RESEARCH AND DEVELOPMENT
|3 Months Ended|
Mar. 31, 2017
|Notes to Financial Statements|
|RESEARCH AND DEVELOPMENT||
Devicix Prototype Manufacturing Agreement
In November 2013, the Company accepted a proposal from Devicix, a Minneapolis, Minnesota based FDA registered contract designer and developer, to develop a commercially viable prototype of its product that could be used to receive regulatory approval from the FDA and other international agencies for use on humans to relieve pain associated with Facet Joint Syndrome. Through March 31, 2017, we have paid approximately $1,672,000 to Devicix.
The development work commenced in December 2013. The total estimated cost of this work at contract signing was $960,000; however, the terms of the proposal allow either the Company or the designer and developer to cancel the development work with 10-days notice.
The Company incurred expenses of approximately $206,000 and $117,000 for the three months ended March 31, 2017 and 2016, respectively, of which approximately $96,000 and $63,000, respectively, was included in accounts payable as of March 31, 2017 and December 31, 2016.
Denervex Generator Manufacturing Agreement
The DenerveX device requires a custom electrocautery generator for power. As described in Note 5, in November 2014, the Company contracted with Bovie Medical Corporation (“Bovie”) to customize one of their existing electrocautery generators for use with the DenerveX Device, and then manufacture that unit on a commercial basis once regulatory approval for the DenerveX is obtained. The Bovie agreement requires a base $295,000 development fee to customize the unit, plus additional amounts if further customization is necessary beyond predetermined estimates.
The Company paid approximately $31,000 and $0 for the three months ended March 31, 2017 and 2016, respectively, under this agreement. Through March 31, 2017, we have paid approximately $420,000 to Bovie.
Nortech Manufacturing Agreement
In November 2014, the Company selected Nortech Systems Inc. (“Nortech”), a Minneapolis, Minnesota based FDA registered contract manufacturer, to produce 315 DenerveX devices from the prototype supplied by Devicix for use in final development and clinical trials. The agreement with Nortech includes agreed upon per unit prices for delivery of the devices.
Actual work on development of the final units began in November 2014. The Company paid approximately $72,000 and $29,000 to Nortech for the three months ended March 31, 2017 and 2016, respectively.
Through March 31, 2017, we have paid approximately $816,000 to Nortech, of which approximately $28,000 was included in accounts payable as of March 31, 2017.
The entire disclosure for research, development, and computer software activities, including contracts and arrangements to be performed for others and with federal government. Includes costs incurred (1) in a planned search or critical investigation aimed at discovery of new knowledge with the hope that such knowledge will be useful in developing a new product or service, a new process or technique, or in bringing about a significant improvement to an existing product or process; or (2) to translate research findings or other knowledge into a plan or design for a new product or process or for a significant improvement to an existing product or process whether intended for sale or the entity's use, during the reporting period charged to research and development projects, including the costs of developing computer software up to the point in time of achieving technological feasibility and in-process research and development acquired in a business combination consummated during the period.
Reference 1: http://www.xbrl.org/2003/role/presentationRef