Reverse Stock Split

6 Months Ended

Jun. 30, 2017

Equity [Abstract]

Reverse Stock Split

Stockholders’ Equity

Preferred stock and convertible preferred stock consist of the following:

	June 30, 2017		December 31, 2016
Preferred stock, $0.001 par value; 5,000,000 shares authorized at June 30, 2017 and December 31, 2016; no shares issued and outstanding at June 30, 2017 and December 31, 2016	$	—	$	—
Series B convertible preferred stock, $0.001 par value, 147,000 shares designated at June 30, 2017 and December 31, 2016, and 500 shares issued and outstanding at June 30, 2017 and December 31, 2016	$	1	$	1
Series D convertible preferred stock, $0.001 par value, 21,300 shares designated at June 30, 2017 and December 31, 2016, 14,052.93 and 17,202.65 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively	$	14	$	17
Series E convertible preferred stock, $0.001 par value, 7,000 and zero shares designated at June 30, 2017 and December 31, 2016, respectively, and 7,000 and zero shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively	$	7	$	—

Private Offerings of Common Stock and Warrants

In the first quarter of 2017, the Company completed a private equity offering with an institutional investor and its affiliates (collectively the “Investor”) and issued (i) 7,000 shares of Series E convertible preferred stock (the “Series E Preferred Stock”) at a price of $1,000 per share, and (ii) warrants to purchase up to 1,250,000 shares of common stock, par value $0.0001 per share (the “Common Stock”), at an exercise price of $5.60 per share (the “Q1 2017 Offering”). As a part of this offering, the Company reset (i) the conversion price of 19,458.90 shares of Series D convertible preferred stock that were held by the Investor to $5.60 per share, and (ii) the exercise price of warrants to purchase up to 2,934,484 shares of common stock that were held by the Investor to $5.60 per share. The Q1 2017 Offering resulted in gross proceeds of $7.0 million. After underwriting discounts, commission and expenses, net proceeds of the Q1 2017 Offering were $6.3 million.

Each share of Series E Preferred Stock has a stated value of $1,000 and is convertible at the option of the holder into the number of shares of common stock determined by dividing the stated value by the conversion price of $5.60, which is subject to adjustment as provided in the Certificate of Designation for the Series E Preferred Stock. The Series E Preferred Stock has no dividend rights, liquidation preference or other preferences over common stock and has no voting rights except as provided in the Certificate of Designation for the Series E Preferred Stock and as required by law.

The Q1 2017 Offering was accounted for as an extinguishment of the Investor’s equity holdings in recognition of the unrelated equity instruments that were revised in the transaction, the cumulative effect of adjustments to several series of convertible preferred shares in successive transactions, and the significant transfer of value in excess of the funding received by the Company. Under the extinguishment model, a deemed dividend was recognized within retained earnings which represented the fair value of issued Series E Preferred Stock and warrants plus the incremental the fair value of repricing the outstanding Series D Preferred Stock held by the Investor plus the incremental the fair value of repricing outstanding warrants, less the fair value of the consideration transferred, less the carrying value of the outstanding Series D Preferred Stock. The amount of the deemed dividend totaled $4.0 million. During the six months ended June 30, 2017, 3,149.72 shares of the Series D Preferred Stock were converted into a total of 218,125 shares of common stock. As of June 30, 2017, 14,052.93 shares of Series D Preferred Stock remained outstanding.

Between December 19, 2016 and closing of the Q1 2017 Offering on March 7, 2017, the Investor converted 5,405.975 shares of Series D Preferred Stock into 374,375 common shares at the original conversion rate. Following the resetting of the conversion rate, with effect from December 19, 2016, the Company owed the Investor an additional 590,977 common shares associated with these conversions. These common shares were not delivered to the Investor due to a provision in the financing agreement related to the Q1 2017 Offering which limits the Investor’s ownership in the Company to 4.99% of the outstanding common stock. The undelivered shares of common stock represented a non-cash obligation of the Company which was satisfied by the Company when the Investor’s ownership position reduced below the share ownership limitation level. During the six months ended June 30, 2017, 590,978 common shares were delivered to the Investor by the Company and as of June 30, 2017, zero common shares associated with these conversions remained undelivered.

The Company determined that equity classification was appropriate for the warrants issued in the Q1 2017 Offering, following guidance in the Derivatives and Hedging topic of the Codification. In making this equity classification determination, the Company noted the warrants may only be settled in shares of common stock and had no requirements to be settled in registered shares when exercised. The fair value of the five year warrants was estimated to be $3.49 million on the offering date using a Black-Scholes model with the following assumptions: stock price of $4.96, exercise price of $5.60, expected volatility of 70.2%, risk free interest rate of 2.04%, expected term of five years, and no dividends.

In June 2016, the Company completed a private equity offering with one institutional investor (the “Investor”) and issued (i) 21,300 shares of Series D convertible preferred stock (the “Series D Preferred Stock”) at a price of $1,000 per share, and (ii) warrants to purchase up to 1,475,069 shares of common stock, par value $0.0001 per share (the “Common Stock”), at an exercise price of $13.52 per share (the “June 2016 Offering”). As a part of this offering, the Company redeemed 13,800 shares of Series C convertible preferred stock (the “Series C Preferred Stock”) issued in December 2015 that were held by the Investor. Accordingly, the June 2016 Offering resulted in proceeds of $7.5 million. After underwriting discounts, commission and expenses, net proceeds of the June 2016 Offering were $6.7 million.

Each share of Series D Preferred Stock had a stated value of $1,000 and is convertible at the option of the holder into the number of shares of common stock determined by dividing the stated value by the conversion price of $14.44, which is subject to adjustment as provided in the Certificate of Designation for the Series D Preferred Stock. The Series D Preferred Stock has no dividend rights, liquidation preference or other preferences over common stock and has no voting rights except as provided in the Certificate of Designation for the Series D Preferred Stock and as required by law.

The June 2016 Offering was accounted for as a modification of the Investor’s Series C Preferred Stock. Under the modification model, a deemed dividend was recognized within retained earnings which represented the fair value of consideration transferred plus the fair value of repurchased Series C Preferred Stock, less the fair value of the newly issued Series D Preferred Stock and warrants. The amount of the deemed dividend totaled $19.8 million. During 2016, 4,097.35 shares of the Series D Preferred Stock were converted into a total of 283,750 shares of common stock. During six months endedJune 30, 2017, 3,149.72 shares of the Series D Preferred Stock were converted into a total of 255,625 shares of common stock. As of June 30, 2017, 14,052.93 shares of Series D Preferred Stock remained outstanding.

 In March 2016, the Company issued an aggregate of 22,260 shares of fully vested common stock with a value of $318,761 in partial settlement of 2015 management incentive compensation. The shares issued reflected the $14.32 closing price of the Company’s common stock as reported on the NASDAQ Capital Market on March 9, 2016.

Total compensation cost related to nonvested awards not yet recognized at June 30, 2017 was $461,547. The total compensation costs are expected to be recognized over a weighted-average period of 2.8 years.

Reverse Stock Split

The Company’s common stock is quoted on the NASDAQ Capital Market under the symbol “NURO.” One of the requirements for continued listing on the NASDAQ Capital Market is maintenance of a minimum closing bid price of $1.00 per share. The Company’s common stock had been trading below a price of $1.00 per share, and was subject to delisting from The NASDAQ Stock Market LLC, or NASDAQ. On May 11, 2017, the Company effected a 1-for-8 reverse stock split of its common stock, or the Reverse Stock Split. This action was taken to return the Company to compliance with Nasdaq listing requirements. As a result, every eight shares of the Company’s pre-reverse split common stock were combined and reclassified into one share of its common stock. The par value and other terms of the common stock were not affected by the Reverse Stock Split. The Company’s shares outstanding immediately prior to the split totaled 10,147,721, which were subsequently adjusted to 1,268,440 shares outstanding. Share, per share, and stock option amounts for all periods presented within the financial statements contained in the Quarterly Report on Form 10-Q, including the December 31, 2016 Balance Sheet amounts for common stock and additional paid-in capital, have been retroactively adjusted to reflect the Reverse Stock Split.