Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | 11-May-15 | |
Document And Entity Information | ||
Entity Registrant Name | SECOND SIGHT MEDICAL PRODUCTS INC | |
Entity Central Index Key | 1266806 | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -19 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 35,397,148 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2015 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash | $652,254 | $619,411 |
Money market funds | 29,086,778 | 33,999,563 |
Accounts receivable | 1,295,391 | 707,648 |
Inventories, net | 6,401,034 | 5,721,991 |
Prepaid expenses and other current assets | 960,897 | 927,575 |
Total current assets | 38,396,354 | 41,976,188 |
Property and equipment, net | 1,001,222 | 1,004,646 |
Deposits and other assets | 59,423 | 88,610 |
Total assets | 39,456,999 | 43,069,444 |
Current liabilities: | ||
Accounts payable | 414,424 | 513,106 |
Accrued expenses | 1,611,312 | 1,412,383 |
Accrued compensation expense | 1,622,622 | 1,361,894 |
Accrued clinical trial expenses | 486,703 | 488,910 |
Deferred revenue | 805,312 | 599,904 |
Deferred grant revenue | 4,057,491 | 4,075,000 |
Total current liabilities | 8,997,864 | 8,451,197 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, no par value, 10,000,000 shares authorized and none outstanding | ||
Common stock, no par value; 200,000,000 shares authorized; shares issued and outstanding: 35,339,869 and 35,241,428 at March 31, 2015 and December 31, 2014, respectively | 163,441,206 | 163,171,005 |
Common stock to be issued | 237,500 | 166,250 |
Additional paid-in capital | 25,087,547 | 24,590,368 |
Notes receivable to finance stock option exercises | -153,641 | -171,436 |
Accumulated other comprehensive loss | -533,172 | -473,972 |
Accumulated deficit | -157,620,305 | -152,663,968 |
Total stockholders' equity | 30,459,135 | 34,618,247 |
Total liabilities and stockholders' equity | $39,456,999 | $43,069,444 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Preferred stock, no par value | ||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, no par value | ||
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 35,339,869 | 35,241,428 |
Common stock, shares outstanding | 35,339,869 | 35,241,428 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Income Statement [Abstract] | ||
Net sales | $1,700,082 | $656,726 |
Cost of sales | 1,295,753 | 727,433 |
Gross profit (loss) | 404,329 | -70,707 |
Operating expenses: | ||
Research and development, net of grants | 1,047,857 | 1,039,486 |
Clinical and regulatory | 666,472 | 594,662 |
Selling and marketing | 1,994,962 | 1,254,503 |
General and administrative | 1,655,816 | 1,497,127 |
Total operating expenses | 5,365,107 | 4,385,778 |
Loss from operations | -4,960,778 | -4,456,485 |
Interest income | 796 | 2,823 |
Other income, net | 3,645 | 826 |
Interest expense on convertible promissory notes | -545,900 | |
Amortization of discount on convertible promissory notes | -1,440,017 | |
Net loss | ($4,956,337) | ($6,438,753) |
Net loss per common share - basic and diluted | ($0.14) | ($0.28) |
Weighted average common shares outstanding - basic and diluted | 35,300,906 | 23,072,693 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Condensed Consolidated Statements Of Comprehensive Loss | ||
Net loss | ($4,956,337) | ($6,438,753) |
Other comprehensive loss: | ||
Foreign currency translation adjustments | -59,200 | -45,679 |
Comprehensive loss | ($5,015,537) | ($6,484,432) |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Cash flows from operating activities: | ||
Net loss | ($4,956,337) | ($6,438,753) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization of property and equipment | 81,950 | 77,274 |
Stock-based compensation | 497,179 | 595,811 |
Amortization of discount on convertible notes payable | 1,440,017 | |
Non-cash interest accrued on convertible notes payable | 545,900 | |
Common stock issuable | 71,250 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | -587,743 | -126,092 |
Inventories | -679,043 | -908,288 |
Prepaid expenses and other assets | -4,135 | -53,075 |
Inventories Accounts payable | -98,682 | 183,885 |
Accrued expenses | 198,929 | 84,927 |
Accrued compensation expenses | 260,728 | -69,689 |
Accrued clinical trial expenses | -2,207 | |
Deferred revenue | 205,408 | 11,233 |
Deferred grant revenue | -17,509 | |
Net cash used in operating activities | -5,030,212 | -4,656,850 |
Cash flows from investing activities: | ||
Purchase of property and equipment | -78,526 | -91,723 |
Proceeds from money market funds | 4,912,785 | 4,480,759 |
Net cash provided by investing activities | 4,834,259 | 4,389,036 |
Cash flows from financing activities: | ||
Proceeds from sale of common stock | 700,000 | |
Proceeds from exercise of options and warrants | 411,680 | 3,494 |
Repurchase of common stock | -123,684 | |
Net cash provided by financing activities | 287,996 | 703,494 |
Effect of exchange rate changes on cash | -59,200 | -45,679 |
Cash: | ||
Net increase | 32,843 | 390,001 |
Balance at beginning of period | 619,411 | 62,565 |
Balance at end of period | 652,254 | 452,566 |
Non-cash financing and investing activities: | ||
Fair value of common stock issued as finder's fee in connection with private placement of common stock | $35,000 |
1_Organization_and_Business_Op
1. Organization and Business Operations | 3 Months Ended |
Mar. 31, 2015 | |
Organization And Business Operations | |
1. Organization and Business Operations | 1. Organization and Business Operations |
Organization and Business Operations | |
Second Sight Medical Products, Inc. (“Second Sight” or “the Company”), formerly Second Sight LLC, was founded in 1998 as a limited liability company and was subsequently incorporated in the State of California in 2003. Second Sight develops, manufactures and markets implantable prosthetic devices that can restore some functional vision to patients blinded by outer retinal degenerations, such as Retinitis Pigmentosa. | |
In 2007, Second Sight formed Second Sight (Switzerland) Sarl, initially to manage clinical trials for its products in Europe, and later to manage sales and marketing in Europe and the Middle East. As the laws of Switzerland require at least two corporate stockholders, Second Sight (Switzerland) Sarl is 99.5% owned directly by the Company and 0.5% owned by an executive of Second Sight, who is acting as a nominee of the Company. Accordingly, Second Sight (Switzerland) Sarl is considered 100% owned for financial statement purposes and is consolidated with Second Sight for all periods presented. | |
Since its inception, the Company has generated limited revenues from the sale of products and has financed its operations primarily through the issuance of common stock, convertible debt (which has been converted into common stock), and grants primarily from government agencies. The Company’s initial public offering (“IPO”) in November 2014 has provided it with sufficient financial resources to fund its operations for a period in excess of the next twelve months. |
2_Basis_of_Presentation_Signif
2. Basis of Presentation, Significant Accounting Policies and Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2015 | |
Basis Of Presentation Significant Accounting Policies And Recent Accounting Pronouncements | |
2. Basis of Presentation, Significant Accounting Policies and Recent Accounting Pronouncements | 2. Basis of Presentation, Significant Accounting Policies and Recent Accounting Pronouncements |
Basis of Presentation | |
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission for Form 10-Q. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated balance sheet at December 31, 2014 has been derived from the Company’s audited consolidated financial statements. | |
In the opinion of management, these financial statements reflect all normal recurring and other adjustments necessary for a fair presentation. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year or any other future periods. | |
Significant Accounting Policies | |
The Company’s significant accounting policies are set forth in Note 2 in its Annual Report on Form 10-K for the year ended December 31, 2014. | |
Recent Accounting Pronouncements | |
Management does not believe that any recently issued, but not yet effective, accounting standards, if adopted, will have a material effect on the financial statements. |
3_Concentration_of_Risk
3. Concentration of Risk | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Organization And Business Operations | |||||||||
3. Concentration of Risk | 3. Concentration of Risk | ||||||||
Credit Risk | |||||||||
Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash, money market funds, and trade accounts receivable. The Company maintains cash and money market funds with financial institutions that management deems reputable, and at times, cash balances may be in excess of Federal Deposit Insurance Corporations and Securities Investor Protection Corporation insurance limits. The Company extends differing levels of credit to customers, and typically does not require collateral. | |||||||||
The Company also maintains a cash balance at a bank in Switzerland, which is insured up to an amount specified by the deposit insurance agency of Switzerland. | |||||||||
Customer Concentration | |||||||||
During the three months ended March 31, 2015 and 2014 (unaudited), the following customers comprised more than 10% of revenues: | |||||||||
March 31, | March 31, | ||||||||
2015 | 2014 | ||||||||
Customer 1 | 23 | % | 0 | % | |||||
Customer 2 | 15 | % | 0 | % | |||||
Customer 3 | 14 | % | 0 | % | |||||
Customer 4 | 10 | % | 0 | % | |||||
Customer 5 | 0 | % | 70 | % | |||||
Customer 6 | 5 | % | 17 | % | |||||
Customer 7 | 0 | % | 13 | % | |||||
As of March 31, 2015 and December 31, 2014, the following customers comprised more than 10% of accounts receivable: | |||||||||
March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
(unaudited) | |||||||||
Customer 1 | 46 | % | 32 | % | |||||
Customer 2 | 13 | % | 1 | % | |||||
Customer 3 | 4 | % | 20 | % | |||||
Customer 4 | 2 | % | 13 | % | |||||
Customer 5 | 0 | % | 13 | % | |||||
Geographic Concentration | |||||||||
During the three months ended March 31, 2015 and 2014 (unaudited), regional revenue, based on customer location, consisted of the following: | |||||||||
March 31, | March 31, | ||||||||
2015 | 2014 | ||||||||
Italy | 36 | % | 0 | % | |||||
France | 30 | % | 0 | % | |||||
United States | 18 | % | 70 | % | |||||
Germany | 9 | % | 29 | % | |||||
Sources of Supply | |||||||||
Several of the components, materials and services used in the Company’s current Argus II product are available from only one supplier, and substitutes for these items cannot be obtained easily or would require substantial design or manufacturing modifications. Any significant problem experienced by one of the Company’s sole source suppliers could result in a delay or interruption in the supply of components to the Company until that supplier cures the problem or an alternative source of the component is located and qualified. Even where the Company could qualify alternative suppliers, the substitution of suppliers may be at a higher cost and cause time delays that impede the commercial production of the Argus II, reduce gross profit margins and impact the Company’s abilities to deliver its products as may be timely required to meet demand. | |||||||||
Foreign Operations | |||||||||
The accompanying condensed consolidated financial statements as of March 31, 2015 (unaudited) and December 31, 2014 include assets amounting $2,991,000 and $2,091,000, respectively, relating to operations of the company in Switzerland. It is possible that unanticipated events in foreign countries could disrupt the Company’s operations. |
4_Money_Market_Funds
4. Money Market Funds | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Organization And Business Operations | |||||||||||||||||
4. Money Market Funds | 4. Money Market Funds | ||||||||||||||||
The authoritative guidance with respect to fair value establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels, and requires that assets and liabilities carried at fair value be classified and disclosed in one of three categories, as presented below. Disclosure as to transfers in and out of Levels 1 and 2, and activity in Level 3 fair value measurements, is also required. | |||||||||||||||||
Level 1. Observable inputs such as quoted prices in active markets for an identical asset or liability that the Company has the ability to access as of the measurement date. Financial assets and liabilities utilizing Level 1 inputs include active-exchange traded securities and exchange-based derivatives. | |||||||||||||||||
Level 2. Inputs, other than quoted prices included within Level 1, which are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. Financial assets and liabilities utilizing Level 2 inputs include fixed income securities, non-exchange based derivatives, mutual funds, and fair-value hedges. | |||||||||||||||||
Level 3. Unobservable inputs in which there is little or no market data for the asset or liability which requires the reporting entity to develop its own assumptions. Financial assets and liabilities utilizing Level 3 inputs include infrequently-traded non-exchange-based derivatives and commingled investment funds, and are measured using present value pricing models. | |||||||||||||||||
Money market funds are the only financial instrument that is measured and recorded at fair value on the Company’s balance sheet, and they are considered Level 1 valuation securities. The following table presents money market funds at their level within the fair value hierarchy at March 31, 2015 and December 31, 2014. | |||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||||
March 31, 2015 (unaudited): | |||||||||||||||||
Money market funds | $ | 29,086,778 | $ | 29,086,778 | $ | — | $ | — | |||||||||
December 31, 2014: | |||||||||||||||||
Money market funds | $ | 33,999,563 | $ | 33,999,563 | $ | — | $ | — |
5_Selected_Balance_Sheet_Detai
5. Selected Balance Sheet Detail | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Organization And Business Operations | |||||||||
5. Selected Balance Sheet Detail | 5. Selected Balance Sheet Detail | ||||||||
Inventories, net | |||||||||
Inventories consisted of the following at: | |||||||||
March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
(unaudited) | |||||||||
Raw materials | $ | 565,908 | $ | 610,434 | |||||
Work in process | 3,743,981 | 4,729,235 | |||||||
Finished goods | 2,373,867 | 1,748,966 | |||||||
6,683,756 | 7,088,635 | ||||||||
Allowance for excess and obsolescence | |||||||||
(282,722 | ) | (1,366,644 | ) | ||||||
$ | 6,401,034 | $ | 5,721,991 | ||||||
Property and equipment, net of accumulated depreciation and amortization | |||||||||
Property and equipment consisted of the following at: | |||||||||
March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
(unaudited) | |||||||||
Laboratory equipment | $ | 3,301,653 | $ | 3,285,842 | |||||
Computer hardware and software | 1,760,823 | 1,700,612 | |||||||
Leasehold improvements | 364,868 | 362,408 | |||||||
Furniture, fixtures and equipment | 135,347 | 135,303 | |||||||
5,562,691 | 5,484,165 | ||||||||
Accumulated depreciation and amortization | (4,561,469 | ) | (4,479,519 | ) | |||||
Property and equipment, net | $ | 1,001,222 | $ | 1,004,646 |
6_Long_Term_Investor_Right
6. Long Term Investor Right | 3 Months Ended |
Mar. 31, 2015 | |
Organization And Business Operations | |
6. Long Term Investor Right | 6. Long Term Investor Right |
Investors who purchased shares in the Company’s IPO, and who complied with certain terms and conditions, such as holding their IPO shares in their name during the twenty-four month period following the closing of the IPO, are entitled under certain conditions to receive up to one additional share for each share they purchased in the IPO. For a more complete discussion of the Long Term Investor Right, see Note 2 in the Company’s Annual Report on From 10-K for the year ended December 31, 2014. | |
As of March 31, 2015, the Company identified investors who had perfected and maintained Long Term Investor Rights in 1,469,600 shares of common stock that were acquired as part of the Company’s IPO. The highest average closing price for the Company’s common stock on NASDAQ during any consecutive 90 day period ended on or before March 31, 2015 was $11.59. Based on this average closing stock price, an investor who purchased shares as part of the IPO, and who has perfected its Long Term Investor Right, would be entitled to 0.5535 shares for each share purchased in the IPO, rounded up to the next whole share, which represents an aggregate maximum of 813,429 shares that are potentially issuable by the Company pursuant to the Long Term Investor Right at such date. The actual number of common shares issuable pursuant to the Long Term Investor Right is dependent on the future stock price of the Company over the two year period subsequent to the November 24, 2014 closing date of the IPO, and could be as high as 813,429 shares and as low as zero shares. | |
The Long Term Investor Right is an equity instrument that will be accounted for as a component of the actual price per common share paid by the investor in the IPO. For basic earnings per share, the common shares associated with the Long Term Investor Right are treated as contingently issuable shares and are not being included in basic earnings per share until the actual number of shares can be calculated and the shares have been issued. |
7_Equity_Securities
7. Equity Securities | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Organization And Business Operations | |||||||||
7. Equity Securities | 7. Equity Securities | ||||||||
Common Stock Issuable | |||||||||
Beginning with services rendered in 2014, and with the first payment in June 2015, non-employee members of the Board of Directors will be paid for their services in common stock on June 1 of each year based on the average closing prices for the immediately preceding twenty trading days. As of March, 31, 2015, the Company accrued $237,500 for these services, which equates to 18,526 shares based on the $12.82 closing price for Company’s common stock on that date. These shares have not yet been issued and are excluded from the calculation of weighted average common shares outstanding for EPS purposes. | |||||||||
Potentially Dilutive Common Stock Equivalents | |||||||||
At March 31, 2015 and 2014 (unaudited), the Company excluded the outstanding securities summarized below, which entitle the holders thereof to ultimately acquire shares of common stock, from its calculations of earnings per share and weighted average shares outstanding, as their effect would have been anti-dilutive. | |||||||||
March 31, | March 31, | ||||||||
2015 | 2014 | ||||||||
Long Term Investor Rights | 813,429 | – | |||||||
Underwriter’s warrants | 805,000 | – | |||||||
Convertible notes payable | – | 6,357,832 | |||||||
Warrants associated with convertible debt | 1,099,930 | 1,180,766 | |||||||
Common stock options | 3,227,797 | 2,277,290 | |||||||
Total | 5,946,156 | 9,815,888 |
8_Warrants
8. Warrants | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Organization And Business Operations | |||||||||||||
8. Warrants | 8. Warrants | ||||||||||||
A summary of warrant activity for the three months ended March 31, 2015 (unaudited) is presented below. | |||||||||||||
Weighted Average | |||||||||||||
Weighted | Remaining | ||||||||||||
Number of | Average | Contractual | |||||||||||
Shares | Exercise Price | Life (in Years) | |||||||||||
Warrants outstanding at December 31, 2014 | 1,983,707 | $ | 5 | 3.75 | |||||||||
Granted | — | ||||||||||||
Exercised | (78,777 | ) | $ | 5 | |||||||||
Forfeited or expired | — | ||||||||||||
Warrants outstanding at March 31, 2015 | 1,904,930 | $ | 7.64 | 3.53 | |||||||||
Warrants exercisable at March 31, 2015 | 1,099,930 | $ | 5 | 2.72 | |||||||||
The intrinsic value of warrants outstanding at March 31, 2015 was approximately $8,601,000. During the three months ended March 31, 2015, warrants representing 78,777 shares of common stock were exercised for proceeds of $393,885. |
9_StockBased_Compensation
9. Stock-Based Compensation | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Organization And Business Operations | |||||||||||||
9. Stock-Based Compensation | 9. Stock-Based Compensation | ||||||||||||
Under the 2003 Plan, as restated in June 2011, the Company is authorized to issue stock options covering up to 4,000,000 common shares. | |||||||||||||
A summary of stock option activity for the three months ended March 31, 2015 (unaudited) is presented below. | |||||||||||||
Weighted Average | |||||||||||||
Weighted | Remaining | ||||||||||||
Number of | Average | Contractual | |||||||||||
Shares | Exercise Price | Life (in Years) | |||||||||||
Options outstanding at December 31, 2014 | 3,251,627 | $ | 6.07 | 5.6 | |||||||||
Granted | 121,848 | $ | 13.11 | ||||||||||
Exercised | (59,063 | ) | $ | 4.75 | |||||||||
Forfeited or expired | (86,615 | ) | $ | 4.56 | |||||||||
Options outstanding at March 31, 2015 | 3,227,797 | $ | 6.4 | ||||||||||
Options exercisable at March 31, 2015 | 1,807,879 | $ | 4.9 | 3.11 | |||||||||
The estimated aggregate intrinsic value of stock options exercisable at March 31, 2015 was approximately $14.3 million. As of March 31, 2015, there was $6.2 million of total unrecognized compensation cost related to outstanding stock options that will be recognized over a weighted average period of 3.58 years. | |||||||||||||
On January 1, 2015, the Company’s Chief Executive Officer exercised stock options on a cashless basis to purchase 59,063 shares of common stock at an exercise price of $4.75 per share. Based on the closing market price of the Company’s common stock of $10.26 on December 31, 2014, the Chief Executive Officer tendered 27,344 shares of common stock that he owned to satisfy the aggregate exercise price and surrendered 12,055 shares of common stock to satisfy the related $123,684 income and payroll tax withholding amounts related to the transaction. | |||||||||||||
During the three months ended March 31, 2015, the Company granted stock options to purchase 121,848 shares of common stock to certain employees. The options are exercisable for a period of ten years from the date of grant at $13.09 to 13.90 per share, which was the fair value of the Company’s common stock on such date. The options vest over a period of either four or five years. The fair value of these options, as calculated pursuant to the Black-Scholes option-pricing model, was determined to be $811,314 ($6.66 per share). Assumptions used in the model were an expected term of 6.5 years, volatility of 50.3%, a risk-free interest rate of 2.1% and an expected dividend rate of 0%. | |||||||||||||
On February 25, 2015, the Board of Directors authorized, subject to shareholder approval, (1) an increase of 2,000,000 shares in the number of shares available for option awards under the 2011 Equity Incentive Plan, and (2) 250,000 shares for a proposed Employee Stock Purchase Plan, with annual increases of available shares equal to the lessor of (i) 1% of outstanding shares or (ii) 100,000 shares. | |||||||||||||
The total stock-based compensation recognized for stock-based awards granted under the 2003 Plan and the 2011 Plan in the condensed consolidated statements of operations for the three months ended March 31, 2015 and 2014 (unaudited) is as follows: | |||||||||||||
2015 | 2014 | ||||||||||||
Cost of sales | $ | 99,436 | $ | 25,056 | |||||||||
Research and development | 79,548 | 114,334 | |||||||||||
Clinical and regulatory | 69,605 | 13,572 | |||||||||||
Selling and marketing | 89,492 | 16,704 | |||||||||||
General and administrative | 159,098 | 426,145 | |||||||||||
Total | $ | 497,179 | $ | 595,811 |
10_Litigation_Claims_and_Asses
10. Litigation, Claims and Assessments | 3 Months Ended |
Mar. 31, 2015 | |
Organization And Business Operations | |
10. Litigation, Claims and Assessments | 10. Litigation, Claims and Assessments |
Ten oppositions have been filed by a third-party in the European Patent Office, each challenging the validity of a European patent owned or exclusively licensed by the Company. The outcome of the challenges is not certain, however, if successful, they may affect the Company's ability to block competitors from utilizing some of its patented technology in Europe. Management of the Company does not believe a successful challenge will have a material effect on its ability to manufacture and sell its products, or otherwise have a material effect on its operations. | |
The Company may be party to litigation arising in the ordinary course of business. It is management's opinion that the outcome of such matters will not have a material effect on the Company's financial statements. |
2_Basis_of_Presentation_Signif1
2. Basis of Presentation, Significant Accounting Policies and Recent Accounting Pronouncements (Policies) | 3 Months Ended |
Mar. 31, 2015 | |
Basis Of Presentation Significant Accounting Policies And Recent Accounting Pronouncements | |
Basis of Presentation | Basis of Presentation |
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission for Form 10-Q. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated balance sheet at December 31, 2014 has been derived from the Company’s audited consolidated financial statements. | |
In the opinion of management, these financial statements reflect all normal recurring and other adjustments necessary for a fair presentation. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year or any other future periods. | |
Significant Accounting Policies | Significant Accounting Policies |
The Company’s significant accounting policies are set forth in Note 2 in its Annual Report on Form 10-K for the year ended December 31, 2014. | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements |
Management does not believe that any recently issued, but not yet effective, accounting standards, if adopted, will have a material effect on the financial statements. |
3_Concentration_of_Risk_Tables
3. Concentration of Risk (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Organization And Business Operations | |||||||||
Summary of customer concentration of risk in revenue | During the three months ended March 31, 2015 and 2014 (unaudited), the following customers comprised more than 10% of revenues: | ||||||||
March 31, | March 31, | ||||||||
2015 | 2014 | ||||||||
Customer 1 | 23 | % | 0 | % | |||||
Customer 2 | 15 | % | 0 | % | |||||
Customer 3 | 14 | % | 0 | % | |||||
Customer 4 | 10 | % | 0 | % | |||||
Customer 5 | 0 | % | 70 | % | |||||
Customer 6 | 5 | % | 17 | % | |||||
Customer 7 | 0 | % | 13 | % | |||||
Summary of customer concentration of risk in accounts receivable | As of March 31, 2015 and December 31, 2014, the following customers comprised more than 10% of accounts receivable: | ||||||||
March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
(unaudited) | |||||||||
Customer 1 | 46 | % | 32 | % | |||||
Customer 2 | 13 | % | 1 | % | |||||
Customer 3 | 4 | % | 20 | % | |||||
Customer 4 | 2 | % | 13 | % | |||||
Customer 5 | 0 | % | 13 | % | |||||
Summary of geographic concentration of risk in revenue | During the three months ended March 31, 2015 and 2014 (unaudited), regional revenue, based on customer location, consisted of the following: | ||||||||
March 31, | March 31, | ||||||||
2015 | 2014 | ||||||||
Italy | 36 | % | 0 | % | |||||
France | 30 | % | 0 | % | |||||
United States | 18 | % | 70 | % | |||||
Germany | 9 | % | 29 | % |
4_Money_Market_Funds_Tables
4. Money Market Funds (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Organization And Business Operations | |||||||||||||||||
Summary of money market fund | The following table presents money market funds at their level within the fair value hierarchy at March 31, 2015 and December 31, 2014. | ||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||||
March 31, 2015 (unaudited): | |||||||||||||||||
Money market funds | $ | 29,086,778 | $ | 29,086,778 | $ | — | $ | — | |||||||||
December 31, 2014: | |||||||||||||||||
Money market funds | $ | 33,999,563 | $ | 33,999,563 | $ | — | $ | — |
5_Selected_Balance_Sheet_Detai1
5. Selected Balance Sheet Detail (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Organization And Business Operations | |||||||||
Summary of inventory | Inventories consisted of the following at: | ||||||||
March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
(unaudited) | |||||||||
Raw materials | $ | 565,908 | $ | 610,434 | |||||
Work in process | 3,743,981 | 4,729,235 | |||||||
Finished goods | 2,373,867 | 1,748,966 | |||||||
6,683,756 | 7,088,635 | ||||||||
Allowance for excess and obsolescence | |||||||||
(282,722 | ) | (1,366,644 | ) | ||||||
$ | 6,401,034 | $ | 5,721,991 | ||||||
Summary of property and equipment | Property and equipment consisted of the following at: | ||||||||
March 31, | December 31, | ||||||||
2015 | 2014 | ||||||||
(unaudited) | |||||||||
Laboratory equipment | $ | 3,301,653 | $ | 3,285,842 | |||||
Computer hardware and software | 1,760,823 | 1,700,612 | |||||||
Leasehold improvements | 364,868 | 362,408 | |||||||
Furniture, fixtures and equipment | 135,347 | 135,303 | |||||||
5,562,691 | 5,484,165 | ||||||||
Accumulated depreciation and amortization | (4,561,469 | ) | (4,479,519 | ) | |||||
Property and equipment, net | $ | 1,001,222 | $ | 1,004,646 |
7_Equity_Securities_Tables
7. Equity Securities (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Organization And Business Operations | |||||||||
Summary of potentially dilutive securities | At March 31, 2015 and 2014 (unaudited), the Company excluded the outstanding securities summarized below, which entitle the holders thereof to ultimately acquire shares of common stock, from its calculations of earnings per share and weighted average shares outstanding, as their effect would have been anti-dilutive. | ||||||||
March 31, | March 31, | ||||||||
2015 | 2014 | ||||||||
Long Term Investor Rights | 813,429 | – | |||||||
Underwriter’s warrants | 805,000 | – | |||||||
Convertible notes payable | – | 6,357,832 | |||||||
Warrants associated with convertible debt | 1,099,930 | 1,180,766 | |||||||
Common stock options | 3,227,797 | 2,277,290 | |||||||
Total | 5,946,156 | 9,815,888 |
8_Warrants_Tables
8. Warrants (Tables) | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Organization And Business Operations | |||||||||||||
Summary of warrant activity | A summary of warrant activity for the three months ended March 31, 2015 (unaudited) is presented below. | ||||||||||||
Weighted Average | |||||||||||||
Weighted | Remaining | ||||||||||||
Number of | Average | Contractual | |||||||||||
Shares | Exercise Price | Life (in Years) | |||||||||||
Warrants outstanding at December 31, 2014 | 1,983,707 | $ | 5 | 3.75 | |||||||||
Granted | — | ||||||||||||
Exercised | (78,777 | ) | $ | 5 | |||||||||
Forfeited or expired | — | ||||||||||||
Warrants outstanding at March 31, 2015 | 1,904,930 | $ | 7.64 | 3.53 | |||||||||
Warrants exercisable at March 31, 2015 | 1,099,930 | $ | 5 | 2.72 |
9_StockBased_Compensation_Tabl
9. Stock-Based Compensation (Tables) | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Organization And Business Operations | |||||||||||||
Summary of stock option activity | A summary of stock option activity for the three months ended March 31, 2015 is presented below. | ||||||||||||
Weighted Average | |||||||||||||
Weighted | Remaining | ||||||||||||
Number of | Average | Contractual | |||||||||||
Shares | Exercise Price | Life (in Years) | |||||||||||
Options outstanding at December 31, 2014 | 3,251,627 | $ | 6.07 | 5.6 | |||||||||
Granted | 121,848 | $ | 13.11 | ||||||||||
Exercised | (59,063 | ) | $ | 4.75 | |||||||||
Forfeited or expired | (86,615 | ) | $ | 4.56 | |||||||||
Options outstanding at March 31, 2015 | 3,227,797 | $ | 6.4 | ||||||||||
Options exercisable at March 31, 2015 | 1,807,879 | $ | 4.9 | 3.11 | |||||||||
Summary of stock-based compensation | The total stock-based compensation recognized for stock-based awards granted under the 2003 Plan and the 2011 Plan in the condensed consolidated statements of operations for the three months ended March 31, 2015 and 2014 (unaudited) is as follows: | ||||||||||||
2015 | 2014 | ||||||||||||
Cost of sales | $ | 99,436 | $ | 25,056 | |||||||||
Research and development | 79,548 | 114,334 | |||||||||||
Clinical and regulatory | 69,605 | 13,572 | |||||||||||
Selling and marketing | 89,492 | 16,704 | |||||||||||
General and administrative | 159,098 | 426,145 | |||||||||||
Total | $ | 497,179 | $ | 595,811 |
1_Organization_and_Business_Op1
1. Organization and Business Operations (Details Narrative) | Mar. 31, 2015 |
Organization And Business Operations Details Narrative | |
Owenership by the Company | 99.50% |
Owenership by an executive | 0.50% |
3_Concentration_of_Risk_Detail
3. Concentration of Risk (Details) (Sales Revenue, Net [Member]) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Customer 1 [Member] | ||
Percentage | 23.00% | 0.00% |
Customer 2 [Member] | ||
Percentage | 15.00% | 0.00% |
Customer 3 [Member] | ||
Percentage | 14.00% | 0.00% |
Customer 4 [Member] | ||
Percentage | 10.00% | 0.00% |
Customer 5 [Member] | ||
Percentage | 0.00% | 70.00% |
Customer 6 [Member] | ||
Percentage | 5.00% | 17.00% |
Customer 7 [Member] | ||
Percentage | 0.00% | 13.00% |
3_Concentration_of_Risk_Detail1
3. Concentration of Risk (Details 1) (Accounts Receivable [Member]) | Mar. 31, 2015 | Dec. 31, 2014 |
Customer 1 [Member] | ||
Percentage | 46.00% | 32.00% |
Customer 2 [Member] | ||
Percentage | 13.00% | 1.00% |
Customer 3 [Member] | ||
Percentage | 4.00% | 20.00% |
Customer 4 [Member] | ||
Percentage | 2.00% | 13.00% |
Customer 5 [Member] | ||
Percentage | 0.00% | 13.00% |
3_Concentration_of_Risk_Detail2
3. Concentration of Risk (Details 2) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Italy [Member] | ||
Regional revenue by customer location | 36.00% | 0.00% |
France [Member] | ||
Regional revenue by customer location | 30.00% | 0.00% |
United States [Member] | ||
Regional revenue by customer location | 18.00% | 70.00% |
Germany [Member] | ||
Regional revenue by customer location | 9.00% | 29.00% |
3_Concentration_of_Risk_Detail3
3. Concentration of Risk (Details Narrative) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Assets | $39,456,999 | $43,069,444 |
Switzerland [Member] | ||
Assets | $2,991,000 | $2,091,000 |
4_Money_Market_Funds_Details
4. Money Market Funds (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Money market funds | $29,086,778 | $33,999,563 |
Level 1 [Member] | ||
Money market funds | 29,086,778 | 33,999,563 |
Level 2 [Member] | ||
Money market funds | ||
Level 3 [Member] | ||
Money market funds |
5_Selected_Balance_Sheet_Detai2
5. Selected Balance Sheet Detail (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Selected Balance Sheet Detail Details | ||
Raw materials | $565,908 | $610,434 |
Work in process | 3,743,981 | 4,729,235 |
Finished goods | 2,373,867 | 1,748,966 |
Inventory, Gross | 6,683,756 | 7,088,635 |
Allowance for excess and obsolescence | -282,722 | -1,366,644 |
Inventories, net | $6,401,034 | $5,721,991 |
5_Selected_Balance_Sheet_Detai3
5. Selected Balance Sheet Detail (Detail1) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Property, Plant and Equipment, Gross | $5,562,691 | $5,484,165 |
Accumulated depreciation and amortization | -4,561,469 | -4,479,519 |
Property and equipment, net | 1,001,222 | 1,004,646 |
Laboratory equipment [Member] | ||
Property, Plant and Equipment, Gross | 3,301,653 | 3,285,842 |
Computer hardware and software [Member] | ||
Property, Plant and Equipment, Gross | 1,760,823 | 1,700,612 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment, Gross | 364,868 | 362,408 |
Furniture, fixtures and equipment [Member] | ||
Property, Plant and Equipment, Gross | $135,347 | $135,303 |
6_Long_Term_Investor_Right_Det
6. Long Term Investor Right (Details Narrative) (USD $) | Mar. 31, 2015 |
Long Term Investor Right Details Narrative | |
Shares of common stock acquired perfected and maintained by investors since IPO | 1,469,600 |
Highest average closing price on NASDAQ during any consecutive 90 day | $11.59 |
Actual number of common shares issuable pursuant to Long Term Investor Right, maximum | 813,429 |
Actual number of common shares issuable pursuant to Long Term Investor Right, minimum | 0 |
7_Equity_Securities_Details
7. Equity Securities (Details) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Total | 5,946,156 | 9,815,888 |
Long Term Investor Rights [Member] | ||
Total | 813,429 | |
Underwriter's Warrants [Member] | ||
Total | 805,000 | |
Convertible Notes Payable [Member] | ||
Total | 6,357,832 | |
Warrants Associated With Convertible Debt [Member] | ||
Total | 1,099,930 | 1,180,766 |
Common Stock Options [Member] | ||
Total | 3,227,797 | 2,277,290 |
7_Equity_Securities_Details_Na
7. Equity Securities (Details Narrative) (USD $) | Mar. 31, 2015 |
Equity Securities Details Narrative | |
Accrued services, Value | $237,500 |
Accrued services, Shares | 18,526 |
Accrued services, Closing price per share | $12.82 |
8_Warrants_Details
8. Warrants (Details) (USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2015 | Dec. 31, 2014 | |
Number of Shares | ||
Options outstanding at December 31, 2014 | 3,251,627 | |
Granted | 121,848 | |
Exercised | -59,063 | |
Forfeited or expired | -86,615 | |
Options outstanding at March 31, 2015 | 3,227,797 | |
Options exercisable at March 31, 2015 | 1,807,879 | |
Weighted Average Exercise Price | ||
Options outstanding at December 31, 2014 | $6.07 | |
Granted | $13.11 | |
Exercised | $4.75 | |
Forfeited or expired | $4.56 | |
Options outstanding at March 31, 2015 | $6.40 | |
Options exercisable at March 31, 2015 | $4.90 | |
Weighted Average Remaining Contractual Life (in Years) | ||
Options outstanding | 5 years 7 months 6 days | |
Options exercisable at March 31, 2015 | 3 years 1 month 10 days | |
Warrant [Member] | ||
Number of Shares | ||
Options outstanding at December 31, 2014 | 1,983,707 | |
Granted | ||
Exercised | -78,777 | |
Forfeited or expired | ||
Options outstanding at March 31, 2015 | 1,904,930 | 1,983,707 |
Options exercisable at March 31, 2015 | 1,099,930 | |
Weighted Average Exercise Price | ||
Options outstanding at December 31, 2014 | $5 | |
Granted | ||
Exercised | $5 | |
Forfeited or expired | ||
Options outstanding at March 31, 2015 | $7.64 | $5 |
Options exercisable at March 31, 2015 | $5 | |
Weighted Average Remaining Contractual Life (in Years) | ||
Options outstanding | 3 years 6 months 11 days | 3 years 9 months |
Options exercisable at March 31, 2015 | 2 years 8 months 19 days |
8_Warrants_Details_Narrative
8. Warrants (Details Narrative) (USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Intrinsic value of warrants outstanding | $14,300,000 |
Warrants exercised, shares | 59,063 |
Warrant [Member] | |
Intrinsic value of warrants outstanding | 8,601,000 |
Warrants exercised, shares | 78,777 |
Warrants exercised, Amount | $393,885 |
9_StockBased_Compensation_Deta
9. Stock-Based Compensation (Details) (USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Number of Shares | |
Options outstanding at December 31, 2014 | 3,251,627 |
Granted | 121,848 |
Exercised | -59,063 |
Forfeited or expired | -86,615 |
Options outstanding at March 31, 2015 | 3,227,797 |
Options exercisable at March 31, 2015 | 1,807,879 |
Weighted Average Exercise Price | |
Options outstanding at December 31, 2014 | $6.07 |
Granted | $13.11 |
Exercised | $4.75 |
Forfeited or expired | $4.56 |
Options outstanding at March 31, 2015 | $6.40 |
Options exercisable at March 31, 2015 | $4.90 |
Weighted Average Remaining Contractual Life (in Years) | |
Options outstanding at December 31, 2014 | 5 years 7 months 6 days |
Options exercisable at March 31, 2015 | 3 years 1 month 10 days |
9_StockBased_Compensation_Deta1
9. Stock-Based Compensation (Details 1) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Stock-based compensation, Total | $497,179 | $595,811 |
Cost of Sales [Member] | ||
Stock-based compensation, Total | 99,436 | 25,056 |
Research and Development [Member] | ||
Stock-based compensation, Total | 79,548 | 114,334 |
Clinical and Regulatory [Member] | ||
Stock-based compensation, Total | 69,605 | 13,572 |
Selling and Marketing [Member] | ||
Stock-based compensation, Total | 89,492 | 16,704 |
General and Administrative [Member] | ||
Stock-based compensation, Total | $159,098 | $426,145 |
9_StockBased_Compensation_Deta2
9. Stock-Based Compensation (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | Jun. 30, 2011 | |
Authorized shares | 200,000,000 | 200,000,000 | |
Estimated aggregate intrinsic value of stock options exercisabl | $14,300,000 | ||
Unrecognized compensation cost related to outstanding stock options | 6,200,000 | ||
Weighted average period, stock options | 3 years 6 months 29 days | ||
Exercised stock options on cashless basis to purchase, shares | 59,063 | ||
Granted stock options to purchase | 121,848 | ||
Options vested perioid | either four or five years | ||
Expected term | 6 years 6 months | ||
volatility | 50.30% | ||
Risk-free interest rate | 2.10% | ||
Expected dividend rate | 0.00% | ||
Share-based Compensation Arrangement by Share-based Payment Award, Description | The Board of Directors authorized, subject to shareholder approval, (1) an increase of 2,000,000 shares in the number of shares available for option awards under the 2011 Equity Incentive Plan, and (2) 250,000 shares for a proposed Employee Stock Purchase Plan, with annual increases of available shares equal to the lessor of (i) 1% of outstanding shares or (ii) 100,000 shares. | ||
Chief Executive Officer [Member] | |||
Exercised stock options on cashless basis to purchase, shares | 59,063 | 27,344 | |
Exercise price,stock option | $4.75 | $10.26 | |
Surrendered stock options to purchase | 12,055 | ||
Satisfy Income and payroll tax | $123,684 | ||
Employees [Member] | |||
Granted stock options to purchase | 121,848 | ||
Exercise ranges of stock options, Minimum | $13.09 | ||
Exercise ranges of stock options, Maximum | $13.90 | ||
2003 Plan [Member] | |||
Authorized shares | 4,000,000 |