Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | May. 13, 2016 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Medite Cancer Diagnostics, Inc. | |
Entity Central Index Key | 75,439 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | MDIT | |
Entity Common Stock, Shares Outstanding | 21,055,990 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2016 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,016 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash | $ 100 | $ 587 |
Accounts receivable, net of allowance for doubtful accounts of $83 | 1,765 | 1,798 |
Inventories | 3,601 | 3,075 |
Prepaid expenses and other current assets | 169 | 186 |
Total current assets | 5,635 | 5,646 |
Property and equipment, net | 1,977 | 1,941 |
In-process research and development | 4,620 | 4,620 |
Trademarks, trade names | 1,240 | 1,240 |
Goodwill | 4,658 | 4,658 |
Other assets | 352 | 273 |
Total assets | 18,482 | 18,378 |
Current liabilities: | ||
Secured lines of credit and current portion of long-term debt | 3,072 | 2,857 |
Notes due to employees, current portion | 225 | 202 |
Account payable and accrued expenses | 3,230 | 3,032 |
Advances - related parties | 50 | 70 |
Total current liabilities | 6,577 | 6,161 |
Long-term debt, net of current portion | 110 | 121 |
Notes due to employees, net of current portion | 675 | 725 |
Deferred tax liability – long-term | 2,205 | 2,205 |
Total liabilities | $ 9,567 | $ 9,212 |
Commitments and contingencies | ||
Stockholders’ equity : | ||
Preferred stock, $0.001 par value; 10,000,000 shares authorized; 198,355 shares issued and outstanding (liquidation value of all classes of preferred stock $2,465 and $2,442 as of March 31, 2016 and December 31, 2015, respectively) | $ 962 | $ 962 |
Common stock, $0.001 par value; 35 million shares authorized, 21,055,990 shares issued and outstanding | 21 | 21 |
Additional paid-in capital | 8,520 | 8,340 |
Treasury stock | (327) | (327) |
Accumulated other comprehensive loss | (418) | (609) |
Retained earnings | 157 | 779 |
Total stockholders' equity | 8,915 | 9,166 |
Total liabilities and stockholders' equity | $ 18,482 | $ 18,378 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 83 | $ 83 |
Preferred stock, par value (in dollars per shares) | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 198,355 | 198,355 |
Preferred stock, shares outstanding | 198,355 | 198,355 |
Preferred Stock, Liquidation Preference, Value (in dollars) | $ 2,465 | $ 2,442 |
Common stock, par value (in dollars per shares) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 35,000,000 | 35,000,000 |
Common Stock, Shares, Issued | 21,055,990 | 21,055,990 |
Common Stock, Shares, Outstanding | 21,055,990 | 21,055,990 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Statement [Abstract] | ||
Net sales | $ 2,131 | $ 2,287 |
Cost of revenues | 1,213 | 1,369 |
Gross profit | 918 | 918 |
Operating expenses | ||
Depreciation and amortization expense | 51 | 34 |
Research and development | 360 | 262 |
Selling, general and administrative | 857 | 807 |
Total operating expenses | 1,268 | 1,103 |
Operating loss | (350) | (185) |
Other expense | ||
Interest expense | 261 | 58 |
Other expense | 11 | 50 |
Total other expense | 272 | 108 |
Loss before income taxes | (622) | (293) |
Income tax benefit | 0 | (38) |
Net income (loss) | (622) | (255) |
Preferred dividend | (23) | (23) |
Net loss to common stockholders | (645) | (278) |
Condensed consolidated statements of comprehensive (loss) | ||
Net loss | (622) | (255) |
Other comprehensive income (loss) | ||
Foreign currency translation adjustments | 191 | (247) |
Comprehensive loss | (431) | (502) |
Loss per share | ||
Net loss to common stockholders | $ (645) | $ (278) |
Basic and diluted loss per share | $ (0.03) | $ (0.01) |
Weighted average basic and diluted shares outstanding | 21,055,990 | 19,546,116 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash flows from operating activities: | ||
Net loss | $ (622) | $ (255) |
Adjustments to reconcile net loss to cash (used in) provided by operating activities | ||
Depreciation and amortization | 51 | 34 |
Deferred income taxes | 0 | (66) |
Amortization of debt discount and debt issuance costs | 200 | 0 |
Changes in assets and liabilities: | ||
Accounts receivable, net | 33 | 158 |
Inventories | (526) | 240 |
Prepaid expenses and other current assets | 17 | 60 |
Accounts payable and accrued liabilities | 288 | (46) |
Net cash (used in) provided by operating activities | (559) | 125 |
Cash flows from investing activities: | ||
Purchases of equipment | (15) | (28) |
Increase in other assets | (79) | (104) |
Net cash used in investing activities | (94) | (132) |
Cash flows from financing activities: | ||
Net repayments on lines of credit and long-term debt | (12) | (340) |
Repayment of notes due to employees | (27) | 0 |
Proceeds (repayments) from related party advances, net | (20) | 950 |
Proceeds from sale of common stock, net of issuance costs | 0 | 357 |
Net cash provided by (used in) financing activities | (59) | 967 |
Effect of exchange rates on cash | 225 | (164) |
Net increase (decrease) in cash | (487) | 796 |
Cash at beginning of year | 587 | 230 |
Cash at end of the period | 100 | 1,026 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 46 | 55 |
Cash paid for income taxes | 8 | 28 |
Supplemental schedule of non-cash financing activity: | ||
Reclassification of warrant liability to additional paid in capital | 90 | 0 |
Conversion of preferred stock to common stock | $ 0 | $ 525 |
Organization
Organization | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | The Company MEDITE Cancer Diagnostics, Inc. (MDIT, MEDITE, we, us or the Company) was incorporated in Delaware in December 1998. These statements include the accounts of MEDITE Cancer Diagnostics, Inc. (former CytoCore, Inc.) and its wholly owned subsidiaries, which consists of MEDITE Enterprise, Inc., MEDITE GmbH, Burgdorf, Germany, MEDITE GmbH, Salzburg, Austria, MEDITE Lab Solutions Inc. (formerly MEDITE Inc.), Orlando, USA, MEDITE sp. z o.o., Zilona-Gora, Poland and CytoGlobe, GmbH, Burgdorf, Germany. MEDITE is a medical technology company specialized in the development, manufacturing, and marketing of molecular biomarkers, premium medical devices and consumables for detection, risk assessment and diagnosis of cancerous and precancerous conditions and related diseases. The Company has 82 employees in three countries, a distribution network to about 70 countries and a wide range of products for anatomic pathology, histology and cytology laboratories is available for sale. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2016 | |
Summary Of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Consolidation, Basis of Presentation and Significant Estimates The accompanying condensed consolidated financial statements for the periods ended March 31, 2016 and 2015 included herein are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) and include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company balances and transactions have been eliminated in consolidation. Such consolidated financial statements reflect, in the opinion of management, all adjustments necessary to present fairly the financial position and results of operations as of and for the periods indicated. All such adjustments are of a normal recurring nature. These interim results are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2016 or for any other period. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The Company believes that the disclosures are adequate to make the interim information presented not misleading. These consolidated financial statements should be read in conjunction with the Companys audited consolidated financial statements disclosed in the Report on Form 10-K for the year ended December 31, 2015 filed on April 12. 2016 and other filings with the Securities and Exchange Commission. In preparing the accompanying financial statements, management has made certain estimates and assumptions that affect reported amounts in the financial statements and disclosures of contingencies. Changes in facts and circumstances may result in revised estimates and actual results may differ from these estimates. Going Concern The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. At March 31, 2016, the Companys cash balance was $100,000 and its operating losses for the year ended December 31, 2015 and for the three months March 31, 2016 have used most of the Companys liquid assets and the negative working capital has grown by approximately $500,000 from December 31, 2015 to March 31, 2016. Management is actively seeking forms of debt and equity financing, a portion of the anticipated proceeds will be used to repay some of its debt obligations that are maturing in the next twelve months. The Company is also working with its current financial institution and other institutions to refinance its current lines of credit, which based on the current collateral, is considered restrictive and should provide additional liquidity to the Company. The Company currently has adequate availability on its lines of credit, enabling them to continue growing the business, however the Company may need to slow the pace of some of their new product rollouts. If management is unsuccessful in obtaining new forms of debt or equity financing, they will begin negotiating with some of their major vendors and lenders to extend the terms of their debt and also evaluate certain expenses that have been implemented for the Companys growth strategy. These conditions raise substantial doubt about the Companys ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Revenue Recognition The Company derives its revenue primarily from the sale of medical products and supplies for the diagnosis and prevention of cancer. Product revenue is recognized when all four of the following criteria are met: (1) persuasive evidence that an arrangement exists; (2) delivery of the products has occurred or risk of loss transfers to the customer; (3) the selling price of the product is fixed or determinable; and (4) collectability is reasonably assured. The Company generates the majority of its revenue from the sale of inventory. For its German subsidiaries, the Company and its customers agree in the sales contract that risk of loss and title transfer upon the Company packing the items for shipment, segregating the items packaged and notifying the customer that their items are ready for pickup. The Company records such sales at time of completed packaging and segregation of the items from general inventory and notification has been confirmed by the customer. Shipping and handling costs are included in cost of goods sold and charged to the customers based on the contractual terms. Inventories Inventories are stated at the lower of cost or market. Cost is determined using the first in first out method (FIFO) and market is based generally on net realizable value. Inventories consists of parts inventory purchased from outside vendors, raw materials used in the manufacturing of equipment; work in process and finished goods. Management reviews inventory on a regular basis and determines if inventory is still useable. A reserve is established for the estimated decrease in carrying value for obsolete inventory. Foreign Currency Translation The accounts of the U.S. parent company are maintained in United States Dollar (USD). The functional currency of the Companys German subsidiaries is the EURO (EURO). The accounts of the German subsidiaries were translated into USD in accordance with FASB ASC Topic 830, Foreign Currency Matters Research and Development All research and development costs are expensed as incurred. Research and development costs consist of engineering, product development, testing, developing and validating the manufacturing process, and regulatory related costs. Acquired In-Process Research and Development Acquired in-process research and development (IPR&D) that the Company acquires through business combinations represents the fair value assigned to incomplete research projects which, at the time of acquisition, have not reached technological feasibility. The amounts are capitalized and are accounted for as indefinite-lived intangible assets, subject to impairment testing until completion or abandonment of the projects. Upon successful completion of each project, MEDITE will make a determination as to the then useful life of the intangible asset, generally determined by the period in which the substantial majority of the cash flows are expected to be generated, and begin amortization. The Company tests IPR&D for impairment at least annually, or more frequently if impairment indicators exist, by first assessing qualitative factors to determine whether it is more likely than not that the fair value of the IPR&D intangible asset is less than its carrying amount. If the Company concludes it is more likely than not that the fair value is less than the carrying amount, a quantitative test that compares the fair value of the IPR&D intangible asset with its carrying value is performed. If the fair value is less than the carrying amount, an impairment loss is recognized in operating results. Impairment or Disposal of Long-Lived Assets Including Finite Lived Intangibles At each balance sheet date or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, management of the Company evaluates the recoverability of such assets. An impairment loss is recognized if the amount of undiscounted cash flows is less than the carrying amount of the asset, in which case the asset is written down to fair value. The fair value of the asset is measured by either quoted market prices or the present value of estimated expected future cash flows using a discount rate commensurate with the risks involved. Unless events or circumstances have changed significantly, we generally do not re-test at year end assets acquired from a business combination in the year of acquisition. Impairment of Indefinite Lived Intangible Assets Other Than Goodwill The Company has the option first to assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, the Company concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the entity is not required to take further action. However, if the Company concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount in accordance with Financial Accounting Standards Board Codification Subtopic 350-30. Goodwill Goodwill is recognized for the excess of cost of an acquired entity over the amounts assigned to assets acquired and liabilities assumed in a business combination. Goodwill is tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis (December 31 for us) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit using a discounted cash flow methodology. This analysis requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, and determination of our weighted average cost of capital. The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results, market conditions, and other factors. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit. Fair Value of Financial Instruments The carrying value of accounts receivable, accounts payable, accrued expenses and secured lines of credit and long-term debt approximate their respective fair values due to their short maturities. Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). Level 3 includes unobservable inputs that reflect our assumptions about what factors market participants would use in pricing the asset or liability. We develop these inputs based on the best information available, including our own data. Net Loss Per Share Basic loss per share is calculated based on the weighted-average number of outstanding common shares. Diluted loss per share is calculated based on the weighted-average number of outstanding common shares plus the effect of dilutive potential common shares, using the treasury stock method. MEDITEs calculation of diluted net loss per share excludes potential common shares as of March 31, 2016 and 2015 as the effect would be anti-dilutive (i.e. would reduce the loss per share). In accordance with SEC Accounting Series Release 280, the Company computes its loss applicable to common stock holders by subtracting dividends on preferred stock, including undeclared or unpaid dividends if cumulative, from its reported net loss and reports the same on the face of its statement of operations. Recent Accounting Pronouncements In April 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-10 Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing. The amendments in this Update affect entities with transactions included within the scope of Topic 606. The scope of that Topic includes entities that enter into contracts with customers to transfer goods or services (that are an output of the entitys ordinary activities) in exchange for consideration. The effective date and transition requirements for the amendments in this Update are the same as the effective date and transition requirements of Update 2015-14, which is discussed above. The Company is currently evaluating the impact of the updated guidance, but the Company does not believe that the adoption of ASU 2016-10 will have a significant impact on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The areas for simplification in this Update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The updated guidance is effective for public entities for fiscal years beginning after December 15, 2016. The Company is currently evaluating the impact of the updated guidance, but the Company does not believe that the adoption of ASU 2014-09 will have a significant impact on its consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (ASU 2016-02). The core principle of ASU 2016-02 is that an entity should recognize on its balance sheet assets and liabilities arising from a lease. In accordance with that principle, ASU 2016-02 requires that a lessee recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying leased asset for the lease term. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee will depend on the lease classification as a finance or operating lease. This new accounting guidance is effective for public companies for fiscal years beginning after December 15, 2018 (i.e., calendar years beginning on January 1, 2019), including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2016-02 will have on the Companys consolidated financial statements. November 2015, the FASB issued Accounting Standards Update No. 2015-17 (ASU 2015-17) Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. ASU 2015-17 simplifies the presentation of deferred income taxes by eliminating the separate classification of deferred income tax liabilities and assets into current and noncurrent amounts in the consolidated balance sheet statement of financial position. The amendments in the update require that all deferred tax liabilities and assets be classified as noncurrent in the consolidated balance sheet. The amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods therein and may be applied either prospectively or retrospectively to all periods presented. Early adoption is permitted. We have early adopted this standard in the fourth quarter of 2015 on a retrospective basis. In April 2015, the FASB issued ASU No. 2015-03 - Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (ASU No. 2015-03), which changes the presentation of debt issuance costs in financial statements. ASU No. 2015-03 requires an entity to present such costs on the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs is reported as interest expense. The standards core principle is that debt issuance costs related to a note are reflected in the balance sheet as a direct deduction from the face amount of that note and amortization of debt issuance costs is reported in interest expense. ASU No. 2015-03 is effective for annual and interim periods beginning after December 15, 2015, and interim periods beginning after December 15, 2016. Early adoption is allowed for all entities for financial statements that have not been previously issued. Entities would apply the new guidance retrospectively to all prior periods (i.e., the balance sheet for each period is adjusted). The Company adopted this ASU No. 2015-03 in December 31, 2015. Accordingly, $20,000 of debt issuance costs have been presented on the balance sheet as a direct deduction from the related debt liability as of December 31, 2015. The Company had no debt issuance costs as of March 31, 2016. In May 2014, the FASB issued ASU 2014-09, Revenue with Contracts from Customers. ASU 2014-09 supersedes the current revenue recognition guidance, including industry-specific guidance. The ASU introduces a five-step model to achieve its core principal of the entity recognizing revenue to depict the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The updated guidance is effective for public entities for interim and annual periods beginning after December 15, 2017. Early adoption is permitted for annual reporting periods beginning after December 15, 2016. The Company is currently evaluating the impact of the updated guidance for the Companys consolidated financial statements. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories | The following is a summary of the components of inventories (in thousands): March 31, December 31, 2016 (Unaudited) 2015 Raw materials $ 1,529 $ 1,170 Work in progress 207 142 Finished Goods 1,865 1,763 $ 3,601 $ 3,075 No amounts were reserved for obsolete inventory as of March 31, 2016 and December 31, 2015. |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | The following is a summary of the components of property and equipment as of (in thousands): March 31, December 31, 2016 (Unaudited) 2015 Land $ 218 $ 209 Buildings 1,207 1,158 Machinery and equipment 1,234 1,196 Office furniture and equipment 242 232 Vehicles 54 53 Computer equipment 99 87 Construction in progress 234 225 Less: Accumulated depreciation (1,311 ) (1,219 ) $ 1,977 $ 1,941 |
Secured Lines of Credit, Long-t
Secured Lines of Credit, Long-term Debt, and Notes Due to Employees | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Secured Lines of Credit, Long-term Debt, and Notes Due to Employees | The Companys outstanding note payable indebtedness was as follows as of (in thousands): March 31, December 31, 2016 (Unaudited) 2015 Hannoversche Volksbank credit line #1 $ 1,250 $ 1,120 Hannoversche Volksbank credit line #2 350 383 Hannoversche Volksbank term loan #1 32 61 Hannoversche Volksbank term loan #2 25 24 Hannoversche Volksbank term loan #3 173 182 Secured Promissory Note 500 500 DZ Equity Partners Participation rights 852 818 Total 3,182 3,088 Discount on secured promissory notes and debt issuance costs - (110) Less current portion of long-term debt (3,072) (2,857) Long-term debt $ 110 $ 121 In July 2006, MEDITE GmbH, Burgdorf, entered into a master line of credit agreement #1 with Hannoversche Volksbank. The line of credit was amended in 2012 and was later amended to increase the credit limit to Euro 1.8 million ($2.0 million as of March 31, 2016). In 2015, the credit line was reduced to Euro 1.1 million ($1.25 million as of March 31, 2016). Borrowings on the master line of credit agreement #1 bears interest at a variable rate based on Euribor (Euro Interbank Offered Rate) depending on the type of advance elected by the Company and defined in the agreement. Interest rates depending on the type of advance elected ranged from 3.77 8.00% during the period ended March 31, 2016 and the year ended December 31, 2015. The line of credit has no stated maturity date. The line of credit is collateralized by the accounts receivable and inventory of MEDITE GmbH, Burgdorf, and a mortgage on the buildings owned by the Company and is guaranteed by Michaela Ott and Michael Ott, stockholders of the Company. In June 2012, CytoGlobe, GmbH, Burgdorf, entered into a line of credit agreement #2 with Hannoversche Volksbank. The line of credit granted a maximum borrowing authority of Euro 400,000 ($454,200 as of March 31, 2016). Borrowings on the master line of credit agreement #2 bears interest at a variable rate based on Euribor (Euro Interbank Offered Rate) depending on the type of advance elected by the Company and defined in the agreement. Interest rates ranged from 3.77 8.00% during the period ended March 31, 2016 and the year ended December 31, 2015. The line of credit has no stated maturity date. The line of credit is collateralized by the accounts receivable and inventory of CytoGlobe GmbH, Burgdorf and is guaranteed by Michaela Ott and Michael Ott, stockholders of the Company, and the state of Lower Saxony (Germany) to support high-tech companies in the area. In December 2006, MEDITE GmbH, Burgdorf, entered into a Euro 500,000 ($567,750 as of March 31, 2016) term loan agreement #1 with Hannoversche Volksbank with an interest rate of 3.4% per annum. The term loan has a maturity of September 2016 and requires semi-annual principal payments of approximately Euro 27,780 ($31,544 as of March 31, 2016). The term loan is guaranteed by Michaela Ott and Michael Ott, stockholders of the Company, and a mortgage on the property of the Company. In June 2006, MEDITE GmbH, Burgdorf, entered into a Euro 400,000 ($454,200 as of March 31, 2016) term loan #2 with Hannoversche Volksbank with an interest rate of 3.6 % per annum. The term loan has a maturity of June 2016, requires 18 semi-annual principal repayments of approximately Euro 22,220 ($25,231 as of March 31, 2016). The term loan is guaranteed by Michaela Ott and Michael Ott, stockholders of the Company, and is collateralized by subordinated assignments of all of the receivables and inventories of MEDITE GmbH, Burgdorf and also has a subordinated pledge of share term life insurance policies. In November 2008, MEDITE GmbH, Burgdorf, entered into a Euro 400,000 ($454,200 as of March 31, 2016) term loan #3 with Hannoversche Volksbank with an interest rate of 4.7% per annum. The term loan has a maturity of December 31, 2018, and requires quarterly principal repayments of Euro 13,890 ($15,772 as of March 31, 2016). The term loan is guaranteed by Michaela Ott and Michael Ott, stockholders of the Company, and is collateralized by a partial subordinated pledge of the receivables and inventory of MEDITE GmbH, Burgdorf. In March 2009, the Company entered into a participation rights agreement with DZ Equity Partners in the form of a debenture with a mezzanine lender who advanced the Company up to Euro 1.5 million, ($1.7 million as of March 31, 2016) in two tranches of Euro 750,000 each, ($851,625 as of March 31, 2016). The first tranche was paid to the Company at closing with the second tranche being conditioned on MEDITE GmbH, Burgdorf and its subsidiaries hitting certain performance targets. Those targets were not met and the second tranche was never called. The debenture pays interest at the rate of 12.15% per annum and matures at December 31, 2016. On February 23, 2015, the Company reached an agreement with Ventana Medical Systems, Inc. whereby both parties agreed that Ventana Medical Systems, Inc. will accept $38,281 as payment in full for all outstanding principal and accrued interest. As part of this agreement, Ventana Medical Systems, Inc. converted $1.75 million stated value of Series D Preferred stock and $525,000 of book value and all outstanding accrued dividends of $656,250 for 12,100 shares of the Companys common stock. On December 31, 2015, the Company entered into a Securities Purchase Agreement (the 2015 Purchase Agreement) with seven (7) individual accredited investors (collectively the Purchasers), pursuant to which the Company agreed to issue to the Purchasers secured promissory notes in the aggregate principal amount of $500,000 with interest accruing at an annual rate of 15% (the Note(s)) and warrants to purchase up to an aggregate amount of 250,000 shares of the common stock, par value $0.001) per share, of the Company (the Warrant(s)). The Notes matured on the earlier of the third (3rd) month anniversary date following the Closing Date, as defined in the Note, or the third (3rd) business day following the Companys receipt of funds exceeding one million dollars ($1,000,000) from an equity or debt financing, not including the financing contemplated under the 2015 Purchase Agreement. The Notes are secured by the Companys accounts receivable and inventories held in the United States. The Warrants had an initial exercise price of $1.60 per share, which were subject to adjustment, and are exercisable for a period of five (5) years. If the Notes were not redeemed by the Company on maturity, the Purchasers were entitled to receive 10% of the principal balance of the Notes outstanding in warrants for every month that the Notes were not redeemed. On March 31, 2016, these Notes matured and were not repaid. Therefore the Notes were in default on April 1, 2016. The Company agreed to pay the Purchasers 10% of the principal balance of the Notes in warrants for the months of April 2016 and May 2016 (See Note 10). Further, on March 15, 2016, the Board of Directors agreed to renegotiated terms with the warrant holders to remove the anti-dilution and down round price protection features in the warrant agreement and fixed the exercise price at $.80. The warrants issued with the Notes were increased from 250,000 to 500,000. On December 31, 2015, the Company recognized the fair value of the Warrants issued with the secured promissory notes of $90,000. On March 31, 2016, the Company recorded an additional discount of $90,000 for the additional Warrants issued in connection with the renegotiated terms as discussed above. As of March 31, 2016, the discounts have been fully amortized into interest expense as the related Notes matured on March 31, 2016. There were no such arrangements during the same period in 2015. See Note 8 for further disclosure of the Warrants. One of the Purchasers of a $100,000 secured promissory note (see above) was elected to the Board of Directors to serve as Director and Chairman of the Companys audit committee. In November 2015 and February 2016, the Company entered into promissory notes totaling $927,000 with certain employees to repay wages earned prior to December 31, 2014 not paid (Notes Due to Employees"). The Notes Due to Employees are to be paid monthly through September 2019, with no interest due on the outstanding balances. The monthly amounts increase over the payment term. The amounts due become immediately due and payable if payments are more than ten days late either one or two consecutive months as defined in the agreement with the employee. As of May 13, 2016, payments on the Notes Due to Employees had not been accelerated. The Notes Due to Employees have been presented separately on the consolidated balance sheet at March 31, 2016 and December 31, 2015, respectively. Certain employees may convert any of the amounts owed during the duration of the notes due to employees to equity at a discounted priced defined in the agreement. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Included in related party advances the Company owed its CFO and former CEO and Chairman of the board, $50,000 and $70,000 at March 31, 2016 and December 31, 2015, respectively. The Company paid $20,000 during the period ended March 31, 2016. The Company owes the CFO approximately $963,000 and $938,000 of unpaid wages and accrued vacation at March 31, 2016 and December 31, 2015, respectively, which is included in accounts payable and accrued expenses in the accompanying consolidated balance sheets. The CEO Michaela Ott together with the COO Michael Ott provided an additional $950,000 in a non-interest bearing short term advance at the end of the first quarter 2015 to the Company. This advance was made pending the share placement and was due on demand and repaid in second quarter of 2015. Included in accounts payable and accrued expenses at March 31, 2016 and at December 31, 2015, are amounts owed to both the CEO and COO totaling approximately $90,000 of accrued wages. |
Common Stock
Common Stock | 3 Months Ended |
Mar. 31, 2016 | |
Common Stock, Number of Shares, Par Value and Other Disclosures [Abstract] | |
Common Stock | During the quarter ended March 31, 2016, the Company did not issue any shares of common stock. |
Preferred Stock and Warrants
Preferred Stock and Warrants | 3 Months Ended |
Mar. 31, 2016 | |
Preferred Stock, Number of Shares, Par Value and Other Disclosures [Abstract] | |
Preferred Stock and Warrants | A summary of the Companys preferred stock as of March 31, 2016 and December 31, 2015 is as follows. March 31, December 31, 2016 2015 (unaudited) Shares Issued & Shares Issued & Offering Outstanding Outstanding Series A convertible 47,250 47,250 Series B convertible, 10% cumulative dividend 93,750 93,750 Series C convertible, 10% cumulative dividend 38,333 38,333 Series E convertible, 10% cumulative dividend 19,022 19,022 Total Preferred Stock 198,355 198,355 As of March 31, 2016 and December 31, 2015, the Company had cumulative preferred undeclared and unpaid dividends. In accordance with the Financial Accounting Standard Boards Accounting Standards Codification 260-10-45-11, Earnings per Share Summary of Preferred Stock Terms Series A Convertible Preferred Stock Liquidation Value: $4.50 per share, $212,625 Conversion Price: $10,303 per share Conversion Rate: 0.00044Liquidation Value divided by Conversion Price ($4.50/$10,303) Voting Rights: None Dividends: None Conversion Period: Any time Series B Convertible Preferred Stock Liquidation Value: $4.00 per share, $375,000 Conversion Price: $1,000 per share Conversion Rate: 0.0040Liquidation Value divided by Conversion Price ($4.00/$1,000) Voting Rights: None Dividends: 10%QuarterlyCommencing March 31, 2001 Conversion Period: Any time Cumulative dividends in arrears at March 31, 2016 were $567,538 Series C Convertible Preferred Stock Liquidation Value: $3.00 per share, $115,000 Conversion Price: $600 per share Conversion Rate: 0.0050Liquidation Value divided by Conversion Price ($3.00/$600) Voting Rights: None Dividends: 10%QuarterlyCommencing March 31, 2002 Conversion Period: Any time Cumulative dividends in arrears at March 31, 2016 were $165,788 Series D Convertible Preferred Stock Liquidation Value: $10.00 per share, $525,000 Conversion Price: $1,000 per share Conversion Rate: .01Liquidation Value divided by Conversion Price ($10.00/$1,000) Voting Rights: None Dividends: 10%QuarterlyCommencing April 30, 2002 Conversion Period: Any time Cumulative dividends in arrears at March 31, 2016 were $0 Series E Convertible Preferred Stock Liquidation Value: $22.00 per share, $418,488 Conversion Price: $800.00 per share Conversion Rate: .0275Liquidation Value divided by Conversion Price ($22.00/$800) Voting Rights: Equal in all respects to holders of common shares Dividends: 10%QuarterlyCommencing May 31, 2002 Conversion Period: Any time Cumulative dividends in arrears at March 31, 2016 were $610,484 Warrants outstanding Weighted Weighted Average Average Aggregate Remaining Options and Exercise Intrinsic Contractual Warrants Price Value Life (Years) Outstanding at December 31, 2015 400,808 $ 2.29 5.18 Granted 250,000 $ 0.80 5.00 Exercised Expired Outstanding at March 31, 2016 650,808 $ 1.72 4.96 In connection with the secured promissory notes issued on December 31, 2015, as discussed in Note 5, the Company issued an aggregate of 250,000 warrants to purchase shares of common stock with a par value of $0.001 for $1.60 per shares. The exercise price and number of warrants were subject to a change as defined in the agreement. The warrants are exercisable for a period of five (5) years. On March 15, 2016, the Board of Directors agreed to renegotiated terms with the warrant holders to remove the anti-dilution and price protection features in the warrant agreement and fixed the exercise price at $.80. The warrants issued with the Notes were increased from 250,000 to 500,000. At March 31, 2016 and December 31, 2015, the Company determined the fair value of the warrants issued with the secured promissory notes and renegotiated terms using the Black Scholes pricing model and the following assumptions: an interest free rate of 1.75%, volatility of 50% and a remaining term of 5 years. Based on information known at March 15, 2016 and December 31, 2015, the Company priced the warrants with an assumed stock and exercise price of $0.80. At December 31, 2015, the fair value of the warrants initially issued with the secured promissory notes were determined to be approximately $90,000 which is presented as a discount on the related secured promissory notes and a liability which is included in accounts payable and accrued expenses on the consolidated balance sheets at December 31, 2015. The $90,000 was reclassified to additional paid-in capital on March 15, 2016 due to the renegotiated terms as discussed above. At March 31, 2016, the fair value of the additional warrants of $90,000 was recorded as a discount on the related secured promissory notes and additional paid-in capital. The aggregate fair value amount of $180,000 has been fully amortized into interest expense at March 31, 2016. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | The Company currently leases 11 vehicles for sales and service employees, delivery and other purposes with expirations ranging from April 2017 through December 2018. The current minimum monthly payment for these vehicle leases is approximately $5,369. The Company has several operation leases for office, laboratory and manufacturing space. The Companys operating lease for one of its German facilities can be cancelled by either party with a 3 months notice, its Poland facility can be terminated by either party with a six month notice. Monthly rent payments for the German and Poland facilities are Euro 6,200 ($6,838 as of March 31, 2016) and PLN 6,240 ($1,619 as of March 31, 2016) respectively. The Companys laboratory facility in Chicago, IL terminates June 30, 2016 and requires monthly payments of $1,070. The Company also sublease its former Chicago laboratory facility for $3,948 per month. The lease for this facility terminates October 30, 2016 and require monthly rent payments of $4,526. The Companys Orlando facility has escalating rents ranging from $2,345 to $2,563 per month and terminates July 31, 2018. The total aggregate monthly lease payments (net of the sublease) required on these leases is approximately $12,520. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | The Notes discussed in Note 5 above matured on March 31, 2016 and were not repaid. Therefore, the Notes were in default as of the April 1, 2016. The Company agreed to pay the Purchasers 10% of the principal balance of the Notes in warrants for the months of April 2016 and May 2016. Therefore, for the months of April and May 2016, the Company issued an aggregate 100,000 warrants and recorded interest expense related to the issuance of these warrants, attributable to the secured promissory notes of approximately $36,000. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
Segment Information | The Company operates in one operating segment. However, the Company has assets and operations in the United States, Germany and Poland. The following tables show the breakdown of the Companys operations and assets by region (in thousands): United States Germany Poland Total March 31, 2016 December 31, 2015 March 31, 2016 December 31, 2015 March 31, 2016 December 31, 2015 March 31, 2016 December 31, 2015 Assets $ 11,435 $ 11,826 $ 6,862 $ 6,357 $ 185 $ 195 $ 18,482 $ 18,378 Property & equipment, net 79 84 1,895 1,853 3 4 1,977 1,941 Intangible assets 10,518 10,518 - - - - 10,518 10,518 United States Germany Poland Total March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015 Revenues $ 274 $ 280 $ 1,842 $ 2,003 $ 15 $ 4 $ 2,131 $ 2,287 Net loss (490 ) (163) (89 ) (76) (43 ) (16) (622 ) (255) |
Summary of Significant Accoun17
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Consolidation, Basis of Presentation and Significant Estimates | The accompanying condensed consolidated financial statements for the periods ended March 31, 2016 and 2015 included herein are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) and include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company balances and transactions have been eliminated in consolidation. Such consolidated financial statements reflect, in the opinion of management, all adjustments necessary to present fairly the financial position and results of operations as of and for the periods indicated. All such adjustments are of a normal recurring nature. These interim results are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2016 or for any other period. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The Company believes that the disclosures are adequate to make the interim information presented not misleading. These consolidated financial statements should be read in conjunction with the Companys audited consolidated financial statements disclosed in the Report on Form 10-K for the year ended December 31, 2015 filed on April 12. 2016 and other filings with the Securities and Exchange Commission. In preparing the accompanying financial statements, management has made certain estimates and assumptions that affect reported amounts in the financial statements and disclosures of contingencies. Changes in facts and circumstances may result in revised estimates and actual results may differ from these estimates. |
Going Concern | The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. At March 31, 2016, the Companys cash balance was $100,000 and its operating losses for the year ended December 31, 2015 and for the three months March 31, 2016 have used most of the Companys liquid assets and the negative working capital has grown by approximately $500,000 from December 31, 2015 to March 31, 2016. Management is actively seeking forms of debt and equity financing, a portion of the anticipated proceeds will be used to repay some of its debt obligations that are maturing in the next twelve months. The Company is also working with its current financial institution and other institutions to refinance its current lines of credit, which based on the current collateral, is considered restrictive and should provide additional liquidity to the Company. The Company currently has adequate availability on its lines of credit, enabling them to continue growing the business, however the Company may need to slow the pace of some of their new product rollouts. If management is unsuccessful in obtaining new forms of debt or equity financing, they will begin negotiating with some of their major vendors and lenders to extend the terms of their debt and also evaluate certain expenses that have been implemented for the Companys growth strategy. These conditions raise substantial doubt about the Companys ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
Revenue Recognition | The Company derives its revenue primarily from the sale of medical products and supplies for the diagnosis and prevention of cancer. Product revenue is recognized when all four of the following criteria are met: (1) persuasive evidence that an arrangement exists; (2) delivery of the products has occurred or risk of loss transfers to the customer; (3) the selling price of the product is fixed or determinable; and (4) collectability is reasonably assured. The Company generates the majority of its revenue from the sale of inventory. For its German subsidiaries, the Company and its customers agree in the sales contract that risk of loss and title transfer upon the Company packing the items for shipment, segregating the items packaged and notifying the customer that their items are ready for pickup. The Company records such sales at time of completed packaging and segregation of the items from general inventory and notification has been confirmed by the customer. Shipping and handling costs are included in cost of goods sold and charged to the customers based on the contractual terms. |
Inventories | Inventories are stated at the lower of cost or market. Cost is determined using the first in first out method (FIFO) and market is based generally on net realizable value. Inventories consists of parts inventory purchased from outside vendors, raw materials used in the manufacturing of equipment; work in process and finished goods. Management reviews inventory on a regular basis and determines if inventory is still useable. A reserve is established for the estimated decrease in carrying value for obsolete inventory. |
Foreign Currency Translation | The accounts of the U.S. parent company are maintained in United States Dollar (USD). The functional currency of the Companys German subsidiaries is the EURO (EURO). The accounts of the German subsidiaries were translated into USD in accordance with FASB ASC Topic 830, Foreign Currency Matters |
Research and Development | All research and development costs are expensed as incurred. Research and development costs consist of engineering, product development, testing, developing and validating the manufacturing process, and regulatory related costs. |
Acquired In-Process Research and Development | Acquired in-process research and development (IPR&D) that the Company acquires through business combinations represents the fair value assigned to incomplete research projects which, at the time of acquisition, have not reached technological feasibility. The amounts are capitalized and are accounted for as indefinite-lived intangible assets, subject to impairment testing until completion or abandonment of the projects. Upon successful completion of each project, MEDITE will make a determination as to the then useful life of the intangible asset, generally determined by the period in which the substantial majority of the cash flows are expected to be generated, and begin amortization. The Company tests IPR&D for impairment at least annually, or more frequently if impairment indicators exist, by first assessing qualitative factors to determine whether it is more likely than not that the fair value of the IPR&D intangible asset is less than its carrying amount. If the Company concludes it is more likely than not that the fair value is less than the carrying amount, a quantitative test that compares the fair value of the IPR&D intangible asset with its carrying value is performed. If the fair value is less than the carrying amount, an impairment loss is recognized in operating results. |
Impairment or Disposal of Long-Lived Assets Including Finite Lived Intangibles | At each balance sheet date or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, management of the Company evaluates the recoverability of such assets. An impairment loss is recognized if the amount of undiscounted cash flows is less than the carrying amount of the asset, in which case the asset is written down to fair value. The fair value of the asset is measured by either quoted market prices or the present value of estimated expected future cash flows using a discount rate commensurate with the risks involved. Unless events or circumstances have changed significantly, we generally do not re-test at year end assets acquired from a business combination in the year of acquisition. |
Impairment of Indefinite Lived Intangible Assets Other Than Goodwill | The Company has the option first to assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, the Company concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the entity is not required to take further action. However, if the Company concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount in accordance with Financial Accounting Standards Board Codification Subtopic 350-30. |
Goodwill | Goodwill is recognized for the excess of cost of an acquired entity over the amounts assigned to assets acquired and liabilities assumed in a business combination. Goodwill is tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis (December 31 for us) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit using a discounted cash flow methodology. This analysis requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, and determination of our weighted average cost of capital. The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results, market conditions, and other factors. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit. |
Fair Value of Financial Instruments | The carrying value of accounts receivable, accounts payable, accrued expenses and secured lines of credit and long-term debt approximate their respective fair values due to their short maturities. Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). Level 3 includes unobservable inputs that reflect our assumptions about what factors market participants would use in pricing the asset or liability. We develop these inputs based on the best information available, including our own data. |
Net Loss Per Share | Basic loss per share is calculated based on the weighted-average number of outstanding common shares. Diluted loss per share is calculated based on the weighted-average number of outstanding common shares plus the effect of dilutive potential common shares, using the treasury stock method. MEDITEs calculation of diluted net loss per share excludes potential common shares as of March 31, 2016 and 2015 as the effect would be anti-dilutive (i.e. would reduce the loss per share). In accordance with SEC Accounting Series Release 280, the Company computes its loss applicable to common stock holders by subtracting dividends on preferred stock, including undeclared or unpaid dividends if cumulative, from its reported net loss and reports the same on the face of its statement of operations. |
Recent Accounting Pronouncements | In April 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-10 Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing. The amendments in this Update affect entities with transactions included within the scope of Topic 606. The scope of that Topic includes entities that enter into contracts with customers to transfer goods or services (that are an output of the entitys ordinary activities) in exchange for consideration. The effective date and transition requirements for the amendments in this Update are the same as the effective date and transition requirements of Update 2015-14, which is discussed above. The Company is currently evaluating the impact of the updated guidance, but the Company does not believe that the adoption of ASU 2016-10 will have a significant impact on its consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Compensation Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The areas for simplification in this Update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The updated guidance is effective for public entities for fiscal years beginning after December 15, 2016. The Company is currently evaluating the impact of the updated guidance, but the Company does not believe that the adoption of ASU 2014-09 will have a significant impact on its consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (ASU 2016-02). The core principle of ASU 2016-02 is that an entity should recognize on its balance sheet assets and liabilities arising from a lease. In accordance with that principle, ASU 2016-02 requires that a lessee recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying leased asset for the lease term. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee will depend on the lease classification as a finance or operating lease. This new accounting guidance is effective for public companies for fiscal years beginning after December 15, 2018 (i.e., calendar years beginning on January 1, 2019), including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2016-02 will have on the Companys consolidated financial statements. November 2015, the FASB issued Accounting Standards Update No. 2015-17 (ASU 2015-17) Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. ASU 2015-17 simplifies the presentation of deferred income taxes by eliminating the separate classification of deferred income tax liabilities and assets into current and noncurrent amounts in the consolidated balance sheet statement of financial position. The amendments in the update require that all deferred tax liabilities and assets be classified as noncurrent in the consolidated balance sheet. The amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods therein and may be applied either prospectively or retrospectively to all periods presented. Early adoption is permitted. We have early adopted this standard in the fourth quarter of 2015 on a retrospective basis. In April 2015, the FASB issued ASU No. 2015-03 - Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (ASU No. 2015-03), which changes the presentation of debt issuance costs in financial statements. ASU No. 2015-03 requires an entity to present such costs on the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs is reported as interest expense. The standards core principle is that debt issuance costs related to a note are reflected in the balance sheet as a direct deduction from the face amount of that note and amortization of debt issuance costs is reported in interest expense. ASU No. 2015-03 is effective for annual and interim periods beginning after December 15, 2015, and interim periods beginning after December 15, 2016. Early adoption is allowed for all entities for financial statements that have not been previously issued. Entities would apply the new guidance retrospectively to all prior periods (i.e., the balance sheet for each period is adjusted). The Company adopted this ASU No. 2015-03 in December 31, 2015. Accordingly, $20,000 of debt issuance costs have been presented on the balance sheet as a direct deduction from the related debt liability as of December 31, 2015. The Company had no debt issuance costs as of March 31, 2016. In May 2014, the FASB issued ASU 2014-09, Revenue with Contracts from Customers. ASU 2014-09 supersedes the current revenue recognition guidance, including industry-specific guidance. The ASU introduces a five-step model to achieve its core principal of the entity recognizing revenue to depict the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The updated guidance is effective for public entities for interim and annual periods beginning after December 15, 2017. Early adoption is permitted for annual reporting periods beginning after December 15, 2016. The Company is currently evaluating the impact of the updated guidance for the Companys consolidated financial statements. |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | The following is a summary of the components of inventories (in thousands): March 31, December 31, 2016 (Unaudited) 2015 Raw materials $ 1,529 $ 1,170 Work in progress 207 142 Finished Goods 1,865 1,763 $ 3,601 $ 3,075 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | The following is a summary of the components of property and equipment as of (in thousands): March 31, December 31, 2016 (Unaudited) 2015 Land $ 218 $ 209 Buildings 1,207 1,158 Machinery and equipment 1,234 1,196 Office furniture and equipment 242 232 Vehicles 54 53 Computer equipment 99 87 Construction in progress 234 225 Less: Accumulated depreciation (1,311 ) (1,219 ) $ 1,977 $ 1,941 |
Secured Lines of Credit, Long20
Secured Lines of Credit, Long-term Debt, and Notes Due to Employees (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Outstanding note payable indebtedness | The Companys outstanding note payable indebtedness was as follows as of (in thousands): March 31, December 31, 2016 (Unaudited) 2015 Hannoversche Volksbank credit line #1 $ 1,250 $ 1,120 Hannoversche Volksbank credit line #2 350 383 Hannoversche Volksbank term loan #1 32 61 Hannoversche Volksbank term loan #2 25 24 Hannoversche Volksbank term loan #3 173 182 Secured Promissory Note 500 500 DZ Equity Partners Participation rights 852 818 Total 3,182 3,088 Discount on secured promissory notes and debt issuance costs - (110) Less current portion of long-term debt (3,072) (2,857) Long-term debt $ 110 $ 121 |
Preferred Stock and Warrants (T
Preferred Stock and Warrants (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Equity [Abstract] | |
Summary of Company's Preferred Stock | A summary of the Companys preferred stock as of March 31, 2016 and December 31, 2015 is as follows. March 31, December 31, 2016 2015 (unaudited) Shares Issued & Shares Issued & Offering Outstanding Outstanding Series A convertible 47,250 47,250 Series B convertible, 10% cumulative dividend 93,750 93,750 Series C convertible, 10% cumulative dividend 38,333 38,333 Series E convertible, 10% cumulative dividend 19,022 19,022 Total Preferred Stock 198,355 198,355 |
Summary of Preferred Stock Terms | Summary of Preferred Stock Terms Series A Convertible Preferred Stock Liquidation Value: $4.50 per share, $212,625 Conversion Price: $10,303 per share Conversion Rate: 0.00044Liquidation Value divided by Conversion Price ($4.50/$10,303) Voting Rights: None Dividends: None Conversion Period: Any time Series B Convertible Preferred Stock Liquidation Value: $4.00 per share, $375,000 Conversion Price: $1,000 per share Conversion Rate: 0.0040Liquidation Value divided by Conversion Price ($4.00/$1,000) Voting Rights: None Dividends: 10%QuarterlyCommencing March 31, 2001 Conversion Period: Any time Cumulative dividends in arrears at March 31, 2016 were $567,538 Series C Convertible Preferred Stock Liquidation Value: $3.00 per share, $115,000 Conversion Price: $600 per share Conversion Rate: 0.0050Liquidation Value divided by Conversion Price ($3.00/$600) Voting Rights: None Dividends: 10%QuarterlyCommencing March 31, 2002 Conversion Period: Any time Cumulative dividends in arrears at March 31, 2016 were $165,788 Series D Convertible Preferred Stock Liquidation Value: $10.00 per share, $525,000 Conversion Price: $1,000 per share Conversion Rate: .01Liquidation Value divided by Conversion Price ($10.00/$1,000) Voting Rights: None Dividends: 10%QuarterlyCommencing April 30, 2002 Conversion Period: Any time Cumulative dividends in arrears at March 31, 2016 were $0 Series E Convertible Preferred Stock Liquidation Value: $22.00 per share, $418,488 Conversion Price: $800.00 per share Conversion Rate: .0275Liquidation Value divided by Conversion Price ($22.00/$800) Voting Rights: Equal in all respects to holders of common shares Dividends: 10%QuarterlyCommencing May 31, 2002 Conversion Period: Any time Cumulative dividends in arrears at March 31, 2016 were $610,484 |
Warrants Outstanding | Warrants outstanding Weighted Weighted Average Average Aggregate Remaining Options and Exercise Intrinsic Contractual Warrants Price Value Life (Years) Outstanding at December 31, 2015 400,808 $ 2.29 5.18 Granted 250,000 $ 0.80 5.00 Exercised Expired Outstanding at March 31, 2016 650,808 $ 1.72 4.96 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information | The Company operates in one operating segment. However, the Company has assets and operations in the United States, Germany and Poland. The following tables show the breakdown of the Companys operations and assets by region (in thousands): United States Germany Poland Total March 31, 2016 December 31, 2015 March 31, 2016 December 31, 2015 March 31, 2016 December 31, 2015 March 31, 2016 December 31, 2015 Assets $ 11,435 $ 11,826 $ 6,862 $ 6,357 $ 185 $ 195 $ 18,482 $ 18,378 Property & equipment, net 79 84 1,895 1,853 3 4 1,977 1,941 Intangible assets 10,518 10,518 - - - - 10,518 10,518 United States Germany Poland Total March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015 Revenues $ 274 $ 280 $ 1,842 $ 2,003 $ 15 $ 4 $ 2,131 $ 2,287 Net loss (490 ) (163) (89 ) (76) (43 ) (16) (622 ) (255) |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 1,529 | $ 1,170 |
Work in progress | 207 | 142 |
Finished Goods | 1,865 | 1,763 |
Inventory, Net | $ 3,601 | $ 3,075 |
Property and Equipment (Detail)
Property and Equipment (Detail) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment [Abstract] | ||
Land | $ 218 | $ 209 |
Buildings | 1,207 | 1,158 |
Machinery and equipment | 1,234 | 1,196 |
Office furniture and equipment | 242 | 232 |
Vehicles | 54 | 53 |
Computer equipment | 99 | 87 |
Construction in progress | 234 | 225 |
Less: Accumulated depreciation | (1,311) | (1,219) |
Property, Plant and Equipment, Net | $ 1,977 | $ 1,941 |
Secured Lines of Credit, Long25
Secured Lines of Credit, Long-term Debt, and Notes Due to Employees (Details) PLN in Thousands, $ in Thousands | Mar. 31, 2016USD ($) | Mar. 31, 2016PLN | Dec. 31, 2015PLN |
Line of Credit Facility [Line Items] | |||
Long-term Debt, Gross | PLN 3,182 | PLN 3,088 | |
Discount on secured promissory notes and debt issuance costs | 0 | (110) | |
Less current portion of long-term debt | (3,072) | (2,857) | |
Long-term debt | 110 | 121 | |
Hannoversech Volksbank Credit line 1 [Member] | |||
Line of Credit Facility [Line Items] | |||
Long-term Debt, Gross | $ 1,250 | 1,120 | |
Hannoversech Volksbank Credit line 2 [Member] | |||
Line of Credit Facility [Line Items] | |||
Long-term Debt, Gross | 350 | 383 | |
Hannoversech Volksbank term loan 1 [Member] | |||
Line of Credit Facility [Line Items] | |||
Long-term Debt, Gross | $ 32 | 61 | |
Hannoversech Volksbank term loan 2 [Member] | |||
Line of Credit Facility [Line Items] | |||
Long-term Debt, Gross | 25 | 24 | |
Hannoversech Volksbank term loan 3 [Member] | |||
Line of Credit Facility [Line Items] | |||
Long-term Debt, Gross | 173 | 182 | |
Secured Promissory Note [Member] | |||
Line of Credit Facility [Line Items] | |||
Long-term Debt, Gross | 500 | 500 | |
DZ Equity Partners Participation rights [Member] | |||
Line of Credit Facility [Line Items] | |||
Long-term Debt, Gross | PLN 852 | PLN 818 |
Secured Lines of Credit, Long26
Secured Lines of Credit, Long-term Debt, and Notes Due to Employees (Details Narrative) PLN in Thousands | 3 Months Ended | |||
Mar. 31, 2016USD ($) | Mar. 31, 2016PLN | Dec. 31, 2015USD ($) | Dec. 31, 2015PLN | |
Line of Credit Facility [Line Items] | ||||
Notes Payable, Current | $ 225,000 | $ 202,000 | ||
Long-term Debt, Current Maturities, Total | PLN | PLN (3,072) | PLN (2,857) | ||
Hannoversech Volksbank Credit lines 1 [Member] | Medite GmbH, Burgdorf [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Line of Credit Facility, Maximum Borrowing Capacity | 1,250,000 | |||
Hannoversech Volksbank Credit lines 2 [Member] | CytoGlobe, GmbH, Burgdorf [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Line of Credit Facility, Maximum Borrowing Capacity | 454,200 | |||
Hannoversech Volksbank term loan 1 [Member] | Medite GmbH, Burgdorf [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Debt instrument face amount | 567,750 | |||
Principal repayments | 31,544 | |||
Hannoversech Volksbank term loan 2 [Member] | Medite GmbH, Burgdorf [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Debt instrument face amount | 454,200 | |||
Principal repayments | 25,231 | |||
Hannoversech Volksbank term loan 3 [Member] | Medite GmbH, Burgdorf [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Debt instrument face amount | 454,200 | |||
Principal repayments | 15,772 | |||
DZ Equity Partners Participation rights [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 1,700,000 |
Related Party Advances (Details
Related Party Advances (Details Narrative) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Related Party Transaction [Line Items] | ||
Due To Related Parties Current | $ 50 | $ 70 |
Chief Financial Officer [Member] | ||
Related Party Transaction [Line Items] | ||
Accrued wages | 963 | 938 |
CEO and COO [Member] | ||
Related Party Transaction [Line Items] | ||
Accrued wages | $ 90 | $ 90 |
Preferred Stock and Warrants (D
Preferred Stock and Warrants (Details) - shares | Mar. 31, 2016 | Dec. 31, 2015 |
Class of Stock [Line Items] | ||
Preferred stock, shares issued | 198,355 | 198,355 |
Preferred stock, shares outstanding | 198,355 | 198,355 |
Series A Preferred Stock [Member] | ||
Class of Stock [Line Items] | ||
Preferred stock, shares issued | 47,250 | 47,250 |
Preferred stock, shares outstanding | 47,250 | 47,250 |
Series B Preferred Stock [Member] | ||
Class of Stock [Line Items] | ||
Preferred stock, shares issued | 93,750 | 93,750 |
Preferred stock, shares outstanding | 93,750 | 93,750 |
Series C Preferred Stock [Member] | ||
Class of Stock [Line Items] | ||
Preferred stock, shares issued | 38,333 | 38,333 |
Preferred stock, shares outstanding | 38,333 | 38,333 |
Series E Preferred Stock [Member] | ||
Class of Stock [Line Items] | ||
Preferred stock, shares issued | 19,022 | 19,022 |
Preferred stock, shares outstanding | 19,022 | 19,022 |
Preferred Stock and Warrants 29
Preferred Stock and Warrants (Details 1) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016 | Dec. 31, 2015 | |
Class of Stock [Line Items] | ||
Preferred Stock, Liquidation Value | $ 2,465,000 | $ 2,442,000 |
Series A Preferred Stock [Member] | ||
Class of Stock [Line Items] | ||
Preferred Stock, Liquidation Value | $ 212,625 | $ 212,625 |
Preferred Stock, Conversion Price | $ 10,303 | $ 10,303 |
Preferred stock, conversion Rate | 0.044% | 0.044% |
Preferred stock, voting Rights | None | None |
Preferred Stock, Dividends | 0.00% | 0.00% |
Preferred Stock, Conversion Period | Any time | Any time |
Preferred Stock Liquidation Preference | $ 4.50 | $ 4.50 |
Series B Preferred Stock [Member] | ||
Class of Stock [Line Items] | ||
Preferred Stock, Liquidation Value | $ 375,000 | $ 375,000 |
Preferred Stock, Conversion Price | $ 1,000 | $ 1,000 |
Preferred stock, conversion Rate | 0.40% | 0.40% |
Preferred stock, voting Rights | None | None |
Preferred Stock, Dividends | 10.00% | 10.00% |
Preferred Stock, Conversion Period | Any time | Any time |
Preferred stock, cumulative and undeclared dividends in arrears | $ 567,538 | $ 567,538 |
Preferred Stock Liquidation Preference | $ 4 | $ 4 |
Series C Preferred Stock [Member] | ||
Class of Stock [Line Items] | ||
Preferred Stock, Liquidation Value | $ 115,000 | $ 115,000 |
Preferred Stock, Conversion Price | $ 600 | $ 600 |
Preferred stock, conversion Rate | 0.50% | 0.50% |
Preferred stock, voting Rights | None | None |
Preferred Stock, Dividends | 10.00% | 10.00% |
Preferred Stock, Conversion Period | Any time | Any time |
Preferred stock, cumulative and undeclared dividends in arrears | $ 165,788 | $ 165,788 |
Preferred Stock Liquidation Preference | $ 3 | $ 3 |
Series D Preferred Stock [Member] | ||
Class of Stock [Line Items] | ||
Preferred Stock, Liquidation Value | $ 525,000 | $ 525,000 |
Preferred Stock, Conversion Price | $ 1,000 | $ 1,000 |
Preferred stock, conversion Rate | 1.00% | 1.00% |
Preferred stock, voting Rights | None | None |
Preferred Stock, Dividends | 10.00% | 10.00% |
Preferred Stock, Conversion Period | Any time | Any time |
Preferred stock, cumulative and undeclared dividends in arrears | $ 0 | $ 0 |
Preferred Stock Liquidation Preference | $ 10 | $ 10 |
Series E Preferred Stock [Member] | ||
Class of Stock [Line Items] | ||
Preferred Stock, Liquidation Value | $ 418,488 | $ 418,488 |
Preferred Stock, Conversion Price | $ 800 | $ 800 |
Preferred stock, conversion Rate | 2.75% | 2.75% |
Preferred stock, voting Rights | Equal in all respects to holders of common shares | Equal in all respects to holders of common shares |
Preferred Stock, Dividends | 10.00% | 10.00% |
Preferred Stock, Conversion Period | Any time | Any time |
Preferred stock, cumulative and undeclared dividends in arrears | $ 610,484 | $ 610,484 |
Preferred Stock Liquidation Preference | $ 22 | $ 22 |
Preferred Stock and Warrants 30
Preferred Stock and Warrants (Details 2) - Warrant [Member] | 3 Months Ended |
Mar. 31, 2016USD ($)$ / sharesshares | |
Warrants, Opening Balance | shares | 400,808 |
Warrants, Granted | shares | 250,000 |
Warrants, Exercised | shares | 0 |
Warrants, Expired | shares | 0 |
Warrants, Ending Balance | shares | 650,808 |
Weighted Average Exercise Price, Opening Balance | $ / shares | $ 2.29 |
Weighted Average Exercise Price, Granted | $ / shares | .80 |
Weighted Average Exercise Price, Exercised | $ / shares | 0 |
Weighted Average Exercise Price, Expired | $ / shares | 0 |
Weighted Average Exercise Price, Ending Balance | $ / shares | $ 1.72 |
Aggregate Intrinsic Value, Opening Balance | $ | $ 0 |
Aggregate Intrinsic Value, Granted | $ | 0 |
Aggregate Intrinsic Value, Exercised | $ | 0 |
Aggregate Intrinsic Value, Expired | $ | 0 |
Aggregate Intrinsic Value, Ending Balance | $ | $ 0 |
Weighted Average Remaining Contractual Life(Years),Outstanding | 5 years 2 months 5 days |
Warrants Outstanding Granted Weighted Average Remaining Contractual Term | 5 years |
Warrants Outstanding Expired Weighted Average Remaining Contractual Term | 4 years 11 months 16 days |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - 3 months ended Mar. 31, 2016 | USD ($) | PLN |
Commitments and Contingencies Disclosure [Line Items] | ||
Operating Leases, Rent Expense, Monthly | $ 12,520 | |
POLAND | ||
Commitments and Contingencies Disclosure [Line Items] | ||
Operating Leases, Rent Expense, Monthly | 1,619 | |
GERMANY | ||
Commitments and Contingencies Disclosure [Line Items] | ||
Operating Leases, Rent Expense, Monthly | PLN | PLN 6,838 | |
Vehicles [Member] | ||
Commitments and Contingencies Disclosure [Line Items] | ||
Operating Leases, Rent Expense, Monthly | 5,369 | |
Chicago laboratory facility [Member] | ||
Commitments and Contingencies Disclosure [Line Items] | ||
Operating Leases, Rent Expense, Monthly | 1,070 | |
Sublease [Member] | ||
Commitments and Contingencies Disclosure [Line Items] | ||
Operating Leases, Rent Expense, Monthly | 3,948 | |
Orlando Facility [Member] | Minimum [Member] | ||
Commitments and Contingencies Disclosure [Line Items] | ||
Operating Leases, Rent Expense, Monthly | 2,345 | |
Orlando Facility [Member] | Maximum [Member] | ||
Commitments and Contingencies Disclosure [Line Items] | ||
Operating Leases, Rent Expense, Monthly | $ 2,563 |
Segment Information (Detail)
Segment Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Segment Reporting Information [Line Items] | |||
Assets | $ 18,482 | $ 18,378 | |
Property & equipment, net | 1,977 | 1,941 | |
Intangible assets | 10,518 | 10,518 | |
Revenues | 2,131 | $ 2,287 | |
Net income (loss) | (622) | (255) | |
UNITED STATES | |||
Segment Reporting Information [Line Items] | |||
Assets | 11,435 | 11,826 | |
Property & equipment, net | 79 | 84 | |
Intangible assets | 10,518 | 10,518 | |
Revenues | 274 | 280 | |
Net income (loss) | (490) | (163) | |
GERMANY | |||
Segment Reporting Information [Line Items] | |||
Assets | 6,862 | 6,357 | |
Property & equipment, net | 1,895 | 1,853 | |
Intangible assets | 0 | 0 | |
Revenues | 1,842 | 2,003 | |
Net income (loss) | (89) | (76) | |
POLAND | |||
Segment Reporting Information [Line Items] | |||
Assets | 185 | 195 | |
Property & equipment, net | 3 | 4 | |
Intangible assets | 0 | $ 0 | |
Revenues | 15 | 4 | |
Net income (loss) | $ (43) | $ (16) |