| Business and Basis of Presentation | Business and Basis of Presentation Our Business-An Overview NeuroMetrix, Inc., or the Company, is a commercial stage, innovation driven healthcare company combining neurostimulation and digital medicine to address chronic health conditions including chronic pain, sleep disorders, and diabetes. The Company has two primary products. Quell is an over-the-counter wearable therapeutic device for chronic pain. DPNCheck® is a rapid point-of-care test for diabetic neuropathy which is the most common long-term complication of Type 2 diabetes. In 2018, the Company entered into a collaboration with GlaxoSmithKline ("GSK"). The GSK collaboration established a framework for the joint development of the next generation of Quell, recently launched in the United States in September 2018, and the assignment of areas of marketing responsibility. The initial term of the GSK collaboration runs through 2020. Through March 31, 2019 , GSK has paid the Company $18.7 million , committed to future performance milestone payments totaling up to $6.2 million , and agreed to co-fund Quell development costs starting in 2019. The accompanying financial statements have been prepared on a basis which assumes that the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. The Company has suffered recurring losses from operations and negative cash flows from operating activities. At March 31, 2019 , the Company had an accumulated deficit of $189.0 million . These factors raise substantial doubt about the Company’s ability to continue as a going concern for the one-year period from the date of issuance of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company held cash and cash equivalents of $7.2 million as of March 31, 2019 . The Company believes that these resources, future GSK collaboration milestone payments, and the cash to be generated from future product sales will be sufficient to meet its projected operating requirements through 2019. Accordingly, the Company may need to raise additional funds to support its operating and capital needs in 2020. The Company continues to face significant challenges and uncertainties and, as a result, the Company’s available capital resources may be consumed more rapidly than currently expected due to (a) decreases in sales of the Company’s products and the uncertainty of future revenues from new products; (b) changes the Company may make to the business that affect ongoing operating expenses; (c) changes the Company may make in its business strategy; (d) regulatory developments affecting the Company’s existing products; (e) changes the Company may make in its research and development spending plans; (f) delays in the anticipated timing of achievement of GSK milestones; (g) the final outcome of the Federal Trade Commission civil investigative demand enforcement action involving Quell; and (h) other items affecting the Company’s forecasted level of expenditures and use of cash resources. The Company may attempt to obtain additional funding through achievement of milestones under the GSK collaboration, public or private financing, collaborative arrangements with strategic partners, or through additional credit lines or other debt financing sources to increase the funds available to fund operations. However, the Company may not be able to secure such financing in a timely manner or on favorable terms, if at all. Furthermore, if the Company issues equity or debt securities to raise additional funds, its existing stockholders may experience dilution, and the new equity or debt securities may have rights, preferences and privileges senior to those of the Company’s existing stockholders. If the Company raises additional funds through collaboration, licensing or other similar arrangements, it may be necessary to relinquish valuable rights to its potential products or proprietary technologies, or grant licenses on terms that are not favorable to the Company. Without additional funds, the Company may be forced to delay, scale back or eliminate some of its sales and marketing efforts, research and development activities, or other operations and potentially delay product development in an effort to provide sufficient funds to continue its operations. If any of these events occurs, the Company’s ability to achieve its development and commercialization goals would be adversely affected. Unaudited Interim Financial Statements The accompanying unaudited balance sheet as of March 31, 2019 , unaudited statements of operations for the quarters ended March 31, 2019 and 2018 , unaudited statements of changes in stockholders' equity for the three months ended March 31, 2019 and 2018 and the unaudited statements of cash flows for the three months ended March 31, 2019 and 2018 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. The accompanying balance sheet as of December 31, 2018 has been derived from audited financial statements prepared at that date, but does not include all disclosures required by accounting principles generally accepted in the United States of America. In the opinion of management, the financial statements include all normal and recurring adjustments considered necessary for a fair presentation of the Company’s financial position and operating results. Operating results for the three months ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019 or any other period. These financial statements and notes should be read in conjunction with the financial statements for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission, or the SEC, on January 24, 2019 (File No. 001-33351), or the Company’s 2018 Form 10-K. Revenues Revenues include product sales, net of estimated returns. Revenue is measured as the amount of consideration the Company expects to receive in exchange for product transferred. Revenue is recognized when contractual performance obligations have been satisfied and control of the product has been transferred to the customer. In most cases, the Company has a single product delivery performance obligation. Accrued product returns are estimated based on historical data and evaluation of current information. Accounts receivable are recorded net of the allowance for doubtful accounts which represents the Company’s best estimate of credit losses. Allowance for doubtful accounts was $25,000 as of March 31, 2019 and December 31, 2018 . Two customers accounted for 32% and 32% of total revenues in the quarters ended March 31, 2019 and 2018, respectively. Two customers accounted for 44% and 45% of accounts receivable as of March 31, 2019 and December 31, 2018 , respectively. Collaboration income Collaboration income is recognized within Other income when contractual performance obligations, outside the ordinary activities of the Company, have been satisfied and control has been transferred to a collaboration partner. Collaboration income for each performance obligation is based on the fair value of such performance obligation relative to the total fair value of all performance obligations multiplied by the overall transaction price. A deferred collaboration income liability is recorded when payments are received prior to satisfaction of performance obligations. The Company recognized Collaboration income net of costs, within Other income in the Statement of Operations of $5,734,849 and $4,755,705 , for the quarters ended March 31, 2019 and 2018, respectively. Stock-based Compensation Total compensation cost related to non-vested awards not yet recognized at March 31, 2019 was $208,741 . The total compensation costs are expected to be recognized over a weighted-average period of 1.8 years. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during reporting periods. Actual results could differ from those estimates. Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation. Recent Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 required that lessees recognize virtually all of their leases on the balance sheet, by recording a right-of-use asset and lease liability. The Company adopted ASU 2016-02, using the modified retrospective method, upon its effective date of January 1, 2019. The impact of adoption was an increase to long-term assets and total liabilities of approximately $1.9 million as of January 1, 2019. The following table summarizes the effects of adopting ASU 2016-02 on the Company's balance sheet as of March 31, 2019: As reported Adjustments Amounts under prior GAAP Prepaid expenses and other current assets $ 962,727 $ 44,852 $ 1,007,579 Total current assets $ 11,630,142 $ 44,852 $ 11,674,994 Right of use asset $ 1,870,979 $ (1,870,979 ) $ — Other long-term assets $ 30,081 $ 34,363 $ 64,444 Total assets $ 13,906,763 $ (1,791,764 ) $ 12,114,999 Accrued expenses $ 3,036,301 $ (580,284 ) $ 2,456,017 Total current liabilities $ 4,502,872 $ (580,284 ) $ 3,922,588 Lease obligation - net of current portion $ 1,211,480 $ (1,211,480 ) $ — Total liabilities $ 5,714,352 $ (1,791,764 ) $ 3,922,588 The following table summarizes the effects of adopting ASU 2016-02 on the Company's balance sheet as of December 31, 2018: As reported Adjustments Amounts under prior GAAP Prepaid expenses and other current assets $ 860,915 $ 44,852 $ 905,767 Total current assets $ 11,586,165 $ 44,852 $ 11,631,017 Right of use asset $ 1,968,062 $ (1,968,062 ) $ — Other long-term assets $ 30,314 $ 44,578 $ 74,892 Total assets $ 13,991,880 $ (1,878,632 ) $ 12,113,248 Accrued expenses $ 2,236,633 $ (577,460 ) $ 1,659,173 Total current liabilities $ 6,592,897 $ (577,460 ) $ 6,015,437 Lease obligation - net of current portion $ 1,301,172 $ (1,301,172 ) $ — Total liabilities $ 7,894,069 $ (1,878,632 ) $ 6,015,437 Adoption of ASU 2016-02 had no impact on the Company's statements of operations, statements of changes in stockholders' equity and statements of cash flows. |
