|
Delaware
(State or other jurisdiction
of incorporation or organization)
|
|
13-3986004
(I.R.S. Employer
Identification No.)
|
|
Part I. Financial Information:
|
PAGE
|
||
ITEM 1. Financial Statements:
|
|||
a.
|
3
|
||
b.
|
4
|
||
c.
|
5
|
||
d.
|
6
|
||
e.
|
7
|
||
f.
|
9
|
||
32
|
|||
41
|
|||
ITEM 4.
Controls and Procedures
|
41
|
||
ITEM 1.
Legal Proceedings
|
42
|
||
ITEM 1A.
Risk Factors
|
42
|
||
42
|
|||
ITEM 3.
Defaults Upon Senior Securities
|
42
|
||
ITEM 4.
Mine Safety Disclosures
|
43
|
||
ITEM 5.
Other Information
|
43
|
||
ITEM 6.
Exhibits
|
43
|
||
45
|
|||
E-31.1
|
September 30, 2015
|
December 31, 2014
|
|||||||
ASSETS
|
(unaudited)
|
|||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
3,169
|
$
|
11,434
|
||||
Restricted cash
|
100
|
-
|
||||||
Accounts receivable, net of allowance for doubtful accounts of $42 and $95, respectively
|
4,182
|
220
|
||||||
Inventories, net
|
3,915
|
5,275
|
||||||
Prepaid expenses and other current assets
|
596
|
274
|
||||||
Total current assets
|
11,962
|
17,203
|
||||||
Property and equipment, net
|
14,461
|
1,961
|
||||||
Patents and licensed technologies, net
|
7,490
|
37
|
||||||
Other intangible assets, net
|
8,190
|
-
|
||||||
Goodwill
|
8,928
|
-
|
||||||
Deferred financing costs
|
1,029
|
821
|
||||||
Other assets
|
94
|
48
|
||||||
Total assets
|
$
|
52,154
|
$
|
20,070
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Senior
Note payable
|
$
|
8,848
|
$
|
-
|
||||
Note payable
|
39
|
-
|
||||||
Accounts payable (includes $0 and $74 of related parties respectively)
|
4,193
|
1,185
|
||||||
Other accrued liabilities
|
1,920
|
959
|
||||||
Deferred revenues
|
267
|
43
|
||||||
Total current liabilities
|
15,267
|
2,187
|
||||||
Long-term liabilities:
|
||||||||
Senior secured convertible debentures, net
|
11,373
|
5,001
|
||||||
Warrant liability
|
9,535
|
499
|
||||||
Other liabilities
|
103
|
107
|
||||||
Total liabilities
|
36,278
|
7,794
|
||||||
Commitment and contingencies
|
||||||||
Stockholders' equity:
|
||||||||
Preferred Stock, $.10 par value, 10,000,000 shares authorized; 6,505 and 11,787 shares issued and outstanding, respectively
|
1
|
1
|
||||||
Common Stock, $.001 par value, 150,000,000 shares authorized; 9,887,358 and 6,037,232 shares issued and outstanding, respectively
|
10
|
6
|
||||||
Additional paid-in capital
|
222,502
|
194,562
|
||||||
Accumulated deficit
|
(206,647
|
)
|
(182,293
|
)
|
||||
Accumulated other comprehensive income
|
10
|
-
|
||||||
Total stockholders' equity
|
15,876
|
12,276
|
||||||
Total liabilities and stockholders' equity
|
$
|
52,154
|
$
|
20,070
|
For the Three Months Ended
September 30,
|
||||||||
2015
|
2014
|
|||||||
Revenues
|
$
|
8,323
|
$
|
218
|
||||
Cost of revenues
|
3,042
|
1,560
|
||||||
Gross profit (loss)
|
5,281
|
(1,342
|
)
|
|||||
|
||||||||
Operating expenses:
|
||||||||
Engineering and product development
|
471
|
345
|
||||||
Selling and marketing
|
4,001
|
429
|
||||||
General and administrative
|
3,132
|
1,885
|
||||||
|
7,604
|
2,659
|
||||||
Operating loss before other income (expense), net
|
(2,323
|
)
|
(4,001
|
)
|
||||
|
||||||||
Other income (expense), net:
|
||||||||
Interest expense, net
|
(5,577
|
)
|
(527
|
)
|
||||
Change in fair value of warrant liability
|
(1,329
|
)
|
2,108
|
|||||
Gain on sale of assets
|
-
|
11
|
||||||
Other (loss) income, net
|
(5
|
)
|
121
|
|||||
(6,911
|
)
|
1,713
|
||||||
Net loss
|
( 9,234
|
)
|
( 2,288
|
)
|
||||
Deemed dividend related to warrant modification
|
(2,962
|
)
|
-
|
|||||
Net loss attributable to common stockholders
|
$
|
(12,196
|
)
|
$
|
(2,288
|
)
|
||
Basic and diluted net loss per share
|
$
|
(1.29
|
)
|
$
|
(0.44
|
)
|
||
Shares used in computing basic and diluted net loss per share
|
9,442,022
|
5,216,290
|
||||||
Other comprehensive income:
|
||||||||
Foreign currency translation adjustments
|
$
|
10
|
$
|
-
|
||||
Comprehensive loss
|
$
|
(12,186
|
)
|
$
|
(2,288
|
)
|
||
For the Nine Months Ended
September 30,
|
||||||||
2015
|
2014
|
|||||||
Revenues
|
$
|
9,015
|
$
|
541
|
||||
Cost of revenues
|
10,226
|
3,755
|
||||||
Gross loss
|
(1,211
|
)
|
(3,214
|
)
|
||||
|
||||||||
Operating expenses:
|
||||||||
Engineering and product development
|
946
|
1,423
|
||||||
Selling and marketing
|
5,984
|
2,366
|
||||||
General and administrative
|
6,819
|
5,988
|
||||||
|
13,749
|
9,777
|
||||||
Operating loss before other income (expense), net
|
(14,960
|
)
|
(12,991
|
)
|
||||
|
||||||||
Other income (expense), net:
|
||||||||
Interest expense, net
|
(8,738
|
)
|
(528
|
)
|
||||
Change in fair value of warrant liability
|
(679
|
)
|
7,151
|
|||||
Gain on sale of assets
|
-
|
16
|
||||||
Registration rights liquidated damages
|
-
|
(3,420
|
)
|
|||||
Other income, net
|
23
|
131
|
||||||
(9,394
|
)
|
3,350
|
||||||
Net loss
|
( 24,354
|
)
|
( 9,641
|
)
|
||||
Deemed dividend related to warrant modification
|
( 2,962
|
)
|
-
|
|||||
Net loss attributable to common stockholders
|
$
|
(27,316
|
)
|
$
|
(9,641
|
)
|
||
Basic and diluted net loss per share
|
$
|
(3.42
|
)
|
$
|
(1.89
|
)
|
||
Shares used in computing basic and diluted net loss per share
|
7,994,012
|
5,108,418
|
||||||
Other comprehensive income:
|
||||||||
Foreign currency translation adjustments
|
$
|
10
|
$
|
-
|
||||
Comprehensive loss
|
$
|
(27,305
|
)
|
$
|
(9,641
|
)
|
||
Convertible Preferred Stock
|
Common Stock
|
Additional Paid-In
|
Accumulated
|
Accumulated Other Comprehensive
|
||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Loss
|
Total
|
|||||||||||||||||||||||||
BALANCE, JANUARY 1, 2015
|
11,787
|
$
|
1
|
6,037,232
|
$
|
6
|
$
|
194,562
|
$
|
(182,293
|
)
|
$
|
-
|
$
|
12,276
|
|||||||||||||||||
Stock-based compensation
|
-
|
-
|
-
|
-
|
1,483
|
-
|
-
|
1,483
|
||||||||||||||||||||||||
Conversion of convertible preferred stock
|
(5,282
|
)
|
-
|
2,059,455
|
2
|
(2
|
)
|
-
|
-
|
-
|
||||||||||||||||||||||
Conversion of senior secured convertible debentures
|
-
|
-
|
1,790,671
|
2
|
4,591
|
-
|
-
|
4,593
|
||||||||||||||||||||||||
Discount on senior secured convertible debentures
|
-
|
-
|
-
|
-
|
27,300
|
-
|
-
|
27,300
|
||||||||||||||||||||||||
Modification of warrants
|
-
|
-
|
-
|
-
|
(5,399
|
)
|
-
|
-
|
(5,399
|
)
|
||||||||||||||||||||||
Deemed dividend contribution to additional paid-in capital
|
-
|
-
|
-
|
-
|
2,962
|
-
|
-
|
2,962
|
||||||||||||||||||||||||
Deemed dividend distribution from additional paid-in capital
|
-
|
-
|
-
|
-
|
(2,962
|
)
|
-
|
-
|
(2,962
|
)
|
||||||||||||||||||||||
Registration costs
|
-
|
-
|
-
|
-
|
(33
|
)
|
-
|
-
|
(33
|
)
|
||||||||||||||||||||||
Other comprehensive income
|
-
|
-
|
-
|
-
|
-
|
-
|
10
|
10
|
||||||||||||||||||||||||
Net loss for the nine months ended September 30, 2015
|
-
|
-
|
-
|
-
|
-
|
(24,354
|
)
|
-
|
(24,354
|
)
|
||||||||||||||||||||||
BALANCE, SEPTEMBER 30, 2015
|
6,505
|
$
|
1
|
9,887,358
|
$
|
10
|
$
|
222,502
|
$
|
(206,647
|
)
|
$
|
10
|
$
|
15,876
|
For the Nine Months Ended
September 30,
|
||||||||
2015
|
2014
|
|||||||
Cash Flows From Operating Activities:
|
||||||||
Net loss
|
$
|
(24,354
|
)
|
$
|
(9,641
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation and amortization
|
2,348
|
1,371
|
||||||
Provision for doubtful accounts
|
20
|
1
|
||||||
Stock-based compensation
|
1,483
|
447
|
||||||
Gain on disposal of property and equipment
|
-
|
(16
|
)
|
|||||
Impairment of long-lived assets
|
920
|
-
|
||||||
Amortization of debt discount
|
7,571
|
385
|
||||||
Amortization of deferred financing costs
|
373
|
38
|
||||||
Inventory write-offs
|
4,818
|
1,076
|
||||||
Change in fair value of warrant liability
|
679
|
(7,151
|
)
|
|||||
Changes in operating assets and liabilities:
|
||||||||
Restricted cash
|
(100
|
)
|
-
|
|||||
Accounts receivable
|
(300
|
)
|
(29
|
)
|
||||
Inventories
|
(295
|
)
|
(1,362
|
)
|
||||
Prepaid expenses and other assets
|
(321
|
)
|
262
|
|||||
MelaFind systems sold
|
-
|
163
|
||||||
Accounts payable and accrued expenses
|
289
|
(40
|
)
|
|||||
Other accrued liabilities
|
(150
|
)
|
-
|
|||||
Other liabilities
|
(39
|
)
|
66
|
|||||
Deferred revenues
|
13
|
(238
|
)
|
|||||
Net cash used in operating activities
|
(7,045
|
)
|
(14,668
|
)
|
||||
Cash Flows From Investing Activities:
|
||||||||
Lasers placed-in-service, net
|
(1,066
|
)
|
-
|
|||||
(Purchases) proceeds on sale of property and equipment
|
(17
|
)
|
17
|
|||||
Acquisition of business, net of cash aquired of $0
|
(42,500
|
)
|
-
|
|||||
Net cash (used in) provided by investing activities
|
(43,583
|
)
|
17
|
For the Nine Months Ended September 30,
|
||||||||
2015
|
2014
|
|||||||
Cash Flows From Financing Activities:
|
||||||||
Proceeds from convertible debentures
|
32,500
|
15,000
|
||||||
Proceeds from senior notes
|
10,000
|
-
|
||||||
Payments on notes payable
|
(20
|
)
|
-
|
|||||
Registration costs
|
(134
|
)
|
-
|
|||||
Expenses related to financing
|
-
|
(1,123
|
)
|
|||||
Proceeds from private placements/public offerings
|
-
|
11,458
|
||||||
Net cash provided by financing activities
|
42,346
|
25,335
|
||||||
Effect of exchange rate changes on cash
|
17
|
-
|
||||||
Net (decrease)/increase in cash and cash equivalents
|
(8,265
|
)
|
10,684
|
|||||
Cash and cash equivalents, beginning of period
|
11,434
|
3,783
|
||||||
Cash and cash equivalents, end of period
|
$
|
3,169
|
$
|
14,467
|
||||
Supplemental information:
|
||||||||
Cash paid for interest
|
$
|
402
|
$
|
-
|
||||
Supplemental information of non-cash investing and financing activities:
|
||||||||
Establishment of a warrant liability with a deemed dividend
|
$
|
2,962
|
$
|
-
|
||||
Conversion of senior secured convertible debentures into common stock
|
$
|
4,593
|
$
|
-
|
||||
Reclassification of property and equipment to inventory, net
|
$
|
107
|
$
|
-
|
||||
Reclassification of warrant liability from stockholders' equity
|
$
|
(5,399
|
)
|
$
|
-
|
|||
Recognition of debt discount and beneficial conversion feature on long-term debt
|
$
|
27,300
|
$
|
10,353
|
||||
Exchange of series A convertible preferred stock for series B convertible preferred stock
|
$
|
-
|
$
|
12,300
|
|
•
|
Level 1 – unadjusted quoted prices are available in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date.
|
|
•
|
Level 2 – pricing inputs are other than quoted prices in active markets that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.
|
|
•
|
Level 3 – pricing inputs are unobservable for the non-financial asset or liability and only used when there is little, if any, market activity for the non-financial asset or liability at the measurement date. The inputs into the determination of fair value require significant management judgment or estimation. Fair value is determined using comparable market transactions and other valuation methodologies, adjusted as appropriate for liquidity, credit, market and/or other risk factors
|
Fair Value
as of
September 30, 2015
|
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
|
Significant
other
Observable Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
|||||||||||||
Liabilities:
|
||||||||||||||||
Warrant liability (Note 11)
|
$
|
9,535
|
$
|
-
|
$
|
-
|
$
|
9,535
|
||||||||
Fair Value as of
December 31, 2014
|
Quoted Prices
in Active Markets
for Identical Assets
(Level 1)
|
Significant other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
|||||||||||||
Liabilities:
|
||||||||||||||||
Warrant liability (Note 11)
|
$
|
499
|
$
|
-
|
$
|
-
|
$
|
499
|
September 30,
2015
|
||||
(unaudited)
|
||||
Accrual at beginning of year
|
$
|
48
|
||
Acquired in asset purchase
|
265
|
|||
Additions charged to warranty expense
|
62
|
|||
Expiring warranties/claimed satisfied
|
(110
|
)
|
||
Total
|
265
|
|||
Less: current portion
|
(177
|
)
|
||
$
|
88
|
September 30,
|
|||||
2015
|
2014
|
||||
Common stock equivalents of convertible debentures
|
46,521,127
|
5,847,955
|
|||
Common stock purchase warrants
|
16,078,920
|
13,078,920
|
|||
Common stock equivalents of convertible preferred stock
|
2,535,866
|
4,795,321
|
|||
Common stock options
|
2,302,802
|
320,349
|
|||
Total
|
67,438,715
|
24,042,545
|
Current assets
|
$
|
7,233
|
||
Property, plant and equipment
|
14,340
|
|||
Identifiable intangible assets
|
16,100
|
|||
Other assets
|
45
|
|||
Total assets assumed
|
37,718
|
|||
Current liabilities
|
(3,945
|
)
|
||
Note payable
|
(57
|
)
|
||
Other long term liabilities
|
(116
|
)
|
||
Total liabilities assumed
|
(4,118
|
)
|
||
Net assets acquired
|
$
|
33,600
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
|||||||||||||
Net revenues
|
$
|
8,323
|
$
|
7,816
|
$
|
23,684
|
$
|
21,378
|
||||||||
Net loss attributable to common shareholders
|
$
|
(12,186
|
)
|
$
|
(3,715
|
)
|
$
|
(33,662
|
)
|
$
|
(20,410
|
)
|
||||
Net loss per basic and diluted share:
|
$
|
(1.29
|
)
|
$
|
(0.71
|
)
|
$
|
(4.21
|
)
|
$
|
(4.00
|
)
|
||||
Shares used in calculating net loss per basic and diluted share:
|
9,442,022
|
5,216,290
|
7,994,012
|
5,108,418
|
September 30
,
2015
|
December 31, 2014
|
|||||||
(unaudited)
|
||||||||
Raw materials and work in progress
|
$
|
3,329
|
$
|
2,553
|
||||
Finished goods
|
586
|
4,131
|
||||||
Total inventories
|
3,915
|
6,684
|
||||||
Reserve for obsolete inventory
|
-
|
(870
|
)
|
|||||
Reserve for inventory repairs
|
-
|
(539
|
)
|
|||||
$
|
3,915
|
$
|
5,275
|
September 30, 2015
|
December 31, 2014
|
|||||||
(unaudited)
|
||||||||
Lasers placed-in-service
|
$
|
15,154
|
$
|
-
|
||||
MELAFind systems
|
2,019
|
3,193
|
||||||
Equipment, computer hardware and software
|
1,244
|
1,084
|
||||||
Furniture and fixtures
|
2,054
|
1,969
|
||||||
Leasehold improvements
|
913
|
906
|
||||||
21,384
|
7,152
|
|||||||
Accumulated depreciation and amortization
|
(6,923
|
)
|
(5,191
|
)
|
||||
Property and equipment, net
|
$
|
14,461
|
$
|
1
,
961
|
September 30, 2015
|
December 31, 2014
|
|||||||
(unaudited)
|
||||||||
Core technology
|
$
|
5,974
|
$
|
274
|
||||
Product technology
|
2,000
|
-
|
||||||
7,974
|
274
|
|||||||
Accumulated amortization
|
(484
|
)
|
(237
|
)
|
||||
Patents and licensed technologies, net
|
$
|
7,490
|
$
|
37
|
Last three months of 2015
|
$
|
238
|
||
2016
|
995
|
|||
2017
|
995
|
|||
2018
|
995
|
|||
2019
|
995
|
|||
Thereafter
|
3,272
|
|||
Total
|
$
|
7,490
|
Balance at January 1, 2015
|
$
|
-
|
||
Additions for the asset purchase
|
8,928
|
|||
Balance at September 30, 2015
|
$
|
8,928
|
September 30, 2015
|
||||
(unaudited)
|
||||
Customer relationships
|
$
|
6,900
|
||
Tradenames
|
1,500
|
|||
8,400
|
||||
Accumulated amortization
|
(210
|
)
|
||
Other intangible assets, net
|
$
|
8,190
|
Last three months of 2015
|
$
|
210
|
||
2016
|
840
|
|||
2017
|
840
|
|||
2018
|
840
|
|||
2019
|
840
|
|||
Thereafter
|
4,620
|
|||
Total
|
$
|
8,190
|
September 30, 2015
|
December 31, 2014
|
|||||||
(unaudited)
|
||||||||
Accrued warranty, current, see Note 1
|
$
|
177
|
$
|
48
|
||||
Accrued compensation, including commissions and vacation
|
965
|
55
|
||||||
Other accrued liabilities
|
778
|
856
|
||||||
Total other accrued liabilities
|
$
|
1,920
|
$
|
959
|
September 30, 2015
|
||||
(unaudited)
|
||||
Senior-secured notes payable, net of unamortized debt discount of $1,152
|
$
|
8,848
|
June 22, 2015
|
September 30, 2015
|
|||
Number of shares underlying warrants
|
3,000,000
|
3,000,000
|
||
Exercise price
|
$0.75
|
$0.75
|
||
Share price
|
$1.38
|
$1.14
|
||
Fair value of warrants
|
$2,959
|
$2,561
|
||
Probability of stockholder approval
|
80.0%
|
100.0%
|
||
Volatility
|
90.0%
|
90.0%
|
||
Risk-free interest rate
|
1.62%
|
1.30%
|
||
Expected dividend yield
|
0%
|
0%
|
||
Expected warrant life
|
5 years
|
4.73 years
|
September 30, 2015
|
December 31, 2014
|
|||||||
(unaudited)
|
||||||||
Senior secured 2.25% convertible debentures, net of unamortized debt discount of $25,798
|
$
|
6,701
|
$
|
-
|
||||
Senior secured 4% convertible debentures, net of unamortized debt discount of $4,146 and $8,410, respectively
|
4,672
|
5,001
|
||||||
Total convertible debt
|
$
|
11,373
|
$
|
5,001
|
Issue date
|
# of warrants
|
Original
Exercise Price
|
New
Exercise Price
|
|||||||||
7/24/14 Series A
|
4,288,500
|
$
|
2.45
|
$
|
0.75
|
|||||||
7/24/14 Series B
|
4,795,321
|
$
|
2.45
|
$
|
0.75
|
September 30, 2015
|
June 22, 2015
|
December 31, 2014
|
||||
(unaudited)
|
(unaudited)
|
|||||
Stock price
|
$ 1.14
|
$ 1.38
|
$ 1.20
|
|||
Volatility
|
90.00%
|
90.00%
|
72.90 – 88.10%
|
|||
Risk-free interest rate
|
0.02% - 1.30%
|
1.62%
|
1.65%
|
|||
Expected dividend yield
|
0%
|
0%
|
0%
|
|||
Expected warrant life
|
0.32 – 4.73 years
|
5 years
|
4.10 – 4.33 years
|
Issuance Date
|
January 1,
2015
|
Initial Measurements
|
Increase (Decrease)
in Fair Value
|
Reclassed
from Equity
|
September 30,
2015
|
|||||||||||||||
10/31/2013
|
$
|
233
|
$
|
-
|
$
|
309
|
$
|
-
|
$
|
542
|
||||||||||
2/5/2014
|
266
|
-
|
767
|
-
|
1,033
|
|||||||||||||||
7/24/2014 Series A
|
-
|
-
|
-
|
3,452
|
3,452
|
|||||||||||||||
7/24/2014 Series B
|
-
|
-
|
-
|
1,947
|
1,947
|
|||||||||||||||
6/22/2015
|
-
|
2,958
|
(397
|
)
|
-
|
2,561
|
||||||||||||||
Total
|
$
|
499
|
$
|
2,958
|
$
|
679
|
$
|
5,399
|
$
|
9,535
|
Issue Date
|
Expiration Date
|
Total Warrants
|
Exercise Price
|
||||
4/26/2013
|
4/26/2018
|
69,321
|
$ 11.18
|
||||
10/31/2013
|
4/30/2019
|
685,715
|
$ 0.75
|
||||
2/5/2014
|
2/5/2019
|
1,329,731
|
$ 0.75
|
||||
7/24/2014
|
7/24/2019
|
6,198,832
|
$ 0.75 - $ 2.45
|
||||
7/24/2014
|
1/24/2016
|
4,795,321
|
$ 0.75
|
||||
6/22/2015
|
6/22/2020
|
3,000,000
|
$ 0.75
|
||||
16,078,920
|
Nine Months Ended September 30,
|
|||
2015
|
2014
|
||
Risk-free interest rate
|
1.75%
|
2.14 – 2.45%
|
|
Volatility
|
85.68%
|
75.51 – 73.87%
|
|
Expected dividend yield
|
0%
|
0%
|
|
Expected life
|
6.5 years
|
6.5 years
|
|
Estimated forfeiture rate
|
0%
|
0%
|
Dermatology
Recurring
Procedures
|
Dermatology
Procedures
Equipment
|
Dermatology
Imaging
|
TOTAL
|
|||||||||||||
Revenues
|
$
|
7,033
|
$
|
1,189
|
$
|
101
|
$
|
8,323
|
||||||||
Costs of revenues
|
2,326
|
607
|
109
|
3,042
|
||||||||||||
Gross profit
|
4,707
|
582
|
( 8
|
)
|
5,281
|
|||||||||||
Gross profit %
|
66.9
|
%
|
48.9
|
%
|
(7.9
|
%)
|
63.5
|
%
|
||||||||
Allocated operating expenses:
|
||||||||||||||||
Engineering and product development
|
348
|
31
|
92
|
471
|
||||||||||||
Selling and marketing expenses
|
3,554
|
97
|
350
|
4,001
|
||||||||||||
Unallocated operating expenses
|
-
|
-
|
-
|
3,132
|
||||||||||||
3,902
|
128
|
442
|
7,604
|
|||||||||||||
Income (loss) from operations
|
805
|
454
|
(450
|
)
|
(2,323
|
)
|
||||||||||
Interest expense, net
|
-
|
-
|
-
|
(5,577
|
)
|
|||||||||||
Change in fair value of warrant liability
|
-
|
-
|
-
|
(1,329
|
)
|
|||||||||||
Other income (expense), net
|
-
|
-
|
-
|
(5
|
)
|
|||||||||||
Net income (loss)
|
$
|
805
|
$
|
454
|
$
|
(450
|
)
|
$
|
(9,234
|
)
|
||||||
Dermatology Recurring Procedures
|
Dermatology Procedures Equipment
|
Dermatology Imaging
|
TOTAL
|
|||||||||||||
Revenues
|
$
|
-
|
$
|
-
|
$
|
218
|
$
|
218
|
||||||||
Costs of revenues
|
-
|
-
|
1,560
|
1,560
|
||||||||||||
Gross profit
|
-
|
-
|
(1,342
|
)
|
(1,342
|
)
|
||||||||||
Gross profit %
|
0.0
|
%
|
0.0
|
%
|
(615.6
|
%)
|
(615.6
|
%)
|
||||||||
Allocated operating expenses:
|
||||||||||||||||
Engineering and product development
|
-
|
-
|
345
|
345
|
||||||||||||
Selling and marketing expenses
|
-
|
-
|
429
|
429
|
||||||||||||
Unallocated operating expenses
|
-
|
-
|
-
|
1,885
|
||||||||||||
-
|
-
|
774
|
2,659
|
|||||||||||||
Loss from operations
|
-
|
-
|
(2,116
|
)
|
(4,001
|
)
|
||||||||||
Interest expense, net
|
-
|
-
|
(527
|
)
|
||||||||||||
Change in fair value of warrant liability
|
-
|
-
|
-
|
2,108
|
||||||||||||
Gain on sale of assets
|
-
|
-
|
-
|
11
|
||||||||||||
Other income (expense), net
|
-
|
-
|
-
|
121
|
||||||||||||
Net loss
|
$
|
-
|
$
|
-
|
$
|
(2,116
|
)
|
$
|
(2,288
|
)
|
||||||
Dermatology
Recurring
Procedures
|
Dermatology
Procedures
Equipment
|
Dermatology
Imaging
|
TOTAL
|
|||||||||||||
Revenues
|
$
|
7,138
|
$
|
1,638
|
$
|
239
|
$
|
9,015
|
||||||||
Costs of revenues
|
2,386
|
891
|
6,949
|
10,226
|
||||||||||||
Gross profit
|
4,752
|
747
|
(6,710
|
)
|
( 1,211
|
)
|
||||||||||
Gross profit %
|
66.6
|
%
|
45.6
|
%
|
(2807.5
|
%)
|
(13.4
|
%)
|
||||||||
Allocated operating expenses:
|
||||||||||||||||
Engineering and product development
|
355
|
62
|
529
|
946
|
||||||||||||
Selling and marketing expenses
|
3,723
|
127
|
2,134
|
5,984
|
||||||||||||
Unallocated operating expenses
|
-
|
-
|
-
|
6,819
|
||||||||||||
4,078
|
189
|
2,663
|
13,749
|
|||||||||||||
Income (loss) from operations
|
674
|
558
|
(9,373
|
)
|
(14,960
|
)
|
||||||||||
Interest expense, net
|
-
|
-
|
-
|
(8,738
|
)
|
|||||||||||
Change in fair value of warrant liability
|
-
|
-
|
-
|
(679
|
)
|
|||||||||||
Other income (expense), net
|
-
|
-
|
-
|
23
|
||||||||||||
Net income (loss)
|
$
|
674
|
$
|
558
|
$
|
(9,373
|
)
|
$
|
(24,354
|
)
|
||||||
Dermatology Recurring Procedures
|
Dermatology Procedures Equipment
|
Dermatology Imaging
|
TOTAL
|
|||||||||||||
Revenues
|
$
|
-
|
$
|
-
|
$
|
541
|
$
|
541
|
||||||||
Costs of revenues
|
-
|
-
|
3,755
|
3,755
|
||||||||||||
Gross profit
|
-
|
-
|
(3,214
|
)
|
(3,214
|
)
|
||||||||||
Gross profit %
|
0.0
|
%
|
0.0
|
%
|
(594.1
|
%)
|
(594.1
|
%)
|
||||||||
Allocated operating expenses:
|
||||||||||||||||
Engineering and product development
|
-
|
-
|
1,423
|
1,423
|
||||||||||||
Selling and marketing expenses
|
-
|
-
|
2,366
|
2,366
|
||||||||||||
Unallocated operating expenses
|
-
|
-
|
-
|
5,988
|
||||||||||||
-
|
-
|
3,789
|
9,777
|
|||||||||||||
Loss from operations
|
-
|
-
|
(7,003
|
)
|
(12,991
|
)
|
||||||||||
Interest expense, net
|
-
|
-
|
-
|
(528
|
)
|
|||||||||||
Change in fair value of warrant liability
|
-
|
-
|
-
|
7,151
|
||||||||||||
Gain on sale of assets
|
-
|
-
|
-
|
16
|
||||||||||||
Other income (expense), net
|
-
|
-
|
-
|
131
|
||||||||||||
Registration rights liquidated damages
|
-
|
-
|
-
|
(3,420
|
)
|
|||||||||||
Net loss
|
$
|
-
|
$
|
-
|
$
|
(7,003
|
)
|
$
|
(9,641
|
)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Domestic
|
$
|
7,114
|
$
|
55
|
$
|
7,236
|
$
|
140
|
||||||||
Foreign
|
1,209
|
163
|
1,779
|
401
|
||||||||||||
$
|
8,323
|
$
|
218
|
$
|
9,015
|
$
|
541
|
|||||||||
•
|
XTRAC® Excimer Laser.
XTRAC received FDA clearance in 2000 and has since become a widely recognized treatment among dermatologists for psoriasis and other skin diseases for which there are no cures. Eximer lasers deliver narrow ultraviolet B ("UVB"
)
light to affected areas of skin. Following a series of treatments typically performed twice weekly, psoriasis remission is achieved and vitiligo patches are repigmented. XTRAC is endorsed by the National Psoriasis Foundation, and its use for psoriasis is covered by nearly all major insurance companies, including Medicare. We estimate that more than half of all major insurance companies now offer reimbursement for vitiligo as well, a figure that is increasing.
|
|
•
|
VTRAC® Lamp.
VTRAC received FDA clearance in 2005 and
provides targeted therapeutic efficacy demonstrated by excimer technology with the simplicity of design and reliability of a lamp system.
|
|
•
|
MelaFind®
.
MelaFind received a Pre-Market Approval, or PMA, from the FDA, in 2012, having already received in September 2011 Conformité Européenne ("CE") Mark approval. MelaFind is a non-invasive, point–of-care, (i.e. in the doctor's office) instrument to aid dermatologists in their decision to biopsy suspicious pigmented lesions, (e.g. melanoma). MelaFind aids in the evaluation of clinically atypical pigmented skin lesions, when a dermatologist chooses to obtain additional information before making a final decision to biopsy in order to rule out melanoma. MelaFind acquires and displays multi-spectral (from blue to near infrared) images and dermoscopic Red Green Blue ("RGB") digital data from pigmented skin lesions.
|
For the Three Months Ended
September 30,
|
For the Nine Months Ended
September 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Dermatology Recurring Procedures
|
$
|
7,033
|
$
|
-
|
$
|
7,138
|
$
|
-
|
||||||||
Dermatology Procedures Equipment
|
1,189
|
-
|
1,638
|
-
|
||||||||||||
Dermatology Imaging
|
101
|
218
|
239
|
541
|
||||||||||||
Total Revenues
|
$
|
8,323
|
$
|
218
|
$
|
9,015
|
$
|
541
|
For the Three Months Ended
September 30,
|
For the Nine Months Ended
September 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Dermatology Recurring Procedures
|
$
|
2,326
|
$
|
-
|
$
|
2,386
|
$
|
-
|
||||||||
Dermatology Procedures Equipment
|
607
|
-
|
891
|
-
|
||||||||||||
Dermatology Imaging
|
109
|
1,560
|
6,949
|
3,755
|
||||||||||||
Total Cost of Revenues
|
$
|
3,042
|
$
|
1,560
|
$
|
10,226
|
$
|
3,755
|
For the Three Months Ended September 30, 2015
|
For the Three
|
|||||||||||||||||||
Dermatology
Recurring
Procedures
|
Dermatology
Procedures
Equipment
|
Dermatology
Imaging
|
Total
|
Months Ended
September 30,
2014
|
||||||||||||||||
Revenues
|
$
|
7,033
|
$
|
1,189
|
$
|
101
|
$
|
8,323
|
$
|
218
|
||||||||||
Cost of revenues
|
2,326
|
607
|
109
|
3,042
|
1,560
|
|||||||||||||||
Gross profit
|
$
|
4,707
|
$
|
582
|
$
|
(8
|
)
|
$
|
5,281
|
$
|
(1,342
|
)
|
||||||||
Gross margin percentage
|
66.9
|
%
|
48.9
|
%
|
(7.9
|
%)
|
63.5
|
%
|
(615.6
|
%)
|
For the Nine Months Ended September 30, 2015
|
For the Nine
|
|||||||||||||||||||
Dermatology
Recurring
Procedures
|
Dermatology
Procedures
Equipment
|
Dermatology
Imaging
|
Total
|
Months Ended
September 30,
2014
|
||||||||||||||||
Revenues
|
$
|
7,138
|
$
|
1,638
|
$
|
239
|
$
|
9,015
|
$
|
541
|
||||||||||
Cost of revenues
|
2,386
|
891
|
6,949
|
10,226
|
3,755
|
|||||||||||||||
Gross profit
|
$
|
4,752
|
$
|
747
|
$
|
(6,710
|
)
|
$
|
(1,211
|
)
|
$
|
(3,214
|
)
|
|||||||
Gross margin percentage
|
66.6
|
%
|
45.6
|
%
|
(2,807.5
|
%)
|
(13.4
|
%)
|
(594.1
|
%)
|
•
|
In the three and nine months ended September 30, 2015, we recorded $826 in stock-based compensation expense related to the special option issuance to certain board directors.
|
|
•
|
In the three and nine months ended September 30, 2015, we had additional expenses of $745 and $803 in general and administrative expenses related the XTRAC and VTRAC businesses. As the
XTRAC and VTRAC acquisition
was completed on June 22, 2015, the expenses were included only from June 23, 2015 through September 30, 2015. There was no corresponding expense for the three and nine months ended September 30, 2014.
|
|
•
|
In the nine months ended September 30, 2015, we recorded $456 in costs related to the asset purchase.
|
For the Three Months Ended September 30,
|
||||||||||||
2015
|
2014
|
Change
|
||||||||||
Net loss
|
$
|
(9,234
|
)
|
$
|
(2,288
|
)
|
$
|
(6,946
|
)
|
|||
Adjustments:
|
||||||||||||
Depreciation and amortization
|
1,710
|
489
|
1,221
|
|||||||||
Interest expense, net
|
506
|
104
|
402
|
|||||||||
Non-cash interest expense
|
5,071
|
423
|
4,648
|
|||||||||
EBITDA
|
(1,947
|
)
|
(1,272
|
)
|
(675
|
)
|
||||||
Stock-based compensation expense
|
1,007
|
115
|
892
|
|||||||||
Change in fair value of warrants
|
1,329
|
(2,108
|
)
|
3,437
|
||||||||
Non-GAAP adjusted income (loss)
|
$
|
389
|
$
|
(3,265
|
)
|
$
|
3,654
|
|||||
For the Nine Months Ended September 30,
|
||||||||||||
2015
|
2014
|
Change
|
||||||||||
Net loss
|
$
|
(24,354
|
)
|
$
|
(9,641
|
)
|
$
|
(14,713
|
)
|
|||
Adjustments:
|
||||||||||||
Depreciation and amortization
|
2,348
|
1,371
|
977
|
|||||||||
Interest expense, net
|
794
|
105
|
689
|
|||||||||
Non-cash interest expense
|
7,944
|
423
|
7,521
|
|||||||||
EBITDA
|
(13,268
|
)
|
(7,742
|
)
|
(5,526
|
)
|
||||||
Stock-based compensation expense
|
1,483
|
447
|
1,036
|
|||||||||
Acquisition costs
|
456
|
-
|
456
|
|||||||||
Change in fair value of warrants
|
679
|
(7,151
|
)
|
7,830
|
||||||||
Registration rights liquidated damages
|
-
|
3,420
|
(3,420
|
)
|
||||||||
Impairment of property and equipment
|
920
|
-
|
920
|
|||||||||
Inventory valuation reserves
|
4,818
|
-
|
4,818
|
|||||||||
Non-GAAP adjusted loss
|
$
|
(4,912
|
)
|
$
|
(11,026
|
)
|
$
|
6,114
|
||||
31.1
|
Rule 13a-14(a) Certificate of Chief Executive Officer
|
|
31.2
|
Rule 13a-14(a) Certificate of Chief Financial Officer
|
|
32.1*
|
Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
101.INS
|
XBRL Instance Document
|
|
101.SCH
|
XBRL Taxonomy Schema
|
|
101.CAL
|
XBRL Taxonomy Calculation Linkbase
|
|
101.DEF
|
XBRL Taxonomy Definition Linkbase
|
|
101.LAB
|
XBRL Taxonomy Label Linkbase
|
|
101.PRE
|
XBRL Taxonomy Presentation Linkbase
|
*
|
The certifications attached as Exhibit 32.1 accompany this Quarterly Report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed "filed" by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
|
|
MELA SCIENCES, INC
.
|
|
|
|
|
|
|
Date November 16, 2015
|
By:
|
/s/ Michael R. Stewart
|
|
|
|
Name Michael R. Stewart
|
|
|
|
Title Chief Executive Officer
|
|
Date November 16, 2015
|
By:
|
/s/ Christina L. Allgeier
|
|
|
|
Name Christina L. Allgeier
|
|
|
|
Title Chief Financial Officer
|
|
(1) |
I have reviewed this quarterly report on Form 10-Q of MELA Sciences, Inc.;
|
(2) |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
(3) |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
(4) |
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) |
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
(5) |
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
|
Date: November 16, 2015 |
By:
|
/s/ Michael R. Stewart
|
|
|
|
Name: Michael R. Stewart
|
|
|
|
|
Title: Chief Executive Officer
|
|
(1) |
I have reviewed this quarterly report on Form 10-Q of MELA Sciences, Inc.;
|
(2) |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
(3) |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
(4) |
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) |
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
(5) |
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
|
Dated: November 16, 2015
|
By:
|
/s/ Christina Allgeier
|
|
Christina Allgeier
|
||||
Chief Financial Officer
|
|
1.
|
The Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, to which this Certification is attached as Exhibit 32.1 (the "Periodic Report"), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, and
|
|
2.
|
The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
|
|
|
|
|
/s/ Michael R. Stewart
|
|
|
|
|
Name: Michael R. Stewart
|
|
|
|
|
Title: Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
/s/ Christina L. Allgeier
|
|
|
|
|
Name: Christina L. Allgeier
|
|
|
|
|
Title: Chief Financial Officer
|
|
(1)
|
This certification accompanies the Quarterly Report on Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of MELA Sciences, Inc. under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing. A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to MELA Sciences, Inc. and will be retained by MELA Sciences, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
|
/s/ Robert W. Cook | November 10, 2015 | |||
|
Robert W. Cook
|
Date
|
||
FOR MELA SCIENCES, INC.
|
||||
/s/ Michael R. Stewart | November 10, 2015 | |||
By: |
Michael R. Stewart
|
Date
|
||
Title: |
Title: Chief Executive Officer
|
(a)
|
Severance Payments
|
(b)
|
COBRA Premium Payments
|
(c)
|
Other Earned Compensation
|
(d)
|
Consideration and Value
|
(a)
|
In General
|
(b)
|
Claims Released
|
(c)
|
Unknown Claims
|
(d)
|
Released Parties
|
(a)
|
Pursuit of Released Claims and Forfeiture in the Event of Breach
|
(b)
|
Exceptions Related to Employee's Promises and Representations.
|
(c)
|
Ownership of Claims
|
(d)
|
Nonadmission of Liability
|
(e)
|
Confidentiality
|
(f)
|
Return of Company Property
|
(g)
|
Cooperation and Transition of Duties
|
(h)
|
Non-Disclosure of Confidential Information
|
(i)
|
Post-Employment Obligations
|
(a)
|
Entire Agreement
|
(b)
|
Successors
|
(c)
|
Consideration Period
|
(d)
|
Severability
|
(e)
|
Interpretation and Governing Law
|
(f)
|
Knowing and Voluntary
|
|
Robert W. Cook
|
Date
|
||
FOR MELA SCIENCES, INC.
|
||||
By: |
Michael R. Stewart
|
Date
|
||
Title: |
Title: Chief Executive Officer
|
COMPANY:
|
||||
MELA SCIENCES, INC.
|
||||
By: /s/ Michael R. Stewart
|
||||
Michael R. Stewart
|
||||
Chief Executive Officer
|
||||
EMPLOYEE:
|
||||
/s/ Christina L. Allgeier | ||||
Christina L. Allgeier
|
||||
Address:
|
||||
EMPLOYEE:
|
||||
/s/ Christina L. Allgeier | ||||
Christina L. Allgeier
|
||||
MELA SCIENCES, INC.
|
||||
By: /s/ Michael R. Stewart
|
||||
Name: Michael R. Stewart
|
||||
Title: Chief Executive Officer
|
||||