Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Feb. 29, 2016 | Jun. 30, 2015 | |
Document and Entity Information | |||
Entity Registrant Name | IRADIMED CORP | ||
Entity Central Index Key | 1,325,618 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 81,912,000 | ||
Entity Common Stock, Shares Outstanding | 11,034,810 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 19,368,114 | $ 9,454,150 |
Accounts receivable, net | 3,863,632 | 1,960,214 |
Investments | 7,602,204 | 7,913,793 |
Inventory, net | 2,383,158 | 2,125,838 |
Prepaid expenses and other current assets | 317,957 | 276,540 |
Prepaid income taxes | 273,968 | 320,941 |
Deferred income taxes | 141,446 | 116,339 |
Total current assets | 33,950,479 | 22,167,815 |
Property and equipment, net | 905,622 | 794,835 |
Intangible assets, net | 175,513 | 250,836 |
Deferred income taxes | 88,398 | 76,557 |
Other assets | 124,195 | 19,676 |
Total assets | 35,244,207 | 23,309,719 |
Current liabilities: | ||
Accounts payable | 1,005,460 | 629,167 |
Accrued payroll and benefits | 1,288,248 | 1,244,898 |
Other accrued taxes | 30,687 | 65,790 |
Warranty reserve | 34,081 | 27,925 |
Deferred revenue | 536,924 | 308,341 |
Total current liabilities | 2,895,400 | 2,276,121 |
Deferred revenue | 415,782 | 142,902 |
Total liabilities | 3,311,182 | 2,419,023 |
Stockholders' equity: | ||
Common stock; $0.0001 par value; 31,500,000 shares authorized; 11,175,125 shares issued and outstanding as of December 31, 2015 and 10,814,650 shares issued and outstanding as of December 31, 2014 | 1,118 | 1,082 |
Additional paid-in capital | 19,332,023 | 15,785,838 |
Retained earnings | 12,655,169 | 5,125,249 |
Accumulated other comprehensive loss | (55,285) | (21,473) |
Total stockholders' equity | 31,933,025 | 20,890,696 |
Total liabilities and stockholders' equity | $ 35,244,207 | $ 23,309,719 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
BALANCE SHEETS | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 31,500,000 | 31,500,000 |
Common stock, shares issued | 11,175,125 | 10,814,650 |
Common stock, shares outstanding | 11,175,125 | 10,814,650 |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
STATEMENTS OF OPERATIONS | ||
Revenue | $ 31,593,720 | $ 15,653,057 |
Cost of revenue | 5,840,407 | 3,404,400 |
Gross profit | 25,753,313 | 12,248,657 |
Operating expenses: | ||
General and administrative | 7,769,881 | 4,816,973 |
Sales and marketing | 4,705,977 | 3,297,120 |
Research and development | 1,764,306 | 1,068,674 |
Total operating expenses | 14,240,164 | 9,182,767 |
Income from operations | 11,513,149 | 3,065,890 |
Other income (expense), net | 121,385 | (48,549) |
Income before provision for income taxes | 11,634,534 | 3,017,341 |
Provision for income taxes | 4,104,614 | 966,975 |
Net income | $ 7,529,920 | $ 2,050,366 |
Net income per share: | ||
Basic (in dollars per share) | $ 0.68 | $ 0.23 |
Diluted (in dollars per share) | $ 0.60 | $ 0.20 |
Weighted average shares outstanding: | ||
Basic (in shares) | 11,003,272 | 8,743,461 |
Diluted (in shares) | 12,556,887 | 10,219,143 |
STATEMENTS OF COMPREHENSIVE INC
STATEMENTS OF COMPREHENSIVE INCOME - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
STATEMENTS OF COMPREHENSIVE INCOME | ||
Net income | $ 7,529,920 | $ 2,050,366 |
Other comprehensive income (loss): | ||
Change in fair value of available-for-sale securities, net of tax benefit of $23,500 and $10,659 respectively | (36,053) | (17,641) |
Realized loss (gain) on available-for-sale securities reclassified to net income, net of tax (benefit) expense of $(1,334) and $2,560 | 2,241 | (4,756) |
Other comprehensive loss | (33,812) | (22,397) |
Comprehensive income | $ 7,496,108 | $ 2,027,969 |
STATEMENTS OF COMPREHENSIVE IN6
STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
STATEMENTS OF COMPREHENSIVE INCOME | ||
Change in fair value of available for sale securities, tax (benefit) expense | $ (23,500) | $ (10,659) |
Reclassification to net income, tax (benefit) expense | $ (1,334) | $ 2,560 |
STATEMENTS OF STOCKHOLDERS' EQU
STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) | Preferred Stock | Common Stock | Additional Paid In Capital. | Retained Earnings | Accumulated Other Comprehensive (loss) Income | Total |
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 and warrants | 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 | |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income | 7,529,920 | 7,529,920 | ||||
Other comprehensive loss | (33,812) | (33,812) | ||||
Stock - based compensation | 1,220,118 | 1,220,118 | ||||
Tax benefits credited to equity | 1,728,595 | 1,728,595 | ||||
Exercise of stock options and warrants | 36 | 597,472 | 597,508 | |||
Balances at Dec. 31, 2015 | $ 1,118 | $ 19,332,023 | $ 12,655,169 | $ (55,285) | $ 31,933,025 |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Operating activities: | ||
Net income | $ 7,529,920 | $ 2,050,366 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Bad debt expense | 3,553 | (108,852) |
Provision for excess and obsolete inventory | 51,089 | 62,069 |
Depreciation and amortization | 223,942 | 149,056 |
Excess tax benefit on the exercise of stock options | (1,728,595) | (165,228) |
Stock-based compensation | 1,220,118 | 724,063 |
Impairment of intangible assets | 55,433 | |
Loss on sale of investments | 3,575 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (1,906,971) | 130,721 |
Inventory | (308,409) | (847,576) |
Prepaid expenses and other current assets | (31,977) | (154,912) |
Other assets | (113,959) | (15,433) |
Prepaid income taxes | 1,775,568 | (48,188) |
Deferred income taxes | (16,116) | (167,305) |
Accounts payable | 376,293 | 201,693 |
Accrued payroll and benefits | 43,350 | 589,536 |
Other accrued liabilities | (35,103) | (14,997) |
Warranty reserve | 6,156 | 15,923 |
Deferred revenue | 501,463 | 186,172 |
Other | (1,388) | |
Net cash provided by operating activities | 7,649,330 | 2,585,720 |
Investing activities: | ||
Purchases of investments | (7,951,497) | |
Proceeds from sale of investments | 253,370 | 255,109 |
Purchases of property and equipment | (298,723) | (583,977) |
Capitalized intangible assets | (16,116) | (22,311) |
Net cash used in investing activities | (61,469) | (8,302,676) |
Financing activities: | ||
Proceeds from stock option and warrant exercises | 597,508 | 105,000 |
Income tax benefits credited to equity | 1,728,595 | 165,228 |
Repayment of officer note payable | (6,333) | |
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 financing activities | 2,326,103 | 12,709,547 |
Net increase in cash and cash equivalents | 9,913,964 | 6,992,591 |
Cash and cash equivalents, beginning of year | 9,454,150 | 2,461,559 |
Cash and cash equivalents, end of year | 19,368,114 | 9,454,150 |
Supplemental disclosure of cash flow information: | ||
Cash paid for income taxes | $ 2,702,000 | $ 1,182,430 |
Organization and Significant Ac
Organization and Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
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 only known provider of non-magnetic intravenous (“IV”) infusion pump systems that are specifically designed to be safe for use during MRI procedures. We were the first to develop an infusion delivery system that largely eliminates many of the dangers and problems present during MRI procedures. Standard infusion pumps contain magnetic and electronic components which can create radio frequency (“RF”) interference and are dangerous to operate in the presence of the powerful magnet that drives an MRI system. Our patented MRidium MRI compatible IV infusion pump system has been designed with a non-magnetic ultrasonic motor, uniquely-designed non-ferrous parts and other special features in order to safely and predictably deliver anesthesia and other IV fluids during various MRI procedures. Our pump solution provides a seamless approach that enables accurate, safe and dependable fluid delivery before, during and after an MRI scan, which is important to critically-ill patients who cannot be removed from their vital medications, and children and infants who must generally be sedated in order to remain immobile during an MRI scan. 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 The FDA conducted a routine inspection of our prior facility between April 7 and April 16, 2014. This was the first FDA inspection of our facility since the voluntary product recall in August 2012 of certain infusion sets and the voluntary recall in July 2013 of our DERS software. The FDA issued a Form 483 on April 16, 2014 that identified eight observations. The majority of the observations related to procedural and documentation issues associated with the design, development, validation testing and documentation 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 control and procedures related to handling certain reported complaints. We submitted a response 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 observations. On September 2, 2014, we received a warning letter from the FDA relating to this inspection (the “Warning Letter”). The 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 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 DERS option. On January 28, 2015, under FDA enforcement discretion, we announced that we resumed domestic distribution of our DERS option. On December 9, 2015, we met with the FDA to review responses to the agency’s additional information letter. We continue to work with the FDA to fully resolve the Warning Letter and complete the review of the 510(k) submission. See Note 13. 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. During the year ended December 31, 2015, warrants to purchase 15,000 shares of our common stock were exercised. 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) 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 generally 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; · 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 described above. 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, 2015 and 2014, our allowance for doubtful accounts was $31,672 and $28,119, 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 other income (expense) 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 Inventory is 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. The estimates we use in projecting future product warranty costs may prove to be incorrect. Any future determination that our provision for product warranty is understated could result in increases to our cost of revenue and a reduction in our operating profits and results of operations. 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 products’ 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 and included in cost of revenue. Amortization begins when the product is available for general release to the customer. Advertising and Marketing For the years ended December 31, 2015 and 2014, these costs were $66,722 and $65,369, respectively. Advertising and marketing costs are expensed as incurred and included in sales and marketing expense. Medical Device Excise Taxes We are 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, 2015 and 2014, we recorded medical device excise taxes of $364,870 and $200,496, respectively. Medical device excise taxes are included as a component of general and administrative expense. On December 18, 2015, under the Consolidated Appropriations Act of 2015, the medical device excise tax was suspended for two years beginning on January 1, 2016. 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. 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 issue 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 year ended December 31, 2015 and 2014, net foreign currency transaction losses were $23,999 and $56,969, 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 14, 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. The Underwriters’ warrants, stock options granted by us and preferred stock 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, 2015 2014 Net income $ $ Weighted-average shares outstanding — Basic Effect of dilutive securities: Underwriters’ warrants — Stock options Preferred stock — Weighted-average shares outstanding — Diluted Basic net income per share $ $ Diluted net income per share $ $ 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, 2015 2014 Anti-dilutive warrants and stock options 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. No such concentration existed as of December 31, 2015. 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 customer contracts. This update is effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period, which will require us to adopt this update in the first quarter of 2018. Early adoption is now 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. In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory (Topic 330). The amendments in this update require that inventory within the scope of this ASU be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, let reasonably predicable costs of completion, disposal, and transportation. The amendments in this ASU do not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. The amendments apply to all other inventory, which includes inventory that is measured at first-in, first-out (FIFO) or average cost. The 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. The amendments in this update should be applied prospectively and early adoption is permitted. We do not expect the adoption of this guidance will have a material impact upon our financial condition or results of operations. In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes (Topic 740). The amendments in this update require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments in the update apply to all entities that present a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendments in this update. The 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. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period. The amendments in this update may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. We do not expect the adoption of this guidance will have a material impact upon our statement of financial position. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This update requires lessees t |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2015 | |
Inventory | |
Inventory | 2 — Inventory Inventory consists of: As of December 31, 2015 2014 Raw materials $ $ Work in process Finished goods Inventory before allowance for excess and obsolete Allowance for excess and obsolete ) ) Total $ $ |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2015 | |
Property and Equipment | |
Property and Equipment | 3 — Property and Equipment Property and equipment consist of: As of December 31, 2015 2014 Computer software and hardware $ $ Furniture and fixtures Leasehold improvements Machinery and equipment Tooling in-process Accumulated depreciation ) ) Total $ $ Depreciation and amortization expense of property and equipment was $187,936 and $110,557 in the years ended December 31, 2015 and 2014, respectively. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2015 | |
Intangible Assets | |
Intangible Assets | 4 — Intangible Assets The following table summarizes the components of intangible asset balances: As of December 31, 2015 2014 Patents — in use $ $ Patents — in process Internally developed software Accumulated amortization ) ) Total $ $ Amortization expense of intangible assets was $36,006 and $38,499 in the years ended December 31, 2015 and 2014, respectively. During 2015, we recorded an impairment charge of $55,433 on patents related to certain of our IV sets. This charge is included in general and administrative expense in our Statements of Operations. Expected annual amortization expense for the next five years related to intangible assets is as follows: 2016 $ 2017 $ 2018 $ 2019 $ 2020 $ |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2015 | |
Stock-Based Compensation | |
Stock Based Compensation | 5 — Stock-Based Compensation 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 previous equity incentive plan was terminated and the remaining shares available for future awards were canceled. The 2014 Plan reserved 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, 2015, there were 757,750 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, 2015 2014 Cost of revenue $ $ General and administrative Sales and marketing Research and development Total $ $ As of December 31, 2015, we had $2,539,673 of total unrecognized stock-based compensation expense, which is expected to be recognized over a weighted average period of 2.6 years. The total grant date fair value of stock options that vested during the year ended December 31, 2015 was $1,128,742. The fair value of our option grants was estimated using the Black-Scholes model with the following weighted average assumptions: Years Ended December 31, 2015 2014 Volatility % % Expected term (years) Risk-free interest rate % % Dividend yield % % The weighted-average grant-date fair value of options granted during the years ended December 31, 2015 and 2014 was $11.75 and $6.47, respectively. The estimated forfeiture rate used to determine stock-based compensation expense was 1.4% and 3.0% for the years ended December 31, 2015 and 2014, 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, 2015: Options Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Life (Yrs) Aggregate Intrinsic Value Outstanding beginning of period $ $ Options granted Options exercised ) Options cancelled ) Outstanding end of period $ $ Exercisable $ $ Cash received from option and warrant exercises during the year ended December 31, 2015 was $597,508. The total intrinsic value of options exercised during the year ended December 31, 2015 was $6,954,526. |
Investments
Investments | 12 Months Ended |
Dec. 31, 2015 | |
Investments | |
Investments | 6 — Investments As of December 31, 2015 and 2014, our investments consisted of corporate bonds that we have classified as available-for-sale and are summarized in the following tables: December 31, 2015 Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Corporate bonds: U.S. corporations $ $ — $ $ International corporations — Total $ $ — $ $ December 31, 2014 Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Corporate bonds: U.S. corporations $ $ — $ $ International corporations — Total $ $ — $ $ As of December 31, 2015, the scheduled maturities of our investments are as follows: Cost Fair Value Less than 1 year $ $ 1 to 3 years Total $ $ |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2015 | |
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, 2015 Fair Value Quoted Prices in Active Market for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Corporate bonds: U.S. corporations $ $ — $ $ — International corporations — — Total $ $ — $ $ — Fair Value at December 31, 2014 Fair Value Quoted Prices in Active Market for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Corporate bonds: U.S. corporations $ $ — $ $ — International corporations — — Total $ $ — $ $ — Our corporate bonds are valued by the third-party custodian at closing prices from national exchanges or pricing vendors on the valuation date. There were no transfers into or out of any Levels during the years ended December 31, 2015 or 2014. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 12 Months Ended |
Dec. 31, 2015 | |
Accumulated Other Comprehensive Loss | |
Accumulated Other Comprehensive Loss | 8 — Accumulated Other Comprehensive Loss The only component of accumulated other comprehensive loss is as follows: Unrealized Gains (Losses) on Available-For-Sale Securities Balances at December 31, 2013 $ Losses, net ) Reclassification realized in net earnings ) Balances at December 31, 2014 $ ) Losses, net ) Reclassification realized in net earnings Balances at December 31, 2015 $ ) |
Other Income (Expense),Net
Other Income (Expense),Net | 12 Months Ended |
Dec. 31, 2015 | |
Other Income (Expense), Net | |
Other Income (Expense), Net | 9 — Other Income (Expense), Net Other income (expense), net consists of: As of December 31, 2015 2014 Interest income $ $ Foreign currency exchange losses ) ) Other ) Total $ $ ) |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2015 | |
Income Taxes | |
Income Taxes | 10 — Income Taxes The components of the provision for income taxes are as follows: Years Ended December 31, 2015 2014 Current taxes: U.S. federal $ $ State Total current tax expense Deferred taxes: U.S. federal ) ) State ) ) Total deferred tax benefit ) ) Income tax expense $ $ 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, 2015 2014 Deferred tax assets: Current deferred tax assets: Reserves and allowances $ $ Total current deferred tax assets $ $ Noncurrent deferred tax assets: Stock compensation $ $ Other Total noncurrent deferred tax assets $ $ Deferred tax liabilities: Current deferred tax liabilities: Reserves and allowances $ $ Total current deferred tax liabilities $ $ Noncurrent deferred tax liabilities: Depreciation and amortization $ $ Total noncurrent deferred tax liabilities A reconciliation of the statutory U.S. federal tax rate to our effective rate is as follows: Years Ended December 31, 2015 2014 Statutory U.S. federal tax rate % % State taxes, net of federal benefit Stock compensation expense Domestic production activities deduction ) ) Research and development credits ) ) Permanent items ) ) Total % % As of December 31, 2015 and December 31, 2014, 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, 2015 | |
Employee Benefit Plan | |
Employee Benefit Plan | 11 — 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 $221,903 and $162,581, respectively, for the years ended December 31, 2015 and 2014. Employer contributions vest ratably over five years. |
Segment, Customer and Geographi
Segment, Customer and Geographic Information | 12 Months Ended |
Dec. 31, 2015 | |
Segment, Customer and Geographic Information | |
Segment, Customer and Geographic Information | 12 — 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, 2015 2014 United States $ $ International $ $ Revenue information by type is as follows: Years Ended December 31, 2015 2014 Devices $ $ Disposable IV Sets and Services $ $ Property and equipment, net information by geographic region is as follows: Years Ended December 31, 2015 2014 United States $ $ International $ $ 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, 2015 | |
Commitments and Contingencies | |
Commitments and Contingencies | 13 — 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, an 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 $32,616, 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, 2015 and 2014 was $400,807 and $284,210, 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, 2015 are as follows: Operating Leases 2016 $ 2017 2018 2019 2020 — Thereafter — Total minimum lease payments $ Purchase commitments. We had various purchase orders for goods or services totaling approximately $3,564,088 at December 31, 2015. No amounts related to these purchase orders have been recognized in our balance sheet. 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, 2015. 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 was a putative class action lawsuit brought against the Company and certain individuals who are officers and / or directors of the Company. The plaintiff was an alleged shareholder of the Company, and in the operative complaint sought relief on behalf of a class of persons who purchased the Company’s common stock during the period from July 15, 2014 through September 17, 2014. The complaint alleged 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 alleged “control person” liability against the individual defendants under Section 20(a) of the Securities Exchange Act of 1934. The Company disputed the plaintiff’s allegations and theories of liability. On May 26, 2015, the court granted the defendants’ motions to dismiss the complaint in its entirety. On June 22, 2015, the plaintiff filed a notice of appeal in the U.S. Court of Appeals for the Eleventh Circuit. The appeal was dismissed with prejudice by the Court of Appeals on October 28, 2015 on joint motion of the parties. 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 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. In March 2015, we settled this matter and paid the amount that had been accrued during 2014. 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, 2015 | |
Capital Stock | |
Capital Stock | 14 — 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 Stock split ratio 1.75:1 Series A Preferred Stock outstanding — Post recapitalization Common stock outstanding — Pre recapitalization Class A Common Stock Class B Common Stock Total Stock split ratio 1.75:1 Common stock outstanding — Post recapitalization 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. As of the effective date of the reincorporation, we were 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. Effective October 30, 2015, after receiving approval by our Board of Directors and a majority of the voting power of our outstanding common stock, we amended our Certificate of Incorporation to decrease the number of authorized shares of our common stock from 90,000,000 to 31,500,000 shares and to decrease the number of authorized shares of preferred stock from 10,000,000 to 3,500,000 shares, of which 800,000 shares will remain designated as Series A Preferred Stock. The purpose of the decrease in authorized shares was to reduce our annual franchise tax costs. 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 3,500,000 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 31,500,000 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. The table below summarizes our common stock activity (shares): Balance, December 31, 2013 Issued pursuant to initial public offering Conversion of preferred stock Option exercises Balance, December 31, 2014 Option exercises Warrant exercises Balance, December 31, 2015 |
Officer Note Payable
Officer Note Payable | 12 Months Ended |
Dec. 31, 2015 | |
Officer Note Payable | |
Officer Note Payable | 15 — 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. In March 2014 we repaid with cash the outstanding balance of $6,333 on the note payable. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent Events | |
Subsequent Events | 16 — Subsequent Events On January 28, 2016, our Board of Directors approved a stock repurchase program, authorizing the repurchase of up to $10 million of our common stock through January 28, 2017. We intend to use our cash, investments and cash generated from operations to fund the share repurchases. The timing and amount of the repurchases will be subject to applicable legal requirements including federal and state securities laws. Purchases will be made in open market transactions effected through a broker-dealer at prevailing market prices, in block trades, or in privately negotiated transactions. Any repurchased shares will be available for general corporate purchases. |
Organization and Significant 25
Organization and Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
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 The FDA conducted a routine inspection of our prior facility between April 7 and April 16, 2014. This was the first FDA inspection of our facility since the voluntary product recall in August 2012 of certain infusion sets and the voluntary recall in July 2013 of our DERS software. The FDA issued a Form 483 on April 16, 2014 that identified eight observations. The majority of the observations related to procedural and documentation issues associated with the design, development, validation testing and documentation 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 control and procedures related to handling certain reported complaints. We submitted a response 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 observations. On September 2, 2014, we received a warning letter from the FDA relating to this inspection (the “Warning Letter”). The 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 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 DERS option. On January 28, 2015, under FDA enforcement discretion, we announced that we resumed domestic distribution of our DERS option. On December 9, 2015, we met with the FDA to review responses to the agency’s additional information letter. We continue to work with the FDA to fully resolve the Warning Letter and complete the review of the 510(k) submission. See Note 13. |
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. During the year ended December 31, 2015, warrants to purchase 15,000 shares of our common stock were exercised. 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) 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 generally 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; · 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 described above. |
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, 2015 and 2014, our allowance for doubtful accounts was $31,672 and $28,119, 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 other income (expense) 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 Inventory is 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. The estimates we use in projecting future product warranty costs may prove to be incorrect. Any future determination that our provision for product warranty is understated could result in increases to our cost of revenue and a reduction in our operating profits and results of operations. 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 products’ 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 and included in cost of revenue. 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, 2015 and 2014, these costs were $66,722 and $65,369, respectively. Advertising and marketing costs are expensed as incurred and included in sales and marketing expense. |
Medical Device Excise Taxes | Medical Device Excise Taxes We are 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, 2015 and 2014, we recorded medical device excise taxes of $364,870 and $200,496, respectively. Medical device excise taxes are included as a component of general and administrative expense. On December 18, 2015, under the Consolidated Appropriations Act of 2015, the medical device excise tax was suspended for two years beginning on January 1, 2016. |
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. 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 issue 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 year ended December 31, 2015 and 2014, net foreign currency transaction losses were $23,999 and $56,969, 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 14, 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. The Underwriters’ warrants, stock options granted by us and preferred stock 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, 2015 2014 Net income $ $ Weighted-average shares outstanding — Basic Effect of dilutive securities: Underwriters’ warrants — Stock options Preferred stock — Weighted-average shares outstanding — Diluted Basic net income per share $ $ Diluted net income per share $ $ 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, 2015 2014 Anti-dilutive warrants and stock options |
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. No such concentration existed as of December 31, 2015. 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 customer contracts. This update is effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period, which will require us to adopt this update in the first quarter of 2018. Early adoption is now 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. In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory (Topic 330). The amendments in this update require that inventory within the scope of this ASU be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, let reasonably predicable costs of completion, disposal, and transportation. The amendments in this ASU do not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. The amendments apply to all other inventory, which includes inventory that is measured at first-in, first-out (FIFO) or average cost. The 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. The amendments in this update should be applied prospectively and early adoption is permitted. We do not expect the adoption of this guidance will have a material impact upon our financial condition or results of operations. In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes (Topic 740). The amendments in this update require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments in the update apply to all entities that present a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendments in this update. The 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. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period. The amendments in this update may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. We do not expect the adoption of this guidance will have a material impact upon our statement of financial position. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This update requires lessees to recognize, on the balance sheet, assets and liabilities for the rights and obligations created by all leases not considered short-term leases. For short-term leases, lessees may elect an accounting policy by class of underlying assets under which right-of-use assets and lease liabilities are not recognized and lease payments are generally recognized as expense over the lease term on a straight-line basis. The accounting by lessors will remain largely unchanged from current U.S. GAAP. This update is effective for annual periods beginning after December 15, 2018, including interim periods within that reporting period, which will require us to adopt this update in the first quarter of 2019. Early adoption is permitted. We are in the process of determining the method and date of adoption and assessing the impact of the update on our financial condition and results of operations. |
Organization and Significant 26
Organization and Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Organization and Significant Accounting Policies | |
Schedule of computation of basic and diluted net income per share | Years Ended December 31, 2015 2014 Net income $ $ Weighted-average shares outstanding — Basic Effect of dilutive securities: Underwriters’ warrants — Stock options Preferred stock — Weighted-average shares outstanding — Diluted Basic net income per share $ $ Diluted net income per share $ $ |
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, 2015 2014 Anti-dilutive warrants and stock options |
Inventory (Tables)
Inventory (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Inventory | |
Schedule of inventory | As of December 31, 2015 2014 Raw materials $ $ Work in process Finished goods Inventory before allowance for excess and obsolete Allowance for excess and obsolete ) ) Total $ $ |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Property and Equipment | |
Schedule of property and equipment | As of December 31, 2015 2014 Computer software and hardware $ $ Furniture and fixtures Leasehold improvements Machinery and equipment Tooling in-process Accumulated depreciation ) ) Total $ $ |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Intangible Assets | |
Summary of the components of intangible asset balances | As of December 31, 2015 2014 Patents — in use $ $ Patents — in process Internally developed software Accumulated amortization ) ) Total $ $ |
Schedule of expected annual amortization expense related to intangible assets | 2016 $ 2017 $ 2018 $ 2019 $ 2020 $ |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Stock-Based Compensation | |
Schedule of stock-based compensation | Years Ended December 31, 2015 2014 Cost of revenue $ $ General and administrative Sales and marketing Research and development Total $ $ |
Schedule of weighted average fair value of options and related assumptions used in the Black Scholes model | Years Ended December 31, 2015 2014 Volatility % % Expected term (years) Risk-free interest rate % % Dividend yield % % |
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, 2015: Options Weighted-Average Exercise Price Per Share Weighted-Average Remaining Contractual Life (Yrs) Aggregate Intrinsic Value Outstanding beginning of period $ $ Options granted Options exercised ) Options cancelled ) Outstanding end of period $ $ Exercisable $ $ |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Investments | |
Summary of available for sale securities | As of December 31, 2015 and 2014, our investments consisted of corporate bonds that we have classified as available-for-sale and are summarized in the following tables: December 31, 2015 Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Corporate bonds: U.S. corporations $ $ — $ $ International corporations — Total $ $ — $ $ December 31, 2014 Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Corporate bonds: U.S. corporations $ $ — $ $ International corporations — Total $ $ — $ $ |
Scheduled maturities of our investments | As of December 31, 2015, the scheduled maturities of our investments are as follows: Cost Fair Value Less than 1 year $ $ 1 to 3 years Total $ $ |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Measurements | |
Schedule of the fair value of assets and liabilities subject to recurring fair value measurements | Fair Value at December 31, 2015 Fair Value Quoted Prices in Active Market for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Corporate bonds: U.S. corporations $ $ — $ $ — International corporations — — Total $ $ — $ $ — Fair Value at December 31, 2014 Fair Value Quoted Prices in Active Market for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Corporate bonds: U.S. corporations $ $ — $ $ — International corporations — — Total $ $ — $ $ — |
Accumulated Other Comprehensi33
Accumulated Other Comprehensive Loss (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Accumulated Other Comprehensive Loss | |
Schedule of component of accumulated other comprehensive (loss) income, net of tax | Unrealized Gains (Losses) on Available-For-Sale Securities Balances at December 31, 2013 $ Losses, net ) Reclassification realized in net earnings ) Balances at December 31, 2014 $ ) Losses, net ) Reclassification realized in net earnings Balances at December 31, 2015 $ ) |
Other Income (Expense),Net (Tab
Other Income (Expense),Net (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Other Income (Expense), Net | |
Schedule of components of other income (expense), net | As of December 31, 2015 2014 Interest income $ $ Foreign currency exchange losses ) ) Other ) Total $ $ ) |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Taxes | |
Schedule of components of provision for income taxes | Years Ended December 31, 2015 2014 Current taxes: U.S. federal $ $ State Total current tax expense Deferred taxes: U.S. federal ) ) State ) ) Total deferred tax benefit ) ) Income tax expense $ $ |
Schedule of significant components of deferred taxes | Years Ended December 31, 2015 2014 Deferred tax assets: Current deferred tax assets: Reserves and allowances $ $ Total current deferred tax assets $ $ Noncurrent deferred tax assets: Stock compensation $ $ Other Total noncurrent deferred tax assets $ $ Deferred tax liabilities: Current deferred tax liabilities: Reserves and allowances $ $ Total current deferred tax liabilities $ $ Noncurrent deferred tax liabilities: Depreciation and amortization $ $ Total noncurrent deferred tax liabilities |
Schedule of reconciliation of statutory U.S. Federal tax rate to effective rate | Years Ended December 31, 2015 2014 Statutory U.S. federal tax rate % % State taxes, net of federal benefit Stock compensation expense Domestic production activities deduction ) ) Research and development credits ) ) Permanent items ) ) Total % % |
Segment, Customer and Geograp36
Segment, Customer and Geographic Information (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Segment, Customer and Geographic Information | |
Schedule of revenue information by geographic region | Years Ended December 31, 2015 2014 United States $ $ International $ $ |
Schedule of revenue information by external customers by product | Years Ended December 31, 2015 2014 Devices $ $ Disposable IV Sets and Services $ $ |
Schedule of property and equipment, net information by geographic region | Years Ended December 31, 2015 2014 United States $ $ International $ $ |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies | |
Schedule of future minimum lease payments | Future minimum lease payments under noncancelable operating leases as of December 31, 2015 are as follows: Operating Leases 2016 $ 2017 2018 2019 2020 — Thereafter — Total minimum lease payments $ |
Capital Stock (Tables)
Capital Stock (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
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 Stock split ratio 1.75:1 Series A Preferred Stock outstanding — Post recapitalization Common stock outstanding — Pre recapitalization Class A Common Stock Class B Common Stock Total Stock split ratio 1.75:1 Common stock outstanding — Post recapitalization |
Summary of common stock activity | Balance, December 31, 2013 Issued pursuant to initial public offering Conversion of preferred stock Option exercises Balance, December 31, 2014 Option exercises Warrant exercises Balance, December 31, 2015 |
Organization and Significant 39
Organization and Significant Accounting Policies (Details) | Jul. 21, 2014USD ($)$ / sharesshares | Dec. 31, 2015shares | Sep. 02, 2014item | Apr. 16, 2014item |
FDA Warning Letter | ||||
Number of observations | item | 8 | |||
Number of identified responses whose accuracy will be determined | item | 2 | |||
Initial Public Offering | ||||
Conversion ratio | 1.75 | |||
IPO | ||||
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) | $ / shares | $ 6.25 | |||
Net proceeds generated after deducting underwriting discounts and expenses | $ | $ 12,400,000 | |||
Underwriting discounts and expenses | $ | $ 2,000,000 | |||
Conversion ratio | 1 | |||
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) | $ / shares | $ 8.13 | |||
Exercise price expressed as a percent of original issue price | 130.00% | |||
Number of warrants exercised | 15,000 |
Organization and Significant 40
Organization and Significant Accounting Policies - Revenue Recognition (Details) - USD ($) | Dec. 18, 2015 | Dec. 31, 2015 | Dec. 31, 2014 |
Revenue Recognition | |||
Deferred period of revenue related to undelivered installation and training services | 30 days | ||
Accounts receivable and allowance for doubtful accounts | |||
Accounts receivable, allowance for doubtful accounts | $ 31,672 | $ 28,119 | |
Advertising and Marketing | |||
Advertising and marketing costs | $ 66,722 | 65,369 | |
Medical Device Excise Taxes | |||
Medical device excise taxes (as a percent) | 2.30% | ||
Medical device excise taxes | $ 364,870 | 200,496 | |
Medical device excise tax suspension period | 2 years | ||
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 | |||
Foreign currency exchange losses | $ (23,999) | $ (56,969) | |
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 | |||
Accounts receivable and allowance for doubtful accounts | |||
Estimated useful lives of assets | 3 years | ||
Minimum | Furniture and fixtures | |||
Accounts receivable and allowance for doubtful accounts | |||
Estimated useful lives of assets | 5 years | ||
Minimum | Machinery and equipment | |||
Accounts receivable and allowance for doubtful accounts | |||
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 | |||
Accounts receivable and allowance for doubtful accounts | |||
Estimated useful lives of assets | 5 years | ||
Maximum | Furniture and fixtures | |||
Accounts receivable and allowance for doubtful accounts | |||
Estimated useful lives of assets | 7 years | ||
Maximum | Machinery and equipment | |||
Accounts receivable and allowance for doubtful accounts | |||
Estimated useful lives of assets | 7 years |
Organization and Significant 41
Organization and Significant Accounting Policies - Basic and Diluted Net Income per Share (Details) | 12 Months Ended | |
Dec. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2014USD ($)$ / sharesshares | |
Organization and Significant Accounting Policies | ||
Stock split ratio | 1.75 | |
Basic and Diluted Net Income Per Share | ||
Net income | $ | $ 7,529,920 | $ 2,050,366 |
Weighted-average shares outstanding - Basic (in shares) | 11,003,272 | 8,743,461 |
Effect of dilutive securities: | ||
Underwriters' warrants | 123,144 | |
Stock options | 1,430,471 | 723,902 |
Preferred stock | 751,780 | |
Weighted-average common shares outstanding - Diluted (in shares) | 12,556,887 | 10,219,143 |
Basic net income per share (in dollars per share) | $ / shares | $ 0.68 | $ 0.23 |
Diluted net income per share (in dollars per share) | $ / shares | $ 0.60 | $ 0.20 |
Anti-dilutive stock | ||
Anti-dilutive warrants and stock options (in shares) | 27,553 | 129,340 |
Organization and Significant 42
Organization and Significant Accounting Policies - Certain Significant Risks and Uncertainties (Details) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Gross accounts receivable | One Customer | ||
Certain Significant Risks and Uncertainties | ||
Concentration risk (as a percent) | 0.00% | 35.00% |
Inventory (Details)
Inventory (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Inventory | ||
Raw materials | $ 2,025,674 | $ 1,603,757 |
Work in process | 184,478 | 126,188 |
Finished goods | 286,164 | 457,962 |
Inventory before allowance for excess and obsolete | 2,496,316 | 2,187,907 |
Allowance for excess and obsolete | (113,158) | (62,069) |
Total | $ 2,383,158 | $ 2,125,838 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Property and equipment | ||
Property and equipment, gross | $ 1,874,324 | $ 1,575,601 |
Accumulated depreciation | (968,702) | (780,766) |
Total | 905,622 | 794,835 |
Depreciation and amortization expense of property and equipment | 187,936 | 110,557 |
Computer software and hardware | ||
Property and equipment | ||
Property and equipment, gross | 404,950 | 303,076 |
Furniture and fixtures | ||
Property and equipment | ||
Property and equipment, gross | 267,643 | 198,253 |
Leasehold improvements | ||
Property and equipment | ||
Property and equipment, gross | 191,139 | 182,105 |
Machinery and equipment | ||
Property and equipment | ||
Property and equipment, gross | 963,897 | 849,852 |
Tooling in-process | ||
Property and equipment | ||
Property and equipment, gross | $ 46,695 | $ 42,315 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Intangible assets | ||
Intangible Assets, gross | $ 364,824 | $ 418,873 |
Accumulated amortization | (189,311) | (168,037) |
Total | 175,513 | 250,836 |
Amortization expense of intangible assets | 36,006 | 38,499 |
Impairment of intangible assets | 55,433 | |
Expected annual amortization expense | ||
2,016 | 18,016 | |
2,017 | 10,538 | |
2,018 | 10,538 | |
2,019 | 10,538 | |
2,020 | 10,538 | |
Patents - in use | ||
Intangible assets | ||
Intangible Assets, gross | 168,383 | 238,548 |
Patents - in process | ||
Intangible assets | ||
Intangible Assets, gross | 47,474 | 31,358 |
Internally developed software | ||
Intangible assets | ||
Intangible Assets, gross | $ 148,967 | $ 148,967 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - Equity Incentive Plan 2014 - shares | Dec. 31, 2015 | Apr. 30, 2014 |
Stock Based Compensation | ||
Common shares authorized for issuance | 1,000,000 | |
Shares available for future awards | 757,750 |
Stock-Based Compensation - Allo
Stock-Based Compensation - Allocated Stock-based compensation (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Stock Based Compensation | ||
Stock based compensation | $ 1,220,118 | $ 724,063 |
Total unrecognized stock based compensation expense | $ 2,539,673 | |
Weighted average period expected to be recognized | 2 years 7 months 6 days | |
Total fair value of stock options vesting during the period | $ 1,128,742 | |
Cost of revenue | ||
Stock Based Compensation | ||
Stock based compensation | 77,771 | 6,529 |
General and administrative | ||
Stock Based Compensation | ||
Stock based compensation | 541,876 | 266,167 |
Sales and marketing | ||
Stock Based Compensation | ||
Stock based compensation | 555,478 | 415,021 |
Research and development | ||
Stock Based Compensation | ||
Stock based compensation | $ 44,993 | $ 36,346 |
Stock-Based Compensation - Fair
Stock-Based Compensation - Fair value of option grants and stock option activity (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Summary of weighted-average fair value assumptions used to value options | ||
Volatility (as a percent) | 87.10% | 104.30% |
Expected term (years) | 6 years 8 months 12 days | 7 years |
Risk- free interest rate (as a percent) | 1.80% | 2.10% |
Dividend yield (as a percent) | 0.00% | 0.00% |
Weighted-average fair value of common stock (in dollars per share) | $ 11.75 | $ 6.47 |
Forfeiture rate (as a percent) | 1.40% | 3.00% |
Options | ||
Outstanding beginning of period (in shares) | 1,945,192 | |
Options granted (in shares) | 38,000 | |
Options exercised (in shares) | (345,475) | |
Options cancelled (in shares) | (8,375) | |
Outstanding end of period (in shares) | 1,629,342 | 1,945,192 |
Exercisable (in shares) | 1,019,605 | |
Weighted-Average Exercise Price Per Share | ||
Outstanding beginning of period (in dollars per share) | $ 2.11 | |
Options granted (in dollars per share) | 16.54 | |
Options exercised (in dollars per share) | 1.38 | |
Options canceled (in dollars per share) | 6.42 | |
Outstanding end of period (in dollars per share) | 2.58 | $ 2.11 |
Exercisable (in dollars per share) | $ 1.49 | |
Weighted-Average Remaining Contractual Life (Yrs) | ||
Outstanding end of period | 7 years 2 months 12 days | 7 years 4 months 24 days |
Exercisable | 6 years 7 months 6 days | |
Aggregate Intrinsic Value | ||
Outstanding beginning of period (in dollars) | $ 20,996,495 | |
Outstanding end of period (in dollars) | 41,474,962 | $ 20,996,495 |
Exercisable (in dollars) | 27,057,093 | |
Additional disclosure | ||
Proceeds from stock option and warrant exercises | 597,508 | |
intrinsic value of options exercised | $ 6,954,526 |
Investments (Details)
Investments (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cost | $ 7,691,541 | $ 7,948,486 |
Gross Unrealized Losses | 89,337 | 34,693 |
Fair Value | 7,602,204 | 7,913,793 |
Cost | ||
Less than 1 year | 4,660,286 | |
1 to 3 years | 3,031,255 | |
Fair Value | ||
Less than 1 year | 4,592,680 | |
1 to 3 years | 3,009,524 | |
U.S. corporations | ||
Cost | 6,176,341 | 6,433,286 |
Gross Unrealized Losses | 68,381 | 27,067 |
Fair Value | 6,107,960 | 6,406,219 |
International corporations | ||
Cost | 1,515,200 | 1,515,200 |
Gross Unrealized Losses | 20,956 | 7,626 |
Fair Value | $ 1,494,244 | $ 1,507,574 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
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 Measurements | ||
Total | 7,602,204 | 7,913,793 |
Recurring | U.S. corporations | ||
Fair Value Measurements | ||
Total | 6,107,960 | 6,406,219 |
Recurring | International corporations | ||
Fair Value Measurements | ||
Total | 1,494,244 | 1,507,574 |
Recurring | Significant Other Observable Inputs (Level 2) | ||
Fair Value Measurements | ||
Total | 7,602,204 | 7,913,793 |
Recurring | Significant Other Observable Inputs (Level 2) | U.S. corporations | ||
Fair Value Measurements | ||
Total | 6,107,960 | 6,406,219 |
Recurring | Significant Other Observable Inputs (Level 2) | International corporations | ||
Fair Value Measurements | ||
Total | $ 1,494,244 | $ 1,507,574 |
Accumulated Other Comprehensi51
Accumulated Other Comprehensive Loss (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Unrealized Gains (Losses) on Available-For-Sale Securities | ||
Balance at the beginning | $ (21,473) | $ 924 |
Losses, net | (36,053) | (17,641) |
Reclassification realized in net earnings | 2,241 | (4,756) |
Balance at the end | $ (55,285) | $ (21,473) |
Other Income (Expense),Net (Det
Other Income (Expense),Net (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Other Income (Expense), Net | ||
Interest income | $ 148,907 | $ 5,701 |
Foreign currency exchange losses | (23,999) | (56,969) |
Other | (3,523) | 2,719 |
Total | $ 121,385 | $ (48,549) |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Current taxes: | ||
U.S. Federal | $ 3,874,171 | $ 1,022,098 |
State | 245,204 | 112,144 |
Total current tax expense | 4,119,375 | 1,134,242 |
Deferred taxes: | ||
U.S. Federal | (13,171) | (149,247) |
State | (1,590) | (18,020) |
Total deferred tax benefit | (14,761) | (167,267) |
Income tax expense | $ 4,104,614 | $ 966,975 |
Income Taxes - Significant comp
Income Taxes - Significant components of deferred taxes (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Current deferred tax assets: | ||
Reserves and allowances | $ 205,595 | $ 119,548 |
Total current deferred tax assets | 205,595 | 119,548 |
Noncurrent deferred tax assets: | ||
Stock compensation | 427,133 | 417,956 |
Other | 35,511 | 14,689 |
Total noncurrent deferred tax assets | 462,644 | 432,645 |
Current deferred tax liabilities: | ||
Reserves and allowances | 64,149 | 3,209 |
Total current deferred tax liabilities | 64,149 | 3,209 |
Noncurrent deferred tax liabilities: | ||
Depreciation and amortization | 374,246 | 356,088 |
Total noncurrent deferred tax liabilities | $ 374,246 | $ 356,088 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of the statutory U.S. federal tax rate to effective rate (Details) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Reconciliation of the statutory U.S. federal tax rate to effective rate | ||
Statutory U.S. federal tax rate | 34.00% | 34.00% |
State taxes, net of federal benefit | 1.80% | 2.00% |
Stock compensation expense | 2.90% | 0.30% |
Domestic production activities deduction | (1.80%) | (2.10%) |
Research and development credits | (1.10%) | (1.80%) |
Permanent items | (0.50%) | (0.40%) |
Total | 35.30% | 32.00% |
Employee Benefit Plan (Details)
Employee Benefit Plan (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Employee Benefit Plan | ||
Employer matching contributions | $ 221,903 | $ 162,581 |
Employer matching contributions vest period | 5 years |
Segment, Customer and Geograp57
Segment, Customer and Geographic Information (Details) | 12 Months Ended | |
Dec. 31, 2015USD ($)item | Dec. 31, 2014USD ($)item | |
Segment, Customer and Geographic Information | ||
Number of reportable segment | item | 1 | 1 |
Segment, Customer and Geographic Information | ||
Revenue | $ 31,593,720 | $ 15,653,057 |
Property and equipment, net | 905,622 | 794,835 |
Devices | ||
Segment, Customer and Geographic Information | ||
Revenue | 26,353,235 | 12,812,446 |
Disposable IV Sets and Services | ||
Segment, Customer and Geographic Information | ||
Revenue | 5,240,485 | 2,840,611 |
United States | ||
Segment, Customer and Geographic Information | ||
Revenue | 28,854,911 | 11,357,705 |
Property and equipment, net | 837,728 | 728,556 |
International | ||
Segment, Customer and Geographic Information | ||
Revenue | 2,738,809 | 4,295,352 |
Property and equipment, net | $ 67,894 | $ 66,279 |
Commitments and Contingencies58
Commitments and Contingencies (Details) | Jan. 30, 2014USD ($)item | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) |
Purchase commitments | |||
Purchase commitments | $ 3,564,088 | ||
Susi, LLC | Winter Springs, Florida Facility | |||
Leases | |||
Monthly base rent | $ 32,616 | ||
Number of successive renewal terms of lease | item | 2 | ||
Renewal term of lease beginning in 2019 | 5 years | ||
Renewal term of lease beginning in 2024 | 5 years | ||
Renewal term lease thereafter | 1 year | ||
Rent expense | 400,807 | $ 284,210 | |
Non-cancelable operating lease commitments | |||
2,016 | 393,252 | ||
2,017 | 392,617 | ||
2,018 | 392,617 | ||
2,019 | 163,080 | ||
Total non-cancelable operating lease commitments | $ 1,341,566 |
Capital Stock (Details)
Capital Stock (Details) | Oct. 30, 2015USD ($)item$ / sharesshares | Jul. 31, 2014 | Jul. 21, 2014 | Apr. 14, 2014$ / sharesshares | Dec. 31, 2015$ / sharesshares | Dec. 31, 2013shares | Dec. 31, 2014$ / sharesshares |
Capital Stock | |||||||
Conversion ratio | 1.75 | ||||||
Common stock shares outstanding - Post recapitalization | 11,175,125 | 10,814,650 | |||||
Common stock, shares authorized | 31,500,000 | 31,500,000 | |||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | |||||
IPO | |||||||
Capital Stock | |||||||
Conversion ratio | 1 | ||||||
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 | 31,500,000 | 90,000,000 | |||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | |||||
Number of voting right on each common stock | item | 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 | 3,500,000 | 10,000,000 | |||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.0001 | ||||||
Number of voting right on each preferred stock | item | 1 | ||||||
Amount per preferred stock to be paid in the event of liquidation, dissolution, or winding up (in dollars per share) | $ | $ 1.07143 | ||||||
Conversion price (in dollars per share) | $ / shares | $ 1.07143 | ||||||
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) | $ / shares | $ 0.0001 | ||||||
Dividend on each share of Preferred Stock (in dollars per share) | $ / shares | $ 0.06429 |
Capital Stock - Common stock ac
Capital Stock - Common stock activity (Details) - shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Balances at the beginning | 10,814,650 | |
Option exercises | 345,475 | |
Balances at the end | 11,175,125 | 10,814,650 |
Common Stock | ||
Balances at the beginning | 10,814,650 | 7,000,000 |
Issued pursuant to initial public offering | 2,318,400 | |
Conversion of preferred stock | 1,400,000 | |
Option exercises | 345,475 | 96,250 |
Warrant exercises | 15,000 | |
Balances at the end | 11,175,125 | 10,814,650 |
Officer Note Payable (Details)
Officer Note Payable (Details) - USD ($) | 1 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Dec. 31, 2014 | |
Officer Note Payable | ||
Repayments of Notes Payable | $ 6,333 | $ 6,333 |
Subsequent Events (Details)
Subsequent Events (Details) $ in Millions | Jan. 28, 2016USD ($) |
Subsequent Event | Common Stock | |
Subsequent Events | |
Repurchase of common stock, authorized | $ 10 |