Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | May 12, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | MEDOVEX CORP. | |
Entity Central Index Key | 1,591,165 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | Yes | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 18,983,375 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,017 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 |
Current Assets | ||
Cash | $ 1,992,671 | $ 892,814 |
Prepaid expenses | 161,672 | 364,822 |
Short-term receivable | 150,000 | 0 |
Total Current Assets | 2,304,343 | 1,257,636 |
Long Term Receivable | 0 | 150,000 |
Property and Equipment, Net | 94,449 | 97,590 |
Deposits | 2,751 | 2,751 |
Total Assets | 2,401,543 | 1,507,977 |
Current Liabilities | ||
Interest payable | 69,222 | 69,222 |
Accounts payable | 220,700 | 225,725 |
Accrued liabilities | 45,000 | 459,800 |
Notes payable, current portion | 82,329 | 126,086 |
Short-term note payable, net of debt discount | 0 | 970,240 |
Total Current Liabilities | 417,251 | 1,851,073 |
Long-Term Liabilities | ||
Notes payable, net of current portion | 87,814 | 103,742 |
Deferred rent | 1,179 | 1,179 |
Total Long-Term Liabilities | 88,993 | 404,921 |
Total Liabilities | 506,244 | 1,955,994 |
Stockholders' Equity (Deficit) | ||
Preferred stock - $.001 par value: 500,000 shares authorized, 22,139 shares issued, 17,993 shares outstanding at March 31, 2017 (unaudited), no shares issued and outstanding at December 31, 2016 | 18 | 0 |
Common stock - $.001 par value: 49,500,000 shares authorized, 17,441,351 and 14,855,181 shares issued at March 31, 2017 (unaudited) and December 31, 2016, respectively, 17,441,351 and 14,855,181 shares outstanding at March 31, 2017 (unaudited) and December 31, 2016, respectively | 17,442 | 14,855 |
Additional paid-in capital | 30,477,753 | 25,898,054 |
Accumulated deficit | (28,599,914) | (26,360,926) |
Total Stockholders' Equity (Deficit) | 1,895,299 | (448,017) |
Total Liabilities and Stockholders' Equity (Deficit) | $ 2,401,543 | $ 1,507,977 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2017 | Dec. 31, 2016 |
Stockholders' Equity | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 500,000 | 500,000 |
Preferred stock, shares issued | 22,139 | 0 |
Preferred stock, shares outstanding | 17,993 | 0 |
Common stock, par value | $ .001 | $ .001 |
Common stock, shares authorized | 49,500,000 | 49,500,000 |
Common stock, shares issued | 17,441,351 | 14,855,181 |
Common stock, shares outstanding | 17,441,351 | 14,855,181 |
UNAUDITED CONSOLIDATED STATEMEN
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Unaudited Consolidated Statements Of Operations | ||
Revenues | ||
Operating Expenses | ||
General and administrative | 1,423,229 | 1,050,878 |
Sales and marketing | 82,137 | 21,272 |
Research and development | 335,440 | 143,183 |
Depreciation and amortization | 6,221 | 1,963 |
Total Operating Expenses | 1,847,027 | 1,217,296 |
Operating Loss | (1,847,027) | (1,217,296) |
Other Expenses | ||
Interest expense | 390,798 | 344,093 |
Total Other Expenses | 390,798 | 344,093 |
Loss from Continuing Operations | (2,237,825) | (1,561,389) |
Discontinued Operations | ||
Loss from discontinued operations | 1,163 | 270,897 |
Total Loss from Discontinued Operations | (1,163) | (270,897) |
Net Loss | $ (2,238,988) | $ (1,832,286) |
Basic and diluted net loss per common share from continuing operations | $ (.14) | $ (0.14) |
Basic and diluted net loss per common share from discontinued operations | 0 | (0.02) |
Basic and diluted net loss per common share | $ (.14) | $ (0.16) |
Weighted average outstanding shares used to compute basic net loss per share | 16,271,075 | 11,624,202 |
Weighted average outstanding shares used to compute diluted net loss per share | 16,271,075 | 11,624,202 |
UNAUDITED CONSOLIDATED STATEME5
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Cash Flows from Operating Activities | ||
Net loss | $ (2,238,988) | $ (1,832,286) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 6,221 | 2,028 |
Amortization of intangibles | 0 | 142,142 |
Amortization of debt discount | 31,772 | 246,086 |
Debt conversion expense | 356,400 | 68,694 |
Stock based compensation | 605,833 | 261,991 |
Straight-line rent adjustment | 0 | 295 |
Non-cash directors fees | 0 | 5,000 |
Adjustment of fair value of warrant modification | 0 | 25,720 |
Changes in operating assets and liabilities, net of effects of acquisition: | ||
Accounts receivable | 0 | 33,045 |
Prepaid expenses | 203,150 | 14,217 |
Accounts payable | (5,025) | (67,497) |
Interest payable | 0 | (3,671) |
Accrued liabilities | (414,800) | 48,755 |
Net Cash Used in Operating Activities | (1,455,437) | (1,055,481) |
Cash Flows from Investing Activities | ||
Expenditures for property and equipment | (3,080) | (3,213) |
Net Cash Used in Investing Activities | (3,080) | (3,213) |
Cash Flows from Financing Activities | ||
Principal payments under note payable obligation | (59,686) | (40,249) |
Proceeds from issuance of common stock, net of offering costs | 1,923,248 | 0 |
Proceeds from issuance of warrants, net of offering costs | 694,812 | 0 |
Net Cash Provided by (Used in) Financing Activities | 2,558,374 | (40,249) |
Net Increase/(Decrease) in Cash | 1,099,857 | (1,098,943) |
Cash - Beginning of period | 892,814 | 1,570,167 |
Cash - End of period | 1,992,671 | 471,224 |
Supplementary Cash Flow Information | ||
Cash paid for interest | 3,037 | 2,756 |
Non-cash investing and financing activities | ||
Financing agreement for insurance policy | 44,701 | 0 |
Conversion of note and accrued interest to common stock | 0 | 1,072,513 |
Conversion of short-term loan to common stock | 126,720 | 0 |
Issuance of common stock for consideration of cancellation of warrants | 208,000 | 0 |
Repayment of due from stockholder through forgone director fees | 0 | 5,000 |
Issuance of warrants for conversion of notes | 305,201 | 0 |
Stock issued for board fees | 239,826 | 0 |
Issuance of stock for preferred stock conversion | $ 411 | $ 0 |
ORGANIZATION AND SIGNIFICANT AC
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES | MedoveX Corp. (the “Company”) was incorporated in Nevada on July 30, 2013 as SpineZ Corp. (“SpineZ”) and changed its name to MedoveX Corp. on March 20, 2014. MedoveX is the parent company of Debride Inc. (“Debride”), which was incorporated under the laws of the State of Florida on October 1, 2012. The Company is in the business of designing and marketing proprietary medical devices for commercial use in the United States and Europe. The Company is currently seeking approval from the FDA and CE for the DenerveX System. |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
BASIS OF PRESENTATION | The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) and with the rules and regulations of the Securities and Exchange Commission ("SEC") that permit reduced disclosure for interim periods. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments which included only normal recurring adjustments, necessary to present fairly the Company’s financial position as of March 31, 2017 and results of operations and cash flows for the three months ended March 31, 2017 and 2016. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended December 31, 2016, included in the Company’s Annual Report on Form 10-K. The results for the three months ended March 31, 2017 are not necessarily indicative of the results to be expected for the year ending December 31, 2017 or for any other interim period or for any future year. principles of consolidation These unaudited condensed consolidated financial statements that present the Company’s results of operations and cash flows for the three months ended March 31, 2017 and 2016 include Debride and the accounts of the Company as well as its formerly wholly-owned subsidiary, Streamline Inc. (“Streamline”). All intercompany accounts and transactions have been eliminated in consolidation. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
PROPERTY AND EQUIPMENT | Property and equipment, net, consists of the following: Useful Life March 31, 2017 December 31, 2016 Furniture and fixtures 5 years $ 65,987 $ 65,987 Computers and software 3 years 19,928 19,928 Leasehold improvements 5 years 35,673 32,593 121,588 118,508 Less accumulated depreciation (27,139 ) (20,918 ) Total $ 94,449 $ 97,590 Depreciation and amortization expense, excluding depreciation and amortization from Streamline, amounted to $6,221 and $1,963 for the three months ended March 31, 2017 and 2016, respectively. |
EQUITY TRANSACTIONS
EQUITY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
EQUITY TRANSACTIONS | Common stock issuance In November 2016, the Board authorized the issuance of shares of common stock to all Board members, both current and former, in an amount equivalent to $240,000, representing their accrued but unpaid directors’ fees as of December 31, 2016. In January 2017, the Company issued an aggregate of 173,912 shares at $1.38 per share, which was the average closing price of the Company’s stock during 2016, to fulfill this obligation. The closing price of the Company’s stock on January 17, 2017, the day the shares were issued, was $1.16 per share. Stock-Based Compensation Plan 2013 Stock Option Incentive Plan During the three months ended March 31, 2017, the Board of Directors authorized the Company to issue options to purchase an aggregate of 189,159 shares of common stock to certain employees. The stock options vest as follows: 25% on date of grant and 25% on each of the next three years after the grant date. The options granted were at the market value of the common stock on the date of the grant. We utilize the Black-Scholes valuation method to recognize compensation expense over the vesting period. The expected life represents the period that our stock-based compensation awards are expected to be outstanding. We use a simplified method provided in Securities and Exchange Commission release, Staff Accounting Bulletin No. 110, The significant assumptions used to estimate the fair value of the equity awards granted are; Grant date February 3 March 28 Fair value of options granted $ 1.13 $ 1.35 Expected term (years) 6 6 Risk-free interest rate 2.10 % 2.11 % Volatility 82.53 % 76.86 % Dividend yield None None For the three months ended March 31, 2017 and 2016, the Company recognized approximately $366,000 and $262,000, respectively, as compensation expense with respect to the stock options. Stock Option Activity As of March 31, 2017, there were 695,755 shares of time-based, non-vested stock options outstanding. As of March 31, 2017, there was approximately $543,687 of total unrecognized stock-based compensation related to these non-vested stock options. That expense is expected to be recognized on a straight-line basis over a weighted average period of 2.27 years. The following is a summary of stock option activity at March 31, 2017: Shares Weighted Average Exercise Price Weighted Average Remaining Term (Years) Outstanding at 12/31/2016 1,124,900 $ 2.15 9.0 Granted 189,159 $ 1.15 9.9 Outstanding at 3/31/2017 1,314,059 $ 2.01 8.95 Exercisable at 3/31/2017 618,305 $ 4.27 8.83 Private Placement On February 9, 2017, the Company entered into a Unit Purchase Agreement with selected accredited investors whereby the Company had the right to sell in a private placement a minimum of $3,000,000 and up to a maximum of $5,000,000 of units. Each Unit had a purchase price of $100,000 and consisted of (i) 96,154 shares of the Company’s common stock, par value $0.001 per share at a purchase price of $1.04 per share, and (ii) a warrant to purchase 48,077 shares of common stock. Each warrant has an initial exercise price of $1.50 per share and is exercisable for a period of five (5) years from the date of issuance. Investors had the option to request shares of Series A Preferred stock in lieu of common stock, on a basis of one share of preferred stock for every 100 shares of common stock. The offering resulted in gross proceeds of $3,022,000 and resulted in the issuance of an aggregate of 1,631,730 shares of common stock, 12,740 shares of Series A convertible preferred stock and warrants to purchase 2,005,761 shares of common stock. The placement agent collected an aggregate of approximately $350,000 in total fees related to the offering and warrants to purchase an aggregate of 405,577 shares of common stock at a price of $1.50 per share. Each share of Series A preferred stock may be converted into shares of fully paid and non-assessable shares of common stock at a rate of one hundred shares of the Company’s common stock for every share of Series A preferred stock. Debt Conversion On February 9, 2017, the Company’s $1,150,000 short-term note payable was converted into an aggregate of 165,865 shares of common stock and 9,399 shares of Series A convertible preferred stock, eliminating the Company’s debt obligation. The debt was converted into shares at $1.04 per share, which was the offering price of the Company’s stock in the February private placement. The Series A convertible preferred stock is convertible into shares of common stock at $1.04 per share. Each share of Series A preferred stock may be converted into shares of fully paid and non-assessable shares of common stock at a rate of one hundred shares of the Company’s common stock for every share of Series A preferred stock. As consideration for converting the debt, the noteholders’ agreed to receive common stock in lieu of the 200,000 warrants to purchase common stock that were issued in conjunction with the short term loan, see Note 7. As a result, the 200,000 warrants were cancelled, and the Company issued to the noteholders’ an aggregate of 200,000 shares of common stock. The closing price of the Company’s stock on February 9, 2017, the day the shares were issued, was $1.04 per share. The fair value of the common stock issued was approximately $208,000. |
COMMITMENTS
COMMITMENTS | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
COMMITMENTS | Operating Leases Office Space The Company pays TAG Aviation, a company owned by its Chief Executive Officer, Jarrett Gorlin (“Mr. Gorlin”) for office space that is currently being used as the Company’s principal business location plus utilities cost (see “Related Party Transactions”) on a monthly basis. Base annual rent is $2,147 per month. Rent expense and utilities cost paid to TAG Aviation amounted to approximately $6,300 and $7,500 for the three months ended March 31, 2017 and 2016, respectively. On July 8, 2015, the Company entered into a 3 year lease agreement for a commercial building which commenced on August 1, 2015. Base rent for the three months ended March 31, 2017 was $2,849 per month. Total lease expense for the three months ended March 31, 2017 and 2016 was approximately $8,550 and $8,250, respectively, related to this lease. Future minimum lease payments under this rental agreement are approximately as follows: For the year ending: December 31, 2017 $ 26,000 December 31, 2018 21,000 $ 47,000 Equipment The Company entered into a non-cancelable 36 month operating lease agreement for equipment on April 22, 2015. The agreement is renewable at the end of the term and requires the Company to maintain comprehensive liability insurance. Total lease expense was approximately $700 for the three months ended March 31, 2017 and 2016. Future minimum lease payments under this operating lease agreement are approximately as follows: For the year ending : December 31, 2017 $ 2,000 December 31, 2018 800 $ 2,800 Purchase Orders For the three months ended March 31, 2017, the Company had approximately $130,000 in outstanding purchase order obligations related to the build of the DenerveX System to Nortech and Bovie Medical Corporation (“Bovie”). Consulting Agreements In January 2017, the consulting agreement with one of the Company’s founding stockholders to provide business development consulting services was modified from $5,000 per month to $10,000 per month and extended through January 2018. Employment Agreements The Company has Employment Agreements with each of its five executive officers for aggregate compensation amounting to approximately $994,000 per annum, plus customary benefits. These employment agreements, having commenced at separate dates, are for terms of three years which began in October 2013 and end in January 2018. Generator development agreement The Company is obligated to reimburse Bovie up to $295,000 for the development of the Pro40 electrocautery generator. For the three months ended March 31, 2017 and 2016, the Company paid approximately $31,000 and $0, respectively, under this agreement. Through March 31, 2017, we have paid approximately $420,000 to Bovie. |
SHORT TERM LIABILITIES
SHORT TERM LIABILITIES | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
SHORT TERM LIABILITIES | Finance Agreement The Company entered into a commercial insurance premium finance and security agreement in December 2016. The agreement finances the Company’s annual D&O insurance premium. Payments are due in quarterly installments of approximately $23,000 and carry an annual percentage interest rate of 4.9%. The Company had an outstanding balance of approximately $21,000 at March 31, 2017 related to the agreement. Promissory Notes In conjunction with the consummation of the Streamline acquisition on March 25, 2015, the Company assumed two promissory notes for approximately $135,000 and $125,000 to the Bank of North Dakota New Venture Capital Program and North Dakota Development Fund, both outside non-related parties. Payments on both of the notes are due in aggregate monthly installments of $5,661 and carry an interest rate of 5%. Both of the notes have a maturity date of August 1, 2019. The promissory notes, excluding interest, had outstanding balances of approximately $149,000 and $165,000 at March 31, 2017 and December 31, 2016, respectively. The promissory notes, including interest, had outstanding balances of approximately $164,000 and $181,000 at March 31, 2017 and December 31, 2016, respectively. Expected future payments, including interest, related to the promissory notes as of March 31, 2017, are approximately as follows: For the year ending December 31, 2017 51,000 December 31, 2018 68,000 December 31, 2019 45,000 $ 164,000 The Company paid interest expense related to the promissory notes for the three months ended March 31, 2017 and 2016 in the amount of approximately $2,300 and $2,800, respectively. The Company had unpaid accrued interest in the amount of approximately $69,000 at March 31, 2017 and December 31, 2016 related to the promissory notes. |
COMMON STOCK WARRANTS
COMMON STOCK WARRANTS | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
COMMON STOCK WARRANTS | Fair value measurement valuation techniques, to the extent possible, should maximize the use of observable inputs and minimize the use of unobservable inputs. The Company’s fair value measurements of all warrants are designated as Level 1 since all of the significant inputs are observable and quoted prices were available for the four comparative companies in an active market. A summary of the Company’s warrant issuance activity and related information for the three months ended March 31, 2017 is as follows: Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life Outstanding at 12/31/2016 3,504,847 $ 1.85 3.9 Issued 2,411,338 $ 1.50 4.9 Cancelled (200,000 ) $ 1.625 -- Outstanding and exercisable at 3/31/2017 5,716,185 $ 1.75 4.0 As further described in Note 4, 200,000 warrants were cancelled and 200,000 shares of common stock were issued to the Noteholders’ as consideration for converting the Company’s short-term debt. The fair value of all warrants issued are determined by using the Black-Scholes-Merton valuation technique and were assigned based on the relative fair value of both the common stock and the warrants issued. The inputs used in the Black-Scholes-Merton valuation technique to value each of the warrants issued in the three months ended March 31, 2017 as of their respective issue dates are as follows: Event Description Date MDVX Stock Price Exercise Price of Warrant Grant Date Fair Value Life of Warrant Risk Free Rate of Return (%) Annualized Volatility Rate (%) Private Placement 2/8/17 $1.04 $1.50 $0.75 5 years 1.81 104.49 The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. |
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS | 3 Months Ended |
Mar. 31, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DISCONTINUED OPERATIONS | Effective December 7, 2016, the Company sold all Streamline related assets after the Board authorized management to seek buyers for Streamline in May 2016. The Company sought additional funds to complete the development and launch of the Company’s primary product, the DenerveX System, and the decision to sell the Streamline assets helped raise part of the necessary funds required for continuing operations of the Company in a non-dilutive manner to existing shareholders. The results of the discontinued operations, which represents Streamline’s IV Suspension System (“ISS”), for the three months ended March 31, 2017 and 2016 are as follows: Three Months Ended March 31, 2017 2016 Operating Expenses General and administrative $ 1,163 $ 79,834 Research and development -- 46,100 Depreciation and amortization -- 142,207 Total Operating Expenses -- 268,141 Operating Loss (1,163 ) (268,141 ) Other Expenses Interest expense -- 2,756 Total Other Expenses -- 2,756 Net Loss $ (1,163 ) $ (270,897 ) Cash flows from discontinued operations are as follows: Three Months Ended March 31, 2017 2016 Cash Flows used in Operating Activities $ (1,163 ) $ (244,775 ) Cash Flows used in Investing Activities -- -- Cash Flows used in Financing Activities -- -- Net Cash Used in Discontinued Operations $ (1,163 ) $ (244,755 ) Amortization expense related to the discontinued intangible assets for the three months ended March 31, 2017 and 2016 was $0 and $142,142, respectively. Depreciation expense amounted to approximately $0 and $65 for the three months ended March 31, 2017 and 2016, respectively. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
INCOME TAXES | For the period from February 1, 2013 (inception) to March 31, 2017, the Company has incurred net losses and, therefore, has no current income tax liability. The net deferred tax asset generated by these losses, which principally consist of start-up costs deferred for income tax purposes, is fully reserved as of March 31, 2017 or December 31, 2016, since it is currently more likely than not that the benefit will not be realized in future periods. The Company is required to file federal income tax returns and state income tax returns in the states of Florida, Georgia and Minnesota. There are no uncertain tax positions at March 31, 2017 and December 31, 2016. The Company has not undergone any tax examinations since inception. |
RELATED-PARTY TRANSACTIONS
RELATED-PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
RELATED-PARTY TRANSACTIONS | Royalty Agreement The Company has a Contribution and Royalty Agreement with Dr. Haufe. The agreement provides for the Company to pay Dr. Haufe royalties equal to 1% of revenues earned from sales of any and all products derived from the use of the DenerveX technology. No royalties have been paid or are payable as of March 31, 2017. Co-Development Agreement The Company has a Co-Development Agreement with Dr. Andrews. The agreement provides for the Company to pay Dr. Andrews a royalty of 2% of revenues earned from applicable product sales over a period of 5 years. No royalties have been paid or are payable as of March 31, 2017. Aviation Expense Periodically the Company may charter general aviation aircraft from TAG Aviation LLC (“TAG”), a company owned by Mr. Jarrett Gorlin. No general aviation expenses were paid to TAG for the three months ended March 31, 2017 and 2016. Operating Lease As described in Note 5, the Company pays TAG Aviation LLC, (“TAG”), a company owned by Mr. Gorlin, for month to month rental of office space at Dekalb-Peachtree Airport in Atlanta, Georgia plus cost of utilities. Rent payments under this arrangement were $1,800 per month through August 31, 2016. Effective September 1, 2016, rent payments under this arrangement increased to $2,147 per month. Rent expense and utilities cost paid to TAG Aviation amounted to approximately $6,300 and $7,500 for the three months ended March 31, 2017 and 2016, respectively. Consulting Expense As described in Note 5, the Company paid $30,000 and $15,000, respectively, for the three months ended March 31, 2017 and 2016 to a founding stockholder for business advisory services. |
RESEARCH AND DEVELOPMENT
RESEARCH AND DEVELOPMENT | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
RESEARCH AND DEVELOPMENT | Devicix Prototype Manufacturing Agreement In November 2013, the Company accepted a proposal from Devicix, a Minneapolis, Minnesota based FDA registered contract designer and developer, to develop a commercially viable prototype of its product that could be used to receive regulatory approval from the FDA and other international agencies for use on humans to relieve pain associated with Facet Joint Syndrome. Through March 31, 2017, we have paid approximately $1,672,000 to Devicix. The development work commenced in December 2013. The total estimated cost of this work at contract signing was $960,000; however, the terms of the proposal allow either the Company or the designer and developer to cancel the development work with 10-days notice. The Company incurred expenses of approximately $206,000 and $117,000 for the three months ended March 31, 2017 and 2016, respectively, of which approximately $96,000 and $63,000, respectively, was included in accounts payable as of March 31, 2017 and December 31, 2016. Denervex Generator Manufacturing Agreement The DenerveX device requires a custom electrocautery generator for power. As described in Note 5, in November 2014, the Company contracted with Bovie Medical Corporation (“Bovie”) to customize one of their existing electrocautery generators for use with the DenerveX Device, and then manufacture that unit on a commercial basis once regulatory approval for the DenerveX is obtained. The Bovie agreement requires a base $295,000 development fee to customize the unit, plus additional amounts if further customization is necessary beyond predetermined estimates. The Company paid approximately $31,000 and $0 for the three months ended March 31, 2017 and 2016, respectively, under this agreement. Through March 31, 2017, we have paid approximately $420,000 to Bovie. Nortech Manufacturing Agreement In November 2014, the Company selected Nortech Systems Inc. (“Nortech”), a Minneapolis, Minnesota based FDA registered contract manufacturer, to produce 315 DenerveX devices from the prototype supplied by Devicix for use in final development and clinical trials. The agreement with Nortech includes agreed upon per unit prices for delivery of the devices. Actual work on development of the final units began in November 2014. The Company paid approximately $72,000 and $29,000 to Nortech for the three months ended March 31, 2017 and 2016, respectively. Through March 31, 2017, we have paid approximately $816,000 to Nortech, of which approximately $28,000 was included in accounts payable as of March 31, 2017. |
LIQUIDITY, GOING CONCERN AND MA
LIQUIDITY, GOING CONCERN AND MANAGEMENT'S PLANS | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
LIQUIDITY, GOING CONCERN AND MANAGEMENT'S PLANS | The Company incurred a net loss of approximately $2,239,000 and $1,832,000 for the three months ended March 31, 2017 and 2016, respectively. The Company will continue to incur losses until such time as it can bring a sufficient number of approved products to market and sell them with margins sufficient to offset expenses. To date, the Company’s sole source of funds has been from the issuance of debt and equity. As discussed in Note 4, in February 2017, the Company obtained $2,618,060, net of fees, in a private equity financing. The Company will require additional cash in 2017 and is exploring other fundraising options for 2017. No assurances can be provided regarding the success of such efforts. Furthermore, if the Company is unable to raise sufficient financing in 2017, it could be required to undertake initiatives to conserve its capital resources, including delaying or suspending the development of its technology. These matters raise substantial doubt about the Company’s ability to continue as a going concern. NASDAQ continues to monitor the Company’s ongoing compliance with the stockholders’ equity requirement after a deficiency notice was received in August 2016 for non-compliance with listing rule 5550(b), which requires a minimum $2,500,000 stockholders’ equity for continued listing on the NASDAQ capital market. The Company’s current stockholders’ equity of $1,895,299, as reported in our current quarterly report on form 10-Q for the quarter ended March 31, 2017, has evidenced non-compliance with the listing rule and, consequently, we may be subject to delisting. The condensed consolidated financial statements do not include any adjustments to the carrying amounts of its assets or liabilities that might be necessary should the Company be unable to continue as a going concern. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2017 | |
Notes to Financial Statements | |
SUBSEQUENT EVENTS | In April 2017, the consulting agreement the Company has with a sales consultant to provide sales, marketing and distribution consulting services over a one year period was modified from €10,000 ($10,682) per month to €11,667 ($12,463) per month and extended through April 30, 2019. On April 17, 2017, the Company entered into a six month business advisory and investor relations consulting agreement at a monthly fee of $10,000 for the purpose of creating market awareness of the Company. |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Summary Of Significant Accounting Policies Policies | |
BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION | The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) and with the rules and regulations of the Securities and Exchange Commission ("SEC") that permit reduced disclosure for interim periods. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments which included only normal recurring adjustments, necessary to present fairly the Company’s financial position as of March 31, 2017 and results of operations and cash flows for the three months ended March 31, 2017 and 2016. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended December 31, 2016, included in the Company’s Annual Report on Form 10-K. The results for the three months ended March 31, 2017 are not necessarily indicative of the results to be expected for the year ending December 31, 2017 or for any other interim period or for any future year. principles of consolidation These unaudited condensed consolidated financial statements that present the Company’s results of operations and cash flows for the three months ended March 31, 2017 and 2016 include Debride and the accounts of the Company as well as its formerly wholly-owned subsidiary, Streamline Inc. (“Streamline”). All intercompany accounts and transactions have been eliminated in consolidation. |
USE OF ESTIMATES | In preparing the financial statements, U.S. GAAP requires disclosure regarding estimates and assumptions used by management that affect the amounts reported in financial statements and accompanying notes. The Company’s significant estimates include the deferred income tax asset and the related valuation allowance, and the fair value of its share based payment arrangements. For those estimates that are sensitive to the outcome of future events, actual results could differ from those estimates. |
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | In August 2014, FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern In April 2015, FASB issued ASU No. 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the presentation of Debt Issuance Costs, to reduce the complexity of having different balance sheet presentation requirements for debt issuance costs and debt discounts and premiums. The guidance requires debt issuance costs related to a recognized debt liability be reported on the balance sheet as a direct deduction from the carrying amount of that debt liability. ASU 2015-03 is effective for public companies for annual reporting periods beginning after December 15, 2015, and interim periods within those fiscal years. The Company has adopted the amendments of ASU 2015-03 effective January 1, 2016. The adoption of this standard did not have a material impact on our consolidated statements of financial position, results of operations or cash flows. In November 2015, FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes. ASU 2015-17 simplifies the presentation of deferred taxes by requiring deferred tax assets and liabilities be classified as noncurrent on the balance sheet. ASU 2015-17 is effective for public companies for annual reporting periods beginning after December 15, 2016, and interim periods within those fiscal years. The guidance may be adopted prospectively or retrospectively and early adoption is permitted. The adoption of this standard did not have a material impact on our consolidated statements of financial position, results of operations or cash flows. In February 2016, FASB issued ASU No. 2016-02, Leases (Topic 842). The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. ASU 2016-02 is effective for public companies for annual reporting periods beginning after December 15, 2018, and interim periods within those fiscal years. The guidance may be adopted prospectively or retrospectively and early adoption is permitted. The Company is currently assessing the impact the adoption of ASU 2016-02 will have on its consolidated financial statements. |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Property And Equipment Tables | |
Property and equipment, net | Useful Life March 31, 2017 December 31, 2016 Furniture and fixtures 5 years $ 65,987 $ 65,987 Computers and software 3 years 19,928 19,928 Leasehold improvements 5 years 35,673 32,593 121,588 118,508 Less accumulated depreciation (27,139 ) (20,918 ) Total $ 94,449 $ 97,590 |
EQUITY TRANSACTIONS (Tables)
EQUITY TRANSACTIONS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Equity Transactions Tables | |
Significant assumptions used to estimate the fair value of the equity awards | Grant date February 3 March 28 Fair value of options granted $ 1.13 $ 1.35 Expected term (years) 6 6 Risk-free interest rate 2.10 % 2.11 % Volatility 82.53 % 76.86 % Dividend yield None None |
Summary of stock option activity | Shares Weighted Average Exercise Price Weighted Average Remaining Term (Years) Outstanding at 12/31/2016 1,124,900 $ 2.15 9.0 Granted 189,159 $ 1.15 9.9 Outstanding at 3/31/2017 1,314,059 $ 2.01 8.95 Exercisable at 3/31/2017 618,305 $ 4.27 8.83 |
COMMITMENTS (Tables)
COMMITMENTS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Commitments Tables | |
Operating leases | December 31, 2017 $ 26,000 December 31, 2018 21,000 $ 47,000 |
Equipment leases | December 31, 2017 $ 2,000 December 31, 2018 800 $ 2,800 |
SHORT TERM LIABILITIES (Tables)
SHORT TERM LIABILITIES (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Long Term Liabilities Tables | |
Future payments related to the promissory notes | December 31, 2017 51,000 December 31, 2018 68,000 December 31, 2019 45,000 $ 164,000 |
COMMON STOCK WARRANT (Tables)
COMMON STOCK WARRANT (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Common Stock Warrant Tables | |
Warrant Activity | Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life Outstanding at 12/31/2016 3,504,847 $ 1.85 3.9 Issued 2,411,338 $ 1.50 4.9 Cancelled (200,000 ) $ 1.625 -- Outstanding and exercisable at 3/31/2017 5,716,185 $ 1.75 4.0 |
Assumptions for warrants | Event Description Date MDVX Stock Price Exercise Price of Warrant Grant Date Fair Value Life of Warrant Risk Free Rate of Return (%) Annualized Volatility Rate (%) Private Placement 2/8/17 $1.04 $1.50 $0.75 5 years 1.81 104.49 |
DISCONTINUED OPERATIONS (Tables
DISCONTINUED OPERATIONS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Results of discontinued operations | March 31, 2017 2016 Operating Expenses General and administrative $ 1,163 $ 79,834 Research and development -- 46,100 Depreciation and amortization -- 142,207 Total Operating Expenses -- 268,141 Operating Loss (1,163 ) (268,141 ) Other Expenses Interest expense -- 2,756 Total Other Expenses -- 2,756 Net Loss $ (1,163 ) $ (270,897 ) |
Cash flows from discontinued operations | Three Months Ended March 31, 2017 2016 Cash Flows used in Operating Activities $ (1,163 ) $ (244,775 ) Cash Flows used in Investing Activities -- -- Cash Flows used in Financing Activities -- -- Net Cash Used in Discontinued Operations $ (1,163 ) $ (244,755 ) |
ORGANIZATION AND SIGNIFICANT 26
ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 3 Months Ended |
Mar. 31, 2017 | |
State of incorporation | Nevada |
Date of incorporation | Jul. 30, 2013 |
Debride [Member] | |
State of incorporation | Florida |
Date of incorporation | Oct. 1, 2012 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | |
Property and equipment | $ 121,588 | $ 118,508 |
Less accumulated depreciation | (27,139) | (20,918) |
Property and Equipment, net | 94,449 | 97,590 |
Furniture and Fixtures [Member] | ||
Property and equipment | $ 65,987 | 65,987 |
Useful Life | 5 years | |
Computers and Software [Member] | ||
Property and equipment | $ 19,928 | 19,928 |
Useful Life | 3 years | |
Leasehold Improvements | ||
Property and equipment | $ 35,673 | $ 32,593 |
Useful Life | 5 years |
PROPERTY AND EQUIPMENT (Detai28
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Property And Equipment Details Narrative | ||
Depreciation expense | $ 6,221 | $ 1,963 |
EQUITY TRANSACTIONS (Details)
EQUITY TRANSACTIONS (Details) | 3 Months Ended |
Mar. 31, 2017$ / shares | |
Feb 03 2017 [Member] | |
Weighted Fair value of options granted | $ 1.13 |
Expected term (years) | 6 years |
Risk-free interest rate | 2.10% |
Volatility | 82.53% |
Dividend yield | 0.00% |
March 28 2017 [Member] | |
Weighted Fair value of options granted | $ 1.35 |
Expected term (years) | 6 years |
Risk-free interest rate | 2.11% |
Volatility | 76.86% |
Dividend yield | 0.00% |
EQUITY TRANSACTIONS (Details 1)
EQUITY TRANSACTIONS (Details 1) | 3 Months Ended |
Mar. 31, 2017$ / sharesshares | |
Equity Transactions Details 1 | |
Number of Options Outstanding, Beginning | shares | 1,124,900 |
Number of Options Granted | shares | 189,159 |
Number of Options Outstanding, Ending | shares | 1,314,059 |
Number of Options Outstanding, Exercisable | shares | 618,305 |
Weighted Average Exercise Price Outstanding, Beginning | $ / shares | $ 2.15 |
Weighted Average Exercise Price Granted | $ / shares | 1.15 |
Weighted Average Exercise Price Outstanding, Ending | $ / shares | 2.01 |
Weighted Average Exercise Price Outstanding, Exercisable | $ / shares | $ 4.27 |
Weighted Average Remaining Term, Outstanding | 9 years |
Weighted Average Remaining Term, Granted | 9 years 10 months 24 days |
Weighted Average Remaining Term, Outstanding | 8 years 11 months 12 days |
Weighted Average Remaining Term, Exercisable | 8 years 9 months 29 days |
EQUITY TRANSACTIONS (Details Na
EQUITY TRANSACTIONS (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Stock options authorized incentive plan | 189,159 | |
Compensation expense | $ 605,833 | $ 261,991 |
Unrecognized stock-based compensation | $ 543,687 | |
Weighted average period | 2 years 3 months 7 days | |
Non vested options | 695,755 |
COMMITMENTS (Details)
COMMITMENTS (Details) | Mar. 31, 2017USD ($) |
Future minimum office lease payments | |
December 31, 2017 | $ 26,000 |
December 31, 2018 | 21,000 |
Total | $ 47,000 |
COMMITMENTS (Details 1)
COMMITMENTS (Details 1) | Mar. 31, 2017USD ($) |
Future minimum equipment lease payments | |
December 31, 2017 | $ 2,000 |
December 31, 2018 | 800 |
Total | $ 2,800 |
COMMITMENTS (Details Narrative)
COMMITMENTS (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Payment to Bovie | $ 31,000 | $ 0 |
Purchase order obligation | 130,000 | |
TAG Aviation [Member] | ||
Rent/Lease expense | 6,300 | 7,500 |
Equipment Lease [Member] | ||
Rent/Lease expense | 700 | 700 |
Building Lease [Member] | ||
Rent/Lease expense | $ 8,550 | $ 8,250 |
SHORT TERM LIABILITIES (Details
SHORT TERM LIABILITIES (Details) | Mar. 31, 2017USD ($) |
Long Term Liabilities Details | |
2,017 | $ 51,000 |
2,018 | 68,000 |
2,019 | 45,000 |
Total | $ 164,000 |
COMMON STOCK WARRANT (Details)
COMMON STOCK WARRANT (Details) | 12 Months Ended |
Dec. 31, 2016$ / sharesshares | |
Common Stock Warrant Details | |
Shares, Outstanding, beginning | shares | 3,504,847 |
Shares, Issued | shares | 2,411,338 |
Shares, Cancelled | shares | (200,000) |
Shares, Outstanding, ending | shares | 5,716,185 |
Shares, Exerecisable | shares | 5,716,185 |
Weighted Average Exercise Price, Outstanding, beginning | $ / shares | $ 1.85 |
Weighted Average Exercise Price, Issued | $ / shares | 1.50 |
Weighted Average Exercise Price, Cancelled | $ / shares | 1.625 |
Weighted Average Exercise Price, Outstanding, ending | $ / shares | 1.75 |
Weighted Average Exercise Price, Exerecisable | $ / shares | $ 1.75 |
Weighted Average Remaining Contractual Life, Outstanding, beginning | 3 years 10 months 24 days |
Weighted Average Remaining Contractual Life, Issued | 4 years 10 months 24 days |
Weighted Average Remaining Contractual Life, Outstanding, ending | 4 years |
Weighted Average Remaining Contractual Life, Exerecisable | 4 years |
COMMON STOCK WARRANT (Details 1
COMMON STOCK WARRANT (Details 1) - Private Placement 2/8/17 | 3 Months Ended |
Mar. 31, 2017$ / shares | |
MDVX Stock Price | $ 1.04 |
Exercise Price of Warrant | 1.50 |
Fair Value of Exercise Price | $ 0.75 |
Life of Warrant | 5 years |
Risk Free Rate of Return (%) | 1.81% |
Annualized Volatility Rate (%) | 104.49% |
DISCONTINUED OPERATIONS (Detail
DISCONTINUED OPERATIONS (Details 2) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | ||
Revenues | ||
Operating Expenses | ||
General and administrative | 1,163 | 79,834 |
Research and development | 0 | 46,100 |
Depreciation and amortization | 0 | 142,207 |
Total Operating Expenses | 0 | 268,141 |
Operating Loss | (1,163) | (268,141) |
Other Expenses | ||
Interest expense | 0 | 2,756 |
Total Other Expenses | 0 | 2,756 |
Net Loss | $ (1,163) | $ (270,897) |
DISCONTINUED OPERATIONS (Deta39
DISCONTINUED OPERATIONS (Details 3) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | ||
Cash Flows from Operating Activities | $ (1,163) | $ (244,775) |
Cash Flows from Investing Activities | 0 | 0 |
Cash Flows from Financing Activities | 0 | 0 |
Net Cash (Used in) Discontinued Operations | $ (1,163) | $ (244,775) |
RELATED-PARTY TRANSACTIONS (Det
RELATED-PARTY TRANSACTIONS (Details Narrative) - Affiliated Entity [Member] - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Aviation expense | $ 0 | $ 0 |
Rent expense | 6,300 | 7,500 |
Consulting expense | $ 30,000 | $ 15,000 |
RESEARCH AND DEVELOPMENT (Detai
RESEARCH AND DEVELOPMENT (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Research and Development expenses | $ 335,440 | $ 143,183 |
DEVICIX PROTOTYPE [Member] | ||
Research and Development expenses | 206,000 | 117,000 |
Accounts payable | 96,000 | 63,000 |
NORTECH [Member] | ||
Research and Development expenses | 816,000 | |
Accounts payable | 28,000 | |
DEVICIX GENERATOR [Member] | ||
Research and Development expenses | $ 31,000 | $ 0 |