Document_And_Entity_Informatio
Document And Entity Information | 3 Months Ended | |
Mar. 31, 2015 | 5-May-15 | |
Entity Registrant Name | MRI INTERVENTIONS, INC. | |
Entity Central Index Key | 1285550 | |
Current Fiscal Year End Date | -19 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Entity Common Stock, Shares Outstanding (in shares) | 74,880,011 | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | FALSE |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (Unaudited) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 |
Current Assets: | |||
Cash and cash equivalents | $6,438,329 | $9,244,006 | $5,801,050 |
Accounts receivable | 605,718 | 468,949 | |
Inventory, net | 2,096,899 | 1,965,039 | |
Prepaid expenses and other current assets | 36,129 | 29,220 | |
Total current assets | 9,177,075 | 11,707,214 | |
Property and equipment, net | 406,892 | 482,970 | |
Software license inventory | 892,500 | 910,000 | |
Other assets | 268,814 | 285,498 | |
Total assets | 10,745,281 | 13,385,682 | |
Current liabilities: | |||
Accounts payable | 1,142,876 | 997,090 | |
Accrued compensation | 321,060 | 323,644 | |
Accrued restructuring charges | 753,400 | ||
Other accrued liabilities | 328,842 | 1,297,712 | |
Derivative liabilites | 2,980,964 | 2,198,162 | |
Deferred product and service revenues | 97,840 | 102,710 | |
Total current liabilities | 5,624,982 | 4,919,318 | |
Accrued interest | 962,075 | 876,025 | |
Senior secured note payable, net of unamortized discount of $225,353 and $271,305 at March 31, 2015 and December 31, 2014, respectively | 4,064,091 | 4,018,139 | |
Total liabilities | 14,375,390 | 13,486,012 | |
Commitments and contingencies (Notes 4, 5, 6 and 7) | |||
Stockholders' deficit: | |||
Common stock, $0.01 par value; 100,000,000 shares authorized; 74,880,011 shares issued and outstanding at March 31, 2015; and 74,842,428 issued and outstanding at December 31, 2014 | 748,800 | 748,424 | |
Additional paid-in capital | 76,843,679 | 76,428,580 | |
Accumulated deficit | -81,222,588 | -77,277,334 | |
Total stockholders' deficit | -3,630,109 | -100,330 | |
Total liabilities and stockholders' deficit | 10,745,281 | 13,385,682 | |
2014 Junior Secured Notes Payable [Member] | |||
Current liabilities: | |||
Junior secured notes payable | 3,373,775 | 3,355,701 | |
2010 Junior Secured Notes Payable [Member] | |||
Current liabilities: | |||
Junior secured notes payable | $350,467 | $316,829 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Unamortized discount | $3,226,112 | |
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 74,880,011 | 74,842,428 |
Common stock, shares outstanding (in shares) | 74,880,011 | 74,842,428 |
Senior Notes [Member] | ||
Unamortized discount | 225,353 | 271,305 |
2010 Junior Secured Notes Payable [Member] | ||
Unamortized discount | $2,649,533 | $2,683,171 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations (Unaudited) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Revenues: | ||
Product revenues | $976,871 | $713,259 |
Other service revenues | 33,532 | 10,410 |
Development service revenues | 98,862 | |
Total revenues | 1,010,403 | 822,531 |
Cost of product revenues | 385,609 | 350,685 |
Research and development costs | 527,512 | 817,621 |
Selling, general, and administrative expenses | 2,288,660 | 1,800,799 |
Restructuring charges | 753,400 | |
Gain on sale of intellectual property | -4,338,601 | |
Operating income (loss) | -2,944,778 | 2,192,027 |
Other income (expense): | ||
Gain (loss) on change in fair value of deriviative liabilities | -782,802 | 483,790 |
Other income, net | 82,688 | 103,386 |
Interest income | 7,451 | 2,607 |
Interest expense | -307,813 | -151,408 |
Net income (loss) | ($3,945,254) | $2,630,402 |
Net income (loss) per share attributable to common stockholders: | ||
Basic (in dollars per share) | ($0.05) | $0.04 |
Diluted (in dollars per share) | ($0.05) | $0.04 |
Weighted average shares outstanding: | ||
Basic (in shares) | 74,842,841 | 58,716,727 |
Diluted (in shares) | 74,842,841 | 61,248,630 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Cash flows from operating activities: | ||
Net income (loss) | ($3,945,254) | $2,630,402 |
Adjustments to reconcile net income (loss) to net cash flows from operating activities: | ||
Depreciation and license amortization | 86,680 | 92,629 |
Share-based compensation | 377,892 | 179,746 |
Expenses paid through the issuance of common stock | 37,583 | 299,657 |
(Gain) loss on change in fair value of derivative liabilities | 782,802 | -483,790 |
Gain on sale of intellectual property | -4,338,601 | |
Amortization of debt issuance costs and and original issue discounts | 110,015 | 56,985 |
Increase (decrease) in cash resulting from changes in: | ||
Accounts receivable | -136,769 | 317,649 |
Inventory | -109,994 | -147,906 |
Prepaid expenses and other current assets | -6,909 | 102,833 |
Other assets | -4,000 | -1,500 |
Accounts payable and accrued expenses | 13,782 | -85,730 |
Deferred revenue | -4,870 | 18,508 |
Net cash flows from operating activities | -2,799,042 | -1,359,118 |
Cash flows from investing activities: | ||
Purchases of property and equipment | -6,635 | -2,390 |
Net cash flows from investing activities | -6,635 | -2,390 |
Cash flows from financing activities: | ||
Proceeds from stock option exercises | 143,000 | |
Net cash flows from financing activities | 3,646,314 | |
Net change in cash and cash equivalents | -2,805,677 | 2,284,806 |
Cash and cash equivalents, beginning of period | 9,244,006 | 3,516,244 |
Cash and cash equivalents, end of period | 6,438,329 | 5,801,050 |
SUPPLEMENTAL CASH FLOW INFORMATION | ||
Income taxes | ||
Interest | 223,500 | 323 |
Debt Private Placement [Member] | ||
Cash flows from financing activities: | ||
Net proceeds from debt private placement | $3,503,314 |
NonCash_Investing_and_Financin
Non-Cash Investing and Financing Transactions | 3 Months Ended | ||
Mar. 31, 2015 | |||
Notes to Financial Statements | |||
Cash Flow, Supplemental Disclosures [Text Block] | NON-CASH INVESTING AND FINANCING | ||
TRANSACTIONS | |||
: | |||
● | During the three months ended March 31, 2015, a net amount of ClearPoint reusable components with a cost of $8,006 and accumulated depreciation of $3,640 was transferred from loaned systems to inventory at the net carrying cost. During the three months ended March 31, 2014, a net amount of ClearPoint reusable components with a cost of $47,329 and accumulated depreciation of $18,780 was transferred from loaned systems to inventory at the net carrying cost. | ||
● | In March 2014, the Company entered into an asset purchase agreement to sell certain intellectual property. The asset purchase price was satisfied through the cancellation of related party convertible notes payable in the aggregate amount of $4,338,601. | ||
● | In recording the March 2014 debt private placement transaction, the Company recorded the fair value of the warrants issued to the placement agent, in the amount of $30,210, as a deferred financing cost, and the Company recorded a corresponding amount to additional paid-in capital. In addition, warrants with a relative fair value of $413,057 were issued to investors in the debt private placement transaction. The relative fair value of these warrants was recorded as additional paid-in capital, which resulted in a corresponding debt discount. |
Note_1_Description_of_the_Busi
Note 1 - Description of the Business and Liquidity | 3 Months Ended | |
Mar. 31, 2015 | ||
Notes to Financial Statements | ||
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | 1 | Description of the Business and Liquidity |
MRI Interventions, 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 was incorporated in the state of Delaware in March 1998. The Company’s principal executive office and principal operations are located in Irvine, California. The Company established MRI Interventions (Canada) Inc., a wholly-owned subsidiary incorporated in Canada, in August 2013. This subsidiary was established primarily for the purpose of performing software development, and its activities are reflected in these consolidated financial statements. | ||
The Company’s ClearPoint system, an integrated system comprised of reusable and disposable products, is designed to allow minimally invasive procedures in the brain to be performed in an MRI suite. The Company received 510(k) clearance from the U.S. Food and Drug Administration (“FDA”) in 2010 to market the ClearPoint system in the United States for general neurological interventional procedures. The Company’s ClearTrace system is a product candidate under development that is designed to allow catheter-based minimally invasive procedures in the heart to be performed in an MRI suite. | ||
Liquidity and Management’s Plans | ||
The cumulative net loss from the Company’s inception through March 31, 2015 was $81,222,588. Net cash used in operations was $2,799,042 for the three months ended March 31, 2015 and $7,250,303 for the year ended December 31, 2014. Since inception, the Company has financed its activities principally from the sale of equity securities, the issuance of notes payable and license arrangements. | ||
The Company’s primary financing activities during the three months ended March 31, 2015 and the year ended December 31, 2014 were: (i) a December 2014 equity private placement, which resulted in net proceeds of $9,379,880; and (ii) a March 2014 debt private placement, which resulted in net proceeds of $3,503,314. In addition, in March 2014, the Company completed a transaction with Boston Scientific Corporation and certain of its affiliates (collectively “Boston Scientific”) that resulted in the cancellation of $4,338,601 in related party convertible notes payable held by Boston Scientific which were scheduled to mature in 2014 (see Note 5). | ||
While the Company expects to continue to use cash in operations, the Company believes its existing cash and cash equivalents at March 31, 2015 of $6,438,329, combined with cash expected to be generated from product sales, will be sufficient to meet its anticipated cash requirements through at least March 31, 2016. | ||
During 2015, the Company expects to increase revenues from sales of ClearPoint system products as a result of greater utilization at existing installed sites and an increase in the number of installed sites. Certain planned expenditures are discretionary and could be deferred if the Company is required to do so to fund critical operations. | ||
To the extent the Company’s available cash and cash equivalents are insufficient to satisfy its long-term operating requirements, the Company will need to seek additional sources of funds from the sale of equity or debt securities or through a credit facility, or the Company will need to modify its current business plan. There can be no assurances that the Company will be able to obtain additional financing on commercially reasonable terms, if at all. The sale of additional equity or convertible debt securities would likely result in dilution to the Company’s current stockholders. |
Note_2_Basis_of_Presentation_a
Note 2 - Basis of Presentation and Summary of Significant Accounting Policies | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Notes to Financial Statements | |||||||||||||||||
Basis of Presentation and Significant Accounting Policies [Text Block] | 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 (“condensed financial statements”) have been prepared on a basis consistent with the Company’s December 31, 2014 audited consolidated financial statements, and include all adjustments, consisting of only normal recurring adjustments, necessary to fairly state the information set forth therein. The condensed financial statements have been prepared in accordance with United States (“U.S.”) 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 the condensed 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 financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the SEC on March 17, 2015. The accompanying unaudited condensed consolidated balance sheet as of December 31, 2014 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 months ended March 31, 2015 may not be indicative of the results to be expected for the entire year or any future periods. | |||||||||||||||||
Derivative Liabilit | |||||||||||||||||
ies | |||||||||||||||||
for Warrants to Purchase Common Stock | |||||||||||||||||
Derivative liabilities for warrants to purchase common stock represent the fair value of warrants issued in connection with certain private placements of shares of the Company’s common stock (see Note 7). The fair values of these warrants are presented as liabilities based on certain net cash settlement and exercise price reset, or “down round,” provisions. These derivative liabilities, which are recorded on the accompanying consolidated balance sheets, are calculated utilizing the Monte Carlo simulation valuation method. Changes in the fair values of these warrants are recognized as other income or expense in the related statement of operations. | |||||||||||||||||
Fair Value Measurements | |||||||||||||||||
The Company measures and records certain financial assets and liabilities at fair value on a recurring basis. GAAP provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority, referred to as Level 1, to quoted prices in active markets for identical assets and liabilities. The next priority, referred to as Level 2, is given to quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active; that is, markets in which there are few transactions for the asset or liability. The lowest priority, referred to as Level 3, is given to unobservable inputs. The table below reflects the level of the inputs used in the Company’s fair value calculation for instruments carried at fair value at (see Note 7): | |||||||||||||||||
Quoted Prices in Active Markets (Level 1) | Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Fair Value | ||||||||||||||
31-Mar-15 | |||||||||||||||||
Derivative liabilities - warrants | $ | - | $ | - | $ | 2,980,964 | $ | 2,980,964 | |||||||||
31-Dec-14 | |||||||||||||||||
Derivative liabilities - warrants | $ | - | $ | - | $ | 2,198,162 | $ | 2,198,162 | |||||||||
Carrying amounts of the Company’s cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair values due to their short maturities. | |||||||||||||||||
The table below reflects the carrying values and the estimated fair values, based on Level 3 inputs, of the Company’s outstanding notes payable, including the related accrued interest, at March 31, 2015: | |||||||||||||||||
Estimated | |||||||||||||||||
Carrying Values | Fair Values | ||||||||||||||||
Senior secured note payable, including accrued interest | $ | 4,562,416 | $ | 4,562,416 | |||||||||||||
2014 junior secured notes payable, including accrued interest | 3,382,150 | 3,733,375 | |||||||||||||||
2010 junior secured notes payable, including accrued interest | 814,217 | 2,362,324 | |||||||||||||||
Inventory | |||||||||||||||||
Inventory is carried at the lower of cost (first-in, first-out (FIFO) method) or net realizable value. All items included in inventory relate to the Company’s ClearPoint system. Software license inventory that is not expected to be utilized within the next twelve months 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. | |||||||||||||||||
Revenue Recognition | |||||||||||||||||
The Company’s revenues are comprised of: (1) product revenues resulting from the sale of ClearPoint system reusable products, disposable products and ClearTrace system components; (2) development service revenues; and (3) other service revenues. The Company recognizes revenue when persuasive evidence of an arrangement exists, the selling price or fee is fixed or determinable, collection is reasonably assured and, for product revenues, risk of loss has transferred to the customer. For all sales, the Company requires either a purchase agreement or a purchase order as evidence of an arrangement. The Company analyzes revenue recognition on an individual arrangement basis. The Company determines whether deliverables under an arrangement represent one or more separate units of accounting as defined by GAAP. Application of GAAP regarding multiple-element arrangements requires management to make subjective judgments about the values of the individual elements and whether delivered elements are separable from the other aspects of the contractual relationship. | |||||||||||||||||
-1 | Product Revenues | ||||||||||||||||
Sales of ClearPoint system reusable products: | |||||||||||||||||
Generally, revenues related to the sale of ClearPoint system reusable products are recognized upon installation of the system and the completion of training of at least one of the customer’s physicians, which typically occurs concurrently with the installation. Reusable products include software which is integral to the utility of the system as a whole. Sales of reusable products that have stand-alone value to the customer are recognized when risk of loss passes to the customer. Sales of ClearPoint reusable products to a distributor that has been trained to perform system installations and to conduct ClearPoint physician training are recognized at the time risk of loss passes to the distributor. | |||||||||||||||||
Sales of disposable products: | |||||||||||||||||
Revenues from the sale of disposable products, including ClearPoint system disposable products, are recognized at the time risk of loss passes to the customer, which is generally at shipping point or upon delivery to the customer’s location, depending on the agreed upon terms with the customer. | |||||||||||||||||
Sales of ClearTrace components: | |||||||||||||||||
Revenues from sales of ClearTrace system components to research sites for non-commercial use are recognized at the time risk of loss passes to the customer, which is generally at shipping point or upon delivery to the customer’s location, depending on the agreed upon terms with the customer. The Company does not have regulatory clearance or approval to sell ClearTrace system components for commercial use. | |||||||||||||||||
( | Development Service Revenues | ||||||||||||||||
2 | — The Company entered into an agreement to provide development services to a third party. Under the agreement, the Company earned revenue equal to costs incurred for outside expenses related to the development services provided, plus actual direct internal labor costs (including the cost of employee benefits), plus an overhead markup of the direct internal labor costs incurred. Revenues are recognized in the period in which the Company incurred the related costs. | ||||||||||||||||
) | |||||||||||||||||
( | Other Service Revenues | ||||||||||||||||
3 | — Other service revenues are comprised of installation fees, training fees, shipping fees and service fees charged in connection with ClearPoint system installations and ClearPoint system service agreements. Typically, the Company bills upfront for service agreements, which have terms ranging from one to three years. These amounts are recognized as revenues ratably over the term of the related service agreement. | ||||||||||||||||
) | |||||||||||||||||
Net Income (Loss | |||||||||||||||||
) | |||||||||||||||||
Per Share | |||||||||||||||||
The Company computes basic net income (loss) per share using the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share assumes the conversion, exercise or issuance of all potential common stock equivalents, unless the effect of inclusion would be anti-dilutive. For purposes of this calculation, common stock equivalents include the Company’s common stock options and common stock warrants. For purposes of computing diluted net income per share, the number of potential common stock equivalents is reduced by the number of shares the Company could have repurchased with the proceeds from issuance of the potentially dilutive shares. | |||||||||||||||||
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 United States insured by the Federal Deposit Insurance Corporation. At March 31, 2015, the Company had bank balances in excess of the insured limits of approximately $68,000, most of which was held on deposit to satisfy outstanding checks. | |||||||||||||||||
Accounts receivable at March 31, 2015 and December 31, 2014, and substantially all product revenues recognized for the three months ended March 31, 2015 and 2014, relate to sales to customers located in the U.S. and to one distributor. At March 31, 2015, three customers represented 24%, 14% and 12% of the Company’s accounts receivable balance. At December 31, 2014, two customers represented 20% and 17% of the Company’s accounts receivable balance. No other customer represented more than 9% of total accounts receivable at March 31, 2015 or December 31, 2014. For the three months ended March 31, 2015, sales to two customers represented 17% and 14% of product revenues. For the three months ended March 31, 2014, sales to a distributor represented 15% of product revenues and sales to two customers represented 13% and 12% of product revenues. No other single customer represented greater than 8% of product revenues for the three months ended March 31, 2015 or 2014. 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, but the Company has not experienced any credit losses or recorded any allowances to date. | |||||||||||||||||
Recent | |||||||||||||||||
Accounting Pronouncements | |||||||||||||||||
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers,” which creates a new Topic, Accounting Standards Codification (“ASC”) Topic 606. The standard is principle-based and provides a five-step model to determine when and how revenue is recognized. The core principle is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This standard is effective for the Company beginning in 2017 and allows for either full retrospective adoption or modified retrospective adoption. The Company is currently evaluating the impact of the adoption of ASC Topic 606 on its consolidated financial statements. | |||||||||||||||||
In August 2014, the FASB issued ASU 2014-15, “Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern,” which provides guidance on determining when and how to disclose going-concern uncertainties in financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company is currently evaluating the impact of this update on future disclosures concerning its liquidity position. | |||||||||||||||||
In April 2015, the FASB issued ASU 2015-03, "Simplifying the Presentation of Debt Issuance Costs", which requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This ASU requires retrospective adoption and is effective for financial statements issued for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact that this guidance will have on its financial statements. |
Note_3_Inventory
Note 3 - Inventory | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Notes to Financial Statements | |||||||||
Inventory Disclosure [Text Block] | 3 | Inventory | |||||||
Inventory consists of the following as of: | |||||||||
31-Mar | December 31, | ||||||||
2015 | 2014 | ||||||||
Raw materials and work in process | $ | 1,028,258 | $ | 899,014 | |||||
Software license inventory | 350,000 | 350,000 | |||||||
Finished goods | 718,641 | 716,025 | |||||||
Inventory included in current assets | 2,096,899 | 1,965,039 | |||||||
Software license inventory | 892,500 | 910,000 | |||||||
$ | 2,989,399 | $ | 2,875,039 |
Note_4_Restructuring_Charges
Note 4 - Restructuring Charges | 3 Months Ended | |
Mar. 31, 2015 | ||
Notes to Financial Statements | ||
Restructuring and Related Activities Disclosure [Text Block] | 4 | Restructuring Charges |
In March 2015, the Company announced that it will consolidate all major business functions into its Irvine, California headquarters. In connection with this consolidation, the Company will close its Memphis, Tennessee office in May 2015. The Company will not retain any of its Memphis-based employees. A total of seven employees have been or will be impacted by the consolidation, including three executives of the Company. In connection with this consolidation, the Company recorded restructuring charges of $753,400. Approximately $718,000 of the restructuring charge relates to costs associated with severance and other compensation for the impacted employees. Most of the amount recorded as a restructuring charge is expected to be paid during the quarter ended June 30, 2015. |
Note_5_Sale_of_Intellectual_Pr
Note 5 - Sale of Intellectual Property in Exchange for Cancellation of the Boston Scientific Notes | 3 Months Ended | |
Mar. 31, 2015 | ||
Notes to Financial Statements | ||
Related Party Transactions Disclosure [Text Block] | 5 | Sale of Intellectual Property in Exchange for Cancellation of the Boston Scientific Notes |
In March 2014, the Company entered into an Asset Purchase Agreement (the “BSC Purchase Agreement”) with Boston Scientific. Pursuant to the BSC Purchase Agreement, Boston Scientific purchased from the Company certain MRI-safety technology for implantable medical leads (the “Transferred Intellectual Property”) for an aggregate purchase price of $4,338,601. The Transferred Intellectual Property includes some, but not all, of the intellectual property the Company previously licensed exclusively to Boston Scientific within the fields of neuromodulation and implantable medical leads for cardiac applications. The purchase price was satisfied through the cancellation of three convertible notes payable issued by the Company to Boston Scientific, which were scheduled to mature in 2014, in the aggregate principal amount of $4,338,601 (the “Boston Scientific Notes”). Accordingly, all obligations of the Company under the Boston Scientific Notes were discharged and the liens that secured the Company’s obligations under the Boston Scientific Notes were terminated and released. The Company recorded a gain in its consolidated statement of operations for the three months ended March 31, 2014, equal to the aggregate purchase price for the assets sold under the BSC Purchase Agreement. | ||
In connection with the BSC Purchase Agreement, the parties entered into a license agreement pursuant to which Boston Scientific granted the Company an exclusive, royalty-free, fully paid up, irrevocable, worldwide license to the Transferred Intellectual Property, with the right to sublicense, within fields of use other than neuromodulation and implantable medical leads for cardiac applications. | ||
In addition, Boston Scientific and the Company entered into amendments to their pre-existing development and license agreements (the “Pre-existing Agreements”), in the fields of neuromodulation and implantable medical leads for cardiac applications, to eliminate the milestone-based payments and royalties provided under those agreements. As such, the Company is no longer entitled to receive any potential future milestone-based payments or royalties under its development and license agreements with Boston Scientific. | ||
The transactions contemplated by the BSC Purchase Agreement do not impact the Company’s ability to continue to commercialize its ClearPoint system or to continue the development of its ClearTrace system. |
Note_6_Notes_Payable
Note 6 - Notes Payable | 3 Months Ended | ||||||
Mar. 31, 2015 | |||||||
Notes to Financial Statements | |||||||
Debt Disclosure [Text Block] | 6 | Notes Payable | |||||
Senior Secured Note Payable | |||||||
The Company has a note payable to Brainlab AG (the “Brainlab Note”) in the principal amount of $4,289,444. Interest accrues at 5.5% per year. The Brainlab Note matures in April 2016, and principal and accrued interest is payable in a single installment upon maturity. The Brainlab Note is secured by a senior security interest in the assets of the Company. The original discount associated with the Brainlab Note represented the difference between the fair value and the principal amount of the note at the time the note was modified in March 2013. The unamortized discount at March 31, 2015 and December 31, 2014 was $225,353 and $271,305, respectively. The discount is being amortized to interest expense using the effective interest method over the term of the Brainlab Note. | |||||||
2014 Junior Secured 12% Notes Payable | |||||||
In March 2014, the Company entered into securities purchase agreements for the private placement of (i) 12% second-priority secured non-convertible promissory notes maturing in 2019 (the “2014 Secured Notes”) and (ii) warrants to purchase 0.3 share of the Company’s common stock for each dollar in principal amount of the 2014 Secured Notes sold by the Company. Pursuant to those securities purchase agreements, the Company sold 2014 Secured Notes in a total aggregate principal amount of $3,725,000, together with warrants to purchase up to 1,117,500 shares of common stock, for aggregate gross proceeds of $3,725,000, before placement agent commissions and other expenses. | |||||||
The 2014 Secured Notes have a five-year term, and they bear interest at a rate of 12% per year, payable semi-annually, in arrears, on each six-month and one-year anniversary of the issuance date. The 2014 Secured Notes are not convertible into shares of the Company’s common stock. Following the third anniversary of the issuance date, the 2014 Secured Notes may be prepaid, without penalty or premium, provided that all principal and unpaid accrued interest under all 2014 Secured Notes is prepaid at the same time. Prior to the third anniversary of the issuance date, the Company may prepay all, but not less than all, of the principal and unpaid accrued interest under the 2014 Secured Notes at any time, subject to the Company’s payment of the additional prepayment premium stated in the notes. The 2014 Secured Notes are secured by a security interest in the Company’s property and assets, which security interest is junior and subordinate to the security interest that secures Brainlab note. | |||||||
The warrants issued to the investors are exercisable, in full or in part, at any time prior to the fifth anniversary of the issuance date, at an exercise price of $1.75 per share, subject to adjustment from time to time for stock splits or combinations, stock dividends, stock distributions, recapitalizations and other similar transactions. Assumptions used in calculating the fair value of the warrants using the Black-Scholes valuation model were: | |||||||
Dividend yield | 0% | ||||||
Expected Volatility | 47.50% | - | 47.70% | ||||
Risk free Interest rates | 1.73% | - | 1.76% | ||||
Expected life (in years) | 5 | ||||||
Under GAAP, the Company allocated the $3,725,000 in proceeds proportionately between the 2014 Secured Notes and the warrants issued to investors based on their relative fair values, with $413,057 being recorded as equity. The 2014 Secured Notes were recorded at the principal amount less a discount equal to the $413,057 amount recorded as equity. This discount is being amortized to interest expense over the five year term of the notes using the effective interest method. | |||||||
Non-employee directors of the Company invested a total of $1,100,000, either directly or through a trust. The Company’s placement agents earned cash commissions of $145,500 as well as warrants to purchase 72,750 shares of the Company’s common stock. The placement agent warrants have the same terms and conditions as the investor warrants. The placement agent cash commissions, the $30,210 fair value of the placement agent warrants, and other offering expenses totaling $76,186 were recorded as deferred financing costs and are classified as other assets. These deferred financing costs are being amortized to interest expense over the term of the 2014 Secured Notes using the effective interest method. | |||||||
2010 Junior Secured Notes Payable | |||||||
In November 2010, the Company issued an aggregate of 10,714,286 units and received proceeds of $3,000,000. The units were sold to existing stockholders and other existing security holders of the Company. Each unit consisted of a junior secured note and one share of the Company’s common stock. The Company issued 10,714,286 shares of common stock and junior secured notes in the aggregate principal amount of $3,000,000. The notes mature in November 2020 and accrue interest at the rate of 3.5% per year. The notes are secured by a security interest in the assets of the Company, which security interest is junior and subordinate to the security interests that secure the Brainlab Note and the 2014 Secured Notes. All outstanding principal and interest on the junior secured notes will be due and payable in a single payment upon maturity. | |||||||
Under GAAP, the Company allocated the $3,000,000 in proceeds from the sale of the units between the junior secured notes and the shares of common stock based on their relative fair values, with $2,775,300 being recorded as equity. The junior secured notes were recorded at the principal amount of $3,000,000 less a discount of $2,775,300. This discount is being amortized to interest expense over the 10-year term of the notes using the effective interest method. The fair value of the notes was estimated based on an assumed market interest rate for notes of similar terms and risk. The fair value of the Company’s common stock was estimated by management using a market approach, with input from a third-party valuation specialist. | |||||||
Four officers of the Company purchased an aggregate of 882,726 units in the offering for $247,164. In addition, three non-employee directors of the Company also purchased an aggregate of 567,203 units in the offering for $158,816. | |||||||
Scheduled Notes Payable Maturities | |||||||
Scheduled principal payments with respect to notes payable are summarized as follows: | |||||||
Years ending December 31, | |||||||
2015 | $ | - | |||||
2016 | 4,289,445 | ||||||
2017 | - | ||||||
2018 | - | ||||||
2019 | 3,725,000 | ||||||
Thereafter | 3,000,000 | ||||||
Total scheduled principal payments | 11,014,445 | ||||||
Less unamortized discounts at March 31, 2015 | (3,226,112 | ) | |||||
$ | 7,788,333 |
Note_7_Stockholders_Equity
Note 7 - Stockholders' Equity | 3 Months Ended | ||||||||||
Mar. 31, 2015 | |||||||||||
Notes to Financial Statements | |||||||||||
Stockholders' Equity Note Disclosure [Text Block] | 7 | Stockholders’ Equity | |||||||||
Common Stock | |||||||||||
Warrants | |||||||||||
Requiring Liability Accounting | |||||||||||
The net-cash settlement and down round provisions contained in the warrants issued in a January 2013 financing transaction require derivative liability accounting treatment for the warrants. Likewise, a down round provision contained in the terms of warrants issued by the Company in a July 2012 financing transaction also requires derivative liability accounting treatment for those warrants. The fair value of all such warrants was calculated using the Monte Carlo simulation valuation method. | |||||||||||
Assumptions used in calculating the fair value of the warrants at March 31, 2015 are noted below: | |||||||||||
Dividend yield | 0% | ||||||||||
Expected volatility | 40.40% | - | 100.00% | ||||||||
Risk free interest rates | 0.56% | - | 0.70% | ||||||||
Expected remaining term (in years) | 2.26 | - | 2.82 | ||||||||
In addition to the assumptions above, the Company also takes into consideration whether it would participate in another round of equity financing and, if so, what that stock price would be for such a financing at that time. | |||||||||||
The fair values and the changes in fair values of the warrants accounted for as a derivative liability is reflected below: | |||||||||||
Fair value at December 31, 2014 | $ | 2,198,162 | |||||||||
Loss on change in fair value | 782,802 | ||||||||||
Fair value at March 31, 2015 | $ | 2,980,964 | |||||||||
Stock Incentive Plans | |||||||||||
The Company has various share-based compensation plans and share-based compensatory contracts (collectively, the “Plans”). The Plans provide for the granting of share-based awards, such as incentive and non-qualified stock options, to employees, directors, consultants and advisors, and some of the Plans provide for cash-based awards. Awards may be subject to a vesting schedule as set forth in each individual award agreement. | |||||||||||
In June 2013, the stockholders of the Company approved the 2013 Incentive Compensation Plan (the “2013 Plan”). A total of 1,250,000 shares of the Company’s common stock are reserved for issuance under the 2013 Plan, of which awards as to 1,055,667 shares were outstanding as of March 31, 2015. Thus, awards as to 194,333 shares remained available for grants under the 2013 Plan as of March 31, 2015. | |||||||||||
In December 2013, the Company’s board of directors approved the 2013 Non-Employee Director Equity Incentive Plan (the “Director Plan”). A total of 570,000 shares of the Company’s common stock are reserved for issuance under the Director Plan. The shares reserved for issuance under the Director Plan are intended to be used to cover the stock options granted pursuant to the terms of the Company’s Non-Employee Director Compensation Plan. As of March 31, 2015, awards for 295,000 shares had been issued under the Director Plan. Therefore, 275,000 shares remained available for awards under the Director Plan as of March 31, 2015. | |||||||||||
Activity under all of the Company’s equity compensation plans during the three months ended March 31, 2015 is summarized below: | |||||||||||
Shares | Weighted - Average Exercise Price | ||||||||||
Outstanding at December 31, 2014 | 10,343,309 | $ | 1.36 | ||||||||
Granted | 502,500 | 1.01 | |||||||||
Forfeited | (35,000 | ) | 0.99 | ||||||||
Outstanding at March 31, 2015 | 10,810,809 | 1.35 | |||||||||
The estimated grant date fair values of options granted during the three months ended March 31, 2015 were calculated using the Black-Scholes valuation model, based on the following assumptions: | |||||||||||
Dividend yield | 0% | ||||||||||
Expected Volatility | 46.70% | to | 48.80% | ||||||||
Risk free Interest rates | 1.95% | to | 2.71% | ||||||||
Expected lives (in years) | 6 | ||||||||||
The Company records share-based compensation expense on a straight-line basis over the related vesting period. For the periods indicated below, share-based compensation expense related to options was: | |||||||||||
Three Months Ended March 31, | |||||||||||
2015 | 2014 | ||||||||||
$ | 367,309 | $ | 179,746 | ||||||||
As of March 31, 2015, there was unrecognized compensation expense of approximately $1,902,000 related to outstanding stock options, which is expected to be recognized over a weighted average period of approximately 2.2 years. | |||||||||||
Warrants | |||||||||||
Warrants have generally been issued for terms of up to five years. Common stock warrant activity for the three months ended March 31, 2015 was as follows: | |||||||||||
Shares | Weighted - Average Exercise Price | ||||||||||
Outstanding at December 31, 2014 | 20,759,136 | $ | 0.91 | ||||||||
Issued | 35,000 | 1 | |||||||||
Terminated | (25,444 | ) | 8 | ||||||||
Outstanding at March 31, 2015 | 20,768,692 | 0.9 |
Significant_Accounting_Policie
Significant Accounting Policies (Policies) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||
Basis of Accounting, Policy [Policy Text Block] | Basis of Presentation and Use of Estimates | ||||||||||||||||
In the opinion of management, the accompanying unaudited condensed consolidated financial statements (“condensed financial statements”) have been prepared on a basis consistent with the Company’s December 31, 2014 audited consolidated financial statements, and include all adjustments, consisting of only normal recurring adjustments, necessary to fairly state the information set forth therein. The condensed financial statements have been prepared in accordance with United States (“U.S.”) 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 the condensed 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 financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the SEC on March 17, 2015. The accompanying unaudited condensed consolidated balance sheet as of December 31, 2014 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 months ended March 31, 2015 may not be indicative of the results to be expected for the entire year or any future periods. | |||||||||||||||||
Derivative Liability for Warrants to Purchase Common Stock [Policy Text Block] | Derivative Liabilit | ||||||||||||||||
ies | |||||||||||||||||
for Warrants to Purchase Common Stock | |||||||||||||||||
Derivative liabilities for warrants to purchase common stock represent the fair value of warrants issued in connection with certain private placements of shares of the Company’s common stock (see Note 7). The fair values of these warrants are presented as liabilities based on certain net cash settlement and exercise price reset, or “down round,” provisions. These derivative liabilities, which are recorded on the accompanying consolidated balance sheets, are calculated utilizing the Monte Carlo simulation valuation method. Changes in the fair values of these warrants are recognized as other income or expense in the related statement of operations. | |||||||||||||||||
Fair Value Measurement, Policy [Policy Text Block] | Fair Value Measurements | ||||||||||||||||
The Company measures and records certain financial assets and liabilities at fair value on a recurring basis. GAAP provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority, referred to as Level 1, to quoted prices in active markets for identical assets and liabilities. The next priority, referred to as Level 2, is given to quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active; that is, markets in which there are few transactions for the asset or liability. The lowest priority, referred to as Level 3, is given to unobservable inputs. The table below reflects the level of the inputs used in the Company’s fair value calculation for instruments carried at fair value at (see Note 7): | |||||||||||||||||
Quoted Prices in Active Markets (Level 1) | Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Fair Value | ||||||||||||||
31-Mar-15 | |||||||||||||||||
Derivative liabilities - warrants | $ | - | $ | - | $ | 2,980,964 | $ | 2,980,964 | |||||||||
31-Dec-14 | |||||||||||||||||
Derivative liabilities - warrants | $ | - | $ | - | $ | 2,198,162 | $ | 2,198,162 | |||||||||
Carrying amounts of the Company’s cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair values due to their short maturities. | |||||||||||||||||
The table below reflects the carrying values and the estimated fair values, based on Level 3 inputs, of the Company’s outstanding notes payable, including the related accrued interest, at March 31, 2015: | |||||||||||||||||
Estimated | |||||||||||||||||
Carrying Values | Fair Values | ||||||||||||||||
Senior secured note payable, including accrued interest | $ | 4,562,416 | $ | 4,562,416 | |||||||||||||
2014 junior secured notes payable, including accrued interest | 3,382,150 | 3,733,375 | |||||||||||||||
2010 junior secured notes payable, including accrued interest | 814,217 | 2,362,324 | |||||||||||||||
Inventory, Policy [Policy Text Block] | Inventory | ||||||||||||||||
Inventory is carried at the lower of cost (first-in, first-out (FIFO) method) or net realizable value. All items included in inventory relate to the Company’s ClearPoint system. Software license inventory that is not expected to be utilized within the next twelve months 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. | |||||||||||||||||
Revenue Recognition, Policy [Policy Text Block] | Revenue Recognition | ||||||||||||||||
The Company’s revenues are comprised of: (1) product revenues resulting from the sale of ClearPoint system reusable products, disposable products and ClearTrace system components; (2) development service revenues; and (3) other service revenues. The Company recognizes revenue when persuasive evidence of an arrangement exists, the selling price or fee is fixed or determinable, collection is reasonably assured and, for product revenues, risk of loss has transferred to the customer. For all sales, the Company requires either a purchase agreement or a purchase order as evidence of an arrangement. The Company analyzes revenue recognition on an individual arrangement basis. The Company determines whether deliverables under an arrangement represent one or more separate units of accounting as defined by GAAP. Application of GAAP regarding multiple-element arrangements requires management to make subjective judgments about the values of the individual elements and whether delivered elements are separable from the other aspects of the contractual relationship. | |||||||||||||||||
-1 | Product Revenues | ||||||||||||||||
Sales of ClearPoint system reusable products: | |||||||||||||||||
Generally, revenues related to the sale of ClearPoint system reusable products are recognized upon installation of the system and the completion of training of at least one of the customer’s physicians, which typically occurs concurrently with the installation. Reusable products include software which is integral to the utility of the system as a whole. Sales of reusable products that have stand-alone value to the customer are recognized when risk of loss passes to the customer. Sales of ClearPoint reusable products to a distributor that has been trained to perform system installations and to conduct ClearPoint physician training are recognized at the time risk of loss passes to the distributor. | |||||||||||||||||
Sales of disposable products: | |||||||||||||||||
Revenues from the sale of disposable products, including ClearPoint system disposable products, are recognized at the time risk of loss passes to the customer, which is generally at shipping point or upon delivery to the customer’s location, depending on the agreed upon terms with the customer. | |||||||||||||||||
Sales of ClearTrace components: | |||||||||||||||||
Revenues from sales of ClearTrace system components to research sites for non-commercial use are recognized at the time risk of loss passes to the customer, which is generally at shipping point or upon delivery to the customer’s location, depending on the agreed upon terms with the customer. The Company does not have regulatory clearance or approval to sell ClearTrace system components for commercial use. | |||||||||||||||||
( | Development Service Revenues | ||||||||||||||||
2 | — The Company entered into an agreement to provide development services to a third party. Under the agreement, the Company earned revenue equal to costs incurred for outside expenses related to the development services provided, plus actual direct internal labor costs (including the cost of employee benefits), plus an overhead markup of the direct internal labor costs incurred. Revenues are recognized in the period in which the Company incurred the related costs. | ||||||||||||||||
) | |||||||||||||||||
( | Other Service Revenues | ||||||||||||||||
3 | — Other service revenues are comprised of installation fees, training fees, shipping fees and service fees charged in connection with ClearPoint system installations and ClearPoint system service agreements. Typically, the Company bills upfront for service agreements, which have terms ranging from one to three years. These amounts are recognized as revenues ratably over the term of the related service agreement. | ||||||||||||||||
) | |||||||||||||||||
Earnings Per Share, Policy [Policy Text Block] | Net Income (Loss | ||||||||||||||||
) | |||||||||||||||||
Per Share | |||||||||||||||||
The Company computes basic net income (loss) per share using the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share assumes the conversion, exercise or issuance of all potential common stock equivalents, unless the effect of inclusion would be anti-dilutive. For purposes of this calculation, common stock equivalents include the Company’s common stock options and common stock warrants. For purposes of computing diluted net income per share, the number of potential common stock equivalents is reduced by the number of shares the Company could have repurchased with the proceeds from issuance of the potentially dilutive shares. | |||||||||||||||||
Concentration Risk, Credit Risk, Policy [Policy Text Block] | 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 United States insured by the Federal Deposit Insurance Corporation. At March 31, 2015, the Company had bank balances in excess of the insured limits of approximately $68,000, most of which was held on deposit to satisfy outstanding checks. | |||||||||||||||||
Accounts receivable at March 31, 2015 and December 31, 2014, and substantially all product revenues recognized for the three months ended March 31, 2015 and 2014, relate to sales to customers located in the U.S. and to one distributor. At March 31, 2015, three customers represented 24%, 14% and 12% of the Company’s accounts receivable balance. At December 31, 2014, two customers represented 20% and 17% of the Company’s accounts receivable balance. No other customer represented more than 9% of total accounts receivable at March 31, 2015 or December 31, 2014. For the three months ended March 31, 2015, sales to two customers represented 17% and 14% of product revenues. For the three months ended March 31, 2014, sales to a distributor represented 15% of product revenues and sales to two customers represented 13% and 12% of product revenues. No other single customer represented greater than 8% of product revenues for the three months ended March 31, 2015 or 2014. 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, but the Company has not experienced any credit losses or recorded any allowances to date. | |||||||||||||||||
New Accounting Pronouncements, Policy [Policy Text Block] | Recent | ||||||||||||||||
Accounting Pronouncements | |||||||||||||||||
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers,” which creates a new Topic, Accounting Standards Codification (“ASC”) Topic 606. The standard is principle-based and provides a five-step model to determine when and how revenue is recognized. The core principle is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This standard is effective for the Company beginning in 2017 and allows for either full retrospective adoption or modified retrospective adoption. The Company is currently evaluating the impact of the adoption of ASC Topic 606 on its consolidated financial statements. | |||||||||||||||||
In August 2014, the FASB issued ASU 2014-15, “Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern,” which provides guidance on determining when and how to disclose going-concern uncertainties in financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company is currently evaluating the impact of this update on future disclosures concerning its liquidity position. | |||||||||||||||||
In April 2015, the FASB issued ASU 2015-03, "Simplifying the Presentation of Debt Issuance Costs", which requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This ASU requires retrospective adoption and is effective for financial statements issued for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact that this guidance will have on its financial statements. |
Note_2_Basis_of_Presentation_a1
Note 2 - Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Notes Tables | |||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] | Quoted Prices in Active Markets (Level 1) | Significant Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Fair Value | |||||||||||||
31-Mar-15 | |||||||||||||||||
Derivative liabilities - warrants | $ | - | $ | - | $ | 2,980,964 | $ | 2,980,964 | |||||||||
31-Dec-14 | |||||||||||||||||
Derivative liabilities - warrants | $ | - | $ | - | $ | 2,198,162 | $ | 2,198,162 | |||||||||
Schedule of Carrying Values and Estimated Fair Values of Debt Instruments [Table Text Block] | Estimated | ||||||||||||||||
Carrying Values | Fair Values | ||||||||||||||||
Senior secured note payable, including accrued interest | $ | 4,562,416 | $ | 4,562,416 | |||||||||||||
2014 junior secured notes payable, including accrued interest | 3,382,150 | 3,733,375 | |||||||||||||||
2010 junior secured notes payable, including accrued interest | 814,217 | 2,362,324 |
Note_3_Inventory_Tables
Note 3 - Inventory (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Notes Tables | |||||||||
Schedule of Inventory, Current [Table Text Block] | 31-Mar | December 31, | |||||||
2015 | 2014 | ||||||||
Raw materials and work in process | $ | 1,028,258 | $ | 899,014 | |||||
Software license inventory | 350,000 | 350,000 | |||||||
Finished goods | 718,641 | 716,025 | |||||||
Inventory included in current assets | 2,096,899 | 1,965,039 | |||||||
Software license inventory | 892,500 | 910,000 | |||||||
$ | 2,989,399 | $ | 2,875,039 |
Note_6_Notes_Payable_Tables
Note 6 - Notes Payable (Tables) | 3 Months Ended | ||||||
Mar. 31, 2015 | |||||||
Notes Tables | |||||||
Assumptions Used in Calculating Fair Value of Warrants Issued [Table Text Block] | Dividend yield | 0% | |||||
Expected Volatility | 47.50% | - | 47.70% | ||||
Risk free Interest rates | 1.73% | - | 1.76% | ||||
Expected life (in years) | 5 | ||||||
Schedule of Maturities of Long-term Debt [Table Text Block] | Years ending December 31, | ||||||
2015 | $ | - | |||||
2016 | 4,289,445 | ||||||
2017 | - | ||||||
2018 | - | ||||||
2019 | 3,725,000 | ||||||
Thereafter | 3,000,000 | ||||||
Total scheduled principal payments | 11,014,445 | ||||||
Less unamortized discounts at March 31, 2015 | (3,226,112 | ) | |||||
$ | 7,788,333 |
Note_7_Stockholders_Equity_Tab
Note 7 - Stockholders' Equity (Tables) | 3 Months Ended | ||||||||||
Mar. 31, 2015 | |||||||||||
Notes Tables | |||||||||||
Assumptions Used in Calculating Fair Value of Warrants Issued [Table Text Block] | Dividend yield | 0% | |||||||||
Expected Volatility | 47.50% | - | 47.70% | ||||||||
Risk free Interest rates | 1.73% | - | 1.76% | ||||||||
Expected life (in years) | 5 | ||||||||||
Fair Value, Liabilities Measured on Recurring Basis [Table Text Block] | Fair value at December 31, 2014 | $ | 2,198,162 | ||||||||
Loss on change in fair value | 782,802 | ||||||||||
Fair value at March 31, 2015 | $ | 2,980,964 | |||||||||
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | Shares | Weighted - Average Exercise Price | |||||||||
Outstanding at December 31, 2014 | 10,343,309 | $ | 1.36 | ||||||||
Granted | 502,500 | 1.01 | |||||||||
Forfeited | (35,000 | ) | 0.99 | ||||||||
Outstanding at March 31, 2015 | 10,810,809 | 1.35 | |||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | Dividend yield | 0% | |||||||||
Expected Volatility | 46.70% | to | 48.80% | ||||||||
Risk free Interest rates | 1.95% | to | 2.71% | ||||||||
Expected lives (in years) | 6 | ||||||||||
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block] | Three Months Ended March 31, | ||||||||||
2015 | 2014 | ||||||||||
$ | 367,309 | $ | 179,746 | ||||||||
Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block] | Shares | Weighted - Average Exercise Price | |||||||||
Outstanding at December 31, 2014 | 20,759,136 | $ | 0.91 | ||||||||
Issued | 35,000 | 1 | |||||||||
Terminated | (25,444 | ) | 8 | ||||||||
Outstanding at March 31, 2015 | 20,768,692 | 0.9 | |||||||||
Common Stock Warrants Issued in Private Placement [Member] | |||||||||||
Notes Tables | |||||||||||
Assumptions Used in Calculating Fair Value of Warrants Issued [Table Text Block] | Dividend yield | 0% | |||||||||
Expected volatility | 40.40% | - | 100.00% | ||||||||
Risk free interest rates | 0.56% | - | 0.70% | ||||||||
Expected remaining term (in years) | 2.26 | - | 2.82 |
NonCash_Investing_and_Financin1
Non-Cash Investing and Financing Transactions (Details Textual) (USD $) | 3 Months Ended | 1 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2014 | |
Deferred Finance Costs, Net | $30,210 | $30,210 | |
Clear Point Reusable Components [Member] | |||
Transfer from Inventory to Property and Equipment | 8,006 | 47,329 | |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | 3,640 | 18,780 | 18,780 |
Boston Scientific Notes [Member] | |||
Notes Payable Cancelled, Principal Amount | 4,338,601 | ||
Warrant [Member] | |||
Derivative, Fair Value, Net | $413,057 | $413,057 |
Note_1_Description_of_the_Busi1
Note 1 - Description of the Business and Liquidity (Details Textual) (USD $) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | |
Retained Earnings (Accumulated Deficit) | ($77,277,334) | ($81,222,588) | ($77,277,334) | |||
Net Cash Provided by (Used in) Operating Activities | -2,799,042 | -1,359,118 | -7,250,303 | |||
Proceeds from Issuance of Private Placement | 9,379,880 | 3,503,314 | ||||
Cash and Cash Equivalents, at Carrying Value | 9,244,006 | 5,801,050 | 6,438,329 | 5,801,050 | 9,244,006 | 3,516,244 |
Boston Scientific Notes [Member] | ||||||
Notes Payable Cancelled, Principal Amount | $4,338,601 |
Note_2_Basis_of_Presentation_a2
Note 2 - Basis of Presentation and Summary of Significant Accounting Policies (Details Textual) (USD $) | 3 Months Ended | 12 Months Ended | 3 Months Ended |
Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 | |
Cash, Uninsured Amount | 68,000 | ||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Other Customers with Total Accounts Receivable over Threshold [Member] | |||
Concentration Risk, Percentage | 9.00% | 9.00% | |
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer A [Member] | |||
Concentration Risk, Percentage | 24.00% | 20.00% | |
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer B [Member] | |||
Concentration Risk, Percentage | 14.00% | 17.00% | |
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer C [Member] | |||
Concentration Risk, Percentage | 12.00% | ||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | |||
Number of Major Customers | 3 | 2 | |
Sales Revenue, Net [Member] | Customer Concentration Risk [Member] | Other Customers with Total Accounts Receivable over Threshold [Member] | |||
Concentration Risk, Percentage | 8.00% | 8.00% | |
Sales Revenue, Net [Member] | Customer Concentration Risk [Member] | Customer A [Member] | |||
Concentration Risk, Percentage | 17.00% | 13.00% | |
Sales Revenue, Net [Member] | Customer Concentration Risk [Member] | Customer B [Member] | |||
Concentration Risk, Percentage | 14.00% | 12.00% | |
Sales Revenue, Net [Member] | Customer Concentration Risk [Member] | Customer C [Member] | |||
Concentration Risk, Percentage | 15.00% | ||
Sales Revenue, Net [Member] | Customer Concentration Risk [Member] | |||
Number of Major Customers | 2 | 2 | |
Minimum [Member] | |||
Term of Service Agreements | 1 year | ||
Maximum [Member] | |||
Term of Service Agreements | 3 years |
Note_2_Basis_of_Presentation_a3
Note 2 - Basis of Presentation and Summary of Significant Accounting Policies - Financial Assets and Liabilities at Fair Value on a Recurring Basis (Details) (Fair Value, Measurements, Recurring [Member], Warrant [Member], USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Derivative liabilities - warrants | $2,980,964 | $2,198,162 |
Fair Value, Inputs, Level 3 [Member] | ||
Derivative liabilities - warrants | $2,980,964 | $2,198,162 |
Note_2_Basis_of_Presentation_a4
Note 2 - Basis of Presentation and Summary of Significant Accounting Policies - Carrying Values and Estimated Fair Values of Outstanding Notes (Details) (USD $) | Mar. 31, 2015 |
Senior Notes [Member] | |
Carrying Values | $4,562,416 |
Estimated Fair Value | 4,562,416 |
2014 Junior Secured Notes Payable [Member] | |
Carrying Values | 3,382,150 |
Estimated Fair Value | 3,733,375 |
2010 Junior Secured Notes Payable [Member] | |
Carrying Values | 814,217 |
Estimated Fair Value | $2,362,324 |
Note_3_Inventory_Inventory_Det
Note 3 - Inventory - Inventory (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Raw materials and work in process | $1,028,258 | $899,014 |
Software license inventory | 350,000 | 350,000 |
Finished goods | 718,641 | 716,025 |
Inventory included in current assets | 2,096,899 | 1,965,039 |
Software license inventory | 892,500 | 910,000 |
$2,989,399 | $2,875,039 |
Note_4_Restructuring_Charges_D
Note 4 - Restructuring Charges (Details Textual) (USD $) | 1 Months Ended | 3 Months Ended |
Mar. 31, 2015 | Mar. 31, 2015 | |
Restructuring and Related Cost, Number of Positions Eliminated | 7 | |
Restructuring Charges | $753,400 | $753,400 |
Executive Officer [Member] | ||
Restructuring and Related Cost, Number of Positions Eliminated | 3 | |
Employee Severance [Member] | ||
Restructuring Charges | $718,000 |
Note_5_Sale_of_Intellectual_Pr1
Note 5 - Sale of Intellectual Property in Exchange for Cancellation of the Boston Scientific Notes (Details Textual) (USD $) | 1 Months Ended |
Mar. 31, 2014 | |
Number of Convertible Notes Payable Cancelled | 3 |
Boston Scientific Notes [Member] | |
Sale of Intangible Asset | $4,338,601 |
Notes Payable Cancelled, Principal Amount | $4,338,601 |
Note_6_Notes_Payable_Details_T
Note 6 - Notes Payable (Details Textual) (USD $) | 1 Months Ended | 13 Months Ended | |||
Dec. 31, 2014 | Mar. 31, 2014 | Nov. 30, 2010 | Nov. 30, 2011 | Mar. 31, 2015 | |
Long-term Debt | $11,014,445 | ||||
Debt Instrument, Interest Rate, Stated Percentage | 3.50% | ||||
Debt Instrument, Unamortized Discount | 2,775,300 | 3,226,112 | |||
Debt Instrument, Face Amount | 3,000,000 | ||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $0.91 | $0.90 | |||
Proceeds from Issuance of Private Placement | 9,379,880 | 3,503,314 | |||
Deferred Finance Costs, Net | 30,210 | ||||
Units Issued | 10,714,286 | ||||
Units Share of Common Stock Per Unit | $1 | ||||
Stock Issued During Period, Shares, Conversion of Units | 10,714,286 | ||||
Proceeds from Issuance or Sale of Equity | 3,000,000 | ||||
Debt Instrument, Term | 10 years | ||||
Senior Notes [Member] | |||||
Long-term Debt | 4,289,444 | ||||
Debt Instrument, Interest Rate, Stated Percentage | 5.50% | ||||
Debt Instrument, Unamortized Discount | 271,305 | 225,353 | |||
2014 Junior Secured Notes Payable [Member] | Shareholders' Equity [Member] | |||||
Proceeds from Issuance of Debt | 413,057 | ||||
2014 Junior Secured Notes Payable [Member] | |||||
Debt Instrument, Interest Rate, Stated Percentage | 12.00% | ||||
Debt Instrument, Unamortized Discount | 413,057 | ||||
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right | 0.3 | ||||
Debt Instrument, Face Amount | 3,725,000 | ||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 1,117,500 | ||||
Proceeds from Secured Notes Payable | 3,725,000 | ||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $1.75 | ||||
Debt Instrument, Convertible, Remaining Discount Amortization Period | 5 years | ||||
Investment from Nonemployee Directors [Member] | |||||
Proceeds from Issuance of Private Placement | 1,100,000 | ||||
Issued to Placement Agents and Subagents [Member] | |||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 72,750 | ||||
Payments for Commissions | 145,500 | ||||
Other Assets [Member] | Placement Agent Warrants [Member] | |||||
Deferred Finance Costs, Net | 30,210 | ||||
Other Assets [Member] | Other Offering Expenses [Member] | |||||
Deferred Finance Costs, Net | 76,186 | ||||
Officer [Member] | |||||
Units Issued | 882,726 | ||||
Proceeds from Issuance or Sale of Equity | 247,164 | ||||
Director [Member] | |||||
Units Issued | 567,203 | ||||
Proceeds from Issuance or Sale of Equity | $158,816 |
Note_6_Notes_Payable_Assumptio
Note 6 - Notes Payable - Assumptions Used in Calculating Fair Value of Warrants Issued, Directors (Details) (Black Scholes Valuation Model [Member]) | 3 Months Ended |
Mar. 31, 2015 | |
Dividend yield | 0.00% |
Expected life (in years) | 5 years |
Minimum [Member] | |
Expected Volatility | 47.50% |
Risk free Interest rates | 1.73% |
Maximum [Member] | |
Expected Volatility | 47.70% |
Risk free Interest rates | 1.76% |
Note_6_Notes_Payable_Principle
Note 6 - Notes Payable - Principle Payments (Details) (USD $) | Mar. 31, 2015 |
2016 | $4,289,445 |
2019 | 3,725,000 |
Thereafter | 3,000,000 |
Total scheduled principal payments | 11,014,445 |
Less unamortized discounts at March 31, 2015 | -3,226,112 |
$7,788,333 |
Note_7_Stockholders_Equity_Det
Note 7 - Stockholders' Equity (Details Textual) (USD $) | 3 Months Ended | |||
Mar. 31, 2015 | Dec. 31, 2014 | Jun. 30, 2013 | Dec. 31, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 10,810,809 | 10,343,309 | ||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $1,902,000 | |||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 2 years 73 days | |||
The 2013 Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 1,250,000 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 1,055,667 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 194,333 | |||
The Director Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 570,000 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 275,000 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Shares Issued in Period | 295,000 | |||
Service Provider [Member] | ||||
Term of Warrants | 5 years |
Note_7_Stockholders_Equity_Ass
Note 7 - Stockholders' Equity - Assumptions Used in Calculating Fair Value of Warrants Issued, Private Placement (Details) (Monte Carlo Simulation Valuation Method [Member]) | 3 Months Ended |
Mar. 31, 2015 | |
Dividend yield | 0.00% |
Minimum [Member] | |
Expected volatility | 40.40% |
Risk free interest rates | 0.56% |
Expected remaining term (in years) | 2 years 94 days |
Maximum [Member] | |
Expected volatility | 100.00% |
Risk free interest rates | 0.70% |
Expected remaining term (in years) | 2 years 299 days |
Note_7_Stockholders_Equity_Cha
Note 7 - Stockholders' Equity - Changes in Fair Values of Warrants Issued (Details) (USD $) | Warrant [Member] | Total |
Fair value at Dec. 31, 2014 | $2,198,162 | $2,198,162 |
Loss on change in fair value | 782,802 | 782,802 |
Fair value at Mar. 31, 2015 | $2,980,964 | $2,980,964 |
Note_7_Stockholders_Equity_Sto
Note 7 - Stockholders' Equity - Stock Options Activity (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | |
Outstanding at December 31, 2014 (in shares) | 10,810,809 | 10,343,309 |
Outstanding at December 31, 2014 (in dollars per share) | $1.35 | $1.36 |
Granted (in shares) | 502,500 | |
Granted (in dollars per share) | $1.01 | |
Forfeited (in shares) | -35,000 | |
Forfeited (in dollars per share) | $0.99 |
Note_7_Stockholders_Equity_Sto1
Note 7 - Stockholders' Equity - Stock Options Valuation Assumptions (Details) | 3 Months Ended |
Mar. 31, 2015 | |
Dividend yield | 0.00% |
Expected lives (in years) | 6 years |
Minimum [Member] | |
Expected Volatility | 46.70% |
Risk free Interest rates | 1.95% |
Maximum [Member] | |
Expected Volatility | 48.80% |
Risk free Interest rates | 2.71% |
Note_7_Stockholders_Equity_Emp
Note 7 - Stockholders' Equity - Employee Share-Based Compensation Expense (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Share-based compensation | $367,309 | $179,746 |
Note_7_Stockholders_Equity_Com
Note 7 - Stockholders' Equity - Common Stock Warrants (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | |
Outstanding at December 31, 2014 (in shares) | 20,768,692 | 20,759,136 |
Outstanding at December 31, 2014 (in dollars per share) | $0.90 | $0.91 |
Issued (in shares) | 35,000 | |
Issued (in dollars per share) | $1 | |
Terminated (in shares) | -25,444 | |
Terminated (in dollars per share) | $8 |