Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Aug. 03, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | CorMedix Inc. | |
Entity Central Index Key | 1,410,098 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 34,232,044 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,015 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Current assets | ||
Cash and cash equivalents | $ 24,110,836 | $ 4,339,540 |
Restricted cash | 131,994 | 0 |
Short-term investments | 13,377,077 | 0 |
Trade receivables | 112,872 | 80,183 |
Inventories, net | 715,049 | 463,029 |
Other prepaid expenses and current assets | 298,546 | 155,210 |
Total current assets | 38,746,374 | 5,037,962 |
Property and equipment, net | 44,652 | 41,458 |
Security deposit | 5,000 | 18,342 |
TOTAL ASSETS | 38,796,026 | 5,097,762 |
Current liabilities | ||
Accounts payable | 1,141,629 | 893,385 |
Accrued expenses | 761,121 | 521,525 |
Deferred revenue | 9,025 | 10,477 |
Total current liabilities | 1,911,775 | 1,425,387 |
Deferred revenue, long term | 33,391 | 37,903 |
TOTAL LIABILITIES | 1,945,166 | 1,463,290 |
STOCKHOLDERS' EQUITY | ||
Preferred stock - $0.001 par value: 2,000,000 shares authorized; 450,085 and 949,948 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively | 450 | 950 |
Common stock - $0.001 par value: 80,000,000 shares authorized; 34,212,044 and 22,461,668 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively | 34,212 | 22,461 |
Deferred stock issuances | (110) | (110) |
Accumulated other comprehensive income | 92,704 | 98,972 |
Additional paid-in capital | 122,560,439 | 79,716,265 |
Accumulated deficit | (85,836,835) | (76,204,066) |
TOTAL STOCKHOLDERS' EQUITY | 36,850,860 | 3,634,472 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 38,796,026 | $ 5,097,762 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 450,085 | 949,948 |
Preferred stock, shares outstanding | 450,085 | 949,948 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 80,000,000 | 80,000,000 |
Common stock, shares issued | 34,212,044 | 22,461,668 |
Common stock, shares outstanding | 34,212,044 | 22,461,668 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE GAIN (LOSS) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Revenue | ||||
Net sales | $ 119,973 | $ 39,729 | $ 151,237 | $ 51,932 |
Cost of sales | (101,798) | (54,479) | (119,117) | (135,505) |
Gross profit (loss) | 18,175 | (14,750) | 32,120 | (83,573) |
Operating Expenses | ||||
Research and development | (1,797,588) | (171,929) | (3,032,103) | (524,947) |
Selling, general and administrative | (2,355,176) | (1,703,041) | (6,631,531) | (4,215,750) |
Total Operating Expenses | (4,152,764) | (1,874,970) | (9,663,634) | (4,740,697) |
Loss From Operations | (4,134,589) | (1,889,720) | (9,631,514) | (4,824,270) |
Other Income (Expense) | ||||
Interest income | 8,778 | 987 | 9,321 | 1,508 |
Foreign exchange transaction loss | (5,597) | (20,520) | (6,026) | (28,158) |
Loss on issuance of preferred stock, convertible notes and warrants | 0 | 0 | 0 | (89,590) |
Change in fair value of derivative liabilities | 0 | 5,419,056 | 0 | (8,262,513) |
Interest expense | (3,692) | (513) | (4,550) | (978) |
Net Loss | (4,135,100) | 3,509,290 | (9,632,769) | (13,204,001) |
Other Comprehensive Income (Loss) | ||||
Unrealized loss from investments | (5,504) | 0 | (5,504) | 0 |
Foreign currency translation gain (loss) | (3,574) | 9,344 | (764) | 7,983 |
Comprehensive Loss | (4,144,178) | 3,518,634 | (9,639,037) | (13,196,018) |
Net loss | (4,135,100) | 3,509,290 | (9,632,769) | (13,204,001) |
Dividends, including beneficial conversion feature | 0 | (27,453) | (33,121) | (54,602) |
Net Loss Attributable To Common Shareholders | $ (4,135,100) | $ 3,481,537 | $ (9,665,890) | $ (13,258,603) |
Net Loss Per Common Share - Basic | $ (0.13) | $ 0.12 | $ (0.35) | $ (0.64) |
Weighted Average Common Shares Outstanding - Basic | 31,623,100 | 21,993,384 | 27,793,627 | 20,636,671 |
Net Loss Per Common Share - Diluted | $ (0.13) | $ (0.05) | $ (0.35) | $ (0.64) |
Weighted Average Common Shares Outstanding - Diluted | 31,623,100 | 25,439,799 | 27,793,627 | 20,636,671 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - 6 months ended Jun. 30, 2015 - USD ($) | Common Stock | Non-Voting Preferred Stock - Series B, Series C-2, Series C-3, Series D and Series E | Deferred Stock Issuances | Accumulated Other Comprehensive Income | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning balance (in shares) at Dec. 31, 2014 | 22,461,668 | 949,948 | (110) | ||||
Beginning balance at Dec. 31, 2014 | $ 22,461 | $ 950 | $ 98,972 | $ 79,716,265 | $ (76,204,066) | $ 3,634,472 | |
Conversion of Series B non-voting preferred stock to common stock, Shares | 454,546 | (454,546) | |||||
Conversion of Series B non-voting preferred stock to common stock, Amount | $ 455 | $ (455) | |||||
Conversion of Series C-3 non-voting preferred stock to common stock, shares | 425,000 | (42,500) | |||||
Conversion of Series C-3 non-voting preferred stock to common stock, amount | $ 425 | $ (42) | (383) | ||||
Conversion of Series E non-voting preferred stock to common stock, Shares | 61,598 | (2,817) | |||||
Conversion of Series E non-voting preferred stock to common stock, Amount | $ 62 | $ (3) | (59) | ||||
Stock issued in connection with warrants exercised, Shares | 4,581,783 | ||||||
Stock issued in connection with warrants exercised, Amount | $ 4,581 | 14,653,579 | 14,658,160 | ||||
Stock issued in connection with warrants cashless exercised, Shares | 2,158,033 | ||||||
Stock issued in connection with warrants cashless exercised, Amount | $ 2,158 | (2,158) | |||||
Stock issued in connection with stock options exercised, Shares | 454,955 | ||||||
Stock issued in connection with stock options exercised, Amount | $ 455 | 452,005 | 452,460 | ||||
Stock issued in connection with sale of common stock, Shares | 3,603,733 | ||||||
Stock issued in connection with sale of common stock, Amount | $ 3,604 | 23,978,671 | 23,982,275 | ||||
Stock issued in connection with conversion of wages, Shares | 10,728 | ||||||
Stock issued in connection with conversion of wages, Amount | $ 11 | 49,989 | 50,000 | ||||
Value of warrants issued in connection with backstop financing | 1,583,252 | 1,583,252 | |||||
Modification of warrant agreement | 112,982 | 112,982 | |||||
Short swing profit recovery | 28,594 | 28,594 | |||||
Stock-based compensation | 1,987,702 | 1,987,702 | |||||
Other comprehensive income (loss) | (6,268) | (6,268) | |||||
Net loss | (9,632,769) | (9,632,769) | |||||
Ending balance (in shares) at Jun. 30, 2015 | 34,212,044 | 450,085 | (110) | ||||
Ending balance at Jun. 30, 2015 | $ 34,212 | $ 450 | $ 92,704 | $ 122,560,439 | $ (85,836,835) | $ 36,850,860 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (9,632,769) | $ (13,204,001) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock-based compensation | 1,987,702 | 1,775,753 |
Value of warrants issued in connection with backstop financing | 1,583,252 | 0 |
Modification of warrant agreement | 112,982 | 0 |
Loss on foreign currency transactions | 0 | 28,158 |
Loss on issuance of warrants and preferred stock | 0 | 89,590 |
Revaluation of derivative liability | 0 | 8,262,513 |
Depreciation | 7,115 | 1,112 |
Changes in operating assets and liabilities: | ||
Restricted cash | (131,994) | 220,586 |
Trade receivables | (39,960) | (52,941) |
Inventory | (252,021) | (198,028) |
Prepaid expenses and other current assets | (133,475) | 35,979 |
Accounts payable | 256,298 | (62,660) |
Accrued expenses and accrued interest | 301,656 | 170,715 |
Deferred revenue | (5,964) | (2,197) |
Net cash used in operating activities | (5,947,178) | (2,935,421) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of short-term investments | (13,382,581) | 0 |
Purchase of equipment | (13,797) | (19,613) |
Net cash used in investing activities | (13,396,378) | (19,613) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from Series C-3 preferred stock, net | 0 | 743,884 |
Proceeds from Series C-3 preferred stock, related party | 0 | 575,000 |
Proceeds from sale of common stock from an at-the-market program | 23,982,275 | 0 |
Proceeds from exercise of warrants | 14,658,160 | 0 |
Proceeds from exercise of stock options | 452,460 | 213,650 |
Proceeds from short swing profit recovery | 28,594 | 0 |
Payments for deferred financing costs | 0 | (2,366) |
Proceeds from sale of equity securities | 0 | 6,723,248 |
Net cash provided by financing activities | 39,121,489 | 8,253,416 |
Foreign exchange effect on cash | (6,637) | (20,431) |
NET INCREASE IN CASH | 19,771,296 | 5,277,951 |
CASH - BEGINNING OF PERIOD | 4,339,540 | 2,373,893 |
CASH - END OF PERIOD | 24,110,836 | 7,651,844 |
Cash paid for interest | 1,026 | 970 |
Supplemental Disclosure of Non-Cash Financing Activities: | ||
Conversion of preferred stock to common stock | $ 500 | 2,447,384 |
Conversion of accounts payable and accrued expenses to preferred stock | 645,458 | |
Reclassification of derivative liability to equity | 6,235,398 | |
Conversion of wages and fees to common stock | $ 50,000 | 5,000 |
Dividend, including beneficial conversion feature | $ 33,121 | $ 54,602 |
1. Organization, Business and B
1. Organization, Business and Basis of Presentation | 6 Months Ended |
Jun. 30, 2015 | |
Organization Business And Basis Of Presentation | |
Organization, Business and Basis of Presentation | Organization and Business CorMedix Inc. (CorMedix or the Company) was incorporated in the State of Delaware on July 28, 2006. The Company seeks to in-license, develop and commercialize prophylactic and therapeutic products for the prevention and treatment of infectious diseases in cardiac, renal and oncology patients. In 2013, the Company formed a wholly owned subsidiary, CorMedix Europe GmbH. The Companys primary activities since incorporation have been organizational activities, including recruiting personnel, establishing office facilities, acquiring licenses for its pharmaceutical product candidates, performing business and financial planning, performing research and development, seeking regulatory approval for its products and conducting initial commercialization activities for its product Neutrolin® in certain markets. The Company has in-licensed all of the product candidates in its pipeline. The Company received CE Mark approval for Neutrolin in 2013 and began the commercial launch of Neutrolin in Germany for the prevention of catheter-related bloodstream infections and maintenance of catheter patency in hemodialysis patients using a tunneled, cuffed central venous catheter for vascular access. To date, Neutrolin is registered and may be sold in Austria, Germany, Italy, Malta, Saudi Arabia, Bahrain, Qatar, Kuwait and The Netherlands. In September 2014, the TUV-SUD and The Medicines Evaluation Board of the Netherlands granted a label expansion for Neutrolin for expanded indications for the European Union (EU). In December 2014, the Company received approval from the Hessian District President in Germany to expand the label to include use in oncology patients receiving chemotherapy, intravenous (IV), hydration and IV medications via central venous catheters. The expansion also adds patients receiving medication and IV fluids via central venous catheters in intensive or critical care units (cardiac care unit, surgical care unit, neonatal critical care unit, and urgent care centers). An indication for use in total parenteral nutrition was also approved. The Company plans to initiate a Phase 3 clinical trial in hemodialysis catheters in the U.S. in the fourth quarter of 2015 and a Phase 3 clinical trial in oncology/total parenteral nutrition in the second quarter of 2016. In January 2015, the U.S. Food and Drug Administration (FDA) granted Fast Track designation to Neutrolin® Catheter Lock Solution, pursuant to the Food and Drug Administration Safety and Innovation Act (FDASIA). Fast Track designation is granted to drug products designed to treat a serious condition, for which clinical data has been generated and shown to potentially address an unmet medical need. The Fast Track designation of Neutrolin provides the Company with the opportunity to meet with the FDA on a more frequent basis during the review process, and also ensures an expedited review of any marketing application. The FDA designated Neutrolin as a Qualified Infectious Disease Product (QIDP) for oncology, hemodialysis, and critical care/intensive care patients, where catheter-related blood stream infections and clotting can be life-threatening in January 2015. The QIDP designation will make Neutrolin eligible to benefit from certain incentives such as FDA priority review, fast-track status and it also provides an additional five years of market exclusivity in addition to the five years granted for a New Chemical Entity under Hatch-Waxman patent exclusivity. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, these unaudited condensed consolidated financial statements do not include all information and footnotes required by GAAP for complete annual financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of such interim results. Interim operating results are not necessarily indicative of results that may be expected for the full year ending December 31, 2015 or for any subsequent period. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto of the Company for the year ended December 31, 2014, which are included in the Companys Annual Report on Form 10-K for the year ended December 31, 2014 (the 2014 Form 10-K) filed with the Securities and Exchange Commission (the SEC) on March 12, 2015. The accompanying condensed balance sheet as of December 31, 2014 has been derived from the audited financial statements included in the 2014 Form 10-K. |
2. Summary of Significant Accou
2. Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Liquidity, Risks and Uncertainties The Companys operations are subject to a number of factors that can affect its operating results and financial condition. Such factors include, but are not limited to: the results of clinical testing and trial activities of the Companys product candidates; the ability to obtain regulatory approval to market the Companys products; competition from products manufactured and sold or being developed by other companies, the price of, and demand for, Company products; the Companys ability to negotiate favorable licensing or other manufacturing and marketing agreements for its products; and the Companys ability to raise capital. To date, the Company has not generated significant commercial revenues. Based on the current development plans for Neutrolin in both the United States (U.S.) and foreign markets (including the planned Phase 3 clinical trials in the U.S.) and on the current revenue assumptions for Neutrolin in approved markets, management believes that the existing cash will be sufficient to fund its operations for at least the next 12 months following the balance sheet date. The Companys continued operations, including the completion of its planned Phase 3 clinical trials for Neutrolin in hemodialysis and oncology/total parenteral nutrition patients in the U.S., will depend on its ability to raise additional capital through potential sources such as equity and/or debt financings, strategic relationships, out-licensing or distribution arrangements of its products and its ability to generate substantial revenue from sales of Neutrolin. However, the Company can provide no assurances that such financing or strategic relationships will be available on acceptable terms, or at all, or that the Company will achieve substantial levels of revenue from sales of Neutrolin. If the Company is unable to raise sufficient capital or find strategic partners, there would be a material adverse effect on its business. Further, the Company expects to incur increases in its cash used in operations as it continues to commercialize Neutrolin, increases its business development activities, incurs additional legal costs to defend its intellectual property and seeks FDA approval of Neutrolin in the U.S. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Basis of Consolidation The condensed consolidated financial statements include the accounts of the Company and CorMedix Europe GmbH, a wholly owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation. Cash and Cash Equivalents The Company considers all highly liquid instruments with an original maturity of 90 days or less at the time of purchase to be cash equivalents. Cash and cash equivalents consist of deposits and other interest bearing accounts, the balances of which, at times, may exceed federally insured limits. Short-Term Investments The Company determines the appropriate classification of marketable securities at the time of purchase and reevaluates such designation as of each balance sheet date. Investments in marketable debt and equity securities classified as available-for-sale are reported at fair value. Fair values of the Companys investments are determined using quoted market prices in active markets for identical assets or liabilities or quoted prices for similar assets or liabilities or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Changes in fair value that are considered temporary are reported net of tax in other comprehensive income (loss). Realized gains and losses, amortization of premiums and discounts and interest and dividends earned are included in income (expense) on the condensed consolidated statements of operations and comprehensive income (loss). The cost of investments for purposes of computing realized and unrealized gains and losses is based on the specific identification method. For declines in the fair value of equity securities that are considered other-than-temporary, impairment losses are charged to other (income) expense, net. The Company considers available evidence in evaluating potential impairments of its investments, including the duration and extent to which fair value is less than cost and, for equity securities, the Companys ability and intent to hold the investments. The Companys marketable securities are highly liquid and consist of U.S. government agency securities, high-grade corporate obligations and commercial paper with original maturities of more than 90 days. As of June 30, 2015, all of the Companys investments had contractual maturities which were less than one year. The following table summarizes the amortized cost, unrealized gains and losses and the fair value at June 30, 2015 of the Companys financial assets that are measured on a recurring basis: Amortized Cost Gross Unrealized Losses Gross Unrealized Gains Fair Value Money Market Funds included in Cash Equivalents $ 8,582,883 $ - $ - $ 8,582,883 US Government Agency Securities 1,507,470 (360 ) - 1,507,110 Corporate Securities 10,876,000 (6,683 ) 1,539 10,870,856 Commercial Paper 999,111 - - 999,111 Subtotal 13,382,581 (7,043 ) 1,539 13,377,077 $ 21,965,464 $ (7,043 ) $ 1,539 $ 21,959,960 Fair Value Measurements The Companys financial instruments recorded in the consolidated balance sheets include cash and cash equivalents, accounts receivable, investment securities, accounts payable and accrued expenses. The carrying value of certain financial instruments, primarily cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate their estimated fair values based upon the short-term nature of their maturity dates. The Company categorizes its financial instruments into a three-level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument. Financial assets recorded at fair value on the Companys condensed consolidated balance sheets are categorized as follows: ● Level 1 inputsObservable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 inputs Significant other observable inputs (e.g., quoted prices for similar items in active markets, quoted prices for identical or similar items in markets that are not active, inputs other than quoted prices that are observable such as interest rate and yield curves, and market-corroborated inputs). ● Level 3 inputsUnobservable inputs for the asset or liability, which are supported by little or no market activity and are The following table provides the carrying value and fair value of the Companys financial assets measured at fair value on a recurring basis as of June 30, 2015: Fair Value Measurement at June 30, 2015 Carrying Value Level 1 Level 2 Level 3 Money Market Funds $ 8,582,883 $ 8,582,883 $ - $ - US Government Agency Securities 1,507,110 - 1,507,110 - Corporate Securities 10,870,856 - 10,870,856 - Commercial Paper 999,111 - 999,111 - Subtotal $ 13,377,077 $ - $ 13,377,077 $ - $ 21,959,960 $ 8,582,883 $ 13,377,077 $ - Foreign Currency Translation and Transactions These condensed consolidated financial statements are presented in U.S. Dollars (USD), the reporting currency of the Company. For the financial statements of the Companys foreign subsidiary, whose functional currency is the EURO, foreign currency asset and liability amounts, are translated into USD at end-of-period exchange rates. Foreign currency income and expenses are translated at average exchange rates in effect during the year. Translation gains and losses are included in other comprehensive income (loss). The Company has intercompany loans between the parent company based in New Jersey and its German subsidiary. Effective October 1, 2014, the Company assessed and determined that the intercompany loans outstanding are not expected to be repaid in the foreseeable future and the nature of the funding advanced is of a long-term investment nature. As such, beginning October 1, 2014, unrealized foreign exchange movements related to long-term intercompany loans are recognized in other comprehensive income (loss). Foreign currency exchange transaction gain (loss) is the result of re-measuring transactions denominated in a currency other than the functional currency of the entity recording the transaction. Segment and Geographic Information The Company operates in one business segment. The Company reported revenues of $119,973 and $151,237 for the three and six months ended June 30, 2015, respectively. Of the Companys revenues for the three and six months ended June 30, 2015, $117,767 and $146,825, respectively, were attributable to its European and Middle East operations, which are based in Germany. All of the Companys revenues of $39,729 and $51,932 for the three and six month ended June 30, 2014, respectively, were attributable to its European operations. Total assets at June 30, 2015 were $38,796,026, of which $37,816,669 were located in the United States, with the remainder in Germany. Net property and equipment at June 30, 2015 was $44,652, of which $13,065 was located in the United States, with the remainder located in Germany. Prepaid Expenses Prepaid expenses consist of payments made in advance to vendors relating to service contracts for clinical trial development, manufacturing, preclinical development and insurance policies. These advanced payments are amortized to expense either as services are performed or over the relevant service period using the straight-line method. Inventories, net Inventories are valued at the lower of cost or market on a first in, first out basis. Inventories consist of raw materials (including labeling and packaging), work-in-process, and finished goods, if any, for the Neutrolin product. Inventories consist of the following: June 30, 2015 December 31, 2014 Raw materials $ 247,625 $ 293,976 Work in process 460,945 166,807 Finished goods 6,479 2,246 Total $ 715,049 $ 463,029 The Company maintained an inventory reserve of $175,000 at June 30, 2015 and December 31, 2014. Accrued Expenses Accrued expenses consist of the following: June 30, 2015 December 31, 2014 Professional and consulting fees $ 216,125 $ 225,726 Accrued payroll and payroll taxes 195,078 13,393 Market research 162,345 137,345 Monitoring program fees 80,013 82,861 Statutory taxes 65,773 34,548 Other 41,787 27,652 Total $ 761,121 $ 521,525 Revenue Recognition The Company recognizes revenue in accordance with SEC Staff Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial Statements Revenue Recognition Revenue Recognition. Deferred Revenue In August 2014, the Company entered into an exclusive distribution agreement (the Agreement) with Wonik Corporation, a South Korean company, to market, sell and distribute Neutrolin for hemodialysis and oncolytic patients upon receipt of regulatory approval in South Korea (the Territory). Upon execution of the Agreement, Wonik paid the Company a non-refundable $50,000 payment and will pay an additional $50,000 upon receipt of the product registration necessary to sell Neutrolin in the Territory. The term of the agreement commenced on August 8, 2014 and will continue for three years after the first commercial sale of Neutrolin in the Territory. The non-refundable up-front payment has been recorded as deferred revenue and will be recognized as revenue on a straight-line basis over the contractual term of the Agreement. Income (Loss) Per Common Share Basic loss per common share excludes any potential dilution and is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. For the three and six months ended June 30, 2015 and 2014, basic income (loss) per common share is calculated by dividing net income (loss) available to common shareholders by the number of weighted average common shares issued and outstanding. Diluted earnings (loss) per common share is calculated by dividing net income (loss) available to common shareholders by the weighted average number of common shares issued and outstanding for the period, plus amounts representing the dilutive effect from the exercise of stock options and warrants and the conversion of convertible preferred stock, as applicable. The Company calculates dilutive potential common shares using the treasury stock method, which assumes the Company will use the proceeds from the exercise of stock options and warrants to repurchase shares of common stock to hold in its treasury stock reserves. However, since their effect is anti-dilutive, the Company has excluded potentially dilutive shares. The following potentially dilutive shares have been excluded from the calculation of diluted net loss per share as their effect would be anti-dilutive. June 30, 2015 2014 Series B non-voting convertible preferred stock - 454,546 Series C non-voting convertible preferred stock 2,865,000 3,500,000 Series D non-voting convertible preferred stock 1,479,240 1,148,000 Series E non-voting convertible preferred stock 1,959,759 1,104,280 Shares underlying outstanding warrants 4,422,188 11,571,233 Shares underlying outstanding stock options 3,594,545 4,048,000 Total 14,320,732 21,826,059 Each outstanding series of convertible preferred stock is considered to be a participating security under ASC 260, Earnings Per Share The following table is the calculation of the basic and diluted net income (loss) per share of common stock: Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Income (Loss) Per Common Share - Basic: Net income (loss) $ (4,135,100 ) $ 3,509,290 $ (9,632,769 ) $ (13,204,001 ) Less: Dividends on participating securities - (27,453 ) (33,121 ) (54,602 ) Less: Net income allocated to participating securities - (766,348 ) - - Net income (loss) available to common shareholders - basic $ (4,135,100 ) $ 2,715,489 $ (9,665,890 ) $ (13,258,603 ) Weighted average common shares outstanding basic 31,623,100 21,993,384 27,793,627 20,036,671 Net income (loss) per common share basic $ (0.13 ) $ 0.12 $ (0.35 ) $ (0.64 ) Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Income (Loss) Per Common Share - Diluted: Net income (loss) available to common shareholders - basic $ (4,135,100 ) $ 2,715,490 $ (9,665,890 ) $ (13,258,603 ) Plus: Dividends declared on participating securities - 27,452 - - Plus: Net income allocated to participating securities - 766,348 - - Less: Change in fair value of derivative securities - (4,657,481 ) - - Numerator for income per share - diluted $ (4,135,100 ) $ (1,148,191 ) $ (9,665,890 ) $ (13,258,603 ) Weighted average common shares outstanding basic 31,623,100 21,993,384 27,793,627 20,036,671 Weighted average effect of dilutive securities: Exercise of warrants - 1,194,135 - - Conversion of preferred stock to common stock - 2,252,280 - - Weighted average common shares outstanding diluted 31,623,100 25,439,799 27,793,627 20,036,671 Net loss per common share diluted $ (0.13 ) $ (0.05 ) $ (0.35 ) $ (0.64 ) Warrants and options if exercised, and convertible preferred stock if converted, that would result in the issuance of 16,073,779 and 21,826,059 shares of common stock for the three and six months ended June 30, 2014, respectively, and 14,320,732 for the three and six months ended June 30, 2015 were excluded from the computation of diluted earnings (loss) per share because they were anti-dilutive. Stock-Based Compensation The Company accounts for stock options granted to employees, officers and directors according to ASC No. 718, Compensation Stock Compensation (ASC 718). Under ASC 718, share-based compensation cost is measured at grant date, based on the estimated fair value of the award using the Black-Scholes option pricing model, and is recognized as expense net of expected forfeitures, over the employees requisite service period on a straight-line basis. Stock compensation expense is recognized by applying the expected forfeiture rate during the vesting period to the fair value of the award. The estimation of the number of stock awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from the Companys current estimates, compensation expense may need to be revised. The Company considers many factors when estimating expected forfeitures for stock awards granted to employees, officers and directors, including types of awards, employee class, and an analysis of historical forfeitures. The Company accounts for stock options granted to non-employees on a fair value basis using the Black-Scholes option pricing model in accordance with ASC 718 and ASC No. 505-50, Equity-Based Payments to Non-Employees (ASC 505). The non-cash charge to operations for non-employee options with time based vesting provisions is based on the fair value of the options at the balance sheet date and amortized to expense over the related vesting period. Research and Development Research and development costs are charged to expense as incurred. Research and development costs include fees associated for operational consultants, contract clinical research organizations, contract manufacturing organizations, contract laboratory research organizations and contract central testing laboratories, licensing activities, clinical site fees, and allocated executive, human resources and facilities expenses, among others. The Company accrues for costs incurred as the services are being provided. |
3. Stockholders' Equity
3. Stockholders' Equity | 6 Months Ended |
Jun. 30, 2015 | |
STOCKHOLDERS' EQUITY | |
Stockholders' Equity | Common Stock On April 8, 2015, the Company entered into an At-the-Market Issuance Sales Agreement (the Sales Agreement) with MLV & Co. LLC (MLV) under which the Company may issue and sell up to $40.0 million of shares of its common stock from time to time through MLV acting as agent, subject to limitations imposed by the Company, such as the number or dollar amount of shares registered under the registration statement to which the offering relates. When the Company wishes to issue and sell common stock under the Sales Agreement, it notifies MLV of the number of shares to be issued, the dates on which such sales are anticipated to be made, any minimum price below which sales may not be made and other sales parameters as the Company deems appropriate. MLV is entitled to a commission of up to 3% of the gross proceeds from the sale of common stock sold under the Sales Agreement. The shares of common stock to be sold under the Sales Agreement are registered under an effective registration statement filed with the SEC. During the six months ended June 30, 2015, the Company issued 3,603,733 shares of common stock and realized net proceeds of approximately $23,982,275. During the six months ended June 30, 2015, the Company issued the following shares of its common stock, resulting in gross proceeds of $14,658,160 to the Company: ● 150,000 shares of common stock upon exercise of warrants with an exercise price of $0.90 per share; ● 125,000 shares of common stock upon exercise of warrants with an exercise price of $0.40 per share; ● 353,500 shares of common stock upon exercise of warrants with an exercise price of $2.50 per share; and ● 3,953,283 shares of common stock upon exercise of warrants with an exercise price of $3.4375 per share. During the six months ended June 30, 2015, the Company issued 2,158,033 shares of its common stock upon a cashless exercise of 2,597,591 warrants. During the six months ended June 30, 2015, the Company issued 454,955 shares of its common stock upon exercise of an aggregate of 454,955 stock options at a weighted average exercise price of $0.99 per share, resulting in gross proceeds of $452,460 to the Company. During the six months ended June 30, 2015, the Company issued 454,546 shares of its common stock upon conversion of 454,546 shares of the Series B non-voting preferred stock. During the six months ended June 30, 2015, the Company issued an aggregate of 425,000 shares of its common stock upon conversion of an aggregate of 42,500 shares of the Series C-3 non-voting preferred stock. During the six months ended June 30, 2015, the Company issued 61,598 shares of its common stock upon conversion of 2,817 shares of the Series E non-voting preferred stock. During the six months ended June 30, 2015, wages in an aggregate amount of $50,000 were converted into 10,728 shares of its common stock by an officer of the Company at prices per share of $3.10 - $8.55. Preferred Stock and Warrants Under the terms of the Companys Amended and Restated Certificate of Incorporation, as amended, the Companys board of directors is authorized to issue up to 2,000,000 shares of preferred stock in one or more series without stockholder approval. The Companys board of directors has the discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock. Of the 2,000,000 shares of preferred stock authorized, the Companys board of directors has designated (all with par value of $0.001 per share) the following: As of June 30, 2015 As of December 31, 2014 Preferred Shares Outstanding Liquidation Preference (Per Share) Total Liquidation Preference Preferred Shares Outstanding Liquidation Preference (Per Share) Total Liquidation Preference Series B - $ - $ - 454,546 $ 0.001 $ 455 Series C-2 150,000 10.000 1,500,000 150,000 10.000 1,500,000 Series C-3 136,500 10.000 1,365,000 179,000 10.000 1,790,000 Series D 73,962 21.000 1,553,202 73,962 21.000 1,553,202 Series E 89,623 49.200 4,409,452 92,440 49.200 4,548,048 Total 450,085 $ 8,827,654 949,948 $ 9,391,705 Stock Options During the six months ended June 30, 2015, the Company granted to its officers, directors and consultant, ten-year non-qualified stock options under the 2013 Plan, covering an aggregate of 440,000 shares of the Companys common stock. Of these options, 150,000 vested on the date of grant and had an exercise price of $5.00 per share, 250,000 will vest one year after the grant date and had an exercise price of $5.62 per share, 20,000 options with an exercise price of $3.62 per share and the remaining 20,000 options with an exercise price of $6.07 per share, will vest upon achievement of various performance milestones. During the six months ended June 30, 2015 and 2014 total compensation expense was $1,987,702 and $1,775,753, respectively, and $960,778 and $360,509 for the three months ended June 30, 2015 and 2014, respectively. The fair value of the grants at grant dates are determined using the Black-Scholes option pricing model with the following assumptions for the six months ended June 30, 2015: Expected term (years) 4.5 10 Volatility 94% Dividend yield 0.0% Risk-free interest rate 1.47% - 2.18% Weighted-average fair value of options granted during the period $ 3.90 The Company estimated the expected term of the stock options granted based on anticipated exercises in future periods. The expected term of the stock options granted to consultants is based upon the full term of the respective option agreements. Prior to 2015, the expected volatility used in the valuation of the Companys stock options was based on the historical volatility of publicly traded peer group companies due to the limited trading history of the Companys common stock. Beginning in the first quarter of 2015, the expected stock price volatility for the Companys stock options is calculated based on the historical volatility since the initial public offering of the Companys common stock in March 2010. The expected dividend yield of 0.0% reflects the Companys current and expected future policy for dividends on the Companys common stock. To determine the risk-free interest rate, the Company utilized the U.S. Treasury yield curve in effect at the time of grant with a term consistent with the expected term of the Companys awards. At June 30, 2015, a summary of the Companys stock option activity and related information is as follows: Shares Weighted Average Exercise Price Outstanding at beginning of period 3,664,500 $ 1.25 Exercised (454,955 ) $ 0.99 Forfeited (55,000 ) $ 1.83 Expired - $ - Granted 440,000 $ 5.34 Outstanding at end of period 3,594,545 $ 1.77 Options exercisable 3,102,295 $ 1.43 Expected to vest 414,475 $ 3.88 Weighted average remaining contractual life of stock options outstanding (years) 8.2 Weighted average remaining contractual life of stock options exercisable (years) 8.0 Weighted average vesting period over which total compensation expense related to non-vested options not yet recognized (years) 0.7 Aggregate intrinsic value of stock options exercised $ 3,139,678 Aggregate intrinsic value of stock options outstanding $ 7,720,544 Compensation expense related to non-vested options not yet recognized $ 1,270,587 The aggregate intrinsic value is calculated as the difference between the exercise prices of the underlying options and the quoted closing price of the common stock of the Company at the end of the reporting period for those options that have an exercise price below the quoted closing price. Warrants On March 2, 2015, the Companys board of directors approved an extension to April 30, 2015 of the expiration date of the Companys publicly traded warrants which resulted in deemed dividend of $33,121. In March 2015, the Company issued two warrants exercisable for an aggregate of up to 283,400 common shares with an exercise price of $7.00 per share and a term of five years as a result of entering into a backstop agreement with Manchester Securities Corp. (Manchester) (See Note 4). Additionally, the expiration date of March 24, 2015 of warrants to purchase 390,720 shares of common stock issued to Manchester in connection with the Companys initial public offering (IPO) was extended by one year to March 24, 2016. The Company recorded non-cash general and administrative expense of $1,583,252 for these warrants using the Black-Scholes option pricing model with the following assumptions: Expected term (years) 5 Volatility 75.81% - 104.08% Dividend yield 0.0% Risk-free interest rate 0.01% - 1.61% During the six months ended June 30, 2015, the Company issued 774 warrants upon the exercise of a unit warrant related to the IPO. These warrants were subsequently exercised resulting in the issuance of 774 shares of common stock and gross proceeds of $2,661 to the Company. During the six months ended June 30, 2015, the Company extended the expiration date for an aggregate of 38,400 warrants with an exercise price of $3.4375. The Company accounted for this transaction as a modification of warrants and recorded additional paid in capital and non-cash general and administrative expense in the amount of $112,982. The warrants were valued using the Black-Scholes option pricing model with the following assumptions: Expected term (days) 5 Volatility 88.17% Dividend yield 0.0% Risk-free interest rate .003% The following table is the summary of warrant activity for the six months ended June 30, 2015: Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life Outstanding at beginning of period 11,520,762 $ 1.99 2.57 Granted 284,174 $ 6.99 4.93 Expired (203,374 ) $ 3.44 - Exercised (7,179,374 ) $ 2.27 - Outstanding at end of period 4,422,188 $ 1.80 2.50 Short Swing Profit Recovery In June 2015, a member of the board of directors of the Company paid a total of $28,594 to the Company representing the disgorgement of short swing profits under Section 16(b) under the Exchange Act. The amount was recorded as additional paid in capital. |
4. Related Party Transactions
4. Related Party Transactions | 6 Months Ended |
Jun. 30, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | On March 3, 2015, the Company entered into a backstop agreement with an existing institutional investor, Manchester, a wholly owned subsidiary of Elliott Associates, L.P., and a beneficial holder of more than 5% of the Companys outstanding common stock. Pursuant to the backstop agreement, Manchester agreed to lend the Company, at its request, up to $4,500,000 less the dollar amount of gross proceeds received by the Company upon the exercise of warrants to purchase common stock issued in connection with its IPO on or before April 30, 2015, provided that the loan could not exceed $3,000,000. The Company had received approximately $5.7 million through March 31, 2015 from the exercise of warrants issued in connection with its IPO therefore, the Company did not access the loan and the loan expired on April 30, 2015. On April 7, 2015, the Company entered into a one year agreement with a consultant to advise management with their investment banking relationships and assist in the negotiations with potential external parties, if applicable. The consultant is a member of the board of directors of Sterling HSA which was founded by the Chairman of the Board of Directors of the Company. The arrangement calls for a $30,000 retainer, a monthly fee of $6,000, and a multiple of the price per share upon a merger or acquisition or a percentage of any strategic partnership. Either party can terminate the agreement with a 30 day advance notice. Upon termination, the Company is liable for any services rendered through the termination date. |
5. Commitments and Contingencie
5. Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Contingency Matters In February 2007, Geistlich Söhne AG für Chemische Industrie, Switzerland (Geistlich) brought an action against the European Sodemann Patent covering the Companys Neutrolin product candidate, which is owned by ND Partners, LLC (NDP) and licensed to the Company pursuant to the License and Assignment Agreement between the Company and NDP. The action that was brought at the Board of the European Patent Office (EPO) opposition division (the Opposition Board) was for lack of inventiveness in the use of citric acid and a pH value in the range of 4.5 to 6.5 with having the aim to provide an alternative lock solution through having improved anticoagulant characteristics compared to the lock solutions of the prior art. The Opposition Board rejected the opposition by Geistlich. On August 27, 2008, Geistlich appealed the court's ruling, alleging the same arguments as presented during the opposition proceedings. The Company filed a response to the appeal of Geistlich on March 25, 2009 requesting a dismissal of the appeal and maintenance of the patent as granted. On November 28, 2012, the Board of Appeals of the EPO (the Appeals Board) held oral proceedings and verbally upheld the counterpart of the Sodemann Patent covering Neutrolin, but remanded the proceeding to the lower court to consider restricting certain claims of the counterpart of the Sodemann Patent. The Company received the Appeals Boards final written decision on March 28, 2013, which was consistent with the oral proceedings. In a letter dated September 30, 2013, the Company was notified that the opposition division of the EPO reopened the proceedings before the first instance and gave their preliminary non-binding opinion that the patent as amended during the appeal proceedings fulfills the requirements of clarity, novelty, and inventive step, and invited the parties to provide their comments and/or requests by February 10, 2014. The Company filed its response on February 3, 2014 to request that the patent be maintained as amended during the appeal proceedings. Geistlich did not provide any filing by February 10, 2014; however, the Opposition Board granted Geistlich an extension to respond by the end of July 2014 because its representative did not receive the September 30, 2013 letter due to a change of address. Geistlich did not file a further statement within the required timeline. On November 5, 2014, the Opposition Division at the EPO issued the interlocutory decision to maintain the patent on the basis of the claims as amended during the appeal proceedings. This decision became final because no further appeal was lodged by Geistlich by January 15, 2015. On September 9, 2014, the Company filed in the Mannheim, Germany District Court a patent infringement action against TauroPharm GmbH and Tauro-Implant GmbH as well as their respective CEOs (the Defendants) claiming infringement of the Companys European Patent EP 1 814 562 B1, which was granted by the EPO on January 8, 2014 (the Prosl European Patent). The Prosl European Patent covers a low dose heparin catheter lock solution for maintaining patency and preventing infection in a hemodialysis catheter. In this action, the Company claims that the Defendants infringe on the Prosl European Patent by manufacturing and distributing catheter locking solutions to the extent they are covered by the claims of the Prosl European Patent. The Company believes that its patent is sound, and is seeking injunctive relief and raising claims for information, rendering of accounts, calling back, destruction and damages. Separately, TauroPharm has filed an opposition with the EPO against the Prosl European Patent alleging that it lacks novelty and inventive step. The Company cannot predict what other defenses the Defendants may raise, or the ultimate outcome of either of these related matters. In the same complaint against the same Defendants, the Company also alleged an infringement (requesting the same remedies) of NDPs utility model DE 20 2005 022 124 U1 (the Utility Model), which the Company believes is fundamentally identical to the Prosl European Patent in its main aspects and claims. The Mannheim court separated the two proceedings and the Prosl European Patent and the Utility Model claims are now being tried separately. TauroPharm has filed a cancellation action against the Utility Model before the German Patent and Trademark Office based on the similar arguments as those in the opposition against the Prosl European Patent. On March 27, 2015, the Mannheim District Court held a hearing to evaluate whether the Utility Model has been infringed by TauroPharm in connection with the manufacture, sale and distribution of its TauroLock-HEP100TM and TauroLock-HEP500TM products. A hearing before the same court was held on January 30, 2015 on the separate, but related, question of infringement of the Prosl European Patent by TauroPharm. The District Court of Mannheim issued its decisions on May 8, 2015 staying both proceedings. In its decisions, the Court found that the commercialization by TauroPharm in Germany of its TauroLock catheter lock solutions Hep100 and Hep500 infringes both the Prosl European Patent and the Utility Model and further that there is no prior use right that would allow TauroPharm to continue to make, use or sell its product in Germany. However, the Court declined to issue an injunction in favor of the Company that would preclude the continued commercialization by TauroPharm based upon its finding that there is a sufficient likelihood that the European Patent Office (EPO), in the case of the Prosl European Patent, or the German Patent and Trademark Office (the German PTO), in the case of the Utility Model, may find that such patent or utility model is invalid. Specifically, the Court noted the possible publication of certain instructions for product use that may be deemed to constitute prior art. As such, the District Court determined that it will defer any consideration of the request by the Company for injunctive and other relief until such time as the EPO or the German PTO has ruled on the underlying validity of the Prosl European Patent and the Utility Model. Both the opposition proceedings against the Prosl European Patent before the EPO and the cancellation action against the Utility Model before the German PTO are ongoing. The EPO has scheduled a hearing for the end of 2015. The Company does not expect a decision from the EPO before the end of 2015, and that decision would be subject to appeal. However, in its preliminary consideration of the matter, the EPO (and the German Patent and Trademark Office) regarded the patent as not inventive or novel due to publication of prior art. While the Company continues to believe that the referenced publication and instructions for use do not, in fact, constitute prior art and that the Prosl European Patent and the Utility Model validly claim inventions that will be found to be such by the EPO and the German PTO, there can be no assurance that the Company will prevail in this matter. The Company does not expect a decision from the German PTO in the Utility Model matter before late 2015, with any such decision also being subject to appeal. On January 16, 2015, the Company filed a complaint against TauroPharm GmbH and its managing directors in the District Court of Cologne, Germany. In the complaint, the Company alleges violation of the German Unfair Competition Act by TauroPharm for the unauthorized use of its proprietary information obtained in confidence by TauroPharm. The Company alleges that TauroPharm is improperly and unfairly using its proprietary information relating to the composition and manufacture of Neutrolin, in the manufacture and sale of TauroPharms products TauroLockTM, TauroLock-HEP100 and TauroLock-HEP500. The Company seeks a cease and desist order against TauroPharm from continuing to manufacture and sell any product containing taurolidine (the active pharmaceutical ingredient (API) of Neutrolin) and citric acid in addition to possible other components, damages for any sales in the past and the removal of all such products from the market. A hearing in this matter was scheduled for July 2, 2015, but was postponed by the Court. A new hearing date has not yet been issued. In connection with the aforementioned proceedings against TauroPharm, the Company was required by the District Court Mannheim to provide a security deposit of approximately $132,000 to cover legal fees in the event TauroPharm is entitled to reimbursement of these costs. The Company recorded the deposit as restricted cash for the six months ended June 30, 2015. The Company will shortly have to provide a deposit in the amount of 36,000 in connection with the unfair competition proceedings in Cologne. Commitments Navinta LLC, a U.S.-based Active Pharmaceutical Ingredient (API) developer, provides API manufacturing (manufactured in India at an FDA-compliant facility) and a Drug Master File for CRMD003, pursuant to a supply agreement dated December 7, 2009 (the Navinta Agreement). The Navinta Agreement provides that Navinta supply taurolidine (the API for CRMD003) to the Company on an exclusive worldwide basis in the field of the prevention and treatment of human infection and/or dialysis so long as the Company purchased a minimum of $350,000 of product from Navinta by December 30, 2010, which the Company achieved, and following the Companys first commercial sale of a product incorporating taurolidine, purchases a minimum of $2,250,000 of product on an annual basis for five years. The Company did not purchase the required amount in 2014 and as a result, lost its exclusive manufacturing rights. The Company is also required to make certain cash payments to Navinta upon the achievement of certain sales-based milestones which is based on a tiered approach and does not commence until the Company achieves a designated net sales threshold. The maximum aggregate amount of such payments, assuming achievement of all milestones, is $1,975,000 over five years. On March 24, 2015, the Company and Navinta LLC entered into an amendment to the Taurolidine Supply Agreement to extend the term of the Agreement to March 31, 2016 and to lower the price per kilogram of API that the Company purchases from Navinta LLC under the Navinta Agreement. The Company also agreed to purchase a minimum amount of product from Navinta LLC during 2015, which replaces the prior minimum purchase requirement. The Navinta Agreement may be terminated by either party upon 30 days written notice. In 2008, the Company entered into a License and Assignment Agreement (the NDP License Agreement) with NDP. Pursuant to the NDP License Agreement, NDP granted the Company exclusive, worldwide licenses for certain antimicrobial catheter lock solutions, processes for treating and inhibiting infections, a biocidal lock system and a taurolidine delivery apparatus, and the corresponding United States and foreign patents and applications (the NDP Technology). The Company acquired such licenses and patents through its assignment and assumption of NDPs rights under certain separate license agreements by and between NDP and Dr. Hans-Dietrich Polaschegg, Dr. Klaus Sodemann and Dr. Johannes Reinmueller. As consideration in part for the rights to the NDP Technology, the Company paid NDP an initial licensing fee of $325,000 and granted NDP a 5% equity interest in the Company, consisting of 39,980 shares of the Companys common stock. In addition, the Company is required to make payments to NDP upon the achievement of certain regulatory and sales-based milestones. Certain of the milestone payments are to be made in the form of shares of common stock currently held in escrow for NDP, and other milestone payments are to be paid in cash. The maximum aggregate number of shares issuable upon achievement of milestones is 145,543 shares. During the year ended December 31, 2014, a certain milestone was achieved resulting in the release of 36,386 shares held in escrow. The number of shares held in escrow as of June 30, 2015 is 109,157 shares of common stock. The maximum aggregate amount of cash payments upon achievement of milestones is $3,000,000 with $2,500,000 remaining at June 30, 2015. Events that trigger milestone payments include but are not limited to the reaching of various stages of regulatory approval and upon achieving certain worldwide net sales amounts. On April 11, 2013, the Company entered into an amendment to the NDP License Agreement. Under Article 6 of the NDP License Agreement as the Company was obligated to make a milestone payment of $500,000 to NDP upon the first issuance of a CE Marking for a licensed product, which payment was payable to NDP within 30 days after such issuance. Pursuant to the terms of the amendment, the Company and NDP agreed to delay such milestone payment to a time, to be chosen by the Company, anytime within 12 months after the achievement of such issuance. As consideration for the amendment, the Company issued NDP a warrant to purchase 125,000 shares of the Companys common stock at an exercise price of $1.50 per share. The warrant is exercisable immediately upon issuance and has a term of five years. In January 2014, the Company settled this milestone payment which resulted in the issuance of 50,000 shares of the Companys Series C-3 non-voting convertible preferred and 250,000 shares issuable upon exercise of warrants at an exercise price of $1.25 per share which was decreased to $0.90 per share. Through June 30, 2015, no other milestone payments have been earned by or paid to NDP. The NDP License Agreement may be terminated by the Company on a country-by-country basis upon 60 days prior written notice. If the NDP License Agreement is terminated by either party, the Companys rights to the NDP Technology will revert back to NDP. On April 9, 2015, the Company announced a program aimed at reducing the cost of goods of Neutrolin through a more efficient, custom synthesis of the active ingredient taurolidine. As part of that program, on April 8, 2015, the Company entered into a Preliminary Services Agreement with [RC]2 Pharma Connect LLC (RC2), pursuant to which RC2 will coordinate certain manufacturing services related to taurolidine, which is a key ingredient in Neutrolin. Specifically, RC2 will undertake a critical parameters evaluation for the Companys manufacturing needs and coordinate the cGMP processes set forth in the agreement that the Company believe are necessary for the submission of its planned new drug application for Neutrolin to the FDA, as well as any foreign regulatory applications. The total cost for RC2s services under the preliminary services agreement is approximately $1.7 million which is expected to be incurred under the terms of this agreement through the first quarter of 2016. To date, the Company has paid RC2 approximately $380,000 for their services related to this agreement. If Neutrolin is approved for use in the U.S., to the extent that cGMP validation batches of taurolidine called for under the agreement are completed and in compliance with cGMP, those batches may be available for inclusion in Neutrolin as commercial product available for sale. The Company and RC2 are also in the process of negotiating a manufacturing services agreement. RC2 also agreed to an expected price per kilogram for taurolidine for any future commercial supply agreement the Company may negotiate with RC2. The Company is also working with RC2 under a service agreement for the manufacture of clinical supplies to support its Phase 3 clinical trials. The Company may terminate this agreement upon 30 days written notice and is only obligated for project costs and reasonable project shut down costs provided through that date. The Company entered into sublease for 4,700 square feet of office space in Bedminster, New Jersey, which sublease runs from April 1, 2015 until March 31, 2018. Rent is $5,000 per month plus occupancy costs such as utilities, maintenance and taxes. In accordance with the lease agreement, the Company has deposited $5,000 with the landlord, the equivalent of one month rent. The Companys subsidiary entered into a lease agreement for its offices in Fulda, Germany with ITZ GmbH. The lease has a term of 36 months which commenced on September 1, 2013 for a base monthly payment of 498. The total 36 month lease obligation is approximately 17,900 ($20,000). Under the Companys current lease agreements, the total remaining lease obligation as of June 30, 2015 is set forth below: 2015 $ 33,733 2016 66,236 2017 60,784 2018 15,000 Total $ 175,753 |
6. Subsequent Events
6. Subsequent Events | 6 Months Ended |
Jun. 30, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | On July 7, 2015, a putative class action lawsuit was commenced against the Company and certain of its current and former officers in the United States District Court for the District of New Jersey, captioned Li v. Cormedix Inc., et al. On July 17, 2015, the Companys Board of Directors announced that it will seek a successor to Randy Milby as Chief Executive Officer. The Company has begun an executive search for a senior executive with more substantial regulatory, clinical and reimbursement experience. Mr. Milby is expected to continue to serve as Chief Executive Officer during the interim period and to remain as a member of the Board of Directors. In anticipation of the termination of Mr. Milbys employment, the Company entered into a Release of Claims and Severance Modification with Mr. Milby. In exchange for the release of various claims by Mr. Milby against the Company, including claims related to his employment with Company and the termination of same and claims for additional compensation or benefits other than the compensation and benefits set forth in his employment agreement, the Company agreed to amend Mr. Milbys employment agreement, dated as of March 31, 2014, to specify that Mr. Milby may not compete against the Company by engaging in any business involving the development or commercialization of (i) a preventive anti-infective product that would be a direct competitor of Neutrolin or (ii) a product containing taurolodine. The non-compete term did not change and remains at 12 months following termination of his employment. The employment agreement was also amended to allow Mr. Milby a period in which to exercise all vested options and warrants until the later of 60 months following the termination date of his employment or 60 months following the date on which his service on the Companys Board of Directors ends, provided in no event shall he be able to exercise after the respective expiration date of any stock option or warrant. Pursuant to the terms of his employment agreement, Mr. Milby will be entitled to receive his base salary and benefits for a period of 12 months following the effective date of the termination of his employment, or, in the case of benefits, until such time as he receives equivalent coverage and benefits under plans and programs of a subsequent employer. In addition, all shares of restricted stock and all unvested options to purchase shares of Company capital stock then held by Mr. Milby will be accelerated and deemed to have vested as of the effective date of the termination of his employment. To the extent any of the aforementioned benefits cannot be provided to former employees, the Company will pay Mr. Milby a lump-sum payment in the amount necessary to allow Mr. Milby to purchase the equivalent benefits. |
2. Summary of Significant Acc13
2. Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Liquidity, Risks and Uncertainties | Liquidity, Risks and Uncertainties The Companys operations are subject to a number of factors that can affect its operating results and financial condition. Such factors include, but are not limited to: the results of clinical testing and trial activities of the Companys product candidates; the ability to obtain regulatory approval to market the Companys products; competition from products manufactured and sold or being developed by other companies, the price of, and demand for, Company products; the Companys ability to negotiate favorable licensing or other manufacturing and marketing agreements for its products; and the Companys ability to raise capital. To date, the Company has not generated significant commercial revenues. Based on the current development plans for Neutrolin in both the United States (U.S.) and foreign markets (including the planned Phase 3 clinical trials in the U.S.) and on the current revenue assumptions for Neutrolin in approved markets, management believes that the existing cash will be sufficient to fund its operations for at least the next 12 months following the balance sheet date. The Companys continued operations, including the completion of its planned Phase 3 clinical trials for Neutrolin in hemodialysis and oncology/total parenteral nutrition patients in the U.S., will depend on its ability to raise additional capital through potential sources such as equity and/or debt financings, strategic relationships, out-licensing or distribution arrangements of its products and its ability to generate substantial revenue from sales of Neutrolin. However, the Company can provide no assurances that such financing or strategic relationships will be available on acceptable terms, or at all, or that the Company will achieve substantial levels of revenue from sales of Neutrolin. If the Company is unable to raise sufficient capital or find strategic partners, there would be a material adverse effect on its business. Further, the Company expects to incur increases in its cash used in operations as it continues to commercialize Neutrolin, increases its business development activities, incurs additional legal costs to defend its intellectual property and seeks FDA approval of Neutrolin in the U.S. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. |
Basis of Consolidation | Basis of Consolidation The condensed consolidated financial statements include the accounts of the Company and CorMedix Europe GmbH, a wholly owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid instruments with an original maturity of 90 days or less at the time of purchase to be cash equivalents. Cash and cash equivalents consist of deposits and other interest bearing accounts, the balances of which, at times, may exceed federally insured limits. |
Short term investments | Short-Term Investments The Company determines the appropriate classification of marketable securities at the time of purchase and reevaluates such designation as of each balance sheet date. Investments in marketable debt and equity securities classified as available-for-sale are reported at fair value. Fair values of the Companys investments are determined using quoted market prices in active markets for identical assets or liabilities or quoted prices for similar assets or liabilities or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Changes in fair value that are considered temporary are reported net of tax in other comprehensive income (loss). Realized gains and losses, amortization of premiums and discounts and interest and dividends earned are included in income (expense) on the condensed consolidated statements of operations and comprehensive income (loss). The cost of investments for purposes of computing realized and unrealized gains and losses is based on the specific identification method. For declines in the fair value of equity securities that are considered other-than-temporary, impairment losses are charged to other (income) expense, net. The Company considers available evidence in evaluating potential impairments of its investments, including the duration and extent to which fair value is less than cost and, for equity securities, the Companys ability and intent to hold the investments. The Companys marketable securities are highly liquid and consist of U.S. government agency securities, high-grade corporate obligations and commercial paper with original maturities of more than 90 days. As of June 30, 2015, all of the Companys investments had contractual maturities which were less than one year. The following table summarizes the amortized cost, unrealized gains and losses and the fair value at June 30, 2015 of the Companys financial assets that are measured on a recurring basis: Amortized Cost Gross Unrealized Losses Gross Unrealized Gains Fair Value Money Market Funds included in Cash Equivalents $ 8,582,883 $ - $ - $ 8,582,883 US Government Agency Securities 1,507,470 (360 ) - 1,507,110 Corporate Securities 10,876,000 (6,683 ) 1,539 10,870,856 Commercial Paper 999,111 - - 999,111 Subtotal 13,382,581 (7,043 ) 1,539 13,377,077 $ 21,965,464 $ (7,043 ) $ 1,539 $ 21,959,960 |
Fair value measurements | The Companys financial instruments recorded in the consolidated balance sheets include cash and cash equivalents, accounts receivable, investment securities, accounts payable and accrued expenses. The carrying value of certain financial instruments, primarily cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate their estimated fair values based upon the short-term nature of their maturity dates. The Company categorizes its financial instruments into a three-level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument. Financial assets recorded at fair value on the Companys condensed consolidated balance sheets are categorized as follows: ● Level 1 inputsObservable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 inputs Significant other observable inputs (e.g., quoted prices for similar items in active markets, quoted prices for identical or similar items in markets that are not active, inputs other than quoted prices that are observable such as interest rate and yield curves, and market-corroborated inputs). ● Level 3 inputsUnobservable inputs for the asset or liability, which are supported by little or no market activity and are The following table provides the carrying value and fair value of the Companys financial assets measured at fair value on a recurring basis as of June 30, 2015: Fair Value Measurement at June 30, 2015 Carrying Value Level 1 Level 2 Level 3 Money Market Funds $ 8,582,883 $ 8,582,883 $ - $ - US Government Agency Securities 1,507,110 - 1,507,110 - Corporate Securities 10,870,856 - 10,870,856 - Commercial Paper 999,111 - 999,111 - Subtotal $ 13,377,077 $ - $ 13,377,077 $ - $ 21,959,960 $ 8,582,883 $ 13,377,077 $ - |
Foreign Currency Translation and Transactions | Foreign Currency Translation and Transactions These condensed consolidated financial statements are presented in U.S. Dollars (USD), the reporting currency of the Company. For the financial statements of the Companys foreign subsidiary, whose functional currency is the EURO, foreign currency asset and liability amounts, are translated into USD at end-of-period exchange rates. Foreign currency income and expenses are translated at average exchange rates in effect during the year. Translation gains and losses are included in other comprehensive income (loss). The Company has intercompany loans between the parent company based in New Jersey and its German subsidiary. Effective October 1, 2014, the Company assessed and determined that the intercompany loans outstanding are not expected to be repaid in the foreseeable future and the nature of the funding advanced is of a long-term investment nature. As such, beginning October 1, 2014, unrealized foreign exchange movements related to long-term intercompany loans are recognized in other comprehensive income (loss). Foreign currency exchange transaction gain (loss) is the result of re-measuring transactions denominated in a currency other than the functional currency of the entity recording the transaction. |
Geographic Information | The Company operates in one business segment. The Company reported revenues of $119,973 and $151,237 for the three and six months ended June 30, 2015, respectively. Of the Companys revenues for the three and six months ended June 30, 2015, $117,767 and $146,825, respectively, were attributable to its European and Middle East operations, which are based in Germany. All of the Companys revenues of $39,729 and $51,932 for the three and six month ended June 30, 2014, respectively, were attributable to its European operations. Total assets at June 30, 2015 were $38,796,026, of which $37,816,669 were located in the United States, with the remainder in Germany. Net property and equipment at June 30, 2015 was $44,652, of which $13,065 was located in the United States, with the remainder located in Germany. |
Prepaid Expenses | Prepaid Expenses Prepaid expenses consist of payments made in advance to vendors relating to service contracts for clinical trial development, manufacturing, preclinical development and insurance policies. These advanced payments are amortized to expense either as services are performed or over the relevant service period using the straight-line method. |
Inventories, net | Inventories, net Inventories are valued at the lower of cost or market on a first in, first out basis. Inventories consist of raw materials (including labeling and packaging), work-in-process, and finished goods, if any, for the Neutrolin product. Inventories consist of the following: June 30, 2015 December 31, 2014 Raw materials $ 247,625 $ 293,976 Work in process 460,945 166,807 Finished goods 6,479 2,246 Total $ 715,049 $ 463,029 The Company maintained an inventory reserve of $175,000 at June 30, 2015 and December 31, 2014. |
Accrued Expenses | Accrued expenses consist of the following: June 30, 2015 December 31, 2014 Professional and consulting fees $ 216,125 $ 225,726 Accrued payroll and payroll taxes 195,078 13,393 Market research 162,345 137,345 Monitoring program fees 80,013 82,861 Statutory taxes 65,773 34,548 Other 41,787 27,652 Total $ 761,121 $ 521,525 |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with SEC Staff Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial Statements Revenue Recognition Revenue Recognition. |
Deferred Revenue | Deferred Revenue In August 2014, the Company entered into an exclusive distribution agreement (the Agreement) with Wonik Corporation, a South Korean company, to market, sell and distribute Neutrolin for hemodialysis and oncolytic patients upon receipt of regulatory approval in South Korea (the Territory). Upon execution of the Agreement, Wonik paid the Company a non-refundable $50,000 payment and will pay an additional $50,000 upon receipt of the product registration necessary to sell Neutrolin in the Territory. The term of the agreement commenced on August 8, 2014 and will continue for three years after the first commercial sale of Neutrolin in the Territory. The non-refundable up-front payment has been recorded as deferred revenue and will be recognized as revenue on a straight-line basis over the contractual term of the Agreement. |
Loss per common share | Income (Loss) Per Common Share Basic loss per common share excludes any potential dilution and is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. For the three and six months ended June 30, 2015 and 2014, basic income (loss) per common share is calculated by dividing net income (loss) available to common shareholders by the number of weighted average common shares issued and outstanding. Diluted earnings (loss) per common share is calculated by dividing net income (loss) available to common shareholders by the weighted average number of common shares issued and outstanding for the period, plus amounts representing the dilutive effect from the exercise of stock options and warrants and the conversion of convertible preferred stock, as applicable. The Company calculates dilutive potential common shares using the treasury stock method, which assumes the Company will use the proceeds from the exercise of stock options and warrants to repurchase shares of common stock to hold in its treasury stock reserves. However, since their effect is anti-dilutive, the Company has excluded potentially dilutive shares. The following potentially dilutive shares have been excluded from the calculation of diluted net loss per share as their effect would be anti-dilutive. June 30, 2015 2014 Series B non-voting convertible preferred stock - 454,546 Series C non-voting convertible preferred stock 2,865,000 3,500,000 Series D non-voting convertible preferred stock 1,479,240 1,148,000 Series E non-voting convertible preferred stock 1,959,759 1,104,280 Shares underlying outstanding warrants 4,422,188 11,571,233 Shares underlying outstanding stock options 3,594,545 4,048,000 Total 14,320,732 21,826,059 Each outstanding series of convertible preferred stock is considered to be a participating security under ASC 260, Earnings Per Share The following table is the calculation of the basic and diluted net income (loss) per share of common stock: Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Income (Loss) Per Common Share - Basic: Net income (loss) $ (4,135,100 ) $ 3,509,290 $ (9,632,769 ) $ (13,204,001 ) Less: Dividends on participating securities - (27,453 ) (33,121 ) (54,602 ) Less: Net income allocated to participating securities - (766,348 ) - - Net income (loss) available to common shareholders - basic $ (4,135,100 ) $ 2,715,489 $ (9,665,890 ) $ (13,258,603 ) Weighted average common shares outstanding basic 31,623,100 21,993,384 27,793,627 20,036,671 Net income (loss) per common share basic $ (0.13 ) $ 0.12 $ (0.35 ) $ (0.64 ) Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Income (Loss) Per Common Share - Diluted: Net income (loss) available to common shareholders - basic $ (4,135,100 ) $ 2,715,490 $ (9,665,890 ) $ (13,258,603 ) Plus: Dividends declared on participating securities - 27,452 - - Plus: Net income allocated to participating securities - 766,348 - - Less: Change in fair value of derivative securities - (4,657,481 ) - - Numerator for income per share - diluted $ (4,135,100 ) $ (1,148,191 ) $ (9,665,890 ) $ (13,258,603 ) Weighted average common shares outstanding basic 31,623,100 21,993,384 27,793,627 20,036,671 Weighted average effect of dilutive securities: Exercise of warrants - 1,194,135 - - Conversion of preferred stock to common stock - 2,252,280 - - Weighted average common shares outstanding diluted 31,623,100 25,439,799 27,793,627 20,036,671 Net loss per common share diluted $ (0.13 ) $ (0.05 ) $ (0.35 ) $ (0.64 ) Warrants and options if exercised, and convertible preferred stock if converted, that would result in the issuance of 16,073,779 and 21,826,059 shares of common stock for the three and six months ended June 30, 2014, respectively, and 14,320,732 for the three and six months ended June 30, 2015 were excluded from the computation of diluted earnings (loss) per share because they were anti-dilutive. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock options granted to employees, officers and directors according to ASC No. 718, Compensation Stock Compensation (ASC 718). Under ASC 718, share-based compensation cost is measured at grant date, based on the estimated fair value of the award using the Black-Scholes option pricing model, and is recognized as expense net of expected forfeitures, over the employees requisite service period on a straight-line basis. Stock compensation expense is recognized by applying the expected forfeiture rate during the vesting period to the fair value of the award. The estimation of the number of stock awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from the Companys current estimates, compensation expense may need to be revised. The Company considers many factors when estimating expected forfeitures for stock awards granted to employees, officers and directors, including types of awards, employee class, and an analysis of historical forfeitures. The Company accounts for stock options granted to non-employees on a fair value basis using the Black-Scholes option pricing model in accordance with ASC 718 and ASC No. 505-50, Equity-Based Payments to Non-Employees (ASC 505). The non-cash charge to operations for non-employee options with time based vesting provisions is based on the fair value of the options at the balance sheet date and amortized to expense over the related vesting period. |
Research and Development | Research and Development Research and development costs are charged to expense as incurred. Research and development costs include fees associated for operational consultants, contract clinical research organizations, contract manufacturing organizations, contract laboratory research organizations and contract central testing laboratories, licensing activities, clinical site fees, and allocated executive, human resources and facilities expenses, among others. The Company accrues for costs incurred as the services are being provided. |
2. Summary of Significant Acc14
2. Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
Summary of short-term investments | Amortized Cost Gross Unrealized Losses Gross Unrealized Gains Fair Value Money Market Funds included in Cash Equivalents $ 8,582,883 $ - $ - $ 8,582,883 US Government Agency Securities 1,507,470 (360 ) - 1,507,110 Corporate Securities 10,876,000 (6,683 ) 1,539 10,870,856 Commercial Paper 999,111 - - 999,111 Subtotal 13,382,581 (7,043 ) 1,539 13,377,077 $ 21,965,464 $ (7,043 ) $ 1,539 $ 21,959,960 |
Carrying and fair value of financial assets | Fair Value Measurement at June 30, 2015 Carrying Value Level 1 Level 2 Level 3 Money Market Funds $ 8,582,883 $ 8,582,883 $ - $ - US Government Agency Securities 1,507,110 - 1,507,110 - Corporate Securities 10,870,856 - 10,870,856 - Commercial Paper 999,111 - 999,111 - Subtotal $ 13,377,077 $ - $ 13,377,077 $ - $ 21,959,960 $ 8,582,883 $ 13,377,077 $ - |
Schedule of inventories | June 30, 2015 December 31, 2014 Raw materials $ 247,625 $ 293,976 Work in process 460,945 166,807 Finished goods 6,479 2,246 Total $ 715,049 $ 463,029 |
Schedule of accrued expenses | June 30, 2015 December 31, 2014 Professional and consulting fees $ 216,125 $ 225,726 Accrued payroll and payroll taxes 195,078 13,393 Market research 162,345 137,345 Monitoring program fees 80,013 82,861 Statutory taxes 65,773 34,548 Other 41,787 27,652 Total $ 761,121 $ 521,525 |
Schedule of anti-dilutive securities excluded from calculation of diluted net loss per share | June 30, 2015 2014 Series B non-voting convertible preferred stock - 454,546 Series C non-voting convertible preferred stock 2,865,000 3,500,000 Series D non-voting convertible preferred stock 1,479,240 1,148,000 Series E non-voting convertible preferred stock 1,959,759 1,104,280 Shares underlying outstanding warrants 4,422,188 11,571,233 Shares underlying outstanding stock options 3,594,545 4,048,000 Total 14,320,732 21,826,059 |
3. Stockholders' Equity (Tables
3. Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Summary of Preferred Stock and Warrants | As of June 30, 2015 As of December 31, 2014 Preferred Shares Outstanding Liquidation Preference (Per Share) Total Liquidation Preference Preferred Shares Outstanding Liquidation Preference (Per Share) Total Liquidation Preference Series B - - $ - 454,546 $ 0.001 $ 455 Series C-2 150,000 10.000 1,500,000 150,000 10.000 1,500,000 Series C-3 136,500 10.000 1,365,000 179,000 10.000 1,790,000 Series D 73,962 21.000 1,553,202 73,962 21.000 1,553,202 Series E 89,623 49.200 4,409,452 92,440 49.200 4,548,048 Total 450,085 $ 8,827,654 949,948 $ 9,391,705 |
Summary of Option Activity under Plan and Related Information | At June 30, 2015, a summary of the Companys stock option activity and related information is as follows: Shares Weighted Average Exercise Price Outstanding at beginning of period 3,664,500 $ 1.25 Exercised (454,955 ) $ 0.99 Forfeited (55,000 ) $ 1.83 Expired - $ - Granted 440,000 $ 5.34 Outstanding at end of period 3,594,545 $ 1.77 Options exercisable 3,102,295 $ 1.43 Expected to vest 414,475 $ 3.88 Weighted average remaining contractual life of stock options outstanding (years) 8.2 Weighted average remaining contractual life of stock options exercisable (years) 8.0 Weighted average vesting period over which total compensation expense related to non-vested options not yet recognized (years) 0.7 Aggregate intrinsic value of stock options exercised $ 3,139,678 Aggregate intrinsic value of stock options outstanding $ 7,720,544 Compensation expense related to non-vested options not yet recognized $ 1,270,587 |
Summary of Warrant Activity | Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life Outstanding at beginning of period 11,520,762 $ 1.99 2.57 Granted 284,174 $ 6.99 4.93 Expired (203,374 ) $ 3.44 - Exercised (7,179,374 ) $ 2.27 - Outstanding at end of period 4,422,188 $ 1.80 2.50 |
Stock options | |
Fair value assumptions for Black Sholes | Expected term (years) 4.5 10 Volatility 94% Dividend yield 0.0% Risk-free interest rate 1.47% - 2.18% Weighted-average fair value of options granted during the period $ 3.90 |
Warrants | |
Fair value assumptions for Black Sholes | In March 2015, the Company issued two warrants exercisable for an aggregate of up to 283,400 common shares with an exercise price of $7.00 per share and a term of five years as a result of entering into a backstop agreement with Manchester Securities Corp. (Manchester) (See Note 4). Additionally, the expiration date of March 24, 2015 of warrants to purchase 390,720 shares of common stock issued to Manchester in connection with the Companys initial public offering (IPO) was extended by one year to March 24, 2016. The Company recorded non-cash general and administrative expense of $1,583,252 for these warrants using the Black-Scholes option pricing model with the following assumptions: Expected term (years) 5 Volatility 75.81% - 104.08% Dividend yield 0.0% Risk-free interest rate 0.01% - 1.61% During the six months ended June 30, 2015, the Company extended the expiration date for an aggregate of 38,400 warrants with an exercise price of $3.4375. The Company accounted for this transaction as a modification of warrants and recorded additional paid in capital and non-cash general and administrative expense in the amount of $112,982. The warrants were valued using the Black-Scholes option pricing model with the following assumptions: Expected term (days) 5 Volatility 88.17% Dividend yield 0.0% Risk-free interest rate .003% |
5. Commitments and Contingenc16
5. Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | 2015 $ 33,733 2016 66,236 2017 60,784 2018 15,000 Total $ 175,753 |
2. Summary of Significant Acc17
2. Summary of Significant Accounting Policies (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Summary Of Significant Accounting Policies Details | ||
Raw materials | $ 247,625 | $ 293,976 |
Work in process | 460,945 | 166,807 |
Finished goods | 6,479 | 2,246 |
Total | $ 715,049 | $ 463,029 |
2. Summary of Significant Acc18
2. Summary of Significant Accounting Policies (Details 1) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Accounting Policies [Abstract] | ||
Professional and consulting fees | $ 216,125 | $ 225,726 |
Accrued payroll and payroll taxes | 195,078 | 13,393 |
Market research | 162,345 | 137,345 |
Monitoring program fees | 80,013 | 82,861 |
Statutory taxes | 65,773 | 34,548 |
Other | 41,787 | 27,652 |
Total | $ 761,121 | $ 521,525 |
2. Summary of Significant Acc19
2. Summary of Significant Accounting Policies (Details 2) - shares | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Antidilutive Shares | 14,320,732 | 21,826,059 |
Series B non-voting convertible preferred stock | ||
Antidilutive Shares | 0 | 454,546 |
Series C non-voting convertible preferred stock | ||
Antidilutive Shares | 2,865,000 | 3,500,000 |
Series D non-voting convertible preferred stock | ||
Antidilutive Shares | 1,479,240 | 1,148,000 |
Series E non-voting convertible preferred stock | ||
Antidilutive Shares | 1,959,759 | 1,104,280 |
Warrants | ||
Antidilutive Shares | 4,422,188 | 11,571,233 |
Shares underlying outstanding stock options | ||
Antidilutive Shares | 3,594,545 | 4,048,000 |
2. Summary of Significant Acc20
2. Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Accumulated deficit | $ (85,836,835) | $ (85,836,835) | $ (76,204,066) | ||
Operating Income (loss) | 4,134,589 | $ 1,889,720 | 9,631,514 | $ 4,824,270 | |
Revenues | 119,973 | 39,729 | 151,237 | 51,932 | |
Total assets | 38,796,026 | 38,796,026 | 5,097,762 | ||
Net property and equipment | 44,652 | 44,652 | $ 41,458 | ||
Europe | |||||
Revenues | $ 39,729 | $ 51,932 | |||
Middle East and Europe | |||||
Revenues | 117,767 | 146,825 | |||
United States [Member] | |||||
Total assets | 37,816,669 | 37,816,669 | |||
Net property and equipment | $ 13,065 | $ 13,065 |
3. Stockholders' Equity (Detail
3. Stockholders' Equity (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Preferred Shares Outstanding | 450,085 | 949,948 |
Total liquidation preference | $ 8,827,654 | $ 9,391,705 |
Series B | ||
Preferred Shares Outstanding | 0 | 454,546 |
Liquidation Preference (Per Share) | $ 0 | $ 0.001 |
Total liquidation preference | $ 0 | $ 455 |
Series C-2 | ||
Preferred Shares Outstanding | 150,000 | 150,000 |
Liquidation Preference (Per Share) | $ 10 | $ 10 |
Total liquidation preference | $ 1,500,000 | $ 1,500,000 |
Series C-3 | ||
Preferred Shares Outstanding | 136,500 | 179,000 |
Liquidation Preference (Per Share) | $ 10 | $ 10 |
Total liquidation preference | $ 1,365,000 | $ 1,790,000 |
Series D non-voting convertible preferred stock | ||
Preferred Shares Outstanding | 73,962 | 73,962 |
Liquidation Preference (Per Share) | $ 21 | $ 21 |
Total liquidation preference | $ 1,553,202 | $ 1,533,202 |
Series E non-voting convertible preferred stock | ||
Preferred Shares Outstanding | 89,623 | 92,440 |
Liquidation Preference (Per Share) | $ 49.200 | $ 49.200 |
Total liquidation preference | $ 4,409,452 | $ 4,548,048 |
3. Stockholders' Equity (Deta22
3. Stockholders' Equity (Details 1) - 6 months ended Jun. 30, 2015 - Stock options - $ / shares | Total |
Expected Term, minimum | 4 years 6 months |
Expected Term, maximum | 10 years |
Volatility, minimum | 94.00% |
Dividend yield | 0.00% |
Risk-free interest rate, minimum | 1.47% |
Risk-free interest rate, maximum | 2.18% |
Weighted-average fair value of options granted during the period | $ 3.90 |
3. Stockholders' Equity (Deta23
3. Stockholders' Equity (Details 2) - 6 months ended Jun. 30, 2015 - Stock options - USD ($) | Total |
Number of Options | |
Outstanding at beginning of period | 3,664,500 |
Number of Options Exercised | (454,955) |
Number of Options Forfeited | (55,000) |
Number of Options Expired | 0 |
Number of Options Granted | 440,000 |
Outstanding at end of period | 3,594,545 |
Options exercisable | 3,102,295 |
Expected to vest | 414,475 |
Weighted Average Exercise Price | |
Weighted Average Exercise Price Outstanding, Beginning | $ 1.25 |
Weighted Average Exercise Price Exercised | 0.99 |
Weighted Average Exercise Price Forfeited | 1.83 |
Weighted Average Exercise Price Expired | 0 |
Weighted Average Exercise Price Granted | 5.34 |
Weighted Average Exercise Price Outstanding, Ending | 1.77 |
Weighted Average Exercise Price Exercisable | 1.43 |
Weighted Average Exercise Price expected to vest | 3.88 |
Weighted-average fair value of options granted during the period | $ 3.90 |
Weighted Average Remaining Contractual Life (in years) | |
Weighted Average Remaining Contractual Life (in years) Outstanding, Ending | 8 years 2 months 12 days |
Weighted Average Remaining Contractual Life (in years) Exercisable | 8 years |
Weighted average vesting period over which total compensation expense related to non-vested options not yet recognized (years) | 8 months 12 days |
Aggregate Intrinsic Value | |
Aggregate Intrinsic Value Exercised | $ 3,139,678 |
Aggregate intrinsic value of stock options outstanding | 7,720,544 |
Compensation expense related to non-vested options not yet recognized | $ 1,270,587 |
3. Stockholders' Equity (Deta24
3. Stockholders' Equity (Details 3) - 6 months ended Jun. 30, 2015 | Total |
Machester Warrants | |
Expected Term | 5 years |
Volatility, minimum | 75.81% |
Volatility, maximum | 104.08% |
Dividend yield | 0.00% |
Risk-free interest rate, minimum | 0.01% |
Risk-free interest rate, maximum | 1.61% |
Warrants | |
Expected Term | 5 days |
Volatility, minimum | 88.17% |
Dividend yield | 0.00% |
Risk-free interest rate, minimum | 0.03% |
3. Stockholders' Equity (Deta25
3. Stockholders' Equity (Details 4) - 6 months ended Jun. 30, 2015 - Warrants - $ / shares | Total |
Outstanding at beginning of period | 11,520,762 |
Number of Warrants Granted | 284,174 |
Number of Warrants Expired | (203,374) |
Number of Warrants Exercised | (7,179,374) |
Outstanding at end of period | 4,422,188 |
Weighted Average Exercise Price Outstanding, Beginning | $ 1.99 |
Weighted Average Exercise Price Granted | 6.99 |
Weighted Average Exercise Price Expired | 3.44 |
Weighted Average Exercise Price Exercised | 2.27 |
Weighted Average Exercise Price Outstanding, Ending | $ 1.8 |
Weighted Average Remaining Contractual Life (in years) Outstanding, Beginning | 2 years 5 months 25 days |
Weighted Average Remaining Contractual Life (in years) warrants granted | 4 years 11 months 5 days |
Weighted Average Remaining Contractual Life (in years) Outstanding, Ending | 2 years 6 months |
5. Commitments and Contingenc26
5. Commitments and Contingencies (Details) | Jun. 30, 2015USD ($) |
Commitments And Contingencies Details | |
2,015 | $ 33,733 |
2,016 | 66,236 |
2,017 | 60,784 |
2,018 | 15,000 |
Total | $ 175,753 |