Full Press Release Details
A. Hurwitz, Chief Financial Officer
MRI INTERVENTIONS, INC. ANNOUNCES 2016
AND SIX MONTH RESULTS
Second Quarter Highlights Include Record
Number of Procedures
and 52% Year-Over-Year Growth in Disposable
IRVINE, CA, August 15, 2016 - MRI Interventions,
Inc. (OTCQB: MRICD) today announced financial results for the quarter and six months ended June 30, 2016.
Quarter Ended June 30, 2016 - Highlights
with the continued growth in procedures and disposable revenue in the 2016 second quarter. Our growth over the same quarter last
year was strong, especially in procedures and disposable revenue," said Frank Grillo, Chief Executive Officer, MRI Interventions.
"Our reusable equipment sales were down by approximately $50,000, although we believe we have made good progress building
the pipeline for near-term installations and systems sales during the remainder of this year. Adoption of our technology in laser,
drug delivery and DBS continues to grow, and we are pleased with the current level of interest by current and potential customers."
5 Musick, Irvine, California 92618 949.900.6833
Quarter Ended June 30, 2016 - Financial
Revenues were $1.1 million
for the three months ended June 30, 2016, and $826,000 for the same period in 2015, an increase of $278,000, or 34%, attributable
to increases in the Company's ClearPoint system disposable products.
ClearPoint disposable product
sales for the three months ended June 30, 2016 were $1.0 million, compared with $678,000 for the same period in 2015, representing
an increase of $350,000, or 52%. This increase was due primarily to a greater number of procedures performed using the ClearPoint
system within a larger installed base for ClearPoint in the three months ended June 30, 2016, relative to the same period in 2015.
ClearPoint reusable product
sales for the three months ended June 30, 2016 were $39,000, compared with $93,000 for the same period in 2015. Reusable products
consist primarily of computer hardware and software bearing sales prices that are appreciably higher than those for disposable
products and historically have fluctuated, sometimes significantly, from quarter to quarter.
Gross margin on product
revenues was 51% for the three months ended June 30, 2016, compared to 49% for the same period in 2015. The increase in gross margin
was due primarily to a favorable product mix toward disposable product sales during the three months ended June 30, 2016, relative
to the same period in 2015, as disposable products bear a higher margin relative to reusable products, and to a decrease in the
provision for inventory obsolescence during the three months ended June 30, 2016, relative to the same period in 2015. These factors
were partially offset by increases during the three months ended June 30, 2016, relative to the same period in 2015, in product
scrap levels and in the allocation of indirect costs, amounting to $112,000, to manufacturing in connection with our transition
from a focus on research and development to commercial activities.
Research and development
costs were $750,000 for the three months ended June 30, 2016, compared to $427,000 for the same period in 2015, an increase of
$323,000, or 76%. The increase was due primarily to increases in the three months ended June 30, 2016, relative to the same period
in 2015, in: (a) software development costs of $104,000 incurred in connection with the Company's development of the next
generation of the ClearPoint operating system; (b) compensation of $86,000 related primarily to an increase in headcount in January
2016; (c) regulatory fees of $35,000; and (d) product development costs other than software of $33,000.
Selling, general and administrative
expenses were $1.9 million for the three months ended June 30, 2016 as compared with $2.2 million for the same period in 2015,
a decrease of $299,000, or 14%. This decrease was attributable primarily to decreases during the three months ended June 30, 2016,
relative to the same period in 2015, in: (a) personnel costs, including share-based compensation and travel costs, of $197,000;
(b) the allocation of costs, amounting to $51,000, to manufacturing in connection with the Company's transition from a focus
on research and development to commercial activities; (c) occupancy costs of $25,000; and (d) medical device excise taxes, suspended
by federal legislation for a two-year period beginning January 1, 2016, of $14,000. These fluctuations were partially offset by
increases in: (i) professional fees of $44,000; and (b) public company and investor relations expenses of $37,000.
During 2015, the Company
incurred restructuring charges in connection with its consolidation of all major business functions into its Irvine, California
headquarters. In connection with this consolidation, the Company closed its Memphis, Tennessee office and did not retain any of
its Memphis-based employees. The termination of certain of these employees 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, constituting nearly all of the restructuring charges incurred during the three
months ended June 30, 2015.
The Company's operating
loss for the three months ended June 30, 2016 was $2.1 million, as compared with $2.7 million for the same period in 2015, an improvement
of $627,000, or 23%.
During the three months
ended June 30, 2016, the Company recorded a gain of $264,000, and during the three months ended June 30, 2015, the Company recorded
a loss of $186,000, resulting from additions to, and changes in the fair value of, the Company's derivative liabilities.
For the three months ended June 30, 2016, such derivative liabilities related to: (a) the issuance of warrants in connection with
2012 and 2013 private placement transactions; and (b) the amendment, in June 2016, of certain notes to add contingent conversion
terms and potential down round pricing protection of warrants issued in connection with such notes. For the three months ended
June 30, 2015, derivative liabilities were limited to the issuance of warrants in connection with the 2012 and 2013 private placement
In April 2016, the Company
entered into a securities purchase agreement with Brainlab AG ("Brainlab") under which a note payable to Brainlab in
the principal amount of $4.3 million (the "Brainlab Note") was restructured and, among other items, the Company: (i)
entered into a patent and technology license agreement with Brainlab for software relating to the Company's SmartFrame device,
in consideration for the cancellation of $1.0 million of the principal amount of the Brainlab Note; and (ii) issued to Brainlab,
in consideration for the cancellation of approximately $1.3 million of the principal amount of the Brainlab Note, equity units,
consisting of shares of the Company's common stock and warrants to purchase shares of common stock. As a result of the foregoing,
the Company recorded a debt restructuring gain of $941,000 representing the difference between (a) the aggregate fair value of
the license agreement, which had no cost basis on the Company's consolidated balance sheets, and the equity units, and (b)
the aggregate principal amount of the Brainlab Note cancelled as consideration.
n June 30, 2016, the Company
entered into amendments (the "Amendments") with Brainlab, with respect to the Brainlab Note, and with two holders of
the 2014 Secured Notes. Pursuant to the Amendments, the parties agreed that, in the event the Company closes a qualified public
offering: (i) $2,000,000 of the principal balance of those notes, plus all unpaid accrued interest on that amount, will automatically
convert into the security offered in the qualified public offering; and (ii) the exercise price for 46,207 shares of common stock
underlying warrants issued in connection with those notes will be reduced as provided in the Amendments. Based on the provisions
of the Amendments, on June 30, 2016, the Company recorded a debt restructuring loss of $820,000 resulting from the restructuring
of the Brainlab Note and those 2014 Secured Notes.
Net loss for the three
months ended June 30, 2016 was $1.8 million, as compared with $3.1 million for the same period in 2015, an improvement of $1.3
Six Months Ended June 30, 2016 -
Revenues were $2.5 million
for the six months ended June 30, 2016, and $1.8 million for the same period in 2015, an increase of $662,000, or 36%, attributable
primarily to increases in the Company's ClearPoint system disposable products.
ClearPoint disposable product
sales for the six months ended June 30, 2016 were $2.1 million, compared with $1.5 million for the same period in 2015, representing
an increase of $614,000, or 40%. This increase was due primarily to a greater number of procedures performed using the Company's
ClearPoint system within a larger installed base for ClearPoint in the six months ended June 30, 2016, relative to the same period
ClearPoint reusable product
sales for the six months ended June 30, 2016 were $301,000, compared with $230,000 of such sales for the same period in 2015, representing
an increase of $71,000, or 31%. 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, may vary, sometimes significantly,
from quarter to quarter.
Gross margin on product