Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Aug. 15, 2016 | |
Document Information [Line Items] | ||
Entity Registrant Name | Diffusion Pharmaceuticals Inc. | |
Entity Central Index Key | 1,053,691 | |
Trading Symbol | dffn | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Entity Common Stock, Shares Outstanding (in shares) | 103,453,492 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) | Jun. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 3,006,149 | $ 1,997,192 |
Prepaid expenses, deposits and other current assets | 238,004 | 45,921 |
Total current assets | 3,244,153 | 2,043,113 |
Property and equipment, net of accumulated depreciation of of $228,248 and $215,028, respectively | 91,399 | 51,996 |
Intangible assets | 9,317,000 | |
Goodwill | 7,105,031 | |
Other assets | 166,894 | 181,487 |
Total assets | 19,924,477 | 2,276,596 |
Current liabilities: | ||
Accounts payable | 1,014,948 | 424,675 |
Other accrued expenses and liabilities | 741,878 | 621,669 |
Current portion of convertible debt, net | 424,964 | |
Total current liabilities | 1,756,826 | 1,471,308 |
Convertible debt, net of current portion | 550,000 | 818,646 |
Deferred income taxes | 3,536,933 | |
Other liabilities | 48,209 | 28,265 |
Total liabilities | 5,891,968 | 2,318,219 |
Stockholders' Equity (Deficit) | ||
Common stock, $0.001 par value: 1,000,000,000 shares authorized; 103,453,492 and 81,186,620 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively | 103,454 | 81,187 |
Additional paid-in-capital | 66,111,032 | 42,029,808 |
Accumulated deficit | (52,181,977) | (42,152,618) |
Total stockholders' equity (deficit) | 14,032,509 | (41,623) |
Total liabilities and stockholders' equity (deficit) | $ 19,924,477 | $ 2,276,596 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) | Jun. 30, 2016 | Dec. 31, 2015 |
Property and equipment, accumulated depreciation | $ 228,248 | $ 215,028 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued (in shares) | 103,453,492 | 81,186,620 |
Common stock, shares outstanding (in shares) | 103,453,492 | 81,186,620 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Operating expenses: | ||||
Research and development | $ 1,444,906 | $ 948,757 | $ 3,797,713 | $ 1,680,665 |
General and administrative | 2,349,227 | 347,118 | 6,211,711 | 805,875 |
Depreciation | 5,845 | 1,916 | 13,698 | 3,926 |
Loss from operations | 3,799,978 | 1,297,791 | 10,023,122 | 2,490,466 |
Interest expense, net | 6,216 | 33,337 | 6,237 | 84,147 |
Net loss | $ (3,806,194) | $ (1,331,128) | $ (10,029,359) | $ (2,574,613) |
Per share information: | ||||
Net loss per share - basic and diluted (in dollars per share) | $ (0.04) | $ (0.06) | $ (0.10) | $ (0.12) |
Basic and diluted weighted average shares outstanding (in shares) | 102,628,977 | 22,087,431 | 101,294,067 | 22,087,431 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Changes in Stockholders' Equity (Deficit) (Unaudited) - 6 months ended Jun. 30, 2016 - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Balance (in shares) at Dec. 31, 2015 | 81,186,620 | |||
Balance at Dec. 31, 2015 | $ 81,187 | $ 42,029,808 | $ (42,152,618) | $ (41,623) |
Stock Issued During Period, Shares, Acquisitions | 18,614,968 | 18,614,968 | ||
Common stock issued to former shareholders of RestorGenex | $ 18,615 | 19,527,385 | $ 19,546,000 | |
RestorGenex stock options assumed | 1,321,000 | 1,321,000 | ||
RestorGenex common stock warrants assumed | 384,000 | $ 384,000 | ||
Stock Issued During Period, Shares, Issued for Services | 1,480,719 | 456,427 | ||
Stock Issued During Period, Value, Issued for Services | $ 1,481 | 1,407,882 | $ 1,409,363 | |
Conversion of convertible notes (in shares) | 2,171,185 | 2,171,185 | ||
Conversion of convertible notes | $ 2,171 | 709,324 | $ 711,495 | |
Stock-based compensation expense | 731,633 | 731,633 | ||
Net loss | (10,029,359) | (10,029,359) | ||
Balance (in shares) at Jun. 30, 2016 | 103,453,492 | |||
Balance at Jun. 30, 2016 | $ 103,454 | $ 66,111,032 | $ (52,181,977) | $ 14,032,509 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Cash flows used in operating activities: | ||
Net loss | $ (10,029,359) | $ (2,574,613) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 13,698 | 3,926 |
Loss on disposal or sale of assets | 6,761 | |
Stock-based compensation expense | 731,633 | 232,581 |
Common stock issued for advisory services | 1,409,363 | |
Non-cash interest expense | 4,754 | 91,344 |
Changes in operating assets and liabilities: | ||
Prepaid expenses, deposits and other assets | 17,712 | 8,642 |
Accounts payable, accrued expenses and other liabilities | 356,124 | 300,522 |
Net cash used in operating activities | (7,489,314) | (1,937,598) |
Cash flows provided by investing activities: | ||
Purchases of property and equipment | (2,331) | (10,944) |
Maturities of certificates of deposit | 2,500,000 | |
Cash received in reverse merger transaction | 8,500,602 | |
Net cash provided by investing activities | 8,498,271 | 2,489,056 |
Net increase in cash and cash equivalents | 1,008,957 | 551,458 |
Cash and cash equivalents, beginning of period | 1,997,192 | 2,336,519 |
Cash and cash equivalents, end of period | 3,006,149 | 2,887,977 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Conversion of convertible notes and related accrued interest into common stock | 711,495 | 0 |
Consideration in connection with RestorGenex Corporation merger transaction | $ 21,261,000 | $ 0 |
Note 1 - Organization and Descr
Note 1 - Organization and Description of Business | 6 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Nature of Operations [Text Block] | 1. Organization and Description of Business Diffusion Pharmaceuticals Inc. (“Diffusion” or the “Company”), a Delaware Corporation, is a clinical stage biotechnology company focused on extending the life expectancy of cancer patients by improving the effectiveness of current standard-of-care treatments, including radiation therapy and chemotherapy. The Company’s lead product candidate, trans sodium crocetinate (“TSC”), uses a novel mechanism to re-oxygenate the microenvironment of solid cancerous tumors, thereby enhancing tumor cells’ response to conventional treatment without additional side effects. TSC has received orphan drug designations for the treatment of glioblastoma multiforme (“GBM”) and metastatic brain cancer. The Company expects to enter a Phase III study in newly diagnosed GBM patients and potentially a Phase II study in patients with pancreatic cancer in the next twelve months, assuming the availability of financial resources. On January 8, 2016, the Company completed a merger (the “Merger”) of a wholly-owned subsidiary with Diffusion Pharmaceuticals LLC (“Diffusion LLC”) pursuant to an Agreement and Plan of Merger, dated December 15, 2015, by and among the Company, Arco Merger Sub LLC and Diffusion LLC (the “Merger Agreement”) and, as a result, Diffusion LLC became a wholly-owned subsidiary of the Company. At the effective time of the Merger, each outstanding unit of membership interest of Diffusion LLC (“Diffusion Units”) was converted into the right to receive 3.652658 shares of the Company’s common stock, as determined pursuant to the Merger Agreement (“Exchange Ratio”). Also at the effective time of the Merger, $1,125,000 of Diffusion LLC convertible notes were outstanding and the rights of the holders of each outstanding convertible promissory note convertible into Diffusion Units (“Diffusion Convertible Notes”) was converted into the right to convert such securities into a number of shares of the Company’s common stock equal to the number of Diffusion Units into which such Diffusion Convertible Notes would have been convertible under the original terms of the note multiplied by the Exchange Ratio. In addition, at the effective time of the Merger and as a result of the Merger, all outstanding options to purchase Diffusion Units were converted into and became options to purchase the Company’s common stock on terms substantially identical to those in effect prior to the effective time of the Merger, except for adjustments to the underlying number of shares and the exercise price based on the Exchange Ratio. As a result of the Merger, at the Effective Time, after taking into account the adjustments to the number of shares and exercise price as a result of the Merger, the Company assumed options to purchase Diffusion Units which converted into options to purchase an aggregate of 14,952,101 shares of the Company’s common stock with a weighted average exercise price of $0.40 per share. No fractional shares of the Company’s common stock were issued in connection with the Merger, and holders of Diffusion Units are eligible to receive cash in lieu thereof. The merger transaction was accounted for as a reverse acquisition under the acquisition method of accounting. Because Diffusion LLC’s pre-transaction owners held an 84.1% economic and voting interest in the combined company immediately following the closing of the merger, Diffusion LLC is considered to be the acquirer of the Company for accounting purposes. Accordingly, the historical financial statements of Diffusion LLC became the Company’s historical financial statements including the comparative prior periods. All references in the unaudited interim condensed consolidated financial statements to the number of shares and per-share amounts of common stock have been retroactively restated to reflect the Exchange Ratio. Immediately following the Merger, the holders of the Company’s common stock immediately prior to the merger held 18,614,968 shares, or approximately 15.9% of the common stock of the combined company, in each case, on a fully-diluted basis (subject to certain exceptions and adjustments). |
Note 2 - Liquidity
Note 2 - Liquidity | 6 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Substantial Doubt about Going Concern [Text Block] | 2. Liquidity The Company has not generated any revenues from product sales and has funded operations primarily from the proceeds of private placements of its membership units and convertible notes. Substantial additional financing will be required by the Company to continue to fund its research and development activities. No assurance can be given that any such financing will be available when needed or that the Company’s research and development efforts will be successful. The Company regularly explores alternative means of financing its operations and seeks funding through various sources, including public and private securities offerings, collaborative arrangements with third parties and other strategic alliances and business transactions. However, the Company currently does not have any commitments to obtain additional funds and may be unable to obtain sufficient funding in the future on acceptable terms, if at all. If the Company cannot obtain funding in the immediate future, it will need to delay, scale back or eliminate some or all of its research and development programs or enter into collaborations with third parties to: commercialize potential products or technologies that it might otherwise seek to develop or commercialize independently; consider various strategic alternatives, including a merger or sale of the Company; or cease operations. If the Company engages in collaborations, it may receive lower consideration upon commercialization of such products than if it had not entered into such arrangements or if it entered into such arrangements at later stages in the product development process. The Company has prepared its financial statements assuming that it will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred net losses since inception and it expects to generate losses from operations for the foreseeable future primarily due to research and development costs for its potential product candidates. Various internal and external factors will affect whether and when the Company’s product candidates become approved drugs and how significant their market share will be. The regulatory approval and market acceptance of the Company’s proposed future products (if any), length of time and cost of developing and commercializing these product candidates and/or failure of them at any stage of the drug approval process will materially affect the Company’s financial condition and future operations. The Company believes its cash and cash equivalents at June 30, 2016 are sufficient to fund operations and meet its research and development goals into the fourth quarter of 2016. |
Note 3 - Basis of Presentation
Note 3 - Basis of Presentation and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Significant Accounting Policies [Text Block] | 3. Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information as found in the Accounting Standard Codification, or ASC, and Accounting Standards Updates, or ASUs, of the Financial Accounting Standards Board, or FASB, and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission, or SEC. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements of the Company include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the financial statements) considered necessary to present fairly the Company’s financial position as of June 30, 2016, its results of operations for the three and six months ended June 30, 2016 and 2015 and cash flows for the six months ended June 30, 2016 and 2015. Operating results for the six months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. The unaudited interim condensed consolidated financial statements, presented herein, do not contain the required disclosures under GAAP for annual financial statements. The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the annual audited financial statements and related notes as of and for the year ended December 31, 2015 filed with the SEC on Form 8-K/A on March 25, 2016. The Company’s members’ capital at December 31, 2015 has been recast as common stock and additional paid in capital. Fair Value of Financial Instruments The carrying amounts of the Company’s financial instruments, including cash equivalents, accounts payable, and accrued expenses approximate fair value due to the short-term nature of those instruments. The carrying value of the contingent consideration liability is the estimated fair value of the liability (Note 11). As of June 30, 2016 and December 31, 2015, the fair value of the Company’s outstanding convertible notes was approximately $1,700,000 and $4,800,000, respectively. The fair value of the convertible notes falls within Level 3 of the fair value hierarchy at December 31, 2015 as it is significantly driven by the creditworthiness of the Company, which is an unobservable input, and Level 1 at June 30, 2016 as the Company’s debt is convertible into shares of the Company’s common stock, which has quoted prices in an active market. Cash and Cash Equivalents The Company considers any highly liquid investments, such as money market funds, with original maturities of three months or less to be cash and cash equivalents. Property and Equipment The Company records property and equipment at cost less accumulated depreciation and amortization. Costs of renewals and improvements that extend the useful lives of the assets are capitalized. Maintenance and repairs are expensed as incurred. Depreciation is recognized on a straight-line basis over the estimated useful lives of the assets, which generally range from five to fifteen years. The Company amortizes leasehold improvements over the shorter of the estimated useful life of the asset or the term of the related lease. Upon retirement or disposition of assets, the costs and related accumulated depreciation and amortization are removed from the accounts with the resulting gains or losses, if any, reflected in results of operations. Long-Lived Assets Long-lived assets are reviewed for potential impairment whenever events indicate that the carrying amount of such assets may not be recoverable. The Company does this by comparing the carrying value of the long-lived assets with the estimated future undiscounted cash flows expected to result from the use of the assets, including cash flows from disposition. If it is determined an impairment exists, the asset is written down to its estimated fair value. The Company has not recognized any impairment or disposition of long-lived assets during the six months ended June 30, 2016. Intangible Assets Intangible assets are comprised of identifiable in-process research and development (“IPR&D”) assets and are considered indefinite-lived intangible assets and are assessed for impairment annually or more frequently if impairment indicators exist. If the associated research and development effort is abandoned, the related assets will be written-off and the Company will record a non-cash impairment loss. For those compounds that reach commercialization, the IPR&D assets will be amortized over their estimated useful lives. In August 2016, the Company determined that the IPR&D asset associated with the Company’s RES-440 product candidate will be abandoned and written down to $0 (Note 12). Goodwill Goodwill is the excess of the cost of an acquired entity over the net amounts assigned to tangible and intangible assets acquired and liabilities assumed. Goodwill is not amortized, but is subject to an annual impairment test. The Company has a single reporting unit and all goodwill relates to that reporting unit. The Company performs its annual goodwill impairment test on October 1 of its fiscal year or more frequently if changes in circumstances or the occurrence of events suggest that an impairment exists. If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the implied fair value of the reporting unit’s goodwill is less than the carrying value of the reporting unit’s goodwill. Research and Development Major components of research and development costs include internal research and development (such as salaries and related employee benefits, equity-based compensation, supplies and allocated facility costs) and contracted services (research and development activities performed on the Company’s behalf). Costs incurred for research and development are expensed as incurred. At the end of the reporting period, the Company compares payments made to third-party service providers to the estimated progress toward completion of the research or development objectives. Such estimates are subject to change as additional information becomes available. Depending on the timing of payments to the service providers and the progress that the Company estimates has been made as a result of the service provided, the Company may record net prepaid or accrued expenses relating to these costs. Upfront milestone payments made to third parties who perform research and development services on the Company’s behalf are expensed as services are rendered. Patent Costs Patent costs, including related legal costs, are expensed as incurred and are recorded within general and administrative expenses in the statements of operations. Income Taxes Prior to the Merger, Diffusion LLC was treated as a partnership for federal and state income tax purposes. Diffusion LLC’s taxable income or loss, as well as certain other tax attributes, were passed through directly to its members and were reported in each member’s individual income tax return. Upon completion of the Merger as discussed in Note 1, the Company converted from a partnership to a corporation. As a corporation, the Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The Company recognizes the benefit of an uncertain tax position that it has taken or expects to take on its income tax return it files, if such a position is more likely than not to be sustained. Debt Issuance Costs Debt issuance costs incurred in connection with debt financing arrangements are amortized to interest expense over the life of the respective financing arrangement using the effective interest method. Stock-Based Compensation The Company measures employee and nonemployee stock-based awards at grant-date fair value and records compensation expense on a straight-line basis over the vesting period of the award. Stock-based awards issued to non-employees are revalued until the award vests. The Company uses the Black-Scholes option pricing model to value its stock option awards. Estimating the fair value of stock option awards requires management to apply judgment and make estimates, including the volatility of the Company’s common stock, the expected term of the Company’s stock options, the expected dividend yield and the fair value of the Company’s common stock on the measurement date. As a result, if factors change and management uses different assumptions, stock-based compensation expense could be materially different for future awards. The expected life of stock options was estimated using the “simplified method” for employee options as the Company has no historical information to develop reasonable expectations about future exercise patterns and post vesting employment termination behavior for its stock option grants. The simplified method is based on the average of the vesting tranches and the contractual life of each grant. For options granted to non-employees, the Company uses the remaining contractual life. For stock price volatility, the Company uses comparable public companies as a basis for its expected volatility to calculate the fair value of option grants. The Company assumes no dividend yield because dividends are not expected to be paid in the near future, which is consistent with the Company’s history of not paying dividends. The risk-free interest rate is based on U.S. Treasury notes with a term approximating the expected life of the option. Net Loss Per Share Basic loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during each period. Diluted loss per share includes the effect, if any, from the potential exercise or conversion of securities, such as convertible debt, warrants, stock options and unvested restricted stock that would result in the issuance of incremental shares of common stock. In computing the basic and diluted net loss per share applicable to common stockholders, the weighted average number of shares remains the same for both calculations due to the fact that when a net loss exists, dilutive shares are not included in the calculation as the impact is anti-dilutive. The following potentially dilutive securities outstanding as of June 30, 2016 and 2015 have been excluded from the computation of diluted weighted average shares outstanding, as they would be anti-dilutive: June 30, 2016 2015 Convertible debt 2,115,407 58,534,765 Common stock warrants 4,612,089 — Stock options 17,879,116 11,095,734 Unvested restricted stock awards 122,725 184,093 24,729,337 69,814,592 Amounts in the table reflect the common stock equivalents of the noted instruments. Recent Accounting Pronouncements On March 30, 2016, the FASB issued ASU 2016-09, Compensation – Improvements to Employee Share-Based Payment Accounting In March 2016, the FASB issued ASU 2016-06, Contingent Put and Call Options in Debt Instruments In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern |
Note 4 - Acquisition
Note 4 - Acquisition | 6 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Business Combination Disclosure [Text Block] | 4. Acquisition Merger of RestorGenex Corporation and Diffusion Pharmaceuticals LLC On December 15, 2015, the Company, formerly known as RestorGenex Corporation (“RestorGenex”), entered into the Merger Agreement with Diffusion LLC. On January 8, 2016, the Company completed the Merger, with Diffusion LLC surviving as a wholly-owned subsidiary of the Company. Subsequent to the Merger, the Company was renamed “Diffusion Pharmaceuticals Inc.” and the Company’s ticker symbol on the OTC Bulletin Board was changed from “RESX” to “DFFN.” Diffusion LLC and RestorGenex entered into the merger agreement in an effort to provide improved access to the capital markets in order to obtain the resources necessary to accelerate development of TSC in multiple clinical programs and continue to build an oncology-focused company. The merger transaction was accounted for as a reverse acquisition under the acquisition method of accounting. Because Diffusion LLC’s pre-transaction owners held an 84.1% economic and voting interest in the combined company immediately following the completion of the merger, Diffusion LLC is considered to be the acquirer of RestorGenex for accounting purposes. Each outstanding unit of membership interest of Diffusion LLC (the Diffusion Units) was converted into the right to receive 3.652658 shares of the Company’s common stock, par value $0.001 per share (the Common Stock), as determined pursuant to the Merger Agreement (the Exchange Ratio). Additionally, the right of holders of outstanding convertible notes of Diffusion LLC to convert such notes into Diffusion Units was converted into the right to convert such notes into a number of shares of Common Stock equal to the number of Diffusion Units into which such note would have been convertible under the original terms of the note multiplied by the Exchange Ratio. In addition, all outstanding options to purchase Diffusion Units were assumed by the Company and the right to exercise converted into stock options to purchase Common Stock on terms substantially identical to those in effect prior to the merger transaction, except for adjustments to the underlying number of shares and the exercise price based on the Exchange Ratio. In connection with the Merger, the Company’s Board of Directors authorized, declared and effected a distribution of contingent value rights (CVRs) to shareholders of the Company as of the close of business on January 7, 2016. Each CVR is a non-transferable right to potentially receive certain cash payments in the event the combined company receives net cash payments during the five-year period after the merger transaction as a result of the sale, transfer, license or similar transaction or any other agreement to the extent relating to the development of the Company’s product currently known as RES-440, a “soft” anti-androgen. See Note 11 for additional fair value information. The purchase consideration in a reverse acquisition is determined with reference to the value of equity that the accounting acquirer, Diffusion LLC, would have had to issue to the owners of the accounting acquiree, RestorGenex, to give the pre-acquisition RestorGenex equity holders the same percentage interest in Diffusion that such pre-acquisition RestorGenex equity holders held in the Company immediately following the reverse acquisition. The purchase price is calculated as follows: Purchase consideration Fair value of RestorGenex shares outstanding $ 19,546,000 Estimated fair value of RestorGenex stock options assumed by Diffusion 1,321,000 Estimated fair value of RestorGenex warrants assumed by Diffusion 384,000 CVRs – RES-440 product candidate 10,000 Total preliminary purchase price $ 21,261,000 The Merger transaction has been accounted for using the acquisition method of accounting, which requires that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The valuation technique utilized to value the IPR&D was the cost approach. The following table summarizes the preliminary allocation of the purchase price to the assets acquired and liabilities assumed as of the acquisition date: Cash and cash equivalents $ 8,500,602 Prepaid expenses and other assets 195,200 Property and equipment 57,531 Intangible assets 9,317,000 Goodwill 7,105,031 Accrued liabilities (377,431 ) Deferred tax liability (3,536,933 ) Net assets acquired $ 21,261,000 The above allocation of the purchase price is based on certain preliminary valuations and other analyses that have not been completed as of the date of the filing. Any changes in the estimated fair values of the net assets recorded for the Merger upon the finalization of more detailed analyses of the facts and circumstances that existed at the date of the transaction may change the allocation of the purchase price. As such, the purchase price allocations for this transaction are preliminary estimates, which are subject to change within the measurement period. Qualitative factors supporting the recognition of goodwill due to the Merger include the Company’s enhanced ability to secure additional capital and gain access to capital market opportunities as a public company and the potential value created by having a more well-rounded clinical development portfolio by adding the earlier stage RestorGenex products to the Company’s later state product portfolio. Intangible assets were as follows: June 30, 2016 December 31, 2015 Gross Carrying Amount Accumulated Amortization Intangible Assets, net Gross Carrying Amount Accumulated Amortization Intangible Assets, net RES 529 $ 8,385,000 $ 0 $ 8,385,000 $ 0 $ 0 $ 0 RES-440 932,000 0 932,000 0 0 0 Total in-process research and development costs (IPR&D) $ 9,317,000 $ 0 $ 9,317,000 $ 0 $ 0 $ 0 The Company’s novel PI3K/Akt/mTOR pathway inhibitor, RES-529, is in preclinical development for oncology. Through a series of in vitro and in vivo animal models, RES-529 has been shown to have activity in several cancer types due to its ability to target and inhibit the PI3K/Akt/mTOR signal transduction pathway. RES-529 is a first-in-class inhibitor of both TORC1 and TORC2 that is mechanistically differentiated from other PI3K/Akt/mTOR pathway inhibitors currently in development. RES-529 has shown activity in both in vitro and in vivo glioblastoma animal models and has been demonstrated to be orally bioavailable and able to cross the blood brain barrier. In August 2016, the Company determined that the IPR&D asset associated with the Company’s RES-440 product candidate will be abandoned and written down to $0 (Note 12). Pro Forma Financial Information (Unaudited) The following pro forma financial information reflects the consolidated results of operations of the Company as if the acquisition of RestorGenex had taken place on January 1, 2015. The pro forma financial information is not necessarily indicative of the results of operations as they would have been had the transactions been effected on the assumed date. Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Net revenues $ — $ — $ — $ — Net loss $ (3,806,194 ) $ (5,300,450 ) $ (8,464,138 ) $ (10,060,351 ) Basic and diluted loss per share $ (0.04 ) $ (0.13 ) $ (0.08 ) $ (0.24 ) Nonrecurring pro forma transaction costs directly attributable to the Merger were $0 and $1,644,768 for the three and six month periods ended June 30, 2016, respectively, and have been deducted from the net loss presented above. The costs deducted from the six months ended June 30, 2016 periods included a success fee of $1,000,000 and approximately 457,000 shares of common stock with a fair market value of $487,500 paid to a financial advisor upon the closing of the Merger on January 8, 2016. Additionally, the Company incurred approximately $3,000,000 in severance costs as a result of resignations of executive officers immediately prior to the reverse merger. These costs are excluded from the pro forma financial information for the three and six months ended June 30, 2016. There were no nonrecurring proforma transaction costs directly attributable to the Merger for the three and six month periods ended June 30, 2015. |
Note 5 - Other Accrued Expenses
Note 5 - Other Accrued Expenses and Liabilities | 6 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Other Liabilities Disclosure [Text Block] | 5. Other Accrued Expenses and Liabilities Other accrued expenses and liabilities consisted of the following: June 30, 2016 December 31, 2015 Accrued interest payable $ 0 $ 14,009 Accrued payroll and payroll related expenses 345,239 56,947 Accrued professional fees 47,285 327,950 Accrued clinical studies expenses 282,224 184,737 Other accrued expenses 67,130 38,026 Total $ 741,878 $ 621,669 |
Note 6 - Convertible Notes
Note 6 - Convertible Notes | 6 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Debt Disclosure [Text Block] | 6. Convertible Notes From December 2009 through December 2015, Diffusion LLC issued unsecured convertible promissory notes (the “Convertible Notes”) for gross proceeds of $22,384,320. The Convertible Notes bear interest at either 1% or 1.5% per annum. The Convertible Notes accrue interest beginning on the date of issuance, with the principal and accrued interest due upon the earlier of the maturity date or conversion date. At any time prior to the maturity date, the holders may elect to convert, in whole or in part, the Convertible Notes and any related accrued but unpaid interest into common stock of the Company at a price per share equal to the conversion price. The current and noncurrent portions of accrued interest are included within accrued expenses and other liabilities, respectively, on the accompanying balance sheets. In the event of a Change of Control or a Qualified Financing (each as defined below), the holders of the Convertible Notes may declare the aggregate outstanding amount of the Convertible Notes to be immediately due and payable or may elect to convert the Convertible Notes and any accrued but unpaid interest as if such conversion took place on the maturity date. A Change of Control is defined as: (i) a merger or consolidation in which the members immediately prior to the transaction do not own, directly or indirectly, more than 50% of the membership interest of the surviving company; (ii) the acquisition of more than 50% of the Company’s outstanding membership interest by a single person, entity or group or persons or entities acting in concert or (iii) the sale or transfer of all or substantially all of the assets of the Company. A Qualified Financing is defined as a sale of units or other transaction that results in gross proceeds to the Company of at least $15,000,000, including the conversion of the Convertible Notes. Through the date the financial statements were available to be issued, there have been no Change of Control or Qualified Financing events. The Company may prepay the Convertible Notes, in full or in part, at any time on a pari passu basis. Upon receipt of notice that the Company intends to prepay the Convertible Notes, holders will have the option to convert their notes in lieu of payment. At the effective time of the Merger, $1,125,000 in aggregate principal amount of Convertible Notes were outstanding and the rights of the holders of each such outstanding Convertible Note convertible into Diffusion Units were converted into the right to convert such securities into a number of shares of the Company’s common stock equal to the number of Diffusion Units such Convertible Note would be convertible into pursuant to its terms multiplied by the Exchange Ratio. The following table provides the details of the Convertible Notes outstanding at June 30, 2016: Convertible Note Series Issue Date Maturity Date Conversion Price Interest Rate Total Principal B 3/15/2011 6/30/2018 $ 0.27377 1.0 % $ 550,000 Total principal amount $ 550,000 During the six months ended June 30, 2016, the following Convertible Notes and the related accrued interest were converted into 2,171,185 shares of common stock: Convertible Note Series Principal Accrued Interest Total Principal and Accrued Interest B $ 20,000 $ 962 $ 20,962 C 425,000 14,538 439,538 E 50,000 770 50,770 F 200,000 225 200,225 Total $ 695,000 $ 16,495 $ 711,495 During the six months ended June 30, 2015, no convertible notes and related accrued interest were converted to equity. |
Note 7 - Stockholder's Equity
Note 7 - Stockholder's Equity | 6 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Stockholders' Equity Note Disclosure [Text Block] | 7. Stockholder’s Equity Common Stock In connection with the reverse merger, as discussed in Note 4, the Company ascribed non-cash consideration of $384,000 to 4,781,574 warrants outstanding prior to the reverse merger. During the six months ended June 30, 2016, the Company is deemed to have issued 22,266,872 shares of its common stock of which 18,614,968 are shares held by the former shareholders of RestorGenex immediately prior to the completion of the Merger, 456,427 shares were issued for advisory services provided to Diffusion LLC in connection with the merger, 1,024,292 shares were issued for general financial advisory services provided to Diffusion Pharmaceuticals Inc. and 2,171,185 shares were issued pursuant to conversions of convertible debt as discussed in Note 6. The Company did not purchase or retire any shares of its common stock. Legacy RestorGenex Warrants During the six months ended June 30, 2016, the Company did not grant any warrants to purchase shares of its common stock and no warrants were exercised. During the six months ended June 30, 2016, warrants to purchase an aggregate of 169,486 shares of common stock expired unexercised. Warrants to purchase an aggregate of 4,612,089 shares of the Company’s common stock were outstanding and exercisable as of June 30, 2016, with per share exercise prices ranging from $2.00 to $75.00 and a weighted average exercise price of $5.50 per share. |
Note 8 - Stock-based Compensati
Note 8 - Stock-based Compensation | 6 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | 8. Stock-Based Compensation Stock-based Compensation Upon consummation of the reverse merger with RestorGenex on January 8, 2016, all outstanding options to purchase Diffusion LLC units were converted into stock options to purchase the Company’s common stock on terms substantially identical to those in effect prior to the reverse merger, except for adjustments to the underlying number of shares and the exercise price based on the Exchange Ratio. As a result of the Merger, the Company assumed 3,011,498 RestorGenex stock options that are exercisable for shares of the Company’s common stock at a weighted average exercise price of $4.02 per share. The Company recorded stock-based compensation expense in the following expense categories of its unaudited interim condensed consolidated statements of operations for the periods indicated: Three Months Ended June 30 , Six Months Ended June 30 , 201 6 2015 2016 201 5 Research and development $ 184,051 $ 79,626 $ 426,328 $ 119,582 General and administrative 154,111 57,099 305,305 112,999 Total stock-based compensation expense $ 338,162 $ 136,725 $ 731,633 $ 232,581 The following table summarizes the activity related to all stock option grants to employees and non-employees for the six months ended June 30, 2016: Number of Options Weighted average exercise price per share Weighted average remaining contractual life (in years) Balance at January 1, 2016 14,955,753 $ 0.39 Assumed in connection with Merger 3,011,498 4.02 Cancelled (481,885 ) 6.13 Granted 393,750 0.96 Outstanding at June 30, 2016 17,879,116 $ 0.86 7.8 Exercisable at June 30, 2016 12,657,098 $ 1.00 7.3 Vested and expected to vest at June 30, 2016 17,858,930 $ 0.86 7.8 At June 30, 2016, there was $1,767,805 of unrecognized compensation cost related to non-vested options of which $651,989 is attributable to 924,524 options issued to non-employees and subject to re-measurement until vested. The total unrecognized compensation expense will be recognized as expense over a weighted-average period of 1.9 years. Other than 400,400 stock options and options assumed as a result of the Merger, all other stock options outstanding have been issued outside of the 2015 Equity Plan. All of these options have a ten-year term, vest in equal monthly installments over three years and were valued using the Black-Scholes model and assumptions used to value the options granted during the first six months of 2016 were as follows: Weighted average grant date fair value $ 0.78 Expected term (in years) 5.77 Risk-free interest rate 1.4 % Expected volatility 106.8 % Dividend yield 0 % Restricted Stock Awards As of June 30, 2016 and December 31, 2015, there were 122,725 and 153,412, respectively, unvested shares of restricted stock. During the three and six months ended June 30, 2016, 15,342 and 30,684 shares vested, respectively, and the Company recognized stock-based compensation expense of $3,009 and $6,033 during the three and six months ended June 30, 2016, respectively. At June 30, 2016, there was $23,553 of unrecognized compensation cost related to unvested restricted stock that will be recognized as expense over a weighted average period of 2.0 years. 2015 Equity Plan The 2015 Equity Plan allows for the issuance of up to a maximum of 2,500,000 shares of common stock in connection with the grant of stock-based awards, including stock options, restricted stock, restricted stock units, stock appreciation rights and other types of awards as deemed appropriate. Of the 17,879,116 options outstanding at June 30, 2016, 400,400 options were issued under the 2015 Equity Plan (excluding options assumed in connection with the Merger) and 2,099,600 shares of common stock remained available for future issuance. On July 21, 2016, the Company’s stockholders approved an amendment to the 2015 Equity Plan to immediately increase the number of shares of the Company’s common stock available for issuance by 2,500,000 shares for a total of 4,599,600 available for issuance post-amendment approval. In addition, beginning on January 1, 2017, on each January 1 st st |
Note 9 - Commitments and Contin
Note 9 - Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Commitments and Contingencies Disclosure [Text Block] | 9. Commitments and Contingencies Office Space Rental The Company leases office and laboratory facilities in Charlottesville, Virginia under a month-to-month cancelable operating lease. Rent expense related to the operating lease was $16,500 and $33,000 during the three and six months ended June 30, 2016 and 2015, respectively. The Company also leases office space totaling approximately 2,900 square feet in Buffalo Grove, Illinois. The term of the lease commenced on September 15, 2014 and will continue through February 28, 2018. During the three months ended June 30, 2016, the Company vacated these leased premises and recorded an associated rent liability pursuant to Accounting Standard Codification Topic 420, Exit or Disposal Cost Obligations (ASC 420) The Company’s contractual obligations with respect to rental commitments as of June 30, 2016 were as follows: Rental Commitments Payments due by period: One year $ 73,600 Two years 49,600 Three years — Thereafter — Total $ 123,200 Legal Proceedings From time to time, the Company is subject to various pending or threatened legal actions and proceedings, including those that arise in the ordinary course of its business, which may include employment matters, breach of contract disputes and stockholder litigation. Such actions and proceedings are subject to many uncertainties and to outcomes that are not predictable with assurance and that may not be known for extended periods of time. The Company records a liability in its unaudited interim condensed consolidated financial statements for costs related to claims, including future legal costs, settlements and judgments, when the Company has assessed that a loss is probable and an amount can be reasonably estimated. If the reasonable estimate of a probable loss is a range, the Company records the most probable estimate of the loss or the minimum amount when no amount within the range is a better estimate than any other amount. The Company discloses a contingent liability even if the liability is not probable or the amount is not estimable, or both, if there is a reasonable possibility that a material loss may have been incurred. In the opinion of management, as of June 30, 2016, the amount of liability, if any, with respect to these matters, individually or in the aggregate, will not materially affect the Company’s unaudited interim condensed consolidated results of operations, financial position or cash flows. On August 7, 2014, a complaint was filed in the Superior Court of Los Angeles County, California by Paul Feller, the Company’s former Chief Executive Officer under the caption Paul Feller v. RestorGenex Corporation, Pro Sports & Entertainment, Inc., ProElite, Inc. and Stratus Media Group, GmbH On September 21, 2015, David Schmidt, a former member of Diffusion LLC and current stockholder of the Company, filed suit (the “Original Complaint”) in the Circuit Court for Albemarle County, Virginia (Case. No. CL15-791, David G. Schmidt v. Diffusion Pharmaceuticals LLC), which Complaint was amended on April 14, 2016 (the “Amended Complaint”). In December 2009, Mr. Schmidt purchased a $1.5 million convertible promissory note from Diffusion LLC which he elected to immediately convert in full into membership units at the contractual per-unit conversion price of $3.50. In 2012, Diffusion LLC negotiated a reduction of the conversion price, from $3.50 to $1.00, with respect to the notes in such series that remained outstanding at such time. The Original Complaint alleged that this renegotiation represented a breach of contract with respect to Mr. Schmidt’s previously converted convertible note, and requested relief of specific performance requiring Diffusion LLC to issue him an additional 1,071,432.50 units, representing the additional number of units he would have received had he converted at the renegotiated conversion price. The claim was dismissed on March 14, 2016 for failure to state a viable cause of action, but Mr. Schmidt was given 21 days to file an amended complaint. The Amended Complaint alleges that Mr. Schmidt was denied the opportunity to exercise preemptive rights under the Company’s Operating Agreement to purchase the additional 1,071,432.50 units for $1 per unit. The sole relief sought by Mr. Schmidt is an order of specific performance requiring the Company to issue him 3,913,577 shares of the Company’s common stock (the equivalent of 1,071,432.50 Diffusion LLC units based upon the Merger exchange ratio) in exchange for his payment of $1,071,432.50. A two-day jury trial has been set for March 9 and March 10, 2017. Management and legal counsel for the Company are of the opinion that the plaintiff’s claim is without merit and the Company will continue to vigorously defend the suit. |
Note 10 - Income Taxes
Note 10 - Income Taxes | 6 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Income Tax Disclosure [Text Block] | 10. Income Taxes Due to the operating losses for the six months ended June 30, 2016, and estimated for the year-ending December 31, 2016, the Company’s estimated annual effective tax rate is 0%. Accordingly, no income tax provision is recorded for six months ended June 30, 2016. Deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect for years in which differences are expected to reverse. A deferred tax liability of approximately $3,536,933 is recorded for the basis differences associated with indefinite-lived in-process R&D assets. Due to their indefinite-lived treatment, the related deferred tax liabilities are not expected to reverse in a period that would support the realization of the Company’s deferred tax assets. The Company maintains a valuation allowance against its deferred tax assets. In August 2016, the Company determined that the IPR&D asset associated with the Company’s RES-440 product candidate will be abandoned and written down to $0. This abandonment will reduce the Company’s deferred tax liability (Note 12). The Company has incurred net operating losses for federal and state income tax purposes since inception. The Tax Reform Act of 1986 (the “Act”) provides for limitation on the use of net operating loss and research and development tax credit carryforwards following certain ownership changes (as defined in the Act) that could limit the Company’s ability to utilize these carryforwards. The Company may have experienced various ownership changes as a result of past financings and acquisitions. Accordingly, the Company’s ability to utilize the aforementioned carryforwards may be limited. Additionally, U.S. tax laws limit the time during which these carryforwards may be applied against future taxes; therefore, the Company has determined it is more likely than not that these net operating losses will not be realized. |
Note 11 - Fair Value Measuremen
Note 11 - Fair Value Measurements | 6 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Fair Value Disclosures [Text Block] | 11. Fair Value Measurements Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable: ● Level 1—Quoted prices in active markets for identical assets or liabilities. ● Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. ● Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis: June 30, 2016 (Level 1) (Level 2) (Level 3) Assets Cash and cash equivalents $ 3,006,149 $ — $ — Liabilities Contingent consideration $ — $ — $ 10,000 December 31, 2015 (Level 1) (Level 2) (Level 3) Assets Cash and cash equivalents $ 1,997,192 $ — $ — Contingent consideration $ — $ — $ — As of June 30, 2016 and December 31, 2015, the fair value of the convertible notes was $1,700,000 and $4,800,000, respectively. The fair value of the convertible notes falls within Level 3 of the fair value hierarchy at December 31, 2015 as it is significantly driven by the creditworthiness of the Company, which is an unobservable input, and Level 1 at June 30, 2016 as the Company’s debt is convertible into shares of the Company’s common stock, which has quoted prices in an active market. Contingent Value Rights Distribution In December 2015, the Company’s Board of Directors authorized, declared and effected a distribution of contingent value rights (CVRs) to shareholders of the Company as of the close of business on January 7, 2016 (the “CVR Record Date”) at a rate of one CVR for each share of the Company’s common stock. The CVRs, which are not certificated and not attached to the shares of the Company’s common stock, were payable immediately prior to the effective time. Each CVR represents a non-transferable right (subject to certain limited exceptions) to potentially receive certain cash payments in the event the Company receives net cash payments during the five-year period after the Merger as a result of the sale, transfer, license or similar transaction relating to the Company’s product currently known as RES-440, which is a “soft” anti-androgen, upon the terms and subject to the conditions set forth in a contingent value rights agreement, dated January 8, 2016, between the Company and Computershare, Inc., as rights agent (the “CVR Agreement”). The aggregate cash payments to be distributed to the holders of the CVRs, if any, will be equal to the amount of net cash payments received by the Company as a result of the sale, transfer, license or similar transaction relating to RES-440, as determined pursuant to the CVR Agreement, but will not exceed $50,000,000 in the aggregate. Any option or warrant holder of the Company as of the record date for the CVRs would, at the time of exercise, be entitled to receive one CVR for each share of the Company’s common stock issued upon the future exercise of the option or warrant, which would entitle the holder to a pro rata portion of any CVR payments made after the date of exercise. The reconciliation of the contingent consideration liability measured at fair value on a recurring basis using significant unobservable inputs (Level 3) is as follows: Contingent Consideration Issued in connection with the merger transaction $ 10,000 Change in fair value — Balance at June 30, 2016 $ $10,000 |
Note 12 - Subsequent Event
Note 12 - Subsequent Event | 6 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Subsequent Events [Text Block] | 12. Subsequent Event In August 2016, the Board of Directors determined that RES-440, a “soft” anti-androgen compound for the treatment of acne vulgaris, was outside the Company’s core product focus, is not a priority and therefore will be abandoned and written off in the third quarter of 2016. The abandonment will result in a $932,000 charge to earnings to reduce the carrying amount of the RES-440 IPR&D asset and will also result in a reduction of the associated deferred tax liability. |
Significant Accounting Policies
Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Basis of Accounting, Policy [Policy Text Block] | Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information as found in the Accounting Standard Codification, or ASC, and Accounting Standards Updates, or ASUs, of the Financial Accounting Standards Board, or FASB, and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission, or SEC. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements of the Company include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the financial statements) considered necessary to present fairly the Company’s financial position as of June 30, 2016, its results of operations for the three and six months ended June 30, 2016 and 2015 and cash flows for the six months ended June 30, 2016 and 2015. Operating results for the six months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. The unaudited interim condensed consolidated financial statements, presented herein, do not contain the required disclosures under GAAP for annual financial statements. The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the annual audited financial statements and related notes as of and for the year ended December 31, 2015 filed with the SEC on Form 8-K/A on March 25, 2016. The Company’s members’ capital at December 31, 2015 has been recast as common stock and additional paid in capital. |
Fair Value of Financial Instruments, Policy [Policy Text Block] | Fair Value of Financial Instruments The carrying amounts of the Company’s financial instruments, including cash equivalents, accounts payable, and accrued expenses approximate fair value due to the short-term nature of those instruments. The carrying value of the contingent consideration liability is the estimated fair value of the liability (Note 11). As of June 30, 2016 and December 31, 2015, the fair value of the Company’s outstanding convertible notes was approximately $1,700,000 and $4,800,000, respectively. The fair value of the convertible notes falls within Level 3 of the fair value hierarchy at December 31, 2015 as it is significantly driven by the creditworthiness of the Company, which is an unobservable input, and Level 1 at June 30, 2016 as the Company’s debt is convertible into shares of the Company’s common stock, which has quoted prices in an active market. |
Cash and Cash Equivalents, Policy [Policy Text Block] | Cash and Cash Equivalents The Company considers any highly liquid investments, such as money market funds, with original maturities of three months or less to be cash and cash equivalents. |
Property, Plant and Equipment, Policy [Policy Text Block] | Property and Equipment The Company records property and equipment at cost less accumulated depreciation and amortization. Costs of renewals and improvements that extend the useful lives of the assets are capitalized. Maintenance and repairs are expensed as incurred. Depreciation is recognized on a straight-line basis over the estimated useful lives of the assets, which generally range from five to fifteen years. The Company amortizes leasehold improvements over the shorter of the estimated useful life of the asset or the term of the related lease. Upon retirement or disposition of assets, the costs and related accumulated depreciation and amortization are removed from the accounts with the resulting gains or losses, if any, reflected in results of operations. |
Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block] | Long-Lived Assets Long-lived assets are reviewed for potential impairment whenever events indicate that the carrying amount of such assets may not be recoverable. The Company does this by comparing the carrying value of the long-lived assets with the estimated future undiscounted cash flows expected to result from the use of the assets, including cash flows from disposition. If it is determined an impairment exists, the asset is written down to its estimated fair value. The Company has not recognized any impairment or disposition of long-lived assets during the six months ended June 30, 2016. |
Goodwill and Intangible Assets, Intangible Assets, Policy [Policy Text Block] | Intangible Assets Intangible assets are comprised of identifiable in-process research and development (“IPR&D”) assets and are considered indefinite-lived intangible assets and are assessed for impairment annually or more frequently if impairment indicators exist. If the associated research and development effort is abandoned, the related assets will be written-off and the Company will record a non-cash impairment loss. For those compounds that reach commercialization, the IPR&D assets will be amortized over their estimated useful lives. In August 2016, the Company determined that the IPR&D asset associated with the Company’s RES-440 product candidate will be abandoned and written down to $0 (Note 12). |
Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block] | Goodwill Goodwill is the excess of the cost of an acquired entity over the net amounts assigned to tangible and intangible assets acquired and liabilities assumed. Goodwill is not amortized, but is subject to an annual impairment test. The Company has a single reporting unit and all goodwill relates to that reporting unit. The Company performs its annual goodwill impairment test on October 1 of its fiscal year or more frequently if changes in circumstances or the occurrence of events suggest that an impairment exists. If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the implied fair value of the reporting unit’s goodwill is less than the carrying value of the reporting unit’s goodwill. |
Research and Development Expense, Policy [Policy Text Block] | Research and Development Major components of research and development costs include internal research and development (such as salaries and related employee benefits, equity-based compensation, supplies and allocated facility costs) and contracted services (research and development activities performed on the Company’s behalf). Costs incurred for research and development are expensed as incurred. At the end of the reporting period, the Company compares payments made to third-party service providers to the estimated progress toward completion of the research or development objectives. Such estimates are subject to change as additional information becomes available. Depending on the timing of payments to the service providers and the progress that the Company estimates has been made as a result of the service provided, the Company may record net prepaid or accrued expenses relating to these costs. Upfront milestone payments made to third parties who perform research and development services on the Company’s behalf are expensed as services are rendered. |
Legal Costs, Policy [Policy Text Block] | Patent Costs Patent costs, including related legal costs, are expensed as incurred and are recorded within general and administrative expenses in the statements of operations. |
Income Tax, Policy [Policy Text Block] | Income Taxes Prior to the Merger, Diffusion LLC was treated as a partnership for federal and state income tax purposes. Diffusion LLC’s taxable income or loss, as well as certain other tax attributes, were passed through directly to its members and were reported in each member’s individual income tax return. Upon completion of the Merger as discussed in Note 1, the Company converted from a partnership to a corporation. As a corporation, the Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The Company recognizes the benefit of an uncertain tax position that it has taken or expects to take on its income tax return it files, if such a position is more likely than not to be sustained. |
Debt, Policy [Policy Text Block] | Debt Issuance Costs Debt issuance costs incurred in connection with debt financing arrangements are amortized to interest expense over the life of the respective financing arrangement using the effective interest method. |
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] | Stock-Based Compensation The Company measures employee and nonemployee stock-based awards at grant-date fair value and records compensation expense on a straight-line basis over the vesting period of the award. Stock-based awards issued to non-employees are revalued until the award vests. The Company uses the Black-Scholes option pricing model to value its stock option awards. Estimating the fair value of stock option awards requires management to apply judgment and make estimates, including the volatility of the Company’s common stock, the expected term of the Company’s stock options, the expected dividend yield and the fair value of the Company’s common stock on the measurement date. As a result, if factors change and management uses different assumptions, stock-based compensation expense could be materially different for future awards. The expected life of stock options was estimated using the “simplified method” for employee options as the Company has no historical information to develop reasonable expectations about future exercise patterns and post vesting employment termination behavior for its stock option grants. The simplified method is based on the average of the vesting tranches and the contractual life of each grant. For options granted to non-employees, the Company uses the remaining contractual life. For stock price volatility, the Company uses comparable public companies as a basis for its expected volatility to calculate the fair value of option grants. The Company assumes no dividend yield because dividends are not expected to be paid in the near future, which is consistent with the Company’s history of not paying dividends. The risk-free interest rate is based on U.S. Treasury notes with a term approximating the expected life of the option. |
Earnings Per Share, Policy [Policy Text Block] | Net Loss Per Share Basic loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during each period. Diluted loss per share includes the effect, if any, from the potential exercise or conversion of securities, such as convertible debt, warrants, stock options and unvested restricted stock that would result in the issuance of incremental shares of common stock. In computing the basic and diluted net loss per share applicable to common stockholders, the weighted average number of shares remains the same for both calculations due to the fact that when a net loss exists, dilutive shares are not included in the calculation as the impact is anti-dilutive. The following potentially dilutive securities outstanding as of June 30, 2016 and 2015 have been excluded from the computation of diluted weighted average shares outstanding, as they would be anti-dilutive: June 30, 2016 2015 Convertible debt 2,115,407 58,534,765 Common stock warrants 4,612,089 — Stock options 17,879,116 11,095,734 Unvested restricted stock awards 122,725 184,093 24,729,337 69,814,592 Amounts in the table reflect the common stock equivalents of the noted instruments. |
New Accounting Pronouncements, Policy [Policy Text Block] | Recent Accounting Pronouncements On March 30, 2016, the FASB issued ASU 2016-09, Compensation – Improvements to Employee Share-Based Payment Accounting In March 2016, the FASB issued ASU 2016-06, Contingent Put and Call Options in Debt Instruments In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern |
Note 3 - Basis of Presentatio20
Note 3 - Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Notes Tables | |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block] | June 30, 2016 2015 Convertible debt 2,115,407 58,534,765 Common stock warrants 4,612,089 — Stock options 17,879,116 11,095,734 Unvested restricted stock awards 122,725 184,093 24,729,337 69,814,592 |
Note 4 - Acquisition (Tables)
Note 4 - Acquisition (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Notes Tables | |
Business Combination, Preliminary Purchase Price Consideration [Table Text Block] | Purchase consideration Fair value of RestorGenex shares outstanding $ 19,546,000 Estimated fair value of RestorGenex stock options assumed by Diffusion 1,321,000 Estimated fair value of RestorGenex warrants assumed by Diffusion 384,000 CVRs – RES-440 product candidate 10,000 Total preliminary purchase price $ 21,261,000 |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block] | Cash and cash equivalents $ 8,500,602 Prepaid expenses and other assets 195,200 Property and equipment 57,531 Intangible assets 9,317,000 Goodwill 7,105,031 Accrued liabilities (377,431 ) Deferred tax liability (3,536,933 ) Net assets acquired $ 21,261,000 |
Schedule of Finite-Lived Intangible Assets [Table Text Block] | June 30, 2016 December 31, 2015 Gross Carrying Amount Accumulated Amortization Intangible Assets, net Gross Carrying Amount Accumulated Amortization Intangible Assets, net RES 529 $ 8,385,000 $ 0 $ 8,385,000 $ 0 $ 0 $ 0 RES-440 932,000 0 932,000 0 0 0 Total in-process research and development costs (IPR&D) $ 9,317,000 $ 0 $ 9,317,000 $ 0 $ 0 $ 0 |
Business Acquisition, Pro Forma Information [Table Text Block] | Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Net revenues $ — $ — $ — $ — Net loss $ (3,806,194 ) $ (5,300,450 ) $ (8,464,138 ) $ (10,060,351 ) Basic and diluted loss per share $ (0.04 ) $ (0.13 ) $ (0.08 ) $ (0.24 ) |
Note 5 - Other Accrued Expens22
Note 5 - Other Accrued Expenses and Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Notes Tables | |
Other Current Liabilities [Table Text Block] | June 30, 2016 December 31, 2015 Accrued interest payable $ 0 $ 14,009 Accrued payroll and payroll related expenses 345,239 56,947 Accrued professional fees 47,285 327,950 Accrued clinical studies expenses 282,224 184,737 Other accrued expenses 67,130 38,026 Total $ 741,878 $ 621,669 |
Note 6 - Convertible Notes (Tab
Note 6 - Convertible Notes (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Notes Tables | |
Convertible Debt [Table Text Block] | Convertible Note Series Issue Date Maturity Date Conversion Price Interest Rate Total Principal B 3/15/2011 6/30/2018 $ 0.27377 1.0 % $ 550,000 Total principal amount $ 550,000 |
Schedule of Debt Conversions [Table Text Block] | Convertible Note Series Principal Accrued Interest Total Principal and Accrued Interest B $ 20,000 $ 962 $ 20,962 C 425,000 14,538 439,538 E 50,000 770 50,770 F 200,000 225 200,225 Total $ 695,000 $ 16,495 $ 711,495 |
Note 8 - Stock-based Compensa24
Note 8 - Stock-based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Notes Tables | |
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block] | Three Months Ended June 30 , Six Months Ended June 30 , 201 6 2015 2016 201 5 Research and development $ 184,051 $ 79,626 $ 426,328 $ 119,582 General and administrative 154,111 57,099 305,305 112,999 Total stock-based compensation expense $ 338,162 $ 136,725 $ 731,633 $ 232,581 |
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | Number of Options Weighted average exercise price per share Weighted average remaining contractual life (in years) Balance at January 1, 2016 14,955,753 $ 0.39 Assumed in connection with Merger 3,011,498 4.02 Cancelled (481,885 ) 6.13 Granted 393,750 0.96 Outstanding at June 30, 2016 17,879,116 $ 0.86 7.8 Exercisable at June 30, 2016 12,657,098 $ 1.00 7.3 Vested and expected to vest at June 30, 2016 17,858,930 $ 0.86 7.8 |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | Weighted average grant date fair value $ 0.78 Expected term (in years) 5.77 Risk-free interest rate 1.4 % Expected volatility 106.8 % Dividend yield 0 % |
Note 9 - Commitments and Cont25
Note 9 - Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Notes Tables | |
Schedule of Maturities of Contractual Obligations [Table Text Block] | Rental Commitments Payments due by period: One year $ 73,600 Two years 49,600 Three years — Thereafter — Total $ 123,200 |
Note 11 - Fair Value Measurem26
Note 11 - Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Notes Tables | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] | June 30, 2016 (Level 1) (Level 2) (Level 3) Assets Cash and cash equivalents $ 3,006,149 $ — $ — Liabilities Contingent consideration $ — $ — $ 10,000 December 31, 2015 (Level 1) (Level 2) (Level 3) Assets Cash and cash equivalents $ 1,997,192 $ — $ — Contingent consideration $ — $ — $ — |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block] | Contingent Consideration Issued in connection with the merger transaction $ 10,000 Change in fair value — Balance at June 30, 2016 $ $10,000 |
Note 1 - Organization and Des27
Note 1 - Organization and Description of Business (Details Textual) - USD ($) | Jan. 08, 2016 | Jun. 30, 2016 |
Diffusion LLC [Member] | Former Equity Holders of Diffusion LLC [Member] | ||
Percentage of Common Stock Outstanding Owned | 84.10% | |
Diffusion LLC [Member] | Equity Holders of RestorGenex [Member] | ||
Percentage of Common Stock Outstanding Owned | 15.90% | |
Diffusion LLC [Member] | ||
Business Combination, Number of Shares Called by Each Previously Held Unit of Membership Interest | 3.652658 | |
Convertible Notes Payable | $ 1,125,000 | |
Business Combination, Number of Shares Called by Share Options Assumed | 14,952,101 | |
Business Combination, Share Options Assumed, Weighted-average Exercise Price | $ 0.40 | |
Stock Issued During Period, Shares, Acquisitions | 18,614,968 | |
Stock Issued During Period, Shares, Acquisitions | 18,614,968 |
Note 3 - Basis of Presentatio28
Note 3 - Basis of Presentation and Summary of Significant Accounting Policies (Details Textual) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2016 | Jun. 30, 2016 | Sep. 30, 2016 | Dec. 31, 2015 | |
Fair Value, Inputs, Level 3 [Member] | ||||
Convertible Debt, Fair Value Disclosures | $ 1,700,000 | $ 4,800,000 | ||
Minimum [Member] | ||||
Property, Plant and Equipment, Useful Life | 5 years | |||
Maximum [Member] | ||||
Property, Plant and Equipment, Useful Life | 15 years | |||
In Process Research and Development [Member] | Scenario, Forecast [Member] | ||||
Intangible Assets, Net (Excluding Goodwill) | $ 0 | |||
In Process Research and Development [Member] | ||||
Intangible Assets, Net (Excluding Goodwill) | 9,317,000 | $ 0 | ||
Asset Impairment Charges | $ 0 |
Note 3 - Outstanding Dilutive S
Note 3 - Outstanding Dilutive Securities (Details) - shares | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Convertible Debt Securities [Member] | ||
Anti-dilutive securities (in shares) | 2,115,407 | 58,534,765 |
Warrant [Member] | ||
Anti-dilutive securities (in shares) | 4,612,089 | |
Employee Stock Option [Member] | ||
Anti-dilutive securities (in shares) | 17,879,116 | 11,095,734 |
Restricted Stock [Member] | ||
Anti-dilutive securities (in shares) | 122,725 | 184,093 |
Anti-dilutive securities (in shares) | 24,729,337 | 69,814,592 |
Note 4 - Acquisition (Details T
Note 4 - Acquisition (Details Textual) - USD ($) | Jan. 08, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Sep. 30, 2016 | Dec. 31, 2015 |
Diffusion LLC [Member] | Former Equity Holders of Diffusion LLC [Member] | |||||||
Percentage of Common Stock Outstanding Owned | 84.10% | ||||||
Diffusion LLC [Member] | Acquisition-related Costs [Member] | |||||||
Business Combination, Acquisition Related Costs | $ 0 | $ 0 | $ 1,644,768 | $ 0 | |||
Diffusion LLC [Member] | Success Fee Agreement Costs [Member] | |||||||
Payments for Other Fees | $ 1,000,000 | ||||||
Stock Issued During Period, Shares, Issued for Services | 457,000 | ||||||
Stock Issued During Period, Value, Issued for Services | $ 487,500 | ||||||
Diffusion LLC [Member] | |||||||
Business Combination, Number of Shares Called by Each Previously Held Unit of Membership Interest | 3.652658 | ||||||
Business Combination, Period Following Merger in Which Receipt of Cash for Discontinued Product Assets Would Trigger Contingent Value Right Payements | 5 years | ||||||
In Process Research and Development [Member] | Scenario, Forecast [Member] | |||||||
Intangible Assets, Net (Excluding Goodwill) | $ 0 | ||||||
In Process Research and Development [Member] | |||||||
Intangible Assets, Net (Excluding Goodwill) | $ 9,317,000 | $ 9,317,000 | $ 0 | ||||
Executive Officers [Member] | |||||||
Severance Costs | $ 3,000,000 | ||||||
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | |||
Stock Issued During Period, Shares, Issued for Services | 456,427 | ||||||
Stock Issued During Period, Value, Issued for Services | $ 1,409,363 |
Note 4 - Purchase Price Conside
Note 4 - Purchase Price Consideration (Details) - RestorGenex [Member] - Diffusion LLC [Member] | Jan. 08, 2016USD ($) |
Fair value of RestorGenex shares outstanding | $ 19,546,000 |
Estimated fair value of RestorGenex stock options assumed by Diffusion | 1,321,000 |
Estimated fair value of RestorGenex warrants assumed by Diffusion | 384,000 |
CVRs – RES-440 product candidate | 10,000 |
Total preliminary purchase price | $ 21,261,000 |
Note 4 - Summary of Assets Acqu
Note 4 - Summary of Assets Acquired and Liabilities Assumed (Details) - USD ($) | Jun. 30, 2016 | Jan. 08, 2016 | Dec. 31, 2015 |
Diffusion LLC [Member] | |||
Cash and cash equivalents | $ 8,500,602 | ||
Prepaid expenses and other assets | 195,200 | ||
Property and equipment | 57,531 | ||
Intangible assets | 9,317,000 | ||
Goodwill | 7,105,031 | ||
Accrued liabilities | (377,431) | ||
Deferred tax liability | (3,536,933) | ||
Net assets acquired | $ 21,261,000 | ||
Goodwill | $ 7,105,031 |
Note 4 - Intangible Assets, Net
Note 4 - Intangible Assets, Net - Intangible Assets, Net (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2016 | Dec. 31, 2015 | |
RES-529 [Member] | ||
Gross carrying amount | $ 8,385,000 | $ 0 |
Accumulated amortization | 0 | 0 |
Intangible Assets, Net (Excluding Goodwill) | 8,385,000 | 0 |
RES-440 [Member] | ||
Gross carrying amount | 932,000 | 0 |
Accumulated amortization | 0 | 0 |
Intangible Assets, Net (Excluding Goodwill) | 932,000 | 0 |
In Process Research and Development [Member] | ||
Gross carrying amount | 9,317,000 | 0 |
Accumulated amortization | 0 | 0 |
Intangible Assets, Net (Excluding Goodwill) | $ 9,317,000 | $ 0 |
Note 4 - Pro Forma Financial In
Note 4 - Pro Forma Financial Information (Details) - Diffusion LLC [Member] - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Net revenues | ||||
Net loss | $ (3,806,194) | $ (5,300,450) | $ (8,464,138) | $ (10,060,351) |
Basic and diluted loss per share (in dollars per share) | $ (0.04) | $ (0.13) | $ (0.08) | $ (0.24) |
Note 5 - Summary of Accrued Exp
Note 5 - Summary of Accrued Expenses (Details) - USD ($) | Jun. 30, 2016 | Dec. 31, 2015 |
Accrued interest payable | $ 0 | $ 14,009 |
Accrued payroll and payroll related expenses | 345,239 | 56,947 |
Accrued professional fees | 47,285 | 327,950 |
Accrued clinical studies expenses | 282,224 | 184,737 |
Other accrued expenses | 67,130 | 38,026 |
Total | $ 741,878 | $ 621,669 |
Note 6 - Convertible Notes (Det
Note 6 - Convertible Notes (Details Textual) - USD ($) | 6 Months Ended | 73 Months Ended | ||
Jun. 30, 2016 | Dec. 31, 2015 | Jan. 08, 2016 | Jun. 30, 2015 | |
Convertible Notes [Member] | Minimum [Member] | ||||
Debt Instrument, Interest Rate, Stated Percentage | 1.00% | |||
Convertible Notes [Member] | Maximum [Member] | ||||
Debt Instrument, Interest Rate, Stated Percentage | 1.50% | |||
Convertible Notes [Member] | ||||
Proceeds from Issuance of Unsecured Debt | $ 22,384,320 | |||
Qualified Financing, Minimum Amount of Gross Proceeds | $ 15,000,000 | |||
Debt Conversion, Converted Instrument, Shares Issued | 2,171,185 | |||
Diffusion LLC [Member] | ||||
Convertible Notes Payable | $ 1,125,000 | |||
Debt Instrument, Convertible, Carrying Amount of Equity Component | $ 0 |
Note 6 - Outstanding Convertibl
Note 6 - Outstanding Convertible Notes (Details) | 6 Months Ended |
Jun. 30, 2016USD ($)$ / shares | |
Convertible Note Series B [Member] | |
Issue Date | Mar. 15, 2011 |
Maturity Date | Jun. 30, 2018 |
Conversion Price (in dollars per share) | $ / shares | $ 0.27377 |
Interest Rate | 1.00% |
Total Principal | $ 550,000 |
Total Principal | $ 550,000 |
Note 6 - Conversion of Converti
Note 6 - Conversion of Convertible Notes and Related Accrued Interest (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Convertible Note Series B [Member] | ||
Debt Conversion, Original Debt, Amount | $ 20,000 | |
Accrued Interest | 962 | |
Total Principal and Accrued Interest | 20,962 | |
Convertible Note Series C [Member] | ||
Debt Conversion, Original Debt, Amount | 425,000 | |
Accrued Interest | 14,538 | |
Total Principal and Accrued Interest | 439,538 | |
Convertible Note Series E [Member] | ||
Debt Conversion, Original Debt, Amount | 50,000 | |
Accrued Interest | 770 | |
Total Principal and Accrued Interest | 50,770 | |
Convertible Note Series F [Member] | ||
Debt Conversion, Original Debt, Amount | 200,000 | |
Accrued Interest | 225 | |
Total Principal and Accrued Interest | 200,225 | |
Debt Conversion, Original Debt, Amount | 695,000 | |
Accrued Interest | 16,495 | |
Total Principal and Accrued Interest | $ 711,495 | $ 0 |
Note 7 - Stockholder's Equity (
Note 7 - Stockholder's Equity (Details Textual) - USD ($) | Jan. 08, 2016 | Jan. 07, 2016 | Jun. 30, 2016 |
Diffusion LLC [Member] | |||
Noncash or Part Noncash Divestiture, Amount of Consideration Received | $ 384,000 | ||
Stock Issued During Period, Shares, Acquisitions | 18,614,968 | ||
General Financial Advisory Services [Member] | |||
Stock Issued During Period, Shares, Issued for Services | 1,024,292 | ||
Legacy RestorGenex Warrants [Member] | Minimum [Member] | |||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 2 | ||
Legacy RestorGenex Warrants [Member] | Maximum [Member] | |||
Class of Warrant or Right, Exercise Price of Warrants or Rights | 75 | ||
Legacy RestorGenex Warrants [Member] | Weighted Average [Member] | |||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 5.50 | ||
Legacy RestorGenex Warrants [Member] | |||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 0 | ||
Class of Warrant or Right, Granted | 0 | ||
Class of Warrant or Rights, Expired | 169,486 | ||
Class of Warrant or Right, Outstanding | 4,612,089 | ||
Class of Warrant or Right, Exercisable | 4,612,089 | ||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 4,781,574 | ||
Stock Issued During Period, Shares, Total | 22,266,872 | ||
Stock Issued During Period, Shares, Acquisitions | 18,614,968 | ||
Stock Issued During Period, Shares, Issued for Services | 456,427 | ||
Stock Issued During Period, Shares, Conversion of Convertible Securities | 2,171,185 |
Note 8 - Stock-based Compensa40
Note 8 - Stock-based Compensation (Details Textual) - USD ($) | Jul. 21, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Jan. 08, 2016 | Dec. 31, 2015 |
Non-employees [Member] | |||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options | $ 651,989 | $ 651,989 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 924,524 | ||||||
Restorgenex Corporation 2015 Equity Incentive Plan [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 400,400 | ||||||
Employee Stock Option [Member] | Diffusion LLC [Member] | Vest Monthly [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 3 years | ||||||
Employee Stock Option [Member] | Diffusion LLC [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period | 10 years | ||||||
Restricted Stock [Member] | |||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 2 years | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number | 122,725 | 122,725 | 153,412 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period | 15,342 | 30,684 | |||||
Allocated Share-based Compensation Expense | $ 3,009 | $ 6,033 | |||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options | $ 23,553 | $ 23,553 | |||||
Restorgenex Corporation 2015 Equity Incentive Plan [Member] | Subsequent Event [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 4,599,600 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized | 2,500,000 | ||||||
Percentage of Total Shares Eligible for Plan Reserve, On an Annual Basis | 4.00% | ||||||
Restorgenex Corporation 2015 Equity Incentive Plan [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 2,500,000 | 2,500,000 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 17,879,116 | 17,879,116 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 2,099,600 | 2,099,600 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number | 12,657,098 | 12,657,098 | 3,011,498 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price | $ 1 | $ 1 | $ 4.02 | ||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $ 1,767,805 | $ 1,767,805 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 393,750 | ||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 1 year 328 days | ||||||
Allocated Share-based Compensation Expense | $ 338,162 | $ 136,725 | $ 731,633 | $ 232,581 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 17,879,116 | 17,879,116 | 14,955,753 |
Note 8 - Summary of Stock-based
Note 8 - Summary of Stock-basedCompensation Expense (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Research and Development Expense [Member] | ||||
Allocated Share-based Compensation Expense | $ 184,051 | $ 79,626 | $ 426,328 | $ 119,582 |
General and Administrative Expense [Member] | ||||
Allocated Share-based Compensation Expense | 154,111 | 57,099 | 305,305 | 112,999 |
Allocated Share-based Compensation Expense | $ 338,162 | $ 136,725 | $ 731,633 | $ 232,581 |
Note 8 - Stock Option Activity
Note 8 - Stock Option Activity (Details) - $ / shares | 6 Months Ended | |
Jun. 30, 2016 | Jan. 08, 2016 | |
Diffusion LLC [Member] | ||
Assumed in connection with Merger (in shares) | 3,011,498 | |
Assumed in connection with Merger (in dollars per share) | $ 4.02 | |
Balance at January 1, 2016 (in shares) | 14,955,753 | |
Balance at January 1, 2016 (in dollars per share) | $ 0.39 | |
Cancelled (in shares) | (481,885) | |
Cancelled (in dollars per share) | $ 6.13 | |
Granted (in shares) | 393,750 | |
Granted (in dollars per share) | $ 0.96 | |
Options outstanding (in shares) | 17,879,116 | |
Options outstanding, weighted-average per share exercise price (in dollars per share) | $ 0.86 | |
Options outstanding, weighted-average remaining contractual life | 7 years 292 days | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number | 12,657,098 | 3,011,498 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price | $ 1 | $ 4.02 |
Exercisable at June 30, 2016 | 7 years 109 days | |
Vested and expected to vest at June 30, 2016 (in shares) | 17,858,930 | |
Vested and expected to vest at June 30, 2016 (in dollars per share) | $ 0.86 | |
Vested and expected to vest at June 30, 2016 | 7 years 292 days |
Note 8 - Share-based Payment Aw
Note 8 - Share-based Payment Award, Fair Value Assumptions (Details) | 6 Months Ended |
Jun. 30, 2016$ / shares | |
Weighted average grant date fair value (in dollars per share) | $ 0.78 |
Expected term (in years) | 5 years 281 days |
Risk-free interest rate | 1.40% |
Expected volatility | 106.80% |
Dividend yield | 0.00% |
Note 9 - Commitments and Cont44
Note 9 - Commitments and Contingencies (Details Textual) | Sep. 15, 2014ft²shares | Dec. 15, 2009USD ($)$ / sharesshares | Jun. 30, 2016USD ($)$ / sharesshares | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($)$ / shares | Jun. 30, 2015USD ($) | Dec. 31, 2012$ / shares |
Charlottesville, Virginia [Member] | Building [Member] | |||||||
Operating Leases, Rent Expense, Net | $ 16,500 | $ 33,000 | $ 16,500 | $ 33,000 | |||
Buffalo Grove [Member] | Building [Member] | Long Term Operating Lease Agreement [Member] | |||||||
Area of Real Estate Property | ft² | 2,900 | ||||||
David G. Schmidt v. Diffusion Pharmaceuticals, LLC [Member] | Scenario, Actual [Member] | |||||||
Debt Instrument, Convertible, Conversion Price | $ / shares | $ 3.50 | $ 1 | |||||
David G. Schmidt v. Diffusion Pharmaceuticals, LLC [Member] | If Conversion Price $1.00 per Unit Rather Than $3.50 per Unit [Member] | |||||||
Debt Conversion, Converted Instrument, Shares Issued | shares | 1,071,432.5 | ||||||
David G. Schmidt v. Diffusion Pharmaceuticals, LLC [Member] | |||||||
Operating Leases, Rent Expense, Net | $ 22,859 | ||||||
Debt Conversion, Original Debt, Amount | $ 1,500,000 | ||||||
Amended David G. Schmidt V Diffusion Pharmaceuticals LLC [Member] | If Conversion Price $1.00 per Unit Rather Than $3.50 per Unit [Member] | |||||||
Debt Instrument, Convertible, Conversion Price | $ / shares | $ 1 | $ 1 | |||||
Debt Conversion, Converted Instrument, Shares Issued | shares | 1,071,432.5 | ||||||
Amended David G. Schmidt V Diffusion Pharmaceuticals LLC [Member] | |||||||
Loss Contingency, Damages Sought, Shares | shares | 3,913,577 | ||||||
Loss Contingency, Damages Sought, Proceeds From Plaintiff | $ 1,071,432.50 | ||||||
Debt Conversion, Original Debt, Amount | $ 695,000 |
Note 9 - Contractual Obligation
Note 9 - Contractual Obligations (Details) | Jun. 30, 2016USD ($) |
Payments due by period: | |
One year | $ 73,600 |
Two years | 49,600 |
Three years | |
Thereafter | |
Total | $ 123,200 |
Note 10 - Income Taxes (Details
Note 10 - Income Taxes (Details Textual) - USD ($) | 3 Months Ended | |||
Mar. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Dec. 31, 2015 | |
In Process Research and Development Costs (IPR&D) [Member] | ||||
Deferred Tax Liabilities, Net | $ 3,536,933 | |||
In Process Research and Development [Member] | Scenario, Forecast [Member] | ||||
Intangible Assets, Net (Excluding Goodwill) | $ 0 | |||
In Process Research and Development [Member] | ||||
Intangible Assets, Net (Excluding Goodwill) | $ 9,317,000 | $ 0 | ||
Effective Income Tax Rate Reconciliation, Percent | 0.00% |
Note 11 - Fair Value Measurem47
Note 11 - Fair Value Measurements (Details Textual) | Jan. 08, 2016USD ($) | Jun. 30, 2016USD ($) | Dec. 31, 2015USD ($) |
Fair Value, Inputs, Level 3 [Member] | |||
Convertible Debt, Fair Value Disclosures | $ 1,700,000 | $ 4,800,000 | |
Diffusion LLC [Member] | |||
Business Combination, Number of Contingent Value Rights per Share Called by Each Previously Held Share of Common Stock | 1 | ||
Business Combination, Period Following Merger in Which Receipt of Cash for Discontinued Product Assets Would Trigger Contingent Value Right Payements | 5 years | ||
Business Combination, Contingent Value Right Payout Maximum | $ 50,000,000 |
Note 11 - Fair Value On a Recur
Note 11 - Fair Value On a Recurring Basis (Details) - USD ($) | Jun. 30, 2016 | Dec. 31, 2015 |
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Assets | ||
Cash and cash equivalents | $ 3,006,149 | $ 1,997,192 |
Fair Value, Inputs, Level 3 [Member] | Contingent Consideration [Member] | ||
Liabilities | ||
Contingent consideration | $ 10,000 |
Note 11 - Reconciliation of Con
Note 11 - Reconciliation of Contingent Consideration Liability (Details) - Contingent Consideration [Member] | 6 Months Ended |
Jun. 30, 2016USD ($) | |
Issued in connection with the merger transaction | $ 10,000 |
Change in fair value | |
Contingent consideration liability | $ 10,000 |
Note 12 - Subsequent Event (Det
Note 12 - Subsequent Event (Details Textual) | 3 Months Ended |
Sep. 30, 2016USD ($) | |
Scenario, Forecast [Member] | In Process Research and Development [Member] | |
Impairment of Long-Lived Assets to be Disposed of | $ 932,000 |