Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 13, 2019 | Jun. 30, 2018 | |
Document and Entity Information | |||
Entity Registrant Name | ROCKWELL MEDICAL, INC. | ||
Entity Central Index Key | 0001041024 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 254,458,000 | ||
Entity Common Stock, Shares Outstanding | 57,098,327 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
ASSETS | ||
Cash and Cash Equivalents | $ 22,713,980 | $ 8,406,917 |
Investments Available for Sale | 10,818,059 | 24,648,459 |
Accounts Receivable, net of a reserve of $2,104 in 2018 and $11,000 in 2017 | 6,979,514 | 6,355,566 |
Insurance Receivable | 371,217 | |
Inventory | 4,038,778 | 7,637,384 |
Prepaid and Other Current Assets | 1,903,682 | 1,779,992 |
Total Current Assets | 46,825,230 | 48,828,318 |
Property and Equipment, net | 2,638,293 | 2,548,978 |
Inventory, Non-Current | 1,637,000 | 5,986,752 |
Goodwill | 920,745 | 920,745 |
Other Non-current Assets | 536,516 | 494,847 |
Total Assets | 52,557,784 | 58,779,640 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||
Accounts Payable | 4,492,071 | 4,222,159 |
Accrued Liabilities | 5,129,761 | 4,715,712 |
Settlement Payable | 416,668 | |
Current Portion of Deferred License Revenue | 2,252,868 | |
Customer Deposits | 63,143 | 205,303 |
Total Current Liabilities | 13,204,511 | 9,143,174 |
Deferred License Revenue | 12,076,399 | 16,723,318 |
Other Current Liability - Related Party | 850,000 | |
Total Liabilities | 25,280,910 | 25,866,492 |
Commitments and Contingencies (See Note 10) | ||
Shareholders' Equity: | ||
Preferred Shares, no par value, no shares issued and outstanding at December 31, 2018 and 2017 | ||
Common Shares, no par value, 57,034,154 and 51,768,424 shares issued and outstanding at December 31, 2018 and 2017, respectively | 299,601,960 | 273,210,907 |
Accumulated Deficit | (272,388,234) | (240,262,376) |
Accumulated Other Comprehensive Income (Loss) | 63,148 | (35,383) |
Total Shareholders' Equity | 27,276,874 | 32,913,148 |
Total Liabilities And Shareholders' Equity | $ 52,557,784 | $ 58,779,640 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Allowance for reserve, accounts receivable (in dollars) | $ 2,104 | $ 11,000 |
Preferred Shares, par value (in dollars per share) | $ 0 | $ 0 |
Preferred Shares, shares authorized | 2,000,000 | 2,000,000 |
Preferred Shares, shares issued | 0 | 0 |
Preferred Shares, shares outstanding | 0 | 0 |
Common Shares, par value (in dollars per share) | $ 0 | $ 0 |
Common Shares, shares issued | 57,034,154 | 51,768,424 |
Common Shares, shares outstanding | 57,034,154 | 51,768,424 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||
Net Sales | $ 63,388,617 | $ 57,300,281 |
Cost of Sales | 64,973,157 | 53,598,390 |
Gross Profit (Loss) | (1,584,540) | 3,701,891 |
Selling, General and Administrative | 23,082,304 | 23,303,409 |
Settlement Expense, net of Reimbursement | 1,030,000 | |
Research and Product Development | 5,642,317 | 6,321,400 |
Research and Development - Licenses Acquired (Related Party) | 1,100,000 | |
Operating Loss | (32,439,161) | (25,922,918) |
Other Income (Expense) | ||
Realized Gain (Loss) on Investments | (222,338) | (792,207) |
Interest Income | 535,328 | 790,226 |
Other Income | 313 | 2,873 |
Foreign Currency Gain | 742 | |
Total Other Income (Expense) | 313,303 | 1,634 |
Net Loss | $ (32,125,858) | $ (25,921,284) |
Basic and Diluted Net Loss per Share | $ (0.61) | $ (0.51) |
Basic and Diluted Weighted Average Shares Outstanding (in shares) | 52,824,486 | 51,067,412 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||
Net Loss | $ (32,125,858) | $ (25,921,284) |
Unrealized Gain on Available-for-Sale Securities | 109,293 | 866,031 |
Foreign currency rate changes | (10,762) | 1,134 |
Comprehensive Loss | $ (32,027,327) | $ (25,054,119) |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY - USD ($) | COMMON SHARES | ACCUMULATED DEFICIT | ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS) | Total |
Balance at Dec. 31, 2016 | $ 268,199,939 | $ (214,341,092) | $ (902,548) | $ 52,956,299 |
Balance (in shares) at Dec. 31, 2016 | 51,527,711 | |||
Increase (Decrease) in Shareholders' Equity | ||||
Net Loss | (25,921,284) | (25,921,284) | ||
Unrealized Gain on Available-for-Sale Investments | 866,031 | 866,031 | ||
Foreign currency rate changes | 1,134 | 1,134 | ||
Issuance of Common Shares | $ 123,603 | 123,603 | ||
Issuance of Common Shares (in shares) | 508,384 | |||
Shares Issued in Exchange for Services | $ 228,847 | 228,847 | ||
Shares Issued in Exchange for Services (in shares) | 50,000 | |||
Stock-based compensation | $ 6,945,749 | 6,945,749 | ||
Stock Tendered in Satisfaction of Tax Liabilities | $ (2,287,231) | (2,287,231) | ||
Stock Tendered in Satisfaction of Tax Liabilities (in shares) | (317,671) | |||
Balance at Dec. 31, 2017 | $ 273,210,907 | (240,262,376) | (35,383) | $ 32,913,148 |
Balance (in shares) at Dec. 31, 2017 | 51,768,424 | 51,768,424 | ||
Increase (Decrease) in Shareholders' Equity | ||||
Net Loss | (32,125,858) | $ (32,125,858) | ||
Unrealized Gain on Available-for-Sale Investments | 109,293 | 109,293 | ||
Foreign currency rate changes | (10,762) | (10,762) | ||
Issuance of Common Shares | $ 21,935,951 | 21,935,951 | ||
Issuance of Common Shares (in shares) | 5,541,562 | |||
Exercise of Employee Stock Option, Net of Tax | $ 67,548 | $ 67,548 | ||
Exercise of Employee Stock Option, Net of Tax (in shares) | 57,368 | 267,500 | ||
Forfeiture of Restricted Stock (Shares) | (333,200) | |||
Stock-based compensation | $ 4,387,554 | $ 4,387,554 | ||
Balance at Dec. 31, 2018 | $ 299,601,960 | $ (272,388,234) | $ 63,148 | $ 27,276,874 |
Balance (in shares) at Dec. 31, 2018 | 57,034,154 | 57,034,154 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cash Flows From Operating Activities: | ||
Net Loss | $ (32,125,858) | $ (25,921,284) |
Adjustments To Reconcile Net Loss To Net Cash Used In Operating Activities: | ||
Depreciation and Amortization | 650,142 | 514,362 |
Stock-based Compensation | 4,387,554 | 7,174,596 |
Research and Development - Licenses Acquired (Related Party) | 1,100,000 | |
Increase in Inventory Reserves | 8,784,000 | |
Loss on Disposal of Assets | 4,752 | 10,777 |
Realized Loss on Sale of Investments Available-for-Sale | 222,338 | 792,207 |
Foreign Currency Translation Adjustment | (10,762) | 1,306 |
Changes in Assets and Liabilities: | ||
Increase in Insurance Receivable | (371,217) | |
Increase in Accounts Receivable | (623,948) | (962,338) |
Decrease in Inventory | (835,641) | 343,490 |
(Increase) Decrease in Other Assets | (165,712) | 264,975 |
Increase (Decrease) in Accounts Payable | 269,912 | (1,636,840) |
Increase in Settlement Payable | 416,668 | |
Increase in Other Liabilities | 271,889 | 634,238 |
Decrease in Deferred License Revenue | (2,394,051) | (2,328,418) |
Changes in Assets and Liabilities | (3,432,100) | (3,684,893) |
Cash Used In Operating Activities | (20,419,934) | (21,112,929) |
Cash Flows From Investing Activities: | ||
Purchase of Investments Available-for-Sale | (20,178,127) | (35,733,677) |
Sale of Investments Available-for-Sale | 33,895,481 | 51,918,745 |
Purchase of Equipment | (744,256) | (1,682,913) |
Purchase of Research and Development Licenses (Related Party) | (250,000) | |
Proceeds on Sale of Assets | 400 | 725 |
Cash Provided By Investing Activities | 12,723,498 | 14,502,880 |
Cash Flows From Financing Activities: | ||
Proceeds from the Issuance of Common Shares | 22,000,000 | 123,603 |
Common Share Issuance Costs | (64,049) | |
Proceeds from the Exercise of Employee Stock Options, Net of Tax | 67,548 | |
Repurchase of Common Shares to Pay Employee Withholding Taxes | (2,287,231) | |
Cash Provided By (Used In) Financing Activities | 22,003,499 | (2,163,628) |
Increase (Decrease) In Cash and Cash Equivalents | 14,307,063 | (8,773,677) |
Cash At Beginning Of Period | 8,406,917 | 17,180,594 |
Cash At End Of Period | 22,713,980 | 8,406,917 |
Supplemental Cash Flow Information: | ||
Change in Unrealized Gain on Marketable Securities Available-for-Sale | 109,293 | $ 866,031 |
Research and Development Licenses (Related Party) | $ 850,000 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2018 | |
Description of Business | |
Description of Business | Note 1. Description of Business Rockwell Medical, Inc. and subsidiaries (collectively, “we”, “our”, “us”, or the “Company”), is a specialty pharmaceutical company targeting end-stage renal disease and chronic kidney disease with products for the treatment of iron deficiency and hemodialysis. We are also a manufacturer of hemodialysis concentrates/dialysates for dialysis providers and distributors in the United States and abroad. We supply the domestic market with dialysis concentrates and we also supply dialysis concentrates to distributors serving a number of foreign countries, primarily in the Americas and the Pacific Rim. Substantially, all of our sales have been concentrate products and ancillary items. Our business strategy is developing unique, proprietary renal drug therapies that we can commercialize or out-license, while also expanding our dialysis products business. These renal drug therapies support disease management initiatives to improve the quality of life and care of dialysis patients and are designed to deliver safe and effective therapy, while decreasing drug administration costs and improving patient convenience and outcome. Triferic ® is a registered trademark of Rockwell Medical, Inc. |
Going Concern
Going Concern | 12 Months Ended |
Dec. 31, 2018 | |
Going Concern | |
Going Concern | Note 2. Going Concern As of December 31, 2018, the Company had approximate balances of $22.7 million of cash and cash equivalents, $10.8 million of investments available-for-sale, working capital of $33.6 million and an accumulated deficit of $272.4 million. Net cash used in operating activities for the year ended December 31, 2018 was approximately $20.4 million. The Company will require significant additional capital to sustain its operations and make the investments it needs to execute its longer-term business plan. The Company’s existing liquidity is not sufficient to fund its operations and anticipated capital expenditures within one year of the issuance of the accompanying consolidated financial statements. The Company intends to seek additional equity or debt financing; however, there are currently no commitments in place for further financing nor is there any assurance that such financing will be available to the Company on favorable terms, if at all. The Company’s recurring operating losses, net operating cash flow deficits, and an accumulated deficit, raise substantial doubt about the Company’s ability to continue as a going concern for one year from the issuance of the accompanying consolidated financial statements. The consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has not made any adjustments to the accompanying consolidated financial statements related to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 3. Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Rockwell Transportation, Inc. and Rockwell Medical India Private Limited. Rockwell Medical India Private Limited was formed in 2016 for the purpose of conducting certain commercial activities in India. All intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications have been made to the 2017 financial statements and notes to conform to the 2018 presentation. Revenue Recognition The Company recognizes revenue under Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. The core principle of the new revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle: · Step 1: Identify the contract with the customer · Step 2: Identify the performance obligations in the contract · Step 3: Determine the transaction price · Step 4: Allocate the transaction price to the performance obligations in the contract · Step 5: Recognize revenue when the company satisfies a performance obligation Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by us from a customer, are excluded from revenue. Shipping and handling costs associated with outbound freight related to contracts with customers are accounted for as a fulfillment cost and are included in cost of sales when control of the goods transfers to the customer. Nature of goods and services The following is a description of principal activities from which the Company generates its revenue. Product sales – The Company accounts for individual products and services separately if they are distinct (i.e., if a product or service is separately identifiable from other items and if a customer can benefit from it on its own or with other resources that are readily available to the customer). The consideration, including any discounts, is allocated between separate products and services based on their stand-alone selling prices. The stand-alone selling prices are determined based on the cost plus margin approach. Drug and dialysis concentrate products are sold directly to dialysis clinics and to wholesale distributors in both domestic and international markets. Distribution and license agreements for which upfront fees are received are evaluated upon execution or modification of the agreement to determine if the agreement creates a separate performance obligation from the underlying product sales. For all existing distribution and license agreements, the distribution and license agreement is not a distinct performance obligation from the product sales. In instances where regulatory approval of the product has not been established and the Company does not have sufficient experience with the foreign regulatory body to conclude that regulatory approval is probable, the revenue for the performance obligation is recognized over the term of the license agreement (over time recognition). Conversely, when regulatory approval already exists or is probable, revenue is recognized at the point in time that control of the product transfers to the customer. The Company received upfront fees under two distribution and license agreements that have been deferred as a contract liability. The amounts received from Wanbang Biopharmaceuticals Co., Ltd. (“Wanbang”) are recognized as revenue over the estimated term of the distribution and license agreement as regulatory approval was not received and the Company did not have sufficient experience in China to determine that regulatory approval was probable as of the execution of the agreement. The amounts received from Baxter Healthcare Corporation (“Baxter”) are recognized as revenue at the point in time that the estimated product sales under the agreement occur. For the business under the Company’s distribution agreement with Baxter (the “Baxter Agreement”) and for the majority of the Company’s international customers, the Company recognizes revenue at the shipping point, which is generally the Company’s plant or warehouse. For other business, the Company recognizes revenue based on when the customer takes control of the product. The amount of revenue recognized is based on the purchase order less returns and adjusted for any rebates, discounts, chargebacks or other amounts paid to customers. There were no such adjustments for the periods reported. Customers typically pay for the product based on customary business practices with payment terms averaging 30 days, while distributor payment terms average 45 days. Disaggregation of revenue Revenue is disaggregated by primary geographical market, major product line, and timing of revenue recognition. In thousands of US dollars ($) Year Ended December 31, 2018 Products By Geographic Area Total U.S. Rest of World Drug Revenues License Fee – Over time $ 273 $ — $ 273 Concentrate Products Product Sales – Point-in-time 60,995 52,264 8,731 License Fee – Point-in-time 2,121 2,121 — Total Concentrate Products 63,116 54,385 8,731 Net Revenue $ 63,389 $ 54,385 $ 9,004 Year Ended December 31, 2017 Products By Geographic Area Total U.S. Rest of World Drug Revenues License Fee – Over time $ 229 — 229 Concentrate Products Product Sales – Point-in-time 54,972 48,307 6,665 License Fee – Point-in-time 2,099 2,099 — Total Concentrate Products 57,071 50,406 6,665 Net Revenue $ 57,300 $ 50,406 $ 6,894 For the years ended December 31, 2018 and 2017, license fee revenue was $2.4 million and $2.3 million, respectively. For the years ended December 31, 2018 and 2017, product sales revenue was $61.0 million and $55.0 million, respectively. Contract balances The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers. In thousands of US dollars ($) December 31, 2018 December 31, 2017 Receivables, which are included in "Trade and other receivables" $ 6,980 $ 6,356 Contract liabilities $ 14,329 $ 16,723 There were no impairment losses recognized related to any receivables arising from the Company’s contracts with customers for the years ended December 31, 2018 and 2017, respectively. For the years ended December 31, 2018 and 2017, the Company did not recognize material bad-debt expense and there were no material contract assets recorded on the consolidated balance sheet as of December 31, 2018 and 2017, respectively. The Company does not generally accept returns of its concentrate products and no reserve for returns of concentrate products was established as of December 31, 2018 or December 31, 2017. The contract liabilities primarily relate to upfront payments and consideration received from customers that are received in advance of the customer assuming control of the related products. Transaction price allocated to remaining performance obligations For the year ended December 31, 2018, revenue recognized from performance obligations related to prior periods was not material. Revenue expected to be recognized in any future year related to remaining performance obligations, excluding revenue pertaining to contracts that have an original expected duration of one year or less, contracts where revenue is recognized as invoiced and contracts with variable consideration related to undelivered performance obligations, totaled $14.3 million and $16.7 million for each of the years ended December 31, 2018 and 2017. The amount relates primarily to upfront payments and consideration received from customers that are received in advance of the customer assuming control of the related products. The Company applies the practical expedient in paragraph 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less. The Baxter Agreement includes minimum commitments of product sales over the duration of the agreement. Unfulfilled performance obligations related to the Baxter Agreement are product sales totaling $11.1 million, which will be amortized through expiration of the agreement on October 2, 2024. Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period. Actual results could differ from those estimates. The most significant accounting estimates inherent in the preparation of our financial statements include estimates associated with revenue recognition, allowance for doubtful accounts, inventory reserves, accrued expenses, deferred license revenue, stock-based compensation, impairments of long‑lived assets, and accounting for income taxes. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with original maturities of 90 days or less at acquisition to be cash equivalents. Cash and cash equivalents include cash held in banks, money market mutual funds and unrestricted certificates of deposit. The Company’s cash and cash equivalents exceeds the Federal Deposit Insurance Corporation insured limits. The Company has not experienced any credit losses for amounts in excess of insured limits. Currently the Company does not reasonably believe a significant risk of credit loss exists. Fair Value Measurement The Company applies the guidance issued with ASC 820, Fair Value Measurements , which provides guidance on the development and disclosure of fair value measurements. Under this accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The accounting guidance classifies fair value measurements in one of the following three categories for disclosure purposes: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than Level 1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace. Level 3: Unobservable inputs which are supported by little or no market activity ad values determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgement or estimation. Investments – Available for Sale The Company has designated its short term investments as of each balance sheet date as available-for-sale securities and accounts for them at their respective fair values. Available-for-sale securities are measured at fair value, including accrued interest, with temporary unrealized gains and losses reported as a component of shareholders’ equity until their disposition. We review all available-for-sale securities at each period end to determine if they remain available-for-sale based on our then current intent and ability to sell the security if required to do so. The cost of securities sold is based on the specific identification method. All of our investments available-for-sale are subject to periodic impairment review. We recognize an impairment charge when a decline in the fair value of our investments below the cost basis is judged to be other than temporary. Accounts Receivable Accounts receivable are stated at invoice amounts. The carrying amount of trade accounts receivable is reduced by an allowance for doubtful accounts that reflects our best estimate of accounts that may not be collected. We review outstanding trade accounts receivable balances and based on our assessment of expected collections, we estimate the portion, if any, of the balance that may not be collected as well as a general valuation allowance for other accounts receivable based primarily on historical experience. All accounts or portions thereof deemed to be uncollectible are written off to the allowance for doubtful accounts. Inventory Inventory is stated at the lower of cost or net realizable value. Cost is determined on the first‑in first‑out (FIFO) method. Inventory that is not expected to be converted to cash over the next year is classified as non-current. Our policy is to reserve for our drug product inventory that we determine is unlikely to be sold to, or if sold, unlikely to be utilized by our customers on or before its expiration date. Property and Equipment Property and equipment are recorded at cost and are depreciated using the straight‑line method over the useful lives of the assets, which range from three to ten years. Expenditures for routine maintenance and repairs are expensed as incurred. Leasehold improvements are amortized using the straight‑line method over the shorter of the useful lives or the related lease term. Impairment of Long-lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. Impairment losses on long-lived assets, such as real estate and equipment, are recognized when events or changes in circumstances indicate that the undiscounted cash flows estimated to be generated by such assets are less than their carrying value and, accordingly, all or a portion of such carrying value may not be recoverable. Impairment losses are then measured by comparing the fair value of assets to their carrying amounts. For the years ended December 31, 2018 and 2017, there were no impairments of long-lived assets. Goodwill and Intangible Assets Goodwill is the excess of purchase price over the fair value of identified net assets of businesses acquired. Intangible assets with indefinite useful lives are measured at their respective fair values as of the acquisition date. We do not amortize goodwill and intangible assets with indefinite useful lives. We review goodwill and indefinite-lived intangible assets at least annually for possible impairment. Goodwill and indefinite-lived intangible assets are reviewed for possible impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit or the indefinite-lived intangible assets below their carrying values. Intangible assets with definite lives are amortized over their estimated useful lives. Intangible assets subject to amortization are reviewed for potential impairment whenever events or circumstances indicate that carrying amounts may not be recoverable. Definite-lived intangible assets consist of our license fees related to the technology, intellectual property and marketing rights for Triferic covered under certain issued patents have been capitalized and are being amortized over the life of the related patents which is generally 17 years. Deferred Revenue In October of 2014, the Company entered into a 10 year distribution agreement with Baxter and received an upfront fee of $20 million. The upfront fee was recorded as deferred revenue and is being recognized based on the proportion of product shipments to Baxter in each period, compared with total expected sales volume over the term of the Distribution Agreement. The Company recognized revenue of approximately $2.1 million during each of years ended December 31, 2018 and 2017, respectively. Deferred revenue related to the Baxter agreement totaled $11.1 million and $13.2 million as of December 31, 2018 and 2017, respectively. If a “Refund Trigger Event” occurs, we would be obligated to repay a portion of the upfront fee and any paid portion of the facility fee. In the event of a Refund Trigger Event occurring from January 1, 2019 to December 31, 2021, Baxter would be eligible for a 25% benefit of the Agreement’s Upfront Payment. In addition, if Baxter terminates the Distribution Agreement because Baxter has been enjoined by a court of competent jurisdiction from selling in the United States any product covered by the Distribution Agreement due to a claim of intellectual property infringement or misappropriation relating to such product prior to the end of 2019, Baxter would be eligible for a partial refund of $6.6 million. In no event would more than one refund be required to be paid. During the year ended December 31, 2016, the Company entered into a distribution agreement with Wanbang and received an upfront fee of $4.0 million. The upfront fee was recorded as deferred revenue and is being recognized as revenue based on the agreement term. The Company recognized revenue of approximately $0.3 million during each of the years ended December 31, 2018 and 2017. Deferred revenue related to the Wanbang agreement totaled $3.2 million and $3.5 million as of December 31, 2018 and 2017, respectively. Income Taxes We account for income taxes in accordance with the provisions of ASC 740‑10, Income Taxes. A current tax liability or asset is recognized for the estimated taxes payable or refundable on tax returns for the year. Deferred tax liabilities or assets are recognized for the estimated future tax effects of temporary differences between book and tax accounting and operating loss and tax credit carryforwards. A valuation allowance is established for deferred tax assets if we determine it to be more likely than not that the deferred tax asset will not be realized. The effects of tax positions are generally recognized in the financial statements consistent with amounts reflected in returns filed, or expected to be filed, with taxing authorities. For tax positions that the Company considers to be uncertain, current and deferred tax liabilities are recognized, or assets derecognized, when it is probable that an income tax liability has been incurred and the amount of the liability is reasonably estimable, or when it is probable that a tax benefit, such as a tax credit or loss carryforward, will be disallowed by a taxing authority. The amount of unrecognized tax benefits related to current tax positions is insignificant. The Company recognizes interest and penalties accrued related to unrecognized tax benefits as income tax expense. Research and Product Development The Company recognizes research and product development expenses as incurred. The Company incurred product development and research costs related to the commercial development, patent approval and regulatory approval of new products aggregating approximately $5.6 million and $6.3 million for the years ended December 31, 2018 and 2017, respectively. During the year ended December 31, 2018, $1.1 million was expensed related to our product license agreement for exclusive worldwide rights to certain patents and information related to our Triferic product. Stock-Based Compensation Service-Based Stock Unit Awards The Company expenses stock-based compensation to employees over the requisite service period based on the estimated grant-date fair value of the awards. For stock-based compensation awards to non-employees, the Company re-measures the fair value of the non-employee awards at each reporting period prior to vesting and finally at the vesting date of the award. Changes in the estimated fair value of these non-employee awards are recognized as compensation expense in the period of change. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgement. For the years ended December 31, 2018 and 2017, the Company recorded stock-based compensation expense on its options granted under the Company’s equity compensation plans to its directors and officers, and its employees (See Note 12). Market and Performance-Based Stock Unit Awards In addition to awards with service-based vesting conditions, the Company has granted performance share units with market and performance conditions, to certain of its executives. The fair value of awards with performance conditions are based on the fair value of the Company’s common stock on the date of grant. The fair value of awards with market conditions are based on a Monte Carlo simulation model. Assumptions and estimates utilized in the calculation of the fair value of the market awards include the risk-free interest rate, dividend yield, average closing price, expected volatility based on the historical volatility of the Company, and the remaining period of the award. The awards with performance conditions vest and result in issuance, at settlement, of common shares for each recipient based upon the recipient’s continued employment with the Company through the settlement date of the award and the Company’s achievement of specified milestones. The requisite service period of the awards with performance conditions is generally 1-2 years. In the case of awards with performance conditions, the Company recognizes stock-based compensation expense based on the grant date fair value of the award when achievement of the underlying performance-based targets become probable. The awards with market conditions vest and result in the issuance of common shares based upon the recipient’s continuing employment with the Company through the settlement date of the award related to the market capitalization criteria. The fair value related to the awards with market conditions is recorded as stock-based compensation expense over the period from date of grant to the settlement date regardless of whether the market capitalization is achieved. Commitments and Contingencies In the normal course of business, the Company may become subject to loss contingencies, such as legal proceedings and claims arising out of its business, including government investigations. An accrual for a loss contingency is recognized when it is probable that an asset had been impaired or a liability had been incurred and the amount of loss can be reasonably estimated. The Company expenses legal costs associated with loss contingencies as they are incurred. Loss Per Share ASC 260, Earnings Per Share, requires dual presentation of basic and diluted earnings per share (“EPS”), with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issued common stock were exercised or converted into common stock or resulted in the issuance of common stock that are then shared in the earnings of the entity. Basic net loss per share of common stock excludes dilution and is computed by dividing the net loss by the weighted average number of shares outstanding during the period. Diluted net loss per share of common stock reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that are then shared in the earnings of the entity unless inclusion of such shares would be anti-dilutive. The Company has only incurred losses, therefore, basic and diluted net loss per share is the same. Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share for the years ended December 31, 2018 and 2017 were as follows: As of December 31, 2018 2017 Options to purchase common stock 8,244,605 6,906,001 Unvested restricted stock awards 146,800 480,000 Unvested restricted stock units 1,461,917 - 9,853,322 7,386,001 Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive income (loss) includes all changes in equity during a period except those that resulted from investments by or distributions to the Company’s stockholders. Accumulated other comprehensive income (loss) refers to revenues, expenses, gains and losses that are included in comprehensive income (loss), but excluded from net income (loss) as these amounts are recorded directly as an adjustment to shareholders’ equity. Accumulated other comprehensive income (loss) consists of unrealized gains and losses on available‑for‑sale investment securities and foreign currency translation adjustments. Adoption of Recent Accounting Pronouncements The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequences of the change to its consolidated financial statements and assures that there are proper controls in place to ascertain that the Company’s consolidated financial statements properly reflect the change. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), as modified by ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, ASU 2016-08 , Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, and ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. The revenue recognition principle in ASU 2014-09 is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, new and enhanced disclosures will be required. Companies may adopt the new standard either using the full retrospective approach, a modified retrospective approach with practical expedients, or a cumulative effect upon the adoption approach. The Company adopted the new standard on January 1, 2018, using the modified retrospective approach. The adoption of ASU 2014-09 did not have a material impact on the Company’s consolidated financial statements and related disclosures. In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 requires equity investments to be measured at fair value with changes in fair value recognized in net income; simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; requires separate presentation of financial assets and financial liabilities by measurement category and form of financial assets on the balance sheet or the accompanying notes to the financial statements and clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred taxes. ASU 2016-01 is effective for financial statements issued of fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company adopted the new standard on January 1, 2018, and the adoption of ASU 2016-01 did not have a material impact on the Company’s consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) in order to increase transparency and comparability among organizations by, and among other provisions, recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous U.S. GAAP. For public companies, ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 (including interim periods within those periods) using a modified retrospective approach and early adoption is permitted. In transition, entities may also elect a package of practical expedients that must be applied in its entirety to all leases commencing before the adoption date, unless the lease is modified, and permits entities to not reassess (a) the existence of a lease, (b) lease classification or (c) determination of initial direct costs, as of the adoption date, which effectively allows entities to carryforward accounting conclusions under previous U.S. GAAP. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842) : Targeted Improvements , which provides entities an optional transition method to apply the guidance under Topic 842 as of the adoption date, rather than as of the earliest period presented. The Company adopted Topic 842 on January 1, 2019, using the optional transition method to apply the new guidance as of January 1, 2019, rather than as of the earliest period presented, and elected the package of practical expedients described above. The Company is still finalizing its analysis, but expects to recognize additional operating liabilities ranging from $3.5 million to $4.0 million, with corresponding ROU assets of approximately the same amount as of January 1, 2019 based on the present value of the remaining lease payments. In June 2018, the FASB issued ASU 2018-17, Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under ASU 2018-17, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than an entity’s adoption of Topic 606. The Company adopted this new standard on January 1, 2019 and the adoption did not have a material impact on its consolidated financial statements and related disclosures. In August 2018, the Securities and Exchange Commission (SEC), adopted the final rule under SEC Release No. 33-10532, “Disclosure Update and Simplification,” amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders’ equity presented in the balance sheet must be provide in a note or separate statement. The analysis should represent a reconciliation of the beginning balance to the ending balance for each period for which a statement of comprehensive income is required to be filed. This final rule is effective on November 5, 2018. The Company is evaluating the impact of this guidance on its consolidated financial statements. The Company anticipates its first presentation of changes in stockholders’ equity will be included in its Form 10-Q for the quarter ended March 31, 2019. |
Investments in Available For Sa
Investments in Available For Sale Securities | 12 Months Ended |
Dec. 31, 2018 | |
Investments in Available For Sale Securities | |
Investments in Available For Sale Securities | Note 4. Investments - Available-for-Sale Investments available-for-sale consisted of the following as of December 31, 2018 and 2017: December 31, 2018 Amortized Cost Unrealized Gain Unrealized Loss Fair Value Available-for-Sale Securities Bonds $ 10,801,836 $ 17,415 $ (1,192) $ 10,818,059 December 31, 2017 Amortized Cost Unrealized Gain Unrealized Loss Fair Value Available-for-Sale Securities Bonds $ 24,684,304 $ 30,059 $ (65,904) $ 24,648,459 The fair value of investments available-for-sale are determined using quoted market prices from daily exchange-traded markets based on the closing price as of the balance sheet date and are classified as Level 1, as described in Note 3, Fair Value Measurement to our consolidated financial statements. As of December 31, 2018 and 2017, the amortized cost and estimated fair value of our available-for-sale securities were due in one year or less. |
Significant Market Segments And
Significant Market Segments And Customers | 12 Months Ended |
Dec. 31, 2018 | |
Significant Market Segments And Customers | |
Significant Market Segments And Customers | Note 5. Significant Market Segments and Customers We operate in one market segment, the hemodialysis market, which involves the manufacture, sale and distribution of hemodialysis products to hemodialysis clinics, including pharmaceutical, dialysis concentrates, dialysis kits and other ancillary products used in the dialysis process. In October 2014, we entered into the Distribution Agreement with Baxter, which was amended in June 2017, pursuant to which Baxter received exclusive distribution rights for our concentrate products in the United States. Our domestic customer contracts for the supply of dialysis concentrate products that permitted assignment to Baxter without consent have been assigned to Baxter. As a result, for 2018 and 2017, our direct sales to Baxter aggregated approximately 26% and 27% of sales, respectively, and we had a receivable from Baxter of $2,824,051 and $1,863,412 as of December 31, 2018 and 2017, respectively. One customer, DaVita Healthcare Partners, Inc., accounted for 46% of our sales in 2018 and 50% of our sales in 2017. Our accounts receivable from this customer were $2,538,503 and $2,406,257 as of December 31, 2018 and 2017, respectively. DaVita and Baxter and the accounts administered by Baxter are important to our business, financial condition and results of operations. The loss of any significant accounts could have a material adverse effect on our business, financial condition and results of operations. No other domestic customers accounted for more than 10% of our sales in any of the last two years. The majority of our international sales in each of the last two years were sales to domestic distributors that were resold to end users outside the United States. Our sales to foreign customers and distributors accounted for approximately 14% of our total sales in 2018 and 2017. However one customer, Nipro Medical Corporation, accounted for 10% and 7% of our sales for 2018 and 2017 respectively. Our total international sales, including sales made through domestic distributors for resale outside the United States, aggregated 14% and 12%, of our overall sales in 2018 and 2017, respectively. |
Distribution Agreement
Distribution Agreement | 12 Months Ended |
Dec. 31, 2018 | |
DISTRIBUTION AGREEMENT. | |
DISTRIBUTION AGREEMENT | Note 6. Distribution Agreement As of October 2, 2014, we entered into the Distribution Agreement with Baxter, pursuant to which Baxter became our exclusive agent for sales, marketing and distribution activities for our hemodialysis concentrate and ancillary products in the United States and various foreign countries for an initial term of 10 years ending on October 2, 2024. The Distribution Agreement does not include any of our drug products. We will retain sales, marketing and distribution rights for our hemodialysis concentrate products in specified foreign countries in which we have an established commercial presence. During the term of the Distribution Agreement, Baxter has agreed not to manufacture or sell any competitive concentrate products in the United States hemodialysis market, other than specified products. Pursuant to the Distribution Agreement, Baxter paid us $20 million in cash in October 2014 (the “Upfront Fee”). The Upfront Fee has been deferred and is being recognized as revenue based on the proportion of product shipments to Baxter in each period to total expected sales volume over the term of the Distribution Agreement. We recognized revenue associated with the Upfront Fee totaling $2.1 million for each of the years ended December 31, 2018, and 2017, respectively. Under the Distribution Agreement, Baxter purchases products from us at established gross margin-based prices per unit, adjusted each year during the term. We continue to manage customer service, transportation and certain other functions for our current customers on Baxter’s behalf, in exchange for which Baxter will pay us an amount equal to our related costs to provide such functions plus a slight mark-up. The Distribution Agreement also requires Baxter to meet minimum annual gallon-equivalent purchase levels, subject to a cure period and certain other relief, in order to maintain its exclusive distribution rights. The minimum purchase levels increase each year over the term of the Distribution Agreement. Orders in any contract year that exceed the minimum will be carried forward and applied to future years’ minimum requirements. The Distribution Agreement also contains provisions governing the operating relationship between the parties, our obligations to maintain specified manufacturing capacity and quality levels, remedies, as well as representations, warranties and indemnification obligations of the parties. Either party may terminate the Distribution Agreement upon the insolvency or material breach of the other party or in the event of a force majeure. In addition, Baxter may also terminate the Distribution Agreement at any time upon 270 days’ prior written notice to us or if (1) prices increase beyond certain thresholds and notice is provided within 45 days after the true up payment is due for the year in which the price threshold is exceeded, (2) a change of control of the Company occurs and 270 days’ notice is provided, or (3) upon written notice that Baxter has been enjoined by a court of competent jurisdiction from selling in the United States any product covered by the Distribution Agreement due to a claim of intellectual property infringement or misappropriation relating to such product. If Baxter terminates the Distribution Agreement under the discretionary termination or the price increase provisions, it would be subject to a limited non-compete obligation in the United States with respect to certain products for a period of two years. If a “Refund Trigger Event” occurs, we would be obligated to repay 25% of the Upfront Fee and Facility Fee (described below) if the event occurs in 2019, 2020 or 2021. A “Refund Trigger Event” means any of the following: (1) a change of control of the Company involving any of certain specified companies; (2) a termination by Baxter due to the Company’s bankruptcy or breach, or due to price increases that exceed the stated thresholds; (3) a termination by either party due to a force majeure; (4) settlement or adjudication of any claim, action or litigation relating to a covered product that materially and adversely affects Baxter’s commercialization of the product; and (5) any regulatory action or ruling relating to a covered product that materially and adversely affects Baxter’s commercialization of the product. In addition, if Baxter terminates the Distribution Agreement because Baxter has been enjoined by a court of competent jurisdiction from selling in the United States any product covered by the Distribution Agreement due to a claim of intellectual property infringement or misappropriation relating to such product prior to the end of 2018, Baxter would be entitled to a refund of up to $10 million, or $6.6 million if the termination occurs in 2019. In no event would Baxter be entitled to more than one refund payment. The Distribution Agreement also required us to prepay our outstanding secured long-term indebtedness within 180 days and prohibits us from entering into a subsequent contract encumbering the assets used in our concentrate business without the prior written consent of Baxter. The Distribution Agreement may be extended an additional five years by Baxter if Baxter achieves a specified sales target and pays an extension fee of $7.5 million. If the first extension occurs, the Distribution Agreement term may later be extended an additional five years at Baxter’s option at no additional cost. On September 12, 2016, Baxter initiated an arbitration proceeding against us under the Distribution Agreement alleging various breaches of the Distribution Agreement, and we counterclaimed alleging various breaches by Baxter. On June 23, 2017, we settled the arbitration with Baxter (the “Settlement”). The Settlement included a mutual release with respect to all known claims existing on the date of the Settlement and the arbitration was dismissed with prejudice. No payments were made by either party in connection with the Settlement. In connection with the Settlement, on June 23, 2017, we entered into a First Amendment to Exclusive Distribution Agreement and a First Amendment to Investment Agreement, in each case, with Baxter. The terms of the Settlement included, among other things, reduced pricing on certain accounts that provides incentive to Baxter to pursue new customers and increase future sales. |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2018 | |
Inventory | |
Inventory | Note 7. Inventory Components of inventory, net of reserves as of December 31, 2018 and 2017 are as follows: December 31, December 31, 2018 2017 Raw Materials $ 3,621,548 $ 10,604,232 Work in Process 256,129 212,505 Finished Goods 1,798,101 2,807,399 Total $ 5,675,778 $ 13,624,136 As of December 31, 2018 and 2017, we classified $1.6 million and $6.0 million of inventory as non-current all of which was related to Triferic or the active pharmaceutical ingredient for Triferic. As of December 31, 2018 and 2017, we had total Triferic inventory aggregating $8.0 and $13.5 million respectively, against which we had reserved $5.8 and $3.5 million, respectively. For the year ended December 31, 2018, the Company’s inventory reserves and write-offs increased by $8.8 million, consisting of $8.1 million related to Triferic and $0.7 million related to Calcitriol. For the year ended December 31, 2017, inventory reserves and write-offs increased by $3.5 million related to Triferic. |
Property And Equipment
Property And Equipment | 12 Months Ended |
Dec. 31, 2018 | |
Property and Equipment | |
Property and Equipment | Note 8. Property and Equipment As of December 31, 2018 and 2017, the Company’s property and equipment consisted of the following: 2018 2017 Leasehold Improvements $ 929,849 $ 824,087 Machinery and Equipment 4,800,774 7,893,566 Information Technology & Office Equipment 2,459,832 2,327,524 Laboratory Equipment 668,977 631,666 Transportation Equipment — 242,277 8,859,432 11,919,120 Accumulated Depreciation (6,221,139) (9,370,142) Net Property and Equipment $ 2,638,293 $ 2,548,978 Depreciation expense during the years ended December 31, 2018 and 2017 is as follows: 2018 2017 Depreciation expense $ 649,789 $ 514,009 |
Goodwill And Intangible Assets
Goodwill And Intangible Assets | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | Note 9. Goodwill and Intangible Assets Total goodwill was $0.9 million at December 31, 2018 and 2017. We completed our annual impairment tests as of November 30, 2018 and 2017, and determined that no adjustment for impairment of goodwill was required during the years ended December 31, 2018 and 2017. We entered into a global licensing agreement for certain patents covering Triferic, a therapeutic drug compound to be delivered using our dialysate product lines. We received FDA approval for this product in January 2015. We have capitalized the licensing fees paid for the rights to use this patented technology as an intangible asset. We have capitalized certain patent approval costs. During 2011, we acquired an abbreviated new drug application (“ANDA”) for a generic version of an intravenous vitamin‑D analogue, Calcitriol. Total capitalized costs related to this ANDA were approximately $695,000. These were amortized over a five year period ending December 31, 2016. 2018 2017 Capitalized Licensing Fees $ 1,070,126 $ 1,070,126 Accumulated Amortization (1,066,451) (1,066,098) Capitalized Licensing Fees, Net of Amortization $ 3,675 $ 4,028 Amortization Expense $ 353 $ 353 Our policy is to amortize licensing fees over the life of the patents pertaining to certain licensing agreements and to amortize patent costs over the life of the patent. Amortization expense was $353 for capitalized patent costs for each of the years ended December 31, 2018 and 2017, respectively. |
Accrued Liabilities
Accrued Liabilities | 12 Months Ended |
Dec. 31, 2018 | |
ACCRUED LIABILITIES | |
Accrued Liabilities | Note 10. Accrued Liabilities Accrued liabilities as of December 31, 2018 and 2017 consisted of the following: 2018 2017 Accrued Research & Development Expense $ 86,820 $ 400,024 Accrued Compensation and Benefits 1,525,599 1,991,874 Other Accrued Liabilities 3,517,342 2,323,814 Total Accrued Liabilities $ 5,129,761 $ 4,715,712 |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2018 | |
Stockholders' Equity | |
Stockholders' Equity | Note 11. Shareholders’ Equity Preferred Stock As of December 31, 2018 and 2017, there were 2,000,000 shares of preferred stock authorized and no shares of preferred stock issued or outstanding. Common Stock During the year ended December 31, 2017 we received cash proceeds of $123,603 in exchange for shares of the Company’s common stock issued upon the exercise of options. No income tax benefits were recognized during 2017 related to stock option activity as we have a full valuation allowance recorded against its deferred tax assets. However, tax benefits (expense) for the excess of the value of the shares issued over the price paid of $1,209,000 was created in 2017. The cumulative excess tax benefit will be credited directly to shareholders' equity when realized. On March 7, 2017, 50,000 shares of the Company’s common stock were issued to a consultant for the performance of certain business development services for the Company at a fair value of approximately $297,500 or $5.95 per share. We expensed $68,653 and $228,847 in 2018 and 2017, respectively. On August 7, 2018, 333,200 shares of restricted stock were forfeited. Forfeitures of restricted stock were related to a settlement agreement between the Company and its former CEO, CFO, and two former Directors. (see Note 14.) On October 15, 2018, the Company raised $21.9 million, net of issuance costs, in capital from the offering and sale of 5,541,562 shares of common stock at a price of $3.97 per share, along with warrants to purchase up to an additional 2,770,781 shares of common stock at a price of $4.96 per share. During the year ended December 31, 2018, 267,500 vested employee stock options were exercised for net cash proceeds of $67,548 at a weighted average exercise price of $3.09 per share. The Company withheld 210,132 of these common shares at a cost of $759,028, or a weighted average cost of $3.61 per share, to cover the employee withholding taxes and other expenses related to these exercises. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2018 | |
Stock-Based Compensation | |
Stock-Based Compensation | Note 12 – Stock-Based Compensation The Board of Directors adopted the Rockwell Medical, Inc., 2007 Long Term Incentive Plan (“2007 LTIP”) on April 11, 2007. The 2007 LTIP expired on April 11, 2017 and no equity awards were granted under the 2007 LTIP following its expiration. There were 11,500,000 common shares reserved for issuance under the 2007 LTIP. The Board of Directors adopted the 2018 Long-Term Incentive Plan (“2018 LTIP”) on January 29, 2018 as a replacement for the 2007 LTIP. There are 3,300,000 common shares reserved for issuance under the 2018 LTIP. The Compensation Committee of the Board of Directors (the “Committee”) is responsible for the administration of the 2007 LTIP and 2018 LTIP, including the grant of stock based awards and other financial incentives including performance based incentives to employees, non‑employee directors and consultants. Our standard stock option agreement under the 2007 LTIP and 2018 LTIP allows for the payment of the exercise price of vested stock options either through cash remittance in exchange for newly issued shares, or through non‑cash exchange of previously issued shares held by the recipient for at least six months in exchange for our newly issued shares. The 2007 LTIP and 2018 LTIP also allow for the retention of shares in payment of the exercise price and income tax withholding. The latter method results in no cash being received by us, but also results in a lower number of total shares being outstanding subsequently as a direct result of this exchange of shares. Shares returned to us in this manner would be retired. The Company recognized total stock-based compensation expense during the years ended December 31, 2018 and 2017 as follows: Year Ended 2018 2017 Service based awards: Restricted stock awards $ 1,292,125 $ 3,316,093 Restricted stock units 840,477 - Stock option awards 1,588,291 3,858,503 3,720,893 7,174,596 Performance based awards: Restricted stock units 505,999 - Stock option awards 160,662 - 666,661 - Total $ 4,387,554 $ 7,174,596 Restricted Stock Awards A summary of the Company’s restricted stock awards during the years ended December 31, 2018 and 2017 is as follows: Weighted Average Grant-Date Number of Shares Fair Value Outstanding at December 31, 2016 850,000 $ 8.23 Granted 530,000 $ 5.72 Outstanding at December 31, 2017 1,380,000 $ 7.27 Forfeited (333,200) $ 5.70 Outstanding at December 31, 2018 $ 7.77 During the year ended December 31, 2017, 530,000 restricted stock awards were granted under the 2007 LTIP. The restricted shares awarded in 2017 consisted of 480,000 performance based restricted shares and 50,000 restricted shares for consulting services. Vesting of the performance based awards is conditioned upon achievement of certain performance measures which were originally estimated to be approximately seventeen months following the grant date and may also vest based on a market performance measure. Evaluation of the expected vesting period is reviewed quarterly. The restricted stock awards are valued at the market price on the date of grant. During the year ended December 31, 2018, forfeitures of performance based restricted stock awards totaled 333,200 related to the settlement agreement with the Company’s former CEO, CFO, and two former Directors. (see Note 14.) The fair value of restricted stock awards are measured based on their fair value on the date of grant and amortized over the vesting period of 20 months. As of December 31, 2018, unvested restricted stock awards of 146,800 were related to performance based awards. Stock-based compensation expense of $1.3 million and $3.3 million was recognized for the years ended December 31, 2018 and 2017, respectively. As of December 31, 2018, there is no unrecognized stock-based compensation expense related to restricted stock awards. Service Based Restricted Stock Units A summary of the Company’s service based restricted stock units during the year ended December 31, 2018 is as follows: Weighted Average Grant-Date Number of Shares Fair Value Unvested at December 31, 2017 - $ - Granted 571,459 $ 4.38 Vested (98,500) $ 4.70 Unvested at December 31, 2018 472,959 $ 4.32 The fair value of service based restricted stock units are measured based on their fair value on the date of grant and amortized over the vesting period. The vesting periods range from 1-3 years. Stock-based compensation expense of $0.8 million was recognized during the year ended December 31, 2018. As of December 31, 2018, the unrecognized stock-based compensation expense was $1.7 million. Performance Based Restricted Stock Units A summary of the Company’s performance based restricted stock units during the year ended December 31, 2018 is as follows: Weighted Average Grant-Date Number of Shares Fair Value Unvested at December 31, 2017 - $ - Granted Performance-based 646,875 $ 4.70 Market-based 342,083 $ 4.07 Unvested at December 31, 2018 988,958 $ 4.48 During the year ended December 31, 2018, the Company granted 988,958 performance based restricted stock units. Each performance unit represents the right to receive one share of the Company’s common stock at a future date, based on performance against specified targets. A performance unit may be comprised of either a performance based award or a market-based award. Performance based awards vest from the grant date through the remaining service period, and the fair value is the market price of one common share on the grant date. Evaluation of the expected vesting period is reviewed quarterly. Market-based awards vest upon the achievement of the market-based performance goal, provided the continued employment of the Company’s employee. The fair value of each market-based restricted stock unit was determined through the use of the Monte Carlo simulation method. Over the performance period, the number of shares expected to be issued is adjusted upward or downward based upon probability of achievement of performance targets. The ultimate number of shares issued and the related compensation cost recognized is based on a comparison of the final performance metrics to the specified targets. In accordance with ASC 718, Share-Based Payments, the market-based restricted stock units were assigned a fair value of $4.07 per share on the date of grant using the Monte Carlo simulation model. The following assumptions were used in the model: Year Ended December 31, 2018 Expected stock price volatility 70.0% Risk-free interest rate 2.9% - 3.1% Dividend yield rate - Term (years) 10.0 Stock-based compensation expense recognized for performance based restricted stock units was $0.5 million during the year ended December 31, 2018. As of December 31, 2018, the unrecognized stock-based compensation expense related to performance restricted stock units was $2.7 million. Service Based Stock Options The fair value of the service based stock options granted for the years ended December 31, 2018 and 2017 were based on the following assumptions: December 31, 2018 2017 Exercise price $3.17 - $5.75 $6.09 Expected stock price volatility 67.5% - 69.9% 66.3% Risk-free interest rate 2.7% - 3.2% 2.0% Term (years) 5.0 - 6.5 6.0 A summary of the Company’s service based stock option activity for the years ended December 31, 2018 and 2017 is as follows: Weighted Weighted Average Shares Average Remaining Aggregate Underlying Exercise Contractual Intrinsic Options Price Term Value Outstanding at December 31, 2016 7,691,501 $ 7.83 5.7 $ 1,821,384 Granted 15,000 $ 6.09 9.1 Exercised (433,500) $ 6.45 - Forfeited (367,000) $ 7.85 - Outstanding at December 31, 2017 6,906,001 $ 7.92 5.1 $ 976,335 Granted 1,447,479 $ 4.55 9.3 Exercised (267,500) $ 3.09 - Forfeited (229,500) $ 6.59 - Outstanding at December 31, 2018 7,856,480 $ 7.50 5.2 $ - Exercisable at December 31, 2018 6,470,500 $ 8.14 4.3 $ - The aggregate intrinsic value in the table above is calculated as the difference between the closing price of our common stock and the exercise price of the stock options that had strike prices below the closing price. During the year ended December 31, 2018, the service based stock options granted consisted of 1,447,479 options granted to employees. The vested options were exercisable at an average price of $8.03 per share and the unvested options were exercisable at an average price of $4.54 per share. In accordance with the original terms of their employment agreements of the former Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”) and in accordance with the terms of the Settlement Agreement (defined below), the Company accelerated the vesting of 258,334 and 71,667 unvested stock options on the termination date. As a result of this acceleration of stock options, the Company recorded additional stock-based compensation of approximately $162,000. As of December 31, 2018 and 2017, stock-based compensation expense of $1.6 million and $3.9 million was recognized, respectively. As of December 31, 2018, total stock-based compensation expense related to unvested options not yet recognized totaled approximately $2.7 million. Performance Based Stock Options A summary of the performance based stock options granted for the year ended December 31, 2018, is as follows: Weighted Average Exercise Number of Shares Price Outstanding at December 31, 2017 - $ - Granted Performance-based $ 4.70 Market-based $ 4.70 Outstanding at December 31, 2018 388,125 $ 4.70 Exercisable at December 31, 2018 - $ - During the year ended December 31, 2018, the Company granted 388,125 performance based stock options to employees of the Company. Each performance option represents the right to receive one share of the Company’s common stock at a future date, based on performance against specified targets. A performance option may be comprised of either a performance based award or a market-based award. Performance based awards start vesting on the grant date through the probability date of the measured performance, and the fair value is the market price of one common share on the grant date. Evaluation of the expected vesting period is reviewed quarterly. Market-based awards vest upon the achievement of the market-based performance goal, provided the continued employment of the Company’s employee. The fair value of each market-based stock option was determined through the use of the Monte Carlo simulation method. Over the performance period, the number of shares expected to be issued is adjusted upward or downward based upon probability of achievement of performance targets. The ultimate number of shares issued and the related compensation cost recognized is based on a comparison of the final performance metrics to the specified targets. In accordance with ASC 718, Share-Based Payments, the market-based stock options were assigned an average fair value of $2.71 per share on the date of grant using the Monte Carlo simulation model. The following assumptions were used in the model: Year Ended December 31, 2018 Expected stock price volatility 70.0% Risk-free interest rate 2.9% Dividend yield rate - Term (years) 10.0 Stock-based compensation expense recognized for performance based stock options was $0.2 million during the year ended December 31, 2018. As of December 31, 2018, the unrecognized stock-based compensation expense related to performance based stock options was $0.9 million. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions | |
Related Party Transactions | Note 13. Related Party Transactions Settlement Agreements and Related Director and Officer Insurance Receivable On August 7, 2018, the Company entered into a confidential settlement agreement and mutual release (the “Settlement Agreement”) with its former CEO, former CFO and a former and then current director. For more details see Note 14. The Company accrued approximately $1.5 million related to this Settlement Agreement and as of December 31, 2018, the Company has paid $1.1 million. The Company is also entitled to a partial reimbursement for this accrual from the Company’s insurance company of approximately $0.5 million which was collected in October 2018. This resulted in a net settlement expense of approximately $1.0 million for the year ended December 31, 2018. Product License Agreements The Company is a party to an in-license agreement for exclusive worldwide rights to certain patents and information related to our Triferic® product. On October 7, 2018, the Company entered into a Master Services and IP Agreement (the “Charak MSA”) with Charak, LLC and Dr. Ajay Gupta (collectively “Charak”), who serves as Executive Vice President and Chief Scientific Officer of the Company. Pursuant to the MSA, the parties entered into three additional agreements described below related to the license of certain soluble ferric pyrophosphate (“SFP”) intellectual property owned by Charak, as well as the Employment Agreement (defined below). The Charak MSA provides for a payment of $1.0 million to Dr. Gupta, payable in four quarterly installments of $250,000 each on October 15, 2018, January 15, 2019, April 15, 2019 and July 15, 2019, and reimbursement for certain legal fees incurred in connection with the Charak MSA. As of December 31, 2018, the Company paid the first quarterly installment of $250,000 and accrued $100,000 for the reimbursement of certain legal expenses. The Company recorded $1.1 million as a component of research and development expense for the twelve months ended December 31, 2018 and had $850,000 accrued as of December 31, 2018, which was recorded as a component of settlement payable. Pursuant to the Charak MSA, the aforementioned parties entered into an Amendment, dated as of October 7, 2018 (the “Charak Amendment”), to the Licensing Agreement between the Company and Charak, dated January 7, 2002, as amended (the “2002 Agreement”), under which Charak granted the Company an exclusive, worldwide, non-transferable license to commercialize SFP for the treatment of patients with renal failure. The Charak Amendment amends the royalty payments due to Charak under the 2002 Agreement such that the Company is liable to pay Charak royalties on net sales by the Company of products developed under the license, which includes the Company’s Triferic® product, at a specified rate until December 31, 2021 and thereafter at a reduced rate from January 1, 2022 until February 1, 2034. Additionally, the Company shall pay Charak a percentage of any sublicense income during the term of the agreement, which amount shall not be less than a minimum specified percentage of net sales of the licensed products by the sublicensee in jurisdictions where there exists a valid claim, on a country-by-country basis, and be no less than a lower rate of the net sales of the licensed products by the sublicensee in jurisdictions where there exists no valid claim, on a country-by-country basis. Also pursuant to the Charak MSA, the Company and Charak entered into a Commercialization and Technology License Agreement IV Triferic®, dated as of October 7, 2018 (the “IV Agreement”), under which Charak granted the Company an exclusive, sublicensable, royalty-bearing license to SFP for the purpose of commercializing certain intravenous-delivered products incorporating SFP for the treatment of iron disorders worldwide for a term that expires on the later of February 1, 2034 or upon the expiration or termination of a valid claim of a licensed patent. The Company is liable to pay Charak royalties on net sales by the Company of products developed under the license at a specified rate until December 31, 2021. From January 1, 2022 until February 1, 2034, the Company is liable to pay Charak a base royalty at a reduced rate on net sales and an additional royalty on net sales while there exists a valid claim of a licensed patent, on a country-by-country basis. The Company shall also pay to Charak a percentage of any sublicense income received during the term of the IV Agreement, which amount shall not be less than a minimum specified percentage of net sales of the licensed products by the sublicensee in jurisdictions where there exists a valid claim, on a country-by-country basis, and not be less than a lower rate of the net sales of the licensed products by the sublicensee in jurisdictions where there exists no valid claim, on a country-by-country basis. Also pursuant to the Charak MSA, the Company and Charak entered into a Technology License Agreement TPN Triferic®, dated as of October 7, 2018 (the “TPN Agreement”), pursuant to which Charak granted the Company an exclusive, sublicensable, royalty-bearing license to SFP for the purpose of commercializing worldwide certain parenteral nutritional (TPN”) products incorporating SFP. The license grant under the TPN Agreement continues for a term that expires on the later of February 1, 2034 or upon the expiration or termination of a valid claim of a licensed patent. During the term of the TPN Agreement, the Company is liable to pay Charak a base royalty on net sales and an additional royalty on net sales while there exists a valid claim of a licensed patent, on a country-by-country basis. The Company shall also pay to Charak a percentage of any sublicense income received during the term of the TPN Agreement, which amount shall not be less than a minimum royalty on net sales of the licensed products by the sublicensee in jurisdictions where there exists a valid claim, on a country-by-country basis, and not be less than a lower rate of the net sales of the licensed products by the sublicensee in jurisdictions where there exists no valid claim, on a country-by-country basis. The transaction was accounted for as an asset acquisition pursuant to ASU 2017-01, Business Combinations (Topic 805), Clarifying the Definition of a Business, as the majority of the fair value of the assets acquired was concentrated in a group of similar assets, and the acquired assets did not have outputs or employees. The assets acquired under the MSA include a license of SFP. Because SFP has not yet received regulatory approval, the $1.1 million purchase price paid and accrued to date for these assets has been expensed in the Company’s statement of operations for the year ended December 31, 2018. In addition, the potential milestone payments are not yet considered probable, and no milestone payments have been accrued at December 31, 2018. 2018 Director Compensation In 2018, the Company compensated non-employee directors with a cash retainer and a stock option grant, which was approved at the 2018 Annual Meeting of Shareholders in conjunction with the approval of the Company’s 2018 Long Term Incentive Plan. Following the removal of the Company’s then Chief Executive Officer and Chief Financial Officer in May 2018, independent directors Lisa Colleran, John Cooper and Benjamin Wolin were appointed to a special committee of the Board, which committee was delegated the responsibility to provide Board-level oversight of management on a more frequent basis until the appointment of a new Chief Executive Officer and Chief Financial Officer in the third and fourth quarters of 2018, as well as to provide Board-level oversight over the Company’s legal matters during this time. Subsequent to the appointment of this committee, the Compensation Committee of the Board recommended, and the Board approved, additional aggregate cash compensation of $330,000 payable to the directors who served on this committee in light of the substantial investment of additional time required in this role during the Company’s transition in 2018. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies. | |
Commitments and Contingencies | Note 14. Commitments and Contingencies Leases We lease our production facilities and administrative offices as well as certain equipment used in our operations including leases on transportation equipment used in the delivery of our products. The lease terms range from monthly to seven years. We occupy a 51,000 square foot facility and a 17,500 square foot facility in Wixom, Michigan under a lease expiring in August 2021. We also occupy two other manufacturing facilities, a 51,000 square foot facility in Grapevine, Texas under a lease expiring in December 2020, and a 57,000 square foot facility in Greer, South Carolina under a lease expiring February 2020. In addition, we executed a lease for 4,100 square feet of office space in Hackensack, New Jersey with a lease term beginning on April 1, 2019 and expiring on July 1, 2024. 2018 2017 2016 Rent Expense Recognized Under Operating Leases $ 2,369,183 $ 2,463,145 $ 2,369,101 Future minimum rental payments under operating lease agreements are as follows: Year ending December 31, 2019 $ 1,982,547 Year ending December 31, 2020 1,309,267 Year ending December 31, 2021 687,105 Year ending December 31, 2022 222,656 Year ending December 31, 2023 132,140 Year ending December 31, 2024 and thereafter 65,119 Total $ 4,398,834 Insurance We evaluate various kinds of risk that we are exposed to in our business. In our evaluation of risk, we evaluate options and alternatives to mitigating such risks. For certain insurable risks, we may acquire insurance policies to protect against potential losses or to partially insure against certain risks. For our subsidiary, Rockwell Transportation, Inc., we maintain a partially self-insured workers' compensation policy. Under the policy, our self‑insurance retention is $350,000 per occurrence and $675,010 in aggregate coverage for the policy year ending July 1, 2019. The total amount at December 31, 2018 by which retention limits exceed the claims paid and accrued is approximately $605,000 for the policy year ending July 1, 2019. Estimated loss and additional future claims of approximately $322,000 have been reserved and accrued for the year ended December 31, 2018. Purchase Obligations We have contracts for anticipated future obligations through December 31, 2019 of approximately $25.7 million, which include $24.5 million for concentrate manufacturing and $1.2 million in ancillary supplies. At December 31, 2017, approximately $0.3 million was held in cash collateral and escrow by the insurance carrier for workers’ compensation insurance. At December 31, 2017, amounts held in cash collateral and escrow are included in prepaid expenses and other non-current assets in the consolidated financial statements. Litigation Richmond/Ravich Litigation On March 8, 2017, we filed suit in the United States District Court for the Eastern District of Michigan against Richmond Brothers, Inc. and certain related entities, David S. Richmond, Mark H. Ravich and certain related trusts, Matthew J. Curfman (“Richmond/Ravich Defendants”). Our complaint alleged various violations of the Securities and Exchange Act of 1933 (the “Exchange Act”) by the Richmond/Ravich Defendants. Richmond/Ravich Settlement On November 22, 2017, we entered into a Settlement and Standstill Agreement with the Richmond/Ravich Defendants (the “Standstill Agreement”) whereby the Richmond/Ravich Defendants agreed to support our recommendations and nominations in connection with any meeting of shareholders, including the 2018 Annual Meeting of shareholders (the “2018 Meeting”) through December 31, 2018, and we agreed to add a seventh, independent director to our Board of Directors by February 15, 2018 and to reimburse the Richmond/Ravich Defendants for certain of their third-party expenses. Pursuant to the Standstill Agreement, we and Richmond/Ravich Defendants each released all claims against one another and jointly submitted a stipulation to the Court seeking to voluntarily dismiss the lawsuits. On November 30, 2017, the Court entered a Stipulated Order of Dismissal dismissing the entire case with prejudice. Our Board of Directors was unable to appoint a seventh director by February 15, 2018. Accordingly, on February 27, 2018, Richmond Brothers, Inc. (“RBI”) and David S. Richmond (“Richmond”) delivered a letter to us nominating Lisa Colleran, Benjamin Wolin and Richmond for election to the Board of Directors at the 2018 Meeting. Thereafter, on March 7, 2018, we entered into a letter agreement with RBI and Richmond to memorialize the parties’ mutual agreement on certain corporate governance matters (the “Letter Agreement”). The Letter Agreement provided, among other things, that: (a) by March 7, 2018, the Company’s Board would increase the size of the Board from six directors to eight directors and would appoint: (i) Benjamin Wolin as (A) a Class I director to serve for a term expiring at the Company’s 2019 Annual Meeting of Shareholders and (B) the lead independent director of the Board; and (ii) Lisa Colleran as a Class II director to serve for a term expiring at the Company’s 2020 Annual Meeting of Shareholders; and (b) if the Company complied with the provisions of the Letter Agreement by March 7, 2018, then RBI would withdraw its proposal to separately nominate any directors for election at the 2018 Meeting. As a result, on March 9, 2018, RBI and Richmond withdrew their proposal to separately nominate directors for election at the 2018 Meeting. Termination of our CEO and CFO The Company terminated its CEO and CFO, which resulted in the following litigation involving the Company. Circuit Court for Oakland County, Michigan Following the Board’s termination of the Company’s former CEO on May 22, 2018, and in response to his continued assertion that he remained the duly appointed Chief Executive Officer of the Company, on May 23, 2018, the Company filed a complaint in the Oakland County Circuit Court in Michigan (“State Court”) seeking declaratory relief and a temporary restraining order. On May 24, 2018, the Board terminated its then-serving CFO. On July 11, 2018, the State Court entered a stipulated order permitting the Company to withdraw its complaint and allowing the parties to litigate in the Federal Court action described below. On July 17, 2018, the lawsuit in the State Court action was dismissed and closed. United States District Court for the Eastern District of Michigan On June 13, 2018, the Company’s former CEO and CFO filed a complaint in the United States District Court for the Eastern District of Michigan (“Federal Court”) against the Company and certain directors (collectively, the “Defendants”). The complaint requested that the Federal Court reinstate the former CEO to his former position of Chief Executive Officer, reinstate the former CFO to his former position of Chief Financial Officer and order the Defendants to pay all costs associated with the matter. The complaint alleged that the Defendants possibly violated their duties of loyalty and care to the Company; rules under Regulation Fair Disclosure; and various federal securities laws, including Section 10(b) of the Exchange Act and SEC Rule 10b-5. On July 2, 2018, the Company filed an answer and counterclaim against the Company’s former CEO, former CFO, a former director and a then-serving director. On August 7, 2018, the parties entered into the Settlement Agreement by which the parties agreed to dismiss the Federal Court action with prejudice. Settlement Agreement and Dismissal of State and Federal Court Actions On August 7, 2018, the parties entered into a Settlement Agreement by which the parties agreed to dismiss the federal court action with prejudice. The court dismissed and closed the action on August 15, 2018. On August 7, 2018, the Company, the Company’s former CEO, former CFO, a former director and a then-serving director and the Defendants, entered into the Settlement Agreement, pursuant to which the parties agreed to dismiss the Federal Court action with prejudice and to enter into a broad mutual release of claims. The Company agreed to: (i) pay the Company’s former CEO, former CFO, a former director and a then-serving director a total of $1,500,000, one-half of which was paid at execution and the remainder of which will be paid in nine equal monthly installments of $83,333, (ii) pay $30,000 to the then-serving director (who then agreed to resign as a director); (iii) accelerate the vesting of options held by the Company’s former CEO and former CFO as of the date of their terminations; and (iv) grant an extended option exercise period for vested options. The Company’s former CEO, former CFO, a former director and the resigning director agreed to certain standstill covenants for a period of approximately five years and agreed to forfeit a total of 313,600 unvested shares of restricted common stock. SEC Investigation As a follow up to its prior inquiry letters, the Company received a subpoena from the SEC during the Company’s third quarter requesting, among other things, certain information and documents relating to the status of the Company’s request to CMS for separate reimbursement status for Dialysate Triferic, the Company’s reserving methodology for expiring Triferic inventory, and the basis for the Board’s termination of the former CEO and CFO. The Company is cooperating with the SEC and is responding to the SEC’s requests for documents and information. Shareholder Class Action Lawsuits On July 27, 2018, Plaintiff Ah Kit Too filed a putative class action lawsuit in the United States District Court in the Eastern District of New York against the Company and former officers, Robert Chioini and On September 4, 2018, Plaintiff Robert Spock filed a similar putative class action lawsuit in the United States District Court in the Eastern District of New York against the Company and Messrs. Chioini and Klema. The Spock complaint is a federal securities class action purportedly brought on behalf of a class consisting of persons who purchased the Company’s securities between November 8, 2017 and June 26, 2018. This complaint alleges that the Company and Messrs. Chioini and Klema violated the Exchange Act in that the Company was aware the Centers for Medicare and Medicaid Services would not pursue the Company’s proposal for separate reimbursement for Triferic; misstated reserves in the Company’s quarterly report for the first quarter of 2018; had a material weakness its internal controls over financial reporting, which rendered those controls ineffective; Mr. Chioini withheld material information regarding Triferic from the Company’s auditor, corporate counsel, and independent directors of the Board; and, as a result of these alleged issues, statements about the Company’s business were materially false and misleading. On September 25, 2018, four Company stockholders filed motions to appoint lead plaintiffs, lead counsel, and to consolidate the Ah Kit Too v. Rockwell securities class action with the Spock v. Rockwell securities class action. On October 10, 2018, the court issued an order consolidating the two actions, appointing co-lead plaintiffs and co-lead counsel. On December 10, 2018, lead Plaintiffs filed a consolidated amended complaint, which included the same allegations as the initial complaints and asserted claims on behalf of a putative class consisting of person who purchased the Company’s securities between November 8, 2017 and June 26, 2018. On February 18, 2019, the Company answered the consolidated amended complaint. The lawsuits seek damages allegedly sustained by the class and an award of plaintiffs’ costs and attorney fees. The case is at an early stage with no significant pre-trial proceedings (such, as substantive motions, discovery, etc.) having occurred. The Company believes it has defenses to the claims of liability and damages and is responding accordingly. The Company has tendered the class action to its D&O insurance carrier(s) for defense and indemnity under its applicable insurance policies. The Company maintains a $1.0 million self-insured retention under the applicable insurance policies, which can be exhausted by payment of expenses or indemnity. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
INCOME TAXES | |
INCOME TAXES | Note 15. Income Taxes A reconciliation of income tax expense at the statutory rate to income tax expense at our effective tax rate is as follows: 2018 2017 Tax Expense (Benefit) Computed at 22.79 % and 21.00% of Pretax Income (Loss) $ (7,299,026) $ (8,813,237) Changes in Tax Laws — 29,450,000 Foreign Income Tax Expense — — Effect of Change in Valuation Allowance 7,299,026 (20,636,763) Total Income Tax Expense $ — $ — The details of the net deferred tax asset are as follows: December 31, 2018 2017 Deferred tax assets: Net Operating Loss Carryforward $ 45,055,000 $ 35,030,000 Stock Based Compensation 6,405,000 5,030,000 Deferred Revenue 3,266,000 3,512,000 General Business Credit 6,872,000 6,872,000 Accrued Expenses 426,000 341,000 Inventories 1,685,000 909,000 Book over Tax Depreciation 13,000 32,000 Allowance for Doubtful Accounts — 2,000 Total Deferred Tax Assets 63,722,000 51,728,000 Deferred Tax Liabilities: Goodwill & Intangible Assets 122,000 98,000 Prepaid Expenses 187,000 136,000 Total Deferred Tax Liabilities 309,000 234,000 Subtotal 63,413,000 51,494,000 Valuation Allowance (63,413,000) (51,494,000) Net Deferred Tax Asset $ — $ — TCJA tax reform legislation enacted on December 22, 2017 makes major changes to the U.S. corporate income tax system, including lowering the U.S. federal corporate income tax rate to 21 percent from 35 percent, limiting or eliminating certain existing tax deductions, credits and incentives, allowing immediate expensing of capital expenditures through 2022, and eliminating the expiration of net operating loss carryforwards for losses generated in 2018 or after. ASC 740 requires companies to recognize the effects of tax law changes in the period of enactment, which for us was the fourth quarter of 2017, even though the effective date of most provisions of the TCJA is January 1, 2018. TCJA resulted in significant changes to our fourth quarter 2017 income tax provision most notably a reduction in our deferred tax asset, before valuation allowance, as a result of the lower corporate income tax rate. Deferred tax assets result primarily from net operating loss carryforwards. For tax purposes, we have net operating loss carryforwards of approximately $197,700,000 that expire between 2019 and 2037. In assessing the potential for realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized upon the generation of future taxable income during the periods in which those temporary differences become deductible. We recognized no income tax expense or benefit for the years ended December 31, 2018, and 2017. While we anticipate generating income within the next year or two, we expect to incur operating losses until our drug products are marketed and generating sufficient profits to offset our operating expenses. Considered together with our limited history of operating income and our net losses in 2018 and 2017, management has placed a full valuation allowance against the net deferred tax assets as of December 31, 2018 and 2017. The portion of the valuation allowance resulting from excess tax benefits on share based compensation that would be credited directly to contributed capital if recognized in subsequent periods is $3.3 million. We account for our uncertain tax positions in accordance with ASC 740‑10, Income Taxes and the amount of unrecognized tax benefits related to tax positions is not significant at December 31, 2018 and 2017. We have not been under tax examination in any jurisdiction for the years ended December 31, 2018 and 2017. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
SUBSEQUENT EVENTS | |
Subsequent Events | Note 16. Subsequent Events Decision on Calcitriol (Active Vitamin D) Injection During the first quarter of 2019, following a strategic review of Calcitriol, including pricing, commercial distribution and marketing, manufacturing efficiencies and capacity (including potential capital investment), we determined commercialization of Calcitriol in the U.S. would not be viable at this time. The decision was based, in part, on the fact that prevailing market prices for similar Vitamin D products are lower than our cost to produce Calcitriol on a dose-equivalent basis, and as a result it would be difficult for us to market Calcitriol profitably. As a result of this decision, we recorded an inventory reserve of $0.7 million for the fourth quarter of 2018, reflecting the remainder of our Calcitriol inventory. We are continuing to evaluate the potential commercialization of Calcitriol in China with Wanbang, including the market opportunity and regulatory pathway. Amendment to DaVita Concentrates Agreement On March 1, 2019, we entered into an amendment to our Products Purchase Agreement with DaVita. Pursuant to the terms of the amendment, the term of the contract was extended from March 31, 2019 to June 30, 2019. We are currently negotiating a long-term contract with DaVita for our concentrates products, and we expect to reach an agreement on such contract prior to the expiration of the Products Purchase Agreement, as amended. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Rockwell Transportation, Inc. and Rockwell Medical India Private Limited. Rockwell Medical India Private Limited was formed in 2016 for the purpose of conducting certain commercial activities in India. All intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications have been made to the 2017 financial statements and notes to conform to the 2018 presentation. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue under Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. The core principle of the new revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle: · Step 1: Identify the contract with the customer · Step 2: Identify the performance obligations in the contract · Step 3: Determine the transaction price · Step 4: Allocate the transaction price to the performance obligations in the contract · Step 5: Recognize revenue when the company satisfies a performance obligation Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by us from a customer, are excluded from revenue. Shipping and handling costs associated with outbound freight related to contracts with customers are accounted for as a fulfillment cost and are included in cost of sales when control of the goods transfers to the customer. Nature of goods and services The following is a description of principal activities from which the Company generates its revenue. Product sales – The Company accounts for individual products and services separately if they are distinct (i.e., if a product or service is separately identifiable from other items and if a customer can benefit from it on its own or with other resources that are readily available to the customer). The consideration, including any discounts, is allocated between separate products and services based on their stand-alone selling prices. The stand-alone selling prices are determined based on the cost plus margin approach. Drug and dialysis concentrate products are sold directly to dialysis clinics and to wholesale distributors in both domestic and international markets. Distribution and license agreements for which upfront fees are received are evaluated upon execution or modification of the agreement to determine if the agreement creates a separate performance obligation from the underlying product sales. For all existing distribution and license agreements, the distribution and license agreement is not a distinct performance obligation from the product sales. In instances where regulatory approval of the product has not been established and the Company does not have sufficient experience with the foreign regulatory body to conclude that regulatory approval is probable, the revenue for the performance obligation is recognized over the term of the license agreement (over time recognition). Conversely, when regulatory approval already exists or is probable, revenue is recognized at the point in time that control of the product transfers to the customer. The Company received upfront fees under two distribution and license agreements that have been deferred as a contract liability. The amounts received from Wanbang Biopharmaceuticals Co., Ltd. (“Wanbang”) are recognized as revenue over the estimated term of the distribution and license agreement as regulatory approval was not received and the Company did not have sufficient experience in China to determine that regulatory approval was probable as of the execution of the agreement. The amounts received from Baxter Healthcare Corporation (“Baxter”) are recognized as revenue at the point in time that the estimated product sales under the agreement occur. For the business under the Company’s distribution agreement with Baxter (the “Baxter Agreement”) and for the majority of the Company’s international customers, the Company recognizes revenue at the shipping point, which is generally the Company’s plant or warehouse. For other business, the Company recognizes revenue based on when the customer takes control of the product. The amount of revenue recognized is based on the purchase order less returns and adjusted for any rebates, discounts, chargebacks or other amounts paid to customers. There were no such adjustments for the periods reported. Customers typically pay for the product based on customary business practices with payment terms averaging 30 days, while distributor payment terms average 45 days. Disaggregation of revenue Revenue is disaggregated by primary geographical market, major product line, and timing of revenue recognition. In thousands of US dollars ($) Year Ended December 31, 2018 Products By Geographic Area Total U.S. Rest of World Drug Revenues License Fee – Over time $ 273 $ — $ 273 Concentrate Products Product Sales – Point-in-time 60,995 52,264 8,731 License Fee – Point-in-time 2,121 2,121 — Total Concentrate Products 63,116 54,385 8,731 Net Revenue $ 63,389 $ 54,385 $ 9,004 Year Ended December 31, 2017 Products By Geographic Area Total U.S. Rest of World Drug Revenues License Fee – Over time $ 229 — 229 Concentrate Products Product Sales – Point-in-time 54,972 48,307 6,665 License Fee – Point-in-time 2,099 2,099 — Total Concentrate Products 57,071 50,406 6,665 Net Revenue $ 57,300 $ 50,406 $ 6,894 For the years ended December 31, 2018 and 2017, license fee revenue was $2.4 million and $2.3 million, respectively. For the years ended December 31, 2018 and 2017, product sales revenue was $61.0 million and $55.0 million, respectively. Contract balances The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers. In thousands of US dollars ($) December 31, 2018 December 31, 2017 Receivables, which are included in "Trade and other receivables" $ 6,980 $ 6,356 Contract liabilities $ 14,329 $ 16,723 There were no impairment losses recognized related to any receivables arising from the Company’s contracts with customers for the years ended December 31, 2018 and 2017, respectively. For the years ended December 31, 2018 and 2017, the Company did not recognize material bad-debt expense and there were no material contract assets recorded on the consolidated balance sheet as of December 31, 2018 and 2017, respectively. The Company does not generally accept returns of its concentrate products and no reserve for returns of concentrate products was established as of December 31, 2018 or December 31, 2017. The contract liabilities primarily relate to upfront payments and consideration received from customers that are received in advance of the customer assuming control of the related products. Transaction price allocated to remaining performance obligations For the year ended December 31, 2018, revenue recognized from performance obligations related to prior periods was not material. Revenue expected to be recognized in any future year related to remaining performance obligations, excluding revenue pertaining to contracts that have an original expected duration of one year or less, contracts where revenue is recognized as invoiced and contracts with variable consideration related to undelivered performance obligations, totaled $14.3 million and $16.7 million for each of the years ended December 31, 2018 and 2017. The amount relates primarily to upfront payments and consideration received from customers that are received in advance of the customer assuming control of the related products. The Company applies the practical expedient in paragraph 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less. The Baxter Agreement includes minimum commitments of product sales over the duration of the agreement. Unfulfilled performance obligations related to the Baxter Agreement are product sales totaling $11.1 million, which will be amortized through expiration of the agreement on October 2, 2024. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period. Actual results could differ from those estimates. The most significant accounting estimates inherent in the preparation of our financial statements include estimates associated with revenue recognition, allowance for doubtful accounts, inventory reserves, accrued expenses, deferred license revenue, stock-based compensation, impairments of long‑lived assets, and accounting for income taxes. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments purchased with original maturities of 90 days or less at acquisition to be cash equivalents. Cash and cash equivalents include cash held in banks, money market mutual funds and unrestricted certificates of deposit. The Company’s cash and cash equivalents exceeds the Federal Deposit Insurance Corporation insured limits. The Company has not experienced any credit losses for amounts in excess of insured limits. Currently the Company does not reasonably believe a significant risk of credit loss exists. |
Fair Value Measurement | Fair Value Measurement The Company applies the guidance issued with ASC 820, Fair Value Measurements , which provides guidance on the development and disclosure of fair value measurements. Under this accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The accounting guidance classifies fair value measurements in one of the following three categories for disclosure purposes: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than Level 1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace. Level 3: Unobservable inputs which are supported by little or no market activity ad values determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgement or estimation. |
Investments Available for Sale | Investments – Available for Sale The Company has designated its short term investments as of each balance sheet date as available-for-sale securities and accounts for them at their respective fair values. Available-for-sale securities are measured at fair value, including accrued interest, with temporary unrealized gains and losses reported as a component of shareholders’ equity until their disposition. We review all available-for-sale securities at each period end to determine if they remain available-for-sale based on our then current intent and ability to sell the security if required to do so. The cost of securities sold is based on the specific identification method. All of our investments available-for-sale are subject to periodic impairment review. We recognize an impairment charge when a decline in the fair value of our investments below the cost basis is judged to be other than temporary. |
Accounts Receivable | Accounts Receivable Accounts receivable are stated at invoice amounts. The carrying amount of trade accounts receivable is reduced by an allowance for doubtful accounts that reflects our best estimate of accounts that may not be collected. We review outstanding trade accounts receivable balances and based on our assessment of expected collections, we estimate the portion, if any, of the balance that may not be collected as well as a general valuation allowance for other accounts receivable based primarily on historical experience. All accounts or portions thereof deemed to be uncollectible are written off to the allowance for doubtful accounts. |
Inventory | Inventory Inventory is stated at the lower of cost or net realizable value. Cost is determined on the first‑in first‑out (FIFO) method. Inventory that is not expected to be converted to cash over the next year is classified as non-current. Our policy is to reserve for our drug product inventory that we determine is unlikely to be sold to, or if sold, unlikely to be utilized by our customers on or before its expiration date. |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost and are depreciated using the straight‑line method over the useful lives of the assets, which range from three to ten years. Expenditures for routine maintenance and repairs are expensed as incurred. Leasehold improvements are amortized using the straight‑line method over the shorter of the useful lives or the related lease term. |
Impairment of Long-lived Assets | Impairment of Long-lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. Impairment losses on long-lived assets, such as real estate and equipment, are recognized when events or changes in circumstances indicate that the undiscounted cash flows estimated to be generated by such assets are less than their carrying value and, accordingly, all or a portion of such carrying value may not be recoverable. Impairment losses are then measured by comparing the fair value of assets to their carrying amounts. For the years ended December 31, 2018 and 2017, there were no impairments of long-lived assets. |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill is the excess of purchase price over the fair value of identified net assets of businesses acquired. Intangible assets with indefinite useful lives are measured at their respective fair values as of the acquisition date. We do not amortize goodwill and intangible assets with indefinite useful lives. We review goodwill and indefinite-lived intangible assets at least annually for possible impairment. Goodwill and indefinite-lived intangible assets are reviewed for possible impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit or the indefinite-lived intangible assets below their carrying values. Intangible assets with definite lives are amortized over their estimated useful lives. Intangible assets subject to amortization are reviewed for potential impairment whenever events or circumstances indicate that carrying amounts may not be recoverable. Definite-lived intangible assets consist of our license fees related to the technology, intellectual property and marketing rights for Triferic covered under certain issued patents have been capitalized and are being amortized over the life of the related patents which is generally 17 years. |
Deferred Revenue | Deferred Revenue In October of 2014, the Company entered into a 10 year distribution agreement with Baxter and received an upfront fee of $20 million. The upfront fee was recorded as deferred revenue and is being recognized based on the proportion of product shipments to Baxter in each period, compared with total expected sales volume over the term of the Distribution Agreement. The Company recognized revenue of approximately $2.1 million during each of years ended December 31, 2018 and 2017, respectively. Deferred revenue related to the Baxter agreement totaled $11.1 million and $13.2 million as of December 31, 2018 and 2017, respectively. If a “Refund Trigger Event” occurs, we would be obligated to repay a portion of the upfront fee and any paid portion of the facility fee. In the event of a Refund Trigger Event occurring from January 1, 2019 to December 31, 2021, Baxter would be eligible for a 25% benefit of the Agreement’s Upfront Payment. In addition, if Baxter terminates the Distribution Agreement because Baxter has been enjoined by a court of competent jurisdiction from selling in the United States any product covered by the Distribution Agreement due to a claim of intellectual property infringement or misappropriation relating to such product prior to the end of 2019, Baxter would be eligible for a partial refund of $6.6 million. In no event would more than one refund be required to be paid. During the year ended December 31, 2016, the Company entered into a distribution agreement with Wanbang and received an upfront fee of $4.0 million. The upfront fee was recorded as deferred revenue and is being recognized as revenue based on the agreement term. The Company recognized revenue of approximately $0.3 million during each of the years ended December 31, 2018 and 2017. Deferred revenue related to the Wanbang agreement totaled $3.2 million and $3.5 million as of December 31, 2018 and 2017, respectively. |
Income Taxes | Income Taxes We account for income taxes in accordance with the provisions of ASC 740‑10, Income Taxes. A current tax liability or asset is recognized for the estimated taxes payable or refundable on tax returns for the year. Deferred tax liabilities or assets are recognized for the estimated future tax effects of temporary differences between book and tax accounting and operating loss and tax credit carryforwards. A valuation allowance is established for deferred tax assets if we determine it to be more likely than not that the deferred tax asset will not be realized. The effects of tax positions are generally recognized in the financial statements consistent with amounts reflected in returns filed, or expected to be filed, with taxing authorities. For tax positions that the Company considers to be uncertain, current and deferred tax liabilities are recognized, or assets derecognized, when it is probable that an income tax liability has been incurred and the amount of the liability is reasonably estimable, or when it is probable that a tax benefit, such as a tax credit or loss carryforward, will be disallowed by a taxing authority. The amount of unrecognized tax benefits related to current tax positions is insignificant. The Company recognizes interest and penalties accrued related to unrecognized tax benefits as income tax expense. |
Research and Product Development | Research and Product Development The Company recognizes research and product development expenses as incurred. The Company incurred product development and research costs related to the commercial development, patent approval and regulatory approval of new products aggregating approximately $5.6 million and $6.3 million for the years ended December 31, 2018 and 2017, respectively. During the year ended December 31, 2018, $1.1 million was expensed related to our product license agreement for exclusive worldwide rights to certain patents and information related to our Triferic product. |
Stock-Based Compensation | Stock-Based Compensation Service-Based Stock Unit Awards The Company expenses stock-based compensation to employees over the requisite service period based on the estimated grant-date fair value of the awards. For stock-based compensation awards to non-employees, the Company re-measures the fair value of the non-employee awards at each reporting period prior to vesting and finally at the vesting date of the award. Changes in the estimated fair value of these non-employee awards are recognized as compensation expense in the period of change. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgement. For the years ended December 31, 2018 and 2017, the Company recorded stock-based compensation expense on its options granted under the Company’s equity compensation plans to its directors and officers, and its employees (See Note 12). Market and Performance-Based Stock Unit Awards In addition to awards with service-based vesting conditions, the Company has granted performance share units with market and performance conditions, to certain of its executives. The fair value of awards with performance conditions are based on the fair value of the Company’s common stock on the date of grant. The fair value of awards with market conditions are based on a Monte Carlo simulation model. Assumptions and estimates utilized in the calculation of the fair value of the market awards include the risk-free interest rate, dividend yield, average closing price, expected volatility based on the historical volatility of the Company, and the remaining period of the award. The awards with performance conditions vest and result in issuance, at settlement, of common shares for each recipient based upon the recipient’s continued employment with the Company through the settlement date of the award and the Company’s achievement of specified milestones. The requisite service period of the awards with performance conditions is generally 1-2 years. In the case of awards with performance conditions, the Company recognizes stock-based compensation expense based on the grant date fair value of the award when achievement of the underlying performance-based targets become probable. The awards with market conditions vest and result in the issuance of common shares based upon the recipient’s continuing employment with the Company through the settlement date of the award related to the market capitalization criteria. The fair value related to the awards with market conditions is recorded as stock-based compensation expense over the period from date of grant to the settlement date regardless of whether the market capitalization is achieved. |
Commitments and Contingencies | Commitments and Contingencies In the normal course of business, the Company may become subject to loss contingencies, such as legal proceedings and claims arising out of its business, including government investigations. An accrual for a loss contingency is recognized when it is probable that an asset had been impaired or a liability had been incurred and the amount of loss can be reasonably estimated. The Company expenses legal costs associated with loss contingencies as they are incurred. |
Loss Per Share | Loss Per Share ASC 260, Earnings Per Share, requires dual presentation of basic and diluted earnings per share (“EPS”), with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issued common stock were exercised or converted into common stock or resulted in the issuance of common stock that are then shared in the earnings of the entity. Basic net loss per share of common stock excludes dilution and is computed by dividing the net loss by the weighted average number of shares outstanding during the period. Diluted net loss per share of common stock reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that are then shared in the earnings of the entity unless inclusion of such shares would be anti-dilutive. The Company has only incurred losses, therefore, basic and diluted net loss per share is the same. Securities that could potentially dilute loss per share in the future that were not included in the computation of diluted loss per share for the years ended December 31, 2018 and 2017 were as follows: As of December 31, 2018 2017 Options to purchase common stock 8,244,605 6,906,001 Unvested restricted stock awards 146,800 480,000 Unvested restricted stock units 1,461,917 - 9,853,322 7,386,001 |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive income (loss) includes all changes in equity during a period except those that resulted from investments by or distributions to the Company’s stockholders. Accumulated other comprehensive income (loss) refers to revenues, expenses, gains and losses that are included in comprehensive income (loss), but excluded from net income (loss) as these amounts are recorded directly as an adjustment to shareholders’ equity. Accumulated other comprehensive income (loss) consists of unrealized gains and losses on available‑for‑sale investment securities and foreign currency translation adjustments. |
Recent Accounting Pronouncements | Adoption of Recent Accounting Pronouncements The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequences of the change to its consolidated financial statements and assures that there are proper controls in place to ascertain that the Company’s consolidated financial statements properly reflect the change. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), as modified by ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, ASU 2016-08 , Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, and ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. The revenue recognition principle in ASU 2014-09 is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, new and enhanced disclosures will be required. Companies may adopt the new standard either using the full retrospective approach, a modified retrospective approach with practical expedients, or a cumulative effect upon the adoption approach. The Company adopted the new standard on January 1, 2018, using the modified retrospective approach. The adoption of ASU 2014-09 did not have a material impact on the Company’s consolidated financial statements and related disclosures. In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 requires equity investments to be measured at fair value with changes in fair value recognized in net income; simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; requires separate presentation of financial assets and financial liabilities by measurement category and form of financial assets on the balance sheet or the accompanying notes to the financial statements and clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred taxes. ASU 2016-01 is effective for financial statements issued of fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company adopted the new standard on January 1, 2018, and the adoption of ASU 2016-01 did not have a material impact on the Company’s consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) in order to increase transparency and comparability among organizations by, and among other provisions, recognizing lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous U.S. GAAP. For public companies, ASU 2016-02 is effective for fiscal years beginning after December 15, 2018 (including interim periods within those periods) using a modified retrospective approach and early adoption is permitted. In transition, entities may also elect a package of practical expedients that must be applied in its entirety to all leases commencing before the adoption date, unless the lease is modified, and permits entities to not reassess (a) the existence of a lease, (b) lease classification or (c) determination of initial direct costs, as of the adoption date, which effectively allows entities to carryforward accounting conclusions under previous U.S. GAAP. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842) : Targeted Improvements , which provides entities an optional transition method to apply the guidance under Topic 842 as of the adoption date, rather than as of the earliest period presented. The Company adopted Topic 842 on January 1, 2019, using the optional transition method to apply the new guidance as of January 1, 2019, rather than as of the earliest period presented, and elected the package of practical expedients described above. The Company is still finalizing its analysis, but expects to recognize additional operating liabilities ranging from $3.5 million to $4.0 million, with corresponding ROU assets of approximately the same amount as of January 1, 2019 based on the present value of the remaining lease payments. In June 2018, the FASB issued ASU 2018-17, Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under ASU 2018-17, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than an entity’s adoption of Topic 606. The Company adopted this new standard on January 1, 2019 and the adoption did not have a material impact on its consolidated financial statements and related disclosures. In August 2018, the Securities and Exchange Commission (SEC), adopted the final rule under SEC Release No. 33-10532, “Disclosure Update and Simplification,” amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders’ equity presented in the balance sheet must be provide in a note or separate statement. The analysis should represent a reconciliation of the beginning balance to the ending balance for each period for which a statement of comprehensive income is required to be filed. This final rule is effective on November 5, 2018. The Company is evaluating the impact of this guidance on its consolidated financial statements. The Company anticipates its first presentation of changes in stockholders’ equity will be included in its Form 10-Q for the quarter ended March 31, 2019. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Accounting Policies | |
Disaggregation Of Revenue | In thousands of US dollars ($) Year Ended December 31, 2018 Products By Geographic Area Total U.S. Rest of World Drug Revenues License Fee – Over time $ 273 $ — $ 273 Concentrate Products Product Sales – Point-in-time 60,995 52,264 8,731 License Fee – Point-in-time 2,121 2,121 — Total Concentrate Products 63,116 54,385 8,731 Net Revenue $ 63,389 $ 54,385 $ 9,004 Year Ended December 31, 2017 Products By Geographic Area Total U.S. Rest of World Drug Revenues License Fee – Over time $ 229 — 229 Concentrate Products Product Sales – Point-in-time 54,972 48,307 6,665 License Fee – Point-in-time 2,099 2,099 — Total Concentrate Products 57,071 50,406 6,665 Net Revenue $ 57,300 $ 50,406 $ 6,894 |
Contract Balances | In thousands of US dollars ($) December 31, 2018 December 31, 2017 Receivables, which are included in "Trade and other receivables" $ 6,980 $ 6,356 Contract liabilities $ 14,329 $ 16,723 |
Summary of potentially dilutive securities | As of December 31, 2018 2017 Options to purchase common stock 8,244,605 6,906,001 Unvested restricted stock awards 146,800 480,000 Unvested restricted stock units 1,461,917 - 9,853,322 7,386,001 |
Investments In Available For _2
Investments In Available For Sale Securities (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Investments in Available For Sale Securities | |
Investments Available for Sale | December 31, 2018 Amortized Cost Unrealized Gain Unrealized Loss Fair Value Available-for-Sale Securities Bonds $ 10,801,836 $ 17,415 $ (1,192) $ 10,818,059 December 31, 2017 Amortized Cost Unrealized Gain Unrealized Loss Fair Value Available-for-Sale Securities Bonds $ 24,684,304 $ 30,059 $ (65,904) $ 24,648,459 |
Inventory (Tables)
Inventory (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Inventory | |
Schedule components of inventory | December 31, December 31, 2018 2017 Raw Materials $ 3,621,548 $ 10,604,232 Work in Process 256,129 212,505 Finished Goods 1,798,101 2,807,399 Total $ 5,675,778 $ 13,624,136 |
Property And Equipment (Tables)
Property And Equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property and Equipment | |
Schedule of major classes of property and equipment, stated at cost | 2018 2017 Leasehold Improvements $ 929,849 $ 824,087 Machinery and Equipment 4,800,774 7,893,566 Information Technology & Office Equipment 2,459,832 2,327,524 Laboratory Equipment 668,977 631,666 Transportation Equipment — 242,277 8,859,432 11,919,120 Accumulated Depreciation (6,221,139) (9,370,142) Net Property and Equipment $ 2,638,293 $ 2,548,978 |
Summary of depreciation expense | 2018 2017 Depreciation expense $ 649,789 $ 514,009 |
Goodwill And Intangible Assets
Goodwill And Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets | |
Schedule of costs are being amortized | 2018 2017 Capitalized Licensing Fees $ 1,070,126 $ 1,070,126 Accumulated Amortization (1,066,451) (1,066,098) Capitalized Licensing Fees, Net of Amortization $ 3,675 $ 4,028 Amortization Expense $ 353 $ 353 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
ACCRUED LIABILITIES | |
Schedule of accrued liabilities | 2018 2017 Accrued Research & Development Expense $ 86,820 $ 400,024 Accrued Compensation and Benefits 1,525,599 1,991,874 Other Accrued Liabilities 3,517,342 2,323,814 Total Accrued Liabilities $ 5,129,761 $ 4,715,712 |
Stock-Based Compensation - (Tab
Stock-Based Compensation - (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |
Schedule of total stock-based compensation expense | Year Ended 2018 2017 Service based awards: Restricted stock awards $ 1,292,125 $ 3,316,093 Restricted stock units 840,477 - Stock option awards 1,588,291 3,858,503 3,720,893 7,174,596 Performance based awards: Restricted stock units 505,999 - Stock option awards 160,662 - 666,661 - Total $ 4,387,554 $ 7,174,596 |
Restricted stock awards | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |
Schedule of restricted stock award | Weighted Average Grant-Date Number of Shares Fair Value Outstanding at December 31, 2016 850,000 $ 8.23 Granted 530,000 $ 5.72 Outstanding at December 31, 2017 1,380,000 $ 7.27 Forfeited (333,200) $ 5.70 Outstanding at December 31, 2018 $ 7.77 |
Restricted stock units - Service based awards | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |
Schedule of restricted stock award | Weighted Average Grant-Date Number of Shares Fair Value Unvested at December 31, 2017 - $ - Granted 571,459 $ 4.38 Vested (98,500) $ 4.70 Unvested at December 31, 2018 472,959 $ 4.32 |
Restricted stock units - Performance based awards | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |
Schedule of restricted stock award | Weighted Average Grant-Date Number of Shares Fair Value Unvested at December 31, 2017 - $ - Granted Performance-based 646,875 $ 4.70 Market-based 342,083 $ 4.07 Unvested at December 31, 2018 988,958 $ 4.48 |
Schedule of fair value assumptions | Year Ended December 31, 2018 Expected stock price volatility 70.0% Risk-free interest rate 2.9% - 3.1% Dividend yield rate - Term (years) 10.0 |
Stock option awards - Service based awards | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |
Schedule of fair value assumptions | December 31, 2018 2017 Exercise price $3.17 - $5.75 $6.09 Expected stock price volatility 67.5% - 69.9% 66.3% Risk-free interest rate 2.7% - 3.2% 2.0% Term (years) 5.0 - 6.5 6.0 |
Schedule of stock options | Weighted Weighted Average Shares Average Remaining Aggregate Underlying Exercise Contractual Intrinsic Options Price Term Value Outstanding at December 31, 2016 7,691,501 $ 7.83 5.7 $ 1,821,384 Granted 15,000 $ 6.09 9.1 Exercised (433,500) $ 6.45 - Forfeited (367,000) $ 7.85 - Outstanding at December 31, 2017 6,906,001 $ 7.92 5.1 $ 976,335 Granted 1,447,479 $ 4.55 9.3 Exercised (267,500) $ 3.09 - Forfeited (229,500) $ 6.59 - Outstanding at December 31, 2018 7,856,480 $ 7.50 5.2 $ - Exercisable at December 31, 2018 6,470,500 $ 8.14 4.3 $ - |
Stock option awards - Performance based awards | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |
Schedule of fair value assumptions | Year Ended December 31, 2018 Expected stock price volatility 70.0% Risk-free interest rate 2.9% Dividend yield rate - Term (years) 10.0 |
Schedule of stock options | Weighted Average Exercise Number of Shares Price Outstanding at December 31, 2017 - $ - Granted Performance-based $ 4.70 Market-based $ 4.70 Outstanding at December 31, 2018 388,125 $ 4.70 Exercisable at December 31, 2018 - $ - |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies. | |
Rent Expense Recognized Under Operating Leases | 2018 2017 2016 Rent Expense Recognized Under Operating Leases $ 2,369,183 $ 2,463,145 $ 2,369,101 |
Schedule of future minimum rental payments under operating lease agreements | Year ending December 31, 2019 $ 1,982,547 Year ending December 31, 2020 1,309,267 Year ending December 31, 2021 687,105 Year ending December 31, 2022 222,656 Year ending December 31, 2023 132,140 Year ending December 31, 2024 and thereafter 65,119 Total $ 4,398,834 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
INCOME TAXES | |
Schedule of reconciliation of income tax expense at the statutory rate to income tax expense at Entity's effective tax rate | 2018 2017 Tax Expense (Benefit) Computed at 22.79 % and 21.00% of Pretax Income (Loss) $ (7,299,026) $ (8,813,237) Changes in Tax Laws — 29,450,000 Foreign Income Tax Expense — — Effect of Change in Valuation Allowance 7,299,026 (20,636,763) Total Income Tax Expense $ — $ — |
Schedule of details of the net deferred tax asset | December 31, 2018 2017 Deferred tax assets: Net Operating Loss Carryforward $ 45,055,000 $ 35,030,000 Stock Based Compensation 6,405,000 5,030,000 Deferred Revenue 3,266,000 3,512,000 General Business Credit 6,872,000 6,872,000 Accrued Expenses 426,000 341,000 Inventories 1,685,000 909,000 Book over Tax Depreciation 13,000 32,000 Allowance for Doubtful Accounts — 2,000 Total Deferred Tax Assets 63,722,000 51,728,000 Deferred Tax Liabilities: Goodwill & Intangible Assets 122,000 98,000 Prepaid Expenses 187,000 136,000 Total Deferred Tax Liabilities 309,000 234,000 Subtotal 63,413,000 51,494,000 Valuation Allowance (63,413,000) (51,494,000) Net Deferred Tax Asset $ — $ — |
Going Concern (Details)
Going Concern (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Going Concern | |||
Cash and Cash Equivalents | $ 22,713,980 | $ 8,406,917 | $ 17,180,594 |
Investments Available for Sale | 10,818,059 | 24,648,459 | |
Working Capital Net | 33,600,000 | ||
Accumulated Deficit | (272,388,234) | (240,262,376) | |
Net cash used in operating activities | $ (20,419,934) | $ (21,112,929) |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Revenue Recognition, PPE, Licensing and Research (Details) | Dec. 31, 2016USD ($) | Oct. 31, 2014USD ($) | Dec. 31, 2018USD ($)agreementshares | Dec. 31, 2017USD ($)shares | Dec. 31, 2018USD ($) |
Revenue Recognition | |||||
Number of distribution and license agreements | agreement | 2 | ||||
Customers average payment term | 30 days | ||||
Distributors average payment term | 45 days | ||||
Contract liabilities | $ 14,329,000 | $ 16,723,000 | $ 14,329,000 | ||
Impairment losses | 0 | 0 | |||
Bad-debt expense | 0 | 0 | |||
Contract assets | 0 | 0 | 0 | ||
Revenue performance obligation | $ 14,300,000 | 16,700,000 | 14,300,000 | ||
Remaining performance obligation practical expedient | true | ||||
Impairment of Long-lived Assets | |||||
Impairments of long-lived assets | 0 | ||||
Research and Product Development | |||||
Product development and research costs | $ 5,642,317 | 6,321,400 | |||
Investments Available for Sale | |||||
Fair value of investments | $ 10,818,059 | 24,648,459 | 10,818,059 | ||
Licensing Fees | |||||
Useful life | 17 years | ||||
Research and Development | |||||
Research and Development Expense | $ 5,642,317 | $ 6,321,400 | |||
Loss Per Share | |||||
Securities excluded from diluted loss per share calculation | shares | 9,853,322 | 7,386,001 | |||
Statutory rate (as a percent) | 21.00% | 35.00% | |||
License Agreement Terms [Member] | |||||
Research and Product Development | |||||
Product development and research costs | $ 1,100,000 | ||||
Research and Development | |||||
Research and Development Expense | $ 1,100,000 | ||||
Baxter Healthcare Organization | |||||
Licensing Fees | |||||
Useful life | 10 years | ||||
Minimum | |||||
Property and Equipment | |||||
Useful life | 3 years | ||||
Stock-Based Compensation | |||||
Market and performance-based stock unit awards service period | 1 year | ||||
Maximum | |||||
Property and Equipment | |||||
Useful life | 10 years | ||||
Stock-Based Compensation | |||||
Market and performance-based stock unit awards service period | 2 years | ||||
Wanbang Biopharmaceutical | |||||
Revenue Recognition | |||||
Deferred Revenue | $ 3,200,000 | $ 3,500,000 | 3,200,000 | ||
Upfront payment | $ 4,000,000 | ||||
Deferred drug license revenue | $ 300,000 | 300,000 | |||
Baxter Healthcare Organization | |||||
Revenue Recognition | |||||
Upfront payment benefit percent | 25.00% | ||||
Partial Refund | $ 6,600,000 | ||||
Upfront payment | $ 20,000,000 | ||||
Deferred drug license revenue | 2,100,000 | 2,100,000 | |||
Contract liabilities | 11,100,000 | $ 13,200,000 | 11,100,000 | ||
Revenue performance obligation | 11,100,000 | 11,100,000 | |||
Concentrate Products [Member] | |||||
Revenue Recognition | |||||
Reserve for returns | $ 0 | $ 0 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Disaggregation Of Revenue (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Net Revenue | $ 63,388,617 | $ 57,300,281 |
United States | ||
Net Revenue | 54,385,000 | 50,406,000 |
Rest of World | ||
Net Revenue | 9,004,000 | 6,894,000 |
Concentrate Products [Member] | ||
Net Revenue | 63,116,000 | 57,071,000 |
Concentrate Products [Member] | United States | ||
Net Revenue | 54,385,000 | 50,406,000 |
Concentrate Products [Member] | Rest of World | ||
Net Revenue | 8,731,000 | 6,665,000 |
Product License Agreements | ||
Net Revenue | 2,400,000 | 2,300,000 |
Product License Agreements | Drug Revenue [Member] | ||
Net Revenue | 273,000 | 229,000 |
Product License Agreements | Drug Revenue [Member] | Rest of World | ||
Net Revenue | 273,000 | 229,000 |
Product License Agreements | Concentrate Products [Member] | ||
Net Revenue | 2,121,000 | 2,099,000 |
Product License Agreements | Concentrate Products [Member] | United States | ||
Net Revenue | 2,121,000 | 2,099,000 |
Product Sales [Member] | ||
Net Revenue | 61,000,000 | 55,000,000 |
Product Sales [Member] | Concentrate Products [Member] | ||
Net Revenue | 60,995,000 | 54,972,000 |
Product Sales [Member] | Concentrate Products [Member] | United States | ||
Net Revenue | 52,264,000 | 48,307,000 |
Product Sales [Member] | Concentrate Products [Member] | Rest of World | ||
Net Revenue | $ 8,731,000 | $ 6,665,000 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Contract Balances (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Summary of Significant Accounting Policies | ||
Other Receivables | $ 6,980 | $ 6,356 |
Contract liabilities | $ 14,329 | $ 16,723 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Loss Per Share (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Oct. 15, 2018 | |
Net Earnings per Share | |||
Securities excluded from diluted loss per share calculation | 9,853,322 | 7,386,001 | |
Exercise price (in dollars per share) | $ 4.96 | ||
Stock options | |||
Net Earnings per Share | |||
Securities excluded from diluted loss per share calculation | 8,244,605 | 6,906,001 | |
Restricted stock awards | |||
Net Earnings per Share | |||
Securities excluded from diluted loss per share calculation | 146,800 | 480,000 | |
Restricted stock units | |||
Net Earnings per Share | |||
Securities excluded from diluted loss per share calculation | 1,461,917 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Adoption of Recent Accounting Pronouncements (Details) - ASU 2016-02 - Restatement Adjustment $ in Millions | Jan. 01, 2019USD ($) |
Minimum | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Operating liabilities | $ 3.5 |
ROU assets | 3 |
Maximum | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Operating liabilities | 4 |
ROU assets | $ 3.5 |
Investments in Available For _3
Investments in Available For Sale Securities (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Investments in Available For Sale Securities | ||
Investment securities available for sale | $ 10,801,836 | $ 24,684,304 |
Unrealized gains | 17,415 | 30,059 |
Unrealized losses | (1,192) | (65,904) |
Fair value of investments | $ 10,818,059 | $ 24,648,459 |
Significant Market Segments A_2
Significant Market Segments And Customers (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Significant market segments | ||
Accounts receivable | $ 6,979,514 | $ 6,355,566 |
Assets | $ 52,557,784 | $ 58,779,640 |
International sales | ||
Significant market segments | ||
Direct sales percentage of sales | 14.00% | 12.00% |
DaVita Healthcare Partners, Inc. | ||
Significant market segments | ||
Direct sales percentage of sales | 46.00% | 50.00% |
Accounts receivable | $ 2,538,503 | $ 2,406,257 |
Nipro Medical Corporation [Member] | ||
Significant market segments | ||
Direct sales percentage of sales | 10.00% | 7.00% |
Baxter Healthcare Organization | ||
Significant market segments | ||
Accounts receivable | $ 2,824,051 | $ 1,863,412 |
Baxter Healthcare Organization | Customer concentration | ||
Significant market segments | ||
Direct sales percentage of sales | 26.00% | 27.00% |
Distribution Agreement (Details
Distribution Agreement (Details) - USD ($) | Oct. 02, 2014 | Dec. 31, 2018 | Dec. 31, 2017 |
Agreement Refund Trigger Event repayment percent first criteria | 25.00% | ||
Baxter Healthcare Organization | |||
Distribution agreement term | 10 years | ||
Upfront fee | $ 20,000,000 | ||
Recognized Distribution Agreement Income | $ 2,100,000 | $ 2,100,000 | |
Recognized Distribution Agreement Income | 2,100,000 | $ 2,100,000 | |
Payment (made) received | $ 0 | ||
Agreement termination notice period | 270 days | ||
Agreement termination significant price increase notice period | 45 days | ||
Agreement termination limited non-compete period | 2 years | ||
Agreement property infringement repayment amount first criteria | $ 10,000,000 | ||
Agreement property infringement repayment amount second criteria | $ 6,600,000 | ||
Agreement extension period | 5 years | ||
Extension fee | $ 7,500,000 |
Inventory (Details)
Inventory (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Inventory [Line Items] | ||
Raw Materials | $ 3,621,548 | $ 10,604,232 |
Work in Process | 256,129 | 212,505 |
Finished Goods | 1,798,101 | 2,807,399 |
Total | 5,675,778 | 13,624,136 |
Inventory, Noncurrent | 1,637,000 | 5,986,752 |
inventory reserve | 700,000 | |
Inventory reserves and write-offs | 8,800,000 | |
Triferic Finished Goods | ||
Inventory [Line Items] | ||
Inventory, Noncurrent | 1,600,000 | 6,000,000 |
Finished goods inventory | 8,000,000 | 13,500,000 |
inventory reserve | 5,800,000 | 3,500,000 |
Inventory reserves and write-offs | 8,100,000 | |
Increase in inventory reserves and write-offs | $ 3,500,000 | |
Calcitriol [Member] | ||
Inventory [Line Items] | ||
Inventory reserves and write-offs | $ 700,000 |
Property And Equipment (Details
Property And Equipment (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property and equipment | ||
Gross Property and Equipment | $ 8,859,432 | $ 11,919,120 |
Accumulated Depreciation | (6,221,139) | (9,370,142) |
Property, Plant and Equipment, Net, Total | 2,638,293 | 2,548,978 |
Depreciation expense | 649,789 | 514,009 |
Leasehold Improvements | ||
Property and equipment | ||
Gross Property and Equipment | 929,849 | 824,087 |
Machinery and Equipment | ||
Property and equipment | ||
Gross Property and Equipment | 4,800,774 | 7,893,566 |
Information Technology & Office Equipment | ||
Property and equipment | ||
Gross Property and Equipment | 2,459,832 | 2,327,524 |
Laboratory Equipment | ||
Property and equipment | ||
Gross Property and Equipment | $ 668,977 | 631,666 |
Transportation Equipment | ||
Property and equipment | ||
Gross Property and Equipment | $ 242,277 |
Goodwill And Intangible Asset_2
Goodwill And Intangible Assets (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2011 | |
Intangible assets | |||
Goodwill | $ 920,745 | $ 920,745 | |
Adjustment for impairment of goodwill | 0 | 0 | |
Global licensing agreement | |||
Intangible assets | |||
Capitalized Licensing Fees | 1,070,126 | 1,070,126 | |
Accumulated Amortization | (1,066,451) | (1,066,098) | |
Capitalized Licensing Fees, Net of Amortization | 3,675 | 4,028 | |
Amortization expense | $ 353 | 353 | |
ANDA | |||
Intangible assets | |||
Amortization period | 5 years | ||
Capitalized Licensing Fees, Net of Amortization | $ 695,000 | ||
Patent costs | |||
Intangible assets | |||
Amortization expense | $ 353 | $ 353 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
ACCRUED LIABILITIES | ||
Accrued Research & Development Expense | $ 86,820 | $ 400,024 |
Accrued Compensation and Benefits | 1,525,599 | 1,991,874 |
Other Accrued Liabilities | 3,517,342 | 2,323,814 |
Total Accrued Liabilities | $ 5,129,761 | $ 4,715,712 |
Stockholders_ Equity (Details)
Stockholders’ Equity (Details) | Oct. 15, 2018USD ($)$ / sharesshares | Aug. 07, 2018directorshares | Mar. 07, 2017USD ($)$ / sharesshares | Dec. 31, 2018USD ($)director$ / sharesshares | Dec. 31, 2017USD ($)shares |
Preferred Stock | |||||
Preferred stock, Outstanding | 0 | 0 | |||
Preferred stock, Authorized | 2,000,000 | 2,000,000 | |||
Preferred Stock, Shares Issued | 0 | 0 | |||
Common Stock | |||||
Common stock issued on exercise of stock options (in shares) | 267,500 | ||||
Amount of common stock issued on exercise of stock options | $ | $ 67,548 | ||||
Exercised (in dollars per share) | $ / shares | $ 3.09 | ||||
Common stock repurchased (in shares) | 210,132 | ||||
Amount of common stock repurchased | $ | $ 759,028 | ||||
Proceeds from the Issuance of Common Shares | $ | $ 22,000,000 | $ 123,603 | |||
Income tax expense related to stock option activity | $ | 1,209,000 | ||||
Shares Issued in Exchange for Services (in shares) | 50,000 | ||||
Value of Shares issued in Exchange for Services (in dollars) | $ | $ 297,500 | 228,847 | |||
Share price | $ / shares | $ 3.97 | $ 5.95 | $ 3.61 | ||
Share Based Compensation - Non-employee | $ | $ 68,653 | 228,847 | |||
Issuance of common stock, net of issuance cost | $ | $ 21,900,000 | $ 21,935,951 | $ 123,603 | ||
Issuance of Common Shares (in shares) | 5,541,562 | ||||
Warrant to purchase | 2,770,781 | ||||
Exercise price | $ / shares | $ 4.96 | ||||
Restricted stock awards - Performance based | |||||
Common Stock | |||||
Forfeited (in shares) | 333,200 | 333,200 | |||
Number of former directors | director | 2 | 2 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock-based compensation (Details) - shares | 12 Months Ended | 120 Months Ended | |
Dec. 31, 2018 | Apr. 07, 2017 | Jan. 29, 2018 | |
2007 LTIP | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Granted (in shares) | 0 | ||
Common stock reserved for issuance | 11,500,000 | ||
2018 LTIP | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Common stock reserved for issuance | 3,300,000 | ||
Stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Minimum period for non-cash exchange of previously issued shares in exchange for newly issued shares | 6 months |
Stock-Based Compensation - Shar
Stock-Based Compensation - Share-based compensation expense (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total share-based compensation expense | $ 4,387,554 | $ 7,174,596 |
Service based awards | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total share-based compensation expense | 3,720,893 | 7,174,596 |
Restricted stock awards - Service based awards | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total share-based compensation expense | 1,292,125 | 3,316,093 |
Restricted stock units - Service based awards | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total share-based compensation expense | 840,477 | |
Stock option awards - Service based awards | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total share-based compensation expense | 1,588,291 | $ 3,858,503 |
Performance Based Awards [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total share-based compensation expense | 666,661 | |
Restricted stock units - Performance based awards | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total share-based compensation expense | 505,999 | |
Stock option awards - Performance based awards | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total share-based compensation expense | $ 160,662 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Awards (Details) | Aug. 07, 2018directorshares | Dec. 31, 2018USD ($)director$ / sharesshares | Dec. 31, 2017USD ($)$ / sharesshares |
Weighted Average Grant Date Fair Value | |||
Stock based compensation expenses | $ | $ 4,387,554 | $ 7,174,596 | |
Restricted stock awards | |||
Number of Shares | |||
Outstanding at beginning of period (in shares) | 1,380,000 | 850,000 | |
Granted (in shares) | 530,000 | ||
Forfeited (in shares) | (333,200) | ||
Outstanding at end of period (in shares) | 1,046,800 | 1,380,000 | |
Weighted Average Grant Date Fair Value | |||
Outstanding at beginning of period (in dollars per share) | $ / shares | $ 7.27 | $ 8.23 | |
Granted (in dollars per share) | $ / shares | 5.72 | ||
Forfeited (in shares) | $ / shares | 5.70 | ||
Outstanding at end of period (in dollars per share) | $ / shares | $ 7.77 | $ 7.27 | |
Vesting period | 20 months | ||
Stock based compensation expenses | $ | $ 1,300,000 | $ 3,300,000 | |
Unrecognized stock-based compensation expenses | $ | $ 0 | ||
Restricted stock awards - Performance based | |||
Number of Shares | |||
Forfeited (in shares) | (333,200) | (333,200) | |
Outstanding at end of period (in shares) | 146,800 | ||
Weighted Average Grant Date Fair Value | |||
Number of former directors | director | 2 | 2 | |
Restricted stock awards - Service based awards | |||
Weighted Average Grant Date Fair Value | |||
Stock based compensation expenses | $ | $ 1,292,125 | $ 3,316,093 | |
2007 LTIP | Restricted stock awards | |||
Number of Shares | |||
Granted (in shares) | 530,000 | ||
2007 LTIP | Restricted stock awards - Performance based | |||
Number of Shares | |||
Granted (in shares) | 480,000 | ||
Weighted Average Grant Date Fair Value | |||
Vesting period | 17 months | ||
2007 LTIP | Restricted stock awards - Service based awards | |||
Number of Shares | |||
Granted (in shares) | 50,000 |
Stock-Based Compensation - Serv
Stock-Based Compensation - Service Based Restricted Stock Units (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Weighted Average Grant Date Fair Value | ||
Stock based compensation expenses | $ 4,387,554 | $ 7,174,596 |
Restricted stock units - Service based awards | ||
Number of Shares | ||
Granted (in shares) | 571,459 | |
Vested (in shares) | (98,500) | |
Outstanding at end of period (in shares) | 472,959 | |
Weighted Average Grant Date Fair Value | ||
Granted (in dollars per share) | $ 4.38 | |
Vested (in dollars per share) | 4.70 | |
Outstanding at end of period (in dollars per share) | 4.32 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | $ 4.32 | |
Stock based compensation expenses | $ 800,000 | |
Unrecognized stock-based compensation expenses | $ 1,700,000 | |
Minimum | ||
Weighted Average Grant Date Fair Value | ||
Vesting period | 1 year | |
Maximum | ||
Weighted Average Grant Date Fair Value | ||
Vesting period | 3 years |
Stock-Based Compensation - Perf
Stock-Based Compensation - Performance Based Restricted Stock Units (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Fair value assumptions: | ||
Stock based compensation expenses | $ 4,387,554 | $ 7,174,596 |
Restricted stock units - Performance based awards | ||
Number of Shares | ||
Granted (in shares) | 988,958 | |
Outstanding at end of period (in shares) | 988,958 | |
Weighted Average Grant Date Fair Value | ||
Outstanding at end of period (in dollars per share) | $ 4.48 | |
Number of shares per unit | 1 | |
Fair value assumptions: | ||
Expected stock price volatility | 70.00% | |
Risk-free interest rate - minimum | 2.90% | |
Risk-free interest rate - maximum | 3.10% | |
Term (years) | 10 years | |
Stock based compensation expenses | $ 505,999 | |
Unrecognized stock-based compensation expenses | $ 2,700,000 | |
Performance -based | ||
Number of Shares | ||
Granted (in shares) | 646,875 | |
Weighted Average Grant Date Fair Value | ||
Granted (in dollars per share) | $ 4.70 | |
Number of shares per unit | 1 | |
Market-based | ||
Number of Shares | ||
Granted (in shares) | 342,083 | |
Weighted Average Grant Date Fair Value | ||
Granted (in dollars per share) | $ 4.07 | |
Fair value assumptions: | ||
Risk-free interest rate - minimum | 2.90% | |
Risk-free interest rate - maximum | 3.10% |
Stock-Based Compensation - Se_2
Stock-Based Compensation - Service Based Stock Options - Fair value assumptions (Details) - Stock option awards - Service based awards - $ / shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Exercise price | $ 6.09 | |
Expected stock price volatility | 66.30% | |
Risk-free interest rate | 2.00% | |
Term (years) | 6 years | |
Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Exercise price | $ 3.17 | |
Expected stock price volatility | 67.50% | |
Risk-free interest rate | 2.70% | |
Term (years) | 5 years | 6 years |
Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Exercise price | $ 5.75 | |
Expected stock price volatility | 69.90% | |
Risk-free interest rate | 3.20% | |
Term (years) | 6 years 6 months |
Stock-Based Compensation - Se_3
Stock-Based Compensation - Service Based Stock Options (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Shares Underlying Options | |||
Exercised (in shares) | (267,500) | ||
Weighted Average Exercise Price | |||
Granted (in dollars per share) | $ 2.71 | ||
Exercised (in dollars per share) | $ 3.09 | ||
Stock option awards - Service based awards | |||
Shares Underlying Options | |||
Outstanding at the beginning of the period (in shares) | 6,906,001 | 7,691,501 | |
Granted (in shares) | 1,447,479 | 15,000 | |
Exercised (in shares) | (267,500) | (433,500) | |
Forfeited (in shares) | (229,500) | (367,000) | |
Outstanding at the end of the period (in shares) | 7,856,480 | 6,906,001 | 7,691,501 |
Exercisable at June 30, 2018 | 6,470,500 | ||
Weighted Average Exercise Price | |||
Outstanding at the beginning of the period (in dollars per share) | $ 7.92 | $ 7.83 | |
Granted (in dollars per share) | 4.55 | 6.09 | |
Exercised (in dollars per share) | 3.09 | 6.45 | |
Forfeited (in dollars per share) | 6.59 | 7.85 | |
Outstanding at the end of the period (in dollars per share) | 7.50 | $ 7.92 | $ 7.83 |
Exercise price (in dollars per share) | $ 8.14 | ||
Weighted Average Remaining Contractual Term | |||
Beginning Balance | 5 years 2 months 12 days | 5 years 8 months 12 days | |
Granted, Weighted Average Remaining Contractual Term | 9 years 3 months 18 days | 9 years 1 month 6 days | |
Exercisable at June 30, 2018 | 4 years 3 months 18 days | 5 years 1 month 6 days | |
Aggregate intrinsic Value | |||
Outstanding (in dollars) | $ 976,335 | $ 1,821,384 |
Stock-Based Compensation - Se_4
Stock-Based Compensation - Service Based Stock Options - Others (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated Share-based Compensation Expense | $ 4,387,554 | $ 7,174,596 |
Stock option awards - Service based awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Granted (in shares) | 1,447,479 | |
Vested options exercisable at an average price | $ 8.03 | |
Unvested options exercisable at an average price | $ 4.54 | |
Allocated Share-based Compensation Expense | $ 1,588,291 | $ 3,858,503 |
Unrecognized stock-based compensation expenses | $ 2,700,000 | |
Chief Executive Officer | Stock option awards - Service based awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Accelerated vesting | 258,334 | |
Chief Financial Officer | Stock option awards - Service based awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Accelerated vesting | 71,667 | |
Additional stock-based compensation | $ 162,000 |
Stock-Based Compensation - Pe_2
Stock-Based Compensation - Performance Based Stock Options (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Weighted Average Exercise Price | ||
Granted (in dollars per share) | $ 2.71 | |
Fair value assumptions: | ||
Stock based compensation expenses | $ 4,387,554 | $ 7,174,596 |
Stock option awards - Performance based awards | ||
Number of Shares | ||
Granted (in shares) | 388,125 | |
Outstanding at the end of the period (in shares) | 388,125 | |
Weighted Average Exercise Price | ||
Outstanding at the end of the period (in dollars per share) | $ 4.70 | |
Number of shares per unit | 1 | |
Fair value assumptions: | ||
Expected stock price volatility | 70.00% | |
Risk-free interest rate | 2.90% | |
Term (years) | 10 years | |
Stock based compensation expenses | $ 160,662 | |
Unrecognized stock-based compensation expenses | $ 900,000 | |
Performance-based | ||
Number of Shares | ||
Granted (in shares) | 129,375 | |
Weighted Average Exercise Price | ||
Granted (in dollars per share) | $ 4.70 | |
Number of shares per unit | 1 | |
Market-based | ||
Number of Shares | ||
Granted (in shares) | 258,750 | |
Weighted Average Exercise Price | ||
Granted (in dollars per share) | $ 4.70 |
Related Party Transactions (Det
Related Party Transactions (Details) | Oct. 07, 2018USD ($) | Dec. 31, 2018USD ($)installment | Dec. 31, 2017USD ($) | Jul. 15, 2019USD ($) | Apr. 15, 2019USD ($) | Jan. 15, 2019USD ($) | Oct. 31, 2018USD ($) | Oct. 15, 2018USD ($) | Aug. 07, 2018USD ($) |
Accrued Settlement Payable | $ 416,668 | $ 1,500,000 | |||||||
Settlement expenses paid | 1,100,000 | ||||||||
Director and Officer Insurance Receivable | 371,217 | $ 500,000 | |||||||
Net settlement expense | $ 1,030,000 | ||||||||
Number of additional agreements | 3 | ||||||||
Number of quarterly installment payments | installment | 4 | ||||||||
Product development and research costs | $ 5,642,317 | $ 6,321,400 | |||||||
Cash compensation | 330,000 | ||||||||
Master services and IP agreements | |||||||||
Payments to acquire assets | 1,100,000 | ||||||||
Milestone payments | 0 | ||||||||
Executive Vice President and Chief Scientific Officer [Member] | |||||||||
Total amount due | $ 1,000,000 | 850,000 | $ 250,000 | $ 250,000 | $ 250,000 | $ 250,000 | |||
Product development and research costs | 100,000 | ||||||||
Installment paid | 250,000 | ||||||||
Product development and research costs | $ 1,100,000 |
Commitments and Contingencies -
Commitments and Contingencies - Leases (Details) | 12 Months Ended | ||
Dec. 31, 2018USD ($)ft² | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
LEASES | |||
Rent Expense Recognized Under Operating Leases | $ 2,369,183 | $ 2,463,145 | $ 2,369,101 |
Future minimum rental payments under operating lease agreements | |||
Year ending December 31, 2019 | 1,982,547 | ||
Year ending December 31, 2020 | 1,309,267 | ||
Year ending December 31, 2021 | 687,105 | ||
Year ending December 31, 2022 | 222,656 | ||
Year ending December 31, 2023 | 132,140 | ||
Year ending December 31, 2024 and thereafter | 65,119 | ||
Total | $ 4,398,834 | ||
Maximum | |||
LEASES | |||
Lease term | 7 years | ||
Michigan | |||
LEASES | |||
Area occupied by Entity (in square feet) | ft² | 17,500 | ||
Texas | |||
LEASES | |||
Area occupied by Entity (in square feet) | ft² | 51,000 | ||
South Carolina | |||
LEASES | |||
Area occupied by Entity (in square feet) | ft² | 57,000 | ||
New Jersey | |||
LEASES | |||
Area occupied by Entity (in square feet) | ft² | 4,100 |
Commitments and Contingencies_2
Commitments and Contingencies - Insurance (Details) | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Commitments and Contingencies. | |
Self insurance retention per occurrence | $ 350,000 |
Aggregate coverage | 675,010 |
Retention limit in excess of claims paid and accrued | 605,000 |
Estimated loss reserves and additional future claims | $ 322,000 |
Commitments and Contingencies_3
Commitments and Contingencies - Purchase Obligations (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Recorded Unconditional Purchase Obligation [Line Items] | ||
Purchase Obligation | $ 25.7 | |
Cash collateral and escrow held by insurance carrier for workers' compensation insurance | $ 0.3 | |
Concentrate manufacturing | ||
Recorded Unconditional Purchase Obligation [Line Items] | ||
Purchase Obligation | 24.5 | |
Ancillary supplies | ||
Recorded Unconditional Purchase Obligation [Line Items] | ||
Purchase Obligation | $ 1.2 |
Commitments and Contingencies_4
Commitments and Contingencies (Details) | Aug. 07, 2018USD ($)itemshares | Dec. 31, 2018USD ($) |
Loss Contingencies [Line Items] | ||
Settlement payment agreement standstill period | 5 years | |
Unvested shares forfeited | shares | 313,600 | |
Self insurance retention | $ 1,000,000 | |
Litigation with Chiconi, Klema, Bagley and Boyd | ||
Loss Contingencies [Line Items] | ||
Litigation settlement amount | $ 1,500,000 | |
Payment of litigation settlement amount | $ 83,333 | |
Number of litigation settlement amount payments | item | 9 | |
Litigation with Chiconi, Klema, Bagley and Boyd | Boyd [Member] | ||
Loss Contingencies [Line Items] | ||
Payment of litigation settlement amount | $ 30,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
INCOME TAXES | ||
Tax expense (benefit) tax rate | 22.79% | |
Statutory rate (as a percent) | 21.00% | 35.00% |
Reconciliation of income tax expense at the statutory rate to income tax expense at Entity's effective tax rate | ||
Tax Expense (Benefit) Computed at 21 % of Pretax Income (Loss) | $ (7,299,026) | $ (8,813,237) |
Changes in Tax Laws | 29,450,000 | |
Effect of Change in Valuation Allowance | 7,299,026 | (20,636,763) |
Total Income Tax Expense | 0 | 0 |
Deferred tax assets: | ||
Net Operating Loss Carryforward | 45,055,000 | 35,030,000 |
Stock Based Compensation | 6,405,000 | 5,030,000 |
Deferred Revenue | 3,266,000 | 3,512,000 |
General Business Credit | 6,872,000 | 6,872,000 |
Accrued Expenses | 426,000 | 341,000 |
Inventories | 1,685,000 | 909,000 |
Book over Tax Depreciation | 13,000 | 32,000 |
Allowance for Doubtful Accounts | 2,000 | |
Total Deferred Tax Assets | 63,722,000 | 51,728,000 |
Deferred Tax Liabilities: | ||
Goodwill & Intangible Assets | 122,000 | 98,000 |
Prepaid Expenses | 187,000 | 136,000 |
Total Deferred Tax Liabilities | 309,000 | 234,000 |
Subtotal | 63,413,000 | 51,494,000 |
Valuation Allowance | (63,413,000) | (51,494,000) |
Net Deferred Tax Asset | 0 | $ 0 |
Net operating loss carryforwards that expire between 2018 and 20137 | 197,700,000 | |
Excess tax benefits on share based compensation that would be credited directly to contributed capital, if recognized | $ 3,300,000 |
Subsequent Events (Details)
Subsequent Events (Details) $ in Millions | Dec. 31, 2018USD ($) |
SUBSEQUENT EVENTS | |
inventory reserve | $ 0.7 |