Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 10, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | MRI INTERVENTIONS, INC. | |
Entity Central Index Key | 1,285,550 | |
Document Type | 10-Q | |
Trading Symbol | MRIC | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity a Well-known Seasoned Issuer | No | |
Entity a Voluntary Filer | No | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 74,971,026 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,015 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Current Assets: | ||
Cash and cash equivalents | $ 1,851,862 | $ 9,244,006 |
Accounts receivable | 837,441 | 468,949 |
Inventory, net | 1,802,818 | 1,965,039 |
Prepaid expenses and other current assets | 133,341 | 29,220 |
Total current assets | 4,625,462 | 11,707,214 |
Property and equipment, net | 495,084 | 482,970 |
Software license inventory | 919,600 | 910,000 |
Other assets | 232,982 | 285,498 |
Total assets | 6,273,128 | 13,385,682 |
Current liabilities: | ||
Accounts payable | 640,637 | 997,090 |
Accrued compensation | 459,142 | 323,644 |
Other accrued liabilities | 1,092,112 | 1,297,712 |
Derivative liabilities | 1,216,939 | 2,198,162 |
Deferred product and service revenues | 165,562 | $ 102,710 |
Senior secured note payable, net of unamortized discount of $118,342 | 4,171,103 | |
Total current liabilities | 7,745,495 | $ 4,919,318 |
Accrued interest | $ 524,625 | 876,025 |
Senior secured note payable, net of unamortized discount of $271,305 | 4,018,139 | |
Total liabilities | $ 12,095,500 | $ 13,486,012 |
Commitments and contingencies | ||
Stockholders' deficit: | ||
Common stock, $0.01 par value; 200,000,000 shares authorized; 74,971,026 shares issued and outstanding at September 30, 2015; and 74,842,428 issued and outstanding at December 31, 2014 | $ 749,709 | $ 748,424 |
Additional paid-in capital | 77,956,063 | 76,428,580 |
Accumulated deficit | (84,528,144) | (77,277,334) |
Total stockholders' deficit | (5,822,372) | (100,330) |
Total liabilities and stockholders' deficit | 6,273,128 | 13,385,682 |
Junior Secured Notes Payable 2014 [Member] | ||
Current liabilities: | ||
Junior secured notes payable | 3,407,636 | 3,355,701 |
Junior Secured Notes Payable 2010 [Member] | ||
Current liabilities: | ||
Junior secured notes payable | $ 417,744 | $ 316,829 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Unamortized discount current | $ 118,342 | |
Unamortized discount non current | $ 271,305 | |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 74,971,026 | 74,842,428 |
Common stock, shares outstanding (in shares) | 74,971,026 | 74,842,428 |
Junior Secured Notes Payable 2014 [Member] | ||
Unamortized discount non current | $ 317,364 | $ 369,299 |
Interest rate | 12.00% | 12.00% |
Junior Secured Notes Payable 2010 [Member] | ||
Unamortized discount non current | $ 2,582,256 | $ 2,683,171 |
Interest rate | 12.00% | 12.00% |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Revenues: | ||||
Product revenues | $ 1,209,321 | $ 588,343 | $ 2,963,073 | $ 2,456,171 |
Other service revenues | 33,709 | $ 44,861 | 93,663 | 84,623 |
Development service revenues | 3,404 | 25,842 | 103,846 | |
Total revenues | 1,246,434 | $ 633,204 | 3,082,578 | 2,644,640 |
Cost of product revenues | 560,394 | 315,852 | 1,340,824 | 1,243,472 |
Research and development costs | 480,280 | 873,366 | 1,434,723 | 2,589,410 |
Selling, general, and administrative expenses | $ 2,132,777 | $ 2,062,309 | 6,608,829 | $ 5,792,241 |
Restructuring charges | $ 1,252,584 | |||
Gain (loss) on change in fair value of derivative liabilities | $ (4,338,601) | |||
Operating loss | $ (1,927,017) | $ (2,618,323) | $ (7,554,382) | (2,641,882) |
Other income (expense): | ||||
Gain on change in fair value of derivative liabilities | 1,950,329 | (781,157) | 981,222 | 578,179 |
Other income, net | 45,302 | 38,237 | 243,505 | 167,614 |
Interest income | 2,692 | 2,804 | 14,887 | 10,055 |
Interest expense | (316,705) | (288,783) | (936,043) | (723,886) |
Net loss | $ (245,399) | $ (3,647,222) | $ (7,250,811) | $ (2,609,920) |
Net loss per share attributable to common stockholders: | ||||
Basic and diluted (in dollars per share) | $ 0 | $ 0 | $ (0.10) | $ (0.04) |
Weighted average shares outstanding: | ||||
Basic and diluted (in shares) | 74,912,906 | 58,957,191 | 74,878,962 | 58,864,305 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash flows from operating activities: | ||
Net loss | $ (7,250,811) | $ (2,609,920) |
Adjustments to reconcile net income (loss) to net cash flows from operating activities: | ||
Depreciation and license amortization | 153,545 | 294,639 |
Share-based compensation | 1,421,198 | 555,909 |
Expenses paid through the issuance of common stock | 107,570 | 374,546 |
Gain on change in fair value of derivative liabilities | $ (981,222) | (578,179) |
Gain on negotiated reductions in accounts payable | (70,000) | |
Gain on sale of intellectual property | (4,338,601) | |
Amortization of debt issuance costs and original issue discounts | $ 342,645 | 233,865 |
Increase (decrease) in cash resulting from changes in: | ||
Accounts receivable | (368,492) | 221,586 |
Inventory | 83,987 | (657,948) |
Prepaid expenses and other current assets | (104,121) | $ 126,778 |
Other assets | (9,317) | |
Accounts payable and accrued expenses | (777,956) | $ 1,203,834 |
Deferred revenue | 62,852 | (12,796) |
Net cash flows from operating activities | (7,320,122) | (5,256,287) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (72,021) | (11,590) |
Net cash flows from investing activities | $ (72,021) | (11,590) |
Cash flows from financing activities: | ||
Net proceeds from debt private placement | 3,503,314 | |
Proceeds from stock option exercises | 143,000 | |
Net cash flows from financing activities | 3,646,314 | |
Net change in cash and cash equivalents | $ (7,392,144) | (1,621,563) |
Cash and cash equivalents, beginning of period | 9,244,006 | 3,516,244 |
Cash and cash equivalents, end of period | $ 1,851,862 | $ 1,894,681 |
Cash paid for: | ||
Income taxes | ||
Interest | $ 223,500 | $ 223,823 |
NON-CASH INVESTING AND FINANCING TRANSACTIONS | ||
Transfer from Inventory to Property and Equipment | $ 196,882 | 10,344 |
Notes Payable Cancelled, Principal Amount | 4,338,601 | |
Fair value of the warrants issued to the placement agent | 30,210 | |
Debt discount | $ 413,057 |
Description of the Business and
Description of the Business and Liquidity | 9 Months Ended |
Sep. 30, 2015 | |
Description Of Business And Liquidity | |
Description of the Business and Liquidity | 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 Companys 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 condensed consolidated financial statements. The Companys 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 Companys 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 Managements Plans The cumulative net loss from the Companys inception through September 30, 2015 was $84,528,144. Net cash used in operations was $7,320,122 for the nine months ended September 30, 2015 and $7,250,303 for the year ended December 31, 2014. Since inception, the Company has financed its operations principally from the sale of equity securities, the issuance of notes payable and license arrangements. Recent financing activities consist of: (i) a December 2014 private placement of equity, which resulted in net proceeds of $9,379,880; and (ii) a March 2014 private placement of debt and warrants, 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). The Companys plans for the next twelve months reflect managements anticipation of increases in revenues from sales of the ClearPoint system and related disposable products as a result of greater utilization at existing installed sites and the installation of the ClearPoint system at new sites. Management also anticipates maintaining recurring operating expenses at historical levels, with expected decreases in general and administrative expenses resulting primarily from the operational restructuring discussed in Note 4, being offset by increases in selling and marketing expenses associated with the anticipated growth in revenues. However, there is no assurance that the Company will be able to achieve its anticipated results, and even in the event such results are achieved, the Company expects to continue to consume cash in its operations over at least the next twelve months. In addition, as discussed in Note 6, the Company has a note payable to Brainlab AG (the Brainlab Note) that matures in April 2016, with both principal of $4.3 million and accrued interest of $740,000 at the maturity date payable in a single installment upon maturity. As a result of the foregoing, the Company believes it will be necessary to seek additional financing from the sale of equity or debt securities, which likely would result in dilution to the Companys current stockholders, or from the establishment of a credit facility. There is no assurance, however, that the Company will be able to obtain such additional financing on commercially reasonable terms, if at all, and there is no assurance that any additional financing that the Company does obtain will be sufficient to meet its needs. If the Company is not able to obtain the additional financing on a timely basis, the Company may be unable to achieve its anticipated results, and the Company may not be able to meet its other obligations as they become due. An inability to obtain a sufficient amount of additional financing would create substantial doubt as to the Companys ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence. |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2015 | |
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 (condensed financial statements) have been prepared on a basis consistent with the Companys 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 Companys 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 and nine months ended September 30, 2015 may not be indicative of the results to be expected for the entire year or any future periods. Derivative Liabilities 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 Companys 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 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 statements 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 Companys fair value calculation for instruments carried at fair value at (see Note 7): Quoted Prices Significant Significant Total Fair September 30, 2015 Derivative liabilities - warrants $ $ $ 1,216,939 $ 1,216,939 December 31, 2014 Derivative liabilities - warrants $ $ $ 2,198,162 $ 2,198,162 Carrying amounts of the Companys 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 Companys outstanding notes payable, including the related accrued interest, at September 30, 2015: Carrying Values Estimated Fair Values Senior secured note payable, including accrued interest $ 4,789,026 $ 4,789,026 2014 junior secured notes payable, including accrued interest 3,416,011 3,416,011 2010 junior secured notes payable, including accrued interest 933,994 2,476,630 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 Companys 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 Companys revenues are comprised of: (1) product revenues resulting primarily from the sale of ClearPoint system reusable and disposable products; (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: Sales of disposable products: (2) Development Service Revenues (3) Other Service Revenues 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 are comprised of the Companys common stock options and warrants described in Note 7, 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, 2015, the Company had no bank balances that were in excess of the insured limits. At September 30, 2015, three commercial customers represented 21%, 10% and 10% of the Companys accounts receivable balance. At December 31, 2014, two commercial customers represented 20% and 17% of the Companys accounts receivable balance. No other customer represented more than 9% of total accounts receivable at each of September 30, 2015 and December 31, 2014. For the three months ended September 30, 2015, sales to three customers represented 16%, 11% and 10% of product revenues. For the three months ended September 30, 2014, sales to two customers represented 16% and 15% of product revenues. For the nine months ended September 30, 2015, sales to one customer represented 13% of product revenues. For the nine months ended September 30, 2014, sales to one customer represented 10% of product revenues. No other single customer represented more than 9% of product revenues for each of the three months ended September 30, 2015 and 2014, and 8% of product revenues for each the nine months ended September 30, 2015 and 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, and as amended in August 2015, 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 2018. Earlier application is permitted only as of 2017. 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 Entitys 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 entitys 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 entitys ability to continue as a going concern. ASU 2014-15 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. ASU 2015-03 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. While ASU 2015-03 permits early adoption, the Company has opted to implement its provisions in conformity with its effective date. Adoption will result in offsetting reductions of assets and liabilities in the amount of the unamortized balances of debt issuance costs as of each balance sheet date, and will have no effect on consolidated results of operations. In August 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory, which require an entity to measure inventor at the lower of cost and net realizable value, as opposed to the current requirement to measure inventory at the lower of cost or market, where market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. ASU 2015-11 is effective for fiscal years beginning after December 15, 2016 and interim periods within fiscal years beginning after December 15, 2017. ASU 2015-11 is to be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The Company believes that adoption of ASU 2015-11 will not have a material effect on consolidated results of operations. |
Inventory
Inventory | 9 Months Ended |
Sep. 30, 2015 | |
Inventory Disclosure [Abstract] | |
Inventory | 3. Inventory Inventory consists of the following as of: September 30, 2015 December 31, 2014 Raw materials and work in process $ 1,075,189 $ 899,014 Software license inventory 284,800 350,000 Finished goods 442,829 716,025 Inventory included in current assets 1,802,818 1,965,039 Software license inventory 919,600 910,000 $ 2,722,418 $ 2,875,039 |
Restructuring Charges
Restructuring Charges | 9 Months Ended |
Sep. 30, 2015 | |
Restructuring and Related Activities [Abstract] | |
Restructuring Charges | 4. Restructuring Charges In May 2015, the Company closed its Memphis, Tennessee office and consolidated all major business functions into its Irvine, California headquarters. The Company did not retain any of its Memphis-based employees. A total of seven employees were impacted by the consolidation, including three executives of the Company. In connection with this consolidation, the Company recorded restructuring charges of $753,400 in March 2015, concurrent with its public announcement of the consolidation, of which approximately $718,000 related to costs associated with severance and other compensation for the impacted employees. In connection with the then-contemplated consolidation of the Companys business functions discussed above, effective August 1, 2014, the Company entered into new employment agreements with its then-Chief Financial Officer and one other executive officer. Among other items, the new agreements each provided that if, on or before July 31, 2015, the Company were to terminate the employment of either officer, any unvested stock options would become fully vested on the termination date and would be exercisable until the contractual expiration date of each such option. Under the officers prior employment agreements, the exercise period subsequent to termination without cause was three years. In connection with the Companys consolidation of its business functions as discussed above, these officers employment with the Company was terminated without cause on May 15, 2015. Also in connection with the consolidation of the Companys business functions discussed above, effective April 1, 2015, the Companys then-Executive Chairman and former Chief Executive Officer separated his employment with the Company (continuing thereafter as Chairman). In recognition of the Chairmans contributions as an officer of the Company, the Companys Board of Directors accelerated the vesting of all previously unvested options held by the Chairman and extended the exercise period until the contractual expiration date of each such option. Under the Chairmans prior employment agreement, the exercise period subsequent to termination without cause was three years. As a result of the modification of the terms of stock options, and as of the employment separation dates in 2015, all as discussed in the preceding two paragraphs, the Company revalued such options and recognized non-cash restructuring costs of $492,926, and recorded a corresponding amount as additional paid-in capital. Also, in the second fiscal quarter of 2015, the Company recorded additional restructuring charges of $6,258. As a result of the foregoing, the Company recorded aggregate restructuring costs of $1,252,584 in its condensed consolidated statement of operations for the nine months ended September 30, 2015 related to the consolidation of its business functions. A reconciliation of the liability for accrued restructuring charges, included in other accrued liabilities in the accompanying condensed consolidated balance sheet, for the nine months ended September 30, 2015 is as follows: Balance, December 31, 2014 $ Activity during the nine months ended September 30, 2015 Accruals 1,252,584 Less: Non-cash portion of accruals related to modification of stock option terms (492,926 ) Payments (733,938 ) Reclassifications (20,720 ) Balance, September 30, 2015 $ 5,000 |
Sale of Intellectual Property i
Sale of Intellectual Property in Exchange for Cancellation of the Boston Scientific Notes | 9 Months Ended |
Sep. 30, 2015 | |
Related Party Transactions [Abstract] | |
Sale of Intellectual Property in Exchange for Cancellation of the Boston Scientific Notes | 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 Companys obligations under the Boston Scientific Notes were terminated and released. The Company recorded a gain in its condensed consolidated statement of operations for the nine months ended September 30, 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 completed under the terms of the BSC Purchase Agreement do not impact the Companys ability to continue to commercialize its ClearPoint system or to continue the development of its ClearTrace system. |
Notes Payable
Notes Payable | 9 Months Ended |
Sep. 30, 2015 | |
Notes Payable [Abstract] | |
Notes Payable | 6. Notes Payable Senior Secured Note Payable Indebtedness under the Brainlab Note as of September 30, 2015 was $4,289,445. 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 collateralized 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 September 30, 2015 and December 31, 2014 was $118,342 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) second-priority secured non-convertible promissory notes (the 2014 Secured Notes) and (ii) warrants to purchase 0.3 shares of the Companys 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 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 Companys 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 Companys payment of the additional prepayment premium stated in the notes. The 2014 Secured Notes are collateralized by a security interest in the Companys property and assets, which security interest is junior and subordinate to the security interest that collateralizes 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 46.7% 47.8% Risk free interest rates 1.58% 1.75% Expected life (in years) 5.5 6.0 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 allocated to the fair value of the warrants, recorded as equity. The 2014 Secured Notes were recorded at the principal amount, less a discount equal to $413,057. The unamortized discount at September 30, 2015 and December 31, 2014 was $317,364 and $369,299, respectively. This discount is being amortized to interest expense over the five year term of the 2014 Secured Notes using the effective interest method. Non-employee directors of the Company purchased a total of $1,100,000 of the 2014 Secured Notes, either directly or through a trust. The Companys placement agents earned cash commissions of $145,500 as well as warrants to purchase 72,750 shares of the Companys 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, aggregating $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 units consisting of a junior secured note (the 2010 Secured Notes) and one share of the Companys common stock. An aggregate of 10,714,286 units were issued, and the Company received proceeds of $3,000,000 representing the aggregate principal amount of the 2010 Secured Notes. The 2010 Secured Notes mature in November 2020, accrue interest at the rate of 3.5% per year, and are collateralized by a security interest in the assets of the Company, which security interest is junior and subordinate to the security interests that collateralize the Brainlab Note and the 2014 Secured Notes. All outstanding principal and interest on the 2010 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 2010 Secured Notes and the shares of common stock based on their relative fair values, with the fair value of the notes being estimated based on an assumed market interest rate for notes of similar terms and risk, and the fair value of the Companys common stock being estimated by management using a market approach, with input from a third-party valuation specialist. The allocation of such relative fair values resulted in $2,775,300 being allocated to the value of the shares of common stock, which was recorded as equity. The 2010 Secured Notes were recorded at the principal amount of $3,000,000, less a discount equal to $2,775,300. The unamortized discount at September 30, 2015 and December 31, 2014 was $2,582,256 and $2,683,171, respectively. This discount is being amortized to interest expense over the 10-year term of the notes using the effective interest method. Four then-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 $ 4,289,444 2017 2018 2019 3,725,000 Thereafter 3,000,000 Total scheduled principal payments 11,014,444 Less, unamortized discounts at September 30, 2015 (3,017,961 ) $ 7,996,483 |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2015 | |
Equity [Abstract] | |
StockholdersEquityNoteDisclosureTextBlock | 7. Stockholders Equity Authorized Shares At the annual meeting of the Companys stockholders on June 4, 2015 (the 2015 Annual Meeting), the Companys stockholders approved an amendment to the Companys Amended and Restated Certificate of Incorporation to increase the number of authorized shares of the Companys common stock to 200,000,000 shares. Issuance of Common Stock in Lieu of Cash Under the terms of the Amended and Restated Non-Employee Director Compensation Plan, each non-employee member of the Companys Board of Directors may elect to receive all or part of his or her fees in shares of the Companys 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 (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 (c) the volume weighted average price per share of common stock over the last five trading days of the quarter. During the nine months ended September 30, 2015 and 2014, 128,598 shares and 97,573 shares, respectively, were issued to directors as payment for fees in lieu of cash. Common Stock Warrants Requiring Liability Accounting The net-cash settlement and down round provisions contained in warrants issued in a January 2013 financing transaction require derivative liability accounting treatment. 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. 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 September 30, 2015 are noted below: Dividend yield 0% Expected volatility 45.51% 46.50% Risk free interest rates 0.448% 0.685% Expected remaining term (in years) 1.76 2.32 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 the Company estimates the price would be for a share of its common stock 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 Gain on change in fair value (981,223 ) Fair value at September 30, 2015 $ 1,216,939 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 certain of the Plans provide for cash-based awards. Awards may be subject to a vesting schedule as set forth in individual award agreements. In June 2013, the Companys stockholders approved the 2013 Incentive Compensation Plan, and at the 2015 Annual Meeting, the Companys stockholders approved the adoption of the MRI Interventions, Inc. Amended and Restated 2013 Incentive Compensation Plan (the Amended 2013 Plan). The material change effected in the Amended 2013 Plan was to increase the number of shares of the Companys common stock available for awards thereunder by 5,000,000 shares, resulting in a total of 6,250,000 shares of the Companys common stock being reserved for issuance under the Amended 2013 Plan. Of this amount, grants of 2,504,667 shares were outstanding as of September 30, 2015. Accordingly, 3,755,333 shares remained available for grants under the Amended 2013 Plan as of that date. In December 2013, the Companys board of directors approved the 2013 Non-Employee Director Equity Incentive Plan (the Director Equity Plan). A total of 570,000 shares of the Companys common stock are reserved for issuance under the Director Equity Plan. The shares reserved for issuance under the Director Equity Plan are intended to be used for stock options granted pursuant to the terms of the Companys Non-Employee Director Compensation Plan (the Director Compensation Plan). As of September 30, 2015, awards for 435,000 shares had been issued under the Director Equity Plan. Accordingly, 155,000 shares remained available for awards under the Director Equity Plan as of that date. Should option grants pursuant to the Director Compensation Plan exceed the amount of shares available under the Director Equity Plan, the Company expects to continue granting such options under the terms of the Amended 2013 Plan described above. As further discussed in Note 4, the Company, in April and May 2015, recorded $492,926 of share-based compensation expense, classified as restructuring costs in the accompanying 2015 condensed consolidated statements of operations, related to the modification of the terms of options held by certain former officers. In addition, effective April 1, 2015, a member of the Companys Board of Directors resigned. In recognition of the directors contributions to the Company, the Companys Board of Directors accelerated the vesting of two stock options previously awarded to the director and extended the exercise period through April 1, 2017 for all vested options held by the director. Prior to such extension, the exercise period under the options original terms was three months subsequent to the date the individual ceased to be a director of the Company. The Company revalued the directors stock option based on the modified terms described above and recorded share-based compensation expense of $12,005. Activity under all of the Companys equity compensation plans during the nine months ended September 30, 2015 is summarized below: Shares Weighted - Average Exercise Price Outstanding at December 31, 2014 10,343,309 $ 1.36 Granted 2,216,500 0.80 Forfeited (858,500 ) 1.50 Outstanding at September 30, 2015 11,701,309 $ 1.15 The estimated grant date fair values of options granted during the nine months ended September 30, 2015 were calculated using the Black-Scholes valuation model, based on the following assumptions: Dividend yield 0% Expected volatility 46.67% to 59.49% Risk free interest rates 1.48% to 1.80% Expected lives (in years) 6.0 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, which includes the expense associated with the modification of option terms discussed above and in Note 4, related to options was: Three Months Ended September 30, 2015 2014 $ 268,880 $ 192,001 Nine Months Ended September 30, 2015 2014 $ 1,421,198 $ 555,909 As of September 30, 2015, there was unrecognized compensation expense of $2,050,240 related to outstanding stock options, which is expected to be recognized over a weighted average period of approximately 2.20 years. Warrants Warrants have generally been issued for terms of up to five years. Common stock warrant activity for the nine months ended September 30, 2015 was as follows: Shares Weighted - Average Exercise Price Outstanding at December 31, 2014 20,759,136 $ 0.91 Issued 35,000 1.00 Terminated (25,444 ) 8.00 Outstanding at September 30, 2015 20,768,692 0.90 |
Basis of Presentation and Sum13
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
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 (condensed financial statements) have been prepared on a basis consistent with the Companys 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 Companys 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 and nine months ended September 30, 2015 may not be indicative of the results to be expected for the entire year or any future periods. |
Derivative Liabilities for Warrants to Purchase Common Stock | Derivative Liabilities 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 Companys 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 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 statements of operations. |
Fair Value Measurements | 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 Companys fair value calculation for instruments carried at fair value at (see Note 7): Quoted Prices Significant Significant Total Fair September 30, 2015 Derivative liabilities - warrants $ $ $ 1,216,939 $ 1,216,939 December 31, 2014 Derivative liabilities - warrants $ $ $ 2,198,162 $ 2,198,162 Carrying amounts of the Companys 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 Companys outstanding notes payable, including the related accrued interest, at September 30, 2015: Carrying Values Estimated Fair Values Senior secured note payable, including accrued interest $ 4,789,026 $ 4,789,026 2014 junior secured notes payable, including accrued interest 3,416,011 3,416,011 2010 junior secured notes payable, including accrued interest 933,994 2,476,630 |
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 Companys 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 | Revenue Recognition The Companys revenues are comprised of: (1) product revenues resulting primarily from the sale of ClearPoint system reusable and disposable products; (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: Sales of disposable products: (2) Development Service Revenues (3) Other Service Revenues |
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 are comprised of the Companys common stock options and warrants described in Note 7, 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, 2015, the Company had no bank balances that were in excess of the insured limits. At September 30, 2015, three commercial customers represented 21%, 10% and 10% of the Companys accounts receivable balance. At December 31, 2014, two commercial customers represented 20% and 17% of the Companys accounts receivable balance. No other customer represented more than 9% of total accounts receivable at each of September 30, 2015 and December 31, 2014. For the three months ended September 30, 2015, sales to three customers represented 16%, 11% and 10% of product revenues. For the three months ended September 30, 2014, sales to two customers represented 16% and 15% of product revenues. For the nine months ended September 30, 2015, sales to one customer represented 13% of product revenues. For the nine months ended September 30, 2014, sales to one customer represented 10% of product revenues. No other single customer represented more than 9% of product revenues for each of the three months ended September 30, 2015 and 2014, and 8% of product revenues for each the nine months ended September 30, 2015 and 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 | Recent Accounting Pronouncements In May 2014, and as amended in August 2015, 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 2018. Earlier application is permitted only as of 2017. 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 Entitys 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 entitys 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 entitys ability to continue as a going concern. ASU 2014-15 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. ASU 2015-03 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. While ASU 2015-03 permits early adoption, the Company has opted to implement its provisions in conformity with its effective date. Adoption will result in offsetting reductions of assets and liabilities in the amount of the unamortized balances of debt issuance costs as of each balance sheet date, and will have no effect on consolidated results of operations. In August 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory, which require an entity to measure inventor at the lower of cost and net realizable value, as opposed to the current requirement to measure inventory at the lower of cost or market, where market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. ASU 2015-11 is effective for fiscal years beginning after December 15, 2016 and interim periods within fiscal years beginning after December 15, 2017. ASU 2015-11 is to be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The Company believes that adoption of ASU 2015-11 will not have a material effect on consolidated results of operations. |
Basis of Presentation and Sum14
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Schedule of financial assets and liabilities at fair value on a recurring basis | The table below reflects the level of the inputs used in the Companys fair value calculation for instruments carried at fair value at (see Note 7): Quoted Prices Significant Significant Total Fair September 30, 2015 Derivative liabilities - warrants $ $ $ 1,216,939 $ 1,216,939 December 31, 2014 Derivative liabilities - warrants $ $ $ 2,198,162 $ 2,198,162 |
Schedule of carrying values and the estimated fair values of debt instruments | The table below reflects the carrying values and the estimated fair values, based on Level 3 inputs, of the Companys outstanding notes payable, including the related accrued interest, at September 30, 2015: Carrying Values Estimated Fair Values Senior secured note payable, including accrued interest $ 4,789,026 $ 4,789,026 2014 junior secured notes payable, including accrued interest 3,416,011 3,416,011 2010 junior secured notes payable, including accrued interest 933,994 2,476,630 |
Inventory (Tables)
Inventory (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Inventory Disclosure [Abstract] | |
Schedule of inventory | Inventory consists of the following as of: September 30, 2015 December 31, 2014 Raw materials and work in process $ 1,075,189 $ 899,014 Software license inventory 284,800 350,000 Finished goods 442,829 716,025 Inventory included in current assets 1,802,818 1,965,039 Software license inventory 919,600 910,000 $ 2,722,418 $ 2,875,039 |
Restructuring Charges (Tables)
Restructuring Charges (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Restructuring and Related Activities [Abstract] | |
Schedule of reconciliation of the liability for accrued restructuring charges | A reconciliation of the liability for accrued restructuring charges, included in other accrued liabilities in the accompanying condensed consolidated balance sheet, for the nine months ended September 30, 2015 is as follows: Balance, December 31, 2014 $ Activity during the nine months ended September 30, 2015 Accruals 1,252,584 Less: Non-cash portion of accruals related to modification of stock option terms (492,926 ) Payments (733,938 ) Reclassifications (20,720 ) Balance, September 30, 2015 $ 5,000 |
Notes Payable (Tables)
Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Notes Payable [Abstract] | |
Schedule of fair value of warrants | Assumptions used in calculating the fair value of the warrants using the Black-Scholes valuation model were: Dividend yield 0% Expected volatility 46.7% 47.8% Risk free interest rates 1.58% 1.75% Expected life (in years) 5.5 6.0 |
Schedule of principal payments with respect to notes payable maturities | Scheduled principal payments with respect to notes payable are summarized as follows: Years ending December 31, 2015 2016 $ 4,289,444 2017 2018 2019 3,725,000 Thereafter 3,000,000 Total scheduled principal payments 11,014,444 Less, unamortized discounts at September 30, 2015 (3,017,961 ) $ 7,996,483 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Equity [Abstract] | |
Schedule of assumptions used in calculating the fair value of the warrants | Assumptions used in calculating the fair value of the warrants at September 30, 2015 are noted below: Dividend yield 0% Expected volatility 45.51% 46.50% Risk free interest rates 0.448% 0.685% Expected remaining term (in years) 1.76 2.32 |
Schedule of fair value of liabilities measured on recurring basis | 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 Gain on change in fair value (981,223 ) Fair value at September 30, 2015 $ 1,216,939 |
Schedule of compensation, stock option, activity | Activity under all of the Companys equity compensation plans during the nine months ended September 30, 2015 is summarized below: Shares Weighted - Average Exercise Price Outstanding at December 31, 2014 10,343,309 $ 1.36 Granted 2,216,500 0.80 Forfeited (858,500 ) 1.50 Outstanding at September 30, 2015 11,701,309 $ 1.15 |
Schedule of share based payment award stock option valuation assumptions | The estimated grant date fair values of options granted during the nine months ended September 30, 2015 were calculated using the Black-Scholes valuation model, based on the following assumptions: Dividend yield 0% Expected volatility 46.67% to 59.49% Risk free interest rates 1.48% to 1.80% Expected lives (in years) 6.0 |
Schedule of employee serviceshare based-compensation, allocation of recognized period costs | 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, which includes the expense associated with the modification of option terms discussed above and in Note 4, related to options was: Three Months Ended September 30, 2015 2014 $ 268,880 $ 192,001 Nine Months Ended September 30, 2015 2014 $ 1,421,198 $ 555,909 |
Schedule of stockholders' equity note warrants or rights | Warrants have generally been issued for terms of up to five years. Common stock warrant activity for the nine months ended September 30, 2015 was as follows: Shares Weighted - Average Exercise Price Outstanding at December 31, 2014 20,759,136 $ 0.91 Issued 35,000 1.00 Terminated (25,444 ) 8.00 Outstanding at September 30, 2015 20,768,692 0.90 |
Description of the Business a19
Description of the Business and Liquidity (Details Narrative) - USD ($) | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||
Dec. 31, 2014 | Mar. 31, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Accumulated deficit | $ (77,277,334) | $ (84,528,144) | $ (77,277,334) | ||
Net cash provided by (used in) operating activities | $ (7,320,122) | $ (5,256,287) | $ 7,250,303 | ||
Proceeds from issuance of private placement | $ 9,379,880 | $ 3,503,314 | 3,503,314 | ||
Notes payable cancelled, principal amount | $ 4,338,601 | ||||
Brainlab Senior Secured Note Payable [Member] | |||||
Description of maturity date | Matures in April 2016 | ||||
Debt face amount | $ 4,289,445 | ||||
Accrued interest | $ 740,000 |
Basis of Presentation and Sum20
Basis of Presentation and Summary of Significant Accounting Policies (Details Narrative) - Number | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Customer Concentration Risk [Member] | Accounts Receivable [Member] | |||||
Number of major customers | 3 | 2 | |||
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Customer A [Member] | |||||
Concentration risk, percentage | 21.00% | 20.00% | |||
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Customer B [Member] | |||||
Concentration risk, percentage | 10.00% | 17.00% | |||
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Customer C [Member] | |||||
Concentration risk, percentage | 10.00% | ||||
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Other Customers with Total Accounts Receivable over Threshold [Member] | |||||
Concentration risk, percentage | 9.00% | 9.00% | |||
Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | |||||
Number of major customers | 3 | 2 | 1 | 1 | |
Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | Customer A [Member] | |||||
Concentration risk, percentage | 16.00% | 16.00% | 13.00% | 10.00% | |
Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | Customer B [Member] | |||||
Concentration risk, percentage | 11.00% | 15.00% | |||
Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | Customer C [Member] | |||||
Concentration risk, percentage | 10.00% | ||||
Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | Other Customers with Total Accounts Receivable over Threshold [Member] | |||||
Concentration risk, percentage | 9.00% | 9.00% | 8.00% | 8.00% | |
Maximum [Member] | |||||
Term of service agreements (in years) | 3 years | ||||
Minimum [Member] | |||||
Term of service agreements (in years) | 1 year |
Basis of Presentation and Sum21
Basis of Presentation and Summary of Significant Accounting Policies (Details) - Warrant [Member] - Fair Value, Measurements, Recurring [Member] - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Derivative liabilities - warrants | $ 1,216,939 | $ 2,198,162 |
Fair Value, Inputs, Level 1 [Member] | ||
Derivative liabilities - warrants | ||
Fair Value, Inputs, Level 2 [Member] | ||
Derivative liabilities - warrants | ||
Fair Value, Inputs, Level 3 [Member] | ||
Derivative liabilities - warrants | $ 1,216,939 | $ 2,198,162 |
Basis of Presentation and Sum22
Basis of Presentation and Summary of Significant Accounting Policies (Details 1) | Sep. 30, 2015USD ($) |
Brainlab Senior Secured Note Payable [Member] | |
Debt Instrument [Line Items] | |
Carrying Values | $ 4,789,026 |
Estimated Fair Value | 4,789,026 |
Junior Secured Notes Payable 2014 [Member] | |
Debt Instrument [Line Items] | |
Carrying Values | 3,416,011 |
Estimated Fair Value | 3,416,011 |
Junior Secured Notes Payable 2010 [Member] | |
Debt Instrument [Line Items] | |
Carrying Values | 933,994 |
Estimated Fair Value | $ 2,476,630 |
Inventory (Details)
Inventory (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Inventory Disclosure [Abstract] | ||
Raw materials and work in process | $ 1,075,189 | $ 899,014 |
Software license inventory | 284,800 | 350,000 |
Finished goods | 442,829 | 716,025 |
Inventory included in current assets | 1,802,818 | 1,965,039 |
Software license inventory | 919,600 | 910,000 |
Total Inventory | $ 2,722,418 | $ 2,875,039 |
Restructuring Charges (Details
Restructuring Charges (Details Narrative) | 1 Months Ended | 2 Months Ended | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2015USD ($)Number | May. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | |
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring charges | $ 1,252,584 | ||||||
Memphis,Tennessee Office [Member] | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Number of positions eliminated | Number | 7 | ||||||
Restructuring charges | $ 753,400 | ||||||
Severance and other compensation | $ 718,000 | ||||||
Additional restructuring charges | $ 6,258 | ||||||
Memphis,Tennessee Office [Member] | Executive Officer [Member] | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Number of positions eliminated | Number | 3 | ||||||
Memphis,Tennessee Office [Member] | Chief Financial Officer & One Executive Officer (New Employment Agreements) [Member] | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring charges | $ 492,926 | $ 492,926 |
Restructuring Charges (Details)
Restructuring Charges (Details) | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Restructuring Reserve [Roll Forward] | |
Balance | |
Accruals | $ 1,252,584 |
Less:Non-cash portion of accruals related to modification of stock option terms | (492,926) |
Payments | (733,938) |
Reclassifications | (20,720) |
Balance | $ 5,000 |
Sale of Intellectual Property26
Sale of Intellectual Property in Exchange for Cancellation of the Boston Scientific Notes (Detail Narrative) - Boston Scientific (BSC Purchase Agreement) [Member] | 1 Months Ended |
Mar. 31, 2014USD ($)Number | |
Intellectual property acquired | $ 4,338,601 |
Boston Scientific Notes [Member] | |
Number of notes cancelled | Number | 3 |
Description of maturity date | Mature in 2014 |
Aggregate principal amount cancelled | $ 4,338,601 |
Notes Payable (Detail Narrative
Notes Payable (Detail Narrative) - USD ($) | 1 Months Ended | 9 Months Ended | ||
Dec. 31, 2014 | Mar. 31, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Debt Instrument [Line Items] | ||||
Proceeds from common stock called | $ 9,379,880 | $ 3,503,314 | $ 3,503,314 | |
Unamortized discount | 369,299 | $ (3,017,961) | ||
Brainlab Senior Secured Note Payable [Member] | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate | 5.50% | |||
Description of maturity date | Matures in April 2016 | |||
Debt face amount | $ 4,289,445 | |||
Description of collateral terms | The Brainlab Note is collateralized by a senior security interest in the assets of the Company. | |||
Unamortized discount | 271,305 | $ 118,342 | ||
Description of payment terms | Principal and accrued interest is payable in a single installment upon maturity. | |||
Private Placement (Securities Purchase Agreements) [Member] | Warrant [Member] | ||||
Debt Instrument [Line Items] | ||||
Number of each common stock called | 0.3 | |||
Number of common stock called | 1,117,500 | |||
Proceeds from common stock called | $ 3,725,000 | |||
Warrant exercise price (in dollars per share) | $ 1.75 | |||
Fair value | $ 413,057 | |||
Private Placement (Securities Purchase Agreements) [Member] | 2014 Secured Notes [Member] | ||||
Debt Instrument [Line Items] | ||||
Stated interest rate | 12.00% | |||
Debt face amount | $ 3,725,000 | |||
Maturity period | 5 years | |||
Debt frequency of periodic payment | Semi-annually | |||
Description of collateral terms | The 2014 Secured Notes are collateralized by a security interest in the Companys property and assets, which security interest is junior and subordinate to the security interest that collateralizes Brainlab note. | |||
Unamortized discount | $ 3,692,999 | $ 413,057 | $ 317,364 | |
Private Placement (Securities Purchase Agreements) [Member] | 2014 Secured Notes [Member] | Non-Employee Directors [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt face amount | 1,100,000 | |||
Fair value | 30,210 | |||
Placement agents cash commission | $ 145,500 | |||
Number of warrants issued to placement agent | 72,750 | |||
Other offering expenses | $ 76,186 |
Notes Payable (Detail Narrati28
Notes Payable (Detail Narrative 1) | 1 Months Ended | ||
Nov. 30, 2010USD ($)Numbershares | Sep. 30, 2015USD ($) | Dec. 31, 2014USD ($) | |
Debt Instrument [Line Items] | |||
Common stock fair value | $ | $ 2,775,300 | ||
Unamortized discount | $ | $ (3,017,961) | $ 369,299 | |
Officer [Member] | |||
Debt Instrument [Line Items] | |||
Number of unit issued | 882,726 | ||
Number of officers and directors | Number | 4 | ||
Value of unit issued | 247,164 | ||
Non-Employee Directors [Member] | |||
Debt Instrument [Line Items] | |||
Number of unit issued | 567,203 | ||
Number of officers and directors | Number | 3 | ||
Value of unit issued | 158,816 | ||
2010 Junior Secured Notes Payable [Member] | |||
Debt Instrument [Line Items] | |||
Description of unit | Units consisting of a junior secured note (the 2010 Secured Notes) and one share of the Companys common stock. | ||
Number of unit issued | 10,714,286 | ||
Debt face amount | $ | $ 3,000,000 | ||
Description of maturity date | Mature in November 2020 | ||
Stated interest rate | 3.50% | ||
Description of collateral terms | Collateralized by a security interest in the assets of the Company, which security interest is junior and subordinate to the security interests that collateralize the Brainlab Note and the 2014 Secured Notes. | ||
Description of payment terms | Interest on the 2010 Secured Notes will be due and payable in a single payment upon maturity. | ||
Unamortized discount | $ | $ 2,775,300 | $ 2,582,256 | $ 2,683,171 |
Notes Payable (Details)
Notes Payable (Details) - Warrant [Member] | 9 Months Ended |
Sep. 30, 2015 | |
Debt Instrument [Line Items] | |
Dividend yield | 0.00% |
Valuation method used | Black-Scholes valuation model |
Maximum [Member] | |
Debt Instrument [Line Items] | |
Expected volatility | 47.80% |
Risk free interest rates | 1.75% |
Expected life (in years) | 6 years |
Minimum [Member] | |
Debt Instrument [Line Items] | |
Expected volatility | 46.70% |
Risk free interest rates | 1.58% |
Expected life (in years) | 5 years 6 months |
Notes Payable (Details 1)
Notes Payable (Details 1) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Debt Disclosure [Abstract] | ||
2,015 | ||
2,016 | $ 4,289,444 | |
2,017 | ||
2,018 | ||
2,019 | $ 3,725,000 | |
Thereafter | 3,000,000 | |
Total scheduled principal payments | 11,014,444 | |
Unamortized discount | (3,017,961) | $ 369,299 |
Total | $ 7,996,483 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | 1 Months Ended | 2 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
Mar. 31, 2015 | May. 31, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Jun. 04, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Jun. 30, 2013 | |
Revised common stock authorized | 200,000,000 | 200,000,000 | 200,000,000 | 200,000,000 | ||||||
Restructuring charges | $ 1,252,584 | |||||||||
Number of awards oustanding | 11,701,309 | 11,701,309 | 10,343,309 | |||||||
Number of awards granted | 2,216,500 | |||||||||
Share-based compensation expense | $ 268,880 | $ 192,001 | $ 1,421,198 | $ 555,909 | ||||||
Directors fees | 128,958 | $ 97,573 | ||||||||
Memphis,Tennessee Office [Member] | ||||||||||
Restructuring charges | $ 753,400 | |||||||||
Chief Financial Officer & One Executive Officer (New Employment Agreements) [Member] | ||||||||||
Unrecognized compensation expense | $ 2,050,240 | $ 2,050,240 | ||||||||
Weighted average period | 2 years 2 months 12 days | |||||||||
Chief Financial Officer & One Executive Officer (New Employment Agreements) [Member] | Memphis,Tennessee Office [Member] | ||||||||||
Restructuring charges | $ 492,926 | $ 492,926 | ||||||||
Share-based compensation expense | $ 12,005 | |||||||||
Amended and Restated 2013 Incentive Compensation Plan [Member] | ||||||||||
Previously common stock reserved for issuance | 5,000,000 | |||||||||
Common stock reserved for issuance | 6,250,000 | |||||||||
Number of share available for grant | 3,755,333 | 3,755,333 | ||||||||
Number of awards oustanding | 2,504,667 | 2,504,667 | ||||||||
2013 Non-Employee Director Equity Incentive Plan [Member] | ||||||||||
Common stock reserved for issuance | 570,000 | |||||||||
Number of share available for grant | 155,000 | 155,000 | ||||||||
Number of awards granted | 435,000 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - Common Stock Warrants [Member] | 9 Months Ended |
Sep. 30, 2015 | |
Dividend yield | 0.00% |
Valuation method used | Monte Carlo simulation valuation method. |
Maximum [Member] | |
Expected volatility | 46.50% |
Risk free interest rates | 0.685% |
Expected remaining term (in years) | 2 years 3 months 25 days |
Minimum [Member] | |
Expected volatility | 45.51% |
Risk free interest rates | 0.448% |
Expected remaining term (in years) | 1 year 9 months 3 days |
Stockholders' Equity (Details 1
Stockholders' Equity (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Fair value at December 31, 2014 | $ 2,198,162 | |||
Loss on change in fair value | $ 1,950,329 | $ (781,157) | 981,222 | $ 578,179 |
Fair value at September 30, 2015 | 1,216,939 | 1,216,939 | ||
Common Stock Warrants [Member] | ||||
Fair value at December 31, 2014 | 2,198,162 | |||
Loss on change in fair value | (981,223) | |||
Fair value at September 30, 2015 | $ 1,216,939 | $ 1,216,939 |
Stockholders' Equity (Details 2
Stockholders' Equity (Details 2) | 9 Months Ended |
Sep. 30, 2015$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Outstanding at December 31, 2014 | 10,343,309 |
Granted | 2,216,500 |
Forfeited | (858,500) |
Outstanding at September 30, 2015 | 11,701,309 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | |
Outstanding at December 31, 2014 | $ / shares | $ 1.36 |
Granted | $ / shares | 0.80 |
Forfeited | $ / shares | 1.50 |
Outstanding at September 30, 2015 | $ / shares | $ 1.15 |
Stockholders' Equity (Details 3
Stockholders' Equity (Details 3) | 9 Months Ended |
Sep. 30, 2015 | |
Equity [Abstract] | |
Dividend yield | 0.00% |
Minimum Expected volatility | 46.67% |
Maximum Expected volatility | 59.49% |
Minimum Risk free interest rates | 1.48% |
Maximum Risk free interest rates | 1.80% |
Expected lives (in years) | 6 years |
Stockholders' Equity (Details 4
Stockholders' Equity (Details 4) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Equity [Abstract] | ||||
Share-based compensation expense | $ 268,880 | $ 192,001 | $ 1,421,198 | $ 555,909 |
Stockholders' Equity (Details 5
Stockholders' Equity (Details 5) - Common Stock Warrants [Member] | 9 Months Ended |
Sep. 30, 2015$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Outstanding at December 31, 2014 | 20,759,136 |
Issued | 35,000 |
Terminated | (25,444) |
Outstanding at September 30, 2015 | 20,768,692 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | |
Outstanding at December 31, 2014 | $ / shares | $ 0.91 |
Issued | $ / shares | 1 |
Terminated | $ / shares | 8 |
Outstanding at September 30, 2015 | $ / shares | $ 0.90 |