Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Feb. 28, 2018 | Jun. 30, 2017 | |
Document And Entity Information | |||
Entity Registrant Name | MRI INTERVENTIONS, INC. | ||
Entity Central Index Key | 1,285,550 | ||
Document Type | 10-K | ||
Trading Symbol | MRIC | ||
Document Period End Date | Dec. 31, 2017 | ||
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 Public Float | $ 37,780,637 | ||
Entity Common Stock, Shares Outstanding | 10,693,851 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Cash and cash equivalents | $ 9,289,831 | $ 3,315,774 |
Accounts receivable, net | 949,415 | 865,943 |
Inventory, net | 2,314,184 | 1,768,382 |
Prepaid expenses and other current assets | 192,727 | 134,996 |
Total current assets | 12,746,157 | 6,085,095 |
Property and equipment, net | 267,667 | 328,249 |
Software license inventory | 871,900 | 976,900 |
Other assets | 11,641 | 10,641 |
Total assets | 13,897,365 | 7,400,885 |
Current liabilities: | ||
Accounts payable | 759,445 | 1,546,926 |
Accrued compensation | 806,445 | 666,060 |
Other accrued liabilities | 480,159 | 450,424 |
Derivative liabilities | 95,786 | 131,173 |
Deferred product and service revenues | 256,178 | 223,117 |
Senior secured note payable | 2,000,000 | |
Total current liabilities | 4,398,013 | 3,017,700 |
Accrued interest | 752,500 | 647,500 |
Senior secured note payable | 2,000,000 | |
Junior secured notes payable | ||
Total liabilities | 8,068,625 | 8,156,954 |
Commitments and contingencies | ||
Stockholders' equity (deficit): | ||
Preferred stock, $0.01 par value; 25,000,000 shares authorized at December 31, 2017 and 2016; none issued and outstanding at December 31, 2017 and 2016 | ||
Common stock, $0.01 par value; 200,000,000 shares authorized at December 31, 2017 and 2016; 10,693,851 and 3,622,032 shares issued and outstanding at December 31, 2017 and 2016, respectively | 106,937 | 36,220 |
Additional paid-in capital | 106,757,920 | 93,076,475 |
Accumulated deficit | (101,036,117) | (93,868,764) |
Total stockholders' equity (deficit) | 5,828,740 | (756,069) |
Total liabilities and stockholders' equity (deficit) | 13,897,365 | 7,400,885 |
12% Junior Secured Notes Payable 2014 [Member] | ||
Current liabilities: | ||
Junior secured notes payable | 1,874,570 | 1,794,226 |
Junior Secured Notes Payable 2010 [Member] | ||
Current liabilities: | ||
Junior secured notes payable | $ 1,043,542 | $ 697,528 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized | 25,000,000 | 25,000,000 |
Preferred stock, issued | ||
Preferred stock, outstanding | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized | 200,000,000 | 200,000,000 |
Common stock, issued | 10,693,851 | 3,622,032 |
Common stock, outstanding | 10,693,851 | 3,622,032 |
12% Junior Secured Notes Payable 2014 [Member] | ||
Unamortized discount and deferred issuance costs | $ 100,430 | $ 180,774 |
Junior Secured Notes Payable 2010 [Member] | ||
Unamortized discount non-current | $ 1,956,458 | $ 2,302,472 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Revenues: | ||
Product revenues | $ 7,024,010 | $ 5,600,453 |
Service and other revenues | 355,515 | 149,001 |
Total revenues | 7,379,525 | 5,749,454 |
Cost of revenues | 2,898,808 | 2,642,763 |
Research and development costs | 2,813,733 | 2,628,179 |
Sales and marketing expenses | 3,956,455 | 3,777,119 |
General and administrative expenses | 4,046,366 | 4,190,131 |
Operating loss | (6,335,837) | (7,488,738) |
Other income (expense): | ||
Gain on change in fair value of derivative liabilities | 24,728 | 1,065,935 |
Loss on debt restructuring | (811,909) | |
Other income, net | 16,682 | 216,075 |
Interest expense, net | (872,926) | (1,051,258) |
Net loss | $ (7,167,353) | $ (8,069,895) |
Net loss per share attributable to common stockholders: | ||
Basic and diluted (in dollars per share) | $ (0.93) | $ (2.93) |
Weighted average shares outstanding: | ||
Basic and diluted (in shares) | 7,738,343 | 2,754,803 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (Deficit) - USD ($) | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Total |
Balances at beginning at Dec. 31, 2015 | $ 22,845 | $ 83,722,596 | $ (85,726,580) | $ (1,981,139) |
Balances at beginning (in shares) at Dec. 31, 2015 | 2,284,537 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuances of common stock in Share-based compensation | $ 291 | 1,186,809 | 1,187,100 | |
Issuances of common stock in Share-based compensation (in shares) | 29,117 | |||
Issuances of common stock in payment of expenses | $ 44 | 62,686 | 62,730 | |
Issuances of common stock in payment of expenses (in shares) | 4,375 | |||
Issuances of common stock in connection with debt restructuring | $ 993 | 1,347,727 | 1,348,720 | |
Issuances of common stock in connection with debt restructuring (in shares) | 99,310 | |||
Issuances of common stock Warrant exercise | $ 42 | 37,630 | 37,672 | |
Issuances of common stock Warrant exercise (in shares) | 4,245 | |||
Creation of derivative liabilities in connection with note and warrant restructuring | (72,289) | (72,289) | ||
Cash paid in lieu of issuing fractional shares in reverse split of common stock | $ (5) | (4,755) | (4,760) | |
Cash paid in lieu of issuing fractional shares in reverse split of common stock (in shares) | (552) | |||
Private placement, net of offering costs | $ 12,010 | 5,635,350 | 5,647,360 | |
Private placement, net of offering costs (in shares) | 1,201,000 | |||
Transfer of fair value of derivative liabilities upon conversion of related debt in connection with private placement | 1,088,432 | 1,088,432 | ||
Net loss for the year | (8,069,895) | (8,069,895) | ||
Balances at end at Dec. 31, 2016 | $ 36,220 | 93,076,475 | (93,868,764) | (756,069) |
Balances at end (in shares) at Dec. 31, 2016 | 3,622,032 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuances of common stock in Share-based compensation | $ 3,544 | 1,242,057 | 1,245,601 | |
Issuances of common stock in Share-based compensation (in shares) | 354,391 | |||
Issuances of common stock in payment of expenses | $ 883 | 501,149 | 502,032 | |
Issuances of common stock in payment of expenses (in shares) | 88,333 | |||
Issuances of common stock Warrant exercise | $ 40 | 11,169 | 11,209 | |
Issuances of common stock Warrant exercise (in shares) | 4,095 | |||
Private placement, net of offering costs | $ 66,250 | 11,927,070 | 11,993,320 | |
Private placement, net of offering costs (in shares) | 6,625,000 | |||
Net loss for the year | (7,167,353) | (7,167,353) | ||
Balances at end at Dec. 31, 2017 | $ 106,937 | $ 106,757,920 | $ (101,036,117) | $ 5,828,740 |
Balances at end (in shares) at Dec. 31, 2017 | 10,693,851 |
Consolidated Statements of Sto6
Consolidated Statements of Stockholders' Equity (Deficit) (Parenthetical) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Statement of Stockholders' Equity [Abstract] | ||
Private placement, net of offering costs | $ 1,244,581 | $ 140,749 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Cash flows from operating activities: | ||
Net loss | $ (7,167,353) | $ (8,069,895) |
Adjustments to reconcile net loss to net cash flows from operating activities: | ||
Depreciation and amortization | 116,454 | 155,707 |
Share-based compensation | 1,245,601 | 1,187,100 |
Expenses paid through the issuance of common stock | 502,032 | 62,730 |
Gain on change in fair value of derivative liabilities | (24,728) | (1,065,935) |
Loss on debt restructuring | 811,909 | |
Loss on retirement of equipment | 1,689 | |
Amortization of debt issuance costs and original issue discounts | 426,358 | 424,431 |
Increase (decrease) in cash resulting from changes in: | ||
Accounts receivable | (83,472) | 352,100 |
Inventory | (469,922) | 72,342 |
Prepaid expenses and other current assets | (57,731) | (37,748) |
Other assets | (999) | |
Accounts payable and accrued expenses | (512,362) | 178,419 |
Deferred revenue | 33,061 | 107,108 |
Net cash flows from operating activities | (5,992,511) | (5,820,043) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (26,752) | (101,002) |
Net cash flows from investing activities | (26,752) | (101,002) |
Cash flows from financing activities: | ||
Net proceeds from equity private placements and exercise of warrants | 11,993,320 | 3,833,052 |
Cash paid in lieu of issuing fractional shares in reverse split of common stock | (4,756) | |
Net cash flows from financing activities | 11,993,320 | 3,828,296 |
Net change in cash and cash equivalents | 5,974,057 | (2,092,749) |
Cash and cash equivalents, beginning of year | 3,315,774 | 5,408,523 |
Cash and cash equivalents, end of year | 9,289,831 | 3,315,774 |
Cash paid for: | ||
Income taxes | ||
Interest | 348,528 | 976,295 |
Noncash Investing and Financing Items | ||
Transfer from inventory to property and equipment | 29,121 | 55,963 |
The fair value of the derivatives | 72,289 | 1,207,813 |
Reduced of derivative liabilities | $ 10,659 | $ 37,672 |
Description of the Business and
Description of the Business and Financial Condition | 12 Months Ended |
Dec. 31, 2017 | |
Description Of Business And Financial Condition | |
Description of the Business and Financial Condition | 1. Description of the Business and Financial Condition MRI Interventions, Inc. (the “Company”) is a medical device company focused on the development and commercialization of technology that enables physicians to see inside the brain and heart using direct, intra-procedural magnetic resonance imaging (“MRI”) guidance while performing minimally invasive surgical procedures. The Company was incorporated in the state of Delaware in March 1998. The Company’s principal executive office and principal operations are located in Irvine, California. The Company established MRI Interventions (Canada) Inc., a wholly-owned subsidiary incorporated in Canada, in August 2013. This subsidiary was established primarily for the purpose of performing software development, and its activities are reflected in these consolidated financial statements. The Company’s ClearPoint system, an integrated system comprised of capital equipment and disposable products, is designed to allow minimally invasive procedures in the brain to be performed in an MRI suite. The Company received 510(k) clearance from the U.S. Food and Drug Administration (“FDA”) in 2010 to market the ClearPoint system in the United States for general neurological interventional procedures. The Company’s ClearTrace system is a product candidate 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 Management’s Plans The Company has incurred net losses since its inception which has resulted in a cumulative deficit at December 31, 2017 of $101 million. As a result, management historically has expressed substantial doubt as to the Company’s ability to continue as a going concern. As discussed in Note 6, in May 2017, the Company completed a private offering of equity units (the “2017 PIPE”) through which the Company received aggregate gross proceeds of approximately $13.25 million, before deducting placement agents’ fees and offering expenses aggregating approximately $1.3 million. As a result, the Company’s cash and cash equivalent balances at December 31, 2017 aggregated $9.3 million, which, in management’s opinion, is sufficient to support the Company’s operations for at least the next twelve months and to alleviate doubt as to the Company’s ability to continue as a going concern. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, MRI Interventions (Canada) Inc. All significant inter-company accounts and transactions have been eliminated. Basis of Presentation and Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Reverse Stock Split As discussed in Note 6, on July 21, 2016, the Company’s Board of Directors approved a 1-for-40 reverse stock split of its issued common stock, which was effectuated on July 26, 2016. All disclosures of common shares and per share data in the accompanying consolidated financial statements and related notes have been adjusted retroactively to reflect the reverse stock split for all periods presented. Cash and Cash Equivalents Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less. Derivative Liabilities Derivative liabilities represent the fair value of conversion features of certain notes and of certain warrants to purchase common stock (see Note 7). 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 consolidated 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, or inputs other than quoted prices that are observable for the asset or liability. The lowest priority, referred to as Level 3, is given to unobservable inputs. The table below reflects the level of the inputs used in the Company’s fair value calculations: Quoted Prices in Active Markets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value December 31, 2017 Derivative liabilities - warrants $ - $ - $ 79,286 $ 79,286 Derivative liabilities – debt conversion feature $ - $ - $ 16,500 $ 16,500 December 31, 2016 Derivative liabilities - warrants $ - $ - $ 91,173 $ 91,173 Derivative liabilities – debt conversion feature $ - $ - $ 40,000 $ 40,000 Inputs used in the Company’s Level 3 calculation of fair value include the assumed dividend rate on the Company’s common stock, risk-free interest rates stock price volatility and the likelihood of a future equity financing transaction, all of which are further discussed in Note 7. Carrying amounts of the Company’s cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair values due to their short maturities. The table below reflects the carrying values and the estimated fair values, based on Level 3 inputs, of the Company’s outstanding notes payable, including the related accrued interest, at December 31, 2017 and 2016: Estimated Carrying Value Fair Value December 31, 2017 Senior secured note payable, including accrued interest $ 2,028,111 $ 2,028,111 2014 junior secured notes payable, including accrued interest $ 1,942,195 $ 2,042,625 2010 junior secured notes payable, including accrued interest $ 1,796,042 $ 3,752,500 December 31, 2016 Senior secured note payable, including accrued interest $ 2,028,111 $ 2,028,111 2014 junior secured notes payable, including accrued interest $ 1,861,851 $ 2,042,625 2010 junior secured notes payable, including accrued interest $ 1,345,028 $ 2,789,257 Inventory Inventory is carried at the lower of cost (first-in, first-out method) or net realizable value. Items in inventory relate predominantly to the Company’s ClearPoint system. Software license inventory 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. Property and Equipment Property and equipment, including ClearPoint capital equipment on loan to customers for evaluation purposes, are recorded at cost and are depreciated on a straight-line basis over their estimated useful lives, principally five to seven years. Leasehold improvements are depreciated on a straight-line basis over the lesser of their estimated useful lives or the term of the related lease. Impairment of Long-Lived Assets The Company periodically evaluates the recoverability of its long-lived assets (finite-lived intangible assets and property and equipment). Whenever events or changes in circumstances indicate that the carrying amount of such assets may not be fully recoverable, the expected undiscounted future cash flows are compared to the net book value of the related assets. If the net book value of the related assets were to exceed the undiscounted expected future cash flows of the assets, the carrying amount would be reduced to the present value of the expected future cash flows and an impairment loss would be recognized. The Company has not recorded any impairment losses for the years ended December 31, 2017 or 2016. Revenue Recognition The Company’s revenues are comprised of: (1) product revenues resulting from the sale of functional neurological products, and drug delivery and biologic products; (2) product revenues resulting from the sale of ClearPoint capital equipment; and (3) revenues resulting from the rental, service, installation, training and shipping related to ClearPoint capital equipment. 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 agreement 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. ● Sales of functional neurology products, and biologics and drug delivery systems products ● Sales of capital equipment ● Rental, service and other revenues: Product Warranties The Company’s standard policy is to warrant ClearPoint system capital equipment against defects in material or workmanship for one year following installation. The Company periodically reviews its estimate of costs to service warranty obligations based primarily on historical experience, which has been nominal. Such estimates are included in accrued liabilities in the accompanying consolidated balance sheets, and changes in such estimates are recorded as costs of product revenues in the accompanying consolidated statements of operations. Research and Development Costs Costs related to research, design and development of products are charged to research and development expense as incurred. Income Taxes Deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. Such assets and liabilities are measured using enacted tax rates expected to apply to taxable income or loss in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates is recognized in the period that includes the enactment date. The Company provides a valuation allowance against net deferred income tax assets unless, based upon available evidence, it is more likely than not the deferred income tax assets will be realized. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense. As of December 31, 2017 and 2016, the Company had no accrued interest or penalties related to uncertain tax positions. Net Loss Per Share The Company computes net loss per share using the weighted-average number of common shares outstanding during the period. Basic and diluted net loss per share are the same because the conversion, exercise or issuance of all potential common stock equivalents, which comprise the entire amount of the Company’s outstanding common stock options and warrants as described in Note 6, would be anti-dilutive. Share-Based Compensation The Company accounts for compensation for all arrangements under which employees, directors and others receive shares of stock or other equity instruments (including options and warrants) based on fair value. The fair value of each award is estimated as of the grant date and amortized as compensation expense over the requisite vesting period. The fair values of the Company’s share-based awards are estimated on the grant dates using the Black-Scholes valuation model. This valuation model requires the input of highly subjective assumptions, including the expected stock volatility, estimated award terms and risk-free interest rates for the expected terms. To estimate the expected terms, the Company utilizes the “simplified” method for “plain vanilla” options discussed in the Staff Accounting Bulletin 107 (“SAB 107”) issued by the Securities and Exchange Commission (the “SEC”). The Company believes that all factors listed within SAB 107 as pre-requisites for utilizing the simplified method apply to the Company and its share-based compensation arrangements. The Company intends to utilize the simplified method for the foreseeable future until more detailed information about exercise behavior becomes available. The Company based its estimate of expected volatility on the average of: (i) historical volatilities of publicly traded companies it deemed similar to the Company; and (ii) the Company’s historical volatility, which is limited, and will consistently apply this methodology until its own sufficient relevant historical data is exists. The Company utilizes risk-free interest rates based on zero-coupon U.S. treasury instruments, the terms of which are consistent with the expected terms of the equity awards. The Company has not paid and does not anticipate paying cash dividends on its shares of common stock; therefore, the expected dividend yield is assumed to be zero. Fair Value Determination of Share-Based Transactions The Company’s common stock is traded in the over-the-counter market and is quoted on the OTCQB Marketplace and the OTC Bulletin Board under the symbol “MRIC.” Quoted closing stock prices are used as a key input in determining the fair value for share-based transactions. 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 December 31, 2017, the Company had approximately $103,559 in bank balances that were in excess of the insured limits. For the year ended December 31, 2017, sales to no customers represented in excess of 10% of the Company’s product revenues. For the year ended December 31, 2016, sales to one customer represented 10% of the Company’s product revenues. Information with respect to accounts receivable from those customers who comprised more than 10% of accounts receivable at December 31, 2017 and 2016 is as follows: December 31, 2017 2016 Customer – 1 10% 20% Customer – 2 - 13% Customer – 3 - 10% Prior to granting credit, the Company performs credit evaluations of its customers’ financial condition, and generally does not require collateral from its customers. The Company will provide an allowance for doubtful accounts when collections become doubtful. The allowance for doubtful accounts at December 31, 2017 and 2016 was $29,000 and $25,000, respectively. The Company is subject to risks common to emerging companies in the medical device industry, including, but not limited to: new technological innovations; acceptance and competitiveness of its products; dependence on key personnel; dependence on key suppliers; changes in general economic conditions and interest rates; protection of proprietary technology; compliance with changing government regulations; uncertainty of widespread market acceptance of products; access to credit for capital purchases by customers; and product liability claims. Certain components used in manufacturing have relatively few alternative sources of supply and establishing additional or replacement suppliers for such components cannot be accomplished quickly. The inability of any of these suppliers to fulfill the Company’s supply requirements may negatively impact future operating results. Recent Accounting Pronouncements In August 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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, and ASUs 2016-10, 2016-12, 2016-20 and 2017-13 discussed below, are effective for the Company beginning in 2018. ● In April 2016, the FASB issued ASU 2016-10, “Revenues from Contracts With Customers (Topic 606): Identifying Performance Obligations and Licensing,” which clarified guidance related to identifying performance obligations and licensing implementation guidance contained in ASC Topic 606 as promulgated by ASU 2015-14 discussed above. ● In May 2016, the FASB issued ASU 2016-12, “Revenues from Contracts With Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients,” which address narrow-scope improvements to the guidance on collectability, noncash consideration, and completed contracts at transition. Additionally, the amendments in this ASU provide a practical expedient for contract modifications at transition and an accounting policy election related to the presentation of sales taxes and other similar taxes collected from customers. ● In December 2016, the FASB issued ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts With Customers,” which provided for minor corrections and minor improvements to previously issued Topic 606 guidance. ● In September 2017, the FASB issued ASU 2017-13, “Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842),” which added and deleted paragraphs pursuant to SEC Staff Announcements and SEC Observer Comments. ● In November 2017, the FASB issued ASU 2017-14, “Income Statement – Reporting Comprehensive Income (Topic 220), Revenue Recognition (Topic 605), and Revenue from Contracts with Customers (Topic 606),” which amends SEC paragraphs pursuant to the SEC Staff Accounting Bulletin No. 116 and SEC Release No. 33-10403, which bring existing guidance into conformity with Topic 606 The Company has assessed the potential impact of the provisions ASU 2015-14 and the subsequently issued related ASUs discussed above (collectively, “Topic 606”) on its consolidated financial statements. In its assessment, the Company has considered such factors as the following: ● Economic factors: o The Company’s revenues are comprised of the product and service lines described below. With respect to each of these product and service lines: § The Company’s customers are predominantly large, well-known hospitals. Accounts receivable are due in a range of 30-60 days from the date of product delivery. The Company establishes an allowance for doubtful accounts, which historically has not been material. § Due to the short-term nature of the Company’s performance obligations, the Company has no remaining post-transaction performance obligations. o Based on the foregoing, the Company has concluded that the nature, amount and certainty of revenue recognition for each of the product and service lines described below are not affected by economic factors. ● Sales of functional neurology products, and biologics and drug delivery systems products ● Sales of capital equipment ● Rental, service and other revenues: o Revenues from rental of capital equipment are recognized over the term of the rental agreement, which is less than one year, and which is consistent with the Topic 606 criterion of recognizing revenue for such contracts on a straight-line basis. o Revenues from service of capital equipment previously sold to customers are based on agreements with terms ranging from one to three years. The Company’s performance obligations with respect to such service agreements consists predominantly of being available to service the equipment and the Company’s historical cost of performing service on capital equipment has been nominal. Typically, the Company bills and collects service fees at the inception of the agreement and recognizes revenue ratably over the term of the related service agreement, which the Company believes is consistent with the Topic 606 criterion of recognizing revenue for such contracts on a straight-line basis. o Other revenues consist primarily of installation, training and shipping fees in connection with sales of capital equipment. Such fees are recognized as revenue at the point in time at which the related sale of the capital equipment is recognized, as discussed above, which the Company has concluded is consistent with the Topic 606 criterion related to the satisfaction of performance obligations. Based on the foregoing assessment, the Company concluded that adoption of Topic 606 will not have a material effect on its consolidated financial statements. The Company adopted the provisions of Topic 606 on January 1, 2018 under the modified retrospective method permitted by such provisions. 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. The Company currently has two leases for manufacturing and office space that would be subject to the provisions of ASU 2016-02. The Company believes that adoption of ASC Topic 842 (as amended by ASC 2017-13 described above) will result in the establishment on the Company’s consolidated balance sheet of an asset and liability for each such lease, but that neither such assets and liabilities nor the resulting lease expense recognition will have a material effect on the Company’s consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,” which addresses eight specific cash flow issues with the objective of reducing existing diversity in practice. The standard is effective for the Company beginning in 2018, and early adoption is permitted. The Company believes that adoption of ASU 2016-15 will not have a material effect on its consolidated financial statements. In May 2017, the FASB issued ASU 2017-09, “Compensation – Stock Compensation (Topic 718),” which clarifies and reduces both (i) diversity in practice and (ii) cost and complexity when a company changes the terms or conditions of a share-based payment award. The standard is effective for the Company beginning in 2018, and early adoption is permitted. The Company believes that adoption of ASU 2017-09 will not have a material effect on its consolidated financial statements. In July 2017, the FASB issued ASU 2017-11, “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception,” which, among other items, changes the classification of certain equity-linked financial instruments (or embedded features) with down round features. The standard is effective for the Company beginning in 2019, and early adoption is permitted. Because the terms of the Company’s currently existing derivative liabilities described in Note 7, all of which the Company believes are included in the scope of the standard, will have expired prior to the standard’s effective date, the Company believes that adoption of the standard on its effective date will not have a material effect on the Company’s consolidated financial statements. 2016 Fourth Quarter Adjustment In August 2016, the Company elected to suspend its efforts to sell equity units through a public offering then underway, and instead commenced a private placement of equity units through the 2016 PIPE (see Note 6). Upon suspension of its public offering efforts, the Company capitalized certain related legal and other costs, amounting to $459,000, in anticipation of resuming public offering efforts within an estimated six-month time frame. In December 2016, the Company determined that a future public offering it might consider was not likely to be commenced within this six-month time frame, and accordingly, in the fourth quarter of 2016, the Company recorded a charge of $459,000 to general and administrative expense. |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Inventory | 3. Inventory Inventory consists of the following as of December 31: 2017 2016 Raw materials and work in process $ 1,167,142 $ 1,025,368 Software licenses 52,500 70,000 Finished goods 1,094,542 673,014 Inventory included in current assets 2,314,184 1,768,382 Software licenses – non-current 871,900 976,900 $ 3,186,084 $ 2,745,282 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 4. Property and Equipment Property and equipment consist of the following as of December 31: 2017 2016 Equipment $ 1,151,543 $ 1,165,076 Furniture and fixtures 112,143 112,143 Leasehold improvements 179,999 179,999 Computer equipment and software 148,017 150,304 Loaned systems 348,473 431,608 1,940,175 2,039,130 Less accumulated depreciation and amortization (1,672,508 ) (1,710,881 ) Total property and equipment, net $ 267,667 $ 328,249 Depreciation and amortization expense related to property and equipment for the years ended December 31, 2017 and 2016 was $116,454 and $155,707, respectively. Loaned systems are ClearPoint systems that are in operation at customer sites on an evaluation basis. |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Notes Payable | 5. Notes Payable Senior Secured Note Payable The indebtedness outstanding under the senior secured note payable to Brainlab, originally issued to Brainlab on April 5, 2011, and subsequently amended and restated on March 6, 2013 (the “Brainlab Note”), at December 31, 2015 was approximately $5.0 million, including approximately $740,000 of accrued interest which accrued at a rate of 5.5% and was payable in a single aggregate installment upon maturity of the indebtedness. The Brainlab Note was to mature in April 2016. On April 4, 2016 (the “Closing Date”), the Company and Brainlab finalized a securities purchase agreement (the “2016 Purchase Agreement”), as discussed below. 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 (the “License Agreement”) for software relating to the Company’s 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, 99,310 units, consisting of: (a) one share of the Company’s common stock; (b) warrants to purchase 0.4 share of common stock (the “2016 Series A Warrants”); and (c) warrants to purchase 0.3 shares of common stock (the “2016 Series B Warrants”) (collectively, the “Equity Units”); and (v) entered into a 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. 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. As a result of the foregoing, on the Closing Date, the Company recorded a debt restructuring gain of approximately $941,000 representing the difference between (a) the aggregate fair value of the License Agreement, which had no cost basis on the Company’s consolidated balance sheets, and the Equity Units, and (b) the aggregate principal amount of the Brainlab Note cancelled as consideration. 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 $16.23 per share (before giving effect to the Note Conversion as defined below) and $21.10 per share, respectively, subject to provisions for: (a) adjustments in the case of certain corporate transactions; (b) consideration to be received in lieu of shares of the Company’s common stock in the case of certain fundamental transactions; and (c) a “cashless exercise” feature. 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 the License Agreement, for software relating to the Company’s SmartFrame device, for use in neurosurgery. The License Agreement does not affect the Company’s ability to continue to independently develop, market and sell its own software for the SmartFrame device. The New Brainlab Note is collateralized by a senior security interest in all 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 0.01 shares of the Company’s common stock for each dollar in principal amount of the 2014 Secured Notes sold by the Company (the “investor warrants”). 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 27,937 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 Company’s common stock. Following the third anniversary of the issuance date, the 2014 Secured Notes may be prepaid, without penalty or premium, provided that all principal and unpaid accrued interest under all 2014 Secured Notes is prepaid at the same time. The 2014 Secured Notes are collateralized by a security interest in all the Company’s assets, which security interest is junior and subordinate to the security interest that collateralizes the New Brainlab Note. The investor warrants are exercisable, in full or in part, at any time prior to the fifth anniversary of the issuance date, at an original exercise price of $70.00 per share, subject to provisions for: (a) adjustments in the case of certain corporate transactions; (b) consideration to be received in lieu of shares of the Company’s common stock in the case of certain fundamental transactions; and (c) a “cashless exercise” feature. Under GAAP, the Company allocated the $3,725,000 in proceeds proportionately between the 2014 Secured Notes and the investor warrants based on their relative fair values, with $413,057 being allocated to the fair value of the investor warrants, recorded as equity and as a discount to the carrying amount at the date of issuance. After giving effect to the conversions discussed below under the heading “August 31, 2016 Amendments,” 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 Company’s placement agents earned cash commissions of $145,500 as well as warrants (the “placement agent warrants”) to purchase 1,818 shares of the Company’s common stock. The placement agent warrants have the same terms and conditions as the investor warrants. The placement agent cash commissions, the $30,210 fair value of the placement agent warrants, and other offering expenses, 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 $32,660 and $58,789 at December 31, 2017 and 2016, respectively, 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 Company’s common stock. An aggregate of 267,857 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 all the assets of the Company, which security interest is junior and subordinate to the security interests that collateralize the New 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 million 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 that resulted in $2,775,300 being allocated to the value of the shares of common stock, which was recorded as equity and as a discount to the carrying value of the 2010 Secured Notes at their date of issuance. The unamortized discount at December 31, 2017 and 2016 was $1,956,458 and $2,302,472, 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 22,068 units in the offering for $247,164. In addition, three non-employee directors of the Company also purchased an aggregate of 14,180 units in the offering for $158,816. June 30, 2016 Amendments On June 30, 2016, the Company entered into amendments (the “June 2016 Amendments”) with: (a) Brainlab, with respect to the New Brainlab Note; and (b) two holders of the 2014 Secured Notes (the “2014 Convertible Note Holders”), one of which is a trust for which one of the Company’s then non-employee directors serves as a trustee, having an aggregate principal balance of $3 million. Pursuant to the June 2016 Amendments, the parties agreed that, in the event the Company closes a qualified public offering: (i) $500,000 of the principal balance of the New Brainlab Note and an aggregate $1.5 million of the principal balance of the 2014 Secured Notes, plus all unpaid accrued interest on such principal amounts, would automatically convert into the security offered in the qualified public offering, based on the public offering price of that security; and (ii) the exercise price for 34,957 shares of common stock underlying warrants issued in connection with the New Brainlab Note and 11,250 shares of common stock underlying warrants issued in connection with the 2014 Secured Notes would be reduced to equal the greater of (x) the public offering price of the security offered in the qualified public offering, or (y) if the security offered in the qualified public offering is or includes convertible stock or common stock warrants, the highest price per whole share for which the Company’s common stock is issuable upon conversion of such convertible stock or upon exercise of such common stock warrants. As discussed under the heading “ August 31, 2016 Amendments, The provisions of the June 2016 Amendments created: (a) a conversion feature allowing for the principal balances described above, plus all unpaid related accrued interest, to be converted into the security offered in the qualified public offering, and at a price that may be less than the market value per share of the Company’s common stock; and (b) down round strike price protection with respect to the warrants, both of which the Company has accounted for as derivatives, the calculation for which is described in Note 7. In addition, based on the provisions of the June 2016 Amendments, the Company recorded a debt restructuring loss of approximately $820,000 resulting from the restructuring of the New Brainlab Note and the 2014 Secured Notes subject to the June 2016 Amendments. August 31, 2016 Amendments On August 31, 2016, the Company entered into second amendments (the “August 2016 Amendments”) with the 2014 Convertible Note Holders. Pursuant to the August 2016 Amendments, the parties agreed that, in the event the Company closes a PIPE Transaction (as that term is defined in the August 2016 Amendments; the “2016 PIPE”): (i) an aggregate $1.75 million of aggregate principal balance of the 2014 Convertible Note Holders’ 2014 Secured Notes (the “2014 Principal”) would automatically convert into the security offered by the Company in the 2016 PIPE, based on the offering price of that security in the 2016 PIPE (the “Note Conversion”); and (ii) the exercise price for 13,125 shares of common stock that may be purchased upon exercise of warrants issued in connection with the issuance of the 2014 Secured Notes (the “2014 Warrants”) will be reduced to equal the greater of (x) the offering price of the security offered in the 2016 PIPE, or (y) if the security offered in the 2016 PIPE is or includes convertible stock or common stock warrants, the highest price per whole share for which the Company’s common stock is issuable upon conversion of such convertible stock or upon exercise of such common stock warrants. These provisions maintained but modified: (a) the conversion feature allowing for the 2014 Principal to be converted into the security offered in the 2016 PIPE, and at a price that may be less than the market value per share of the Company’s common stock; and (b) the down round strike price protection with respect to the 2014 Warrants, both of which the Company has accounted for as derivatives, the calculation for which is described in Note 7. Execution of the August 2016 Amendments constituted a debt extinguishment under GAAP, necessitating the Company to record a debt restructuring loss of approximately $933,000, representing the aggregate difference in the fair value of the derivatives described in the preceding paragraph between the points in time (i) immediately preceding, and (ii) immediately subsequent to, the execution of the August 2016 Amendments. As described in Note 6, the 2016 PIPE was completed on September 2, 2016, resulting in (i) conversion of the 2014 Principal, and (ii) establishment of a fixed exercise price and elimination of the down round price protection with respect to the 2014 Warrants, in conformity with the terms set forth in the August 2016 Amendments. Accordingly, concurrent with completion of the 2016 PIPE, derivative liabilities associated with the conversion feature of the 2014 Principal and the down round price protection for the 2014 Warrants were reduced by $1,207,813, with a corresponding amount being recorded as an increase to stockholders’ equity. Scheduled Notes Payable Maturities Scheduled principal payments as of December 31, 2017 with respect to notes payable are summarized as follows: Years ending December 31, 2018 $ 2,000,000 2019 1,975,000 2020 3,000,000 Total scheduled principal payments 6,975,000 Less unamortized discounts (2,024,228 ) Less unamortized deferred financing costs (32,660 ) $ 4,918,112 |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2017 | |
Stockholders' equity (deficit): | |
Stockholders' Equity | 6. Stockholders’ Equity 2016 Private Placement On September 2, 2016, the Company completed the 2016 PIPE, pursuant to the terms of a Securities Purchase Agreement dated August 31, 2016 (the “2016 PIPE Purchase Agreement”), by and among the Company and certain investors (collectively, the “2016 PIPE Investors”). At the closing, in accordance with the terms and conditions of the 2016 PIPE Purchase Agreement, the Company sold to the 2016 PIPE Investors an aggregate of 851,000 units (the “2016 PIPE Units”), with each 2016 PIPE Unit consisting of: (i) one share of the Company’s common stock; and (ii) a warrant to purchase 0.90 shares of the Company’s common stock (each, a “2016 PIPE Warrant” and collectively, the “2016 PIPE Warrants”). In connection with the sale of the 2016 PIPE Units, the Company received aggregate gross proceeds of approximately $4.25 million, before deducting placement agents’ fees and offering expenses aggregating approximately $418,000. In addition, the placement agents for the 2016 PIPE received, in the aggregate, warrants (“2016 PIPE Placement Agent Warrants”) to purchase up to 29,680 shares of common stock. Purchase Agreement The 2016 PIPE Purchase Agreement contains representations and warranties by the Company and the 2016 PIPE Investors and covenants of the Company and the 2016 PIPE Investors (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. Warrants The 2016 PIPE Warrants are exercisable, in full or in part, at any time prior to September 2, 2021, at an exercise price of $5.50 per share, subject to provisions for: (a) adjustments in the case of certain corporate transactions; (b) consideration to be received in lieu of shares of the Company’s common stock in the case of certain fundamental transactions; and (c) a “cashless exercise” feature. The 2016 PIPE Placement Agent Warrants have the same terms and conditions as the 2016 PIPE Warrants. Related Debt Conversion As discussed in Note 5, pursuant to the August 2016 Amendments, in addition to and simultaneously with the sale of the 2016 PIPE Units, on September 2, 2016: (i) the 2014 Principal automatically converted into 350,000 2016 PIPE Units on the same terms and conditions as applied to purchasers of 2016 PIPE Units; and (ii) the exercise price for 13,125 shares of common stock that may be purchased upon exercise of the holders’ 2014 Warrants was reduced to $5.50 per share, which is equal to the per share exercise price of the 2016 PIPE Warrants. 2017 Private Placement On May 26, 2017, the Company completed the 2017 PIPE pursuant to a Securities Purchase Agreement dated May 25, 2017 (the “2017 PIPE Purchase Agreement”) with certain accredited investors (collectively, the “2017 PIPE Investors”) for the private placement of 6,625,000 units (the “2017 PIPE Units”) at a purchase price of $2.00 per unit, with each unit consisting of: (i) one share of the Company’s common stock; and (ii) a warrant to purchase one share of the Company’s common stock (each, a “2017 PIPE Warrant” and collectively, the “2017 PIPE Warrants”). In connection with the sale of the 2017 PIPE Units, the Company received aggregate gross proceeds of approximately $13.25 million, before deducting placement agents’ fees and offering expenses aggregating approximately $1.3 million. In addition, the placement agents for the 2017 PIPE received, in the aggregate, warrants (“2017 PIPE Placement Agent Warrants”) to purchase up to 509,200 shares of common stock. Purchase Agreement The 2017 PIPE Purchase Agreement contains representations and warranties by the Company and the 2017 PIPE Investors and covenants of the Company and the 2017 PIPE Investors (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. Registration Rights Agreement Concurrent with completion of the 2017 PIPE, the Company and the 2017 PIPE Investors entered into a Registration Rights Agreement (the “2017 PIPE Registration Rights Agreement”) pursuant to which the Company was required to prepare and file a registration statement (the “2017 PIPE Registration Statement”) with the SEC under the Securities Act of 1933, as amended, covering the resale of the shares of common stock to be issued to the 2017 PIPE Investors under the 2017 PIPE Purchase Agreement as well as the shares of common stock underlying the 2017 PIPE Warrants and the 2017 PIPE Placement Agent Warrants. The Company was required to file such 2017 PIPE Registration Statement on or before June 26, 2017, and was required to use its best efforts to have the 2017 PIPE Registration Statement declared effective as soon as practicable. The Company filed the 2017 PIPE Registration Statement on June 26, 2017, and the 2017 PIPE Registration Statement was declared effective by the SEC on July 7, 2016, both dates being in conformity with the foregoing requirements. Pursuant to the 2017 PIPE Registration Rights Agreement, if the Company fails to continuously maintain the effectiveness of the 2017 PIPE Registration Statement (with certain permitted exceptions), the Company will incur certain liquidated damages to the 2017 PIPE Investors. The 2017 PIPE Registration Rights Agreement also contains mutual indemnifications by the Company and each 2017 PIPE Investor, which the Company believes are customary for transactions of this type. Warrants The 2017 PIPE Warrants are exercisable, in full or in part, at any time prior to the fifth anniversary of their issuance, at an exercise price of $2.20 per share, subject to provisions for: (a) adjustments in the case of certain corporate transactions; (b) consideration to be received in lieu of shares of the Company’s common stock in the case of certain fundamental transactions; and (c) a “cashless exercise” feature. The 2017 PIPE Placement Agent Warrants have the same terms and conditions as the 2017 PIPE Warrants. 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 Company’s Board of Directors may elect to receive all or part of his or her director fees in shares of the Company’s common stock. Director fees, whether paid in cash or in shares of common stock, are payable quarterly on the last day of each fiscal quarter. The number of shares of common stock issued to directors is determined by dividing (i) the product of: (x) the fees otherwise payable to each director in cash, times (y) the percentage of fees the director elected to receive in shares of common stock, by (ii) the volume weighted average price per share of common stock over the last five trading days of the quarter. During the years ended December 31, 2017 and 2016, 14,650 shares and 22,313 shares, respectively, were issued to directors as payment for director fees, amounting to $37,740 and $124,069, in 2017 and 2016, respectively, in lieu of cash. Stock Incentive Plans The Company has various share-based compensation plans and share-based compensatory contracts (collectively, the “Plans”) under which it has granted share-based awards, such as stock grants, and incentive and non-qualified stock options, to employees, directors, consultants and advisors. Awards may be subject to a vesting schedule as set forth in individual award agreements. Certain of the Plans also have provided for cash-based performance bonus awards. From June 2015 until October 2017, the Company granted share-based awards under the MRI Interventions, Inc. Amended and Restated 2013 Incentive Compensation Plan. At the Annual Meeting of the Company’s stockholders on October 3, 2017, the Company’s stockholders approved the adoption of the MRI Interventions, Inc. Second 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 Company’s common stock available for awards thereunder by 1,800,000 shares. Under the Amended 2013 Plan, a total of 1,956,250 shares of the Company’s common stock are reserved for issuance. Of this amount, stock grants of 105,185 shares have been awarded and option grants, net of options terminated, expired or forfeited, of 754,569 shares were outstanding as of December 31, 2017. Accordingly, 1,096,496 shares remained available for grants under the Amended 2013 Plan as of that date. Activity with respect to stock options issued by the Company is summarized as follows: Options Outstanding Options Exercisable Range of Exercise Prices Weighted- average Exercise price per share Intrinsic Value (1) Outstanding at January 1, 2016 298,283 $ 29.60 $ 385.60 $ 48.73 - Exercisable at January 1, 2016 179,216 $ 29.60 $ 385.60 $ 56.40 - Activity during the year ended December 31, 2016 Granted 53,750 $ 5.00 $ 12.40 $ 6.40 Exercised - Cancelled or forfeited (14,592 ) $ 5.00 $ 385.60 $ 12.67 Outstanding at December 31, 2016 337,441 $ 5.00 $ 385.60 $ 42.07 - Exercisable at December 31, 2016 245,989 $ 5.00 $ 385.60 $ 38.71 - Activity during the year ended December 31, 2017 Granted 940,875 $ 1.95 $ 6.40 $ 2.58 $ 78,486 Exercised - - - - - Cancelled or forfeited (40,117 ) $ 5.00 $ 385.60 $ 35.74 - Outstanding at December 31, 2017 1,238,199 $ 1.95 $ 385.60 $ 12.47 $ 78,486 Exercisable at December 31, 2017 567,210 - (1) Intrinsic value is calculated as the estimated fair value of the Company’s stock at the end of the related period less the option exercise price of in-the-money options. The following table summarizes information about stock options at December 31, 2017 (contractual life expressed in years): Options Outstanding Options Exercisable Range of Exercise Prices Number Outstanding Weighted - Average Remaining Contractual Life Weighted - Average Exercise Price Number Exercisable Weighted - Average Remaining Contractual Life Weighted - Average Exercise Price $1.95 - $45.20 1,161,323 9.18 $ 8.49 490,428 8.40 $ 16.08 $46.40 - $83.60 75,995 3.89 $ 69.09 75,901 3.88 $ 69.11 $128.00 - $385.60 881 0.88 $ 363.21 881 0.88 $ 363.21 1,238,199 9.18 $ 12.47 567,210 7.78 $ 16.08 The weighted average grant date fair value of options granted during the years ended December 31, 2017 and 2016 was $0.85 and $3.01, respectively. A summary of the status of the Company’s nonvested stock options during the years ended December 31, 2017 and 2016 is presented below: Nonvested Stock Options Shares Weighted - Average Grant Date Fair Value Nonvested, January 1, 2016 119,067 $ 18.77 Activity during the year ended December 31, 2016 Granted 53,750 $ 3.01 Forfeited (6,918 ) $ 28.66 Vested (74,447 ) $ 18.16 Nonvested, December 31, 2016 91,452 $ 10.53 Activity during the year ended December 31, 2017 Granted 940,875 $ 0.85 Forfeited (17,619 ) $ 16.50 Vested (343,719 ) $ 3.09 Nonvested, December 31, 2017 670,989 $ 1.45 The Company records share-based compensation expense on a straight-line basis over the related vesting period. For the years ended December 31, 2017 and 2016, share-based compensation expense related to options was: Year Ended December 31, 2017 2016 $ 960,882 $ 959,585 As of December 31, 2017, approximately $813,000 of unrecognized compensation cost related to share-based compensation arrangements granted under the Plans. That cost is expected to be recognized over a weighted-average period of 1.4 years. The assumptions used in calculating the fair value under the Black-Scholes option-pricing model are as follows: Years Ended December 31, 2017 2016 Dividend yield 0% 0% Expected Volatility 51.77% to 52.98% 47.47% to 50.69% Risk free Interest rates 2.04% to 2.25% 1.23% to 1.39% Expected lives (in years) 6.0 6.0 Warrants Warrants have generally been issued in connection with financing transactions and for terms of up to five years. Common stock warrant activity for the years ended December 31, 2017 and 2016 is as follows: Shares Weighted - Average Exercise Price Outstanding at January 1, 2016 845,257 $ 25.67 (1) Activity during the year ended December 31, 2016 Issued 1,208,845 $ 6.23 Exercised (15,625 ) $ 5.00 Terminated (47,184 ) $ 14.77 Outstanding at December 31, 2016 1,991,293 $ 13.00 (2) Activity during the year ended December 31, 2017 Issued 7,134,200 $ 2.20 Exercised (8,207 ) $ 2.00 Terminated (168,208 ) $ 17.64 Outstanding at December 31, 2017 8,949,078 $ 4.12 (3) (1) The weighted-average exercise price reflects exercise price adjustments triggered by the 2015 PIPE. (2) The weighted-average exercise price reflects exercise price adjustments triggered by the 2016 Purchase Agreement and the 2016 PIPE. (3) The weighted-average exercise price reflects exercise price adjustments triggered by the 2017 PIPE. Information regarding outstanding warrants at December 31, 2017 is as follows (contractual life expressed in years): Exercise Price Number Outstanding Weighted - Average Remaining Contractual Life Intrinsic Value $ 1.83 1,540 3.0 $ 1,417 2.00 91,670 0.1 68,753 2.20 7,133,700 4.4 3,923,535 5.50 1,123,705 3.8 - 16.23 242,021 3.0 - 21.10 152,084 3.0 - 34.32 185,779 2.0 - 40.00 875 2.1 - 70.00 17,704 1.3 - 8,949,078 4.2 $ 3,993,704 (1) Intrinsic value is calculated as the estimated fair value of the Company’s stock at December 31, 2017 less the warrant exercise price of in-the-money warrants. |
Derivative Liabilities
Derivative Liabilities | 12 Months Ended |
Dec. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Liabilities | 7. Derivative Liabilities As discussed in Note 5, on June 30, 2016, the Company entered into amendments with Brainlab, with respect to the New Brainlab Note, and with the 2014 Convertible Note Holders, the provisions of which created: (a) a conversion feature allowing for the principal balance described above to be converted at a public offering price that may be less than market value per share of the Company’s common stock; and (b) down round strike price protection with respect to the warrants. In addition, warrants issued in 2013 contain net-cash settlement and down round provisions. Under GAAP, the provisions described above require that the conversion feature and the warrants be accounted for as derivatives, thus requiring that they each be adjusted to estimated fair value at each balance sheet date and shown as liabilities in the accompanying condensed consolidated balance sheets. The fair values of the conversion feature and the warrants were calculated using the Monte Carlo simulation valuation method. Assumptions used in calculating the fair value of the conversion feature at December 31, 2017 are as follows: Risk free interest rates 1.76% Volatility 55% Assumptions used in calculating the fair value of the warrants at December 31, 2017 are as follows: Dividend yield 0% Expected volatility 45% Risk free interest rates 1.28 – 2.01% Expected remaining term (in years) 0.1 – 3.25 In addition to the assumptions above, the Company also estimates the likelihood of whether it will participate in a future qualified public offering, as defined in either the amended note or warrant agreements, as applicable, that would trigger the conversion feature or the repricing of warrants, and, if so, the estimated timing and pricing of its offering of common stock. The fair values and the changes in fair values of derivative liabilities during the years ended December 31, 2017 and 2016 are as follows: Year Ended December 31, 2017 2016 Balance $ 131,173 $ 658,286 Conversion of equity warrants to liabilities - 192,173 Additions from debt restructuring - 1,592,134 Reduction from debt conversions - (1,207,813 ) Reduction from warrant exercise (10,659 ) (37,672 ) Gain on change in fair value for the period (24,728 ) (1,065,935 ) Balance, end of period $ 95,786 $ 131,173 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 8. Income Taxes The Company had no income tax expense for the years ended December 31, 2017 and 2016. Due to uncertainties surrounding the realization of its deferred income tax assets in future periods, the Company has recorded a 100% valuation allowance against its net deferred income tax assets. If it is determined in the future that it is more likely than not that any deferred income tax assets are realizable, the valuation allowance will be reduced by the estimated net realizable amounts. For the year ended December 31, 2017, the valuation allowance decreased by approximately $14.9, due primarily to the effects of reduced corporate income tax rates effected under the Tax Act, which were partially offset by changes in deferred tax assets and liabilities. For the year ended December 31, 2016, the valuation allowance increased by approximately $3.5 million, based on changes in deferred tax assets and liabilities. The tax effect of temporary differences and net operating losses that give rise to components of deferred income tax assets and liabilities consist of the following: As of December 31, 2017 2016 Deferred income tax assets (liabilities): Property and equipment $ 58,036 $ 107,308 Deferred revenue 88,877 Accrued expenses 224,546 53,112 Share based compensation 1,803,943 3,186,133 Derivative liability 164,258 Other (912,575 ) 248,561 Net operating loss carryforwards 18,535,794 30,800,732 19,709,744 34,648,981 Less valuation allowance (19,709,744 ) (34,648,981 ) $ - $ - The Company had a cumulative federal net operating loss of approximately $81.5 million as of December 31, 2017, which will begin expiring in 2018. Under Sections 382 and 383 of the Internal Revenue Code, if an ownership change occurs with respect to a “loss corporation,” as defined, there are annual limitations on the amount of the net operating loss and other deductions which are available to the Company. The Company has not determined whether such an ownership change has occurred. However, given the equity transactions in which the Company has engaged, the Company believes that the use of the net operating losses shown as deferred tax assets will be significantly limited. Management has evaluated the effect of guidance provided by GAAP regarding accounting for uncertainty in income taxes and determined the Company has no uncertain tax positions that could have a significant impact on its consolidated financial statements. The Company’s income tax returns after 2012 remain open for examination. |
Commitments
Commitments | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | 9. Commitments Leases The Company leases space in Irvine, California that houses its headquarters and manufacturing facility under a non-cancellable operating lease. The lease expires in September 2018. At December 31, 2017, future minimum lease payments under non-cancellable operating leases were $71,967. Future minimum lease payments for operating leases having an initial or remaining non-cancellable lease term in excess of one year are as follows: Years ending December 31, 2018 $ 71,967 Total minimum payments $ 71,967 Rent expense under all operating leases was approximately $92,000 for each of the years ended December 31, 2017 and 2016. Licenses Certain license arrangements require minimum royalty payments. As of December 31, 2017, future minimum payments under these arrangements are as follows: Years ending December 31, 2018 $ 50,000 2019 50,000 2020 50,000 2021 50,000 2022 50,000 Thereafter 220,000 Total minimum payments $ 470,000 Royalty payment amounts may be greater than the minimum required payment amounts based on the negotiated royalty rates. If the Company sublicenses the intellectual property that is licensed from the licensor and the Company receives any royalty payment under, or with respect to, such sublicense, the Company is obligated to pay the licensor an agreed upon percentage of any such payments. Under the terms of these license agreements, the Company is required to reimburse the licensor for costs incurred by the licensor associated with patent filing, prosecution and maintenance. The Company may terminate these license agreements for any reason, upon giving the licensor either 60 or 90 days written notice, depending on the agreement. Technical Service and Training Agreements The Company is a party to agreements with a university, which agreements were amended in January 2017, under which the Company may receive technical and training services. Pursuant to the terms of the amended agreements, the Company incurred approximately $17,000 and $45,000 for technical research services during the years ended December 31, 2017 and 2016, respectively. Master Services and Software License Agreement The Company is a party to a Master Services and Licensing Agreement (as amended, the “Master Software Agreement”) with Merge Healthcare Canada Corp. f/k/a Cedara Software Corp. (“Merge”) under which the Company may internally perform development, maintenance and support of its ClearPoint system software that was originally developed for the Company by Merge, utilizing certain of its own pre-existing software code. Under the Master Software Agreement, the Company received a non-exclusive, worldwide license to Merge’s software code, in exchange for which the Company agreed to pay Merge a license fee for each copy of the ClearPoint system software that the Company distributes, subject to a minimum license purchase commitment (the “Minimum License Purchase”) that the Company satisfied in 2013. The Company will have an obligation to pay Merge a license fee for each copy of the ClearPoint system software that the Company distributes in excess of the licenses it purchased under the Minimum License Purchase. Of the licenses purchased under the Minimum License Purchase: (i) those licenses that the Company expects to sell in the next 12 months are included in inventory in the accompanying consolidated balance sheets; (ii) those licenses that the Company has loaned to prospective ClearPoint system customers for evaluation are included in property and equipment in the accompany consolidated balance sheets and depreciated during the evaluation period; and (iii) those licenses not included in (i) or (ii) above are classified as non-current assets and comprise software license inventory on the accompanying consolidated balance sheets. Cardiac EP Business Participation Plan The Company is party to agreements under which it may provide a key product development advisor and consultant with financial rewards in the event that the Company sells its business operations relating to catheter-based MRI-guided cardiac ablation to treat cardiac arrhythmias (“Cardiac EP Operations”). In the event the Company sells its Cardiac EP Operations, whether on a stand-alone basis or as part of the sale of the Company, the participant will receive a payment under the plan equal to: (i) the transaction value paid for or allocated to the Cardiac EP Operations in the sale, multiplied by (ii) the participant’s “participation interest” at the time of the sale. The participant was initially awarded a participation interest of 6.6%. However, pursuant to the terms of the plan, the participation interest is equitably reduced from time to time to take into account equity financing transactions in which the Company issues shares of its common stock, or securities convertible into shares of its common stock, in exchange for cash proceeds. At December 31, 2017, the participation interest was 0.48%. The plan will terminate in June 2025. Management Change On October 6, 2017, Francis P. Grillo entered into a Separation, Transition and Consulting Agreement (the “Separation Agreement”) with the Company, under which Mr. Grillo voluntarily resigned from his position as the Chief Executive Officer and President of the Company, and as a member of the Company’s Board of Directors, and separating from the Company, effective as of November 7, 2017 (the “Transition Date”). Under the terms of the Separation Agreement, Mr. Grillo received the following payments and other benefits, subject to certain conditions, pursuant to the Separation Agreement: (i) 87,500 unregistered shares of the Company’s common stock; (ii) a lump sum payment of $15,000; (iii) $30,000 per month for the first two months following his separation from the Company in exchange for transition and consulting services provided to the Company by Mr. Grillo, after which Mr. Grillo is being compensated on an hourly basis to the extent he renders any such consulting services; and (iv) the option exercise period of all stock options previously granted to Mr. Grillo was extended to be coterminous with the term of the option award. In addition, Mr. Grillo will receive his annual bonus, amounting to approximately $109,000 and based on his and the Company’s performance for the fiscal year ended December 31, 2017, determined in accordance with the applicable policies and procedures set forth in his employment agreement. In conjunction with Mr. Grillo’s resignation from the positions described above, on October 6, 2017, the Company entered into an Employment Agreement (the “Employment Agreement”) with Joseph M. Burnett, whereby Mr. Burnett commenced service as the Company’s Chief Executive Officer and President, effective as of the Transition Date. In addition, the Mr. Burnett was elected to serve as a director of the Company, effective as of the Transition Date. Under the terms of the Employment Agreement, Mr. Burnett’s base salary, effective as of the Transition Date, is $360,000. Starting with the fiscal year commencing on January 1, 2018 and for each year thereafter, Mr. Burnett will be eligible to receive an annual target incentive bonus of 40% of his annual base salary, subject to certain performance goals to be established by the Compensation Committee of the Board of Directors. In addition, the Company will pay Mr. Burnett up to $50,000 in reasonable relocation expenses during the first two years of his employment, subject to Mr. Burnett’s continued employment through such two-year period. The Employment Agreement also provides for certain payments to be made t o Mr. Burnett: (a) in the event the Company terminates his employment without cause or if Mr. Burnett voluntarily terminates his employment with the Company for good reason, as those terms are defined in the Employment Agreement; or (b) if the Company terminates his employment without cause or if Mr. Burnett voluntarily terminates his employment with the Company for good reason within two months of a change of control, as such term is defined in the Employment Agreement. Also, in the event of a change of control, any unvested stock options and restricted stock previously granted to Mr. Burnett will become fully vested. As an inducement to his employment with the Company, Mr. Burnett is entitled to receive an initial signing bonus in the aggregate amount of $100,000 under the Employment Agreement, to be paid in two equal installments: the first installment was paid on the Transition Date, and the second installment is to be paid on the 6-month anniversary of the Transition Date, conditioned upon Mr. Burnett’s continued employment. In addition, on the Transition Date Mr. Burnett was granted: (i) a non-qualified stock option to purchase up to 350,000 shares of the Company’s common stock at a per share exercise price of $2.50, which was the per share closing price of the Company’s common stock on the Transition Date; and (ii) 200,000 restricted shares of the Company’s common stock. The stock option and restricted shares will vest as follows: (i) one-third on the first anniversary of the date of grant; and (ii) the remainder in equal quarterly installments during each of the second and third years following the date of grant. In connection with the foregoing, the Company recorded compensation expense in 2017 of approximately $44,000. Mr. Burnett is entitled to participate in any benefit plan from time to time in effect for the Company’s executives and/or employees generally, subject to the eligibility provisions of that plan. Employment Agreements In addition to Mr. Burnett’s Employment Agreement, the Company has employment agreements with its other executive officers that, among other provisions customary for agreements of this nature, provide for severance payments in the event the Company terminates the officer’s employment without cause. The agreements also provide for certain payments in connection with a change of control transaction and a termination of employment following a change of control transaction. |
Summary of Significant Accoun17
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, MRI Interventions (Canada) Inc. All significant inter-company accounts and transactions have been eliminated. |
Basis of Presentation and Use of Estimates | Basis of Presentation and Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Reverse Stock Split | Reverse Stock Split As discussed in Note 6, on July 21, 2016, the Company’s Board of Directors approved a 1-for-40 reverse stock split of its issued common stock, which was effectuated on July 26, 2016. All disclosures of common shares and per share data in the accompanying consolidated financial statements and related notes have been adjusted retroactively to reflect the reverse stock split for all periods presented. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less. |
Derivative Liabilities | Derivative Liabilities Derivative liabilities represent the fair value of conversion features of certain notes and of certain warrants to purchase common stock (see Note 7). 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 consolidated 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, or inputs other than quoted prices that are observable for the asset or liability. The lowest priority, referred to as Level 3, is given to unobservable inputs. The table below reflects the level of the inputs used in the Company’s fair value calculations: Quoted Prices in Active Markets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Total Fair Value December 31, 2017 Derivative liabilities - warrants $ - $ - $ 79,286 $ 79,286 Derivative liabilities – debt conversion feature $ - $ - $ 16,500 $ 16,500 December 31, 2016 Derivative liabilities - warrants $ - $ - $ 91,173 $ 91,173 Derivative liabilities – debt conversion feature $ - $ - $ 40,000 $ 40,000 Inputs used in the Company’s Level 3 calculation of fair value include the assumed dividend rate on the Company’s common stock, risk-free interest rates stock price volatility and the likelihood of a future equity financing transaction, all of which are further discussed in Note 7. Carrying amounts of the Company’s cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair values due to their short maturities. The table below reflects the carrying values and the estimated fair values, based on Level 3 inputs, of the Company’s outstanding notes payable, including the related accrued interest, at December 31, 2017 and 2016: Estimated Carrying Value Fair Value December 31, 2017 Senior secured note payable, including accrued interest $ 2,028,111 $ 2,028,111 2014 junior secured notes payable, including accrued interest $ 1,942,195 $ 2,042,625 2010 junior secured notes payable, including accrued interest $ 1,796,042 $ 3,752,500 December 31, 2016 Senior secured note payable, including accrued interest $ 2,028,111 $ 2,028,111 2014 junior secured notes payable, including accrued interest $ 1,861,851 $ 2,042,625 2010 junior secured notes payable, including accrued interest $ 1,345,028 $ 2,789,257 |
Inventory | Inventory Inventory is carried at the lower of cost (first-in, first-out method) or net realizable value. Items in inventory relate predominantly to the Company’s ClearPoint system. Software license inventory 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. |
Property and Equipment | Property and Equipment Property and equipment, including ClearPoint capital equipment on loan to customers for evaluation purposes, are recorded at cost and are depreciated on a straight-line basis over their estimated useful lives, principally five to seven years. Leasehold improvements are depreciated on a straight-line basis over the lesser of their estimated useful lives or the term of the related lease. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company periodically evaluates the recoverability of its long-lived assets (finite-lived intangible assets and property and equipment). Whenever events or changes in circumstances indicate that the carrying amount of such assets may not be fully recoverable, the expected undiscounted future cash flows are compared to the net book value of the related assets. If the net book value of the related assets were to exceed the undiscounted expected future cash flows of the assets, the carrying amount would be reduced to the present value of the expected future cash flows and an impairment loss would be recognized. The Company has not recorded any impairment losses for the years ended December 31, 2017 or 2016. |
Revenue Recognition | Revenue Recognition The Company’s revenues are comprised of: (1) product revenues resulting from the sale of functional neurological products, and drug delivery and biologic products; (2) product revenues resulting from the sale of ClearPoint capital equipment; and (3) revenues resulting from the rental, service, installation, training and shipping related to ClearPoint capital equipment. 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 agreement 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. · Sales of functional neurology products, and biologics and drug delivery systems products · Sales of capital equipment · Rental, service and other revenues: |
Product Warranties | Product Warranties The Company’s standard policy is to warrant ClearPoint system capital equipment against defects in material or workmanship for one year following installation. The Company periodically reviews its estimate of costs to service warranty obligations based primarily on historical experience, which has been nominal. Such estimates are included in accrued liabilities in the accompanying consolidated balance sheets, and changes in such estimates are recorded as costs of product revenues in the accompanying consolidated statements of operations. |
Research and Development Costs | Research and Development Costs Costs related to research, design and development of products are charged to research and development expense as incurred. |
Income Taxes | Income Taxes Deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. Such assets and liabilities are measured using enacted tax rates expected to apply to taxable income or loss in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates is recognized in the period that includes the enactment date. The Company provides a valuation allowance against net deferred income tax assets unless, based upon available evidence, it is more likely than not the deferred income tax assets will be realized. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense. As of December 31, 2017 and 2016, the Company had no accrued interest or penalties related to uncertain tax positions. |
Net Loss Per Share | Net Loss Per Share The Company computes net loss per share using the weighted-average number of common shares outstanding during the period. Basic and diluted net loss per share are the same because the conversion, exercise or issuance of all potential common stock equivalents, which comprise the entire amount of the Company’s outstanding common stock options and warrants as described in Note 6, would be anti-dilutive. |
Share-Based Compensation | Share-Based Compensation The Company accounts for compensation for all arrangements under which employees, directors and others receive shares of stock or other equity instruments (including options and warrants) based on fair value. The fair value of each award is estimated as of the grant date and amortized as compensation expense over the requisite vesting period. The fair values of the Company’s share-based awards are estimated on the grant dates using the Black-Scholes valuation model. This valuation model requires the input of highly subjective assumptions, including the expected stock volatility, estimated award terms and risk-free interest rates for the expected terms. To estimate the expected terms, the Company utilizes the “simplified” method for “plain vanilla” options discussed in the Staff Accounting Bulletin 107 (“SAB 107”) issued by the Securities and Exchange Commission (the “SEC”). The Company believes that all factors listed within SAB 107 as pre-requisites for utilizing the simplified method apply to the Company and its share-based compensation arrangements. The Company intends to utilize the simplified method for the foreseeable future until more detailed information about exercise behavior becomes available. The Company based its estimate of expected volatility on the average of: (i) historical volatilities of publicly traded companies it deemed similar to the Company; and (ii) the Company’s historical volatility, which is limited, and will consistently apply this methodology until its own sufficient relevant historical data is exists. The Company utilizes risk-free interest rates based on zero-coupon U.S. treasury instruments, the terms of which are consistent with the expected terms of the equity awards. The Company has not paid and does not anticipate paying cash dividends on its shares of common stock; therefore, the expected dividend yield is assumed to be zero. |
Fair Value Determination of Share-Based Transactions | Fair Value Determination of Share-Based Transactions The Company’s common stock is traded in the over-the-counter market and is quoted on the OTCQB Marketplace and the OTC Bulletin Board under the symbol “MRIC.” Quoted closing stock prices are used as a key input in determining the fair value for share-based transactions. |
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 December 31, 2017, the Company had approximately $103,559 in bank balances that were in excess of the insured limits. For the year ended December 31, 2017, sales to no customers represented in excess of 10% of the Company’s product revenues. For the year ended December 31, 2016, sales to one customer represented 10% of the Company’s product revenues. Information with respect to accounts receivable from those customers who comprised more than 10% of accounts receivable at December 31, 2017 and 2016 is as follows: December 31, 2017 2016 Customer – 1 10% 20% Customer – 2 - 13% Customer – 3 - 10% Prior to granting credit, the Company performs credit evaluations of its customers’ financial condition, and generally does not require collateral from its customers. The Company will provide an allowance for doubtful accounts when collections become doubtful. The allowance for doubtful accounts at December 31, 2017 and 2016 was $29,000 and $25,000, respectively. The Company is subject to risks common to emerging companies in the medical device industry, including, but not limited to: new technological innovations; acceptance and competitiveness of its products; dependence on key personnel; dependence on key suppliers; changes in general economic conditions and interest rates; protection of proprietary technology; compliance with changing government regulations; uncertainty of widespread market acceptance of products; access to credit for capital purchases by customers; and product liability claims. Certain components used in manufacturing have relatively few alternative sources of supply and establishing additional or replacement suppliers for such components cannot be accomplished quickly. The inability of any of these suppliers to fulfill the Company’s supply requirements may negatively impact future operating results. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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, and ASUs 2016-10, 2016-12, 2016-20 and 2017-13 discussed below, are effective for the Company beginning in 2018. · In April 2016, the FASB issued ASU 2016-10, “Revenues from Contracts With Customers (Topic 606): Identifying Performance Obligations and Licensing,” which clarified guidance related to identifying performance obligations and licensing implementation guidance contained in ASC Topic 606 as promulgated by ASU 2015-14 discussed above. · In May 2016, the FASB issued ASU 2016-12, “Revenues from Contracts With Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients,” which address narrow-scope improvements to the guidance on collectability, noncash consideration, and completed contracts at transition. Additionally, the amendments in this ASU provide a practical expedient for contract modifications at transition and an accounting policy election related to the presentation of sales taxes and other similar taxes collected from customers. · In December 2016, the FASB issued ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts With Customers,” which provided for minor corrections and minor improvements to previously issued Topic 606 guidance. · In September 2017, the FASB issued ASU 2017-13, “Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842),” which added and deleted paragraphs pursuant to SEC Staff Announcements and SEC Observer Comments. · In November 2017, the FASB issued ASU 2017-14, “Income Statement – Reporting Comprehensive Income (Topic 220), Revenue Recognition (Topic 605), and Revenue from Contracts with Customers (Topic 606),” which amends SEC paragraphs pursuant to the SEC Staff Accounting Bulletin No. 116 and SEC Release No. 33-10403, which bring existing guidance into conformity with Topic 606 The Company has assessed the potential impact of the provisions ASU 2015-14 and the subsequently issued related ASUs discussed above (collectively, “Topic 606”) on its consolidated financial statements. In its assessment, the Company has considered such factors as the following: · Economic factors: o The Company’s revenues are comprised of the product and service lines described below. With respect to each of these product and service lines: § The Company’s customers are predominantly large, well-known hospitals. Accounts receivable are due in a range of 30-60 days from the date of product delivery. The Company establishes an allowance for doubtful accounts, which historically has not been material. § Due to the short-term nature of the Company’s performance obligations, the Company has no remaining post-transaction performance obligations. o Based on the foregoing, the Company has concluded that the nature, amount and certainty of revenue recognition for each of the product and service lines described below are not affected by economic factors. · Sales of functional neurology products, and biologics and drug delivery systems products · Sales of capital equipment · Rental, service and other revenues: o Revenues from rental of capital equipment are recognized over the term of the rental agreement, which is less than one year, and which is consistent with the Topic 606 criterion of recognizing revenue for such contracts on a straight-line basis. o Revenues from service of capital equipment previously sold to customers are based on agreements with terms ranging from one to three years. The Company’s performance obligations with respect to such service agreements consists predominantly of being available to service the equipment and the Company’s historical cost of performing service on capital equipment has been nominal. Typically, the Company bills and collects service fees at the inception of the agreement and recognizes revenue ratably over the term of the related service agreement, which the Company believes is consistent with the Topic 606 criterion of recognizing revenue for such contracts on a straight-line basis. o Other revenues consist primarily of installation, training and shipping fees in connection with sales of capital equipment. Such fees are recognized as revenue at the point in time at which the related sale of the capital equipment is recognized, as discussed above, which the Company has concluded is consistent with the Topic 606 criterion related to the satisfaction of performance obligations. Based on the foregoing assessment, the Company concluded that adoption of Topic 606 will not have a material effect on its consolidated financial statements. The Company adopted the provisions of Topic 606 on January 1, 2018 under the modified retrospective method permitted by such provisions. 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. The Company currently has two leases for manufacturing and office space that would be subject to the provisions of ASU 2016-02. The Company believes that adoption of ASC Topic 842 (as amended by ASC 2017-13 described above) will result in the establishment on the Company’s consolidated balance sheet of an asset and liability for each such lease, but that neither such assets and liabilities nor the resulting lease expense recognition will have a material effect on the Company’s consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,” which addresses eight specific cash flow issues with the objective of reducing existing diversity in practice. The standard is effective for the Company beginning in 2018, and early adoption is permitted. The Company believes that adoption of ASU 2016-15 will not have a material effect on its consolidated financial statements. In May 2017, the FASB issued ASU 2017-09, “Compensation – Stock Compensation (Topic 718),” which clarifies and reduces both (i) diversity in practice and (ii) cost and complexity when a company changes the terms or conditions of a share-based payment award. The standard is effective for the Company beginning in 2018, and early adoption is permitted. The Company believes that adoption of ASU 2017-09 will not have a material effect on its consolidated financial statements. In July 2017, the FASB issued ASU 2017-11, “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception,” which, among other items, changes the classification of certain equity-linked financial instruments (or embedded features) with down round features. The standard is effective for the Company beginning in 2019, and early adoption is permitted. Because the terms of the Company’s currently existing derivative liabilities described in Note 7, all of which the Company believes are included in the scope of the standard, will have expired prior to the standard’s effective date, the Company believes that adoption of the standard on its effective date will not have a material effect on the Company’s consolidated financial statements. |
2016 Fourth Quarter Adjustment | 2016 Fourth Quarter Adjustment In August 2016, the Company elected to suspend its efforts to sell equity units through a public offering then underway, and instead commenced a private placement of equity units through the 2016 PIPE (see Note 6). Upon suspension of its public offering efforts, the Company capitalized certain related legal and other costs, amounting to $459,000, in anticipation of resuming public offering efforts within an estimated six-month time frame. In December 2016, the Company determined that a future public offering it might consider was not likely to be commenced within this six-month time frame, and accordingly, in the fourth quarter of 2016, the Company recorded a charge of $459,000 to general and administrative expense. |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
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 Company’s fair value calculations: Quoted Prices in Active Markets (Level 1) Significant Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Fair Value December 31, 2017 Derivative liabilities - warrants $ - $ - $ 79,286 $ 79,286 Derivative liabilities – debt conversion feature $ - $ - $ 16,500 $ 16,500 December 31, 2016 Derivative liabilities - warrants $ - $ - $ 91,173 $ 91,173 Derivative liabilities – debt conversion feature $ - $ - $ 40,000 $ 40,000 |
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 Company’s outstanding notes payable, including the related accrued interest, at December 31, 2017 and 2016: Estimated Carrying Value Fair Value December 31, 2017 Senior secured note payable, including accrued interest $ 2,028,111 $ 2,028,111 2014 junior secured notes payable, including accrued interest $ 1,942,195 $ 2,042,625 2010 junior secured notes payable, including accrued interest $ 1,796,042 $ 3,752,500 December 31, 2016 Senior secured note payable, including accrued interest $ 2,028,111 $ 2,028,111 2014 junior secured notes payable, including accrued interest $ 1,861,851 $ 2,042,625 2010 junior secured notes payable, including accrued interest $ 1,345,028 $ 2,789,257 |
Schedule of concentration of risk | Information with respect to accounts receivable from those customers who comprised more than 10% of accounts receivable at December 31, 2017 and 2016 is as follows: December 31, 2017 2016 Customer – 1 10% 20% Customer – 2 - 13% Customer – 3 - 10% |
Inventory (Tables)
Inventory (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of inventory | Inventory consists of the following as of December 31: 2017 2016 Raw materials and work in process $ 1,167,142 $ 1,025,368 Software licenses 52,500 70,000 Finished goods 1,094,542 673,014 Inventory included in current assets 2,314,184 1,768,382 Software licenses – non-current 871,900 976,900 $ 3,186,084 $ 2,745,282 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment consist of the following as of December 31: 2017 2016 Equipment $ 1,151,543 $ 1,165,076 Furniture and fixtures 112,143 112,143 Leasehold improvements 179,999 179,999 Computer equipment and software 148,017 150,304 Loaned systems 348,473 431,608 1,940,175 2,039,130 Less accumulated depreciation and amortization (1,672,508 ) (1,710,881 ) Total property and equipment, net $ 267,667 $ 328,249 |
Notes Payable (Tables)
Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of notes payable maturities | Scheduled principal payments as of December 31, 2017 with respect to notes payable are summarized as follows: Years ending December 31, 2018 $ 2,000,000 2019 1,975,000 2020 3,000,000 Total scheduled principal payments 6,975,000 Less unamortized discounts (2,024,228 ) Less unamortized deferred financing costs (32,660 ) $ 4,918,112 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Stockholders' equity (deficit): | |
Schedule of stock options issued by the Company | Activity with respect to stock options issued by the Company is summarized as follows: Options Outstanding Options Exercisable Range of Exercise Prices Weighted-average Exercise price per share Intrinsic Value Outstanding at January 1, 2016 298,283 $29.60 $385.60 $48.73 - Exercisable at January 1, 2016 179,216 $29.60 $385.60 $56.40 - Activity during the year ended December 31, 2016 Granted 53,750 $5.00 $12.40 $6.40 Exercised - Cancelled or forfeited (14,592 ) $5.00 $385.60 $12.67 Outstanding at December 31, 2016 337,441 $5.00 $385.60 $42.07 - Exercisable at December 31, 2016 245,989 $5.00 $385.60 $38.71 - Activity during the year ended December 31, 2017 Granted 940,875 $1.95 $6.40 $2.58 $78,486 Exercised - - -- - - Cancelled or forfeited (40,117 ) $5.00 $385.60 $35.74 - Outstanding at December 31, 2017 1,238,199 $1.95 $385.60 $12.47 $78,486 Exercisable at December 31, 2017 567,210 - (1) Intrinsic value is calculated as the estimated fair value of the Company’s stock at the end of the related period less the option exercise price of in-the-money options. |
Schedule of stock options (contractual life expressed in years) | The following table summarizes information about stock options at December 31, 2017 (contractual life expressed in years): Options Outstanding Options Exercisable Range of Exercise Prices Number Outstanding Weighted - Average Remaining Contractual Life Weighted - Average Exercise Price Number Exercisable Weighted - Average Remaining Contractual Life Weighted - Average Exercise Price $1.95 - $45.20 1,161,323 9.18 $8.49 490,428 8.40 $16.08 $46.40 - $83.60 75,995 3.89 $69.09 75,901 3.88 $69.11 $128.00 - $385.60 881 0.88 $363.21 881 0.88 $363.21 1,238,199 9.18 $12.47 567,210 7.78 $16.08 |
Schedule of company's nonvested stock options during the years | A summary of the status of the Company’s nonvested stock options during the years ended December 31, 2017 and 2016 is presented below: Nonvested Stock Options Shares Weighted - Average Grant Date Fair Value Nonvested, January 1, 2016 119,067 $ 18.77 Activity during the year ended December 31, 2016 Granted 53,750 $ 3.01 Forfeited (6,918 ) $ 28.66 Vested (74,447 ) $ 18.16 Nonvested, December 31, 2016 91,452 $ 10.53 Activity during the year ended December 31, 2017 Granted 940,875 $ 0.85 Forfeited (17,619 ) $ 16.50 Vested (343,719 ) $ 3.09 Nonvested, December 31, 2017 670,989 $ 1.45 |
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 years ended December 31, 2017 and 2016, share-based compensation expense related to options was: Year Ended December 31, 2017 2016 $ 960,882 $ 959,585 |
Schedule of assumptions used in calculating the fair value under the Black-Scholes option-pricing model | The assumptions used in calculating the fair value under the Black-Scholes option-pricing model are as follows: Years Ended December 31, 2017 2016 Dividend yield 0% 0% Expected Volatility 51.77% to 52.98% 47.47% to 50.69% Risk free Interest rates 2.04% to 2.25% 1.23% to 1.39% Expected lives (in years) 6.0 6.0 |
Schedule of common stock warrant activity | Common stock warrant activity for the years ended December 31, 2017 and 2016 Shares Weighted - Average Exercise Price Outstanding at January 1, 2016 845,257 $25.67 (1) Activity during the year ended December 31, 2016 Issued 1,208,845 $6.23 Exercised (15,625 ) $5.00 Terminated (47,184 ) $14.77 Outstanding at December 31, 2016 1,991,293 $13.00 (2) Activity during the year ended December 31, 2017 Issued 7,134,200 $2.20 Exercised (8,207 ) $2.00 Terminated (168,208 ) $17.64 Outstanding at December 31, 2017 8,949,078 $4.12 (3) (1) The weighted-average exercise price reflects exercise price adjustments triggered by the 2015 PIPE. (2) The weighted-average exercise price reflects exercise price adjustments triggered by the 2016 Purchase Agreement and the 2016 PIPE. (3) The weighted-average exercise price reflects exercise price adjustments triggered by the 2017 PIPE. |
Schedule of information regarding outstanding warrants | Information regarding outstanding warrants at December 31, 2017 is as follows (contractual life expressed in years): Exercise Price Number Outstanding Weighted - Average Remaining Contractual Life Intrinsic Value $ 1.83 1,540 3.0 $ 1,417 2.00 91,670 0.1 68,753 2.20 7,133,700 4.4 3,923,535 5.50 1,123,705 3.8 - 16.23 242,021 3.0 - 21.10 152,084 3.0 - 34.32 185,779 2.0 - 40.00 875 2.1 - 70.00 17,704 1.3 - 8,949,078 4.2 $ 3,993,704 (1) Intrinsic value is calculated as the estimated fair value of the Company's stock at December 31, 2017 less the warrant exercise price of in-the-money warrants. |
Derivative Liabilities (Tables)
Derivative Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of fair value valuation method | Assumptions used in calculating the fair value of the conversion feature at December 31, 2017 are as follows: Risk free interest rates 1.76% Volatility 55% |
Schedule of assumptions used in calculating the fair value of the warrants | Assumptions used in calculating the fair value of the warrants at December 31, 2017 are as follows: Dividend yield 0% Expected volatility 45% Risk free interest rates 1.28 – 2.01% Expected remaining term (in years) 0.1 – 3.25 |
Schedule of fair values and the changes in fair values of derivative liabiliti | The fair values and the changes in fair values of derivative liabilities during the years ended December 31, 2017 and 2016 are as follows: Year Ended December 31, 2017 2016 Balance $ 131,173 $ 658,286 Conversion of equity warrants to liabilities - 192,173 Additions from debt restructuring - 1,592,134 Reduction from debt conversions - (1,207,813 ) Reduction from warrant exercise (10,659 ) (37,672 ) Gain on change in fair value for the period (24,728 ) (1,065,935 ) Balance, end of period $ 95,786 $ 131,173 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of deferred income tax assets and liabilities | The tax effect of temporary differences and net operating losses that give rise to components of deferred income tax assets and liabilities consist of the following: As of December 31, 2017 2016 Deferred income tax assets (liabilities): Property and equipment $ 58,036 $ 107,308 Deferred revenue 88,877 Accrued expenses 224,546 53,112 Share based compensation 1,803,943 3,186,133 Derivative liability 164,258 Other (912,575 ) 248,561 Net operating loss carryforwards 18,535,794 30,800,732 19,709,744 34,648,981 Less valuation allowance (19,709,744 ) (34,648,981 ) $ - $ - |
Commitments (Tables)
Commitments (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum lease payments for operating leases | Future minimum lease payments for operating leases having an initial or remaining non-cancellable lease term in excess of one year are as follows: Years ending December 31, 2018 $ 71,967 Total minimum payments $ 71,967 |
Schedule of future minimum payments under license arrangements | As of December 31, 2017, future minimum payments under these arrangements are as follows: Years ending December 31, 2018 $ 50,000 2019 50,000 2020 50,000 2021 50,000 2022 50,000 Thereafter 220,000 Total minimum payments $ 470,000 |
Description of the Business a26
Description of the Business and Financial Condition (Details Narrative) - USD ($) | 1 Months Ended | |||
May 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cumulative net loss | $ 101,036,117 | $ 93,868,764 | ||
Cash and cash equivalents | $ 9,289,831 | $ 3,315,774 | $ 5,408,523 | |
2017 Private Placement [Member] | ||||
Proceeds from issuance of private placement | $ 13,250,000 | |||
Agents' fees and offering expenses | $ 1,300,000 |
Summary of Significant Accoun27
Summary of Significant Accounting Policies (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Derivative liabilities - warrants | $ (164,258) | |
Warrant [Member] | Fair Value, Measurements, Recurring [Member] | ||
Derivative liabilities - warrants | $ 79,286 | 91,173 |
Derivative liabilities - debt conversion feature | 16,500 | 40,000 |
Warrant [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Derivative liabilities - warrants | ||
Derivative liabilities - debt conversion feature | ||
Warrant [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Derivative liabilities - warrants | ||
Derivative liabilities - debt conversion feature | ||
Warrant [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Derivative liabilities - warrants | 79,286 | 91,173 |
Derivative liabilities - debt conversion feature | $ 16,500 | $ 40,000 |
Summary of Significant Accoun28
Summary of Significant Accounting Policies (Details 1) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Brainlab Senior Secured Note Payable [Member] | ||
Debt Instrument [Line Items] | ||
Carrying Values | $ 2,028,111 | $ 2,028,111 |
Estimated Fair Values | 2,028,111 | 2,028,111 |
12% Junior Secured Notes Payable 2014 [Member] | ||
Debt Instrument [Line Items] | ||
Carrying Values | 1,942,195 | 1,861,851 |
Estimated Fair Values | 2,042,625 | 2,042,625 |
Junior Secured Notes Payable 2010 [Member] | ||
Debt Instrument [Line Items] | ||
Carrying Values | 1,796,042 | 1,345,028 |
Estimated Fair Values | $ 3,752,500 | $ 2,789,257 |
Summary of Significant Accoun29
Summary of Significant Accounting Policies (Details 2) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Sales Revenue, Net [Member] | Customer - 1 [Member] | ||
Concentration risk, percentage | 10.00% | |
Accounts Receivable [Member] | Customer - 1 [Member] | ||
Concentration risk, percentage | 10.00% | 20.00% |
Accounts Receivable [Member] | Customer - 2 [Member] | ||
Concentration risk, percentage | 13.00% | |
Accounts Receivable [Member] | Customer - 3 [Member] | ||
Concentration risk, percentage | 10.00% |
Summary of Significant Accoun30
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |
Dec. 31, 2016 | Aug. 31, 2016 | Dec. 31, 2017 | |
FDIC insured limit | $ 103,559 | ||
Allowance for doubtful accounts | $ 25,000 | $ 29,000 | |
Reverse stock split | 1-for-40 | ||
IPO [Member] | |||
Legal and other costs | $ 459,000 | ||
IPO [Member] | General and Administrative Expense [Member] | |||
Legal and other costs | $ 459,000 | ||
Minimum [Member] | |||
Term of service agreements (in years) | 1 year | ||
Property and equipment, estimated useful lives | 5 years | ||
Maximum [Member] | |||
Term of service agreements (in years) | 3 years | ||
Property and equipment, estimated useful lives | 7 years |
Inventory (Details)
Inventory (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Raw materials and work in process | $ 1,167,142 | $ 1,025,368 |
Software licenses | 52,500 | 70,000 |
Finished goods | 1,094,542 | 673,014 |
Inventory included in current assets | 2,314,184 | 1,768,382 |
Software licenses - non-current | 871,900 | 976,900 |
Total inventory | $ 3,186,084 | $ 2,745,282 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | $ 1,940,175 | $ 2,039,130 |
Less accumulated depreciation and amortization | (1,672,508) | (1,710,881) |
Total property and equipment, net | 267,667 | 328,249 |
Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | 1,151,543 | 1,165,076 |
Furniture And Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | 112,143 | 112,143 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | 179,999 | 179,999 |
Computer Equipment And Software [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | 148,017 | 150,304 |
Loaned Systems [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | $ 348,473 | $ 431,608 |
Property and Equipment (Detai33
Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation and amortization expense | $ 116,454 | $ 155,707 |
Notes Payable (Details)
Notes Payable (Details) | Dec. 31, 2017USD ($) |
Debt Disclosure [Abstract] | |
2,018 | $ 2,000,000 |
2,019 | 1,975,000 |
2,020 | 3,000,000 |
Total scheduled principal payments | 6,975,000 |
Less unamortized discounts | (2,024,228) |
Less unamortized deferred financing costs | (32,660) |
Total | $ 4,918,112 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | Apr. 04, 2017 | Mar. 31, 2014 | Dec. 31, 2017 | Dec. 31, 2015 | Dec. 31, 2016 |
Debt Instrument [Line Items] | |||||
Unamortized discount | $ 2,024,228 | ||||
12% Junior Secured Notes Payable 2014 [Member] | Private Placement (Securities Purchase Agreements) [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 all of the Companys assets, which security interest is junior and subordinate to the security interest that collateralizes the New Brainlab note. | ||||
Unamortized discount | 67,770 | $ 121,985 | |||
12% Junior Secured Notes Payable 2014 [Member] | Private Placement (Securities Purchase Agreements) [Member] | Non-Employee Directors [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt face amount | $ 1,100,000 | ||||
Other offering expenses | 32,660 | $ 58,789 | |||
12% Junior Secured Notes Payable 2014 [Member] | Private Placement (Securities Purchase Agreements) [Member] | Placement Agents [Member] | |||||
Debt Instrument [Line Items] | |||||
Fair value | 30,210 | ||||
Placement agents cash commission | 145,500 | ||||
Other offering expenses | $ 76,186 | ||||
12% Junior Secured Notes Payable 2014 [Member] | Private Placement (Securities Purchase Agreements) [Member] | Warrant [Member] | |||||
Debt Instrument [Line Items] | |||||
Number of each common stock called | 0.01 | ||||
Proceeds from common stock called | $ 3,725,000 | ||||
Warrant exercise price (in dollars per share) | $ 70 | ||||
Fair value | $ 413,057 | ||||
12% Junior Secured Notes Payable 2014 [Member] | Private Placement (Securities Purchase Agreements) [Member] | Warrant [Member] | Maximum [Member] | |||||
Debt Instrument [Line Items] | |||||
Number of common stock called | 27,937 | ||||
12% Junior Secured Notes Payable 2014 [Member] | Private Placement (Securities Purchase Agreements) [Member] | Warrant [Member] | Placement Agents [Member] | |||||
Debt Instrument [Line Items] | |||||
Number of warrants issued to placement agent | 1,818 | ||||
Brainlab Senior Secured Note Payable [Member] | |||||
Debt Instrument [Line Items] | |||||
Stated interest rate | 5.50% | ||||
Debt face amount | $ 5,000,000 | ||||
Maturity date | Apr. 30, 2016 | ||||
Accrued interest | $ 740,000 | ||||
Brainlab Senior Secured Note Payable [Member] | Securities Purchase Agreement (the "2016 PIPE Purchase Agreement") [Member] | |||||
Debt Instrument [Line Items] | |||||
Accrued interest | 740,000 | ||||
Debt cancelled principal amount | $ 1,300,000 | ||||
Number of units issued | 99,310 | ||||
Gain on foregoing of debt | $ 941,000 | ||||
Brainlab Senior Secured Note Payable [Member] | 2016 Securities Purchase Agreement (Patent And Technology License Agreement) [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt cancelled principal amount | $ 1,000,000 | ||||
Brainlab Senior Secured Note Payable [Member] | 2016 Securities Purchase Agreement (Patent And Technology License Agreement) [Member] | Common Stock [Member] | |||||
Debt Instrument [Line Items] | |||||
Number of common shares issued | 1 | ||||
Brainlab Senior Secured Note Payable [Member] | 2016 Securities Purchase Agreement (Patent And Technology License Agreement) [Member] | 2016 Series A Warrants [Member] | |||||
Debt Instrument [Line Items] | |||||
Warrant exercise price (in dollars per share) | $ 16.23 | ||||
Number of common shares issued | 0.4 | ||||
Brainlab Senior Secured Note Payable [Member] | 2016 Securities Purchase Agreement (Patent And Technology License Agreement) [Member] | 2016 Series B Warrants [Member] | |||||
Debt Instrument [Line Items] | |||||
Warrant exercise price (in dollars per share) | $ 21.10 | ||||
Number of common shares issued | 0.3 | ||||
New Brainlab Note (amended and restated secured note) [Member] | Securities Purchase Agreement (the "2016 PIPE Purchase Agreement") [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt face amount | $ 2,000,000 | ||||
Maturity date | Dec. 31, 2018 | ||||
Description of collateral terms | Note is collateralized by a senior security interest in all of the assets of the Company. |
Notes Payable (Details Narrat36
Notes Payable (Details Narrative 1) | Sep. 02, 2016USD ($) | Jun. 30, 2016USD ($)shares | Aug. 31, 2016USD ($)shares | Nov. 30, 2010USD ($)Numbershares | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) |
Debt Instrument [Line Items] | |||||||
Common stock fair value | $ 2,775,300 | ||||||
Unamortized discount | $ 2,024,228 | ||||||
Reduction in warrants from debt conversions | $ (1,207,813) | ||||||
Loss on restructuring of debt | (811,909) | ||||||
June 2016 Amendments [Member] | 12% Junior Secured Notes Payable 2014 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt face amount | $ 1,500,000 | ||||||
Number of warrants issued | shares | 11,250 | ||||||
Second Amendment (2016 PIPE) [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Reduction in warrants from debt conversions | $ 1,207,813 | ||||||
Second Amendment (2016 PIPE) [Member] | 12% Junior Secured Notes Payable 2014 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt face amount | $ 1,750,000 | ||||||
Number of warrants issued | shares | 13,125 | ||||||
Loss on restructuring of debt | $ 933,000 | ||||||
Non-Employee Directors [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Number of unit issued | shares | 14,180 | ||||||
Number of officers and directors | Number | 3 | ||||||
Value of unit issued | shares | 158,816 | ||||||
Officer [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Number of unit issued | shares | 22,068 | ||||||
Number of officers and directors | Number | 4 | ||||||
Value of unit issued | shares | 247,164 | ||||||
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 | shares | 267,857 | ||||||
Stated interest rate | 3.50% | ||||||
Description of collateral terms | Collateralized by a security interest in all of 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 | $ 1,956,458 | $ 2,302,472 | |||||
Interest expense terms | 10-year term of the notes using the effective interest method. | ||||||
Proceeds from debt issuance | $ 3,000,000 | ||||||
Maturity date | Nov. 30, 2020 | ||||||
New Brainlab Note [Member] | June 2016 Amendments [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt face amount | $ 500,000 | ||||||
Number of warrants issued | shares | 34,957 | ||||||
New Brainlab Note [Member] | Non-Employee Directors [Member] | June 2016 Amendments [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt face amount | $ 3,000,000 | ||||||
Brainlab Senior Secured Note Payable [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt face amount | $ 5,000,000 | ||||||
Stated interest rate | 5.50% | ||||||
Maturity date | Apr. 30, 2016 | ||||||
Brainlab Senior Secured Note Payable [Member] | 12% Junior Secured Notes Payable 2014 [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Loss on restructuring of debt | $ 820,000 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Outstanding at beginning | 337,441 | 298,283 | |
Exercisable at beginning | 245,989 | 179,216 | |
Granted | 940,875 | 53,750 | |
Exercised | |||
Cancelled or forfeited | (40,117) | (14,592) | |
Outstanding at ending | 1,238,199 | 337,441 | |
Exercisable at ending | 567,210 | 245,989 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | |||
Outstanding at beginning | $ 42.07 | $ 48.73 | |
Exercisable at beginning | 38.71 | 56.40 | |
Granted | 2.58 | 6.40 | |
Exercised | |||
Cancelled or forfeited | 35.74 | 12.67 | |
Outstanding at ending | $ 12.47 | 42.07 | |
Exercisable at ending | $ 38.71 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Intrinsic Value [Abstract] | |||
Outstanding at beginning | [1] | ||
Exercisable at beginning | [1] | ||
Granted | [1] | 78,486 | |
Outstanding at ending | [1] | 78,486 | |
Exercisable at ending | [1] | ||
Maximum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | |||
Outstanding at beginning | $ 5 | $ 29.60 | |
Exercisable at beginning | 5 | 29.60 | |
Granted | 1.95 | 5 | |
Exercised | |||
Cancelled or forfeited | 5 | 5 | |
Outstanding at ending | 1.95 | 5 | |
Exercisable at ending | 5 | ||
Minimum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | |||
Outstanding at beginning | 385.60 | 385.60 | |
Exercisable at beginning | 385.60 | 385.60 | |
Granted | 6.40 | 12.40 | |
Exercised | |||
Cancelled or forfeited | 385.60 | 385.60 | |
Outstanding at ending | $ 385.60 | 385.60 | |
Exercisable at ending | $ 385.60 | ||
[1] | Intrinsic value is calculated as the estimated fair value of the Company's stock at the end of the related period less the option exercise price of in-the-money options. |
Stockholders' Equity (Details 1
Stockholders' Equity (Details 1) | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Number of Options Outstanding | shares | 1,238,199 |
Options Outstanding Weighted - Average Remaining Contractual Life (in years) | 9 years 2 months 5 days |
Options Outstanding Weighted - Average Exercise Price | $ / shares | $ 12.47 |
Number of Options Exercisable | shares | 567,210 |
Options Exercisable Weighted - Average Remaining Contractual Life (in years) | 7 years 9 months 11 days |
Options Exercisable Weighted - Average Exercise Price | $ / shares | $ 16.08 |
Exercise Price $1.95 - $45.20 [Member] | |
Number of Options Outstanding | shares | 1,161,323 |
Options Outstanding Weighted - Average Remaining Contractual Life (in years) | 9 years 2 months 5 days |
Options Outstanding Weighted - Average Exercise Price | $ / shares | $ 8.49 |
Number of Options Exercisable | shares | 490,428 |
Options Exercisable Weighted - Average Remaining Contractual Life (in years) | 8 years 4 months 24 days |
Options Exercisable Weighted - Average Exercise Price | $ / shares | $ 16.08 |
Exercise Price $46.40 - $83.60 [Member] | |
Number of Options Outstanding | shares | 75,995 |
Options Outstanding Weighted - Average Remaining Contractual Life (in years) | 3 years 10 months 20 days |
Options Outstanding Weighted - Average Exercise Price | $ / shares | $ 69.09 |
Number of Options Exercisable | shares | 75,901 |
Options Exercisable Weighted - Average Remaining Contractual Life (in years) | 3 years 10 months 17 days |
Options Exercisable Weighted - Average Exercise Price | $ / shares | $ 69.11 |
Exercise Price $128.00 - $385.60 [Member] | |
Number of Options Outstanding | shares | 881 |
Options Outstanding Weighted - Average Remaining Contractual Life (in years) | 10 months 17 days |
Options Outstanding Weighted - Average Exercise Price | $ / shares | $ 363.21 |
Number of Options Exercisable | shares | 881 |
Options Exercisable Weighted - Average Remaining Contractual Life (in years) | 10 months 17 days |
Options Exercisable Weighted - Average Exercise Price | $ / shares | $ 363.21 |
Stockholders' Equity (Details 2
Stockholders' Equity (Details 2) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares [Roll Forward] | ||
Balance at beginning | 91,452 | 119,067 |
Granted | 940,875 | 53,750 |
Forfeited | (17,619) | (6,918) |
Vested | (343,719) | (74,447) |
Balance at ending | 670,989 | 91,452 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | ||
Balance at beginning | $ 10.53 | $ 18.77 |
Granted | 0.85 | 3.01 |
Forfeited | 16.5 | 28.66 |
Vested | 3.09 | 18.16 |
Balance at ending | $ 1.45 | $ 10.53 |
Stockholders' Equity (Details
Stockholders' Equity (Details 3) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Stockholders' equity (deficit): | ||
Share-based compensation expense | $ 1,245,601 | $ 1,187,100 |
Stockholders' Equity (Details 4
Stockholders' Equity (Details 4) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Dividend yield | 0.00% | 0.00% |
Expected lives (in years) | 6 years | 6 years |
Minimum [Member] | ||
Expected Volatility | 51.77% | 47.47% |
Risk free Interest rates | 2.04% | 1.23% |
Maximum [Member] | ||
Expected Volatility | 52.98% | 50.69% |
Risk free Interest rates | 2.25% | 1.39% |
Stockholders' Equity (Details 5
Stockholders' Equity (Details 5) - Common Stock Warrants [Member] - $ / shares | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||||
Outstanding at beginning | 1,991,293 | 845,257 | ||
Issued | 7,134,200 | 1,208,845 | ||
Exercised | (8,207) | (15,625) | ||
Terminated | (168,208) | (47,184) | ||
Outstanding at ending | 8,949,078 | 1,991,293 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | ||||
Outstanding at beginning | $ 13 | [1] | $ 25.67 | [2] |
Issued | 2.20 | 6.23 | ||
Exercised | 2 | 5 | ||
Terminated | 17.64 | 14.77 | ||
Outstanding at ending | $ 4.12 | [3] | $ 13 | [1] |
[1] | The weighted-average exercise price reflects exercise price adjustments triggered by the 2016 Purchase Agreement and the 2016 PIPE. | |||
[2] | The weighted-average exercise price reflects exercise price adjustments triggered by the 2015 PIPE. | |||
[3] | The weighted-average exercise price reflects exercise price adjustments triggered by the 2017 PIPE. |
Stockholders' Equity (Details 6
Stockholders' Equity (Details 6) | 12 Months Ended | |
Dec. 31, 2017USD ($)shares | ||
Number Outstanding | 1,238,199 | |
Weighted - Average Remaining Contractual Life | 9 years 2 months 5 days | |
Common Stock Warrants [Member] | ||
Number Outstanding | 8,949,078 | |
Weighted - Average Remaining Contractual Life | 4 years 2 months 12 days | |
Intrinsic Value | $ | $ 3,993,704 | [1] |
Common Stock Warrants [Member] | Exercise Price $1.83 [Member] | ||
Number Outstanding | 1,540 | |
Weighted - Average Remaining Contractual Life | 3 years | |
Intrinsic Value | $ | $ 1,417 | [1] |
Common Stock Warrants [Member] | Exercise Price $2.00 [Member] | ||
Number Outstanding | 91,670 | |
Weighted - Average Remaining Contractual Life | 1 month 6 days | |
Intrinsic Value | $ | $ 68,753 | [1] |
Common Stock Warrants [Member] | Exercise Price $2.20 [Member] | ||
Number Outstanding | 7,133,700 | |
Weighted - Average Remaining Contractual Life | 4 years 4 months 24 days | |
Intrinsic Value | $ | $ 3,923,535 | [1] |
Common Stock Warrants [Member] | Exercise Price $5.50 [Member] | ||
Number Outstanding | 1,123,705 | |
Weighted - Average Remaining Contractual Life | 3 years 9 months 18 days | |
Intrinsic Value | $ | [1] | |
Common Stock Warrants [Member] | Exercise Price $16.23 [Member] | ||
Number Outstanding | 242,021 | |
Weighted - Average Remaining Contractual Life | 3 years | |
Intrinsic Value | $ | [1] | |
Common Stock Warrants [Member] | Exercise Price $21.10 [Member] | ||
Number Outstanding | 152,084 | |
Weighted - Average Remaining Contractual Life | 3 years | |
Intrinsic Value | $ | [1] | |
Common Stock Warrants [Member] | Exercise Price $34.32 [Member] | ||
Number Outstanding | 185,779 | |
Weighted - Average Remaining Contractual Life | 2 years | |
Intrinsic Value | $ | [1] | |
Common Stock Warrants [Member] | Exercise Price $40.00 [Member] | ||
Number Outstanding | 875 | |
Weighted - Average Remaining Contractual Life | 2 years 1 month 6 days | |
Intrinsic Value | $ | [1] | |
Common Stock Warrants [Member] | Exercise Price $70.00 [Member] | ||
Number Outstanding | 17,704 | |
Weighted - Average Remaining Contractual Life | 1 year 3 months 18 days | |
Intrinsic Value | $ | [1] | |
[1] | Intrinsic value is calculated as the estimated fair value of the Company's stock at December 31, 2017 less the warrant exercise price of in-the-money warrants. |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | May 26, 2017 | Sep. 02, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Oct. 31, 2017 | Dec. 31, 2015 |
Number of awards oustanding | 1,238,199 | 337,441 | 298,283 | |||
Number of awards granted | 940,875 | 53,750 | ||||
Securities Purchase Agreement (the "2016 PIPE Purchase Agreement") [Member] | Secured Notes 2014 [Member] | ||||||
Number of shares issued | 13,125 | |||||
Number of unit issued | 350,000 | |||||
Securities Purchase Agreement (the "2016 PIPE Purchase Agreement") [Member] | Secured Notes 2014 [Member] | Warrant [Member] | ||||||
Warrant exercise price (in dollars per share) | $ 5.50 | |||||
Securities Purchase Agreement (the "2017 PIPE Purchase Agreement") [Member] | Warrant [Member] | ||||||
Warrant exercise price (in dollars per share) | $ 2.20 | |||||
Warrant [Member] | ||||||
Term of warrant | 5 years | |||||
Amended and Restated 2013 Incentive Compensation Plan [Member] | ||||||
Common stock available for awards | 1,800,000 | |||||
Common stock reserved for issuance | 1,956,250 | |||||
Number of share available for grant | 1,096,496 | |||||
Number of awards oustanding | 754,569 | |||||
Number of awards granted | 105,185 | |||||
Unrecognized compensation expense | $ 813,000 | |||||
Weighted average period | 1 year 4 months 24 days | |||||
2016 PIPE Investors [Member] | Securities Purchase Agreement (the "2016 PIPE Purchase Agreement") [Member] | Secured Notes 2014 [Member] | ||||||
Number of shares issued | 1 | |||||
Number of unit issued | 851,000 | |||||
Value of unit issued | 4,250,000 | |||||
Other offering expenses | $ 418,000 | |||||
2016 PIPE Investors [Member] | Securities Purchase Agreement (the "2016 PIPE Purchase Agreement") [Member] | Secured Notes 2014 [Member] | Warrant [Member] | ||||||
Warrant exercise price (in dollars per share) | $ 5.50 | |||||
Number of each common stock called | 0.90 | |||||
Placement Agents [Member] | Securities Purchase Agreement (the "2016 PIPE Purchase Agreement") [Member] | Secured Notes 2014 [Member] | Warrant [Member] | ||||||
Number of shares issued | 29,680 | |||||
Placement Agents [Member] | Securities Purchase Agreement (the "2016 PIPE Purchase Agreement") [Member] | Secured Notes 2014 [Member] | Warrant [Member] | Maximum [Member] | ||||||
Warrants exercisable date | Sep. 2, 2021 | |||||
Placement Agents [Member] | Securities Purchase Agreement (the "2017 PIPE Purchase Agreement") [Member] | Warrant [Member] | ||||||
Number of shares issued | 509,200 | |||||
2017 PIPE Investors [Member] | Securities Purchase Agreement (the "2017 PIPE Purchase Agreement") [Member] | ||||||
Number of shares issued | 1 | |||||
Number of unit issued | 6,625,000 | |||||
Value of unit issued | 13,250,000 | |||||
Other offering expenses | $ 1,300,000 | |||||
Share purchase price per share (in dollars per share) | $ 2 | |||||
2017 PIPE Investors [Member] | Securities Purchase Agreement (the "2017 PIPE Purchase Agreement") [Member] | Warrant [Member] | ||||||
Number of shares issued | 1 | |||||
Director [Member] | ||||||
Number of shares issued for services | 14,650 | 22,313 | ||||
Number of shares issued for services in lieu of cash | $ 37,740 | $ 124,069 |
Derivative Liabilities (Details
Derivative Liabilities (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Risk free interest rates | 1.76% |
Volatility | 55.00% |
Derivative Liabilities (Detai46
Derivative Liabilities (Details 1) | 12 Months Ended |
Dec. 31, 2017 | |
Expected volatility | 55.00% |
Risk free interest rates | 1.76% |
Common Stock Warrants [Member] | |
Dividend yield | 0.00% |
Expected volatility | 45.00% |
Valuation method used | Monte Carlo simulation valuation method. |
Common Stock Warrants [Member] | Minimum [Member] | |
Risk free interest rates | 1.28% |
Expected remaining term (in years) | 1 month 6 days |
Common Stock Warrants [Member] | Maximum [Member] | |
Risk free interest rates | 2.01% |
Expected remaining term (in years) | 3 years 3 months |
Derivative Liabilities (Detai47
Derivative Liabilities (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Derivative Instruments and Hedges, Liabilities [Roll Forward] | ||
Balance, beginning of period | $ 131,173 | $ 658,286 |
Conversion of equity warrants to liabilities | 192,173 | |
Additions from debt restructuring | 1,592,134 | |
Reduction from debt conversions | (1,207,813) | |
Reduction from warrant exercise | (10,659) | (37,672) |
Gain on change in fair value for the period | (24,728) | (1,065,935) |
Balance, end of period | $ 95,786 | $ 131,173 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred income tax assets (liabilities): | ||
Property and equipment | $ 58,036 | $ 107,308 |
Deferred revenue | 88,877 | |
Accrued expenses | 224,546 | 53,112 |
Share based compensation | 1,803,943 | 3,186,133 |
Derivative liability | 164,258 | |
Other | (912,575) | 248,561 |
Net operating loss carryforwards | 18,535,794 | 30,800,732 |
Deferred income tax assets (liabilities), gross | 19,709,744 | 34,648,981 |
Less valuation allowance | (19,709,744) | (34,648,981) |
Deferred income tax assets (liabilities), Net |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Percentage of valuation allowance | 100.00% | |
Decrease in valuation allowance | $ (14,900,000) | |
Increase in valuation allowance | $ 3,500,000 | |
Federal [Member] | ||
Operating loss carryforwards | $ 81,500,000 |
Commitments (Details)
Commitments (Details) | Dec. 31, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,018 | $ 71,967 |
Total minimum payments | $ 71,967 |
Commitments (Details 1)
Commitments (Details 1) | Dec. 31, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,018 | $ 50,000 |
2,019 | 50,000 |
2,020 | 50,000 |
2,021 | 50,000 |
2,022 | 50,000 |
Thereafter | 220,000 |
Total minimum payments | $ 470,000 |
Commitments (Details Narrative)
Commitments (Details Narrative) - USD ($) | Oct. 06, 2017 | Dec. 31, 2017 | Dec. 31, 2016 |
Rent expense | $ 92,000 | $ 92,000 | |
Compensation expenses | $ 1,245,601 | 1,187,100 | |
Key Personnel Incentive Program [Member] | |||
Description of participants | Two participants, one a consultant to the Company and a former non-employee director of the Company, and the other a former employee of the Company. | ||
Payment from sale of company | $ 1,000,000 | ||
Description of sale of company transaction | One of the participants will be entitled to receive a payment equal to $700,000 in the event the net proceeds from a sale of the Company exceeds $50,000,000. If a sale of the Company has not occurred by December 31, 2025, the KPIP will terminate. | ||
Technical Service and Training Agreements [Member] | |||
Technical research services fees payable in future | $ 17,000 | $ 45,000 | |
Cardiac EP Business Participation Plan Agreements [Member] | |||
Initial participation interest | 6.60% | ||
Revised participation interest | 0.48% | ||
Separation Agreement [Member] | Mr. Francis P. Grillo [Member] | |||
Number of unregistered shares of common stock | 87,500 | ||
Lump sum payment | $ 15,000 | ||
Transition and consulting services fees (per month) | 30,000 | ||
Annual bonus | $ 109,000 | ||
Employment Agreement [Member] | Mr. Joseph M. Burnett [Member] | |||
Base salary | $ 360,000 | ||
Description of annual target incentive bonus | Mr. Burnett will be eligible to receive an annual target incentive bonus of 40% of his annual base salary, subject to certain performance goals to be established by the Compensation Committee of the Board of Directors. | ||
Relocation expenses | $ 50,000 | ||
Initial signing bonus amount | $ 100,000 | ||
Compensation expenses | $ 44,000 | ||
Employment Agreement [Member] | Mr. Joseph M. Burnett [Member] | Non-qualified Stock Option [Member] | |||
Number of shares issued | 350,000 | ||
Exercise price (in dollars per share) | $ 2.50 | ||
Employment Agreement [Member] | Mr. Joseph M. Burnett [Member] | Restricted Stock [Member] | |||
Number of shares issued | 200,000 |