Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 16, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | TAPIMMUNE INC | |
Entity Central Index Key | 1,094,038 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 64,618,762 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,015 |
Balance Sheets (Unaudited)
Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Current Assets | ||
Cash | $ 6,087,016 | $ 141,944 |
Prepaid expenses and deposits | 138,286 | 82,504 |
Total Current Assets | 6,225,302 | 224,448 |
Current Liabilities | ||
Accounts payable and accrued liabilities | 874,628 | 693,362 |
Research agreement obligations | 492,365 | 492,365 |
Derivative liability – warrants | 7,426,684 | 9,415 |
Promissory notes | 52,942 | 52,942 |
Total Current Liabilities | $ 8,846,619 | $ 1,248,084 |
Stockholders’ Deficit | ||
Convertible preferred stock, $0.001 par value — 10,000,000 shares authorized: | ||
Common stock, $0.001 par value, 500,000,000 shares authorized 62,890,763 shares issued and outstanding (2014 – 20,318,815) | $ 62,891 | $ 20,319 |
Additional paid-in capital | 100,568,900 | 85,265,776 |
Accumulated deficit | (103,253,108) | (86,309,731) |
Total Stockholders’ Deficit | (2,621,317) | (1,023,636) |
Total LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ 6,225,302 | $ 224,448 |
Series A Preferred Stock [Member] | ||
Stockholders’ Deficit | ||
Convertible preferred stock, $0.001 par value — 10,000,000 shares authorized: | ||
Series B Preferred Stock [Member] | ||
Stockholders’ Deficit | ||
Convertible preferred stock, $0.001 par value — 10,000,000 shares authorized: |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Common stock par value | $ 0.001 | $ 0.001 |
Common stock shares authorized | 500,000,000 | 500,000,000 |
Common stock shares issued | 62,890,763 | 20,318,815 |
Common stock shares outstanding | 62,890,763 | 20,318,815 |
Convertible preferred stock | $ 10,000,000 | $ 10,000,000 |
Preferred stock par value | $ 0.001 | |
Series A Preferred Stock [Member] | ||
Preferred stock par value | $ 0.001 | $ 0.001 |
Preferred stock shares designated | 1,250,000 | 1,250,000 |
Preferred stock issued | 0 | 0 |
Preferred stock outstanding | 0 | 0 |
Series B Preferred Stock [Member] | ||
Preferred stock par value | $ 0.001 | $ 0.001 |
Preferred stock shares designated | 1,500,000 | 1,500,000 |
Preferred stock issued | 0 | 0 |
Preferred stock outstanding | 0 | 0 |
Statements of Operations (Unaud
Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Operating expenses: | ||||
General and administrative | $ 968,759 | $ 1,351,209 | $ 2,324,432 | $ 2,899,181 |
Research and development | 769,219 | 32,500 | 1,579,754 | 77,500 |
Total Operating expense | 1,737,978 | 1,383,709 | 3,904,186 | 2,976,681 |
Loss from Operations | $ (1,737,978) | $ (1,383,709) | (3,904,186) | $ (2,976,681) |
Other Income (Expense) | ||||
Foreign exchange gain | $ 775 | |||
Accretion of interest on convertible debt | $ (492,296) | |||
Changes in fair value of derivative liabilities | $ 4,246,663 | $ (74,062) | $ (4,759,269) | 243,475 |
Interest and finance charges | $ (15,425) | $ (83,247) | ||
Shares issued in settlement agreement | $ (24,697) | $ (24,697) | ||
Loss on settlement of debt | $ (94,640) | $ (26,837,837) | ||
Inducement expense | $ (8,256,000) | |||
Net Income (Loss) for the Period | $ 2,483,988 | $ (1,567,836) | $ (16,943,377) | $ (30,146,586) |
Other comprehensive income (loss) | ||||
Foreign exchange translation adjustment | 2,972 | 2,765 | ||
TOTAL COMPREHENSIVE Income (LOSS) | $ 2,483,988 | $ (1,564,864) | $ (16,943,377) | $ (30,143,821) |
Basic Net Income (Loss) per Share | $ 0.05 | $ (0.09) | $ (0.46) | $ (2.27) |
Diluted Net Income (Loss) per Share | $ 0.03 | $ (0.09) | $ (0.46) | $ (2.27) |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC | 48,585,003 | 17,310,708 | 36,651,565 | 13,292,886 |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING DILUTED | 80,944,993 | 17,310,708 | 36,651,565 | 13,292,886 |
Statements of Cash Flows (Unaud
Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (16,943,377) | $ (30,146,586) |
Adjustments to reconcile net loss to net cash from operating activities: | ||
Changes in fair value of derivative liabilities | 4,759,269 | $ (243,475) |
Inducement expense | $ 8,256,000 | |
Loss on settlement of debt | $ 26,837,837 | |
Loss on settlement agreement | $ 24,697 | |
Accretion of interest on convertible debt | $ 492,296 | |
Share-based compensation | $ 261,805 | 1,265,625 |
Changes in operating assets and liabilities: | ||
Prepaid expenses and deposits | (55,782) | (15,000) |
Accounts payable and accrued liabilities | 204,956 | 291,359 |
NET CASH USED IN OPERATING ACTIVITIES | (3,492,432) | (1,517,944) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Private placement, net of finders’ fee | $ 2,009,506 | 2,097,500 |
Proceeds from loans payable | $ 500 | |
Proceeds from exercise of warrants | $ 7,427,998 | |
Repayment of promissory notes | $ (15,000) | |
NET CASH PROVIDED BY FINANCING ACTIVITIES | $ 9,437,504 | 2,083,000 |
INCREASE IN CASH | 5,945,072 | 565,056 |
CASH, BEGINNING OF YEAR | 141,944 | 48,589 |
CASH, END OF YEAR | 6,087,016 | 613,645 |
SUPPLEMENTAL SCHEDULE OF NON-CASH ACTIVITIES | ||
Accounts payable settled in common stock | $ 22,000 | 683,000 |
Conversion of debt obligations into common stock: | ||
Accrued interest | 476,000 | |
Convertible notes payable | 3,797,000 | |
Loans payable, related party | 42,000 | |
Promissory notes, related party | 210,000 | |
Due to related parties | 369,000 | |
Fair value derivative liability – conversion option at conversion | $ 708,000 |
Shareholders Equity
Shareholders Equity - 9 months ended Sep. 30, 2015 - USD ($) | Common Stock | Additional Paid-In Capital | Retained Earnings / Accumulated Deficit | Total |
Balance, Share at Dec. 31, 2014 | 20,318,816 | |||
Balance, Amount at Dec. 31, 2014 | $ (1,023,636) | |||
Accounts payable settled in shares | 118,450 | |||
Accounts payable settled in Amount | $ 118 | $ 21,795 | 21,913 | |
Private placement (net of finders’ fee of $454,000) Share | 12,363,447 | |||
Private placement (net of finders’ fee of $454,000) Amount | $ 12,362 | $ 1,997,144 | $ 2,009,506 | |
Fair value of warrants recognized as derivative liabilities, Share | (2,090,000) | (2,090,000) | ||
Exercise of warrants, Share | 29,639,990 | |||
Exercise of warrants, Amount | $ 29,640 | $ 7,398,358 | $ 7,427,998 | |
Inducement expense on incremental value associated with modified warrants | 7,688,000 | 7,688,000 | ||
Shares issued in settlement agreement, Shares | 49,950 | |||
Shares issued in settlement agreement, Amount | $ 50 | 26,424 | 26,474 | |
Stock- based compensation, Share | 400,110 | |||
Stock- based compensation, Amount | $ 402 | 261,404 | 261,806 | |
Net loss | $ (16,943,377) | (16,943,377) | ||
Balance, Share at Sep. 30, 2015 | 62,890,763 | |||
Balance, Amount at Sep. 30, 2015 | $ 62,891 | $ 100,568,901 | $ (103,253,108) | $ (2,621,317) |
Shareholders Equity (Parentheti
Shareholders Equity (Parenthetical) | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Statement of Stockholders' Equity [Abstract] | |
Net of finders' fee | $ 454,000 |
NATURE OF OPERATIONS
NATURE OF OPERATIONS | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF OPERATIONS | Note 1: Nature of Operations TapImmune Inc. (the Company), a Nevada corporation incorporated in 1992, is a biotechnology Company focusing on immunotherapy specializing in the development of innovative peptide and gene-based immunotherapeutics and vaccines for the treatment of oncology and infectious disease. Unlike other vaccine technologies that narrowly address the initiation of an immune response, TapImmune's approach broadly stimulates the cellular immune system by enhancing the function of killer T-cells and T-helper cells and by restoring antigen presentation in tumor cells allowing their recognition and killing by the immune system. |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | NOTE 2: Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (SEC) and on the same basis as the Company prepares its annual audited consolidated financial statements. The condensed consolidated balance sheet as of September 30, 2015, condensed consolidated statements of interim financials include all adjustments, consisting only of normal recurring adjustments, which the Company considers necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The results for the statement of operations are not necessarily indicative of results to be expected for the year ending December 31, 2015 or for any future interim period. The condensed balance sheet at December 31, 2014 has been derived from audited financial statements; however, it does not include all of the information and notes required by U.S. GAAP for complete financial statements. The accompanying condensed financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2014, and notes thereto included in the Companys annual report on Form 10-K. |
LIQUIDITY AND FINANCIAL CONDITI
LIQUIDITY AND FINANCIAL CONDITION | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
LIQUIDITY AND FINANCIAL CONDITION | NOTE 3: LIQUIDITY AND FINANCIAL CONDITION The Companys activities since inception have consisted principally of acquiring product and technology rights, raising capital, and performing research and development. Successful completion of the Companys development programs and, ultimately, the attainment of profitable operations are dependent on future events, including, among other things, its ability to access potential markets; secure financing, develop a customer base; attract, retain and motivate qualified personnel; and develop strategic alliances. From inception, the Company has been funded by a combination of equity and debt financings. The Company expects to continue to incur substantial losses over the next several years during its development phase. To fully execute its business plan, the Company will need to complete certain research and development activities and clinical studies. Further, the Companys product candidates will require regulatory approval prior to commercialization. These activities may span many years and require substantial expenditures to complete and may ultimately be unsuccessful. Any delays in completing these activities could adversely impact the Company. The Company plans to meet its capital requirements primarily through issuances of debt and equity securities and, in the longer term, revenue from product sales. As of September 30, 2015, the Company had cash and cash equivalents of approximately $6,087,000. Historically, the Company has net losses and negative cash flows from operations. The Company believes its current capital resources are not sufficient to support its operations. Management intends to continue its research efforts and to finance operations of the Company through debt and/or equity financings. Management plans to seek additional debt and/or equity financing through private or public offerings or through a business combination or strategic partnership. There can be no assurance that the Company will be successful in obtaining additional financing on favorable terms, or at all. These matters raise substantial doubt about the Companys ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Note 4: SIGNIFICANT ACCOUNTING POLICIES There have been no material changes in the Companys significant accounting policies to those previously disclosed in the Companys annual report on Form 10-K, which was filed with the SEC on April 15, 2015. Prior Period Reclassifications The expense categories of the comparable prior period have been reclassified for comparability with the September 30, 2015 presentation. These reclassifications had no effect on previously reported net loss. |
NET INCOME (LOSS) PER SHARE
NET INCOME (LOSS) PER SHARE | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
NET INCOME (LOSS) PER SHARE | Note 5: net income (loss) per share Basic income (loss) per common share is computed by dividing net income by the weighted average number of common shares outstanding during the reporting period. Diluted income per common share is computed similar to basic income per common share except that it reflects the potential dilution that could occur if dilutive securities or other obligations to issue common stock were exercised or converted into common stock. The following table sets forth the computation of income (loss) per share: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2015 2014 2015 2014 Net income (loss) $ 2,483,988 $ (1,567,836 ) $ (16,943,377 ) $ (30,146,586 ) Weighted average shares outstanding - basic 48,583,003 17,310,708 36,651,565 13,292,886 Common stock warrants 31,959,990 Common stock options 400,000 Weighted average shares outstanding - diluted 80,944,993 17,310,708 36,651,565 13,292,886 Net loss per share data: $ 0.05 $ (0.09 ) $ (0.46 ) $ (2.27 ) Diluted $ 0.03 $ (0.09 ) $ (0.46 ) $ (2.27 ) Options, warrants, and convertible debt outstanding were all considered anti-dilutive for the nine months ended September 30, 2015 and 2014, due to net losses. The following securities were not included in the diluted net loss per share calculation because their effect was anti-dilutive as of the periods presented: Nine Months Ended September 30 2015 2014 Common stock options 465,000 65,000 Common stock warrants - equity treatment 47,032,000 185,000 Common stock warrants - liability treatment 12,514,000 49,000 Convertible notes 7,000 Potentially dilutive securities 60,011,000 306,000 |
DERIVATIVE LIABILITY - WARRANTS
DERIVATIVE LIABILITY - WARRANTS AND DERIVATIVE LIABILITY – CONVERSION OPTION | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
DERIVATIVE LIABILITY - WARRANTS AND DERIVATIVE LIABILITY – CONVERSION OPTION | Note 6: DERIVATIVE LIABILITY - WARRANTs AND DERIVATIVE LIABILITY CONVERSION OPTION A summary of quantitative information with respect to valuation methodology and significant unobservable inputs used for the Companys common stock purchase warrants that are categorized within Level 3 of the fair value hierarchy for the nine months ended 2015 and 2014 is as follows: Stock Purchase Warrants Weighted Average Inputs for the Period Date of valuation For the Nine Months Ending September 30, 2015 For the Nine Months Ending September 30, 2014 Strike price $ 0.13 $ 5.84 Volatility (annual) 158.00 % 156.00 % Risk-free rate 1.63 % 1.07 % Contractual term (years) 4.34 3.33 Dividend yield (per share) 0 % 0 % The foregoing assumptions are reviewed quarterly and are subject to change based primarily on managements assessment of the probability of the events described occurring. Accordingly, changes to these assessments could materially affect the valuations. Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis Financial assets and liabilities measured at fair value on a recurring basis are summarized below and disclosed on the balance sheet under Derivative liability warrants: As of September 30, 2015 Fair Value Measurements Fair Value Level 1 Level 2 Level 3 Total Derivative liability - warrants $ 7,427,000 $ 7,427,000 $ 7,427,000 Total $ 7,427,000 $ 7,427,000 $ 7,427,000 As of December 31, 2014 Fair Value Measurements Fair Value Level 1 Level 2 Level 3 Total Derivative liability - warrants $ 9,000 $ 9,000 $ 9,000 Total $ 9,000 $ 9,000 $ 9,000 There were no transfers between Level 1, 2 or 3 during the nine months ended September 30, 2015. The following table presents changes in Level 3 liabilities measured at fair value for the nine months ended September 30, 2015: Derivative liability warrants Balance December 31, 2014 $ 9,000 Additions during the period 2,659,000 Change in fair value of warrant liability 4,760,000 Balance September 30, 2015 $ 7,428,000 The valuation of warrants is subjective and is affected by changes in inputs to the valuation model including the price per share of common stock, the historical volatility of the stock price, risk-free rates based on U.S. Treasury security yields, the expected term of the warrants and dividend yield. Changes in these assumptions can materially affect the fair value estimate. The Company could ultimately incur amounts to settle the warrant at a cash settlement value that is significantly different than the carrying value of the liability on the financial statements. The Company will continue to classify the fair value of the warrants as a liability until the warrants are exercised, expire, or are amended in a way that would no longer require these warrants to be classified as a liability. Changes in the fair value of the common stock warrants liability are recognized as a component of other income (expense) in the Statements of Operations. During 2014 the Company entered into numerous extinguishment agreements with various convertible note holders. As a result the derivative liability associated with the bifurcated conversion options were extinguished at the date of conversion and recorded in the loss on extinguishment in the Statement of Operations. The inputs utilized in the final mark to market were as follows: Conversion Option Weighted Average Inputs for the Period Date of valuation For the Quarter Ending September 30, 2015 For the Quarter Ending September 30, 2014 Strike price $ $ 1.03 Volatility (annual) % 199.00 % Risk-free rate % 0.05 % Contractual term (years) 0.24 Dividend yield (per share) % % Fair value of Conversion Option at extinguishment $ $ 708,000 |
PROMISSORY NOTES, RELATED PARTY
PROMISSORY NOTES, RELATED PARTY | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
PROMISSORY NOTE | Note 7: Promissory notes, related party The Company has outstanding promissory notes in the amount of $52,942 (December 31, 2014 - $52,942), of which $23,000 of promissory notes relate to amounts owed to an officer and a director of the Company. The promissory notes bear no interest charges and have no fixed repayment terms. |
CAPITAL STOCK
CAPITAL STOCK | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
CAPITAL STOCK | Note 8: Capital Stock 2015 Share Transactions Private placements In January, 2015, the Company entered into a Securities Purchase Agreement with certain investors for the sale of 7,320,000 units at a purchase price of $0.20 per unit, for a total purchase price of approximately $1,250,000, net of finders fee and offering expenses of approximately $214,000. Each unit consisting of (i) one share of the Companys Common Stock, (ii) one Series A warrant to purchase one share of common stock, (iii) one Series B warrant to purchase one share of common stock (iv) one Series C warrant to purchase one share of common stock, (v) one Series D warrant to purchase one share of common stock, and (vi) one Series E warrant to purchase one share of common stock (the Series A, B, C, D and E warrants are hereby collectively referred to as the January 2015 Warrants). Series A warrants are exercisable at $1.50 per share, with a five year term. Series B warrants are exercisable at $0.40 per share, with a six month term. Series C warrants are exercisable at $1.00 per share, with a five year term. Series D warrants are exercisable at $0.75 per share only if and to the extent that the Series B warrants are exercised, with a five year term from the date that the Series B warrants are exercised. Series E warrants are exercisable at $1.25 per share, only if and to the extent that the Series C warrants are exercised, with a five year term from the date that the Series C warrants are exercised. Pursuant to a placement agent agreement, the Company agreed to issue warrants to purchase 366,000 common shares with substantially the same terms as the January 2015 Warrants. The Series A warrants were issued with price reset features. The fair value of these warrants was determined to be $1,346,000 and recognized as a derivative liability. The fair value of Series B, C, D & E warrants was determined to be $4,635,000 and was included within equity. In March, 2015, the Company entered into a Securities Purchase Agreement with certain accredited investors for the sale of 5,000,000 units at a purchase price of $0.20 per unit, for a total purchase price of approximately $950,000, net of finders fee and offering expenses of approximately $50,000. Each unit consisting of (i) one share of the Companys Common Stock, (ii) one Series A warrant to purchase one share of common stock, (iii) one Series B warrant to purchase one share of common stock (iv) one Series C warrant to purchase one share of common stock, (v) one Series D warrant to purchase one share of common stock, and (vi) one Series E warrant to purchase one share of common stock (the Series A, B, C, D and E warrants are hereby collectively referred to as the March 2015 Warrants). The March 2015 Warrants have substantially the same terms as the January 2015 Warrants. Pursuant to a placement agent agreement, the Company agreed to issue warrants to purchase 125,000 common shares with substantially the same terms as the March 2015 Warrants. The Series A warrants were issued with price reset features. The fair value of these warrants was determined to be $744,000 and recognized as a derivative liability. The fair value of Series B, C, D & E warrants was determined to be $2,588,000 and was included within equity. In May 2015, the Company entered into a restructuring agreement with the investors of the January 2015 and March 2015 private placements, where: The exercise price of the Series A warrants was changed from $1.50 per warrant to $0.10 per warrant, The exercise price of Series B warrants was changed from $0.40 per warrant to $0.20 per warrant, Each warrant of Series B existing prior to the restructuring agreement was replaced with two warrants of such series, The exercise price of the Series C warrants was changed from $1.00 per warrant to $0.50 per warrant, and Each warrant of Series C existing prior to the restructuring agreement was replaced with two warrants of such series. As a result of the restructuring agreement, the Company issued an additional 12,320,000 Series B warrants and 12,320,000 Series C Warrants. The incremental fair value of Series A warrants due to repricing was determined to be $568,000 and recognized as a derivative liability with a corresponding inducement expense in the Statement of Operations. The incremental fair value of Series B and Series C warrants due to repricing and increasing the number of warrants was determined to be $7,688,000. The fair value of these warrants was recognized as additional paid-in capital with a corresponding inducement expense in the Statement of Operations. The fair value was estimated immediately prior to the date of the restructuring agreement using the Black-Scholes option pricing model with the following weighted average assumptions: Share Purchase Warrants Weighted Average Inputs Date of valuation May 28, 2015 Strike price $ 0.40 1.00 Volatility (annual) 127.00 155.00 % Risk-free rate .01 - 1.51 % Contractual term (years) .13 - 4.79 Dividend yield (per share) 0 % The fair value was estimated immediately after, on the date of the restructuring agreement, using the Black-Scholes option pricing model with the following weighted average assumptions: Share Purchase Warrants Weighted Average Inputs Date of valuation May 28, 2015 Strike price $ 0.20 0.50 Volatility (annual) 127.00 155.00 % Risk-free rate .01 - 1.51 % Contractual term (years) 29 - 4.79 Dividend yield (per share) 0 % Share Purchase Warrants During the nine months ended September 30, 2015, a warrant holder exercised 5,000,000 of Series C warrants at $0.50 per warrant for a total of $2,500,000. During the nine months ended September 30, 2015, warrant holders exercised 24,639,995 of Series B warrants at $0.20 per warrant for a total of $4,928,000. A summary of the Companys share purchase warrants as of September 30, 2015 and changes during the period is presented below: Number of Weighted Average Weighted Average Balance, December 31, 2014 2,659,417 1.83 4.15 Issued 86,730,975 0.54 4.52 Exercised (29,639,995 ) 0.25 Extinguished or expired (203,900 ) 2.39 Balance, September 30, 2015 59,546,497 $ 0.68 4.47 Stock Compensation Plan On October 14, 2009, the Company adopted the 2009 Stock Incentive Plan (the 2009 Plan) which supersedes and replaces the 2007 Stock Plan. The 2009 Plan allows for the issuance of up to 10,000,000 common shares. Options granted under the Plan shall be at prices and for terms as determined by the Board of Directors. During the nine months ended September 30, 2015 the Company granted 400,000 stock options with a weighted average exercise price of $0.17. The fair value of the options was estimated to be $62,000 or $0.16. The weighted average inputs used to value the options were an expected life of 5 years, volatility of 155%, risk-free interest rate of 1.54% and dividend yield of 0%. Stock based compensation costs of $21,000 are expected to be recognized over the next 1.4 years. In July, 2015, the Company issued 118,450 shares of common stock with a fair value of $21,913 to its counsel for legal services rendered through January 21, 2015. In August, 2015, the Company issued 50,000 shares of common stock with fair value of $26,474 as full settlement to a marketing consultant for services provided to the Company in 2014 and 2015. Share purchase options A summary of the Companys stock options as of September 30, 2015 and changes during the period is presented below: Number of Weighted Average Weighted Average Intrinsic Value Outstanding at January 1, 2014 65,430 18.00 5.04 $ Issued Cancelled/Forfeited Outstanding at January 1, 2015 65,430 18.00 4.04 Issued 400,000 0.17 4.39 $ 182,000 Outstanding at September 30, 2015 465,430 $ 2.62 4.23 $ 182,000 Exercisable at September 30, 2015 238,810 $ 5.00 4.09 $ 80,000 Number of Weighted Average Unvested, December 31, 2014 278 $ 18.00 Granted 400,000 0.16 Vested (173,658 ) 0.21 Cancelled Unvested, September 30, 2015 226,620 $ 0.16 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2015 | |
Subsequent Events | |
SUBSEQUENT EVENTS | NOTE 9: SUBSEQUENT EVENTS 1. Subsequent to September 30, 2015, the Board of Directors approved an amendment to a consulting agreement with a board member, which increased the consulting fee from $10,000 per month to $15,000 per month. 2. On November 6, 2015, the Board of Directors approved an amendment to the Companys 2014 Omnibus Stock Ownership Plan which provided for an increase in the number of shares reserved for issuance under the Plan by 5 million shares to 7 million shares. 3. On November 12, 2015, the Company entered into a new employment agreement with Dr. Glynn Wilson, the Companys Chief Executive Officer, President and Chairman. The initial term of the agreement ends November 11, 2017, but it will automatically be extended for 12-months unless terminated by the Company or Dr. Wilson by written notice to the other not later than 12 months prior to the end of such initial term. It will thereafter be further extended for an additional 12 months after the end of each such extended term unless terminated by the Company or Dr. Wilson by written notice no later than 90 days prior to the end of such term, subject to early termination for cause or good reason by Dr. Wilson. Under the agreement, Dr. Wilsons annual base salary is to be $280,000, and he is entitled to a performance-based bonus ranging of up to 50% of his base salary based on goals and other conditions as the Board determines on an annual basis, which may be paid in cash or equity awards as the Board determines. In connection with entering into the new agreement, Dr. Wilson will receive equity awards under the Companys 2014 Omnibus Stock Ownership Plan consisting of (i) an award of 315,000 shares of unregistered common stock, which immediately vest, and (ii) an award of stock options to purchase 2 million shares of Company common stock, prior to November 12, 2025, for $0.__ per share (the closing price of the common stock on November 12, 2015). One-half of the stock options will be immediately vested, and the remaining 1 million shares will vest ratably over the following 24 months. 4. On November 12, 2015, the Board of Directors approved awards of stock options to acquire 150,000 shares of common stock to each of Sherry Grisewood and Mark Reddish. All of such options are fully vested. In addition, the Board approved awards of stock options to four individuals (two employees and two consultants) to purchase an aggregate of 690,000 shares of common stock. Of the options granted to the employees and consultants, 290,000 are immediately vested, and the remainder vest over periods of between one and three years. All of the stock options have a 10-year term, and the exercise price is $0.__ per share, the closing price of the common stock on the date of grant. 5. Between October 1, 2015 and November 12, 2015, holders of Series C Warrants exercised 1,728,000 of Series C Warrants registered under our recent registration statements on Form S-1, resulting in proceeds of $864,000 to the Company.. |
SIGNIFICANT ACCOUNTING POLICI17
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Prior Period Reclassifications | Prior Period Reclassifications The expense categories of the comparable prior period have been reclassified for comparability with the September 30, 2015 presentation. These reclassifications had no effect on previously reported net loss. |
NET INCOME (LOSS) PER SHARE (Ta
NET INCOME (LOSS) PER SHARE (Table) | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Computation of income (loss) per share | Note 5: net income (loss) per share Basic income (loss) per common share is computed by dividing net income by the weighted average number of common shares outstanding during the reporting period. Diluted income per common share is computed similar to basic income per common share except that it reflects the potential dilution that could occur if dilutive securities or other obligations to issue common stock were exercised or converted into common stock. The following table sets forth the computation of income (loss) per share: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2015 2014 2015 2014 Net income (loss) $ 2,483,988 $ (1,567,836 ) $ (16,943,377 ) $ (30,146,586 ) Weighted average shares outstanding - basic 48,583,003 17,310,708 36,651,565 13,292,886 Common stock warrants 31,959,990 Common stock options 400,000 Weighted average shares outstanding - diluted 80,944,993 17,310,708 36,651,565 13,292,886 Net loss per share data: $ 0.05 $ (0.09 ) $ (0.46 ) $ (2.27 ) Diluted $ 0.03 $ (0.09 ) $ (0.46 ) $ (2.27 ) |
Net loss per share | Options, warrants, and convertible debt outstanding were all considered anti-dilutive for the nine months ended September 30, 2015 and 2014, due to net losses. The following securities were not included in the diluted net loss per share calculation because their effect was anti-dilutive as of the periods presented: Nine Months Ended September 30, 2015 2014 Common stock options 465,000 65,000 Common stock warrants - equity treatment 47,032,000 185,000 Common stock warrants - liability treatment 12,514,000 49,000 Convertible notes 7,000 Potentially dilutive securities 60,011,000 306,000 |
DERIVATIVE WARRANT LIABILITY AN
DERIVATIVE WARRANT LIABILITY AND FAIR VALUE (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Valuation methodology | Note 6: DERIVATIVE LIABILITY - WARRANTs AND DERIVATIVE LIABILITY CONVERSION OPTION A summary of quantitative information with respect to valuation methodology and significant unobservable inputs used for the Companys common stock purchase warrants that are categorized within Level 3 of the fair value hierarchy for the nine months ended 2015 and 2014 is as follows: Stock Purchase Warrants Weighted Average Inputs for the Period Date of valuation For the Nine Months Ending September 30, 2015 For the Nine Months Ending September 30, 2014 Strike price $ 0.13 $ 5.84 Volatility (annual) 158.00 % 156.00 % Risk-free rate 1.63 % 1.07 % Contractual term (years) 4.34 3.33 Dividend yield (per share) 0 % 0 % |
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis | The foregoing assumptions are reviewed quarterly and are subject to change based primarily on managements assessment of the probability of the events described occurring. Accordingly, changes to these assessments could materially affect the valuations. Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis Financial assets and liabilities measured at fair value on a recurring basis are summarized below and disclosed on the balance sheet under Derivative liability warrants: As of September 30, 2015 Fair Value Measurements Fair Value Level 1 Level 2 Level 3 Total Derivative liability - warrants $ 7,427,000 $ 7,427,000 $ 7,427,000 Total $ 7,427,000 $ 7,427,000 $ 7,427,000 As of December 31, 2014 Fair Value Measurements Fair Value Level 1 Level 2 Level 3 Total Derivative liability - warrants $ 9,000 $ 9,000 $ 9,000 Total $ 9,000 $ 9,000 $ 9,000 |
Measured at fair value | There were no transfers between Level 1, 2 or 3 during the nine months ended September 30, 2015. The following table presents changes in Level 3 liabilities measured at fair value for the nine months ended September 30, 2015: Derivative liability warrants Balance December 31, 2014 $ 9,000 Additions during the period 2,659,000 Change in fair value of warrant liability 4,760,000 Balance September 30, 2015 $ 7,428,000 |
Numerous extinguishment agreements | The valuation of warrants is subjective and is affected by changes in inputs to the valuation model including the price per share of common stock, the historical volatility of the stock price, risk-free rates based on U.S. Treasury security yields, the expected term of the warrants and dividend yield. Changes in these assumptions can materially affect the fair value estimate. The Company could ultimately incur amounts to settle the warrant at a cash settlement value that is significantly different than the carrying value of the liability on the financial statements. The Company will continue to classify the fair value of the warrants as a liability until the warrants are exercised, expire, or are amended in a way that would no longer require these warrants to be classified as a liability. Changes in the fair value of the common stock warrants liability are recognized as a component of other income (expense) in the Statements of Operations. During 2014 the Company entered into numerous extinguishment agreements with various convertible note holders. As a result the derivative liability associated with the bifurcated conversion options were extinguished at the date of conversion and recorded in the loss on extinguishment in the Statement of Operations. The inputs utilized in the final mark to market were as follows: Conversion Option Weighted Average Inputs for the Period Date of valuation For the Quarter Ending September 30, 2015 For the Quarter Ending September 30, 2014 Strike price $ $ 1.03 Volatility (annual) % 199.00 % Risk-free rate % 0.05 % Contractual term (years) 0.24 Dividend yield (per share) % % Fair value of Conversion Option at extinguishment $ $ 708,000 |
CAPITAL STOCK (Tables)
CAPITAL STOCK (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Notes to Financial Statements | |
Weighted average assumptions: | Note 8: Capital Stock The fair value was estimated immediately prior to the date of the restructuring agreement using the Black-Scholes option pricing model with the following weighted average assumptions: Share Purchase Warrants Weighted Average Inputs Date of valuation May 28, 2015 Strike price $ 0.40 1.00 Volatility (annual) 127.00 155.00 % Risk-free rate .01 - 1.51 % Contractual term (years) .13 - 4.79 Dividend yield (per share) 0 % The fair value was estimated immediately after, on the date of the restructuring agreement, using the Black-Scholes option pricing model with the following weighted average assumptions: Share Purchase Warrants Weighted Average Inputs Date of valuation May 28, 2015 Strike price $ 0.20 0.50 Volatility (annual) 127.00 155.00 % Risk-free rate .01 - 1.51 % Contractual term (years) .29 - 4.79 Dividend yield (per share) 0 % |
Share Purchase Warrants | Share Purchase Warrants During the nine months ended September 30, 2015, a warrant holder exercised 5,000,000 of Series C warrants at $0.50 per warrant for a total of $2,500,000. During the nine months ended September 30, 2015, warrant holders exercised 24,639,995 of Series B warrants at $0.20 per warrant for a total of $4,928,000. A summary of the Companys share purchase warrants as of September 30, 2015 and changes during the period is presented below: Number of Weighted Average Weighted Average Balance, December 31, 2014 2,659,417 1.83 4.15 Issued 86,730,975 0.54 4.52 Exercised (29,639,995 ) 0.25 Extinguished or expired (203,900 ) 2.39 Balance, September 30, 2015 59,546,497 $ 0.68 4.47 |
Share purchase options | Share purchase options A summary of the Companys stock options as of September 30, 2015 and changes during the period is presented below: Number of Weighted Average Weighted Average Intrinsic Value Outstanding at January 1, 2014 65,430 18.00 5.04 $ Issued Cancelled/Forfeited Outstanding at January 1, 2015 65,430 18.00 4.04 Issued 400,000 0.17 4.39 $ 182,000 Outstanding at September 30, 2015 465,430 $ 2.62 4.23 $ 182,000 Exercisable at September 30, 2015 238,810 $ 5.00 4.09 $ 80,000 A summary of the status of the Companys unvested options as of September 30, 2015 is presented below: Number of Weighted Average Unvested, December 31, 2014 278 $ 18.00 Granted 400,000 0.16 Vested (173,658 ) 0.21 Cancelled Unvested, September 30, 2015 226,620 $ 0.16 |
LIQUIDITY AND FINANCIAL CONDI21
LIQUIDITY AND FINANCIAL CONDITION (Details Narrtive) | Sep. 30, 2015USD ($) |
Liquidity And Financial Condition Details Narrtive | |
Cash and cash equivalents | $ 6,087,000 |
NET INCOME (LOSS) PER SHARE (De
NET INCOME (LOSS) PER SHARE (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Notes to Financial Statements | ||||
Net income (loss) | $ 2,483,988 | $ (1,567,836) | $ (16,943,377) | $ (30,146,586) |
Weighted average shares outstanding - basic | 48,585,003 | 17,310,708 | 36,651,565 | 13,292,886 |
Common stock warrants | 31,959,990 | |||
Common stock options | 400,000 | |||
Weighted average shares outstanding - diluted | 80,944,993 | 17,310,708 | 36,651,565 | 13,292,886 |
Net loss per share data: | ||||
Basic | $ 0.05 | $ (0.09) | $ (0.46) | $ (2.27) |
Diluted | $ 0.03 | $ (0.09) | $ (0.46) | $ (2.27) |
NET INCOME (LOSS) PER SHARE (23
NET INCOME (LOSS) PER SHARE (Details 1) - shares | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Notes to Financial Statements | ||
Common stock options | 465,000 | 65,000 |
Common stock warrants - equity treatment | 47,032,000 | 185,000 |
Common stock warrants - liability treatment | 12,514,000 | 49,000 |
Convertible notes | 7,000 | |
Potentially dilutive securities | 60,011,000 | 306,000 |
DERIVATIVE LIABILITY - WARRAN24
DERIVATIVE LIABILITY - WARRANTS AND DERIVATIVE LIABILITY - CONVERSION OPTION (Details ) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Strike price | $ 1.03 | |||
Share Purchase Warrants[Member] | ||||
Contractual Life (Years) | 4 years 7 months 6 days | 3 years 6 months 29 days | ||
Risk free Rate | 1.63% | 1.07% | ||
Dividend yield | 0.00% | 0.00% | ||
Volatility | 158.00% | 156.00% | ||
Strike price | $ 0.13 | $ 5.84 | ||
Fair market value of stock | $ 0.96 | $ 0.02 |
DERIVATIVE LIABILITY - WARRAN25
DERIVATIVE LIABILITY - WARRANTS AND DERIVATIVE LIABILITY - CONVERSION OPTION (Details 1) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Derivative liability - warrants | $ 7,427,000 | $ 9,000 |
Total | 7,427,000 | $ 9,000 |
Carrying Value [Member] | ||
Derivative liability - warrants | 7,427,000 | |
Total | $ 7,427,000 | |
Fair Value, Inputs, Level 1 [Member] | ||
Derivative liability - warrants | ||
Total | ||
Fair Value, Inputs, Level 2 [Member] | ||
Derivative liability - warrants | ||
Total | ||
Fair Value, Inputs, Level 3 [Member] | ||
Derivative liability - warrants | $ 7,427,000 | $ 9,000 |
Total | $ 7,427,000 | 9,000 |
Fair Value [Member] | ||
Derivative liability - warrants | 9,000 | |
Total | $ 9,000 |
DERIVATIVE LIABILITY - WARRAN26
DERIVATIVE LIABILITY - WARRANTS AND DERIVATIVE LIABILITY – CONVERSION OPTION (Details 2) | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Notes to Financial Statements | |
Balance - December 31, 2014 | $ 9,000 |
Additions during the quarter | 2,659,000 |
Change in fair value of warrant liability | 4,760,000 |
Balance – September 30, 2015 | $ 7,428,000 |
DERIVATIVE LIABILITY - WARRAN27
DERIVATIVE LIABILITY - WARRANTS AND DERIVATIVE LIABILITY – CONVERSION OPTION (Details 3) - USD ($) | 3 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Notes to Financial Statements | ||
Dividend yield (per share) | 0.00% | 0.00% |
Strike price | $ 1.03 | |
Volatility (annual) | 199.00% | |
Risk-free rate | 0.05% | |
Contractual term (years) | 2 months 27 days | |
Fair value of Conversion Option at extinguishment | $ 708,000 |
PROMISSORY NOTES, RELATED PAR28
PROMISSORY NOTES, RELATED PARTY (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Notes to Financial Statements | ||
Outstanding promissory notes | $ 52,942 | |
Promissory notes officer and a director | $ 23,000 |
CAPITAL STOCK (Details)
CAPITAL STOCK (Details) - $ / shares | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | |
Strike price maximum | $ 1.03 | ||
Contractual term (years) minmum | 4 years 1 month 24 days | ||
Dividend yield (per share) | 0.00% | 0.00% | |
Weighted Average Inputs [Member] | |||
Strike price minimum | $ 0.40 | ||
Strike price maximum | $ 1 | ||
Risk-free rate maximum | 0.01% | ||
Risk-free rate minimum | 1.51% | ||
Volatility (annual) maximum | 155.00% | ||
Volatility (annual) minimum | 127.00% | ||
Contractual term (years) minmum | 1 month 17 days | ||
Contractual term (years) maximum | 4 years 9 months 15 days | ||
Dividend yield (per share) | 0.00% | ||
Weighted Average Inputs One[Member] | |||
Strike price minimum | $ 0.20 | ||
Strike price maximum | $ 0.50 | ||
Risk-free rate maximum | 0.01% | ||
Risk-free rate minimum | 1.51% | ||
Volatility (annual) maximum | 155.00% | ||
Volatility (annual) minimum | 127.00% | ||
Contractual term (years) minmum | 3 months 15 days | ||
Contractual term (years) maximum | 4 years 9 months 15 days | ||
Dividend yield (per share) | 0.00% |
CAPITAL STOCK (Details 1)
CAPITAL STOCK (Details 1) | 9 Months Ended |
Sep. 30, 2015$ / sharesshares | |
Number of Warrants | |
Balance, December 31, 2014 | 2,659,417 |
Issued | 86,730,975 |
Exercised | (29,639,995) |
Extinguished or expired | (203,900) |
Balance, September 30, 2015 | 59,546,497 |
Weighted Average Exercise Price | |
Issued | $ / shares | $ 0.54 |
Exercised | $ / shares | 0.25 |
Extinguished or expired | $ / shares | 2.39 |
Balance, September 30, 2015 | $ / shares | $ 0.68 |
Weighted Average Remaining Life | |
Balance, December 31, 2014 | 4 years 1 month 24 days |
Issued | 4 years 6 months 7 days |
Balance, September 30, 2015 | 4 years 5 months 19 days |
CAPITAL STOCK (Details 2)
CAPITAL STOCK (Details 2) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 30, 2014 | Sep. 30, 2015 | Dec. 31, 2014 | |
Issued | 86,730,975 | ||
Issued | $ 0.54 | ||
Balance, December 31, 2014 | $ 1.83 | ||
Balance, December 31, 2013 | 2 months 27 days | ||
Issued | $ 4,928,000 | ||
Stock Options [Member] | |||
Outstanding at January 1, 2014 | 65,430 | ||
Issued | |||
Cancelled/Forfeited | |||
Issued | 465,430 | 400,000 | |
Balance, September 30, 2015 | 465,430 | ||
Exercisable at September 30, 2015 | 238,810 | ||
Outstanding at January 1, 2014 | $ 18 | $ 18 | |
Issued | |||
Cancelled/Forfeited | |||
Issued | $ 0.17 | ||
Balance, September 30, 2015 | 2.62 | ||
Exercisable at September 30, 2015 | $ 5 | ||
Balance, December 31, 2013 | 5 years 15 days | ||
Balance, December 31, 2014 | 4 years 15 days | ||
Issued | 4 years 7 months 21 days | ||
Balance, September 30, 2015 | 4 years 5 months 27 days | ||
Exercisable at September 30, 2015 | 4 years 1 month 2 days | ||
Outstanding at January 1, 2014 | $ 182,000 | ||
Issued | $ 182,000 | ||
Cancelled/Forfeited | |||
Balance, December 31, 2014 | $ 182,000 | ||
Exercisable at September 30, 2015 | $ 80,000 |
CAPITAL STOCK (Details 3)
CAPITAL STOCK (Details 3) | 9 Months Ended |
Sep. 30, 2015$ / sharesshares | |
Granted | 86,730,975 |
Unvested Options [Member] | |
Unvested, December 31, 2014 | 278 |
Granted | 400,000 |
Vested | (173,658) |
Cancelled | |
Unvested, June 30, 2015 | 226,620 |
Weighted Average Grant-Date Fair Value | |
Unvested, December 31, 2014 | $ / shares | $ 18 |
Granted | $ / shares | 0.16 |
Vested | $ / shares | $ 0.21 |
Cancelled | $ / shares | |
Unvested, June 30, 2015 | $ / shares | $ 0.16 |
CAPITAL STOCK (Details Narrativ
CAPITAL STOCK (Details Narrative) | 9 Months Ended |
Sep. 30, 2015USD ($)shares | |
Notes to Financial Statements | |
Warrant exercised | 5,000,000 |
Warrant Shares exercised | 24,639,995 |
Intrinsic value of the vested options | $ | $ 4,928,000 |