Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | Apr. 14, 2016 | |
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 | Mar. 31, 2016 | |
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 | 95,889,044 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,016 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Current Assets: | ||
Cash and cash equivalents | $ 3,582,227 | $ 5,408,523 |
Accounts receivable | 1,497,537 | 1,218,043 |
Inventory, net | 1,570,078 | 1,807,895 |
Prepaid expenses and other current assets | 115,364 | 97,249 |
Total current assets | 6,765,206 | 8,531,710 |
Property and equipment, net | 459,259 | 440,606 |
Software license inventory | 989,600 | 937,100 |
Other assets | 77,446 | 27,306 |
Total assets | 8,291,511 | 9,936,722 |
Current liabilities: | ||
Accounts payable | 818,047 | 697,807 |
Accrued compensation | 455,915 | 557,784 |
Other accrued liabilities | 1,305,943 | 1,398,707 |
Derivative liabilities | 498,168 | 658,286 |
Deferred product and service revenues | $ 151,706 | 116,009 |
Senior secured note payable, net of unamortized discount of $64,835 at December 31, 2015 | 4,224,609 | |
Total current liabilities | $ 3,229,779 | 7,653,202 |
Accrued interest | 577,125 | $ 542,500 |
Senior secured note payable | 4,289,444 | |
Total liabilities | $ 11,905,430 | $ 11,917,861 |
Commitments and contingencies | ||
Stockholders' deficit: | ||
Common stock, $0.01 par value; 200,000,000 shares authorized; 91,916,634 shares issued and outstanding at March 31, 2016; and 91,381,488 issued and outstanding at December 31, 2015 | $ 919,165 | $ 913,814 |
Additional paid-in capital | 83,237,314 | 82,831,627 |
Accumulated deficit | (87,770,398) | (85,726,580) |
Total stockholders' deficit | (3,613,919) | (1,981,139) |
Total liabilities and stockholders' deficit | 8,291,511 | 9,936,722 |
12% Junior Secured Notes Payable 2014 [Member] | ||
Current liabilities: | ||
Junior secured notes payable | 3,290,592 | 3,257,389 |
Junior Secured Notes Payable 2010 [Member] | ||
Current liabilities: | ||
Junior secured notes payable | $ 518,490 | $ 464,770 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Unamortized discount current | $ 64,835 | |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized | 200,000,000 | 200,000,000 |
Common stock, issued | 91,916,634 | 91,381,488 |
Common stock, outstanding | 91,916,634 | 91,381,488 |
12% Junior Secured Notes Payable 2014 [Member] | ||
Unamortized discount non-current | $ 434,408 | $ 467,611 |
Junior Secured Notes Payable 2010 [Member] | ||
Unamortized discount non-current | $ 2,535,230 | $ 2,481,510 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Revenues: | ||
Product revenues | $ 1,366,153 | $ 976,871 |
Other service revenues | 27,981 | 33,532 |
Total revenues | 1,394,134 | 1,010,403 |
Cost of product revenues | 696,546 | 385,609 |
Research and development costs | 657,192 | 527,512 |
Selling, general, and administrative expenses | $ 1,974,249 | 2,288,660 |
Restructuring charges | 753,400 | |
Operating loss | $ (1,933,853) | (2,944,778) |
Other income (expense): | ||
Gain (loss) on change in fair value of derivative liabilities | 160,118 | (782,802) |
Other income, net | 75,142 | 82,688 |
Interest income | 4,333 | 7,451 |
Interest expense | (349,558) | (307,813) |
Net loss | $ (2,043,818) | $ (3,945,254) |
Net loss per share attributable to common stockholders: | ||
Basic and diluted (in dollars per share) | $ (0.02) | $ (0.05) |
Weighted average shares outstanding: | ||
Basic and diluted (in shares) | 91,645,881 | 74,842,841 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash flows from operating activities: | ||
Net loss | $ (2,043,818) | $ (3,945,254) |
Adjustments to reconcile net loss to net cash flows from operating activities: | ||
Depreciation and amortization | 41,022 | 86,680 |
Share-based compensation | 260,149 | 377,892 |
Expenses paid through the issuance of common stock | 192,166 | 37,583 |
(Gain) loss on change in fair value of derivative liabilities | (160,118) | 782,802 |
Amortization of debt issuance costs and original issue discounts | 151,759 | 110,015 |
Increase (decrease) in cash resulting from changes in: | ||
Accounts receivable | (279,494) | (136,769) |
Inventory | 217,873 | (109,994) |
Prepaid expenses and other current assets | (18,114) | (6,909) |
Other assets | (58,473) | (4,000) |
Accounts payable and accrued expenses | 52,790 | 13,782 |
Deferred revenue | 35,697 | (4,870) |
Net cash flows from operating activities | (1,608,561) | (2,799,042) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (77,649) | (6,635) |
Net cash flows from investing activities | (77,649) | $ (6,635) |
Cash flows from financing activities | ||
Payment of 2015 private placement financing costs | (140,086) | |
Net cash flows from financing activities | (140,086) | |
Net change in cash and cash equivalents | (1,826,296) | $ (2,805,677) |
Cash and cash equivalents, beginning of period | 5,408,523 | 9,244,006 |
Cash and cash equivalents, end of period | $ 3,582,227 | $ 6,438,329 |
Cash paid for: | ||
Income taxes | ||
Interest | $ 223,500 | $ 223,500 |
NON-CASH INVESTING AND FINANCING TRANSACTIONS | ||
Transfer from inventory to property and equipment | $ 24,223 | $ 4,366 |
Description of the Business and
Description of the Business and Liquidity | 3 Months Ended |
Mar. 31, 2016 | |
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. Although still a product candidate, the Company has suspended its efforts to commercialize the ClearTrace system. Liquidity and Managements Plans The cumulative net loss from the Companys inception through March 31, 2016 was $87.8 million. Net cash used in operations was $1.6 million and $8.6 million for the three months ended March 31, 2016 and the year ended December 31, 2015, respectively. 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 2015 private placement of equity, which resulted in net proceeds of $4.7 million; (ii) a December 2014 private placement of equity, which resulted in net proceeds of $9.4 million; and (iii) a March 2014 private placement of debt and warrants, which resulted in net proceeds of $3.5 million. In addition, as more fully discussed in Note 7, on March 22, 2016 the Company entered into a securities purchase agreement (the 2016 Purchase Agreement) with Brainlab AG (Brainlab) that provided, among other items, for the restructuring of a senior secured note payable to Brainlab, which was originally issued to Brainlab on April 5, 2011, and subsequently amended and restated on March 6, 2013 (the Brainlab Note). The restructuring of the Brainlab Note was consummated on April 4, 2016 and resulted in a reduction of the principal amount outstanding under the Brainlab Note, which is reflected in a new, amended and restated note payable to Brainlab that matures on December 31, 2018. 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. 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 would result in dilution to the Companys current stockholders, the establishment of a credit facility, or the entry into an agreement with a strategic partner of some other form of collaborative relationship. 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. As such, there is 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 as a going concern. |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2016 | |
Basis Of Presentation And Summary Of Significant Accounting Policies | |
Basis of Presentation and Summary of Significant Accounting Policies | 2. Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation and Use of Estimates In the opinion of management, the accompanying unaudited condensed consolidated financial statements have been prepared on a basis consistent with the Companys December 31, 2015 audited consolidated financial statements, and include all adjustments, consisting of only normal recurring adjustments, necessary to fairly state the information set forth therein. These condensed consolidated financial statements have been prepared in accordance with United States (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 these condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and the related disclosures at the date of the financial statements and during the reporting period. Actual results could materially differ from these estimates. These condensed 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, 2015, which was filed with the SEC on March 25, 2016. The accompanying unaudited condensed consolidated balance sheet as of December 31, 2015 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, 2016 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 6). 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 6): Quoted Prices Significant Significant Total Fair March 31, 2016 Derivative liabilities - warrants $ - $ - $ 498,168 $ 498,168 December 31, 2015 Derivative liabilities - warrants $ - $ - $ 658,286 $ 658,286 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 March 31, 2016: Carrying Values Estimated Senior secured note payable, including accrued interest $ 5,026,966 $ 5,026,966 2014 junior secured notes payable, including accrued interest 3,298,967 3,733,375 2010 junior secured notes payable, including accrued interest 1,087,240 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 from the sale of ClearPoint system reusable products and disposable products; and (2) 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 a case-by-case basis. The Company determines if the deliverables under the arrangement represent separate units of accounting as defined by GAAP. Application of GAAP regarding multiple-element arrangements requires the Company 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 ClearPoint system disposable products (2) Other Service Revenues 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 revenue ratably over the term of the related service agreement 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 6, 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 March 31, 2016, the Company had approximately $11,000 in bank balances that were in excess of the insured limits. At March 31, 2016, two customers each represented 11% of the Companys accounts receivable balance. At December 31, 2015, three customers represented 14%, 14% and 12% of the Companys accounts receivable balance. No other customer represented more than 9% of total accounts receivable at each of March 31, 2016 and December 31, 2015. For the three months ended March 31, 2016, sales to one customer represented 11% of product revenues. For the three months ended March 31, 2015, sales to two customers represented 17% and 14% of product revenues. No other single customer represented more than 9% and 7% of product revenues for the three months ended March 31, 2016 and 2015, respectively. The Company performs credit evaluations of its customers financial condition, and generally does not require collateral from its customers. The Company will provide an allowance for doubtful accounts when collections become doubtful. The allowance for doubtful accounts at each of March 31, 2016 and December 31, 2015 was $28,000. Recent Accounting Pronouncements In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (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 July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory, which requires an entity to measure inventory at the lower of cost or 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 its consolidated financial statements. In August 2015, the FASB issued ASU 2015-14 as an amendment to ASU 2014-09, Revenue from Contracts with Customers, which created 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. Based on a preliminary evaluation, the Company believes that adoption of ASC Topic 606 will not have a material effect on its consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, which simplifies the presentation of deferred income taxes by requiring that deferred income tax liabilities and assets be classified as noncurrent in a classified balance sheet. Until implementation of this standard, deferred income tax liabilities and assets are required to be classified as current or noncurrent based on the classification of the related asset or liability for financial reporting purposes. Deferred tax liabilities and assets that are not related to an asset or liability for financial reporting are classified according to the expected reversal date of the temporary difference. This standard is effective for the Company beginning in 2017. Adoption will have no effect on the Companys consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases, which created a new Topic, ASC Topic 842 and established the core principle that a lessee should recognize the assets, representing rights-of-use, and liabilities to make lease payments, that arise from leases. For leases with a term of 12 months or less, a lessee is permitted to make an election under which such assets and liabilities would not be recognized, and lease expense would be recognized generally on a straight-line basis over the lease term. This standard is effective for the Company beginning in 2019, and early application is permitted. Based on a preliminary evaluation, the Company believes that adoption of ASC Topic 842 will not have a material effect on its consolidated financial statements. Adoption of New Accounting Standard 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 required retrospective adoption and became effective with respect to the Companys financial statements on January 1, 2016. Prior to the effective date, such issuance costs were classified as assets and included as other assets in the Companys balance sheet. Under the provisions of ASU 2015-03, such issuance costs are presented as a direct deduction from the carrying amount of the related debt (see Note 5) in the accompanying March 31, 2016 condensed consolidated balance sheet, and such issuance costs, amounting to $166,080 have been reclassified in the December 31, 2015 condensed consolidated balance sheet to conform to the 2016 presentation. |
Inventory
Inventory | 3 Months Ended |
Mar. 31, 2016 | |
Inventory | |
Inventory | 3. Inventory Inventory consists of the following as of: March 31, December 31, Raw materials and work in process $ 820,907 $ 853,034 Software licenses 109,800 179,400 Finished goods 639,372 775,461 Inventory included in current assets 1,570,078 1,807,895 Software licenses non-current 989,600 937,100 $ 2,559,678 $ 2,744,995 |
Restructuring Charges
Restructuring Charges | 3 Months Ended |
Mar. 31, 2016 | |
Restructuring Charges [Abstract] | |
Restructuring Charges | 4. Restructuring Charges In March 2015, the Company announced its plan to consolidate all major business functions into its Irvine, California headquarters and close its Memphis, Tennessee office. The Company completed this consolidation and closure in May 2015. 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 and closure, the Company recorded restructuring charges of approximately $753,000 during the three months ended March 31, 2015 that related primarily to costs associated with severance and other compensation for the impacted employees. |
Notes Payable
Notes Payable | 3 Months Ended |
Mar. 31, 2016 | |
Notes Payable [Abstract] | |
Notes Payable | 5. Notes Payable Senior Secured Note Payable The principal indebtedness outstanding under the Brainlab Note at both March 31, 2016 and December 31, 2015 was $4,289,444. 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 discount was completely amortized as of March 31, 2016 and amounted to $64,835 at December 31, 2015. The discount was amortized to interest expense using the effective interest method over the term of the Brainlab Note. The Brainlab Note was to mature in April 2016, with principal and accrued interest, which had accrued at a rate of 5.5% and amounted to approximately $738,000 at March 31, 2016, payable in a single installment upon maturity. As discussed in Note 7, on March 22, 2016, the Company entered into the 2016 Purchase Agreement with Brainlab that would provide, among other items, for a reduction of the principal amount outstanding under the Brainlab Note. The restructuring of the Brainlab Note was consummated on April 4, 2016, and was reflected by a new, amended and restated note payable to Brainlab that matures on December 31, 2018. The Brainlab Note is collateralized by a senior security interest in the assets of the Company. 2014 Junior Secured 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. 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 the 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 47.5% - 47.7% Risk free interest rates 1.73% - 1.76% Expected life (in years) 5.0 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 March 31, 2016 and December 31, 2015 was $280,919 and $301,531, respectively. This discount is being amortized to interest expense over the five-year term of the 2014 Secured Notes using the effective interest method. The carrying amount of the 2014 Secured Notes in the accompanying condensed consolidated balance sheets is also presented net of issuance costs, as discussed further below. 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 presented as reductions of the carrying amount of the 2014 Secured Notes in the accompanying condensed consolidated balance sheets. These deferred financing costs, having an unamortized balance of $153,489 and $166,080 at March 31, 2016 and December 31, 2015, 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 March 31, 2016 and December 31, 2015 was $2,481,510 and $2,535,230, respectively. This discount is being amortized to interest expense over the 10-year term of the notes using the effective interest method. Four then-serving 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, before giving effect to the terms of the New Brainlab Note discussed in Note 7, with respect to notes payable are summarized as follows: Years ending December 31, 2016 $ 4,289,444 2017 - 2018 - 2019 3,725,000 2020 3,000,000 Total scheduled principal payments 11,014,444 Less unamortized discounts at March 31, 2016 (2,762,429 ) $ 8,252,016 |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2016 | |
Stockholders' deficit: | |
Stockholders' Equity | 6. Stockholders Equity Issuance of Common Stock in Lieu of Cash Payments 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 director 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: (i) the fees otherwise payable to each director in cash, times (ii) the percentage of fees the director elected to receive in shares of common stock, by (iii) the volume weighted average price per share of common stock over the last five trading days of the quarter. During the three months ended March 31, 2016 and 2015, 112,975 shares and 37,583 shares, respectively, were issued to directors as payment for director fees in lieu of cash. Common Stock Warrants Requiring Liability Accounting Warrants issued in 2012 and 2013 financing transactions contain either or both of net-cash settlement and down round provisions. Under GAAP, such provisions require that these warrants be accounted for as derivatives, thus requiring that they be adjusted to estimated fair value at each balance sheet date and shown as liabilities in the accompanying consolidated balance sheets. The fair value of such warrants was calculated using the Monte Carlo simulation valuation method. Assumptions used in calculating the fair value of the warrants at March 31, 2016 are as follows: March 31, 2016 Dividend yield 0% Expected volatility 54.50% - 59.50% Risk free interest rates 0.63% - 0.70% Expected remaining term (in years) 1.25 1.82 In addition to the assumptions above, the Company also estimates the likelihood of whether it will participate in a future round of equity financing and, if so, the estimated timing and pricing of its offering of common stock. The fair values and the changes in fair values of the warrants accounted for as derivative liabilities for the three months ended March 31, 2016 are as follows: Balance, December 31, 2015 $ 658,286 Gain on change in fair value for the three months ended March 31, 2016 (160,118 ) Balance, March 31, 2016 $ (498,168 ) Stock Incentive Plans The Company has various share-based compensation plans and share-based compensatory contracts (collectively, the Plans) under which it has granted share-based awards, such as stock grants, and incentive and non-qualified stock options, to employees, directors, consultants and advisors. Awards may be subject to a vesting schedule as set forth in individual award agreements. Certain of the Plans also have provided for cash-based performance bonus awards. In June 2013, the Companys stockholders approved the 2013 Incentive Compensation Plan. Upon its approval, the Company ceased making awards under other previous Plans, although then-outstanding awards made under such other previous Plans remain outstanding in conformity with their original terms. 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, stock grants of 727,353 shares have been awarded and option grants of 3,104,667 shares were outstanding as of March 31, 2016. Accordingly, 2,417,980 shares remained available for grants under the Amended 2013 Plan as of that date. Activity under all of the Companys equity compensation plans during the three months ended March 31, 2016 is summarized below: Shares Weighted - Outstanding at December 31, 2015 11,931,309 $ 1.22 Granted 300,000 0.31 Forfeited (90,000 ) 1.08 Outstanding at March 31, 2016 12,141,309 $ 1.20 The estimated grant date fair values of options granted during the three months ended March 31, 2016 were calculated using the Black-Scholes valuation model, based on the following assumptions: Dividend yield 0% Expected volatility 49.86% Risk free interest rates 1.38% 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 three months ended March 31, 2016 and 2015, share-based compensation expense related to options was: Three Months Ended March 31, 2016 2015 $ 260,149 $ 367,309 As of March 31, 2016, there was unrecognized compensation expense of $1,575,511 related to outstanding stock options, which is expected to be recognized over a weighted average period of 1.83 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, 2016 was as follows: Shares Weighted - Outstanding at December 31, 2015 33,816,102 $ 0.66 Issued - - Terminated - - Outstanding at March 31, 2016 33,816,102 $ 0.66 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | 7. Subsequent Events 2016 Securities Purchase Agreement On April 4, 2016 (the Closing Date), the Company consummated the transactions contemplated by the 2016 Purchase Agreement. Under the 2016 Purchase Agreement, the Company: (i) paid to Brainlab all accrued and unpaid interest on the Brainlab Note, in the amount of approximately $740,000; (ii) amended and restated the Brainlab Note on the terms described below; (iii) entered into a patent and technology license agreement with Brainlab for software relating to the Companys SmartFrame device, in consideration for the cancellation of $1.0 million of the principal amount of the Brainlab Note; (iv) issued to Brainlab, in consideration for the cancellation of approximately $1.3 million of the principal amount of the Brainlab Note, 3,972,410 units, consisting of: (a) one share of the Companys common stock; (b) warrants to purchase 0.40 shares of common stock (the 2016 Series A Warrants); and (c) warrants to purchase 0.30 shares of common stock (the 2016 Series B Warrants) (collectively, the Units); and (v) entered into a Registration Rights Agreement (the 2016 Registration Rights Agreement), pursuant to which the Company agreed to file a registration statement with the SEC covering the resale of the shares of common stock issued to Brainlab under the 2016 Purchase Agreement, as well as the shares of common stock that are issuable upon exercise of the 2016 Series A Warrants and 2016 Series B Warrants (together, the 2016 Warrants). The 2016 Purchase Agreement contains covenants, representations and warranties by the Company and Brainlab (including indemnification from the Company in the event of breaches of its representations and warranties), which the Company believes are customary for transactions of this type. 2016 Registration Rights Agreement The Company is required to file the 2016 Registration Statement within 60 calendar days following the Closing Date (the Filing Deadline). The Company is required to use its best efforts to have the 2016 Registration Statement declared effective as soon as practicable. Pursuant to the 2016 Registration Rights Agreement, if: (i) the 2016 Registration Statement is not filed with the SEC on or prior to the Filing Deadline; (ii) the 2016 Registration Statement is not declared effective by the SEC on or prior to the 75th day after the Closing Date (or the 120th day after the Closing Date if the SEC determines to review the 2016 Registration Statement); or (iii) the Company fails to continuously maintain the effectiveness of the 2016 Registration Statement (with certain permitted exceptions), the Company will incur certain liquidated damages in a range of 2%-10%, depending on the duration of such failure, of the approximately $1.3 million principal reduction of the Brainlab Note as described above. The 2016 Registration Rights Agreement also contains mutual indemnifications by the Company and Brainlab, which the Company believes are customary for transactions of this type. 2016 Warrants The 2016 Series A Warrants and 2016 Series B Warrants are exercisable, in full or in part, at any time prior to the fifth anniversary of their issuance, at an exercise price of $0.4058 per share and $0.5275 per share, respectively. The 2016 Warrants provide for certain adjustments that may be made to the exercise price and the number of shares issuable upon exercise due to future corporate events or otherwise. In the case of certain fundamental transactions affecting the Company, the holder of such 2016 Warrants, upon exercise of such warrants after such fundamental transaction, will have the right to receive, in lieu of shares of the Companys common stock, the same amount and kind of securities, cash or property that such holder would have been entitled to receive upon the occurrence of the fundamental transaction, had the 2016 Warrants been exercised immediately prior to such fundamental transaction. The 2016 Warrants contain a cashless exercise feature that allows the holders to exercise the warrants without a cash payment to the Company upon the terms set forth in the respective 2016 Warrant agreements. Amended and Restated Promissory Note On the Closing Date and pursuant to the 2016 Purchase Agreement, the Company issued Brainlab an unregistered, amended and restated secured note (the New Brainlab Note), which has the same terms and conditions as the Brainlab Note, except that: (i) the principal amount of the New Brainlab Note is $2 million; (ii) interest will be paid quarterly in arrears; and (iii) the maturity date of the New Brainlab Note is December 31, 2018. Non-Exclusive License Agreement On the Closing Date and pursuant to the 2016 Purchase Agreement, the Company and Brainlab entered into a patent and technology license (the 2016 License Agreement), for software relating to our SmartFrame device, for use in neurosurgery. The 2016 License Agreement does not affect the Companys ability to continue to independently develop, market and sell its own software for the SmartFrame device. Based on the foregoing, the Brainlab Note was classified as a non-current liability in the accompanying March 31, 2016 condensed consolidated balance sheet. |
Basis of Presentation and Sum13
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Basis Of Presentation And Summary Of Significant Accounting Policies Policies | |
Basis of Presentation and Use of Estimates | Basis of Presentation and Use of Estimates In the opinion of management, the accompanying unaudited condensed consolidated financial statements have been prepared on a basis consistent with the Companys December 31, 2015 audited consolidated financial statements, and include all adjustments, consisting of only normal recurring adjustments, necessary to fairly state the information set forth therein. These condensed consolidated financial statements have been prepared in accordance with United States (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 these condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and the related disclosures at the date of the financial statements and during the reporting period. Actual results could materially differ from these estimates. These condensed 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, 2015, which was filed with the SEC on March 25, 2016. The accompanying unaudited condensed consolidated balance sheet as of December 31, 2015 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, 2016 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 6). 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 6): Quoted Prices Significant Significant Total Fair March 31, 2016 Derivative liabilities - warrants $ - $ - $ 498,168 $ 498,168 December 31, 2015 Derivative liabilities - warrants $ - $ - $ 658,286 $ 658,286 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 March 31, 2016: Carrying Values Estimated Senior secured note payable, including accrued interest $ 5,026,966 $ 5,026,966 2014 junior secured notes payable, including accrued interest 3,298,967 3,733,375 2010 junior secured notes payable, including accrued interest 1,087,240 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 from the sale of ClearPoint system reusable products and disposable products; and (2) 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 a case-by-case basis. The Company determines if the deliverables under the arrangement represent separate units of accounting as defined by GAAP. Application of GAAP regarding multiple-element arrangements requires the Company 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 ClearPoint system disposable products (2) Other Service Revenues 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 revenue ratably over the term of the related service agreement |
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 6, 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 March 31, 2016, the Company had approximately $11,000 in bank balances that were in excess of the insured limits. At March 31, 2016, two customers each represented 11% of the Companys accounts receivable balance. At December 31, 2015, three customers represented 14%, 14% and 12% of the Companys accounts receivable balance. No other customer represented more than 9% of total accounts receivable at each of March 31, 2016 and December 31, 2015. For the three months ended March 31, 2016, sales to one customer represented 11% of product revenues. For the three months ended March 31, 2015, sales to two customers represented 17% and 14% of product revenues. No other single customer represented more than 9% and 7% of product revenues for the three months ended March 31, 2016 and 2015, respectively. The Company performs credit evaluations of its customers financial condition, and generally does not require collateral from its customers. The Company will provide an allowance for doubtful accounts when collections become doubtful. The allowance for doubtful accounts at each of March 31, 2016 and December 31, 2015 was $28,000. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (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 July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory, which requires an entity to measure inventory at the lower of cost or 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 its consolidated financial statements. In August 2015, the FASB issued ASU 2015-14 as an amendment to ASU 2014-09, Revenue from Contracts with Customers, which created 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. Based on a preliminary evaluation, the Company believes that adoption of ASC Topic 606 will not have a material effect on its consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, which simplifies the presentation of deferred income taxes by requiring that deferred income tax liabilities and assets be classified as noncurrent in a classified balance sheet. Until implementation of this standard, deferred income tax liabilities and assets are required to be classified as current or noncurrent based on the classification of the related asset or liability for financial reporting purposes. Deferred tax liabilities and assets that are not related to an asset or liability for financial reporting are classified according to the expected reversal date of the temporary difference. This standard is effective for the Company beginning in 2017. Adoption will have no effect on the Companys consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases, which created a new Topic, ASC Topic 842 and established the core principle that a lessee should recognize the assets, representing rights-of-use, and liabilities to make lease payments, that arise from leases. For leases with a term of 12 months or less, a lessee is permitted to make an election under which such assets and liabilities would not be recognized, and lease expense would be recognized generally on a straight-line basis over the lease term. This standard is effective for the Company beginning in 2019, and early application is permitted. Based on a preliminary evaluation, the Company believes that adoption of ASC Topic 842 will not have a material effect on its consolidated financial statements. |
Adoption of New Accounting Standard | Adoption of New Accounting Standard 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 required retrospective adoption and became effective with respect to the Companys financial statements on January 1, 2016. Prior to the effective date, such issuance costs were classified as assets and included as other assets in the Companys balance sheet. Under the provisions of ASU 2015-03, such issuance costs are presented as a direct deduction from the carrying amount of the related debt (see Note 5) in the accompanying March 31, 2016 condensed consolidated balance sheet, and such issuance costs, amounting to $166,080 have been reclassified in the December 31, 2015 condensed consolidated balance sheet to conform to the 2016 presentation. |
Basis of Presentation and Sum14
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Basis Of Presentation And Summary Of Significant Accounting Policies Tables | |
Schedule of the level of the inputs used in the company's fair value calculation for instruments carried at fair value | 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 6): Quoted Prices Significant Significant Total Fair March 31, 2016 Derivative liabilities - warrants $ - $ - $ 498,168 $ 498,168 December 31, 2015 Derivative liabilities - warrants $ - $ - $ 658,286 $ 658,286 |
Schedule of the carrying values and the estimated fair values, based on Level 3 inputs | 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 March 31, 2016: Carrying Values Estimated Senior secured note payable, including accrued interest $ 5,026,966 $ 5,026,966 2014 junior secured notes payable, including accrued interest 3,298,967 3,733,375 2010 junior secured notes payable, including accrued interest 1,087,240 2,476,630 |
Inventory (Tables)
Inventory (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Inventory Tables | |
Schedule of inventory | Inventory consists of the following as of: March 31, December 31, Raw materials and work in process $ 820,907 $ 853,034 Software licenses 109,800 179,400 Finished goods 639,372 775,461 Inventory included in current assets 1,570,078 1,807,895 Software licenses non-current 989,600 937,100 $ 2,559,678 $ 2,744,995 |
Notes Payable (Tables)
Notes Payable (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Notes Payable Tables | |
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 47.5% - 47.7% Risk free interest rates 1.73% - 1.76% Expected life (in years) 5.0 |
Schedule of notes payable maturities | Scheduled principal payments, before giving effect to the terms of the New Brainlab Note discussed in Note 7, with respect to notes payable are summarized as follows: Years ending December 31, 2016 $ 4,289,444 2017 - 2018 - 2019 3,725,000 2020 3,000,000 Total scheduled principal payments 11,014,444 Less unamortized discounts at March 31, 2016 (2,762,429 ) $ 8,252,016 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Stockholders Equity Tables | |
Schedule of assumptions used in calculating the fair value of the warrants | Assumptions used in calculating the fair value of the warrants at March 31, 2016 are as follows: March 31, 2016 Dividend yield 0% Expected volatility 54.50% - 59.50% Risk free interest rates 0.63% - 0.70% Expected remaining term (in years) 1.25 1.82 |
Schedule of fair values and the changes in fair values of the warrants accounted for as derivative liabilities | The fair values and the changes in fair values of the warrants accounted for as derivative liabilities for the three months ended March 31, 2016 are as follows: Balance, December 31, 2015 $ 658,286 Gain on change in fair value for the three months ended March 31, 2016 (160,118 ) Balance, March 31, 2016 $ (498,168 ) |
Schedule of equity compensation plans | Activity under all of the Companys equity compensation plans during the three months ended March 31, 2016 is summarized below: Shares Weighted - Outstanding at December 31, 2015 11,931,309 $ 1.22 Granted 300,000 0.31 Forfeited (90,000 ) 1.08 Outstanding at March 31, 2016 12,141,309 $ 1.20 |
Schedule of the estimated grant date fair values of options granted | The estimated grant date fair values of options granted during the three months ended March 31, 2016 were calculated using the Black-Scholes valuation model, based on the following assumptions: Dividend yield 0% Expected volatility 49.86% Risk free interest rates 1.38% Expected lives (in years) 6.0 |
Schedule of share-based compensation expense | The Company records share-based compensation expense on a straight-line basis over the related vesting period. For the three months ended March 31, 2016 and 2015, share-based compensation expense related to options was: Three Months Ended March 31, 2016 2015 $ 260,149 $ 367,309 |
Schedule of common stock warrant activity | Warrants have generally been issued for terms of up to five years. Common stock warrant activity for the three months ended March 31, 2016 was as follows: Shares Weighted - Outstanding at December 31, 2015 33,816,102 $ 0.66 Issued - - Terminated - - Outstanding at March 31, 2016 33,816,102 $ 0.66 |
Description of the Business a18
Description of the Business and Liquidity (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Cumulative net loss | $ (85,726,580) | $ (87,770,398) | $ (85,726,580) | |||
Net cash flows from operating activities | (1,608,561) | $ (2,799,042) | $ 8,600,000 | |||
Proceeds from issuance of private placement | $ 4,700,000 | $ 9,400,000 | $ 3,500,000 | $ (140,086) | ||
Brainlab Senior Secured Note Payable [Member] | ||||||
Description of maturity date | Matures on December 31, 2018. |
Basis of Presentation and Sum19
Basis of Presentation and Summary of Significant Accounting Policies (Details) - Warrant [Member] - Fair Value, Measurements, Recurring [Member] - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative liabilities - warrants | $ 498,168 | $ 658,286 |
Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative liabilities - warrants | ||
Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative liabilities - warrants | ||
Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative liabilities - warrants | $ 498,168 | $ 658,286 |
Basis of Presentation and Sum20
Basis of Presentation and Summary of Significant Accounting Policies (Details 1) | Mar. 31, 2016USD ($) |
Brainlab Senior Secured Note Payable [Member] | |
Debt Instrument [Line Items] | |
Carrying Values | $ 5,026,966 |
Estimated Fair Values | 5,026,966 |
12% Junior Secured Notes Payable 2014 [Member] | |
Debt Instrument [Line Items] | |
Carrying Values | 3,298,967 |
Estimated Fair Values | 3,733,375 |
Junior Secured Notes Payable 2010 [Member] | |
Debt Instrument [Line Items] | |
Carrying Values | 1,087,240 |
Estimated Fair Values | $ 2,476,630 |
Basis of Presentation and Sum21
Basis of Presentation and Summary of Significant Accounting Policies (Details Narrative) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2016USD ($)Number | Mar. 31, 2015Number | Dec. 31, 2015USD ($)Number | |
FDIC insured limit | $ 11,000 | ||
Allowance for doubtful accounts | 28,000 | $ 28,000 | |
Debt issuance costs | $ 166,080 | ||
Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | |||
Number of major customers | Number | 1 | 2 | |
Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | Customer A [Member] | |||
Percentage of concentration risk | 11.00% | 17.00% | |
Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | Customer B [Member] | |||
Percentage of concentration risk | 14.00% | ||
Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | Other Customers with Total Accounts Receivable over Threshold [Member] | |||
Percentage of concentration risk | 9.00% | 7.00% | |
Customer Concentration Risk [Member] | Accounts Receivable [Member] | |||
Number of major customers | Number | 2 | 3 | |
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Customer A [Member] | |||
Percentage of concentration risk | 11.00% | 14.00% | |
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Customer B [Member] | |||
Percentage of concentration risk | 11.00% | 14.00% | |
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Other Customers with Total Accounts Receivable over Threshold [Member] | |||
Percentage of concentration risk | 9.00% | 9.00% | |
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Customer C [Member] | |||
Percentage of concentration risk | 12.00% | ||
Minimum [Member] | |||
Term of service agreements (in years) | 1 year | ||
Maximum [Member] | |||
Term of service agreements (in years) | 3 years |
Inventory (Details)
Inventory (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Raw materials and work in process | $ 820,907 | $ 853,034 |
Software licenses | 109,800 | 179,400 |
Finished goods | 639,372 | 775,461 |
Inventory included in current assets | 1,570,078 | 1,807,895 |
Software licenses - non-current | 989,600 | 937,100 |
Total Inventory | $ 2,559,678 | $ 2,744,995 |
Restructuring Charges (Details
Restructuring Charges (Details Narrative) | 3 Months Ended | |
Mar. 31, 2016USD ($) | Mar. 31, 2015USD ($)Number | |
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | $ | $ 753,400 | |
Memphis,Tennessee Office [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | $ | $ 753,000 | |
Memphis,Tennessee Office [Member] | Employees [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Number of positions eliminated | Number | 7 | |
Memphis,Tennessee Office [Member] | Executive Officer [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Number of positions eliminated | Number | 3 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2016 | Mar. 31, 2015 | |
Debt Instrument [Line Items] | |||||
Proceeds from common stock called | $ 4,700,000 | $ 9,400,000 | $ 3,500,000 | $ (140,086) | |
Unamortized discount | 2,762,429 | ||||
Other offering expenses | $ 166,080 | ||||
Brainlab Senior Secured Note Payable [Member] | |||||
Debt Instrument [Line Items] | |||||
Stated interest rate | 5.50% | ||||
Description of maturity date | Matures on December 31, 2018. | ||||
Debt face amount | 4,289,444 | $ 4,289,444 | |||
Description of collateral terms | The Brainlab Note is collateralized by a senior security interest in the assets of the Company. | ||||
Unamortized discount | 64,835 | ||||
Description of payment terms | Principal and accrued interest is payable in a single installment upon maturity. | ||||
Private Placement (Securities Purchase Agreements) [Member] | 12% Junior Secured Notes Payable 2014 [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] | Brainlab Senior Secured Note Payable [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt face amount | $ 738,000 | ||||
Private Placement (Securities Purchase Agreements) [Member] | 2014 Secured Notes [Member] | |||||
Debt Instrument [Line Items] | |||||
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 the Brainlab note. | ||||
Unamortized discount | $ 301,531 | $ 413,057 | 280,919 | ||
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 | $ 153,489 | $ 166,080 |
Notes Payable (Details Narrat25
Notes Payable (Details Narrative 1) | 1 Months Ended | ||
Nov. 30, 2010USD ($)Numbershares | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Debt Instrument [Line Items] | |||
Common stock fair value | $ | $ 2,775,300 | ||
Unamortized discount | $ | $ 2,762,429 | ||
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 | $ 2,481,510 | $ 2,535,230 |
Interest expense terms | 10-year term of the notes using the effective interest method. |
Notes Payable (Details)
Notes Payable (Details) - Warrant [Member] | 3 Months Ended |
Mar. 31, 2016 | |
Debt Instrument [Line Items] | |
Dividend yield | 0.00% |
Expected life (in years) | 5 years |
Valuation method used | Black-Scholes valuation model |
Maximum [Member] | |
Debt Instrument [Line Items] | |
Expected volatility | 47.70% |
Risk free interest rates | 1.76% |
Minimum [Member] | |
Debt Instrument [Line Items] | |
Expected volatility | 47.50% |
Risk free interest rates | 1.73% |
Notes Payable (Details 1)
Notes Payable (Details 1) | Mar. 31, 2016USD ($) |
Debt Disclosure [Abstract] | |
2,016 | $ 4,289,444 |
2,017 | |
2,018 | |
2,019 | $ 3,725,000 |
2,020 | 3,000,000 |
Total scheduled principal payments | 11,014,444 |
Less unamortized discounts at March 31, 2016 | (2,762,429) |
Total | $ 8,252,016 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | 3 Months Ended | |||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | Jun. 30, 2013 | |
Number of awards oustanding | 12,141,309 | 11,931,309 | ||
Number of awards granted | 300,000 | |||
Directors fees | $ 112,975 | $ 37,583 | ||
Chief Financial Officer & One Executive Officer (New Employment Agreements) [Member] | ||||
Unrecognized compensation expense | $ 1,575,511 | |||
Weighted average period | 1 year 9 months 29 days | |||
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 | 2,417,980 | |||
Number of awards oustanding | 3,104,667 | |||
Number of awards granted | 727,353 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - Common Stock Warrants [Member] | 3 Months Ended |
Mar. 31, 2016 | |
Dividend yield | 0.00% |
Valuation method used | Monte Carlo simulation valuation method. |
Maximum [Member] | |
Expected volatility | 59.50% |
Risk free interest rates | 0.70% |
Expected remaining term (in years) | 1 year 9 months 25 days |
Minimum [Member] | |
Expected volatility | 54.50% |
Risk free interest rates | 0.63% |
Expected remaining term (in years) | 1 year 3 months |
Stockholders' Equity (Details 1
Stockholders' Equity (Details 1) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Balance at beginning | $ 658,286 | |
Gain on change in fair value for the three months ended March 31, 2016 | 160,118 | $ (782,802) |
Balance at ending | 498,168 | |
Common Stock Warrants [Member] | ||
Balance at beginning | 658,286 | |
Gain on change in fair value for the three months ended March 31, 2016 | (160,118) | |
Balance at ending | $ (498,168) |
Stockholders' Equity (Details 2
Stockholders' Equity (Details 2) | 3 Months Ended |
Mar. 31, 2016$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Balance at beginning | shares | 11,931,309 |
Granted | shares | 300,000 |
Forfeited | shares | (90,000) |
Balance at ending | shares | 12,141,309 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | |
Balance at beginning | $ / shares | $ 1.22 |
Granted | $ / shares | 0.31 |
Forfeited | $ / shares | 1.08 |
Balance at ending | $ / shares | $ 1.20 |
Stockholders' Equity (Details 3
Stockholders' Equity (Details 3) | 3 Months Ended |
Mar. 31, 2016 | |
Equity [Abstract] | |
Dividend yield | 0.00% |
Expected volatility | 49.86% |
Risk free interest rates | 1.38% |
Expected lives (in years) | 6 years |
Stockholders' Equity (Details 4
Stockholders' Equity (Details 4) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Equity [Abstract] | ||
Share-based compensation expense | $ 260,149 | $ 377,892 |
Stockholders' Equity (Details 5
Stockholders' Equity (Details 5) - Common Stock Warrants [Member] | 3 Months Ended |
Mar. 31, 2016$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Balance at beginning | shares | 33,816,102 |
Issued | shares | |
Terminated | shares | |
Balance at ending | shares | 33,816,102 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | |
Balance at beginning | $ / shares | $ 0.66 |
Issued | $ / shares | |
Terminated | $ / shares | |
Balance at ending | $ / shares | $ 0.66 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Apr. 04, 2016 | Mar. 31, 2016 | Dec. 31, 2015 |
Common stock par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Brainlab Senior Secured Note Payable [Member] | |||
Debt face amount | $ 4,289,444 | $ 4,289,444 | |
Interest rate | 5.50% | ||
2016 Securities Purchase Agreement (Patent And Technology License Agreement) [Member] | Brainlab Senior Secured Note Payable [Member] | Common Stock [Member] | Subsequent Event [Member] | |||
Number of common shares issued | 1 | ||
Subsequent Event [Member] | 2016 Securities Purchase Agreement (Patent And Technology License Agreement) [Member] | Brainlab Senior Secured Note Payable [Member] | |||
Debt cancelled principal amount | $ 1,000,000 | ||
Subsequent Event [Member] | 2016 Securities Purchase Agreement (Patent And Technology License Agreement) [Member] | Brainlab Senior Secured Note Payable [Member] | Common Stock [Member] | |||
Common stock par value (in dollars per share) | $ 0.01 | ||
Subsequent Event [Member] | 2016 Securities Purchase Agreement (Patent And Technology License Agreement) [Member] | Brainlab Senior Secured Note Payable [Member] | 2016 Series A Warrants [Member] | |||
Number of each common stock called | 0.40 | ||
Number of common shares issued | 1 | ||
Warrant exercise price (in dollars per share) | $ 0.4058 | ||
Subsequent Event [Member] | 2016 Securities Purchase Agreement (Patent And Technology License Agreement) [Member] | Brainlab Senior Secured Note Payable [Member] | 2016 Series B Warrants [Member] | |||
Number of each common stock called | 0.30 | ||
Number of common shares issued | 1 | ||
Warrant exercise price (in dollars per share) | $ 0.5275 | ||
Subsequent Event [Member] | 2016 Securities Purchase Agreement [Member] | Brainlab Senior Secured Note Payable [Member] | |||
Accrued interest | $ 740,000 | ||
Debt cancelled principal amount | $ 1,300,000 | ||
Number of units issued | 3,972,410 | ||
Subsequent Event [Member] | 2016 Securities Purchase Agreement [Member] | New Brainlab Note (amended and restated secured note) [Member] | |||
Debt face amount | $ 2,000,000 | ||
Maturity date | Dec. 31, 2018 | ||
Subsequent Event [Member] | 2016 Registration Rights Agreement [Member] | Brainlab Senior Secured Note Payable [Member] | |||
Debt face amount | $ 1,300,000 | ||
Subsequent Event [Member] | 2016 Registration Rights Agreement [Member] | Brainlab Senior Secured Note Payable [Member] | Maximum [Member] | |||
Interest rate | 10.00% | ||
Subsequent Event [Member] | 2016 Registration Rights Agreement [Member] | Brainlab Senior Secured Note Payable [Member] | Minimum [Member] | |||
Interest rate | 2.00% |