Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Feb. 28, 2015 | Jun. 30, 2014 | |
Document and Entity Information | |||
Entity Registrant Name | IRADIMED CORP | ||
Entity Central Index Key | 1325618 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -19 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $0 | ||
Entity Common Stock, Shares Outstanding | 10,972,150 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY |
BALANCE_SHEETS
BALANCE SHEETS (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Current assets: | ||
Cash and cash equivalents | $9,454,150 | $2,461,559 |
Accounts receivable, net | 1,960,214 | 1,982,083 |
Investments | 7,913,793 | 246,203 |
Inventory, net | 2,125,838 | 1,340,331 |
Prepaid expenses and other current assets | 276,540 | 119,974 |
Prepaid income taxes | 320,941 | 170,496 |
Deferred income taxes | 116,339 | 65,961 |
Total current assets | 22,167,815 | 6,386,607 |
Property and equipment, net | 794,835 | 327,343 |
Intangible assets, net | 250,836 | 267,024 |
Deferred income taxes | 76,557 | |
Other assets | 19,676 | 5,897 |
Total assets | 23,309,719 | 6,986,871 |
Current liabilities: | ||
Accounts payable | 629,167 | 427,474 |
Accrued payroll and benefits | 1,244,898 | 655,362 |
Other accrued taxes | 65,790 | 80,787 |
Warranty reserve | 27,925 | 12,002 |
Deferred revenue | 308,341 | 207,395 |
Officer note payable | 6,333 | |
Accrued income taxes | 62,971 | |
Total current liabilities | 2,276,121 | 1,452,324 |
Deferred revenue | 142,902 | 57,676 |
Deferred income taxes | 54,087 | |
Total liabilities | 2,419,023 | 1,564,087 |
Stockholders' equity: | ||
Preferred stock, $0.0001 par value; 10,000,000 shares authorized; none issued and outstanding as of December 31, 2014 and 1,400,000 shares issued and outstanding as of December 31, 2013 | 140 | |
Common stock; $0.0001 par value; 90,000,000 shares authorized; 10,814,650 shares issued and outstanding as of December 31, 2014 and 7,000,000 shares issued and outstanding as of December 31, 2013 | 1,082 | 700 |
Additional paid-in capital | 15,785,838 | 2,346,137 |
Retained earnings | 5,125,249 | 3,074,883 |
Accumulated other comprehensive (loss) income | -21,473 | 924 |
Total stockholders' equity | 20,890,696 | 5,422,784 |
Total liabilities and stockholders' equity | $23,309,719 | $6,986,871 |
BALANCE_SHEETS_Parenthetical
BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
BALANCE SHEETS | ||
Accounts receivable, allowance for doubtful accounts | $28,119 | $136,971 |
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 1,400,000 |
Preferred stock, shares outstanding | 0 | |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 90,000,000 | 90,000,000 |
Common stock, shares issued | 10,814,650 | 7,000,000 |
Common stock, shares outstanding | 10,814,650 | 7,000,000 |
STATEMENTS_OF_OPERATIONS_AND_C
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | ||
Revenue | $15,653,057 | $11,340,097 |
Cost of revenue | 3,404,400 | 2,853,385 |
Gross profit | 12,248,657 | 8,486,712 |
Operating expenses: | ||
General and administrative | 4,816,973 | 2,392,305 |
Sales and marketing | 3,297,120 | 2,297,309 |
Research and development | 1,068,674 | 1,009,872 |
Total operating expenses | 9,182,767 | 5,699,486 |
Income from operations | 3,065,890 | 2,787,226 |
Other expense, net | -48,549 | -3,458 |
Income before provision for income taxes | 3,017,341 | 2,783,768 |
Provision for income taxes | 966,975 | 846,878 |
Net income | 2,050,366 | 1,936,890 |
Other comprehensive income (loss): | ||
Change in fair value of available-for-sale securities, net of tax benefit of $13,220 and $3,352 respectively. | -27,153 | -6,225 |
Realized gain on available-for-sale securities reclassified to net income, net of tax expense of $2,560 and $0 | -4,756 | |
Other comprehensive loss | -22,397 | -6,225 |
Comprehensive income | $2,027,969 | $1,930,665 |
Net income per share: | ||
Basic (in dollars per share) | $0.23 | $0.28 |
Diluted (in dollars per share) | $0.20 | $0.22 |
Weighted average shares outstanding: | ||
Basic (in shares) | 8,743,461 | 7,000,000 |
Diluted (in shares) | 10,219,143 | 8,624,314 |
STATEMENTS_OF_OPERATIONS_AND_C1
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Parenthetical) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | ||
Change in fair value of available for sale securities, tax benefit | $13,220 | $3,352 |
Reclassification to net income, tax expense | $2,560 | $0 |
STATEMENTS_OF_STOCKHOLDERS_EQU
STATEMENTS OF STOCKHOLDERS' EQUITY (USD $) | Preferred Stock | Common Stock | Additional Paid In Capital. | Retained Earnings | Accumulated Other Comprehensive Income | Total |
Balances at Dec. 31, 2012 | $140 | $700 | $2,074,218 | $1,137,993 | $7,149 | $3,220,200 |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 1,936,890 | 1,936,890 | ||||
Other comprehensive loss | -6,225 | -6,225 | ||||
Stock - based compensation | 271,919 | 271,919 | ||||
Balances at Dec. 31, 2013 | 140 | 700 | 2,346,137 | 3,074,883 | 924 | 5,422,784 |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 2,050,366 | 2,050,366 | ||||
Other comprehensive loss | -22,397 | -22,397 | ||||
Stock - based compensation | 724,063 | 724,063 | ||||
Tax benefits credited to equity | 165,228 | 165,228 | ||||
Exercise of stock options | 10 | 104,990 | 105,000 | |||
Issuance of common stock pursuant to initial public offering | 232 | 14,489,768 | 14,490,000 | |||
Common stock issuance costs and underwriter fees | -2,044,348 | -2,044,348 | ||||
Conversion of preferred stock | -140 | 140 | ||||
Balances at Dec. 31, 2014 | $1,082 | $15,785,838 | $5,125,249 | ($21,473) | $20,890,696 |
STATEMENTS_OF_CASH_FLOWS
STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Operating activities: | ||
Net income | $2,050,366 | $1,936,890 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Provision for excess and obsolete inventory | 62,069 | |
Depreciation and amortization | 149,056 | 139,040 |
Stock-based compensation | 724,063 | 271,919 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 21,869 | -396,589 |
Inventory | -847,576 | 45,655 |
Prepaid expenses and other current assets | -154,912 | -40,819 |
Other assets | -15,433 | -4,594 |
Deferred income taxes | -167,305 | -48,797 |
Accounts payable | 201,693 | 19,050 |
Accrued payroll and benefits | 589,536 | 114,109 |
Other accrued current liabilities | -14,997 | 60,466 |
Warranty reserve | 15,923 | -134 |
Deferred revenue | 186,172 | -126,985 |
Accrued income taxes, net of prepaid income taxes | -213,416 | -494,814 |
Other | -1,388 | |
Net cash provided by operating activities | 2,585,720 | 1,474,397 |
Investing activities: | ||
Purchases of investments | -7,951,497 | -4,986 |
Proceeds from sale of investments | 255,109 | |
Purchases of property and equipment | -583,977 | -163,175 |
Capitalized intangible assets | -22,311 | -28,586 |
Net cash used in investing activities | -8,302,676 | -196,747 |
Financing activities: | ||
Proceeds from stock options exercises | 105,000 | |
Income tax benefits credited to equity | 165,228 | |
Repayment of officer note payable | -6,333 | -513,397 |
Proceeds from the issuance of common stock, pursuant to initial public offering | 14,490,000 | |
Payment of initial public offering costs | -2,044,348 | |
Net cash provided by (used in) financing activities | 12,709,547 | -513,397 |
Net increase in cash and equivalents | 6,992,591 | 764,253 |
Cash and cash equivalents, beginning of year | 2,461,559 | 1,697,306 |
Cash and cash equivalents, end of year | 9,454,150 | 2,461,559 |
Supplemental disclosure of cash flow information: | ||
Cash paid for income taxes | $1,182,430 | $1,390,049 |
Organization_and_Significant_A
Organization and Significant Accounting Policies | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Organization and Significant Accounting Policies | ||||||||
Organization and Significant Accounting Policies | 1 — Organization and Significant Accounting Policies | |||||||
Organization | ||||||||
IRADIMED CORPORATION (“IRADIMED”, the “Company”, “we”, “our”) was incorporated in Oklahoma in July 1992 and reincorporated in Delaware in April 2014. We develop, manufacture, market and distribute Magnetic Resonance Imaging (“MRI”) compatible products, and today, we are the sole known provider of non-magnetic intravenous (“IV”) infusion pump systems. We were the first to develop an infusion delivery system that neutralizes the dangers and problems present during MRI procedures. Our headquarters are in Winter Springs, Florida. | ||||||||
Use of Estimates | ||||||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities in the financial statements and the reported amount of revenue and expenses during the reporting period. Such estimates include allowances for potentially uncollectible accounts receivable, valuation of inventory, intangible assets, allocation of revenue arrangement consideration, stock-based compensation, deferred income taxes, reserves for warranty obligations, and the provision for income taxes. Actual results could differ from those estimates. | ||||||||
FDA Warning Letter | ||||||||
On September 2, 2014 we announced we received a Warning Letter from the U.S. Food and Drug Administration (“FDA”) relating to an inspection of our facility that took place in April 2014. At the conclusion of the April inspection, FDA issued a Form 483 that identified eight observations. The majority of the observations related to procedures and documentation associated with the design, development and validation testing of software used in certain of our products. Other observations were related to the design validation of pump labeling, design analysis of tube stretching, procedures for post-market design review, and procedures and processing related to handling certain reported complaints. We submitted responses to the Form 483 in May 2014 and June 2014 in which we described our proposed corrective and preventative actions to address each of the FDA’s concerns. | ||||||||
FDA’s Warning Letter stated that the FDA accepted as adequate several of our responses to Form 483 observations, identified two responses whose accuracy will be determined in the next scheduled inspection of our facility and identified issues for which our response was determined to be inadequate. The issues identified as inadequate concern our procedures for validating device design primarily related to software quality assurance. | ||||||||
Also, the Warning Letter raised a new issue. The Warning Letter stated that modifications made to software on our previously cleared infusion pumps, the MRidium 3860 and MRidium 3850, were “significant” and required submission of new premarket notifications under Section 510(k) (a “510(k) submission”) of the Food, Drug and Cosmetic Act (the “FDC Act”). These modifications were made over time. We believe they were insignificant and did not require premarket notification submissions. However, the FDA indicated that the modifications of the software for the MRidium 3860 and the software for the MRidium 3850 were “significant” modifications because they could significantly affect the safety or effectiveness of these devices. As a result, the Warning Letter states that the products being sold by us are “adulterated” and “misbranded” under the FDC Act. The Warning Letter also indicates that the MRidium 3860+ infusion pump requires separate FDA clearance from the MRidium 3860 and MRidium 3850. | ||||||||
The Warning Letter requested that we immediately cease activities that result in the misbranding or adulteration of the MRidium 3860 MRI infusion pump, MRidium 3850 MRI infusion pump, and the MRidium 3860+ MRI infusion pump, including the commercial distribution of the devices. We immediately complied with the Warning Letter and ceased sale and distribution of the identified products in the United States. | ||||||||
On September 4, 2014, we submitted to the FDA our initial response to the Warning Letter and on September 17, 2014 we sent an additional response that included supplemental information related to the Form 483 inspection observations for which the FDA considered our initial responses inadequate. | ||||||||
On November 25, 2014, we announced that we filed the 510(k) submission related to our MRidium 3860+ MRI IV infusion pumps and on December 12, 2014 we were notified that our 510(k) submission had been formally accepted for review by the FDA. On December 22, 2014, under FDA enforcement discretion, we announced that we resumed domestic distribution of our MRI compatible MRidium 3860+ MRI IV infusion pump systems, without the Dose Error Reduction System (“DERS”) option. On January 28, 2015, subsequent to our year end, we announced that we resumed domestic distribution of our DERS option. | ||||||||
We continue to work with the FDA to fully resolve the Warning Letter and complete the review of the 510(k) submission. See Note 12. | ||||||||
Initial Public Offering | ||||||||
On July 21, 2014, the Company completed an initial public offering (“IPO”) of its common stock and sold 2,318,400 shares of common stock (including 302,400 shares sold upon the underwriters’ exercise of their over-allotment option to purchase additional shares) at a price of $6.25 per share. The IPO generated net proceeds of approximately $12.4 million after deducting underwriting discounts and expenses of approximately $2.0 million. These expenses were recorded against the proceeds received from the IPO. Concurrent with the closing of the IPO, all outstanding preferred stock was automatically converted into common stock on a 1:1 basis. | ||||||||
Associated with our IPO, we issued the underwriters warrants to purchase up to a total of 201,600 shares of our common stock. The grant date aggregate fair value of the warrants was $611,000. The warrants are exercisable, in whole or in part, commencing July 21, 2015 through July 21, 2017. The warrants are exercisable at a per share price equal to $8.13 per share, or 130% of the public offering price per share of our common stock in the IPO. The exercise price and number of warrant shares may be adjusted upon (1) voluntarily at our discretion, or (2) if we undertake a stock split, stock dividend, recapitalization or reorganization of our common stock into a lesser / greater number of shares, the warrant exercise price will be proportionately reduced / increased and the number of warrant shares will be proportionately increased / decreased. The warrants may only be settled through the issuance of our common stock in exchange for cash. We have classified the warrants as equity and incremental direct costs associated with our IPO. Accordingly, the warrants do not impact our financial statements. | ||||||||
Revenue Recognition | ||||||||
Revenue is recognized when persuasive evidence of an arrangement exists, the price is fixed or determinable, delivery has occurred and title and risk of loss has transferred and collection of the resulting receivable is reasonably assured. Terms of sale for most domestic sales are FOB destination, reflecting that title and risk of loss are assumed by the purchaser upon delivery. Terms of sales to international distributors are FOB shipping point, reflecting that title and risk of loss are assumed by the distributor at the shipping point. | ||||||||
Under the revenue recognition rules for tangible products, we allocate revenue from arrangements with multiple deliverables to each of the deliverables based upon their relative selling prices as determined by a selling-price hierarchy. A deliverable in an arrangement qualifies as a separate unit of accounting if 1) the delivered item has value to the customer on a stand-alone basis, and 2) the arrangement includes a general right of return relative to the delivered item, delivery or performance of the undelivered items is considered probable and substantially in control of the vendor. The principal deliverables in our multiple deliverable arrangements that qualify as separate units of accounting consist of (i) sales of medical devices and supplies, (ii) installation and training services, and (iii) separately priced extended warranty agreements. | ||||||||
We use a hierarchy to determine the selling price to be used for allocating revenue to deliverables as follows: (i) vendor-specific objective evidence of fair value (“VSOE”), (ii) third-party evidence of selling price (“TPE”), and (iii) best estimate of the selling price (“ESP”). VSOE of fair value is defined as the price charged when the same element is sold separately, or if the element has not yet been sold separately, the price for the element established by management having the relevant authority when it is probable that the price will not change before the introduction of the element into the marketplace. VSOE generally exists only when we sell the deliverable separately and is the price actually charged for that deliverable. For certain sales under group purchasing organization (“GPO”) contracts, we have established VSOE for all of the elements in our multiple element arrangements. This determination is based on the volume of sales to these customers in relation to our total sales and the discount tier in which those sales are made. For all other sales we rely on ESP, reflecting our best estimates of what the selling prices of elements would be if they were sold regularly on a stand-alone basis, to establish the amount of revenue to allocate to the undelivered elements. TPE generally does not exist for our products because of their uniqueness. | ||||||||
For products shipped under FOB shipping point terms, delivery is considered to have occurred when shipped. Undelivered elements in our sales arrangements, which are not considered to be essential to the functionality of a product, generally include installation and training services that are performed after the related products have been delivered and extended warranty agreements. Revenue related to undelivered installation and training services is deferred until such time as those services are complete, which is typically within 30 days of the related products being delivered to the customer’s location. Revenue and direct acquisition costs related to undelivered extended warranty agreements are deferred and recognized ratably over the service period, which is between one and four years. Deferred revenue for extended warranty agreements is based on the price charged when the service is sold separately. | ||||||||
Shipping and handling charges billed to customers are included in revenue and shipping and handling related expenses are charged to cost of revenue. Advance payments from customers are recorded as deferred revenue and recognized as revenue as otherwise described above. Most of our sales are subject to 30 to 60 day customer-specified acceptance provisions. These provisions require us to estimate the amount of future returns and recognize revenue net of these potential returns. | ||||||||
In certain States we are required to collect sales taxes from our customers. These amounts are excluded from revenue and recorded as a liability until remitted to the taxing authority. | ||||||||
GPOs negotiate volume purchase prices for hospitals, group practices, and other clinics that are members of a GPO. Our agreements with GPOs typically include the following provisions: | ||||||||
· | Negotiated pricing for all group members; | |||||||
· | Volume discounts and other preferential terms on their members’ purchases from us; | |||||||
· | Promotion of our products by the GPO to its members; and | |||||||
· | Payment of administrative fees by us to the GPO, based on purchases of our products by group members. | |||||||
We do not sell to GPOs. Hospitals, group practices, and other acute care facilities that are members of a GPO purchase products directly from us under the terms negotiated by the GPO. Negotiated pricing and discounts are recognized as a reduction of the selling price of products at the time of the sale. Revenue from sales to members of GPOs is otherwise consistent with revenue recognition policies as previously described. | ||||||||
Cash Equivalents | ||||||||
All highly liquid instruments purchased with an original maturity of three months or less are classified as cash equivalents. | ||||||||
Accounts Receivable and Allowance for Doubtful Accounts | ||||||||
Accounts receivable is recorded at the sales price of the related products and services. We assess the sufficiency of the allowance for estimated uncollectible accounts receivable. Estimates are based on historical collection experience and other customer-specific information, such as bankruptcy filings or liquidity problems of our customers. When it is determined that an account receivable is uncollectible, it is written off and relieved from the allowance. Any future determination that the allowance for estimated uncollectible accounts receivable is not properly stated could result in changes in operating expense and results of operations. As of December 31, 2014 and 2013, our allowance for doubtful accounts was $28,119 and $136,971, respectively. | ||||||||
Investments | ||||||||
Our investments consist of corporate debt securities and are considered available-for-sale. The specific identification method is used to determine the cost basis of investments sold. Our investments are recorded in our balance sheets at fair value. We classify our investments as current based on the nature of the investments and their availability for use in current operations. Unrealized gains and losses on our investments are included in accumulated other comprehensive income, net of tax. Realized gains or losses are recorded in sale of investments and impairment losses that are determined to be other-than-temporary are recorded in investment impairment losses in our statements of operations. | ||||||||
Fair Value Measurements | ||||||||
Fair value is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. A three-level valuation hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. | ||||||||
The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. The three levels of inputs are: | ||||||||
· | Level 1 — quoted prices (unadjusted) in active markets for an identical asset or liability. | |||||||
· | Level 2 — quoted prices for a similar asset or liability in an active market or model-derived valuations in which all significant inputs are observable for substantially the full term of the asset or liability. | |||||||
· | Level 3 — unobservable and significant to the fair value measurement of the asset or liability. | |||||||
Financial instruments include cash and cash equivalents, investments, accounts receivable, accounts payable and accrued expenses. Cash and cash equivalents and investments are reported at their respective fair values on the balance sheet dates. The recorded carrying amount of accounts receivable, accounts payable and accrued expenses approximates their fair values due to their short-term maturities. | ||||||||
Inventory | ||||||||
Inventories are stated at the lower of standard cost, which approximates actual cost on a first-in, first-out basis, or market. We may be exposed to a number of factors that could result in portions of our inventory becoming either obsolete or in excess of anticipated usage. These factors include, but are not limited to, technological changes, competitive situations in products and prices, and the introduction of new product lines. We regularly evaluate our ability to realize the value of inventory based on a combination of factors, including historical usage rates, forecasted sales, product life cycles, and market acceptance of new products. When inventory that is obsolete or in excess of anticipated usage is identified, it is written down to realizable salvage value or an inventory valuation allowance is established. | ||||||||
Property and Equipment | ||||||||
Property and equipment are stated at cost less accumulated depreciation. Depreciation expense is computed using the straight-line method over estimated useful lives of the respective assets, which are three to five years for computer software and hardware; five to seven years for furniture, fixtures, machinery and equipment. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the improvements. | ||||||||
Repair and maintenance costs that do not extend the useful life of our property and equipment are expensed as incurred. | ||||||||
Intangible Assets | ||||||||
Intangible assets include application and legal costs incurred to obtain patents. We capitalize these costs when we determine that probable future economic benefits exist. In making this determination, we consider the projected future operating results associated with the patents, industry and economic trends, and the entry of new products in the market. Costs incurred prior to this determination are expensed in the period they are incurred. We amortize capitalized patent costs using the straight-line method over their useful lives, which is typically 17 years. Periodic costs incurred to maintain existing patents are expensed as incurred. | ||||||||
Long-lived Assets | ||||||||
Long-lived assets are tested for impairment whenever changes in circumstances indicate the carrying value of these assets may be impaired. Impairment indicators include, but are not limited to, technological obsolescence, unfavorable court rulings, significant negative industry and economic trends, and significant underperformance relative to historical and projected future operating results. Impairment is considered to have occurred when the estimated undiscounted future cash flows related to the asset groups are less than its carrying value. Estimates of future cash flows involve consideration of many factors including the marketability of new products, product acceptance and lifecycle, competition, appropriate discount rates, and operating margins. An impairment is recognized as the amount by which the carrying value is less than the fair value of the asset or asset group. | ||||||||
Warranty | ||||||||
We provide for the estimated cost of product warranties at the time revenue is recognized. While we engage in product quality programs and processes, including actively monitoring and evaluating the quality of our suppliers, the estimated warranty obligation is affected by ongoing product failure rates, material usage costs and direct labor incurred in correcting a product failure. Actual product failure rates, material usage costs and the amount of labor required to repair products that differ from estimates result in revisions to the estimated liability. We warrant for a limited period of time that our products will be free from defects in materials and workmanship. We estimate warranty allowances based on historical warranty experience. Historically, warranty expenses have not been material to our financial statements. | ||||||||
Research & Development and Capitalized Software Development Costs | ||||||||
Research and development costs are expensed as incurred. Some of our products include embedded software which is essential to the product’s functionality. Costs incurred in the research and development of new software components and enhancements to existing software components are expensed as incurred until technological feasibility has been established. We capitalize software development costs when the project reaches technological feasibility and cease capitalization when the project is ready for release. Capitalized software development costs are included in intangible assets and are amortized on a straight-line basis over the estimated useful life of the product. Amortization begins when the product is available for general release to the customer. | ||||||||
Advertising and Marketing | ||||||||
For the years ended December 31, 2014 and 2013, these costs were $65,369 and $78,882, respectively. Advertising and marketing costs are expensed as incurred and included in sales and marketing expense. | ||||||||
Medical Device Excise Taxes | ||||||||
Effective January 1, 2013, we became subject to the Medical Device Excise Tax applicable to sales of listed medical devices under the Patient Protection and Affordable Care Act (“ACA”) enacted in 2010. The ACA requires us to pay 2.3% of the taxable sales value of devices sold. Qualifying sales are recorded on a gross basis. For the years ended December 31, 2014 and 2013, we recorded medical device excise taxes of $200,496 and $161,246, respectively. Medical device excise taxes are included as a component of general and administrative expense. | ||||||||
Stock-Based Compensation | ||||||||
We recognize stock-based compensation expense associated with employee stock options on a straight-line basis over the requisite service period for the entire award, which is generally four years. The maximum contractual life of our stock options is ten years from the grant date. We utilize the Black-Scholes option pricing model to estimate the grant date fair value of those awards. The Black-Scholes option pricing model requires the input of certain assumptions including stock price, dividend yield, expected volatility, risk-free interest rate, and expected option life. Changes in these assumptions can materially affect the estimated fair value of our employee stock options. | ||||||||
Prior to our IPO, the grant date stock price was based on third-party valuations that have been performed periodically and consideration of significant events impacting us since the date of the respective valuations; subsequent to our IPO, the grant date stock price was based on our closing stock price on the date of grant; dividend yield was based on our expectation of dividend payments over the expected life of the option; expected volatility was based on a study of comparable, publicly traded companies with similar products and product life cycles; risk-free interest rate was the rate available on zero coupon U.S. government obligations with a term approximating the expected option life; the expected option life was calculated using the simplified method. | ||||||||
Forfeitures of employee stock options are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates. Stock-based compensation expense is recorded net of estimated forfeitures, such that expense is recorded only for those stock-based awards that are expected to vest. | ||||||||
The cash flow resulting from the tax benefits from tax deductions in excess of the compensation cost recognized for those options (excess tax benefits) is classified as a cash inflow from financing activities and a cash outflow from operating activities in our statements of cash flows. We treat tax deductions from certain stock option exercises as being realized when they reduce taxes payable in accordance with relevant tax law. Upon exercise, we issues new shares. | ||||||||
Income Taxes | ||||||||
We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. | ||||||||
We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is recorded to offset net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. | ||||||||
We recognize the tax benefit of uncertain tax positions in the financial statements based on the technical merits of the position. When the tax position is deemed more likely than not of being sustained, we recognize the largest amount of tax benefit that is greater than 50 percent likely of being ultimately realized upon settlement. | ||||||||
Foreign Currency | ||||||||
Gains and losses from transactions denominated in currencies other than our functional currency are included in other income and expense. For the years ended December 31, 2014 and 2013, net foreign currency transaction losses were $56,969 and $23,432, respectively. Foreign currency gains and losses result primarily from fluctuations in the exchange rate between the U.S. Dollar and the Japanese Yen. | ||||||||
Comprehensive Income | ||||||||
Comprehensive income includes net income and other comprehensive income items that are excluded from net income under U.S. generally accepted accounting principles. Comprehensive income includes unrealized gains and losses on our investments classified as available for sale. | ||||||||
Basic and Diluted Net Income per Share | ||||||||
Basic net income per share is based upon the weighted average number of common shares outstanding during the period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. As discussed further in Note 13, the effect of our 1.75:1 stock split and recapitalization is reflected in the number of outstanding shares and per share information in the table below. Preferred stock and stock options granted by us represent the only dilutive effect reflected in diluted weighted-average shares outstanding. | ||||||||
The following table presents the computation of basic and diluted net income per share: | ||||||||
Years Ended December 31, | ||||||||
2014 | 2013 | |||||||
Net income | $ | 2,050,366 | $ | 1,936,890 | ||||
Weighted-average shares outstanding — Basic | 8,743,461 | 7,000,000 | ||||||
Effect of dilutive securities: | ||||||||
Preferred stock | 751,780 | 1,400,000 | ||||||
Stock options | 723,902 | 224,314 | ||||||
Weighted-average shares outstanding — Diluted | 10,219,143 | 8,624,314 | ||||||
Basic net income per share | $ | 0.23 | $ | 0.28 | ||||
Diluted net income per share | $ | 0.20 | $ | 0.22 | ||||
Warrants and stock options to purchase shares of our common stock excluded from the calculation of diluted net income per share because the effect would have been anti-dilutive are as follows: | ||||||||
As of December 31, | ||||||||
2014 | 2013 | |||||||
Anti-dilutive warrants and stock options | 129,340 | 467,109 | ||||||
Certain Significant Risks and Uncertainties | ||||||||
We market our products to end users in the United States and to distributors internationally. Sales to end users in the United States are generally made on open credit terms. Management maintains an allowance for potential credit losses. As of December 31, 2014, two international customers accounted for approximately 35% of gross accounts receivable. As of December 31, 2013, one international customer accounted for approximately 11% of gross accounts receivable. | ||||||||
Revenue for 2013 included sales to an international customer for 129 of our MRI compatible IV infusion pumps, which represented approximately 11% of total revenue for 2013. | ||||||||
We have deposited our cash and cash equivalents with various financial institutions. Our cash and cash equivalents balances exceed federally insured limits throughout the year. We have not incurred any losses related to these balances. | ||||||||
Our products require clearance from the Food and Drug Administration and international regulatory agencies prior to commercialized sales. The Company’s future products may not receive required approvals. If the Company were denied such approvals, or if such approvals were delayed, it would have a materially adverse impact on the Company’s business, results of operations and financial condition. | ||||||||
Certain key components of our products essential to their functionality are sole-sourced. Any disruption in the availability of these components would have a materially adverse impact on our business, results of operations and financial condition. | ||||||||
Recent Accounting Pronouncements | ||||||||
In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue Contracts with Customers (Topic 606). This update provides guidance on the recognition of revenue based upon the entity’s contracts with customers to transfer goods or services at an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. This update also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. This update is effective for annual periods beginning after December 15, 2016, including interim periods within that reporting period, which will require us to adopt this update in the first quarter of 2017. Early adoption is not permitted. We are evaluating this guidance and have not yet determined the effect it will have on our financial statements and related disclosures, if any. | ||||||||
Inventory
Inventory | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Inventory | ||||||||
Inventory | 2 — Inventory | |||||||
Inventory consists of: | ||||||||
As of December 31, | ||||||||
2014 | 2013 | |||||||
Raw materials | $ | 1,541,688 | $ | 1,143,495 | ||||
Work in process | 126,188 | 14,337 | ||||||
Finished goods | 457,962 | 182,499 | ||||||
Total | $ | 2,125,838 | $ | 1,340,331 | ||||
Property_and_Equipment
Property and Equipment | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Property and Equipment | ||||||||
Property and Equipment | 3 — Property and Equipment | |||||||
Property and equipment consist of: | ||||||||
As of December 31, | ||||||||
2014 | 2013 | |||||||
Computer software and hardware | $ | 303,076 | $ | 154,709 | ||||
Furniture and fixtures | 198,253 | 87,611 | ||||||
Leasehold improvements | 182,105 | 47,623 | ||||||
Machinery and equipment | 849,852 | 721,270 | ||||||
Tooling in-process | 42,315 | 46,562 | ||||||
1,575,601 | 1,057,775 | |||||||
Accumulated depreciation | (780,766 | ) | (730,432 | ) | ||||
Total | $ | 794,835 | $ | 327,343 | ||||
Depreciation and amortization expense of property and equipment was $110,557 and $101,449 in the years ended December 31, 2014 and 2013, respectively. | ||||||||
Intangible_Assets
Intangible Assets | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Intangible Assets | ||||||||
Intangible Assets | 4 — Intangible Assets | |||||||
The following table summarizes the components of intangible asset balances: | ||||||||
As of December 31, | ||||||||
2014 | 2013 | |||||||
Patents — in use | $ | 238,548 | $ | 228,430 | ||||
Patents — in process | 31,358 | 19,165 | ||||||
Internally developed software | 148,967 | 148,967 | ||||||
418,873 | 396,562 | |||||||
Accumulated amortization | (168,037 | ) | (129,538 | ) | ||||
Total | $ | 250,836 | $ | 267,024 | ||||
Amortization expense of intangible assets was $38,499 and $37,591 in the years ended December 31, 2014 and 2013, respectively. | ||||||||
Expected annual amortization expense for the next five years related to intangible assets is as follows: | ||||||||
2015 | $ | 39,446 | ||||||
2016 | $ | 22,144 | ||||||
2017 | $ | 14,665 | ||||||
2018 | $ | 14,665 | ||||||
2019 | $ | 14,665 | ||||||
StockBased_Compensation
Stock-Based Compensation | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Stock-Based Compensation | ||||||||||||
Stock Based Compensation | 5 — Stock-Based Compensation | |||||||||||
During the year ended December 31, 2013, we maintained one stock plan known as the iRadimed Corporation Incentive Stock Plan (“Plan”). In April 2014, our Board of Directors adopted and our shareholders approved the 2014 Equity Incentive Plan (“2014 Plan”). Upon adoption and approval of the 2014 Plan, the Plan was terminated and the remaining shares available for future awards were canceled. The 2014 Plan reserves 1,000,000 shares of our common stock for awards of incentive stock options, non-qualified stock option, stock appreciation rights, restricted stock, restricted stock units, performance awards and other stock-based awards and cash awards. As of December 31, 2014, there were 791,750 shares available for future awards under the 2014 Plan. | ||||||||||||
Stock-based compensation was recognized as follows in the statements of operations: | ||||||||||||
Years Ended December 31, | ||||||||||||
2014 | 2013 | |||||||||||
Cost of revenue | $ | 6,529 | $ | 13 | ||||||||
General and administrative | 266,167 | 16,461 | ||||||||||
Sales and marketing | 415,021 | 255,096 | ||||||||||
Research and development | 36,346 | 349 | ||||||||||
Total | $ | 724,063 | $ | 271,919 | ||||||||
As of December 31, 2014, we had $3,122,686 of total unrecognized stock-based compensation expense, which is expected to be recognized over a weighted average period of 3.3 years. The total grant date fair value of stock options that vested during the year ended December 31, 2014 was $752,927. | ||||||||||||
The fair value of our option grants was estimated using the Black-Scholes model with the following weighted average assumptions: | ||||||||||||
Years Ended December 31, | ||||||||||||
2014 | 2013 | |||||||||||
Volatility | 104.3 | % | 113.0 | % | ||||||||
Expected term (years) | 7.0 | 7.0 | ||||||||||
Risk-free interest rate | 2.1 | % | 2.4 | % | ||||||||
Dividend yield | 0.0 | % | 0.0 | % | ||||||||
The weighted-average grant-date fair value of options granted during the years ended December 31, 2014 and 2013 was $6.47 and $2.99, respectively. The estimated forfeiture rate used to determine stock-based compensation expense was 3% and 10% for the years ended December 31, 2014 and 2013, respectively. | ||||||||||||
Prior to our IPO, historical valuations of our common stock were determined in accordance with the guidelines outlined in the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. In the absence of a public trading market, we considered all relevant facts and circumstances known at the time of valuation, made certain assumptions based on future expectations and exercised significant judgment to determine the fair value of our common stock. The factors considered in determining the fair value include, but are not limited to, the following: | ||||||||||||
· | Retrospective and contemporaneous third-party valuation of our common stock; | |||||||||||
· | Our historical financial results and estimated trends and projections of our future operating and financial performance; | |||||||||||
· | The market performance of comparable, publicly traded companies; and | |||||||||||
· | The overall economic and industry conditions and outlook. | |||||||||||
The following table presents a summary of our stock option activity as of and for the year ended December 31, 2014: | ||||||||||||
Options | Weighted-Average | Weighted-Average | Aggregate | |||||||||
Exercise Price | Remaining | Intrinsic | ||||||||||
Per Share | Contractual | Value | ||||||||||
Life (Yrs) | ||||||||||||
Outstanding beginning of period | 1,759,692 | $ | 1.18 | 7.7 | $ | 3,741,190 | ||||||
Options granted | 281,750 | 7.55 | ||||||||||
Options exercised | (96,250 | ) | 1.09 | |||||||||
Options cancelled | ||||||||||||
Outstanding end of period | 1,945,192 | $ | 2.11 | 7.4 | $ | 20,996,495 | ||||||
Exercisable | 957,787 | $ | 1.12 | 6 | $ | 11,282,000 | ||||||
Cash received from option exercises during the year ended December 31, 2014 was $105,000. The total intrinsic value of options exercised during the year ended December 31, 2014 was $592,463. | ||||||||||||
Investments
Investments | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Investments | ||||||||||||||
Investments | 6 — Investments | |||||||||||||
As of December 31, 2014, our investments consisted of corporate bonds that we have classified as available-for-sale and are summarized in the following table: | ||||||||||||||
Cost | Gross | Gross | Fair | |||||||||||
Unrealized | Unrealized | Value | ||||||||||||
Gains | Losses | |||||||||||||
Corporate bonds: | ||||||||||||||
U.S. corporations | $ | 6,433,286 | $ | — | $ | 27,067 | $ | 6,406,219 | ||||||
International corporations | 1,515,200 | — | 7,626 | 1,507,574 | ||||||||||
Total | $ | 7,948,486 | $ | — | $ | 34,693 | $ | 7,913,793 | ||||||
As of December 31, 2014, the scheduled maturities of our investments are as follows: | ||||||||||||||
Cost | Fair Value | |||||||||||||
Less than 1 year | $ | — | $ | — | ||||||||||
1 to 3 years | 6,723,316 | 6,697,241 | ||||||||||||
3 to 5 years | 1,225,170 | 1,216,552 | ||||||||||||
Total | $ | 7,948,486 | $ | 7,913,793 | ||||||||||
As of December 31, 2013, our investments consisted of two mutual funds classified as available-for-sale and are summarized in the following table: | ||||||||||||||
Cost | Gross | Gross | Fair | |||||||||||
Unrealized | Unrealized | Value | ||||||||||||
Gains | Losses | |||||||||||||
31-Dec-13 | $ | 244,782 | $ | 1,421 | $ | — | $ | 246,203 | ||||||
Fair_Value_Measurements
Fair Value Measurements | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Fair Value Measurements | ||||||||||||||
Fair Value Measurements | 7 — Fair Value Measurements | |||||||||||||
The fair value of our assets and liabilities subject to recurring fair value measurements are as follows: | ||||||||||||||
Fair Value at December 31, 2014 | ||||||||||||||
Fair | Quoted Prices | Significant | Significant | |||||||||||
Value | in Active | Other | Unobservable | |||||||||||
Market for | Observable | Inputs | ||||||||||||
Identical Assets | Inputs | (Level 3) | ||||||||||||
(Level 1) | (Level 2) | |||||||||||||
Corporate bonds: | ||||||||||||||
U.S. corporations | $ | 6,406,219 | $ | — | $ | 6,406,219 | $ | — | ||||||
International corporations | 1,507,574 | — | 1,507,574 | — | ||||||||||
Total | $ | 7,913,793 | $ | — | $ | 7,913,793 | $ | — | ||||||
Our corporate bonds are valued by the third-party custodian at closing prices from national exchanges or pricing vendors on the valuation date. | ||||||||||||||
Fair Value at December 31, 2013 | ||||||||||||||
Fair | Quoted Prices | Significant | Significant | |||||||||||
Value | in Active | Other | Unobservable | |||||||||||
Market for | Observable | Inputs | ||||||||||||
Identical Assets | Inputs | (Level 3) | ||||||||||||
(Level 1) | (Level 2) | |||||||||||||
Mutual funds | $ | 246,203 | $ | 246,203 | $ | — | $ | — | ||||||
The fair values of our mutual funds are based upon quoted market prices and valuations provided by the third-party custodian of our mutual funds. | ||||||||||||||
There were no transfers into or out of any Levels during the years ended December 31, 2014 or 2013. | ||||||||||||||
Accumulated_Other_Comprehensiv
Accumulated Other Comprehensive lncome | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Accumulated Other Comprehensive Income. | |||||
Accumulated Other Comprehensive Income | |||||
8 — Accumulated Other Comprehensive Income | |||||
The only component of accumulated other comprehensive income is as follows: | |||||
Unrealized Gains | |||||
(Losses) on | |||||
Available-For-Sale | |||||
Securities | |||||
Balances at December 31, 2012 | $ | 7,149 | |||
Gains (losses), net | (6,225 | ) | |||
Reclassification realized in net earnings | — | ||||
Balances at December 31, 2013 | $ | 924 | |||
Gains (losses), net | (27,153 | ) | |||
Reclassification realized in net earnings | (4,756 | ) | |||
Balances at December 31, 2014 | (21,473 | ) | |||
Income_Taxes
Income Taxes | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Income Taxes | ||||||||
Income Taxes | 9 — Income Taxes | |||||||
The components of the provision for income taxes are as follows: | ||||||||
Years Ended December 31, | ||||||||
2014 | 2013 | |||||||
Current taxes: | ||||||||
U.S. federal | $ | 1,022,098 | $ | 764,452 | ||||
State | 112,144 | 130,784 | ||||||
Total current tax expense | 1,134,242 | 895,236 | ||||||
Deferred taxes: | ||||||||
U.S. federal | (149,247 | ) | (14,278 | ) | ||||
State | (18,020 | ) | (34,080 | ) | ||||
Total deferred tax benefit | (167,267 | ) | (48,358 | ) | ||||
Income tax expense | $ | 966,975 | $ | 846,878 | ||||
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred taxes are as follows: | ||||||||
Years Ended December 31, | ||||||||
2014 | 2013 | |||||||
Deferred tax assets: | ||||||||
Current deferred tax assets: | ||||||||
Reserves and allowances | $ | 119,548 | $ | 109,177 | ||||
Total current deferred tax assets | $ | 119,548 | $ | 109,177 | ||||
Noncurrent deferred tax assets: | ||||||||
Stock compensation | $ | 417,956 | $ | 152,906 | ||||
Other | 14,689 | — | ||||||
Total noncurrent deferred tax assets | $ | 432,645 | $ | 152,906 | ||||
Deferred tax liabilities: | ||||||||
Current deferred tax liabilities: | ||||||||
Reserves and allowances | $ | 3,209 | $ | 42,674 | ||||
Other | — | 542 | ||||||
Total current deferred tax liabilities | $ | 3,209 | $ | 43,216 | ||||
Noncurrent deferred tax liabilities: | ||||||||
Depreciation and amortization | $ | 356,088 | $ | 206,993 | ||||
Total noncurrent deferred tax liabilities | 356,088 | 206,993 | ||||||
A reconciliation of the statutory U.S. federal tax rate to our effective rate is as follows: | ||||||||
Years Ended December 31, | ||||||||
2014 | 2013 | |||||||
Statutory U.S. federal tax rate | 34 | % | 34 | % | ||||
Domestic production activities deduction | (2.1 | ) | (3.7 | ) | ||||
Research and development credits | (1.8 | ) | (2.8 | ) | ||||
State taxes, net of federal benefit | 2 | 2.3 | ||||||
Permanent items | (0.1 | ) | 0.6 | |||||
Total | 32 | % | 30.4 | % | ||||
As of December 31, 2014 and December 31, 2013, we have not identified or accrued for any uncertain tax positions. We are currently unaware of any uncertain tax positions that could result in significant payments, accruals or other material deviations in this estimate over the next 12 months. | ||||||||
We file tax returns in the United States Federal jurisdiction and many state jurisdictions. Our returns are not currently under examination by the Internal Revenue Service or other taxing authorities. The Company is subject to income tax examinations for our United States federal and State income taxes for 2008 and subsequent years. | ||||||||
Employee_Benefit_Plan
Employee Benefit Plan | 12 Months Ended |
Dec. 31, 2014 | |
Employee Benefit Plan | |
Employee Benefit Plan | 10 — Employee Benefit Plan |
We sponsor a 401(k) tax-deferred savings plan under which eligible employees may elect to have a portion of their salary deferred and contributed to the plan. Employer matching contributions are determined by management and are discretionary. Employer matching contributions were $162,581 and $103,755, respectively, for the years ended December 31, 2014 and 2013. Employer contributions vest ratably over five years. | |
Segment_Customer_and_Geographi
Segment, Customer and Geographic Information | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Segment, Customer and Geographic Information | ||||||||
Segment, Customer and Geographic Information | 11 — Segment, Customer and Geographic Information | |||||||
We operate in one reportable segment which is the development, manufacture and sale of MRI compatible products and IV infusion pump systems for use by hospitals and acute care facilities during MRI procedures. | ||||||||
In the U.S., we sell our products through our direct sales force and outside of the U.S. we sell our products through distributors who resell our products to end users. | ||||||||
Revenue information by geographic region is as follows: | ||||||||
Years Ended December 31, | ||||||||
2014 | 2013 | |||||||
United States | $ | 11,357,705 | $ | 8,100,907 | ||||
International | 4,295,352 | 3,239,190 | ||||||
$ | 15,653,057 | $ | 11,340,097 | |||||
Revenue information by type is as follows: | ||||||||
Years Ended December 31, | ||||||||
2014 | 2013 | |||||||
Devices | $ | 12,812,446 | $ | 9,335,753 | ||||
Disposable IV Sets and Services | 2,840,611 | 2,004,344 | ||||||
$ | 15,653,057 | $ | 11,340,097 | |||||
Revenue for 2013 included two sales to a customer in Saudi Arabia for 129 of our MRI compatible IV infusion pumps. Revenue recorded in 2013 related to these orders represented 11% of total revenue for 2013. | ||||||||
Property and equipment, net information by geographic region is as follows: | ||||||||
Years Ended December 31, | ||||||||
2014 | 2013 | |||||||
United States | $ | 728,556 | $ | 256,386 | ||||
International | 66,279 | 70,957 | ||||||
$ | 794,835 | $ | 327,343 | |||||
Long-lived assets held outside of the United States consist principally of tooling, which is a component of property and equipment, net. | ||||||||
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Commitments and Contingencies | |||||
Commitments and Contingencies | 12 — Commitments and Contingencies | ||||
Leases. We have entered into noncancelable operating leases for our facilities. | |||||
In January 2014, we entered into a lease, commencing July 1, 2014, for a new facility in Winter Springs, Florida owned by Susi, LLC, and entity controlled by our president and CEO, Roger Susi. Pursuant to the terms of our lease for this property, the monthly base rent will be $32,583, adjusted annually for changes in the consumer price index. The term of the lease expires on May 31, 2019. The lease will automatically renew for two successive terms of five years each beginning in 2019 and again in 2024, and thereafter, will be renewed for successive terms of one year each. | |||||
Rent expense for the years ended December 31, 2014 and 2013 was $284,210 and $116,277, respectively. Minimum lease payments for each of our operating leases are even throughout their respective lease term. | |||||
Future minimum lease payments under noncancelable operating leases as of December 31, 2014 are as follows: | |||||
Operating | |||||
Leases | |||||
2015 | $ | 390,996 | |||
2016 | 390,996 | ||||
2017 | 390,996 | ||||
2018 | 390,996 | ||||
2019 | 162,915 | ||||
Thereafter | — | ||||
Total minimum lease payments | $ | 1,726,899 | |||
Purchase commitments. We had various purchase orders for goods or services totaling approximately $1,993,801 at December 31, 2014. No amounts related to these purchase orders have been recognized in our balance sheet. | |||||
Uncommitted Revolving Credit Facility. We had an uncommitted revolving credit facility with Bank of America, National Association that provided for a maximum borrowing capacity of $100,000. This facility was terminated during September 2014 and we no longer have the ability to obtain advances from this revolving credit facility. Prior to the termination of this facility during the third quarter 2014 and throughout the year ended December 31, 2013, we did not request or obtain any advances from this revolving credit facility. | |||||
Indemnifications. Under our amended and restated bylaws, we have agreed to indemnify our officers and directors for certain events or occurrences arising as a result of the officer or director serving in such capacity. We have a director and officer liability insurance policy that limits our exposure under these indemnifications and enables us to recover a portion of any future loss arising out of them. | |||||
In addition, in the normal course of business, we enter into contracts that contain indemnification clauses whereby the Company indemnifies our customers against damages associated with product failures. We have determined that these agreements fall within the scope of ASC 460, Guarantees. We have obtained liability insurance providing coverage that limits our exposure for these indemnified matters. We have not incurred costs to defend lawsuits or settle claims related to these indemnities. We believe the estimated fair value of these indemnities is minimal and have not recorded a liability for these agreements as of December 31, 2014. | |||||
Legal matters. We may from time to time become a party to various legal proceedings or claims that arise in the ordinary course of business. We do not believe that any current legal or administrative proceedings are likely to have a material effect on our business, financial condition, or results of operations. | |||||
On September 10, 2014, a Civil Action was filed in the U.S. District Court for the Southern District of Florida (“Lam Civil Action”). The Lam Civil Action is a putative class action lawsuit brought against the Company and certain individuals who are officers and / or directors of the Company. The plaintiff is an alleged shareholder of the Company, and seeks relief on behalf of a class of persons who purchased the Company’s common stock during the period from July 15, 2014 through September 2, 2014. The complaint alleges that the defendants failed to disclose material information concerning the Company’s compliance with FDA regulations in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and that the putative class members suffered damages as a result. The complaint additionally alleges “control person” liability against the individual defendants under Section 20(a) of the Securities Exchange Act of 1934. The Lam Civil Action is presently in the very early stages of litigation. The Company disputes the plaintiff’s allegations and theories of liability, and intends to defend the case vigorously. We have not accrued for any loss related to this matter as we believe that any such loss is not probable or estimable. | |||||
In October 2012, Radimed Gesellschaft für Kommunikationsdienstleistungen und Medizintechnik mbH (“Radimed”) brought an action in Düsseldorf Regional Court against our German distributor alleging the name and sign “iRadimed” was confusingly similar to their German trademark “Radimed.” A judgment was rendered against our German distributor preventing use of the name and sign “iRadimed” in Germany. We have however continued to sell products in Germany without any discernible effect by using the product name IRI Development. On July 31, 2013, Radimed filed a lawsuit against us and our founder, Roger Susi, in Düsseldorf Regional Court, alleging that we infringed their German and Community trademarks “Radimed” and seeking to prevent our use of the name, sign and domain name “iRadimed” in the European Union. Prior to year end, we began settlement discussions with Radimed and accrued an insignificant amount related to this matter. Subsequent to year end, in March 2015, we settled this matter and paid the amount that had been accrued. Pursuant to this settlement, we may continue to use the name “iRadimed” and our associated signs and domain name in the European Union. | |||||
Capital_Stock
Capital Stock | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Capital Stock | ||||
Capital Stock | 13 — Capital Stock | |||
Reincorporation | ||||
Effective April 14, 2014, we reincorporated as a Delaware corporation. As part of this reincorporation, we converted all previously outstanding shares of our Class A Common Stock and Class B Common Stock into a single class of common stock on a 1.75:1 conversion ratio and all previously outstanding shares of our Series A Preferred Stock were split on a 1.75:1 conversion ratio into new Series A Preferred Stock. In accordance with our Certificate of Incorporation, upon the sale of shares pursuant to an initial public offering, which was completed in July 2014, all of our Series A Preferred Stock was automatically converted into common stock on a 1:1 conversion ratio (see Note 1). The table below summarizes the effect of the stock split and conversion on our capital stock that was previously outstanding as of December 31, 2013: | ||||
Series A Preferred Stock outstanding — Pre recapitalization | 800,000 | |||
Stock split ratio | 1.75:1 | |||
Series A Preferred Stock outstanding — Post recapitalization | 1,400,000 | |||
Common stock outstanding — Pre recapitalization | ||||
Class A Common Stock | 400,000 | |||
Class B Common Stock | 3,600,000 | |||
Total | 4,000,000 | |||
Stock split ratio | 1.75:1 | |||
Common stock outstanding — Post recapitalization | 7,000,000 | |||
As of the effective date of the reincorporation, we are now authorized to issue 90,000,000 shares of Common Stock with a par value of $0.0001 per share and 10,000,000 shares of Preferred Stock with a par value of $0.0001. | ||||
The effect of this stock split has been retroactively applied to per-share computations, share and option amounts for all periods presented within these financial statements and accompanying notes. | ||||
The rights and privileges of our Series A Preferred Stock and Common Stock are as follows: | ||||
Series A Preferred Stock | ||||
We are authorized to issue 10,000,000 shares of preferred stock, of which 800,000 of these shares shall be designated as Series A Preferred Stock (“Preferred Stock”) with a par value of $0.0001 per share. | ||||
Voting and Dividends. The holder of each share of Preferred Stock has the right to one vote for each share of Common Stock into which such Preferred Stock could then be converted. The holders of the Preferred Stock are entitled to receive dividends from legally available assets prior to any declaration or payment of dividends to Common Stock holders. Dividends on each share of Preferred Stock are initially at $0.06429 per year payable when and as declared by the Board and are non-cumulative. After payment of such dividends, any additional dividends or distributions are distributed among all holders of Common Stock and Preferred Stock in proportion to the number of shares of Common Stock that would be held by each holder if all shares of Preferred Stock were converted to Common Stock at the then effective conversion rate. To date, no dividends have been declared. | ||||
Liquidation. In the event of any liquidation, dissolution or winding up of our Company, either voluntary or involuntary, the holders of the Preferred Stock are entitled to receive, prior and in preference to any distribution of the proceeds resulting from such liquidation event to holders of the Common Stock, an amount equal to $1.07143 plus declared but unpaid dividends. If, upon occurrence of such liquidation event, the proceeds are insufficient to permit the payment of the aforementioned amount in full, then the entire proceeds shall be distributed ratably among all holders of the Preferred Stock in proportion to the full amount each holder would otherwise receive. | ||||
Conversion. Each share of Preferred Stock is convertible at any time, at the option of the holder, into such number of fully paid non-assessable shares of Common Stock as is determined by dividing the original issue price of each share of Preferred Stock by the applicable conversion price. The initial conversion price per share is $1.07143. Adjustments to the initial conversion price may result from a recapitalization event or changes in the number of common shares outstanding. Each share of Preferred Stock automatically converts into shares of fully paid non-assessable shares of Common Stock, at the then applicable conversion rate, upon the date specified by written consent or agreement of the holders of a majority of the then outstanding shares of Preferred Stock, voting as a single class on an as-converted basis. | ||||
Redemption. Upon a majority vote of the then outstanding shares of Preferred Stock, we may, at our discretion, redeem or purchase shares of Preferred Stock. We also have a first right of refusal to repurchase shares of the Preferred Stock arising from a holder’s proposal to sell such Preferred Stock. | ||||
Common Stock | ||||
We are authorized to issue 90,000,000 shares of Common Stock with a par value of $0.0001 per share. | ||||
Voting and Dividends. Each outstanding share of Common Stock shall entitle the holder thereof to one vote on each matter properly submitted to the stockholders of the Company for their vote except for matters related to potential amendments to our Certificate of Incorporation or matters that solely relate to the terms of one or more outstanding series of our Preferred Stock. Holders of our Common Stock are entitled to receive, when, as and if declared by the Board, dividends pro rata based on the number of shares of Common Stock held. These dividend rights are junior to those of the Preferred Stock holders’ rights to dividends. | ||||
Liquidation. Liquidation preference of the Common Stock holders is junior to that of the Preferred Stock holders. | ||||
Redemption. The Common Stock is not redeemable. | ||||
Officer_Note_Payable
Officer Note Payable | 12 Months Ended |
Dec. 31, 2014 | |
Officer Note Payable | |
Officer Note Payable | 14 — Officer Note Payable |
In the early stages of the Company, our CEO provided funding for operations in the form of an unsecured interest-free note payable with no specified due date. As of December 31, 2013, $6,333 remained outstanding. In March 2014 we repaid with cash the outstanding balance of the note payable. | |
Organization_and_Significant_A1
Organization and Significant Accounting Policies (Policies) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Organization and Significant Accounting Policies | ||||||||
Use of Estimates | Use of Estimates | |||||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities in the financial statements and the reported amount of revenue and expenses during the reporting period. Such estimates include allowances for potentially uncollectible accounts receivable, valuation of inventory, intangible assets, allocation of revenue arrangement consideration, stock-based compensation, deferred income taxes, reserves for warranty obligations, and the provision for income taxes. Actual results could differ from those estimates. | ||||||||
FDA Warning Letter | FDA Warning Letter | |||||||
On September 2, 2014 we announced we received a Warning Letter from the U.S. Food and Drug Administration (“FDA”) relating to an inspection of our facility that took place in April 2014. At the conclusion of the April inspection, FDA issued a Form 483 that identified eight observations. The majority of the observations related to procedures and documentation associated with the design, development and validation testing of software used in certain of our products. Other observations were related to the design validation of pump labeling, design analysis of tube stretching, procedures for post-market design review, and procedures and processing related to handling certain reported complaints. We submitted responses to the Form 483 in May 2014 and June 2014 in which we described our proposed corrective and preventative actions to address each of the FDA’s concerns. | ||||||||
FDA’s Warning Letter stated that the FDA accepted as adequate several of our responses to Form 483 observations, identified two responses whose accuracy will be determined in the next scheduled inspection of our facility and identified issues for which our response was determined to be inadequate. The issues identified as inadequate concern our procedures for validating device design primarily related to software quality assurance. | ||||||||
Also, the Warning Letter raised a new issue. The Warning Letter stated that modifications made to software on our previously cleared infusion pumps, the MRidium 3860 and MRidium 3850, were “significant” and required submission of new premarket notifications under Section 510(k) (a “510(k) submission”) of the Food, Drug and Cosmetic Act (the “FDC Act”). These modifications were made over time. We believe they were insignificant and did not require premarket notification submissions. However, the FDA indicated that the modifications of the software for the MRidium 3860 and the software for the MRidium 3850 were “significant” modifications because they could significantly affect the safety or effectiveness of these devices. As a result, the Warning Letter states that the products being sold by us are “adulterated” and “misbranded” under the FDC Act. The Warning Letter also indicates that the MRidium 3860+ infusion pump requires separate FDA clearance from the MRidium 3860 and MRidium 3850. | ||||||||
The Warning Letter requested that we immediately cease activities that result in the misbranding or adulteration of the MRidium 3860 MRI infusion pump, MRidium 3850 MRI infusion pump, and the MRidium 3860+ MRI infusion pump, including the commercial distribution of the devices. We immediately complied with the Warning Letter and ceased sale and distribution of the identified products in the United States. | ||||||||
On September 4, 2014, we submitted to the FDA our initial response to the Warning Letter and on September 17, 2014 we sent an additional response that included supplemental information related to the Form 483 inspection observations for which the FDA considered our initial responses inadequate. | ||||||||
On November 25, 2014, we announced that we filed the 510(k) submission related to our MRidium 3860+ MRI IV infusion pumps and on December 12, 2014 we were notified that our 510(k) submission had been formally accepted for review by the FDA. On December 22, 2014, under FDA enforcement discretion, we announced that we resumed domestic distribution of our MRI compatible MRidium 3860+ MRI IV infusion pump systems, without the Dose Error Reduction System (“DERS”) option. On January 28, 2015, subsequent to our year end, we announced that we resumed domestic distribution of our DERS option. | ||||||||
We continue to work with the FDA to fully resolve the Warning Letter and complete the review of the 510(k) submission. See Note 12. | ||||||||
Initial Public Offering | Initial Public Offering | |||||||
On July 21, 2014, the Company completed an initial public offering (“IPO”) of its common stock and sold 2,318,400 shares of common stock (including 302,400 shares sold upon the underwriters’ exercise of their over-allotment option to purchase additional shares) at a price of $6.25 per share. The IPO generated net proceeds of approximately $12.4 million after deducting underwriting discounts and expenses of approximately $2.0 million. These expenses were recorded against the proceeds received from the IPO. Concurrent with the closing of the IPO, all outstanding preferred stock was automatically converted into common stock on a 1:1 basis. | ||||||||
Associated with our IPO, we issued the underwriters warrants to purchase up to a total of 201,600 shares of our common stock. The grant date aggregate fair value of the warrants was $611,000. The warrants are exercisable, in whole or in part, commencing July 21, 2015 through July 21, 2017. The warrants are exercisable at a per share price equal to $8.13 per share, or 130% of the public offering price per share of our common stock in the IPO. The exercise price and number of warrant shares may be adjusted upon (1) voluntarily at our discretion, or (2) if we undertake a stock split, stock dividend, recapitalization or reorganization of our common stock into a lesser / greater number of shares, the warrant exercise price will be proportionately reduced / increased and the number of warrant shares will be proportionately increased / decreased. The warrants may only be settled through the issuance of our common stock in exchange for cash. We have classified the warrants as equity and incremental direct costs associated with our IPO. Accordingly, the warrants do not impact our financial statements. | ||||||||
Revenue Recognition | Revenue Recognition | |||||||
Revenue is recognized when persuasive evidence of an arrangement exists, the price is fixed or determinable, delivery has occurred and title and risk of loss has transferred and collection of the resulting receivable is reasonably assured. Terms of sale for most domestic sales are FOB destination, reflecting that title and risk of loss are assumed by the purchaser upon delivery. Terms of sales to international distributors are FOB shipping point, reflecting that title and risk of loss are assumed by the distributor at the shipping point. | ||||||||
Under the revenue recognition rules for tangible products, we allocate revenue from arrangements with multiple deliverables to each of the deliverables based upon their relative selling prices as determined by a selling-price hierarchy. A deliverable in an arrangement qualifies as a separate unit of accounting if 1) the delivered item has value to the customer on a stand-alone basis, and 2) the arrangement includes a general right of return relative to the delivered item, delivery or performance of the undelivered items is considered probable and substantially in control of the vendor. The principal deliverables in our multiple deliverable arrangements that qualify as separate units of accounting consist of (i) sales of medical devices and supplies, (ii) installation and training services, and (iii) separately priced extended warranty agreements. | ||||||||
We use a hierarchy to determine the selling price to be used for allocating revenue to deliverables as follows: (i) vendor-specific objective evidence of fair value (“VSOE”), (ii) third-party evidence of selling price (“TPE”), and (iii) best estimate of the selling price (“ESP”). VSOE of fair value is defined as the price charged when the same element is sold separately, or if the element has not yet been sold separately, the price for the element established by management having the relevant authority when it is probable that the price will not change before the introduction of the element into the marketplace. VSOE generally exists only when we sell the deliverable separately and is the price actually charged for that deliverable. For certain sales under group purchasing organization (“GPO”) contracts, we have established VSOE for all of the elements in our multiple element arrangements. This determination is based on the volume of sales to these customers in relation to our total sales and the discount tier in which those sales are made. For all other sales we rely on ESP, reflecting our best estimates of what the selling prices of elements would be if they were sold regularly on a stand-alone basis, to establish the amount of revenue to allocate to the undelivered elements. TPE generally does not exist for our products because of their uniqueness. | ||||||||
For products shipped under FOB shipping point terms, delivery is considered to have occurred when shipped. Undelivered elements in our sales arrangements, which are not considered to be essential to the functionality of a product, generally include installation and training services that are performed after the related products have been delivered and extended warranty agreements. Revenue related to undelivered installation and training services is deferred until such time as those services are complete, which is typically within 30 days of the related products being delivered to the customer’s location. Revenue and direct acquisition costs related to undelivered extended warranty agreements are deferred and recognized ratably over the service period, which is between one and four years. Deferred revenue for extended warranty agreements is based on the price charged when the service is sold separately. | ||||||||
Shipping and handling charges billed to customers are included in revenue and shipping and handling related expenses are charged to cost of revenue. Advance payments from customers are recorded as deferred revenue and recognized as revenue as otherwise described above. Most of our sales are subject to 30 to 60 day customer-specified acceptance provisions. These provisions require us to estimate the amount of future returns and recognize revenue net of these potential returns. | ||||||||
In certain States we are required to collect sales taxes from our customers. These amounts are excluded from revenue and recorded as a liability until remitted to the taxing authority. | ||||||||
GPOs negotiate volume purchase prices for hospitals, group practices, and other clinics that are members of a GPO. Our agreements with GPOs typically include the following provisions: | ||||||||
· | Negotiated pricing for all group members; | |||||||
· | Volume discounts and other preferential terms on their members’ purchases from us; | |||||||
· | Promotion of our products by the GPO to its members; and | |||||||
· | Payment of administrative fees by us to the GPO, based on purchases of our products by group members. | |||||||
We do not sell to GPOs. Hospitals, group practices, and other acute care facilities that are members of a GPO purchase products directly from us under the terms negotiated by the GPO. Negotiated pricing and discounts are recognized as a reduction of the selling price of products at the time of the sale. Revenue from sales to members of GPOs is otherwise consistent with revenue recognition policies as previously described. | ||||||||
Cash Equivalents | Cash Equivalents | |||||||
All highly liquid instruments purchased with an original maturity of three months or less are classified as cash equivalents. | ||||||||
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts | |||||||
Accounts receivable is recorded at the sales price of the related products and services. We assess the sufficiency of the allowance for estimated uncollectible accounts receivable. Estimates are based on historical collection experience and other customer-specific information, such as bankruptcy filings or liquidity problems of our customers. When it is determined that an account receivable is uncollectible, it is written off and relieved from the allowance. Any future determination that the allowance for estimated uncollectible accounts receivable is not properly stated could result in changes in operating expense and results of operations. As of December 31, 2014 and 2013, our allowance for doubtful accounts was $28,119 and $136,971, respectively. | ||||||||
Investments | Investments | |||||||
Our investments consist of corporate debt securities and are considered available-for-sale. The specific identification method is used to determine the cost basis of investments sold. Our investments are recorded in our balance sheets at fair value. We classify our investments as current based on the nature of the investments and their availability for use in current operations. Unrealized gains and losses on our investments are included in accumulated other comprehensive income, net of tax. Realized gains or losses are recorded in sale of investments and impairment losses that are determined to be other-than-temporary are recorded in investment impairment losses in our statements of operations. | ||||||||
Fair Value Measurements | Fair Value Measurements | |||||||
Fair value is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. A three-level valuation hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. | ||||||||
The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. The three levels of inputs are: | ||||||||
· | Level 1 — quoted prices (unadjusted) in active markets for an identical asset or liability. | |||||||
· | Level 2 — quoted prices for a similar asset or liability in an active market or model-derived valuations in which all significant inputs are observable for substantially the full term of the asset or liability. | |||||||
· | Level 3 — unobservable and significant to the fair value measurement of the asset or liability. | |||||||
Financial instruments include cash and cash equivalents, investments, accounts receivable, accounts payable and accrued expenses. Cash and cash equivalents and investments are reported at their respective fair values on the balance sheet dates. The recorded carrying amount of accounts receivable, accounts payable and accrued expenses approximates their fair values due to their short-term maturities. | ||||||||
Inventory | Inventory | |||||||
Inventories are stated at the lower of standard cost, which approximates actual cost on a first-in, first-out basis, or market. We may be exposed to a number of factors that could result in portions of our inventory becoming either obsolete or in excess of anticipated usage. These factors include, but are not limited to, technological changes, competitive situations in products and prices, and the introduction of new product lines. We regularly evaluate our ability to realize the value of inventory based on a combination of factors, including historical usage rates, forecasted sales, product life cycles, and market acceptance of new products. When inventory that is obsolete or in excess of anticipated usage is identified, it is written down to realizable salvage value or an inventory valuation allowance is established. | ||||||||
Property and Equipment | Property and Equipment | |||||||
Property and equipment are stated at cost less accumulated depreciation. Depreciation expense is computed using the straight-line method over estimated useful lives of the respective assets, which are three to five years for computer software and hardware; five to seven years for furniture, fixtures, machinery and equipment. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the improvements. | ||||||||
Repair and maintenance costs that do not extend the useful life of our property and equipment are expensed as incurred. | ||||||||
Intangible Assets | Intangible Assets | |||||||
Intangible assets include application and legal costs incurred to obtain patents. We capitalize these costs when we determine that probable future economic benefits exist. In making this determination, we consider the projected future operating results associated with the patents, industry and economic trends, and the entry of new products in the market. Costs incurred prior to this determination are expensed in the period they are incurred. We amortize capitalized patent costs using the straight-line method over their useful lives, which is typically 17 years. Periodic costs incurred to maintain existing patents are expensed as incurred. | ||||||||
Long-lived Assets | Long-lived Assets | |||||||
Long-lived assets are tested for impairment whenever changes in circumstances indicate the carrying value of these assets may be impaired. Impairment indicators include, but are not limited to, technological obsolescence, unfavorable court rulings, significant negative industry and economic trends, and significant underperformance relative to historical and projected future operating results. Impairment is considered to have occurred when the estimated undiscounted future cash flows related to the asset groups are less than its carrying value. Estimates of future cash flows involve consideration of many factors including the marketability of new products, product acceptance and lifecycle, competition, appropriate discount rates, and operating margins. An impairment is recognized as the amount by which the carrying value is less than the fair value of the asset or asset group. | ||||||||
Warranty | Warranty | |||||||
We provide for the estimated cost of product warranties at the time revenue is recognized. While we engage in product quality programs and processes, including actively monitoring and evaluating the quality of our suppliers, the estimated warranty obligation is affected by ongoing product failure rates, material usage costs and direct labor incurred in correcting a product failure. Actual product failure rates, material usage costs and the amount of labor required to repair products that differ from estimates result in revisions to the estimated liability. We warrant for a limited period of time that our products will be free from defects in materials and workmanship. We estimate warranty allowances based on historical warranty experience. Historically, warranty expenses have not been material to our financial statements. | ||||||||
Research & Development and Capitalized Software Development Costs | Research & Development and Capitalized Software Development Costs | |||||||
Research and development costs are expensed as incurred. Some of our products include embedded software which is essential to the product’s functionality. Costs incurred in the research and development of new software components and enhancements to existing software components are expensed as incurred until technological feasibility has been established. We capitalize software development costs when the project reaches technological feasibility and cease capitalization when the project is ready for release. Capitalized software development costs are included in intangible assets and are amortized on a straight-line basis over the estimated useful life of the product. Amortization begins when the product is available for general release to the customer. | ||||||||
Advertising and Marketing | Advertising and Marketing | |||||||
For the years ended December 31, 2014 and 2013, these costs were $65,369 and $78,882, respectively. Advertising and marketing costs are expensed as incurred and included in sales and marketing expense. | ||||||||
Medical Device Excise Taxes | Medical Device Excise Taxes | |||||||
Effective January 1, 2013, we became subject to the Medical Device Excise Tax applicable to sales of listed medical devices under the Patient Protection and Affordable Care Act (“ACA”) enacted in 2010. The ACA requires us to pay 2.3% of the taxable sales value of devices sold. Qualifying sales are recorded on a gross basis. For the years ended December 31, 2014 and 2013, we recorded medical device excise taxes of $200,496 and $161,246, respectively. Medical device excise taxes are included as a component of general and administrative expense. | ||||||||
Stock-Based Compensation | Stock-Based Compensation | |||||||
We recognize stock-based compensation expense associated with employee stock options on a straight-line basis over the requisite service period for the entire award, which is generally four years. The maximum contractual life of our stock options is ten years from the grant date. We utilize the Black-Scholes option pricing model to estimate the grant date fair value of those awards. The Black-Scholes option pricing model requires the input of certain assumptions including stock price, dividend yield, expected volatility, risk-free interest rate, and expected option life. Changes in these assumptions can materially affect the estimated fair value of our employee stock options. | ||||||||
Prior to our IPO, the grant date stock price was based on third-party valuations that have been performed periodically and consideration of significant events impacting us since the date of the respective valuations; subsequent to our IPO, the grant date stock price was based on our closing stock price on the date of grant; dividend yield was based on our expectation of dividend payments over the expected life of the option; expected volatility was based on a study of comparable, publicly traded companies with similar products and product life cycles; risk-free interest rate was the rate available on zero coupon U.S. government obligations with a term approximating the expected option life; the expected option life was calculated using the simplified method. | ||||||||
Forfeitures of employee stock options are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates. Stock-based compensation expense is recorded net of estimated forfeitures, such that expense is recorded only for those stock-based awards that are expected to vest. | ||||||||
The cash flow resulting from the tax benefits from tax deductions in excess of the compensation cost recognized for those options (excess tax benefits) is classified as a cash inflow from financing activities and a cash outflow from operating activities in our statements of cash flows. We treat tax deductions from certain stock option exercises as being realized when they reduce taxes payable in accordance with relevant tax law. Upon exercise, we issues new shares. | ||||||||
Income Taxes | Income Taxes | |||||||
We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. | ||||||||
We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is recorded to offset net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. | ||||||||
We recognize the tax benefit of uncertain tax positions in the financial statements based on the technical merits of the position. When the tax position is deemed more likely than not of being sustained, we recognize the largest amount of tax benefit that is greater than 50 percent likely of being ultimately realized upon settlement. | ||||||||
Foreign Currency | Foreign Currency | |||||||
Gains and losses from transactions denominated in currencies other than our functional currency are included in other income and expense. For the years ended December 31, 2014 and 2013, net foreign currency transaction losses were $56,969 and $23,432, respectively. Foreign currency gains and losses result primarily from fluctuations in the exchange rate between the U.S. Dollar and the Japanese Yen. | ||||||||
Comprehensive Income | Comprehensive Income | |||||||
Comprehensive income includes net income and other comprehensive income items that are excluded from net income under U.S. generally accepted accounting principles. Comprehensive income includes unrealized gains and losses on our investments classified as available for sale. | ||||||||
Basic and Diluted Net Income per Share | Basic and Diluted Net Income per Share | |||||||
Basic net income per share is based upon the weighted average number of common shares outstanding during the period. Diluted net income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. As discussed further in Note 13, the effect of our 1.75:1 stock split and recapitalization is reflected in the number of outstanding shares and per share information in the table below. Preferred stock and stock options granted by us represent the only dilutive effect reflected in diluted weighted-average shares outstanding. | ||||||||
The following table presents the computation of basic and diluted net income per share: | ||||||||
Years Ended December 31, | ||||||||
2014 | 2013 | |||||||
Net income | $ | 2,050,366 | $ | 1,936,890 | ||||
Weighted-average shares outstanding — Basic | 8,743,461 | 7,000,000 | ||||||
Effect of dilutive securities: | ||||||||
Preferred stock | 751,780 | 1,400,000 | ||||||
Stock options | 723,902 | 224,314 | ||||||
Weighted-average shares outstanding — Diluted | 10,219,143 | 8,624,314 | ||||||
Basic net income per share | $ | 0.23 | $ | 0.28 | ||||
Diluted net income per share | $ | 0.20 | $ | 0.22 | ||||
Warrants and stock options to purchase shares of our common stock excluded from the calculation of diluted net income per share because the effect would have been anti-dilutive are as follows: | ||||||||
As of December 31, | ||||||||
2014 | 2013 | |||||||
Anti-dilutive warrants and stock options | 129,340 | 467,109 | ||||||
Certain Significant Risks and Uncertainties | Certain Significant Risks and Uncertainties | |||||||
We market our products to end users in the United States and to distributors internationally. Sales to end users in the United States are generally made on open credit terms. Management maintains an allowance for potential credit losses. As of December 31, 2014, two international customers accounted for approximately 35% of gross accounts receivable. As of December 31, 2013, one international customer accounted for approximately 11% of gross accounts receivable. | ||||||||
Revenue for 2013 included sales to an international customer for 129 of our MRI compatible IV infusion pumps, which represented approximately 11% of total revenue for 2013. | ||||||||
We have deposited our cash and cash equivalents with various financial institutions. Our cash and cash equivalents balances exceed federally insured limits throughout the year. We have not incurred any losses related to these balances. | ||||||||
Our products require clearance from the Food and Drug Administration and international regulatory agencies prior to commercialized sales. The Company’s future products may not receive required approvals. If the Company were denied such approvals, or if such approvals were delayed, it would have a materially adverse impact on the Company’s business, results of operations and financial condition. | ||||||||
Certain key components of our products essential to their functionality are sole-sourced. Any disruption in the availability of these components would have a materially adverse impact on our business, results of operations and financial condition. | ||||||||
Recent Accounting Pronouncements | Recent Accounting Pronouncements | |||||||
In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue Contracts with Customers (Topic 606). This update provides guidance on the recognition of revenue based upon the entity’s contracts with customers to transfer goods or services at an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. This update also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. This update is effective for annual periods beginning after December 15, 2016, including interim periods within that reporting period, which will require us to adopt this update in the first quarter of 2017. Early adoption is not permitted. We are evaluating this guidance and have not yet determined the effect it will have on our financial statements and related disclosures, if any. | ||||||||
Organization_and_Significant_A2
Organization and Significant Accounting Policies (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Organization and Significant Accounting Policies | ||||||||
Schedule of computation of basic and diluted net income per share | ||||||||
Years Ended December 31, | ||||||||
2014 | 2013 | |||||||
Net income | $ | 2,050,366 | $ | 1,936,890 | ||||
Weighted-average shares outstanding — Basic | 8,743,461 | 7,000,000 | ||||||
Effect of dilutive securities: | ||||||||
Preferred stock | 751,780 | 1,400,000 | ||||||
Stock options | 723,902 | 224,314 | ||||||
Weighted-average shares outstanding — Diluted | 10,219,143 | 8,624,314 | ||||||
Basic net income per share | $ | 0.23 | $ | 0.28 | ||||
Diluted net income per share | $ | 0.20 | $ | 0.22 | ||||
Schedule of warrants and stock options to purchase shares of common stock excluded from the calculation of diluted net income per share | ||||||||
As of December 31, | ||||||||
2014 | 2013 | |||||||
Anti-dilutive warrants and stock options | 129,340 | 467,109 | ||||||
Inventory_Tables
Inventory (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Inventory | ||||||||
Schedule of inventory | ||||||||
As of December 31, | ||||||||
2014 | 2013 | |||||||
Raw materials | $ | 1,541,688 | $ | 1,143,495 | ||||
Work in process | 126,188 | 14,337 | ||||||
Finished goods | 457,962 | 182,499 | ||||||
Total | $ | 2,125,838 | $ | 1,340,331 | ||||
Property_and_Equipment_Tables
Property and Equipment (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Property and Equipment | ||||||||
Schedule of property and equipment | ||||||||
As of December 31, | ||||||||
2014 | 2013 | |||||||
Computer software and hardware | $ | 303,076 | $ | 154,709 | ||||
Furniture and fixtures | 198,253 | 87,611 | ||||||
Leasehold improvements | 182,105 | 47,623 | ||||||
Machinery and equipment | 849,852 | 721,270 | ||||||
Tooling in-process | 42,315 | 46,562 | ||||||
1,575,601 | 1,057,775 | |||||||
Accumulated depreciation | (780,766 | ) | (730,432 | ) | ||||
Total | $ | 794,835 | $ | 327,343 | ||||
Intangible_Assets_Tables
Intangible Assets (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Intangible Assets | ||||||||
Summary of the components of intangible asset balances | ||||||||
As of December 31, | ||||||||
2014 | 2013 | |||||||
Patents — in use | $ | 238,548 | $ | 228,430 | ||||
Patents — in process | 31,358 | 19,165 | ||||||
Internally developed software | 148,967 | 148,967 | ||||||
418,873 | 396,562 | |||||||
Accumulated amortization | (168,037 | ) | (129,538 | ) | ||||
Total | $ | 250,836 | $ | 267,024 | ||||
Schedule of expected annual amortization expense related to intangible assets | ||||||||
2015 | $ | 39,446 | ||||||
2016 | $ | 22,144 | ||||||
2017 | $ | 14,665 | ||||||
2018 | $ | 14,665 | ||||||
2019 | $ | 14,665 | ||||||
StockBased_Compensation_Tables
Stock-Based Compensation (Tables) | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Stock-Based Compensation | ||||||||||||
Schedule of stock-based compensation | ||||||||||||
Years Ended December 31, | ||||||||||||
2014 | 2013 | |||||||||||
Cost of revenue | $ | 6,529 | $ | 13 | ||||||||
General and administrative | 266,167 | 16,461 | ||||||||||
Sales and marketing | 415,021 | 255,096 | ||||||||||
Research and development | 36,346 | 349 | ||||||||||
Total | $ | 724,063 | $ | 271,919 | ||||||||
Schedule of weighted average fair value of options and related assumptions used in the Black Scholes model | ||||||||||||
Years Ended December 31, | ||||||||||||
2014 | 2013 | |||||||||||
Volatility | 104.3 | % | 113.0 | % | ||||||||
Expected term (years) | 7.0 | 7.0 | ||||||||||
Risk-free interest rate | 2.1 | % | 2.4 | % | ||||||||
Dividend yield | 0.0 | % | 0.0 | % | ||||||||
Summary of stock option activity | ||||||||||||
The following table presents a summary of our stock option activity as of and for the year ended December 31, 2014: | ||||||||||||
Options | Weighted-Average | Weighted-Average | Aggregate | |||||||||
Exercise Price | Remaining | Intrinsic | ||||||||||
Per Share | Contractual | Value | ||||||||||
Life (Yrs) | ||||||||||||
Outstanding beginning of period | 1,759,692 | $ | 1.18 | 7.7 | $ | 3,741,190 | ||||||
Options granted | 281,750 | 7.55 | ||||||||||
Options exercised | (96,250 | ) | 1.09 | |||||||||
Options cancelled | ||||||||||||
Outstanding end of period | 1,945,192 | $ | 2.11 | 7.4 | $ | 20,996,495 | ||||||
Exercisable | 957,787 | $ | 1.12 | 6 | $ | 11,282,000 | ||||||
Investments_Tables
Investments (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Investments | ||||||||||||||
Summary of available for sale securities | ||||||||||||||
As of December 31, 2014, our investments consisted of corporate bonds that we have classified as available-for-sale and are summarized in the following table: | ||||||||||||||
Cost | Gross | Gross | Fair | |||||||||||
Unrealized | Unrealized | Value | ||||||||||||
Gains | Losses | |||||||||||||
Corporate bonds: | ||||||||||||||
U.S. corporations | $ | 6,433,286 | $ | — | $ | 27,067 | $ | 6,406,219 | ||||||
International corporations | 1,515,200 | — | 7,626 | 1,507,574 | ||||||||||
Total | $ | 7,948,486 | $ | — | $ | 34,693 | $ | 7,913,793 | ||||||
As of December 31, 2013, our investments consisted of two mutual funds classified as available-for-sale and are summarized in the following table: | ||||||||||||||
Cost | Gross | Gross | Fair | |||||||||||
Unrealized | Unrealized | Value | ||||||||||||
Gains | Losses | |||||||||||||
31-Dec-13 | $ | 244,782 | $ | 1,421 | $ | — | $ | 246,203 | ||||||
Scheduled maturities of our investments | As of December 31, 2014, the scheduled maturities of our investments are as follows: | |||||||||||||
Cost | Fair Value | |||||||||||||
Less than 1 year | $ | — | $ | — | ||||||||||
1 to 3 years | 6,723,316 | 6,697,241 | ||||||||||||
3 to 5 years | 1,225,170 | 1,216,552 | ||||||||||||
Total | $ | 7,948,486 | $ | 7,913,793 | ||||||||||
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Fair Value Measurements | ||||||||||||||
Schedule of the fair value of assets and liabilities subject to recurring fair value measurements | ||||||||||||||
Fair Value at December 31, 2014 | ||||||||||||||
Fair | Quoted Prices | Significant | Significant | |||||||||||
Value | in Active | Other | Unobservable | |||||||||||
Market for | Observable | Inputs | ||||||||||||
Identical Assets | Inputs | (Level 3) | ||||||||||||
(Level 1) | (Level 2) | |||||||||||||
Corporate bonds: | ||||||||||||||
U.S. corporations | $ | 6,406,219 | $ | — | $ | 6,406,219 | $ | — | ||||||
International corporations | 1,507,574 | — | 1,507,574 | — | ||||||||||
Total | $ | 7,913,793 | $ | — | $ | 7,913,793 | $ | — | ||||||
Fair Value at December 31, 2013 | ||||||||||||||
Fair | Quoted Prices | Significant | Significant | |||||||||||
Value | in Active | Other | Unobservable | |||||||||||
Market for | Observable | Inputs | ||||||||||||
Identical Assets | Inputs | (Level 3) | ||||||||||||
(Level 1) | (Level 2) | |||||||||||||
Mutual funds | $ | 246,203 | $ | 246,203 | $ | — | $ | — | ||||||
Accumulated_Other_Comprehensiv1
Accumulated Other Comprehensive lncome (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Accumulated Other Comprehensive Income. | |||||
Schedule of component of accumulated other comprehensive income | |||||
Unrealized Gains | |||||
(Losses) on | |||||
Available-For-Sale | |||||
Securities | |||||
Balances at December 31, 2012 | $ | 7,149 | |||
Gains (losses), net | (6,225 | ) | |||
Reclassification realized in net earnings | — | ||||
Balances at December 31, 2013 | $ | 924 | |||
Gains (losses), net | (27,153 | ) | |||
Reclassification realized in net earnings | (4,756 | ) | |||
Balances at December 31, 2014 | (21,473 | ) | |||
Income_Taxes_Tables_Imported
Income Taxes (Tables) (Imported) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Income Taxes | ||||||||
Schedule of components of provision for income taxes | ||||||||
Years Ended December 31, | ||||||||
2014 | 2013 | |||||||
Current taxes: | ||||||||
U.S. federal | $ | 1,022,098 | $ | 764,452 | ||||
State | 112,144 | 130,784 | ||||||
Total current tax expense | 1,134,242 | 895,236 | ||||||
Deferred taxes: | ||||||||
U.S. federal | (149,247 | ) | (14,278 | ) | ||||
State | (18,020 | ) | (34,080 | ) | ||||
Total deferred tax benefit | (167,267 | ) | (48,358 | ) | ||||
Income tax expense | $ | 966,975 | $ | 846,878 | ||||
Schedule of significant components of deferred taxes | ||||||||
Years Ended December 31, | ||||||||
2014 | 2013 | |||||||
Deferred tax assets: | ||||||||
Current deferred tax assets: | ||||||||
Reserves and allowances | $ | 119,548 | $ | 109,177 | ||||
Total current deferred tax assets | $ | 119,548 | $ | 109,177 | ||||
Noncurrent deferred tax assets: | ||||||||
Stock compensation | $ | 417,956 | $ | 152,906 | ||||
Other | 14,689 | — | ||||||
Total noncurrent deferred tax assets | $ | 432,645 | $ | 152,906 | ||||
Deferred tax liabilities: | ||||||||
Current deferred tax liabilities: | ||||||||
Reserves and allowances | $ | 3,209 | $ | 42,674 | ||||
Other | — | 542 | ||||||
Total current deferred tax liabilities | $ | 3,209 | $ | 43,216 | ||||
Noncurrent deferred tax liabilities: | ||||||||
Depreciation and amortization | $ | 356,088 | $ | 206,993 | ||||
Total noncurrent deferred tax liabilities | 356,088 | 206,993 | ||||||
Schedule of reconciliation of statutory U.S. Federal tax rate to effective rate | ||||||||
Years Ended December 31, | ||||||||
2014 | 2013 | |||||||
Statutory U.S. federal tax rate | 34 | % | 34 | % | ||||
Domestic production activities deduction | (2.1 | ) | (3.7 | ) | ||||
Research and development credits | (1.8 | ) | (2.8 | ) | ||||
State taxes, net of federal benefit | 2 | 2.3 | ||||||
Permanent items | (0.1 | ) | 0.6 | |||||
Total | 32 | % | 30.4 | % | ||||
Segment_Customer_and_Geographi1
Segment, Customer and Geographic Information (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Segment, Customer and Geographic Information | ||||||||
Schedule of revenue information by geographic region | ||||||||
Years Ended December 31, | ||||||||
2014 | 2013 | |||||||
United States | $ | 11,357,705 | $ | 8,100,907 | ||||
International | 4,295,352 | 3,239,190 | ||||||
$ | 15,653,057 | $ | 11,340,097 | |||||
Schedule of revenue information by external customers by product | ||||||||
Years Ended December 31, | ||||||||
2014 | 2013 | |||||||
Devices | $ | 12,812,446 | $ | 9,335,753 | ||||
Disposable IV Sets and Services | 2,840,611 | 2,004,344 | ||||||
$ | 15,653,057 | $ | 11,340,097 | |||||
Schedule of property and equipment, net information by geographic region | ||||||||
Years Ended December 31, | ||||||||
2014 | 2013 | |||||||
United States | $ | 728,556 | $ | 256,386 | ||||
International | 66,279 | 70,957 | ||||||
$ | 794,835 | $ | 327,343 | |||||
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Commitments and Contingencies | |||||
Minimum lease payments | |||||
Future minimum lease payments under noncancelable operating leases as of December 31, 2014 are as follows: | |||||
Operating | |||||
Leases | |||||
2015 | $ | 390,996 | |||
2016 | 390,996 | ||||
2017 | 390,996 | ||||
2018 | 390,996 | ||||
2019 | 162,915 | ||||
Thereafter | — | ||||
Total minimum lease payments | $ | 1,726,899 | |||
Capital_Stock_Tables
Capital Stock (Tables) | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Capital Stock | ||||
Summarizes the effect of the stock split and conversion of capital stock previously outstanding | The table below summarizes the effect of the stock split and conversion on our capital stock that was previously outstanding as of December 31, 2013: | |||
Series A Preferred Stock outstanding — Pre recapitalization | 800,000 | |||
Stock split ratio | 1.75:1 | |||
Series A Preferred Stock outstanding — Post recapitalization | 1,400,000 | |||
Common stock outstanding — Pre recapitalization | ||||
Class A Common Stock | 400,000 | |||
Class B Common Stock | 3,600,000 | |||
Total | 4,000,000 | |||
Stock split ratio | 1.75:1 | |||
Common stock outstanding — Post recapitalization | 7,000,000 | |||
Organization_and_Significant_A3
Organization and Significant Accounting Policies (Details) (USD $) | 0 Months Ended | 12 Months Ended | ||
Jul. 21, 2014 | Dec. 31, 2013 | Sep. 02, 2014 | Jul. 21, 2014 | |
item | ||||
FDA Warning Letter | ||||
Number of observations | 8 | |||
Number of identified responses whose accuracy will be determined | 2 | |||
Initial Public Offering | ||||
Number of shares sold of common stock | 2,318,400 | |||
Number of shares sold to the underwriter for the exercise of over-allotment option | 302,400 | |||
Original issue price (in dollars per share) | $6.25 | |||
Net proceeds generated after deducting underwriting discounts and expenses | $12,400,000 | |||
Underwriting discounts and expenses | 2,000,000 | |||
Conversion ratio | 1 | 1.75 | ||
Warrants up to the number of shares, underwriters can be purchase | 201,600 | |||
Fair value of warrants | $611,000 | |||
Exercise price of warrants (in dollars per share) | $8.13 | |||
Exercise price expressed as a percent of original issue price | 130.00% |
Organization_and_Significant_A4
Organization and Significant Accounting Policies (Details 2) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
item | ||
Accounts receivable and allowance for doubtful accounts | ||
Accounts receivable, allowance for doubtful accounts | $28,119 | $136,971 |
Revenue Recognition | ||
Deferred period of revenue related to undelivered installation and training services | 30 days | |
Investments | ||
Number of mutual funds | 2 | |
Advertising and Marketing | ||
Advertising and marketing costs | 65,369 | 78,882 |
Medical Device Excise Taxes | ||
Medical device excise taxes (as a percent) | 2.30% | |
Medical device excise taxes | 200,496 | 161,246 |
Stock Based Compensation | ||
Requisite service period for recognizing stock based compensation expenses associated with employee stock options | 4 years | |
Contractual life of stock options | 10 years | |
Foreign Currency | ||
Net foreign currency transactions losses | $56,969 | $23,432 |
Patent | ||
Intangible Assets | ||
Estimated useful lives of intangible assets | 17 years | |
Minimum | ||
Revenue Recognition | ||
Deferral period of revenue and direct acquisition costs related to undelivered extended warranty agreements | 1 year | |
Represents the period of customer specified acceptance provision. | 30 days | |
Minimum | Computer software and hardware | ||
Property and equipment | ||
Estimated useful lives of assets | 3 years | |
Minimum | Furniture and fixtures | ||
Property and equipment | ||
Estimated useful lives of assets | 5 years | |
Minimum | Machinery and equipment | ||
Property and equipment | ||
Estimated useful lives of assets | 5 years | |
Maximum | ||
Revenue Recognition | ||
Deferral period of revenue and direct acquisition costs related to undelivered extended warranty agreements | 4 years | |
Represents the period of customer specified acceptance provision. | 60 days | |
Maximum | Computer software and hardware | ||
Property and equipment | ||
Estimated useful lives of assets | 5 years | |
Maximum | Furniture and fixtures | ||
Property and equipment | ||
Estimated useful lives of assets | 7 years | |
Maximum | Machinery and equipment | ||
Property and equipment | ||
Estimated useful lives of assets | 7 years |
Organization_and_Significant_A5
Organization and Significant Accounting Policies (Details 3) (USD $) | 0 Months Ended | 12 Months Ended | |
Jul. 21, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | |
Organization and Significant Accounting Policies | |||
Stock split ratio | 1 | 1.75 | |
Basic and Diluted Net Income Per Share | |||
Net income | $2,050,366 | $1,936,890 | |
Weighted-average shares outstanding - Basic (in shares) | 8,743,461 | 7,000,000 | |
Effect of dilutive securities: | |||
Preferred stock | 751,780 | 1,400,000 | |
Stock options | 723,902 | 224,314 | |
Weighted-average common shares outstanding - Diluted | 10,219,143 | 8,624,314 | |
Basic net income per share (in dollars per share) | $0.23 | $0.28 | |
Diluted net income per share (in dollars per share) | $0.20 | $0.22 | |
Anti-dilutive stock | |||
Anti-dilutive warrants and stock options (in shares) | 129,340 | 467,109 | |
Options granted to employees for purchase of common stock (in shares) | 281,750 |
Organization_and_Significant_A6
Organization and Significant Accounting Policies (Details 4) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Gross accounts receivable | One Customer | ||
Certain Significant Risks and Uncertainties | ||
Concentration risk (as a percent) | 35.00% | 11.00% |
Revenue | Customer in Saudi Arabia | ||
Certain Significant Risks and Uncertainties | ||
Concentration risk (as a percent) | 11.00% | |
Number of MRI compatible IV infusion pumps | 129 |
Inventory_Details
Inventory (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Inventory | ||
Raw materials | $1,541,688 | $1,143,495 |
Work in process | 126,188 | 14,337 |
Finished goods | 457,962 | 182,499 |
Total | $2,125,838 | $1,340,331 |
Property_and_Equipment_Details
Property and Equipment (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Property and equipment | ||
Property and equipment, gross | $1,575,601 | $1,057,775 |
Accumulated depreciation | -780,766 | -730,432 |
Total | 794,835 | 327,343 |
Depreciation and amortization expense of property and equipment | 110,557 | 101,449 |
Computer software and hardware | ||
Property and equipment | ||
Property and equipment, gross | 303,076 | 154,709 |
Furniture and fixtures | ||
Property and equipment | ||
Property and equipment, gross | 198,253 | 87,611 |
Leasehold improvements | ||
Property and equipment | ||
Property and equipment, gross | 182,105 | 47,623 |
Machinery and equipment | ||
Property and equipment | ||
Property and equipment, gross | 849,852 | 721,270 |
Tooling in-process | ||
Property and equipment | ||
Property and equipment, gross | $42,315 | $46,562 |
Intangible_Assets_Details
Intangible Assets (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Intangible assets | ||
Intangible Assets, gross | $418,873 | $396,562 |
Accumulated amortization | -168,037 | -129,538 |
Total | 250,836 | 267,024 |
Amortization expense of intangible assets | 38,499 | 37,591 |
Expected annual amortization expense | ||
2015 | 39,446 | |
2016 | 22,144 | |
2017 | 14,665 | |
2018 | 14,665 | |
2019 | 14,665 | |
Patents - in use | ||
Intangible assets | ||
Intangible Assets, gross | 238,548 | 228,430 |
Patents - in process | ||
Intangible assets | ||
Intangible Assets, gross | 31,358 | 19,165 |
Internally developed software | ||
Intangible assets | ||
Intangible Assets, gross | $148,967 | $148,967 |
StockBased_Compensation_Detail
Stock-Based Compensation (Details) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2014 | Apr. 30, 2014 | |
item | |||
Stock Based Compensation | |||
Number of stock plans | 1 | ||
Equity Incentive Plan 2014 | |||
Stock Based Compensation | |||
Common shares authorized for issuance | 1,000,000 | ||
Shares available for future awards | 791,750 |
StockBased_Compensation_Detail1
Stock-Based Compensation (Details 2) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Stock Based Compensation | ||
Stock based compensation | $724,063 | $271,919 |
Total unrecognized stock based compensation expense | 3,122,686 | |
Weighted average period expected to be recognized | 3 years 3 months 18 days | |
Total fair value of stock options vesting during the period | 752,927 | |
Cost of revenue. | ||
Stock Based Compensation | ||
Stock based compensation | 6,529 | 13 |
General and administrative | ||
Stock Based Compensation | ||
Stock based compensation | 266,167 | 16,461 |
Sales and marketing | ||
Stock Based Compensation | ||
Stock based compensation | 415,021 | 255,096 |
Research and development | ||
Stock Based Compensation | ||
Stock based compensation | $36,346 | $349 |
StockBased_Compensation_Detail2
Stock-Based Compensation (Details 3) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Summary of weighted-average fair value assumptions used to value options | ||
Volatility (as a percent) | 104.30% | 113.00% |
Expected term (years) | 7 years | 7 years |
Risk- free interest rate (as a percent) | 2.10% | 2.40% |
Dividend yield (as a percent) | 0.00% | 0.00% |
Forfeiture rate (as a percent) | 3.00% | 10.00% |
Weighted-average fair value of common stock (in dollars per share) | $6.47 | $2.99 |
Options | ||
Outstanding beginning of period (in shares) | 1,759,692 | |
Options granted (in shares) | 281,750 | |
Options exercised (in shares) | -96,250 | |
Options cancelled (in shares) | 0 | |
Outstanding end of period (in shares) | 1,945,192 | 1,759,692 |
Exercisable (in shares) | 957,787 | |
Weighted-Average Exercise Price Per Share | ||
Outstanding beginning of period (in dollars per share) | $1.18 | |
Options granted (in dollars per share) | $7.55 | |
Options exercised (in dollars per share) | $1.09 | |
Options canceled (in dollars per share) | $0 | |
Outstanding end of period (in dollars per share) | $2.11 | $1.18 |
Exercisable (in dollars per share) | $1.12 | |
Weighted-Average Remaining Contractual Life (Yrs) | ||
Outstanding beginning of period | 7 years 4 months 24 days | 7 years 8 months 12 days |
Outstanding end of period | 7 years 4 months 24 days | 7 years 8 months 12 days |
Exercisable | 6 years | |
Aggregate Intrinsic Value | ||
Outstanding beginning of period (in dollars) | $3,741,190 | |
Outstanding end of period (in dollars) | 20,996,495 | 3,741,190 |
Exercisable (in dollars) | 11,282,000 | |
Additional disclosure | ||
Cash received from option exercises | 105,000 | |
intrinsic value of options exercised | $592,463 |
Investments_Details
Investments (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
item | ||
Number of mutual funds | 2 | |
Cost | $7,948,486 | $244,782 |
Gross Unrealized Gains | 1,421 | |
Gross Unrealized Losses | 34,693 | |
Fair Value | 7,913,793 | 246,203 |
Cost | ||
1 to 3 years | 6,723,316 | |
3 to 5 years | 1,225,170 | |
Fair Value | ||
1 to 3 years | 6,697,241 | |
3 to 5 years | 1,216,552 | |
U.S. corporation | ||
Cost | 6,433,286 | |
Gross Unrealized Losses | 27,067 | |
Fair Value | 6,406,219 | |
International corporations | ||
Cost | 1,515,200 | |
Gross Unrealized Losses | 7,626 | |
Fair Value | $1,507,574 |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Fair Value Measurements | ||
Fair value assets, amount transferred between measurement levels | $0 | $0 |
Fair value liabilities, amount transferred between measurement levels | 0 | 0 |
Recurring | Fair Value | ||
Fair Value Measurements | ||
Total | 7,913,793 | |
Recurring | Fair Value | U.S. corporation | ||
Fair Value Measurements | ||
Total | 6,406,219 | |
Recurring | Fair Value | International corporations | ||
Fair Value Measurements | ||
Total | 1,507,574 | |
Recurring | Fair Value | Mutual Funds | ||
Fair Value Measurements | ||
Total | 246,203 | |
Recurring | Quoted Prices in Active Market for Identical Assets (Level 1) | Mutual Funds | ||
Fair Value Measurements | ||
Total | 246,203 | |
Recurring | Significant Other Observable Inputs (Level 2) | ||
Fair Value Measurements | ||
Total | 7,913,793 | |
Recurring | Significant Other Observable Inputs (Level 2) | U.S. corporation | ||
Fair Value Measurements | ||
Total | 6,406,219 | |
Recurring | Significant Other Observable Inputs (Level 2) | International corporations | ||
Fair Value Measurements | ||
Total | $1,507,574 |
Accumulated_Other_Comprehensiv2
Accumulated Other Comprehensive lncome (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Unrealized Gain (Losses) on Available-For-Sale Securities | ||
Balance at the beginning | $924 | $7,149 |
Gain (losses), net | -27,153 | -6,225 |
Reclassification realized in net earnings | -4,756 | |
Balance at the end | ($21,473) | $924 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Current taxes: | ||
U.S. Federal | $1,022,098 | $764,452 |
State | 112,144 | 130,784 |
Total current tax expenses | 1,134,242 | 895,236 |
Deferred taxes: | ||
U.S. Federal | -149,247 | -14,278 |
State | -18,020 | -34,080 |
Total deferred tax benefit | -167,267 | -48,358 |
Income tax expense | $966,975 | $846,878 |
Income_Taxes_Details_2
Income Taxes (Details 2) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Current deferred tax assets: | ||
Reserves and allowances | $119,548 | $109,177 |
Total current deferred tax assets | 119,548 | 109,177 |
Noncurrent deferred tax assets: | ||
Stock compensation | 417,956 | 152,906 |
Other | 14,689 | |
Total noncurrent deferred tax assets | 432,645 | 152,906 |
Current deferred tax liabilities: | ||
Reserves and allowances | 3,209 | 42,674 |
Other | 542 | |
Total current deferred tax liabilities | 3,209 | 43,216 |
Noncurrent deferred tax liabilities: | ||
Depreciation and amortization | 356,088 | 206,993 |
Total noncurrent deferred tax liabilities | $356,088 | $206,993 |
Income_Taxes_Details_3
Income Taxes (Details 3) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Reconciliation of the statutory U.S. federal tax rate to effective rate | ||
Statutory U.S. federal tax rate | 34.00% | 34.00% |
Domestic production activities deduction | -2.10% | -3.70% |
Research and development credits | -1.80% | -2.80% |
State taxes, net of federal benefit | 2.00% | 2.30% |
Permanent items | -0.10% | 0.60% |
Total | 32.00% | 30.40% |
Employee_Benefit_Plan_Details
Employee Benefit Plan (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Employee Benefit Plan | ||
Employer matching contributions | $162,581 | $103,755 |
Employer matching contributions vest period | 5 years |
Segment_Customer_and_Geographi2
Segment, Customer and Geographic Information (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
item | item | |
Segment, Customer and Geographic Information | ||
Number of reportable segment | 1 | 1 |
Segment, Customer and Geographic Information | ||
Revenue | $15,653,057 | $11,340,097 |
Property and equipment, net | 794,835 | 327,343 |
Devices | ||
Segment, Customer and Geographic Information | ||
Revenue | 12,812,446 | 9,335,753 |
Disposable IV sets and services | ||
Segment, Customer and Geographic Information | ||
Revenue | 2,840,611 | 2,004,344 |
United States | ||
Segment, Customer and Geographic Information | ||
Revenue | 11,357,705 | 8,100,907 |
Property and equipment, net | 728,556 | 256,386 |
International | ||
Segment, Customer and Geographic Information | ||
Revenue | 4,295,352 | 3,239,190 |
Property and equipment, net | $66,279 | $70,957 |
Saudi Arabia | ||
Segment, Customer and Geographic Information | ||
Number of customers | 2 | |
Revenue from sale of products (as a percent) | 11.00% | |
Saudi Arabia | MRI compatible IV infusion pumps | ||
Segment, Customer and Geographic Information | ||
Number of Infusion Pumps sold | 129 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Jan. 30, 2014 | |
Purchase commitments | |||
Purchase commitments | $1,993,801 | ||
Susi, LLC | Winter Springs, Florida Facility | |||
Leases | |||
Rent expense | 284,210 | 116,277 | |
Monthly base rent | 32,583 | ||
Non-cancelable operating lease commitments | |||
2015 | 390,996 | ||
2016 | 390,996 | ||
2017 | 390,996 | ||
2018 | 390,996 | ||
2019 | 162,915 | ||
Total non-cancelable operating lease commitments | $1,726,899 |
Commitments_and_Contingencies_2
Commitments and Contingencies (Details 2) (Uncommitted revolving credit facility, USD $) | Jun. 30, 2014 |
Uncommitted revolving credit facility | |
Uncommitted Revolving Credit Facility | |
Maximum borrowing capacity | $100,000 |
Capital_Stock_Details
Capital Stock (Details) (USD $) | 0 Months Ended | 12 Months Ended | 0 Months Ended | ||
Jul. 21, 2014 | Dec. 31, 2013 | Apr. 14, 2014 | Jul. 31, 2014 | Dec. 31, 2014 | |
item | |||||
Capital Stock | |||||
Conversion ratio | 1 | 1.75 | |||
Preferred stock outstanding - Post recapitalization | 0 | ||||
Common stock shares outstanding - Post recapitalization | 7,000,000 | 10,814,650 | |||
Common stock, shares authorized | 90,000,000 | 90,000,000 | |||
Common stock, par value (in dollars per share) | $0.00 | $0.00 | |||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | |||
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 | |||
Original issue price (in dollars per share) | $6.25 | ||||
Common Stock | |||||
Capital Stock | |||||
Conversion ratio | 1.75 | 1.75 | |||
Common stock shares outstanding - Pre recapitalization | 4,000,000 | ||||
Common stock shares outstanding - Post recapitalization | 7,000,000 | ||||
Common stock, shares authorized | 90,000,000 | 90,000,000 | |||
Common stock, par value (in dollars per share) | $0.00 | $0.00 | |||
Number of voting right on each common stock | 1 | ||||
Common Stock | IPO | |||||
Capital Stock | |||||
Conversion ratio | 1 | ||||
Class A Common Stock | |||||
Capital Stock | |||||
Common stock shares outstanding - Pre recapitalization | 400,000 | ||||
Class B Common Stock | |||||
Capital Stock | |||||
Common stock shares outstanding - Pre recapitalization | 3,600,000 | ||||
Preferred Stock | |||||
Capital Stock | |||||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | |||
Preferred stock, par value (in dollars per share) | $0.00 | ||||
Number of voting right on each preferred stock | 1 | ||||
Amount per preferred stock to be paid in the event of liquidation, dissolution, or winding up (in dollars per share) | $1.07 | ||||
Conversion price (in dollars per share) | $1.07 | ||||
Series A Preferred Stock | |||||
Capital Stock | |||||
Conversion ratio | 1.75 | 1.75 | |||
Preferred stock outstanding - Pre recapitalization | 800,000 | ||||
Preferred stock outstanding - Post recapitalization | 1,400,000 | ||||
Preferred stock, shares authorized | 800,000 | ||||
Preferred stock, par value (in dollars per share) | $0.00 | ||||
Dividend on each share of Preferred Stock (in dollars per share) | $0.06 |
Officer_Note_Payable_Details
Officer Note Payable (Details) (USD $) | Dec. 31, 2013 |
Officer Note Payable | |
Amount outstanding on note payable | $6,333 |