Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 10, 2019 | Jun. 30, 2018 | |
Document And Entity Information [Abstract] | |||
Entity Registrant Name | NEPHROS INC | ||
Entity Central Index Key | 0001196298 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2018 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business Flag | true | ||
Entity Emerging Growth Company | false | ||
Entity Ex Transition Period | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 19,500,000 | ||
Entity Common Stock, Shares Outstanding | 64,611,300 | ||
Trading Symbol | NEPH | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2018 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash | $ 4,581 | $ 2,194 |
Accounts receivable, net | 1,452 | 836 |
Investment in lease, net-current portion | 20 | |
Inventory, net | 1,864 | 674 |
Prepaid expenses and other current assets | 276 | 85 |
Total current assets | 8,173 | 3,809 |
Property and equipment, net | 91 | 52 |
Investment in lease, net-less current portion | 39 | |
Intangible assets | 590 | |
Goodwill | 748 | |
License and supply agreement, net | 938 | 1,072 |
Other asset | 18 | 11 |
Total assets | 10,558 | 4,983 |
Current liabilities: | ||
Secured revolving credit facility | 991 | 711 |
Current portion of secured note payable | 195 | |
Accounts payable | 836 | 872 |
Accrued expenses | 396 | 218 |
Current portion of contingent consideration | 236 | |
Deferred revenue, current portion | 70 | |
Total current liabilities | 2,654 | 1,871 |
Secured note payable, net of current portion | 843 | |
Contingent consideration, net of current portion | 263 | |
Unsecured long-term note payable, net of debt issuance costs and debt discount of $0 and $233, respectively | 954 | |
Long-term portion of deferred revenue | 208 | |
Total liabilities | 3,760 | 3,033 |
Commitments and Contingencies (Note 19) | ||
Stockholders' equity: | ||
Preferred stock, $.001 par value; 5,000,000 shares authorized at December 31, 2018 and 2017; no shares issued and outstanding at December 31, 2018 and 2017. | ||
Common stock, $.001 par value; 90,000,000 shares authorized at December 31, 2018 and 2017; 64,616,031 and 55,293,267 shares issued and outstanding at December 31, 2018 and 2017, respectively. | 64 | 55 |
Additional paid-in capital | 127,816 | 122,924 |
Accumulated other comprehensive income | 71 | 77 |
Accumulated deficit | (124,153) | (121,106) |
Subtotal | 3,798 | 1,950 |
Noncontrolling interest | 3,000 | |
Total stockholders' equity | 6,798 | 1,950 |
Total liabilities and stockholders' equity | $ 10,558 | $ 4,983 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Net of debt issuance costs and debt discount | $ 0 | $ 233 |
Preferred stock, par value | $ .001 | $ .001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ .001 | $ .001 |
Common stock, shares authorized | 90,000,000 | 90,000,000 |
Common stock, shares issued | 64,616,031 | 55,293,267 |
Common stock, shares outstanding | 64,616,031 | 55,293,267 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Net revenue: | ||
Total net revenues | $ 5,687 | $ 3,809 |
Cost of goods sold | 2,484 | 1,517 |
Gross margin | 3,203 | 2,292 |
Operating expenses: | ||
Research and development | 1,539 | 1,002 |
Depreciation and amortization | 163 | 218 |
Selling, general and administrative | 4,517 | 3,298 |
Total operating expenses | 6,219 | 4,518 |
Loss from operations | (3,016) | (2,226) |
Loss on extinguishment of debt | (199) | |
Interest expense | (172) | (302) |
Interest income | 4 | 4 |
Other expense, net | (35) | (74) |
Loss before income taxes | (3,418) | (2,598) |
Income tax benefit | 93 | 1,789 |
Net loss | (3,325) | (809) |
Less: Undeclared deemed dividend attributable to noncontrolling interest | (77) | |
Net loss attributable to Nephros, Inc. | (3,402) | (809) |
Other comprehensive income (loss), foreign currency translation adjustments, net of tax | (6) | 10 |
Total comprehensive loss attributable to Nephros, Inc. | $ (3,408) | $ (799) |
Net loss per common share, basic and diluted | $ (0.06) | $ (0.02) |
Weighted average common shares outstanding, basic and diluted | 61,620,423 | 52,935,728 |
Product Revenue [Member] | ||
Net revenue: | ||
Total net revenues | $ 5,457 | $ 3,544 |
License, Royalty and Other Revenues [Member] | ||
Net revenue: | ||
Total net revenues | $ 230 | $ 265 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Other Comprehensive Income [Member] | Accumulated Deficit [Member] | SubTotal [Member] | Noncontrolling Interest [Member] | Total |
Balance at Dec. 31, 2016 | $ 50 | $ 120,835 | $ 67 | $ (120,285) | $ 667 | $ 667 | |
Balance, shares at Dec. 31, 2016 | 49,782,797 | ||||||
Net loss | (809) | (809) | (809) | ||||
Cumulative effect of adoption of ASC 606 | 12 | (12) | |||||
Net unrealized losses on foreign currency translation, net of tax | 10 | 10 | 10 | ||||
Issuance of common stock, net of equity issuance costs | $ 4 | 1,175 | 1,179 | 1,179 | |||
Issuance of common stock, net of equity issuance costs, shares | 4,359,994 | ||||||
Issuance of restricted stock | $ 1 | 1 | 1 | ||||
Issuance of restricted stock, shares | 750,099 | ||||||
Restricted stock issued to settle liability | 30 | 30 | 30 | ||||
Restricted stock issued to settle liability, shares | 67,045 | ||||||
Exercise of warrants | 100 | 100 | 100 | ||||
Exercise of warrants, shares | 333,332 | ||||||
Noncash stock-based compensation | 772 | 772 | 772 | ||||
Noncontrolling interest | |||||||
Balance at Dec. 31, 2017 | $ 55 | 122,924 | 77 | (121,106) | 1,950 | 1,950 | |
Balance, shares at Dec. 31, 2017 | 55,293,267 | ||||||
Net loss | (3,325) | (3,325) | (3,325) | ||||
Cumulative effect of adoption of ASC 606 | 278 | 278 | 278 | ||||
Net unrealized losses on foreign currency translation, net of tax | (6) | (6) | (6) | ||||
Issuance of common stock, net of equity issuance costs | $ 9 | 3,769 | 3,778 | 3,778 | |||
Issuance of common stock, net of equity issuance costs, shares | 8,440,669 | ||||||
Exercise of warrants | 138 | 138 | 138 | ||||
Exercise of warrants, shares | 456,666 | ||||||
Noncash stock-based compensation | 985 | 985 | 985 | ||||
Noncontrolling interest | 3,000 | 3,000 | |||||
Cashless exercise of stock options | |||||||
Cashless exercise of stock options, shares | 22,245 | ||||||
Balance at Dec. 31, 2018 | $ 64 | $ 127,816 | $ 71 | $ (124,153) | $ 3,798 | $ 3,000 | $ 6,798 |
Balance, shares at Dec. 31, 2018 | 64,212,847 |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Statement of Stockholders' Equity [Abstract] | ||
Equity issuance costs | $ 19 | $ 152 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Operating activities | ||
Net loss | $ (3,325) | $ (809) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation of property and equipment | 29 | 28 |
Amortization of license and supply agreement | 134 | 190 |
Non-cash stock-based compensation, including stock options and restricted stock | 985 | 772 |
Loss on extinguishment of debt | 199 | |
Inventory reserve | 70 | |
Provision for bad debt expense | 40 | |
Amortization of debt discount | 34 | 116 |
Loss on disposal of equipment | 10 | |
Loss on capital lease termination | 11 | |
Loss on foreign currency transactions | 3 | 19 |
(Increase) decrease in operating assets: | ||
Accounts receivable | (484) | (416) |
Inventory | (1,082) | (195) |
Prepaid expenses and other current assets | (191) | 30 |
Other asset | (10) | |
Increase (decrease) in operating liabilities: | ||
Accounts payable | (130) | 268 |
Accrued expenses | 35 | |
Deferred revenue | (70) | |
Net cash used in operating activities | (3,662) | (77) |
Investing activities | ||
Biocon Acquisition, net of cash acquired | (991) | |
Net cash used in investing activities | (991) | |
Financing activities | ||
Proceeds from issuance of common stock, net of equity issuance costs of $19 and $152, respectively | 3,778 | 1,179 |
Net proceeds from secured revolving credit facility | 280 | 711 |
Proceeds from sale of subsidiary preferred shares to noncontrolling interest | 3,000 | |
Payments on secured note payable | (149) | |
Proceeds from issuance of secured note | 1,187 | |
Repayment of unsecured long term note payable | (1,187) | |
Proceeds from exercise of warrants | 138 | 100 |
Net cash provided by financing activities | 7,047 | 1,990 |
Effect of exchange rates on cash | (7) | 6 |
Net increase in cash | 2,387 | 1,919 |
Cash, beginning of year | 2,194 | 275 |
Cash, end of year | 4,581 | 2,194 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest expense | 150 | 148 |
Cash paid for income taxes | 4 | 7 |
Supplemental disclosure of noncash investing and financing activities | ||
Fair value of contingent consideration related to the Biocon Acquisition | 499 | |
Reclassification of capital lease to equipment | 39 | |
Purchase of equipment in accrued expenses | 10 | |
Restricted stock issued to settle liability | $ 30 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Statement of Cash Flows [Abstract] | ||
Equity issuance costs | $ 19 | $ 152 |
Organization and Nature of Oper
Organization and Nature of Operations | 12 Months Ended |
Dec. 31, 2018 | |
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. The Company was founded by health professionals, scientists and engineers affiliated with Columbia University to develop advanced end stage renal disease (“ESRD”) therapy technology and products. Today, the Company has two FDA 510(k)-cleared products in the hemodiafiltration (“HDF”) market that deliver therapy to ESRD patients: 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. Beginning in 2009, Nephros introduced an additional, complementary business developing and marketing high performance liquid purification filters, to meet the demand for water purification in certain medical markets. The Company’s filters, generally classified as ultrafilters, are primarily used in hospitals for the prevention of infection from water-borne pathogens, such as legionella and pseudomonas, and in dialysis centers for the removal of biological contaminants from water and bicarbonate concentrate. The Company is also exploring water purification applications in several commercial markets, including food and beverage, data center cooling, and military field applications. In July 2018, the Company formed a new, wholly-owned subsidiary, Specialty Renal Products, Inc. (“SRP”), to drive the development of its second-generation HDF system and other products focused on improving therapies for patients with renal disease. The Company transferred three patents to SRP, which were carried at zero book value. SRP is a reportable segment, referred to as the Renal Products segment. On September 5, 2018, SRP completed a private placement transaction whereby SRP sold preferred shares equivalent to 37.5% of its outstanding equity interest for aggregate proceeds of $3,000,000. On December 31, 2018, the Company entered into a Membership Interest Purchase Agreement (the “Agreement”) with Biocon 1, LLC, a Nevada limited liability company (“Biocon”), Aether Water Systems, LLC, a Nevada limited liability company (“Aether”), and Gregory Lucas, the sole member of each of Biocon and Aether (“Lucas”). Pursuant to the terms of the Agreement, the Company acquired 100% of the outstanding membership interests of each of Aether and Biocon (the “Biocon Acquisition”). The U.S. facilities, located at 380 Lackawanna Place, South Orange, New Jersey, 07079, and at 591 East Sunset Road, Henderson, Nevada 89011, are used to house the Company’s corporate headquarters, research, manufacturing, and distribution facilities. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 - Summary of Significant Accounting Policies Principles of Consolidation and Basis of Presentation The accompanying consolidated financial statements include the accounts of Nephros, Inc. and its subsidiaries, including the entity in which a controlling interest is maintained. For the consolidated subsidiary in which the Company’s ownership is less than 100% but greater than 50%, the outside shareholders’ interest is shown as noncontrolling interest. All intercompany accounts and transactions were eliminated in the preparation of the accompanying consolidated financial statements. Use of Estimates in the Preparation of Financial Statements The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“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, the assessment of expected cash flows used in evaluating goodwill and other long-lived assets, value of contingent consideration, the assessment of the ability to continue as a going concern and assumptions used in determining stock compensation such as expected volatility and risk-free interest rate. Liquidity The Company has sustained operating losses and expects such losses to continue over the next several quarters. In addition, net cash from operations has been negative since inception, as have been net losses from operations, generating an accumulated deficit of approximately $124,153,000 as of December 31, 2018. Also, the Company has a loan agreement Tech Capital, which provides a secured asset-based revolving credit facility of up to $1,000,000. This loan agreement will automatically renew on August 17, 2019, although this renewal is not guaranteed. In July 2018, the Company formed a new, wholly-owned subsidiary, Specialty Renal Products, Inc. (“SRP”), to drive the development of its second-generation HDF system and other products focused on improving therapies for patients with renal disease. On September 5, 2018, SRP completed a private placement transaction whereby SRP sold preferred shares equivalent to 37.5% of its outstanding equity interests for aggregate proceeds of $3,000,000. The proceeds of this private placement are restricted to SRP expenses and may not be used for the benefit of the Company or other affiliated entities, except to reimburse for expenses directly attributable to SRP. Based on cash that is available for Company operations and projections of future Company operations, the Company believes that its cash will be sufficient to fund the Company’s current operating plan through at least the next twelve months from the date of issuance of the accompanying consolidated financial statements. In the event that operations do not meet expectations, the Company will reduce discretionary expenditures such as additional headcount, new R&D projects, and other variable costs to alleviate the substantial doubt as to the Company’s ability to continue as a going concern. Recently Adopted Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 to be 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.” This ASU deferred the effective date of ASU No. 2014-09 for all entities for one year. In March, April and May 2016, the FASB issued ASU No. 2016-08, ASU No. 2016-10 and ASU No. 2016-12, respectively, which clarified implementation guidance, including the guidance on principal versus agent considerations, performance obligations and licensing and assessments of collectability and noncash considerations. Public business entities, certain not-for-profit entities, and certain employee benefit plans are required to apply the guidance in ASU 2014-09 to fiscal years beginning after December 15, 2017, including interim reporting periods within that fiscal year. The Company adopted the new revenue recognition standard as of January 1, 2018 using the modified retrospective method, which requires the cumulative effect of adoption, if any, to be recognized as an adjustment to opening accumulated deficit in the period of adoption. The majority of the Company’s revenue relates to the sale of finished products to various customers and the adoption did not have any impact on revenue recognized from these transactions. The Company completed its analysis of the impact on certain less significant transactions involving third-party arrangements and as a result of the analysis, the Company accelerated the remaining approximately $278,000 of deferred revenue to be recognized under the License Agreement with Bellco as of December 31, 2017 and recorded a cumulative effect adjustment to opening accumulated deficit as of January 1, 2018. 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 was permitted. The Company adopted this guidance as of January 1, 2018 and the guidance did not have an impact 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 was effective for the Company beginning in the first quarter of fiscal year 2018. Early adoption was permitted. The Company adopted the guidance as of January 1, 2018 and the guidance did not have a significant impact on its consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, “Restricted Cash,” which clarifies how restricted cash is presented and classified in the statement of cash flows. The guidance was effective for the Company beginning in the first quarter of fiscal year 2018. Early adoption was permitted. The Company adopted the guidance as of January 1, 2018 and the guidance did not have an impact 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 was effective for the Company beginning in the first quarter of fiscal year 2018. Early adoption was permitted. The Company adopted the guidance as of January 1, 2018 and the guidance did not have an impact on its consolidated financial statements. In May 2017, the FASB issued ASU 2017-09, “Compensation – Stock Compensation,” which requires modification accounting to be used on share-based payment awards if the fair value, the vesting conditions, or the classification of the award changes as a result of the change in terms or conditions. The guidance was effective for the Company beginning in the first quarter of fiscal year 2018. The Company adopted the guidance as of January 1, 2018 and the guidance did not have an impact on its consolidated financial statements. Concentration of Credit Risk The Company deposits its cash in financial institutions. At times, such deposits may be in excess of insured limits. To date, the Company has not experienced any impairment losses on its cash. The Company also limits its credit risk with respect to accounts receivable by performing credit evaluations when deemed necessary. Major Customers For the year ended December 31, 2018 and 2017, the following customers accounted for the following percentages of the Company’s revenues, respectively: Customer 2018 2017 A 11 % 13 % B 11 % 20 % C 10 % 1 % Total 32 % 34 % As of December 31, 2018 and December 31, 2017, the following customers accounted for the following percentages of the Company’s accounts receivable, respectively: Customer 2018 2017 D 15 % - % A 11 % 18 % C 11 % - % E 2 % 11 % Total 39 % 29 % Accounts Receivable 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. Factors considered include economic conditions, each customer’s payment and return history and credit worthiness. 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 $15,000 and $1,000 as of December 31, 2018 and 2017, respectively. For the year ended December 31, 2018, provision for bad expense was approximately $40,000 of which $14,000 was an increase to the allowance for doubtful accounts. Of the remaining $26,000, $1,000 was write-offs of accounts receivable related to a prior period. There was no allowance for sales returns at December 31, 2018 or 2017. During the year ended December 31, 2017, there were write-offs of accounts receivable of approximately $42,000, which were fully reserved. Inventory For all medical device products and some commercial products, the Company engages third parties to manufacture and package its finished goods, which are shipped to the Company for warehousing, until sold to distributors or end customers. As a result of the Biocon Acquisition, some commercial products will be manufactured at Company facilities. Inventory consists of finished goods and raw materials and is valued at the lower of cost or net realizable value using the first-in, first-out method. The Company’s inventory reserve requirements are based on factors including product expiration dates and estimates for future sales of the product. If estimated sales levels do not materialize, the Company will make adjustments to its assumptions for inventory reserve requirements. License and Supply Rights The Company’s rights under the License and Supply Agreement with Medica are capitalized and stated at cost, less accumulated amortization, and are amortized using the straight-line method over the term of the License and Supply Agreement, which is from April 23, 2012 through December 31, 2025. The Company determines amortization periods for licenses based on its assessment of various factors impacting estimated useful lives and cash flows of the acquired rights. Such factors include the expected launch date of the product, the strength of the intellectual property protection of the product and various other competitive, developmental and regulatory issues, and contractual terms. See Note 9 – License and Supply Agreement, net for further discussion. Patents The Company has filed numerous patent applications with the United States Patent and Trademark Office and in foreign countries. All costs and direct expenses incurred in connection with patent applications have been expensed as incurred and are included in selling, general and administrative expenses on the accompanying consolidated statement of operations and comprehensive loss. Property and Equipment, net Property and equipment, net is stated at cost less accumulated depreciation. These assets are depreciated over their estimated useful lives of three to seven years using the straight-line method. The Company adheres to Accounting Standards Codification (“ASC”) 360 and periodically evaluates whether current facts or circumstances indicate that the carrying value of its depreciable assets to be held and used may not be recoverable. If such circumstances are determined to exist, an estimate of undiscounted future cash flows produced by the long-lived assets, or the appropriate grouping of assets, is compared to the carrying value to determine whether impairment exists. If an asset is determined to be impaired, the loss is measured based on the difference between the asset’s fair value and its carrying value. For long-lived assets, the estimate of fair value is based on various valuation techniques, including a discounted value of estimated future cash flows. The Company reports an asset to be disposed of at the lower of its carrying value or its fair value less costs to sell. There were no impairment losses for long-lived assets recorded for the years ended December 31, 2018 and December 31, 2017. Intangible Assets The Company’s intangible assets include finite lived assets. Finite lived intangible assets, consisting of customer lists, tradenames, service marks and domain names are amortized on a straight-line basis over the estimated useful lives of the assets. Finite lived intangible assets are tested for impairment when events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. Impairment testing requires management to estimate the future undiscounted cash flows of an intangible asset using assumptions believed to be reasonable, but which are unpredictable and inherently uncertain. Actual future cash flows may differ from the estimates used in the impairment testing. Goodwill Goodwill, which represents the excess of purchase price over the fair value of net assets acquired, is carried at cost. In accordance with ASC 350, “Goodwill and Other Intangibles,” rather than recording periodic amortization, goodwill is subject to an annual assessment for impairment by applying a fair value based test. If the fair value of the reporting unit exceeds the reporting unit’s carrying value, including goodwill, then goodwill is considered not impaired, making further analysis not required. Revenue Recognition The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. ASC 606 prescribes a five-step model for recognizing revenue, which includes (i) identifying contracts with customers; (ii) identifying performance obligations; (iii) determining the transaction price; (iv) allocating the transaction price; and (v) recognizing revenue. Shipping and Handling Costs Shipping and handling costs charged to customers are recorded as cost of goods sold and were approximately $45,000 and $35,000 for the years ended December 31, 2018 and 2017, respectively. Research and Development Costs Research and development costs are expensed as incurred. Stock-Based Compensation The fair value of stock options is recognized as stock-based compensation expense in the Company’s consolidated statement of operations and comprehensive loss. The Company calculates employee stock-based compensation expense in accordance with ASC 718. 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 fair value of the Company’s stock option awards is estimated using a Black-Scholes option valuation model. This model requires the input of highly subjective assumptions and elections including expected stock price volatility and the estimated life of each award. The fair value of stock-based awards is amortized over the vesting period of the award. Warrants The Company accounts for stock warrants as either equity instruments or derivative liabilities depending on the specific terms of the warrant agreement. Amortization of Debt Issuance Costs and Debt Discounts The Company accounts for debt issuance costs in accordance with ASC 835, “Interest”, which requires that costs paid directly to the issuer of a recognized debt liability be reported in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The Company amortizes the debt discount, including debt issuance costs, in accordance with ASC 835, Interest, over the term of the associated debt. See Note 13 – Unsecured Promissory Notes and Warrants for a discussion of the Company’s prior unsecured long-term note payable. Other Income (Expense), net Other expense of approximately $35,000 and approximately $74,000 for the years ended December 31, 2018 and 2017, respectively, is primarily due to foreign currency transaction gains and losses. Income Taxes The Company accounts for income taxes in accordance with ASC 740, which requires accounting for deferred income taxes under the asset and liability method. Deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable in future years to differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities. For financial reporting purposes, the Company has incurred a loss in each period since its inception. Based on available objective evidence, including the Company’s history of losses, management believes it is more likely than not that the net deferred tax assets will not be fully realizable. Accordingly, the Company provided for a full valuation allowance against its net deferred tax assets at December 31, 2018 and 2017. ASC 740 prescribes, among other things, a recognition threshold and measurement attributes for the financial statement recognition and measurement of uncertain tax positions taken or expected to be taken in a company’s income tax return. ASC 740 utilizes a two-step approach for evaluating uncertain tax positions. Step one, or recognition, requires a company to determine if the weight of available evidence indicates a tax position is more likely than not to be sustained upon audit, including resolution of related appeals or litigation processes, if any. Step two, or measurement, is based on the largest amount of benefit that is more likely than not to be realized on settlement with the taxing authority. The Company is subject to income tax examinations by major taxing authorities for all tax years subsequent to 2013. During the years ended December 31, 2018 and 2017, the Company recognized no adjustments for uncertain tax positions. However, management’s conclusions regarding this policy may be subject to review and adjustment at a later date based on factors including, but not limited to, on-going analyses of and changes to tax laws, regulation and interpretations, thereof. The Company recognized approximately $93,000 and $1,789,000 in the years ended December 31, 2018 and 2017, respectively, from the sale of net operating loss and research and development credit carryforwards under the New Jersey Economic Development Authority Technology Business Tax Certificate Transfer Program. These amounts are recorded on the consolidated financial statements as income tax benefit in the year they are earned. See Note 15 – Income Taxes for further discussion. Net Income (Loss) per Common Share Basic net 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 net income (loss) per common share is calculated by dividing net income (loss) available to common shareholders 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 securities have been excluded from the dilutive per share computation as they are antidilutive: December 31, 2018 2017 Shares underlying options outstanding 7,434,561 6,770,777 Shares underlying warrants outstanding 6,642,344 7,099,010 Unvested restricted stock 449,043 799,387 Foreign Currency Translation Foreign currency translation is recognized in accordance with ASC 830. The functional currency of Nephros International Limited, the Company’s Irish subsidiary, is the Euro and its translation gains and losses are included in accumulated other comprehensive income. The balance sheet is translated at the year-end rate. The consolidated statements of operations and comprehensive loss are translated at the weighted average rate for the year. Comprehensive Income (Loss) Comprehensive income (loss), as defined in ASC 220, is the total of net income (loss) and all other non-owner changes in equity (or other comprehensive income (loss)). The Company’s other comprehensive income (loss) consists only of foreign currency translation adjustments. Recent Accounting Pronouncements, Not Yet Effective In February 2016, the FASB issued ASU No. 2016-02, “Leases,” (“ASC 842”) which 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. The guidance is effective for the Company beginning in the first quarter of 2019. The Company plans to adopt the standard using the transition method provided by ASU 2018-11, “Leases (Topic 842): Targeted Improvements”. Under this method, the Company will apply the new requirements to only those leases that exist as of January 1, 2019, rather than at the earliest comparative period presented in the financial statements. Prior periods will be presented under existing lease guidance. Upon transition, the Company plans to apply the package of practical expedients permitted under ASC 842 transition guidance. As a result, the Company is not required to reassess (1) whether expired or existing contracts contain leases under the new definition of a lease, including whether an existing or expired contract contains an embedded lease, (2) lease classification for expired or existing leases and (3) any initial direct costs of existing leases. While the Company is still finalizing the potential impacts of the standard, it currently expects the most significant impact will be the recognition of right-of- use assets and lease liabilities for operating leases. The Company estimates adoption of the standard will result in the recognition of right-of-use assets and lease liabilities for operating leases ranging from approximately $500,000 to $750,000 as of January 1, 2019. The Company does not expect the adoption will have a material impact on its consolidated statements of operations and comprehensive loss. In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments,” which replaces the current incurred loss impairment methodology 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 adoption of this guidance on January 1, 2019 will not have a significant impact on the Company’s 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 assessing the impact of adopting this guidance on its consolidated financial statements. In July 2017, the FASB issued ASU 2017-11, “Accounting for Certain Financial Instruments with Down Round Features and Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception” which changes the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features and recharacterizes the indefinite deferral of certain provisions within the guidance for distinguishing liabilities from equity. The guidance is effective for the Company beginning in the first quarter of fiscal year 2019. Early adoption is permitted. The adoption of this guidance on January 1, 2019 will not have a significant impact on the Company’s consolidated financial statements. In May 2018, the FASB issued ASU 2018-07, “Improvements to Nonemployee Share-Based Payment Accounting,” which expands the scope of ASC 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The guidance is effective for the Company beginning in the first quarter of fiscal year 2019. Early adoption is permitted. The adoption of this guidance on January 1, 2019 will not have a significant impact on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, “Disclosure Framework-Changes to the Disclosure Requirements for the Fair Value Measurement,” which modifies the disclosure requirements on fair value measurements. The guidance is effective for the Company beginning in the first quarter of fiscal year 2020. Early adoption is permitted. The Company is assessing the impact of adopting this guidance on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract,” which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The guidance is effective for the Company beginning in the first quarter of fiscal year 2020. Early adoption is permitted. The Company is assessing the impact of adopting this guidance on its consolidated financial statements. In November 2018, the FASB issued ASU 2018-18, “Collaborative Arrangements: Clarifying the Interaction Between Topic 808 and Topic 606.” The new guidance clarifies that, when the collaborative arrangement participant is a customer in the context of a unit-of-account, revenue from contracts with customers guidance should be applied, adds unit-of-account guidance to collaborative arrangements guidance, and requires, that in a transaction with a collaborative arrangement participant who is not a customer, presenting the transaction together with revenue recognized under contracts with customers is precluded. The guidance is effective for the Company beginning in the first quarter of fiscal year 2020. Early adoption is permitted. The Company is assessing the impact of adopting this guidance on its consolidated financial statements. |
Biocon Acquisition
Biocon Acquisition | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Biocon Acquisition | Note 3 – Biocon Acquisition On December 31, 2018, the Company completed the Biocon Acquisition, which included the acquisition of 100% of the outstanding membership interests of each of Aether and Biocon. The purpose of the Biocon Acquisition was to accelerate growth and to expedite entry into additional markets. For the year ended December 31, 2018, transaction costs associated with the Biocon Acquisition of approximately $33,000 were recorded in selling, general and administrative costs. The Company has accounted for the Biocon Acquisition as a business combination under the acquisition method of accounting. The following is a summary of total consideration for the Biocon Acquisition: Total Consideration Fixed purchase price $ 1,059,000 Acquisition date fair value of contingent consideration 562,000 Total consideration 1 $ 1,621,000 1 The Company has allocated the total consideration for the transaction based upon the fair value of net assets acquired and liabilities assumed at the date of acquisition. The following is a summary of the preliminary purchase price allocation for the Biocon Acquisition: Fair Values December 31, 2018 Trade accounts receivable $ 164,000 Inventories 179,000 Equipment 39,000 Security deposit 7,000 Goodwill 748,000 Intangible assets 590,000 Total assets acquired, net of cash acquired 1,727,000 Accounts payable 91,000 Accrued expenses 15,000 Total liabilities assumed 106,000 Net assets acquired, net of cash acquired $ 1,621,000 Intangible Assets The acquired intangible assets are being amortized over their estimated useful lives as follows: Preliminary Fair Values Weighted Average Useful Life (Years) Tradenames, service marks and domain names 50,000 5 Customer relationships 540,000 17 Total intangible assets $ 590,000 Estimated aggregate amortization expense for each of the next five years is estimated to be approximately $42,000. The estimated fair value of the identifiable intangible assets was determined using the “income approach,” which is a valuation technique that provides an estimate of the fair value of an asset based on market participant expectations of the cash flows an asset would generate over its remaining useful life. The assumptions, including the expected projected cash flows, utilized in the preliminary purchase price allocation and in determining the purchase price were based on the Company’s best estimates as of December 31, 2018, the closing date of the Biocon Acquisition. Some of the more significant assumptions inherent in the development of those asset valuations include the estimated net cash flows for each year for each asset or product (including net revenues, cost of sales, research and development costs, selling and marketing costs and working capital / contributory asset charges), the appropriate discount rate to select in order to measure the risk inherent in each future cash flow stream, the assessment of each asset’s life cycle, the potential regulatory and commercial success risks, competitive trends impacting the asset and each cash flow stream, as well as other factors. No assurances can be given that the underlying assumptions used to prepare the discounted cash flow analysis will not change. For these and other reasons, actual results may vary significantly from estimated results. Goodwill Goodwill is calculated as the excess of the consideration transferred over the net assets recognized. Factors that contributed to the Company’s recognition of goodwill include the Company’s intent to expand its product portfolio. Goodwill has been allocated to the Water Filtration segment. Unaudited Pro Forma Results of Operations The following table reflects the unaudited pro forma combined results of operations for the years ended December 31, 2018 and 2017 (assuming the closing of the Biocon Acquisition occurred on January 1, 2017): Year Ended December 31, 2018 December 31, 2017 Total revenues $ 6,412,000 $ 4,236,000 Net loss attributable to Nephros, Inc $ (3,158,000 ) $ (855,000 ) The pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the actual results of operations had the closing of the Biocon Acquisition taken place on January 1, 2017. Furthermore, the pro forma results do not purport to project the future results of operations of the Company. The unaudited pro forma information reflects the following adjustments: ● Adjustments to amortization expense for each of the years ended December 31, 2018 and 2017 of approximately $21,000 related to identifiable intangible assets acquired; ● Adjustments, net of a reduction, to depreciation expense for each of the years ended December 31, 2018 and 2017 of approximately $10,000 related to equipment acquired and for which the capitalization policy and useful lives were adjusted based on the Company’s policy; ● Adjustments to selling, general and administrative expense related to transaction costs directly attributable to the Biocon Acquisition, including the elimination of $33,000 of expenses incurred in the year ended December 31, 2018 which have been included in the year ended December 31, 2017; ● Eliminate interest expense in the historical Biocon results of operations and eliminate interest income in the Company’s historical results of operations, each of which was approximately $4,000 for each of the years ended December 31, 2018 and 2017, which interest was related to a lease that was terminated as of the acquisition; and ● Eliminate sales, and related cost of goods, for products sold by Biocon to the Company, with a gross margin impact of approximately $5,000 and $10,000 for the years ended December 31, 2018 and 2017, respectively. |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Note 4 – Revenue Recognition The Company recognizes revenue related to product sales when product is shipped via external logistics provider and the other criteria of ASC 606 are met. Product revenue is recorded net of returns and allowances. In addition to product revenue, the Company recognizes revenue related to license, royalty and other agreements in accordance with the five-step model in ASC 606. License, royalty and other revenue recognized for the years ended December 31, 2018 and 2017 is comprised of: Years Ended December 31, 2018 2017 Royalty revenue under the Sublicense Agreement with CamelBak (1) $ 100,000 $ 25,000 Royalty revenue under the License Agreement with Bellco 101,000 140,000 License revenue under the License Agreement with Bellco - 70,000 Other revenue 29,000 30,000 Total license, royalty and other revenue $ 230,000 $ 265,000 (1) In May 2015, the Company entered into a Sublicense Agreement (the “Sublicense Agreement”) with CamelBak Products, LLC (“CamelBak”). Under the Sublicense Agreement, the Company granted CamelBak an exclusive, non-transferable, worldwide (with the exception of Italy) sublicense and license, in each case solely to market, sell, distribute, import and export the Company’s individual water treatment device. In exchange for the rights granted to CamelBak, CamelBak agreed, through December 31, 2022, to pay the Company a percentage of the gross profit on any sales made to a branch of the U.S. military, subject to certain exceptions, and to pay a fixed per-unit fee for any other sales made. CamelBak is also required to meet or exceed certain minimum annual fees payable to the Company, and if such fees are not met or exceeded, the Company may convert the exclusive sublicense to a non-exclusive sublicense with respect to non-U.S. military sales In the first quarter of 2019, the Sublicense Agreement was amended to eliminate the minimum fee obligations starting May 6, 2018 and, as such, Camelbak has no further minimum fee obligation. Bellco License Agreement With regard to the OLpūr 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. (“Bellco”), an Italy-based supplier of hemodialysis and intensive care products, for the manufacturing, marketing and sale of the Company’s patented mid-dilution dialysis filters (the “Products”). Under the License Agreement, as amended, the Company granted Bellco a license to manufacture, market and sell the Products under its own name, label, and CE mark in certain countries on an exclusive basis, and to do the same on a non-exclusive basis in certain other countries. Under the License Agreement with Bellco, the Company received upfront payments which were previously deferred and recognized as license revenue over the term of the License Agreement with expires on December 31, 2021. During the year ended December 31, 2017, approximately $70,000, respectively, was recognized as license revenue. See “ASC 606 Adoption” below for a discussion of the impact of ASC 606 on the recognition of this license revenue. The License Agreement, as amended, also provides minimum sales targets which, if not satisfied, will, at the discretion of the Company, result in conversion of the license to non-exclusive status. 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 covered territory as follows: for the first 125,000 units sold in total, €1.75 (approximately $2.10) per unit; thereafter, €1.25 (approximately $1.50) per unit. The License Agreement also provides for a fixed royalty payment payable to the Company for the period beginning on January 1, 2015 through and including December 31, 2021 if the minimum sales targets are not met. The Company recognized royalty income from Bellco pursuant to the License Agreement for the years ended December 31, 2018 and 2017 of approximately $101,000 and $140,000, respectively. ASC 606 Adoption In accordance with the adoption of ASC 606, the remaining deferred revenue of approximately $278,000 related to license revenue as of December 31, 2017 was recognized as a cumulative effect adjustment to accumulated deficit as of January 1, 2018. The following tables present the Company’s revenue for the year ended December 31, 2018 under the ASC 606 model as compared to revenue under the previous accounting guidance: Year Ended December 31, 2018 Revenue as reported Revenue under previous accounting guidance Difference Product revenue $ 5,457,000 $ 5,457,000 $ - Royalty revenue under the Sublicense Agreement with CamelBak 100,000 100,000 - Royalty revenue under the License Agreement with Bellco 101,000 101,000 - License revenue under the License Agreement with Bellco (1) - 70,000 (70,000 ) Other revenue 29,000 29,000 - Total net revenues $ 5,687,000 $ 5,757,000 $ (70,000 ) (1) Under ASC 606, amounts received related to the license under the License Agreement with Bellco would have been recognized as revenue at the time that the license was transferred, which was at the time the payments were received by the Company. Under previous accounting guidance, amounts received under the License Agreement with Bellco were deferred and recognized as revenue over the term of the License Agreement. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 5 – Fair Value Measurements The Company measures certain financial instruments and other items at fair value. To determine the fair value, the Company uses the fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use to value an asset or liability and are developed based on market data obtained from independent sources. Unobservable inputs are inputs based on assumptions about the factors market participants would use to value an asset or liability. To measure fair value, the Company uses the following fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable: Level 1 Level 2 – Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level of classification for each reporting period. The following table sets forth the Company’s financial assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2018 (there were no assets or liabilities that were measured at fair value on a recurring basis as of December 31, 2017): Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Total At December 31, 2018: Current portion of contingent consideration - - $ 236,000 $ 236,000 Contingent consideration, net of current portion - - 263,000 263,000 Total contingent consideration liability $ - $ - $ 499,000 $ 499,000 Consideration paid in a business combination may include potential future payments that are contingent upon the acquired business achieving certain levels of earnings in the future (“contingent consideration”). Contingent consideration liabilities are measured at their estimated fair value as of the date of acquisition, with subsequent changes in fair value recorded in the consolidated statements of operations. Fair value as of the date of acquisition is estimated based on projections of expected future cash flows of the acquired business. The Company estimated the contingent consideration liability using the income approach (discounted cash flow method) which requires the Company to make estimates and assumptions regarding the future cash flows and profits. Changes in these estimates and assumptions could have a significant impact on the amounts recognized. There were no transfers between levels in the fair value hierarchy during the year ended December 31, 2018. Assets and Liabilities Not Measured at Fair Value on a Recurring Basis The carrying amounts of cash, accounts receivable, secured revolving credit facility, accounts payable and accrued expenses approximate fair value due to the short-term maturity of these instruments. The carrying amounts of the investment in lease, net, the secured long-term note payable and the unsecured long-term note payable approximate fair value as of December 31, 2018 and December 31, 2017 because those financial instruments bear interest at rates that approximate current market rates for similar agreements with similar maturities and credit. Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis See Note 3 – Biocon Acquisition for the allocation of the total consideration for the Biocon Acquisition based upon the fair value of net assets acquired and liabilities assumed at the date of acquisition. |
Inventory, Net
Inventory, Net | 12 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Inventory, Net | Note 6 - Inventory, net The Company’s inventory components as of December 31, 2018 and 2017 were as follows: December 31, 2018 2017 Finished goods $ 1,633,000 $ 654,000 Raw material 280,000 51,000 Less: inventory reserve (49,000 ) (31,000 ) Total inventory, net $ 1,864,000 $ 674,000 |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 12 Months Ended |
Dec. 31, 2018 | |
Other Assets [Abstract] | |
Prepaid Expenses and Other Current Assets | Note 7- Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets as of December 31, 2018 and 2017 were as follows: December 31, 2018 2017 Prepaid insurance premiums $ 45,000 $ 39,000 Deposit for future services 200,000 - Security deposit - 20,000 Other 31,000 26,000 Prepaid expenses and other current assets $ 276,000 $ 85,000 |
Investment in Lease, Net
Investment in Lease, Net | 12 Months Ended |
Dec. 31, 2018 | |
Leases [Abstract] | |
Investment in Lease, Net | Note 8 – Investment in Lease, net On October 8, 2015, the Company entered into an equipment lease agreement with Biocon. The lease commenced on January 1, 2016 with a term of 60 months and monthly rental payments to the Company of approximately $1,800. At the completion of the lease term, Biocon was to 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 was recognized monthly over the lease term using the effective-interest method. Cash received was applied against the direct financing lease receivable and was 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 lease of approximately $92,000 was recorded, net of unearned interest of approximately $14,000. Approximately $4,000 and $4,000, respectively, was recognized in interest income during each of the years ended December 31, 2018 and 2017. As a result of the Biocon Acquisition on December 31, 2018, the equipment lease was terminated. The equipment is now included in property and equipment, net on the consolidated balance sheet as of December 31, 2018. The equipment will be depreciated over four years. |
License and Supply Agreement, N
License and Supply Agreement, Net | 12 Months Ended |
Dec. 31, 2018 | |
License And Supply Agreement Net | |
License and Supply Agreement, Net | Note 9 – License and Supply Agreement, net 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, and for an exclusive supply arrangement for the filtration products. Under the License and Supply Agreement, as amended, 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, with certain limitations on territory, 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. The filtration covered under the License and Supply Agreement include both certain products based on Medica’s proprietary Versatile microfiber technology and certain filtration products based on Medica’s proprietary Medisulfone ultrafiltration technology. The License and Supply Agreement with Medica expires on December 31, 2025, unless earlier terminated by either party in accordance with the terms of the License and Supply Agreement. In exchange for the license, 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 $938,000 and $1,072,000 as of December 31, 2018 and December 31, 2017, respectively. Accumulated amortization is approximately $1,312,000 and $1,178,000 as of December 31, 2018 and December 31, 2017, respectively. The intangible asset is being amortized as an expense over the life of the License and Supply Agreement. Approximately $134,000 and $190,000 has been charged to amortization expense for the years ended December 31, 2018 and 2017, respectively, on the consolidated statement of operations and comprehensive loss. 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 years ended December 31, 2018 and 2017, approximately $13,000 and $24,000 of interest, respectively, was recognized as interest expense. In addition, for the period beginning April 23, 2014 through December 31, 2025, 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 $161,000 and $98,000 for the years ended December 31, 2018 and 2017, respectively, was recognized as royalty expense and is included in cost of goods sold on the consolidated statement of operations and comprehensive loss. Approximately $50,000 and $34,000 in royalties are included in accounts payable as of December 31, 2018 and December 31, 2017, respectively. |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | Note 10 - Property and Equipment, Net Property and equipment as of December 31, 2018 and 2017 was as follows: December 31, Life 2018 2017 Manufacturing equipment 3-7 years $ 768,000 $ 700,000 Research equipment 5 years 37,000 37,000 Computer equipment 3-4 years 43,000 43,000 Furniture and fixtures 7 years 37,000 37,000 Property and equipment, gross 885,000 817,000 Less: accumulated depreciation 794,000 765,000 Property and equipment, net $ 91,000 $ 52,000 Depreciation expense for the years ended December 31, 2018 and 2017 was approximately $29,000 and $28,000, respectively. |
Secured Note Payable
Secured Note Payable | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Secured Note Payable | Note 11 – Secured Note Payable On March 27, 2018, the Company entered into a Secured Promissory Note Agreement (the “Secured Note”) with Tech Capital, LLC (“Tech Capital”) for a principal amount of $1,187,000. As of December 31, 2018, the principal balance of the Secured Note was approximately $1,038,000. The Company used the proceeds from the Secured Note to repay the Company’s 11% unsecured promissory notes issued in June 2016 pursuant to the Note and Warrant Agreement (see Note 13 – Unsecured Promissory Notes and Warrants). The Secured Note has a maturity date of April 1, 2023. The unpaid principal balance accrues interest at a rate of 8% per annum. Principal and interest payments are due on the first day of each month commencing on May 1, 2018. The Secured Note is subject to the terms and conditions of and is secured by security interests granted by the Company in favor of Tech Capital under the Loan and Security Agreement between the Company and Tech Capital, dated August 17, 2017 and all of the riders and amendments thereto (the “Loan Agreement”) (see Note 12 – Secured Revolving Credit Facility). An event of default under such Loan Agreement would be an event of default under the Secured Note and vice versa. In the event the principal balance under the Loan Agreement is due, all amounts due under the Secured Note would also be due. During the year ended December 31, 2018, the Company made payments under the Secured Note of approximately $216,000. Approximately $67,000 of the total payments made was recognized as interest expense on the consolidated statement of operations and comprehensive loss for the year ended December 31, 2018. Debt issuance costs of approximately $6,000 were recognized as interest expense on the consolidated statement of operations and comprehensive loss for the year ended December 31, 2018. As of December 31, 2018, future principal maturities are as follows: 2019 $ 195,000 2020 230,000 2021 249,000 2022 269,000 2023 95,000 Total $ 1,038,000 |
Secured Revolving Credit Facili
Secured Revolving Credit Facility | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Secured Revolving Credit Facility | Note 12 – Secured Revolving Credit Facility On August 17, 2017, the Company entered into the Loan Agreement with Tech Capital. The Loan Agreement provides for a secured asset-based revolving credit facility of up to $1,000,000, which the Company may draw upon and repay from time to time during the term of the Loan Agreement. The outstanding principal balance of the Loan Agreement was approximately $991,000 and $711,000 as of December 31, 2018 and 2017, respectively. The Company is using these proceeds for working capital and general corporate purposes. The Loan Agreement has a term of 12 months, which automatically renewed on August 17, 2018 and will automatically renew for successive 12-month periods unless cancelled. Availability under the Loan Agreement is based upon periodic borrowing base certifications valuing certain of the Company’s accounts receivable and inventory. Outstanding borrowings under the Loan Agreement accrue interest, which is payable monthly based on the average daily outstanding balance, at a rate equal to 3.5% plus the prime rate per annum, provided that such prime rate will not be less than 4.25% per annum. As of December 31, 2018, the current interest rate was 9.00% per annum. The Company also granted to Tech Capital a first priority security interest in its assets, including its accounts receivable and inventory, to secure all of its obligations under the Loan Agreement. In addition, Nephros International Limited unconditionally guaranteed the Company’s obligations under the Loan Agreement. For the year ended December 31, 2018, approximately $22,000 was recognized as interest expense on the consolidated statement of operations and comprehensive loss. As of December 31, 2018, approximately $2,000 of such interest expense incurred is included in accrued expenses on the consolidated balance sheet. For the year ended December 31, 2017, approximately $29,000 was recognized as interest expense on the consolidated statement of operations and comprehensive loss, which includes the debt issuance costs of approximately $12,000 in addition to interest expense incurred of approximately $17,000 on the revolving facility. As of December 31, 2017, approximately $4,000 of such interest expense incurred is included in accrued expenses on the consolidated balance sheet. |
Unsecured Promissory Notes and
Unsecured Promissory Notes and Warrants | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Unsecured Promissory Notes and Warrants | Note 13 - Unsecured Promissory Notes and Warrants In June 2016, the Company entered into a Note and Warrant Agreement (the “Note and Warrant Agreement”) with new creditors as well as existing stockholders under which the Company issued unsecured promissory notes and warrants resulting in total gross proceeds to the Company of approximately $1,187,000. The outstanding principal under the notes accrued interest at a rate of 11% per annum. The notes required the Company to make interest only payments on a semi-annual basis, with all outstanding principal under the notes being repayable in cash on 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. The portion of the gross proceeds allocated to the warrants, approximately $393,000, was accounted for as additional paid-in capital resulting in a debt discount. The debt discount, which included approximately $9,000 of debt issuance costs in addition to the fair value of the warrants, was being amortized to interest expense using the effective interest method in accordance with ASC 835 over the term of the Note and Warrant Agreement. As of December 31, 2017, the portion of the outstanding notes held by related parties comprised of persons controlled by a member of management and by Lambda Investors LLC (“Lambda”), a significant shareholder, amounted to $30,000 and $300,000, respectively. On March 30, 2018, the principal balance of the notes, along with the remaining accrued interest of approximately $43,000, was repaid in full. While the notes were outstanding, approximately $195,000 of interest was paid to noteholders. The remaining debt discount of approximately $199,000 was recorded as loss on extinguishment of debt in the Company’s consolidated statements of operations and comprehensive loss. For the years ended December 31, 2018 and 2017, approximately $34,000 and $116,000, respectively, was recognized as amortization of debt discount and is included in interest expense on the consolidated statement of operations and comprehensive loss. For the years ended December 31, 2018 and 2017, approximately $30,000 and $133,000, respectively, of interest expense was incurred. For the year ended December 31, 2018, the amount of interest expense recognized related to related parties comprised of entities controlled by a member of management and by Lambda was approximately $1,000 and $8,000, respectively. For the year ended December 31, 2017, the amount of interest expense recognized related to related parties comprised of entities controlled by a member of management and by Lambda was approximately $3,000 and $33,000, respectively. |
Accrued Expenses
Accrued Expenses | 12 Months Ended |
Dec. 31, 2018 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Note 14 - Accrued Expenses Accrued expenses as of December 31, 2018 and 2017 were as follows: December 31, 2018 2017 Accrued legal $ 90,000 $ 90,000 Accrued sales commission 42,000 40,000 Accrued research and development 65,000 - Accrued accounting 8,000 11,000 Accrued interest 2,000 18,000 Accrued other 189,000 59,000 $ 396,000 $ 218,000 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 15 - Income Taxes The income tax benefit attributable to loss before income taxes for the years ended December 31, 2018 and 2017 is as follows: Years Ended December 31, 2018 2017 Current: State $ (93,000 ) $ (1,789,000 ) Total current tax benefit (93,000 ) (1,789,000 ) Total deferred tax benefit - - Income tax benefit $ (93,000 ) $ (1,789,000 ) A reconciliation of the income tax benefit computed at the statutory tax rate to the Company’s effective tax rate for the years ended December 31, 2018 and 2017 is as follows: Years Ended December 31, 2018 2017 U.S. federal statutory rate 21.00 % 35.00 % State taxes 5.25 % (21.84 )% Sale of NJ NOLS and credits (2.78 )% (68.91 )% Change in federal statutory rate - % (441.07 )% Stock based compensation (1.96 )% (5.48 )% Other permanent difference due to sale of NJ NOLs and credits - % (24.12 )% Federal research and development credits 2.28 % 2.24 % Other (0.11 )% (12.46 )% Valuation allowance (26.46 )% 467.73 % Effective tax rate (2.78 )% (68.91 )% Significant components of the Company’s deferred tax assets as of December 31, 2018 and 2017 are as follows: December 31, 2018 2017 Deferred tax assets: Net operating loss carry forwards $ 18,671,000 $ 17,907,000 Research and development credits 1,399,000 1,322,000 Nonqualified stock option compensation expense 497,000 453,000 Other temporary book - tax differences 58,000 125,000 Total deferred tax assets 20,625,000 19,807,000 Deferred tax liabilities: Fixed and intangible asset basis difference (21,000 ) - Total deferred tax liabilities (21,000 ) - Deferred tax assets (liabilities), net 20,604,000 19,807,000 Valuation allowance for deferred tax assets (20,604,000 ) (19,807,000 ) Deferred tax assets (liabilities), net after valuation allowance $ - $ - The Tax Cuts and Jobs Act of 2017 (the “Tax Act”), which was signed into law on December 22, 2017, resulted in significant changes to the U.S. corporate income tax system. These changes include a federal statutory rate reduction from 35% to 21%, the elimination or reduction of certain domestic deductions and credits and limitations on the deductibility of interest expense and executive compensation. The Tax Act also transitions international taxation from a worldwide system to a modified territorial system and includes base erosion prevention measures on non-U.S. earnings, which has the effect of subjecting certain earnings of the Company’s foreign subsidiary to U.S. taxation as global intangible low-taxed income. The Company has completed its analysis of the Tax Cuts and Jobs Act during the year ended December 31, 2018. There were no significant adjustments to the provisional amounts recorded during the year-ended December 31, 2017. The Tax Act also includes a one-time mandatory deemed repatriation tax on accumulated foreign subsidiaries’ previously untaxed foreign earnings. For tax years beginning after December 31, 2017, taxpayers must include in taxable income their share of Global Intangible Low Taxed Income (GILTI) from foreign controlled corporations. The Company has elected to treat income from GILTI as a period cost. Changes in tax rates and tax laws are accounted for in the period of enactment. During the years ended December 31, 2018 and 2017, the Company recorded an income tax benefit of approximately $93,000 and $1,789,000, respectively, due to the sale of net operating loss and research and development credit carryforwards under the New Jersey Economic Development Authority Technology Business Tax Certificate Transfer Program. These amounts are recorded on the consolidated financial statements as income tax benefits in the year they were earned. As a result of the sale of net operating loss and research and development credit carryforwards during these years, the Company’s deferred tax assets decreased by approximately $99,000 and $1,903,000, respectively. The gross amounts of the net operating loss and research and development credit carryforwards that were sold during the years ended December 31, 2018 and 2017 were approximately $613,000 and $19,233,000, respectively, and $44,000 and $170,000, respectively. A valuation allowance has been recognized to offset the Company’s net deferred tax asset as it is more likely than not that such net asset will not be realized. The Company primarily considered its historical loss and potential Internal Revenue Code Section 382 limitations to arrive at its conclusion that a valuation allowance was required. The Company’s valuation allowance increased approximately $797,000 from December 31, 2017 to December 31, 2018. At December 31, 2018, the Company had Federal income tax net operating loss carryforwards of $82,241,000 and New Jersey income tax net operating loss carryforwards of $2,244,000. Foreign income tax net operating loss carryforwards were $7,903,000 as of December 31, 2018. The Company had Federal research tax credit carryforwards of $1,330,000 and $1,220,000 at December 31, 2018 and 2017, respectively. The Company also had state research tax credit carryforwards of $42,000 and $45,000 at December 31, 2018 and 2017, respectively. The Company’s net operating losses and research credits may ultimately be limited by Section 382 of the Internal Revenue Code and, as a result, it may be unable to offset future taxable income (if any) with losses, or its tax liability with credits, before such losses and credits expire. The Federal and New Jersey net operating loss carryforwards and Federal and New Jersey tax credit carryforwards will expire at various times between 2019 and 2038 unless utilized. The 2018 Federal net operating loss carryforward of $2,780,000 has an indefinite carryover period. The Company has analyzed the tax positions taken or expected to be taken in its tax returns and concluded it has no liability related to uncertain tax positions. The Company is subject to income tax examinations by major taxing authorities for all tax years subsequent to 2013 and does not anticipate a change in its uncertain tax positions within the next twelve months. The Company’s policy is to report interest and penalties, if any, related to unrecognized tax benefits in income tax expense. |
Stock Plans, Share-Based Paymen
Stock Plans, Share-Based Payments and Warrants | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Plans, Share-Based Payments and Warrants | Note 16 - Stock Plans, Share-Based Payments and Warrants Stock Plans In 2015, the Board of Directors adopted the Nephros, Inc. 2015 Equity Incentive Plan (“2015 Plan”) and reserved and authorized 7,000,000 shares of common stock for issuance pursuant to stock options, restricted stock and other equity incentive awards to the Company’s employees, directors and consultants. In December 2017, the Board of Directors approved an amendment to the 2015 Plan increasing the number of shares of common stock authorized thereunder to 10,000,000 shares. The maximum contractual term for stock options granted under the 2015 Plan is 10 years. As of December 31, 2018, options to purchase 6,369,425 shares of common stock had been issued to employees under the 2015 Plan and were outstanding. The options issued to employees expire on various dates between April 15, 2025 and December 31, 2028. As of December 31, 2018, options to purchase 30,000 shares of common stock issued to non-employees under the 2015 Plan were outstanding and will expire on May 31, 2021. Taking into account all options and restricted stock granted under the 2015 Plan, there are 460,917 shares available for future grant under the 2015 Plan. Options currently outstanding are fully vested or will vest upon a combination of the following: immediate vesting, performance-based vesting or straight-line vesting of two or four years. Of the 6,399,425 options granted, 1,845,447 options will vest when specified performance criteria are met. The Company’s previously adopted and approved plan, the 2004 Stock Incentive Plan (“2004 Plan”), expired in the year ended December 31, 2014. As of December 31, 2018, options to purchase 1,035,136 shares of common stock had been issued to employees under the 2004 Plan and were outstanding. The options expire on various dates between January 6, 2019 and March 26, 2024. As of December 31, 2018, 447,500 options had been issued to non-employees under the 2004 Plan and were outstanding. Such options expire at various dates between March 24, 2021 and November 17, 2024. No shares are available for future grants under the 2004 Plan. Options currently outstanding are fully vested. Share-Based Payments Expense related to share-based payments is recognized over the vesting period of the options. The Company has elected to recognize forfeitures as they occur. Stock-based compensation expense recognized for the years ended December 31, 2018 and 2017 was approximately $525,000 and $456,000, respectively. Approximately $500,000 and $426,000 has been recognized in selling, general and administrative expenses on the consolidated statement of operations and comprehensive loss for the years ended December 31, 2018 and 2017, respectively. Approximately $25,000 and $30,000 has been recognized in research and development expenses on the consolidated statement of operations and comprehensive loss for the years ended December 31, 2018 and 2017, respectively. The following table summarizes the option activity for the years ended December 31, 2018 and 2017: Shares Weighted Average Exercise Price Outstanding at December 31, 2016 4,592,347 0.60 Options granted 2,311,542 0.44 Options forfeited or expired (133,112 ) 0.77 Outstanding at December 31, 2017 6,770,777 $ 0.55 Options granted 1,143,034 0.62 Options forfeited or expired (379,250 ) 0.46 Options exercised (100,000 ) 0.30 Outstanding at December 31, 2018 7,434,561 $ 0.56 The following table summarizes the options exercisable and vested and expected to vest as of December 31, 2018 and 2017: Shares Weighted Average Exercise Price Exercisable at December 31, 2017 2,271,527 $ 0.65 Vested and expected to vest at December 31, 2017 6,509,821 $ 0.55 Exercisable at December 31, 2018 3,221,236 $ 0.61 Vested and expected to vest at December 31, 2018 7,190,188 $ 0.57 The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the below assumptions for the risk-free interest rates, expected dividend yield, expected lives and expected stock price volatility. Option Pricing Assumptions Grant Year 2018 2017 Stock Price Volatility 92,42 % 104.56 % Risk-Free Interest Rates 2.71 % 2.19 % Expected Life (in years) 6.15 6.11 Expected Dividend Yield 0 % 0 % Expected volatility is based on historical volatility of the Company’s common stock at the time of grant. The risk-free interest rate is based on the U.S. Treasury yields in effect at the time of grant for periods corresponding with the expected life of the options. For the expected life, the Company is using the simplified method as described in the SEC Staff Accounting Bulletin 107. This method assumes that stock option grants will be exercised based on the average of the vesting periods and the option’s life. The weighted-average fair value of options granted in 2018 and 2017 is $0.48 and $0.36, respectively. The aggregate intrinsic values of stock options outstanding and stock options vested or expected to vest as of December 31, 2018 were approximately $441,000 and $425,000, respectively. A stock option has intrinsic value, at any given time, if and to the extent that the exercise price of such stock option is less than the market price of the underlying common stock at such time. The weighted-average remaining contractual life of options vested or expected to vest as of December 31, 2018 was 7.25 years. The aggregate intrinsic values of stock options outstanding and of stock options vested or expected to vest as of December 31, 2017 were approximately $170,000 and $162,000, respectively. The weighted-average remaining contractual life of options vested or expected to vest as of December 31, 2017 was 7.8 years. As of December 31, 2018, there was approximately $1,311,000 of total unrecognized compensation cost related to unvested share-based compensation awards granted under the equity compensation plans. Approximately $230,000 of the $1,311,000 total unrecognized compensation will be recognized if and when certain performance conditions are met. The remaining approximately $1,081,000 will be amortized over the weighted average remaining requisite service period of 2.2 years. Restricted Stock Issued to Employees and Directors The Company has issued restricted stock as compensation for the services of certain employees and non-employee directors. The grant date fair value of restricted stock is based on the fair value of the common stock on the date of grant, and compensation expense is recognized based on the period in which the restrictions lapse. The following table summarizes restricted stock activity for the years ended December 31, 2018 and 2017: Shares Weighted Average Grant Date Fair Value Nonvested at December 31, 2016 957,336 $ 0.35 Granted 817,144 0.50 Vested (975,093 ) 0.35 Nonvested at December 31, 2017 799,387 0.50 Granted 449,043 0.62 Vested (753,528 ) 0.50 Forfeited (45,859 ) 0.50 Nonvested at December 31, 2018 449,043 $ 0.62 The total fair value of restricted stock that vested during the years ended December 31, 2018 and 2017 was approximately $377,000 and $345,000, respectively. Total stock-based compensation expense for the restricted stock granted to employees and non-employee directors was approximately $460,000 and $316,000, respectively, for the years ended December 31, 2018 and 2017. Approximately $416,000 and $264,000 is included in selling, general and administrative expenses on the accompanying consolidated statement of operations and comprehensive loss for the years ended December 31, 2018 and 2017, respectively. Approximately $44,000 and $52,000 is included in research and development expenses on the accompanying consolidated statement of operations and comprehensive loss for the years ended December 31, 2018 and 2017, respectively. Approximately $30,000 of stock-based compensation expense was recognized in the year ended December 31, 2017 related to restricted stock granted to employees in 2017 to settle liabilities for services incurred in prior years. As of December 31, 2018, there was approximately $87,000 of unrecognized compensation expense related to the restricted stock awards, which is expected to be recognized over the next six months. The aggregate shares of common stock legally issued and outstanding as of December 31, 2018 is greater than the aggregate shares of common stock outstanding for accounting purposes by the amount of unvested restricted shares. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | Note 17 - Stockholders’ Equity April 2018 Private Placement On April 10, 2018, the Company entered into a stock purchase agreement with certain accredited investors identified therein pursuant to which the Company issued and sold in a private placement 6,540,669 shares of the Company’s common stock resulting in gross proceeds to the Company of approximately $2,943,000. The purchase price for each share was $0.45. Proceeds, net of equity issuance costs of $19,000, recorded as a result of the private placement were approximately $2,924,000. Of the 6,540,669 shares of the Company’s common stock issued, 219,000 shares, resulting in proceeds of $98,000, were sold to members of management, including immediate family members. March 2017 Private Placement On March 17, 2017, the Company entered into a securities purchase agreement with certain accredited investors identified therein pursuant to which the Company issued and sold in a private placement 4,059,994 units of its securities, resulting in gross proceeds to the Company of approximately $1,218,000. Each unit consisted of one share of the Company’s common stock and a five-year warrant to purchase one additional share of common stock. The purchase price for each unit was $0.30. The 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 $152,000, recorded as a result of the private placement were approximately $1,066,000. In addition to the equity issuance costs incurred as a result of the private placement, the Company also issued a warrant to purchase 81,199 shares of its common stock to the placement agent engaged in connection with the private placement. The form and terms of the placement agent warrant are substantially the same as the form of warrants issued to the investors under the securities purchase agreement, 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 both a securities purchase agreement and registration rights agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park”). Under the terms and subject to the conditions of the securities purchase agreement, the Company had the right to sell to Lincoln Park, and Lincoln Park was obligated to purchase, up to $10.0 million in shares of the Company’s common stock, subject to certain limitations, from time to time, over the 36-month period commencing on September 4, 2015. Pursuant to the securities purchase agreement, during the years ended December 31, 2018 and 2017, the Company issued and sold 1,900,000 and 300,000 shares of its common stock, respectively, to Lincoln Park. The issuance of the common shares to Lincoln Park resulted in gross proceeds of $854,000 and $113,000 for the years ended December 31, 2018 and 2017, respectively. The securities purchase agreement expired on September 4, 2018. Noncontrolling Interest In July 2018, the Company formed a new, wholly-owned subsidiary, SRP, to drive the development of its second-generation HDF system and other products focused on improving therapies for patients with renal disease. On September 5, 2018, SRP entered into a Series A Preferred Stock Purchase Agreement with certain purchasers pursuant to which SRP sold 600,000 shares of its Series A Preferred Stock (“Series A Preferred”) for $5.00 per share. The aggregate purchase price was $3,000,000. SRP incurred transaction-related expenses of approximately $30,000, which are included in selling, general and administrative expenses on the accompanying consolidated statement of operations and comprehensive loss. The net proceeds from the issuance of the Series A Preferred are restricted to SRP expenses, and may not be used for the benefit of the Company or other affiliated entities, except to reimburse for expenses directly attributable to SRP. Following the Series A Preferred transaction, the Company retained a 62.5% ownership interest in SRP, holding 100% of the outstanding common shares, and holders of Series A Preferred retained a 37.5% interest in SRP on a fully diluted basis, holding 100% of the outstanding preferred shares. Of the 600,000 shares of Series A Preferred issued, the shares purchased by related parties comprised of persons controlled by members of management and by Lambda amounted to 18,000 and 400,000 shares, respectively. Each share of Series A Preferred is initially convertible into one share of SRP common stock, subject to adjustment for stock splits and recapitalization events. Subject to customary exempt issuances, in the event SRP issues additional shares of its common stock or securities convertible into common stock at a per share price that is less than the original Series A Preferred price, the conversion price of the Series A Preferred will automatically be reduced to such lower price. In the event of any voluntary or involuntary liquidation, dissolution or winding up of SRP, the holders of the Series A Preferred are entitled to be paid out of the assets of SRP available for distribution to its stockholders or, in the case of a deemed liquidation event, out of the consideration payable to stockholders in such deemed liquidation event or the available proceeds, before any payment shall be made to the holders of SRP common stock by reason of their ownership thereof, an amount per share equal to one times (1x) the Series A Preferred original issue price, plus any accruing dividends accrued but unpaid thereon, whether or not declared, together with any other dividends declared but unpaid thereon (the “Series A Liquidation Preference”). If upon any such liquidation, dissolution or winding up of SRP or deemed liquidation event, the assets of SRP available for distribution to its stockholders shall be insufficient to pay the Series A Liquidation Preference in full, the holders of Series A Preferred shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full. After the full payment of the Series A Liquidation Preference, the holders of the Series A Preferred and the holders of common stock will share ratably in any remaining proceeds available for distribution on an as-converted to common stock basis. Each share of Series A Preferred accrues dividends at the rate per annum of $0.40 per share. The accruing dividends shall accrue from day to day, whether or not declared, and shall be cumulative and shall be payable only when, as, and if declared by the Board. Holders of Series A Preferred shall be entitled to cast the number of votes equal to the number of whole shares of common stock into which the shares of Series A Preferred held by such holder are convertible as of the record date for determining stockholders entitled to vote. Except as provided by law or by the other provisions, the holders of Series A Preferred vote together with the holders of common stock as a single class. Notwithstanding the foregoing, for as long as at least 150,000 shares of Series A Preferred are outstanding, SRP is required to obtain the affirmative vote or written consent of a majority of the Series A Preferred in order to effect certain corporate transactions, including without limitation, the issuance of any securities senior to or on parity with the Series A Preferred, a liquidation or deemed liquidation of SRP, amendments to SRP’s charter documents, the issuance of indebtedness in excess of $250,000, any annual budget for the Company’s operations, and the hiring or firing of any executive officers of SRP. In addition, the holders of the Series A Preferred are entitled to elect two members of SRP’s board of directors. The noncontrolling interest in SRP held by holders of the Series A Preferred has been classified as equity on the accompanying consolidated interim balance sheet, as the noncontrolling interest is redeemable only upon the occurrence of events that are within the control of the Company. Warrants The Company accounts for stock warrants as either equity instruments or derivative liabilities depending on the specific terms of the warrant agreement. As of December 31, 2018 and 2017, all of the Company’s outstanding warrants are classified as equity. The following table summarizes certain terms of all of the Company’s outstanding warrants at December 31, 2018 and 2017: Exercise Total Common Shares Issuable as of December 31, Title of Warrant Date Issued Expiry Date Price 2018 2017 Equity-classified warrants May 2015 – private placement warrants 3/18/2015 3/18/2020 $ 0.85 917,149 917,149 June 2016 – Note and Warrant Agreement 6/7/2016 6/7/2021 $ 0.30 2,284,000 2,374,000 March 2017 – private placement warrants 3/22/2017 3/22/2022 $ 0.30 3,441,195 3,807,861 Total 6,642,344 7,099,010 The weighted average exercise price of the outstanding warrants was $0.38 as of December 31, 2018 and $0.37 as of December 31, 2017. Warrants Exercised During 2018 and 2017 During the year ended December 31, 2018, warrants to purchase 456,666 shares of common stock were exercised, resulting in proceeds of approximately $138,000 and the issuance of 456,666 shares of the Company’s common stock. During the year ended December 31, 2017, warrants to purchase 333,332 shares of common stock were exercised, resulting in proceeds of approximately $100,000 and the issuance of 333,332 shares of the Company’s common stock. |
Savings Incentive Match Plan
Savings Incentive Match Plan | 12 Months Ended |
Dec. 31, 2018 | |
Retirement Benefits [Abstract] | |
Savings Incentive Match Plan | Note 18 – Savings Incentive Match Plan On January 1, 2017, the Company established a Savings Incentive Match Plan for Employees Individual Retirement Account (SIMPLE IRA), which covers all employees. The SIMPLE IRA Plan provides for voluntary employee contributions up to statutory IRA limitations. The Company matches 100% of employee contributions to the SIMPLE IRA Plan, up to 3% of each employee’s salary. The Company contributed and expensed approximately $52,000 and $39,000 to this plan in 2018 and 2017, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 19 - Commitments and Contingencies Purchase Commitments In exchange for the rights granted under the License and Supply Agreement with Medica (see Note 9 – License and Supply Agreement, net), the Company agreed to make certain minimum annual aggregate purchases from Medica over the term of the License and Supply Agreement. For the year ended December 31, 2018, the Company has agreed to make minimum annual aggregate purchases from Medica of €2,500,000. As of December 31, 2018, the Company’s aggregate purchase commitments totaled approximately €2,500,000 (approximately $2,900,000). Contractual Obligations The Company entered into an operating lease that began in December 2017 for 380 Lackawanna Place, South Orange, New Jersey 07079, which consists of approximately 7,700 square feet of space. The rental agreement expires in November 2022 with a monthly cost of approximately $11,000. Approximately $11,000 related to a security deposit for this U.S. office facility is classified as other assets on the consolidated balance sheet as of December 31, 2018 and 2017. The Company uses these facilities to house its corporate headquarters and research facilities. The Company also has a rental agreement for 591 East Sunset Road, Henderson, Nevada 89011 which consists of approximately 16,000 total square feet of space. The Nevada lease expires in November 2020 with a monthly cost of approximately $6,000. The lease agreement for the office space in Ireland was entered into on August 1, 2018 and includes a twelve month term. Rent expense for the years ended December 31, 2018 and 2017 totaled $162,000 and $131,000, respectively. As of December 31, 2018, minimum lease payments are as follows: 2019 $ 204,000 2020 197,000 2021 145,000 2022 136,000 Contractual Obligations and Commercial Commitments The following table summarizes our approximate minimum contractual obligations and commercial commitments as of December 31, 2018: Payments Due in Period Total Within 1 Year Years 2 - 3 Years 4 - 5 More than 5 Years Minimum Purchase Commitments 1 $ 28,700,000 $ 3,500,000 $ 7,600,000 $ 8,400,000 $ 9,200,000 Leases 2 696,000 213,000 347,000 136,000 - Employment Contract 3 117,000 117,000 - - - Total $ 29,513,000 $ 3,830,000 $ 7,947,000 $ 8,536,000 $ 9,200,000 1 2 3 |
Segment Reporting
Segment Reporting | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Segment Reporting | Note 20 – Segment Reporting During the year ended December 31, 2018, the Company began reporting the results of SRP as a new segment. Prior to the formation of SRP, the Company had only a single operating segment. The Company has reflected these new segment measures beginning in the year ended December 31, 2018 and prior periods have been restated for comparability. The Company has defined its two reportable segments as Water Filtration and Renal Products. The Water Filtration segment develops and sells high performance liquid purification filters. The Renal Products segment is focused on the development of medical device products for patients with renal disease, including a second-generation hemodiafiltration system, for the treatment of patients with ESRD. The Company’s chief operating decision maker evaluates the financial performance of the Company’s segments based upon segment revenues, gross margin and operating expenses which include research and development and selling, general and administrative expenses. The accounting policies for the Company’s segments are the same as those described in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” of this Annual Report on Form 10-K and “Note 2 – Summary of Significant Accounting Policies.” The tables below present segment information reconciled to total Company loss from operations, with segment operating loss including gross profit less direct research and development expenses and direct selling, general and administrative expenses to the extent specifically identified by segment: Year Ended December 31, 2018 Water Filtration Renal Products Nephros, Inc. Consolidated Total net revenues $ 5,687,000 $ - $ 5,687,000 Gross margin 3,203,000 - 3,203,000 Research and development expenses 808,000 731,000 1,539,000 Depreciation and amortization expense 163,000 - 163,000 Selling, general and administrative expenses 4,340,000 177,000 4,517,000 Total operating expenses (5,311,000 ) (908,000 ) (6,219,000 ) Loss from operations $ (2,108,000 ) $ (908,000 ) $ (3,016,000 ) Year Ended December 31, 2017 Water Filtration Renal Products Nephros, Inc. Consolidated Total net revenues $ 3,809,000 $ - $ 3,809,000 Gross margin 2,292,000 - 2,292,000 Research and development expenses 970,000 32,000 1,002,000 Depreciation and amortization expense 218,000 - 218,000 Selling, general and administrative expenses 3,286,000 12,000 3,298,000 Total operating expenses (4,474,000 ) (44,000 ) (4,518,000 ) Loss from operations $ (2,182,000 ) $ (44,000 ) $ (2,226,000 ) As of December 31, 2018, approximately $2,500,000 of total assets are in the Renal Products segment. The $2,500,000 consists of the remaining cash received of approximately $2,300,000 from the sale of Series A Preferred during the year ended December 31, 2018 and prepaid expenses and other current assets of approximately $200,000. There were no assets allocated to the Renal Products segment as of December 31, 2017. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Principles of Consolidation and Basis of Presentation | Principles of Consolidation and Basis of Presentation The accompanying consolidated financial statements include the accounts of Nephros, Inc. and its subsidiaries, including the entity in which a controlling interest is maintained. For the consolidated subsidiary in which the Company’s ownership is less than 100% but greater than 50%, the outside shareholders’ interest is shown as noncontrolling interest. All intercompany accounts and transactions were eliminated in the preparation of the accompanying consolidated financial statements. |
Use of Estimates in the Preparation of Financial Statements | Use of Estimates in the Preparation of Financial Statements The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“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, the assessment of expected cash flows used in evaluating goodwill and other long-lived assets, value of contingent consideration, the assessment of the ability to continue as a going concern and assumptions used in determining stock compensation such as expected volatility and risk-free interest rate. |
Liquidity | Liquidity The Company has sustained operating losses and expects such losses to continue over the next several quarters. In addition, net cash from operations has been negative since inception, as have been net losses from operations, generating an accumulated deficit of approximately $124,153,000 as of December 31, 2018. Also, the Company has a loan agreement Tech Capital, which provides a secured asset-based revolving credit facility of up to $1,000,000. This loan agreement will automatically renew on August 17, 2019, although this renewal is not guaranteed. In July 2018, the Company formed a new, wholly-owned subsidiary, Specialty Renal Products, Inc. (“SRP”), to drive the development of its second-generation HDF system and other products focused on improving therapies for patients with renal disease. On September 5, 2018, SRP completed a private placement transaction whereby SRP sold preferred shares equivalent to 37.5% of its outstanding equity interests for aggregate proceeds of $3,000,000. The proceeds of this private placement are restricted to SRP expenses and may not be used for the benefit of the Company or other affiliated entities, except to reimburse for expenses directly attributable to SRP. Based on cash that is available for Company operations and projections of future Company operations, the Company believes that its cash will be sufficient to fund the Company’s current operating plan through at least the next twelve months from the date of issuance of the accompanying consolidated financial statements. In the event that operations do not meet expectations, the Company will reduce discretionary expenditures such as additional headcount, new R&D projects, and other variable costs to alleviate the substantial doubt as to the Company’s ability to continue as a going concern. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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 to be 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.” This ASU deferred the effective date of ASU No. 2014-09 for all entities for one year. In March, April and May 2016, the FASB issued ASU No. 2016-08, ASU No. 2016-10 and ASU No. 2016-12, respectively, which clarified implementation guidance, including the guidance on principal versus agent considerations, performance obligations and licensing and assessments of collectability and noncash considerations. Public business entities, certain not-for-profit entities, and certain employee benefit plans are required to apply the guidance in ASU 2014-09 to fiscal years beginning after December 15, 2017, including interim reporting periods within that fiscal year. The Company adopted the new revenue recognition standard as of January 1, 2018 using the modified retrospective method, which requires the cumulative effect of adoption, if any, to be recognized as an adjustment to opening accumulated deficit in the period of adoption. The majority of the Company’s revenue relates to the sale of finished products to various customers and the adoption did not have any impact on revenue recognized from these transactions. The Company completed its analysis of the impact on certain less significant transactions involving third-party arrangements and as a result of the analysis, the Company accelerated the remaining approximately $278,000 of deferred revenue to be recognized under the License Agreement with Bellco as of December 31, 2017 and recorded a cumulative effect adjustment to opening accumulated deficit as of January 1, 2018. 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 was permitted. The Company adopted this guidance as of January 1, 2018 and the guidance did not have an impact 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 was effective for the Company beginning in the first quarter of fiscal year 2018. Early adoption was permitted. The Company adopted the guidance as of January 1, 2018 and the guidance did not have a significant impact on its consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, “Restricted Cash,” which clarifies how restricted cash is presented and classified in the statement of cash flows. The guidance was effective for the Company beginning in the first quarter of fiscal year 2018. Early adoption was permitted. The Company adopted the guidance as of January 1, 2018 and the guidance did not have an impact 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 was effective for the Company beginning in the first quarter of fiscal year 2018. Early adoption was permitted. The Company adopted the guidance as of January 1, 2018 and the guidance did not have an impact on its consolidated financial statements. In May 2017, the FASB issued ASU 2017-09, “Compensation – Stock Compensation,” which requires modification accounting to be used on share-based payment awards if the fair value, the vesting conditions, or the classification of the award changes as a result of the change in terms or conditions. The guidance was effective for the Company beginning in the first quarter of fiscal year 2018. The Company adopted the guidance as of January 1, 2018 and the guidance did not have an impact on its consolidated financial statements. |
Concentration of Credit Risk | Concentration of Credit Risk The Company deposits its cash in financial institutions. At times, such deposits may be in excess of insured limits. To date, the Company has not experienced any impairment losses on its cash. The Company also limits its credit risk with respect to accounts receivable by performing credit evaluations when deemed necessary. |
Major Customers | Major Customers For the year ended December 31, 2018 and 2017, the following customers accounted for the following percentages of the Company’s revenues, respectively: Customer 2018 2017 A 11 % 13 % B 11 % 20 % C 10 % 1 % Total 32 % 34 % As of December 31, 2018 and December 31, 2017, the following customers accounted for the following percentages of the Company’s accounts receivable, respectively: Customer 2018 2017 D 15 % - % A 11 % 18 % C 11 % - % E 2 % 11 % Total 39 % 29 % |
Accounts Receivable | Accounts Receivable 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. Factors considered include economic conditions, each customer’s payment and return history and credit worthiness. 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 $15,000 and $1,000 as of December 31, 2018 and 2017, respectively. For the year ended December 31, 2018, provision for bad expense was approximately $40,000 of which $14,000 was an increase to the allowance for doubtful accounts. Of the remaining $26,000, $1,000 was write-offs of accounts receivable related to a prior period. There was no allowance for sales returns at December 31, 2018 or 2017. During the year ended December 31, 2017, there were write-offs of accounts receivable of approximately $42,000, which were fully reserved. |
Inventory | Inventory For all medical device products and some commercial products, the Company engages third parties to manufacture and package its finished goods, which are shipped to the Company for warehousing, until sold to distributors or end customers. As a result of the Biocon Acquisition, some commercial products will be manufactured at Company facilities. Inventory consists of finished goods and raw materials and is valued at the lower of cost or net realizable value using the first-in, first-out method. The Company’s inventory reserve requirements are based on factors including product expiration dates and estimates for future sales of the product. If estimated sales levels do not materialize, the Company will make adjustments to its assumptions for inventory reserve requirements. |
License and Supply Rights | License and Supply Rights The Company’s rights under the License and Supply Agreement with Medica are capitalized and stated at cost, less accumulated amortization, and are amortized using the straight-line method over the term of the License and Supply Agreement, which is from April 23, 2012 through December 31, 2025. The Company determines amortization periods for licenses based on its assessment of various factors impacting estimated useful lives and cash flows of the acquired rights. Such factors include the expected launch date of the product, the strength of the intellectual property protection of the product and various other competitive, developmental and regulatory issues, and contractual terms. See Note 9 – License and Supply Agreement, net for further discussion. |
Patents | Patents The Company has filed numerous patent applications with the United States Patent and Trademark Office and in foreign countries. All costs and direct expenses incurred in connection with patent applications have been expensed as incurred and are included in selling, general and administrative expenses on the accompanying consolidated statement of operations and comprehensive loss. |
Property and Equipment, Net | Property and Equipment, net Property and equipment, net is stated at cost less accumulated depreciation. These assets are depreciated over their estimated useful lives of three to seven years using the straight-line method. The Company adheres to Accounting Standards Codification (“ASC”) 360 and periodically evaluates whether current facts or circumstances indicate that the carrying value of its depreciable assets to be held and used may not be recoverable. If such circumstances are determined to exist, an estimate of undiscounted future cash flows produced by the long-lived assets, or the appropriate grouping of assets, is compared to the carrying value to determine whether impairment exists. If an asset is determined to be impaired, the loss is measured based on the difference between the asset’s fair value and its carrying value. For long-lived assets, the estimate of fair value is based on various valuation techniques, including a discounted value of estimated future cash flows. The Company reports an asset to be disposed of at the lower of its carrying value or its fair value less costs to sell. There were no impairment losses for long-lived assets recorded for the years ended December 31, 2018 and December 31, 2017. |
Intangible Assets | Intangible Assets The Company’s intangible assets include finite lived assets. Finite lived intangible assets, consisting of customer lists, tradenames, service marks and domain names are amortized on a straight-line basis over the estimated useful lives of the assets. Finite lived intangible assets are tested for impairment when events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. Impairment testing requires management to estimate the future undiscounted cash flows of an intangible asset using assumptions believed to be reasonable, but which are unpredictable and inherently uncertain. Actual future cash flows may differ from the estimates used in the impairment testing. |
Goodwill | Goodwill Goodwill, which represents the excess of purchase price over the fair value of net assets acquired, is carried at cost. In accordance with ASC 350, “Goodwill and Other Intangibles,” rather than recording periodic amortization, goodwill is subject to an annual assessment for impairment by applying a fair value based test. If the fair value of the reporting unit exceeds the reporting unit’s carrying value, including goodwill, then goodwill is considered not impaired, making further analysis not required. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. ASC 606 prescribes a five-step model for recognizing revenue, which includes (i) identifying contracts with customers; (ii) identifying performance obligations; (iii) determining the transaction price; (iv) allocating the transaction price; and (v) recognizing revenue. |
Shipping and Handling Costs | Shipping and Handling Costs Shipping and handling costs charged to customers are recorded as cost of goods sold and were approximately $45,000 and $35,000 for the years ended December 31, 2018 and 2017, respectively. |
Research and Development Costs | Research and Development Costs Research and development costs are expensed as incurred. |
Stock-Based Compensation | Stock-Based Compensation The fair value of stock options is recognized as stock-based compensation expense in the Company’s consolidated statement of operations and comprehensive loss. The Company calculates employee stock-based compensation expense in accordance with ASC 718. 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 fair value of the Company’s stock option awards is estimated using a Black-Scholes option valuation model. This model requires the input of highly subjective assumptions and elections including expected stock price volatility and the estimated life of each award. The fair value of stock-based awards is amortized over the vesting period of the award. |
Warrants | Warrants The Company accounts for stock warrants as either equity instruments or derivative liabilities depending on the specific terms of the warrant agreement. |
Amortization of Debt Issuance Costs and Debt Discounts | Amortization of Debt Issuance Costs and Debt Discounts The Company accounts for debt issuance costs in accordance with ASC 835, “Interest”, which requires that costs paid directly to the issuer of a recognized debt liability be reported in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The Company amortizes the debt discount, including debt issuance costs, in accordance with ASC 835, Interest, over the term of the associated debt. See Note 13 – Unsecured Promissory Notes and Warrants for a discussion of the Company’s prior unsecured long-term note payable. |
Other Income (Expense), Net | Other Income (Expense), net Other expense of approximately $35,000 and approximately $74,000 for the years ended December 31, 2018 and 2017, respectively, is primarily due to foreign currency transaction gains and losses. |
Income Taxes | Income Taxes The Company accounts for income taxes in accordance with ASC 740, which requires accounting for deferred income taxes under the asset and liability method. Deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory tax rates applicable in future years to differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities. For financial reporting purposes, the Company has incurred a loss in each period since its inception. Based on available objective evidence, including the Company’s history of losses, management believes it is more likely than not that the net deferred tax assets will not be fully realizable. Accordingly, the Company provided for a full valuation allowance against its net deferred tax assets at December 31, 2018 and 2017. ASC 740 prescribes, among other things, a recognition threshold and measurement attributes for the financial statement recognition and measurement of uncertain tax positions taken or expected to be taken in a company’s income tax return. ASC 740 utilizes a two-step approach for evaluating uncertain tax positions. Step one, or recognition, requires a company to determine if the weight of available evidence indicates a tax position is more likely than not to be sustained upon audit, including resolution of related appeals or litigation processes, if any. Step two, or measurement, is based on the largest amount of benefit that is more likely than not to be realized on settlement with the taxing authority. The Company is subject to income tax examinations by major taxing authorities for all tax years subsequent to 2013. During the years ended December 31, 2018 and 2017, the Company recognized no adjustments for uncertain tax positions. However, management’s conclusions regarding this policy may be subject to review and adjustment at a later date based on factors including, but not limited to, on-going analyses of and changes to tax laws, regulation and interpretations, thereof. The Company recognized approximately $93,000 and $1,789,000 in the years ended December 31, 2018 and 2017, respectively, from the sale of net operating loss and research and development credit carryforwards under the New Jersey Economic Development Authority Technology Business Tax Certificate Transfer Program. These amounts are recorded on the consolidated financial statements as income tax benefit in the year they are earned. See Note 15 – Income Taxes for further discussion. |
Net Income (Loss) Per Common Share | Net Income (Loss) per Common Share Basic net 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 net income (loss) per common share is calculated by dividing net income (loss) available to common shareholders 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 securities have been excluded from the dilutive per share computation as they are antidilutive: December 31, 2018 2017 Shares underlying options outstanding 7,434,561 6,770,777 Shares underlying warrants outstanding 6,642,344 7,099,010 Unvested restricted stock 449,043 799,387 |
Foreign Currency Translation | Foreign Currency Translation Foreign currency translation is recognized in accordance with ASC 830. The functional currency of Nephros International Limited, the Company’s Irish subsidiary, is the Euro and its translation gains and losses are included in accumulated other comprehensive income. The balance sheet is translated at the year-end rate. The consolidated statements of operations and comprehensive loss are translated at the weighted average rate for the year. |
Comprehensive Income (Loss) | Comprehensive Income (Loss) Comprehensive income (loss), as defined in ASC 220, is the total of net income (loss) and all other non-owner changes in equity (or other comprehensive income (loss)). The Company’s other comprehensive income (loss) consists only of foreign currency translation adjustments. |
Recent Accounting Pronouncements, Not Yet Effective | Recent Accounting Pronouncements, Not Yet Effective In February 2016, the FASB issued ASU No. 2016-02, “Leases,” (“ASC 842”) which 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. The guidance is effective for the Company beginning in the first quarter of 2019. The Company plans to adopt the standard using the transition method provided by ASU 2018-11, “Leases (Topic 842): Targeted Improvements”. Under this method, the Company will apply the new requirements to only those leases that exist as of January 1, 2019, rather than at the earliest comparative period presented in the financial statements. Prior periods will be presented under existing lease guidance. Upon transition, the Company plans to apply the package of practical expedients permitted under ASC 842 transition guidance. As a result, the Company is not required to reassess (1) whether expired or existing contracts contain leases under the new definition of a lease, including whether an existing or expired contract contains an embedded lease, (2) lease classification for expired or existing leases and (3) any initial direct costs of existing leases. While the Company is still finalizing the potential impacts of the standard, it currently expects the most significant impact will be the recognition of right-of- use assets and lease liabilities for operating leases. The Company estimates adoption of the standard will result in the recognition of right-of-use assets and lease liabilities for operating leases ranging from approximately $500,000 to $750,000 as of January 1, 2019. The Company does not expect the adoption will have a material impact on its consolidated statements of operations and comprehensive loss. In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments,” which replaces the current incurred loss impairment methodology 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 adoption of this guidance on January 1, 2019 will not have a significant impact on the Company’s 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 assessing the impact of adopting this guidance on its consolidated financial statements. In July 2017, the FASB issued ASU 2017-11, “Accounting for Certain Financial Instruments with Down Round Features and Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception” which changes the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features and recharacterizes the indefinite deferral of certain provisions within the guidance for distinguishing liabilities from equity. The guidance is effective for the Company beginning in the first quarter of fiscal year 2019. Early adoption is permitted. The adoption of this guidance on January 1, 2019 will not have a significant impact on the Company’s consolidated financial statements. In May 2018, the FASB issued ASU 2018-07, “Improvements to Nonemployee Share-Based Payment Accounting,” which expands the scope of ASC 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The guidance is effective for the Company beginning in the first quarter of fiscal year 2019. Early adoption is permitted. The adoption of this guidance on January 1, 2019 will not have a significant impact on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, “Disclosure Framework-Changes to the Disclosure Requirements for the Fair Value Measurement,” which modifies the disclosure requirements on fair value measurements. The guidance is effective for the Company beginning in the first quarter of fiscal year 2020. Early adoption is permitted. The Company is assessing the impact of adopting this guidance on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract,” which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The guidance is effective for the Company beginning in the first quarter of fiscal year 2020. Early adoption is permitted. The Company is assessing the impact of adopting this guidance on its consolidated financial statements. In November 2018, the FASB issued ASU 2018-18, “Collaborative Arrangements: Clarifying the Interaction Between Topic 808 and Topic 606.” The new guidance clarifies that, when the collaborative arrangement participant is a customer in the context of a unit-of-account, revenue from contracts with customers guidance should be applied, adds unit-of-account guidance to collaborative arrangements guidance, and requires, that in a transaction with a collaborative arrangement participant who is not a customer, presenting the transaction together with revenue recognized under contracts with customers is precluded. The guidance is effective for the Company beginning in the first quarter of fiscal year 2020. Early adoption is permitted. The Company is assessing the impact of adopting this guidance on its consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Revenues and Receivable Major Customers | For the year ended December 31, 2018 and 2017, the following customers accounted for the following percentages of the Company’s revenues, respectively: Customer 2018 2017 A 11 % 13 % B 11 % 20 % C 10 % 1 % Total 32 % 34 % As of December 31, 2018 and December 31, 2017, the following customers accounted for the following percentages of the Company’s accounts receivable, respectively: Customer 2018 2017 D 15 % - % A 11 % 18 % C 11 % - % E 2 % 11 % Total 39 % 29 % |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following securities have been excluded from the dilutive per share computation as they are antidilutive: December 31, 2018 2017 Shares underlying options outstanding 7,434,561 6,770,777 Shares underlying warrants outstanding 6,642,344 7,099,010 Unvested restricted stock 449,043 799,387 |
Biocon Acquisition (Tables)
Biocon Acquisition (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Summary of Total Consideration | The following is a summary of total consideration for the Biocon Acquisition: Total Consideration Fixed purchase price $ 1,059,000 Acquisition date fair value of contingent consideration 562,000 Total consideration 1 $ 1,621,000 1 |
Summary of Preliminary Purchase Price Allocation | The following is a summary of the preliminary purchase price allocation for the Biocon Acquisition: Fair Values December 31, 2018 Trade accounts receivable $ 164,000 Inventories 179,000 Equipment 39,000 Security deposit 7,000 Goodwill 748,000 Intangible assets 590,000 Total assets acquired, net of cash acquired 1,727,000 Accounts payable 91,000 Accrued expenses 15,000 Total liabilities assumed 106,000 Net assets acquired, net of cash acquired $ 1,621,000 |
Schedule of Acquired Intangible Assets Amortized Over Estimated Useful Lives | The acquired intangible assets are being amortized over their estimated useful lives as follows: Preliminary Fair Values Weighted Average Useful Life (Years) Tradenames, service marks and domain names 50,000 5 Customer relationships 540,000 17 Total intangible assets $ 590,000 |
Schedule of Business Acquisition, Pro Forma Information | The following table reflects the unaudited pro forma combined results of operations for the years ended December 31, 2018 and 2017 (assuming the closing of the Biocon Acquisition occurred on January 1, 2017): Year Ended December 31, 2018 December 31, 2017 Total revenues $ 6,412,000 $ 4,236,000 Net loss attributable to Nephros, Inc $ (3,158,000 ) $ (855,000 ) |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of License, Royal and Other Revenue | The Company recognizes revenue related to product sales when product is shipped via external logistics provider and the other criteria of ASC 606 are met. Product revenue is recorded net of returns and allowances. In addition to product revenue, the Company recognizes revenue related to license, royalty and other agreements in accordance with the five-step model in ASC 606. License, royalty and other revenue recognized for the years ended December 31, 2018 and 2017 is comprised of: Years Ended December 31, 2018 2017 Royalty revenue under the Sublicense Agreement with CamelBak (1) $ 100,000 $ 25,000 Royalty revenue under the License Agreement with Bellco 101,000 140,000 License revenue under the License Agreement with Bellco - 70,000 Other revenue 29,000 30,000 Total license, royalty and other revenue $ 230,000 $ 265,000 (1) In May 2015, the Company entered into a Sublicense Agreement (the “Sublicense Agreement”) with CamelBak Products, LLC (“CamelBak”). Under the Sublicense Agreement, the Company granted CamelBak an exclusive, non-transferable, worldwide (with the exception of Italy) sublicense and license, in each case solely to market, sell, distribute, import and export the Company’s individual water treatment device. In exchange for the rights granted to CamelBak, CamelBak agreed, through December 31, 2022, to pay the Company a percentage of the gross profit on any sales made to a branch of the U.S. military, subject to certain exceptions, and to pay a fixed per-unit fee for any other sales made. CamelBak is also required to meet or exceed certain minimum annual fees payable to the Company, and if such fees are not met or exceeded, the Company may convert the exclusive sublicense to a non-exclusive sublicense with respect to non-U.S. military sales In the first quarter of 2019, the Sublicense Agreement was amended to eliminate the minimum fee obligations starting May 6, 2018 and, as such, Camelbak has no further minimum fee obligation. |
Schedule of Revenues, Net | The following tables present the Company’s revenue for the year ended December 31, 2018 under the ASC 606 model as compared to revenue under the previous accounting guidance: Year Ended December 31, 2018 Revenue as reported Revenue under previous accounting guidance Difference Product revenue $ 5,457,000 $ 5,457,000 $ - Royalty revenue under the Sublicense Agreement with CamelBak 100,000 100,000 - Royalty revenue under the License Agreement with Bellco 101,000 101,000 - License revenue under the License Agreement with Bellco (1) - 70,000 (70,000 ) Other revenue 29,000 29,000 - Total net revenues $ 5,687,000 $ 5,757,000 $ (70,000 ) (1) Under ASC 606, amounts received related to the license under the License Agreement with Bellco would have been recognized as revenue at the time that the license was transferred, which was at the time the payments were received by the Company. Under previous accounting guidance, amounts received under the License Agreement with Bellco were deferred and recognized as revenue over the term of the License Agreement. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair value on Recurring Basic | The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level of classification for each reporting period. The following table sets forth the Company’s financial assets and liabilities that were measured at fair value on a recurring basis as of December 31, 2018 (there were no assets or liabilities that were measured at fair value on a recurring basis as of December 31, 2017): Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Total At December 31, 2018: Current portion of contingent consideration - - $ 236,000 $ 236,000 Contingent consideration, net of current portion - - 263,000 263,000 Total contingent consideration liability $ - $ - $ 499,000 $ 499,000 |
Inventory, Net (Tables)
Inventory, Net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Net | The Company’s inventory components as of December 31, 2018 and 2017 were as follows: December 31, 2018 2017 Finished goods $ 1,633,000 $ 654,000 Raw material 280,000 51,000 Less: inventory reserve (49,000 ) (31,000 ) Total inventory, net $ 1,864,000 $ 674,000 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Other Assets [Abstract] | |
Schedule of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets as of December 31, 2018 and 2017 were as follows: December 31, 2018 2017 Prepaid insurance premiums $ 45,000 $ 39,000 Deposit for future services 200,000 - Security deposit - 20,000 Other 31,000 26,000 Prepaid expenses and other current assets $ 276,000 $ 85,000 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment, Net | Property and equipment as of December 31, 2018 and 2017 was as follows: December 31, Life 2018 2017 Manufacturing equipment 3-7 years $ 768,000 $ 700,000 Research equipment 5 years 37,000 37,000 Computer equipment 3-4 years 43,000 43,000 Furniture and fixtures 7 years 37,000 37,000 Property and equipment, gross 885,000 817,000 Less: accumulated depreciation 794,000 765,000 Property and equipment, net $ 91,000 $ 52,000 |
Secured Note Payable (Tables)
Secured Note Payable (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Future Debt Principal Maturities | As of December 31, 2018, future principal maturities are as follows: 2019 $ 195,000 2020 230,000 2021 249,000 2022 269,000 2023 95,000 Total $ 1,038,000 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses as of December 31, 2018 and 2017 were as follows: December 31, 2018 2017 Accrued legal $ 90,000 $ 90,000 Accrued sales commission 42,000 40,000 Accrued research and development 65,000 - Accrued accounting 8,000 11,000 Accrued interest 2,000 18,000 Accrued other 189,000 59,000 $ 396,000 $ 218,000 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Expense (Benefit) | The income tax benefit attributable to loss before income taxes for the years ended December 31, 2018 and 2017 is as follows: Years Ended December 31, 2018 2017 Current: State $ (93,000 ) $ (1,789,000 ) Total current tax benefit (93,000 ) (1,789,000 ) Total deferred tax benefit - - Income tax benefit $ (93,000 ) $ (1,789,000 ) |
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation of the income tax benefit computed at the statutory tax rate to the Company’s effective tax rate for the years ended December 31, 2018 and 2017 is as follows: Years Ended December 31, 2018 2017 U.S. federal statutory rate 21.00 % 35.00 % State taxes 5.25 % (21.84 )% Sale of NJ NOLS and credits (2.78 )% (68.91 )% Change in federal statutory rate - % (441.07 )% Stock based compensation (1.96 )% (5.48 )% Other permanent difference due to sale of NJ NOLs and credits - % (24.12 )% Federal research and development credits 2.28 % 2.24 % Other (0.11 )% (12.46 )% Valuation allowance (26.46 )% 467.73 % Effective tax rate (2.78 )% (68.91 )% |
Schedule of Deferred Tax Assets | Significant components of the Company’s deferred tax assets as of December 31, 2018 and 2017 are as follows: December 31, 2018 2017 Deferred tax assets: Net operating loss carry forwards $ 18,671,000 $ 17,907,000 Research and development credits 1,399,000 1,322,000 Nonqualified stock option compensation expense 497,000 453,000 Other temporary book - tax differences 58,000 125,000 Total deferred tax assets 20,625,000 19,807,000 Deferred tax liabilities: Fixed and intangible asset basis difference (21,000 ) - Total deferred tax liabilities (21,000 ) - Deferred tax assets (liabilities), net 20,604,000 19,807,000 Valuation allowance for deferred tax assets (20,604,000 ) (19,807,000 ) Deferred tax assets (liabilities), net after valuation allowance $ - $ - |
Stock Plans, Share-Based Paym_2
Stock Plans, Share-Based Payments and Warrants (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Option Activity | The following table summarizes the option activity for the years ended December 31, 2018 and 2017: Shares Weighted Average Exercise Price Outstanding at December 31, 2016 4,592,347 0.60 Options granted 2,311,542 0.44 Options forfeited or expired (133,112 ) 0.77 Outstanding at December 31, 2017 6,770,777 $ 0.55 Options granted 1,143,034 0.62 Options forfeited or expired (379,250 ) 0.46 Options exercised (100,000 ) 0.30 Outstanding at December 31, 2018 7,434,561 $ 0.56 |
Summary of Options Exercisable Vested and Expected to Vest | The following table summarizes the options exercisable and vested and expected to vest as of December 31, 2018 and 2017: Shares Weighted Average Exercise Price Exercisable at December 31, 2017 2,271,527 $ 0.65 Vested and expected to vest at December 31, 2017 6,509,821 $ 0.55 Exercisable at December 31, 2018 3,221,236 $ 0.61 Vested and expected to vest at December 31, 2018 7,190,188 $ 0.57 |
Schedule of Fair Value Assumptions | The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the below assumptions for the risk-free interest rates, expected dividend yield, expected lives and expected stock price volatility. Option Pricing Assumptions Grant Year 2018 2017 Stock Price Volatility 92,42 % 104.56 % Risk-Free Interest Rates 2.71 % 2.19 % Expected Life (in years) 6.15 6.11 Expected Dividend Yield 0 % 0 % |
Summary of Restricted Stock Activity | The following table summarizes restricted stock activity for the years ended December 31, 2018 and 2017: Shares Weighted Average Grant Date Fair Value Nonvested at December 31, 2016 957,336 $ 0.35 Granted 817,144 0.50 Vested (975,093 ) 0.35 Nonvested at December 31, 2017 799,387 0.50 Granted 449,043 0.62 Vested (753,528 ) 0.50 Forfeited (45,859 ) 0.50 Nonvested at December 31, 2018 449,043 $ 0.62 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Summary of Terms of Outstanding Warrants | The following table summarizes certain terms of all of the Company’s outstanding warrants at December 31, 2018 and 2017: Exercise Total Common Shares Issuable as of December 31, Title of Warrant Date Issued Expiry Date Price 2018 2017 Equity-classified warrants May 2015 – private placement warrants 3/18/2015 3/18/2020 $ 0.85 917,149 917,149 June 2016 – Note and Warrant Agreement 6/7/2016 6/7/2021 $ 0.30 2,284,000 2,374,000 March 2017 – private placement warrants 3/22/2017 3/22/2022 $ 0.30 3,441,195 3,807,861 Total 6,642,344 7,099,010 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Minimum Lease Payments | As of December 31, 2018, minimum lease payments are as follows: 2019 $ 204,000 2020 197,000 2021 145,000 2022 136,000 |
Contractual Obligations and Commercial Commitments | The following table summarizes our approximate minimum contractual obligations and commercial commitments as of December 31, 2018: Payments Due in Period Total Within 1 Year Years 2 - 3 Years 4 - 5 More than 5 Years Minimum Purchase Commitments 1 $ 28,700,000 $ 3,500,000 $ 7,600,000 $ 8,400,000 $ 9,200,000 Leases 2 696,000 213,000 347,000 136,000 - Employment Contract 3 117,000 117,000 - - - Total $ 29,513,000 $ 3,830,000 $ 7,947,000 $ 8,536,000 $ 9,200,000 1 2 3 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Segment Information | The tables below present segment information reconciled to total Company loss from operations, with segment operating loss including gross profit less direct research and development expenses and direct selling, general and administrative expenses to the extent specifically identified by segment: Year Ended December 31, 2018 Water Filtration Renal Products Nephros, Inc. Consolidated Total net revenues $ 5,687,000 $ - $ 5,687,000 Gross margin 3,203,000 - 3,203,000 Research and development expenses 808,000 731,000 1,539,000 Depreciation and amortization expense 163,000 - 163,000 Selling, general and administrative expenses 4,340,000 177,000 4,517,000 Total operating expenses (5,311,000 ) (908,000 ) (6,219,000 ) Loss from operations $ (2,108,000 ) $ (908,000 ) $ (3,016,000 ) Year Ended December 31, 2017 Water Filtration Renal Products Nephros, Inc. Consolidated Total net revenues $ 3,809,000 $ - $ 3,809,000 Gross margin 2,292,000 - 2,292,000 Research and development expenses 970,000 32,000 1,002,000 Depreciation and amortization expense 218,000 - 218,000 Selling, general and administrative expenses 3,286,000 12,000 3,298,000 Total operating expenses (4,474,000 ) (44,000 ) (4,518,000 ) Loss from operations $ (2,182,000 ) $ (44,000 ) $ (2,226,000 ) |
Organization and Nature of Op_2
Organization and Nature of Operations (Details Narrative) - USD ($) $ in Thousands | Sep. 05, 2018 | Dec. 31, 2018 |
Aether Water Systems, LLC [Member] | Membership Interest Purchase Agreement [Member] | ||
Noncontrolling interest, percentage | 100.00% | |
Biocon Acquisition [Member] | Membership Interest Purchase Agreement [Member] | ||
Noncontrolling interest, percentage | 100.00% | |
Specialty Renal Products, Inc. [Member] | Private Placement [Member] | ||
Number of common stock shares sold, value | $ 3,000 | |
Specialty Renal Products, Inc. [Member] | Private Placement [Member] | Minority Interest Ownership [Member] | ||
Noncontrolling interest, percentage | 37.50% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | Sep. 05, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Noncontrolling interest, description | The Company's ownership is less than 100% but greater than 50%, the outside shareholders' interest is shown as noncontrolling interest. | ||
Accumulated deficit | $ (124,153) | $ (121,106) | |
Available for secured revolving credit facility | 1,000 | ||
Cumulative effect adjustment to opening accumulated deficit | 278 | ||
Allowance for doubtful accounts receivable | 15 | 1 | |
Provision for bad expense | 40 | ||
Increase in allowance for doubtful accounts | 14 | ||
Remaining balance on provision for bad expense | 26 | ||
Write offs of accounts receivable | 1 | 42 | |
Sales returns and allowances | |||
Impairment losses for long-lived assets | |||
Shipping and handling costs | 2,484 | 1,517 | |
Other expense | 35 | 74 | |
New Jersey Economic Development Authority [Member] | |||
Proceeds from net operating loss and research and development tax credit | 1,789 | 93 | |
Shipping and Handling [Member] | |||
Shipping and handling costs | $ 45 | $ 35 | |
Minimum [Member] | |||
Estimated useful lives for property and equipment, net | 3 years | ||
Minimum [Member] | January 1, 2019 [Member] | |||
Right-of-use assets and lease liabilities for operating leases | $ 500 | ||
Maximum [Member] | |||
Estimated useful lives for property and equipment, net | 7 years | ||
Maximum [Member] | January 1, 2019 [Member] | |||
Right-of-use assets and lease liabilities for operating leases | $ 750 | ||
Specialty Renal Products, Inc. [Member] | Private Placement [Member] | |||
Number of common stock shares sold, value | $ 3,000 | ||
Specialty Renal Products, Inc. [Member] | Private Placement [Member] | Minority Interest Ownership [Member] | |||
Noncontrolling interest, percentage | 37.50% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Revenues and Receivable Major Customers (Details) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Sales Revenue Goods Net [Member] | ||
Concentration risk percentage | 32.00% | 34.00% |
Accounts Receivable [Member] | ||
Concentration risk percentage | 39.00% | 29.00% |
Customer A [Member] | Sales Revenue Goods Net [Member] | ||
Concentration risk percentage | 11.00% | 13.00% |
Customer A [Member] | Accounts Receivable [Member] | ||
Concentration risk percentage | 11.00% | 18.00% |
Customer B [Member] | Sales Revenue Goods Net [Member] | ||
Concentration risk percentage | 11.00% | 20.00% |
Customer C [Member] | Sales Revenue Goods Net [Member] | ||
Concentration risk percentage | 10.00% | 1.00% |
Customer C [Member] | Accounts Receivable [Member] | ||
Concentration risk percentage | 11.00% | 0.00% |
Customer D [Member] | Accounts Receivable [Member] | ||
Concentration risk percentage | 15.00% | 0.00% |
Customer E [Member] | Accounts Receivable [Member] | ||
Concentration risk percentage | 2.00% | 11.00% |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Shares Underlying Options Outstanding [Member] | ||
Excluded anti-dilutive stock options and warrants | 7,434,561 | 6,770,777 |
Shares Underlying Warrants Outstanding [Member] | ||
Excluded anti-dilutive stock options and warrants | 6,642,344 | 7,099,010 |
Unvested Restricted Stock [Member] | ||
Excluded anti-dilutive stock options and warrants | 449,043 | 799,387 |
Biocon Acquisition (Details Nar
Biocon Acquisition (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Amortization expense | $ 134 | $ 190 |
Interest income | 4 | 4 |
Gross margin | $ 3,203 | 2,292 |
Biocon Acquisition [Member] | ||
Percentage on membership interests | 100.00% | |
Amortization term | 5 years | |
Amortization expense | $ 42 | |
Adjustments to amortization expense related to identifiable intangible assets acquired | 21 | 21 |
Adjustments to depreciation expense on equipment | 10 | 10 |
Interest income | 4 | 4 |
Gross margin | 5 | $ 10 |
Biocon Acquisition [Member] | Selling, General and Administrative Cost [Member] | ||
Transaction costs | $ 33 |
Biocon Acquisition - Summary of
Biocon Acquisition - Summary of Total Consideration (Details) - Biocon Acquisition [Member] $ in Thousands | 12 Months Ended | |
Dec. 31, 2018USD ($) | ||
Fixed purchase price | $ 1,059 | |
Acquisition date fair value of contingent consideration | 562 | |
Total consideration | $ 1,621 | [1] |
[1] | Total consideration consists of an upfront payment of $991,000 which includes $250,000 held in escrow, $131,000 in accrued expenses and $499,000 of contingent consideration liabilities. |
Biocon Acquisition - Summary _2
Biocon Acquisition - Summary of Total Consideration (Details) (Parenthetical) - Biocon Acquisition [Member] $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Upfront payment | $ 991 |
Held in escrow | 250 |
Accrued expenses | 131 |
Contingent consideration liabilities | $ 499 |
Biocon Acquisition - Summary _3
Biocon Acquisition - Summary of Preliminary Purchase Price Allocation (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Goodwill | $ 748 | |
Biocon Acquisition [Member] | ||
Trade accounts receivable | 164 | |
Inventories | 179 | |
Equipment | 39 | |
Security deposit | 7 | |
Goodwill | 748 | |
Intangible assets | 590 | |
Total assets acquired, net of cash acquired | 1,727 | |
Accounts payable | 91 | |
Accrued expenses | 15 | |
Total liabilities assumed | 106 | |
Net assets acquired, net of cash acquired | $ 1,621 |
Biocon Acquisition - Schedule o
Biocon Acquisition - Schedule of Acquired Intangible Assets Amortized Over Estimated Useful Lives (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Preliminary Fair Values: Total intangible assets | $ 590 |
Tradenames, Service Marks and Domain Names [Member] | |
Preliminary Fair Values: Total intangible assets | $ 50 |
Weighted Average Useful Life (Years) | 5 years |
Customer Relationships [Member] | |
Preliminary Fair Values: Total intangible assets | $ 540 |
Weighted Average Useful Life (Years) | 17 years |
Biocon Acquisition - Schedule_2
Biocon Acquisition - Schedule of Business Acquisition, Pro Forma Information (Details) - Biocon Acquisition [Member] - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Total revenues | $ 6,412 | $ 4,236 |
Net loss attributable to Nephros, Inc | $ (3,158) | $ (855) |
Revenue Recognition (Details Na
Revenue Recognition (Details Narrative) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2018USD ($)Products$ / shares | Dec. 31, 2017USD ($) | |
Cumulative effect adjustment to accumulated deficit | $ | $ 278 | |
Bellco [Member] | ||
Number of units under first tier royalty receivable | Products | 125,000 | |
First tier royalty per unit | $ / shares | $ 2.10 | |
Second tier royalty per unit | $ / shares | 1.50 | |
Bellco [Member] | EURO Currency [Member] | ||
First tier royalty per unit | $ / shares | 1.75 | |
Second tier royalty per unit | $ / shares | $ 1.25 | |
Bellco [Member] | License Agreement [Member] | ||
Deferred revenue recognized | $ | $ 70 | |
Royalty income | $ | $ 101 | 140 |
Cumulative effect adjustment to accumulated deficit | $ | $ 278 |
Revenue Recognition - Schedule
Revenue Recognition - Schedule of License, Royal and Other Revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | ||
Royalty Revenue [Member] | Sublicense Agreement [Member] | CamelBak [Member] | |||
Revenue | [1] | $ 100 | $ 25 |
Royalty Revenue [Member] | License Agreement [Member] | Bellco [Member] | |||
Revenue | 101 | 140 | |
License Revenue [Member] | License Agreement [Member] | Bellco [Member] | |||
Revenue | 70 | ||
Other Revenue [Member] | |||
Revenue | 29 | 30 | |
License, Royalty and Other Revenues [Member] | |||
Revenue | $ 230 | $ 265 | |
[1] | In May 2015, the Company entered into a Sublicense Agreement (the "Sublicense Agreement") with CamelBak Products, LLC ("CamelBak"). Under the Sublicense Agreement, the Company granted CamelBak an exclusive, non-transferable, worldwide (with the exception of Italy) sublicense and license, in each case solely to market, sell, distribute, import and export the Company's individual water treatment device. In exchange for the rights granted to CamelBak, CamelBak agreed, through December 31, 2022, to pay the Company a percentage of the gross profit on any sales made to a branch of the U.S. military, subject to certain exceptions, and to pay a fixed per-unit fee for any other sales made. CamelBak is also required to meet or exceed certain minimum annual fees payable to the Company, and if such fees are not met or exceeded, the Company may convert the exclusive sublicense to a non-exclusive sublicense with respect to non-U.S. military sales In the first quarter of 2019, the Sublicense Agreement was amended to eliminate the minimum fee obligations starting May 6, 2018 and, as such, Camelbak has no further minimum fee obligation. |
Revenue Recognition - Schedul_2
Revenue Recognition - Schedule of Revenues, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | ||
Total net revenues | $ 5,687 | $ 3,809 | |
Revenue Under Previous Guidance [Member] | |||
Total net revenues | 5,757 | ||
Difference [Member] | |||
Total net revenues | (70) | ||
Product Revenue [Member] | |||
Total net revenues | 5,457 | $ 3,544 | |
Product Revenue [Member] | Revenue Under Previous Guidance [Member] | |||
Total net revenues | 5,457 | ||
Product Revenue [Member] | Difference [Member] | |||
Total net revenues | |||
Royalty Revenue [Member] | Sublicense Agreement [Member] | CamelBak [Member] | |||
Total net revenues | 100 | ||
Royalty Revenue [Member] | Sublicense Agreement [Member] | CamelBak [Member] | Revenue Under Previous Guidance [Member] | |||
Total net revenues | 100 | ||
Royalty Revenue [Member] | Sublicense Agreement [Member] | CamelBak [Member] | Difference [Member] | |||
Total net revenues | |||
Royalty Revenue [Member] | License Agreement [Member] | Bellco [Member] | |||
Total net revenues | 101 | ||
Royalty Revenue [Member] | License Agreement [Member] | Bellco [Member] | Revenue Under Previous Guidance [Member] | |||
Total net revenues | 101 | ||
Royalty Revenue [Member] | License Agreement [Member] | Bellco [Member] | Difference [Member] | |||
Total net revenues | |||
License Revenue [Member] | License Agreement [Member] | Bellco [Member] | |||
Total net revenues | [1] | ||
License Revenue [Member] | License Agreement [Member] | Bellco [Member] | Revenue Under Previous Guidance [Member] | |||
Total net revenues | [1] | 70 | |
License Revenue [Member] | License Agreement [Member] | Bellco [Member] | Difference [Member] | |||
Total net revenues | [1] | (70) | |
Other Revenue [Member] | |||
Total net revenues | 29 | ||
Other Revenue [Member] | Revenue Under Previous Guidance [Member] | |||
Total net revenues | 29 | ||
Other Revenue [Member] | Difference [Member] | |||
Total net revenues | |||
[1] | Under ASC 606, amounts received related to the license under the License Agreement with Bellco would have been recognized as revenue at the time that the license was transferred, which was at the time the payments were received by the Company. Under previous accounting guidance, amounts received under the License Agreement with Bellco were deferred and recognized as revenue over the term of the License Agreement. |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Fair value on Recurring Basic (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Current portion of contingent consideration | $ 236 | |
Contingent consideration, net of current portion | 263 | |
Fair Value, Measurements, Recurring [Member] | ||
Current portion of contingent consideration | 236 | |
Contingent consideration, net of current portion | 263 | |
Total contingent consideration liability | 499 | |
Fair Value, Measurements, Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ||
Current portion of contingent consideration | ||
Contingent consideration, net of current portion | ||
Total contingent consideration liability | ||
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||
Current portion of contingent consideration | ||
Contingent consideration, net of current portion | ||
Total contingent consideration liability | ||
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | ||
Current portion of contingent consideration | 236 | |
Contingent consideration, net of current portion | 263 | |
Total contingent consideration liability | $ 499 |
Inventory, Net - Schedule of In
Inventory, Net - Schedule of Inventory, Net (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 1,633 | $ 654 |
Raw materials | 280 | 51 |
Less: inventory reserve | (49) | (31) |
Total inventory, net | $ 1,864 | $ 674 |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Other Assets [Abstract] | ||
Prepaid insurance premiums | $ 45,000 | $ 39,000 |
Deposit for future services | 200,000 | |
Security deposit | 20,000 | |
Other | 31,000 | 26,000 |
Prepaid expenses and other current assets | $ 276,000 | $ 85,000 |
Investment in Lease, Net (Detai
Investment in Lease, Net (Details Narrative) - USD ($) | Oct. 08, 2015 | Dec. 31, 2018 | Dec. 31, 2017 |
Interest income | $ 4,000 | $ 4,000 | |
Equipment Lease Agreement [Member] | |||
Investment lease | $ 92,000 | ||
Unearned interest | $ 14,000 | ||
Equipment Lease Agreement [Member] | Biocon 1, LLC [Member] | |||
Lease term | 60 months | ||
Monthly rent expense | $ 1,800 | ||
Equipment depreciation term | 4 years |
License and Supply Agreement,_2
License and Supply Agreement, Net (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2013 | |
Long-term intangible asset | $ 2,250 | ||
Other long-term assets | 938 | $ 1,072 | |
Accumulated amortization | 1,312 | 1,178 | |
Amortization of other deferred charges | 134 | 190 | |
Interest expense | 13 | 24 | |
Royalty expense | 161 | 98 | |
Accounts Payable [Member] | |||
Royalty expense | $ 50 | $ 34 | |
Medica Spa [Member] | |||
Debt instrument, interest rate, stated percentage | 12.00% | ||
Medica [Member] | April 23, 2014 through December 31, 2025 [Member] | |||
Royalty rate | 3.00% |
Property and Equipment, Net (De
Property and Equipment, Net (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 29 | $ 28 |
Property and Equipment, Net - S
Property and Equipment, Net - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property and equipment, gross | $ 885 | $ 817 |
Less: accumulated depreciation | 794 | 765 |
Property and equipment, net | $ 91 | 52 |
Minimum [Member] | ||
Property and equipment, Life | 3 years | |
Maximum [Member] | ||
Property and equipment, Life | 7 years | |
Manufacturing Equipment [Member] | ||
Property and equipment, gross | $ 768 | $ 700 |
Manufacturing Equipment [Member] | Minimum [Member] | ||
Property and equipment, Life | 3 years | 3 years |
Manufacturing Equipment [Member] | Maximum [Member] | ||
Property and equipment, Life | 7 years | 7 years |
Research Equipment [Member] | ||
Property and equipment, gross | $ 37 | $ 37 |
Property and equipment, Life | 5 years | 5 years |
Computer Equipment [Member] | ||
Property and equipment, gross | $ 43 | $ 43 |
Computer Equipment [Member] | Minimum [Member] | ||
Property and equipment, Life | 3 years | 3 years |
Computer Equipment [Member] | Maximum [Member] | ||
Property and equipment, Life | 4 years | 4 years |
Furniture and Fixtures [Member] | ||
Property and equipment, gross | $ 37 | $ 37 |
Property and equipment, Life | 7 years | 7 years |
Secured Note Payable (Details N
Secured Note Payable (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Mar. 27, 2018 | |
Interest expense | $ 172 | $ 302 | |
Unsecured Promissory Note [Member] | |||
Debt interest rate | 11.00% | ||
Secured Note [Member] | |||
Repayments of notes payable | $ 216 | ||
Interest expense | 67 | ||
Secured Promissory Note Agreement [Member] | Tech Capital, LLC [Member] | |||
Principal amount of secured note payable | $ 1,187 | ||
Principal balance of line of credit | $ 1,038 | ||
Debt interest rate | 8.00% | ||
Maturity date | Apr. 1, 2023 | ||
Debt instrument, maturity date, description | Principal and interest payments are due on the first day of each month commencing on May 1, 2018. | ||
Debt issuance costs | $ 6 |
Secured Notes Payable - Schedul
Secured Notes Payable - Schedule of Future Debt Principal Maturities (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Debt Disclosure [Abstract] | |
2019 | $ 195 |
2020 | 230 |
2021 | 249 |
2022 | 269 |
2023 | 95 |
Total | $ 1,038 |
Secured Revolving Credit Faci_2
Secured Revolving Credit Facility (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Aug. 17, 2017 | |
Interest expense | $ 172 | $ 302 | |
Interest expense included in accrued expenses | 396 | 218 | |
Loan Agreement [Member] | Tech Capital, LLC [Member] | |||
Maximum secured revolving credit facility | $ 1,000 | ||
Principal balance of line of credit | $ 991 | 711 | |
Loan agreement, term | 12 months | ||
Line of credit interest rate | 9.00% | ||
Interest expense | $ 22 | 29 | |
Interest expense included in accrued expenses | 17 | ||
Debt issuance costs | 12 | ||
Loan Agreement [Member] | Tech Capital, LLC [Member] | Revolving Credit Facility [Member] | |||
Interest expense included in accrued expenses | $ 2 | $ 4 | |
Loan Agreement [Member] | Tech Capital, LLC [Member] | Prime Rate [Member] | |||
Line of credit interest rate | 3.50% | ||
Loan Agreement [Member] | Tech Capital, LLC [Member] | Prime Rate [Member] | Maximum [Member] | |||
Line of credit interest rate | 4.25% |
Unsecured Promissory Notes an_2
Unsecured Promissory Notes and Warrants (Details Narrative) - USD ($) $ in Thousands | Mar. 30, 2018 | Jun. 30, 2016 | Dec. 31, 2018 | Dec. 31, 2017 |
Number of warrants issued to purchase of shares of common stock | 6,642,344 | 7,099,010 | ||
Loss on extinguishment of debt | $ (199) | |||
Amortization of debt discount | 34 | 116 | ||
Interest expense | 172 | 302 | ||
Lambda Investors, LLC [Member] | ||||
Due to related party | 300 | |||
Lambda [Member] | ||||
Interest expense related party | 8 | 33 | ||
Entities Controlled by Member of Management [Member] | ||||
Due to related party | 30 | |||
Interest expense related party | 1 | 3 | ||
Note and Warrant Agreement [Member] | ||||
Gross proceeds from unsecured promissory notes and warrants | $ 1,187 | |||
Percentage of accrued interest rate per annum | 11.00% | |||
Proceeds from warrants | $ 393 | |||
Debt issuance costs | $ 9 | |||
Amortization of debt discount | 34 | 116 | ||
Interest expense | $ 30 | $ 133 | ||
Note and Warrant Agreement [Member] | Investors [Member] | ||||
Number of warrants issued to purchase of shares of common stock | 2,400,000 | |||
Secured Note Agreement [Member] | ||||
Accrued interest | $ 43 | |||
Loss on extinguishment of debt | 199 | |||
Secured Note Agreement [Member] | Noteholders [Member] | ||||
Interest paid | $ 195 |
Accrued Expenses - Schedule of
Accrued Expenses - Schedule of Accrued Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Payables and Accruals [Abstract] | ||
Accrued legal | $ 90 | $ 90 |
Accrued sales commission | 42 | 40 |
Accrued research and development | 65 | |
Accrued accounting | 8 | 11 |
Accrued interest | 2 | 18 |
Accrued other | 189 | 59 |
Accrued expenses | $ 396 | $ 218 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax [Line Items] | ||
Federal statutory rate | 21.00% | 35.00% |
Income tax benefit | $ (93,000) | $ (1,789,000) |
Operating loss carryforwards | 613,000 | 19,233,000 |
Research and development credit carryforwards | 44,000 | 170,000 |
Valuation allowance, deferred tax asset, increase, amount | 797,000 | |
Federal Research Tax Credit Carryforward [Member] | ||
Income Tax [Line Items] | ||
Tax credit carryforward, amount | 1,330,000 | 1,220,000 |
State Research Tax Credit Carryforward [Member] | ||
Income Tax [Line Items] | ||
Tax credit carryforward, amount | 42,000 | 45,000 |
Federal [Member] | ||
Income Tax [Line Items] | ||
Operating loss carryforwards | 82,241,000 | |
New Jersey [Member] | ||
Income Tax [Line Items] | ||
Operating loss carryforwards | 2,244,000 | |
Foreign [Member] | ||
Income Tax [Line Items] | ||
Operating loss carryforwards | 7,903,000 | |
2018 Federal [Member] | ||
Income Tax [Line Items] | ||
Operating loss carryforwards | 2,780,000 | |
New Jersey [Member] | ||
Income Tax [Line Items] | ||
Decrease in deferred tax assets | $ 99,000 | $ 1,903,000 |
Minimum [Member] | Foreign [Member] | ||
Income Tax [Line Items] | ||
Operating loss carryforwards, expiration date | Dec. 31, 2019 | |
Maximum [Member] | Foreign [Member] | ||
Income Tax [Line Items] | ||
Operating loss carryforwards, expiration date | Dec. 31, 2038 |
Income Taxes - Schedule of Inco
Income Taxes - Schedule of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Current: State | $ (93) | $ (1,789) |
Total current tax benefit | (93) | (1,789) |
Total deferred tax benefit | ||
Income tax benefit | $ (93) | $ (1,789) |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effective Income Tax Rate Reconciliation (Details) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
U.S. federal statutory rate | 21.00% | 35.00% |
State taxes | 5.25% | (21.84%) |
Sale of NJ NOLS and credits | (2.78%) | (68.91%) |
Change in federal statutory rate | 0.00% | (441.07%) |
Stock based compensation | (1.96%) | (5.48%) |
Other permanent difference due to sale of NJ NOLs and credits | 0.00% | (24.12%) |
Federal research and development credits | 2.28% | 2.24% |
Other | (0.11%) | (12.46%) |
Valuation allowance | (26.46%) | 467.73% |
Effective tax rate | (2.78%) | (68.91%) |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carry forwards | $ 18,671 | $ 17,907 |
Research and development credits | 1,399 | 1,322 |
Nonqualified stock option compensation expense | 497 | 453 |
Other temporary book - tax differences | 58 | 125 |
Total deferred tax assets | 20,625 | 19,807 |
Fixed and intangible asset basis difference | (21) | |
Total deferred tax liabilities | (21) | |
Deferred tax assets (liabilities), net | 20,604 | 19,807 |
Valuation allowance for deferred tax assets | (20,604) | (19,807) |
Deferred tax assets (liabilities), net after valuation allowance |
Stock Plans, Share-Based Paym_3
Stock Plans, Share-Based Payments and Warrants (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2015 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Common stock, shares authorized | 90,000,000 | 90,000,000 | ||
Options outstanding | 7,434,561 | 6,770,777 | 4,592,347 | |
Stock options granted | 1,143,034 | 2,311,542 | ||
Share-based compensation expense | $ 525 | $ 456 | ||
Weighted-average fair value of options granted | $ 0.48 | $ 0.36 | ||
Share-based compensation arrangement by share-based payment award, options, outstanding, intrinsic value | $ 441 | $ 170 | ||
Share-based compensation arrangement by share-based payment award, options, vested and expected to vest, outstanding, aggregate intrinsic value | $ 425 | $ 162 | ||
Share-based compensation arrangement by share-based payment award, options, vested and expected to vest, outstanding, weighted average remaining contractual term | 7 years 2 months 30 days | 7 years 9 months 18 days | ||
Employee service share-based compensation, nonvested awards, compensation not yet recognized, stock options | $ 1,311 | |||
Employee service share-based compensation, nonvested awards, compensation recognized at the time of certain performance conditions met | 230 | |||
Stock based compensation recognized amortization cost | $ 1,081 | |||
Employee service share-based compensation, nonvested awards, compensation cost not yet recognized, period for recognition | 2 years 2 months 12 days | |||
Fair value of restricted stock | $ 377 | $ 345 | ||
Selling, general and administrative expense | $ 4,517 | $ 3,298 | ||
Restricted Stock [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock options granted | 449,043 | 817,144 | ||
Share-based compensation expense | $ 460 | $ 316 | ||
Weighted-average fair value of options granted | $ 0.62 | $ 0.50 | ||
Employee service share-based compensation, nonvested awards, compensation not yet recognized, stock options | $ 87 | |||
Employee service share-based compensation, nonvested awards, compensation cost not yet recognized, period for recognition | 6 months | |||
Selling, general and administrative expense | 416 | $ 264 | ||
Research and Development Expense | 44 | 52 | ||
Selling, General and Administrative Expenses [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | 500 | 426 | ||
Research and Development Expenses [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 25 | $ 30 | ||
2015 Equity Incentive Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares reserved and authorized for awards | 7,000,000 | |||
2015 Equity Incentive Plan [Member] | Options [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Options outstanding | 6,369,425 | |||
Stock option plan terms and description | The options issued to employees expire on various dates between April 15, 2025 and December 31, 2028 | |||
Stock option vesting term description | Options currently outstanding are fully vested or will vest upon a combination of the following: immediate vesting, performance-based vesting or straight-line vesting of two or four years. | |||
Stock options granted | 6,399,425 | |||
Stock options will vest upon the specified performance condition is met | 1,845,447 | |||
2015 Equity Incentive Plan [Member] | Options [Member] | Option and Restricted Stock [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares available for future grants | 460,917 | |||
2015 Equity Incentive Plan [Member] | Options [Member] | Non Employees [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Options outstanding | 30,000 | |||
Stock option plan terms and description | Will expire on May 31, 2021 | |||
2015 Equity Incentive Plan [Member] | Maximum [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Common stock, shares authorized | 10,000,000 | |||
Stock options contractual term | 10 years | |||
2004 Stock Incentive Plan [Member] | Options [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Options outstanding | 1,035,136 | |||
Stock option plan terms and description | The options expire on various dates between January 6, 2019 and March 26, 2024. | |||
Stock option vesting term description | Options currently outstanding are fully vested | |||
2004 Stock Incentive Plan [Member] | Non Employee Stock Options [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Options outstanding | 447,500 | |||
Stock option plan terms and description | Options expire at various dates between March 24, 2021 and November 17, 2024 |
Stock Plans, Share-Based Paym_4
Stock Plans, Share-Based Payments and Warrants - Summary of Option Activity (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Shares, Outstanding at beginning of year | 6,770,777 | 4,592,347 |
Shares, Options granted | 1,143,034 | 2,311,542 |
Shares, Options forfeited or expired | (379,250) | (133,112) |
Shares, Options exercised | (100,000) | |
Shares, Outstanding at end of year | 7,434,561 | 6,770,777 |
Weighted Average Exercise Price, Outstanding at beginning of year | $ 0.55 | $ 0.60 |
Weighted Average Exercise Price, Options granted | 0.62 | 0.44 |
Weighted Average Exercise Price, Options forfeited or expired | 0.46 | 0.77 |
Weighted Average Exercise Price, Options exercised | 0.30 | |
Weighted Average Exercise Price, Outstanding at end of year | $ 0.56 | $ 0.55 |
Stock Plans, Share-Based Paym_5
Stock Plans, Share-Based Payments and Warrants - Summary of Options Exercisable Vested and Expected to Vest (Details) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Shares, Exercisable | 3,221,236 | 2,271,527 |
Shares, Vested and expected to vest | 7,190,188 | 6,509,821 |
Weighted Average Exercise Price, Exercisable | $ 0.61 | $ 0.65 |
Weighted Average Exercise Price, Vested and expected to vest | $ 0.57 | $ 0.55 |
Stock Plans, Share-Based Paym_6
Stock Plans, Share-Based Payments and Warrants - Schedule of Fair Value Assumptions (Details) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Stock Price Volatility | 92.42% | 104.56% |
Risk-Free Interest Rates | 2.71% | 2.19% |
Expected Life (in years) | 6 years 1 month 24 days | 6 years 1 month 9 days |
Expected Dividend Yield | 0.00% | 0.00% |
Stock Plans, Share-Based Paym_7
Stock Plans, Share-Based Payments and Warrants - Summary of Restricted Stock Activity (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Class of Warrant or Right [Line Items] | ||
Shares, Granted | 1,143,034 | 2,311,542 |
Weighted Average Grant Date Fair Value, Granted | $ 0.48 | $ 0.36 |
Restricted Stock [Member] | ||
Class of Warrant or Right [Line Items] | ||
Shares, Nonvested Beginning Balance | 799,387 | 957,336 |
Shares, Granted | 449,043 | 817,144 |
Shares, Vested | (753,528) | (975,093) |
Shares, Forfeited | (45,859) | |
Shares, Nonvested Ending Balance | 449,043 | 799,387 |
Weighted Average Grant Date Fair Value, Nonvested Beginning Balance | $ 0.50 | $ 0.35 |
Weighted Average Grant Date Fair Value, Granted | 0.62 | 0.50 |
Weighted Average Grant Date Fair Value, Vested | 0.50 | 0.35 |
Weighted Average Grant Date Fair Value, Forfeited | 0.50 | |
Weighted Average Grant Date Fair Value, Nonvested Ending Balance | $ 0.62 | $ 0.50 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Sep. 05, 2018 | Apr. 10, 2018 | Mar. 17, 2017 | Jul. 24, 2015 | Dec. 31, 2018 | Dec. 31, 2017 |
Class of Stock [Line Items] | ||||||
Proceeds from issuance of common stock | $ 3,778 | $ 1,179 | ||||
Number of shares issued in transaction, value | $ 3,000 | |||||
Preferred stock, shares outstanding | ||||||
Proceeds from warrants exercised | $ 138 | $ 100 | ||||
Series A Preferred Stock [Member] | ||||||
Class of Stock [Line Items] | ||||||
Number of shares issued in transaction, value | $ 2,300 | |||||
Preferred stock, shares outstanding | 150,000 | |||||
Proceeds from indebtedness | $ 250 | |||||
Securities Purchase Agreement [Member] | Lincoln Park Capital Fund LLC [Member] | ||||||
Class of Stock [Line Items] | ||||||
Number of shares issued during period | 1,900,000 | 300,000 | ||||
Stock issued during period, value, new issues | $ 10,000 | |||||
Proceeds from issuance of common stock | $ 854 | $ 113 | ||||
Limited liability company description for purchase shares level | Lincoln Park, and Lincoln Park was obligated to purchase, up to $10.0 million in shares of the Company's common stock, subject to certain limitations, from time to time, over the 36-month period commencing on September 4, 2015. | |||||
Series A Preferred Stock Purchase Agreement [Member] | Specialty Renal Products, Inc. [Member] | ||||||
Class of Stock [Line Items] | ||||||
Sale of stock, price per share | $ 5 | |||||
Equity interest | 62.50% | |||||
Ownership percentage | 100.00% | |||||
Dividends per share rate | $ 0.40 | |||||
Series A Preferred Stock Purchase Agreement [Member] | Specialty Renal Products, Inc. [Member] | Holders of Series A Preferred [Member] | ||||||
Class of Stock [Line Items] | ||||||
Equity interest | 37.50% | |||||
Ownership percentage | 100.00% | |||||
Series A Preferred Stock Purchase Agreement [Member] | Specialty Renal Products, Inc. [Member] | Entities Controlled by Member of Management [Member] | ||||||
Class of Stock [Line Items] | ||||||
Number of shares issued during period | 18,000 | |||||
Series A Preferred Stock Purchase Agreement [Member] | Specialty Renal Products, Inc. [Member] | ||||||
Class of Stock [Line Items] | ||||||
Number of shares sold during the period | 600,000 | |||||
Number of shares issued in transaction | 600,000 | |||||
Number of shares issued in transaction, value | $ 3,000 | |||||
Transaction-related expenses | $ 30 | |||||
Series A Preferred Stock Purchase Agreement [Member] | Specialty Renal Products, Inc. [Member] | Lambda, Majority Shareholder [Member] | ||||||
Class of Stock [Line Items] | ||||||
Number of shares issued during period | 400,000 | |||||
Warrant Agreement [Member] | ||||||
Class of Stock [Line Items] | ||||||
Number of shares issued during period | 456,666 | 333,332 | ||||
Exercise price per share | $ 0.38 | $ 0.37 | ||||
Number of warrants exercised | 456,666 | 333,332 | ||||
Proceeds from warrants exercised | $ 138,000 | $ 100,000 | ||||
Private Placement [Member] | Stock Purchase Agreement [Member] | ||||||
Class of Stock [Line Items] | ||||||
Number of shares sold during the period | 6,540,669 | |||||
Gross proceeds from issuance of private placement | $ 2,943 | |||||
Shares issued price per share | $ 0.45 | |||||
Proceeds of equity issuance costs net | $ 19 | |||||
Proceeds from private placement | $ 2,924 | |||||
Number of shares issued during period | 219,000 | |||||
Proceeds from issuance of common stock | $ 98 | |||||
Number of shares issued in transaction | 6,540,669 | |||||
Private Placement [Member] | Securities Purchase Agreement [Member] | ||||||
Class of Stock [Line Items] | ||||||
Number of shares sold during the period | 4,059,994 | |||||
Gross proceeds from issuance of private placement | $ 1,218 | |||||
Shares issued price per share | $ 0.30 | |||||
Proceeds of equity issuance costs net | $ 152 | |||||
Proceeds from private placement | $ 1,066 | |||||
Warrants description | Each unit consisted of one share of the Company's common stock and a five-year warrant to purchase one additional share of the Company's common stock. | |||||
Proceeds received from certain members of management and existing shareholders | $ 315 | |||||
Number of warrants to placement agent | 81,199 | |||||
Exercise price per share | $ 0.33 | |||||
Number of shares issued in transaction | 4,059,994 |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of Terms of Outstanding Warrants (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Class of Stock [Line Items] | ||
Total Common Shares Issuable | 6,642,344 | 7,099,010 |
May 2015 - Private Placement Warrants [Member] | ||
Class of Stock [Line Items] | ||
Date Issued | Mar. 18, 2015 | |
Expiry Date | Mar. 18, 2020 | |
Exercise Price | $ 0.85 | |
Total Common Shares Issuable | 917,149 | 917,149 |
June 2016 - Note and Warrant Agreement [Member] | ||
Class of Stock [Line Items] | ||
Date Issued | Jun. 7, 2016 | |
Expiry Date | Jun. 7, 2021 | |
Exercise Price | $ 0.30 | |
Total Common Shares Issuable | 2,284,000 | 2,374,000 |
March 2017 - Private Placement Warrants [Member] | ||
Class of Stock [Line Items] | ||
Date Issued | Mar. 22, 2017 | |
Expiry Date | Mar. 22, 2022 | |
Exercise Price | $ 0.30 | |
Total Common Shares Issuable | 3,441,195 | 3,807,861 |
Savings Incentive Match Plan (D
Savings Incentive Match Plan (Details Narrative) - USD ($) $ in Thousands | Jan. 02, 2017 | Dec. 31, 2018 | Dec. 31, 2017 |
Defined Benefit Plan Disclosure [Line Items] | |||
Contribution expense | $ 52 | $ 39 | |
Three Percent Employee Contribution [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Employer matching contribution, percentage | 100.00% | ||
Percentage of employee contributions matched by employer | 3.00% |
Commitments and Contingencies_2
Commitments and Contingencies (Details Narrative) € in Thousands | 12 Months Ended | ||
Dec. 31, 2018USD ($)ft² | Dec. 31, 2018EUR (€) | Dec. 31, 2017USD ($)ft² | |
Security deposit | $ 20,000 | ||
Rent expense | 162,000 | $ 131,000 | |
Operating Lease [Member] | |||
Area of a land | ft² | 7,700 | ||
Lease expiration date | expires in November 2022 | ||
Monthly rent expense | $ 11,000 | ||
Security deposit | 11,000 | $ 11,000 | |
Lease term | 12 months | ||
Medica Spa [Member] | |||
Purchase commitment | $ 2,900,000 | ||
Medica Spa [Member] | EURO Currency [Member] | |||
Purchase commitment | € | € 2,500 | ||
License and Supply Agreement [Member] | Medica Spa [Member] | EURO Currency [Member] | |||
Purchase commitment | € | € 2,500 | ||
Rental Agreement [Member] | |||
Area of a land | ft² | 16,000 | ||
Lease expiration date | Lease expires in November 2020 | Lease expires in November 2020 | |
Monthly rent expense | $ 6,000 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Minimum Lease Payments (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2019 | $ 204 |
2020 | 197 |
2021 | 145 |
2022 | $ 136 |
Commitments and Contingencies_3
Commitments and Contingencies - Contractual Obligations and Commercial Commitments (Details) $ in Thousands | Dec. 31, 2018USD ($) | |
Commitments And Contingencies [Line Items] | ||
Payments Due, Total | $ 29,513 | |
Payments Due Within 1 Year | 3,830 | |
Payments Due Within 2 - 3 Years | 7,947 | |
Payments Due Within 4 - 5 Years | 8,536 | |
Payments Due More Than 5 Years | 9,200 | |
Minimum Purchase Commitments [Member] | ||
Commitments And Contingencies [Line Items] | ||
Payments Due, Total | 28,700 | [1] |
Payments Due Within 1 Year | 3,500 | [1] |
Payments Due Within 2 - 3 Years | 7,600 | [1] |
Payments Due Within 4 - 5 Years | 8,400 | [1] |
Payments Due More Than 5 Years | 9,200 | [1] |
Leases [Member] | ||
Commitments And Contingencies [Line Items] | ||
Payments Due, Total | 696 | [2] |
Payments Due Within 1 Year | 213 | [2] |
Payments Due Within 2 - 3 Years | 347 | [2] |
Payments Due Within 4 - 5 Years | 136 | [2] |
Payments Due More Than 5 Years | [2] | |
Employment Contracts [Member] | ||
Commitments And Contingencies [Line Items] | ||
Payments Due, Total | 117 | [3] |
Payments Due Within 1 Year | 117 | [3] |
Payments Due Within 2 - 3 Years | [3] | |
Payments Due Within 4 - 5 Years | [3] | |
Payments Due More Than 5 Years | [3] | |
[1] | License and supply agreement with Medica. | |
[2] | In addition to lease obligations for office space, obligations include a lease for various office equipment which expires in 2020. | |
[3] | Relates to employment agreement with Daron Evans, our President and Chief Executive Officer, entered into on April 15, 2015 for a term of four years. |
Segment Reporting (Details Narr
Segment Reporting (Details Narrative) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018USD ($)Products | Dec. 31, 2017USD ($) | |
Number of operating segments | Products | 1 | |
Number of reportable segments | Products | 2 | |
Total assets | $ 10,558 | $ 4,983 |
Sale of preferred stock, cash value | 3,000 | |
Prepaid Expenses and Other Current Assets [Member] | ||
Total assets | 200 | |
Series A Preferred Stock [Member] | ||
Sale of preferred stock, cash value | 2,300 | |
Renal Products Segment [Member] | ||
Total assets | $ 2,500 |
Segment Reporting - Schedule of
Segment Reporting - Schedule of Segment Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Total net revenues | $ 5,687 | $ 3,809 |
Gross margin | 3,203 | 2,292 |
Research and development expenses | 1,539 | 1,002 |
Depreciation and amortization expense | 163 | 218 |
Selling, general and administrative expenses | 4,517 | 3,298 |
Total operating expenses | (6,219) | (4,518) |
Loss from operations | (3,016) | (2,226) |
Water Filtration [Member] | ||
Total net revenues | 5,687 | 3,809 |
Gross margin | 3,203 | 2,292 |
Research and development expenses | 808 | 970 |
Depreciation and amortization expense | 163 | 218 |
Selling, general and administrative expenses | 4,340 | 3,286 |
Total operating expenses | (5,311) | (4,474) |
Loss from operations | (2,108) | (2,182) |
Renal Products [Member] | ||
Total net revenues | ||
Gross margin | ||
Research and development expenses | 731 | 32 |
Depreciation and amortization expense | ||
Selling, general and administrative expenses | 177 | 12 |
Total operating expenses | (908) | (44) |
Loss from operations | $ (908) | $ (44) |