CORMEDIX INC (CRMD, Financial) filed Quarterly Report for the period ended 2012-09-30.
Cormedix, Inc. has a market cap of $5 million; its shares were traded at around $0.45 .
As a result of our significant R&D expenditures and the lack of any approved products to generate product sales revenue, we have not been profitable and have generated operating losses since we were incorporated in July 2006. Prior to the IPO, we had funded our operations principally with $14,364,973 in convertible notes sold in private placements and $625,464 in related party notes, which were also convertible. All of our convertible notes were automatically converted into 1,237,293 shares of common stock and 2,338,576 Units comprised of 4,677,152 shares of common stock and 2,841,603 warrants at an exercise price of $3.4375. We received net proceeds of $10,457,270 from the IPO, after deducting underwriting discounts, commissions and offering expenses payable by us upon the closing of the IPO on March 30, 2010. Additionally, we received a total of approximately $490,000 from Federal grants under the Qualifying Therapeutic Discovery Project program and a total of approximately $775,000 from the sale of our unused net operating losses through the State of New Jersey’s Economic Development Authority Technology Business Tax Certificate Transfer Program and a total of approximately $35,000 from qualified R&D expenditures refunded to us through the New York State Department of Taxation and Finance under the Qualifying Emerging Technology Incentive Program.
During the quarter ended September 30, 2012, we completed an initial closing on our private placement of 850 Units, each Unit consisting of (i) a one-year $1,000 aggregate principal amount 9% Senior Convertible Note (the "Notes"), convertible into shares (the "Conversion Shares") of common stock, at a conversion price of $0.35 per Note, and (ii) a five-year redeemable Warrant (the "Warrants"), to purchase 2,500 shares of Common Stock (the "Warrant Shares"), to certain accredited investors (the "Purchasers") pursuant to a Subscription Agreement dated September 20, 2012. The Units were offered on a "reasonable efforts, all-or-none" basis as to 500 Units for a minimum amount of $500,000, and, thereafter on a "reasonable efforts" basis as to the remaining 2,500 Units for a maximum amount of $3,000,000 (the "Maximum Amount"). We received gross proceeds of $850,000 and net proceeds of approximately $689,000. The maturity date of the Notes issued in the initial closing is September 20, 2013.
Net cash used in operating activities was $1,747,993 for the nine months ended September 30, 2012. The net loss of $2,237,548 for the nine months ended September 30, 2012 was higher than cash used in operating activities by $489,555. The difference is attributable primarily to a stock-based compensation charge of $183,177, net amortization of debt discount and deferred financing cost of $23,616, a decrease in prepaid expenses and other current assets of $456,871, which consisted primarily of collection of other receivables related to the sale of our unused net operating losses through the State of New Jersey’s Economic Development Authority Technology Business Tax Certificate Transfer Program and the amortization of insurance premiums during the nine months ended September 30, 2012. These were offset by a decrease in accounts payable of $146,079 and accrued expenses of $33,167 related to the reversal of year end 2011 bonuses accrued but not paid as a result of conserving cash during the period and additional accruals of professional fees related to debt financing.
For the purpose of valuing options and warrants granted to our employees, directors and officers during the nine months ended September 30, 2012, we used the Black-Scholes option pricing model. We granted options to purchase an aggregate of 380,000 and 826,000 shares of common stock to our employees, directors and officers and consultants during the nine months ended September 30, 2012 and 2011, respectively. Of the 380,000 options issued during the nine months ended September 30, 2012, we granted 180,000 performance based options to our Chief Operating Officer and Chief Financial Officer with an exercise price of $0.49, of which 25% vested on March 20, 2012, the date of grant, and were fully expensed, 25% vest upon the closing of a financing by the Company with gross proceeds in excess of $1.5 million which includes either the issuance of equity, debt or any combination thereof with an expectation by the Company it is probable that such objective will be achieved and the Company will be expensing the vesting of such options through the end of 2012, 25% vest upon CE Mark approval for CRMD003 (Neutrolin®) with an expectation by the Company it is probable that such objective will be achieved and the Company will be expensing the vesting of such options through the end of 2012 and 25% vest upon the launch of Neutrolin® in Europe, provided, however, that each of the events described occur on or before December 31, 2012, of which the Company has not determined if such options will vest by year end 2012 which will occur only if and until CE Marking is achieved, as such the Company has not recognized any expense for such options. To determine the risk-free interest rate, we utilized the U.S. Treasury yield curve in effect at the time of grant with a term consistent with the expected term of our awards. We estimated the expected term of the options granted based on anticipated exercises in future periods assuming the success of our business model as currently forecasted. The expected dividend yield reflects our current and expected future policy for dividends on our common stock. The expected stock price volatility for our stock options was calculated by examining historical volatilities for publicly traded industry peers, since we do not have any trading history for our common stock. We will continue to analyze the expected stock price volatility and expected term assumptions as more historical data for our common stock becomes available. The Company has experienced forfeitures of stock options issued to its former President and Chief Executive Officer, former Chief Medical Officer, former Chairman and Board member, former Chief Operating Officer/Chief Financial Officer and employees. As a result of such forfeitures, we established a forfeiture rate of 55% for stock option expense for the three and nine months ended September 30, 2012, respectively. The Company will continue to evaluate the estimated forfeiture rate derived from previous forfeitures of employees and board of directors and may adjust such forfeiture rate accordingly.
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Cormedix, Inc. has a market cap of $5 million; its shares were traded at around $0.45 .
Highlight of Business Operations:
During the quarter ended September 30, 2012, we completed an initial closing of our private placement of 850 Units, each Unit consisting of (i) a one-year $1,000 aggregate principal amount 9% Senior Convertible Note, convertible into shares of common stock, at a conversion price of $0.35 per Note, and (ii) a five-year redeemable Warrant, to purchase 2,500 shares of common stock, to certain accredited investors pursuant to a Subscription Agreement dated September 20, 2012. The Units were offered on a "reasonable efforts, all-or-none" basis as to 500 Units for a minimum amount of $500,000, and, thereafter on a "reasonable efforts" basis as to the remaining 2,500 Units for a maximum amount of $3,000,000. We received gross proceeds of $850,000 and net proceeds of approximately $689,000 in the September 20, 2012 initial closing. The maturity date of the Notes issued in the initial closing is September 20, 2013. (See Notes to the Financial Statements – Note 3.)As a result of our significant R&D expenditures and the lack of any approved products to generate product sales revenue, we have not been profitable and have generated operating losses since we were incorporated in July 2006. Prior to the IPO, we had funded our operations principally with $14,364,973 in convertible notes sold in private placements and $625,464 in related party notes, which were also convertible. All of our convertible notes were automatically converted into 1,237,293 shares of common stock and 2,338,576 Units comprised of 4,677,152 shares of common stock and 2,841,603 warrants at an exercise price of $3.4375. We received net proceeds of $10,457,270 from the IPO, after deducting underwriting discounts, commissions and offering expenses payable by us upon the closing of the IPO on March 30, 2010. Additionally, we received a total of approximately $490,000 from Federal grants under the Qualifying Therapeutic Discovery Project program and a total of approximately $775,000 from the sale of our unused net operating losses through the State of New Jersey’s Economic Development Authority Technology Business Tax Certificate Transfer Program and a total of approximately $35,000 from qualified R&D expenditures refunded to us through the New York State Department of Taxation and Finance under the Qualifying Emerging Technology Incentive Program.
During the quarter ended September 30, 2012, we completed an initial closing on our private placement of 850 Units, each Unit consisting of (i) a one-year $1,000 aggregate principal amount 9% Senior Convertible Note (the "Notes"), convertible into shares (the "Conversion Shares") of common stock, at a conversion price of $0.35 per Note, and (ii) a five-year redeemable Warrant (the "Warrants"), to purchase 2,500 shares of Common Stock (the "Warrant Shares"), to certain accredited investors (the "Purchasers") pursuant to a Subscription Agreement dated September 20, 2012. The Units were offered on a "reasonable efforts, all-or-none" basis as to 500 Units for a minimum amount of $500,000, and, thereafter on a "reasonable efforts" basis as to the remaining 2,500 Units for a maximum amount of $3,000,000 (the "Maximum Amount"). We received gross proceeds of $850,000 and net proceeds of approximately $689,000. The maturity date of the Notes issued in the initial closing is September 20, 2013.
Net cash used in operating activities was $1,747,993 for the nine months ended September 30, 2012. The net loss of $2,237,548 for the nine months ended September 30, 2012 was higher than cash used in operating activities by $489,555. The difference is attributable primarily to a stock-based compensation charge of $183,177, net amortization of debt discount and deferred financing cost of $23,616, a decrease in prepaid expenses and other current assets of $456,871, which consisted primarily of collection of other receivables related to the sale of our unused net operating losses through the State of New Jersey’s Economic Development Authority Technology Business Tax Certificate Transfer Program and the amortization of insurance premiums during the nine months ended September 30, 2012. These were offset by a decrease in accounts payable of $146,079 and accrued expenses of $33,167 related to the reversal of year end 2011 bonuses accrued but not paid as a result of conserving cash during the period and additional accruals of professional fees related to debt financing.
For the purpose of valuing options and warrants granted to our employees, directors and officers during the nine months ended September 30, 2012, we used the Black-Scholes option pricing model. We granted options to purchase an aggregate of 380,000 and 826,000 shares of common stock to our employees, directors and officers and consultants during the nine months ended September 30, 2012 and 2011, respectively. Of the 380,000 options issued during the nine months ended September 30, 2012, we granted 180,000 performance based options to our Chief Operating Officer and Chief Financial Officer with an exercise price of $0.49, of which 25% vested on March 20, 2012, the date of grant, and were fully expensed, 25% vest upon the closing of a financing by the Company with gross proceeds in excess of $1.5 million which includes either the issuance of equity, debt or any combination thereof with an expectation by the Company it is probable that such objective will be achieved and the Company will be expensing the vesting of such options through the end of 2012, 25% vest upon CE Mark approval for CRMD003 (Neutrolin®) with an expectation by the Company it is probable that such objective will be achieved and the Company will be expensing the vesting of such options through the end of 2012 and 25% vest upon the launch of Neutrolin® in Europe, provided, however, that each of the events described occur on or before December 31, 2012, of which the Company has not determined if such options will vest by year end 2012 which will occur only if and until CE Marking is achieved, as such the Company has not recognized any expense for such options. To determine the risk-free interest rate, we utilized the U.S. Treasury yield curve in effect at the time of grant with a term consistent with the expected term of our awards. We estimated the expected term of the options granted based on anticipated exercises in future periods assuming the success of our business model as currently forecasted. The expected dividend yield reflects our current and expected future policy for dividends on our common stock. The expected stock price volatility for our stock options was calculated by examining historical volatilities for publicly traded industry peers, since we do not have any trading history for our common stock. We will continue to analyze the expected stock price volatility and expected term assumptions as more historical data for our common stock becomes available. The Company has experienced forfeitures of stock options issued to its former President and Chief Executive Officer, former Chief Medical Officer, former Chairman and Board member, former Chief Operating Officer/Chief Financial Officer and employees. As a result of such forfeitures, we established a forfeiture rate of 55% for stock option expense for the three and nine months ended September 30, 2012, respectively. The Company will continue to evaluate the estimated forfeiture rate derived from previous forfeitures of employees and board of directors and may adjust such forfeiture rate accordingly.
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