Full Press Release Details
Contact: Harold A. Hurwitz,
Chief Financial Officer
MRI INTERVENTIONS, INC. ANNOUNCES 2015 SECOND
IRVINE, CA, July 30, 2015
- MRI Interventions, Inc. (OTCQB: MRIC) today announced financial results for the second quarter ended June 30, 2015.
Quarter Ended June 30, 2015
Revenues were $826,000 for the three months
ended June 30, 2015, and $1.2 million for the same period in 2014, a decrease of $363,000, or 31%, attributable primarily to periodic
fluctuations in sales of the Company's ClearPoint System reusable products.
ClearPoint reusable product sales for the
three months ended June 30, 2015 were $93,000, compared with $389,000 of such sales for same period in 2014, representing a decrease
of $296,000 or 76%. Sales of the Company's reusable products, which consist primarily of computer hardware and software bearing
sales prices that are appreciably higher than those for disposable products, historically have fluctuated from quarter to quarter.
ClearPoint disposable product sales for
the three months ended June 30, 2015 were $654,000, compared with $760,000 for the same period in 2014, representing a decrease
of $106,000, or 14%. This decrease was due primarily to adverse weather conditions on June 30, 2015 that prevented delivery of
the Company's products, with an aggregate sales value of approximately $80,000, to customers who require FOB Destination
delivery terms. Accordingly, the Company was precluded by U.S. generally accepted accounting principles from recognizing revenue
on these shipments in the quarter ended June 30, 2015.
Gross margin on product revenues was 51%
for both three-month periods ended June 30, 2015 and 2014.
Research and development costs were $427,000
for the three months ended June 30, 2015, compared to $898,000 for the same period last year, a decrease of $471,000, or 52%. Approximately
$181,000 of the decrease related to a reduction in spending on the Company's ClearTrace development program, and $72,000
related to reductions in sponsored research. Commensurate with these decreases, materials and supplies decreased $87,000 and compensation
decreased $27,000 during the three months ended June 30, 2015, as compared with the corresponding period in 2014.
Selling, general and administrative expenses
were $2.2 million for the three months ended June 30, 2015, compared with $1.9 million for the same period last year, an increase
of $258,000, or 13%. The increase was primarily attributable to increases in compensation and related expenses resulting from growth
in the Company's commercial teams.
In March 2015, the Company announced the consolidation
of all major business functions into its Irvine, California headquarters. In connection with this consolidation, the Company closed
its Memphis, Tennessee office in May 2015. The Company did not retain any of its Memphis-based employees. A total of seven employees
were impacted by the consolidation, including three executives, whose termination of employment triggered a modification in the
terms of stock options previously granted to them. As a result of these modifications of option terms, the Company revalued such
options and recorded related, one-time restructuring costs of $493,000.
During the three months ended June 30, 2015,
the Company recorded a loss of $186,000, and during the three months ended June 30, 2014, it recorded a gain of $876,000, from
changes in the fair value of derivative liabilities associated with certain warrants the Company issued in equity private placement
Six Months Ended June 30, 2015
Revenues were $1.8 million for the six months ended June 30, 2015, and $2.0 million for the same period in 2014, a decrease of $175,000, or 9%, attributable primarily
to periodic fluctuations in sales of the Company's ClearPoint System reusable products.
ClearPoint reusable product sales for the
six months ended June 30, 2015 were $262,000, compared with $481,000 for the same period in 2014, representing a decrease of $219,000,
or 46%. Sales of the Company's reusable products, which consist primarily of computer hardware and software bearing sales
prices that are appreciably higher than those for disposable products, historically have fluctuated from period to period.
ClearPoint disposable product sales for
the six months ended June 30, 2015 were $1.4 million, compared with $1.2 million for the same period in 2014, representing an increase
of $192,000, or 15%. This increase is due primarily to the use of ClearPoint disposable products in a greater number of procedures
during the six months ended June 30, 2015.
Gross margin on product revenues for the
six months ended June 30, 2015 was 57%, compared to gross margin of 51% for the corresponding period in 2014. The improvement in
gross margin is primarily attributable to a more favorable product mix in the 2015 period, relative to the same period in 2014.
Research and development costs were $954,000
for the six months ended June 30, 2015, compared to $1.7 million for the same period in 2014, a decrease of $762,000, or 44%. Approximately
$361,000 of the decrease related to a reduction in spending on the Company's ClearTrace development program and $139,000
related to reductions in sponsored research. Commensurate with these decreases, materials and supplies decreased $79,000 and compensation
decreased $20,000 during the six months ended June 30, 2015, as compared with the same period in 2014.
Selling, general and administrative expenses
were $4.5 million for the six months ended June 30, 2015, compared with $3.7 million for the same period last year, an increase
of $746,000, or 20%. The increase was primarily attributable to an increase during the six months ended June 30, 2015 in cash compensation
costs of approximately $390,000, a portion of which was associated with overlapping executives' terms of employment so as
to provide for a coordinated transition of duties during the period in which the Company, as previously announced, consolidated
its business functions into its Irvine, California headquarters and closed its executive offices in Memphis, Tennessee. Also contributing
to the increase was an increase in share-based compensation of $284,000.
In connection with the consolidation of
the Company's offices, restructuring charges of $1.3 million, including $493,000 in non-cash charges related to the aforementioned
modification of option terms, were recorded during the six months ended June 30, 2015.
During the six months ended June 30, 2014, the
Company recorded a gain of $4.3 million related to the sale of certain intellectual property to Boston Scientific. The purchase
price was satisfied through the cancellation of related party convertible notes payable the Company previously issued to Boston
Scientific in the aggregate principal amount of $4.3 million. The Company recorded a gain equal to the purchase price, as the assets
sold had not been previously recorded on its balance sheet.
During the six months ended June 30, 2015, the
Company recorded a loss of $969,000, and during the six months ended June 30, 2014, it recorded a gain of $1.4 million, in each
case resulting from changes in the fair value of derivative liabilities associated with certain warrants the Company issued in
equity private placement transactions.
Management's Comments
"Revenues for the quarter
of $826,000 were lower than we anticipated. Delayed shipments due to storms in the Midwest at the very end of June, as well as
a capital order that did not close in the 2015 second quarter, reduced the overall revenue figure. Had the capital order closed
and the shipments arrived on time, we would have had another quarter in excess of $1 million," commented Frank Grillo, Chief
Executive Officer. "Interest continues to grow in ClearPoint, and we have signed on two more evaluation sites. Hospitals
specializing in pediatric care have shown particular interest in ClearPoint, and the improved patient experience it enables. Laser
ablation continues to be a larger portion of our case mix, and we saw increased activity by many accounts in this area."
"On the marketing front, we
were particularly pleased with the interest in our technology at the Annual Scientific Meeting of the American Association for
Neurologic Surgeons, held in Washington D.C. in May. Booth traffic was strong, and more than 100 clinicians came to a luncheon
session on real-time MRI guidance which we co-sponsored. In September, we anticipate an equally strong showing at the Annual Meeting
of the Congress of Neurological Surgeons."
"As previously communicated,
we closed our Memphis office this quarter, and transitioned all corporate functions to Irvine, California, which is now officially
our headquarters. Restructuring charges and payments related to this transition are now behind us. While our net cash burn in the
second quarter of 2015 was similar to the first quarter, we expect cash utilization in the third and fourth quarters will significantly
decline, based upon our revenue and expense budgets."
"We made great progress this quarter in
aligning our focus and operations to our best market opportunities, with a particular emphasis on laser ablation, which continues
to grow as a share of our procedures. ClearPoint is compatible with both of the two competing laser ablation technologies available
in the United States, and our collaborative efforts with both of these companies are contributing to our growth in laser cases.
We believe momentum continues to build, we remain confident of the benefits our technology brings to patient care, and we remain