Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Mar. 11, 2016 | Jun. 30, 2015 | |
Document And Entity Information | |||
Entity Registrant Name | CorMedix Inc. | ||
Entity Central Index Key | 1,410,098 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 118,000,000 | ||
Entity Common Stock, Shares Outstanding | 36,118,323 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Current assets | ||
Cash and cash equivalents | $ 11,817,418 | $ 4,339,540 |
Restricted cash | 171,553 | 0 |
Short-term investments | 23,568,386 | 0 |
Trade receivables | 315,771 | 80,183 |
Inventories, net | 376,569 | 463,029 |
Prepaid research and development expenses | 430,162 | 0 |
Other prepaid expenses and current assets | 379,004 | 155,210 |
Total current assets | 37,058,863 | 5,037,962 |
Property and equipment, net | 37,866 | 41,458 |
Security deposit | 5,000 | 18,342 |
TOTAL ASSETS | 37,101,729 | 5,097,762 |
Current liabilities | ||
Accounts payable | 1,709,397 | 893,385 |
Accrued expenses | 1,221,557 | 521,525 |
Deferred revenue | 130,409 | 10,477 |
Total current liabilities | 3,061,363 | 1,425,387 |
Deferred revenue and rent, long term | 28,878 | 37,903 |
TOTAL LIABILITIES | 3,090,241 | $ 1,463,290 |
COMMITMENTS AND CONTINGENCIES | ||
STOCKHOLDERS' EQUITY | ||
Preferred stock - $0.001 par value: 2,000,000 shares authorized; 450,085 and 949,948 shares issued and outstanding at December 31, 2015 and 2014, respectively (See Note 8) | 450 | $ 950 |
Common stock - $0.001 par value: 80,000,000 shares authorized; 35,963,348 and 22,461,668 shares issued and outstanding at December 31, 2015 and 2014, respectively | 35,964 | 22,461 |
Deferred stock issuances | (110) | (110) |
Accumulated other comprehensive gain | 62,130 | 98,972 |
Additional paid-in capital | 128,304,649 | 79,716,265 |
Accumulated deficit | (94,391,595) | (76,204,066) |
TOTAL STOCKHOLDERS' EQUITY | 34,011,488 | 3,634,472 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 37,101,729 | $ 5,097,762 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 450,085 | 949,948 |
Preferred stock, shares outstanding | 450,085 | 949,948 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 80,000,000 | 80,000,000 |
Common stock, shares issued | 35,963,348 | 22,461,668 |
Common stock, shares outstanding | 35,963,348 | 22,461,668 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Revenue | ||
Net sales | $ 210,130 | $ 189,274 |
Cost of sales | (318,718) | (445,799) |
Gross loss | (108,588) | (256,525) |
OPERATING EXPENSES | ||
Research and development | (6,281,823) | (1,318,734) |
Selling, general and administrative | (10,263,560) | (7,326,861) |
Total Operating Expenses | (16,545,383) | (8,645,595) |
LOSS FROM OPERATIONS | (16,653,971) | (8,902,120) |
OTHER INCOME (EXPENSE) | ||
Interest income | 60,393 | 2,714 |
Foreign exchange transaction loss | (6,735) | (150,803) |
Loss on issuance of preferred stock, convertible notes and warrants | 0 | (89,590) |
Value of warrants issued in connection with backstop financing | (1,583,252) | 0 |
Change in fair value of derivative liabilities | 0 | (8,848,953) |
Loss on modification of equity instruments and extinguishment of derivative liabilities | 0 | (2,462,588) |
Interest expense, including amortization and write-off of deferred financing costs and debt discounts | (3,964) | (2,087) |
Total income (expense) | (1,533,558) | (11,551,307) |
NET LOSS | (18,187,529) | (20,453,427) |
Other Comprehensive Income (Loss) | ||
Unrealized loss from investments | (24,239) | 0 |
Foreign currency translation gain (loss) | (12,603) | 108,295 |
Total comprehensive income (loss) | (36,842) | 108,295 |
Comprehensive Loss | (18,224,371) | (20,345,132) |
NET LOSS | (18,187,529) | (20,453,427) |
Dividends, including deemed dividends | (33,121) | (82,899) |
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ (18,220,650) | $ (20,536,326) |
NET LOSS PER COMMON SHARE - BASIC AND DILUTED | $ (0.58) | $ (0.96) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC AND DILUTED | 31,343,545 | 21,441,906 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Shareholders Equity - USD ($) | Common Stock | Preferred Stock | Deferred Stock Issuances | Accumulated Other Comprehensive Gain (Loss) | Additional Paid-In Capital | Retained Earnings / Accumulated Deficit | Total |
Beginning balance at Dec. 31, 2013 | $ 16,606 | $ 857 | $ (146) | $ (9,323) | $ 51,720,302 | $ (55,750,639) | $ (4,022,343) |
Beginning balance (in shares) at Dec. 31, 2013 | 16,606,695 | 857,160 | |||||
Series C-3 non-voting preferred stock issued in January 2014 financing at $10 per share, net, Shares | 200,000 | ||||||
Series C-3 non-voting preferred stock issued in January 2014 financing at $10 per share, net, Amount | $ 200 | 200 | |||||
Stock issued in connection with March 2014 public offering at $2.50 per unit, net, Shares | 2,960,000 | ||||||
Stock issued in connection with March 2014 public offering at $2.50 per unit, net, Amount | $ 2,960 | $ 4,991,838 | 4,994,798 | ||||
Reclassification of Series C-2 and C-3 preferred stock conversion option derivative liability to equity, Amount | 6,235,398 | 6,235,398 | |||||
Reclassification of derivative liabilities to equity from modification of various equity instruments including payment-in-kind dividends, shares | 53,788 | ||||||
Reclassification of derivative liabilities to equity from modification of various equity instruments including payment-in-kind dividends, amount | $ 54 | 11,740,809 | 11,740,863 | ||||
Shares held in escrow upon achievement of certain milestone | 36 | (36) | 0 | ||||
Stock issued in connection with warrants exercised, Shares | 772,589 | ||||||
Stock issued in connection with warrants exercised, Amount | $ 773 | (773) | 0 | ||||
Conversion of Series C-3 non-voting preferred stock to common stock, shares | 210,000 | (21,000) | |||||
Conversion of Series C-3 non-voting preferred stock to common stock, amount | $ 210 | $ (21) | (189) | 0 | |||
Stock issued in connection with stock options exercised, Shares | 455,000 | ||||||
Stock issued in connection with stock options exercised, Amount | $ 455 | 317,695 | 318,150 | ||||
Conversion of Series C-1 non-voting preferred stock to common stock, shares | 1,400,000 | (140,000) | |||||
Conversion of Series C-1 non-voting preferred stock to common stock, amount | $ 1,400 | $ (140) | 2,446,124 | 2,447,384 | |||
Conversion of wages and fee to common stock, Shares | 57,384 | ||||||
Conversion of wages and fee to common stock, Amount | $ 57 | 96,794 | 96,851 | ||||
Stock-based compensation | 2,168,303 | 2,168,303 | |||||
Other comprehensive gain (loss) | 108,295 | 108,295 | |||||
Net loss | (20,453,427) | (20,453,427) | |||||
Ending balance (in shares) at Dec. 31, 2014 | 22,461,668 | 949,948 | |||||
Ending balance at Dec. 31, 2014 | $ 22,461 | $ 950 | (110) | 98,972 | 79,716,265 | (76,204,066) | 3,634,472 |
Conversion of Series B non-voting preferred stock to common stock, shares | 454,546 | (454,546) | |||||
Conversion of Series B non-voting preferred stock to common stock, amount | $ 455 | $ (455) | 0 | 0 | |||
Stock issued in connection with warrants exercised, Shares | 4,581,783 | ||||||
Stock issued in connection with warrants exercised, Amount | $ 4,582 | 14,653,579 | 14,658,161 | ||||
Stock issued in connection with warrants cashless exercised, shares | 2,158,033 | ||||||
Stock issued in connection with warrants cashless exercised, amount | $ 2,158 | (2,158) | 0 | ||||
Conversion of Series C-3 non-voting preferred stock to common stock, shares | 425,000 | (42,500) | |||||
Conversion of Series C-3 non-voting preferred stock to common stock, amount | $ 425 | $ (42) | (383) | 0 | |||
Conversion of Series E non-voting preferred stock to common stock, shares | 61,598 | (2,817) | |||||
Conversion of Series E non-voting preferred stock to common stock, amount | $ 62 | $ (3) | (59) | 0 | |||
Stock issued in connection with stock options exercised, Shares | 499,955 | ||||||
Stock issued in connection with stock options exercised, Amount | $ 500 | 492,460 | 492,960 | ||||
Stock issued in connection with sale of common stock, shares | 5,310,037 | ||||||
Stock issued in connection with sale of common stock, amount | $ 5,310 | 28,446,538 | 28,451,848 | ||||
Stock issued in connection with conversion of wages, shares | 10,728 | ||||||
Stock issued in connection with conversion of wages, amount | $ 11 | 49,989 | 50,000 | ||||
Value of warrants in connection with backstop financing | 1,583,252 | 1,583,252 | |||||
Modification of warrant agreement | 112,982 | 112,982 | |||||
Short swing profit recovery | 26,525 | 26,525 | |||||
Stock-based compensation | 3,225,659 | 3,225,659 | |||||
Other comprehensive gain (loss) | (36,842) | 0 | (36,842) | ||||
Net loss | 0 | (18,187,529) | (18,187,529) | ||||
Ending balance (in shares) at Dec. 31, 2015 | 35,963,348 | 450,085 | |||||
Ending balance at Dec. 31, 2015 | $ 35,964 | $ 450 | $ (110) | $ 62,130 | $ 128,304,649 | $ (94,391,595) | $ 34,011,488 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (18,187,529) | $ (20,453,427) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock-based compensation | 3,225,659 | 2,168,303 |
Value of warrants issued in connection with backstop financing | 1,583,252 | 0 |
Modification of warrant agreement | 112,982 | |
Loss on foreign exchange transactions | 0 | 150,803 |
Loss on issuance of preferred stock, convertible notes and warrants | 0 | 89,590 |
Loss on modification of equity instruments and extinguishment of derivative liabilities | 0 | 2,462,588 |
Inventory reserve | 125,000 | 175,000 |
Revaluation of derivative liabilities | 0 | 8,848,953 |
Depreciation | 15,076 | 15,074 |
Changes in operating assets and liabilities: | ||
Restricted cash | (171,553) | 220,586 |
Trade receivables | (248,186) | (85,412) |
Inventory | (38,540) | (558,008) |
Prepaid expenses and other current assets | (645,356) | 72,958 |
Accounts payable | 825,105 | 8,055 |
Accrued expenses and accrued interest | 764,114 | 522,995 |
Deferred revenue | 113,078 | 41,123 |
Net cash used in operating activities | (12,526,898) | (6,320,819) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of short-term investments | (23,592,625) | 0 |
Purchase of equipment | (15,446) | (25,402) |
Net cash used in investing activities | (23,608,071) | (25,402) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from sale of common stock from at-the-market program | 28,451,848 | 0 |
Proceeds from Series C-3 preferred stock, net | 0 | 743,884 |
Proceeds from Series C-3 preferred stock, related party | 0 | 575,000 |
Proceeds from exercise of warrants | 14,658,161 | 0 |
Proceeds from exercise of stock options | 492,960 | 318,150 |
Payment of deferred financing costs | 0 | (2,366) |
Proceeds from sale of equity securities | 0 | 6,723,248 |
Proceeds from short swing profit recovery | 26,525 | 0 |
Net cash provided by financing activities | 43,629,494 | 8,357,916 |
Foreign exchange effect on cash | (16,647) | (46,048) |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 7,477,878 | 1,965,647 |
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR | 4,339,540 | 2,373,893 |
CASH AND CASH EQUIVALENTS - END OF YEAR | 11,817,418 | 4,339,540 |
Cash paid for interest | 3,964 | 2,074 |
Supplemental Disclosure of Non-Cash Financing Activities: | ||
Unrealized loss from investments | (24,239) | 0 |
Conversion of preferred stock to common stock | 500 | 2,447,384 |
Conversion of accounts payable and accrued expenses to preferred stock | 0 | 645,458 |
Reclassification of derivative liabilities to equity | 0 | 17,955,143 |
Settlement of accrued dividends with issuance of preferred stock | 0 | 102,845 |
Conversion of wages and fees to common stock | 50,000 | 96,851 |
Dividend, including deemed dividends | $ 33,121 | $ 82,899 |
1. Organization, Business and B
1. Organization, Business and Basis of Presentation | 12 Months Ended |
Dec. 31, 2015 | |
Organization Business And Basis Of Presentation | |
Organization, Business and Basis of Presentation | Organization and Business: CorMedix Inc. (CorMedix or the Company) was incorporated in the State of Delaware on July 28, 2006. The Company in-licenses, develops and commercializes prophylactic and therapeutic products for the prevention and treatment of infectious and inflammatory diseases. In 2013, the Company formed a wholly-owned subsidiary, CorMedix Europe GmbH. The Companys primary activities since incorporation have been acquiring licenses for its pharmaceutical product candidates, performing business and financial planning, performing research and development, seeking regulatory approval for its products and conducting initial commercialization activities for its product Neutrolin® in certain markets. The Company has in-licensed Neutrolin and CRMD004 (see Note 6 related to CRMD004) and filed provisional patents for the other product candidates in its pipeline. The Company received CE Mark approval for Neutrolin in 2013 and began the commercial launch of Neutrolin in Germany for the prevention of catheter-related bloodstream infections and maintenance of catheter patency in hemodialysis patients using a tunneled, cuffed central venous catheter for vascular access. To date, Neutrolin is registered and may be sold in Austria, Germany, Italy, Malta, Saudi Arabia, Bahrain, Qatar, Kuwait, United Arab Emirates and The Netherlands. In September 2014, the TUV-SUD and The Medicines Evaluation Board of the Netherlands granted a label expansion for Neutrolin for expanded indications for the European Union (EU). In December 2014, the Company received approval from the Hessian District President in Germany to expand the label to include use in oncology patients receiving chemotherapy, intravenous (IV), hydration and IV medications via central venous catheters. The expansion also adds patients receiving medication and IV fluids via central venous catheters in intensive or critical care units (cardiac care unit, surgical care unit, neonatal critical care unit, and urgent care centers). An indication for use in total parenteral nutrition was also approved. The Company launched its Phase 3 clinical trial in hemodialysis catheters in the U.S. in December 2015 and plans to conduct a Phase 3 clinical trial in oncology/total parenteral nutrition that is estimated to start in the fourth quarter of 2016 |
2. Liquidity and Uncertainties
2. Liquidity and Uncertainties | 12 Months Ended |
Dec. 31, 2015 | |
Liquidity And Uncertainties | |
Liquidity and Uncertainties | To date, the Companys commercial operations have not generated enough revenues to make the Company profitable. As of December 31, 2015, the Company has an accumulated deficit of $94.4 million, and has incurred losses from operations of $18.2 million for the year then ended. Based on the current development plans for Neutrolin in both the United States (U.S.) and foreign markets (including the ongoing hemodialysis Phase 3 clinical trial in the U.S.) and on the current revenue assumptions for Neutrolin in approved markets, management believes that the existing cash at December 31, 2015 will be sufficient to fund its operations for at least the next twelve months following this balance sheet date. The Company will need additional funding thereafter to complete the hemodialysis clinical trial in the U.S. which commenced in December 2015. The Company also plans to initiate an oncology/total parenteral nutrition trial in the U.S. in the fourth quarter of 2016 and will need to raise additional funds to complete this trial. If the Company is unable to raise additional funds when needed, they will not be able to complete the ongoing hemodialysis Phase 3 clinical trial or the planned Phase 3 oncology/total parenteral nutrition clinical trial. The Companys continued operations will depend on its ability to raise additional capital through various potential sources, such as equity and/or debt financings, strategic relationships, or out-licensing of its products, until it achieves profitability, if ever. However, the Company can provide no assurances that such financing or strategic relationships will be available on acceptable terms, or at all. Without this funding, the Company could be required to delay, scale back or eliminate some or all of its research and development programs which would likely have a material adverse effect on the Companys business. The Companys operations are subject to a number of factors that can affect its operating results and financial condition. Such factors include, but are not limited to: the results of clinical testing and trial activities of the Companys product candidates; the ability to obtain regulatory approval to market the Companys products; competition from products manufactured and sold or being developed by other companies; the price of, and demand for, Company products; the Companys ability to negotiate favorable licensing or other manufacturing and marketing agreements for its products amongst others. |
3. Summary of Significant Accou
3. Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Basis of Consolidation: The consolidated financial statements include the accounts of the Company and CorMedix Europe GmbH, a wholly owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation. Cash and Cash Equivalents: Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company maintains its cash and cash equivalents in bank deposit and other interest bearing accounts, the balances of which, at times, may exceed federally insured limits. Short-Term Investments The Company determines the appropriate classification of marketable securities at the time of purchase and reevaluates such designation as of each balance sheet date. Investments in marketable debt and equity securities classified as available-for-sale are reported at fair value. Fair values of the Companys investments are determined using quoted market prices in active markets for identical assets or liabilities or quoted prices for similar assets or liabilities or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Changes in fair value that are considered temporary are reported net of tax in other comprehensive income (loss). Realized gains and losses, amortization of premiums and discounts and interest and dividends earned are included in income (expense) on the consolidated statements of operations and comprehensive income (loss). The cost of investments for purposes of computing realized and unrealized gains and losses is based on the specific identification method. For declines in the fair value of equity securities that are considered other-than-temporary, impairment losses are charged to other (income) expense, net. The Company considers available evidence in evaluating potential impairments of its investments, including the duration and extent to which fair value is less than cost. There were no deemed permanent impairments at December 31, 2015. The Companys marketable securities are highly liquid and consist of U.S. government agency securities, high-grade corporate obligations and commercial paper with original maturities of more than 90 days. As of December 31, 2015, all of the Companys investments had contractual maturities which were less than one year. The following table summarizes the amortized cost, unrealized gains and losses and the fair value at December 31, 2015 of the Companys financial assets that are measured on a recurring basis: Amortized Cost Gross Unrealized Losses Gross Unrealized Gains Fair Value Money Market Funds included in Cash Equivalents $ 3,353,067 $ - $ - $ 3,353,067 U.S. Government Agency Securities 6,531,914 (3,014 ) - 6,528,900 Corporate Securities 15,065,595 (21,637 ) 412 15,044,370 Commercial Paper 1,995,116 - - 1,995,116 Subtotal 23,592,625 (24,651 ) 412 23,568,386 $ 26,945,692 $ (24,651 ) $ 412 $ 26,921,453 Fair Value Measurements The Companys financial instruments recorded in the consolidated balance sheets include cash and cash equivalents, accounts receivable, investment securities, accounts payable and accrued expenses. The carrying value of certain financial instruments, primarily cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate their estimated fair values based upon the short-term nature of their maturity dates. The Company categorizes its financial instruments into a three-level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument. Financial assets recorded at fair value on the Companys condensed consolidated balance sheets are categorized as follows: Level 1 inputsObservable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 inputs Significant other observable inputs (e.g., quoted prices for similar items in active markets, quoted prices for identical or similar items in markets that are not active, inputs other than quoted prices that are observable such as interest rate and yield curves, and market-corroborated inputs). Level 3 inputsUnobservable inputs for the asset or liability, which are supported by little or no market activity and are The following table provides the carrying value and fair value of the Companys financial assets measured at fair value on a recurring basis as of December 31, 2015: Carrying Value Level 1 Level 2 Level 3 Money Market Funds $ 3,353,067 $ 3,353,067 $ - $ - US Government Agency Securities 6,528,900 - 6,528,900 - Corporate Securities 15,044,370 - 15,044,370 - Commercial Paper 1,995,116 - 1,995,116 - Subtotal $ 23,568,386 $ - $ 23,568,386 $ - $ 26,921,453 $ 3,353,067 $ 23,568,386 $ - Foreign Currency Translation and Transactions: The consolidated financial statements are presented in U.S. Dollars (USD), the reporting currency of the Company. For the financial statements of the Companys foreign subsidiary, whose functional currency is the EURO, foreign currency asset and liability amounts, if any, are translated into USD at end-of-period exchange rates. Foreign currency income and expenses are translated at average exchange rates in effect during the year. Translation gains and losses are included in other comprehensive loss. The Company has intercompany loans between the parent company based in New Jersey and its German subsidiary. Effective October 1, 2014, the Company assessed and determined that the intercompany loans outstanding are not expected to be repaid in the foreseeable future and the nature of the funding advanced is of a long-term investment nature. As such, beginning October 1, 2014, unrealized foreign exchange movements related to long-term intercompany loans are recognized in other comprehensive income (loss). Foreign currency exchange transaction gain (loss) is the result of re-measuring transactions denominated in a currency other than the functional currency of the entity recording the transaction. Segment and Geographic Information: The Company reported revenues of $210,130 and $189,274 for the years ended December 31, 2015 and 2014, respectively. Of the Companys 2015 and 2014 revenues, $201,306 and $185,598, respectively, were attributable to its European and Mideast operations, which are based in Germany. Total assets at December 31, 2015 and 2014 were $37,101,729 and $5,097,762, respectively, of which $36,190,835 and $4,416,074 were located in the United States at December 31, 2015 and 2014, respectively, with the remainders in Germany. Net property and equipment at December 31, 2015 and 2014 were $37,866 and $41,458, respectively, of which $12,093 and $1,089 were located in the United States at December 31, 2105 and 2014, respectively, with the remainders located in Germany. Restricted Cash: As of December 31, 2015, the Companys restricted cash is in connection with the patent and utility model infringement proceedings against TauroPharm (see Note 6). The Company was required by the District Court Mannheim to provide a security deposit of approximately $132,000 to cover legal fees in the event TauroPharm is entitled to reimbursement of these costs. The Company furthermore had to provide a deposit in the amount of $40,000 in connection with the unfair competition proceedings in Cologne. Prepaid Research and Development and Other Prepaid Expenses: Prepaid expenses consist of payments made in advance to vendors relating to service contracts for clinical trial development, manufacturing, preclinical development and insurance policies. These advanced payments are amortized to expense either as services are performed or over the relevant service period using the straight-line method. Inventories, net: Inventories are valued at the lower of cost or market on a first in, first out basis. Inventories consist of raw materials (including labeling and packaging), work-in-process, and finished goods, if any, for the Neutrolin product. Inventories consist of the following: December 31, 2015 2014 Raw materials $ 244,459 $ 293,976 Work in process 424,622 341,807 Finished goods 7,488 2,246 Inventory reserve (300,000 ) (175,000 ) Total $ 376,569 $ 463,029 Property and Equipment: Property and equipment consist primarily of furnishings, fixtures, leasehold improvements, office equipment and computer equipment which are recorded at cost. Depreciation is provided for by the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized using the straight-line method over the remaining lease term or the life of the asset, whichever is shorter. Property and equipment, as of December 31, 2015 and 2014 were $37,866 and $41,458, respectively, net of accumulated depreciation of $92,353 and $77,277, respectively. Depreciation and amortization of property and equipment is included in selling, general and administrative expenses. Description Estimated Useful Life Office equipment and furniture 5 years Leasehold improvements 5 years Computer equipment 5 years Computer software 3 years Accrued Expenses: Accrued expenses consist of the following at December 31: 2015 2014 Professional and consulting fees $ 282,975 $ 225,726 Accrued payroll and payroll taxes 532,084 13,393 Clinical trial and manufacturing development 226,042 - Market research 3,225 137,345 Monitoring program fees 65,076 82,861 Statutory taxes 67,236 34,548 Other 44,919 27,652 Total $ 1,221,557 $ 521,525 Revenue Recognition: Revenue is recognized from product sales when the following four revenue recognition criteria are met: persuasive evidence of an arrangement exists, delivery has occurred, the selling price is fixed or determinable, and collectability is reasonably assured. Neutrolin received its CE Mark in Europe in July 2013 and product shipments to dialysis centers began in December 2013. Orders are processed through a distributor; however, Neutrolin is drop-shipped via a pharmacy directly to the Companys customer, the dialysis center. The Company recognizes net sales upon shipment of product to the dialysis centers. Deferred Revenue: In October 2015, the Company shipped product with less than 75% of its remaining shelf life to a customer and issued a guarantee that the specific product shipped would be replaced by the Company if the customer was not able to sell the product before it expired. As a result of this warranty, the Company may have an additional performance obligation (i.e. accept returned product and deliver new product to the customer) if the customer is unable to sell the short-dated product. Due to limited sales experience with the customer, the Company is unable to estimate the amount of the warranty obligation that may be incurred as a result of this shipment. Therefore, the Company has deferred the revenue and related cost of sales associated with the shipment of this product. Since the Company will be unable to resell the expired product if returned by the customer, the deferred revenue and related cost of sales is presented net as Deferred Revenue on the consolidated balance sheet which amounted to $121,000 at December 31, 2015. In August 2014, the Company entered into an exclusive distribution agreement (the Wonik Agreement) with Wonik Corporation, a South Korean company, to market, sell and distribute Neutrolin for hemodialysis and oncolytic patients upon receipt of regulatory approval in Korea. Upon execution of the Wonik Agreement, Wonik paid the Company a non-refundable $50,000 payment and will pay an additional $50,000 upon receipt of the product registration necessary to sell Neutrolin in the Republic of Korea (the Territory). The term of the Wonik Agreement commenced on August 8, 2014 and will continue for three years after the first commercial sale of Neutrolin in the Territory. The non-refundable up-front payment has been recorded as deferred revenue and will be recognized as revenue on a straight-line basis over the contractual term of the Agreement. Loss Per Common Share: Basic loss per common share excludes dilution and is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted loss per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Since the Company has only incurred losses, basic and diluted loss per share are the same as potentially dilutive shares have been excluded from the calculation of diluted net loss per share as their effect would be anti-dilutive. December 31, 2015 2014 Series B non-voting preferred stock - 454,546 Series C non-voting preferred stock 2,865,000 3,290,000 Series D non-voting preferred stock 1,479,240 1,479,240 Series E non-voting preferred stock 1,959,759 2,021,358 Shares underlying outstanding warrants 4,422,188 11,520,762 Shares underlying outstanding stock options 3,600,045 3,664,500 Total 14,326,232 22,430,406 Stock-Based Compensation: The Company accounts for stock options granted to employees, officers and directors according to ASC No. 718, Compensation Stock Compensation Stock compensation expense is recognized by applying the expected forfeiture rate during the vesting period to the fair value of the award. The estimation of the number of stock awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from the Companys current estimates, compensation expense may need to be revised. The Company considers many factors when estimating expected forfeitures for stock awards granted to employees, officers and directors, including types of awards, employee class, and an analysis of historical forfeitures. The Company accounts for stock options granted to non-employees on a fair value basis using the Black-Scholes option pricing model in accordance with ASC 718 and ASC No. 505-50, Equity-Based Payments to Non-Employees Research and Development: Research and development costs are charged to expense as incurred. Research and development includes fees associated with operational consultants, contract clinical research organizations, contract manufacturing organizations, clinical site fees, contract laboratory research organizations, contract central testing laboratories, licensing activities, and allocated executive, human resources and facilities expenses. The Company accrues for costs incurred as the services are being provided by monitoring the status of the trial and the invoices received from its external service providers. As actual costs become known, the Company adjusts its accruals in the period when actual costs become known. Costs related to the acquisition of technology rights and patents for which development work is still in process are charged to operations as incurred and considered a component of research and development expense. Income Taxes: Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when it is more likely than not that some or all of the deferred tax assets will not be realized. Accounting Standards Updates: In May 2014, the FASB issued new guidance related to how an entity should recognize revenue. The guidance specifies that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. In addition, the guidance expands the required disclosures related to revenue and cash flows from contracts with customers. The guidance is effective for the Company beginning in the first quarter of 2017. Early adoption is not permitted and retrospective application is required. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial condition, results of operations and cash flows. In June 2014, the FASB issued an accounting standard that clarifies the accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. The standard requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The amendments are effective for interim and annual reporting periods beginning after December 15, 2015. Earlier adoption is permitted. The standard may be applied prospectively to all awards granted or modified after the effective date; or retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial condition, results of operations and cash flows. In April 2015, the FASB issued new guidance which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This guidance requires retrospective adoption and will be effective for the Company beginning in the first quarter of 2016. Early adoption is permitted. The Company does not expect this adoption to have a material impact on its financial statements. In July 2015, the FASB issued an accounting standard that requires inventory be measured at the lower of cost and net realizable value and options that currently exist for market value be eliminated. The standard defines net realizable value as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation and is effective for reporting periods beginning after December 15, 2016 and interim periods within those fiscal years with early adoption permitted. The guidance should be applied prospectively. The Company is evaluating the impact the adoption of this guidance will have on the determination or reporting of its financial results. In November 2015, the FASB issued guidance that requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by this amendment. The new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is permitted and the standard may be applied either retrospectively or on a prospective basis to all deferred tax assets and liabilities. The Company is evaluating the impact the adoption of this guidance will have on the determination or reporting of its financial results. On August 27, 2014 ASU No. 2014-15 Presentation of Financial Statements, Disclosure of Uncertainties about an Entitys Ability to Continue as a Going Concern was issued. The ASU requires management to evaluate whether there are conditions and events that raise substantial doubt about the entitys ability to continue as a going concern within one year after the financial statements are issued and if managements plans will alleviate that doubt. Management will be required to make this evaluation for both annual and interim reporting periods. The guidance is effective beginning in the first quarter of 2016. In January 2016, the FASB issued a new standard that modifies certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. The Company is currently assessing the impact that adopting this new accounting guidance will have on its financial statements. The accounting standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is permitted. In February 2016, the FASB issued new guidance related to how an entity should lease assets and lease liabilities. The guidance specifies that an entity who is a lessee under lease agreements should recognize lease assets and lease liabilities for those leases classified as operating leases under previous FASB guidance. Accounting for leases by lessors is largely unchanged under the new guidance. The guidance is effective for the Company beginning in the first quarter of 2019. Early adoption is permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company is evaluating the impact of adopting this guidance on our consolidated financial condition, results of operations and cash flows. |
4. Related Party Transactions
4. Related Party Transactions | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | On March 3, 2015, the Company entered into a backstop agreement with an existing institutional investor, Manchester Securities Corp., a wholly owned subsidiary of Elliott Associates, L.P., and a beneficial holder of more than 5% of the Companys outstanding common stock. Pursuant to the backstop agreement, Manchester agreed to lend the Company, at its request, up to $4,500,000 less the dollar amount of gross proceeds received by the Company upon the exercise of warrants to purchase common stock issued in connection with its IPO on or before April 30, 2015, provided that the loan could not exceed $3,000,000. The Company issued two warrants exercisable for an aggregate of up to 283,400 common shares with an exercise price of $7.00 per share and a term of five years as a result of entering into the backstop agreement. The Company had received approximately $5.7 million through March 31, 2015 from the exercise of warrants issued in connection with its IPO and therefore the Company did not access the loan and the loan expired on April 30, 2015. Additionally, the Company granted Manchester the right for as long as it or its affiliates hold any of the Companys common stock or securities convertible into its common stock the right to appoint up to two members to the Companys board of directors and/or to have up to two observers attend board meetings in a non-voting capacity. As of December 31, 2015, one board member had been appointed to the Companys board of directors under this provision. On April 7, 2015, the Company entered into a one year agreement with a consultant to advise management with their investment banking relationships and assist in the negotiations with potential external parties, if applicable. The consultant is a member of the board of directors of Sterling HSA which was founded by the Chairman of the Board of Directors of the Company. The arrangement called for a $30,000 retainer, a monthly fee of $6,000, and a multiple of the price per share upon a merger or acquisition or a percentage of any strategic partnership. Either party could terminate the agreement with a 30 day advance notice. Upon termination, the Company would be liable for any services rendered through the termination date. This agreement was terminated at the end of August 2015. |
5. Income Taxes
5. Income Taxes | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | The Companys U.S. and foreign loss before income taxes are set forth below: December 31, 2015 2014 United States $ (16,690,084 ) $ (18,653,576 ) Foreign (1,497,445 ) (1,799,851 ) Total $ (18,187,529 ) $ (20,453,427 ) There was no current or deferred income tax provision for the year ended December 31, 2015 or 2014. The Companys deferred tax assets consist of the following: December 31, 2015 2014 Net operating loss carryforwards Federal $ 18,282,000 $ 12,928,000 Net operating loss carryforwards state 2,522,000 1,531,000 Net operating loss carryforwards foreign 1,103,000 655,000 Capitalized licensing fees 1,915,000 2,135,000 Stock-based compensation 2,349,000 1,457,000 Accrued compensation 206,000 - Other 150,000 38,000 Totals 26,527,000 18,744,000 Less valuation allowance (26,527,000 ) (18,744,000 ) Deferred tax assets $ - $ - At December 31, 2015, the Company had potentially utilizable Federal, state and foreign net operating loss tax carryforwards of approximately $56,429,000, $45,113,000 and $3,678,000, respectively. The net operating loss tax carryforwards will start to expire in 2026 for Federal purposes and 2015 for state purposes. The foreign net operating loss tax carryforwards do not expire. Our federal and state operating loss carryforwards include windfall tax deductions from stock option exercises. The amount of windfall tax benefit recognized in additional paid-in capital is limited to the amount of benefit realized currently in income taxes payable. As of December 31, 2015, the Company had suspended additional paid-in capital credits of $1,060,000 related to windfall tax deductions. Upon realization of the net operating loss carryforwards from such windfall tax deductions, the Company would record a benefit of $1,062,000 in additional paid-in capital. The utilization of the Companys federal and state net operating losses may be subject to a substantial limitation due to the change of ownership provisions under Section 382 of the Internal Revenue Code and similar state provisions. Such limitation may result in the expiration of the net operating loss carryforwards before their utilization. The Companys foreign earnings are derived from its German subsidiary. The Company does not expect any foreign earnings to be repatriated in the U.S. in the near future. The effective tax rate varied from the statutory rate as follows: December 31, 2015 2014 Statutory Federal tax rate (34.0 )% (34.0 )% State income tax rate (net of Federal) (6.2 )% (0.6 )% Effect of foreign operations (2.5 )% 0.4 % Non-deductible expenses associated with derivative liabilities 0.0 % 23.5 % Warrant related expenses 3.2 % 0.0 % Prior year return to provision adjustment (3.1 )% 0.0 % Other permanent differences (0.1 )% (0.1 )% Effect of valuation allowance 42.7 % 10.8 % Effective tax rate 0.0 % 0.0 % In assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income of the appropriate character during the periods in which those temporary differences become deductible and the loss carryforwards are available to reduce taxable income. In making its assessment, the Company considered all sources of taxable income including carryback potential, future reversals of existing deferred tax liabilities, prudent and feasible tax planning strategies, and lastly, objectively verifiable projections of future taxable income exclusive of reversing temporary differences and carryforwards. At December 31, 2015 and 2014, the Company maintained a full valuation allowance against its net deferred tax assets. The Company will continue to assess all available evidence during future periods to evaluate the realization of its deferred tax assets. The following table presents the changes in the deferred tax asset valuation allowance for the periods indicated: Year Ended Balance at Beginning of Year Increase (Decrease) Charged (Credited) to Income Taxes (Benefit) Increase (Decrease) Charged (Credited) to OCI Balance at End of Year December 31, 2015 $ 18,744,000 $ 7,770,000 $ 13,000 $ 26,527,000 December 31, 2014 $ 16,564,000 $ 2,212,000 $ (32,000 ) $ 18,744,000 Accounting for uncertainty in income taxes requires uncertain tax positions to be classified as non-current income tax liabilities unless they are expected to be paid within one year. The Company has concluded that there are no uncertain tax positions requiring recognition in its consolidated financial statements as of December 31, 2015 and 2014. The Company recognizes interest and penalties related to uncertain tax positions if any as a component of income tax expense. The Company files income tax returns in the U.S. federal, state and foreign jurisdictions. Tax years 2012 to 2015 remain open to examination for both the U.S. federal and state jurisdictions. Tax years 2013 and 2014 remain open for Germany. |
6. Commitments and Contingencie
6. Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Contingency Matters In February 2007, Geistlich Söhne AG für Chemische Industrie, Switzerland (Geistlich) brought an action against the European Sodemann Patent covering the Companys Neutrolin product candidate, which is owned by ND Partners, LLC (NDP) and licensed to the Company pursuant to the License and Assignment Agreement between the Company and NDP. This action was brought at the Board of the European Patent Office (EPO) opposition division (the Opposition Board) based upon alleged lack of inventiveness in the use of citric acid and a pH value in the range of 4.5 to 6.5 with having the aim to provide an alternative lock solution through having improved anticoagulant characteristics compared to the lock solutions of the prior art. The Opposition Board rejected the opposition by Geistlich. On August 27, 2008, Geistlich appealed the court's ruling, alleging the same arguments as presented during the opposition proceedings. The Company filed a response to the appeal of Geistlich on March 25, 2009 requesting a dismissal of the appeal and maintenance of the patent as granted. On November 28, 2012, the Board of Appeals of the EPO (the Appeals Board) held oral proceedings and verbally upheld the counterpart of the Sodemann Patent covering Neutrolin, but remanded the proceeding to the lower court to consider restricting certain claims of the counterpart of the Sodemann Patent. The Company received the Appeals Boards final written decision on March 28, 2013, which was consistent with the oral proceedings. In a letter dated September 30, 2013, the Company was notified that the opposition division of the EPO reopened the proceedings before the first instance and gave their preliminary non-binding opinion that the patent as amended during the appeal proceedings fulfills the requirements of clarity, novelty, and inventive step, and invited the parties to provide their comments and/or requests by February 10, 2014. The Company filed its response on February 3, 2014 to request that the patent be maintained as amended during the appeal proceedings. Geistlich did not provide any filing by February 10, 2014; however, the Opposition Board granted Geistlich an extension to respond by the end of July 2014 because its representative did not receive the September 30, 2013 letter due to a change of address. Geistlich did not file a further statement within the required timeline. On November 5, 2014, the Opposition Division at the EPO issued the interlocutory decision to maintain the patent on the basis of the claims as amended during the appeal proceedings. This decision became final as no further appeal was lodged by Geistlich. On September 9, 2014, the Company filed in the District Court of Mannheim, Germany a patent infringement action against TauroPharm GmbH and Tauro-Implant GmbH as well as their respective CEOs (the Defendants) claiming infringement of the Companys European Patent EP 1 814 562 B1, which was granted by the EPO on January 8, 2014 (the Prosl European Patent). The Prosl European Patent covers a low dose heparin catheter lock solution for maintaining patency and preventing infection in a hemodialysis catheter. In this action, the Company claims that the Defendants infringe on the Prosl European Patent by manufacturing and distributing catheter locking solutions to the extent they are covered by the claims of the Prosl European Patent. The Company believes that its patent is sound, and is seeking injunctive relief and raising claims for information, rendering of accounts, calling back, destruction and damages. Separately, TauroPharm has filed an opposition with the EPO against the Prosl European Patent alleging that it lacks novelty and inventive step. The Company cannot predict what other defenses the Defendants may raise, or the ultimate outcome of either of these related matters. In the same complaint against the same Defendants, the Company also alleged an infringement (requesting the same remedies) of NDPs utility model DE 20 2005 022 124 U1 (the Utility Model), which the Company believes is fundamentally identical to the Prosl European Patent in its main aspects and claims. The Court separated the two proceedings and the Prosl European Patent and the Utility Model claims are now being tried separately. TauroPharm has filed a cancellation action against the Utility Model before the German Patent and Trademark Office based on the similar arguments as those in the opposition against the Prosl European Patent. On March 27, 2015, the District Court held a hearing to evaluate whether the Utility Model has been infringed by TauroPharm in connection with the manufacture, sale and distribution of its TauroLock-HEP100TM and TauroLock-HEP500TM products. A hearing before the same court was held on January 30, 2015 on the separate, but related, question of infringement of the Prosl European Patent by TauroPharm. The Court issued its decisions on May 8, 2015 staying both proceedings. In its decisions, the Court found that the commercialization by TauroPharm in Germany of its TauroLock catheter lock solutions Hep100 and Hep500 infringes both the Prosl European Patent and the Utility Model and further that there is no prior use right that would allow TauroPharm to continue to make, use or sell its product in Germany. However, the Court declined to issue an injunction in favor of the Company that would preclude the continued commercialization by TauroPharm based upon its finding that there is a sufficient likelihood that the EPO, in the case of the Prosl European Patent, or the German Patent and Trademark Office (the German PTO), in the case of the Utility Model, may find that such patent or utility model is invalid. Specifically, the Court noted the possible publication of certain instructions for product use that may be deemed to constitute prior art. As such, the District Court determined that it will defer any consideration of the request by the Company for injunctive and other relief until such time as the EPO or the German PTO has ruled on the underlying validity of the Prosl European Patent and the Utility Model. Both the opposition proceedings against the Prosl European Patent before the EPO and the cancellation action against the Utility Model before the German PTO are ongoing. The EPO held a hearing in the opposition proceeding on November 25, 2015. In its preliminary consideration of the matter, the EPO (and the German Patent and Trademark Office) had regarded the patent as not inventive or novel due to publication of prior art. However, the EPO did not issue a decision at the end of the hearing but adjourned the matter due to the fact that the panel was of the view that Claus Herdeis, one of the managing directors of TauroPharm, has to be heard as a witness in a further hearing in order to close some gaps in the documentation presented by TauroPharm as regards the publication of the prior art. No date has yet been scheduled for such hearing. While the Company continues to believe that the referenced publication and instructions for use do not, in fact, constitute prior art and that the Prosl European Patent and the Utility Model validly claim inventions that will be found to be such by the EPO and the German PTO, there can be no assurance that the Company will prevail in this matter. The German PTO has scheduled a hearing for May 11, 2016 which will, however, likely be rescheduled due to conflicting court appointments of some members of the legal team. The Company therefore does not expect a decision from the German PTO in the Utility Model matter before mid-2016, with any such decision also being subject to appeal. On January 16, 2015, the Company filed a complaint against TauroPharm GmbH and its managing directors in the District Court of Cologne, Germany. In the complaint, the Company alleges violation of the German Unfair Competition Act by TauroPharm for the unauthorized use of its proprietary information obtained in confidence by TauroPharm. The Company alleges that TauroPharm is improperly and unfairly using its proprietary information relating to the composition and manufacture of Neutrolin, in the manufacture and sale of TauroPharms products TauroLockTM, TauroLock-HEP100 and TauroLock-HEP500. The Company seeks a cease and desist order against TauroPharm from continuing to manufacture and sell any product containing taurolidine (the active pharmaceutical ingredient (API) of Neutrolin) and citric acid in addition to possible other components, damages for any sales in the past and the removal of all such products from the market. A hearing in this matter was scheduled for July 2, 2015, but was postponed by the Court to November 19, 2015. In this hearing, the presiding judge explained that the court needed more information with regard to several aspects of the case. As a consequence, the court issued an interim decision in the form of a court order outlining several issues of concern that relate primarily to court's interest in clarifying the facts and reviewing any and all available documentation, in particular with regard to the question which specific know-how was provided to TauroPharm by whom and when. The Company's legal team is in the process of preparing the requested reply and produce the respective documentation. A date for a further oral hearing has not been scheduled yet. In connection with the aforementioned patent and utility model infringement proceedings against TauroPharm, the Company was required by the District Court Mannheim to provide a security deposit of approximately $132,000 to cover legal fees in the event TauroPharm is entitled to reimbursement of these costs. The Company recorded the deposit as restricted cash for the year ended December 31, 2015. The Company furthermore had to provide a deposit in the amount of $40,000 in connection with the unfair competition proceedings in Cologne. On July 7, 2015, a putative class action lawsuit was commenced against the Company and certain of its current and former officers in the United States District Court for the District of New Jersey, captioned Li v. Cormedix Inc., et al. On December 1, 2015, Lead Plaintiff filed an Amended Complaint asserting claims that the Company and Steven Lefkowitz, Randy Milby and Harry OGrady (the Cormedix Defendants) violated Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder and Section 20(a) of the Exchange Act. The Amended Complaint also names as defendants several unrelated entities that allegedly were paid stock promoters. Lead Plaintiff alleges generally that the Cormedix Defendants made materially false or misleading statements and omissions concerning, among other things, the competitive landscape for the Companys Neutrolin product and the alleged use of stock promoters. The Amended Complaint seeks unspecified damages, interest, attorneys fees, and other costs. On February 1, 2016, the Cormedix Defendants filed a motion to dismiss all claims asserted against them in the Amended Complaint on the grounds, among others, that the Amended Complaint fails to adequately allege: (1) material misstatements or omissions; (2) scienter by any of the Cormedix Defendants; or (3) loss causation. The parties are in the process of briefing that motion and oral argument currently is scheduled for May 2, 2016. The Company believes that it has substantial legal and factual defenses to the claims in the class action and intends to continue vigorously defending the case. Commitments Manufacturing Navinta LLC, a U.S.-based API developer, provides API manufacturing (manufactured in India at an FDA-compliant facility) and a Drug Master File for CRMD003, pursuant to an original supply agreement dated December 7, 2009 (the Navinta Agreement). The Navinta Agreement provided that Navinta will supply taurolidine (the API for CRMD003) to the Company on an exclusive worldwide basis in the field of the prevention and treatment of human infection and/or dialysis so long as the Company purchases a minimum of $2,250,000 of product on an annual basis for five years following the Companys first commercial sale of a product incorporating taurolidine. The Company did not purchase the required amounts and as a result, lost its exclusive manufacturing rights. The Company is also required to make certain cash payments to Navinta upon the achievement of certain sales-based milestones which is based on a tiered approach and does not commence until the Company achieves a designated net sales threshold. The maximum aggregate amount of such payments, assuming achievement of all milestones, is $1,975,000 over five years. There were no milestones achieved in 2015. On March 24, 2015, the Company and Navinta LLC entered into an amendment to the Navinta Agreement to extend the term of the Navinta Agreement to March 31, 2016 and to lower the price per kilogram of API that the Company purchases from Navinta LLC under the Navinta Agreement. The Company also agreed to purchase a minimum amount of product from Navinta LLC during 2015, which replaced the prior minimum purchase requirement. The Navinta Agreement may be terminated by either party upon 30 days written notice. The Navinta Agreement is set to expire in accordance with its terms upon the delivery of API in early April of 2016. The Company announced a program aimed at reducing the cost of goods of Neutrolin through a more efficient, custom synthesis of the active ingredient taurolidine. As part of that program, on April 8, 2015, the Company entered into a Preliminary Services Agreement with [RC]2 Pharma Connect LLC (RC2), pursuant to which RC2 will coordinate certain manufacturing services related to taurolidine. Specifically, RC2 will undertake a critical parameters evaluation for the Companys manufacturing needs and coordinate the cGMP processes set forth in the agreement that the Company believes are necessary for the submission of its planned new drug application for Neutrolin to the FDA, as well as any foreign regulatory applications. The total cost for RC2s services under the preliminary services agreement is expected to be approximately $1.7 million which is expected to be incurred through the second quarter of 2016. Through December 31, 2015, the Company recognized expense of approximately $227,000 for its services related to the agreement. The Company is also working with RC2 under several service agreements for the manufacture of clinical supplies to support its ongoing and planned Phase 3 clinical trials for an aggregate amount of $2 million. As of December 31, 2015, the Company recognized research and development expense of approximately $1,348,000 related to these agreements. The Company may terminate these agreements upon 30 days written notice and is only obligated for project costs and reasonable project shut down costs provided through the date of termination. Clinical and Regulatory On December 3, 2015 CorMedix signed a Master Service Agreement and Work Order (the Master Service Agreement) with PPD Development, LP (PPD) for a $19.2 million Phase 3 multicenter, double-blind, randomized active control study (the Phase 3 Clinical Trial) to demonstrate the safety and effectiveness of Neutrolin in preventing catheter-related bloodstream infections and blood clotting in subjects receiving hemodialysis therapy as treatment for end stage renal disease. The Phase 3 Clinical Trial is expected to run for 18 months and accrue up to 632 patients in 70 sites in the US. The Phase 3 Clinical Trial will stop when there are 162 incidences and an interim analysis will be performed after 81 incidences to determine whether additional sites and patients are required to complete the study. Prior to the signing of the Master Service Agreement, CorMedix signed a Letter of Agreement (LOA) with PPD in July 2015. The original LOA was subsequently amended later in July 2015 for a total of $2.75 million, to revise and expand the scope of services provided by PPD in connection with the identification, activation and management of 70 U.S. sites for the Phase 3 Clinical Trial described above. When the Master Service Agreement was signed in December 2015, the amended LOA was rolled into the $19.2 million Phase 3 Clinical Trial. During the year ended December 31, 2015, the Company recognized $1,019,000 research and development expense related to this agreement. In-Licensing In 2008, the Company entered into a License and Assignment Agreement (the NDP License Agreement) with NDP. Pursuant to the NDP License Agreement, NDP granted the Company exclusive, worldwide licenses for certain antimicrobial catheter lock solutions, processes for treating and inhibiting infections, a biocidal lock system and a taurolidine delivery apparatus, and the corresponding United States and foreign patents and applications (the NDP Technology). The Company acquired such licenses and patents through its assignment and assumption of NDPs rights under certain separate license agreements by and between NDP and Dr. Hans-Dietrich Polaschegg, Dr. Klaus Sodemann and Dr. Johannes Reinmueller. As consideration in part for the rights to the NDP Technology, the Company paid NDP an initial licensing fee of $325,000 and granted NDP a 5% equity interest in the Company, consisting of 39,980 shares of the Companys common stock. In addition, the Company is required to make payments to NDP upon the achievement of certain regulatory and sales-based milestones. Certain of the milestone payments are to be made in the form of shares of common stock currently held in escrow for NDP, and other milestone payments are to be paid in cash. The maximum aggregate number of shares issuable upon achievement of milestones is 145,543 shares. During the year ended December 31, 2014, a certain milestone was achieved resulting in the release of 36,386 shares held in escrow. The number of shares held in escrow as of December 31, 2015 is 109,157 shares of common stock. The maximum aggregate amount of cash payments upon achievement of milestones is $3,000,000 with $2,500,000 remaining at December 31, 2015. Events that trigger milestone payments include but are not limited to the reaching of various stages of regulatory approval and upon achieving certain worldwide net sales amounts. There were no milestones achieved in 2015. The NDP License Agreement may be terminated by the Company on a country-by-country basis upon 60 days prior written notice. If the NDP License Agreement is terminated by either party, the Companys rights to the NDP Technology will revert back to NDP. On January 30, 2008, the Company also entered into an Exclusive License and Consulting Agreement with Dr. Polaschegg (the Polaschegg License Agreement). The Polaschegg License Agreement replaced the original license agreement between NDP and Dr. Polaschegg that the Company was assigned and the Company assumed under the NDP License Agreement. Pursuant to the Polaschegg License Agreement, Dr. Polaschegg granted the Company an exclusive, worldwide license for a certain antimicrobial solution and certain taurolidine treatments and the corresponding United States patent applications (the Polaschegg Technology), and agreed to provide the Company with certain consulting services. As consideration for the rights to the Polaschegg Technology, the Company paid Dr. Polaschegg an initial payment of $5,000 and agreed to pay Dr. Polaschegg certain royalty payments ranging from 1% to 3% of the net sales of the Polaschegg Technology. The Polaschegg License Agreement also set forth certain minimum royalty payments (on an annual basis) to be made to Dr. Polaschegg in connection with the Polaschegg Technology, which payments range from $10,000 to $45,000. The Company could terminate the Polaschegg License Agreement with respect to any piece of the Polaschegg Technology upon 60 days notice. If the Polaschegg License Agreement is terminated with respect to any piece of the Polaschegg Technology by either party, all rights with respect to such portion of the Polaschegg Technology revert to Dr. Polaschegg. On November 5, 2015, the Company gave notice of its termination of the Polaschegg License Agreement. During the years ended December 31, 2015 and 2014, the Company expensed $30,000 and $40,000, respectively, in connection with the Polaschegg License Agreement. Other On August 3, 2015, the Company entered into a Release of Claims and Severance Modification with Randy Milby, its Chief Executive Officer, due to the anticipated termination of Mr. Milbys employment. In exchange for the release of various claims by Mr. Milby against the Company, including claims related to his employment with Company and the termination of same and claims for additional compensation or benefits other than the compensation and benefits set forth in his employment agreement, the Company agreed to amend Mr. Milbys employment agreement, dated as of March 31, 2014, to specify that Mr. Milby may not compete against the Company by engaging in any business involving the development or commercialization of (i) a preventive anti-infective product that would be a direct competitor of Neutrolin or (ii) a product containing taurolodine. The non-compete term did not change and remains at twelve months following termination of his employment. The employment agreement was also amended to allow Mr. Milby a period in which to exercise all vested options and warrants until the later of 60 months following the termination date of his employment or 60 months following the date on which his service on the Companys Board of Directors ends, provided in no event shall he be able to exercise after the respective expiration date of any stock option or warrant. During the year ended December 31, 2015, the Company recorded non-cash expense of $507,341 as a result of this modification. Pursuant to the terms of his employment agreement, Mr. Milby will be entitled to receive his base salary and benefits for a period of twelve months following the effective date of the termination of his employment, or, in the case of benefits, until such time as he receives equivalent coverage and benefits under plans and programs of a subsequent employer if such receipt is prior to the expiration of the twelve month period. To the extent any of the aforementioned benefits cannot be provided to former employees, the Company will pay Mr. Milby a lump-sum payment in the amount necessary to allow Mr. Milby to purchase the equivalent benefits. The Company accrued $325,000 of severance pay during the year ended December 31, 2015. The Company entered into sublease for 4,700 square feet of office space in Bedminster, New Jersey, which sublease runs from April 1, 2015 until March 31, 2018. Rent is $5,000 per month plus occupancy costs such as utilities, maintenance and taxes. In accordance with the lease agreement, the Company has deposited $5,000 with the landlord, the equivalent of one month rent. The Companys subsidiary entered into a lease agreement for its offices in Fulda, Germany with ITZ GmbH. The lease has a term of 36 months which commenced on September 1, 2013 for a base monthly payment of 498. The total 36 month lease obligation is approximately 17,900 ($20,000). Rent expense for the years ended December 31, 2015 and 2014, was $72,119 and $70,337, respectively. Under the Companys current lease agreements, the total remaining lease obligation as of December 31, 2015 is set forth below: 2016 $ 65,364 2017 60,784 2018 15,000 Total $ 141,148 |
7. Equity Instruments Modificat
7. Equity Instruments Modification and Fair Value Measurements | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Equity Instruments Modification and Fair Value Measurements: | The following table presents the fair value hierarchy and the change in fair values of the Companys derivative liabilities measured at fair value on a recurring basis. Fair Value Hierarchy Level Change in Fair Value From Jan. 1 to Sept. 15, 2014 (Modification Date) Series C-1, C-2 and C-3 non-voting preferred stock conversion option issued in October 2013 and January 2014 3 $ 599,814 Series D non-voting preferred stock conversion option issued in October 2013 3 2,017,960 Series E non-voting preferred stock conversion option issued in October 2013 3 1,786,902 Warrants issued in connection with convertible debt issued in May 2013 3 1,566,444 Warrants issued in connection with Series C-1, C-2 and C-3 non-voting preferred stock issued in October 2013 and January 2014 3 3,732,962 Warrants issued in March 2014 in connection with the private placement of common stock and warrants 3 (855,129 ) Total $ 8,848,953 The Company's derivative liabilities are classified as Level 3. Changes in the unobservable input values would likely cause material changes in the fair value of the Companys Level 3 derivative liabilities. Significant unobservable inputs are implied volatilities. Significant increases (decreases) in implied volatilities in isolation would result in a significantly higher (lower) fair value measurement. The Company reviews these valuations and the changes in the fair value measurements for reasonableness. On September 15, 2014, the Company entered into consent and exchange agreements with the investors holding its outstanding Series C-2 preferred stock and related warrants, Series C-3 preferred stock and related warrants, Series D preferred stock and Series E preferred stock, and the investors holding warrants issued in March 2014. Pursuant to those agreements, the Company and the investors agreed to amend and restate the Series C-2 preferred stock and related warrants, Series C-3 preferred stock and related warrants, Series D preferred stock and Series E preferred stock and the warrants, to remove anti-dilution, price reset, cash settlement features and certain change of control provisions that caused those instruments to be classified as derivative liabilities. The Company also eliminated the preferred dividends on the Series D preferred stock and Series E preferred stock. In exchange for the removal of the anti-dilution, price reset, cash settlement, change of control and dividend provisions, the Company agreed to the following: 1. Decrease the exercise price of the warrants issued in May 2013 from $1.00 to $0.65, decrease the exercise price of the warrants issued in October 2013 from $1.25 to $0.90, decrease the exercise price of the warrants issued in January 2014 from $1.25 to $0.90, and decrease the exercise price of the warrants issued in March 2014 from $3.10 to $2.50; 2. Extend the existing right of the two institutional investors in our May and October 2013 financings to participate in future financings to the later of two years after September 15, 2014 or the date on which the respective holder holds less than 5% of the Companys common stock on a fully diluted basis; 3. Increase the conversion ratio of the Series E preferred stock from 20 shares to 21.8667 shares of common stock for every share of Series E preferred stock; 4. Issue 16,562 shares of the Companys Series D preferred stock to the investor holding all of the outstanding shares of the Series D preferred stock in satisfaction of the 9.0% payment-in-kind dividend on that stock; and 5. Issue an aggregate of 37,226 shares of Series E preferred stock to the two investors holding all of the outstanding shares of Series E preferred stock in satisfaction of the 8.0% payment-in-kind dividend on that stock. As a result of these modifications, all of the outstanding derivative liabilities were reclassified to equity on September 15, 2015. The Company applied the accounting treatment prescribed for the modification of stock options under ASC 718 to the modification of the preferred stock and warrant instruments by analogy. The fair value was re-measured immediately prior to the modification date with the original terms and immediately after the modification date with the amended terms. The change in fair value resulting from the modifications made to those instruments on September 15, 2014 was recorded as loss on modification of equity instruments and extinguishment of derivative liabilities in the amount of approximately $2,463,000. The table below sets forth a summary of changes in the fair value of the Companys Level 3 derivative liabilities related to the non-voting preferred stock embedded derivatives and the liability classified warrants. December 31, 2014 Balance at beginning of year $ 5,308,804 Additions to derivative liabilities 3,782,182 Conversion of convertible preferred stock to common stock (2,447,384 ) Loss from modification of preferred stock and warrant instruments 2,462,588 Change in fair value of derivative liabilities 8,848,953 Reclassification of derivative liabilities to equity (excluding $21,117 dividends issued in 2013) (17,955,143 ) Balance at end of year $ - |
8. Stockholders' Equity
8. Stockholders' Equity | 12 Months Ended |
Dec. 31, 2015 | |
STOCKHOLDERS' EQUITY | |
Stockholders' Equity | Common Stock: On April 8, 2015, the Company entered into an At-the-Market Issuance Sales Agreement (the Sales Agreement) with MLV & Co. LLC (MLV) under which the Company may issue and sell up to $40.0 million of shares of its common stock from time to time through MLV acting as agent, subject to limitations imposed by the Company, such as the number or dollar amount of shares registered under the registration statement to which the offering relates. When the Company wishes to issue and sell common stock under the Sales Agreement, it notifies MLV of the number of shares to be issued, the dates on which such sales are anticipated to be made, any minimum price below which sales may not be made and other sales parameters as the Company deems appropriate. MLV is entitled to a commission of up to 3% of the gross proceeds from the sale of common stock sold under the Sales Agreement. The shares of common stock to be sold under the Sales Agreement are registered under an effective registration statement filed with the SEC. During the year ended December 31, 2015, the Company issued 5,310,037 shares of common stock under the Sales Agreement and realized net proceeds of approximately $28,451,848. During the year ended December 31, 2015, the Company also issued shares of its common stock, resulting in gross proceeds of $14,658,161: ● 150,000 shares of common stock upon exercise of warrants with an exercise price of $0.90 per share; ● 125,000 shares of common stock upon exercise of warrants with an exercise price of $0.40 per share; ● 353,500 shares of common stock upon exercise of warrants with an exercise price of $2.50 per share; and ● 3,953,283 shares of common stock upon exercise of warrants with an exercise price of $3.4375 per share. During the year ended December 31, 2015, the Company also issued the following shares of common stock: ● 2,158,033 shares upon cashless exercise of 2,597,591 warrants; ● 499,955 shares upon exercise of 499,955 stock options at a weighted average exercise price of $0.99 per share, resulting in gross proceeds of $492,960 to the Company; ● 454,546 shares upon conversion of 454,546 shares of the Series B non-voting preferred stock; ● 425,000 shares upon conversion of an aggregate of 42,500 shares of the Series C-3 non-voting preferred stock; ● 61,598 shares upon conversion of 2,817 shares of the Series E non-voting preferred stock; and ● 10,728 shares upon conversion of wages by an officer of the Company in an aggregate amount of $50,000 at prices per share of $3.10 - $8.55. During the year ended December 31, 2015, the Company also issued 774 warrants upon the exercise of a unit warrant related to the IPO. These warrants were subsequently exercised resulting in the issuance of 774 shares of common stock and gross proceeds of $2,661 to the Company. In March 2014, the Company sold an aggregate of 2,960,000 units in a registered direct offering at a purchase price of $2.50 per unit, for net proceeds of $6,723,248. Each unit consisted of one share of the Companys common stock and 0.35 of a warrant, each to purchase one share of the Companys common stock. Upon issuance, the warrants had an exercise price of $3.10 per share, are exercisable commencing six months from the date of issuance, and have a term of five years from the date of exercisability. Under certain circumstances, the warrants may be settled in cash and were therefore were initially classified as derivative liabilities (See Note 7). The Company used the Black Scholes option pricing model to value the warrants, of which $1,728,450 was the ascribed value calculated at the issuance date. These warrants were revalued at each balance sheet date and the resulting changes were recorded in other income (expense) in the statement of operations. On September 15, 2014, the exercise price of these warrants was decreased to $2.50 in exchange for the removal of the cash settlement provisions of the warrant. The Company revalued the warrants on September 15, 2014 immediately prior to the modification which resulted in a change in fair value recorded in other income (expense) in the statement of operations, and immediately subsequent to the modification which resulted in a loss on modification of equity instruments and extinguishment of derivative liabilities recorded in other income (expense) in the statement of operations. During 2014, the Company used the following assumptions in calculating the Black Scholes values of these warrants: At Issuance Date At September 15, 2014 Expected term (years) 5.5 5 Volatility 75 % 75 % Dividend yield 0.0 % 0.0 % Risk-free interest rate 1.63 % 1.8 % During the year ended December 31, 2014, the Company issued the following shares of common stock: ● 455,000 shares upon exercise of 455,000 shares of stock options resulting in gross proceeds of $318,150 to the Company; ● 1,400,000 shares upon conversion of an aggregate of 140,000 shares of the Series C-1 non-voting preferred stock; ● 210,000 shares upon conversion of 21,000 shares of the Series C-3 non-voting preferred stock; ● 772,589 shares upon exercise of warrants to purchase 919,513 shares of the Companys common stock on a cashless basis; ● 57,384 shares upon conversion of wages and board fees by an officer and board member in an aggregate amount of $96,851 at prices of $1.32 - $2.00 per share; and ● 35,886 shares held in escrow was released upon achievement of certain milestones. Preferred Stock and Warrants Under the terms of our Amended and Restated Certificate of Incorporation, as amended, our board of directors is authorized to issue up to 2,000,000 shares of preferred stock in one or more series without stockholder approval. Our board of directors has the discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock. Of the 2,000,000 shares of preferred stock authorized, our board of directors has designated (all with par value of $0.001 per share) the following: As of December 31, 2015 As of December 31, 2014 Preferred Shares Outstanding Liquidation Preference (Per Share) Total Liquidation Preference Preferred Shares Outstanding Liquidation Preference (Per Share) Total Liquidation Preference Series B - $ 0.001 $ - 454,546 $ 0.001 $ 455 Series C-2 150,000 10.000 1,500,000 150,000 10.000 1,500,000 Series C-3 136,500 10.000 1,365,000 179,000 10.000 1,790,000 Series D 73,962 21.000 1,553,202 73,962 21.000 1,553,202 Series E 89,623 49.200 4,409,452 92,440 49.200 4,548,048 Total 450,085 $ 8,827,654 949,948 $ 9,391,705 On September 15, 2014 the Company entered into consent and exchange agreements with investors holding its outstanding Series C-2, Series C-3, Series D, and Series E non-voting convertible preferred stock. The Company modified certain terms within the preferred stock, as described in Note 7, which resulted in the reclassification of the remaining derivative liability to equity. The Company used a Monte Carlo simulation model to separately value the conversion options associated with the preferred stock instruments and the warrants issued in connection with the preferred stock. A summary of the assumptions used in the Monte Carlo models are as follows: At September 15, 2014 At Issuance Date Expected term (months) 49 - 64 56 - 60 Volatility 75 % 75 % Dividend yield 0.0 % 0.0 % Risk-free interest rate 1.63 - 1.8 % 1.3 - 1.5 % The following terms and conditions apply to all of the non-voting convertible preferred stock outstanding at December 31, 2015: Dividends Fundamental Transactions- Redemption Listing- Series B Non-Voting Convertible Preferred Stock and Warrants On July 30, 2013, the Company sold 454,546 shares of its Series B non-voting convertible preferred stock and a warrant to purchase up to 227,273 shares of the Companys common stock, for gross proceeds of $500,000. The Series B shares and the warrant were sold together at a price of $1.10 per share for each share of Series B stock. Each share of Series B stock was convertible into one share of the Companys common stock at any time at the holders option. All shares of Series B stock were converted into 454,546 shares of common stock in 2015. The warrant was exercisable immediately upon issuance and has an exercise price of $1.50 per share and a term of five years. Series C-1, Series C-2 and Series C-3 Non-Voting Convertible Preferred Stock and Warrants On October 22, 2013, the Company sold to existing institutional investors 150,000 shares of Series C-1 non-voting convertible preferred stock and 150,000 shares of Series C-2 non-voting convertible preferred stock, together with warrants to purchase up to an aggregate of 1,500,000 shares of common stock, for aggregate gross proceeds of $3,000,000. As a condition to the closing, the Company simultaneously exchanged a convertible note held by one of the investors in the principal amount of $400,000 for 57,400 shares of Series D non-voting convertible preferred stock and exchanged another convertible note held by the same investor in the principal amount of $750,000 for 53,537 shares of Series E non-voting convertible preferred stock. The Company also issued 1,677 shares of Series E preferred stock to the other investor in the offering. The Series C-1 non-voting preferred stock and Series C-2 non-voting preferred stock have identical rights, privileges and terms and are referred to collectively as the Series C Stock. Each share of Series C Stock is convertible into 10 shares of common stock at any time at the holders option at a conversion price of $1.00 per share. In the event of the Companys liquidation, dissolution, or winding up, holders of the Series C Stock will receive a payment equal to $10.00 per share of Series C Stock, subject to adjustment, before any proceeds are distributed to the holders of common stock. Shares of the Series C Stock will not be entitled to receive any dividends, unless and until specifically declared by the Companys board of directors. In January 2014, all 140,000 outstanding shares of Series C-1 non-voting preferred stock were converted into 1,400,000 shares of the Companys common stock which resulted in the reclassification of the derivative liability to equity in the amount of $2,447,384 for the year ended December 31, 2014. In January 2014, the Company sold to various investors 200,000 shares of Series C-3 non-voting convertible preferred stock, together with warrants to purchase up to an aggregate of 1,000,000 shares of common stock, for aggregate gross proceeds of $2,000,000. The Series C-3 non-voting convertible preferred stock and the related warrants were sold together at a price of $10.00 per share for each share of Series C-3 preferred stock. The Series C-3 non-voting convertible preferred stock has rights, privileges and terms that are identical to the Companys Series C Stock. Each share of Series C-3 preferred stock is convertible into 10 shares of common stock at any time at the holders option. The warrants are exercisable one year after issuance, had an exercise price of $1.25 per share (decreased to $0.90 per share in September 2014 See Note 7), subject to adjustment, and a term of five years from the date they are first exercisable. The Company received net proceeds of $1,318,884. The Series C-2 and Series C-3 non-voting preferred stock, referred to collectively as the Series C Preferred Stock, have identical rights, privileges and terms. The Series C Preferred Stock rank senior to the Companys common stock; senior Due to the existence of downround provisions, the conversion features of the Series C-3 non-voting convertible preferred stock and the associated warrants were initially classified as derivative liabilities upon issuance and were valued using a Monte Carlo simulation model. On the issuance date, the estimated value of the conversion features and warrants was $1,398,158 and $655,574, respectively. In February 2014, the downround protection of Series C-2 and Series C-3 non-voting convertible preferred stock was eliminated as, pursuant to their terms, the closing price of the Companys common stock was greater than $2.00 for a period of twenty trading days for a consecutive thirty trading day period subsequent to the closing (See Note 7). The Series C-1 non-voting convertible preferred stock, Series C-2 non-voting convertible preferred stock, Series D non-voting convertible preferred stock and Series E non-voting convertible preferred stock all contained a prohibition on its respective conversion (in the case of the Series C-1 and Series C-2, in the aggregate for both series) if, as a result of such conversion, the Company would have issued in each case shares of its common stock in an aggregate amount equal to 3,190,221 shares, which is 20% of the shares of common stock outstanding on October 17, 2013, unless the Company received the approval of its stockholders for such overage. On February 28, 2014, the shareholders approved the issuance of such overage. Series D Non-Voting Convertible Preferred Stock Each share of Series D non-voting convertible preferred stock is convertible into 20 shares of common stock (subject to adjustment) at a per share price of $0.35 at any time at the option of the holder, except that a holder will be prohibited from converting shares of Series D non-voting convertible preferred stock into shares of common stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own more than 9.99% of the total number of shares of the Companys common stock then issued and outstanding. In the event of the Companys liquidation, dissolution or winding up, holders of Series D non-voting convertible preferred stock originally were to receive a payment equal to $7.00 per share (increased to $21.00 per share in September 2014 See Note 7) of Series D non-voting convertible preferred stock on parity with the payment of the liquidation preference due the Series E non-voting convertible preferred stock, but before any proceeds are distributed to the holders of common stock, the Series C-1 non-voting convertible preferred stock and the Series C-2 non-voting convertible preferred stock. Shares of Series D non-voting convertible preferred stock received a dividend of 9% per annum through September 15, 2014 (See Note 7). The Series D non-voting convertible preferred stock ranks senior to the Companys common stock; senior to any class or series of capital stock created after the issuance of the Series D non-voting convertible preferred stock; senior to the Series C-2 non-voting convertible preferred stock and the Series C-3 non-voting convertible preferred stock; and on parity with the Series E non-voting convertible preferred stock. Shares of Series D non-voting convertible preferred stock will generally have no voting rights, except as required by law and except that the consent of holders of a majority of the outstanding Series D non-voting convertible preferred stock will be required to amend the terms of the Series D non-voting convertible preferred stock or the certificate of designation for the Series D non-voting convertible preferred stock. As long as any of the Series D non-voting convertible preferred stock is outstanding, the Company cannot incur any indebtedness other than indebtedness existing prior to September 15, 2014, trade payables incurred in the ordinary course of business consistent with past practice, and letters of credit incurred in an aggregate amount of $3.0 million at any point in time. In addition to the debt restrictions above, as long as any shares of the Series D non-voting convertible preferred stock are outstanding, the Company cannot, among others things: create, incur, assume or suffer to exist any encumbrances on any of its assets or property; or redeem, purchase or otherwise acquire or pay or declare any dividend or other distribution on any junior securities. Series E Non-Voting Convertible Preferred Stock Each share of Series E non-voting convertible preferred stock was originally convertible into 20 shares (increased to 21.8667 per share in September 2014 See Note 7) of the Companys common stock (subject to adjustment) at a per share price of $0.82 (reduced to $0.75 per share in September 2014 See Note 7) at any time at the option of the holder, except that a holder will be prohibited from converting shares of Series E non-voting convertible preferred stock into shares of common stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own more than 9.99% of the total number of shares of the Companys common stock then issued and outstanding. In the event of the Companys liquidation, dissolution or winding up, holders of Series E preferred stock originally was to receive a payment equal to $16.40 per share (increased to $49.20 per share in September 2014 See Note 7) of Series E non-voting convertible preferred stock on parity with the payment of the liquidation preference due the Series D non-voting convertible preferred stock, but before any proceeds are distributed to the holders of common stock, the Series C-2 non-voting convertible preferred stock. Shares of Series E non-voting convertible preferred stock received a dividend of 8% per annum through September 15, 2014 (See Note 7). The Series E non-voting convertible preferred stock ranks senior to the Companys common stock; senior to any class or series of capital stock created after the issuance of the Series E non-voting preferred stock; senior to the Series C-2 non-voting convertible preferred stock and the Series C-3 non-voting convertible preferred stock; and on parity with the Series D non-voting convertible preferred stock. Shares of Series E non-voting convertible preferred stock will generally have no voting rights, except as required by law and except that the consent of holders of a majority of the outstanding Series E non-voting convertible preferred stock will be required to amend the terms of the Series E non-voting convertible preferred stock or the certificate of designation for the Series E non-voting convertible preferred stock. As long as any of the Series E non-voting convertible preferred stock is outstanding, the Company cannot incur any indebtedness other than indebtedness existing prior to September 15, 2014, trade payables incurred in the ordinary course of business consistent with past practice, and letters of credit incurred in an aggregate amount of $3.0 million at any point in time. In addition to the debt restrictions above, as long as any the Series E non-voting convertible preferred stock is outstanding , the Company cannot, among others things: create, incur, assume or suffer to exist any encumbrances on any of our assets or property; redeem, repurchase or pay any cash dividend or distribution on any of our capital stock (other than as permitted); redeem, repurchase or prepay any indebtedness; or engage in any material line of business substantially different from our current lines of business. In the event the Company issues any options, convertible securities or rights to purchase stock or other securities pro rata to the holders of common stock, then holders of Series E non-voting convertible preferred stock will be entitled to acquire, upon the same terms a pro rata amount of such stock or securities as if the Series E non-voting convertible preferred stock had been converted to common stock. The Company used a Monte Carlo model to separately value the Series C-1, C-2, D and E preferred stock, the conversion options associated with the those preferred stock instruments and the warrants issued in connection with the Series C-1 and C-2 preferred stock. A summary of the key assumptions used in the Monte Carlo models are as follows: Stock price Conversion/redemption strike price Volatility Term Risk-free Rate Credit adjusted discount rate Dividend rate Stock Options: In 2013, the Companys board of directors approved the 2013 Stock Incentive Plan (the 2013 Plan). The 2013 Plan provides for the issuance of equity grants in the form of options, restricted stock, stock awards and other forms of equity compensation. Awards may be made to directors, officers, employees and consultants under the 2013 Plan. An aggregate of 5,000,000 shares of the Companys common stock is reserved for issuance under the 2013 Plan. On January 19, 2016, the shareholders approved the increase of the shares issuable under the 2013 Plan from 5,000,000 to 8,000,000. During the year ended December 31, 2015, the Company granted ten-year non-qualified stock options under the 2013 Plan covering an aggregate of 640,000 shares of the Companys common stock to its officers, directors and consultants. During the year ended December 31, 2014, the Company granted ten-year non-qualified stock options under the 2013 Plan covering an aggregate of 1,185,000 shares of its common stock to its officers, directors and employees and an aggregate of 396,000 shares of its common stock to its consultants. During the years ended December 31, 2015 and 2014, total compensation expense for stock options issued to employees, directors, officers and consultants was $3,225,659 and $2,168,303, respectively. The fair value of the grants at grant dates is determined using the Black-Scholes option pricing model with the following assumptions: Year Ended December 31, 2015 2014 Risk-free interest rate 1.47% - 2.26 % 1.5% - 2.9 % Expected volatility 93% - 94 % 74% - 113 % Expected term (years) 5 - 10 years 5 - 10 years Expected dividend yield 0.0 % 0.0 % Weighted-average fair value of options granted during the period $ 3.46 $ 1.50 The Company estimated the expected term of the stock options granted based on anticipated exercises in future periods. The expected term of the stock options granted to consultants is based upon the full term of the respective option agreements. Prior to 2015, the expected volatility used in the valuation of the Companys stock options was based on the historical volatility of publicly traded peer group companies due to the limited trading history of the Companys common stock. Beginning in the first quarter of 2015, the expected stock price volatility for the Companys stock options is calculated based on the historical volatility since the initial public offering of the Companys common stock in March 2010. The expected dividend yield of 0.0% reflects the Companys current and expected future policy for dividends on the Companys common stock. To determine the risk-free interest rate, the Company utilized the U.S. Treasury yield curve in effect at the time of grant with a term consistent with the expected term of the Companys awards. A summary of the Companys stock options activity under the Plan and related information is as follows: Year Ended December 31, 2015 Year Ended December 31, 2014 Shares Weighted Average Exercise Price Shares Weighted Average Exercise Price Outstanding at beginning of year 3,664,500 $ 1.25 3,453,630 $ 1.06 Granted 640,000 $ 4.60 1,581,000 $ 1.98 Exercised (499,955 ) $ 0.99 (455,000 ) $ 0.70 Expired/Cancelled (25,000 ) $ 2.97 (574,630 ) $ 2.65 Forfeited (179,500 ) $ 2.20 (340,500 ) $ 1.13 Outstanding at end of year 3,600,045 $ 1.82 3,664,500 $ 1.25 Options exercisable 3,172,212 $ 1.46 3,092,250 $ 1.15 Weighted-average fair value of options granted during the year $ 3.46 $ 1.50 December 31, 2015 2014 Weighted average remaining contractual life of stock options outstanding (years) 7.6 8.2 Weighted average remaining contractual life of stock options exercisable (years) 7.4 8.0 Weighted average vesting period over which total compensation expense related to non-vested options not yet recognized (years) 0.5 0.5 Compensation expense related to non-vested options not yet recognized $ 543,089 $ 308,005 Aggregate intrinsic value of stock options exercised $ 3,260,728 $ 636,250 Aggregate intrinsic value of stock options outstanding $ 2,405,321 $ 2,659,665 The aggregate intrinsic value is calculated as the difference between the exercise prices of the underlying options and the quoted closing price of the common stock of the Company at the end of the reporting period for those options that have an exercise price below the quoted closing price. In July 2015, the Company entered into a Release of Claims and Severance Modification Agreement with Randy Milby (See Note 6), the Companys CEO, due to Mr. Milbys anticipated termination of employment. As a result, the Company recorded a total of $507,341 compensation expense for the incremental value of an aggregate of 762,500 options during the year ended December 31, 2015 using the Black-Scholes option pricing model with the following assumptions: Expected term (years) 0.25 5 Volatility 94% - 97 % Dividend yield 0.0 % Risk-free interest rate 0.05% - 1.61 % Warrants: During the year ended December 31, 2015, the Company extended the expiration date for an aggregate of 38,400 warrants with an exercise price of $3.4375. The Company accounted for this transaction as a modification of warrants and recorded additional paid in capital and non-cash general and administrative expense in the amount of $112,982. The warrants were valued using the Black-Scholes option pricing model with the following assumptions: Expected term (days) 5 Volatility 88.17 % Dividend yield 0.0 % Risk-free interest rate .003 % On March 2, 2015, the Companys board of directors approved an extension to April 30, 2015 of the expiration date of the Companys publicly traded warrants which resulted in deemed dividend of $33,121. In March 2015, the Company issued two warrants exercisable for an aggregate of up to 283,400 common shares with an exercise price of $7.00 per share and a term of five years as a result of entering into a backstop agreement with Manchester Securities Corp. (Manchester) (See Note 4). Additionally, the expiration date of March 24, 2015 of warrants to purchase 390,720 shares of common stock issued to Manchester in connection with the Companys initial public offering (IPO) was extended by one year to March 24, 2016. The Company recorded non-cash other expense of $1,583,252 for these warrants using the Black-Scholes option pricing model with the following assumptions: Expected term (years) 1 - 5 Volatility 75.81% - 104.08% Dividend yield 0.0 % Risk-free interest rate 0.01% - 1.61% The following table is the summary of warrant activity for the year ended December 31: 2015 2014 Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life Outstanding at beginning of year 11,520,762 $ 1.99 2.57 10,422,525 $ 2.00 3.12 Granted 284,174 $ 6.99 4.19 2,036,000 $ 2.19 5.11 Expired (203,374 ) $ 3.44 - (18,250 ) - - Exercised (7,179,374 ) $ 2.28 - (919,513 ) $ 0.41 - Outstanding at end of year 4,422,188 $ 1.80 3.07 11,520,762 $ 1.99 2.57 Stock-based Deferred Compensation Plan for Non-Employee Directors During the third quarter of 2014, the Company established an unfunded stock-based deferred compensation plan, providing non-employee directors the opportunity to defer up to one hundred percent of fees and compensation, including restricted stock units. The amount of fees and compensation deferred by a non-employee director is converted into stock units, the number of which is determined based on the closing price of the Companys common stock on the date such compensation would have otherwise been payable. At all times, the plan participants are one hundred percent vested in their respective deferred compensation accounts. On the tenth business day of January in the year following a directors termination of service, the director will receive a number of common shares equal to the number of stock units accumulated in the directors deferred compensation account. The Company accounts for this plan as stock based compensation under ASC 718. During the year ended December 31, 2015 and 2014, the amount of compensation that was deferred under this plan was $79,200 and $21,826, respectively. Short Swing Profit Recovery In June 2015, a member of the board of directors of the Company paid a total of $26,525 to the Company representing the disgorgement of short swing profits under Section 16(b) under the Exchange Act. The amount was recorded as additional paid in capital. |
9. Concentrations
9. Concentrations | 12 Months Ended |
Dec. 31, 2015 | |
Risks and Uncertainties [Abstract] | |
Concentrations | During the year ended December 31, 2015, the Company had revenues of $100,000 from one customer which represented 48% of the Companys total revenue. At December 31, 2015, approximately 93% of net accounts receivable was due from this same customer. |
10. Subsequent Events
10. Subsequent Events | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | In January and February 2016, the Company issued the following shares of common stock: ● 74,975 shares under the at-the-market sales agreement with a weighted average sale price of $2.05 per share, resulting in net proceeds of approximately $149,000 to the Company; and ● 80,000 shares upon exercise of 80,000 stock options at a weighted average exercise price of $1.23 per share, resulting in gross proceeds of $98,700 to the Company. |
3. Summary of Significant Acc17
3. Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Use of Estimates | The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. |
Basis of Consolidation | The consolidated financial statements include the accounts of the Company and CorMedix Europe GmbH, a wholly owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation. |
Cash and Cash Equivalents | Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company maintains its cash and cash equivalents in bank deposit and other interest bearing accounts, the balances of which, at times, may exceed federally insured limits. |
Short-Term Investments | The Company determines the appropriate classification of marketable securities at the time of purchase and reevaluates such designation as of each balance sheet date. Investments in marketable debt and equity securities classified as available-for-sale are reported at fair value. Fair values of the Companys investments are determined using quoted market prices in active markets for identical assets or liabilities or quoted prices for similar assets or liabilities or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Changes in fair value that are considered temporary are reported net of tax in other comprehensive income (loss). Realized gains and losses, amortization of premiums and discounts and interest and dividends earned are included in income (expense) on the consolidated statements of operations and comprehensive income (loss). The cost of investments for purposes of computing realized and unrealized gains and losses is based on the specific identification method. For declines in the fair value of equity securities that are considered other-than-temporary, impairment losses are charged to other (income) expense, net. The Company considers available evidence in evaluating potential impairments of its investments, including the duration and extent to which fair value is less than cost. There were no deemed permanent impairments at December 31, 2015. The Companys marketable securities are highly liquid and consist of U.S. government agency securities, high-grade corporate obligations and commercial paper with original maturities of more than 90 days. As of December 31, 2015, all of the Companys investments had contractual maturities which were less than one year. The following table summarizes the amortized cost, unrealized gains and losses and the fair value at December 31, 2015 of the Companys financial assets that are measured on a recurring basis: Amortized Cost Gross Unrealized Losses Gross Unrealized Gains Fair Value Money Market Funds included in Cash Equivalents $ 3,353,067 $ - $ - $ 3,353,067 U.S. Government Agency Securities 6,531,914 (3,014 ) - 6,528,900 Corporate Securities 15,065,595 (21,637 ) 412 15,044,370 Commercial Paper 1,995,116 - - 1,995,116 Subtotal 23,592,625 (24,651 ) 412 23,568,386 $ 26,945,692 $ (24,651 ) $ 412 $ 26,921,453 |
Fair Value Measurements | The Companys financial instruments recorded in the consolidated balance sheets include cash and cash equivalents, accounts receivable, investment securities, accounts payable and accrued expenses. The carrying value of certain financial instruments, primarily cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate their estimated fair values based upon the short-term nature of their maturity dates. The Company categorizes its financial instruments into a three-level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument. Financial assets recorded at fair value on the Companys condensed consolidated balance sheets are categorized as follows: Level 1 inputsObservable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 inputs Significant other observable inputs (e.g., quoted prices for similar items in active markets, quoted prices for identical or similar items in markets that are not active, inputs other than quoted prices that are observable such as interest rate and yield curves, and market-corroborated inputs). Level 3 inputsUnobservable inputs for the asset or liability, which are supported by little or no market activity and are The following table provides the carrying value and fair value of the Companys financial assets measured at fair value on a recurring basis as of December 31, 2015: Carrying Value Level 1 Level 2 Level 3 Money Market Funds $ 3,353,067 $ 3,353,067 $ - $ - US Government Agency Securities 6,528,900 - 6,528,900 - Corporate Securities 15,044,370 - 15,044,370 - Commercial Paper 1,995,116 - 1,995,116 - Subtotal $ 23,568,386 $ - $ 23,568,386 $ - $ 26,921,453 $ 3,353,067 $ 23,568,386 $ - |
Foreign Currency Translation and Transactions | The consolidated financial statements are presented in U.S. Dollars (USD), the reporting currency of the Company. For the financial statements of the Companys foreign subsidiary, whose functional currency is the EURO, foreign currency asset and liability amounts, if any, are translated into USD at end-of-period exchange rates. Foreign currency income and expenses are translated at average exchange rates in effect during the year. Translation gains and losses are included in other comprehensive loss. The Company has intercompany loans between the parent company based in New Jersey and its German subsidiary. Effective October 1, 2014, the Company assessed and determined that the intercompany loans outstanding are not expected to be repaid in the foreseeable future and the nature of the funding advanced is of a long-term investment nature. As such, beginning October 1, 2014, unrealized foreign exchange movements related to long-term intercompany loans are recognized in other comprehensive income (loss). Foreign currency exchange transaction gain (loss) is the result of re-measuring transactions denominated in a currency other than the functional currency of the entity recording the transaction. |
Segment and Geographic Information | The Company reported revenues of $210,130 and $189,274 for the years ended December 31, 2015 and 2014, respectively. Of the Companys 2015 and 2014 revenues, $201,306 and $185,598, respectively, were attributable to its European and Mideast operations, which are based in Germany. Total assets at December 31, 2015 and 2014 were $37,101,729 and $5,097,762, respectively, of which $36,190,835 and $4,416,074 were located in the United States at December 31, 2015 and 2014, respectively, with the remainders in Germany. Net property and equipment at December 31, 2015 and 2014 were $37,866 and $41,458, respectively, of which $12,093 and $1,089 were located in the United States at December 31, 2105 and 2014, respectively, with the remainders located in Germany. |
Restricted Cash | As of December 31, 2015, the Companys restricted cash is in connection with the patent and utility model infringement proceedings against TauroPharm (see Note 6). The Company was required by the District Court Mannheim to provide a security deposit of approximately $132,000 to cover legal fees in the event TauroPharm is entitled to reimbursement of these costs. The Company furthermore had to provide a deposit in the amount of $40,000 in connection with the unfair competition proceedings in Cologne. |
Prepaid Research and Development and Other Prepaid Expenses | Prepaid expenses consist of payments made in advance to vendors relating to service contracts for clinical trial development, manufacturing, preclinical development and insurance policies. These advanced payments are amortized to expense either as services are performed or over the relevant service period using the straight-line method. |
Inventories, net | Inventories are valued at the lower of cost or market on a first in, first out basis. Inventories consist of raw materials (including labeling and packaging), work-in-process, and finished goods, if any, for the Neutrolin product. Inventories consist of the following: December 31, 2015 2014 Raw materials $ 244,459 $ 293,976 Work in process 424,622 341,807 Finished goods 7,488 2,246 Inventory reserve (300,000 ) (175,000 ) Total $ 376,569 $ 463,029 |
Property and Equipment | Property and equipment consist primarily of furnishings, fixtures, leasehold improvements, office equipment and computer equipment which are recorded at cost. Depreciation is provided for by the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized using the straight-line method over the remaining lease term or the life of the asset, whichever is shorter. Property and equipment, as of December 31, 2015 and 2014 were $37,866 and $41,458, respectively, net of accumulated depreciation of $92,353 and $77,277, respectively. Depreciation and amortization of property and equipment is included in selling, general and administrative expenses. Description Estimated Useful Life Office equipment and furniture 5 years Leasehold improvements 5 years Computer equipment 5 years Computer software 3 years |
Accrued Expenses | Accrued expenses consist of the following at December 31: 2015 2014 Professional and consulting fees $ 282,975 $ 225,726 Accrued payroll and payroll taxes 532,084 13,393 Clinical trial and manufacturing development 226,042 - Market research 3,225 137,345 Monitoring program fees 65,076 82,861 Statutory taxes 67,236 34,548 Other 44,919 27,652 Total $ 1,221,557 $ 521,525 |
Revenue Recognition | Revenue is recognized from product sales when the following four revenue recognition criteria are met: persuasive evidence of an arrangement exists, delivery has occurred, the selling price is fixed or determinable, and collectability is reasonably assured. Neutrolin received its CE Mark in Europe in July 2013 and product shipments to dialysis centers began in December 2013. Orders are processed through a distributor; however, Neutrolin is drop-shipped via a pharmacy directly to the Companys customer, the dialysis center. The Company recognizes net sales upon shipment of product to the dialysis centers. |
Deferred Revenue | In October 2015, the Company shipped product with less than 75% of its remaining shelf life to a customer and issued a guarantee that the specific product shipped would be replaced by the Company if the customer was not able to sell the product before it expired. As a result of this warranty, the Company may have an additional performance obligation (i.e. accept returned product and deliver new product to the customer) if the customer is unable to sell the short-dated product. Due to limited sales experience with the customer, the Company is unable to estimate the amount of the warranty obligation that may be incurred as a result of this shipment. Therefore, the Company has deferred the revenue and related cost of sales associated with the shipment of this product. Since the Company will be unable to resell the expired product if returned by the customer, the deferred revenue and related cost of sales is presented net as Deferred Revenue on the consolidated balance sheet which amounted to $121,000 at December 31, 2015. In August 2014, the Company entered into an exclusive distribution agreement (the Wonik Agreement) with Wonik Corporation, a South Korean company, to market, sell and distribute Neutrolin for hemodialysis and oncolytic patients upon receipt of regulatory approval in Korea. Upon execution of the Wonik Agreement, Wonik paid the Company a non-refundable $50,000 payment and will pay an additional $50,000 upon receipt of the product registration necessary to sell Neutrolin in the Republic of Korea (the Territory). The term of the Wonik Agreement commenced on August 8, 2014 and will continue for three years after the first commercial sale of Neutrolin in the Territory. The non-refundable up-front payment has been recorded as deferred revenue and will be recognized as revenue on a straight-line basis over the contractual term of the Agreement. |
Loss per common share | Basic loss per common share excludes dilution and is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted loss per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Since the Company has only incurred losses, basic and diluted loss per share are the same as potentially dilutive shares have been excluded from the calculation of diluted net loss per share as their effect would be anti-dilutive. December 31, 2015 2014 Series B non-voting preferred stock - 454,546 Series C non-voting preferred stock 2,865,000 3,290,000 Series D non-voting preferred stock 1,479,240 1,479,240 Series E non-voting preferred stock 1,959,759 2,021,358 Shares underlying outstanding warrants 4,422,188 11,520,762 Shares underlying outstanding stock options 3,600,045 3,664,500 Total 14,326,232 22,430,406 |
Stock-Based Compensation | The Company accounts for stock options granted to employees, officers and directors according to ASC No. 718, Compensation Stock Compensation Stock compensation expense is recognized by applying the expected forfeiture rate during the vesting period to the fair value of the award. The estimation of the number of stock awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from the Companys current estimates, compensation expense may need to be revised. The Company considers many factors when estimating expected forfeitures for stock awards granted to employees, officers and directors, including types of awards, employee class, and an analysis of historical forfeitures. The Company accounts for stock options granted to non-employees on a fair value basis using the Black-Scholes option pricing model in accordance with ASC 718 and ASC No. 505-50, Equity-Based Payments to Non-Employees |
Research and Development | Research and development costs are charged to expense as incurred. Research and development includes fees associated with operational consultants, contract clinical research organizations, contract manufacturing organizations, clinical site fees, contract laboratory research organizations, contract central testing laboratories, licensing activities, and allocated executive, human resources and facilities expenses. The Company accrues for costs incurred as the services are being provided by monitoring the status of the trial and the invoices received from its external service providers. As actual costs become known, the Company adjusts its accruals in the period when actual costs become known. Costs related to the acquisition of technology rights and patents for which development work is still in process are charged to operations as incurred and considered a component of research and development expense. |
Income Taxes | Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when it is more likely than not that some or all of the deferred tax assets will not be realized. |
Accounting Standards Update | In May 2014, the FASB issued new guidance related to how an entity should recognize revenue. The guidance specifies that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. In addition, the guidance expands the required disclosures related to revenue and cash flows from contracts with customers. The guidance is effective for the Company beginning in the first quarter of 2017. Early adoption is not permitted and retrospective application is required. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial condition, results of operations and cash flows. In June 2014, the FASB issued an accounting standard that clarifies the accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. The standard requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The amendments are effective for interim and annual reporting periods beginning after December 15, 2015. Earlier adoption is permitted. The standard may be applied prospectively to all awards granted or modified after the effective date; or retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial condition, results of operations and cash flows. In April 2015, the FASB issued new guidance which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This guidance requires retrospective adoption and will be effective for the Company beginning in the first quarter of 2016. Early adoption is permitted. The Company does not expect this adoption to have a material impact on its financial statements. In July 2015, the FASB issued an accounting standard that requires inventory be measured at the lower of cost and net realizable value and options that currently exist for market value be eliminated. The standard defines net realizable value as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation and is effective for reporting periods beginning after December 15, 2016 and interim periods within those fiscal years with early adoption permitted. The guidance should be applied prospectively. The Company is evaluating the impact the adoption of this guidance will have on the determination or reporting of its financial results. In November 2015, the FASB issued guidance that requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by this amendment. The new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is permitted and the standard may be applied either retrospectively or on a prospective basis to all deferred tax assets and liabilities. The Company is evaluating the impact the adoption of this guidance will have on the determination or reporting of its financial results. On August 27, 2014 ASU No. 2014-15 Presentation of Financial Statements, Disclosure of Uncertainties about an Entitys Ability to Continue as a Going Concern was issued. The ASU requires management to evaluate whether there are conditions and events that raise substantial doubt about the entitys ability to continue as a going concern within one year after the financial statements are issued and if managements plans will alleviate that doubt. Management will be required to make this evaluation for both annual and interim reporting periods. The guidance is effective beginning in the first quarter of 2016. In January 2016, the FASB issued a new standard that modifies certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. The Company is currently assessing the impact that adopting this new accounting guidance will have on its financial statements. The accounting standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is permitted. In February 2016, the FASB issued new guidance related to how an entity should lease assets and lease liabilities. The guidance specifies that an entity who is a lessee under lease agreements should recognize lease assets and lease liabilities for those leases classified as operating leases under previous FASB guidance. Accounting for leases by lessors is largely unchanged under the new guidance. The guidance is effective for the Company beginning in the first quarter of 2019. Early adoption is permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company is evaluating the impact of adopting this guidance on our consolidated financial condition, results of operations and cash flows. |
3. Summary of Significant Acc18
3. Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Schedule of Investments | Amortized Cost Gross Unrealized Losses Gross Unrealized Gains Fair Value Money Market Funds included in Cash Equivalents $ 3,353,067 $ - $ - $ 3,353,067 U.S. Government Agency Securities 6,531,914 (3,014 ) - 6,528,900 Corporate Securities 15,065,595 (21,637 ) 412 15,044,370 Commercial Paper 1,995,116 - - 1,995,116 Subtotal 23,592,625 (24,651 ) 412 23,568,386 $ 26,945,692 $ (24,651 ) $ 412 $ 26,921,453 |
Carrying value and fair value of the Company's financial assets measured at fair value on a recurring ba | Carrying Value Level 1 Level 2 Level 3 Money Market Funds $ 3,353,067 $ 3,353,067 $ - $ - US Government Agency Securities 6,528,900 - 6,528,900 - Corporate Securities 15,044,370 - 15,044,370 - Commercial Paper 1,995,116 - 1,995,116 - Subtotal $ 23,568,386 $ - $ 23,568,386 $ - $ 26,921,453 $ 3,353,067 $ 23,568,386 $ - |
Inventories | December 31, 2015 2014 Raw materials $ 244,459 $ 293,976 Work in process 424,622 341,807 Finished goods 7,488 2,246 Inventory reserve (300,000 ) (175,000 ) Total $ 376,569 $ 463,029 |
Property and Equipment | Description Estimated Useful Life Office equipment and furniture 5 years Leasehold improvements 5 years Computer equipment 5 years Computer software 3 years |
Accrued Expenses | 2015 2014 Professional and consulting fees $ 282,975 $ 225,726 Accrued payroll and payroll taxes 532,084 13,393 Clinical trial and manufacturing development 226,042 - Market research 3,225 137,345 Monitoring program fees 65,076 82,861 Statutory taxes 67,236 34,548 Other 44,919 27,652 Total $ 1,221,557 $ 521,525 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | December 31, 2015 2014 Series B non-voting preferred stock - 454,546 Series C non-voting preferred stock 2,865,000 3,290,000 Series D non-voting preferred stock 1,479,240 1,479,240 Series E non-voting preferred stock 1,959,759 2,021,358 Shares underlying outstanding warrants 4,422,188 11,520,762 Shares underlying outstanding stock options 3,600,045 3,664,500 Total 14,326,232 22,430,406 |
5. Income Taxes (Tables)
5. Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
US and Foreign loss | December 31, 2015 2014 United States $ (16,690,084 ) $ (18,653,576 ) Foreign (1,497,445 ) (1,799,851 ) Total $ (18,187,529 ) $ (20,453,427 ) |
Deferred Tax Assets | December 31, 2015 2014 Net operating loss carryforwards Federal $ 18,282,000 $ 12,928,000 Net operating loss carryforwards state 2,522,000 1,531,000 Net operating loss carryforwards foreign 1,103,000 655,000 Capitalized licensing fees 1,915,000 2,135,000 Stock-based compensation 2,349,000 1,457,000 Accrued compensation 206,000 - Other 150,000 38,000 Totals 26,527,000 18,744,000 Less valuation allowance (26,527,000 ) (18,744,000 ) Deferred tax assets $ - $ - |
Effective Income Tax Rate Reconciliation | December 31, 2015 2014 Statutory Federal tax rate (34.0 )% (34.0 )% State income tax rate (net of Federal) (6.2 )% (0.6 )% Effect of foreign operations (2.5 )% 0.4 % Non-deductible expenses associated with derivative liabilities 0.0 % 23.5 % Warrant related expenses 3.2 % 0.0 % Prior year return to provision adjustment (3.1 )% 0.0 % Other permanent differences (0.1 )% (0.1 )% Effect of valuation allowance 42.7 % 10.8 % Effective tax rate 0.0 % 0.0 % |
Changes in deferred tax asset valuation allowance | Year Ended Balance at Beginning of Year Increase (Decrease) Charged (Credited) to Income Taxes (Benefit) Increase (Decrease) Charged (Credited) to OCI Balance at End of Year December 31, 2015 $ 18,744,000 $ 7,770,000 $ 13,000 $ 26,527,000 December 31, 2014 $ 16,564,000 $ 2,212,000 $ (32,000 ) $ 18,744,000 |
6. Commitments and Contingenc20
6. Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | 2016 $ 65,364 2017 60,784 2018 15,000 Total $ 141,148 |
7. Equity Instruments Modific21
7. Equity Instruments Modification and Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Equity Instruments Modification And Fair Value Measurements Tables | |
Financial Liabilities Measured at Fair Value on a Recurring Basis | Fair Value Hierarchy Level Change in Fair Value From Jan. 1 to Sept. 15, 2014 (Modification Date) Series C-1, C-2 and C-3 non-voting preferred stock conversion option issued in October 2013 and January 2014 3 $ 599,814 Series D non-voting preferred stock conversion option issued in October 2013 3 2,017,960 Series E non-voting preferred stock conversion option issued in October 2013 3 1,786,902 Warrants issued in connection with convertible debt issued in May 2013 3 1,566,444 Warrants issued in connection with Series C-1, C-2 and C-3 non-voting preferred stock issued in October 2013 and January 2014 3 3,732,962 Warrants issued in March 2014 in connection with the private placement of common stock and warrants 3 (855,129 ) Total $ 8,848,953 |
Schedule of changes in fair value | December 31, 2014 Balance at beginning of year $ 5,308,804 Additions to derivative liabilities 3,782,182 Conversion of convertible preferred stock to common stock (2,447,384 ) Loss from modification of preferred stock and warrant instruments 2,462,588 Change in fair value of derivative liabilities 8,848,953 Reclassification of derivative liabilities to equity (excluding $21,117 dividends issued in 2013) (17,955,143 ) Balance at end of year $ - |
8. Stockholders' Equity (Tables
8. Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
STOCKHOLDERS' EQUITY | |
Fair value assumptions for Black Sholes, Warrants | At Issuance Date At September 15, 2014 Expected term (years) 5.5 5 Volatility 75 % 75 % Dividend yield 0.0 % 0.0 % Risk-free interest rate 1.63 % 1.8 % |
Summary of preferred stock | As of December 31, 2015 As of December 31, 2014 Preferred Shares Outstanding Liquidation Preference (Per Share) Total Liquidation Preference Preferred Shares Outstanding Liquidation Preference (Per Share) Total Liquidation Preference Series B - $ 0.001 $ - 454,546 $ 0.001 $ 455 Series C-2 150,000 10.000 1,500,000 150,000 10.000 1,500,000 Series C-3 136,500 10.000 1,365,000 179,000 10.000 1,790,000 Series D 73,962 21.000 1,553,202 73,962 21.000 1,553,202 Series E 89,623 49.200 4,409,452 92,440 49.200 4,548,048 Total 450,085 $ 8,827,654 949,948 $ 9,391,705 |
Fair value assumptions for Monte Carlo | At September 15, 2014 At Issuance Date Expected term (months) 49 - 64 56 - 60 Volatility 75 % 75 % Dividend yield 0.0 % 0.0 % Risk-free interest rate 1.63 - 1.8 % 1.3 - 1.5 % |
Fair value assumptions for Black Sholes, Stock Options | Year Ended December 31, 2015 2014 Risk-free interest rate 1.47% - 2.26 % 1.5% - 2.9 % Expected volatility 93% - 94 % 74% - 113 % Expected term (years) 5 - 10 years 5 - 10 years Expected dividend yield 0.0 % 0.0 % Weighted-average fair value of options granted during the period $ 3.46 $ 1.50 |
Summary of Option Activity under Plan and Related Information | Year Ended December 31, 2015 Year Ended December 31, 2014 Shares Weighted Average Exercise Price Shares Weighted Average Exercise Price Outstanding at beginning of year 3,664,500 $ 1.25 3,453,630 $ 1.06 Granted 640,000 $ 4.60 1,581,000 $ 1.98 Exercised (499,955 ) $ 0.99 (455,000 ) $ 0.70 Expired/Cancelled (25,000 ) $ 2.97 (574,630 ) $ 2.65 Forfeited (179,500 ) $ 2.20 (340,500 ) $ 1.13 Outstanding at end of year 3,600,045 $ 1.82 3,664,500 $ 1.25 Options exercisable 3,172,212 $ 1.46 3,092,250 $ 1.15 Weighted-average fair value of options granted during the year $ 3.46 $ 1.50 December 31, 2015 2014 Weighted average remaining contractual life of stock options outstanding (years) 7.6 8.2 Weighted average remaining contractual life of stock options exercisable (years) 7.4 8.0 Weighted average vesting period over which total compensation expense related to non-vested options not yet recognized (years) 0.5 0.5 Compensation expense related to non-vested options not yet recognized $ 543,089 $ 308,005 Aggregate intrinsic value of stock options exercised $ 3,260,728 $ 636,250 Aggregate intrinsic value of stock options outstanding $ 2,405,321 $ 2,659,665 |
Fair value assumptions for Black Sholes, CEO | Expected term (years) 0.25 5 Volatility 94% - 97 % Dividend yield 0.0 % Risk-free interest rate 0.05% - 1.61 % |
Fair value assumptions for Black Sholes, Modification of warrants | Expected term (days) 5 Volatility 88.17 % Dividend yield 0.0 % Risk-free interest rate .003 % |
Fair value assumptions for Black Sholes, Two warrants | Expected term (years) 1 - 5 Volatility 75.81% - 104.08% Dividend yield 0.0 % Risk-free interest rate 0.01% - 1.61% |
Summary of Warrant Activity | 2015 2014 Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life Outstanding at beginning of year 11,520,762 $ 1.99 2.57 10,422,525 $ 2.00 3.12 Granted 284,174 $ 6.99 4.19 2,036,000 $ 2.19 5.11 Expired (203,374 ) $ 3.44 - (18,250 ) - - Exercised (7,179,374 ) $ 2.28 - (919,513 ) $ 0.41 - Outstanding at end of year 4,422,188 $ 1.80 3.07 11,520,762 $ 1.99 2.57 |
3. Summary of Significant Acc23
3. Summary of Significant Accounting Policies (Details) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Amortized cost | $ 26,945,692 |
Gross unrealized losses | (24,651) |
Gross unrealized gains | 412 |
Fair value | 26,921,453 |
Money Market Funds included in Cash Equivalents | |
Amortized cost | 3,353,067 |
Gross unrealized losses | 0 |
Gross unrealized gains | 0 |
Fair value | 3,353,067 |
U.S. Government Agency Securities | |
Amortized cost | 6,531,914 |
Gross unrealized losses | (3,014) |
Gross unrealized gains | 0 |
Fair value | 6,528,900 |
Corporate Securities | |
Amortized cost | 15,065,595 |
Gross unrealized losses | (21,637) |
Gross unrealized gains | 412 |
Fair value | 15,044,370 |
Commercial Paper | |
Amortized cost | 1,995,116 |
Gross unrealized losses | 0 |
Gross unrealized gains | 0 |
Fair value | 1,995,116 |
Subtotal | |
Amortized cost | 23,592,625 |
Gross unrealized losses | (24,651) |
Gross unrealized gains | 412 |
Fair value | $ 23,568,386 |
3. Summary of Significant Acc24
3. Summary of Significant Accounting Policies (Details 1) | Dec. 31, 2015USD ($) |
Carrying Value | $ 26,921,453 |
Level 1 | |
Carrying Value | 3,353,067 |
Level 2 | |
Carrying Value | 23,568,386 |
Level 3 | |
Carrying Value | 0 |
Money Market Funds included in Cash Equivalents | |
Carrying Value | 3,353,067 |
Money Market Funds included in Cash Equivalents | Level 1 | |
Carrying Value | 3,353,067 |
Money Market Funds included in Cash Equivalents | Level 2 | |
Carrying Value | 0 |
Money Market Funds included in Cash Equivalents | Level 3 | |
Carrying Value | 0 |
U.S. Government Agency Securities | |
Carrying Value | 6,528,900 |
U.S. Government Agency Securities | Level 1 | |
Carrying Value | 0 |
U.S. Government Agency Securities | Level 2 | |
Carrying Value | 6,528,900 |
U.S. Government Agency Securities | Level 3 | |
Carrying Value | 0 |
Corporate Securities | |
Carrying Value | 15,044,370 |
Corporate Securities | Level 1 | |
Carrying Value | 0 |
Corporate Securities | Level 2 | |
Carrying Value | 15,044,370 |
Corporate Securities | Level 3 | |
Carrying Value | 0 |
Commercial Paper | |
Carrying Value | 1,995,116 |
Commercial Paper | Level 1 | |
Carrying Value | 0 |
Commercial Paper | Level 2 | |
Carrying Value | 1,995,116 |
Commercial Paper | Level 3 | |
Carrying Value | 0 |
Subtotal | |
Carrying Value | 23,568,386 |
Subtotal | Level 1 | |
Carrying Value | 0 |
Subtotal | Level 2 | |
Carrying Value | 23,568,386 |
Subtotal | Level 3 | |
Carrying Value | $ 0 |
3. Summary of Significant Acc25
3. Summary of Significant Accounting Policies (Details 2) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Summary Of Significant Accounting Policies Details 2 | ||
Raw materials | $ 244,459 | $ 293,976 |
Work in process | 424,622 | 341,807 |
Finished goods | 7,488 | 2,246 |
Inventory reserve | (300,000) | (175,000) |
Total | $ 376,569 | $ 463,029 |
3. Summary of Significant Acc26
3. Summary of Significant Accounting Policies (Details 3) | 12 Months Ended |
Dec. 31, 2015 | |
Office equipment and furniture | |
Estimated Useful Life | 5 years |
Leasehold improvements | |
Estimated Useful Life | 5 years |
Computer equipment | |
Estimated Useful Life | 5 years |
Computer software | |
Estimated Useful Life | 3 years |
3. Summary of Significant Acc27
3. Summary of Significant Accounting Policies (Details 4) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Accounting Policies [Abstract] | ||
Professional and consulting fees | $ 282,975 | $ 225,726 |
Accrued payroll and payroll taxes | 532,084 | 13,393 |
Clinical trial and manufacturing development | 226,042 | 0 |
Market research | 3,225 | 137,345 |
Monitoring program fees | 65,076 | 82,861 |
Statutory taxes | 67,236 | 34,548 |
Other | 44,919 | 27,652 |
Total | $ 1,221,557 | $ 521,525 |
3. Summary of Significant Acc28
3. Summary of Significant Accounting Policies (Details 5) - shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Antidilutive Shares | 14,326,232 | 22,430,406 |
Series B non-voting preferred stock | ||
Antidilutive Shares | 0 | 454,546 |
Series C non-voting preferred stock | ||
Antidilutive Shares | 2,865,000 | 3,290,000 |
Series D | ||
Antidilutive Shares | 1,479,240 | 1,479,240 |
Series E | ||
Antidilutive Shares | 1,959,759 | 2,021,358 |
Shares underlying outstanding warrants | ||
Antidilutive Shares | 4,422,188 | 11,520,762 |
Shares underlying outstanding stock options | ||
Antidilutive Shares | 3,600,045 | 3,664,500 |
5. Income Taxes (Details)
5. Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Loss Before Income Taxes | $ (18,187,529) | $ (20,453,427) |
United States | ||
Income Loss Before Income Taxes | (16,690,084) | (18,653,576) |
Foreign | ||
Income Loss Before Income Taxes | $ (1,497,445) | $ (1,799,851) |
5. Income Taxes (Details 1)
5. Income Taxes (Details 1) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Income Taxes Details 1 | |||
Net operating loss carryforwards – Federal | $ 18,282,000 | $ 12,928,000 | |
Net operating loss carryforwards – state | 2,522,000 | 1,531,000 | |
Net operating loss carryforwards - foreign | 1,103,000 | 655,000 | |
Capitalized licensing fees | 1,915,000 | 2,135,000 | |
Stock-based compensation | 2,349,000 | 1,457,000 | |
Accrued compensation | 206,000 | 0 | |
Other | 150,000 | 38,000 | |
Totals | 26,527,000 | 18,744,000 | |
Less valuation allowance | (26,527,000) | (18,744,000) | $ (16,564,000) |
Deferred tax assets | $ 0 | $ 0 |
5. Income Taxes (Details 2)
5. Income Taxes (Details 2) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Taxes Details 2 | ||
Statutory Federal tax rate | (34.00%) | (34.00%) |
State income tax rate (net of Federal) | (6.20%) | (0.60%) |
Effect of foreign operations | (2.50%) | 0.40% |
Non-deductible expenses associated with derivative liabilities | 0.00% | 23.50% |
Warrant related expenses | 3.20% | 0.00% |
Prior year return to provision adjustment | (3.10%) | 0.00% |
Other permanent differences | (0.10%) | (0.10%) |
Effect of valuation allowance | 42.70% | 10.80% |
Effective tax rate | 0.00% | 0.00% |
5. Income Taxes (Details 3)
5. Income Taxes (Details 3) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Taxes Details 3 | ||
Deferred tax asset valuation allowance, beginning | $ 18,744,000 | $ 16,564,000 |
Increase (decrease) charged (credited) to income taxes (benefit) | 7,770,000 | 2,212,000 |
Increase (decrease) charged (credited) to OCI | 13,000 | (32,000) |
Deferred tax asset valuation allowance, end | $ 26,527,000 | $ 18,744,000 |
6. Commitments and Contingenc33
6. Commitments and Contingencies (Details) - Bridgewater, Bedminster and Fulda Leases | Dec. 31, 2015USD ($) |
2,016 | $ 65,364 |
2,017 | 60,784 |
2,018 | 15,000 |
Total | $ 141,148 |
6. Commitments and Contingenc34
6. Commitments and Contingencies (Details Narrative) - Dec. 31, 2015 | USD ($) | EUR (€) |
Bedminster office space | ||
Operating lease obligation, per month | $ | $ 5,000 | |
Fulda office space used by subsidiary | ||
Operating lease obligation, per month | € | € 498 |
7. Equity Instruments Modific35
7. Equity Instruments Modification and Fair Value Measurements (Details) | 9 Months Ended |
Sep. 15, 2014USD ($) | |
Change in fair value | $ 8,848,953 |
Series C Non-voting Preferred Stock Conversion Option | |
Fair value hierarchy level | 3 |
Change in fair value | $ 599,814 |
Series D Non-voting Preferred Stock Conversion Option | |
Fair value hierarchy level | 3 |
Change in fair value | $ 2,017,960 |
Series E Non-voting Preferred Stock Conversion Option | |
Fair value hierarchy level | 3 |
Change in fair value | $ 1,786,902 |
Warrants Issued In Connection With Convertible Debt | |
Fair value hierarchy level | 3 |
Change in fair value | $ 1,566,444 |
Warrants Issued In Connection With Series C Preferred Stock | |
Fair value hierarchy level | 3 |
Change in fair value | $ 3,732,962 |
Warrants Issued In Connection With Private Placement | |
Fair value hierarchy level | 3 |
Change in fair value | $ (855,129) |
7. Equity Instruments Modific36
7. Equity Instruments Modification and Fair Value Measurements (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Equity Instruments Modification And Fair Value Measurements Details 1 | ||
Balance at beginning of year | $ 0 | $ 5,308,804 |
Additions to derivative liabilities | 0 | 3,782,182 |
Conversion of convertible preferred stock to common stock | 0 | (2,447,384) |
Loss from modification of preferred stock and warrant instruments | 0 | 2,462,588 |
Change in fair value of derivative liabilities | 0 | 8,848,953 |
Reclassification of derivative liabilities to equity (excluding $21,117 dividends issued in 2013) | 0 | (17,955,143) |
Balance at end of year | $ 0 | $ 0 |
8. Stockholders' Equity (Detail
8. Stockholders' Equity (Details) - Warrants | 2 Months Ended | 9 Months Ended |
Mar. 10, 2014 | Sep. 15, 2014 | |
Expected Term | 5 years 6 months | 5 years |
Volatility | 75.00% | 75.00% |
Dividend yield | 0.00% | 0.00% |
Risk-free interest rate | 1.63% | 1.80% |
8. Stockholders' Equity (Deta38
8. Stockholders' Equity (Details 1) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
Preferred Shares Outstanding | 450,085 | 949,948 |
Total liquidation preference | 8,827,654 | 9,391,705 |
Series B | ||
Preferred Shares Outstanding | 0 | 454,546 |
Liquidation Preference (Per Share) | $ .001 | $ 0.001 |
Total liquidation preference | 0 | 455 |
Series C-2 | ||
Preferred Shares Outstanding | 150,000 | 150,000 |
Liquidation Preference (Per Share) | $ 10 | $ 10 |
Total liquidation preference | 1,500,000 | 1,500,000 |
Series C-3 | ||
Preferred Shares Outstanding | 136,500 | 179,000 |
Liquidation Preference (Per Share) | $ 10 | $ 10 |
Total liquidation preference | 1,365,000 | 1,790,000 |
Series D | ||
Preferred Shares Outstanding | 73,962 | 73,962 |
Liquidation Preference (Per Share) | $ 21 | $ 21 |
Total liquidation preference | 1,553,202 | 1,533,202 |
Series E | ||
Preferred Shares Outstanding | 89,623 | 92,440 |
Liquidation Preference (Per Share) | $ 49.200 | $ 49.200 |
Total liquidation preference | 4,409,452 | 4,548,048 |
8. Stockholders_ Equity (Detail
8. Stockholders’ Equity (Details 2) - Preferred Stock and Warrants | Jan. 08, 2014 | Sep. 15, 2014 |
Volatility | 75.00% | 75.00% |
Dividend yield | 0.00% | 0.00% |
Risk-free interest rate, minimum | 1.30% | 1.63% |
Risk-free interest rate, maximum | 1.50% | 1.80% |
Minimum | ||
Expected Term | 56 months | 49 months |
Maximum | ||
Expected Term | 60 months | 64 months |
8. Stockholders' Equity (Deta40
8. Stockholders' Equity (Details 3) - $ / shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Weighted-average fair value of options granted during the period | $ 3.46 | $ 1.50 |
Stock Options | ||
Risk-free interest rate, minimum | 1.47% | 1.50% |
Risk-free interest rate, maximum | 2.26% | 2.90% |
Expected Volatility, minimum | 93.00% | 74.00% |
Expected Volatility, maximum | 94.00% | 113.00% |
Dividend yield | 0.00% | 0.00% |
Weighted-average fair value of options granted during the period | $ 3.46 | $ 1.50 |
Stock Options | Minimum | ||
Expected Term | 5 years | 5 years |
Stock Options | Maximum | ||
Expected Term | 10 years | 10 years |
8. Stockholders' Equity (Deta41
8. Stockholders' Equity (Details 4) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Number of Options | ||
Number of Options Outstanding, beginning of year | 3,664,500 | 3,453,630 |
Number of Options Granted | 640,000 | 1,581,000 |
Number of Options Exercised | (499,955) | (455,000) |
Number of Options Canceled | (25,000) | (574,630) |
Number of Options Forfeited | (179,500) | (340,500) |
Number of Options Outstanding, at end of year | 3,600,045 | 3,664,500 |
Options Exercisable | 3,172,212 | 3,092,250 |
Weighted Average Exercise Price | ||
Weighted Average Exercise Price Outstanding, Beginning | $ 1.25 | $ 1.06 |
Weighted Average Exercise Price Granted | 4.60 | 1.98 |
Weighted Average Exercise Price Exercised | .99 | 0.70 |
Weighted Average Exercise Price Canceled | 2.97 | 2.65 |
Weighted Average Exercise Price Forfeited | 2.20 | 1.13 |
Weighted Average Exercise Price Outstanding, Ending | 1.82 | 1.25 |
Weighted Average Exercise Price Exercisable | $ 1.46 | $ 1.15 |
Weighted Average Remaining Contractual Life (in years) | ||
Weighted Average Remaining Contractual Life (in years) Outstanding | 7 years 7 months 6 days | 8 years 2 months 12 days |
Weighted Average Remaining Contractual Life (in years) Exercisable | 7 years 4 months 24 days | 8 years |
Weighted average vesting period over which total compensation expense related to non-vested options not yet recognized (years) | 6 months | 6 months |
Aggregate Intrinsic Value | ||
Weighted-average fair value of options granted during the year | $ 3.46 | $ 1.50 |
Compensation expense related to non-vested options not yet recognized | $ 543,089 | $ 308,005 |
Aggregate intrinsic value of stock options exercised | 3,260,728 | 636,250 |
Aggregate intrinsic value of stock options outstanding | $ 2,405,321 | $ 2,659,665 |
8. Stockholders' Equity (Deta42
8. Stockholders' Equity (Details 5) - Chief Executive Officer [Member] | 6 Months Ended |
Dec. 31, 2015 | |
Volatility, minimum | 94.00% |
Volatility, maximum | 97.00% |
Dividend yield | 0.00% |
Risk-free interest rate, minimum | 0.05% |
Risk-free interest rate, maximum | 1.61% |
Minimum | |
Expected Term | 3 months |
Maximum | |
Expected Term | 5 years |
8. Stockholders' Equity (Deta43
8. Stockholders' Equity (Details 6) - Modification of Warrants | 12 Months Ended |
Dec. 31, 2015 | |
Expected Term | 5 days |
Volatility | 88.17% |
Dividend yield | 0.00% |
Risk-free interest rate | 0.003% |
8. Stockholders' Equity (Deta44
8. Stockholders' Equity (Details 7) - Two Warrants | 10 Months Ended |
Dec. 31, 2015 | |
Volatility, minimum | 75.81% |
Volatility, maximum | 104.08% |
Dividend yield | 0.00% |
Risk-free interest rate, minimum | 0.01% |
Risk-free interest rate, maximum | 1.61% |
Minimum | |
Expected Term | 1 year |
Maximum | |
Expected Term | 5 years |
8. Stockholders' Equity (Deta45
8. Stockholders' Equity (Details 8) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Number of Warrants | ||
Outstanding at beginning of period | $ 11,520,762 | $ 10,422,525 |
Granted | $ 284,174 | $ 2,036,000 |
Expired | (203,374) | (18,250) |
Exercised | (7,179,374) | (919,513) |
Outstanding at end of period | $ 4,422,188 | $ 11,520,762 |
Weighted Average Exercise Price | ||
Outstanding at beginning of period | $ 1.99 | $ 2 |
Granted | 6.99 | 2.19 |
Expired | 3.44 | 0 |
Exercised | 2.28 | 0.41 |
Outstanding at end of period | $ 1.80 | $ 1.99 |
Weighted Average Remaining Contractual Life | ||
Outstanding at beginning of period | 2 years 6 months 25 days | 3 years 1 month 13 days |
Granted | 4 years 2 months 8 days | 5 years 1 month 10 days |
Expired | 0 years | 0 years |
Exercised | 0 years | 0 years |
Outstanding at end of period | 3 years 25 days | 2 years 6 months 25 days |