Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | May 05, 2017 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | NEPHROS INC | |
Entity Central Index Key | 1,196,298 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2017 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 54,160,547 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,017 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash | $ 803 | $ 275 |
Accounts receivable, net | 582 | 388 |
Investment in lease, net-current portion | 21 | 27 |
Inventory, net | 401 | 479 |
Prepaid expenses and other current assets | 121 | 95 |
Total current assets | 1,928 | 1,264 |
Property and equipment, net | 63 | 70 |
Investment in lease, net-less current portion | 57 | 61 |
License and supply agreement, net | 1,210 | 1,262 |
Other asset | 21 | 21 |
Total assets | 3,279 | 2,678 |
Current liabilities: | ||
Accounts payable | 361 | 585 |
Accrued expenses | 349 | 240 |
Deferred revenue, current portion | 70 | 70 |
Total current liabilities | 780 | 895 |
Unsecured long-term note payable, net of debt issuance costs and debt discount of $323 and $349, respectively | 864 | 838 |
Long-term portion of deferred revenue | 261 | 278 |
Total liabilities | 1,905 | 2,011 |
Commitments and Contingencies (Note 13) | ||
Stockholders' equity: | ||
Preferred stock, $.001 par value; 5,000,000 shares authorized at March 31, 2017 and December 31, 2016; no shares issued and outstanding at March 31, 2017 and December 31, 2016 | ||
Common stock, $.001 par value; 90,000,000 shares authorized at March 31, 2017 and December 31, 2016; 54,160,547 and 49,782,797 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively. | 54 | 50 |
Additional paid-in capital | 122,229 | 120,835 |
Accumulated other comprehensive income | 68 | 67 |
Accumulated deficit | (120,977) | (120,285) |
Total stockholders' equity | 1,374 | 667 |
Total liabilities and stockholders' equity | $ 3,279 | $ 2,678 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Debt discount | $ 323 | $ 349 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 90,000,000 | 90,000,000 |
Common stock, shares issued | 54,160,547 | 49,782,797 |
Common stock, shares outstanding | 54,160,547 | 49,782,797 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Net revenues: | ||
Product revenues | $ 690 | $ 545 |
License and royalty revenues | 44 | 45 |
Total net revenues | 734 | 590 |
Cost of goods sold | 279 | 295 |
Gross margin | 455 | 295 |
Operating expenses: | ||
Research and development | 231 | 269 |
Depreciation and amortization | 59 | 55 |
Selling, general and administrative | 770 | 777 |
Total operating expenses | 1,060 | 1,101 |
Loss from operations | (605) | (806) |
Interest expense | (66) | (14) |
Interest income | 1 | 1 |
Other expense | (10) | (17) |
Net loss | (680) | (836) |
Other comprehensive income, foreign currency translation adjustments | 1 | 1 |
Total comprehensive loss | $ (679) | $ (835) |
Net loss per common share, basic and diluted | $ (0.01) | $ (0.02) |
Weighted average common shares outstanding, basic and diluted | 49,601,521 | 48,173,521 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - 3 months ended Mar. 31, 2017 - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Other Comprehensive Income [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2016 | $ 50 | $ 120,835 | $ 67 | $ (120,285) | $ 667 |
Balance, shares at Dec. 31, 2016 | 49,782,797 | ||||
Net loss | (680) | (680) | |||
Cumulative effect of change in accounting principle | 12 | (12) | |||
Net unrealized gains on foreign currency translation, net of tax | 1 | 1 | |||
Issuance of common stock, net of equity issuance costs of $144 | $ 4 | 1,070 | 1,074 | ||
Issuance of common stock, net of equity issuance costs, shares | 4,059,994 | ||||
Issuance of common stock | 113 | 113 | |||
Issuance of common stock, shares | 300,000 | ||||
Issuance of restricted stock | |||||
Issuance of restricted stock, shares | 17,756 | ||||
Noncash stock-based compensation | 199 | 199 | |||
Balance at Mar. 31, 2017 | $ 54 | $ 122,229 | $ 68 | $ (120,977) | $ 1,374 |
Balance, shares at Mar. 31, 2017 | 54,160,547 |
Consolidated Statement of Chan6
Consolidated Statement of Changes in Stockholders' Equity (Parenthetical) $ in Thousands | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Statement of Stockholders' Equity [Abstract] | |
Equity issuance costs | $ 144 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Operating activities: | ||
Net loss | $ (680) | $ (836) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation of property and equipment | 7 | 3 |
Amortization of other assets | 52 | 52 |
Non-cash stock-based compensation, including stock options and restricted stock | 199 | 127 |
Non-employee stock-based compensation | 20 | |
Non-cash interest expense | 26 | |
Inventory reserve | 27 | |
Allowance for doubtful accounts reserve | 2 | 9 |
Loss on foreign currency transactions | 2 | 14 |
(Increase) decrease in operating assets: | ||
Accounts receivable | (185) | (181) |
Inventory | 78 | 106 |
Prepaid expenses and other current assets | (26) | 7 |
Increase (decrease) in operating liabilities: | ||
Accounts payable | (226) | 78 |
Accrued expenses | 109 | 69 |
Deferred revenue | (17) | (17) |
Net cash used in operating activities | (659) | (522) |
Investing activities: | ||
Purchase of property, plant and equipment | (26) | |
Net cash used in investing activities | (26) | |
Financing activities: | ||
Proceeds from issuance of common stock | 1,187 | |
Proceeds from exercise of warrants | 1 | |
Net cash provided by financing activities | 1,187 | 1 |
Effect of exchange rates on cash | ||
Net increase (decrease) in cash | 528 | (547) |
Cash, beginning of period | 275 | 1,248 |
Cash, end of period | 803 | 701 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 5 | 12 |
Cash paid for income taxes | 2 | 2 |
Supplemental disclosure of noncash investing and financing activities | ||
Investment in lease receivable, net | 92 | |
Cost of equipment in direct financing lease | 92 | |
Restricted stock issued to settle liability | 16 | |
Deposit on inventory reclassified from prepaid expenses and other current assets to inventory | 18 | |
Deposit on property and equipment reclassified from prepaid expenses and other current assets to property and equipment | $ 98 |
Organization and Nature of Oper
Organization and Nature of Operations | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Nature of Operations | Note 1 - Organization and Nature of Operations Nephros, Inc. (“Nephros” or the “Company”) was incorporated under the laws of the State of Delaware on April 3, 1997. Nephros was founded by health professionals, scientists and engineers affiliated with Columbia University to develop advanced End Stage Renal Disease (“ESRD”) therapy technology and products. The Company has two products in the hemodiafiltration (“HDF”) modality to deliver therapy for ESRD patients. These are the OLpūr mid-dilution HDF filter or “dialyzer,” designed expressly for HDF therapy, and the OLpūr H2H HDF module, an add-on module designed to allow the most common types of hemodialysis machines to be used for HDF therapy. In 2009, the Company introduced its Dual Stage Ultrafilter (“DSU”) water filter, which represented a new and complementary product line to the Company’s ESRD therapy business. The DSU incorporates the Company’s unique and proprietary dual stage filter architecture. On June 4, 2003, Nephros International Limited was incorporated under the laws of Ireland as a wholly-owned subsidiary of the Company. In August 2003, the Company established a European Customer Service and financial operations center in Dublin, Ireland. The U.S. facilities, located at 41 Grand Avenue, River Edge, New Jersey, 07661, are used to house the Company’s corporate headquarters and research facilities. |
Basis of Presentation and Going
Basis of Presentation and Going Concern | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Going Concern | Note 2 - Basis of Presentation and Going Concern Interim Financial Information The accompanying unaudited condensed consolidated interim financial statements of Nephros, Inc. and its wholly owned subsidiary, Nephros International Limited, should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2016 Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 20, 2017. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 and Article 10 of Regulation S-X. Accordingly, since they are interim statements, the accompanying condensed consolidated interim financial statements do not include all of the information and notes required by GAAP for a complete financial statement presentation. The condensed consolidated balance sheet as of December 31, 2016 was derived from the Company’s audited consolidated financial statements but does not include all disclosures required by GAAP. In the opinion of management, the condensed consolidated interim financial statements reflect all adjustments consisting of normal, recurring adjustments that are necessary for a fair presentation of the financial position, results of operations and cash flows for the condensed consolidated interim periods presented. Interim results are not necessarily indicative of results for a full year. All intercompany transactions and balances have been eliminated in consolidation. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, at the date of the financial statements, and the reported amount of revenues and expenses, during the reporting period. Actual results could differ materially from those estimates. Included in these estimates are assumptions about the collection of accounts receivable, value of inventories, useful life of fixed assets and intangible assets, assumptions used in determining stock compensation such as expected volatility and risk-free interest rate and the ability of the Company to continue as a going concern. Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company’s recurring losses and difficulty in generating sufficient cash flow to meet its obligations and sustain its operations raise substantial doubt about its ability to continue as a going concern. The Company’s consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company has incurred significant losses in operations in each quarter and has not generated positive cash flow from operations since inception. To become profitable, the Company must increase revenue substantially and achieve and maintain income from operations. If the Company is not able to increase revenue and generate income from operations sufficiently to achieve profitability, its results from operations and its financial condition will be materially and adversely affected. On March 22, 2017, the Company raised gross proceeds of approximately $1,218,000 through the private placement of 4,059,994 units of its securities. See Note 12 for further discussion. Based on the Company’s current cash flow projections, the Company expects that its existing cash balances and projected increase in product sales from the launch of new products, including the approximately $1.2 million raised in a private placement in March 2017, will allow the Company to fund its operations at least into 2018, if not longer, depending on the timing and market acceptance of our new products. There can be no assurance that the Company’s future cash flow will be sufficient to meet its obligations and commitments. If the Company is unable to generate sufficient cash flow from operations in the future to meet its operating requirements and other commitments, the Company will be required to adopt alternatives, such as seeking to raise debt or equity capital, curtailing its planned activities or ceasing its operations. There can be no assurance that any such actions could be effected on a timely basis or on satisfactory terms or at all, or that these actions would enable the Company to continue to satisfy its capital requirements. Recently Adopted Accounting Pronouncements In July 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-11, “Simplifying the Measurement of Inventory,” that requires inventory be measured at the lower of cost and net realizable value and options that currently exist for market value be eliminated. The standard defines net realizable value as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation and is effective for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years with early adoption permitted. The guidance should be applied prospectively. The Company adopted ASU 2015-11 during the three months ended March 31, 2017 and the adoption of this guidance did not have a significant impact on the Company’s consolidated financial statements. In November 2015, the FASB issued ASU No. 2015-17, “Balance Sheet Classification of Deferred Taxes,” that requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by this amendment. The new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is permitted and the standard may be applied either retrospectively or on a prospective basis to all deferred tax assets and liabilities. The Company adopted ASU 2015-17 during the three months ended March 31, 2017 and the adoption of this guidance did not have a significant impact on the Company’s consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting,” which simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The guidance is effective for the Company beginning in the first quarter of fiscal year 2017. Early adoption is permitted. The Company adopted ASU 2015-17 during the three months ended March 31, 2017 and elected to recognize forfeitures as they occur. Prior to the adoption of ASU 2016-09, the Company recognized stock based compensation based on the estimated fair value of the award, net of expected forfeitures. As of January 1, 2017, a cumulative effect adjustment of approximately $12,000 was recognized to reflect the forfeiture rate that had been applied to unvested option awards prior to fiscal year 2017. |
Major Customers and Concentrati
Major Customers and Concentration of Credit Risk | 3 Months Ended |
Mar. 31, 2017 | |
Risks and Uncertainties [Abstract] | |
Major Customers and Concentration of Credit Risk | Note 3 - Major Customers and Concentration of Credit Risk For the three months ended March 31, 2017 and 2016, the following customers accounted for the following percentages of the Company’s sales, respectively: Customer 2017 2016 A 25 % 17 % B 13 % 42 % C 10 % 2 % D 9 % 11 % As of March 31, 2017 and December 31, 2016, the following customers accounted for the following percentages of the Company’s accounts receivable, respectively: Customer 2017 2016 A 22 % 36 % B 14 % 12 % C 11 % 6 % The Company provides credit terms to customers in connection with purchases of the Company’s products. Management periodically reviews customer account activity in order to assess the adequacy of the allowances provided for potential collection issues and returns. Adjustments, if any, are made to reserve balances following the completion of these reviews to reflect management’s best estimate of potential losses. The allowance for doubtful accounts was approximately $52,000 and $50,000 as of March 31, 2017 and December 31, 2016, respectively. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2017 | |
Revenue Recognition [Abstract] | |
Revenue Recognition | Note 4 - Revenue Recognition Revenue is recognized in accordance with Accounting Standards Codification (“ASC”) Topic 605. Four basic criteria must be met before revenue can be recognized: (i) persuasive evidence that an arrangement exists; (ii) delivery has occurred or services have been rendered; (iii) the fee is fixed or determinable; and (iv) collectability is reasonably assured. The Company recognizes revenue related to product sales when delivery is confirmed by its external logistics provider and the other criteria of ASC Topic 605 are met. Product revenue is recorded net of returns and allowances. All costs and duties relating to delivery are absorbed by the Company. Shipments for all products are currently received directly by the Company’s customers. Deferred revenue was approximately $331,000 and $348,000 on the accompanying consolidated balance sheets as of March 31, 2017 and December 31, 2016, respectively, and is related to the License Agreement with Bellco, which is being deferred over the remainder of the expected obligation period. The Company has recognized approximately $2,745,000 of license revenue related to the License Agreement to date and approximately $17,000 for the three months ended March 31, 2017 and 2016, respectively. Approximately $52,000 of revenue will be recognized in the remaining nine months of fiscal year 2017 and approximately $69,000 of revenue will be recognized in each of the years ended December 31, 2018 through 2021. Beginning on January 1, 2015, Bellco pays the Company a royalty based on the number of units of certain products sold per year due one fiscal quarter in arrears. For the three months ended March 31, 2017 and 2016, the Company recognized royalty revenue of approximately $27,000 and $28,000, respectively. See Note 13, Commitments and Contingencies, for further discussion of the Bellco License Agreement. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Note 5 - Fair Value of Financial Instruments The carrying amounts of cash, accounts receivable, accounts payable and accrued expenses approximate fair value due to the short-term maturity of these instruments. The fair value guidance requires fair value measurements be classified and disclosed in one of the following three categories: ● Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; ● Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; ● Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). Fair Value of Investment in Lease, net The carrying value of the investment in lease, net, approximates fair value as of March 31, 2017. |
Stock Plans and Share-Based Pay
Stock Plans and Share-Based Payments | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Plans and Share-Based Payments | Note 6 - Stock Plans and Share-Based Payments Stock Options The Company accounts for stock option grants to employees and non-employee directors under the provisions of ASC 718, Stock Compensation. ASC 718 requires the recognition of the fair value of stock-based compensation in the statement of operations. In addition, the Company accounts for stock option grants to consultants under the provisions of ASC 505-50, and as such, these stock options are revalued at each reporting period through the vesting period. The Company granted stock options to purchase 579,571 shares of common stock to an employee during the three months ended March 31, 2017. These stock options will be expensed over their respective applicable vesting periods, which are based on service and performance conditions. The fair value of all stock-based awards granted during the three months ended March 31, 2017 was approximately $223,000. The fair value of stock-based awards is amortized over the vesting period of the award. For stock-based awards that vest based on performance conditions (e.g., achievement of certain milestones), expense is recognized when it is probable that the condition will be met. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. The below assumptions for the risk-free interest rates, expected dividend yield, expected lives and expected stock price volatility were used for the awards granted during the three months ended March 31, 2017. Three Months Ended Assumptions for Option Grants March 31, 2017 Stock Price Volatility 110.9 % Risk-Free Interest Rates 2.08 % Expected Life (in years) 6.01 Expected Dividend Yield - % The Company calculates expected volatility for a stock-based grant based on historic monthly common stock price observations during the period immediately preceding the grant that is equal in length to the expected term of the grant. With respect to grants of options, the risk free rate of interest is based on the U.S. Treasury rates appropriate for the expected term of the grant. As a result of adopting ASU 2016-09, the Company has elected to recognize forfeitures as they occur. Stock-based compensation expense was approximately $102,000 for each of the three months ended March 31, 2017 and 2016. For the three months ended March 31, 2017, approximately $94,000 and approximately $8,000 are included in Selling, General and Administrative expenses and Research and Development expenses, respectively, on the accompanying condensed consolidated statement of operations and comprehensive loss. For the three months ended March 31, 2016, approximately $95,000 and approximately $7,000 are included in Selling, General and Administrative expenses and Research and Development expenses, respectively, on the accompanying condensed consolidated statement of operations and comprehensive loss. There was no tax benefit related to expense recognized in the three months ended March 31, 2017 and 2016, as the Company is in a net operating loss position. As of March 31, 2017, there was approximately $1,100,000 of total unrecognized compensation cost related to unvested share-based compensation awards granted under the equity compensation plans. Approximately $211,000 of the $1,100,000 total unrecognized compensation will be recognized at the time that certain performance conditions are met. The remaining unrecognized compensation expense of approximately $889,000 will be amortized over the weighted average remaining requisite service period of 2.1 years. Such amount does not include the effect of future grants of equity compensation, if any. Restricted Stock On March 31, 2017, the Company issued 17,756 shares of restricted stock as compensation for services to its chief executive officer in consideration of deferred cash salary of $7,000 for the three months ended March 31, 2017. The grant date fair value of the outstanding restricted stock awards was approximately $7,000. Total stock based compensation for the restricted stock grants was approximately $97,000 and $45,000 for the three months ended March 31, 2017 and 2016, respectively, and is included in Selling, General and Administrative expenses on the accompanying condensed consolidated statement of operations and comprehensive loss. As of March 31, 2017, there was approximately $88,000 of unrecognized compensation expense related to the restricted stock awards, which is expected to be recognized over the next three to six months, dependent upon the respective restricted stock grant dates. |
Warrants
Warrants | 3 Months Ended |
Mar. 31, 2017 | |
Equity [Abstract] | |
Warrants | Note 7 - Warrants There were no warrants exercised during the three months ended March 31, 2017. For the three months ended March 31, 2016, 19,621 warrants were exercised, resulting in proceeds of approximately $1,000 and the issuance of 906 shares of the Company’s common stock. |
Net Income (Loss) Per Common Sh
Net Income (Loss) Per Common Share | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Common Share | Note 8 - Net Income (Loss) per Common Share Basic income (loss) per common share is calculated by dividing net income (loss) available to common shareholders by the number of weighted average common shares issued and outstanding. Diluted earnings (loss) per common share is calculated by dividing net income (loss) available to common shareholders, adjusted for the change in the fair value of the warrant liability by the weighted average number of common shares issued and outstanding for the period, plus amounts representing the dilutive effect from the exercise of stock options and warrants, as applicable. The Company calculates dilutive potential common shares using the treasury stock method, which assumes the Company will use the proceeds from the exercise of stock options and warrants to repurchase shares of common stock to hold in its treasury stock reserves. The following potentially dilutive securities have been excluded from the computations of diluted weighted-average shares outstanding as they would be anti-dilutive: March 31, 2017 2016 Shares underlying warrants outstanding 7,432,342 917,149 Shares underlying options outstanding 5,040,306 4,192,640 Unvested restricted stock 584,467 356,231 |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Note 9 - Recent Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” related to revenue recognition. The underlying principle of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects to be entitled to in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in prior accounting guidance. ASU 2014-09 provides alternative methods of initial adoption, and was effective for fiscal years beginning after December 15, 2016, and interim periods within those annual periods. Early adoption was not permitted. In August, 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers: Deferral of the Effective Date”. The amendment in this ASU defers the effective date of ASU No. 2014-09 for all entities for one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU 2014-09 to fiscal years beginning after December 15, 2017, including interim reporting periods within that fiscal year. Earlier application is permitted only as of fiscal years beginning after December 31, 2016, including interim reporting periods with that fiscal year. The Company is currently reviewing the revised guidance and assessing the potential impact on its consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities,” that modifies certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. The accounting standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is permitted. The Company is currently assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, “Leases”, that discusses how an entity should account for lease assets and lease liabilities. The guidance specifies that an entity who is a lessee under lease agreements should recognize lease assets and lease liabilities for those leases classified as operating leases under previous FASB guidance. Accounting for leases by lessors is largely unchanged under the new guidance. The guidance is effective for the Company beginning in the first quarter of 2019. Early adoption is permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company is evaluating the impact of adopting this guidance on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-08, “Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” which clarifies the implementation guidance on principal versus agent considerations. The amendments in this update do not change the core principle of ASU 2014-09. The effective date and transition requirements for the amendments in this update are the same as the effective date and transition requirements of ASU 2014-09. As discussed above, ASU 2015-14 defers the effective date of ASU 2014-09 by one year. The Company is assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements. In April 2016, the FASB issued ASU 2016-10, “Identifying Performance Obligations and Licensing,” which clarifies the implementation guidance for performance obligations and licensing. The amendments in this update do not change the core principle of ASU 2014-09. The effective date and transition requirements for the amendments in this update are the same as the effective date and transition requirements of ASU 2014-09. As discussed above, ASU 2015-14 defers the effective date of ASU 2014-09 by one year. The Company is currently assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements. In May 2016, the FASB issued ASU 2016-12, “Narrow Scope Improvements and Practical Expedients,” which clarifies the accounting for certain aspects of guidance issued in ASU 2014-09, including assessing collectability and noncash consideration. The clarifications in this update do not change the core principle of ASU 2014-09. The effective date and transition requirements for the amendments in this update are the same as the effective date and transition requirements of ASU 2014-09. As discussed above, ASU 2015-14 defers the effective date of ASU 2014-09 by one year. The Company is currently assessing the impact that adopting this new accounting guidance will have on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments,” which replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance is effective for the Company beginning in the first quarter of fiscal year 2020. Early adoption is permitted beginning in the first quarter of fiscal year 2019. The Company is evaluating the impact of adopting this guidance on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, “Classification of Certain Cash Receipts and Cash Payments,” which clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows in order to reduce diversity in practice. The guidance is effective for the Company beginning in the first quarter of fiscal year 2018. Early adoption is permitted. The Company is evaluating the impact of adopting this guidance on its consolidated financial statements. In November 2016, the FASB issued ASU 2016-17, “Restricted Cash,” which clarifies how restricted cash is presented and classified in the statement of cash flows. The guidance is effective for the Company beginning in the first quarter of fiscal year 2018. Early adoption is permitted. The Company is evaluating the impact of adopting this guidance on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, “Clarifying the Definition of a Business,” which clarifies the definition of a business in a business combination. The guidance is effective for the Company beginning in the first quarter of fiscal year 2018. Early adoption is permitted. The Company is evaluating the impact of adopting this guidance on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment,” which simplifies the test for goodwill impairment. The guidance is effective for the Company beginning in the first quarter of fiscal year 2020. Early adoption is permitted for interim or annual goodwill impairments tests after January 1, 2017. The Company is evaluating the impact of adopting this guidance on its consolidated financial statements. |
Inventory, Net
Inventory, Net | 3 Months Ended |
Mar. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Inventory, Net | Note 10 - Inventory, net Inventory is stated at the lower of cost or net realizable value using the first-in first-out method and consists entirely of finished goods. The Company’s inventory as of March 31, 2017 and December 31, 2016 was as follows: March 31, 2017 December 31, 2016 (Unaudited) (Audited) Total gross inventory, finished goods $ 447,000 $ 528,000 Less: inventory reserve (46,000 ) (49,000 ) Total inventory, net $ 401,000 $ 479,000 |
Unsecured Promissory Notes and
Unsecured Promissory Notes and Warrants | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Unsecured Promissory Notes and Warrants | Note 11 - Unsecured Promissory Notes and Warrants On June 7, 2016, the Company entered into a Note and Warrant Agreement (the “Agreement”) with new creditors as well as existing shareholders under which the Company issued unsecured promissory notes (“Notes”) and warrants (“Warrants”) resulting in total gross proceeds to the Company during June 2016 of approximately $1,187,000. The outstanding principal under the Notes accrues interest at a rate of 11% per annum. The Company is required to make interest only payments on a semi-annual basis, and all outstanding principal under the Notes is repayable in cash on June 7, 2019, the third anniversary of the date of issuance. In addition to the Notes, the Company issued Warrants to purchase approximately 2.4 million shares of the Company’s common stock to the investors in the Agreement. The warrants have an exercise price of $0.30 per share and are exercisable for 5 years from the issuance date. The Warrants issued under the Agreement are indexed to the Company’s common stock, therefore, the Company is accounting for the Warrants as a component of equity. In connection with the Agreement, the Company incurred approximately $13,000 in legal fees. The approximately $1,187,000 in gross proceeds from the Agreement, along with the legal fees of approximately $13,000, were allocated between the Notes and Warrants based on their relative fair values. The portion of the gross proceeds allocated to the Warrants of approximately $393,000 was accounted for as additional paid-in capital. Approximately $4,000 of the legal fees were allocated to the Warrants and recorded as a reduction to additional paid-in capital. The remainder of the gross proceeds of approximately $794,000, net of the remainder of the fees of approximately $9,000, was allocated to the Notes with the fair value of the Warrants resulting in a debt discount. The debt discount is being amortized to interest expense using the effective interest method in accordance with ASC 835 over the term of the Agreement. For the three months ended March 31, 2017, approximately $26,000 was recognized as amortization of debt discount and is included in interest expense on the condensed consolidated interim statement of operations and comprehensive loss. For the three months ended March 31, 2017, approximately $33,000 of interest expense has been accrued. As of March 31, 2017, the portion of the outstanding unsecured promissory notes due to entities controlled by a member of management and to the majority shareholder amounted to $30,000 and $300,000, respectively. There were no unsecured long-term notes payable outstanding as of March 31, 2016. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2017 | |
Equity [Abstract] | |
Stockholders' Equity | Note 12 – Stockholders’ Equity March 2017 Private Placement On March 22, 2017, the Company raised gross proceeds of approximately $1,218,000 from new and existing shareholders through the private placement of 4,059,994 units of its securities. Each unit consisted of one share of its common stock and a five-year warrant to purchase one share of the Company’s common stock. The purchase price for each unit was $0.30. The 4,059,994 warrants are exercisable at a price of $0.30 per share and are indexed to the Company’s common stock, therefore, the Company is accounting for the warrants as a component of equity. The portion of the gross proceeds received from certain members of management and existing shareholders amounted to $315,000. Proceeds, net of equity issuance costs of $144,000, recorded as a result of the private placement were approximately $1,074,000. In addition to the equity issuance costs incurred as a result of the private placement, the Company also issued 81,199 warrants to its placement agent. The form of the 81,199 warrants is substantially the same as the 4,059,994 warrants, except that the exercise price is $0.33 per share. July 2015 Purchase Agreement and Registration Rights Agreement On July 24, 2015, the Company entered into a purchase agreement, together with a registration rights agreement, with Lincoln Park Capital Fund, LLC (“Lincoln Park”), an Illinois limited liability company. Under the terms and subject to the conditions of the purchase agreement, the Company has the right to sell to and Lincoln Park is obligated to purchase up to $10.0 million in shares of its common stock, subject to certain limitations, from time to time, over the 36-month period commencing on September 4, 2015. Pursuant to the Purchase Agreement, during the three months ended March 31, 2017, the Company issued and sold 300,000 shares of common stock to Lincoln Park resulting in gross proceeds of $113,000. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 13 - Commitments and Contingencies Manufacturing and Suppliers The Company has not and does not intend in the foreseeable future, to manufacture any of its products and components. With regard to the OLpur MD190 and MD220, on June 27, 2011, the Company entered into a license agreement (the “License Agreement”), effective July 1, 2011, with Bellco S.r.l., an Italy-based supplier of hemodialysis and intensive care products, for the manufacturing, marketing and sale of our patented mid-dilution dialysis filters (MD 190, MD 220), referred to herein as the Products. Under the License Agreement, Nephros granted Bellco a license to manufacture, market and sell the Products under its own name, label and CE mark in Italy, France, Belgium, Spain and Canada on an exclusive basis, and to do the same on a non-exclusive basis in the United Kingdom and Greece and, upon our written approval, other European countries where the Company does not sell the Products as well as non-European countries (referred to as the “Territory”). On February 19, 2014, the Company entered into the First Amendment to License Agreement (the “First Amendment”), by and between the Company and Bellco, which amends the License Agreement. Pursuant to the First Amendment, the Company and Bellco agreed to extend the term of the License Agreement from December 31, 2016 to December 31, 2021. The First Amendment also expands the Territory covered by the License Agreement to include, on an exclusive basis, Sweden, Denmark, Norway and Finland, and, on a non-exclusive basis, Korea, Mexico, Brazil, China and the Netherlands. The First Amendment further provides new minimum sales targets which, if not satisfied, will, at the discretion of the Company, result in conversion of the license to non-exclusive status. The Company has agreed to reduce the fixed royalty payment payable to the Company for the period beginning on January 1, 2015 through and including December 31, 2021. Beginning on January 1, 2015 through and including December 31, 2021, Bellco will pay the Company a royalty based on the number of units of Products sold per year in the Territory as follows: for the first 125,000 units sold in total, €1.75 (approximately $1.87 using current exchange rates) per unit; thereafter, €1.25 (approximately $1.34 using current exchange rates) per unit. In addition, the Company received a total of €450,000 (approximately $612,000) in upfront fees in connection with the First Amendment, half of which was received on February 19, 2014 and the remaining half was received on April 4, 2014. In addition, the First Amendment provides that, in the event that the Company pursues a transaction to sell, assign or transfer all right, title and interest to the licensed patents to a third party, the Company will provide Bellco with written notice thereof and a right of first offer with respect to the contemplated transaction for a period of thirty (30) days. License and Supply Agreement On April 23, 2012, the Company entered into a License and Supply Agreement (the “License and Supply Agreement”) with Medica S.p.A. (“Medica”), an Italy-based medical product manufacturing company, for the marketing and sale of certain filtration products based upon Medica’s proprietary Medisulfone ultrafiltration technology in conjunction with the Company’s filtration products (collectively, the “Filtration Products”), and to engage in an exclusive supply arrangement for the Filtration Products. Under the License and Supply Agreement, Medica granted to the Company an exclusive license, with right of sublicense, to market, promote, distribute, offer for sale and sell the Filtration Products worldwide, excluding Italy for the first three years, during the term of the License and Supply Agreement. In addition, the Company granted to Medica an exclusive license under the Company’s intellectual property to make the Filtration Products during the term of the License and Supply Agreement. In exchange for the rights granted, the Company agreed to make minimum annual aggregate purchases from Medica of €300,000 (approximately $400,000), €500,000 (approximately $700,000) and €750,000 (approximately $880,000) for the years 2012, 2013 and 2014, respectively. Our aggregate purchase commitments totaled approximately €1,200,000 (approximately $1,300,000) and €999,000 (approximately $1,119,000) for the years ended December 31, 2016 and 2015, respectively. The Company and Medica formalized the agreed upon minimum purchase level for calendar years 2017 through 2022 (see Note 14). In exchange for the license, the Company paid Medica a total of €1,500,000 (approximately $2,000,000) in three installments: €500,000 (approximately $700,000) on April 23, 2012, €600,000 (approximately $800,000) on February 4, 2013, and €400,000 (approximately $500,000) on May 23, 2013. As further consideration for the license and other rights granted to the Company, the Company granted Medica options to purchase 300,000 shares of the Company’s common stock. The fair market value of these stock options was approximately $273,000 at the time of their issuance, calculated as described in Note 6 under Stock-Based Compensation. Together with the total installment payments described above, the fair market value of the options has been capitalized as license and supply agreement, net. The gross value of the intangible asset capitalized was approximately $2,250,000. License and supply agreement, net, on the consolidated balance sheet is approximately $1,210,000 and $1,262,000, as of March 31, 2017 and December 31, 2016, respectively. Accumulated amortization is approximately $1,040,000 and $988,000 as of March 31, 2017 and December 31, 2016, respectively. The asset is being amortized as an expense over the life of the License and Supply Agreement. Approximately $52,000 has been charged to amortization expense for the three months ended March 31, 2017 and 2016 on the condensed consolidated statement of operations and comprehensive loss. Approximately $158,000 of amortization expense will be recognized in the remainder of 2017 and approximately $210,000 will be recognized in each of the years ended December 31, 2018 through 2022. In addition, for the period beginning April 23, 2014 through December 31, 2022, the Company will pay Medica a royalty rate of 3% of net sales of the Filtration Products sold, subject to reduction as a result of a supply interruption pursuant to the terms of the License and Supply Agreement. Approximately $19,000 and $18,000 is included in accrued expenses as of March 31, 2017 and December 31, 2016, respectively. The term of the License and Supply Agreement commenced on April 23, 2012 and continues in effect through December 31, 2022, unless earlier terminated by either party in accordance with the terms of the License and Supply Agreement. As of September 2013, the Company has an understanding with Medica whereby the Company has agreed to pay interest to Medica at a 12% annual rate calculated on the principal amount of any outstanding invoices that are not paid pursuant to the original payment terms. For the three months ended March 31, 2017 and 2016, approximately $7,000 and $14,000 of interest, respectively, was recognized as interest expense. In May 2017, the Company and Medica amended the License and Supply Agreement to re-define the licensed territory, expand the Medica technology included within the license to the Company, and establish minimum purchase requirements for the period from 2017 to 2022. See Note 14 – Subsequent Event. Contractual Obligations The Company has an operating lease that expires on November 30, 2018 for the rental of its U.S. office and research and development facilities with a monthly cost of approximately $9,000. Included in other assets on the condensed consolidated balance sheet as of March 31, 2017 and December 31, 2016 is approximately $21,000 related to a security deposit for the U.S. office facility. Rent expense was approximately $31,000 and $29,000 for the three months ended March 31, 2017 and 2016, respectively. Investment in Lease, net On October 8, 2015, the Company entered into an equipment lease agreement with Biocon 1, LLC. The lease commenced on January 1, 2016 with a term of 60 months and monthly rental payments of approximately $1,800 will be paid to the Company. At the completion of the lease term, Biocon 1, LLC will own the equipment provided under the agreement. An investment in lease was established for the direct financing lease receivable at the present value of the future minimum lease payments. Interest income will be recognized monthly over the lease term using the effective-interest method. Cash received will be applied against the direct financing lease receivable and will be presented within changes in operating assets and liabilities in the operating section of the Company’s consolidated statement of cash flows. At lease inception, an investment in the lease of approximately $92,000 was recorded, net of unearned interest of approximately $14,000. Approximately $1,000 was recognized in interest income during each of the three months ended March 31, 2017 and 2016. As of March 31, 2017, investment in lease, current is approximately $21,000, net of unearned interest of $4,000. As of March 31, 2017, investment in lease, noncurrent, is approximately $57,000, net of unearned interest of $5,000. As of March 31, 2017, scheduled maturities of minimum lease payments receivable were as follows: 2016 2,000 2017 18,000 2018 18,000 2019 19,000 2020 21,000 78,000 Less: Current portion (21,000 ) Investment in sales-type lease, noncurrent $ 57,000 Included in the above scheduled maturities of minimum lease payments receivable, approximately $7,000 was due as of March 31, 2017. |
Subsequent Event
Subsequent Event | 3 Months Ended |
Mar. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Event | Note 14 – Subsequent Event On May 5, 2017, the Company entered into a Third Amendment to License and Supply Agreement (the “Third Amendment”) with Medica, which amended the original License and Supply Agreement, dated April 23, 2012 (as amended, the “License and Supply Agreement”). Pursuant to the Third Amendment, Medica expanded the products covered by the original License and Supply Agreement to include both certain filtration products based on Medica’s proprietary Versatile microfiber technology and certain filtration products based on Medica’s proprietary Medisulfone ultrafiltration technology (collectively, the “Filtration Products”). The Third Amendment also limits the territory in which Medica granted the Company an exclusive license, with right of sublicense, to market, promote, distribute, offer for sale, and sell the Filtration Products to North America, Central America, Columbia, Venezuela, Chile, Ecuador, Peru, Ireland, the United Kingdom, Australia and New Zealand. The Company’s multinational distributors retain the right to market certain of the products worldwide, other than in Italy, on a non-exclusive basis. In exchange for the rights granted, the Company has agreed to make minimum annual aggregate purchases from Medica of €1,600,000 (approximately $1,700,000 using current exchange rates), €2,500,000 (approximately $2,700,000 using current exchange rates), €3,000,000 (approximately $3,300,000 using current exchange rates), €3,150,000 (approximately $3,400,000 using current exchange rates), €3,300,000 (approximately $3,600,000 using current exchange rates), and €3,475,000 (approximately $3,800,000 using current exchange rates) in each of calendar years 2017, 2018, 2019, 2020, 2021 and 2022, respectively. |
Basis of Presentation and Goi22
Basis of Presentation and Going Concern (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Basis Of Presentation And Going Concern Policies | |
Interim Financial Information | Interim Financial Information The accompanying unaudited condensed consolidated interim financial statements of Nephros, Inc. and its wholly owned subsidiary, Nephros International Limited, should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2016 Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 20, 2017. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 and Article 10 of Regulation S-X. Accordingly, since they are interim statements, the accompanying condensed consolidated interim financial statements do not include all of the information and notes required by GAAP for a complete financial statement presentation. The condensed consolidated balance sheet as of December 31, 2016 was derived from the Company’s audited consolidated financial statements but does not include all disclosures required by GAAP. In the opinion of management, the condensed consolidated interim financial statements reflect all adjustments consisting of normal, recurring adjustments that are necessary for a fair presentation of the financial position, results of operations and cash flows for the condensed consolidated interim periods presented. Interim results are not necessarily indicative of results for a full year. All intercompany transactions and balances have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, at the date of the financial statements, and the reported amount of revenues and expenses, during the reporting period. Actual results could differ materially from those estimates. Included in these estimates are assumptions about the collection of accounts receivable, value of inventories, useful life of fixed assets and intangible assets, assumptions used in determining stock compensation such as expected volatility and risk-free interest rate and the ability of the Company to continue as a going concern. |
Going Concern | Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company’s recurring losses and difficulty in generating sufficient cash flow to meet its obligations and sustain its operations raise substantial doubt about its ability to continue as a going concern. The Company’s consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company has incurred significant losses in operations in each quarter and has not generated positive cash flow from operations since inception. To become profitable, the Company must increase revenue substantially and achieve and maintain income from operations. If the Company is not able to increase revenue and generate income from operations sufficiently to achieve profitability, its results from operations and its financial condition will be materially and adversely affected. On March 22, 2017, the Company raised gross proceeds of approximately $1,218,000 through the private placement of 4,059,994 units of its securities. See Note 12 for further discussion. Based on the Company’s current cash flow projections, the Company expects that its existing cash balances and projected increase in product sales from the launch of new products, including the approximately $1.2 million raised in a private placement in March 2017, will allow the Company to fund its operations at least into 2018, if not longer, depending on the timing and market acceptance of our new products. There can be no assurance that the Company’s future cash flow will be sufficient to meet its obligations and commitments. If the Company is unable to generate sufficient cash flow from operations in the future to meet its operating requirements and other commitments, the Company will be required to adopt alternatives, such as seeking to raise debt or equity capital, curtailing its planned activities or ceasing its operations. There can be no assurance that any such actions could be effected on a timely basis or on satisfactory terms or at all, or that these actions would enable the Company to continue to satisfy its capital requirements. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In July 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-11, “Simplifying the Measurement of Inventory,” that requires inventory be measured at the lower of cost and net realizable value and options that currently exist for market value be eliminated. The standard defines net realizable value as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation and is effective for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years with early adoption permitted. The guidance should be applied prospectively. The Company adopted ASU 2015-11 during the three months ended March 31, 2017 and the adoption of this guidance did not have a significant impact on the Company’s consolidated financial statements. In November 2015, the FASB issued ASU No. 2015-17, “Balance Sheet Classification of Deferred Taxes,” that requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by this amendment. The new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is permitted and the standard may be applied either retrospectively or on a prospective basis to all deferred tax assets and liabilities. The Company adopted ASU 2015-17 during the three months ended March 31, 2017 and the adoption of this guidance did not have a significant impact on the Company’s consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting,” which simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The guidance is effective for the Company beginning in the first quarter of fiscal year 2017. Early adoption is permitted. The Company adopted ASU 2015-17 during the three months ended March 31, 2017 and elected to recognize forfeitures as they occur. Prior to the adoption of ASU 2016-09, the Company recognized stock based compensation based on the estimated fair value of the award, net of expected forfeitures. As of January 1, 2017, a cumulative effect adjustment of approximately $12,000 was recognized to reflect the forfeiture rate that had been applied to unvested option awards prior to fiscal year 2017. |
Major Customers and Concentra23
Major Customers and Concentration of Credit Risk (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Sales Revenue Goods Net [Member] | |
Concentration Risk [Line Items] | |
Schedules of Concentration of Risk, by Risk Factor | For the three months ended March 31, 2017 and 2016, the following customers accounted for the following percentages of the Company’s sales, respectively: Customer 2017 2016 A 25 % 17 % B 13 % 42 % C 10 % 2 % D 9 % 11 % |
Accounts Receivable [Member] | |
Concentration Risk [Line Items] | |
Schedules of Concentration of Risk, by Risk Factor | As of March 31, 2017 and December 31, 2016, the following customers accounted for the following percentages of the Company’s accounts receivable, respectively: Customer 2017 2016 A 22 % 36 % B 14 % 12 % C 11 % 6 % |
Stock Plans and Share-Based P24
Stock Plans and Share-Based Payments (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Fair Value Assumptions | The below assumptions for the risk-free interest rates, expected dividend yield, expected lives and expected stock price volatility were used for the awards granted during the three months ended March 31, 2017. Three Months Ended Assumptions for Option Grants March 31, 2017 Stock Price Volatility 110.9 % Risk-Free Interest Rates 2.08 % Expected Life (in years) 6.01 Expected Dividend Yield - % |
Net Income (Loss) per Common 25
Net Income (Loss) per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following potentially dilutive securities have been excluded from the computations of diluted weighted-average shares outstanding as they would be anti-dilutive: March 31, 2017 2016 Shares underlying warrants outstanding 7,432,342 917,149 Shares underlying options outstanding 5,040,306 4,192,640 Unvested restricted stock 584,467 356,231 |
Inventory, Net (Tables)
Inventory, Net (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Net | Inventory is stated at the lower of cost or net realizable value using the first-in first-out method and consists entirely of finished goods. The Company’s inventory as of March 31, 2017 and December 31, 2016 was as follows: March 31, 2017 December 31, 2016 (Unaudited) (Audited) Total gross inventory, finished goods $ 447,000 $ 528,000 Less: inventory reserve (46,000 ) (49,000 ) Total inventory, net $ 401,000 $ 479,000 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Maturities Minimum Lease Payments Receivable | As of March 31, 2017, scheduled maturities of minimum lease payments receivable were as follows: 2016 2,000 2017 18,000 2018 18,000 2019 19,000 2020 21,000 78,000 Less: Current portion (21,000 ) Investment in sales-type lease, noncurrent $ 57,000 |
Basis of Presentation and Goi28
Basis of Presentation and Going Concern (Details Narrative) - USD ($) $ in Thousands | Mar. 22, 2017 | Mar. 31, 2017 |
Fair Value Disclosures [Line Items] | ||
Cumulative effect adjustment | ||
January 1, 2017 [Member] | ||
Fair Value Disclosures [Line Items] | ||
Cumulative effect adjustment | $ 12 | |
Private Placement [Member] | ||
Fair Value Disclosures [Line Items] | ||
Gross proceeds from issuance of private placement | $ 1,218 | |
Stock issued through private placement, shares | 4,059,994 | |
Proceeds from private placement | $ 1,200 |
Major Customers and Concentra29
Major Customers and Concentration of Credit Risk (Details Narrative) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Risks and Uncertainties [Abstract] | ||
Allowance for doubtful accounts current | $ 52 | $ 50 |
Major Customers and Concentra30
Major Customers and Concentration of Credit Risk - Schedules of Concentration of Risk, by Risk Factor (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Sales Revenue Goods Net [Member] | Customer A [Member] | |||
Concentration Risk [Line Items] | |||
Concentration Risk, Percentage | 25.00% | 17.00% | |
Sales Revenue Goods Net [Member] | Customer B [Member] | |||
Concentration Risk [Line Items] | |||
Concentration Risk, Percentage | 13.00% | 42.00% | |
Sales Revenue Goods Net [Member] | Customer C [Member] | |||
Concentration Risk [Line Items] | |||
Concentration Risk, Percentage | 10.00% | 2.00% | |
Sales Revenue Goods Net [Member] | Customer D [Member] | |||
Concentration Risk [Line Items] | |||
Concentration Risk, Percentage | 9.00% | 11.00% | |
Accounts Receivable [Member] | Customer A [Member] | |||
Concentration Risk [Line Items] | |||
Concentration Risk, Percentage | 22.00% | 36.00% | |
Accounts Receivable [Member] | Customer B [Member] | |||
Concentration Risk [Line Items] | |||
Concentration Risk, Percentage | 14.00% | 12.00% | |
Accounts Receivable [Member] | Customer C [Member] | |||
Concentration Risk [Line Items] | |||
Concentration Risk, Percentage | 11.00% | 6.00% |
Revenue Recognition (Details Na
Revenue Recognition (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Royalty revenue | $ 27 | $ 28 | |
License Agreement [Member] | |||
Deferred revenue | 331 | $ 348 | |
Revenue recognized | $ 2,745 | $ 17 | |
Deferred Revenue, Description | Approximately $52,000 of revenue will be recognized in the remaining nine months of fiscal year 2017 and approximately $69,000 of revenue will be recognized in each of the years ended December 31, 2018 through 2021. | ||
License Agreement [Member] | Remaining Nine Months of Fiscal Year 2017 [Member] | |||
Revenue recognized | $ 52 | ||
License Agreement [Member] | December 31, 2018 through 2021 [Member] | |||
Revenue recognized | $ 69 |
Stock Plans and Share-Based P32
Stock Plans and Share-Based Payments (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Stock options granted | 579,571 | |
Fair value of stock-based awards granted | $ 223 | |
Stock-based compensation expense | 102 | $ 102 |
Tax benefit related to expense recognized | 0 | 0 |
Total unrecognized compensation cost | 1,100 | |
Unrecognized compensation cost | 211 | |
Unrecognized compensation remaining amount | $ 889 | |
Amortized over weighted average remaining requisite service period | 2 years 1 month 6 days | |
Fair value grand data outstanding | 20 | |
Restricted Stock [Member] | ||
Stock-based compensation expense | $ 97 | 45 |
Total unrecognized compensation cost | $ 88 | |
Restricted Stock [Member] | Chief Executive Officer [Member] | ||
Number of shares issued for services, shares | 17,756 | |
Deferred salary | $ 7 | |
Fair value grand data outstanding | 7 | |
Selling General and Administrative Expenses [Member] | ||
Stock-based compensation expense | 94 | 95 |
Research and Development Expenses [Member] | ||
Stock-based compensation expense | $ 8 | $ 7 |
Stock Plans and Share-Based P33
Stock Plans and Share-Based Payments - Schedule of Fair Value Assumptions (Details) | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Price Volatility | 110.90% |
Risk-Free Interest Rates | 2.08% |
Expected Life (in years) | 6 years 4 days |
Expected Dividend Yield | 0.00% |
Warrants (Details Narrative)
Warrants (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Warrants [Line Items] | ||
Proceeds from warrant exercises | $ 1 | |
Warrant [Member] | ||
Warrants [Line Items] | ||
Issuance of common stock shares for additional warrants exercised | 19,621 | |
Proceeds from warrant exercises | $ 1 | |
Issuance of common stock | 906 |
Net Income (Loss) per Common 35
Net Income (Loss) per Common Share - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Warrant [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Excluded anti-dilutive stock options and warrants | 7,432,342 | 917,149 |
Unvested Restricted Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Excluded anti-dilutive stock options and warrants | 584,467 | 356,231 |
Options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Excluded anti-dilutive stock options and warrants | 5,040,306 | 4,192,640 |
Inventory, Net - Schedule of In
Inventory, Net - Schedule of Inventory, Net (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Total Gross Inventory, Finished Goods | $ 447,000 | $ 528,000 |
Less: Inventory reserve | (46,000) | (49,000) |
Total Inventory, net | $ 401,000 | $ 479,000 |
Unsecured Promissory Notes an37
Unsecured Promissory Notes and Warrants (Details Narrative) - USD ($) | Jun. 07, 2016 | Mar. 31, 2017 | Mar. 31, 2016 |
Legal fees | $ 9,000 | ||
Interest expense | $ 66,000 | $ 14,000 | |
Note Holders [Member] | |||
Interest expense | 33,000 | ||
Entities Controlled By Member Of Management [Member] | |||
Due to related party | 30,000 | ||
Majority Shareholder [Member] | |||
Due to related party | 300,000 | ||
Note And Warrant Agreement [Member] | |||
Gross proceeds from unsecured promissory notes and warrants | $ 1,187,000 | ||
Percentage of accrues interest rate per annum | 11.00% | ||
Note repayable date | Jun. 7, 2019 | ||
Legal fees | $ 13,000 | ||
Proceeds from warrants | 393,000 | ||
Proceeds from warrant agreement | 1,187,000 | ||
Unsecured promissory notes | $ 794,000 | ||
Amortization of debt discount | $ 26,000 | ||
Note And Warrant Agreement [Member] | Investors [Member] | |||
Number of warrants issued to purchase of shares of common stock | 2,400,000 | ||
Exercise price per share | $ 0.30 | ||
Warrants exercisable term | 5 years | ||
Warrant Agreement [Member] | |||
Legal fees | $ 4,000 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Mar. 22, 2017 | Jul. 24, 2015 | Mar. 31, 2017 |
Class of Stock [Line Items] | |||
Stock issued during period, value, new issues | $ 1,074 | ||
Private Placement [Member] | |||
Class of Stock [Line Items] | |||
Gross proceeds from issuance of private placement | $ 1,218 | ||
Number of common stock shares sold during the period | 4,059,994 | ||
Warrants description | Each unit consisted of one share of its common stock and a five-year warrant to purchase one share of the Companys common stock. | ||
Shares issued price per share | $ 0.30 | ||
Proceeds received from certain members of management and existing shareholders | $ 315 | ||
Number of warrants to placement agent | 81,199 | ||
Class of warrant or right, number of securities called by each warrant or right | 4,059,994 | ||
Exercise price per share | $ 0.30 | ||
Proceeds of equity issuance costs net | $ 144 | ||
Proceeds from private placement | $ 1,074 | ||
Lincoln Park Capital Fund LLC [Member] | |||
Class of Stock [Line Items] | |||
Gross proceeds from issuance of private placement | $ 113 | ||
Number of common stock shares sold during the period | 300,000 | ||
Stock issued during period, value, new issues | $ 10,000 | ||
Limited liability company description for purchase shares level | Under the terms and subject to the conditions of the purchase agreement, the Company has the right to sell to and Lincoln Park is obligated to purchase up to $10.0 million in shares of its common stock, subject to certain limitations, from time to time, over the 36-month period commencing on September 4, 2015. |
Commitments and Contingencies39
Commitments and Contingencies (Details Narrative) | Oct. 08, 2015USD ($) | May 23, 2013USD ($) | May 23, 2013EUR (€) | Feb. 04, 2013USD ($) | Feb. 04, 2013EUR (€) | Apr. 23, 2012USD ($) | Apr. 23, 2012EUR (€) | Mar. 31, 2017USD ($)Products$ / sharesshares | Mar. 31, 2017EUR (€)shares | Mar. 31, 2016USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2016EUR (€) | Dec. 31, 2015USD ($) | Dec. 31, 2015EUR (€) | Dec. 31, 2014USD ($) | Dec. 31, 2014EUR (€) | Dec. 31, 2013USD ($) | Dec. 31, 2013EUR (€) | Dec. 31, 2012USD ($) | Dec. 31, 2012EUR (€) | Mar. 31, 2017€ / shares | Sep. 30, 2013 |
Commitments And Contingencies [Line Items] | ||||||||||||||||||||||
Long-term intangible asset | $ 2,250,000 | |||||||||||||||||||||
Other long-term assets | 1,210,000 | $ 1,262,000 | ||||||||||||||||||||
Accumulated amortization | 1,040,000 | 988,000 | ||||||||||||||||||||
Amortization of other deferred charges | 52,000 | $ 52,000 | ||||||||||||||||||||
Amortization expense remainder fiscal year | 158,000 | |||||||||||||||||||||
Amortization expense, years two and three | 210,000 | |||||||||||||||||||||
Accrued expenses | $ 19,000 | 18,000 | ||||||||||||||||||||
Royalty rate | 3.00% | 3.00% | ||||||||||||||||||||
Interest expense | $ 7,000 | 14,000 | ||||||||||||||||||||
Monthly rent expense | $ 9,000 | |||||||||||||||||||||
Lease expiration date | expire in November 2018 | expire in November 2018 | ||||||||||||||||||||
Security deposit | $ 21,000 | |||||||||||||||||||||
Rent expense | 31,000 | $ 29,000 | ||||||||||||||||||||
Investment lease | 92,000 | |||||||||||||||||||||
Unearned interest | 14,000 | |||||||||||||||||||||
Interest income | 1,000 | |||||||||||||||||||||
Investment in lease, net - current portion | 21,000 | |||||||||||||||||||||
Unearned interest current | 4,000 | |||||||||||||||||||||
Investment in lease, net - less current portion | 57,000 | |||||||||||||||||||||
Unearned interest noncurrent | 5,000 | |||||||||||||||||||||
Minimum lease payments receivable | $ 78,000 | |||||||||||||||||||||
Equipment Lease Agreement [Member] | Biocon 1, LLC [Member] | ||||||||||||||||||||||
Commitments And Contingencies [Line Items] | ||||||||||||||||||||||
Monthly rent expense | $ 1,800 | |||||||||||||||||||||
Lease term | 60 months | |||||||||||||||||||||
Bellco [Member] | ||||||||||||||||||||||
Commitments And Contingencies [Line Items] | ||||||||||||||||||||||
Number of units under first tier royalty receivable | Products | 125,000 | |||||||||||||||||||||
First tier royalty per unit | $ / shares | $ 1.87 | |||||||||||||||||||||
Second tier royalty per unit | $ / shares | $ 1.34 | |||||||||||||||||||||
Bellco [Member] | EUR [Member] | ||||||||||||||||||||||
Commitments And Contingencies [Line Items] | ||||||||||||||||||||||
Number of units under first tier royalty receivable | Products | 125,000 | |||||||||||||||||||||
First tier royalty per unit | € / shares | € 1.75 | |||||||||||||||||||||
Second tier royalty per unit | € / shares | € 1.25 | |||||||||||||||||||||
Medica Spa [Member] | ||||||||||||||||||||||
Commitments And Contingencies [Line Items] | ||||||||||||||||||||||
Upfront fees and connection of first amendment | $ 612,000 | |||||||||||||||||||||
License agreement product purchases in year | $ 880,000 | $ 700,000 | $ 400,000 | |||||||||||||||||||
Purchase commitment | $ 1,300,000 | $ 1,119,000 | ||||||||||||||||||||
License agreement payment | $ 2,000,000 | |||||||||||||||||||||
License agreement first installment payment | $ 700,000 | |||||||||||||||||||||
License agreement second installment payment | $ 800,000 | |||||||||||||||||||||
License agreement final installment payment | $ 500,000 | |||||||||||||||||||||
License agreement options to purchase shares | shares | 300,000 | 300,000 | ||||||||||||||||||||
Fair value of stock options granted to medica | $ 273,000 | |||||||||||||||||||||
Debt instrument, interest rate, stated percentage | 12.00% | |||||||||||||||||||||
Medica Spa [Member] | EUR [Member] | ||||||||||||||||||||||
Commitments And Contingencies [Line Items] | ||||||||||||||||||||||
Upfront fees and connection of first amendment | € | € 450,000 | |||||||||||||||||||||
License agreement product purchases in year | € | € 750,000 | € 500,000 | € 300,000 | |||||||||||||||||||
Purchase commitment | € | € 1,200,000 | € 999,000 | ||||||||||||||||||||
License agreement payment | $ 1,500,000 | |||||||||||||||||||||
License agreement first installment payment | € | € 500,000 | |||||||||||||||||||||
License agreement second installment payment | € | € 600,000 | |||||||||||||||||||||
License agreement final installment payment | € | € 400,000 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Maturities Minimum Lease Payments Receivable (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Commitments and Contingencies Disclosure [Abstract] | ||
2,016 | $ 2 | |
2,017 | 18 | |
2,018 | 18 | |
2,019 | 19 | |
2,020 | 21 | |
Total | 78 | |
Less: Current portion | (21) | $ (27) |
Investment in sales-type lease, noncurrent | $ 57 | $ 61 |
Subsequent Event (Details Narra
Subsequent Event (Details Narrative) - May 05, 2017 - Subsequent Event [Member] - Medica [Member] € in Thousands, $ in Thousands | USD ($) | EUR (€) |
2017 [Member] | ||
Foreign currency current exchange rates translation | $ | $ 1,700 | |
2017 [Member] | EUR [Member] | ||
Aggregate purchase price | € | € 1,600 | |
2018 [Member] | ||
Foreign currency current exchange rates translation | $ | 2,700 | |
2018 [Member] | EUR [Member] | ||
Aggregate purchase price | € | 2,500 | |
2019 [Member] | ||
Foreign currency current exchange rates translation | $ | 3,300 | |
2019 [Member] | EUR [Member] | ||
Aggregate purchase price | € | 3,000 | |
2020 [Member] | ||
Foreign currency current exchange rates translation | $ | 3,400 | |
2020 [Member] | EUR [Member] | ||
Aggregate purchase price | € | 3,150 | |
2021 [Member] | ||
Foreign currency current exchange rates translation | $ | 3,600 | |
2021 [Member] | EUR [Member] | ||
Aggregate purchase price | € | 3,300 | |
2022 [Member] | ||
Foreign currency current exchange rates translation | $ | $ 3,800 | |
2022 [Member] | EUR [Member] | ||
Aggregate purchase price | € | € 3,475 |