Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 13, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | MELA SCIENCES, INC. /NY | |
Entity Central Index Key | 1,051,514 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 10,183,393 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,015 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Current Assets: | ||
Cash and cash equivalents | $ 3,169 | $ 11,434 |
Restricted cash | 100 | 0 |
Accounts receivable, net of allowance for doubtful accounts of $42 and $95, respectively | 4,182 | 220 |
Inventories, net | 3,915 | 5,275 |
Prepaid expenses and other current assets | 596 | 274 |
Total current assets | 11,962 | 17,203 |
Property and equipment, net | 14,461 | 1,961 |
Patents and licensed technologies, net | 7,490 | 37 |
Other intangible assets, net | 8,190 | 0 |
Goodwill | 8,928 | 0 |
Deferred financing costs | 1,029 | 821 |
Other assets | 94 | 48 |
Total assets | 52,154 | 20,070 |
Current Liabilities: | ||
Senior Note payable | 8,848 | 0 |
Note payable | 39 | 0 |
Accounts payable (includes $0 and $74 of related parties, respectively) | 4,193 | 1,185 |
Other accrued liabilities | 1,920 | 959 |
Deferred revenues | 267 | 43 |
Total current liabilities | 15,267 | 2,187 |
Long-term liabilities: | ||
Senior secured convertible debentures, net | 11,373 | 5,001 |
Warrant liability | 9,535 | 499 |
Other liabilities | 103 | 107 |
Total liabilities | $ 36,278 | $ 7,794 |
Commitment and contingencies | ||
Stockholders' equity: | ||
Preferred Stock, $.10 par value, 10,000,000 shares authorized; 6,505 and 11,787 shares issued and outstanding, respectively | $ 1 | $ 1 |
Common Stock, $.001 par value, 150,000,000 shares authorized; 9,887,358 and 6,037,232 shares issued and outstanding, respectively | 10 | 6 |
Additional paid-in capital | 222,502 | 194,562 |
Accumulated deficit | (206,647) | (182,293) |
Accumulated other comprehensive income | 10 | 0 |
Total stockholders' equity | 15,876 | 12,276 |
Total liabilities and stockholders' equity | $ 52,154 | $ 20,070 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Current Assets: | ||
Allowance for doubtful accounts, current | $ 42 | $ 95 |
Current Liabilities: | ||
Accounts payable, related parties | $ 0 | $ 74 |
Stockholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 6,505 | 11,787 |
Preferred stock, shares outstanding (in shares) | 6,505 | 11,787 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 150,000,000 | 150,000,000 |
Common stock, shares issued (in shares) | 9,887,358 | 6,037,232 |
Common stock, shares outstanding (in shares) | 9,887,358 | 6,037,232 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME [Abstract] | ||||
Revenues | $ 8,323 | $ 218 | $ 9,015 | $ 541 |
Cost of revenues | 3,042 | 1,560 | 10,226 | 3,755 |
Gross profit (loss) | 5,281 | (1,342) | (1,211) | (3,214) |
Operating expenses: | ||||
Engineering and product development | 471 | 345 | 946 | 1,423 |
Selling and marketing | 4,001 | 429 | 5,984 | 2,366 |
General and administrative | 3,132 | 1,885 | 6,819 | 5,988 |
Total operating expenses | 7,604 | 2,659 | 13,749 | 9,777 |
Operating loss before other income (expense), net | (2,323) | (4,001) | (14,960) | (12,991) |
Other income (expense), net: | ||||
Interest expense, net | (5,577) | (527) | (8,738) | (528) |
Change in fair value of warrant liability | (1,329) | 2,108 | (679) | 7,151 |
Gain on sale of assets | 0 | 11 | 0 | 16 |
Registration rights liquidated damages | 0 | (3,420) | ||
Other (loss) income, net | (5) | 121 | 23 | 131 |
Nonoperating Income (Expense) | (6,911) | 1,713 | (9,394) | 3,350 |
Net income (loss) | (9,234) | (2,288) | (24,354) | (9,641) |
Deemed dividend related to warrant modification | (2,962) | 0 | (2,962) | 0 |
Net loss attributable to common stockholders | $ (12,196) | $ (2,288) | $ (27,316) | $ (9,641) |
Basic and diluted net loss per share (in dollars per share) | $ (1.29) | $ (0.44) | $ (3.42) | $ (1.89) |
Shares used in computing basic and diluted net loss per share (in shares) | 9,442,022 | 5,216,290 | 7,994,012 | 5,108,418 |
Other comprehensive income: | ||||
Foreign currency translation adjustments | $ 10 | $ 0 | $ 10 | $ 0 |
Comprehensive loss | $ (12,186) | $ (2,288) | $ (27,305) | $ (9,641) |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited) - 9 months ended Sep. 30, 2015 - USD ($) $ in Thousands | Convertible Preferred Stock [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Loss [Member] | Total |
Beginning balance at Dec. 31, 2014 | $ 1 | $ 6 | $ 194,562 | $ (182,293) | $ 0 | $ 12,276 |
Beginning balance (in shares) at Dec. 31, 2014 | 11,787 | 6,037,232 | ||||
Stock-based compensation | $ 0 | $ 0 | 1,483 | 0 | 0 | 1,483 |
Conversion of convertible preferred stock | $ 0 | $ 2 | (2) | 0 | 0 | 0 |
Conversion of convertible preferred stock (in shares) | (5,282) | 2,059,455 | ||||
Conversion of senior secured convertible debentures | $ 0 | $ 2 | 4,591 | 0 | 0 | 4,593 |
Conversion of senior secured convertible debentures (in shares) | 0 | 1,790,671 | ||||
Discount on senior secured convertible debentures | $ 0 | $ 0 | 27,300 | 0 | 0 | 27,300 |
Modification of warrants | 0 | 0 | (5,399) | 0 | 0 | (5,399) |
Deemed dividend contribution to additional paid-in capital | 0 | 0 | 2,962 | 0 | 2,962 | |
Deemed dividend distribution from additional paid-in capital | 0 | 0 | (2,962) | 0 | 0 | (2,962) |
Registration costs | 0 | 0 | (33) | 0 | 0 | (33) |
Other comprehensive income | 0 | 0 | 0 | 0 | 10 | 10 |
Net loss | 0 | 0 | 0 | (24,354) | 0 | (24,354) |
Ending balance at Sep. 30, 2015 | $ 1 | $ 10 | $ 222,502 | $ 206,647 | $ 10 | $ 15,876 |
Ending balance (in shares) at Sep. 30, 2015 | 6,505 | 9,887,358 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash Flows From Operating Activities: | ||
Net loss | $ (24,354) | $ (9,641) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 2,348 | 1,371 |
Provision for doubtful accounts | 20 | 1 |
Stock-based compensation | 1,483 | 447 |
Gain on disposal of property and equipment | 0 | (16) |
Impairment of long-lived assets | 920 | 0 |
Amortization of debt discount | 7,571 | 385 |
Amortization of deferred financing costs | 373 | 38 |
Inventory write-offs | 4,818 | 1,076 |
Change in fair value of warrant liability | 679 | (7,151) |
Changes in operating assets and liabilities: | ||
Restricted cash | (100) | 0 |
Accounts receivable | (300) | (29) |
Inventories | (295) | (1,362) |
Prepaid expenses and other assets | (321) | 262 |
MelaFind systems sold | 0 | 163 |
Accounts payable and accrued expenses | 289 | (40) |
Other accrued liabilities | (150) | 0 |
Other liabilities | (39) | 66 |
Deferred revenues | 13 | (238) |
Net cash used in operating activities | (7,045) | (14,668) |
Cash Flows From Investing Activities: | ||
Lasers placed-in-service, net | (1,066) | 0 |
(Purchases) proceeds on sale of property and equipment | (17) | 17 |
Acquisition of a business, net of cash acquired of $0 | (42,500) | 0 |
Net cash (used in) provided by investing activities | (43,583) | 17 |
Cash Flows From Financing Activities: | ||
Proceeds from convertible debentures | 32,500 | 15,000 |
Proceeds from senior notes | 10,000 | 0 |
Payments on notes payable | (20) | 0 |
Registration costs | (134) | 0 |
Expenses related to financing | 0 | (1,123) |
Proceeds from private placement/public offerings | 0 | 11,458 |
Net cash provided by financing activities | 42,346 | 25,335 |
Effect of exchange rate changes on cash | 17 | 0 |
Net (decrease)/increase in cash and cash equivalents | (8,265) | 10,684 |
Cash and cash equivalents, beginning of period | 11,434 | 3,783 |
Cash and cash equivalents, end of period | 3,169 | 14,467 |
Supplemental information: | ||
Cash paid for interest | 402 | 0 |
Supplemental information of non-cash investing and financing activities | ||
Establishment of a warrant liability with a deemed dividend | 2,962 | 0 |
Conversion of senior secured convertible debentures into common stock | 4,593 | 0 |
Reclassification of property and equipment to inventory, net | 107 | 0 |
Reclassification of warrant liability to stockholders' equity | (5,399) | 0 |
Recognition of debt discount and beneficial conversion feature on long-term debt | 27,300 | 10,353 |
Exchange of series A convertible preferred stock for series B convertible preferred stock | $ 0 | $ 12,300 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Parenthetical) $ in Thousands | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Cash Flows From Investing Activities: | |
Cash acquired | $ 0 |
The Company
The Company | 9 Months Ended |
Sep. 30, 2015 | |
The Company [Abstract] | |
The Company | Note 1 The Company: Background MELA Sciences, Inc. (and its subsidiary) ("MELA" or "we" or the "Company") is a medical technology company dedicated to developing and commercializing innovative products for the diagnosis and treatment of serious dermatological disorders. In June 2015 the Company completed the acquisition of the XTRAC excimer laser and the VTRAC excimer lamp businesses from PhotoMedex, Inc. The XTRAC® and VTRAC® products are FDA cleared devices for the treatment of psoriasis, vitiligo and other skin disorders. The purchase price was $42,500 plus the assumption of certain business-related liabilities. Management believes that the cash flow generated by these businesses will be sufficient to finance the Company's operations for the foreseeable future. The XTRAC is an ultraviolet light excimer laser system utilized to treat psoriasis, vitiligo and other skin diseases. The XTRAC received FDA clearance in 2000 and has since become recognized treatment among dermatologists. The system delivers targeted 308um ultraviolet light to affected areas of skin, leading to psoriasis clearing and vitiligo repigmentation, following a series of treatments. As of September 30, 2015, there were 698 XTRAC systems placed in dermatologists' offices in the United States. The systems generate recurring revenue whereby the XTRAC system is placed in a physician's office and revenue is recognized on a per procedure basis. The XTRAC system's use for psoriasis is covered by nearly all major insurance companies, including Medicare. The VTRAC Excimer Lamp system, offered internationally, provides targeted therapeutic efficacy demonstrated by excimer technology with the simplicity of design and reliability of a lamp system. The financial results of the XTRAC and VTRAC businesses have been included in the results of operations subsequent to June 22, 2015, the date of the acquisition. The assets of the businesses purchased and liabilities assumed have been consolidated as of June 22, 2015. (See Note 2 Acquisition To finance the purchase of the XTRAC and VTRAC businesses, in June 2015 the Company entered into a securities purchase agreement with institutional investors (the "Purchasers") in connection with a private placement (the "2015 Financing"). The Company sold $10,000 aggregate principal amount of Notes bearing interest at 9% per year, with a maturity date of the earlier of 30 days after the Company obtains stockholder approval of stock issuances under the Debentures and the Warrants or November 30, 2015. The matter was approved by the stockholders' at the Company's annual meeting held September 30, 2015. Accordingly, the Notes mature 30 days from that approval, October 30, 2015. The Purchasers of the Notes were issued Warrants to purchase an aggregate of 3.0 million shares of the Company's common stock, having an exercise price of $0.75 per share. The Company also issued $32,500 aggregate principal amount of Senior Secured Convertible Debentures ("Debentures") that, subject to certain ownership limitations and stockholder approval conditions, will be convertible into 43,333,334 shares of common stock at an initial conversion price of $0.75 per share. The Debentures bear interest at the rate of 2.25% per year, and, unless previously converted, will mature on the five-year anniversary of the date of issuance. The Company's obligations under the Notes and Debentures (collectively, the "Debt Securities"), except for $500 of Debentures, are secured by a first priority lien on all of the assets, except for a second lien on the intellectual property. Under the terms of the Debentures and the Warrants, the issuances of shares of the common stock, including the Shares upon conversion of the Debentures and upon exercise of the Warrants, are subject to stockholder approval, which was received on September 30, 2015. Effective upon that date, the Company repriced outstanding Warrants held by certain investors to reduce the exercise price to $0.75 per share. Liquidity As of September 30, 2015, the Company had an accumulated deficit of $206,647 and has incurred losses since inception. To date, the Company has dedicated most of its financial resources to research and development, sales and marketing, and general and administrative expenses. The Company has experienced recurring losses and negative cash flow from operations. The Company has been dependent on raising capital from the sale of securities in order to continue to operate and to meet its obligations in the ordinary course of business. The Company plans to refinance the Notes that became due October 30, 2015 with longer term debt, the terms and availability of which the Company cannot determine at this time. The Company is currently evaluation alternatives, including discussions with lenders, to refinance this debt. The timing and availability of any such refinancing cannot be assured and will be affected by numerous factors, many of which are not under our control. There can be no assurance that we will be able to raise additional funding as may be needed or on terms that are acceptable to the Company. These factors raise substantial doubt about the Company's ability to continue as a going concern. The Company has not made any adjustments to its condensed consolidated financial statements with respect to this uncertainty. Basis of Presentation Accounting Principles The accompanying condensed consolidated financial statements and related notes should be read in conjunction with the financial statements and related notes contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014 ("fiscal 2014"). The unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC") related to interim financial statements. As permitted under those rules, certain information and footnote disclosures normally required or included in financial statements prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") have been condensed or omitted. The financial information contained herein is unaudited; however, management believes all adjustments have been made that are considered necessary to present fairly the results of the Company's financial position and operating results for the interim periods. All such adjustments are of a normal recurring nature. The results for the three and nine months ended September 30, 2015 are not necessarily indicative of the results to be expected for the year ending December 31, 2015 or for any other interim period or for any future period. Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation. Reclassification Certain reclassifications from the prior year presentation have been made to conform to the current year presentation. These reclassifications did not have material impact on the Company's equity, net assets, results of operations or cash flows. Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the US requires management to make estimates and assumptions that affect amounts reported of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates and be based on events different from those assumptions. As of September 30, 2015, the more significant estimates include (1) revenue recognition, including deferred revenues and valuation allowances of accounts receivable, (2) valuation of intangible assets, (3) warrant liabilities, (4) stock-based compensation and (5) the valuation allowance related to deferred tax assets. Revenue Recognition The Company recognizes revenues from product sales when the following four criteria have been met: (i) the product has been delivered and the Company has no significant remaining obligations; (ii) persuasive evidence of an arrangement exists; (iii) the price to the buyer is fixed or determinable; and (iv) collection is reasonably assured. Revenues from product sales are recorded net of provisions for expected returns and cash discounts. The Company ships most of its products FOB shipping point, although from time to time certain customers, for example governmental customers, will be granted FOB destination terms. Among the factors the Company takes into account when determining the proper time at which to recognize revenue are (i) when title to the goods transfers and (ii) when the risk of loss transfers. Shipments to distributors or physicians that do not fully satisfy the collection criteria are recognized when invoiced amounts are fully paid or fully assured and included in deferred revenues until that time. For revenue arrangements with multiple deliverables within a single, contractually binding arrangement (usually sales of products with separately priced extended warranty), each element of the contract is accounted for as a separate unit of accounting when it provides the customer value on a stand-alone basis and there is objective evidence of the fair value of the related unit. The Company has two distribution channels for its phototherapy treatment equipment. The Company either (i) places its lasers in a physician's office (at no charge to the physician), and generally charges the physician a fee for an agreed upon number of treatments or (ii) sells its lasers through a distributor or directly to a physician. In some cases, the Company and the customer stipulate to a quarterly or other periodic target of procedures to be performed, and accordingly revenue is recognized ratably over the period. When the Company places a laser in a physician's office, it generally recognizes revenue based on the number of patient treatments performed, or purchased under a periodic commitment, by the physician. Amounts collected with respect to treatments to be performed through laser-access codes that are sold to physicians free of a periodic commitment, but not yet used, are deferred and recognized as a liability until the physician performs the treatment. Unused treatments remain an obligation of the Company because the treatments can only be performed on Company-owned equipment. Once the treatments are performed, this obligation has been satisfied. The Company defers substantially all revenue from sales of treatment codes ordered by its customers within the last two weeks of the period in determining the amount of procedures performed by its physician-customers. Management believes this approach closely approximates the actual amount of unused treatments that existed at the end of a period. Deferred revenue includes amounts received with respect to extended warranty maintenance, repairs and other billable services and amounts not yet recognized as revenues. Revenues with respect to such activities are deferred and recognized on a straight-line basis over the duration of the warranty period, the service period or when service is provided, as applicable to each service. Inventories Inventories are stated at the lower of cost or market. Cost is determined to be purchased cost for raw materials and the production cost (materials, labor and indirect manufacturing cost, including sub-contracted work components) for work-in-process and finished goods. For the Company's products, cost is determined on the first-in, first-out method. Throughout the laser manufacturing process, the related production costs are recorded within inventory. Work-in-process is immaterial, given the typically short manufacturing cycle, and therefore is disclosed in conjunction with raw materials. The Company's equipment for the treatment of skin disorders (e.g. the XTRAC) will either (i) be placed in a physician's office and remain the property of the Company (at which date such equipment is transferred to property and equipment) or (ii) be sold to distributors or physicians directly. The cost to build a laser, whether for sale or for placement, is accumulated in inventory. Reserves for slow moving and obsolete inventories are provided based on historical experience and product demand. Management evaluates the adequacy of these reserves periodically based on forecasted sales and market trends. As of September 30, 2015 reserves on inventory were $0. During the nine months ended September 30, 2015, the Company recorded a write-down of $4,818 towards the remaining inventory value of the MelaFind® systems, raw materials and components. Property, Equipment and Depreciation Property and equipment are recorded at cost, net of accumulated depreciation. Excimer lasers-in-service are depreciated on a straight-line basis over the estimated useful life of five years. For other property and equipment, depreciation is calculated on a straight-line basis over the estimated useful lives of the assets, primarily three to seven years for computer hardware and software, furniture and fixtures, and machinery and equipment. Leasehold improvements are amortized over the lesser of the useful lives or lease terms. Expenditures for major renewals and betterments to property and equipment are capitalized, while expenditures for maintenance and repairs are charged as an expense as incurred. Upon retirement or disposition, the applicable property amounts are deducted from the accounts and any gain or loss is recorded in the condensed consolidated statements of comprehensive loss. Useful lives are determined based upon an estimate of either physical or economic obsolescence or both. Management evaluates the realizability of property and equipment based on estimates of undiscounted future cash flows over the remaining useful life of the asset. If the amount of such estimated undiscounted future cash flows is less than the net book value of the asset, the asset is written down to fair value. For the nine months ended September 30, 2015, the Company recorded a write-down of $920 on the remaining net book value of the MELAFind systems that were part of property and equipment (see Impairment of Long-Lived Assets and Intangibles Patent Costs and Licensed Technologies Costs incurred to obtain or defend patents and licensed technologies are capitalized and amortized over the shorter of the remaining estimated useful lives or eight to 12 years. Core technology and product technology were recorded in connection with the asset purchase on June 22, 2015 and are being amortized on a straight-line basis over ten years for core technology and five years for product technology. (See Note 5 Patent and Licensed Technologies Management evaluates the recoverability of intangible assets based on estimates of undiscounted future cash flows over the remaining useful life of the asset. If the amount of such estimated undiscounted future cash flows is less than the net book value of the asset, the asset is written down to fair value. As of September 30, 2015, no such write-down was required. (See Impairment of Long-Lived Assets and Intangibles Other Intangible Assets Other intangible assets were recorded in connection with the asset purchase on June 22, 2015. The assets that were determined to have definite useful lives are being amortized on a straight-line basis over ten years. Such assets primarily include customer relationships and trademarks. (See Note 7 Other Intangible Assets) Management evaluates the recoverability of such other intangible assets based on estimates of undiscounted future cash flows over the remaining useful life of the asset. If the amount of such estimated undiscounted future cash flows is less than the net book value of the asset, the asset is written down to fair value. As of September 30, 2015 no such write-down was required. (See Impairment of Long-Lived Assets and Intangibles Accounting for the Impairment of Goodwill Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. . When evaluating goodwill for impairment, we may first perform an assessment qualitatively whether it is more likely than not that a reporting unit's carrying amount exceeds its fair value, referred to as a "step zero" approach. If, based on the review of the qualitative factors, we determine it is not more likely than not that the fair value of a reporting unit is less than its carrying value, we would bypass the two-step impairment test. If we conclude that it is more likely than not that a reporting unit's fair value is less than its carrying amount, we would perform the first step ("step one") of the two-step impairment test. Ste Long-lived assets, such as property and equipment, and definite-lived intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the undiscounted cash flows attributable to the asset. If the carrying amount of an asset exceeds its undiscounted cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds its fair value of the asset. During the nine months ended September 30, 2015 the Company recorded a write-down of $920 on the remaining net book value of the MelaFind systems that were part of property and equipment. Assets to be disposed of are separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as discontinued operations are presented separately in the appropriate asset and liability sections of the balance sheet. The currency of the primary economic environment in which the operations of the Company are conducted is the US dollar ("$" or "dollars"). he operations of its foreign subsidiary, which is conducted in its local currency the Indian Rupee (INR). Substantially all of the Company's revenues are derived in dollars or in other currencies linked to the dollar. Purchases of most materials and components are carried out in, or linked to the dollar. Balances denominated in, or linked to, foreign currencies are stated on the basis of the exchange rates prevailing at the balance sheet date. For foreign currency transactions included in the statement of comprehensive income (loss), the exchange rates applicable to the relevant transaction dates are used. Transaction gains or losses arising from changes in the exchange rates used in the translation of such balances are carried to financing income or expenses. Assets and liabilities of the foreign subsidiary, whose functional currency is its local currency, are translated from its functional currency to U.S. dollars at the balance sheet date exchange rate. Income and expense items are translated at the average rate of exchange prevailing during the year. Translation adjustments are reflected in the consolidated balance sheets as a component of accumulated other comprehensive income (loss). Fair Value Measurements The Company measures and discloses fair value in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification 820, Fair Value Measurements and Disclosures • Level 1 – unadjusted quoted prices are available in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date. • Level 2 – pricing inputs are other than quoted prices in active markets that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. • Level 3 – pricing inputs are unobservable for the non-financial asset or liability and only used when there is little, if any, market activity for the non-financial asset or liability at the measurement date. The inputs into the determination of fair value require significant management judgment or estimation. Fair value is determined using comparable market transactions and other valuation methodologies, adjusted as appropriate for liquidity, credit, market and/or other risk factors This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. The Company's recurring fair value measurements at September 30, 2015 and December 31, 2014 are as follows: Fair Value as of September 30, 2015 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Liabilities: Warrant liability (Note 11) $ 9,535 $ - $ - $ 9,535 Fair Value as of December 31, 2014 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Liabilities: Warrant liability (Note 11) $ 499 $ - $ - $ 499 The fair value of cash and cash equivalents and short term bank deposits are based on their respective demand value, which are equal to the carrying value. The fair value of derivative warrant liabilities is estimated using option pricing models that are based on the individual characteristics of the Company's warrants, preferred and common stock, the derivative warrant liability on the valuation date as well as assumptions for volatility, remaining expected life, risk-free interest rate and, in some cases, credit spread. The derivative warrant liabilities are the only recurring Level 3 fair value measures. The carrying value of all other short-term monetary assets and liabilities is estimated to be approximate to their fair value due to the short-term nature of these instruments. The fair value of the senior secured convertible debentures approximates its carrying value at September 30, 2015 due to the recent issuances of these instruments. Several of the warrants have non-standard terms as they relate to a fundamental transaction and require a net-cash settlement upon change in control of the Company and other warrants contain full ratchet provisions that reduce the exercise price of the warrants in the event of a transaction resulting in the issuance of equity below the current price of the warrants. Therefore these warrants are classified as derivatives. These warrants have been recorded at their fair value using a binomial option pricing model and will be recorded at their respective fair value at each subsequent balance sheet date. See Note 11, Warrants In addition to items that are measured at fair value on a recurring basis, there are also assets and liabilities that are measured at fair value on a nonrecurring basis. Assets and liabilities that are measured at fair value on a nonrecurring basis include certain long-lived assets, including goodwill. As such, the Company has determined that each of these fair value measurements reside within Level 3 of the fair value hierarchy. Accrued Warranty Costs The Company offers a standard warranty on product sales generally for a one to two-year period, however, the Company has offered longer warranty periods, ranging from three to four years, in order to meet competition or meet customer demands. The Company provides for the estimated cost of the future warranty claims on the date the product is sold. Total accrued warranty is included in Other Accrued Liabilities Other liabilities September 30, 2015 (unaudited) Accrual at beginning of year $ 48 Acquired in asset purchase 265 Additions charged to warranty expense 62 Expiring warranties/claimed satisfied (110 ) Total 265 Less: current portion (177 ) $ 88 Earnings Per Share Basic net loss per common share excludes dilution for potentially dilutive securities and is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share gives effect to dilutive options, warrants and other potential common shares outstanding during the period. Diluted net loss per common share is equal to the basic net loss per common share since all potentially dilutive securities are anti-dilutive for each of the periods presented. The loss on the change in fair value of the warrant liability was considered in the diluted earnings per share calculation and was deemed to be antidilutive for all periods presented. Potential common stock equivalents outstanding as of September 30, 2015 and 2014 consist of common stock equivalents of common stock purchase warrants, senior secured convertible debentures, convertible preferred stock and common stock options, which are summarized as follows: September 30, 2015 2014 Common stock equivalents of convertible debentures 46,521,127 5,847,955 Common stock purchase warrants 16,078,920 13,078,920 Common stock equivalents of convertible preferred stock 2,535,866 4,795,321 Common stock options 2,302,802 320,349 Total 67,438,715 24,042,545 Adoption of New Accounting Standards In April 2014, the Financial Accounting Standards Board ( " " The amendments in ASU 2014-08 change the criteria for reporting discontinued operations while enhancing disclosures in this area. Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. Those strategic shifts should have a major effect on the organization's operations and financial results. In addition, the new guidance requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. The provisions of ASU 2014-08 were required to be applied in a prospective manner to disposals or classifications as held for sale components of an entity that occur with annual periods beginning on or after December 15, 2014 and interim periods within those years. The adoption of ASU 2014-08 did not have a material impact on the Company's consolidated results of operations and financial condition. Recently Issued Accounting Standards In September 2015, the FASB issued ASU No. 2015-16, " Business Combinations (Topic 805): Simplifying the Accounting for Measurement - Period Adjustments. In July, 2015, The FASB issued Accounting Standards Update No. 2015-11 , Simplifying the Measurement of Inventory (Topic 330) ASU 2015-11 outlines that inventory within the scope of its guidance be measured at the lower of cost and net realizable value. Inventory measured using last-in, first-out (LIFO) are not impacted by the new guidance. Prior to the issuance of ASU 2015-11, inventory was measured at the lower of cost or market (where market was defined as replacement cost, with a ceiling of net realizable value and floor of net realizable value less a normal profit margin). For a public entity, the amendments in ASU 2015-11 are effective, in a prospective manner, for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period (the first quarter of fiscal year 2017 for the Company). Early adoption is permitted as of the beginning of an interim or annual reporting period. The Company is in the process of assessing the impact, if any, of ASU 2015-11 on its consolidated financial statements. In May 2014, The FASB issued Accounting Standards Update No. 2014-09 , Revenue from Contracts with Customers (Topic 606) ASU 2014-09 outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers and supersedes mos current revenue recognition guidance, including industry-specific guidance. ASU 2014-09 also requires entities to disclose sufficient information, both quantitative and qualitative, to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. An entity should apply the amendments in this ASU using one of the following two methods: 1. Retrospectively to each prior reporting period presented with a possibility to elect certain practical expedients, or, 2. Retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. If an entity elects the latter transition method, it also should provide certain additional disclosures. For a public entity, the amendments in ASU 2014-09 were to be effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. In July 2015, the FASB voted for a one year deferral of the effective date of ASU 2014-09 and issued an exposure draft. The new guidance will be effective for annual and interim periods beginning on or after December 15, 2017. Early application is not permitted. The Company is currently assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements and footnote disclosures. In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-03, " Simplifying the Presentation of Debt Issuance Costs (Subtopic 835-30) |
Acquisition
Acquisition | 9 Months Ended |
Sep. 30, 2015 | |
Acquisition [Abstract] | |
Acquisition | Note 2 Acquisition: On June 22, 2015, the Company entered into an asset purchase agreement (the "Asset Purchase Agreement") with PhotoMedex Inc. and PhotoMedex Technology, Inc. pursuant to which the Company has purchased the XTRAC and VTRAC laser businesses from PhotoMedex, Inc. (the "Asset Purchase") for $42,528 in cash and assumed certain business-related liabilities. The purchased assets include all of the accounts receivable, inventory and fixed and intangible assets of the business. The fair value of the assets acquired and liabilities assumed were based on management estimates and values with the assistance of an outside independent appraisal. The significant intangible assets to be recognized in the valuation are core and product technologies, tradenames and customer relationships. The estimated useful lives over which these assets will be amortized, utilizing the straight line method, are five years for product technologies and ten years for core technologies, tradenames and customer relationships. The following allocation of the aggregate fair value is preliminary and subject to adjustment based on the fair value of the assets acquired and the liabilities assumed. Current assets $ 7,233 Property, plant and equipment 14,340 Identifiable intangible assets 16,100 Other assets 45 Total assets assumed 37,718 Current liabilities (3,945 ) Note payable (57 ) Other long term liabilities (116 ) Total liabilities assumed (4,118 ) Net assets acquired $ 33,600 The purchase price exceeded the fair value of the net assets acquired by $8,928, which was recorded as goodwill. The consolidated results of operations do not include any revenues or expenses related to XTRAC and VTRAC businesses on or prior to June 22, 2015, the date of the asset purchase. The Company's unaudited pro-forma results for the three and nine months ended September 30, 2015 and 2014 summarize the combined results in the following table, assuming the asset purchase had occurred on January 1, 2014 and after giving effect to the acquisition adjustments, including amortization of the tangible and long-lived intangible assets acquired in the transaction: Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 (unaudited) (unaudited) (unaudited) (unaudited) Net revenues $ 8,323 $ 7,816 $ 23,684 $ 21,378 Net loss attributable to common shareholders $ (12,186 ) $ (3,715 ) $ (33,662 ) $ (20,410 ) Net loss per basic and diluted share: $ (1.29 ) $ (0.71 ) $ (4.21 ) $ (4.00 ) Shares used in calculating net loss per basic and diluted share: 9,442,022 5,216,290 7,994,012 5,108,418 These unaudited pro-forma results have been prepared for comparative purposes only and do not purport to be indicative of the results of operations which would have actually resulted had the acquisition occurred on January 1, 2014, nor to be indicative of future results of operations. |
Inventories, net
Inventories, net | 9 Months Ended |
Sep. 30, 2015 | |
Inventories, net [Abstract] | |
Inventories, net | Note 3 Inventories, net: September 30 , December 31, 2014 (unaudited) Raw materials and work in progress $ 3,329 $ 2,553 Finished goods 586 4,131 Total inventories 3,915 6,684 Reserve for obsolete inventory - (870 ) Reserve for inventory repairs - (539 ) $ 3,915 $ 5,275 Work-in-process is immaterial, given the Company's typically short manufacturing cycle, and therefore is disclosed in conjunction with raw materials. During the nine months ended September 30, 2015 the Company initiated plans to develop an updated version of the MelaFind system and, accordingly, determined that a majority of its existing inventory of MelaFind systems and related parts exceeded its requirements. As a result, the Company wrote-off the excess and obsolete MelaFind inventories of $5,688, including $870 previously reserved . |
Property and Equipment, net
Property and Equipment, net | 9 Months Ended |
Sep. 30, 2015 | |
Property and Equipment, net [Abstract] | |
Property and Equipment, net | Note 4 Property and Equipment, net: September 30, 2015 December 31, 2014 (unaudited) Lasers placed-in-service $ 15,154 $ - MELAFind systems 2,019 3,193 Equipment, computer hardware and software 1,244 1,084 Furniture and fixtures 2,054 1,969 Leasehold improvements 913 906 21,384 7,152 Accumulated depreciation and amortization (6,923 ) (5,191 ) Property and equipment, net $ 14,461 $ 1 , Depreciation and related amortization expense was $1,253 and $489 for the three months ended September 30, 2015 and 2014, respectively. Depreciation and related amortization expense was $1,891 and $1,367 for the nine months ended September 30, 2015 and 2014, respectively. During the second quarter of 2015, the Company evaluated the future cash flows of the MelaFind devices with remaining net book value, determined there was an impairment and recorded an impairment charge of $920. |
Patents and Licensed Technologi
Patents and Licensed Technologies, net | 9 Months Ended |
Sep. 30, 2015 | |
Patents and Licensed Technologies, Net [Abstract] | |
Patents and Licensed Technologies, net | Note 5 Patents and Licensed Technologies, net: September 30, 2015 December 31, 2014 (unaudited) Core technology $ 5,974 $ 274 Product technology 2,000 - 7,974 274 Accumulated amortization (484 ) (237 ) Patents and licensed technologies, net $ 7,490 $ 37 Related amortization expense was $244 and $1 for each of the three month ended September 30, 2015 and 2014. Related amortization expense was $247 and $4 for each of the nine months ended September 30, 2015 and 2014. The Core technology of $5,700 and Product technology of $2,000 are the core and product technologies acquired in the asset purchase of the XTRAC and VTRAC businesses and were recorded at their preliminary appraised fair market values at that date. Amortization of these intangibles is on a straight-line basis over 5 years for Product technology and 10 years for Core technology. Estimated amortization expense for amortizable patents and licensed technologies assets for the future periods is as follows: Last three months of 2015 $ 238 2016 995 2017 995 2018 995 2019 995 Thereafter 3,272 Total $ 7,490 |
Goodwill
Goodwill | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill Disclosure [Abstract] | |
Goodwill | Note 6 Goodwill: Goodwill reflects the value or premium of the acquisition price in excess of the fair values assigned to specific tangible and intangible assets. Goodwill has an indefinite useful life and therefore is not amortized as an expense, but is reviewed annually for impairment of its fair value to the Company. Goodwill was recorded on the asset purchase of the XTRAC and VTRAC businesses as the purchase price exceeded the net assets of the business. (See Note Acquisition Balance at January 1, 2015 $ - Additions for the asset purchase 8,928 Balance at September 30, 2015 $ 8,928 The Company has no accumulated impairment losses of goodwill related to its continuing operations as of September 30, 2015. |
Other Intangible Assets
Other Intangible Assets | 9 Months Ended |
Sep. 30, 2015 | |
Other Intangible Assets [Abstract] | |
Other Intangible Assets | Note 7 Other Intangible Assets: Set forth below is a detailed listing of other definite-lived intangible assets: September 30, 2015 (unaudited) Customer relationships $ 6,900 Tradenames 1,500 8,400 Accumulated amortization (210 ) Other intangible assets, net $ 8,190 Related amortization expense was $210 for the three and nine months ended September 30, 2015. There was no related amortization expense for the period ended September 30, 2014. Customer Relationships embody the value to the Company of relationships that PhotoMedex, for the XTRAC products, had formed with its customers. Trademarks include the tradenames and various trademarks associated with the products (e.g. "XTRAC" and "VTRAC"). Amortization of these intangibles is on a straight-line basis over 10 years for each of the Customer relationships and Tradenames. Estimated amortization expense for the above amortizable intangible assets for the future periods is as follows: Last three months of 2015 $ 210 2016 840 2017 840 2018 840 2019 840 Thereafter 4,620 Total $ 8,190 |
Other Accrued Liabilities
Other Accrued Liabilities | 9 Months Ended |
Sep. 30, 2015 | |
Other Accrued Liabilities [Abstract] | |
Other Accrued Liabilities | Note 8 Other Accrued Liabilities: September 30, 2015 December 31, 2014 (unaudited) Accrued warranty, current, see Note 1 $ 177 $ 48 Accrued compensation, including commissions and vacation 965 55 Other accrued liabilities 778 856 Total other accrued liabilities $ 1,920 $ 959 |
Senior Notes Payable
Senior Notes Payable | 9 Months Ended |
Sep. 30, 2015 | |
Senior Notes Payable [Abstract] | |
Senior Notes Payable | Note 9 Senior Notes Payable: In the following table is a summary of the Company's notes payable: September 30, 2015 (unaudited) Senior-secured notes payable, net of unamortized debt discount of $1,152 $ 8,848 Senior Notes Payable On June 22, 2015, the Company entered into a Securities Purchase Agreement (the "Securities Purchase Agreement") and related financing documents with entities affiliated with existing institutional investors in the Company providing for the issuance of $42,500 aggregate principal amount (the "Financing") of senior secured notes (the "Notes"), senior secured convertible debentures, except for $500 of Debentures, (the "June 2015 debentures") and warrants (the "June 2015 Warrants") to purchase 3,000,000 shares of common stock at an exercise price of $0.75 per share. The Company sold $10,000 aggregate principal amount of Notes bearing interest at 9% per year with a maturity date of the earlier of 30 days after the Company obtains stockholder approval of stock issuances under the Debentures and the Warrants or November 30, 2015. The June 2015 Debentures are discussed further in Note Convertible Debentures Under the terms of the June 2015 Warrants, the issuances of shares of the common stock upon exercise of the Warrants were subject to stockholder approval of such issuances and an amendment to the Company's certificate of incorporation to increase the Company's authorized shares of common stock . Accordingly, the Notes mature 30 days from that approval, October 30, 2015. The Notes are still outstanding, and while the Company is not in default with the terms of the notes, the notes are now on demand notes with an interest rate of 12% per year. The Company is currently evaluating alternatives, including discussions with lenders to refinance this debt. The June 2015 Warrants contain anti-dilution provisions that allow for downward exercise price adjustments in certain situations. The Company computed the value of the warrants using the binomial method. The key assumptions used to value the warrants are as follows: June 22, 2015 September 30, 2015 Number of shares underlying warrants 3,000,000 3,000,000 Exercise price $0.75 $0.75 Share price $1.38 $1.14 Fair value of warrants $2,959 $2,561 Probability of stockholder approval 80.0% 100.0% Volatility 90.0% 90.0% Risk-free interest rate 1.62% 1.30% Expected dividend yield 0% 0% Expected warrant life 5 years 4.73 years |
Convertible Debentures
Convertible Debentures | 9 Months Ended |
Sep. 30, 2015 | |
Convertible Debentures [Abstract] | |
Convertible Debentures | Note 10 Convertible Debentures: In the following table is a summary of the Company's convertible debentures. September 30, 2015 December 31, 2014 (unaudited) Senior secured 2.25% convertible debentures, net of unamortized debt discount of $25,798 $ 6,701 $ - Senior secured 4% convertible debentures, net of unamortized debt discount of $4,146 and $8,410, respectively 4,672 5,001 Total convertible debt $ 11,373 $ 5,001 The Company issued $32,500 aggregate principal amount of Debentures (June 2015 Debentures) that, subject to certain ownership limitations and stockholder approval conditions, will be convertible into 43,333,334 shares of Company common stock at an initial conversion price of $0.75 per share. The Debentures bear interest at the rate of 2.25% per year, and, unless previously converted, will mature on the five-year anniversary of the date of issuance, June 22, 2020. Under the terms of the Debentures and the June 2015 Warrants (noted above), the issuances of shares of the common stock upon conversion of the Debentures and upon exercise of the Warrants were subject to stockholder approval of such issuances and an amendment to the Company's certificate of incorporation to increase the Company's authorized shares of common stock. The Company received stockholder approval for these proposals, at the annual stockholders meeting held September 30, 2015. The June 2015 Debentures include a beneficial conversion feature of $27,300 that was recorded as a discount to the debenture. On the date of issuance the beneficial conversion feature value was calculated as the difference resulting from subtracting the conversion price of $0.75 from $1.38, the opening market value of the Company's common stock following the announcement of the transaction, multiplied by the number of common shares into which the June 2015 Debentures are convertible. On July 21, 2014, the Company entered into a definitive Securities Purchase Agreement (the "Purchase Agreement") with institutional investors (the "Investors") providing for the issuance of Senior Secured Convertible Debentures in the aggregate principal amount of $15,000, due, subject to the terms therein, in July 2019 (the "July 2014 Debentures"), and warrants (the "July 2014 Series A Warrants") to purchase up to an aggregate of 6,198,832 shares of common stock, $0.001 par value per share, at an exercise price of $2.45 per share expiring in July 2019. The Debentures bear interest at an annual rate of 4%, payable quarterly or upon conversion into shares of common stock. The Debentures are convertible at any time into an aggregate of 5,847,955 shares of common stock at an initial conversion price of $2.565 per share. The Company's obligations under the Debentures are secured by a first priority lien on all of the Company's intellectual property pursuant to the terms of a security agreement ("Security Agreement") dated July 21, 2014 among the Company and the Investors. In connection with the Purchase Agreement, the Company entered into a Registration Rights Agreement with the Investors pursuant to which the Company was obligated to file a registration statement to register for resale the shares of Common Stock issuable upon conversion of the Series B Preferred Stock (See Note 11 For financial reporting purposes, the $15,000 funded by the Investors on July 21, 2014 was allocated first to the fair value of the obligation to issue the Warrants, amounting to $5,296, then to the intrinsic value of the beneficial conversion feature on the Debentures of $4,565. The balance was further reduced by the fair value of warrants issued to the placement agent for services rendered of $491, resulting in an initial carrying value of the Debentures of $4,647. The initial debt discount on the Debentures totaled $10,353 and is being amortized using the effective interest method over the five year life of the Debentures. |
Warrants
Warrants | 9 Months Ended |
Sep. 30, 2015 | |
Warrants [Abstract] | |
Warrants | Note 11 Warrants: The Company accounts for warrants that have provisions that protect holders from a decline in the issue price of its common stock (or "down-round" provisions) as liabilities instead of equity. Down-round provisions reduce the exercise or conversion price of a warrant or convertible instrument if a company either issues equity shares for a price that is lower than the exercise or conversion price of those instruments or issues new warrants or convertible instruments that have a lower exercise or conversion price. Net settlement provisions allow the holder of the warrant to surrender shares underlying the warrant equal to the exercise price as payment of its exercise price, instead of physically exercising the warrant by paying cash. The Company evaluated whether warrants to acquire its common stock contain provisions that protect holders from declines in the stock price or otherwise could result in modification of the exercise price and/or shares to be issued under the respective warrant agreements based on a variable that is not an input to the fair value of a "fixed-for-fixed" option. In connection with the Senior secured notes (see Note 9 As approved by the stockholders on September 30, 2015, the Company modified the terms of warrants held by the investors that participated in the June 2015 Debentures in excess of $5 million, which included reducing the exercise price of such warrants to $0.75 and adding down-round price protection provisions. These warrants had previously been classified and recorded in stockholders' equity. As a result of the modification these warrants now meet the definition of a derivative. The fair value of these warrants as of September 30, 2015 was $5,399 and have been reclassified to a warrant liability. As a result of the modification, the Company recorded a deemed dividend related to these warrants of $2,962, which was determined as the difference between the fair value of these warrants immediately before the modification and immediately after. The Company used the binomial method to value the warrants. (See assumptions used in the table below.) The following is a listing of the warrants modified: Issue date # of warrants Original Exercise Price New Exercise Price 7/24/14 Series A 4,288,500 $ 2.45 $ 0.75 7/24/14 Series B 4,795,321 $ 2.45 $ 0.75 The Company recognizes such warrants as liabilities at the fair value on each reporting date. The Company measured the fair value of these warrants as of September 30, 2015, and recorded other expense of $1,329 resulting from the increase of the liability associated with the fair value of the warrants for the three month period and recorded other expense of $679 resulting from the increase of the liability associated with the fair value of the warrants for the nine months ended September 30, 2015, respectively. The Company measured the fair value of these warrants as of September 30, 2014, and recorded other income of $2,108 resulting from the decrease of the liability associated with the fair value of the warrants for the three month period and recorded other income of $7,151 resulting from the decrease of the liability associated with the fair value of the warrants for the nine months ended September 30, 2014, respectively. The Company computed the value of the warrants using the binomial method. A summary of quantitative information with respect to the valuation methodology and significant unobservable inputs used for the Company's warrant liabilities that are categorized within Level 3 of the fair value hierarchy as of September 30, 2015 and December 31, 2014 is as follows: September 30, 2015 June 22, 2015 December 31, 2014 (unaudited) (unaudited) Stock price $ 1.14 $ 1.38 $ 1.20 Volatility 90.00% 90.00% 72.90 – 88.10% Risk-free interest rate 0.02% - 1.30% 1.62% 1.65% Expected dividend yield 0% 0% 0% Expected warrant life 0.32 – 4.73 years 5 years 4.10 – 4.33 years Recurring Level 3 Activity and Reconciliation The table below provides a reconciliation of the beginning and ending balances for the liability measured at fair value using significant unobservable inputs (Level 3). The table reflects gains and losses for the nine months for all financial liabilities categorized as Level 3 as of September 30, 2015. Fair Value Measurements Using Significant Unobservable Inputs (Level 3): Issuance Date January 1, 2015 Initial Measurements Increase (Decrease) in Fair Value Reclassed from Equity September 30, 2015 10/31/2013 $ 233 $ - $ 309 $ - $ 542 2/5/2014 266 - 767 - 1,033 7/24/2014 Series A - - - 3,452 3,452 7/24/2014 Series B - - - 1,947 1,947 6/22/2015 - 2,958 (397 ) - 2,561 Total $ 499 $ 2,958 $ 679 $ 5,399 $ 9,535 |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2015 | |
Stockholders' Equity [Abstract] | |
Stockholders' Equity | Note 12 Stockholders' Equity: Preferred Stock The Company is authorized to issue 10,000,000 shares of preferred stock with a par value of $0.10 per share with such designation, rights and preferences as may be determined from time to time by the Company's Board of Directors. There were 6,505 shares and 11,787 shares of Series B convertible preferred stock issued and outstanding on September 30, 2015 and December 31, 2014, respectively. On February 5, 2014, pursuant to a securities purchase agreement, dated as of January 31, 2014, the Company sold an aggregate of 12,300 shares of Series A convertible preferred stock, par value $0.10 and a stated value of $1,000 per share convertible into 1,464,287 shares of common stock at an initial conversion price of $8.40, and warrants to purchase up to 1,329,731 shares of common stock for net proceeds of $11,458. The warrants have an exercise price of $7.40 per share, are immediately exercisable and have a term of five years. These warrants have non-standard terms as they relate to a fundamental transaction and require a net-cash settlement upon a change in control of the Company and therefore are classified as a derivative liability and recorded at fair value on the inception date of February 5, 2014. They will be recorded at their respective fair value at each subsequent balance sheet date. In connection with this financing, the Company also granted resale registration rights with respect to the shares of common stock underlying the Series A preferred stock and the warrants pursuant to the terms of a Registration Rights Agreement. The purchasers were entitled to receive liquidated damages upon the occurrence of a number of events relating to filing, effectiveness and maintaining an effective registration statement covering the shares underlying the Series A Preferred Stock and the warrants. The Company was unable to meet certain filing and effectiveness requirements and as a result paid liquidated damages to the Purchasers in the aggregate amount of $3,420 during the nine months ended September 30, 2014. Under the terms of the Registration Rights Agreement, the Company filed a registration statement on March 18, 2014, which was declared effective by the SEC on April 3, 2014. On July 24, 2014, in connection with the July 2014 Debentures (see Note 10, Convertible Debentures The $12,300 preferred stock value was allocated first to the fair value of the July 2014 Series B warrants, which totaled $2,487, then to the intrinsic value of the beneficial conversion feature of $1,887. The amount of the beneficial conversion feature was considered to be a deemed dividend on the date of issuance to the Series B preferred stockholders. Pursuant to the terms of the Purchase Agreement, the Series A convertible preferred stock was redeemed from the proceeds of the Series B convertible preferred stock. In September 2014, the Company amended the registration statement related to the Series A preferred stock to deregister those shares that would have been issuable upon conversion of the Series A preferred stock had it not already been redeemed by the proceeds of the Series B preferred stock. During nine months ending September 30, 2015, 5,282.5 shares of Series B preferred stock were converted into 2,059,455 shares of common stock. Common Stock and Warrants The Company is authorized to issue 150,000,000 shares of common stock with a par value of $0.001 per share. There were 9,887,358 and 6,037,232 issued and outstanding at September 30, 2015 and December 31, 2014, respectively. On October 29, 2013, the Company entered into a securities purchase agreement with certain accredited investors in connection with a $6,000,000 registered offering of 422,819 shares of the Company's common stock, fully paid prefunded warrants (the "October 2013 Series B Warrants") to purchase up to 434,325 shares of its common stock and additional warrants ("October 2013 Series A Warrants") to purchase up to 685,715 shares of its common stock. The October 2013 Series A Warrants are exercisable beginning on May 1, 2014 at a price of $8.50 per share and expire on May 1, 2019. The October 2013 Series B Warrants were exercisable immediately for no additional consideration. The offering closed on October 31, 2013. The holders exercised all of the October 2013 Series B Warrants in March 2014. The October 2013 Series A Warrants have non-standard terms as they relate to a fundamental transaction and require a net-cash settlement upon a change in control of the Company and therefore are classified as a derivative. Therefore, these warrants have been recorded at fair value at the inception date of October 31, 2013, and will be recorded at their respective fair values at each subsequent balance sheet date. Issue Date Expiration Date Total Warrants Exercise Price 4/26/2013 4/26/2018 69,321 $ 11.18 10/31/2013 4/30/2019 685,715 $ 0.75 2/5/2014 2/5/2019 1,329,731 $ 0.75 7/24/2014 7/24/2019 6,198,832 $ 0.75 - $ 2.45 7/24/2014 1/24/2016 4,795,321 $ 0.75 6/22/2015 6/22/2020 3,000,000 $ 0.75 16,078,920 |
Stock-based compensation
Stock-based compensation | 9 Months Ended |
Sep. 30, 2015 | |
Stock-based compensation [Abstract] | |
Stock-based compensation | Note 13 Stock-based compensation: Stock awards under the Company's stock option plans have been granted with exercise prices that are no less than the market value of the stock on the date of the grant. Options granted under the plans are generally time-based or performance-based options and vesting varies accordingly. Options under the plans expire up to a maximum of ten years from the date of grant. Stock-based compensation to non-employee consultants, accounted for pursuant to FASB ASC 505-50-5, Equity, Equity Based Payments to Non-Employees, The fair value of each option award granted during the period is estimated on the date of grant using the Black-Scholes option valuation model and assumptions as noted in the following table: Nine Months Ended September 30, 2015 2014 Risk-free interest rate 1.75% 2.14 – 2.45% Volatility 85.68% 75.51 – 73.87% Expected dividend yield 0% 0% Expected life 6.5 years 6.5 years Estimated forfeiture rate 0% 0% Stock-based compensation expense, primarily included in general and administration, for the three and nine months ended September 30, 2015 was $1,007 and $1,483, respectively. For the three and nine months ended September 30, 2014 stock-based compensation was $115 and $427, respectively. The nine months ended September 30, 2014, also included $20 of non-employee stock-based compensation. As of September 30, 2015 there was $535 in unrecognized compensation expense. |
Business Segments and Geographi
Business Segments and Geographic Data | 9 Months Ended |
Sep. 30, 2015 | |
Business Segments and Geographic Data [Abstract] | |
Business Segments and Geographic Data | Note 14 Business Segments and Geographic Data: The Company organized its business into three operating segments to better align its organization based upon the Company's management structure, products and services offered, markets served and types of customers, as follows: The Dermatology Recurring Procedures segment derives its revenues from the XTRAC procedures performed by dermatologists. The Dermatology Procedures Equipment segment generates revenues from the sale of equipment, such as lasers and lamp products. The Dermatology Imaging segment generates revenues from the sale and usage of MelaFind devices. Management reviews financial information presented on an operating segment basis for the purposes of making certain operating decisions and assessing financial performance. On June 22, 2015, the Company acquired the XTRAC and VTRAC businesses and has classified the revenues and expenses of this business to the two Dermatology Procedures segments. Accordingly, these revenues and operating expenses are included only for the period of June 23, 2015 through September 30, 2015. There are no corresponding revenues for the three and nine months ended September 30, 2014. Unallocated operating expenses include costs that are not specific to a particular segment but are general to the group; included are expenses incurred for administrative and accounting staff, general liability and other insurance, professional fees and other similar corporate expenses. Interest and other financing income (expense), net is also not allocated to the operating segments. The following tables reflect results of operations from our business segments for the periods indicated below: Three Months Ended September 30, 2015 (unaudited) Dermatology Recurring Procedures Dermatology Procedures Equipment Dermatology Imaging TOTAL Revenues $ 7,033 $ 1,189 $ 101 $ 8,323 Costs of revenues 2,326 607 109 3,042 Gross profit 4,707 582 ( 8 ) 5,281 Gross profit % 66.9 % 48.9 % (7.9 %) 63.5 % Allocated operating expenses: Engineering and product development 348 31 92 471 Selling and marketing expenses 3,554 97 350 4,001 Unallocated operating expenses - - - 3,132 3,902 128 442 7,604 Income (loss) from operations 805 454 (450 ) (2,323 ) Interest expense, net - - - (5,577 ) Change in fair value of warrant liability - - - (1,329 ) Other income (expense), net - - - (5 ) Net income (loss) $ 805 $ 454 $ (450 ) $ (9,234 ) Three Months Ended September 30, 2014 (unaudited) Dermatology Recurring Procedures Dermatology Procedures Equipment Dermatology Imaging TOTAL Revenues $ - $ - $ 218 $ 218 Costs of revenues - - 1,560 1,560 Gross profit - - (1,342 ) (1,342 ) Gross profit % 0.0 % 0.0 % (615.6 %) (615.6 %) Allocated operating expenses: Engineering and product development - - 345 345 Selling and marketing expenses - - 429 429 Unallocated operating expenses - - - 1,885 - - 774 2,659 Loss from operations - - (2,116 ) (4,001 ) Interest expense, net - - (527 ) Change in fair value of warrant liability - - - 2,108 Gain on sale of assets - - - 11 Other income (expense), net - - - 121 Net loss $ - $ - $ (2,116 ) $ (2,288 ) Nine Months Ended September 30, 2015 (unaudited) Dermatology Recurring Procedures Dermatology Procedures Equipment Dermatology Imaging TOTAL Revenues $ 7,138 $ 1,638 $ 239 $ 9,015 Costs of revenues 2,386 891 6,949 10,226 Gross profit 4,752 747 (6,710 ) ( 1,211 ) Gross profit % 66.6 % 45.6 % (2807.5 %) (13.4 %) Allocated operating expenses: Engineering and product development 355 62 529 946 Selling and marketing expenses 3,723 127 2,134 5,984 Unallocated operating expenses - - - 6,819 4,078 189 2,663 13,749 Income (loss) from operations 674 558 (9,373 ) (14,960 ) Interest expense, net - - - (8,738 ) Change in fair value of warrant liability - - - (679 ) Other income (expense), net - - - 23 Net income (loss) $ 674 $ 558 $ (9,373 ) $ (24,354 ) Nine Months Ended September 30, 2014 (unaudited) Dermatology Recurring Procedures Dermatology Procedures Equipment Dermatology Imaging TOTAL Revenues $ - $ - $ 541 $ 541 Costs of revenues - - 3,755 3,755 Gross profit - - (3,214 ) (3,214 ) Gross profit % 0.0 % 0.0 % (594.1 %) (594.1 %) Allocated operating expenses: Engineering and product development - - 1,423 1,423 Selling and marketing expenses - - 2,366 2,366 Unallocated operating expenses - - - 5,988 - - 3,789 9,777 Loss from operations - - (7,003 ) (12,991 ) Interest expense, net - - - (528 ) Change in fair value of warrant liability - - - 7,151 Gain on sale of assets - - - 16 Other income (expense), net - - - 131 Registration rights liquidated damages - - - (3,420 ) Net loss $ - $ - $ (7,003 ) $ (9,641 ) For the three and nine months ended September 30, 2015 and 2014 there were no material net revenues attributable to any individual foreign country. Net revenues by geographic area were, as follows: Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Domestic $ 7,114 $ 55 $ 7,236 $ 140 Foreign 1,209 163 1,779 401 $ 8,323 $ 218 $ 9,015 $ 541 |
Significant Customer Concentrat
Significant Customer Concentration | 9 Months Ended |
Sep. 30, 2015 | |
Significant Customer Concentration [Abstract] | |
Significant Customer Concentration | Note 15 Significant Customer Concentration: For the three months ended September 30, 2015, revenues from sales to the Company's international master distributor (GlobalMed Technologies) were $949, or 11.4%, of total revenues for such period. For the nine months ended September 30, 2015, revenues from sales to the Company's international master distributor were $1,385, or 15.4%, of total revenues for such period. At September 30, 2015, the accounts receivable balance from GlobalMed Technologies was $363, or 8.7%, of total net accounts receivable. No other customer represented more than 10% of total company revenues for the three and nine months ended September 30, 2015 and 2014. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 16 Subsequent Events: During October 2015, investors converted debentures amounting to $676 into 296,035 shares of common stock. See Note 10 On November 4, 2015, the Company entered into consulting agreements with two of its directors, Jeffrey F. O'Donnell, Sr. and Samuel E. Navarro, the terms of which are the same. The agreements include compensation of $120 for each director and expire on June 30, 2016. On November 9, 2015, Robert W. Cook, Chief Financial Officer of the Company upon mutual agreement with the Board of Directors, resigned from his position as the Company's Chief Financial Officer, effective immediately. Mr. Cook will remain an employee of the Company at his current salary and benefits in the position of Senior Financial Advisor until January 15, 2016, subject to terms to be agreed upon in a Transition Services Agreement and Release, entered into as of November 11, 2015, which will entitle him to severance payments through October 6, 2016. Also on November 9, 2015, the Board appointed Christina L. Allgeier, age 43, as the Company's Chief Financial Officer, effective immediately. Ms. Allgeier, has served as the Company's Chief Accounting Officer. Ms. Allgeier graduated with a B.S. in accounting from Penn State University. Ms. Allgeier holds a license from the Commonwealth of Pennsylvania as a certified public accountant. For the past fifteen years Ms. Allgeier had been employed by PhotoMedex, Inc. (including a period with Surgical Laser Technologies, Inc. which was acquired by PhotoMedex in 2002). Ms. Allgeier served as Chief Accounting Officer of PhotoMedex from December 2011 until the purchase of the assets from PhotoMedex in June 2015. From November 2009 until the reverse acquisition of Radiancy, Inc. by PhotoMedex in December 2011, Ms. Allgeier served as Chief Financial Officer of PhotoMedex. |
The Company (Policies)
The Company (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
The Company [Abstract] | |
Liquidity | Liquidity As of September 30, 2015, the Company had an accumulated deficit of $206,647 and has incurred losses since inception. To date, the Company has dedicated most of its financial resources to research and development, sales and marketing, and general and administrative expenses. The Company has experienced recurring losses and negative cash flow from operations. The Company has been dependent on raising capital from the sale of securities in order to continue to operate and to meet its obligations in the ordinary course of business. The Company plans to refinance the Notes that became due October 30, 2015 with longer term debt, the terms and availability of which the Company cannot determine at this time. The Company is currently evaluation alternatives, including discussions with lenders, to refinance this debt. The timing and availability of any such refinancing cannot be assured and will be affected by numerous factors, many of which are not under our control. There can be no assurance that we will be able to raise additional funding as may be needed or on terms that are acceptable to the Company. These factors raise substantial doubt about the Company's ability to continue as a going concern. The Company has not made any adjustments to its condensed consolidated financial statements with respect to this uncertainty. |
Accounting Principles | Accounting Principles The accompanying condensed consolidated financial statements and related notes should be read in conjunction with the financial statements and related notes contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014 ("fiscal 2014"). The unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC") related to interim financial statements. As permitted under those rules, certain information and footnote disclosures normally required or included in financial statements prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") have been condensed or omitted. The financial information contained herein is unaudited; however, management believes all adjustments have been made that are considered necessary to present fairly the results of the Company's financial position and operating results for the interim periods. All such adjustments are of a normal recurring nature. The results for the three and nine months ended September 30, 2015 are not necessarily indicative of the results to be expected for the year ending December 31, 2015 or for any other interim period or for any future period. |
Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation. |
Reclassification | Reclassification Certain reclassifications from the prior year presentation have been made to conform to the current year presentation. These reclassifications did not have material impact on the Company's equity, net assets, results of operations or cash flows. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the US requires management to make estimates and assumptions that affect amounts reported of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates and be based on events different from those assumptions. As of September 30, 2015, the more significant estimates include (1) revenue recognition, including deferred revenues and valuation allowances of accounts receivable, (2) valuation of intangible assets, (3) warrant liabilities, (4) stock-based compensation and (5) the valuation allowance related to deferred tax assets. |
Revenue Recognition | Revenue Recognition The Company recognizes revenues from product sales when the following four criteria have been met: (i) the product has been delivered and the Company has no significant remaining obligations; (ii) persuasive evidence of an arrangement exists; (iii) the price to the buyer is fixed or determinable; and (iv) collection is reasonably assured. Revenues from product sales are recorded net of provisions for expected returns and cash discounts. The Company ships most of its products FOB shipping point, although from time to time certain customers, for example governmental customers, will be granted FOB destination terms. Among the factors the Company takes into account when determining the proper time at which to recognize revenue are (i) when title to the goods transfers and (ii) when the risk of loss transfers. Shipments to distributors or physicians that do not fully satisfy the collection criteria are recognized when invoiced amounts are fully paid or fully assured and included in deferred revenues until that time. For revenue arrangements with multiple deliverables within a single, contractually binding arrangement (usually sales of products with separately priced extended warranty), each element of the contract is accounted for as a separate unit of accounting when it provides the customer value on a stand-alone basis and there is objective evidence of the fair value of the related unit. The Company has two distribution channels for its phototherapy treatment equipment. The Company either (i) places its lasers in a physician's office (at no charge to the physician), and generally charges the physician a fee for an agreed upon number of treatments or (ii) sells its lasers through a distributor or directly to a physician. In some cases, the Company and the customer stipulate to a quarterly or other periodic target of procedures to be performed, and accordingly revenue is recognized ratably over the period. When the Company places a laser in a physician's office, it generally recognizes revenue based on the number of patient treatments performed, or purchased under a periodic commitment, by the physician. Amounts collected with respect to treatments to be performed through laser-access codes that are sold to physicians free of a periodic commitment, but not yet used, are deferred and recognized as a liability until the physician performs the treatment. Unused treatments remain an obligation of the Company because the treatments can only be performed on Company-owned equipment. Once the treatments are performed, this obligation has been satisfied. The Company defers substantially all revenue from sales of treatment codes ordered by its customers within the last two weeks of the period in determining the amount of procedures performed by its physician-customers. Management believes this approach closely approximates the actual amount of unused treatments that existed at the end of a period. Deferred revenue includes amounts received with respect to extended warranty maintenance, repairs and other billable services and amounts not yet recognized as revenues. Revenues with respect to such activities are deferred and recognized on a straight-line basis over the duration of the warranty period, the service period or when service is provided, as applicable to each service. |
Inventories | Inventories Inventories are stated at the lower of cost or market. Cost is determined to be purchased cost for raw materials and the production cost (materials, labor and indirect manufacturing cost, including sub-contracted work components) for work-in-process and finished goods. For the Company's products, cost is determined on the first-in, first-out method. Throughout the laser manufacturing process, the related production costs are recorded within inventory. Work-in-process is immaterial, given the typically short manufacturing cycle, and therefore is disclosed in conjunction with raw materials. The Company's equipment for the treatment of skin disorders (e.g. the XTRAC) will either (i) be placed in a physician's office and remain the property of the Company (at which date such equipment is transferred to property and equipment) or (ii) be sold to distributors or physicians directly. The cost to build a laser, whether for sale or for placement, is accumulated in inventory. Reserves for slow moving and obsolete inventories are provided based on historical experience and product demand. Management evaluates the adequacy of these reserves periodically based on forecasted sales and market trends. As of September 30, 2015 reserves on inventory were $0. During the nine months ended September 30, 2015, the Company recorded a write-down of $4,818 towards the remaining inventory value of the MelaFind® systems, raw materials and components |
Property, Equipment and Depreciation | Property, Equipment and Depreciation Property and equipment are recorded at cost, net of accumulated depreciation. Excimer lasers-in-service are depreciated on a straight-line basis over the estimated useful life of five years. For other property and equipment, depreciation is calculated on a straight-line basis over the estimated useful lives of the assets, primarily three to seven years for computer hardware and software, furniture and fixtures, and machinery and equipment. Leasehold improvements are amortized over the lesser of the useful lives or lease terms. Expenditures for major renewals and betterments to property and equipment are capitalized, while expenditures for maintenance and repairs are charged as an expense as incurred. Upon retirement or disposition, the applicable property amounts are deducted from the accounts and any gain or loss is recorded in the condensed consolidated statements of comprehensive loss. Useful lives are determined based upon an estimate of either physical or economic obsolescence or both. Management evaluates the realizability of property and equipment based on estimates of undiscounted future cash flows over the remaining useful life of the asset. If the amount of such estimated undiscounted future cash flows is less than the net book value of the asset, the asset is written down to fair value. For the nine months ended September 30, 2015, the Company recorded a write-down of $920 on the remaining net book value of the MELAFind systems that were part of property and equipment (see Impairment of Long-Lived Assets and Intangibles |
Patent Costs and Licensed Technologies | Patent Costs and Licensed Technologies Costs incurred to obtain or defend patents and licensed technologies are capitalized and amortized over the shorter of the remaining estimated useful lives or eight to 12 years. Core technology and product technology were recorded in connection with the asset purchase on June 22, 2015 and are being amortized on a straight-line basis over ten years for core technology and five years for product technology. (See Note 5 Patent and Licensed Technologies Management evaluates the recoverability of intangible assets based on estimates of undiscounted future cash flows over the remaining useful life of the asset. If the amount of such estimated undiscounted future cash flows is less than the net book value of the asset, the asset is written down to fair value. As of September 30, 2015, no such write-down was required. (See Impairment of Long-Lived Assets and Intangibles |
Other Intangible Assets | Other Intangible Assets Other intangible assets were recorded in connection with the asset purchase on June 22, 2015. The assets that were determined to have definite useful lives are being amortized on a straight-line basis over ten years. Such assets primarily include customer relationships and trademarks. (See Note 7 Other Intangible Assets) Management evaluates the recoverability of such other intangible assets based on estimates of undiscounted future cash flows over the remaining useful life of the asset. If the amount of such estimated undiscounted future cash flows is less than the net book value of the asset, the asset is written down to fair value. As of September 30, 2015 no such write-down was required. (See Impairment of Long-Lived Assets and Intangibles |
Accounting for the Impairment of Goodwill | Accounting for the Impairment of Goodwill Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. . When evaluating goodwill for impairment, we may first perform an assessment qualitatively whether it is more likely than not that a reporting unit's carrying amount exceeds its fair value, referred to as a "step zero" approach. If, based on the review of the qualitative factors, we determine it is not more likely than not that the fair value of a reporting unit is less than its carrying value, we would bypass the two-step impairment test. If we conclude that it is more likely than not that a reporting unit's fair value is less than its carrying amount, we would perform the first step ("step one") of the two-step impairment test. Ste |
Impairment of Long-Lived Assets and Intangibles | Impairment of Long-Lived Assets and Intangibles Long-lived assets, such as property and equipment, and definite-lived intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the undiscounted cash flows attributable to the asset. If the carrying amount of an asset exceeds its undiscounted cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds its fair value of the asset. During the nine months ended September 30, 2015 the Company recorded a write-down of $920 on the remaining net book value of the MelaFind systems that were part of property and equipment. Assets to be disposed of are separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as discontinued operations are presented separately in the appropriate asset and liability sections of the balance sheet. |
Functional Currency | Functional Currency The currency of the primary economic environment in which the operations of the Company are conducted is the US dollar ("$" or "dollars"). he operations of its foreign subsidiary, which is conducted in its local currency the Indian Rupee (INR). Substantially all of the Company's revenues are derived in dollars or in other currencies linked to the dollar. Purchases of most materials and components are carried out in, or linked to the dollar. Balances denominated in, or linked to, foreign currencies are stated on the basis of the exchange rates prevailing at the balance sheet date. For foreign currency transactions included in the statement of comprehensive income (loss), the exchange rates applicable to the relevant transaction dates are used. Transaction gains or losses arising from changes in the exchange rates used in the translation of such balances are carried to financing income or expenses. Assets and liabilities of the foreign subsidiary, whose functional currency is its local currency, are translated from its functional currency to U.S. dollars at the balance sheet date exchange rate. Income and expense items are translated at the average rate of exchange prevailing during the year. Translation adjustments are reflected in the consolidated balance sheets as a component of accumulated other comprehensive income (loss). |
Fair Value Measurements | Fair Value Measurements The Company measures and discloses fair value in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification 820, Fair Value Measurements and Disclosures • Level 1 – unadjusted quoted prices are available in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date. • Level 2 – pricing inputs are other than quoted prices in active markets that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. • Level 3 – pricing inputs are unobservable for the non-financial asset or liability and only used when there is little, if any, market activity for the non-financial asset or liability at the measurement date. The inputs into the determination of fair value require significant management judgment or estimation. Fair value is determined using comparable market transactions and other valuation methodologies, adjusted as appropriate for liquidity, credit, market and/or other risk factors This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. The Company's recurring fair value measurements at September 30, 2015 and December 31, 2014 are as follows: Fair Value as of September 30, 2015 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Liabilities: Warrant liability (Note 11) $ 9,535 $ - $ - $ 9,535 Fair Value as of December 31, 2014 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Liabilities: Warrant liability (Note 11) $ 499 $ - $ - $ 499 The fair value of cash and cash equivalents and short term bank deposits are based on their respective demand value, which are equal to the carrying value. The fair value of derivative warrant liabilities is estimated using option pricing models that are based on the individual characteristics of the Company's warrants, preferred and common stock, the derivative warrant liability on the valuation date as well as assumptions for volatility, remaining expected life, risk-free interest rate and, in some cases, credit spread. The derivative warrant liabilities are the only recurring Level 3 fair value measures. The carrying value of all other short-term monetary assets and liabilities is estimated to be approximate to their fair value due to the short-term nature of these instruments. The fair value of the senior secured convertible debentures approximates its carrying value at September 30, 2015 due to the recent issuances of these instruments. Several of the warrants have non-standard terms as they relate to a fundamental transaction and require a net-cash settlement upon change in control of the Company and other warrants contain full ratchet provisions that reduce the exercise price of the warrants in the event of a transaction resulting in the issuance of equity below the current price of the warrants. Therefore these warrants are classified as derivatives. These warrants have been recorded at their fair value using a binomial option pricing model and will be recorded at their respective fair value at each subsequent balance sheet date. See Note 11, Warrants In addition to items that are measured at fair value on a recurring basis, there are also assets and liabilities that are measured at fair value on a nonrecurring basis. Assets and liabilities that are measured at fair value on a nonrecurring basis include certain long-lived assets, including goodwill. As such, the Company has determined that each of these fair value measurements reside within Level 3 of the fair value hierarchy. |
Accrued Warranty Costs | Accrued Warranty Costs The Company offers a standard warranty on product sales generally for a one to two-year period, however, the Company has offered longer warranty periods, ranging from three to four years, in order to meet competition or meet customer demands. The Company provides for the estimated cost of the future warranty claims on the date the product is sold. Total accrued warranty is included in Other Accrued Liabilities Other liabilities September 30, 2015 (unaudited) Accrual at beginning of year $ 48 Acquired in asset purchase 265 Additions charged to warranty expense 62 Expiring warranties/claimed satisfied (110 ) Total 265 Less: current portion (177 ) $ 88 |
Earnings Per Share | Earnings Per Share Basic net loss per common share excludes dilution for potentially dilutive securities and is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share gives effect to dilutive options, warrants and other potential common shares outstanding during the period. Diluted net loss per common share is equal to the basic net loss per common share since all potentially dilutive securities are anti-dilutive for each of the periods presented. The loss on the change in fair value of the warrant liability was considered in the diluted earnings per share calculation and was deemed to be antidilutive for all periods presented. Potential common stock equivalents outstanding as of September 30, 2015 and 2014 consist of common stock equivalents of common stock purchase warrants, senior secured convertible debentures, convertible preferred stock and common stock options, which are summarized as follows: September 30, 2015 2014 Common stock equivalents of convertible debentures 46,521,127 5,847,955 Common stock purchase warrants 16,078,920 13,078,920 Common stock equivalents of convertible preferred stock 2,535,866 4,795,321 Common stock options 2,302,802 320,349 Total 67,438,715 24,042,545 |
Adoption of New Accounting Standards | Adoption of New Accounting Standards In April 2014, the Financial Accounting Standards Board ( " " The amendments in ASU 2014-08 change the criteria for reporting discontinued operations while enhancing disclosures in this area. Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. Those strategic shifts should have a major effect on the organization's operations and financial results. In addition, the new guidance requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. The provisions of ASU 2014-08 were required to be applied in a prospective manner to disposals or classifications as held for sale components of an entity that occur with annual periods beginning on or after December 15, 2014 and interim periods within those years. The adoption of ASU 2014-08 did not have a material impact on the Company's consolidated results of operations and financial condition. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In September 2015, the FASB issued ASU No. 2015-16, " Business Combinations (Topic 805): Simplifying the Accounting for Measurement - Period Adjustments. In July, 2015, The FASB issued Accounting Standards Update No. 2015-11 , Simplifying the Measurement of Inventory (Topic 330) ASU 2015-11 outlines that inventory within the scope of its guidance be measured at the lower of cost and net realizable value. Inventory measured using last-in, first-out (LIFO) are not impacted by the new guidance. Prior to the issuance of ASU 2015-11, inventory was measured at the lower of cost or market (where market was defined as replacement cost, with a ceiling of net realizable value and floor of net realizable value less a normal profit margin). For a public entity, the amendments in ASU 2015-11 are effective, in a prospective manner, for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period (the first quarter of fiscal year 2017 for the Company). Early adoption is permitted as of the beginning of an interim or annual reporting period. The Company is in the process of assessing the impact, if any, of ASU 2015-11 on its consolidated financial statements. In May 2014, The FASB issued Accounting Standards Update No. 2014-09 , Revenue from Contracts with Customers (Topic 606) ASU 2014-09 outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers and supersedes mos current revenue recognition guidance, including industry-specific guidance. ASU 2014-09 also requires entities to disclose sufficient information, both quantitative and qualitative, to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. An entity should apply the amendments in this ASU using one of the following two methods: 1. Retrospectively to each prior reporting period presented with a possibility to elect certain practical expedients, or, 2. Retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. If an entity elects the latter transition method, it also should provide certain additional disclosures. For a public entity, the amendments in ASU 2014-09 were to be effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. In July 2015, the FASB voted for a one year deferral of the effective date of ASU 2014-09 and issued an exposure draft. The new guidance will be effective for annual and interim periods beginning on or after December 15, 2017. Early application is not permitted. The Company is currently assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements and footnote disclosures. In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-03, " Simplifying the Presentation of Debt Issuance Costs (Subtopic 835-30) |
The Company (Tables)
The Company (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
The Company [Abstract] | |
Fair Value Measurements on Recurring Basis | The Company's recurring fair value measurements at September 30, 2015 and December 31, 2014 are as follows: Fair Value as of September 30, 2015 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Liabilities: Warrant liability (Note 11) $ 9,535 $ - $ - $ 9,535 Fair Value as of December 31, 2014 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Liabilities: Warrant liability (Note 11) $ 499 $ - $ - $ 499 |
Accrued Warranty Costs Activity | The activity in the warranty accrual during the nine months ended September 30, 2015 is summarized as follows: September 30, 2015 (unaudited) Accrual at beginning of year $ 48 Acquired in asset purchase 265 Additions charged to warranty expense 62 Expiring warranties/claimed satisfied (110 ) Total 265 Less: current portion (177 ) $ 88 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | Potential common stock equivalents outstanding as of September 30, 2015 and 2014 consist of common stock equivalents of common stock purchase warrants, senior secured convertible debentures, convertible preferred stock and common stock options, which are summarized as follows: September 30, 2015 2014 Common stock equivalents of convertible debentures 46,521,127 5,847,955 Common stock purchase warrants 16,078,920 13,078,920 Common stock equivalents of convertible preferred stock 2,535,866 4,795,321 Common stock options 2,302,802 320,349 Total 67,438,715 24,042,545 |
Acquisition (Tables)
Acquisition (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Acquisition [Abstract] | |
Estimated Fair Value of Assets Acquired and Liabilities Assumed | The following allocation of the aggregate fair value is preliminary and subject to adjustment based on the fair value of the assets acquired and the liabilities assumed.The Company estimated fair value of the intangibles and lasers placed in service was based on the income approach which estimated cash flow that utilize appropriate discount and capitalization rates and available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known trends and specific market and economic conditions. The fair value of the Company's remaining fixed assets was estimated based on the cost approach which estimated the cost to replace. Current assets $ 7,233 Property, plant and equipment 14,340 Identifiable intangible assets 16,100 Other assets 45 Total assets assumed 37,718 Current liabilities (3,945 ) Note payable (57 ) Other long term liabilities (116 ) Total liabilities assumed (4,118 ) Net assets acquired $ 33,600 |
Unaudited Pro-forma Results | The Company's unaudited pro-forma results for the three and nine months ended September 30, 2015 and 2014 summarize the combined results in the following table, assuming the asset purchase had occurred on January 1, 2014 and after giving effect to the acquisition adjustments, including amortization of the tangible and long-lived intangible assets acquired in the transaction: Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 (unaudited) (unaudited) (unaudited) (unaudited) Net revenues $ 8,323 $ 7,816 $ 23,684 $ 21,378 Net loss attributable to common shareholders $ (12,186 ) $ (3,715 ) $ (33,662 ) $ (20,410 ) Net loss per basic and diluted share: $ (1.29 ) $ (0.71 ) $ (4.21 ) $ (4.00 ) Shares used in calculating net loss per basic and diluted share: 9,442,022 5,216,290 7,994,012 5,108,418 |
Inventories, net (Tables)
Inventories, net (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Inventories, net [Abstract] | |
Schedule of Inventory | Inventories, net: September 30 , December 31, 2014 (unaudited) Raw materials and work in progress $ 3,329 $ 2,553 Finished goods 586 4,131 Total inventories 3,915 6,684 Reserve for obsolete inventory - (870 ) Reserve for inventory repairs - (539 ) $ 3,915 $ 5,275 |
Property and Equipment, net (Ta
Property and Equipment, net (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Property and Equipment, net [Abstract] | |
Summary of Property and Equipment, Net | Property and Equipment, net: September 30, 2015 December 31, 2014 (unaudited) Lasers placed-in-service $ 15,154 $ - MELAFind systems 2,019 3,193 Equipment, computer hardware and software 1,244 1,084 Furniture and fixtures 2,054 1,969 Leasehold improvements 913 906 21,384 7,152 Accumulated depreciation and amortization (6,923 ) (5,191 ) Property and equipment, net $ 14,461 $ 1 , |
Patents and Licensed Technolo29
Patents and Licensed Technologies, net (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Patents and Licensed Technologies, Net [Abstract] | |
Schedule of Patents and Licensed Technologies, Net | Patents and Licensed Technologies, net: September 30, 2015 December 31, 2014 (unaudited) Core technology $ 5,974 $ 274 Product technology 2,000 - 7,974 274 Accumulated amortization (484 ) (237 ) Patents and licensed technologies, net $ 7,490 $ 37 |
Estimated Amortization Expense for Amortizable Patents and Licensed Technologies Assets | Estimated amortization expense for amortizable patents and licensed technologies assets for the future periods is as follows: Last three months of 2015 $ 238 2016 995 2017 995 2018 995 2019 995 Thereafter 3,272 Total $ 7,490 |
Goodwill (Tables)
Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill Disclosure [Abstract] | |
Schedule of Goodwill | Goodwill reflects the value or premium of the acquisition price in excess of the fair values assigned to specific tangible and intangible assets. Goodwill has an indefinite useful life and therefore is not amortized as an expense, but is reviewed annually for impairment of its fair value to the Company. Goodwill was recorded on the asset purchase of the XTRAC and VTRAC businesses as the purchase price exceeded the net assets of the business. (See Note Acquisition Balance at January 1, 2015 $ - Additions for the asset purchase 8,928 Balance at September 30, 2015 $ 8,928 |
Other Intangible Assets (Tables
Other Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Other Intangible Assets [Abstract] | |
Schedule of Other Definite-lived Intangible Assets | Set forth below is a detailed listing of other definite-lived intangible assets: September 30, 2015 (unaudited) Customer relationships $ 6,900 Tradenames 1,500 8,400 Accumulated amortization (210 ) Other intangible assets, net $ 8,190 |
Finite-lived Intangible Assets Amortization Expense | Estimated amortization expense for the above amortizable intangible assets for the future periods is as follows: Last three months of 2015 $ 210 2016 840 2017 840 2018 840 2019 840 Thereafter 4,620 Total $ 8,190 |
Other Accrued Liabilities (Tabl
Other Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Other Accrued Liabilities [Abstract] | |
Schedule of Other Accrued Liabilities | Other Accrued Liabilities: September 30, 2015 December 31, 2014 (unaudited) Accrued warranty, current, see Note 1 $ 177 $ 48 Accrued compensation, including commissions and vacation 965 55 Other accrued liabilities 778 856 Total other accrued liabilities $ 1,920 $ 959 |
Senior Notes Payable (Tables)
Senior Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Senior Notes Payable [Abstract] | |
Summary of Notes Payable | In the following table is a summary of the Company's notes payable: September 30, 2015 (unaudited) Senior-secured notes payable, net of unamortized debt discount of $1,152 $ 8,848 |
Key Assumptions Used to Value the Warrants | The key assumptions used to value the warrants are as follows: June 22, 2015 September 30, 2015 Number of shares underlying warrants 3,000,000 3,000,000 Exercise price $0.75 $0.75 Share price $1.38 $1.14 Fair value of warrants $2,959 $2,561 Probability of stockholder approval 80.0% 100.0% Volatility 90.0% 90.0% Risk-free interest rate 1.62% 1.30% Expected dividend yield 0% 0% Expected warrant life 5 years 4.73 years |
Convertible Debentures (Tables)
Convertible Debentures (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Convertible Debentures [Abstract] | |
Summary of Convertible Debentures | In the following table is a summary of the Company's convertible debentures. September 30, 2015 December 31, 2014 (unaudited) Senior secured 2.25% convertible debentures, net of unamortized debt discount of $25,798 $ 6,701 $ - Senior secured 4% convertible debentures, net of unamortized debt discount of $4,146 and $8,410, respectively 4,672 5,001 Total convertible debt $ 11,373 $ 5,001 |
Warrants (Tables)
Warrants (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Warrants [Abstract] | |
Schedule of Fair Value Hierarchy | The following is a listing of the warrants modified: Issue date # of warrants Original Exercise Price New Exercise Price 7/24/14 Series A 4,288,500 $ 2.45 $ 0.75 7/24/14 Series B 4,795,321 $ 2.45 $ 0.75 |
Warrants Fair Value Assumptions | A summary of quantitative information with respect to the valuation methodology and significant unobservable inputs used for the Company's warrant liabilities that are categorized within Level 3 of the fair value hierarchy as of September 30, 2015 and December 31, 2014 is as follows: September 30, 2015 June 22, 2015 December 31, 2014 (unaudited) (unaudited) Stock price $ 1.14 $ 1.38 $ 1.20 Volatility 90.00% 90.00% 72.90 – 88.10% Risk-free interest rate 0.02% - 1.30% 1.62% 1.65% Expected dividend yield 0% 0% 0% Expected warrant life 0.32 – 4.73 years 5 years 4.10 – 4.33 years |
Schedule of Derivative Warrant Liabilities | Fair Value Measurements Using Significant Unobservable Inputs (Level 3): Issuance Date January 1, 2015 Initial Measurements Increase (Decrease) in Fair Value Reclassed from Equity September 30, 2015 10/31/2013 $ 233 $ - $ 309 $ - $ 542 2/5/2014 266 - 767 - 1,033 7/24/2014 Series A - - - 3,452 3,452 7/24/2014 Series B - - - 1,947 1,947 6/22/2015 - 2,958 (397 ) - 2,561 Total $ 499 $ 2,958 $ 679 $ 5,399 $ 9,535 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Stockholders' Equity [Abstract] | |
Summary of Outstanding Common Stock Warrants | Outstanding common stock warrants consist of the following: Issue Date Expiration Date Total Warrants Exercise Price 4/26/2013 4/26/2018 69,321 $ 11.18 10/31/2013 4/30/2019 685,715 $ 0.75 2/5/2014 2/5/2019 1,329,731 $ 0.75 7/24/2014 7/24/2019 6,198,832 $ 0.75 - $ 2.45 7/24/2014 1/24/2016 4,795,321 $ 0.75 6/22/2015 6/22/2020 3,000,000 $ 0.75 16,078,920 |
Stock-based compensation (Table
Stock-based compensation (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Stock-based compensation [Abstract] | |
Schedule of Fair Value of Each Option Award Granted | The fair value of each option award granted during the period is estimated on the date of grant using the Black-Scholes option valuation model and assumptions as noted in the following table: Nine Months Ended September 30, 2015 2014 Risk-free interest rate 1.75% 2.14 – 2.45% Volatility 85.68% 75.51 – 73.87% Expected dividend yield 0% 0% Expected life 6.5 years 6.5 years Estimated forfeiture rate 0% 0% |
Business Segments and Geograp38
Business Segments and Geographic Data (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Business Segments and Geographic Data [Abstract] | |
Schedule of Segment Reporting Information by Segment | The following tables reflect results of operations from our business segments for the periods indicated below: Three Months Ended September 30, 2015 (unaudited) Dermatology Recurring Procedures Dermatology Procedures Equipment Dermatology Imaging TOTAL Revenues $ 7,033 $ 1,189 $ 101 $ 8,323 Costs of revenues 2,326 607 109 3,042 Gross profit 4,707 582 ( 8 ) 5,281 Gross profit % 66.9 % 48.9 % (7.9 %) 63.5 % Allocated operating expenses: Engineering and product development 348 31 92 471 Selling and marketing expenses 3,554 97 350 4,001 Unallocated operating expenses - - - 3,132 3,902 128 442 7,604 Income (loss) from operations 805 454 (450 ) (2,323 ) Interest expense, net - - - (5,577 ) Change in fair value of warrant liability - - - (1,329 ) Other income (expense), net - - - (5 ) Net income (loss) $ 805 $ 454 $ (450 ) $ (9,234 ) Three Months Ended September 30, 2014 (unaudited) Dermatology Recurring Procedures Dermatology Procedures Equipment Dermatology Imaging TOTAL Revenues $ - $ - $ 218 $ 218 Costs of revenues - - 1,560 1,560 Gross profit - - (1,342 ) (1,342 ) Gross profit % 0.0 % 0.0 % (615.6 %) (615.6 %) Allocated operating expenses: Engineering and product development - - 345 345 Selling and marketing expenses - - 429 429 Unallocated operating expenses - - - 1,885 - - 774 2,659 Loss from operations - - (2,116 ) (4,001 ) Interest expense, net - - (527 ) Change in fair value of warrant liability - - - 2,108 Gain on sale of assets - - - 11 Other income (expense), net - - - 121 Net loss $ - $ - $ (2,116 ) $ (2,288 ) Nine Months Ended September 30, 2015 (unaudited) Dermatology Recurring Procedures Dermatology Procedures Equipment Dermatology Imaging TOTAL Revenues $ 7,138 $ 1,638 $ 239 $ 9,015 Costs of revenues 2,386 891 6,949 10,226 Gross profit 4,752 747 (6,710 ) ( 1,211 ) Gross profit % 66.6 % 45.6 % (2807.5 %) (13.4 %) Allocated operating expenses: Engineering and product development 355 62 529 946 Selling and marketing expenses 3,723 127 2,134 5,984 Unallocated operating expenses - - - 6,819 4,078 189 2,663 13,749 Income (loss) from operations 674 558 (9,373 ) (14,960 ) Interest expense, net - - - (8,738 ) Change in fair value of warrant liability - - - (679 ) Other income (expense), net - - - 23 Net income (loss) $ 674 $ 558 $ (9,373 ) $ (24,354 ) Nine Months Ended September 30, 2014 (unaudited) Dermatology Recurring Procedures Dermatology Procedures Equipment Dermatology Imaging TOTAL Revenues $ - $ - $ 541 $ 541 Costs of revenues - - 3,755 3,755 Gross profit - - (3,214 ) (3,214 ) Gross profit % 0.0 % 0.0 % (594.1 %) (594.1 %) Allocated operating expenses: Engineering and product development - - 1,423 1,423 Selling and marketing expenses - - 2,366 2,366 Unallocated operating expenses - - - 5,988 - - 3,789 9,777 Loss from operations - - (7,003 ) (12,991 ) Interest expense, net - - - (528 ) Change in fair value of warrant liability - - - 7,151 Gain on sale of assets - - - 16 Other income (expense), net - - - 131 Registration rights liquidated damages - - - (3,420 ) Net loss $ - $ - $ (7,003 ) $ (9,641 ) |
Schedule of Net Revenues by Geographic Areas | For the three and nine months ended September 30, 2015 and 2014 there were no material net revenues attributable to any individual foreign country. Net revenues by geographic area were, as follows: Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Domestic $ 7,114 $ 55 $ 7,236 $ 140 Foreign 1,209 163 1,779 401 $ 8,323 $ 218 $ 9,015 $ 541 |
The Company (Details)
The Company (Details) $ / shares in Units, $ in Thousands | Jun. 30, 2015 | Jun. 22, 2015USD ($)$ / shares | Sep. 30, 2015USD ($)sharesSystemsChannel | Sep. 30, 2014USD ($)shares | Dec. 31, 2014USD ($)TreatmentPatient | Sep. 30, 2015USD ($)$ / sharesshares |
Business Acquisition [Line Items] | ||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 0.75 | $ 0.75 | ||||
Liquidity [Abstract] | ||||||
Accumulated deficit | $ (182,293) | $ (206,647) | ||||
Revenue Recognition [Abstract] | ||||||
Number of distribution channels | Channel | 2 | |||||
Inventories [Abstract] | ||||||
Reserves on inventory | $ 870 | 0 | ||||
Inventory write-offs | $ 4,818 | 1,076 | ||||
Property, Plant and Equipment [Line Items] | ||||||
Property, plant and equipment, useful life | 5 years | |||||
Write-down, property and equipment | $ 920 | $ 0 | ||||
Product Warranty Accrual [Roll Forward] | ||||||
Accrual at beginning of year | 48 | |||||
Acquired in asset purchase | 265 | |||||
Additions charged to warranty expense | 62 | |||||
Expiring warranties/claimed satisfied | (110) | |||||
Total | 265 | |||||
Less: current portion | $ (48) | (48) | (177) | |||
Accrued warranty, non-current portion | 88 | |||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Potential common stock equivalents (in shares) | shares | 67,438,715 | 24,042,545 | ||||
Minimum [Member] | ||||||
Product Warranty Liability [Line Items] | ||||||
Standard warranty period | 1 year | |||||
Offered warranty period | 3 years | |||||
Maximum [Member] | ||||||
Product Warranty Liability [Line Items] | ||||||
Standard warranty period | 2 years | |||||
Offered warranty period | 4 years | |||||
2015 Financing [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Aggregate principal amount of debt | $ 42,500 | 42,500 | ||||
Computer Hardware and Software [Member] | Minimum [Member] | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Property, plant and equipment, useful life | 3 years | |||||
Computer Hardware and Software [Member] | Maximum [Member] | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Property, plant and equipment, useful life | 7 years | |||||
Furniture and Fixtures [Member] | Minimum [Member] | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Property, plant and equipment, useful life | 3 years | |||||
Furniture and Fixtures [Member] | Maximum [Member] | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Property, plant and equipment, useful life | 7 years | |||||
Machinery and Equipment [Member] | Minimum [Member] | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Property, plant and equipment, useful life | 3 years | |||||
Machinery and Equipment [Member] | Maximum [Member] | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Property, plant and equipment, useful life | 7 years | |||||
Fair Value, Measurements, Recurring [Member] | ||||||
Fair Value Assets And Liabilities, Measured On Recurring And Nonrecurring Basis [Line Items] | ||||||
Warrant liability (Note 11) | 499 | 9,535 | ||||
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ||||||
Fair Value Assets And Liabilities, Measured On Recurring And Nonrecurring Basis [Line Items] | ||||||
Warrant liability (Note 11) | 0 | 0 | ||||
Fair Value, Measurements, Recurring [Member] | Significant other Observable Inputs (Level 2) [Member] | ||||||
Fair Value Assets And Liabilities, Measured On Recurring And Nonrecurring Basis [Line Items] | ||||||
Warrant liability (Note 11) | 0 | 0 | ||||
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | ||||||
Fair Value Assets And Liabilities, Measured On Recurring And Nonrecurring Basis [Line Items] | ||||||
Warrant liability (Note 11) | $ 499 | 9,535 | ||||
Patents and Licensed Technologies [Member] | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Impairment of intangible assets | $ 0 | |||||
Patents and Licensed Technologies [Member] | Minimum [Member] | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Estimated useful life | 8 years | |||||
Patents and Licensed Technologies [Member] | Maximum [Member] | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Estimated useful life | 12 years | |||||
Core Technology [Member] | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Estimated useful life | 10 years | |||||
Product Technology [Member] | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Estimated useful life | 5 years | |||||
Other Intangible Assets [Member] | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Estimated useful life | 10 years | |||||
Impairment of intangible assets | $ 0 | |||||
XTRAC and VTRAC [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Acquisition price | $ 42,528 | |||||
XTRAC and VTRAC [Member] | 2015 Financing [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Aggregate principal amount of debt | $ 10,000 | |||||
Interest rate | 9.00% | |||||
Maturity date | Maturity date of the earlier of 30 days after the Company obtains stockholder approval of stock issuances under the Debentures and the Warrants or November 30, 2015. | |||||
Warrants issued and outstanding to purchase common stock (in shares) | shares | 3,000,000 | |||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 0.75 | |||||
Issuance of common stock (in shares) | shares | 62,837,601 | |||||
XTRAC and VTRAC [Member] | Senior Secured Convertible Debentures [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Aggregate principal amount of debt | $ 32,500 | |||||
Number of shares issuable on conversion of debt (in shares) | shares | 43,333,334 | |||||
Initial conversion price (in dollars per share) | $ / shares | $ 0.75 | |||||
Interest rate | 2.25% | |||||
Maturity period of debentures | 5 years | |||||
Debentures secured by first priority lien | $ 500 | |||||
XTRAC and VTRAC [Member] | Core Technology [Member] | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Estimated useful life | 10 years | |||||
XTRAC and VTRAC [Member] | Product Technology [Member] | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Estimated useful life | 5 years | |||||
XTRAC [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Number of systems placed in dermatologists offices | Systems | 698 | |||||
Number of laser treatments performed | Treatment | 300,000 | |||||
Number of patients | Patient | 19,000 | |||||
Common Stock Equivalents of Convertible Debentures [Member] | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Potential common stock equivalents (in shares) | shares | 46,521,127 | 5,847,955 | ||||
Common Stock Purchase Warrants [Member] | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Potential common stock equivalents (in shares) | shares | 16,078,920 | 13,078,920 | ||||
Common Stock Equivalents of Convertible Preferred Stock [Member] | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Potential common stock equivalents (in shares) | shares | 2,535,866 | 4,795,321 | ||||
Common Stock Options [Member] | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Potential common stock equivalents (in shares) | shares | 2,302,802 | 320,349 |
Acquisition (Details)
Acquisition (Details) - USD ($) $ / shares in Units, $ in Thousands | Jun. 22, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 |
Aggregate Fair Value of Assets Acquired and the Liabilities Assumed [Abstract] | ||||||
Current assets | $ 7,233 | $ 7,233 | ||||
Property, plant and equipment | 14,340 | 14,340 | ||||
Identifiable intangible assets | 16,100 | 16,100 | ||||
Other assets | 45 | 45 | ||||
Total assets assumed | 37,718 | 37,718 | ||||
Current liabilities | (3,945) | (3,945) | ||||
Note payable | (57) | (57) | ||||
Other long term liabilities | (116) | (116) | ||||
Total liabilities assumed | (4,118) | (4,118) | ||||
Net assets acquired | 33,600 | 33,600 | ||||
Goodwill | 8,928 | 8,928 | $ 0 | |||
Unaudited Pro-forma Results [Abstract] | ||||||
Net revenues | 8,323 | $ 7,816 | 23,684 | $ 21,378 | ||
Net loss attributable to common shareholders | $ (12,186) | $ (3,715) | $ (33,662) | $ (20,410) | ||
Net loss per basic and diluted share: (in dollars per share) | $ (1.29) | $ (0.71) | $ (4.21) | $ (4) | ||
Shares used in calculating net loss per basic and diluted share: (in shares) | 9,442,022 | 5,216,290 | 7,994,012 | 5,108,418 | ||
Core Technology [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Estimated useful life | 10 years | |||||
Product Technology [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Estimated useful life | 5 years | |||||
Trade Names [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Estimated useful life | 10 years | |||||
Customer Relationships [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Estimated useful life | 10 years | |||||
XTRAC and VTRAC [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Acquisition price | $ 42,528 | |||||
XTRAC and VTRAC [Member] | Core Technology [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Estimated useful life | 10 years | |||||
XTRAC and VTRAC [Member] | Product Technology [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Estimated useful life | 5 years |
Inventories, net (Details)
Inventories, net (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Schedule of inventory [Abstract] | |||
Raw materials and work in progress | $ 3,329 | $ 2,553 | |
Finished goods | 586 | 4,131 | |
Total inventories | 3,915 | 6,684 | |
Reserve for obsolete inventory | 0 | (870) | |
Reserve for inventory repairs | 0 | (539) | |
Inventories, net | 3,915 | 5,275 | $ 5,275 |
Inventory [Line Items] | |||
Excess and obsolete inventories write off | 4,818 | $ 1,076 | |
MELAFind Systems [Member] | |||
Inventory [Line Items] | |||
Excess and obsolete inventories write off | $ 5,688 |
Property and Equipment, net (De
Property and Equipment, net (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2015 | Jun. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Property, Plant and Equipment [Line Items] | ||||||
Property and equipment, gross | $ 21,384 | $ 21,384 | $ 7,152 | |||
Accumulated depreciation and amortization | (6,923) | (6,923) | (5,191) | |||
Property and equipment, net | 14,461 | 14,461 | 1,961 | |||
Depreciation and related amortization expense | 1,253 | $ 489 | 1,891 | $ 1,367 | ||
Write-down, property and equipment | 920 | $ 0 | ||||
Lasers Placed-In-Service [Member] | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Property and equipment, gross | 15,154 | 15,154 | 0 | |||
MELAFind Systems [Member] | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Property and equipment, gross | 2,019 | 2,019 | 3,193 | |||
Write-down, property and equipment | $ 920 | |||||
Equipment, Computer Hardware and Software [Member] | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Property and equipment, gross | 1,244 | 1,244 | 1,084 | |||
Furniture and Fixtures [Member] | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Property and equipment, gross | 2,054 | 2,054 | 1,969 | |||
Leasehold Improvements [Member] | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Property and equipment, gross | $ 913 | $ 913 | $ 906 |
Patents and Licensed Technolo43
Patents and Licensed Technologies, net (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Finite-Lived Intangible Assets [Line Items] | |||||
Accumulated amortization | $ 0 | $ 0 | |||
Patents and licensed technologies, net | $ 7,490 | $ 7,490 | $ 37 | ||
Amortization expense | 244 | $ 1 | 247 | $ 4 | |
Estimated amortization expense [Abstract] | |||||
Patents and licensed technologies, net | 7,490 | 7,490 | 37 | ||
Core Technology [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Patents and licensed technologies, gross | 5,974 | $ 5,974 | 274 | ||
Estimated useful life | 10 years | ||||
Core Technology [Member] | XTRAC and VTRAC [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Patents and licensed technologies, net | 5,700 | $ 5,700 | |||
Estimated useful life | 10 years | ||||
Estimated amortization expense [Abstract] | |||||
Patents and licensed technologies, net | 5,700 | $ 5,700 | |||
Product Technology [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Patents and licensed technologies, gross | 2,000 | $ 2,000 | 0 | ||
Estimated useful life | 5 years | ||||
Product Technology [Member] | XTRAC and VTRAC [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Patents and licensed technologies, net | 2,000 | $ 2,000 | |||
Estimated useful life | 5 years | ||||
Estimated amortization expense [Abstract] | |||||
Patents and licensed technologies, net | 2,000 | $ 2,000 | |||
Patents and Licensed Technologies [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Patents and licensed technologies, gross | 7,974 | 7,974 | 274 | ||
Accumulated amortization | (484) | (484) | (237) | ||
Patents and licensed technologies, net | 7,490 | 7,490 | 37 | ||
Estimated amortization expense [Abstract] | |||||
Last three months of 2015 | 238 | 238 | |||
2,016 | 995 | 995 | |||
2,017 | 995 | 995 | |||
2,018 | 995 | 995 | |||
2,019 | 995 | 995 | |||
Thereafter | 3,272 | 3,272 | |||
Patents and licensed technologies, net | $ 7,490 | $ 7,490 | $ 37 |
Goodwill (Details)
Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Goodwill [Roll Forward] | |
Balance at beginning of period | $ 0 |
Additions for the asset purchase | 8,928 |
Balance at end of period | 8,928 |
Accumulated impairment losses of goodwill | $ 0 |
Other Intangible Assets (Detail
Other Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Finite-Lived Intangible Assets [Line Items] | |||||
Accumulated amortization | $ 0 | $ 0 | |||
Other intangible assets, net | $ 8,190 | $ 8,190 | $ 0 | ||
Amortization expense of other intangible assets | 244 | 1 | 247 | 4 | |
Estimated amortization expense [Abstract] | |||||
Other intangible assets, net | 8,190 | 8,190 | $ 0 | ||
Customer Relationships [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Other intangible assets, gross | 6,900 | $ 6,900 | |||
Estimated useful life | 10 years | ||||
Tradenames [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Other intangible assets, gross | 1,500 | $ 1,500 | |||
Estimated useful life | 10 years | ||||
Customer Relationships and Tradenames [Member] | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Other intangible assets, gross | 8,400 | $ 8,400 | |||
Accumulated amortization | (210) | (210) | |||
Other intangible assets, net | 8,190 | 8,190 | |||
Amortization expense of other intangible assets | 210 | $ 0 | 210 | $ 0 | |
Estimated amortization expense [Abstract] | |||||
Last three months of 2015 | 210 | 210 | |||
2,016 | 840 | 840 | |||
2,017 | 840 | 840 | |||
2,018 | 840 | 840 | |||
2,019 | 840 | 840 | |||
Thereafter | 4,620 | 4,620 | |||
Other intangible assets, net | $ 8,190 | $ 8,190 |
Other Accrued Liabilities (Deta
Other Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Other Accrued Liabilities [Abstract] | ||
Accrued warranty, current, see Note 1 | $ 177 | $ 48 |
Accrued compensation, including commissions and vacation | 965 | 55 |
Other accrued liabilities | 778 | 856 |
Total other accrued liabilities | $ 1,920 | $ 959 |
Senior Notes Payable (Details)
Senior Notes Payable (Details) - USD ($) $ / shares in Units, $ in Thousands | Jun. 22, 2015 | Sep. 30, 2015 | Dec. 31, 2014 |
Debt Instrument [Line Items] | |||
Senior-secured notes payable, net of unamortized debt discount of $1,152 | $ 8,848 | $ 0 | |
Assumptions used to value the warrants [Abstract] | |||
Number of shares underlying warrants (in shares) | 3,000,000 | 3,000,000 | |
Exercise price (in dollars per share) | $ 0.75 | $ 0.75 | |
Share price (in dollars per share) | $ 1.38 | $ 1.14 | |
Fair value of warrants | $ 2,959 | $ 2,561 | |
Probability of stockholder approval | 80.00% | 100.00% | |
Volatility | 90.00% | 90.00% | |
Risk-free interest rate | 1.62% | 1.30% | |
Expected dividend yield | 0.00% | 0.00% | |
Expected warrant life | 5 years | 4 years 8 months 23 days | |
Warrant [Member] | |||
Debt Instrument [Line Items] | |||
Unamortized debt discount | $ 1,152 | ||
Assumptions used to value the warrants [Abstract] | |||
Exercise price (in dollars per share) | $ 0.75 | ||
Share price (in dollars per share) | $ 1.38 | $ 1.14 | $ 1.20 |
Fair value of warrants | $ 2,958 | ||
Volatility | 90.00% | 90.00% | |
Risk-free interest rate | 1.62% | 1.65% | |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Expected warrant life | 5 years | ||
Financing 2015 [Member] | |||
Debt Instrument [Line Items] | |||
Aggregate principal amount of debt | $ 42,500 | $ 42,500 | |
Senior Secured Notes Payable [Member] | |||
Debt Instrument [Line Items] | |||
Senior-secured notes payable, net of unamortized debt discount of $1,152 | 8,848 | ||
Unamortized debt discount | $ 1,152 | ||
Number of days for stockholders approval considered for maturity date | 30 days | ||
Interest rate | 12.00% | ||
Warrants liability repayment terms | 5 months | ||
Senior Secured Notes Payable [Member] | Financing 2015 [Member] | |||
Debt Instrument [Line Items] | |||
Aggregate principal amount of debt | $ 10,000 | ||
Number of days for stockholders approval considered for maturity date | 30 days | ||
Interest rate | 9.00% | ||
Debentures [Member] | Financing 2015 [Member] | |||
Debt Instrument [Line Items] | |||
Senior secured convertible debentures | $ 500 | $ 500 |
Convertible Debentures (Details
Convertible Debentures (Details) $ / shares in Units, $ in Thousands | Jul. 21, 2014USD ($)shares$ / shares | Sep. 30, 2015USD ($)shares$ / shares | Jun. 22, 2015USD ($)$ / shares | Dec. 31, 2014USD ($)$ / shares | Jul. 24, 2014$ / shares | Oct. 29, 2013$ / sharesshares |
Debt Instrument [Line Items] | ||||||
Total convertible debt | $ 11,373 | $ 5,001 | ||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 0.75 | $ 0.75 | ||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | ||||
Fair value of warrants | $ 2,561 | $ 2,959 | ||||
Debentures converted in shares of common stock, value | $ 4,593 | |||||
Debt conversion, converted instrument, issued (in shares) | shares | 1,790,671 | |||||
Interest expense on debt | $ 3,415 | |||||
Debentures outstanding amount | $ 41,317 | |||||
Series A Warrants [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Number of warrants to purchase common stock (in shares) | shares | 6,198,832 | 6,198,832 | 685,715 | |||
Exercise price of warrants (in dollars per share) | $ / shares | $ 2.45 | $ 0.75 | $ 2.45 | $ 8.50 | ||
Warrants expiration date | Jul. 1, 2019 | |||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | ||||
Senior Secured 2.25% Convertible Debentures [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Total convertible debt | $ 6,701 | $ 0 | ||||
Debt instrument, unamortized discount | $ 25,798 | |||||
Interest rate | 2.25% | |||||
Aggregate principal amount of debt | $ 32,500 | |||||
Number of shares debt convertible (in shares) | shares | 43,333,334 | |||||
Initial conversion price (in dollars per share) | $ / shares | $ 0.75 | |||||
Debt instrument, maturity period | 5 years | |||||
Debt instrument, convertible, beneficial conversion feature | $ 27,300 | |||||
Maturity date | Jun. 22, 2020 | |||||
Senior Secured 2.25% Convertible Debentures [Member] | Maximum [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Initial conversion price (in dollars per share) | $ / shares | $ 1.38 | |||||
Senior Secured 2.25% Convertible Debentures [Member] | Minimum [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Initial conversion price (in dollars per share) | $ / shares | $ 0.75 | |||||
Senior Secured 4% Convertible Debentures [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Total convertible debt | $ 4,672 | 5,001 | ||||
Debt instrument, unamortized discount | $ 10,353 | $ 4,146 | $ 8,410 | |||
Interest rate | 4.00% | |||||
Aggregate principal amount of debt | $ 15,000 | $ 15,000 | ||||
Number of shares debt convertible (in shares) | shares | 5,847,955 | 5,847,955 | ||||
Initial conversion price (in dollars per share) | $ / shares | $ 2.565 | $ 2.565 | ||||
Debt instrument, maturity period | 5 years | |||||
Debt instrument, convertible, beneficial conversion feature | $ 4,565 | $ 4,565 | ||||
Maturity date | Jul. 1, 2019 | |||||
Fair value of warrants | 5,296 | |||||
Fair value of warrants adjustment (income) expense | 491 | |||||
Debt instrument initial carrying amount | $ 4,647 |
Warrants (Details)
Warrants (Details) $ / shares in Units, $ in Thousands | Jun. 22, 2015USD ($)$ / shares | Sep. 30, 2015USD ($)$ / sharesshares | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)shares$ / shares | Sep. 30, 2014USD ($) | Dec. 31, 2014USD ($)$ / shares | Jul. 24, 2014$ / shares | Jul. 21, 2014$ / sharesshares | Oct. 29, 2013$ / sharesshares |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | |||||||||
Fair value of warrants | $ 2,959 | $ 2,561 | $ 2,561 | ||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 0.75 | $ 0.75 | $ 0.75 | ||||||
Modification of warrants | $ 5,399 | ||||||||
Deemed dividend | $ 2,962 | $ 0 | $ 2,962 | $ 0 | |||||
Fair Value Assumptions [Abstract] | |||||||||
Stock price (in dollars per share) | $ / shares | $ 1.38 | $ 1.14 | $ 1.14 | ||||||
Volatility | 90.00% | 90.00% | |||||||
Risk-free interest rate | 1.62% | 1.30% | |||||||
Expected dividend yield | 0.00% | 0.00% | |||||||
Expected warrant life | 5 years | 4 years 8 months 23 days | |||||||
7/24/2014 Series A [Member] | |||||||||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | |||||||||
Warrants issued to purchase common stock (in shares) | shares | 6,198,832 | 6,198,832 | 6,198,832 | 685,715 | |||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 0.75 | $ 0.75 | $ 2.45 | $ 2.45 | $ 8.50 | ||||
Number of warrants | shares | 4,288,500 | ||||||||
7/24/2014 Series B [Member] | |||||||||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | |||||||||
Warrants issued to purchase common stock (in shares) | shares | 434,325 | ||||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 0.75 | $ 0.75 | $ 2.45 | ||||||
Number of warrants | shares | 4,795,321 | ||||||||
Warrant [Member] | |||||||||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | |||||||||
Warrants issued to purchase common stock (in shares) | shares | 3,000,000 | 3,000,000 | |||||||
Fair value of warrants | $ 2,958 | $ 2,958 | |||||||
Debentures in excess held by the investors | $ 5,000 | $ 5,000 | |||||||
Exercise price of warrants (in dollars per share) | $ / shares | $ 0.75 | $ 0.75 | |||||||
Modification of warrants | $ 5,399 | ||||||||
Deemed dividend | 2,962 | ||||||||
Fair value of warrants adjustment (income) expense | $ 1,329 | $ (2,108) | $ 679 | $ (7,151) | |||||
Fair Value Assumptions [Abstract] | |||||||||
Stock price (in dollars per share) | $ / shares | $ 1.38 | $ 1.14 | $ 1.14 | $ 1.20 | |||||
Volatility | 90.00% | 90.00% | |||||||
Risk-free interest rate | 1.62% | 1.65% | |||||||
Expected dividend yield | 0.00% | 0.00% | 0.00% | ||||||
Expected warrant life | 5 years | ||||||||
Warrant [Member] | Minimum [Member] | |||||||||
Fair Value Assumptions [Abstract] | |||||||||
Volatility | 72.90% | ||||||||
Risk-free interest rate | 0.02% | ||||||||
Expected warrant life | 3 months 25 days | 4 years 1 month 6 days | |||||||
Warrant [Member] | Maximum [Member] | |||||||||
Fair Value Assumptions [Abstract] | |||||||||
Volatility | 88.10% | ||||||||
Risk-free interest rate | 1.30% | ||||||||
Expected warrant life | 4 years 8 months 23 days | 4 years 3 months 29 days | |||||||
Warrant [Member] | Level 3 [Member] | |||||||||
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) [Abstract] | |||||||||
Balance as beginning of period | $ 499 | ||||||||
Initial measurements | 2,958 | ||||||||
Increase (decrease) in fair value | 679 | ||||||||
Reclassed from equity | 5,399 | ||||||||
Balance as end of period | $ 9,535 | 9,535 | $ 499 | ||||||
Warrant [Member] | Level 3 [Member] | 10/31/2013 [Member] | |||||||||
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) [Abstract] | |||||||||
Balance as beginning of period | 233 | ||||||||
Initial measurements | 0 | ||||||||
Increase (decrease) in fair value | 309 | ||||||||
Reclassed from equity | 0 | ||||||||
Balance as end of period | 542 | 542 | 233 | ||||||
Warrant [Member] | Level 3 [Member] | 2/5/2014 [Member] | |||||||||
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) [Abstract] | |||||||||
Balance as beginning of period | 266 | ||||||||
Initial measurements | 0 | ||||||||
Increase (decrease) in fair value | 767 | ||||||||
Reclassed from equity | 0 | ||||||||
Balance as end of period | 1,033 | 1,033 | 266 | ||||||
Warrant [Member] | Level 3 [Member] | 7/24/2014 Series A [Member] | |||||||||
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) [Abstract] | |||||||||
Balance as beginning of period | 0 | ||||||||
Initial measurements | 0 | ||||||||
Increase (decrease) in fair value | 0 | ||||||||
Reclassed from equity | 3,452 | ||||||||
Balance as end of period | 3,452 | 3,452 | 0 | ||||||
Warrant [Member] | Level 3 [Member] | 7/24/2014 Series B [Member] | |||||||||
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) [Abstract] | |||||||||
Balance as beginning of period | 0 | ||||||||
Initial measurements | 0 | ||||||||
Increase (decrease) in fair value | 0 | ||||||||
Reclassed from equity | 1,947 | ||||||||
Balance as end of period | 1,947 | 1,947 | 0 | ||||||
Warrant [Member] | Level 3 [Member] | 6/22/2015 [Member] | |||||||||
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) [Abstract] | |||||||||
Balance as beginning of period | 0 | ||||||||
Initial measurements | 2,958 | ||||||||
Increase (decrease) in fair value | (397) | ||||||||
Reclassed from equity | 0 | ||||||||
Balance as end of period | $ 2,561 | $ 2,561 | $ 0 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | Jul. 24, 2014 | Feb. 05, 2014 | Oct. 29, 2013 | Sep. 30, 2015 | Sep. 30, 2014 | Jun. 22, 2015 | Dec. 31, 2014 | Jul. 21, 2014 |
Class of Stock [Line Items] | ||||||||
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 | ||||||
Preferred stock, par value (in dollars per share) | $ 0.10 | $ 0.10 | ||||||
Preferred stock, shares issued (in shares) | 6,505 | 11,787 | ||||||
Preferred stock, shares outstanding (in shares) | 6,505 | 11,787 | ||||||
Liquidated damages paid to purchasers | $ 3,420 | |||||||
Total preferred stock value | $ 1 | $ 1 | ||||||
Common stock, shares authorized (in shares) | 150,000,000 | 150,000,000 | ||||||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | ||||||
Common stock, shares issued (in shares) | 422,819 | 9,887,358 | 6,037,232 | |||||
Common stock, shares outstanding (in shares) | 9,887,358 | 6,037,232 | ||||||
Proceeds from issuance of common stock | $ 6,000,000 | $ 0 | $ 11,458 | |||||
Class of Warrant or Right [Line Items] | ||||||||
Total Warrants (in shares) | 16,078,920 | |||||||
Exercise price (in dollars per share) | $ 0.75 | $ 0.75 | ||||||
Series A Warrants [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Common stock, par value (in dollars per share) | 0.001 | $ 0.001 | ||||||
Class of Warrant or Right [Line Items] | ||||||||
Exercise price (in dollars per share) | $ 2.45 | $ 8.50 | $ 0.75 | $ 2.45 | ||||
Warrants issued and outstanding to purchase common stock (in shares) | 685,715 | 6,198,832 | 6,198,832 | |||||
Series B warrants [Member] | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Exercise price (in dollars per share) | $ 2.45 | $ 0.75 | ||||||
Warrants issued and outstanding to purchase common stock (in shares) | 434,325 | |||||||
Common Stock Warrant One [Member] | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Issue Date | Apr. 26, 2013 | |||||||
Expiration Date | Apr. 26, 2018 | |||||||
Total Warrants (in shares) | 69,321 | |||||||
Exercise price (in dollars per share) | $ 11.18 | |||||||
Common Stock Warrant Two [Member] | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Issue Date | Oct. 31, 2013 | |||||||
Expiration Date | Apr. 30, 2019 | |||||||
Total Warrants (in shares) | 685,715 | |||||||
Exercise price (in dollars per share) | $ 0.75 | |||||||
Common Stock Warrant Three [Member] | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Issue Date | Feb. 5, 2014 | |||||||
Expiration Date | Feb. 5, 2019 | |||||||
Total Warrants (in shares) | 1,329,731 | |||||||
Exercise price (in dollars per share) | $ 0.75 | |||||||
Common Stock Warrant Four [Member] | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Issue Date | Jul. 24, 2014 | |||||||
Expiration Date | Jul. 24, 2019 | |||||||
Total Warrants (in shares) | 6,198,832 | |||||||
Common Stock Warrant Four [Member] | Minimum [Member] | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Exercise price (in dollars per share) | $ 0.75 | |||||||
Common Stock Warrant Four [Member] | Maximum [Member] | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Exercise price (in dollars per share) | $ 2.45 | |||||||
Common Stock Warrant Five [Member] | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Issue Date | Jul. 24, 2014 | |||||||
Expiration Date | Jan. 24, 2016 | |||||||
Total Warrants (in shares) | 4,795,321 | |||||||
Exercise price (in dollars per share) | $ 0.75 | |||||||
Common Stock Warrant Six [Member] | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Issue Date | Jun. 22, 2015 | |||||||
Expiration Date | Jun. 22, 2020 | |||||||
Total Warrants (in shares) | 3,000,000 | |||||||
Exercise price (in dollars per share) | $ 0.75 | |||||||
Series B Preferred Stock [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Preferred stock, shares issued (in shares) | 6,505 | 11,787 | ||||||
Preferred stock, shares outstanding (in shares) | 6,505 | 11,787 | ||||||
Number of preferred stock converted (in shares) | 12,300 | 5,282.5 | ||||||
Conversion of convertible preferred stock, stated value (in dollars per share) | $ 1,000 | |||||||
Initial conversion price (in dollars per share) | $ 2.565 | |||||||
Total preferred stock value | $ 2,487 | |||||||
Intrinsic value of beneficial conversion feature | $ 1,887 | |||||||
Class of Warrant or Right [Line Items] | ||||||||
Exercise price (in dollars per share) | $ 2.45 | |||||||
Warrants issued and outstanding to purchase common stock (in shares) | 4,795,321 | |||||||
Series A Preferred Stock [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Preferred stock, par value (in dollars per share) | $ 0.10 | |||||||
Preferred stock, shares issued (in shares) | 12,300 | |||||||
Number of preferred stock converted (in shares) | 12,300 | |||||||
Conversion of convertible preferred stock, stated value (in dollars per share) | $ 1,000 | |||||||
Common Stock [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Number of shares issued upon conversion (in shares) | 4,795,321 | 2,059,455 | ||||||
Common Stock Equivalents of Convertible Preferred Stock [Member] | ||||||||
Class of Stock [Line Items] | ||||||||
Preferred stock, par value (in dollars per share) | $ 0.10 | |||||||
Preferred stock, shares issued (in shares) | 12,300 | |||||||
Number of shares issued upon conversion (in shares) | 1,464,287 | |||||||
Initial conversion price (in dollars per share) | $ 8.40 | |||||||
Proceeds from issuance of warrants | $ 11,458 | |||||||
Warrant term | 5 years | |||||||
Class of Warrant or Right [Line Items] | ||||||||
Exercise price (in dollars per share) | $ 7.40 | |||||||
Warrants issued and outstanding to purchase common stock (in shares) | 1,329,731 |
Stock-based compensation (Detai
Stock-based compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | ||||
Stock-based compensation expense | $ 1,483 | $ 447 | ||
Non-employee stock-based compensation | $ 20 | |||
Stock Options [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | ||||
Risk-free interest rate | 1.75% | |||
Risk-free interest rate - Minimum | 2.14% | |||
Risk-free interest rate - Maximum | 2.45% | |||
Volatility | 85.68% | |||
Volatility - Minimum | 75.51% | |||
Volatility - Maximum | 73.87% | |||
Expected dividend yield | 0.00% | 0.00% | ||
Expected life | 6 years 6 months | 6 years 6 months | ||
Estimated forfeiture rate | 0.00% | 0.00% | ||
Stock-based compensation expense | $ 1,007 | $ 115 | $ 1,483 | $ 427 |
Unrecognized compensation expense | $ 535 | $ 535 | ||
Stock Options [Member] | Maximum [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expiry period of option | 10 years |
Business Segments and Geograp52
Business Segments and Geographic Data (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)Segment | Sep. 30, 2014USD ($) | |
Segment Reporting Information [Line Items] | ||||
Number of operating segments | Segment | 3 | |||
Number of dermatology procedures segments | Segment | 2 | |||
Revenues | $ 8,323 | $ 218 | $ 9,015 | $ 541 |
Cost of revenues | 3,042 | 1,560 | 10,226 | 3,755 |
Gross profit | $ 5,281 | $ (1,342) | $ (1,211) | $ (3,214) |
Gross profit % | 63.50% | (615.60%) | (13.40%) | (594.10%) |
Allocated operating expenses [Abstract] | ||||
Engineering and product development | $ 471 | $ 345 | $ 946 | $ 1,423 |
Selling and marketing expenses | 4,001 | 429 | 5,984 | 2,366 |
Unallocated operating expenses | 3,132 | 1,885 | 6,819 | 5,988 |
Total operating expenses | 7,604 | 2,659 | 13,749 | 9,777 |
Income (loss) from operations | (2,323) | (4,001) | (14,960) | (12,991) |
Interest expense, net | (5,577) | (527) | (8,738) | (528) |
Change in fair value of warrant liability | (1,329) | 2,108 | (679) | 7,151 |
Gain on sale of assets | 0 | 11 | 0 | 16 |
Other income (expense), net | (5) | 121 | 23 | 131 |
Registration rights liquidated damages | 0 | (3,420) | ||
Net income (loss) | (9,234) | (2,288) | (24,354) | (9,641) |
Dermatology Recurring Procedures [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 0 | 0 | ||
Dermatology Procedures Equipment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 0 | 0 | ||
Operating Segments [Member] | Dermatology Recurring Procedures [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 7,033 | 0 | 7,138 | 0 |
Cost of revenues | 2,326 | 0 | 2,386 | 0 |
Gross profit | $ 4,707 | $ 0 | $ 4,752 | $ 0 |
Gross profit % | 66.90% | 0.00% | 66.60% | 0.00% |
Allocated operating expenses [Abstract] | ||||
Engineering and product development | $ 348 | $ 0 | $ 355 | $ 0 |
Selling and marketing expenses | 3,554 | 0 | 3,723 | 0 |
Unallocated operating expenses | 0 | 0 | 0 | 0 |
Total operating expenses | 3,902 | 0 | 4,078 | 0 |
Income (loss) from operations | 805 | 0 | 674 | 0 |
Interest expense, net | 0 | 0 | 0 | 0 |
Change in fair value of warrant liability | 0 | 0 | 0 | 0 |
Gain on sale of assets | 0 | 0 | ||
Other income (expense), net | 0 | 0 | 0 | 0 |
Registration rights liquidated damages | 0 | |||
Net income (loss) | 805 | 0 | 674 | 0 |
Operating Segments [Member] | Dermatology Procedures Equipment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 1,189 | 0 | 1,638 | 0 |
Cost of revenues | 607 | 0 | 891 | 0 |
Gross profit | $ 582 | $ 0 | $ 747 | $ 0 |
Gross profit % | 48.90% | 0.00% | 45.60% | 0.00% |
Allocated operating expenses [Abstract] | ||||
Engineering and product development | $ 31 | $ 0 | $ 62 | $ 0 |
Selling and marketing expenses | 97 | 0 | 127 | 0 |
Unallocated operating expenses | 0 | 0 | 0 | 0 |
Total operating expenses | 128 | 0 | 189 | 0 |
Income (loss) from operations | 454 | 0 | 558 | 0 |
Interest expense, net | 0 | 0 | 0 | 0 |
Change in fair value of warrant liability | 0 | 0 | 0 | 0 |
Gain on sale of assets | 0 | 0 | ||
Other income (expense), net | 0 | 0 | 0 | 0 |
Registration rights liquidated damages | 0 | |||
Net income (loss) | 454 | 0 | 558 | 0 |
Operating Segments [Member] | Dermatology Imaging [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 101 | 218 | 239 | 541 |
Cost of revenues | 109 | 1,560 | 6,949 | 3,755 |
Gross profit | $ (8) | $ (1,342) | $ (6,710) | $ (3,214) |
Gross profit % | (7.90%) | (615.60%) | (2807.50%) | (594.10%) |
Allocated operating expenses [Abstract] | ||||
Engineering and product development | $ 92 | $ 345 | $ 529 | $ 1,423 |
Selling and marketing expenses | 350 | 429 | 2,134 | 2,366 |
Unallocated operating expenses | 0 | 0 | 0 | 0 |
Total operating expenses | 442 | 774 | 2,663 | 3,789 |
Income (loss) from operations | (450) | (2,116) | (9,373) | (7,003) |
Interest expense, net | 0 | 0 | 0 | |
Change in fair value of warrant liability | 0 | 0 | 0 | 0 |
Gain on sale of assets | 0 | 0 | ||
Other income (expense), net | 0 | 0 | 0 | 0 |
Registration rights liquidated damages | 0 | |||
Net income (loss) | (450) | (2,116) | (9,373) | (7,003) |
Reportable Geographical Components [Member] | Domestic [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 7,114 | 55 | 7,236 | 140 |
Reportable Geographical Components [Member] | Foreign [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | $ 1,209 | $ 163 | $ 1,779 | $ 401 |
Significant Customer Concentr53
Significant Customer Concentration (Details) - Customer Concentration Risk [Member] $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2015USD ($) | Sep. 30, 2015USD ($) | |
Revenue [Member] | ||
Product Information [Line Items] | ||
Revenues | $ 949 | $ 1,385 |
Concentration risk percentage | 11.40% | 15.40% |
Accounts Receivable [Member] | ||
Product Information [Line Items] | ||
Accounts receivable | $ 363 | $ 363 |
Concentration risk percentage | 8.70% |
Subsequent Events (Details)
Subsequent Events (Details) $ in Thousands | Nov. 04, 2015USD ($)Employee | Oct. 31, 2015USD ($)shares | Sep. 30, 2015USD ($)shares |
Subsequent Events [Line Items] | |||
Debentures converted in shares of common stock, value | $ 4,593 | ||
Debentures converted in shares of common stock (in shares) | shares | 1,790,671 | ||
Subsequent Event [Member] | |||
Subsequent Events [Line Items] | |||
Debentures converted in shares of common stock, value | $ 676 | ||
Debentures converted in shares of common stock (in shares) | shares | 296,035 | ||
Number of directors | Employee | 2 | ||
Subsequent Event [Member] | Jeffrey F. O'Donnell, Sr. [Member] | |||
Subsequent Events [Line Items] | |||
Employee compensation | $ 120 | ||
Subsequent Event [Member] | Samuel E. Navarro [Member] | |||
Subsequent Events [Line Items] | |||
Employee compensation | $ 120 |