Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | May 15, 2017 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Medite Cancer Diagnostics, Inc. | |
Entity Central Index Key | 75,439 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | MDIT | |
Entity Common Stock, Shares Outstanding | 25,881,987 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,017 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS PLN in Thousands, $ in Thousands | Mar. 31, 2017PLN | Dec. 31, 2016PLN |
Current assets: | ||
Cash | PLN 269 | PLN 108 |
Accounts receivable, net of allowance for doubtful accounts of $124 and $123 | 1,331 | 1,346 |
Inventories, net | 3,679 | 3,811 |
Prepaid expenses and other current assets | 111 | 79 |
Total current assets | 5,390 | 5,344 |
Property and equipment, net | 1,547 | 1,557 |
In-process research and development | 4,620 | 4,620 |
Trademarks, trade names | 1,240 | 1,240 |
Goodwill | 4,658 | 4,658 |
Other assets | 354 | 351 |
Total assets | 17,809 | 17,770 |
Current liabilities: | ||
Account payable and accrued expenses | 3,109 | 3,306 |
Secured lines of credit and current portion of long-term debt | 3,096 | 3,214 |
Notes due to employees, current portion | 448 | 681 |
Advances – related party | 147 | 146 |
Total current liabilities | 6,800 | 7,347 |
Long-term debt, net of current portion | 60 | 60 |
Notes due to employees, net of current portion | 113 | 135 |
Deferred tax liability | 2,205 | 2,205 |
Total liabilities | 9,178 | 9,747 |
Commitments and contingencies | ||
Stockholders’ equity : | ||
Preferred stock, $0.001 par value; 10,000,000 shares authorized; 198,355 shares issued and outstanding (liquidation value of all classes of preferred stock $2,556 and $2,533 as of March 31, 2017 and December 31, 2016, respectively) | 962 | 962 |
Common stock, $0.001 par value; 35,000,000 shares authorized, 24,831,987 and 22,421,987 shares issued and outstanding as of March 31, 2017 and December 31, 2016, respectively | 25 | 23 |
Additional paid-in capital | 11,005 | 9,366 |
Stock subscription | 0 | 25 |
Treasury stock | (327) | (327) |
Accumulated other comprehensive loss | (695) | (642) |
Accumulated deficit | (2,339) | (1,384) |
Total stockholders' equity | 8,631 | 8,023 |
Total liabilities and stockholders' equity | PLN 17,809 | PLN 17,770 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) PLN in Thousands | Mar. 31, 2017$ / shares | Mar. 31, 2017PLNshares | Dec. 31, 2016$ / shares | Dec. 31, 2016PLNshares |
Statement of Financial Position [Abstract] | ||||
Allowance for doubtful accounts | PLN | PLN 124 | PLN 123 | ||
Preferred stock, par value (in dollars per shares) | $ / shares | $ 0.001 | $ 0.001 | ||
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 | ||
Preferred stock, shares issued | 198,355 | 198,355 | ||
Preferred stock, shares outstanding | 198,355 | 198,355 | ||
Preferred Stock, Liquidation Preference, Value (in dollars) | PLN | PLN 2,556 | PLN 2,533 | ||
Common stock, par value (in dollars per shares) | $ / shares | $ 0.001 | $ 0.001 | ||
Common stock, shares authorized | 35,000,000 | 35,000,000 | ||
Common Stock, Shares, Issued | 24,831,987 | 22,421,987 | ||
Common Stock, Shares, Outstanding | 24,831,987 | 22,421,987 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) PLN in Thousands | 3 Months Ended | |||
Mar. 31, 2017$ / shares | Mar. 31, 2017PLNshares | Mar. 31, 2016$ / shares | Mar. 31, 2016PLNshares | |
Income Statement [Abstract] | ||||
Net sales | PLN 1,891 | PLN 2,131 | ||
Cost of revenues | 1,211 | 1,213 | ||
Gross profit | 680 | 918 | ||
Operating expenses | ||||
Depreciation and amortization expense | 49 | 51 | ||
Research and development | 425 | 360 | ||
Selling, general and administrative | 782 | 857 | ||
Total operating expenses | 1,256 | 1,268 | ||
Operating loss | (576) | (350) | ||
Other expenses | ||||
Interest expense, net | 193 | 261 | ||
Loss on extinguishment of notes due to employees | 158 | 0 | ||
Other expense | 28 | 11 | ||
Total other expense, net | 379 | 272 | ||
Loss before income taxes | (955) | (622) | ||
Provision for income taxes | 0 | 0 | ||
Net loss | (955) | (622) | ||
Preferred dividend | (23) | (23) | ||
Net loss available to common stockholders | (978) | (645) | ||
Condensed statements of comprehensive income (loss) | ||||
Net loss | (955) | (622) | ||
Other comprehensive income (loss) | ||||
Foreign currency translation adjustments | (53) | 191 | ||
Comprehensive loss | (1,008) | (431) | ||
Loss per share | ||||
Net loss available to common stockholders | PLN (978) | PLN (645) | ||
Basic and diluted loss per share | $ / shares | $ (0.04) | $ (0.03) | ||
Weighted average basic and diluted shares outstanding | shares | 22,940,543 | 21,055,990 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS PLN in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2017PLN | Mar. 31, 2016PLN | |
Cash flows from operating activities: | ||
Net loss | PLN (955) | PLN (622) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation and amortization | 49 | 51 |
Deferred income taxes | 0 | 0 |
Amortization of debt discount and debt issuance costs | 0 | 200 |
Stock-based compensation | 10 | 0 |
Estimated fair value of warrants issued in connection with secured promissory notes | 121 | 0 |
Loss on extinguishment of notes due to employees | 158 | 0 |
Changes in assets and liabilities: | ||
Accounts receivable | 33 | 33 |
Inventories | 183 | (526) |
Prepaid expenses and other assets | (20) | 17 |
Accounts payable and accrued liabilities | (224) | 288 |
Net cash provided by (used in) operating activities | (645) | (559) |
Cash flows from investing activities: | ||
Purchases of equipment | (16) | (15) |
Increase in other assets | 0 | (79) |
Net cash provided by (used in) investing activities | (16) | (94) |
Cash flows from financing activities: | ||
Net borrowings on lines of credit | 8 | (12) |
Repayment of secured promissory notes | (167) | 0 |
Repayment of notes due to employees | (24) | (27) |
Proceeds (repayments) from related party advances, net | 0 | (20) |
Proceeds from sale of common stock, net of issuance costs of $83 | 1,097 | 0 |
Net cash provided by financing activities | 914 | (59) |
Effect of exchange rates on cash | (92) | 225 |
Net change in cash | 161 | (487) |
Cash at beginning of year | 108 | |
Cash at end of the period | 269 | |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 41 | 46 |
Cash paid for income taxes | 13 | 8 |
Supplemental schedule of non-cash financing activity: | ||
Reclassification of warrant liability to additional paid in capital | PLN 0 | PLN 90 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) PLN in Thousands | 3 Months Ended |
Mar. 31, 2017PLN | |
Statement of Cash Flows [Abstract] | |
Issuance costs | PLN 83 |
Organization
Organization | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | MEDITE Cancer Diagnostics, Inc. (“MDIT”, “MEDITE”, “we”, “us” or the “Company”) was incorporated in Delaware in December 1998. These statements include the accounts of MEDITE Cancer Diagnostics, Inc. and its wholly owned subsidiaries, which consists of MEDITE Enterprise, Inc., MEDITE GmbH, Burgdorf, Germany, MEDITE GmbH, Salzburg, Austria, MEDITE Lab Solutions Inc., Orlando, USA, MEDITE sp. z o.o., Zilona-Gora, Poland and CytoGlobe, GmbH, Burgdorf, Germany. MEDITE is a medical technology company specialized in the development, manufacturing, and marketing of molecular biomarkers, premium medical devices and consumables for detection, risk assessment and diagnosis of cancerous and precancerous conditions and related diseases. The Company has 75 employees in four countries, a distribution network to about 80 countries and a wide range of products for anatomic pathology, histology and cytology laboratories is available for sale. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2017 | |
Summary Of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Consolidation, Basis of Presentation and Significant Estimates The accompanying condensed consolidated financial statements for the periods ended March 31, 2017 and 2016 included herein are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Such consolidated financial statements reflect, in the opinion of management, all adjustments necessary to present fairly the financial position and results of operations as of and for the periods indicated. All such adjustments are of a normal recurring nature. These interim results are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2017 or for any other period. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The Company believes that the disclosures are adequate to make the interim information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements disclosed in the Report on Form 10-K for the year ended December 31, 2016 filed on April 14, 2017 and other filings with the Securities and Exchange Commission. In preparing the accompanying condensed consolidated accompanying financial statements, management has made certain estimates and assumptions that affect reported amounts in the condensed consolidated financial statements and disclosures of contingencies. Changes in facts and circumstances may result in revised estimates and actual results may differ from these estimates. Going Concern The accompanying condensed consolidated financial statements have been prepared in conformity with GAAP, which contemplate continuation of the Company as a going concern. This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. At March 31, 2017, the Company’s cash balance was $269,000 and its operating losses for the year ended December 31, 2016 and for the three months March 31, 2017 have used most of the Company’s liquid assets. These factors raise substantial doubt about the Company’s ability to continue as a going concern. However, the negative working capital has declined by approximately $600,000 from December 31, 2016 to March 31, 2017. The Company raised additional cash of $1.1 million net of offering costs. from the sale of shares of common stock subsequent to December 31, 2016 through March 31, 2017 and an additional $250,000 from April 1, 2017 through the date of this filing. The Company has settled three of the five employee notes for $330,000 and warrants and paid the first installment of $94,000 in April 2017. The Company has extended the term of the secured promissory notes and has paid $167,000 of the balance outstanding as of the date of this filing and received notice that one noteholder will convert $50,000 into 100,000 shares of common stock at $0.50. Management believes that the remainder of the balance will be settled in some combination of cash and stock. Management is actively seeking additional equity financing contemplated in the $4.25 million stock purchase agreement. The Company has negotiated with certain parties whose obligations are due in the next twelve months to extend payment terms beyond one year. One lender with an outstanding balance of $801,000 has stated that they will not be able to refinance the debt. The default rate of interest will increase three percent. Accrued salaries, vacation and related expenses at March 31, 2017, includes amounts owed the former CFO of approximately $1.1 million and amounts owed to both Michaela and Michael Ott totaling approximately $152,000. Included in advances – related parties are amounts owed to the Company’s former CFO of $50,000 at March 31, 2017. The Company owes Ms. Ott 91,136 Euros, ($97,351 as March 31, 2017). The Company has made arrangements to repay these obligations evenly over a 24 month period, starting on October 31, 2017. The Company settled the $152,000 obligation through an upfront payment each of $6,750 and a payment plan which settled the amounts owed and established a payment schedule for a period of 18 months starting in October 2017. See Note 8 for further discussion regarding the legal proceedings with the Company’s former CFO. The Company’s security agreement with its lender has provided borrowings of 35% of our collateralized assets. The Company continues to refinance this debt to provide additional liquidity. Management continues to expand its product offerings and has also expanded its sales and distribution channels during 2017. If management is unsuccessful in completing its equity financing, management will begin negotiating with some of the Company's major vendors and lenders to extend the terms of their debt and also evaluate certain expenses that have been implemented for the Company’s growth strategy. However, there can be no assurance that the Company will be successful in these efforts. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Revenue Recognition The Company derives its revenue primarily from the sale of medical products and supplies for the diagnosis and prevention of cancer. Product revenue is recognized when all four of the following criteria are met: (1) persuasive evidence that an arrangement exists; (2) delivery of the products has occurred or risk of loss transfers to the customer; (3) the selling price of the product is fixed or determinable; and (4) collectability is reasonably assured. The Company generates the majority of its revenue from the sale of inventory. For certain sales, the Company and its customers agree in the sales contract that risk of loss and title transfer upon the Company packing the items for shipment, segregating the items packaged and notifying the customer that their items are ready for pickup. The Company records such sales at time of completed packaging and segregation of the items from general inventory and notification has been confirmed by the customer. Shipping and handling costs are included in cost of goods sold and charged to the customers based on the contractual terms. Inventories Inventories are stated at the lower of cost or market. Cost is determined using the first in first out method (FIFO) and market is based generally on net realizable value. Inventories consists of parts inventory purchased from outside vendors, raw materials used in the manufacturing of equipment; work in process and finished goods. Management reviews inventory on a regular basis and determines if inventory is still useable. A reserve is established for the estimated decrease in carrying value for obsolete or excess inventory. Once a reserve is established, it is considered a permanent adjustment to the cost basis of the obsolete or excess inventory. Foreign Currency Translation The accounts of the U.S. parent company are maintained in United States Dollar (“USD”). The functional currency of the Company’s German subsidiaries is the EURO (“EURO”). The accounts of the German subsidiaries were translated into USD in accordance with relevant accounting guidance. All assets and liabilities are translated at the exchange rate on the balance sheet dates, stockholders’ equity was translated at the historical rates and statements of operations transactions are translated at the average exchange rate for each period. The resulting translation gains and losses are recorded in accumulated other comprehensive loss as a component of stockholders’ equity. Research and Development All research and development costs are expensed as incurred. Research and development costs consist of engineering, product development, testing, developing and validating the manufacturing process, and regulatory related costs. Acquired In-Process Research and Development Acquired in-process research and development (“IPR&D”) that the Company acquires through business combinations represents the fair value assigned to incomplete research projects which, at the time of acquisition, have not reached technological feasibility. The amounts are capitalized and are accounted for as indefinite-lived intangible assets, subject to impairment testing until completion or abandonment of the projects. Upon successful completion of each project, MEDITE will make a determination as to the then useful life of the intangible asset, generally determined by the period in which the substantial majority of the cash flows are expected to be generated, and begin amortization. The Company tests IPR&D for impairment at least annually, or more frequently if impairment indicators exist, by first assessing qualitative factors to determine whether it is more likely than not that the fair value of the IPR&D intangible asset is less than its carrying amount. If the Company concludes it is more likely than not that the fair value is less than the carrying amount, a quantitative test that compares the fair value of the IPR&D intangible asset with its carrying value is performed. If the fair value is less than the carrying amount, an impairment loss is recognized in operating results. Impairment of Indefinite Lived Intangible Assets Other Than Goodwill The Company has the option first to assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, the Company concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the entity is not required to take further action. However, if the Company concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount in accordance with relevant accounting guidance. Goodwill Goodwill is recognized for the excess of cost of an acquired entity over the amounts assigned to assets acquired and liabilities assumed in a business combination. Goodwill is tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis (December 31 for us) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit using a discounted cash flow methodology. This analysis requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, and determination of our weighted average cost of capital. The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results, market conditions, and other factors. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit. Net Loss Per Share Basic loss per share is calculated based on the weighted-average number of outstanding common shares. Diluted loss per share is calculated based on the weighted-average number of outstanding common shares plus the effect of dilutive potential common shares, using the treasury stock method and the if-converted method. MEDITE’s calculation of diluted net loss per share excludes potential common shares as of March 31, 2017 and 2016 as the effect would be anti-dilutive (i.e. would reduce the loss per share). The Company computes its loss applicable to common stock holders by subtracting dividends on preferred stock, including undeclared or unpaid dividends if cumulative, from its reported net loss and reports the same on the face of the condensed consolidated statement of operations. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue with Contracts from Customers.” ASU 2014-09 supersedes the current revenue recognition guidance, including industry-specific guidance. The ASU introduces a five-step model to achieve its core principal of the entity recognizing revenue to depict the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The updated guidance is effective for public entities for interim and annual periods beginning after December 15, 2017 with early adoption permitted for annual reporting periods beginning after December 15, 2016. The Company has not yet selected a transition method and is currently evaluating the impact of the updated guidance for the Company’s consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, “Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” The areas for simplification in this Update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The updated guidance is effective for public entities for fiscal years beginning after December 15, 2016. The Company has adopted ASU 2016-09 and it did not impact its consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, “Leases” (“ASU 2016-02”). The core principle of ASU 2016-02 is that an entity should recognize on its balance sheet assets and liabilities arising from a lease. In accordance with that principle, ASU 2016-02 requires that a lessee recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying leased asset for the lease term. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee will depend on the lease classification as a finance or operating lease. This new accounting guidance is effective for public companies for fiscal years beginning after December 15, 2018 (i.e., calendar years beginning on January 1, 2019), including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2016-02 will have on the Company’s consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): “Simplifying the Measurement of Inventory”. The amendments require an entity to measure in scope inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. The amendments do not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. The amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out (FIFO) or average cost. ASU 2015-11 is effective for annual and interim periods beginning after December 31, 2016. The Company adopted this accounting pronouncement during the three months ended March 31, 2017 with no material impact on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the definition of a business . In January 2017, the FASB also issued ASU 2017-04, Intangibles - Goodwill and other (Topic 350): Simplifying the test for goodwill impairment. The amendments in this Update remove the second step of the current goodwill impairment test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. This guidance is effective for impairment tests in fiscal years beginning after December 15, 2019. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | The following is a summary of the components of inventories (in thousands): March 31, 2017 (Unaudited) December 31, 2016 Raw materials $ 1,252 $ 1,309 Work in process 154 203 Finished goods 2,273 2,299 $ 3,679 $ 3,811 |
Secured Lines of Credit, Long-t
Secured Lines of Credit, Long-term Debt, and Notes Due to Employees | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Secured Lines of Credit, Long-term Debt, and Notes Due to Employees | The Company’s outstanding note payable indebtedness was as follows as of (in thousands): March 31, 2017 (Unaudited) December 31, 2016 Hannoversche Volksbank credit line #1 $ 1,354 $ 1,321 Hannoversche Volksbank credit line #2 414 397 Hannoversche Volksbank term loan #3 104 117 Secured Promissory Note 483 650 DZ Equity Partners Participation rights 801 789 Total 3,156 3,274 Less current portion of long-term debt (3,096 ) (3,214 ) Long-term debt $ 60 $ 60 In July 2006, MEDITE GmbH, Burgdorf, entered into a master credit line #1 with Hannoversche Volksbank. The line of credit was amended in 2012, 2015 and again in 2016, in which the credit line availability is Euro 1.3 million ($1.39 million as of March 31, 2017). Borrowings on the master line of credit agreement #1 bears interest at a variable rate based on Euribor (Euro Interbank Offered Rate) depending on the type of advance elected by the Company and defined in the agreement. Interest rates depending on the type of advance elected ranged from 3.75 – 8.00% during the three months ended March 31, 2017. The line of credit has no stated maturity date. The line of credit is collateralized by the accounts receivable and inventory of MEDITE GmbH, Burgdorf, and a mortgage on the building owned by the Company and is guaranteed by Michaela Ott and Michael Ott, stockholders of the Company. In June 2012, CytoGlobe, GmbH, Burgdorf, entered into a credit line #2 with Hannoversche Volksbank. The line of credit granted a maximum borrowing authority of Euro 400,000 ($427,280 as of March 31, 2017). Borrowings on the master line of credit agreement #2 bears interest at a variable rate based on Euribor (Euro Interbank Offered Rate) depending on the type of advance elected by the Company and defined in the agreement. Interest rates ranged from 3.90 – 8.00% during the period ended March 31, 2017. The line of credit has no stated maturity date. The line of credit is collateralized by the accounts receivable and inventory of CytoGlobe GmbH, Burgdorf and is guaranteed by Michaela Ott and Michael Ott, stockholders of the Company, and the state of Lower Saxony (Germany) to support high-tech companies in the area. In November 2008, MEDITE GmbH, Burgdorf, entered into a Euro 400,000 ($427,280 as of March 31, 2017) term loan #3 with Hannoversche Volksbank with an interest rate of 4.7% per annum. The term loan has a maturity of December 31, 2018, and requires quarterly principal repayments of Euro 13,890 ($14,517 as of March 31, 2017). The term loan is guaranteed by Michaela Ott and Michael Ott, stockholders of the Company, and is collateralized by a partial subordinated pledge of the receivables and inventory of MEDITE GmbH, Burgdorf. In March 2009, the Company entered into a participation rights agreement with DZ Equity Partners (“DZ”) in the form of a debenture with a mezzanine lender who advanced the Company up to Euro 1.5 million, ($1.6 million as of March 31, 2017) in two tranches of Euro 750,000 each ($801,150 as of March 31, 2017). The first tranche was paid to the Company at closing with the second tranche being conditioned on MEDITE GmbH, Burgdorf and its subsidiaries hitting certain performance targets. Those targets were not met and the second tranche was never called. The debenture pays interest at the rate of 12.15% per annum and matured on December 31, 2016, however the Notes are not considered in default until June 1, 2017, when the German financial statements are due to be filed. The Company has initiated discussions with DZ to renegotiate the terms of the agreement or to convert any part of the balance into stock. DZ has stated that they will not be able to refinance the debt. The default rate of interest will increase three percent. On December 31, 2015, the Company entered into a Securities Purchase Agreement (the “2015 Purchase Agreement”) with seven individual accredited investors (collectively the “Purchasers”), pursuant to which the Company agreed to issue to the Purchasers secured promissory notes in the aggregate principal amount of $500,000 with interest accruing at an annual rate of 15% (the “Note(s)”) and warrants to purchase up to an aggregate amount of 250,000 shares of the common stock, par value $0.001) per share, of the Company (the “Warrant(s)”) with an initial exercise price of $1.60 per share, subject to adjustment and are exerciseable for a period of five years. On March 15, 2016, the Board of Directors approved renegotiated terms to increase the warrants issued to the Purchasers from a total of 250,000 warrants to 500,000 and fixed the exercise price of the warrants to $0.80. The Notes mature on the earlier of the third month anniversary date following the Closing Date, as defined in the Note, or the third business day following the Company’s receipt of funds exceeding one million dollars from an equity or debt financing, not including the financing contemplated under the 2015 Purchase Agreement. The Notes are secured by the Company’s accounts receivable and inventories held in the United States. If the Notes are not redeemed by the Company on maturity, the Purchasers are entitled to receive 10% of the principal balance of the Notes outstanding in warrants for every month that the Notes are not redeemed. On March 31, 2016, these Notes matured and were not repaid. Therefore the Notes were in default on April 1, 2016. The Company agreed to pay the Purchasers 10% of the principal balance of the Notes in warrants until the Notes are repaid. During the three months ended March 31, 2017, the Company issued 50,000 warrants in connection with the default provision and 100,000 warrants in connection with the January 2017 extension provision (see below), which were valued at $11,443 and $28,167, respectively and recorded it as interest expense in the condensed consolidated statement of operations. The Notes are secured by the Company’s accounts receivable and inventories held in the United States. In January 2017, the Company extended the term of the Notes in default on April 1, 2016 to June 30, 2017 and reduced the price on the warrants issued from $0.80 to $0.50. The Company recorded $64,405 attributed to the repricing of the warrants. On December 31, 2015, the Company recorded a discount related to the issuance of warrants attributed to the Notes of approximately $90,000. The discount was amortized to interest expense during the three months ended March 31, 2016. We did not have any discount amortization for the period ended March 31, 2017. On May 25, 2016, the Company entered into a Securities Purchase Agreement (the “May Purchase Agreement”) with two individual accredited investors, one of which who serves on the Company’s Board of Directors (collectively the “May Purchasers”), pursuant to which the Company agreed to issue to the May Purchasers secured promissory notes in the aggregate principal amount of $150,000 (the “May Note(s)”) with an interest rate of 15% and warrants to purchase up to an aggregate amount of 150,000 shares of common stock, of the Company (the “May Warrant(s)”). The May Notes may be converted into Units issued pursuant to the Company’s private financing of up to $5,000,000 (the “Follow On Offering”) Units at a price of $0.80/Unit (the “Units”) consisting of: (i) a 2 year unsecured convertible note, which converts into shares of common stock at an initial conversion price of $0.80 per share and (ii) a warrant to purchase one half additional share of common stock, with an initial exercise price equal to $0.80 per share (the “Follow On Warrant”). The May Notes are secured by the Company’s accounts receivable and inventories held in the United States. The Company recorded a debt discount of $51,000 related to the relative fair value of the warrants on the date of the May Purchase Agreement, which was amortized to interest expense in the consolidated statement of operations during the year ended December 31, 2016. If the May Notes are not redeemed by the Company on maturity, the Purchasers are entitled to receive 10% of the principal balance of the Notes outstanding in warrants for every month that the Notes are not redeemed. In January 2017 the Company extended the term of the Notes in default on April 1, 2016 to June 30, 2017 and reduced the price on the warrants issued from $0.80 to $0.50. On August 25, 2016, these Notes matured and were not repaid. Therefore the Notes were in default on August 26, 2016. The Company agreed to pay the Purchasers 10% of the principal balance of the May Notes in warrants until the May Notes are repaid. During the three months ended March 31, 2017, the Company issued 45,000 warrants in connection with the January 2017 extension provision, which were valued at $17,110 and recorded it as interest expense in the consolidated statement of operations. In November 2015 and February 2016, the Company entered into promissory notes totaling $927,000 with certain employees to repay wages earned prior to December 31, 2014 not paid (“Notes Due to Employees"). The Notes Due to Employees are to be paid monthly through September 2019, with no interest due on the outstanding balances. The monthly amounts increase over the payment term. The amounts due become immediately due and payable if payments are more than ten days late either one or two consecutive months as defined in the agreement with the employee. On March 30, 2017, the Company negotiated a settlement with three current employees that hold notes, in the amount of $580,000 plus accrued vacation. The agreement supersedes all prior agreements with group and was effective December 31, 2016. The Company is to pay these employees approximately $330,000, the first payment of $94,000 was paid in April 2017, the second payment of $94,000 30 days from signing the agreement and the final payment of $142,000 60 days from signing the agreement. The employees are working with the Company, regarding the timing of the payments discussed above. The Company issued 1,029,734 warrants to purchase common stock at $0.50 a share with a term of 5 years. The fair value of the warrants issued of $389,000 for the three months ended March 31, 2017, was valued based on the Black Scholes model based on a stock price of $0.70, an interest free rate of 1.33% and volatility of 50%. The Company recorded a loss on extinguishment on notes due to employees of $158,000. The settlement was accounted for as an extinguishment under the applicable accounting guidance. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Included in advances – related parties are amounts owed to the Company’s former CFO and Chairman of the Board of $50,000 at March 31, 2017 and December 31, 2016. Also included in advances – related parties are amounts owed to Ms. Ott of 20,000 Euros, ($21,364 as March 31, 2017) and $75,000 related to two short term bridge loans. The Company has made arrangements to settle these obligations evenly over a 24 month period, on October 31, 2017. In addition, the Company settled obligations related to accrued salaries, vacation and related expenses totaling $152,000 owed to Mr. and Ms. Ott. The Company will make an upfront payment to each Mr. and Ms. Ott of $6,750 and will pay the remaining amount owed over a period of 18 months starting in October 2017 The loans noted above are interest-free loans. Accrued salaries, vacation and related expenses at March 31, 2017 and December 31, 2016, includes amounts owed to the former CFO of approximately $1.1 million, which is included in accounts payable and accrued expenses in the accompanying condensed consolidated balance sheets. See Note 8 for further discussion regarding the legal proceedings with the Company’s former CFO. |
Common Stock
Common Stock | 3 Months Ended |
Mar. 31, 2017 | |
Common Stock, Number of Shares, Par Value and Other Disclosures [Abstract] | |
Common Stock | During the three months ended March 31, 2017, the Company issued 2,360,000 shares of common stock for $1,180,000, less $83,400 of issuance costs. In connection with the issuance of common stock, the Company issued 1,180,000 warrants to purchase shares of common stock at $0.50, for a term of 5 years. We also issued 50,000 shares from stock subscriptions of $25,000 at December 31, 2016 and issued 25,000 warrants on the same terms and conditions. During the quarter ended March 31, 2016, the Company did not issue any shares of common stock. |
Preferred Stock and Warrants
Preferred Stock and Warrants | 3 Months Ended |
Mar. 31, 2017 | |
Preferred Stock, Number of Shares, Par Value and Other Disclosures [Abstract] | |
Preferred Stock and Warrants | A summary of the Company’s preferred stock as of March 31, 2017 and December 31, 2016 is as follows. March 31, 2017 (unaudited) December 31, 2016 Shares Issued & Shares Issued & Offering Outstanding Outstanding Series A convertible 47,250 47,250 Series B convertible, 10% cumulative dividend 93,750 93,750 Series C convertible, 10% cumulative dividend 38,333 38,333 Series E convertible, 10% cumulative dividend 19,022 19,022 Total Preferred Stock 198,355 198,355 As of March 31, 2017 and December 31, 2016, the Company had cumulative preferred undeclared and unpaid dividends. In accordance with the relevant accounting guidance, these dividends were added to the net loss in the net loss per share calculation. Warrants outstanding Warrants Weighted Average Exercise Price Aggregate Intrinsic Value Weighted Average Remaining Contractual Life (Years) Outstanding at December 31, 2016 1,396,161 $ 1.08 — 4.11 Granted 2,932,024 0.50 — 5.00 Exercised — — — — Expired — — — — Outstanding at March 31, 2017 4,328,184 $ 0.60 — 4.60 During the three month period ended March 31, 2017, the Company issued 195,000 warrants in connection with the default provisions of the Notes and the May Notes, which were valued at $56,720. The value of the warrants were determined using the Black-Scholes model, at an interest free rate of 1.33%, volatility of 50% and a remaining term of 5 years and a market price of between $0.50 to $0.80 during the three months ended March 31, 2017. During January 2017, the Company reached an agreement with all secured promissory noteholders, to extend the maturity of the secured promissory notes to June 30, 2017, whereby the warrants were repriced from $0.80 a share to $0.50 a share. The notes continue to bear interest at 15% and the secured promissory noteholders continue to receive warrants amounting to 10% of the principal balance, as long as the notes remain outstanding. The Company repriced all warrants issued totaling 1.2 million warrants amounting to a $64,405 incremental value using the Black-Scholes model on January 16, 2017, the date of the amendments at a current market price of $0.36 a share, at an interest free rate of 1.33% and a remaining terms ranging from 4 years to 4 years and 11.5 months. During the three months ended March 31, 2017, the Company issued 2,360,000 shares of common stock for $1,180,000, less $83,400 of issuance costs. In connection with the issuance of common stock, the Company issued 1,180,000 warrants to purchase shares of common stock at $0.50, for a term of 5 years. We also issued 50,000 shares from stock subscriptions of $25,000 at December 31, 2016 and issued 25,000 warrants on the same terms and conditions. On January 16, 2017 the Company also amended the original equity raise closed on December 7, 2016 and issued an additional 411,915 warrants to purchase shares of common stock at an exercise price of $0.50, for a term of 5 years. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | Legal Proceedings On November 13, 2016, the Company’s former CFO filed a complaint against the Company and certain officers and directors of the Company in the United States District Court for the Northern District of Illinois, Eastern Division, Case No. 1:16-cv-10554, whereby he is alleging (i) breach of the Illinois Wage and Protection Act, (ii) breach of employment contract and (iii) breach of loan agreement. He is seeking monetary damages up to approximately $1,665,972. The Company has denied the substantive allegations in the complaint and is vigorously defending the suit. Management believes that the claims set forth in the complaint against the Company are without merit. The Company has accrued wages and vacation of approximately $1.1 million and a $50,000 note payable to the former CFO at March 31, 2017 and December 31, 2016. The Company believes that $836,000 was to be converted into common stock as a condition of the merger agreement at $2.00 a share. The presiding Federal Judge has referred the lawsuit to mediation. No settlement was reach during April 2017 meditation. The magistrate judge highly recommended that both parties work towards a settlement and scheduled an update meeting in September 2017. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | The Company operates in one operating segment. However, the Company has assets and operations in the United States, Germany and Poland. The following tables show the breakdown of the Company’s operations and assets by region (in thousands): United States Germany Poland Total March 31, 2017 December 31, 2016 March 31, 2017 December 31, 2016 March 31, 2017 December 31, 2016 March 31, 2017 December 31, 2016 Assets $ 11,637 $ 11,268 $ 6,072 $ 6,264 $ 99 $ 238 $ 17,809 $ 17,770 Property & equipment, net 65 68 1,478 1,487 4 2 1,547 1,557 Intangible assets 10,518 10,518 - - - - 10,518 10,518 United States Germany Poland Total March 31, 2017 March 31, 2016 March 31, 2017 March 31, 2016 March 31, 2017 March 31, 2016 March 31, 2017 March 31, 2016 Revenues: Histology Equipment $ 146 $ 87 $ 760 $ 1,106 $ 8 $ 15 $ 914 $ 1,208 Histology Consumables 104 47 573 417 - - 677 464 Cytology Consumables - 140 300 319 - - 300 459 Total Revenues $ 250 $ 274 $ 1,633 $ 1,842 $ 8 $ 15 $ 1,891 $ 2,131 Net loss $ (570 ) $ (490 ) $ (216 ) $ (89 ) $ (169 ) $ (43 ) $ (955 ) $ (622 ) |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | On May 4, 2017, the Board of Directors (the “Board”) of MEDITE Cancer Diagnostics, Inc. (the “Company”) accepted the resignation of Michaela Ott as Chief Operating Officer of the Company, effective immediately. Further, the Board accepted Ms. Ott’s resignation from her position as Managing Director of the Company’s wholly-owned subsidiary, Medite GmbH, as well as managing director of CytoGlobe GmbH, Burgdorf, a wholly owned subsidiary of Medite GmbH, effective immediately. Ms. Ott shall further resign from her position as Managing Director of Medite GmbH, Austria, also a wholly-owned subsidiary of Medite GmbH, effective no later than September 30, 2017. Ms. Ott shall remain on the Board of Directors of the Company. Ms. Ott’s resignations do not arise from any disagreement on any matter relating to the Company’s operations, policies or practices, or regarding the general direction of the Company or any of its subsidiaries. Ms. Ott shall take all her remaining holiday leave with no further obligation to render services to the Company or its subsidiaries and shall receive her monthly remuneration of EUR 10,000 ($10,682 at March 31, 2017) through September 30, 2017. The Company agrees to pay to Ms. Ott outstanding accrued compensation due to her in the amount of EUR 75,098, to be paid in eighteen monthly installments of EUR 4,172 commencing October 31, 2017, and at the end of each subsequent month thereafter until paid in full. Further, the Company agrees that upon achieving annual revenue of EUR 15 million (16.0 million at March 31, 2017) by no later than December 31, 2020, the Company shall make a one- time payment to Ms. Ott of EUR 30,000 ($32,046 at March 31, 2017). The payment will be due one month after the adoption of the annual financial statement for the year in which the revenue threshold is exceeded. The Company shall repay to Ms. Ott a loan provided by her to the Company with a current loan value of EUR 91,136 ($97,351 at March 31, 2017). Repayment of the loan shall be made in twenty-four equal monthly installments of EUR 3,797 ($4,056 at March 31, 2017), commencing on October 31, 2017, and on the last day of each month thereafter until the loan is repaid in full. Ms. Ott agrees to maintain her personal guarantee to various financial institutions with respect to certain financial obligations of the Company until September 30, 2017. The Company shall undertake to provide sufficient security to these financial institutions commencing October 1, 2017, whereby the Company shall secure the release of Ms. Ott’s personal guarantee. The Company shall further transfer to Ms. Ott the direct life insurance policy currently maintained by the Company for the benefit of Ms. Ott. Further, on May 4, 2017, the Board also accepted the resignation of Michael Ott as Chairman of the Board, effective immediately. Mr. Ott shall remain on the Board of Directors of the Company. Mr. Ott further resigned as Managing Director of the Company’s wholly-owned German subsidiary, Medite GmbH, as well as from his position as Managing Director of CytoGlobe GmbH, Burgdorf, a wholly-owned subsidiary of Medite GmbH, effective immediately. Mr. Ott shall resign from his position as Managing Director of Medite sp. z. o.o., Poland, also a wholly-owned subsidiary of Medite GmbH, effective no later than September 30, 2017. Mr. Ott’s resignations do not arise from any disagreement on any matter relating to the Company’s operations, policies or practices, or regarding the general direction of the Company or its subsidiaries. Mr. Ott shall take all his remaining holiday leave and shall receive his monthly remuneration of EUR 10,000 ($10,682 at March 31, 2017) through September 30, 2017. The Company agrees to pay to Mr. Ott outstanding accrued compensation due to him in the amount of EUR 52,473 ($56,052 at March 31, 2017), to be paid in eighteen monthly installments of EUR 2,915 ($3,114 at March 31, 2017) commencing October 31, 2017, and at the end of each subsequent month thereafter until paid in full. Further, the Company agrees that upon achieving annual revenue of EUR 15 million ($16 million at March 31, 2017) by no later than December 31, 2020, the Company shall make a one- time payment to Mr. Ott of EUR 30,000 ($32,046 at March 31, 2017). The payment will be due one month after the adoption of the annual financial statement for the year in which the revenue threshold is exceeded. Mr. Ott agrees to maintain his personal guarantee to various financial institutions with respect to certain financial obligations of the Company until September 30, 2017. The Company shall undertake to provide sufficient security to these financial institutions commencing October 1, 2017 whereby the Company shall secure the release of Mr. Ott’s personal guarantee. The Company shall further transfer to Mr. Ott the direct life insurance policy currently maintained by the Company for the benefit of Mr. Ott. On May 4, 2017, the Board unanimously elected David E. Patterson, the Company’s Chief Executive Officer and Director, to the position of Chairman of the Board of Directors of the Company, to serve until his resignation or removal. Effective April 28, 2017, the Company increased the authorized shares from 35,000,000 to 50,000,000. The Board appointed two officers on May 4, 2017 who will receive 350,000 shares of restricted common stock with a three year vesting schedule and on April 26, 2017 appointed an officer who will receive 200,000 shares of restricted common stock with a three year vesting schedule. |
Summary of Significant Accoun17
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Consolidation, Basis of Presentation and Significant Estimates | The accompanying condensed consolidated financial statements for the periods ended March 31, 2017 and 2016 included herein are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Such consolidated financial statements reflect, in the opinion of management, all adjustments necessary to present fairly the financial position and results of operations as of and for the periods indicated. All such adjustments are of a normal recurring nature. These interim results are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2017 or for any other period. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The Company believes that the disclosures are adequate to make the interim information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements disclosed in the Report on Form 10-K for the year ended December 31, 2016 filed on April 14, 2017 and other filings with the Securities and Exchange Commission. In preparing the accompanying condensed consolidated accompanying financial statements, management has made certain estimates and assumptions that affect reported amounts in the condensed consolidated financial statements and disclosures of contingencies. Changes in facts and circumstances may result in revised estimates and actual results may differ from these estimates. |
Going Concern | The accompanying condensed consolidated financial statements have been prepared in conformity with GAAP, which contemplate continuation of the Company as a going concern. This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. At March 31, 2017, the Company’s cash balance was $269,000 and its operating losses for the year ended December 31, 2016 and for the three months March 31, 2017 have used most of the Company’s liquid assets. These factors raise substantial doubt about the Company’s ability to continue as a going concern. However, the negative working capital has declined by approximately $600,000 from December 31, 2016 to March 31, 2017. The Company raised additional cash of $1.1 million net of offering costs. from the sale of shares of common stock subsequent to December 31, 2016 through March 31, 2017 and an additional $250,000 from April 1, 2017 through the date of this filing. The Company has settled three of the five employee notes for $330,000 and warrants and paid the first installment of $94,000 in April 2017. The Company has extended the term of the secured promissory notes and has paid $167,000 of the balance outstanding as of the date of this filing and received notice that one noteholder will convert $50,000 into 100,000 shares of common stock at $0.50. Management believes that the remainder of the balance will be settled in some combination of cash and stock. Management is actively seeking additional equity financing contemplated in the $4.25 million stock purchase agreement. The Company has negotiated with certain parties whose obligations are due in the next twelve months to extend payment terms beyond one year. One lender with an outstanding balance of $801,000 has stated that they will not be able to refinance the debt. The default rate of interest will increase three percent. Accrued salaries, vacation and related expenses at March 31, 2017, includes amounts owed the former CFO of approximately $1.1 million and amounts owed to both Michaela and Michael Ott totaling approximately $152,000. Included in advances – related parties are amounts owed to the Company’s former CFO of $50,000 at March 31, 2017. The Company owes Ms. Ott 91,136 Euros, ($97,351 as March 31, 2017). The Company has made arrangements to repay these obligations evenly over a 24 month period, starting on October 31, 2017. The Company settled the $152,000 obligation through an upfront payment each of $6,750 and a payment plan which settled the amounts owed and established a payment schedule for a period of 18 months starting in October 2017. See Note 8 for further discussion regarding the legal proceedings with the Company’s former CFO. The Company’s security agreement with its lender has provided borrowings of 35% of our collateralized assets. The Company continues to refinance this debt to provide additional liquidity. Management continues to expand its product offerings and has also expanded its sales and distribution channels during 2017. If management is unsuccessful in completing its equity financing, management will begin negotiating with some of the Company's major vendors and lenders to extend the terms of their debt and also evaluate certain expenses that have been implemented for the Company’s growth strategy. However, there can be no assurance that the Company will be successful in these efforts. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
Revenue Recognition | The Company derives its revenue primarily from the sale of medical products and supplies for the diagnosis and prevention of cancer. Product revenue is recognized when all four of the following criteria are met: (1) persuasive evidence that an arrangement exists; (2) delivery of the products has occurred or risk of loss transfers to the customer; (3) the selling price of the product is fixed or determinable; and (4) collectability is reasonably assured. The Company generates the majority of its revenue from the sale of inventory. For certain sales, the Company and its customers agree in the sales contract that risk of loss and title transfer upon the Company packing the items for shipment, segregating the items packaged and notifying the customer that their items are ready for pickup. The Company records such sales at time of completed packaging and segregation of the items from general inventory and notification has been confirmed by the customer. Shipping and handling costs are included in cost of goods sold and charged to the customers based on the contractual terms. |
Inventories | Inventories are stated at the lower of cost or market. Cost is determined using the first in first out method (FIFO) and market is based generally on net realizable value. Inventories consists of parts inventory purchased from outside vendors, raw materials used in the manufacturing of equipment; work in process and finished goods. Management reviews inventory on a regular basis and determines if inventory is still useable. A reserve is established for the estimated decrease in carrying value for obsolete or excess inventory. Once a reserve is established, it is considered a permanent adjustment to the cost basis of the obsolete or excess inventory. |
Foreign Currency Translation | The accounts of the U.S. parent company are maintained in United States Dollar (“USD”). The functional currency of the Company’s German subsidiaries is the EURO (“EURO”). The accounts of the German subsidiaries were translated into USD in accordance with relevant accounting guidance. All assets and liabilities are translated at the exchange rate on the balance sheet dates, stockholders’ equity was translated at the historical rates and statements of operations transactions are translated at the average exchange rate for each period. The resulting translation gains and losses are recorded in accumulated other comprehensive loss as a component of stockholders’ equity. |
Research and Development | All research and development costs are expensed as incurred. Research and development costs consist of engineering, product development, testing, developing and validating the manufacturing process, and regulatory related costs. |
Acquired In-Process Research and Development | Acquired in-process research and development (“IPR&D”) that the Company acquires through business combinations represents the fair value assigned to incomplete research projects which, at the time of acquisition, have not reached technological feasibility. The amounts are capitalized and are accounted for as indefinite-lived intangible assets, subject to impairment testing until completion or abandonment of the projects. Upon successful completion of each project, MEDITE will make a determination as to the then useful life of the intangible asset, generally determined by the period in which the substantial majority of the cash flows are expected to be generated, and begin amortization. The Company tests IPR&D for impairment at least annually, or more frequently if impairment indicators exist, by first assessing qualitative factors to determine whether it is more likely than not that the fair value of the IPR&D intangible asset is less than its carrying amount. If the Company concludes it is more likely than not that the fair value is less than the carrying amount, a quantitative test that compares the fair value of the IPR&D intangible asset with its carrying value is performed. If the fair value is less than the carrying amount, an impairment loss is recognized in operating results. |
Impairment of Indefinite Lived Intangible Assets Other Than Goodwill | The Company has the option first to assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, the Company concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the entity is not required to take further action. However, if the Company concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount in accordance with relevant accounting guidance. |
Goodwill | Goodwill is recognized for the excess of cost of an acquired entity over the amounts assigned to assets acquired and liabilities assumed in a business combination. Goodwill is tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis (December 31 for us) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit using a discounted cash flow methodology. This analysis requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, and determination of our weighted average cost of capital. The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results, market conditions, and other factors. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit. |
Net Loss Per Share | Basic loss per share is calculated based on the weighted-average number of outstanding common shares. Diluted loss per share is calculated based on the weighted-average number of outstanding common shares plus the effect of dilutive potential common shares, using the treasury stock method and the if-converted method. MEDITE’s calculation of diluted net loss per share excludes potential common shares as of March 31, 2017 and 2016 as the effect would be anti-dilutive (i.e. would reduce the loss per share). The Company computes its loss applicable to common stock holders by subtracting dividends on preferred stock, including undeclared or unpaid dividends if cumulative, from its reported net loss and reports the same on the face of the condensed consolidated statement of operations. |
Recent Accounting Pronouncements | In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue with Contracts from Customers.” ASU 2014-09 supersedes the current revenue recognition guidance, including industry-specific guidance. The ASU introduces a five-step model to achieve its core principal of the entity recognizing revenue to depict the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The updated guidance is effective for public entities for interim and annual periods beginning after December 15, 2017 with early adoption permitted for annual reporting periods beginning after December 15, 2016. The Company has not yet selected a transition method and is currently evaluating the impact of the updated guidance for the Company’s consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, “Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” The areas for simplification in this Update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The updated guidance is effective for public entities for fiscal years beginning after December 15, 2016. The Company has adopted ASU 2016-09 and it did not impact its consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, “Leases” (“ASU 2016-02”). The core principle of ASU 2016-02 is that an entity should recognize on its balance sheet assets and liabilities arising from a lease. In accordance with that principle, ASU 2016-02 requires that a lessee recognize a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying leased asset for the lease term. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee will depend on the lease classification as a finance or operating lease. This new accounting guidance is effective for public companies for fiscal years beginning after December 15, 2018 (i.e., calendar years beginning on January 1, 2019), including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2016-02 will have on the Company’s consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): “Simplifying the Measurement of Inventory”. The amendments require an entity to measure in scope inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method. The amendments do not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. The amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out (FIFO) or average cost. ASU 2015-11 is effective for annual and interim periods beginning after December 31, 2016. The Company adopted this accounting pronouncement during the three months ended March 31, 2017 with no material impact on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the definition of a business . In January 2017, the FASB also issued ASU 2017-04, Intangibles - Goodwill and other (Topic 350): Simplifying the test for goodwill impairment. The amendments in this Update remove the second step of the current goodwill impairment test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. This guidance is effective for impairment tests in fiscal years beginning after December 15, 2019. |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | March 31, 2017 (Unaudited) December 31, 2016 Raw materials $ 1,252 $ 1,309 Work in process 154 203 Finished goods 2,273 2,299 $ 3,679 $ 3,811 |
Secured Lines of Credit, Long19
Secured Lines of Credit, Long-term Debt, and Notes Due to Employees (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Outstanding note payable indebtedness | March 31, 2017 (Unaudited) December 31, 2016 Hannoversche Volksbank credit line #1 $ 1,354 $ 1,321 Hannoversche Volksbank credit line #2 414 397 Hannoversche Volksbank term loan #3 104 117 Secured Promissory Note 483 650 DZ Equity Partners Participation rights 801 789 Total 3,156 3,274 Less current portion of long-term debt (3,096 ) (3,214 ) Long-term debt $ 60 $ 60 |
Preferred Stock and Warrants (T
Preferred Stock and Warrants (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Equity [Abstract] | |
Summary of Company's Preferred Stock | March 31, 2017 (unaudited) December 31, 2016 Shares Issued & Shares Issued & Offering Outstanding Outstanding Series A convertible 47,250 47,250 Series B convertible, 10% cumulative dividend 93,750 93,750 Series C convertible, 10% cumulative dividend 38,333 38,333 Series E convertible, 10% cumulative dividend 19,022 19,022 Total Preferred Stock 198,355 198,355 |
Warrants Outstanding | Warrants Weighted Average Exercise Price Aggregate Intrinsic Value Weighted Average Remaining Contractual Life (Years) Outstanding at December 31, 2016 1,396,161 $ 1.08 — 4.11 Granted 2,932,024 0.50 — 5.00 Exercised — — — — Expired — — — — Outstanding at March 31, 2017 4,328,184 $ 0.60 — 4.60 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information | United States Germany Poland Total March 31, 2017 December 31, 2016 March 31, 2017 December 31, 2016 March 31, 2017 December 31, 2016 March 31, 2017 December 31, 2016 Assets $ 11,637 $ 11,268 $ 6,072 $ 6,264 $ 99 $ 238 $ 17,809 $ 17,770 Property & equipment, net 65 68 1,478 1,487 4 2 1,547 1,557 Intangible assets 10,518 10,518 - - - - 10,518 10,518 United States Germany Poland Total March 31, 2017 March 31, 2016 March 31, 2017 March 31, 2016 March 31, 2017 March 31, 2016 March 31, 2017 March 31, 2016 Revenues: Histology Equipment $ 146 $ 87 $ 760 $ 1,106 $ 8 $ 15 $ 914 $ 1,208 Histology Consumables 104 47 573 417 - - 677 464 Cytology Consumables - 140 300 319 - - 300 459 Total Revenues $ 250 $ 274 $ 1,633 $ 1,842 $ 8 $ 15 $ 1,891 $ 2,131 Net loss $ (570 ) $ (490 ) $ (216 ) $ (89 ) $ (169 ) $ (43 ) $ (955 ) $ (622 ) |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Details Narrative) PLN in Thousands, $ in Thousands | Mar. 31, 2017PLN | Dec. 31, 2016PLN | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) |
Accounting Policies [Abstract] | ||||
Cash | PLN 269 | PLN 108 | $ 100 | $ 587 |
Inventories (Details)
Inventories (Details) - PLN PLN in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Raw materials | PLN 1,252 | PLN 1,309 |
Work in process | 154 | 203 |
Finished Goods | 2,273 | 2,299 |
Inventory, Net | PLN 3,679 | PLN 3,811 |
Secured Lines of Credit, Long24
Secured Lines of Credit, Long-term Debt, and Notes Due to Employees (Details) - PLN PLN in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Line of Credit Facility [Line Items] | ||
Long-term Debt, Gross | PLN 3,156 | PLN 3,274 |
Less current portion of long-term debt | (3,096) | (3,214) |
Long-term debt | 60 | 60 |
Hannoversech Volksbank Credit line 1 [Member] | ||
Line of Credit Facility [Line Items] | ||
Long-term Debt, Gross | 1,354 | 1,321 |
Hannoversech Volksbank Credit line 2 [Member] | ||
Line of Credit Facility [Line Items] | ||
Long-term Debt, Gross | 414 | 397 |
Hannoversech Volksbank term loan 3 [Member] | ||
Line of Credit Facility [Line Items] | ||
Long-term Debt, Gross | 104 | 117 |
Secured Promissory Note [Member] | ||
Line of Credit Facility [Line Items] | ||
Long-term Debt, Gross | 483 | 650 |
DZ Equity Partners Participation rights [Member] | ||
Line of Credit Facility [Line Items] | ||
Long-term Debt, Gross | PLN 801 | PLN 789 |
Secured Lines of Credit, Long25
Secured Lines of Credit, Long-term Debt, and Notes Due to Employees (Details Narrative) - PLN | Mar. 31, 2017 | Dec. 31, 2016 |
Line of Credit Facility [Line Items] | ||
Notes Payable, Current | PLN 448,000 | PLN 681,000 |
Long-term Debt, Current Maturities, Total | (3,096,000) | PLN (3,214,000) |
Medite GmbH, Burgdorf [Member] | Hannoversech Volksbank term loan 2 [Member] | ||
Line of Credit Facility [Line Items] | ||
Line of Credit Facility, Maximum Borrowing Capacity | PLN 427,280 |
Related Party Advances (Details
Related Party Advances (Details Narrative) - PLN PLN in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Related Party Transaction [Line Items] | ||
Due To Related Parties Current | PLN 147 | PLN 146 |
Chief Financial Officer [Member] | ||
Related Party Transaction [Line Items] | ||
Due To Related Parties Current | PLN 50,000 | PLN 50,000 |
Common Stock (Details Narrative
Common Stock (Details Narrative) | 3 Months Ended |
Mar. 31, 2017shares | |
Common Stock, Number of Shares, Par Value and Other Disclosures [Abstract] | |
Common stock issued to board | 2,360,000 |
Preferred Stock and Warrants (D
Preferred Stock and Warrants (Details) - shares | Mar. 31, 2017 | Dec. 31, 2016 |
Class of Stock [Line Items] | ||
Preferred stock, shares issued | 198,355 | 198,355 |
Preferred stock, shares outstanding | 198,355 | 198,355 |
Series A Preferred Stock [Member] | ||
Class of Stock [Line Items] | ||
Preferred stock, shares issued | 47,250 | 47,250 |
Preferred stock, shares outstanding | 47,250 | 47,250 |
Series B Preferred Stock [Member] | ||
Class of Stock [Line Items] | ||
Preferred stock, shares issued | 93,750 | 93,750 |
Preferred stock, shares outstanding | 93,750 | 93,750 |
Series C Preferred Stock [Member] | ||
Class of Stock [Line Items] | ||
Preferred stock, shares issued | 38,333 | 38,333 |
Preferred stock, shares outstanding | 38,333 | 38,333 |
Series E Preferred Stock [Member] | ||
Class of Stock [Line Items] | ||
Preferred stock, shares issued | 19,022 | 19,022 |
Preferred stock, shares outstanding | 19,022 | 19,022 |
Preferred Stock and Warrants 29
Preferred Stock and Warrants (Details 1) - Warrant [Member] - $ / shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2017 | |
Warrants, Opening Balance | 1,396,161 | 1,396,161 |
Warrants, Granted | 2,932,024 | |
Warrants, Exercised | 0 | |
Warrants, Expired | 0 | |
Warrants, Ending Balance | 4,328,184 | |
Weighted Average Exercise Price, Opening Balance | $ 1.08 | $ 1.08 |
Weighted Average Exercise Price, Granted | 0.50 | |
Weighted Average Exercise Price, Exercised | 0 | |
Weighted Average Exercise Price, Expired | 0 | |
Weighted Average Exercise Price, Ending Balance | $ 0.60 | |
Weighted Average Remaining Contractual Life(Years),Outstanding | 4 years 7 months 6 days | 4 years 1 month 10 days |
Warrants Outstanding Granted Weighted Average Remaining Contractual Term | 5 years |
Segment Information (Detail)
Segment Information (Detail) - PLN PLN in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Segment Reporting Information [Line Items] | |||
Assets | PLN 17,809 | PLN 17,770 | |
Property & equipment, net | 1,547 | 1,557 | |
Intangible assets | 10,518 | 10,518 | |
Revenues | 1,891 | PLN 2,131 | |
Net income (loss) | (955) | (622) | |
UNITED STATES | |||
Segment Reporting Information [Line Items] | |||
Assets | 11,637 | 11,268 | |
Property & equipment, net | 65 | 68 | |
Intangible assets | 10,518 | 10,518 | |
Revenues | 250 | 274 | |
Net income (loss) | (570) | (490) | |
GERMANY | |||
Segment Reporting Information [Line Items] | |||
Assets | 6,072 | 6,264 | |
Property & equipment, net | 1,478 | 1,487 | |
Intangible assets | 0 | 0 | |
Revenues | 1,633 | 1,842 | |
Net income (loss) | (216) | (89) | |
POLAND | |||
Segment Reporting Information [Line Items] | |||
Assets | 99 | 238 | |
Property & equipment, net | 4 | 2 | |
Intangible assets | 0 | PLN 0 | |
Revenues | 8 | 15 | |
Net income (loss) | PLN (169) | PLN (43) |
Segment Information (Detail 2)
Segment Information (Detail 2) - PLN PLN in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Segment Reporting Information [Line Items] | ||
Revenues | PLN 1,891 | PLN 2,131 |
Net income (loss) | (955) | (622) |
UNITED STATES | ||
Segment Reporting Information [Line Items] | ||
Revenues | 250 | 274 |
Net income (loss) | (570) | (490) |
POLAND | ||
Segment Reporting Information [Line Items] | ||
Revenues | 8 | 15 |
Net income (loss) | (169) | (43) |
GERMANY | ||
Segment Reporting Information [Line Items] | ||
Revenues | 1,633 | 1,842 |
Net income (loss) | (216) | (89) |
Histology Equip [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | 914 | 1,208 |
Histology Equip [Member] | UNITED STATES | ||
Segment Reporting Information [Line Items] | ||
Revenues | 146 | 87 |
Histology Equip [Member] | POLAND | ||
Segment Reporting Information [Line Items] | ||
Revenues | 8 | 15 |
Histology Equip [Member] | GERMANY | ||
Segment Reporting Information [Line Items] | ||
Revenues | 760 | 1,106 |
Histology Consumables [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | 677 | 459 |
Histology Consumables [Member] | UNITED STATES | ||
Segment Reporting Information [Line Items] | ||
Revenues | 104 | 47 |
Histology Consumables [Member] | POLAND | ||
Segment Reporting Information [Line Items] | ||
Revenues | 0 | 0 |
Histology Consumables [Member] | GERMANY | ||
Segment Reporting Information [Line Items] | ||
Revenues | 573 | 417 |
Cytology Consumables [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | 300 | 464 |
Cytology Consumables [Member] | UNITED STATES | ||
Segment Reporting Information [Line Items] | ||
Revenues | 0 | 140 |
Cytology Consumables [Member] | POLAND | ||
Segment Reporting Information [Line Items] | ||
Revenues | 0 | 0 |
Cytology Consumables [Member] | GERMANY | ||
Segment Reporting Information [Line Items] | ||
Revenues | PLN 300 | PLN 319 |
Segment Information (Detail 3)
Segment Information (Detail 3) - PLN PLN in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Segment Reporting Information [Line Items] | ||
Revenues | PLN 1,891 | PLN 2,131 |
Net income (loss) | (955) | (622) |
POLAND | ||
Segment Reporting Information [Line Items] | ||
Revenues | 8 | 15 |
Net income (loss) | (169) | (43) |
UNITED STATES | ||
Segment Reporting Information [Line Items] | ||
Revenues | 250 | 274 |
Net income (loss) | (570) | (490) |
GERMANY | ||
Segment Reporting Information [Line Items] | ||
Revenues | 1,633 | 1,842 |
Net income (loss) | PLN (216) | PLN (89) |
Segment Information (Detail 4)
Segment Information (Detail 4) - PLN PLN in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Segment Reporting Information [Line Items] | ||
Revenues | PLN 1,891 | PLN 2,131 |
POLAND | ||
Segment Reporting Information [Line Items] | ||
Revenues | 8 | 15 |
GERMANY | ||
Segment Reporting Information [Line Items] | ||
Revenues | 1,633 | 1,842 |
UNITED STATES | ||
Segment Reporting Information [Line Items] | ||
Revenues | 250 | 274 |
Cytology Consumables [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | 300 | 464 |
Cytology Consumables [Member] | POLAND | ||
Segment Reporting Information [Line Items] | ||
Revenues | 0 | 0 |
Cytology Consumables [Member] | GERMANY | ||
Segment Reporting Information [Line Items] | ||
Revenues | 300 | 319 |
Cytology Consumables [Member] | UNITED STATES | ||
Segment Reporting Information [Line Items] | ||
Revenues | 0 | 140 |
Histology Consumables [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | 677 | 459 |
Histology Consumables [Member] | POLAND | ||
Segment Reporting Information [Line Items] | ||
Revenues | 0 | 0 |
Histology Consumables [Member] | GERMANY | ||
Segment Reporting Information [Line Items] | ||
Revenues | 573 | 417 |
Histology Consumables [Member] | UNITED STATES | ||
Segment Reporting Information [Line Items] | ||
Revenues | 104 | 47 |
Histology Equip [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenues | 914 | 1,208 |
Histology Equip [Member] | POLAND | ||
Segment Reporting Information [Line Items] | ||
Revenues | 8 | 15 |
Histology Equip [Member] | GERMANY | ||
Segment Reporting Information [Line Items] | ||
Revenues | 760 | 1,106 |
Histology Equip [Member] | UNITED STATES | ||
Segment Reporting Information [Line Items] | ||
Revenues | PLN 146 | PLN 87 |