Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 10, 2020 | |
Document And Entity Information | ||
Entity Registrant Name | ClearPoint Neuro, Inc. | |
Entity Central Index Key | 0001285550 | |
Document Type | 10-Q | |
Entity File Number | 001-34822 | |
Document Period End Date | Sep. 30, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Interactive Data Current | Yes | |
Entity State of Incorporation | DE | |
Entity's Reporting Status Current | Yes | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Filer Category | Non-accelerated Filer | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 16,869,528 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 14,665,597 | $ 5,695,722 |
Accounts receivable, net | 1,449,333 | 1,089,917 |
Inventory, net | 3,534,643 | 3,240,218 |
Prepaid expenses and other current assets | 492,886 | 357,227 |
Total current assets | 20,142,459 | 10,383,084 |
Property and equipment, net | 327,055 | 447,162 |
Operating lease rights of use | 294,583 | 374,218 |
Software license inventory | 571,800 | 504,400 |
Licensing rights | 487,640 | 135,000 |
Other assets | 23,380 | 82,573 |
Total assets | 21,846,917 | 11,926,437 |
Current liabilities: | ||
Accounts payable | 1,064,121 | 965,783 |
Accrued compensation | 1,210,356 | 1,408,292 |
Other accrued liabilities | 487,768 | 328,460 |
Operating lease liabilities, current portion | 108,923 | 113,520 |
Deferred product and service revenue | 767,969 | 1,016,892 |
Paycheck Protection Program loan payable, current portion | 73,985 | |
Total current liabilities | 3,713,122 | 3,832,947 |
Accrued interest | 959,659 | |
Operating lease liabilities, net of current portion | 205,468 | 276,669 |
Deferred product and service revenue, net of current portion | 108,816 | 197,862 |
Paycheck Protection Program loan payable, net of current portion | 822,015 | |
Total liabilities | 21,697,817 | 7,339,720 |
Stockholders' equity: | ||
Preferred stock, $0.01 par value; 25,000,000 shares authorized; none issued and outstanding at September 30, 2020 and December 31, 2019 | ||
Common stock, $0.01 par value; 200,000,000 shares authorized; 15,881,404 shares issued and outstanding at September 30, 2020; and 15,235,308 issued and outstanding at December 31, 2019 | 158,814 | 152,353 |
Additional paid-in capital | 117,930,011 | 117,173,984 |
Accumulated deficit | (117,939,725) | (112,739,620) |
Total stockholders' equity | 149,100 | 4,586,717 |
Total liabilities and stockholders' equity | 21,846,917 | 11,926,437 |
2010 Senior Secured Convertible Notes Payable Net | ||
Current liabilities: | ||
Secured notes payable, net | 16,848,396 | |
2014 Junior Secured Notes Payable Net | ||
Current liabilities: | ||
Secured notes payable, net | $ 2,072,583 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized | 25,000,000 | 25,000,000 |
Preferred stock, issued | ||
Preferred stock, outstanding | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized | 200,000,000 | 200,000,000 |
Common stock, issued | 15,881,404 | 15,235,308 |
Common stock, outstanding | 15,881,404 | 15,235,308 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenues: | ||||
Total revenues | $ 3,519,187 | $ 2,927,466 | $ 9,112,563 | $ 8,006,382 |
Cost of revenues | 718,787 | 983,042 | 2,276,927 | 2,899,837 |
Research and development costs | 1,209,048 | 761,881 | 2,860,877 | 2,044,224 |
Sales and marketing expenses | 1,492,948 | 1,063,143 | 3,915,920 | 3,246,912 |
General and administrative expenses | 1,369,900 | 1,029,929 | 4,013,493 | 2,991,305 |
Operating loss | (1,271,496) | (910,529) | (3,954,654) | (3,175,896) |
Other income (expense): | ||||
Other income (expense), net | (11,491) | 728 | (5,360) | 8,100 |
Interest expense, net | (201,245) | (213,167) | (1,240,091) | (726,292) |
Net loss | $ (1,484,232) | $ (1,122,968) | $ (5,200,105) | $ (3,894,088) |
Net loss per share attributable to common stockholders: | ||||
Basic and diluted (in dollars per share) | $ (0.09) | $ (0.08) | $ (0.33) | $ (0.31) |
Weighted average shares outstanding: | ||||
Basic and diluted (in shares) | 15,724,401 | 14,053,508 | 15,556,231 | 12,477,790 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Balances at beginning at Dec. 31, 2018 | $ 110,183 | $ 108,600,405 | $ (107,199,586) | $ 1,511,002 |
Balances at beginning (in shares) at Dec. 31, 2018 | 11,018,364 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Cumulative adjustment for adoption of new accounting standard | (244) | (244) | ||
Share-based compensation | $ 285 | 152,301 | 152,586 | |
Share-based compensation (in shares) | 28,462 | |||
Warrant exercises | $ 204 | (204) | ||
Warrant exercises (in shares) | 20,381 | |||
Net loss for the period | (1,220,725) | (1,220,725) | ||
Balances at ending at Mar. 31, 2019 | $ 110,672 | 108,752,502 | (108,420,555) | 442,619 |
Balance at ending (in shares) at Mar. 31, 2019 | 11,067,207 | |||
Balances at beginning at Dec. 31, 2018 | $ 110,183 | 108,600,405 | (107,199,586) | 1,511,002 |
Balances at beginning (in shares) at Dec. 31, 2018 | 11,018,364 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net loss for the period | (3,894,088) | |||
Balances at ending at Sep. 30, 2019 | $ 149,918 | 116,951,956 | (111,093,918) | 6,007,956 |
Balance at ending (in shares) at Sep. 30, 2019 | 14,991,892 | |||
Balances at beginning at Mar. 31, 2019 | $ 110,672 | 108,752,502 | (108,420,555) | 442,619 |
Balances at beginning (in shares) at Mar. 31, 2019 | 11,067,207 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Share-based compensation | $ 32 | 203,962 | 203,994 | |
Share-based compensation (in shares) | 3,251 | |||
Warrant exercises | $ 1,894 | 381,182 | 383,076 | |
Warrant exercises (in shares) | 189,407 | |||
May 2019 private placement, net of offering costs | $ 24,265 | 7,403,583 | 7,427,848 | |
May 2019 private placement, net of offering costs (in shares) | 2,426,455 | |||
Net loss for the period | (1,550,395) | (1,550,395) | ||
Balances at ending at Jun. 30, 2019 | $ 136,863 | 116,741,229 | (109,970,950) | 6,907,142 |
Balance at ending (in shares) at Jun. 30, 2019 | 13,686,320 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Share-based compensation | $ 1,571 | 217,861 | 219,432 | |
Share-based compensation (in shares) | 157,169 | |||
Warrant exercises | $ 11,459 | (11,459) | ||
Warrant exercises (in shares) | 1,145,903 | |||
Stock option exercise | $ 25 | 4,325 | 4,350 | |
Stock option exercise (in shares) | 2,500 | |||
Net loss for the period | (1,122,968) | (1,122,968) | ||
Balances at ending at Sep. 30, 2019 | $ 149,918 | 116,951,956 | (111,093,918) | 6,007,956 |
Balance at ending (in shares) at Sep. 30, 2019 | 14,991,892 | |||
Balances at beginning at Dec. 31, 2019 | $ 152,353 | 117,173,984 | (112,739,620) | 4,586,717 |
Balances at beginning (in shares) at Dec. 31, 2019 | 15,235,308 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Share-based compensation | $ 97 | 227,871 | 227,968 | |
Share-based compensation (in shares) | 9,696 | |||
Warrant exercises | $ 2,621 | (2,621) | ||
Warrant exercises (in shares) | 262,145 | |||
Net loss for the period | (2,054,825) | (2,054,825) | ||
Balances at ending at Mar. 31, 2020 | $ 155,071 | 117,399,234 | (114,794,445) | 2,759,860 |
Balance at ending (in shares) at Mar. 31, 2020 | 15,507,149 | |||
Balances at beginning at Dec. 31, 2019 | $ 152,353 | 117,173,984 | (112,739,620) | $ 4,586,717 |
Balances at beginning (in shares) at Dec. 31, 2019 | 15,235,308 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock option exercise (in shares) | 833 | |||
Net loss for the period | $ (5,200,105) | |||
Balances at ending at Sep. 30, 2020 | $ 158,814 | 117,930,011 | (117,939,725) | 149,100 |
Balance at ending (in shares) at Sep. 30, 2020 | 15,881,404 | |||
Balances at beginning at Mar. 31, 2020 | $ 155,071 | 117,399,234 | (114,794,445) | 2,759,860 |
Balances at beginning (in shares) at Mar. 31, 2020 | 15,507,149 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Share-based compensation | $ 56 | 240,961 | 241,017 | |
Share-based compensation (in shares) | 5,538 | |||
Net loss for the period | (1,661,048) | (1,661,048) | ||
Balances at ending at Jun. 30, 2020 | $ 155,127 | 117,640,195 | (116,455,493) | 1,339,829 |
Balance at ending (in shares) at Jun. 30, 2020 | 15,512,687 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Share-based compensation | $ 2,486 | 291,017 | 293,503 | |
Share-based compensation (in shares) | 248,637 | |||
Warrant exercises | $ 1,201 | (1,201) | ||
Warrant exercises (in shares) | 120,080 | |||
Net loss for the period | (1,484,232) | (1,484,232) | ||
Balances at ending at Sep. 30, 2020 | $ 158,814 | $ 117,930,011 | $ (117,939,725) | $ 149,100 |
Balance at ending (in shares) at Sep. 30, 2020 | 15,881,404 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity (Parenthetical) | 3 Months Ended |
Jun. 30, 2019USD ($) | |
Statement of Stockholders' Equity [Abstract] | |
Private placement offering costs | $ 94,162 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (5,200,105) | $ (3,894,088) |
Adjustments to reconcile net loss to net cash flows from operating activities: | ||
Depreciation and amortization | 170,057 | 105,310 |
Share-based compensation | 762,488 | 576,012 |
Amortization of debt issuance costs and original issue discounts | 855,598 | 523,969 |
Amortization of lease right of use, net of accretion in lease liabilities | 74,734 | 76,871 |
Increase (decrease) in cash resulting from changes in: | ||
Accounts receivable | (359,416) | (895,189) |
Inventory, net | (323,075) | (908,413) |
Prepaid expenses and other current assets | (135,658) | (150,589) |
Other assets | 59,193 | 11,899 |
Accounts payable and accrued expenses | 59,711 | 1,506,279 |
Accrued interest | (959,661) | |
Lease liabilities | (70,896) | (82,448) |
Deferred revenue | (337,969) | 746,682 |
Net cash flows from operating activities | (5,404,999) | (2,383,705) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (10,190) | |
Acquisition of licensing rights | (441,341) | (150,000) |
Net cash flows from investing activities | (441,341) | (160,190) |
Cash flows from financing activities: | ||
Proceeds from issuance of 2020 senior secured convertible notes, net of financing costs and discount | 16,757,871 | |
Proceeds from issuance of Paycheck Protection Program loan | 896,000 | |
Proceeds from private placement of common stock, net of offering costs | 7,427,848 | |
Proceeds from stock option warrant exercises | 387,426 | |
Repayment of notes payable | (2,837,656) | (2,137,344) |
Net cash flows from financing activities | 14,816,215 | 5,677,930 |
Net change in cash and cash equivalents | 8,969,875 | 3,134,035 |
Cash and cash equivalents, beginning of period | 5,695,722 | 3,101,133 |
Cash and cash equivalents, end of period | 14,665,597 | 6,235,168 |
Cash paid for: | ||
Interest | 1,399,182 | 82,621 |
Non-Cash Transactions | ||
Operating lease right-of-use assets | 480,395 | |
Operating lease liabilities | 480,395 | |
Aggregate net book value of reusable components transferred from inventory to loaned systems | $ 38,751 | $ 191,647 |
Description of the Business and
Description of the Business and Financial Condition | 9 Months Ended |
Sep. 30, 2020 | |
Description Of Business And Liquidity | |
Description of the Business and Financial Condition | 1. Description of the Business and Financial Condition ClearPoint Neuro, Inc. (the “Company”) is a medical device company focused on the development and commercialization of technology that enables physicians to see inside the brain and heart using direct, intra-procedural magnetic resonance imaging (“MRI”) guidance while performing minimally invasive surgical procedures. The Company’s ClearPoint ® ® On February 12, 2020, the Company changed its corporate name from MRI Interventions, Inc. to ClearPoint Neuro, Inc., pursuant to a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation filed with the Secretary of State of the State of Delaware. In addition, effective as of February 12, 2020, the Company’s Board of Directors adopted the Second and Amended Restated Bylaws, to reflect the name change of the Company. No other changes were made to the Company’s certificate of incorporation or bylaws. In connection with the Company’s name change, effective as of the opening of trading on February 12, 2020, the Company’s shares of common stock commenced trading on the Nasdaq Capital Market under the symbol “CLPT”. COVID-19 On March 11, 2020, the World Health Organization characterized the spread of a novel strain of coronavirus (“COVID-19”) as a global pandemic, and on March 13, 2020, the President of the United States proclaimed that the COVID-19 outbreak in the United States constituted a national emergency. Continued widespread infection in the United States is a possibility. Extraordinary actions have been taken by federal, state and local governmental authorities to combat the spread of COVID-19, including issuance of “stay-at-home” directives and similar mandates for many individuals to substantially restrict daily activities and for many businesses to curtail or cease normal operations. These measures, while intended to protect human life, have led to reduced economic activity, including the postponement or cancellation of elective surgical procedures, which historically have represented approximately 80% of the number of surgical procedures using the Company’s ClearPoint system. Furthermore, the recessionary conditions on the financial markets and global economy caused by the COVID-19 pandemic could have a material adverse effect on the Company’s business, as hospitals postpone or reduce capital purchases and overall spending. Although much of the United States economy has reopened, the COVID-19 pandemic is intensifying in most areas of the country, and many public health experts anticipate a COVID-19 surge in the coming weeks and months of fall and winter. Reinstatement of directives and mandates requiring businesses to again curtail or cease normal operations, including the postponement or cancellation of elective surgeries, remains a possibility, just as some jurisdictions rolled back reopening plans in the summer of 2020. The continuing uncertainty as to whether the federal government will address the resulting fiscal condition in both the near and long-term with measures such as additional fiscal stimulus, as well as other geopolitical issues relating to the global economic slowdown, has increased domestic and global instability. The rapid development and fluidity of the situation precludes any prediction as to the ultimate impact COVID-19 will have on the Company’s business, financial condition, results of operation and cash flows, which will depend largely on future developments directly or indirectly relating to the duration and scope of the COVID-19 outbreak in the United States. Liquidity The Company has incurred net losses since its inception, which has resulted in a cumulative deficit at September 30, 2020 of $118 million. In addition, the Company’s use of cash from operations amounted to $5.4 million for the nine months ended September 30, 2020 and $2.8 million for the year ended December 31, 2019. Since its inception, the Company has financed its operations principally from the sale of equity securities, the issuance of notes payable, product and service contracts and license arrangements. As discussed in Note 7, in May 2019, the Company entered into a Securities Purchase Agreement with certain accredited investors under which such investors purchased 2,426,455 shares of the Company’s common stock at $3.10 per share (the “2019 PIPE), resulting in proceeds of approximately $7.5 million, before deducting offering expenses aggregating approximately $94,000. In addition, as discussed in Note 5, in January 2020, the Company entered into a Securities Purchase Agreement with two investors under which the Company issued to such investors an aggregate principal amount of $17.5 million of floating rate secured convertible notes (the “2020 Secured Notes”), resulting in proceeds, net of financing costs paid and payable, and a commitment fee paid to one of the investors, of approximately $16.8 million. From the net proceeds received from the issuance of the 2020 Secured Notes, which have a five-year term, the Company repaid and retired the 2010 Junior Secured Notes Payable (the “2010 Secured Notes”) that otherwise would have matured in October and November 2020. Also, as discussed in Note 5, in April 2020, the Company received $896,000 in proceeds through a loan funded under the Payroll Protection Program as part of the CARES Act. As of September 30, 2020, the Company has retained and expanded its employee base and has used the funds for the purposes described under the terms of the loan. As a result, the Company has submitted an application requesting that all of the loan be forgiven. However, there is no assurance that the Company will be successful in obtaining such forgiveness. Based on the foregoing, in management’s opinion, cash and cash equivalent balances at September 30, 2020, when combined with the proceeds from issuance of the 2020 Secured Notes (after repayment of the 2010 Secured Notes) and receipt of the proceeds from the loan funded under the Payroll Protection Program, are sufficient to support the Company’s operations and meet its obligations for at least the next twelve months. |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | 2. Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation and Use of Estimates In the opinion of management, the accompanying unaudited condensed consolidated financial statements have been prepared on a basis consistent with the Company’s December 31, 2019 audited consolidated financial statements, and include all adjustments, consisting of only normal recurring adjustments, necessary to fairly state the information set forth therein. These condensed consolidated financial statements have been prepared in accordance with United States Securities and Exchange Commission (“SEC”) rules for interim financial information, and, therefore, omit certain information and footnote disclosures necessary to present such statements in accordance with generally accepted accounting principles in the U.S. (“GAAP”). The preparation of these condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and the related disclosures at the date of the financial statements and during the reporting period. Actual results could materially differ from these estimates. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2019 Form 10-K. The accompanying condensed consolidated balance sheet as of December 31, 2019 has been derived from the audited consolidated financial statements at that date but does not include all information and footnotes required by GAAP for a complete set of financial statements. The results of operations for the three and nine months ended September 30, 2020 may not be indicative of the results to be expected for the entire year or any future periods. Inventory Inventory is carried at the lower of cost (first-in, first-out method) or net realizable value. Items in inventory relate predominantly to the Company’s ClearPoint system. Software license inventory related to ClearPoint systems undergoing on-site customer evaluation is included in inventory in the accompanying condensed consolidated balance sheets. All other software license inventory is classified as a non-current asset. The Company periodically reviews its inventory for obsolete items and provides a reserve upon identification of potential obsolete items. Intangible Assets In 2020 and 2019, the Company entered into certain license agreements that provide rights to the Company for the development and commercialization of products in the functional neurosurgery field. Under the terms of those certain license agreements, the Company paid an aggregate $591,341 to the licensors upon execution of the license agreements for access to the underlying technologies and will make future payments based on the achievement of regulatory and commercialization milestones as defined in the license agreements. In conformity with Accounting Standards Codification Section 350, “Intangibles – Goodwill and Other,” the Company amortizes its investment in the license rights described above over an expected useful life of five years. Revenue Recognition The Company’s revenues are comprised primarily of: (1) product revenues resulting from the sale of functional neurosurgery navigation, therapy, and biologics and drug delivery disposable products; (2) product revenues resulting from the sale of ClearPoint capital equipment and software; (3) revenues resulting from the service, installation, training and shipping related to ClearPoint capital equipment and software; and (4) clinical case support revenues in connection with customer-sponsored clinical trials. The Company recognizes revenue when control of the Company’s products and services is transferred to its customers in an amount that reflects the consideration the Company expects to receive from its customers in exchange for those products and services, in a process that involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. The Company considers a performance obligation satisfied once it has transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The Company recognizes revenue for satisfied performance obligations only when it determines there are no uncertainties regarding payment terms or transfer of control. Lines of Business; Timing of Revenue Recognition · Functional neurosurgery navigation product, biologics and drug delivery systems product, and therapy product sales: · Capital equipment and software sales o Capital equipment and software sales preceded by evaluation periods: o Capital equipment and software sales not preceded by evaluation periods: For both types of capital equipment and software sales described above, the Company’s determination of the point in time at which to recognize revenue represents that point at which the customer has legal title, physical possession, and the risks and rewards of ownership, and the Company has a present right to payment. · Therapy services: · Biologics and drug delivery services: o Outsourced technical clinical support of cases performed pursuant to customer-sponsored clinical trials: § Service Access Fees: § Procedure-Based Fees: · Services related to sales of capital equipment and software sales: · Capital equipment-related services: o Equipment service: o Installation, training and shipping: The Company operates in one industry segment, and substantially all its sales are to U.S.-based customers. Payment terms under contracts with customers generally are in a range of 30-60 days after the customers’ receipt of the Company’s invoices. The Company provides a one-year warranty on its functional neurosurgery navigation products, biologics and drug delivery products, and capital equipment and software products that are not otherwise covered by a third-party manufacturer’s warranty. The Company’s contracts with customers do not provide for a right of return other than for product defects. See Note 3 for additional information regarding revenue recognition. Net Loss Per Share The Company computes net loss per share using the weighted-average number of common shares outstanding during the period. Basic and diluted net loss per share are the same because the conversion, exercise or issuance of all potential common stock equivalents, which comprise the entire amount of the Company’s outstanding common stock options and warrants, as described in Note 7, and the potential conversion of the 2020 Secured Notes, as described in Note 5, would be anti-dilutive. Concentration Risks and Other Risks and Uncertainties Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company holds its cash and cash equivalents on deposit with financial institutions in the U.S. insured by the Federal Deposit Insurance Corporation. At September 30, 2020, the Company had approximately $7.9 million in bank balances that were in excess of the insured limits. Information with respect to accounts receivable from those customers who comprised more than 10% of accounts receivable at September 30, 2020 and December 31, 2019 is as follows: September 30, 2020 December 31, 2019 Customer – 1 12% 12% Information with respect to customers that accounted for sales in excess of 10% of total sales in the three-month periods ended September 30, 2020 and 2019 is as follows: September 30, 2020 2019 Customer – 1 15% — Information with respect to customers that accounted for sales in excess of 10% of total sales in the nine-month periods ended September 30, 2020 and 2019 is as follows: September 30, 2020 2019 Customer – 1 18% — Prior to granting credit, the Company performs credit evaluations of its customers’ financial condition, and generally does not require collateral from its customers. The Company will provide an allowance for doubtful accounts when collections become doubtful. The allowance for doubtful accounts at September 30, 2020 and December 31, 2019 was approximately $43,000 and $29,000, respectively. The Company is subject to risks common to emerging companies in the medical device industry, including, but not limited to: new technological innovations; acceptance and competitiveness of its products; dependence on key personnel; dependence on key suppliers; changes in general economic conditions and interest rates; protection of proprietary technology; compliance with changing government regulations; uncertainty of widespread market acceptance of products; access to credit for capital purchases by customers; and product liability claims. Certain components used in manufacturing have relatively few alternative sources of supply and establishing additional or replacement suppliers for such components cannot be accomplished quickly. The inability of any of these suppliers to fulfill the Company’s supply requirements may negatively impact future operating results. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2020 | |
Revenue Recognition [Abstract] | |
Revenue Recognition | 3. Revenue Recognition Revenue by Service Line Three Months Ended September 30, 2020 2019 Functional neurosurgery navigation Disposable products $ 1,840,060 $ 1,854,251 Therapy Disposable products — 64,095 Services — 50,000 Subtotal – therapy revenue — 114,095 Biologics and drug delivery Disposable products 419,946 491,257 Services 1,054,622 72,500 Subtotal – biologics and drug delivery revenue 1,474,568 563,757 Capital equipment and software Systems and software products 73,544 184,825 Services 131,015 210,538 Subtotal – capital equipment and software revenue 204,559 395,363 Total revenue $ 3,519,187 $ 2,927,466 Nine Months Ended September 30, 2020 2019 Functional neurosurgery navigation Disposable products $ 4,573,484 $ 5,212,460 Therapy Disposable products 78,800 81,925 Services 25,000 200,000 Subtotal – therapy revenue 103,800 281,925 Biologics and drug delivery Disposable products 1,000,276 957,673 Services 2,646,050 338,112 Subtotal – biologics and drug delivery revenue 3,646,326 1,295,785 Capital equipment and software Systems and software products 377,445 700,517 Services 411,508 515,695 Subtotal – capital equipment and software revenue 788,953 1,216,212 Total revenue $ 9,112,563 $ 8,006,382 Contract Balances · Contract assets · Contract liabilities – During the three and nine months ended September 30, 2020, the Company recognized capital equipment and software-related service revenue of approximately $69,000 and $283,000, respectively, which was previously included in deferred revenue in the accompanying condensed consolidated balance sheet at December 31, 2019. In September 2019, the Company entered into a Development Services Agreement with a customer under which the Company was entitled to bill the customer for an upfront payment of $127,600, of which approximately $83,000 and $102,000 are included in deferred revenue in the accompanying September 30, 2020 and December 31, 2019 condensed consolidated balance sheets, respectively. Also, in September 2019, the Company entered into a Letter of Intent, followed by a related Statement of Work (together with the Letter of Intent, the “Project Documents”) in November 2019, with a customer which is a stockholder and whose then Chief Operating Officer was a member of the Company’s Board of Directors (and was subsequently replaced with the customer’s Chief Development Officer), to commence a product development project. Under the terms of the Project Documents, the Company was entitled to bill the customer for: (a) an upfront, nonrefundable payment of $500,000; and (b) quarterly service fees of $500,000 commencing in the fourth quarter of 2019. In February 2020, the Company entered into a Supply Agreement and a Statement of Work (the “European SOW”) with a European affiliate of the customer. Under the terms of the European SOW, the Company was entitled to bill the customer on a quarterly basis, commencing in the first quarter of 2020, for service fees of $250,000. During the nine months ended September 30, 2020, the clinical trials contemplated by the Project Documents and the European SOW were delayed as a result of the COVID-19 pandemic. As a result, the Company agreed to reduce such quarterly service fees by an aggregate of $50,000 and $250,000 during the three and nine months ended September 30, 2020, respectively. The Company recognizes as revenue each of the upfront payments described in this paragraph in proportional relationship to the transaction prices of the performance obligations contained in the related agreements, and recognizes as revenue the quarterly service fees described in this paragraph as stand-by services beginning in the quarter such services commenced. Based on the foregoing, approximately $268,000 and $625,000 of the aggregate amount of all the payments described in this paragraph were included in deferred revenue in the accompanying condensed consolidated balance sheets at September 30, 2020 and December 31, 2019, respectively. The Company offers an upgraded version of its software at no additional charge to customers purchasing a three-year systems service agreement. The transaction prices of the software and the service agreement are determined through an allocation of the service agreement price based on the standalone prices of the software and the service agreements. The transaction price of the software is recognized as revenue upon its installation and comprised approximately $66,000 and $172,000 of unbilled accounts receivable at September 30, 2020 and December 31, 2019, respectively. Remaining Performance Obligations The Company’s contracts with customers, other than capital equipment and software-related service agreements discussed below, are predominantly of terms less than one year. Accordingly, the transaction price of remaining performance obligations related to such contracts at September 30, 2020 are not material. Revenue with respect to remaining performance obligations related to capital equipment and software-related service agreements with original terms in excess of one year and the upfront payments discussed under the heading “Contract Balances” above amounted to approximately $383,000 at September 30, 2020. The Company expects to recognize this revenue within the next three years. |
Inventory
Inventory | 9 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Inventory | 4. Inventory Inventory consists of the following as of: September 30, December 31, Raw materials and work in process $ 1,724,106 $ 1,495,190 Software licenses 227,500 332,500 Finished goods 1,583,037 1,412,528 Inventory, net, included in current assets 3,534,643 3,240,218 Software licenses – non-current 571,800 504,400 Total $ 4,106,443 $ 3,744,618 |
Notes Payable
Notes Payable | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Notes Payable | 5. Notes Payable 2020 Secured Notes On January 29, 2020 (the “Closing Date”), the Company completed a financing transaction (the “2020 Financing Transaction”) with two investors (the “2020 Convertible Noteholders”), whereby the Company issued an aggregate principal amount of $17,500,000 of the 2020 Secured Notes pursuant to a Securities Purchase Agreement (the “SPA”) dated January 11, 2020. Unless earlier converted or redeemed, the 2020 Secured Notes will mature on the fifth anniversary of the Closing Date, and bear interest at a rate equal to the sum of (i) the greater of (x) the three (3)-month London Interbank Offered Rate (“LIBOR”) and (y) two percent (2%), plus (ii) a margin of 2% on the outstanding balance of the 2020 Secured Notes, payable quarterly on the first business day of each calendar quarter. The 2020 Secured Notes may not be pre-paid without the consent of the noteholder, provided that the Company must offer to pre-pay such other noteholder on the same terms and conditions. Prior to maturity, the 2020 Convertible Noteholders will have the right to convert all or any portion of the outstanding balance of their notes, including any accrued but unpaid interest, into shares of the Company’s common stock at a conversion price of $6.00 per share, subject to certain adjustments as set forth in the 2020 Secured Notes. The 2020 Secured Notes are secured by all the assets of the Company. Pursuant to the terms and subject to the conditions of the SPA, at any time on or prior to January 11, 2022, the Company shall have the right, but not the obligation, to request that one of the 2020 Convertible Noteholders purchase an additional $5,000,000 in aggregate principal amount of Second Closing Notes (as defined in the SPA) and an additional $10,000,000 in aggregate principal amount of additional Third Closing Notes (as defined in the SPA) (together, the “Additional Convertible Notes”), provided that such 2020 Convertible Noteholder has the right, but not the obligation, to purchase such notes. As of September 30, 2020, the Company had made no requests of the 2020 Convertible Noteholder to purchase any of the Additional Convertible Notes. The terms of the Additional Convertible Notes are the same as the terms of the 2020 Secured Notes, except that: (a) the Additional Convertible Notes would bear interest at a rate equal to the sum of (i) the greater of (x) the three (3)-month LIBOR and (y) 2%, plus (ii) a margin of 7% on their outstanding balance; and (b) only 70% of the Additional Convertible Notes’ principal amount outstanding would be convertible into shares of the Company’s common stock. The carrying amount of the 2020 Secured Notes in the accompanying September 30, 2020 condensed consolidated balance sheet is presented net of: (a) financing costs, comprised of commissions and legal expenses, having an unamortized balance of $388,000; and (b) a discount, comprised of a commitment fee paid to one of the 2020 Convertible Noteholders, having an unamortized balance amounting to $263,000 at that date. The unamortized balance of the financing costs and the discount are charged to interest expense over the term of the 2020 Secured Notes under the effective interest method. An executive officer of one of the 2020 Convertible Noteholders is a member of the Company’s Board of Directors, and, pursuant to the terms of the SPA and a Board Observer Agreement entered into by the other 2020 Convertible Noteholder and the Company, the other 2020 Convertible Noteholder appointed an individual to attend and observe meetings of the Company’s Board of Directors. On January 27, 2020, as a condition to completion of the 2020 Financing Transaction, the Company entered into the Fourth Omnibus Amendment to the 2010 Secured Notes, whereby the 2010 Secured Notes were subordinated to the Company’s obligations under the terms of the 2020 Secured Notes and the Additional Convertible Notes, as applicable. During its first fiscal quarter of 2020, the Company repaid in full the aggregate outstanding principal amount of the 2010 Secured Notes, amounting to approximately $2.8 million, which, along with the Company’s payment of accrued interest amounting to approximately $920,000, resulted in the full retirement of the 2010 Secured Notes. Payroll Protection Program Loan In April 2020, the Company received $896,000 in proceeds through an unsecured loan funded under the Payroll Protection Program as part of the CARES Act, which was enacted by the U.S. Congress in response to the COVID-19 pandemic. The loan has a term through August 2023, bears interest at 1% per annum, and is payable monthly beginning in August 2021. During the period in which the loan has been outstanding, the Company has retained its employee base and has submitted an application for the loan to be forgiven in conformity with the loan’s terms. However, there is no assurance that the Company will be successful in obtaining approval for such forgiveness from the U.S. Small Business Administration. Accordingly, until and unless the Company obtains such approval, the note is presented as a note payable in conformity with its payment terms in the accompanying consolidated balance sheets. 2010 Secured Notes The indebtedness outstanding under the 2010 Secured Notes at December 31, 2019 was $2.8 million. As discussed above, during the first fiscal quarter of 2020, the Company repaid in full the aggregate outstanding principal amount of the 2010 Secured Notes, together with accrued interest. The Company’s Chairman of its Board of Directors and one of the Company’s officers held 2010 Secured Notes purchased at the date of original issuance having an aggregate principal balance of $197,000. The carrying amount of the 2010 Secured Notes in the accompanying December 31, 2019 condensed consolidated balance sheet is presented net of a discount, having an unamortized balance amounting to $765,073 at that date, arising from shares issued to the noteholders at issuance of the 2010 Secured Notes. During the nine months ended September 30, 2020, the unamortized balance of this discount was charged to interest expense upon the Company’s repayment of the 2010 Secured Notes. Scheduled Notes Payable Maturities Scheduled principal payments as of September 30, 2020 with respect to notes payable are summarized as follows: Years ending December 31, 2020 $ — 2021 185,192 2022 447,621 2023 263,187 2024 — Thereafter 17,500,000 Total scheduled principal payments 18,396,000 Less: Unamortized financing costs and discount (651,604 ) Total $ 17,744,396 |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Leases | 6. Leases The Company leases office space in Irvine, California that houses its headquarters and manufacturing facility under a non-cancellable operating lease. The lease term commenced on October 1, 2018 and expires in September 2023. The Company has the option to renew the lease for two additional periods of five years each. The Company also leases office space in Mississauga, Ontario, Canada for its software development personnel. The lease term commenced on August 1, 2018, and the Company has entered into an agreement with the landlord to terminate the lease in November 2020. Both office leases are classified as operating leases in conformity with the provisions of Topic 842. The lease costs included in general and administrative expenses were $31,252 and $27,468 for the three months ended September 30, 2020 and 2019, respectively, and were $87,690 and $82,405 for the nine months ended September 30, 2020 and 2019, respectively. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2020 | |
Stockholders' equity: | |
Stockholders' Equity | 7. Stockholders’ Equity 2019 Private Placement On May 9, 2019, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain accredited investors (collectively, the “Investors”) for the private placement of 2,426,455 shares of the Company’s common stock at $3.10 per share. The Company received aggregate gross proceeds of approximately $7.5 million, before deducting offering expenses aggregating approximately $94,000. The Purchase Agreement also contains representations and warranties by the Company and the Investors and covenants of the Company and the Investors (including indemnification from the Company in the event of breaches of its representations and warranties), certain information rights and other rights, obligations and restrictions, which the Company believes are customary for transactions of this type. Issuance of Common Stock in Lieu of Cash Payments Under the terms of the Amended and Restated Non-Employee Director Compensation Plan, each compensated non-employee member of the Company’s Board of Directors may elect to receive all or part of his or her director fees in shares of the Company’s common stock. Director fees, whether paid in cash or in shares of common stock, are payable quarterly on the last day of each fiscal quarter. The number of shares of common stock issued to directors is determined by dividing the product of: (i)(a) the fees otherwise payable to each director in cash, times (b) the percentage of fees the director elected to receive in shares of common stock, by (ii) the volume weighted average price per share of common stock over the last five trading days of the quarter. The following is information regarding the number of shares issued to directors as payment for director fees in lieu of cash for the three and nine months ended September 30, 2020 and 2019: Three Months Ended September 30, 2020 2019 6,141 5,720 Nine Months Ended September 30, 2020 2019 25,704 23,459 Stock Incentive Plans The Company has various share-based compensation plans and share-based compensatory contracts (collectively, the “Plans”) under which it has granted share-based awards, such as stock grants, and incentive and non-qualified stock options, to employees, directors, consultants and advisors. Awards may be subject to a vesting schedule as set forth in individual award agreements. Certain of the Plans also have provided for cash-based performance bonus awards. From October 2017 until June 2020, the Company granted share-based awards under the Company’s Second Amended and Restated 2013 Incentive Compensation Plan (the “Second Amended Plan”). On June 2, 2020, the Company’s stockholders approved the Company’s Third Amended and Restated 2013 Incentive Compensation Plan (the “Third Amended Plan” and, together with the Second Amended Plan, the “2013 Plan”), under which 1 million shares of the Company’s common stock were made available for future issuances under the 2013 Plan, resulting in a total of 2,956,250 shares of the Company’s common stock being reserved for issuance under the 2013 Plan. Of this amount, stock grants of 652,157 shares have been awarded and option grants, net of options terminated, expired or forfeited, of 1,260,447 shares were outstanding as of September 30, 2020. Accordingly, 1,043,646 shares remained available for grants under the 2013 Plan as of that date. Stock option activity under all of the Company’s Plans during the nine months ended September 30, 2020 is summarized below: Shares Weighted- Intrinsic Value (1) Outstanding at January 1, 2020 1,639,167 $ 9.87 $ 2,892,027 Granted 255,213 4.34 321,965 Exercised (833 ) 1.74 Outstanding at September 30, 2020 1,893,547 $ 9.59 $ 4,103,901 (1) Intrinsic value is calculated as the estimated fair value of the Company’s stock at the end of the related period less the option exercise price of in-the-money options. As of September 30, 2020, there was unrecognized compensation expense of approximately $1.3 million related to outstanding stock options and shares of restricted stock, which is expected to be recognized over a weighted average period of 2.11 years. Warrants Warrants have generally been issued in connection with financing transactions and for terms of up to five years. Common stock warrant activity for the nine months ended September 30, 2020 was as follows: Shares Weighted- Intrinsic (1) Outstanding at January 1, 2020 5,532,267 $ 4.00 $ 10,470,008 Exercised (625,407 ) 2.20 Outstanding at September 30, 2020 4,906,860 $ 4.23 $ 11,091,657 (1) Intrinsic value is calculated as the estimated fair value of the Company’s stock at the end of the related period less the option exercise price of in-the-money options. |
Summary of Significant Accounti
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Use of Estimates | Basis of Presentation and Use of Estimates In the opinion of management, the accompanying unaudited condensed consolidated financial statements have been prepared on a basis consistent with the Company’s December 31, 2019 audited consolidated financial statements, and include all adjustments, consisting of only normal recurring adjustments, necessary to fairly state the information set forth therein. These condensed consolidated financial statements have been prepared in accordance with United States Securities and Exchange Commission (“SEC”) rules for interim financial information, and, therefore, omit certain information and footnote disclosures necessary to present such statements in accordance with generally accepted accounting principles in the U.S. (“GAAP”). The preparation of these condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and the related disclosures at the date of the financial statements and during the reporting period. Actual results could materially differ from these estimates. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2019 Form 10-K. The accompanying condensed consolidated balance sheet as of December 31, 2019 has been derived from the audited consolidated financial statements at that date but does not include all information and footnotes required by GAAP for a complete set of financial statements. The results of operations for the three and nine months ended September 30, 2020 may not be indicative of the results to be expected for the entire year or any future periods. |
Inventory | Inventory Inventory is carried at the lower of cost (first-in, first-out method) or net realizable value. Items in inventory relate predominantly to the Company’s ClearPoint system. Software license inventory related to ClearPoint systems undergoing on-site customer evaluation is included in inventory in the accompanying condensed consolidated balance sheets. All other software license inventory is classified as a non-current asset. The Company periodically reviews its inventory for obsolete items and provides a reserve upon identification of potential obsolete items. |
Intangible Assets | Intangible Assets In 2020 and 2019, the Company entered into certain license agreements that provide rights to the Company for the development and commercialization of products in the functional neurosurgery field. Under the terms of those certain license agreements, the Company paid an aggregate $591,341 to the licensors upon execution of the license agreements for access to the underlying technologies and will make future payments based on the achievement of regulatory and commercialization milestones as defined in the license agreements. In conformity with Accounting Standards Codification Section 350, “Intangibles – Goodwill and Other,” the Company amortizes its investment in the license rights described above over an expected useful life of five years. |
Revenue Recognition | Revenue Recognition The Company’s revenues are comprised primarily of: (1) product revenues resulting from the sale of functional neurosurgery navigation, therapy, and biologics and drug delivery disposable products; (2) product revenues resulting from the sale of ClearPoint capital equipment and software; (3) revenues resulting from the service, installation, training and shipping related to ClearPoint capital equipment and software; and (4) clinical case support revenues in connection with customer-sponsored clinical trials. The Company recognizes revenue when control of the Company’s products and services is transferred to its customers in an amount that reflects the consideration the Company expects to receive from its customers in exchange for those products and services, in a process that involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. The Company considers a performance obligation satisfied once it has transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The Company recognizes revenue for satisfied performance obligations only when it determines there are no uncertainties regarding payment terms or transfer of control. Lines of Business; Timing of Revenue Recognition · Functional neurosurgery navigation product, biologics and drug delivery systems product, and therapy product sales: · Capital equipment and software sales o Capital equipment and software sales preceded by evaluation periods: o Capital equipment and software sales not preceded by evaluation periods: For both types of capital equipment and software sales described above, the Company’s determination of the point in time at which to recognize revenue represents that point at which the customer has legal title, physical possession, and the risks and rewards of ownership, and the Company has a present right to payment. · Therapy services: · Biologics and drug delivery services: o Outsourced technical clinical support of cases performed pursuant to customer-sponsored clinical trials: § Service Access Fees: § Procedure-Based Fees: · Services related to sales of capital equipment and software sales: · Capital equipment-related services: o Equipment service: o Installation, training and shipping: The Company operates in one industry segment, and substantially all its sales are to U.S.-based customers. Payment terms under contracts with customers generally are in a range of 30-60 days after the customers’ receipt of the Company’s invoices. The Company provides a one-year warranty on its functional neurosurgery navigation products, biologics and drug delivery products, and capital equipment and software products that are not otherwise covered by a third-party manufacturer’s warranty. The Company’s contracts with customers do not provide for a right of return other than for product defects. See Note 3 for additional information regarding revenue recognition. |
Net Loss Per Share | Net Loss Per Share The Company computes net loss per share using the weighted-average number of common shares outstanding during the period. Basic and diluted net loss per share are the same because the conversion, exercise or issuance of all potential common stock equivalents, which comprise the entire amount of the Company’s outstanding common stock options and warrants, as described in Note 7, and the potential conversion of the 2020 Secured Notes, as described in Note 5, would be anti-dilutive. |
Concentration Risks and Other Risks and Uncertainties | Concentration Risks and Other Risks and Uncertainties Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company holds its cash and cash equivalents on deposit with financial institutions in the U.S. insured by the Federal Deposit Insurance Corporation. At September 30, 2020, the Company had approximately $7.9 million in bank balances that were in excess of the insured limits. Information with respect to accounts receivable from those customers who comprised more than 10% of accounts receivable at September 30, 2020 and December 31, 2019 is as follows: September 30, 2020 December 31, 2019 Customer – 1 12% 12% Information with respect to customers that accounted for sales in excess of 10% of total sales in the three-month periods ended September 30, 2020 and 2019 is as follows: September 30, 2020 2019 Customer – 1 15% — Information with respect to customers that accounted for sales in excess of 10% of total sales in the nine-month periods ended September 30, 2020 and 2019 is as follows: September 30, 2020 2019 Customer – 1 18% — Prior to granting credit, the Company performs credit evaluations of its customers’ financial condition, and generally does not require collateral from its customers. The Company will provide an allowance for doubtful accounts when collections become doubtful. The allowance for doubtful accounts at September 30, 2020 and December 31, 2019 was approximately $43,000 and $29,000, respectively. The Company is subject to risks common to emerging companies in the medical device industry, including, but not limited to: new technological innovations; acceptance and competitiveness of its products; dependence on key personnel; dependence on key suppliers; changes in general economic conditions and interest rates; protection of proprietary technology; compliance with changing government regulations; uncertainty of widespread market acceptance of products; access to credit for capital purchases by customers; and product liability claims. Certain components used in manufacturing have relatively few alternative sources of supply and establishing additional or replacement suppliers for such components cannot be accomplished quickly. The inability of any of these suppliers to fulfill the Company’s supply requirements may negatively impact future operating results. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Schedule of concentration of risk | Information with respect to accounts receivable from those customers who comprised more than 10% of accounts receivable at September 30, 2020 and December 31, 2019 is as follows: September 30, 2020 December 31, 2019 Customer – 1 12% 12% Information with respect to customers that accounted for sales in excess of 10% of total sales in the three-month periods ended September 30, 2020 and 2019 is as follows: September 30, 2020 2019 Customer – 1 15% — Information with respect to customers that accounted for sales in excess of 10% of total sales in the nine-month periods ended September 30, 2020 and 2019 is as follows: September 30, 2020 2019 Customer – 1 18% — |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Revenue Recognition [Abstract] | |
Schedule of revenue recognition | Three Months Ended September 30, 2020 2019 Functional neurosurgery navigation Disposable products $ 1,840,060 $ 1,854,251 Therapy Disposable products — 64,095 Services — 50,000 Subtotal – therapy revenue — 114,095 Biologics and drug delivery Disposable products 419,946 491,257 Services 1,054,622 72,500 Subtotal – biologics and drug delivery revenue 1,474,568 563,757 Capital equipment and software Systems and software products 73,544 184,825 Services 131,015 210,538 Subtotal – capital equipment and software revenue 204,559 395,363 Total revenue $ 3,519,187 $ 2,927,466 Nine Months Ended September 30, 2020 2019 Functional neurosurgery navigation Disposable products $ 4,573,484 $ 5,212,460 Therapy Disposable products 78,800 81,925 Services 25,000 200,000 Subtotal – therapy revenue 103,800 281,925 Biologics and drug delivery Disposable products 1,000,276 957,673 Services 2,646,050 338,112 Subtotal – biologics and drug delivery revenue 3,646,326 1,295,785 Capital equipment and software Systems and software products 377,445 700,517 Services 411,508 515,695 Subtotal – capital equipment and software revenue 788,953 1,216,212 Total revenue $ 9,112,563 $ 8,006,382 |
Inventory (Tables)
Inventory (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Schedule of inventory | September 30, December 31, Raw materials and work in process $ 1,724,106 $ 1,495,190 Software licenses 227,500 332,500 Finished goods 1,583,037 1,412,528 Inventory, net, included in current assets 3,534,643 3,240,218 Software licenses – non-current 571,800 504,400 Total $ 4,106,443 $ 3,744,618 |
Notes Payable (Tables)
Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of notes payable maturities | Years ending December 31, 2020 $ — 2021 185,192 2022 447,621 2023 263,187 2024 — Thereafter 17,500,000 Total scheduled principal payments 18,396,000 Less: Unamortized financing costs and discount (651,604 ) Total $ 17,744,396 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Stockholders' equity: | |
Schedule of shares issued to directors | Three Months Ended September 30, 2020 2019 6,141 5,720 Nine Months Ended September 30, 2020 2019 25,704 23,459 |
Schedule of stock options issued by the Company | Shares Weighted- Intrinsic Value (1) Outstanding at January 1, 2020 1,639,167 $ 9.87 $ 2,892,027 Granted 255,213 4.34 321,965 Exercised (833 ) 1.74 Outstanding at September 30, 2020 1,893,547 $ 9.59 $ 4,103,901 |
Schedule of common stock warrant activity | Shares Weighted- Intrinsic (1) Outstanding at January 1, 2020 5,532,267 $ 4.00 $ 10,470,008 Exercised (625,407 ) 2.20 Outstanding at September 30, 2020 4,906,860 $ 4.23 $ 11,091,657 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Schedule of Concentration of Risk (Details) - Customer #1 | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Accounts Receivable | |||||
Concentration risk, percentage | 12.00% | 12.00% | |||
Sales | |||||
Concentration risk, percentage | 15.00% | 18.00% |
Description of the Business a_2
Description of the Business and Financial Condition (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Jun. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Cumulative net loss | $ (117,939,725) | $ (112,739,620) | ||
Net cash used in operations | (5,404,999) | $ (2,383,705) | $ (2,849,515) | |
Offering costs | $ 94,162 | |||
Proceeds from issuance of Paycheck Protection Program loan | 896,000 | |||
Securities Purchase Agreement (the "2019 PIPE") | Accredited Investors | ||||
Sale of stock, number of shares issued | 2,426,455 | |||
Share price (in dollars per share) | $ 3.10 | |||
Offering costs | $ 94,000 | |||
Proceeds from issuance of stock | $ 7,500,000 | |||
Security Purchase Agreement | The "2020 Secured Notes" | ||||
Secured convertible notes | 17,500,000 | |||
Proceeds from debt, net | $ 16,800,000 | |||
Term of secured notes | 5 years |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) | 9 Months Ended | |
Sep. 30, 2020USD ($)Integer | Dec. 31, 2019USD ($) | |
Bank balances in excess of insured limits, approximate | $ 7,900,000 | |
Allowance for doubtful accounts | $ 43,000 | $ 29,000 |
Payment terms under contracts with customers | A range of 30-60 days after the customers' receipt of the Company's invoices. | |
Operating segments | Integer | 1 | |
Minimum | ||
Term of service agreements (in years) | 1 year | |
Maximum | ||
Term of service agreements (in years) | 3 years | |
License Agreement Terms | ||
Payment terms under license agreement | $ 591,341 | |
Expected useful life | 5 years |
Revenue Recognition - Schedule
Revenue Recognition - Schedule of Revenue Recognition (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Total revenues | $ 3,519,187 | $ 2,927,466 | $ 9,112,563 | $ 8,006,382 |
Functional Neurosurgery Navigation - Disposable Products | ||||
Total revenues | 1,840,060 | 1,854,251 | 4,573,484 | 5,212,460 |
Therapy - Disposable Products | ||||
Total revenues | 64,095 | 78,800 | 81,925 | |
Therapy - Services | ||||
Total revenues | 50,000 | 25,000 | 200,000 | |
Therapy Revenue Subtotal | ||||
Total revenues | 114,095 | 103,800 | 281,925 | |
Biologics and Drug Delivery - Disposable Products | ||||
Total revenues | 419,946 | 491,257 | 1,000,276 | 957,673 |
Biologics and Drug Delivery - Services | ||||
Total revenues | 1,054,622 | 72,500 | 2,646,050 | 338,112 |
Biologics and Drug Delivery Revenue Subtotal | ||||
Total revenues | 1,474,568 | 563,757 | 3,646,326 | 1,295,785 |
Capital Equipment and Software - Systems and Software Products | ||||
Total revenues | 73,544 | 184,825 | 377,445 | 700,517 |
Capital Equipment and Software - Services | ||||
Total revenues | 131,015 | 210,538 | 411,508 | 515,695 |
Capital Equipment and Software Revenue Subtotal | ||||
Total revenues | $ 204,559 | $ 395,363 | $ 788,953 | $ 1,216,212 |
Revenue Recognition (Details Na
Revenue Recognition (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Total revenues | $ 3,519,187 | $ 2,927,466 | $ 9,112,563 | $ 8,006,382 | |
Unbilled accounts receivable | 66,000 | 66,000 | $ 172,000 | ||
Development Services Agreement | |||||
Accounts receivable | 127,600 | ||||
Deferred revenue | 83,000 | 83,000 | 102,000 | ||
Letter of Intent | Investor | |||||
Deferred revenue | 268,000 | 268,000 | 625,000 | ||
Service fees receivable, quarterly | 250,000 | 250,000 | 500,000 | ||
Reduction of service fees receivable | 50,000 | 250,000 | |||
Letter of Intent | Investor | Nonrefundable Payment | |||||
Accounts receivable and deferred revenue | $ 500,000 | ||||
Remaining Performance Obligations Capital Equipment-Related Service Revenue | |||||
Total revenues | 283,000 | ||||
Capital Equipment-Related Service Revenue | |||||
Total revenues | $ 69,000 | $ 283,000 |
Inventory - Schedule of Invento
Inventory - Schedule of Inventory (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Raw materials and work in process | $ 1,724,106 | $ 1,495,190 |
Software licenses | 227,500 | 332,500 |
Finished goods | 1,583,037 | 1,412,528 |
Inventory included in current assets | 3,534,643 | 3,240,218 |
Software licenses - non-current | 571,800 | 504,400 |
Total inventory | $ 4,106,443 | $ 3,744,618 |
Notes Payable - Schedule of Not
Notes Payable - Schedule of Notes Payable Maturities (Details) | Sep. 30, 2020USD ($) |
Debt Disclosure [Abstract] | |
2020 | |
2021 | 185,192 |
2022 | 447,621 |
2023 | 263,187 |
2024 | |
Thereafter | 17,500,000 |
Total scheduled principal payments | 18,396,000 |
Less: Unamortized financing costs and discount | (651,604) |
Total | $ 17,744,396 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||
Mar. 30, 2020 | Jun. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Debt Instrument [Line Items] | |||||
Debt instrument, unamortized discount | $ 651,604 | ||||
Proceeds received through a loan funded under the PPP | 896,000 | ||||
2010 Junior Secured Notes Payable | |||||
Debt Instrument [Line Items] | |||||
Repayment of secured debt | $ 2,800,000 | ||||
Payments for accrued interest | $ 920,000 | ||||
Debt face amount | $ 2,800,000 | ||||
Debt instrument, unamortized discount | 765,073 | ||||
2010 Junior Secured Notes Payable | Chairman and Officer | |||||
Debt Instrument [Line Items] | |||||
Debt face amount | $ 197,000 | ||||
SBA's Payroll Protection Program | |||||
Debt Instrument [Line Items] | |||||
Proceeds received through a loan funded under the PPP | $ 896,000 | ||||
Term of PPP loan | 2 years | ||||
Interest rate | 1.00% | ||||
Payment terms | Payable monthly beginning in August 2021. | ||||
Security Purchase Agreement | The "2020 Secured Notes" | |||||
Debt Instrument [Line Items] | |||||
Secured notes | $ 17,500,000 | ||||
Term of secured notes | 5 years | ||||
Interest rate terms | Bears interest at a rate equal to the sum of (i) the greater of (x) the three (3)-month London Interbank Offered Rate and (y) two percent (2%), plus (ii) a margin of 2% on the outstanding balance of the 2020 Notes, payable quarterly on the first business day of each calendar quarter. | ||||
Conversion price, per share | $ 6 | ||||
Debt instrument, unamortized discount | $ 388,000 | ||||
Security Purchase Agreement | The "2020 Convertible Noteholders" | |||||
Debt Instrument [Line Items] | |||||
Secured convertible notes, terms and conditions | At any time on or prior to January 11, 2022, the Company shall have the right, but not the obligation, to request that one of the 2020 Convertible Noteholders purchase an additional $5,000,000 in aggregate principal amount of Second Closing Notes (as defined in the SPA) and an additional $10,000,000 in aggregate principal amount of additional Third Closing Notes (as defined in the SPA) (together, the “Additional Convertible Notes”), provided that the such 2020 Convertible Noteholder has the right, but not the obligation, to purchase such notes. The terms of the Additional Convertible Notes are the same as the terms of the 2020 Secured Notes, except that: (a) the Additional Convertible Notes would bear interest at a rate equal to the sum of (i) the greater of (x) the three (3)-month London Interbank Offered Rate and (y) 2%, plus (ii) a margin of 7% on their outstanding balance; and (b) only 70% of the Additional Convertible Notes’ principal amount outstanding would be convertible into shares of the Company’s common stock. | ||||
Debt instrument, unamortized discount | $ 263,000 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Lease cost (included in general and administrative expense) | $ 31,252 | $ 27,468 | $ 87,690 | $ 82,405 |
Office Lease - Irvine, California | ||||
Commenced date | Oct. 1, 2018 | |||
Lease expiration date | Sep. 30, 2023 | |||
Lease term | 5 years | 5 years | ||
Lease renewal term | 5 years | 5 years | ||
Office Lease - Mississauga, Ontario, Canada | ||||
Commenced date | Aug. 1, 2018 | |||
Lease expiration date | Nov. 30, 2020 | |||
Lease term | 1 year | 1 year | ||
Lease renewal term | 1 year | 1 year |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Shares Issued to Directors (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Director | ||||
Number of shares issued as payment for director fees in lieu of cash | 6,141 | 5,720 | 25,704 | 23,459 |
Stockholders' Equity - Schedu_2
Stockholders' Equity - Schedule of Stock Options Issued by the Company (Details) | 9 Months Ended | |
Sep. 30, 2020USD ($)$ / sharesshares | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Outstanding at beginning | shares | 1,639,167 | |
Granted | shares | 255,213 | |
Exercised | shares | (833) | |
Outstanding at ending | shares | 1,893,547 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | ||
Outstanding at beginning | $ / shares | $ 9.87 | |
Granted | $ / shares | 4.34 | |
Exercised | $ / shares | 1.74 | |
Outstanding at ending | $ / shares | $ 9.59 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Intrinsic Value [Abstract] | ||
Outstanding at beginning | $ | $ 2,892,027 | [1] |
Granted | $ | 321,965 | [1] |
Outstanding at ending | $ | $ 4,103,901 | [1] |
[1] | Intrinsic value is calculated as the estimated fair value of the Company's stock at the end of the related period less the option exercise price of in-the-money options. |
Stockholders' Equity - Schedu_3
Stockholders' Equity - Schedule of Common Stock Warrant Activity (Details) | 9 Months Ended | |
Sep. 30, 2020USD ($)$ / sharesshares | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Outstanding at beginning | shares | 5,532,267 | |
Exercised | shares | (625,407) | |
Outstanding at ending | shares | 4,906,860 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | ||
Outstanding at beginning | $ / shares | $ 4 | |
Exercised | $ / shares | 2.20 | |
Outstanding at ending | $ / shares | $ 4.23 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Aggregate Intrinsic Value [Abstract] | ||
Outstanding at beginning | $ | $ 10,470,008 | [1] |
Outstanding at ending | $ | $ 11,091,657 | [1] |
[1] | Intrinsic value is calculated as the estimated fair value of the Company's stock at the end of the related period less the option exercise price of in-the-money options. |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Jun. 30, 2019 | Sep. 30, 2020 | Dec. 31, 2019 | Jun. 02, 2020 | |
Number of awards outstanding | 1,893,547 | 1,639,167 | ||
Number of awards granted | 255,213 | |||
Unrecognized compensation expense | $ 1,300,000 | |||
Compensation expense, period for recognition | 2 years 2 months | |||
Offering costs | $ 94,162 | |||
Securities Purchase Agreement (the "2019 PIPE") | Accredited Investors | ||||
Sale of stock, number of shares issued | 2,426,455 | |||
Offering costs | $ 94,000 | |||
Share price (in dollars per share) | $ 3.10 | |||
Proceeds from issuance of stock | $ 7,500,000 | |||
Amended and Restated 2013 Incentive Compensation Plan | ||||
Common stock reserved for issuance | 2,956,250 | |||
Number of share available for grant | 1,043,646 | |||
Number of awards outstanding | 1,260,447 | |||
Number of awards granted | 652,157 | |||
Third Amended and Restated 2013 Incentive Compensation Plan | ||||
Common stock reserved for issuance | 1,000,000 |