Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 10, 2018 | |
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 | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Trading Symbol | MDIT | |
Entity Common Stock, Shares Outstanding | 86,723,700 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,018 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash | $ 90 | $ 73 |
Restricted cash | 57 | 417 |
Accounts receivable, net of allowance for doubtful accounts of $426 and $439 | 828 | 453 |
Inventories | 3,749 | 2,403 |
Prepaid expenses and other current assets | 430 | 118 |
Total current assets | 5,154 | 3,464 |
Property and equipment, net | 1,546 | 1,778 |
In-process research and development | 4,620 | 4,620 |
Trademarks, trade names | 1,240 | 1,240 |
Goodwill | 4,658 | 4,658 |
Other assets | 433 | 196 |
Total assets | 17,651 | 15,956 |
Current liabilities: | ||
Account payable and accrued expenses | 3,572 | 3,252 |
Current portion of long-term debt | 643 | 50 |
Notes due to employees, current portion | 309 | 326 |
Advances - related party | 104 | 154 |
Total current liabilities | 4,628 | 3,782 |
Long-term debt, net of current portion and debt discounts | 5,100 | 4,869 |
Notes due to employees, net of current portion | 0 | 45 |
Deferred tax liability | 1,485 | 1,485 |
Total liabilities | 11,213 | 10,181 |
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 $2,692 and $2,624 as of September 30, 2018 and December 31, 2017, respectively) | 962 | 962 |
Common stock, $0.001 par value; 200,000,000 shares authorized, 74,646,201 and 28,906,081 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively | 75 | 29 |
Additional paid-in capital | 17,290 | 13,750 |
Treasury stock | (327) | (327) |
Accumulated other comprehensive loss | (667) | (444) |
Accumulated deficit | (10,895) | (8,195) |
Total stockholders' equity | 6,438 | 5,775 |
Total liabilities and stockholders' equity | $ 17,651 | $ 15,956 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 426 | $ 439 |
Preferred Stock, par value | $ 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 | $ 2,692 | $ 2,624 |
Common Stock, par value | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 200,000,000 | 200,000,000 |
Common Stock, shares issued | 74,646,201 | 28,906,081 |
Common Stock, shares outstanding | 74,646,201 | 28,906,081 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||||
Net sales | $ 2,394 | $ 1,686 | $ 6,174 | $ 4,854 |
Cost of revenues | 925 | 1,317 | 3,310 | 3,756 |
Gross profit | 1,469 | 369 | 2,864 | 1,098 |
Operating expenses | ||||
Depreciation and amortization expense | 62 | 110 | 201 | 213 |
Research and development | 142 | 423 | 705 | 1,177 |
Selling, general and administrative | 1,360 | 1,248 | 3,041 | 3,258 |
Total operating expenses | 1,564 | 1,781 | 3,947 | 4,648 |
Operating loss | (95) | (1,412) | (1,083) | (3,550) |
Other (income) expenses | ||||
Interest expense, net | 657 | 200 | 1,644 | 460 |
Loss on extinguishment of notes due to employees | 0 | 0 | 0 | 158 |
Other (income) expense, net | (17) | (7) | (31) | 13 |
Total other expense, net | 640 | 193 | 1,613 | 631 |
Loss before income taxes | (735) | (1,605) | (2,696) | (4,181) |
Provision for income taxes | 0 | 0 | 4 | 4 |
Net loss | (735) | (1,605) | (2,700) | (4,185) |
Preferred dividend | (22) | (22) | (68) | (68) |
Net loss available to common stockholders | (757) | (1,627) | (2,768) | (4,253) |
Loss per share | ||||
Net loss available to common stockholders | $ (757) | $ (1,627) | $ (2,768) | $ (4,253) |
Basic and diluted loss per share | $ (0.01) | $ (0.06) | $ (0.05) | $ (0.17) |
Weighted average basic and diluted shares outstanding | 72,367,723 | 27,695,967 | 55,774,248 | 25,389,152 |
Condensed consolidated statements of comprehensive income (loss) | ||||
Net loss | $ (735) | $ (1,605) | $ (2,700) | $ (4,185) |
Other comprehensive (loss) income | ||||
Foreign currency translation adjustments | (19) | (118) | (223) | 41 |
Comprehensive loss | $ (754) | $ (1,723) | $ (2,923) | $ (4,144) |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (2,700) | $ (4,185) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation and amortization | 201 | 213 |
Amortization of debt discount and debt issuance costs | 722 | 7 |
Provision for doubtful accounts | 0 | 108 |
Stock-based compensation | 127 | 281 |
Estimated fair value of warrants issued in connection with secured promissory notes | 0 | 196 |
Loss on extinguishment of notes due to employees | 0 | 158 |
Amortization of shares issued for prepaid consulting services | 0 | 55 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (397) | 665 |
Inventories | (1,459) | 560 |
Prepaid expenses and other assets | (577) | (120) |
Accounts payable and accrued expenses | 606 | 207 |
Net cash used in operating activities | (3,477) | (1,855) |
Cash flows from investing activities: | ||
Purchases of equipment | (15) | (43) |
Net cash used in investing activities | (15) | (43) |
Cash flows from financing activities: | ||
Net repayments on lines of credit | 0 | (2,442) |
Repayment of secured promissory notes | 0 | (333) |
Repayment of notes due to employees | (62) | (182) |
Proceeds from convertible debt | 3,324 | 4,669 |
Repayments on related party advances | (48) | 0 |
Proceeds from sale of common stock, net of issuance costs | 0 | 2,344 |
Net cash provided by financing activities | 3,214 | 4,056 |
Effect of exchange rates on cash | (65) | (219) |
Net change in cash and restricted cash | (343) | 1,939 |
Cash and restricted cash at beginning of period | 490 | 108 |
Cash and restricted cash at end of the period | 147 | 2,047 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 404 | 156 |
Cash paid for income taxes | 0 | 34 |
Reconciliation of cash and restricted cash at end of period: | ||
Cash | 90 | 1,654 |
Restricted cash | 57 | 393 |
Total | 147 | 2,047 |
Supplemental schedule of non-cash financing activity: | ||
Issuance of common stock for services | 3,431 | 0 |
Issuance of common stock subscribed | 0 | 25 |
Conversion of secured promissory note plus accrued interest into common stock | 0 | 160 |
Secured promissory notes exchanged for convertible notes | 0 | 133 |
Loan fees settled through common stock | 0 | 75 |
Increase of convertible debt for settlement of DZ debt | 0 | 356 |
Fair value of common stock issued with debt recorded as a debt discount | 3,431 | 0 |
Accrued liabilities exchanged for convertible note payable | 246 | 0 |
Estimated fair value of warrants recorded as debt discount | $ 28 | $ 631 |
Organization
Organization | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | The Company MEDITE Cancer Diagnostics, Inc. (“MDIT”, “MEDITE”, “we”, “us” or the “Company”) was incorporated in Delaware in December 1998. These statements include the accounts of MEDITE Cancer Diagnostics, Inc. and its wholly owned subsidiaries, which consists of MEDITE Enterprise, Inc., MEDITE GmbH, Burgdorf, Germany and MEDITE Lab Solutions Inc., Orlando, USA. In 2017, the Company made the decision to integrate CytoGlobe into Medite GmbH. CytoGlobe had been operating as a separate company focused on cytology products (equipment and consumables) with separate personnel and financial reporting that was consolidated into Medite GmbH. As the CytoGlobe brand became less important over time and customers purchased both cytology and histology products from Medite, it no longer made sense to keep CytoGlobe as a separate company. Therefore, it was integrated from a financial, operational and product portfolio perspective into Medite GmbH. MEDITE is a medical technology company specialized in the development, manufacturing, and marketing of premium medical devices, consumables and molecular biomarkers for detection, risk assessment and diagnosis of cancerous and precancerous conditions and related diseases. The Company has 69 full and part time employees in the U.S and Germany, a distribution network to over 80 countries and a wide range of products for anatomic pathology, histology and cytology laboratories available for sale. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
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 September 30, 2018 and 2017 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, 2018 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, 2017 filed on May 17, 2018 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 September 30, 2018, the Company’s cash balance was $90,000 and its operating losses for the year ended December 31, 2017 and for the three and nine months ended September 30, 2018 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 Company has approximately $526,000 in working capital as of September 30, 2018 compared to negative working capital of approximately $318,000 on December 31, 2017. The Company raised additional cash of $4.2 million from the issuance of convertible notes payable starting in the first nine months of 2018 through the date of this filing (see Notes 4 and 9). Management continues to expand its product offerings and has also expanded its sales and distribution channels during 2018. In the future, we may require sources of capital in addition to cash on hand to continue operations and to implement our strategy. If our operations do not become cash flow positive, we may be forced to seek equity investments or debt arrangements. No assurances can be given that we will be successful in obtaining such additional financing on reasonable terms, or at all. If adequate funds are not available on acceptable terms, or at all, we may be unable to adequately fund our business plans and it could have a negative effect on our business, results of operations and financial condition. In addition, if funds are available, the issuance of equity securities or securities convertible into equity could dilute the value of shares of our common stock and cause the market price to fall, and the issuance of debt securities could impose restrictive covenants that could impair our ability to engage in certain business transactions. Revenue Recognition The Company derives its revenue primarily from the sale of medical products and supplies for the diagnosis and prevention of cancer. The Company recognizes revenue for the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Consumables revenues consist of single-use products and are recognized at a point in time following the transfer of control of such products to the customer, which generally occurs upon shipment. Instruments revenues typically consist of longer-lived assets that, for the substantial majority of sales, are recognized at a point in time in a manner similar to consumables. The Company exercises judgment in determining the timing of revenue by analyzing the point in time or the period over which the customer has the ability to direct the use of and obtain substantially all of the remaining benefits of the asset. The Company expenses contract costs that would otherwise be capitalized and amortized over a period of less than one year. Shipping and handling costs are included in cost of goods sold and charged to the customers based on the contractual terms. Payments from customers for most instruments, consumables and services are typically due in a fixed number of days after shipment or delivery of the product. For certain international equipment orders a prepayment is required. The balance of the customer deposits is reflected in our accrued liabilities and was $15,815 as of September 30, 2018. See Note 8 for revenue disaggregated by type and by geographic region as well as further information about remaining performance obligations. Inventories Inventories are stated at the lower of cost or net realizable value. 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 for the three and nine month periods ended September 30, 2018 and 2017 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 statements 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 adopted the modified retrospective transition method of ASU 2014-09 effective January 1, 2018 and there was no material change to its current business practices upon implementation. 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 November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows - Restricted Cash (Topic 230)”. This new standard requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This guidance is effective for annual and interim reporting periods beginning after December 15, 2017 and requires retrospective application. The Company adopted this standard in the first quarter of 2018 by using the retrospective method, which required the following disclosures and changes to the presentation of its consolidated financial statements: cash and restricted cash reported on the consolidated statements of cash flows now includes restricted cash of $393,000 and $417,000 as of September 30, 2017 and December 31, 2017, respectively, as well as previously reported cash. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | The following is a summary of the components of inventories (in thousands): September 30, December 31, 2018 2017 (Unaudited) Raw materials $ 1,893 $ 1,220 Work in process 88 44 Finished goods 1,768 1,139 $ 3,749 $ 2,403 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Debt | The Company’s outstanding debt was as follows as of (in thousands): September 30, December 31, 2018 2017 (Unaudited) Secured promissory note $ 50 $ 50 Subordinated convertible notes payable 1,085 932 GPB Debt Holdings II, LLC Convertible note payable 5,356 5,356 2018 convertible notes payable 3,431 - Total 9,922 6,338 Discount on convertible notes payable (4,179 ) (1,419 ) Less current portion of long-term debt (643 ) (50 ) Long-term debt $ 5,100 $ 4,869 GPB Debt Holdings II, LLC (“GPB”) Convertible Note Payable On September 26, 2017, the Company entered into a Securities Purchase Agreement (“SPA”) with GPB, pursuant to which the Company issued to GPB (i) a secured convertible promissory note in the aggregate principal amount of $5,356,400 (the “GPB Note”) at a purchase price equal to 97.5% of the face value of the of the original $5 million GPB Note and an additional discount of 300,000 Euro ($356,400 at September 26, 2017) considered an additional purchase discount, with the Company receiving net proceeds of $4.7 million and (ii) a warrant to purchase an aggregate of 4,120,308 shares of common stock of the Company (the “Warrant”). The Company allocated the proceeds received to the GPB Note and the warrants on a relative fair value basis at the time of issuance. The total debt discount will be amortized over the life of the GPB Note to interest expense using the straight line method which approximates the effective interest method. The estimated relative fair value of the warrants was $520,052. Amortization expense of the debt discount, which includes original issue discount, loan fees and the warrant value, during the three and nine months ended September 30, 2018 was $114,438 and $343,313, respectively. The GPB Note matures on the 36th month anniversary date following the Closing Date, as defined in the GPB Note (the “Maturity Date”). The GPB Note is secured by a senior secured first priority security interest on all of the assets of the Company and its subsidiaries evidenced by a security agreement (the “Security Agreement”). Each subsidiary also entered into a guaranty agreement pursuant to which the subsidiaries have guaranteed all obligations of the Company to the GPB. The GPB Note bears interest at a rate of 13.25% per annum (which interest is increased to 18.25% upon an Event of Default). The GPB Note is initially convertible at a price of $0.65 (the “Conversion Price”) into 8,240,615 shares of common stock. There was no discount related to the conversion feature. The exercise price of the Warrant has been ratcheted down to the $0.30 per share floor price due to the Company issuing additional equity securities, and subject to adjustments for stock splits, dividends, combinations, recapitalizations and the like. The value of the difference between the fair value of the Warrant using the original exercise price and the fair value of the Warrant using the reduced exercise price was insignificant. The GPB Note is being amortized quarterly at a rate of 10% of the face value of the Note beginning on month 24, with principal payment of $535,640 due September 30, 2019, December 31, 2019, March 31, 2020 and June 30, 2020, with the remaining balloon payment of $3,213,840 due on the September 26, 2020 Maturity Date. There is a flat 3% success fee which allows for the prepayment of the GPB Note and applies to the payment of principal during the Term through the Maturity Date. The GPB Note contains customary events of default. The GPB Note contains certain covenants, such as restrictions on the incurrence of indebtedness, the existence of liens, the payment of restricted payments, default, redemptions, and the payment of cash dividends and the transfer of assets. GPB also has a right of participation for any Company offering, financing, debt purchase or assignment for 36 months after the closing date. The Company is required to maintain a 6-month interest reserve of $417,000 in restricted cash. The shares underlying the GPB Note and the Warrants are to be registered by the Company through a registration rights agreement within 60 days and the registration statement is to be declared effective within 180 days. Failure to file, or to meet other criteria defined as the event date will required the Company to pay 2% of the registrable securities times the price at the event date per month, up to 12% in cash payments. On February 5, 2018, the Company entered into a Forbearance Agreement (“Forbearance Agreement”) with GBP that provides relief until July 1, 2018 of the Company’s requirement to maintain an interest reserve and to complete a registration rights agreement and provides relief until April 1, 2018 of the Company’s requirement to make interest payments. According to the Forbearance Agreement, interest payments must be current by December 31, 2018. On June 29, 2018, the Company signed a first amendment to the Forbearance Agreement with GPB, whereby GPB agreed to forbear its exercise of registration rights pursuant to Section 4.9 of the SPA, and with respect to the maintenance of the required interest reserve account pursuant to Section 4.14 of the SPA, until September 30, 2018. On September 25, 2018, the Company entered into a second amendment to the Forbearance Agreement with GPB, whereby the Lender agreed to forbear its exercise of registration rights pursuant to Section 4.9 of the SPA, until November 30, 2018. The Company is in compliance with the Forbearance Agreement as of the date of this filing. 2015 Securities Purchase Agreement The Company has an outstanding secured promissory note with a principal balance of $50,000 and an accrued interest balance of $13,250 that is not considered in default as the Company received notification to freeze this account. 2018 Convertible Notes On February 6, 2018, the Company established a private placement of convertible notes and common stock to raise approximately $1,500,000 and has since amended the amount to raise up to $3,250,000 as of September 30, 2018. The convertible notes have a conversion price of $0.075 per share. The investors received shares of common stock of the Company based on an assumed purchase price of $0.075 per share and the investor is not required to pay any additional consideration for the shares of common stock. As of September 30, 2018 the Company had received gross proceeds of $3,185,009, converted $245,500 of accrued liabilities and issued 45,740,120 shares of common stock. The convertible notes mature five years from the closing date, have an interest rate of 12%, are secured obligations of the Company, senior to other outstanding indebtedness and are expressly subordinate to the Company’s SPA with GPB. Of the total $3,430,509 received and converted, the Company received $2,322,500 and converted $223,000 of accrued liabilities into convertible debt from related parties, including board members, and issued 33,940,000 shares of common stock. In order to account for this instrument, we had to determine if it had an embedded beneficial conversion feature (“BCF”), which is measured at the commitment date by allocating a portion of the proceeds equal to the intrinsic value of that feature (not the fair value) to APIC. This allocation will result in a discount on the convertible instrument. The intrinsic value is calculated as the difference between the effective conversion price and the fair value of the common stock into which the security is convertible, multiplied by the number of shares into which the security is convertible. If the intrinsic value of the BCF is greater than the proceeds allocated to the convertible instrument, the amount of the discount assigned to the BCF is limited to the amount of proceeds allocated to the convertible instrument. The net carrying amount should be accreted from zero to its face value over the term of the convertible debt. For the 2018 convertible notes, the BCF was greater than the proceeds, therefore the convertible notes of $3,430,509 had an initial debt discount of $3,430,509 using the straight line method which approximates the effective interest method. Amortization expense of the debt discount during the three and nine month periods ended September 30, 2018 was $176,642 and $326,975, respectively. Subordinated Convertible Notes On September 27, 2017, the Company received $425,000 and issued $435,897 subordinated convertible debt with an original issue debt discount of $10,897 and with similar terms as the GPB Note. The Company issued 335,306 warrants to purchase shares of common stock with a term of 5 years and an exercise price of $0.60 per share, with a ratchet down side protection of $0.30. The Company allocated the value of these notes and the warrants on a relative fair value basis at the time of issuance. The total debt discount will be amortized over the life of these notes to interest expense using the straight line method which approximates the effective interest method. The estimated relative fair value of the warrants was $42,321. Amortization expense of the debt discount, which includes original issue discount and the warrant value, during the three and nine months ended September 30, 2018 was $8,974 and $26,924, respectively. In December 2017, the Company received $350,000 and issued $358,974 subordinated convertible debt with an original issue debt discount of $8,974 and with similar terms as the GPB Note. The Company issued 276,135 warrants to purchase shares of common stock with a term of 5 years and an exercise price of $0.60 per share, with a ratchet down side protection of $0.30. The Company allocated the value of these notes and the warrants on a relative fair value basis at the time of issuance. The total debt discount will be amortized over the life of these notes to interest expense. The estimated relative fair value of the warrants was $28,531. Amortization expense of the debt discount, which includes original issue discount and the warrant value, during the three and nine month periods ending September 30, 2018 was $5,511 and $16,532, respectively. In The exercise prices of all of the warrants issued in connection with the subordinated convertible notes was reduced to $0.30. The value of the difference between the fair value of the warrant using the original exercise prices and the fair value of the warrant using the reduced exercise prices was insignificant. Employee Notes Payable On March 30, 2017, the Company agreed to pay certain employees approximately $330,000 in connection with a settlement of outstanding promissory notes and accrued vacations. 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 of $389,000 was amortized in full during 2017. Per the terms of the agreement, the first payment of $94,000 was paid in April 2017, the second payment of $94,000 was due 30 days from signing the agreement and the final payment of $142,000 was due 60 days from signing the agreements, however the remaining payments, including interest, remained due at September 30, 2018 totaling $309,000. In November 2017, the employees agreed to renegotiate the March 30, 2017 agreement in good faith with the Company as to a future payment plan mutually agreeable by all parties. This negotiation was put on hold in 2018 until the Company’s cash situation improved, and discussions resumed in June. It is expected that a new agreement will be completed and implemented during 2018. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Included in advances – related parties are amounts to the Company’s former CFO and Chairman of the Board of $50,000 at September 30, 2018 and December 31, 2017. Also included in advances – related parties are amounts of 32,105 Euros, ($37,275 as September 30, 2018) to Ms. Michaela Ott, stockholder and former CEO of the Company, related to two short term bridge loans. The Company has made arrangements to settle these obligations evenly over a 24 month period, starting on October 31, 2017. In addition, the Company settled obligations related to accrued salaries, vacation and related expenses totaling $152,000 owed to Mr. Michael Ott, stockholder and former COO of the Company, and Ms. Ott. The Company made 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 Company signed additional agreements to settle the debt owed from the US entity when the wages earned versus the German entity. The Company has paid Ms. Ott $37,275 during the nine months ended September 30, 2018 related to the amount owed. The balance due to Ms. Ott at September 30, 2018 is $37,275 related to the wages owed. During the nine months ended September 30, 2018, the Company has paid Mr. Ott $9,544 and the remaining balance outstanding at September 30, 2018 was $41,356. The Company has stopped payments to Mr. Ott, pending the outcome of legal proceedings (see Note 7 below). Accrued salaries, vacation and related expenses at September 30, 2018 and December 31, 2017, includes amounts for 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 7 for further discussion regarding the legal proceedings with the Company’s former CFO. During the nine months ended September 30, 2018, the Company entered into a subordinated convertible note and 2018 convertible notes (see Note 4). The Company received $2,322,500 of gross proceeds and converted $223,000 of accrued liabilities from related parties, including board members, and issued 33,940,000 shares of common stock. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2018 | |
Common Stock, Number of Shares, Par Value and Other Disclosures [Abstract] | |
Stockholders' Equity | During the nine months ended September 30, 2018, the Company received gross proceeds of $3,185,009 and converted $245,500 of accrued liabilities into convertible notes payable and issued 45,740,120 shares of common stock pursuant to the terms of the 2018 convertible notes (see Note 4). Of the total $3,185,009 received and converted, the Company received $2,322,500 and converted $223,000 of accrued liabilities from related parties, including board members, and issued 33,940,000 shares of common stock. Warrants During the nine month period ended September 30, 2018, the Company issued 118,343 warrants related to the January 2018 subordinated loan with a relative fair value of approximately $28,000. The value of the warrants were determined using the Black-Scholes model, at an interest free rate of 1.33%, volatility of 402% and a remaining term of 5 years and a market price of $0.30 during the nine months ended September 30, 2018 (see Note 4). On March 2, 2018, the Company granted 1,062,500 warrants at an exercise price of $0.075 to TriPoint Global Equities LLC for services related to the issuance of a private placement of convertible notes (see Note 4). The estimated fair value is included in the debt discount of the 2018 convertible notes (see Note 4). On August 3, 2018, the Company granted 50,000 warrants at an exercise price of $0.075 to TriPoint Global Equities LLC for services related to the issuance of a private placement of convertible notes (see Note 4). The estimated fair value is included in the debt discount of the 2018 convertible notes (see Note 4). |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
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 September 30, 2018 and December 31, 2017. The presiding Federal Judge has referred the lawsuit to mediation. No settlement was reach during the April 2017 meditation. The Company has proactively initiated settlement offer. In August 2017, the parties reached a Settlement Term Sheet whereby a final forbearance and settlement agreement must be filed with the magistrate judge. On November 8, 2017, the Plaintiff filed a motion to compel settlement with a meeting before a magistrate judge on November 14, 2017. On February 20, 2018, the magistrate judge denied Plaintiff’s motion. On March 8, 2018, Plaintiff again filed a Motion to Enforce Settlement Agreement which has been opposed by the Company. On April 22, the judge ruled in favor of the Company and denied plaintiff’s motion to compel. The judge also instructed counsels for the Plaintiff and Defendant to conduct depositions and prepare pre-trial orders. Depositions have been completed and both sides have submitted drafts of the pre-trial order. The judge postponed further action on the case until April 2019. In the meantime, the Company has continued to reach out to the former CFO to discuss a possible settlement. On May 15, 2018, a complaint was filed in the United States District Court of Northern California against the individual directors of the Company by Robert McCullough, Jr, and Dr. Zhongxi Zheng. The Company was named as a Nominal Defendant. The complaint alleges various claims including Breach of Fiduciary Obligations, Abuse of Control, Unjust Enrichment, Fraud, Intentional Misrepresentation and Negligent Representation. The suit seeks certain declaratory relief, injunctive relief and an accounting. Management believes these claims are frivolous and without any merit whatsoever, and are being filed for the sole purpose of harassing the named Defendants and to leverage a more beneficial settlement in the suit discussed in the paragraph above. Further, management believes that the suit was filed in a court having no personal jurisdiction over any of the named Defendants. The Company and individual directors will vigorously defend against this suit and seek to have it dismissed. If successful, Defendants will seek attorneys’ fees and appropriate sanctions. On October 22, 2018 the Company filed a motion with the court to dismiss the case. On On August 13, 2018, the Company filed a complaint against the former CEO for breach of executive employment contract, and other related claims, stemming from unauthorized and undocumented expense reimbursements and unauthorized bonus pay. The complaint was filed in the 9th judicial circuit in and for Orange County, Florida. On October 15, 2018, the defendant filed a Motion to Dismiss and the Company is in the process of responding to the Motion to Dismiss. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2018 | |
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 Total September 30, 2018 December 31, 2017 September 30, 2018 December 31, 2017 September 30, 2018 December 31, 2017 Total assets $ $ 10,892 $ 11,179 $ 6,759 $ 4,777 $ 17,651 15,956 Property and equipment, net 85 108 1,461 1,670 1,546 1,778 Intangible assets 10,518 10,518 - - 10,518 10,518 United States Germany Total For the three months ended September 30, September 30, September 30, September 30, September 30, September 30, 2018 2017 2018 2017 2018 2017 Revenues: Histology Equipment $ 65 $ 36 $ 1,563 $ 775 $ 1,628 $ 811 Histology Consumables 119 82 530 495 649 577 Cytology Consumables - - 117 298 117 298 Total Revenues $ 184 $ 118 $ 2,210 $ 1,568 $ 2,394 $ 1,686 Net loss $ (1,087 ) $ (830 ) $ 352 $ (775 ) $ (735 ) $ (1,605 ) United States Germany Total For the nine months ended September 30, September 30, September 30, September 30, September 30, September 30, 2018 2017 2018 2017 2018 2017 Revenues: Histology Equipment $ 175 $ 220 $ 3,672 $ 1,768 $ 3,847 $ 1,988 Histology Consumables 292 322 1,670 1,735 1,962 2,057 Cytology Consumables - - 365 809 365 809 Total Revenues $ 467 $ 542 $ 5,707 $ 4,312 $ 6,174 $ 4,854 Net loss $ (3,042 ) $ (2,067 ) $ 342 $ (2,118 ) $ (2,700 ) $ (4,185 ) |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | From October 11, 2018 through October 15, 2018, the Company entered into and closed Securities Purchase Agreements (collectively the “Purchase Agreements”) with three accredited investors (“Purchasers”), pursuant to which the Company agreed to issue to the Purchasers secured promissory notes in the aggregate principal amount of $870,000 (the collectively the “Notes”). The Notes mature on the 60th month anniversary date following the Closing Date, as defined in the Notes (the “Maturity Date”). Accrued interest shall be paid in restricted common stock of the Company calculated at a value of $0.075 per share and on the basis of a 360-day year and shall accrue and compound monthly. The Notes are secured by security agreements (collectively the “Security Agreements”) and shall represent a perfected senior lien on all of the assets of the Company and its subsidiaries and will be subordinate to the obligation entered into with GPB and the affiliated subordinate investors on September 26, 2017. The Notes shall bear interest at a rate of 12% per annum. In addition, and in accordance with the terms of the Purchase Agreements, the Purchasers were issued an aggregate amount of 11,600,000 shares of the Company’s restricted common stock at $0.075 per share (the “Shares”). The Purchasers shall have piggy-back registration rights with respect to the Shares. On October 31, 2018, the Board of Directors (the “Board”) of MEDITE Cancer Diagnostics, Inc. (the “Company”) held a meeting whereby it accepted the resignation of Stephen Von Rump as Chief Executive Officer and Director of the Company, effective immediately. Mr. Von Rump was thereafter appointed by the Board as Chief Strategy Officer of the Company to serve until his resignation or termination. On October 31, 2018, the Board thereafter, by unanimous consent, appointed Elmar A. Dave to the position of Chief Executive Officer of the Company to serve until such time as his removal or resignation, .Mr. Dave has been engaged by the Company as a Consultant, and shall continue under the terms of his existing Consulting Agreement until its expiration, whereby the Company shall negotiate an Executive Employment Agreement with Mr. Dave upon terms mutually acceptable to the parties. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Consolidation, Basis of Presentation and Significant Estimates | The accompanying condensed consolidated financial statements for the periods ended September 30, 2018 and 2017 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, 2018 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, 2017 filed on May 17, 2018 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 September 30, 2018, the Company’s cash balance was $90,000 and its operating losses for the year ended December 31, 2017 and for the three and nine months ended September 30, 2018 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 Company has approximately $526,000 in working capital as of September 30, 2018 compared to negative working capital of approximately $318,000 on December 31, 2017. The Company raised additional cash of $4.2 million from the issuance of convertible notes payable starting in the first nine months of 2018 through the date of this filing (see Notes 4 and 9). Management continues to expand its product offerings and has also expanded its sales and distribution channels during 2018. In the future, we may require sources of capital in addition to cash on hand to continue operations and to implement our strategy. If our operations do not become cash flow positive, we may be forced to seek equity investments or debt arrangements. No assurances can be given that we will be successful in obtaining such additional financing on reasonable terms, or at all. If adequate funds are not available on acceptable terms, or at all, we may be unable to adequately fund our business plans and it could have a negative effect on our business, results of operations and financial condition. In addition, if funds are available, the issuance of equity securities or securities convertible into equity could dilute the value of shares of our common stock and cause the market price to fall, and the issuance of debt securities could impose restrictive covenants that could impair our ability to engage in certain business transactions. |
Revenue Recognition | The Company derives its revenue primarily from the sale of medical products and supplies for the diagnosis and prevention of cancer. The Company recognizes revenue for the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Consumables revenues consist of single-use products and are recognized at a point in time following the transfer of control of such products to the customer, which generally occurs upon shipment. Instruments revenues typically consist of longer-lived assets that, for the substantial majority of sales, are recognized at a point in time in a manner similar to consumables. The Company exercises judgment in determining the timing of revenue by analyzing the point in time or the period over which the customer has the ability to direct the use of and obtain substantially all of the remaining benefits of the asset. The Company expenses contract costs that would otherwise be capitalized and amortized over a period of less than one year. Shipping and handling costs are included in cost of goods sold and charged to the customers based on the contractual terms. Payments from customers for most instruments, consumables and services are typically due in a fixed number of days after shipment or delivery of the product. For certain international equipment orders a prepayment is required. The balance of the customer deposits is reflected in our accrued liabilities and was $15,815 as of September 30, 2018. See Note 8 for revenue disaggregated by type and by geographic region as well as further information about remaining performance obligations. |
Inventories | Inventories are stated at the lower of cost or net realizable value. 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 for the three and nine month periods ended September 30, 2018 and 2017 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 statements 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 adopted the modified retrospective transition method of ASU 2014-09 effective January 1, 2018 and there was no material change to its current business practices upon implementation. 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 November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows - Restricted Cash (Topic 230)”. This new standard requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This guidance is effective for annual and interim reporting periods beginning after December 15, 2017 and requires retrospective application. The Company adopted this standard in the first quarter of 2018 by using the retrospective method, which required the following disclosures and changes to the presentation of its consolidated financial statements: cash and restricted cash reported on the consolidated statements of cash flows now includes restricted cash of $393,000 and $417,000 as of September 30, 2017 and December 31, 2017, respectively, as well as previously reported cash. |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | September 30, December 31, 2018 2017 (Unaudited) Raw materials $ 1,893 $ 1,220 Work in process 88 44 Finished goods 1,768 1,139 $ 3,749 $ 2,403 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Outstanding note payable indebtedness | September 30, December 31, 2018 2017 (Unaudited) Secured promissory note $ 50 $ 50 Subordinated convertible notes payable 1,085 932 GPB Debt Holdings II, LLC Convertible note payable 5,356 5,356 2018 convertible notes payable 3,431 - Total 9,922 6,338 Discount on convertible notes payable (4,179 ) (1,419 ) Less current portion of long-term debt (643 ) (50 ) Long-term debt $ 5,100 $ 4,869 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information | United States Germany Total September 30, 2018 December 31, 2017 September 30, 2018 December 31, 2017 September 30, 2018 December 31, 2017 Total assets $ $ 10,892 $ 11,179 $ 6,759 $ 4,777 $ 17,651 15,956 Property and equipment, net 85 108 1,461 1,670 1,546 1,778 Intangible assets 10,518 10,518 - - 10,518 10,518 United States Germany Total For the three months ended September 30, September 30, September 30, September 30, September 30, September 30, 2018 2017 2018 2017 2018 2017 Revenues: Histology Equipment $ 65 $ 36 $ 1,563 $ 775 $ 1,628 $ 811 Histology Consumables 119 82 530 495 649 577 Cytology Consumables - - 117 298 117 298 Total Revenues $ 184 $ 118 $ 2,210 $ 1,568 $ 2,394 $ 1,686 Net loss $ (1,087 ) $ (830 ) $ 352 $ (775 ) $ (735 ) $ (1,605 ) United States Germany Total For the nine months ended September 30, September 30, September 30, September 30, September 30, September 30, 2018 2017 2018 2017 2018 2017 Revenues: Histology Equipment $ 175 $ 220 $ 3,672 $ 1,768 $ 3,847 $ 1,988 Histology Consumables 292 322 1,670 1,735 1,962 2,057 Cytology Consumables - - 365 809 365 809 Total Revenues $ 467 $ 542 $ 5,707 $ 4,312 $ 6,174 $ 4,854 Net loss $ (3,042 ) $ (2,067 ) $ 342 $ (2,118 ) $ (2,700 ) $ (4,185 ) |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 |
Accounting Policies [Abstract] | |||
Cash | $ 90 | $ 73 | $ 1,654 |
Working capital | $ (526) | $ (318) |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 1,893 | $ 1,220 |
Work in process | 88 | 44 |
Finished Goods | 1,768 | 1,139 |
Inventory, Net | $ 3,749 | $ 2,403 |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Line of Credit Facility [Line Items] | ||
Long-term Debt, Gross | $ 9,922 | $ 6,338 |
Loan Fees and Original Issue Discount | (4,179) | (1,419) |
Less current portion of long-term debt | (643) | (50) |
Long-term debt | 5,100 | 4,869 |
Secured Promissory Note [Member] | ||
Line of Credit Facility [Line Items] | ||
Long-term Debt, Gross | 50 | 50 |
Subordinated convertible notes payable [Member] | ||
Line of Credit Facility [Line Items] | ||
Long-term Debt, Gross | 1,085 | 932 |
GPB convertible note payable [Member] | ||
Line of Credit Facility [Line Items] | ||
Long-term Debt, Gross | 5,356 | 5,356 |
2018 Convertible notes payable [Member] | ||
Line of Credit Facility [Line Items] | ||
Long-term Debt, Gross | $ 3,431 | $ 0 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Due to Related Parties, Current [Abstract] | ||
Due To Related Parties Current | $ 104 | $ 154 |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Segment Reporting Information [Line Items] | ||
Total Assets | $ 17,651 | $ 15,956 |
Property & equipment, net | 1,546 | 1,778 |
Intangible assets | 10,518 | 10,518 |
UNITED STATES | ||
Segment Reporting Information [Line Items] | ||
Total Assets | 10,892 | 11,179 |
Property & equipment, net | 85 | 108 |
Intangible assets | 10,518 | 10,518 |
GERMANY | ||
Segment Reporting Information [Line Items] | ||
Total Assets | 6,759 | 4,777 |
Property & equipment, net | 1,461 | 1,670 |
Intangible assets | $ 0 | $ 0 |
Segment Information (Details 1)
Segment Information (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Segment Reporting Information [Line Items] | ||||
Revenues | $ 2,394 | $ 1,686 | $ 6,174 | $ 4,854 |
Net income (loss) | (735) | (1,605) | (2,700) | (4,185) |
UnitedStatesMember | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 184 | 118 | 467 | 542 |
Net income (loss) | (1,087) | (830) | (3,042) | (2,067) |
GERMANY | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 2,210 | 1,568 | 5,707 | 4,312 |
Net income (loss) | 352 | (775) | 342 | (2,118) |
Histology Equip [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 1,628 | 811 | 3,847 | 1,988 |
Histology Equip [Member] | UnitedStatesMember | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 65 | 36 | 175 | 220 |
Histology Equip [Member] | GERMANY | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 1,563 | 775 | 3,672 | 1,768 |
Histology Consumables [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 649 | 577 | 1,962 | 2,057 |
Histology Consumables [Member] | UnitedStatesMember | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 119 | 82 | 292 | 322 |
Histology Consumables [Member] | GERMANY | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 530 | 495 | 1,670 | 1,735 |
Cytology Consumables [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 117 | 298 | 365 | 809 |
Cytology Consumables [Member] | UnitedStatesMember | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Cytology Consumables [Member] | GERMANY | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | $ 117 | $ 298 | $ 365 | $ 809 |