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EXCEL - IDEA: XBRL DOCUMENT - ProUroCare Medical Inc.Financial_Report.xls
10-Q - FORM 10-Q - ProUroCare Medical Inc.v325918_10q.htm
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EX-31.2 - EXHIBIT 31.2 - ProUroCare Medical Inc.v325918_ex31-2.htm
EX-32.1 - EXHIBIT 32.1 - ProUroCare Medical Inc.v325918_ex32-1.htm
EX-31.1 - EXHIBIT 31.1 - ProUroCare Medical Inc.v325918_ex31-1.htm
EX-10.4 - EXHIBIT 10.4 - ProUroCare Medical Inc.v325918_ex10-4.htm
v2.4.0.6
Description of Business and Summary of Significant Accounting Policies. (Policies)
9 Months Ended
Sep. 30, 2012
Accounting Policies [Abstract]  
Description Of Business Development Stage Activities [Policy Text Block]
(a)Description of Business, Development Stage Activities

 

ProUroCare Medical Inc. (“ProUroCare,” the “Company,” “we” or “us”) is engaged in the business of developing for market innovative products for the detection and characterization of male urological prostate disease. The primary focus of the Company is currently the ProUroScanTM prostate imaging device, which is designed to produce an elasticity image of the prostate as an adjunctive aid in visualizing and documenting abnormalities of the prostate that have been detected by digital rectal examination. The Company’s developmental activities, conducted by its wholly owned operating subsidiary, ProUroCare Inc. (“PUC”), have included the acquisition of several technology licenses, the purchase of intellectual property, the development of a strategic business plan and a senior management team, product development and fund raising activities. Through its development partner, Artann Laboratories, Inc. (“Artann”), clinical trials of the ProUroScan have been completed. On April 27, 2012, the ProUroScan received clearance from the Food and Drug Administration (“FDA”) for marketing in the United States.

Consolidation, Policy [Policy Text Block]
(b)Basis of Presentation

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. Operating results for the three and nine months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012 or any other period. The accompanying consolidated financial statements and related notes should be read in conjunction with the audited financial statements of the Company, and notes thereto, contained in our Annual Report on Form 10-K for the year ended December 31, 2011.

 

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, PUC. Significant intercompany accounts and transactions have been eliminated in consolidation. The financial information furnished reflects, in the opinion of management, all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the results of the interim periods presented.

Earnings Per Share, Policy [Policy Text Block]
(c)Net Loss Per Common Share

 

Basic and diluted loss per common share is computed by dividing net loss by the weighted-average number of common shares outstanding for the reporting period. Dilutive common-equivalent shares have not been included in the computation of diluted net loss per share because their inclusion would be anti-dilutive. Anti-dilutive common equivalent shares issuable based on future exercise of stock options and warrants or conversion of convertible debt could potentially dilute basic loss per common share in subsequent years. All options and warrants outstanding were anti-dilutive for the three and nine months ended September 30, 2012 and 2011 and the period from August 17, 1999 (inception) to September 30, 2012 due to the Company’s net losses. 10,598,385 shares of common stock issuable under stock options, warrants, and convertible debt were excluded from the computation of diluted net loss per common share for each of the three and nine month periods ended September 30, 2012 and the period from August 17, 1999 (inception) to September 30, 2012, respectively, and 10,046,056 such shares were excluded for each of the three and nine month periods ended September 30, 2011.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]
(d)Stock-Based Compensation

 

The Company’s policy is to grant stock options at fair value at the date of grant and to record stock-based employee compensation expense at fair value. The Company recognizes the expense related to the fair value of the award on a straight-line basis over the vesting period. From time to time, the Company issues options to non-employees. The fair value of options issued to non-employees (typically consultants) is measured on the earlier of the date the performance is complete or the date the consultant is committed to perform. In the event that the measurement date occurs after an interim reporting date, the options are measured at their then-current fair value at each interim reporting date. The fair value of options so determined is expensed on a straight-line basis over the associated performance period.

 

The Company uses the Black-Scholes option pricing model to estimate the fair value of options. The Black-Scholes model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option pricing models require the input of highly subjective assumptions. Because the Company’s employee and consultant stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, the existing models may not necessarily provide a reliable single measure of the fair value of the Company’s stock options. The weighted-average assumptions used in these calculations for options granted during the three and nine months ended September 30, 2012 and 2011 are summarized as follows:

 

 Three Months Ended
September 30
 Nine months Ended
September 30
 2012 2011 2012 2011 
Risk-free Interest Rate0.50% 0.62% 0.50% 1.14% 
Expected Life of Options Granted3.8 years 4.0 years 3.8 years 4.0 years 
Expected Volatility121.3% 125.8% 121.3% 125.5% 
Expected Dividend Yield0 0 0 0 

 

The expected life of the options is determined using a simplified method, computed as the average of the option vesting periods and the contractual term of the option. For performance-based options that vest upon the occurrence of an event, the Company uses an estimate of when the event will occur to determine the vesting period used for each option grant. Expected volatility is based on a simple average of weekly price data since April 5, 2004, the date the Company merged with PUC. Since the Company has only two employees, management expects and estimates that substantially all employee stock options will vest; therefore, the forfeiture rate used was zero. The risk-free rates for the expected terms of the stock options and awards are based on the U.S. Treasury yield curve in effect.

 

During the three month period ended September 30, 2012, the Company estimated that it was less likely than not that certain performance-based options will vest. As a result, $137,394 of compensation expense previously recognized related to these options was reversed. Stock-based compensation expense (income) related to options was $(100,604), $6,981 and $2,621,055 for the three and nine month periods ended September 30, 2012 and the period from August 17, 1999 (inception) to September 30, 2012, respectively, or $(0.01), $0.00, and $0.56 on a per share basis. The Company estimates the amount of future stock-based compensation expense related to currently outstanding options to be approximately $18,000 for the remainder of the year ending December 31, 2012 and $34,500 for the year ending December 31, 2013. Shares issued upon the exercise of stock options are newly issued from the Company’s authorized shares.

Warrant [Policy Text Block]
(e)Warrants

 

Warrants issued to lenders and loan guarantors who provide financing or loan guarantees to the Company are recorded at their fair value as debt issuance cost assets or original issue discount on the date the loans are made and expensed as interest or debt extinguishment expense over the term of the debt. During the three and nine months ended September 30, 2012, the Company issued or accrued for issuance 30,000 and 137,500 warrants related to loans and loan guarantees valued at $18,000 and $91,125, respectively. No such warrants were issued during the three and nine months ended September 30, 2011.

 

The Company’s policy is to record warrants issued to non-employees as consideration for goods or services received at their fair value on the issue date and expense them as an operating expense depending on the nature of the goods or services received. No warrants were issued to non-employees during the three and nine months ended September 30, 2012. The Company issued 0 and 150,000 warrants valued at $0 and $111,000 to a consultant as consideration for services during the three and nine months ended September 30, 2011.

 

The fair value of warrants is determined using the Black-Scholes pricing model. The weighted-average assumptions used are summarized as follows:

 

 Three Months Ended
September 30
 Nine Months Ended
September 30
 2012 2011 2012 2011 
Risk-free Interest Rate1.13% n/a 0.95% 1.52% 
Expected Life of Warrants Issued5.25 years n/a 5.13 years 4.89 years 
Expected Volatility122.7% n/a 122.5% 126.3% 
Expected Dividend Yield0 n/a 0 0
Debt, Policy [Policy Text Block]
(f)Debt Issuance Costs

 

The Company’s loans have been made pursuant to loan arrangements or guarantees that include the provision of compensation to the lenders or guarantors in the form of Company common stock or warrants. The value of the stock-based compensation that does not represent original issue discount is recorded as debt issuance cost and amortized over the term of the loans.

 

Pursuant to the debt guarantees of the Company’s bank loans (see Note 3) and loan arrangements with individual lenders (see Note 4), a total of 4,544 and 489,560 shares of stock valued at $4,089 and $477,297 were issued or accrued for issuance and recorded as debt issuance cost during the three and nine months ended September 30, 2012, respectively. In addition, 30,000 and 115,000 warrants valued at $18,000 and $83,550 were issued or accrued for issuance and recorded as debt issuance cost in connection with loans received from individual lenders during the three and nine months ended September 30, 2012, respectively.

 

Debt issuance costs are summarized as follows:

 

  September 30,
2012
 December 31, 2011
Debt issuance costs, gross $1,684,656  $1,204,639 
Less amortization  (1,611,454)  (1,130,008)
Debt issuance costs, net $73,202  $74,631 

 

Amortization expense related to debt issuance costs was $217,336, $562,276, and $3,664,899 for the three and nine months ended September 30, 2012, and the period from August 17, 1999 (Inception) to September 30, 2012, respectively. Amortization expense related to debt issuance costs was $87,353, and $304,081 for the three and nine months ended September 30, 2011. Fully amortized debt issuance costs related to debt subsequently retired of $80,830 was written off during the three and nine months ended September 30, 2012.

Liquidity Disclosure [Policy Text Block]
(g)Going Concern

 

The Company has incurred operating losses, accumulated deficit and negative cash flows from operations since inception, and our requirement for additional working capital to support future operations, raises substantial doubt as to our ability to continue as a going concern. As of September 30, 2012 the Company had an accumulated deficit of $38,286,094. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying unaudited consolidated financial statements do not include any adjustments related to recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.