggregating $184,311 which were deducted from the gross cash proceeds. Additionally, the placement agent received Class B warrants, with a 1½ year term, to purchase 37,520 shares of the Company’s Common Stock at $1.50 per share. The Notes are initially convertible into 2,241,075 shares of Common Stock at $1.50 per share. The Company also issued Class B warrants, with a 1½ year term, to purchase 2,241,075 shares of Common Stock at $1.50 per share. The Company may call the Class B Warrants in the event that Company’s Common Stock is trading at 200% above the strike price for 10 consecutive trading days (at $100,000 value traded per day) if the Warrant is saleable into the public markets, provided that the holder will have the option of ten trading days to exercise. These Warrants, whose exercise price is subject to adjustments should the Company do a future financing at a price less than $1.50, are considered a derivative. The initial value of these derivative warrants was $1,245,943 which was determined utilizing a Monte Carlo Binomial Model. The assumptions utilized for these derivative warrants, as well as embedded conversion feature, described hereafter, are disclosed in Note 10. Additionally the Notes contain an embedded conversion feature which adjusts the conversion price should the Company have a price reset during the ninety days after April 29, 2016 (the effective date of the Company’s registration) or consummate a future financing at a price less than $1.50, and is also considered a derivative. A price reset to $0.91 occurred on July 29, 2016 as is further described below. The initial value of the embedded conversion feature within the Notes was $2,924,337 which was also determined utilizing a Monte Carlo Binomial Model. In connection with the Note closing, the Certificate of Amendment to the Certificate of Designations of the Company’s Series F Convertible Preferred Stock was filed which provides the holders of 5,276,180 shares of the Company’s Series F Convertible Preferred Stock the same reset rights afforded the Note holders. This modification to the Series F provided them with a beneficial conversion feature. As a result of this change, the Company recorded a deemed dividend of $6,460,818. Effective as of July 29, 2016, notice was given that the Conversion Price of the Notes issued to the note holders pursuant to the Securities Purchase Agreement, dated January 29, 2016 (the “Purchase Agreement”), between Echo Therapeutics, Inc. and the purchasers, had been reset from $1.50 per share to $0.91 per share. Additionally and also effective as of the same date, notice was given that, pursuant to Section 5(c)(v) of the Certification of Designation, Preferences and Rights of the Series F Convertible Preferred Stock of Echo Therapeutics, Inc. (the “Series F Designation”), the Conversion Ratio has been reset from 1:1 to 1:1.65. These resets were based on an amount equal to 80% of the average of the ten lowest closing prices of the Common Stock less than $1.50 per share during the ninety day period immediately following the effectiveness of the Registration Statement, as contemplated by Section 4(b) of the Notes. This price reset resulted in the Series F Convertible Preferred Stockholders receiving the right to 3,429,517 additional common shares upon conversion. The Purchase Agreement for the above described Note financing contains customary representations, warranties and affirmative and negative covenants. The Purchase Agreement also requires management and certain shareholders to lock-up certain of their shares for the earlier of six months after the effective date of a registration statement, the first anniversary of the initial closing (January 29, 2017), or the date, if applicable, such holder of securities is no longer an officer or directors of the Company, subject to certain exceptions. In addition, for up to one year following the effective date of a registration statement, the Investors have the right to participate, on a pro rata basis, in certain subsequent financings by the Company, subject to certain limitations. In connection with the transaction, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) that requires the Company to file one or more registration statements in respect of the shares of Common Stock underlying the Notes and Warrants. If the Company fails to make its filing deadlines or fails to maintain the registration statement for required periods of time, the Company will be subject to certain liquidated damages provisions. Newbridge Securities Corporation/Life Tech Capital (the “Placement Agent”) acted as the sole placement agent for the financing. The Company may redeem the Notes at par when the Company stock price remains above $5.00 for ten consecutive days, or alternatively, at 125% of principal below $5.00. Interest is payable quarterly or, subject to receipt of stockholder approval, at the Company’s option, in shares of Common Stock. The assumptions utilized for the embedded conversion feature valuation, which reflect the initial valuation at January 29th, May 3rd and subsequent valuation at September 30, 2016, were as follows: Risk-free interest rate % 0.34 – 0.48 Expected dividend yield — Expected term - years (contractual term) 0.33 – 0.59 Forfeiture rate — Expected volatility % 112 Timing of down-round triggering event October 2016 Follows is a summary of the Notes and related discounts and the Loss on the early extinguishment of bridge loans: Original Value Loss on Early Extinguishment of Bridge Loans Secured Convertible Notes, net Cash and other proceeds received from financing — — $ 5,148,620 Warrants $ 2,147,574 (831,109 ) (1,316,465 ) Embedded conversion feature in notes $ 3,173,896 (1,312,851 ) (1,861,045 ) Financing costs — — (552,391 ) Amortization of debt discount — — 1,830,012 Totals, net $ 5,321,470 $ (2,143,960 ) $ 3,248,731 On September 23, 2016, the Company issued a promissory note to Network Victory Limited (“NVL”) in the aggregate principal amount of $250,000 in respect of a bridge loan made by such party. The promissory note, which bears interest at 18% per annum, may, at NVL’s option, be exchanged for securities issued in a subsequent financing by the Company. |
DERIVATIVE LIABILITIES
DERIVATIVE LIABILITIES | 9 Months Ended |
Sep. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE LIABILITY | As a result of having warrants which are outstanding, issued in connection with a 2012 Credit Facility (which was terminated in October 2014), the Company is required to record the changes in the value of these derivative warrants through their expirations in November 2017. Additionally as indicated in Note 5 above, Notes and Warrants issued in connection with the Company’s January and May 2016 secured convertible note financing, included certain price/conversion features, which require them to be accounted for as derivatives. The table below presents the changes in the derivative liability, which is measured at fair value on a recurring basis and classified as Level 3 in fair value hierarchy: 09/30/16 12/31/15 Derivative liabilities as of January 1 $ 127,000 $ 208,155 Secured convertible note derivatives: Warrants 2,147,574 — Embedded conversion feature in Notes 3,173,896 — Loss (gain) on revaluation (4,437,776 ) (81,155 ) Derivative liabilities as of end of period $ 1,010,694 $ 127,000 None of the derivative warrants were exercised in 2016 or 2015 pursuant to cashless exercise provisions. |
NET LOSS PER SHARE
NET LOSS PER SHARE | 9 Months Ended |
Sep. 30, 2016 | |
Net Loss Per Share | |
NET LOSS PER SHARE | For the three months ended September 30, 2016 dilutive EPS includes 5,657,824 incremental shares attributable to the assumed conversion of the January 29, 2016 and May 3, 2016 secured convertible notes and an adjustment of $2,720,727 in net loss for the change in fair value of the related conversion option for such period. No such incremental shares were noted for the nine month period as the calculation is anti-dilutive. |
EQUITY COMPENSATION PLANS
EQUITY COMPENSATION PLANS | 9 Months Ended |
Sep. 30, 2016 | |
Equity Compensation Plans | |
EQUITY COMPENSATION PLANS | In March 2003, the Company’s shareholders approved its 2003 Stock Option and Incentive Plan (the “2003 Plan”). Pursuant to the 2003 Plan, the Company’s Board of Directors (or its committees and/or executive officers delegated by the Board of Directors) may grant incentive and nonqualified stock options, restricted stock, and other stock-based awards to the Company’s employees, officers, directors, consultants and advisors. As of September 30, 2016, there were 5,000 restricted shares of Common Stock issued and options to purchase an aggregate of 26,500 shares of Common Stock outstanding under the 2003 Plan and no shares are available for future grants due to the 2003 Plan’s expiration. In May 2008, the Company’s shareholders approved the 2008 Equity Compensation Plan, as amended (the “2008 Plan”). The 2008 Plan provides for grants of incentive stock options to employees and nonqualified stock options and restricted stock to employees, consultants and non-employee directors of the Company. The maximum number of shares available under the 2008 Plan is 10,000,000 shares. As of September 30, 2016, there were 288,866 restricted shares of Common Stock issued and options to purchase 2,403,565 shares of Common Stock outstanding under the 2008 Plan and 7,284,069 shares available for future grants. The following table shows the remaining shares available for future grants for each plan and outstanding shares: Equity Compensation Plans Not Pursuant 2003 Plan 2008 Plan to a Plan Shares Available For Issuance Total reserved for stock options and restricted stock 160,000 10,000,000 Net restricted stock issued net of cancellations (5,000 ) (288,866 ) Stock options granted (154,449 ) (4,293,693 ) Add back options cancelled before exercise 92,349 1,866,628 Less shares no longer available due to Plan expiration (92,900 ) — Remaining shares available for future grants at September 30, 2016 — 7,284,069 Stock options granted 154,449 4,293,693 310,000 Less: Stock options cancelled (92,349 ) (1,866,628 ) (243,333 ) Stock options exercised (35,600 ) (23,500 ) (66,667 ) Net shares outstanding before restricted stock 26,500 2,403,565 — Net restricted stock issued net of cancellations 5,000 288,866 6,485 Outstanding shares at September 30, 2016 31,500 2,692,431 6,485 |
STOCK OPTIONS
STOCK OPTIONS | 9 Months Ended |
Sep. 30, 2016 | |
Stock Options | |
STOCK OPTIONS | The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model with certain assumptions noted below. Expected volatilities are based on historical volatility of the Common Stock using historical periods consistent with the expected term of the options. The Company uses historical data, as well as subsequent events occurring prior to the issuance of the financial statements, to estimate option exercise and employee termination and forfeitures within the valuation model. The expected term of stock options granted under the Company’s stock plans is based on the average of the contractual term (generally 10 years) and the vesting period (generally 24 to 42 months). The risk-free rate is based on the yield of a U.S. Treasury security with a term consistent with the option. For options issued and outstanding during the nine month periods ended September 30, 2016 and 2015, the Company recorded additional paid-in capital and non-cash compensation expense of $521,494 and $756,000, respectively, each net of estimated forfeitures. The assumptions used principally for stock options granted to employees and members of the Company’s Board of Directors in the nine months ended September 30, 2016 and 2015 were as follows: 2016 2015 Risk-free interest rate % 0.18 – 1.07 1.46 – 1.90 Expected dividend yield — — Expected term - years .25 – 4 5 – 5.5 Forfeiture rate % (excluding fully vested stock options) 2 – 5 7.5 - 15 Expected volatility % 0.94 – 1.28 0.92 – 0.93 A summary of stock option activity for the nine months ended September 30, 2016 is as follows: Stock Options Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (years) Aggregate Intrinsic Value Outstanding options at January 1, 2016 1,667,233 $ 2.01 Granted 1,222,810 $ 1.28 Exercised (10,500 ) $ 1.19 Forfeited or expired (449,478 ) $ 2.47 Outstanding options at September 30, 2016 2,430,065 $ 1.56 8.63 $ — Exercisable options at September 30, 2016 1,622,072 $ 1.59 8.48 $ — The weighted-average grant-date fair value of stock options granted for the nine months period ended September 30, 2016 was $1.28 per share. As of September 30, 2016, there was $435,072 of total unrecognized compensation expense related to non-vested share-based option compensation arrangements. With the exception of the unrecognized share-based compensation related to certain restricted stock grants to officers and employees that contain performance conditions related to FDA approval for the Company’s CGM system or the sale of substantially all of the stock or assets of the Company, unrecognized compensation is expected to be recognized over the next four years. |
RESTRICTED STOCK
RESTRICTED STOCK | 9 Months Ended |
Sep. 30, 2016 | |
Restricted Stock | |
RESTRICTED STOCK | For restricted stock issued and outstanding during the nine months ended September 30, 2016 and 2015, the Company incurred non-cash compensation expense of $181,369 and $42,000, respectively, each net of estimated forfeitures. During the nine months ended September 30, 2016, the Company granted 280,000 restricted shares of Common Stock to its officers and Vice President of Operations and Product Development of the Company, in connection with their respective salary deferrals. A summary of non-vested restricted stock activity for the nine months ended September 30, 2016 is as follows: Restricted Stock Shares Weighted- Average Grant-Date Fair Value Non-vested shares at January 1, 2016 27,842 $ 13.06 Granted 280,000 $ 1.13 Vested (2,020 ) $ 8.68 Forfeited (5,471 ) $ 7.67 Non-vested shares at September 30, 2016 300,351 $ 2.07 Among the 300,351 shares of non-vested restricted stock, the various vesting criteria include the following: ● 14,185 shares of restricted stock vest upon the FDA approval of the Company’s CGM system or the sale of the Company; and ● 6,166 shares of restricted stock vest over 4 years, at each of the anniversary dates of the grants, and ● 130,000 shares of restricted stock vest 18 months from the date of issuance, and ● 150,000 shares of restricted stock vest quarterly after the company receives debt/equity financing of at least $1 million As of September 30, 2016, there was $438,429 of total unrecognized compensation expense related to non-vested share-based restricted stock arrangements granted pursuant to the Company’s equity compensation plans that vest over time in the foreseeable future. As of September 30, 2016, the Company cannot estimate the timing of completion of performance vesting requirements required by certain of these restricted stock grant arrangements. Compensation expense related to these restricted share grants will be recognized when the Company concludes that achievement of the performance vesting conditions is probable. |
WARRANTS
WARRANTS | 9 Months Ended |
Sep. 30, 2016 | |
Warrants | |
WARRANTS | In the nine months ended September 30, 2016, the Company issued warrants to purchase 3,552,875 shares of the Company’s common stock in connection with its Note financing. See Note 5. A summary of warrant activity for the nine months ended September 30, 2016 is as follows: Warrants Shares Weighted- Average Exercise Price Outstanding warrants at January 1, 2016 4,530,428 $ 3.68 Granted 3,552,875 $ 1.50 Forfeited — $ — Outstanding warrants at September 30, 2016 8,083,303 $ 2.72 At September 30, 2016, the Company had the following outstanding warrants: Type of Warrant/Range of Exercise Prices Expirations Number Outstanding Weighted-Average RemainingContractual Life (years) Weighted- Average Exercise Price Number Exercisable Derivative: $ 1.50 7/29/21 1,274,280 4.83 $ 1.50 1,274,280 $ 1.50 5/3/18 2,278,595 1.59 $ 1.50 2,278,595 $ 7.50 8/31/17 to 11/6/17 700,000 0.97 $ 7.50 700,000 Equity: $ 2.75 - $3.00 12/10/18 to 10//30/20 3,830,428 3.44 $ 2.98 3,830,428 Total outstanding 8,083,303 8,083,303 The Company uses valuation methods and assumptions that consider among other factors the fair value of the underlying stock, risk-free interest rate, volatility, expected life and dividend rates in estimating fair value for the warrants considered to be derivative instruments. The following assumptions were utilized by the Company: By expiration: 7/29/21 5/3/18 8/31/17 - 11/6/17 Risk-free interest rate % 1.03 0.56 0.73 Expected dividend yield — — — Expected term - years (contractual term) 5.15 1.87 1.17 - 1.35 Forfeiture rate — — — Expected volatility % 103 103 84.95 Timing of down-round triggering event August 2016 N/A Expected volatilities are based on historical volatility of the Common Stock using historical periods consistent with the expected term of the warrant. The risk-free rate is based on the yield of a U.S. Treasury security with a term consistent with the warrant. |
LITIGATION & OTHER SIGNIFICANT
LITIGATION & OTHER SIGNIFICANT MATTERS | 9 Months Ended |
Sep. 30, 2016 | |
Litigation Other Significant Matters | |
LITIGATION & OTHER SIGNIFICANT MATTERS | From time to time, the Company is subject to legal proceedings, claims, investigations, and proceedings in the ordinary course of business. In accordance with generally accepted accounting principles, the Company makes a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss or range of loss can be reasonably estimated. These provisions, if any, are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. Litigation is inherently unpredictable. At September 30, 2016, no litigation loss is deemed probable or reasonably estimated. On September 23, 2016, Scott W. Hollander, President and Chief Executive Officer and a director of the Company, and the Company entered into a separation agreement (the “Separation Agreement”) pursuant to which the parties mutually agreed to Mr. Hollander’s separation from the Company, effective September 23, 2016 (the “Separation Date”). Under the Separation Agreement, Mr. Hollander will receive: (i) severance pay equal to the gross amount of $420,000 (the “Severance Amount”), less applicable federal, state and local withholding and taxes, payable in monthly amounts of $17,500 commencing on October 15, 2016, subject to increase to $25,000 per month if the Company shall consummate a debt or equity financing as described in Section 3(a)(ii) of the Severance Agreement, until the Severance Amount is fully paid; (ii) 150,000 shares of restricted stock previously awarded in March 2016 pursuant to a restricted stock agreement shall vest in quarterly installments of 37,500 shares; (iii) accelerated vesting of all unvested stock options previously awarded to him in December 2014 and March 2016 with three (3) months from the Separation Date to exercise such options; and (iv) reimbursement of COBRA payments for up to eighteen (18) months. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | On October 19, 2016, the Company issued a promissory note to Network Victory Limited in the aggregate principal amount of $125,000 in respect of a bridge loan made by such party. The promissory note, which bears interest at 18% per annum, may, at NVL’s option, be exchanged for securities issued in a subsequent financing by the Company. On October 28, 2016, the Company issued stock options to its employees and a certain consultant aggregating 131,155 shares to purchase our common stock at $0.45 per share. These options vest in one year. |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | 09/30/16 12/31/15 Estimated Useful Lives Computer equipment $ 335,298 $ 332,764 3 Office and laboratory equipment 603,226 628,726 3-5 Furniture and fixtures 228,099 228,099 7 Manufacturing equipment 65,819 61,998 5 Leasehold improvements 41,968 41,968 3-7 Total property and equipment 1,274,410 1,293,555 Less accumulated depreciation and amortization 1,085,474 1,025,884 Property and equipment, net $ 188,936 $ 267,671 |
FINANCING TRANSACTIONS (Tables)
FINANCING TRANSACTIONS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Summary of the Notes and related discounts | Risk-free interest rate % 0.34 – 0.48 Expected dividend yield — Expected term - years (contractual term) 0.33 – 0.59 Forfeiture rate — Expected volatility % 112 Timing of down-round triggering event October 2016 |
Schedule of assumptions for embedded converstion feature valuation | Original Value Loss on Early Extinguishment of Bridge Loans Secured Convertible Notes, net Cash and other proceeds received from financing — — $ 5,148,620 Warrants $ 2,147,574 (831,109 ) (1,316,465 ) Embedded conversion feature in notes $ 3,173,896 (1,312,851 ) (1,861,045 ) Financing costs — — (552,391 ) Amortization of debt discount — — 1,830,012 Totals, net $ 5,321,470 $ (2,143,960 ) $ 3,248,731 |
DERIVATIVE LIABILITIES (Tables)
DERIVATIVE LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative warrant liability | 09/30/16 12/31/15 Derivative liabilities as of January 1 $ 127,000 $ 208,155 Secured convertible note derivatives: Warrants 2,147,574 — Embedded conversion feature in Notes 3,173,896 — Loss (gain) on revaluation (4,437,776 ) (81,155 ) Derivative liabilities as of end of period $ 1,010,694 $ 127,000 |
EQUITY COMPENSATION PLANS (Tabl
EQUITY COMPENSATION PLANS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Equity Compensation Plans | |
EQUITY COMPENSATION PLANS | Equity Compensation Plans Not Pursuant 2003 Plan 2008 Plan to a Plan Shares Available For Issuance Total reserved for stock options and restricted stock 160,000 10,000,000 Net restricted stock issued net of cancellations (5,000 ) (288,866 ) Stock options granted (154,449 ) (4,293,693 ) Add back options cancelled before exercise 92,349 1,866,628 Less shares no longer available due to Plan expiration (92,900 ) — Remaining shares available for future grants at September 30, 2016 — 7,284,069 Stock options granted 154,449 4,293,693 310,000 Less: Stock options cancelled (92,349 ) (1,866,628 ) (243,333 ) Stock options exercised (35,600 ) (23,500 ) (66,667 ) Net shares outstanding before restricted stock 26,500 2,403,565 — Net restricted stock issued net of cancellations 5,000 288,866 6,485 Outstanding shares at September 30, 2016 31,500 2,692,431 6,485 |
STOCK OPTIONS (Tables)
STOCK OPTIONS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Stock Options | |
Assumption used for stock option granted | 2016 2015 Risk-free interest rate % 0.18 – 1.07 1.46 – 1.90 Expected dividend yield — — Expected term - years .25 – 4 5 – 5.5 Forfeiture rate % (excluding fully vested stock options) 2 – 5 7.5 - 15 Expected volatility % 0.94 – 1.28 0.92 – 0.93 |
Stock option activity | Stock Options Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (years) Aggregate Intrinsic Value Outstanding options at January 1, 2016 1,667,233 $ 2.01 Granted 1,222,810 $ 1.28 Exercised (10,500 ) $ 1.19 Forfeited or expired (449,478 ) $ 2.47 Outstanding options at September 30, 2016 2,430,065 $ 1.56 8.63 $ — Exercisable options at September 30, 2016 1,622,072 $ 1.59 8.48 $ — |
RESTRICTED STOCK (Tables)
RESTRICTED STOCK (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Restricted Stock | |
Nonvested restricted stock activity | Restricted Stock Shares Weighted- Average Grant-Date Fair Value Non-vested shares at January 1, 2016 27,842 $ 13.06 Granted 280,000 $ 1.13 Vested (2,020 ) $ 8.68 Forfeited (5,471 ) $ 7.67 Non-vested shares at September 30, 2016 300,351 $ 2.07 |
WARRANTS (Tables)
WARRANTS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Warrants | |
Warrant Activity | Warrants Shares Weighted- Average Exercise Price Outstanding warrants at January 1, 2016 4,530,428 $ 3.68 Granted 3,552,875 $ 1.50 Forfeited — $ — Outstanding warrants at September 30, 2016 8,083,303 $ 2.72 |
Outstanding Warrants | Type of Warrant/Range of Exercise Prices Expirations Number Outstanding Weighted-Average RemainingContractual Life (years) Weighted- Average Exercise Price Number Exercisable Derivative: $ 1.50 7/29/21 1,274,280 4.83 $ 1.50 1,274,280 $ 1.50 5/3/18 2,278,595 1.59 $ 1.50 2,278,595 $ 7.50 8/31/17 to 11/6/17 700,000 0.97 $ 7.50 700,000 Equity: $ 2.75 - $3.00 12/10/18 to 10//30/20 3,830,428 3.44 $ 2.98 3,830,428 Total outstanding 8,083,303 8,083,303 |
Warrants assumptions utilized by the Company | By expiration: 7/29/21 5/3/18 8/31/17 - 11/6/17 Risk-free interest rate % 1.03 0.56 0.73 Expected dividend yield — — — Expected term - years (contractual term) 5.15 1.87 1.17 - 1.35 Forfeiture rate — — — Expected volatility % 103 103 84.95 Timing of down-round triggering event August 2016 August 2016 N/A |
LIQUIDITY AND MANAGEMENT'S PL27
LIQUIDITY AND MANAGEMENT'S PLANS (Details Narrative) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Liquidity And Managements Plans | ||
Cash | $ 172,725 | |
Working capital deficit | (6,865,405) | |
Accumulated deficit | $ (154,897,838) | $ (150,129,933) |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Total property and equipment | $ 1,274,410 | $ 1,293,555 |
Less accumulated depreciation and amortization | 1,085,474 | 1,025,884 |
Property and equipment, net | 188,936 | 267,671 |
Computer Equipment [Member] | ||
Total property and equipment | $ 335,298 | 332,764 |
Estimated Useful Lives | 3 years | |
Office and laboratory equipment [Member] | ||
Total property and equipment | $ 603,226 | 628,726 |
Office and laboratory equipment [Member] | Minimum [Member] | ||
Estimated Useful Lives | 3 years | |
Office and laboratory equipment [Member] | Maximum [Member] | ||
Estimated Useful Lives | 5 years | |
Furniture and fixtures [Member] | ||
Total property and equipment | $ 228,099 | 228,099 |
Estimated Useful Lives | 7 years | |
Manufacturing equipment [Member] | ||
Total property and equipment | $ 65,819 | 61,998 |
Estimated Useful Lives | 5 years | |
Leasehold improvements [Member] | ||
Total property and equipment | $ 41,968 | $ 41,968 |
Leasehold improvements [Member] | Minimum [Member] | ||
Estimated Useful Lives | 3 years | |
Leasehold improvements [Member] | Maximum [Member] | ||
Estimated Useful Lives | 7 years |
CAPITALIZED SOFTWARE DEVELOPM29
CAPITALIZED SOFTWARE DEVELOPMENT COSTS (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2016 | Sep. 30, 2016 | |
Capitalized Software Development Costs | ||
Costs associated with the application programming | $ 25,170 | $ 267,811 |
FINANCING TRANSACTIONS (Details
FINANCING TRANSACTIONS (Details) | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Debt Disclosure [Abstract] | |
Cash and other proceeds received from financing | $ 5,148,620 |
Financing costs | (552,391) |
Warrants | (1,316,465) |
Embedded conversion feature in Notes | (1,861,045) |
Amortization of debt discount | 1,830,012 |
Secured convertible notes, net | $ 3,248,731 |
FINANCING TRANSACTIONS (Detai31
FINANCING TRANSACTIONS (Details 1) | 9 Months Ended |
Sep. 30, 2016USD ($) | |
STOCK OPTIONS AND RESTRICTED STOCK | |
Risk-free interest rate minimum | 0.34% |
Risk-free interest rate maximum | 0.48% |
Expected dividend yield | $ 0 |
Forfeiture rate | 0.00% |
Expected volatility | 112.00% |
Timing of down-round triggering event | October 2,016 |
Minimum [Member] | |
STOCK OPTIONS AND RESTRICTED STOCK | |
Expected term - years | 3 months 29 days |
Maximum [Member] | |
STOCK OPTIONS AND RESTRICTED STOCK | |
Expected term - years | 7 months 2 days |
FINANCING TRANSACTIONS (Detai32
FINANCING TRANSACTIONS (Details Narrative) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Debt Disclosure [Abstract] | ||
Bridge loans | $ 250,000 | $ 330,000 |
DERIVATIVE LIABILITY (Details)
DERIVATIVE LIABILITY (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Derivative warrant liability as of January 1 | $ 127,000 | $ 208,155 |
Warrants | 2,147,574 | 0 |
Embedded conversion feature in Notes | 3,173,896 | 0 |
Loss (gain) on revaluation | (4,437,776) | (81,155) |
Derivative liabilities as of end of period | $ 1,010,694 | $ 127,000 |
NET LOSS PER SHARE (Details Nar
NET LOSS PER SHARE (Details Narrative) | 3 Months Ended |
Sep. 30, 2016USD ($)shares | |
Net Loss Per Share | |
Antidilutive securities | shares | 5,657,824 |
Net (loss) in fair value of derivative | $ | $ (2,720,727) |
EQUITY COMPENSATION PLANS (Deta
EQUITY COMPENSATION PLANS (Details) | 9 Months Ended |
Sep. 30, 2016USD ($)shares | |
Shares Available For Issuance | |
Add back options cancelled before exercise | (449,478) |
Plan2003Member | |
Shares Available For Issuance | |
Total reserved for stock options and restricted stock | $ | $ 160,000 |
Net restricted stock issued net of cancellations | $ | $ (5,000) |
Stock options granted | (154,449) |
Add back options cancelled before exercise | 92,349 |
Less shares no longer available due to Plan expiration | $ | $ (92,900) |
Remaining shares available for future grants at September 30, 2016 | 0 |
Outstanding Options and Restricted Stock | |
Stock options granted | $ | $ 154,449 |
Less: Stock options cancelled | $ | $ (92,349) |
Stock options exercised | (35,600) |
Net shares outstanding before restricted stock | 26,500 |
Net restricted stock issued net of cancellations | 5,000 |
Outstanding shares at September 30, 2016 | 31,500 |
Plan2008Member | |
Shares Available For Issuance | |
Total reserved for stock options and restricted stock | $ | $ 10,000,000 |
Net restricted stock issued net of cancellations | $ | $ (288,866) |
Stock options granted | (4,293,693) |
Add back options cancelled before exercise | 1,866,628 |
Less shares no longer available due to Plan expiration | $ | $ 0 |
Remaining shares available for future grants at September 30, 2016 | 7,284,069 |
Outstanding Options and Restricted Stock | |
Stock options granted | $ | $ 4,293,693 |
Less: Stock options cancelled | $ | $ (1,866,628) |
Stock options exercised | (23,500) |
Net shares outstanding before restricted stock | 2,403,565 |
Net restricted stock issued net of cancellations | 288,866 |
Outstanding shares at September 30, 2016 | 2,692,431 |
Not Pursuant to a Plan [Member] | |
Outstanding Options and Restricted Stock | |
Stock options granted | $ | $ 310,000 |
Less: Stock options cancelled | $ | $ (243,333) |
Stock options exercised | (66,667) |
Net shares outstanding before restricted stock | 0 |
Net restricted stock issued net of cancellations | 6,485 |
Outstanding shares at September 30, 2016 | 6,485 |
EQUITY COMPENSATION PLANS (De36
EQUITY COMPENSATION PLANS (Details Narrative) - shares | Sep. 30, 2016 | Dec. 31, 2015 |
Restricted stock | 300,351 | 27,842 |
Options to purchase an aggregate of shares | 1,622,072 | |
Maximun share authorized | 150,000,000 | 150,000,000 |
Plan2003Member | ||
Restricted stock | 5,000 | |
Options to purchase an aggregate of shares | 26,500 | |
Shares available for future grant | 0 | |
Plan2008Member | ||
Restricted stock | 288,866 | |
Options to purchase an aggregate of shares | 2,403,565 | |
Shares available for future grant | 7,284,069 | |
Maximun share authorized | 10,000,000 |
STOCK OPTIONS (Details)
STOCK OPTIONS (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
STOCK OPTIONS AND RESTRICTED STOCK | ||
Risk-free interest rate minimum | 0.34% | |
Risk-free interest rate maximum | 0.48% | |
Expected dividend yield | $ 0 | |
Forfeiture rate (excluding fully vested stock options) | 0.00% | |
Expected volatility | 112.00% | |
Director [Member] | ||
STOCK OPTIONS AND RESTRICTED STOCK | ||
Risk-free interest rate minimum | 0.18% | 1.46% |
Risk-free interest rate maximum | 1.07% | 1.90% |
Expected dividend yield | $ 0 | $ 0 |
Minimum [Member] | ||
STOCK OPTIONS AND RESTRICTED STOCK | ||
Expected term - years | 3 months 29 days | |
Minimum [Member] | Director [Member] | ||
STOCK OPTIONS AND RESTRICTED STOCK | ||
Expected term - years | 3 months | 5 years |
Forfeiture rate (excluding fully vested stock options) | 2.00% | 7.50% |
Expected volatility | 0.94% | 0.92% |
Maximum [Member] | ||
STOCK OPTIONS AND RESTRICTED STOCK | ||
Expected term - years | 7 months 2 days | |
Maximum [Member] | Director [Member] | ||
STOCK OPTIONS AND RESTRICTED STOCK | ||
Expected term - years | 4 years | 5 years 6 months |
Forfeiture rate (excluding fully vested stock options) | 5.00% | 15.00% |
Expected volatility | 1.28% | 0.93% |
STOCK OPTIONS (Details1)
STOCK OPTIONS (Details1) | 9 Months Ended |
Sep. 30, 2016USD ($)$ / sharesshares | |
Shares | |
Beginning Balance | shares | 1,667,233 |
Granted | shares | 1,222,810 |
Exercised | $ | $ (10,500) |
Forfeited or expired | shares | (449,478) |
Ending Balance | shares | 2,430,065 |
Exercisable at September 30, 2016 | shares | 1,622,072 |
Weighted-Average Exercise Price | |
Beginning Balance | $ 2.01 |
Weighted-average stock options granted | 1.28 |
Exercised | 1.19 |
Forfeited or expired | 2.47 |
Ending Balance | 1.56 |
Exercisable at September 30, 2016 | $ 1.59 |
Weighted-Average Remaining Contractual Term | |
Outstanding remaining term | 8 years 7 months 17 days |
Exercisable remaining term | 8 years 5 months 23 days |
Aggregate Intrinsic Value | |
Beginning Balance | $ | $ 0 |
Ending Balance | $ | $ 0 |
STOCK OPTIONS (Details Narrativ
STOCK OPTIONS (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Stock Options | ||
Additional paid-in capital | $ 521,494 | $ 756,000 |
Unrecognized compensation expense related to non | $ 435,072 | |
Granted | $ 1.28 |
RESTRICTED STOCK (Details)
RESTRICTED STOCK (Details) | 9 Months Ended |
Sep. 30, 2016$ / sharesshares | |
Shares | |
Non-vested shares at January 1, 2016 | shares | 27,842 |
Granted | shares | 280,000 |
Vested | shares | (2,020) |
Forfeited | shares | (5,471) |
Non-vested shares at June 30, 2016 | shares | 300,351 |
Weighted- Average Grant-DateFair Value | |
Non-vested shares at January 1, 2016 | $ / shares | $ 13.06 |
Granted | $ / shares | 1.13 |
Vested | $ / shares | 8.68 |
Forfeited | $ / shares | 7.67 |
Non-vested shares at June 30, 2016 | $ / shares | $ 2.07 |
RESTRICTED STOCK (Details Narra
RESTRICTED STOCK (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Restricted Stock | ||
Non-cash restricted stock compensation expense | $ 181,369 | $ 42,000 |
Vesting criteria | Among the 300,351 shares of non-vested restricted stock, the various vesting criteria include the following: ● 14,185 shares of restricted stock vest upon the FDA approval of the Company’s CGM system or the sale of the Company; and ● 6,166 shares of restricted stock vest over 4 years, at each of the anniversary dates of the grants, and ● 130,000 shares of restricted stock vest 18 months from the date of issuance, and ● 150,000 shares of restricted stock vest quarterly after the company receives debt/equity financing of at least $1 million | |
Unrecognized compensation expense | $ 438,429 |
WARRANTS (Details)
WARRANTS (Details) | 9 Months Ended |
Sep. 30, 2016$ / sharesshares | |
Shares | |
Outstanding warrants at January 1, 2016 | shares | 4,530,428 |
Granted | shares | 3,552,875 |
Forfeited | shares | 0 |
Outstanding warrants at September 30, 2016 | shares | 8,083,303 |
Weighted-Average Exercise Price | |
Outstanding warrants at January 1, 2016 | $ / shares | $ 3.68 |
Granted | $ / shares | 1.50 |
Forfeited | $ / shares | 0 |
Outstanding warrants at September 30, 2016 | $ / shares | $ 2.72 |
WARRANTS (Details 1)
WARRANTS (Details 1) | 9 Months Ended |
Sep. 30, 2016$ / sharesshares | |
Warrants | |
Number Outstanding | 8,083,303 |
Weighted-Average Exercise price | $ / shares | $ 1.13 |
Number Exercisable | 8,083,303 |
Derivative: $7.50 [Member] | |
Warrants | |
Exercise Price | $ / shares | $ 7.50 |
Expirations | 8-31-17 to 11-6-17 |
Number Outstanding | 700,000 |
Weighted- Average Remaining Contractual Life (years) | 7 years 6 months |
Weighted-Average Exercise price | $ / shares | $ 7.50 |
Number Exercisable | 700,000 |
Derivative: $1.50 [Member] | |
Warrants | |
Exercise Price | $ / shares | $ 1.50 |
Expirations | 7-29-2021 |
Number Outstanding | 1,274,280 |
Weighted- Average Remaining Contractual Life (years) | 4 years 9 months 29 days |
Weighted-Average Exercise price | $ / shares | $ 1.50 |
Number Exercisable | 1,274,280 |
Derivative: $1.50 [Member] | |
Warrants | |
Exercise Price | $ / shares | $ 1.50 |
Expirations | 5-30-2018 |
Number Outstanding | 2,278,595 |
Weighted- Average Remaining Contractual Life (years) | 1 year 7 months 2 days |
Weighted-Average Exercise price | $ / shares | $ 1.50 |
Number Exercisable | 2,278,595 |
WARRANTS (Details 2)
WARRANTS (Details 2) | 9 Months Ended |
Sep. 30, 2016 | |
Forfeiture rate | 0.00% |
Expected volatility | 112.00% |
Timing of down-round triggering event | October 2,016 |
8/31/17 - 11/6/17 [Member] | |
Risk-free interest rate | 0.73% |
Expected dividend yield | 0.00% |
Forfeiture rate | 0.00% |
Expected volatility | 84.95% |
Timing of down-round triggering event | N/A |
7/29/21 [Member] | |
Risk-free interest rate | 1.03% |
Expected dividend yield | 0.00% |
Expected term (contractual term) | 5 years 1 month 24 days |
Forfeiture rate | 0.00% |
Expected volatility | 103.00% |
Timing of down-round triggering event | August 2,016 |
5/3/18 [Member] | |
Risk-free interest rate | 0.56% |
Expected dividend yield | 0.00% |
Expected term (contractual term) | 1 year 10 months 13 days |
Forfeiture rate | 0.00% |
Expected volatility | 103.00% |
Timing of down-round triggering event | August 2,016 |
Minimum [Member] | |
Expected term (contractual term) | 3 months 29 days |
Minimum [Member] | 8/31/17 - 11/6/17 [Member] | |
Expected term (contractual term) | 1 year 2 months 1 day |
Maximum [Member] | |
Expected term (contractual term) | 7 months 2 days |
Maximum [Member] | 8/31/17 - 11/6/17 [Member] | |
Expected term (contractual term) | 1 year 4 months 6 days |
WARRANTS (Details Narrative)
WARRANTS (Details Narrative) | 9 Months Ended |
Sep. 30, 2016shares | |
Warrants | |
Warrants issued to purchase shares | 3,552,875 |