Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 09, 2017 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 | |
Entity Registrant Name | 22nd Century Group, Inc. | |
Entity Central Index Key | 1,347,858 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Trading Symbol | XXII | |
Entity Common Stock, Shares Outstanding | 102,760,340 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash | $ 12,482,774 | $ 13,468,188 |
Accounts receivable, net | 717,919 | 40,992 |
Inventory, net | 4,288,017 | 3,092,686 |
Prepaid expenses and other assets | 550,937 | 195,569 |
Total current assets | 18,039,647 | 16,797,435 |
Machinery and equipment, net | 2,271,789 | 2,434,663 |
Other assets: | ||
Intangible assets, net | 7,443,777 | 7,389,946 |
Investment | 1,366,493 | 1,020,313 |
Total other assets | 8,810,270 | 8,410,259 |
Total assets | 29,121,706 | 27,642,357 |
Current liabilities: | ||
Current portion of note payable | 320,554 | 307,938 |
Accounts payable | 2,268,652 | 1,340,156 |
Accrued expenses | 1,407,638 | 1,401,566 |
Accrued severance | 90,101 | 199,657 |
Total current liabilities | 4,086,945 | 3,249,317 |
Warrant liability | 141,608 | 58,681 |
Total liabilities | 4,228,553 | 3,307,998 |
Commitments and contingencies (Note 13) | ||
Shareholders' equity | ||
Common shares value | 970 | 907 |
Capital in excess of par value | 109,007,539 | 102,471,907 |
Accumulated deficit | (84,115,356) | (78,138,455) |
Total shareholders' equity | 24,893,153 | 24,334,359 |
Total liabilities and shareholders' equity | $ 29,121,706 | $ 27,642,357 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, par value | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, par value | $ 0.00001 | $ 0.00001 |
Common stock, shares issued | 97,015,911 | 90,698,113 |
Common stock, shares outstanding | 97,015,911 | 90,698,113 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Revenue: | ||||
Sale of products, net | $ 3,897,206 | $ 2,827,658 | $ 6,128,723 | $ 5,846,714 |
Cost of goods sold (exclusive of depreciation shown separately below): | ||||
Products | 4,062,261 | 2,968,571 | 6,567,675 | 5,863,981 |
Gross loss | (165,055) | (140,913) | (438,952) | (17,267) |
Operating expenses: | ||||
Research and development (including equity based compensation) | 813,287 | 509,928 | 1,364,138 | 1,107,319 |
General and administrative (including equity based compensation) | 1,805,118 | 1,721,775 | 3,425,597 | 3,568,382 |
Sales and marketing costs (including equity based compensation) | 267,591 | 251,106 | 563,304 | 953,720 |
Depreciation | 88,464 | 81,067 | 176,585 | 161,664 |
Amortization | 143,010 | 126,041 | 283,898 | 250,882 |
Total operating expenses | 3,117,470 | 2,689,917 | 5,813,522 | 6,041,967 |
Operating loss | (3,282,525) | (2,830,830) | (6,252,474) | (6,059,234) |
Other income (expense): | ||||
Warrant liability (loss) gain - net | (77,583) | (9,468) | (82,927) | 61,597 |
Gain (loss) on investment | 0 | (54,839) | 346,180 | (142,071) |
Interest income | 12,125 | 2,105 | 27,880 | 4,598 |
Interest expense | (7,641) | (9,322) | (15,560) | (19,696) |
Total other income (expense) | (73,099) | (71,524) | 275,573 | (95,572) |
Loss before income taxes | (3,355,624) | (2,902,354) | (5,976,901) | (6,154,806) |
Income taxes | 0 | 0 | 0 | 0 |
Net loss | $ (3,355,624) | $ (2,902,354) | $ (5,976,901) | $ (6,154,806) |
Loss per common share - basic and diluted | $ (0.04) | $ (0.04) | $ (0.07) | $ (0.08) |
Common shares used in basic and diluted earnings per share calculation | 91,577,688 | 76,024,064 | 91,165,770 | 75,027,606 |
CONSOLIDATED STATEMENTS OF OPE5
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Research and Development Expense [Member] | ||||
Allocated Share-based Compensation Expense | $ 18,250 | $ 38,225 | $ 32,200 | $ 83,281 |
General and Administrative Expense [Member] | ||||
Allocated Share-based Compensation Expense | 105,277 | 176,747 | 233,726 | 402,922 |
Sales and Marketing Costs Expense [Member] | ||||
Allocated Share-based Compensation Expense | $ 30,477 | $ 5,250 | $ 57,057 | $ 16,886 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY - 6 months ended Jun. 30, 2017 - USD ($) | Total | Common Stock [Member] | Capital in Excess of Par Value [Member] | Accumulated Deficit [Member] |
Beginning balance at Dec. 31, 2016 | $ 24,334,359 | $ 907 | $ 102,471,907 | $ (78,138,455) |
Beginning balance, shares at Dec. 31, 2016 | 90,698,113 | |||
Equity based compensation | 322,983 | $ 0 | 322,983 | 0 |
Equity based compensation (in shares) | 0 | |||
Stock issued in connection with warrant exercises | 6,212,712 | $ 63 | 6,212,649 | 0 |
Stock issued in connection with warrant exercises (in shares) | 6,283,205 | |||
Stock issued in connection with stock option exercises | 0 | $ 0 | 0 | 0 |
Stock issued in connection with stock option exercises (in shares) | 34,593 | |||
Net loss | (5,976,901) | $ 0 | 0 | (5,976,901) |
Ending balance at Jun. 30, 2017 | $ 24,893,153 | $ 970 | $ 109,007,539 | $ (84,115,356) |
Ending balance (in shares) at Jun. 30, 2017 | 97,015,911 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Cash flows from operating activities: | ||
Net loss | $ (5,976,901) | $ (6,154,806) |
Adjustments to reconcile net loss to cash used in operating activities: | ||
Amortization and depreciation | 411,472 | 363,535 |
Amortization of license fees | 49,011 | 49,011 |
(Gain) loss on investment | (346,180) | 142,071 |
Accretion of interest on note payable and accrued severance | 15,560 | 19,696 |
Warrant liability loss (gain) | 82,927 | (61,597) |
Equity based employee compensation expense | 322,983 | 472,216 |
Equity based payments for outside services | 0 | 30,873 |
Decrease in allowance for doubtful accounts | (10,000) | 0 |
Increase in inventory reserve | 95,000 | 0 |
Increase in assets: | ||
Accounts receivable | (666,927) | (54,499) |
Inventory | (1,290,331) | (440,603) |
Prepaid expenses and other assets | (355,368) | (98,146) |
Increase (decrease) in liabilities: | ||
Accounts payable | 754,236 | 112,862 |
Accrued expenses | (24,339) | (158,219) |
Accrued severance | (112,500) | (112,501) |
Net cash used in operating activities | (7,051,357) | (5,890,107) |
Cash flows from investing activities: | ||
Acquisition of patents and trademarks | (133,059) | (101,004) |
Acquisition of machinery and equipment | (13,710) | (20,596) |
Net cash used in investing activities | (146,769) | (121,600) |
Cash flows from financing activities: | ||
Net proceeds from exercise of warrants | 6,212,712 | 196 |
Net proceeds from February 2016 registered direct offering | 0 | 5,091,791 |
Net cash provided by financing activities | 6,212,712 | 5,091,987 |
Net decrease in cash | (985,414) | (919,720) |
Cash - beginning of period | 13,468,188 | 3,760,297 |
Cash - end of period | 12,482,774 | 2,840,577 |
Net cash paid for: | ||
Cash paid during the period for interest | 2,943 | 19,696 |
Cash paid during the period for income taxes | 0 | 0 |
Non-cash transactions: | ||
Patent and trademark additions included in accounts payable | 174,258 | 171,215 |
Patent additions included in accrued expenses | 30,411 | 0 |
Reclassification of warrant liability to capital in excess of par due to voiding of exchange rights clause in Crede Tranche 1A warrant | $ 0 | $ 2,810,000 |
NATURE OF BUSINESS AND SUMMARY
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | - The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments consisting of normal recurring accruals considered necessary for a fair and non-misleading presentation of the financial statements have been included. Operating results for the six months ended June 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. The balance sheet as of December 31, 2016 has been derived from the audited consolidated financial statements at that date, but does not include all the information and footnotes required by GAAP for complete financial statements. These interim consolidated financial statements should be read in conjunction with the December 31, 2016 audited consolidated financial statements and the notes thereto. - The accompanying consolidated financial statements include the accounts of 22nd Century Group, Inc. (“22nd Century Group”), its three wholly-owned subsidiaries, 22nd Century Limited, LLC (“22nd Century Ltd”), NASCO Products, LLC (“NASCO”), and Botanical Genetics, LLC (“Botanical Genetics”), and two wholly-owned subsidiaries of 22nd Century Ltd, Goodrich Tobacco Company, LLC (“Goodrich Tobacco”) and Heracles Pharmaceuticals, LLC (“Heracles Pharma”) (collectively, “the Company”). All intercompany accounts and transactions have been eliminated. - 22nd Century Ltd is a plant biotechnology company specializing in technology that allows (i) for the level of nicotine and other nicotinic alkaloids in tobacco plants to be decreased or increased through genetic engineering and plant breeding and (ii) the levels of cannabinoids in cannabis/hemp plants to be decreased or increased through genetic engineering and plant breeding. Goodrich Tobacco and Heracles Pharma are business units for the Company’s (i) premium cigarettes and potential modified risk tobacco products and (ii) smoking cessation product, respectively. The Company acquired the membership interests of NASCO on August 29, 2014. NASCO is a federally licensed tobacco products manufacturer, a participating member of the tobacco Master Settlement Agreement (“MSA”) between the tobacco industry and the settling states under the MSA, and operates the Company’s cigarette manufacturing business in North Carolina. Botanical Genetics is a wholly-owned subsidiary of 22nd Century Group, and was incorporated to facilitate an equity investment more fully described in Note 9. - The Company is authorized to issue “blank check” preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to our common stock. - 0 10,000 Inventory - June 30, December 31, 2017 2016 Inventory - tobacco leaf $ 1,881,233 $ 1,936,039 Inventory - finished goods Cigarettes and filtered cigars 756,186 340,523 Inventory - raw materials Cigarette and filtered cigar components 2,001,221 1,071,747 4,638,640 3,348,309 Less: inventory reserve 350,623 255,623 $ 4,288,017 $ 3,092,686 - Machinery and equipment are recorded at their acquisition cost and depreciated on a straight-line basis over their estimated useful lives ranging from 3 10 - Intangible assets are recorded at cost and consist primarily of (1) expenditures incurred with third parties related to the processing of patent claims and trademarks with government authorities, as well as costs to acquire patent rights from third parties, (2) license fees paid for third-party intellectual property, (3) costs to become a signatory under the tobacco MSA, and (4) license fees paid to acquire a predicate cigarette brand. The amounts capitalized relate to intellectual property that the Company owns or to which it has exclusive rights. The Company’s intellectual property capitalized costs are amortized using the straight-line method over the remaining statutory life of the primary patent in each of the Company’s two primary groupings of patent families, which expire in 2018 and 2028 (the assets’ estimated lives, respectively). Periodic maintenance or renewal fees are expensed as incurred. Annual minimum license fees are charged to expense. License fees paid for third-party intellectual property are amortized on a straight-line basis over the last to expire patents, which patent expiration dates range from 2028 through 2035. The Company believes costs associated with becoming a signatory to the MSA and acquiring a predicate cigarette brand have an indefinite life and as such, no amortization is taken. June 30, December 31, 2017 2016 Intangible assets, net Patent and trademark costs $ 6,026,169 $ 5,688,440 Less: accumulated amortization 2,256,813 2,021,926 Patent and trademark costs, net 3,769,356 3,666,514 License fees, net (see Note 13) 1,450,000 1,450,000 Less: accumulated amortization 277,580 228,568 License fees, net 1,172,420 1,221,432 MSA signatory costs 2,202,000 2,202,000 License fee for predicate cigarette brand 300,000 300,000 $ 7,443,777 $ 7,389,946 Amortization expense relating to the above intangible assets for the three and six months ended June 30, 2017 amounted to $ 143,010 283,898 126,041 250,882 The estimated annual average amortization expense for the next five years is approximately $ 387,000 98,000 - The Company reviews the carrying value of its amortizing long-lived assets whenever events or changes in circumstances indicate that the historical cost-carrying value of an asset may no longer be recoverable. The Company assesses recoverability of the asset by estimating the future undiscounted net cash flows expected to result from the asset, including eventual disposition. If the estimated future undiscounted net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and its fair value. There was no impairment loss recorded during the six months ended June 30, 2017 or 2016. - The Company recognizes deferred tax assets and liabilities for any basis differences in its assets and liabilities between tax and GAAP reporting, and for operating loss and credit carry-forwards. Considering the Company’s history of cumulative net operating losses and the uncertainty of their future utilization, the Company has established a valuation allowance to fully offset its net deferred tax assets as of June 30, 2017 and December 31, 2016. The Company’s federal and state tax returns for the years ended December 31, 2013 through December 31, 2015 are currently open to audit under the statutes of limitations. There were no pending audits as of June 30, 2017. - The Company uses a fair-value based method to determine compensation for all arrangements under which Company employees and others receive shares or options to purchase common shares of the Company. Stock based compensation expense is recorded over the requisite service period based on estimates of probability and time of achieving milestones and vesting. For accounting purposes, the shares will be considered issued and outstanding upon vesting. - The Company recognizes revenue from product sales at the point the product is shipped to a customer and title has transferred. Revenue from the sale of the Company’s products is recognized net of cash discounts, sales returns and allowances. Cigarette and filtered cigar federal excise taxes and other regulatory fees in the approximate amount of $ 1,985,000 3,544,000 1,842,000 3,577,000 SPECTRUM The Company was chosen to be a subcontractor for a 5-year government contract between RTI International (“RTI”) and the National Institute on Drug Abuse (“NIDA”) to supply NIDA with research cigarettes. The contract was renewed in 2015 for an additional 5 years. These government research cigarettes are distributed under the Company’s mark SPECTRUM. SPECTRUM SPECTRUM 0 329,321 2.4 SPECTRUM - The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. The Company evaluates all our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair market value and then is revalued at each reporting date, with changes in fair value reported in the Consolidated Statements of Operations. The methodology for valuing our outstanding warrants classified as derivative instruments utilizes a lattice model, which includes probability weighted estimates of future events, including volatility of our common stock. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified on the balance sheet as current or non-current based on if the net-cash settlement of the derivative instrument could be required within twelve months of the balance sheet date. - Research and development costs are expensed as incurred. - The Company expenses advertising costs as incurred. Advertising expense was approximately $ 12,000 43,000 27,000 235,000 - Basic loss per common share is computed using the weighted-average number of common shares outstanding. Diluted loss per share is computed assuming conversion of all potentially dilutive securities. Potential common shares outstanding are excluded from the computation if their effect is anti-dilutive. - The Company evaluates each commitment and/or contingency in accordance with accounting standards, which state that if the item is more likely than not to become a direct liability, then the Company will record the liability in the financial statements. If not, the Company will disclose any material commitments or contingencies that may arise. - The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. - Financial instruments include cash, receivables, accounts payable, accrued expenses, accrued severance, note payable and warrant liability. Other than warrant liability, fair value is assumed to approximate carrying values for these financial instruments, since they are short term in nature, they are receivable or payable on demand, or had stated interest rates that approximate the interest rates available to the Company as of the reporting date. The determination of the fair value of the warrant liability includes unobservable inputs and is therefore categorized as a Level 3 measurement, as further discussed in Note 12. The Company accounts for investments in equity securities of other entities under the equity method of accounting if the Company’s investment in the voting stock is greater than or equal to 20% and less than a majority, and the Company has the ability to have significant influence over the operating and financial policies of the investee. When the Company’s investment in equity securities falls below 20% and the Company does not have the ability to have significant influence over the operating and financial policies of the investee, the Company carries the equity investment at its cost basis. Accounting Pronouncements - In February 2016, the FASB issued ASU 2016-02, “Leases,” which supersedes existing lease guidance under GAAP. Under the new guidance, lessees will be required to recognize leases as right of use assets and liabilities for leases with lease terms of more than twelve months. The guidance will apply for both finance and operating leases. The effective date for the ASU is for annual periods beginning after December 15, 2018 and interim periods therein. The Company is currently evaluating the impact of the ASU on its consolidated financial statements. |
JUNE 2017 WARRANT EXERCISE AGRE
JUNE 2017 WARRANT EXERCISE AGREEMENTS | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
June Two Thousand Seventeen Warrant Exercise Agreements Disclosure | NOTE 2. JUNE 2017 WARRANT EXERCISE AGREEMENTS On June 19, 2017, the Company entered into Warrant Exercise Agreements (the “Agreements”) with all of the holders (the “Holders”) of outstanding warrants to purchase up to 7,043,211 1.00 4,250,000 1.45 3,229,711 2,354,948 6,169,212 In consideration for the Holders exercising their Warrants for cash, the Company issued to each Holder a new warrant (the “New Warrants”) to purchase shares of common stock of the Company equal to the number of shares of common stock received by each Holder upon the cash exercise of the Holder’s Warrants. The terms of the New Warrants are substantially similar to the terms of the Warrants exercised, except the New Warrants (i) have an exercise price equal to $ 2.15 are exercisable six months from the date of issuance of the New Warrants for a period of five (5) years. 5,584,659 6,913,808 5,708,552 6,167,646 5,708,552 |
OCTOBER 2016 REGISTERED DIRECT
OCTOBER 2016 REGISTERED DIRECT OFFERING | 6 Months Ended |
Jun. 30, 2017 | |
October 2016 [Member] | |
Subsidiary, Sale of Stock [Line Items] | |
OCTOBER 2016 REGISTERED DIRECT OFFERING | NOTE 3. OCTOBER 2016 REGISTERED DIRECT OFFERING On October 19, 2016, the Company closed a registered direct offering with two institutional investors of units consisting of 8,500,000 4,250,000 1.45 3,380,000 The holders of the warrants did not have the right to exercise any portion of the warrants if the holders, together with its respective affiliates, would beneficially own in excess of 4.99% of the number of shares of the Company’s common stock (including securities convertible into common stock) outstanding immediately after the exercise; provided, however, that the holder could increase or decrease this limitation at any time, although any increase shall not be effective until the 61st day following the notice of increase and the holder could not increase this limitation in excess of 9.99%. 1.3425 10,707,823 |
JULY 2016 REGISTERED DIRECT OFF
JULY 2016 REGISTERED DIRECT OFFERING | 6 Months Ended |
Jun. 30, 2017 | |
JULY 2016 [Member] | |
Subsidiary, Sale of Stock [Line Items] | |
JULY 2016 REGISTERED DIRECT OFFERING | NOTE 4. JULY 2016 REGISTERED DIRECT OFFERING On July 27, 2016, the Company closed a registered direct offering of common stock and warrants consisting of 6,172,840 7,043,211 1.00 1,543,210 858,000 5,500,001 3,058,000 5.5 0.81 4,682,764 5.5 1.21 1.25 |
FEBRUARY 2016 REGISTERED DIRECT
FEBRUARY 2016 REGISTERED DIRECT OFFERING | 6 Months Ended |
Jun. 30, 2017 | |
FEBRUARY 2016 [Member] | |
Subsidiary, Sale of Stock [Line Items] | |
FEBRUARY 2016 REGISTERED DIRECT OFFERING | NOTE 5. - FEBRUARY 2016 REGISTERED DIRECT OFFERING On February 5, 2016, the Company closed a registered direct offering of common stock and warrants consisting of 5,000,000 2,500,000 1.21 1,940,000 1.10 5,091,791 |
JOINT VENTURE, CONSULTING AGREE
JOINT VENTURE, CONSULTING AGREEMENT AND ASSOCIATED WARRANTS | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
JOINT VENTURE, CONSULTING AGREEMENT AND ASSOCIATED WARRANTS | NOTE 6. - JOINT VENTURE, CONSULTING AGREEMENT AND ASSOCIATED WARRANTS On June 22, 2015, the Company terminated its joint venture arrangement with Crede CG III, Ltd. (“Crede”) and a third-party due to non-performance and other breaches of the arrangement by Crede and its principals. The Company also notified Crede that the Company reserved and did not waive any rights that the Company may have to assert any and all claims that it may have against Crede, its employees, agents, representatives or affiliates thereof, which are allowable by law or in equity, including claims for breach of the warrant agreements entered into with Crede. The six-month Consulting Agreement (the “Consulting Agreement”), entered into with Crede on September 29, 2014, expired on March 29, 2015. The value of the warrants issued in conjunction with the Consulting Agreement in the aggregate amount of $ 4,070,000 1,978,785 Four tranches of warrants were issued to Crede in conjunction with the Consulting Agreement as follows: Tranche 1A warrant to purchase 1,250,000 1,000,000 1,000,000 1,000,000 2,810,000 3.36 The Tranche 2 and Tranche 3 warrants were not exercisable unless and until certain revenue milestones were attained, as defined in the prior joint venture agreement between Crede and the Company. As stated above, the Company terminated the joint venture agreement on June 22, 2015. Accordingly, such revenue milestones will never be satisfied and the Tranche 2 and Tranche 3 warrants will never be exercisable. |
MANUFACTURING FACILITY
MANUFACTURING FACILITY | 6 Months Ended |
Jun. 30, 2017 | |
Manufacturing Facility [Member] | |
Other Operating Income And Expense [Line Items] | |
MANUFACTURING FACILITY | NOTE 7. - MANUFACTURING FACILITY The Company’s manufacturing operations at its North Carolina factory were not at full production capacity during the six months ended June 30, 2017. However, in mid-May of 2017, the Company began manufacturing an existing brand of filtered cigars under a new contract manufacturing agreement (the “New Agreement”) with a third-party, continued manufacturing a third-party MSA cigarette brand, other filtered cigars on a contract basis and the Company’s own proprietary cigarette brand, RED SUN 215,941 334,691 146,669 281,936 |
MACHINERY AND EQUIPMENT
MACHINERY AND EQUIPMENT | 6 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
MACHINERY AND EQUIPMENT | NOTE 8. - MACHINERY AND EQUIPMENT June 30, December 31, Useful Life 2017 2016 Cigarette manufacturing equipment 3 - 10 years $ 3,193,580 $ 3,193,580 Office furniture, fixtures and equipment 5 years 104,538 103,945 Laboratory equipment 5 years 32,194 19,076 3,330,312 3,316,601 Less: accumulated depreciation 1,058,523 881,938 Machinery and equipment, net $ 2,271,789 $ 2,434,663 Depreciation expense was $ 88,464 176,585 81,067 161,664 |
INVESTMENT IN ANANDIA
INVESTMENT IN ANANDIA | 6 Months Ended |
Jun. 30, 2017 | |
Equity Method Investments and Joint Ventures [Abstract] | |
INVESTMENT IN ANANDIA | NOTE 9. - INVESTMENT IN ANANDIA The Company (through its wholly-owned subsidiary, Botanical Genetics) used the equity method of accounting to record its 24.4 25 19.4 20 The Company has recorded a gain on investment of $ 0 16,872 40,427 113,247 1,199,000 0 7,526 14,412 28,824 336,834 0 346,180 54,839 142,071 |
NOTES PAYABLE AND PATENT ACQUIS
NOTES PAYABLE AND PATENT ACQUISITION | 6 Months Ended |
Jun. 30, 2017 | |
Notes Payable And Patent Acquisition [Abstract] | |
NOTES PAYABLE AND PATENT ACQUISITION | NOTE 10. - NOTES PAYABLE AND PATENT ACQUISITION On December 22, 2014, the Company entered into a Purchase Agreement (the “Purchase Agreement”) with the National Research Council of Canada (“NRC”) to acquire certain patent rights that the Company had previously licensed from NRC under a license agreement between the parties. The Purchase Agreement provided for payment by the Company to NRC for the NRC patent rights a total amount of $ 1,213,000 213,000 1,000,000 333,333 2017 925,730 333,333 320,554 1,138,730 213,000 |
SEVERANCE LIABILITY
SEVERANCE LIABILITY | 6 Months Ended |
Jun. 30, 2017 | |
Severance Liability [Abstract] | |
SEVERANCE LIABILITY | NOTE 11. - SEVERANCE LIABILITY The Company recorded an accrual for severance during the fourth quarter of 2014 in the initial amount of $ 624,320 18,750 36 90,101 199,657 |
WARRANTS FOR COMMON STOCK
WARRANTS FOR COMMON STOCK | 6 Months Ended |
Jun. 30, 2017 | |
Warrants For Common Stock [Abstract] | |
WARRANTS FOR COMMON STOCK | NOTE 12. - WARRANTS FOR COMMON STOCK At June 30, 2017, the Company had outstanding warrants to purchase 12,445,247 94,721 2,000,000 During the second quarter of 2017, warrants to purchase 843,110 525,118 5,657,159 5,584,659 45,834 During June of 2017, the Company issued warrants to purchase 5,584,659 2.15 6,913,808 During March of 2017, warrants to purchase 202,500 100,928 172,730 On January 25, 2016, warrants to purchase 67,042 2,618 6,831,115 4,250,000 1.45 3,380,000 2,354,948 1.45 1,895,052 Pursuant to the registered direct offering that closed on July 27, 2016, and discussed in Note 4, the Company issued warrants to purchase 7,043,211 1.00 1,543,210 858,000 5,500,001 3,058,000 5.5 5.5 1.21 1.25 3,229,711 1.00 3,813,500 Pursuant to the registered direct offering that closed on February 5, 2016, and discussed in Note 5, the Company issued warrants to purchase 2,500,000 1.21 1,940,000 Pursuant to the registered direct offering that closed on June 2, 2015, the Company issued warrants to purchase 3,000,000 1.25 $ 2,067,000 Number of Exercise Warrant Description Warrants Price Expiration December 2011 convertible NP warrants 802,215 $ 1.3816 February 6, 2018 November 2012 PPO warrants 255,100 $ 0.6000 November 9, 2017 August 2012 convertible NP warrants (1) 94,721 $ 0.9310 August 8, 2018 July 2016 registered direct offering warrants (2) 3,813,500 $ 1.0000 January 27,2021 October 2016 registered direct offering warrants (2) 1,895,052 $ 1.4500 April 19, 2022 June 2017 warrants pursuant to warrant exercise agreements (3) 5,584,659 $ 2.1500 December 20, 2022 Total warrants outstanding (4) 12,445,247 (1) Includes anti-dilution features. (2) As of August 7, 2017, no such warrants were outstanding. See Note 16. (3) As of August 7, 2017, after an aggregate of 5,708,552 11,293,211 (4) Excludes 2,000,000 Tranche 2 and 3 warrants that will never become exercisable, as discussed in Note 6. The Company estimates the value of warrant liability upon issuance of the warrants and at each balance sheet date using the binomial lattice model to allocate total enterprise value to the warrants and other securities in the Company’s capital structure. Volatility was estimated based on historical observed equity volatilities and implied (forward) or expected volatilities for a sample group of guideline companies and consideration of recent market trends. As a result of the previously exercisable exchange rights contained in the Tranche 1A warrants, the financial instrument was previously considered a liability in accordance with FASB Accounting Standards Codification Topic 480 - “Distinguishing Liabilities from Equity” (“ASC 480”). More specifically, ASC 480 requires a financial instrument to be classified as a liability if such financial instrument contains a conditional obligation that the issuer must or may settle by issuing a variable number of its equity securities if, at inception, the monetary value of the obligation is based on a known fixed monetary amount. As a result of the actions by Crede that caused the exchange rights feature to be voided (see Note 6 - Joint Venture, Consulting Agreement and Associated Warrants for additional information), the Company reclassified the Tranche 1A warrant liability to Capital in excess of par. Fair value at December 31, 2015 $ 2,898,296 Reclassification of warrant liability to capital in excess of par (2,810,000) Gain as a result of change in fair value (29,615) Fair value at December 31, 2016 58,681 Loss as a result of change in fair value 82,927 Fair value at June 30, 2017 $ 141,608 The aggregate loss as a result of the Company’s warrant liability for the three and six months ended June 30, 2017 amounted to ($ 77,583 82,927 9,468 61,597 FASB ASC 820 - “Fair Value Measurements and Disclosures” establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows: ⋅ Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; ⋅ Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; and ⋅ Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. A financial asset’s or a financial liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The warrant liability is measured at fair value using certain estimated factors such as volatility and probability which are classified within Level 3 of the valuation hierarchy. Significant unobservable inputs that are used in the fair value measurement of the Company’s derivative warrant liabilities include volatility. Significant increases (decreases) in the volatility input would result in a significantly higher (lower) fair value measurement. The following table summarizes the Company’s warrant activity since December 31, 2015: Number of Warrants Warrants outstanding at December 31, 2015 16,634,778 Warrants issued in conjunction with registered direct offering 2,500,000 Unexercisable warrants (1) (2,000,000) Warrants exercised during January 2016 (67,042) Warrants expired during January 2016 (6,831,115) June 2015 registered direct offering warrants cancelled (3,000,000) February 2016 registered direct offering warrants cancelled (2,500,000) Warrants issued in conjunction with July 2016 registered direct offering 7,043,211 Additional warrants due to anti-dilution provisions 2,089 Warrants expired during September 2016 (2) (2,250,000) Warrants issued in conjunction with October 2016 registered direct offering 4,250,000 Warrants outstanding at December 31, 2016 13,781,921 Warrants expired during February 2017 (172,730) Warrants exercised during March 2017 (202,500) Warrants exercised during April 2017 (162,000) Warrants exercised during May 2017 (221,366) Warrants expired during May 2017 (45,834) Warrants exercised during June 2017 (6,116,903) Warrants issued pursuant to June 2017 warrant exercise agreements 5,584,659 Warrants outstanding at June 30, 2017 12,445,247 Composition of outstanding warrants: Warrants containing anti-dilution feature 94,721 Warrants without anti-dilution feature 12,350,526 12,445,247 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 13. - COMMITMENTS AND CONTINGENCIES License Agreements 225,000 150,000 4,866 31,709 10,016 13,996 On December 8, 2015, the Company entered into an additional license agreement (the “License”) with NCSU. Under the terms of the License, the Company paid NCSU a non-refundable, non-creditable lump sum license fee of $ 150,000 25,000 50,000 199 29,866 0 6,075 On February 10, 2014, the Company entered into a sponsored research and development agreement (the “Agreement”) with NCSU. Under the terms of the Agreement, the Company paid NCSU $ 162,408 85,681 All payments made under the above referenced license agreements and the sponsored research and development agreement are initially recorded as a Prepaid expense on the Company’s Consolidated Balance Sheets and subsequently expensed on a straight-line basis over the applicable period and included in Research and development costs on the Company’s Consolidated Statements of Operations. The amounts expensed during the three and six months ended June 30, 2017 were $ 56,250 119,640 115,170 229,967 On August 22, 2014, the Company entered into a Commercial License Agreement with Precision PlantSciences, Inc. (the “Precision License”). The Precision License grants the Company a non-exclusive, but fully paid up right and license to use technology and materials owned by Precision PlantSciences for a license fee of $ 1,250,000 On August 27, 2014, the Company entered into an additional exclusive License Agreement (the “License Agreement”) with NCSU. Under the License Agreement, the Company paid NCSU a non-refundable, non-creditable lump sum license fee of $ 125,000 75,000 15,000 20,000 30,000 50,000 5,173 24,242 5,983 33,939 On September 15, 2014, the Company entered into a Sublicense Agreement with Anandia Laboratories, Inc. (the “Anandia Sublicense”). Under the terms of the Anandia Sublicense, the Company was granted an exclusive sublicense in the United States and a co-exclusive sublicense in the remainder of the world, excluding Canada, to the licensed intellectual property. The Anandia Sublicense required an up-front fee of $ 75,000 10,000 The Precision License, the License Agreement with NCSU and the Anandia Sublicense are included in Intangible assets, net in the Company’s Consolidated Balance Sheets and the applicable license fees will be amortized over the term of the agreements based on their last-to-expire patent date. Amortization amounted to $ 24,505 49,011 24,505 49,011 On September 28, 2015, the Company’s wholly-owned subsidiary, Botanical Genetics, entered into a Sponsored Research Agreement (the “Agreement”) with Anandia Laboratories Inc. (“Anandia”). Pursuant to the Agreement, Anandia is conducting research on behalf of the Company relating to the cannabis/hemp plant. The Agreement had an initial term of twelve (12) months from the date of the Agreement and can be extended at the sole option of the Company for two (2) additional periods of twelve (12) months each (of which the option on one twelve (12) month period has been extended). The Company paid Anandia $ 379,800 785,100 65,425 196,275 261,700 84,200 179,200 The Company had an R&D agreement with the University of Virginia (“UVA”) relating to nicotine biosynthesis in tobacco plants. The extended term of the R&D agreement with UVA expired on October 31, 2016. In December 2016, the Company entered into a new sponsored research agreement with UVA and an exclusive license agreement with the University of Virginia Patent Foundation d/b/a University of Virginia Licensing & Ventures Group (“UVA LVG”) pursuant to which the Company will invest approximately $ 1,000,000 70,729 111,574 48,344 112,973 Lease Agreements - 38,438 76,876 36,131 72,262 Year ended December 31, 2017 - $ 79,000 Year ended December 31, 2018 - $ 169,000 Year ended December 31, 2019 - $ 169,000 Year ended December 31, 2020 - $ 169,000 Year ended December 31, 2021 - $ 141,000 The Company has a lease for its office space in Clarence, New York and extended the lease for an additional one-year renewal period expiring on August 31, 2017. Future minimum lease payments for the year ended December 31, 2017 are approximately $ 8,000 On November 1, 2015, the Company entered into a one-year lease for 25,000 3,750 22,500 45,000 37,500 On May 1, 2016, the Company entered into a sublease for laboratory space in Buffalo, New York. The sublease calls for a monthly payment of $ 1,471 1,219 2,690 2,770 16,000 11,000 On September 1, 2016, the Company entered into a sublease for warehouse space in North Carolina to store and operate tobacco leaf processing equipment. The sublease calls for a monthly payment of $ 1,200 August 31, 2017 7,200 14,400 On April 20, 2017, the Company entered into a lease for warehouse space in North Carolina to store cigarette and filtered cigar raw materials. The lease calls for a monthly payment of $ 3,500 21,000 42,000 Litigation - On April 26, 2016, Crede CG III, LTD. (“Crede”) filed a complaint against the Company in the United States District Court for the Southern District of New York (the “SDNY Court”) entitled Crede CG III, LTD. v. 22nd Century Group, Inc 2,077,555 On May 19, 2016, Crede filed a motion for preliminary injunction, asking the SDNY Court to require the Company to issue 2,077,555 Following such ruling, on July 11, 2016, the Company filed a motion to sever the Crede lawsuit into two separate cases, requesting all claims relating to the Tranche 1A warrant and the securities purchase agreement to stay in the SDNY Court and all claims relating to the China joint venture agreement to be transferred to the United States District Court for the Western District of New York (the “WDNY Court”), where the Company’s headquarters are located. On January 20, 2017, the SDNY Court granted the Company’s motion. On February 14, 2017, Crede voluntarily dismissed its lawsuit against the Company in the WDNY Court. On February 21, 2017, the SDNY Court granted the Company’s request to file a motion for summary judgment for the claims remaining in the SDNY Court, with all discovery in the case being deferred until after the SDNY Court issues its decision on the summary judgment motion of the Company. On March 20, 2017, the Company filed its motion for summary judgment for the claims remaining in the SDNY Court. The response by Crede to the Company’s summary judgment motion was filed by Crede on May 1, 2017. On May 15, 2017, the Company filed its response to Crede’s filing. The parties are now awaiting the SDNY Court to issue its decision on such summary judgment motion. We believe that the claims are frivolous, meritless and that the Company has substantial legal and factual defenses to the claims. The Company has defended and intends to continue to defend against these claims vigorously. |
EARNINGS PER COMMON SHARE
EARNINGS PER COMMON SHARE | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Common Share [Abstract] | |
EARNINGS PER COMMON SHARE | NOTE 14. - EARNINGS PER COMMON SHARE The following table sets forth the computation of basic and diluted earnings per common share for the three-month periods ended June 30, 2017 and 2016: June 30, June 30, 2017 2016 Net loss attributed to common shareholders $ (3,355,624) $ (2,902,354) Denominator for basic earnings per share-weighted average shares outstanding 91,577,688 76,024,064 Effect of dilutive securities: Warrants, restricted stock and options outstanding - - Denominator for diluted earnings per common share-weighted average shares adjusted for dilutive securities 91,577,688 76,024,064 Loss per common share - basic and diluted $ (0.04) $ (0.04) The following table sets forth the computation of basic and diluted earnings per common share for the six-month periods ended June 30, 2017 and 2016: June 30, June 30, 2017 2016 Net loss attributed to common shareholders $ (5,976,901) $ (6,154,806) Denominator for basic earnings per share-weighted average shares outstanding 91,165,770 75,027,606 Effect of dilutive securities: Warrants, restricted stock and options outstanding - - Denominator for diluted earnings per common share-weighted average shares adjusted for dilutive securities 91,165,770 75,027,606 Loss per common share - basic and diluted $ (0.07) $ (0.08) Securities outstanding that were excluded from the computation because they would have been anti-dilutive are as follows: June 30, June 30, 2017 2016 Warrants 12,445,247 10,236,621 Options 6,965,688 4,985,679 19,410,935 15,222,300 |
EQUITY BASED COMPENSATION
EQUITY BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
EQUITY BASED COMPENSATION | NOTE 15. EQUITY BASED COMPENSATION On April 12, 2014, the stockholders of the Company approved the 22nd Century Group, Inc. 2014 Omnibus Incentive Plan (the “OIP”) and on April 29, 2017, the shareholders approved an amendment to the OIP to increase the number of shares available for issuance by 5,000,000 10,000,000 3,949,765 During the three months ended June 30, 2017, the Company issued stock option awards from the OIP for 1,372,000 90,000 1,724,037 For the three and six months ended June 30, 2017, the Company recorded compensation expense related to restricted stock and stock option awards granted under the OIP of $ 154,004 322,983 212,222 472,216 10,000 15,811 100,000 8,000 30,873 As of June 30, 2017, unrecognized compensation expense related to non-vested restricted shares and stock options amounted to approximately $ 2,390,000 507,000 828,000 448,000 140,000 467,000 2017 2016 Risk-free interest rate (weighted average) 2.12 % 1.38 % Expected dividend yield 0 % 0 % Expected stock price volatility 90 % 90 % Expected life of options (weighted average) 5.13 years 5.03 years The Company estimated the expected volatility based on data used by a peer group of public companies. The expected term was estimated using the contract life of the option. The risk-free interest rate assumption was determined using yield of the equivalent U.S. Treasury bonds over the expected term. The Company has never paid any cash dividends and does not anticipate paying any cash dividends in the foreseeable future. Therefore, the Company assumed an expected dividend yield of zero. Weighted Average Weighted Remaining Aggregate Number of Average Contractual Intrinsic Options Exercise Price Term Value Outstanding at December 31, 2015 3,161,642 $ 1.10 Granted in 2016 2,489,037 $ 0.97 Outstanding at December 31, 2016 5,650,679 $ 1.04 Granted in 2017 1,372,000 $ 1.39 Exercised in 2017 (56,991) $ 0.72 Outstanding at June 30, 2017 6,965,688 $ 1.12 7.3 years $ 4,681,882 Exercisable at June 30, 2017 3,663,334 $ 1.11 6.2 years $ 2,611,378 There were stock options granted during the six months ended June 30, 2017 and 2016, to purchase a total of 1,372,000 1,824,037 0.97 0.64 684,265 1,138,910 56,991 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 16. - SUBSEQUENT EVENTS In July and August of 2017, certain of the Holders of the Warrants discussed in Note 2 exercised an aggregate of 3,813,500 1.00 1,895,052 1.45 6,167,646 2.15 5,708,552 9,100,000 |
NATURE OF BUSINESS AND SUMMAR24
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation - The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments consisting of normal recurring accruals considered necessary for a fair and non-misleading presentation of the financial statements have been included. Operating results for the six months ended June 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. The balance sheet as of December 31, 2016 has been derived from the audited consolidated financial statements at that date, but does not include all the information and footnotes required by GAAP for complete financial statements. These interim consolidated financial statements should be read in conjunction with the December 31, 2016 audited consolidated financial statements and the notes thereto. |
Principles of Consolidation | Principles of Consolidation - The accompanying consolidated financial statements include the accounts of 22nd Century Group, Inc. (“22nd Century Group”), its three wholly-owned subsidiaries, 22nd Century Limited, LLC (“22nd Century Ltd”), NASCO Products, LLC (“NASCO”), and Botanical Genetics, LLC (“Botanical Genetics”), and two wholly-owned subsidiaries of 22nd Century Ltd, Goodrich Tobacco Company, LLC (“Goodrich Tobacco”) and Heracles Pharmaceuticals, LLC (“Heracles Pharma”) (collectively, “the Company”). All intercompany accounts and transactions have been eliminated. |
Nature of Business | Nature of Business - 22nd Century Ltd is a plant biotechnology company specializing in technology that allows (i) for the level of nicotine and other nicotinic alkaloids in tobacco plants to be decreased or increased through genetic engineering and plant breeding and (ii) the levels of cannabinoids in cannabis/hemp plants to be decreased or increased through genetic engineering and plant breeding. Goodrich Tobacco and Heracles Pharma are business units for the Company’s (i) premium cigarettes and potential modified risk tobacco products and (ii) smoking cessation product, respectively. The Company acquired the membership interests of NASCO on August 29, 2014. NASCO is a federally licensed tobacco products manufacturer, a participating member of the tobacco Master Settlement Agreement (“MSA”) between the tobacco industry and the settling states under the MSA, and operates the Company’s cigarette manufacturing business in North Carolina. Botanical Genetics is a wholly-owned subsidiary of 22nd Century Group, and was incorporated to facilitate an equity investment more fully described in Note 9. |
Preferred stock authorized | Preferred stock authorized - The Company is authorized to issue “blank check” preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to our common stock. |
Accounts receivable | Accounts receivable - 0 10,000 |
Inventory | Inventory - June 30, December 31, 2017 2016 Inventory - tobacco leaf $ 1,881,233 $ 1,936,039 Inventory - finished goods Cigarettes and filtered cigars 756,186 340,523 Inventory - raw materials Cigarette and filtered cigar components 2,001,221 1,071,747 4,638,640 3,348,309 Less: inventory reserve 350,623 255,623 $ 4,288,017 $ 3,092,686 |
Fixed assets | Machinery and equipment - Machinery and equipment are recorded at their acquisition cost and depreciated on a straight-line basis over their estimated useful lives ranging from 3 10 |
Intangible Assets | - Intangible assets are recorded at cost and consist primarily of (1) expenditures incurred with third parties related to the processing of patent claims and trademarks with government authorities, as well as costs to acquire patent rights from third parties, (2) license fees paid for third-party intellectual property, (3) costs to become a signatory under the tobacco MSA, and (4) license fees paid to acquire a predicate cigarette brand. The amounts capitalized relate to intellectual property that the Company owns or to which it has exclusive rights. The Company’s intellectual property capitalized costs are amortized using the straight-line method over the remaining statutory life of the primary patent in each of the Company’s two primary groupings of patent families, which expire in 2018 and 2028 (the assets’ estimated lives, respectively). Periodic maintenance or renewal fees are expensed as incurred. Annual minimum license fees are charged to expense. License fees paid for third-party intellectual property are amortized on a straight-line basis over the last to expire patents, which patent expiration dates range from 2028 through 2035. The Company believes costs associated with becoming a signatory to the MSA and acquiring a predicate cigarette brand have an indefinite life and as such, no amortization is taken. June 30, December 31, 2017 2016 Intangible assets, net Patent and trademark costs $ 6,026,169 $ 5,688,440 Less: accumulated amortization 2,256,813 2,021,926 Patent and trademark costs, net 3,769,356 3,666,514 License fees, net (see Note 13) 1,450,000 1,450,000 Less: accumulated amortization 277,580 228,568 License fees, net 1,172,420 1,221,432 MSA signatory costs 2,202,000 2,202,000 License fee for predicate cigarette brand 300,000 300,000 $ 7,443,777 $ 7,389,946 Amortization expense relating to the above intangible assets for the three and six months ended June 30, 2017 amounted to $ 143,010 283,898 126,041 250,882 The estimated annual average amortization expense for the next five years is approximately $ 387,000 98,000 |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets - The Company reviews the carrying value of its amortizing long-lived assets whenever events or changes in circumstances indicate that the historical cost-carrying value of an asset may no longer be recoverable. The Company assesses recoverability of the asset by estimating the future undiscounted net cash flows expected to result from the asset, including eventual disposition. If the estimated future undiscounted net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and its fair value. There was no impairment loss recorded during the six months ended June 30, 2017 or 2016. |
Income Taxes | - The Company recognizes deferred tax assets and liabilities for any basis differences in its assets and liabilities between tax and GAAP reporting, and for operating loss and credit carry-forwards. Considering the Company’s history of cumulative net operating losses and the uncertainty of their future utilization, the Company has established a valuation allowance to fully offset its net deferred tax assets as of June 30, 2017 and December 31, 2016. The Company’s federal and state tax returns for the years ended December 31, 2013 through December 31, 2015 are currently open to audit under the statutes of limitations. There were no pending audits as of June 30, 2017. |
Stock Based Compensation | Stock Based Compensation - The Company uses a fair-value based method to determine compensation for all arrangements under which Company employees and others receive shares or options to purchase common shares of the Company. Stock based compensation expense is recorded over the requisite service period based on estimates of probability and time of achieving milestones and vesting. For accounting purposes, the shares will be considered issued and outstanding upon vesting. |
Revenue Recognition | Revenue Recognition - The Company recognizes revenue from product sales at the point the product is shipped to a customer and title has transferred. Revenue from the sale of the Company’s products is recognized net of cash discounts, sales returns and allowances. Cigarette and filtered cigar federal excise taxes and other regulatory fees in the approximate amount of $ 1,985,000 3,544,000 1,842,000 3,577,000 SPECTRUM The Company was chosen to be a subcontractor for a 5-year government contract between RTI International (“RTI”) and the National Institute on Drug Abuse (“NIDA”) to supply NIDA with research cigarettes. The contract was renewed in 2015 for an additional 5 years. These government research cigarettes are distributed under the Company’s mark SPECTRUM. SPECTRUM SPECTRUM 0 329,321 2.4 SPECTRUM |
Derivatives | Derivatives - The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. The Company evaluates all our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair market value and then is revalued at each reporting date, with changes in fair value reported in the Consolidated Statements of Operations. The methodology for valuing our outstanding warrants classified as derivative instruments utilizes a lattice model, which includes probability weighted estimates of future events, including volatility of our common stock. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified on the balance sheet as current or non-current based on if the net-cash settlement of the derivative instrument could be required within twelve months of the balance sheet date. |
Research and Development | Research and Development - Research and development costs are expensed as incurred. |
Advertising | Advertising - The Company expenses advertising costs as incurred. Advertising expense was approximately $ 12,000 43,000 27,000 235,000 |
Loss Per Common Share | Loss Per Common Share - Basic loss per common share is computed using the weighted-average number of common shares outstanding. Diluted loss per share is computed assuming conversion of all potentially dilutive securities. Potential common shares outstanding are excluded from the computation if their effect is anti-dilutive. |
Commitment and Contingency Accounting | Commitment and Contingency Accounting - The Company evaluates each commitment and/or contingency in accordance with accounting standards, which state that if the item is more likely than not to become a direct liability, then the Company will record the liability in the financial statements. If not, the Company will disclose any material commitments or contingencies that may arise. |
Use of Estimates | Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. |
Fair value of financial instruments | Fair Value of Financial Instruments - Financial instruments include cash, receivables, accounts payable, accrued expenses, accrued severance, note payable and warrant liability. Other than warrant liability, fair value is assumed to approximate carrying values for these financial instruments, since they are short term in nature, they are receivable or payable on demand, or had stated interest rates that approximate the interest rates available to the Company as of the reporting date. The determination of the fair value of the warrant liability includes unobservable inputs and is therefore categorized as a Level 3 measurement, as further discussed in Note 12. |
Equity Investments | Equity Investments - The Company accounts for investments in equity securities of other entities under the equity method of accounting if the Company’s investment in the voting stock is greater than or equal to 20% and less than a majority, and the Company has the ability to have significant influence over the operating and financial policies of the investee. When the Company’s investment in equity securities falls below 20% and the Company does not have the ability to have significant influence over the operating and financial policies of the investee, the Company carries the equity investment at its cost basis. |
Accounting Pronouncements | Accounting Pronouncements - In February 2016, the FASB issued ASU 2016-02, “Leases,” which supersedes existing lease guidance under GAAP. Under the new guidance, lessees will be required to recognize leases as right of use assets and liabilities for leases with lease terms of more than twelve months. The guidance will apply for both finance and operating leases. The effective date for the ASU is for annual periods beginning after December 15, 2018 and interim periods therein. The Company is currently evaluating the impact of the ASU on its consolidated financial statements. |
NATURE OF BUSINESS AND SUMMAR25
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Inventory, Current | Inventories at June 30, 2017 and December 31, 2016 consisted of the following: June 30, December 31, 2017 2016 Inventory - tobacco leaf $ 1,881,233 $ 1,936,039 Inventory - finished goods Cigarettes and filtered cigars 756,186 340,523 Inventory - raw materials Cigarette and filtered cigar components 2,001,221 1,071,747 4,638,640 3,348,309 Less: inventory reserve 350,623 255,623 $ 4,288,017 $ 3,092,686 |
Schedule of Intangible Assets and Goodwill | June 30, December 31, 2017 2016 Intangible assets, net Patent and trademark costs $ 6,026,169 $ 5,688,440 Less: accumulated amortization 2,256,813 2,021,926 Patent and trademark costs, net 3,769,356 3,666,514 License fees, net (see Note 13) 1,450,000 1,450,000 Less: accumulated amortization 277,580 228,568 License fees, net 1,172,420 1,221,432 MSA signatory costs 2,202,000 2,202,000 License fee for predicate cigarette brand 300,000 300,000 $ 7,443,777 $ 7,389,946 |
MACHINERY AND EQUIPMENT (Tables
MACHINERY AND EQUIPMENT (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
MACHINERY AND EQUIPMENT | Machinery and equipment at June 30, 2017 and December 31, 2016 consisted of the following: June 30, December 31, Useful Life 2017 2016 Cigarette manufacturing equipment 3 - 10 years $ 3,193,580 $ 3,193,580 Office furniture, fixtures and equipment 5 years 104,538 103,945 Laboratory equipment 5 years 32,194 19,076 3,330,312 3,316,601 Less: accumulated depreciation 1,058,523 881,938 Machinery and equipment, net $ 2,271,789 $ 2,434,663 |
WARRANTS FOR COMMON STOCK (Tabl
WARRANTS FOR COMMON STOCK (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Warrants For Common Stock [Abstract] | |
Schedule Of Warrants Outstanding | Number of Exercise Warrant Description Warrants Price Expiration December 2011 convertible NP warrants 802,215 $ 1.3816 February 6, 2018 November 2012 PPO warrants 255,100 $ 0.6000 November 9, 2017 August 2012 convertible NP warrants (1) 94,721 $ 0.9310 August 8, 2018 July 2016 registered direct offering warrants (2) 3,813,500 $ 1.0000 January 27,2021 October 2016 registered direct offering warrants (2) 1,895,052 $ 1.4500 April 19, 2022 June 2017 warrants pursuant to warrant exercise agreements (3) 5,584,659 $ 2.1500 December 20, 2022 Total warrants outstanding (4) 12,445,247 (1) Includes anti-dilution features. (2) As of August 7, 2017, no such warrants were outstanding. See Note 16. (3) As of August 7, 2017, after an aggregate of 5,708,552 11,293,211 (4) Excludes 2,000,000 Tranche 2 and 3 warrants that will never become exercisable, as discussed in Note 6. |
Roll-Forward of Warrant Liability from Intitial Valuation | The following table is a roll-forward summary of the warrant liability: Fair value at December 31, 2015 $ 2,898,296 Reclassification of warrant liability to capital in excess of par (2,810,000) Gain as a result of change in fair value (29,615) Fair value at December 31, 2016 58,681 Loss as a result of change in fair value 82,927 Fair value at June 30, 2017 $ 141,608 |
Warrant Activity | The following table summarizes the Company’s warrant activity since December 31, 2015: Number of Warrants Warrants outstanding at December 31, 2015 16,634,778 Warrants issued in conjunction with registered direct offering 2,500,000 Unexercisable warrants (1) (2,000,000) Warrants exercised during January 2016 (67,042) Warrants expired during January 2016 (6,831,115) June 2015 registered direct offering warrants cancelled (3,000,000) February 2016 registered direct offering warrants cancelled (2,500,000) Warrants issued in conjunction with July 2016 registered direct offering 7,043,211 Additional warrants due to anti-dilution provisions 2,089 Warrants expired during September 2016 (2) (2,250,000) Warrants issued in conjunction with October 2016 registered direct offering 4,250,000 Warrants outstanding at December 31, 2016 13,781,921 Warrants expired during February 2017 (172,730) Warrants exercised during March 2017 (202,500) Warrants exercised during April 2017 (162,000) Warrants exercised during May 2017 (221,366) Warrants expired during May 2017 (45,834) Warrants exercised during June 2017 (6,116,903) Warrants issued pursuant to June 2017 warrant exercise agreements 5,584,659 Warrants outstanding at June 30, 2017 12,445,247 Composition of outstanding warrants: Warrants containing anti-dilution feature 94,721 Warrants without anti-dilution feature 12,350,526 12,445,247 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | The future minimum lease payments if the Company exercises each of the additional extensions are approximately as follows: Year ended December 31, 2017 - $ 79,000 Year ended December 31, 2018 - $ 169,000 Year ended December 31, 2019 - $ 169,000 Year ended December 31, 2020 - $ 169,000 Year ended December 31, 2021 - $ 141,000 |
EARNINGS PER COMMON SHARE (Tabl
EARNINGS PER COMMON SHARE (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Earnings Per Common Share [Abstract] | |
Computation of Basic and Diluted Earnings Per Common Share | The following table sets forth the computation of basic and diluted earnings per common share for the three-month periods ended June 30, 2017 and 2016: June 30, June 30, 2017 2016 Net loss attributed to common shareholders $ (3,355,624) $ (2,902,354) Denominator for basic earnings per share-weighted average shares outstanding 91,577,688 76,024,064 Effect of dilutive securities: Warrants, restricted stock and options outstanding - - Denominator for diluted earnings per common share-weighted average shares adjusted for dilutive securities 91,577,688 76,024,064 Loss per common share - basic and diluted $ (0.04) $ (0.04) The following table sets forth the computation of basic and diluted earnings per common share for the six-month periods ended June 30, 2017 and 2016: June 30, June 30, 2017 2016 Net loss attributed to common shareholders $ (5,976,901) $ (6,154,806) Denominator for basic earnings per share-weighted average shares outstanding 91,165,770 75,027,606 Effect of dilutive securities: Warrants, restricted stock and options outstanding - - Denominator for diluted earnings per common share-weighted average shares adjusted for dilutive securities 91,165,770 75,027,606 Loss per common share - basic and diluted $ (0.07) $ (0.08) |
Schedule Outstanding Excluded from Computation Because they would have bee Anti-dilutive | Securities outstanding that were excluded from the computation because they would have been anti-dilutive are as follows: June 30, June 30, 2017 2016 Warrants 12,445,247 10,236,621 Options 6,965,688 4,985,679 19,410,935 15,222,300 |
EQUITY BASED COMPENSATION (Tabl
EQUITY BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Fair Value Assumptions | The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The following assumptions were used for the six months ended June 30, 2017 and 2016: 2017 2016 Risk-free interest rate (weighted average) 2.12 % 1.38 % Expected dividend yield 0 % 0 % Expected stock price volatility 90 % 90 % Expected life of options (weighted average) 5.13 years 5.03 years |
Summary of All Stock Option Activity | A summary of all stock option activity since December 31, 2015 is as follows: Weighted Average Weighted Remaining Aggregate Number of Average Contractual Intrinsic Options Exercise Price Term Value Outstanding at December 31, 2015 3,161,642 $ 1.10 Granted in 2016 2,489,037 $ 0.97 Outstanding at December 31, 2016 5,650,679 $ 1.04 Granted in 2017 1,372,000 $ 1.39 Exercised in 2017 (56,991) $ 0.72 Outstanding at June 30, 2017 6,965,688 $ 1.12 7.3 years $ 4,681,882 Exercisable at June 30, 2017 3,663,334 $ 1.11 6.2 years $ 2,611,378 |
NATURE OF BUSINESS AND SUMMAR31
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) pure in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||
May 31, 2017 | Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017 | Jun. 30, 2016USD ($) | Dec. 31, 2016USD ($) | |
Condensed Financial Statements, Captions [Line Items] | |||||||
Amortization of Intangible Assets | $ 143,010 | $ 126,041 | $ 283,898 | $ 250,882 | |||
Allowance for Doubtful Accounts Receivable | 0 | 0 | $ 10,000 | ||||
Advertising Expense | 12,000 | 27,000 | 43,000 | 235,000 | |||
Excise and Sales Taxes | 1,985,000 | 1,842,000 | 3,544,000 | 3,577,000 | |||
Sale of products, net | 3,897,206 | $ 2,827,658 | 6,128,723 | 5,846,714 | |||
Patent and Trademarks [Member] | |||||||
Condensed Financial Statements, Captions [Line Items] | |||||||
Finite-Lived Intangible Assets, Amortization Expense, after Year Five | 387,000 | 387,000 | |||||
Licensing Agreements [Member] | |||||||
Condensed Financial Statements, Captions [Line Items] | |||||||
Finite-Lived Intangible Assets, Amortization Expense, after Year Five | $ 98,000 | 98,000 | |||||
Maximum [Member] | |||||||
Condensed Financial Statements, Captions [Line Items] | |||||||
Property, Plant and Equipment, Estimated Useful Lives | 10 | ||||||
Minimum [Member] | |||||||
Condensed Financial Statements, Captions [Line Items] | |||||||
Property, Plant and Equipment, Estimated Useful Lives | 3 | ||||||
SPECTRUM Order [Member] | |||||||
Condensed Financial Statements, Captions [Line Items] | |||||||
Purchase Order Received During Period | 2.4 | ||||||
Sale of products, net | $ 0 | $ 329,321 |
NATURE OF BUSINESS AND SUMMAR32
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Inventory [Line Items] | ||
Inventory - tobacco leaf | $ 1,881,233 | $ 1,936,039 |
Inventory - finished goods | ||
Cigarettes and filtered cigars | 756,186 | 340,523 |
Inventory - raw materials | ||
Cigarette and filtered cigar components | 2,001,221 | 1,071,747 |
Inventory - tobacco leaf, net | 4,638,640 | 3,348,309 |
Less: inventory reserve | 350,623 | 255,623 |
Inventory, Net | $ 4,288,017 | $ 3,092,686 |
NATURE OF BUSINESS AND SUMMAR33
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Intangible assets, net | ||
Intangible assets, net | $ 7,443,777 | $ 7,389,946 |
Patent and Trademark [Member] | ||
Intangible assets, net | ||
Patent and trademark costs | 6,026,169 | 5,688,440 |
Less: accumulated amortization | 2,256,813 | 2,021,926 |
Patent and trademark costs, net | 3,769,356 | 3,666,514 |
Licensing Agreements [Member] | ||
Intangible assets, net | ||
Patent and trademark costs | 1,450,000 | 1,450,000 |
Less: accumulated amortization | 277,580 | 228,568 |
Patent and trademark costs, net | 1,172,420 | 1,221,432 |
MSA Signatory Costs [Member] | ||
Intangible assets, net | ||
License fee for predicate cigarette brand | 2,202,000 | 2,202,000 |
License Fees, Net [Member] | ||
Intangible assets, net | ||
License fee for predicate cigarette brand | $ 300,000 | $ 300,000 |
JUNE 2017 WARRANT EXERCISE AG34
JUNE 2017 WARRANT EXERCISE AGREEMENTS (Narrative) (Details) - USD ($) | Aug. 04, 2017 | Aug. 09, 2017 | Jul. 31, 2017 | Jun. 19, 2017 | Jul. 27, 2016 | Jan. 25, 2016 | Mar. 31, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | Oct. 19, 2016 |
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 4,250,000 | |||||||||||
Number Of Warrants Exercised | 67,042 | 202,500 | 843,110 | 5,657,159 | 67,042 | |||||||
Proceeds from Warrant Exercises | $ 6,212,712 | $ 196 | ||||||||||
Subsequent Event [Member] | ||||||||||||
Proceeds from Warrant Exercises | $ 6,167,646 | $ 6,167,646 | ||||||||||
Class of Warrant or Right,Exercise Price One [Member] | ||||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 7,043,211 | |||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 1 | $ 1 | ||||||||||
Number Of Warrants Exercised | 3,229,711 | 3,229,711 | ||||||||||
Class of Warrant or Right,Exercise Price One [Member] | Subsequent Event [Member] | ||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 1 | |||||||||||
Number Of Warrants Exercised | 3,813,500 | 3,813,500 | 3,813,500 | |||||||||
Class of Warrant or Right,Exercise Price Two [Member] | ||||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 4,250,000 | |||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 1.45 | |||||||||||
Number Of Warrants Exercised | 2,354,948 | |||||||||||
Class of Warrant or Right,Exercise Price Two [Member] | Subsequent Event [Member] | ||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 1.45 | |||||||||||
Number Of Warrants Exercised | 1,895,052 | 1,895,052 | 1,895,052 | |||||||||
New Warrants [Member] | ||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 2.15 | $ 2.15 | ||||||||||
Fair Value of Warrants | $ 6,913,808 | |||||||||||
Warrants Expiration Term | are exercisable six months from the date of issuance of the New Warrants for a period of five (5) years. | |||||||||||
Number Of Warrants Issued | 5,584,659 | |||||||||||
New Warrants [Member] | Subsequent Event [Member] | ||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 2.15 | |||||||||||
Fair Value of Warrants | $ 9,100,000 | |||||||||||
Number Of Warrants Issued | 5,708,552 | 5,708,552 | 5,708,552 |
OCTOBER 2016 REGISTERED DIREC35
OCTOBER 2016 REGISTERED DIRECT OFFERING (Narrative) (Details) - USD ($) | 1 Months Ended | 6 Months Ended | ||||
Oct. 19, 2016 | Jun. 30, 2017 | Aug. 07, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||
Subsidiary, Sale of Stock [Line Items] | ||||||
Class of Warrant or Right, Outstanding | 12,445,247 | [1] | 13,781,921 | 16,634,778 | ||
October Offering [Member] | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 1.45 | |||||
Fair Value of Warrants | $ 3,380,000 | |||||
Class of Warrant or Right, Outstanding | 0 | |||||
Shares Issued, Price Per Share | $ 1.3425 | |||||
Stock Issued During Period, Value, New Issues | $ 4,250,000 | |||||
Proceeds from Issuance or Sale of Equity | 10,707,823 | |||||
Conversion Of Warrants Terms Of Conversion | The holders of the warrants did not have the right to exercise any portion of the warrants if the holders, together with its respective affiliates, would beneficially own in excess of 4.99% of the number of shares of the Companys common stock (including securities convertible into common stock) outstanding immediately after the exercise; provided, however, that the holder could increase or decrease this limitation at any time, although any increase shall not be effective until the 61st day following the notice of increase and the holder could not increase this limitation in excess of 9.99%. | |||||
October Offering [Member] | Common Stock [Member] | ||||||
Subsidiary, Sale of Stock [Line Items] | ||||||
Stock Issued During Period, Value, New Issues | $ 8,500,000 | |||||
[1] | Excludes 2,000,000 Tranche 2 and 3 warrants that will never become exercisable, as discussed in Note 6. |
JULY 2016 REGISTERED DIRECT O36
JULY 2016 REGISTERED DIRECT OFFERING (Narrative) (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||||
Aug. 31, 2017 | Jul. 27, 2016 | Jan. 25, 2016 | Mar. 31, 2017 | Jun. 30, 2017 | Aug. 07, 2017 | Dec. 31, 2016 | Oct. 19, 2016 | Dec. 31, 2015 | ||
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Stock Issued During Period, Shares, New Issues | 2,618 | 100,928 | 525,118 | |||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 4,250,000 | |||||||||
Class of Warrant or Right, Outstanding | 12,445,247 | [1] | 13,781,921 | 16,634,778 | ||||||
July Offering [Member] | ||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Stock Issued During Period, Shares, New Issues | 4,682,764 | 4,250,000 | ||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 7,043,211 | |||||||||
Fair Value of Warrants | $ 3,380,000 | |||||||||
Class of Warrant or Right, Outstanding | 0 | |||||||||
Class Of Warrants Or Right ,Terminated | 5,500,000 | |||||||||
Shares Issued, Price Per Share | $ 0.81 | |||||||||
Proceeds from Issuance or Sale of Equity | $ 10,707,823 | |||||||||
Warrant Expiration Term | 5 years 6 months | |||||||||
July Offering [Member] | Minimum [Member] | ||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Class of Warrant or Right Terminated, Exercise Price | $ 1.21 | |||||||||
July Offering [Member] | Maximum [Member] | ||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Class of Warrant or Right Terminated, Exercise Price | $ 1.25 | |||||||||
July Offering [Member] | Common Stock [Member] | ||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Stock Issued During Period, Shares, New Issues | 8,500,000 | |||||||||
July Offering [Member] | Warrant [Member] | ||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 1 | |||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 1,543,210 | |||||||||
Fair Value of Warrants | $ 858,000 | |||||||||
Class of Warrant or Right, Outstanding | 5,500,001 | |||||||||
July Offering [Member] | Six Month Warrant [Member] | ||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Fair Value of Warrants | $ 3,058,000 | |||||||||
[1] | Excludes 2,000,000 Tranche 2 and 3 warrants that will never become exercisable, as discussed in Note 6. |
FEBRUARY 2016 REGISTERED DIRE37
FEBRUARY 2016 REGISTERED DIRECT OFFERING (Narrative) (Details) - USD ($) | Feb. 05, 2016 | Jan. 25, 2016 | Mar. 31, 2017 | Jun. 30, 2017 | Jun. 30, 2016 | Oct. 19, 2016 |
Direct Offering [Line Items] | ||||||
Stock Issued During Period, Shares, New Issues | 2,618 | 100,928 | 525,118 | |||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 4,250,000 | |||||
Proceeds From Issuance Registered Direct Offering Three | $ 0 | $ 5,091,791 | ||||
February Offering [Member] | ||||||
Direct Offering [Line Items] | ||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 1.21 | |||||
Warrants Expiration Period | 66 months | 66 months | ||||
Shares Issued, Price Per Share | $ 1.10 | |||||
Fair Value of Warrants | $ 1,940,000 | |||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 2,500,000 | |||||
Proceeds From Issuance Registered Direct Offering Three | $ 5,091,791 | |||||
Common Stock [Member] | February Offering [Member] | ||||||
Direct Offering [Line Items] | ||||||
Stock Issued During Period, Shares, New Issues | 5,000,000 |
JOINT VENTURE, CONSULTING AGR38
JOINT VENTURE, CONSULTING AGREEMENT AND ASSOCIATED WARRANTS (Narrative) (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Jun. 30, 2017 | Jun. 30, 2016 | Oct. 19, 2016 | |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||
Issuance of Stock and Warrants for Services or Claims | $ 2,810,000 | $ 0 | $ 30,873 | ||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 4,250,000 | ||||
Warrant Exercisable Per Share | $ 3.36 | ||||
Consulting Agreement [Member] | |||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||
Issuance of Stock and Warrants for Services or Claims | $ 4,070,000 | ||||
Other Prepaid Expense, Current | $ 1,978,785 | ||||
Consulting Agreement [Member] | Tranche 1A Warrants [Member] | |||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 1,250,000 | ||||
Consulting Agreement [Member] | Tranche 1B Warrants [Member] | |||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 1,000,000 | ||||
Consulting Agreement [Member] | Tranche 2 Warrants [Member] | |||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 1,000,000 | ||||
Consulting Agreement [Member] | Tranche 3 Warrants [Member] | |||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | |||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 1,000,000 |
MANUFACTURING FACILITY (Narrati
MANUFACTURING FACILITY (Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Manufacturing Facility [Line Items] | ||||
General and Administrative Expense, Total | $ 1,805,118 | $ 1,721,775 | $ 3,425,597 | $ 3,568,382 |
North Carolina Manufacturing Facility [Member] | ||||
Manufacturing Facility [Line Items] | ||||
General and Administrative Expense, Total | $ 215,941 | $ 146,669 | $ 334,691 | $ 281,936 |
MACHINERY AND EQUIPMENT (Narrat
MACHINERY AND EQUIPMENT (Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Property, Plant and Equipment [Line Items] | ||||
Depreciation, Total | $ 88,464 | $ 81,067 | $ 176,585 | $ 161,664 |
MACHINERY AND EQUIPMENT (Detail
MACHINERY AND EQUIPMENT (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 3,330,312 | $ 3,316,601 |
Less: accumulated depreciation | 1,058,523 | 881,938 |
Machinery and equipment, net | 2,271,789 | 2,434,663 |
Cigarette manufacturing equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 3,193,580 | 3,193,580 |
Cigarette manufacturing equipment [Member] | Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Useful Life | 10 years | |
Cigarette manufacturing equipment [Member] | Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Useful Life | 3 years | |
Office furniture, fixtures and equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 104,538 | 103,945 |
Property, Plant and Equipment, Useful Life | 5 years | |
Laboratory equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 32,194 | $ 19,076 |
Property, Plant and Equipment, Useful Life | 5 years |
INVESTMENT IN ANANDIA (Narrativ
INVESTMENT IN ANANDIA (Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||||
Jun. 30, 2017 | Mar. 31, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Mar. 31, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2014 | |
Schedule of Equity Method Investments [Line Items] | ||||||||
Equity Method Investments | $ 1,366,493 | $ 1,366,493 | $ 1,020,313 | |||||
Equity Method Investment, Ownership Percentage | 19.40% | 20.00% | 19.40% | 20.00% | ||||
Equity Method Investment, Realized Gain (Loss) on Disposal | $ 0 | $ (54,839) | $ 346,180 | $ (142,071) | ||||
Income (Loss) from Equity Method Investments | 0 | 14,412 | 7,526 | 28,824 | ||||
Accounting Standards Codification 323 [Member] | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Equity Method Investment, Realized Gain (Loss) on Disposal | $ 0 | $ 54,839 | $ 346,180 | $ 142,071 | ||||
Anandia Laboratories, Inc [Member] | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Equity Method Investments | $ 1,199,000 | |||||||
Equity Method Investment, Ownership Percentage | 24.40% | 25.00% | 24.40% | 25.00% | ||||
Equity Method Investment, Realized Gain (Loss) on Disposal | $ 0 | $ 40,427 | $ 16,872 | $ 113,247 | ||||
Anandia Laboratories, Inc [Member] | Other Assets [Member] | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Equity Method Investments | $ 1,366,493 | $ 1,366,493 | $ 1,020,313 | |||||
Anandia Laboratories, Inc [Member] | Accounting Standards Codification 323 [Member] | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Equity Method Investment, Realized Gain (Loss) on Disposal | $ 336,834 | $ 336,834 |
NOTES PAYABLE AND PATENT ACQU43
NOTES PAYABLE AND PATENT ACQUISITION (Narrative) (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2017 | Dec. 31, 2014 | Dec. 31, 2016 | Dec. 22, 2015 | Dec. 23, 2014 | |
Notes Payable And Patent Acquisition [Line Items] | |||||
Other Commitment | $ 1,213,000 | ||||
Finite Lived Intangible Assets Acquired With Notes Payable | $ 925,730 | ||||
Notes Payable, Current | $ 320,554 | $ 307,938 | |||
Notes and Loans, Noncurrent, Total | 320,554 | ||||
Patents [Member] | |||||
Notes Payable And Patent Acquisition [Line Items] | |||||
Other Commitment | $ 333,333 | 1,000,000 | |||
Other Commitment, Due in Second Year | 213,000 | 213,000 | |||
Other Commitment, Due in Third Year | $ 333,333 | ||||
Finite-lived Intangible Assets Acquired | $ 1,138,730 |
SEVERANCE LIABILITY (Narrative)
SEVERANCE LIABILITY (Narrative) (Details) - USD ($) | 3 Months Ended | ||
Dec. 31, 2014 | Jun. 30, 2017 | Dec. 31, 2016 | |
Severance Liability [Line Items] | |||
Severance Costs | $ 624,320 | ||
Severance Term | 36 months | ||
Accrued Severance Liabilities Current | $ 90,101 | $ 199,657 | |
Employee Severance [Member] | |||
Severance Liability [Line Items] | |||
Monthly Severance Cost | $ 18,750 |
WARRANTS FOR COMMON STOCK (Narr
WARRANTS FOR COMMON STOCK (Narrative) (Details) - USD ($) | Aug. 07, 2017 | Aug. 04, 2017 | May 15, 2017 | Feb. 08, 2017 | Feb. 05, 2016 | Aug. 31, 2017 | Aug. 09, 2017 | Jul. 31, 2017 | Jun. 19, 2017 | Oct. 19, 2016 | Jul. 27, 2016 | Jan. 25, 2016 | Jun. 30, 2017 | Mar. 31, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Jun. 02, 2015 | ||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||
Derivative, Gain (Loss) on Derivative, Net, Total | $ 77,583 | $ 9,468 | $ 82,927 | $ 61,597 | ||||||||||||||||||
Stock Issued During Period, Shares, New Issues | 2,618 | 100,928 | 525,118 | |||||||||||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 4,250,000 | |||||||||||||||||||||
Number Of Warrants Exercised | 67,042 | 202,500 | 843,110 | 5,657,159 | 67,042 | |||||||||||||||||
Warrants Expired And Unexercised | 45,834 | 172,730 | 6,831,115 | |||||||||||||||||||
Class of Warrant or Right, Outstanding | 12,445,247 | [1] | 12,445,247 | [1] | 13,781,921 | 16,634,778 | ||||||||||||||||
Tranche 2 And 3 [Member] | ||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||
Warrants and Rights Outstanding | $ 2,000,000 | $ 2,000,000 | ||||||||||||||||||||
New Warrants [Member] | ||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 2.15 | $ 2.15 | $ 2.15 | |||||||||||||||||||
Fair Value of Warrants | $ 6,913,808 | |||||||||||||||||||||
Number Of Warrants Issued | 5,584,659 | |||||||||||||||||||||
Class of Warrant or Right,Exercise Price One [Member] | ||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 1 | $ 1 | ||||||||||||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 7,043,211 | |||||||||||||||||||||
Number Of Warrants Exercised | 3,229,711 | 3,229,711 | ||||||||||||||||||||
Class of Warrant or Right,Exercise Price Two [Member] | ||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 1.45 | |||||||||||||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 4,250,000 | |||||||||||||||||||||
Number Of Warrants Exercised | 2,354,948 | |||||||||||||||||||||
June 2017 Warrants [Member] | ||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||
Number Of Warrants Exercised | 5,584,659 | |||||||||||||||||||||
Common Stock [Member] | ||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 12,445,247 | 12,445,247 | ||||||||||||||||||||
Subsequent Event [Member] | New Warrants [Member] | ||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 2.15 | |||||||||||||||||||||
Warrants Expiration Period | 5 years | |||||||||||||||||||||
Fair Value of Warrants | $ 9,100,000 | |||||||||||||||||||||
Number Of Warrants Issued | 5,708,552 | 5,708,552 | 5,708,552 | |||||||||||||||||||
Subsequent Event [Member] | Class of Warrant or Right,Exercise Price One [Member] | ||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 1 | |||||||||||||||||||||
Number Of Warrants Exercised | 3,813,500 | 3,813,500 | 3,813,500 | |||||||||||||||||||
Subsequent Event [Member] | Class of Warrant or Right,Exercise Price Two [Member] | ||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 1.45 | |||||||||||||||||||||
Number Of Warrants Exercised | 1,895,052 | 1,895,052 | 1,895,052 | |||||||||||||||||||
February Offering [Member] | ||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 1.21 | |||||||||||||||||||||
Warrants Expiration Period | 66 months | 66 months | ||||||||||||||||||||
Fair Value of Warrants | $ 1,940,000 | |||||||||||||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 2,500,000 | |||||||||||||||||||||
February Offering [Member] | Common Stock [Member] | ||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 1.21 | |||||||||||||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 2,500,000 | |||||||||||||||||||||
June Offering [Member] | ||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 1.25 | |||||||||||||||||||||
Warrants Expiration Period | 66 months | |||||||||||||||||||||
Fair Value of Warrants | $ 2,067,000 | |||||||||||||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 3,000,000 | |||||||||||||||||||||
June Offering [Member] | Minimum [Member] | ||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||
Class of Warrant or Right Terminated, Exercise Price | $ 1.21 | |||||||||||||||||||||
June Offering [Member] | Maximum [Member] | ||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||
Class of Warrant or Right Terminated, Exercise Price | $ 1.25 | |||||||||||||||||||||
June Offering [Member] | Subsequent Event [Member] | ||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||
Class of Warrant or Right, Outstanding | 11,293,211 | |||||||||||||||||||||
Class Of Warrant Or Right,Warrants Issued | 5,708,552 | 5,708,552 | ||||||||||||||||||||
October Offering [Member] | ||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 1.45 | |||||||||||||||||||||
Warrants Expiration Period | 66 months | |||||||||||||||||||||
Fair Value of Warrants | $ 3,380,000 | |||||||||||||||||||||
Class of Warrant or Right, Outstanding | 0 | |||||||||||||||||||||
July Offering [Member] | ||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||
Warrants Expiration Period | 5 years 6 months | |||||||||||||||||||||
Fair Value of Warrants | $ 3,380,000 | |||||||||||||||||||||
Stock Issued During Period, Shares, New Issues | 4,682,764 | 4,250,000 | ||||||||||||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 7,043,211 | |||||||||||||||||||||
Class of Warrant or Right, Outstanding | 0 | |||||||||||||||||||||
Class Of Warrants Or Right ,Terminated | 5,500,000 | |||||||||||||||||||||
July Offering [Member] | Minimum [Member] | ||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||
Class of Warrant or Right Terminated, Exercise Price | $ 1.21 | |||||||||||||||||||||
July Offering [Member] | Maximum [Member] | ||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||
Class of Warrant or Right Terminated, Exercise Price | $ 1.25 | |||||||||||||||||||||
July Offering [Member] | Common Stock [Member] | ||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||
Stock Issued During Period, Shares, New Issues | 7,043,211 | |||||||||||||||||||||
July Offering [Member] | Six Month Warrant [Member] | ||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||
Fair Value of Warrants | $ 3,058,000 | |||||||||||||||||||||
Warrant [Member] | July Offering [Member] | ||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 1 | |||||||||||||||||||||
Fair Value of Warrants | $ 858,000 | |||||||||||||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 1,543,210 | |||||||||||||||||||||
Class of Warrant or Right, Outstanding | 5,500,001 | |||||||||||||||||||||
Warrants With Provision Of Anti Dilution [Member] | ||||||||||||||||||||||
Class of Warrant or Right [Line Items] | ||||||||||||||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 94,721 | 94,721 | ||||||||||||||||||||
[1] | Excludes 2,000,000 Tranche 2 and 3 warrants that will never become exercisable, as discussed in Note 6. |
WARRANTS FOR COMMON STOCK (Outs
WARRANTS FOR COMMON STOCK (Outstanding Warrants) (Details) - $ / shares | 6 Months Ended | ||||
Jun. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |||
Class of Warrant or Right [Line Items] | |||||
Number of warrants | 12,445,247 | [1] | 13,781,921 | 16,634,778 | |
December 2011 Convertible Notes Payable Warrants One [Member] | |||||
Class of Warrant or Right [Line Items] | |||||
Number of warrants | 802,215 | ||||
Exercise Price | $ 1.3816 | ||||
Expiration | Feb. 6, 2018 | ||||
November 2012 Private Placement Offering Warrants [Member] | |||||
Class of Warrant or Right [Line Items] | |||||
Number of warrants | 255,100 | ||||
Exercise Price | $ 0.6 | ||||
Expiration | Nov. 9, 2017 | ||||
August 2012 Convertible Notes Payable Warrants One [Member] | |||||
Class of Warrant or Right [Line Items] | |||||
Number of warrants | [2] | 94,721 | |||
Exercise Price | [2] | $ 0.931 | |||
Expiration | [2] | Aug. 8, 2018 | |||
July 2016 Registered Direct Offering Warrants [Member] | |||||
Class of Warrant or Right [Line Items] | |||||
Number of warrants | [3] | 3,813,500 | |||
Exercise Price | [3] | $ 1 | |||
Expiration | [3] | Jan. 27, 2021 | |||
October 2016 registered direct offering warrants [Member] | |||||
Class of Warrant or Right [Line Items] | |||||
Number of warrants | [3] | 1,895,052 | |||
Exercise Price | [3] | $ 1.45 | |||
Expiration | [3] | Apr. 19, 2022 | |||
June 2017 Warrants Pursuant to Warrant Exercise Agreements [Member] | |||||
Class of Warrant or Right [Line Items] | |||||
Number of warrants | [4] | 5,584,659 | |||
Exercise Price | [4] | $ 2.1500 | |||
Expiration | [4] | Dec. 20, 2022 | |||
[1] | Excludes 2,000,000 Tranche 2 and 3 warrants that will never become exercisable, as discussed in Note 6. | ||||
[2] | Includes anti-dilution features. | ||||
[3] | As of August 7, 2017, no such warrants were outstanding. See Note 16. | ||||
[4] | As of August 4, 2017, after an aggregate of 5,708,522 additional warrants were issued in July and August of 2017, 11,293,211 of such warrants were outstanding. See Note 16. |
WARRANTS FOR COMMON STOCK (Roll
WARRANTS FOR COMMON STOCK (Roll-Forward of Warrant Liability from Initial Valuation) (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Class of Warrant or Right [Line Items] | |||
Fair value of warrant liability upon Issuance / conversion | $ 141,608 | $ 58,681 | $ 2,898,296 |
Reclassification of warrant liability to capital in excess of par | (2,810,000) | ||
Gain as a result of change in fair value | $ (29,615) | ||
Loss as a result of change in fair value | $ 82,927 |
WARRANTS FOR COMMON STOCK (Warr
WARRANTS FOR COMMON STOCK (Warrant Activity) (Details) - shares | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jan. 25, 2016 | Mar. 31, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Dec. 31, 2016 | |||
Class of Warrant or Right [Line Items] | |||||||
Warrant outstanding beginning balance | 16,634,778 | 13,781,921 | 13,781,921 | 16,634,778 | |||
Warrants issued in conjunction with registered direct offering | 2,500,000 | ||||||
Unexercisable warrants | (2,000,000) | ||||||
Warrants exercised | (67,042) | (202,500) | (843,110) | (5,657,159) | (67,042) | ||
Warrants expired | (6,831,115) | ||||||
Additional warrants due to anti-dilution provisions | 2,089 | ||||||
Warrant outstanding ending balance | 12,445,247 | [1] | 13,781,921 | ||||
Composition of outstanding warrants: | |||||||
Warrants containing anti-dilution feature | 94,721 | ||||||
Warrants without anti-dilution feature | 12,350,526 | ||||||
Warrants Outstanding | 12,445,247 | ||||||
June 2015 Offering [Member] | |||||||
Composition of outstanding warrants: | |||||||
Warrants Cancelled In Registered Direct Offering | (3,000,000) | ||||||
February 2016 Offering [Member] | |||||||
Composition of outstanding warrants: | |||||||
Warrants Cancelled In Registered Direct Offering | (2,500,000) | ||||||
July 2016 Offering [Member] | |||||||
Class of Warrant or Right [Line Items] | |||||||
Warrants issued in conjunction with registered direct offering | 7,043,211 | ||||||
September 2016 Offering [Member] | |||||||
Class of Warrant or Right [Line Items] | |||||||
Number Of Warrants Exercised Two | (2,250,000) | ||||||
October 2016 Offering [Member] | |||||||
Class of Warrant or Right [Line Items] | |||||||
Warrants issued in conjunction with registered direct offering | 4,250,000 | ||||||
February 2017 Offering [Member] | |||||||
Class of Warrant or Right [Line Items] | |||||||
Warrants expired | (172,730) | ||||||
March 2017 Offering [Member] | |||||||
Class of Warrant or Right [Line Items] | |||||||
Warrants exercised | (202,500) | ||||||
April 2017 Offering [Member] | |||||||
Class of Warrant or Right [Line Items] | |||||||
Warrants exercised | (162,000) | ||||||
May 2017 Offering [Member] | |||||||
Class of Warrant or Right [Line Items] | |||||||
Warrants exercised | (221,366) | ||||||
Warrants expired | (45,834) | ||||||
June 2017 Offering [Member] | |||||||
Class of Warrant or Right [Line Items] | |||||||
Warrants exercised | (6,116,903) | ||||||
June 2017 Warrants Pursuant to Warrant Exercise Agreements [Member] | |||||||
Class of Warrant or Right [Line Items] | |||||||
Warrant outstanding beginning balance | |||||||
Warrants exercised | 5,584,659 | ||||||
Warrant outstanding ending balance | [2] | 5,584,659 | |||||
[1] | Excludes 2,000,000 Tranche 2 and 3 warrants that will never become exercisable, as discussed in Note 6. | ||||||
[2] | As of August 4, 2017, after an aggregate of 5,708,522 additional warrants were issued in July and August of 2017, 11,293,211 of such warrants were outstanding. See Note 16. |
COMMITMENTS AND CONTINGENCIES49
COMMITMENTS AND CONTINGENCIES (Narrative) (Details) | Mar. 13, 2017USD ($) | Dec. 08, 2015USD ($) | Nov. 01, 2015USD ($)ft² | Feb. 10, 2014USD ($) | Apr. 26, 2017USD ($) | Apr. 20, 2017USD ($) | Jan. 31, 2017USD ($) | Sep. 01, 2016USD ($) | Sep. 28, 2015USD ($) | Sep. 15, 2014USD ($) | Aug. 27, 2014USD ($) | Aug. 22, 2014USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Feb. 01, 2017USD ($) | Dec. 31, 2016USD ($) | May 19, 2016shares | May 01, 2016USD ($) | Apr. 26, 2016shares |
Other Commitments [Line Items] | |||||||||||||||||||||||
Annual minimum royalty payments | $ 1,219 | $ 225,000 | $ 1,471 | ||||||||||||||||||||
Milestone payment upon approval of a product | $ 150,000 | ||||||||||||||||||||||
Research and Development Expense, Total | $ 813,287 | $ 509,928 | 1,364,138 | $ 1,107,319 | |||||||||||||||||||
License Costs | $ 85,681 | ||||||||||||||||||||||
Amortization of Other Deferred Charges | 143,010 | 126,041 | 283,898 | 250,882 | |||||||||||||||||||
Lease Payments | 38,438 | 36,131 | 76,876 | 72,262 | |||||||||||||||||||
License Maintenance Fees Due Current | $ 75,000 | ||||||||||||||||||||||
Operating Leases, Future Minimum Payments Due, Next Twelve Months | 79,000 | 79,000 | |||||||||||||||||||||
Operating Leases, Future Minimum Payments, Due in Two Years | 169,000 | 169,000 | |||||||||||||||||||||
Operating Leases, Future Minimum Payments, Due in Three Years | 169,000 | 169,000 | |||||||||||||||||||||
Operating Leases, Rent Expense, Minimum Rentals | $ 3,750 | ||||||||||||||||||||||
Land Subject to Ground Leases | ft² | 25,000 | ||||||||||||||||||||||
Minimum Annual Royalties In Year Four | 25,000 | 25,000 | |||||||||||||||||||||
Minimum Annual Royalties After Year Four | 50,000 | 50,000 | |||||||||||||||||||||
Minimum Annual Royalties In Year Three | 25,000 | 25,000 | $ 4,866 | ||||||||||||||||||||
Litigation Settlement Shares To Be Issued | shares | 2,077,555 | 2,077,555 | |||||||||||||||||||||
Minimum Annual Royalties In Year One | 10,000 | 10,000 | |||||||||||||||||||||
Minimum Annual Royalties In Year Two | 15,000 | 15,000 | |||||||||||||||||||||
Minimum Royalty Fee Payments Due In Year Four | 31,709 | 31,709 | |||||||||||||||||||||
Research and Development Arrangement [Member] | |||||||||||||||||||||||
Other Commitments [Line Items] | |||||||||||||||||||||||
Long-term Purchase Commitment, Amount | $ 785,100 | ||||||||||||||||||||||
University of Virginia [Member] | |||||||||||||||||||||||
Other Commitments [Line Items] | |||||||||||||||||||||||
Research and Development Expense, Total | 70,729 | 48,344 | 111,574 | 112,973 | |||||||||||||||||||
Research and Development Arrangement, Investment Amount | $ 1,000,000 | ||||||||||||||||||||||
Subsequent Event [Member] | |||||||||||||||||||||||
Other Commitments [Line Items] | |||||||||||||||||||||||
Operating Leases, Future Minimum Payments, Remainder of Fiscal Year | $ 7,200 | ||||||||||||||||||||||
Payment One [Member] | |||||||||||||||||||||||
Other Commitments [Line Items] | |||||||||||||||||||||||
Research and Development Arrangement, Contract to Perform for Others, Costs Incurred, Gross | $ 65,425 | $ 379,800 | |||||||||||||||||||||
Payment Two [Member] | |||||||||||||||||||||||
Other Commitments [Line Items] | |||||||||||||||||||||||
Research and Development Arrangement, Contract to Perform for Others, Costs Incurred, Gross | 196,275 | 84,200 | 261,700 | 179,200 | |||||||||||||||||||
Office space in Clarence, New York [Member] | Subsequent Event [Member] | |||||||||||||||||||||||
Other Commitments [Line Items] | |||||||||||||||||||||||
Operating Leases, Future Minimum Payments, Due in Two Years | $ 8,000 | ||||||||||||||||||||||
Warehouse Space in North Carolina [Member] | |||||||||||||||||||||||
Other Commitments [Line Items] | |||||||||||||||||||||||
Annual minimum royalty payments | $ 1,200 | ||||||||||||||||||||||
Minimum Royalty Fee Payments Due In Year Two | $ 42,000 | ||||||||||||||||||||||
Operating Leases, Future Minimum Payments Due, Next Twelve Months | $ 22,500 | ||||||||||||||||||||||
Operating Leases, Future Minimum Payments, Due in Two Years | 45,000 | ||||||||||||||||||||||
Operating Leases, Future Minimum Payments, Due in Three Years | $ 37,500 | ||||||||||||||||||||||
Operating Leases, Future Minimum Payments, Remainder of Fiscal Year | 21,000 | $ 14,400 | |||||||||||||||||||||
Lease Expiration Date | Aug. 31, 2017 | ||||||||||||||||||||||
Lease And Rental Expense | $ 3,500 | ||||||||||||||||||||||
Laboratory space in Buffalo [Member] | |||||||||||||||||||||||
Other Commitments [Line Items] | |||||||||||||||||||||||
Annual minimum royalty payments | $ 2,690 | ||||||||||||||||||||||
Operating Leases, Future Minimum Payments Due, Next Twelve Months | 16,000 | ||||||||||||||||||||||
Operating Leases, Future Minimum Payments, Due in Two Years | $ 11,000 | ||||||||||||||||||||||
Lessee Leasing Arrangements, Operating Leases, Term of Contract | 12 months | ||||||||||||||||||||||
Operating Leases, Rent Expense, Sublease Rentals | $ 2,770 | ||||||||||||||||||||||
Licensing Agreements [Member] | |||||||||||||||||||||||
Other Commitments [Line Items] | |||||||||||||||||||||||
Research and Development Expense, Total | $ 162,408 | 56,250 | 115,170 | 119,640 | 229,967 | ||||||||||||||||||
Licensing Agreements One [Member] | |||||||||||||||||||||||
Other Commitments [Line Items] | |||||||||||||||||||||||
License Costs | $ 150,000 | $ 125,000 | |||||||||||||||||||||
License Maintenance Fees Due Current | 15,000 | 15,000 | |||||||||||||||||||||
Minimum Royalty Fee Payments Due In Year Two | 30,000 | 30,000 | |||||||||||||||||||||
Minimum Royalty Fee Payments Due Thereafter | 50,000 | 50,000 | |||||||||||||||||||||
Capitalized Patent Costs Gross | 5,173 | 5,983 | 24,242 | 33,939 | |||||||||||||||||||
Minimum Royalty Fee Payments Due In Year One | 20,000 | 20,000 | |||||||||||||||||||||
Patents [Member] | |||||||||||||||||||||||
Other Commitments [Line Items] | |||||||||||||||||||||||
Capitalized Patent Costs Gross | 4,866 | 10,016 | 31,709 | 13,996 | |||||||||||||||||||
Precision License [Member] | |||||||||||||||||||||||
Other Commitments [Line Items] | |||||||||||||||||||||||
License Costs | $ 1,250,000 | ||||||||||||||||||||||
Amortization of Other Deferred Charges | 24,505 | 24,505 | 49,011 | 49,011 | |||||||||||||||||||
Anandia Sublicense [Member] | |||||||||||||||||||||||
Other Commitments [Line Items] | |||||||||||||||||||||||
License Costs | $ 10,000 | ||||||||||||||||||||||
Upfront Fee | $ 75,000 | ||||||||||||||||||||||
Licensing Agreements Two [Member] | |||||||||||||||||||||||
Other Commitments [Line Items] | |||||||||||||||||||||||
Capitalized Patent Costs Gross | $ 199 | $ 0 | $ 29,866 | $ 6,075 |
COMMITMENTS AND CONTINGENCIES50
COMMITMENTS AND CONTINGENCIES (Future Minimum Lease Payments) (Details) | Jun. 30, 2017USD ($) |
Other Commitments [Line Items] | |
Year ended December 31, 2017 - | $ 79,000 |
Year ended December 31, 2018 - | 169,000 |
Year ended December 31, 2019 - | 169,000 |
Year ended December 31, 2020 - | 169,000 |
Year ended December 31, 2021 - | $ 141,000 |
EARNINGS PER COMMON SHARE (Comp
EARNINGS PER COMMON SHARE (Computation of Basic and Diluted Earnings Per Common Share) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Net loss attributed to common shareholders | $ (3,355,624) | $ (2,902,354) | $ (5,976,901) | $ (6,154,806) |
Denominator for basic earnings per share-weighted average shares outstanding | 91,577,688 | 76,024,064 | 91,165,770 | 75,027,606 |
Effect of dilutive securities: | ||||
Warrants, restricted stock and options outstanding | 0 | 0 | 0 | 0 |
Denominator for diluted earnings per common share-weighted average shares adjusted for dilutive securities | 91,577,688 | 76,024,064 | 91,165,770 | 75,027,606 |
Loss per common share - basic and diluted | $ (0.04) | $ (0.04) | $ (0.07) | $ (0.08) |
EARNINGS PER COMMON SHARE (Anti
EARNINGS PER COMMON SHARE (Anti-Dilutive Securities Outstanding Excluded from Computation) (Details) - shares | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Securities outstanding but excluded from computation of earnings per share | 19,410,935 | 15,222,300 |
Warrants [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Securities outstanding but excluded from computation of earnings per share | 12,445,247 | 10,236,621 |
Options [ Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Securities outstanding but excluded from computation of earnings per share | 6,965,688 | 4,985,679 |
EQUITY BASED COMPENSATION (Narr
EQUITY BASED COMPENSATION (Narrative) (Details) - USD ($) | Apr. 12, 2014 | Apr. 29, 2017 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Equity based employee compensation expense | $ 322,983 | $ 472,216 | ||||||||
Unrecognized compensation expense related to non-vested restricted shares and stock option | $ 2,390,000 | $ 2,390,000 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 0.97 | $ 0.64 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested in Period, Fair Value | $ 684,265 | $ 1,138,910 | ||||||||
Common Stock [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 34,593 | |||||||||
Omnibus Incentive Plan [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Equity based employee compensation expense | $ 154,004 | $ 212,222 | $ 322,983 | $ 472,216 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 90,000 | 1,372,000 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized | 5,000,000 | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 3,949,765 | 3,949,765 | ||||||||
Omnibus Incentive Plan [Member] | Common Stock [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 10,000,000 | |||||||||
Scenario, Forecast [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Unrecognized compensation expense related to non-vested restricted shares and stock option | $ 140,000 | $ 448,000 | $ 828,000 | $ 507,000 | ||||||
Third Party [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Restricted shares awarded vested immediately | 10,000 | 15,811 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 100,000 | |||||||||
Restricted Stock [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Allocated Share-based Compensation Expense | $ 8,000 | $ 30,873 | ||||||||
Employee Stock Option [Member] | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Unrecognized compensation expense related to non-vested restricted shares and stock option | $ 467,000 | $ 467,000 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 56,991 | 0 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 1,372,000 | 1,824,037 | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures, Total | 1,372,000 | 1,824,037 |
EQUITY BASED COMPENSATION (Sche
EQUITY BASED COMPENSATION (Schedule of Fair Value Assumptions) (Details) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Risk-free interest rate (weighted average) | 2.12% | 1.38% |
Expected dividend yield | 0.00% | 0.00% |
Expected stock price volatility | 90.00% | 90.00% |
Expected life of options (weighted average) | 5 years 1 month 17 days | 5 years 11 days |
EQUITY BASED COMPENSATION (Summ
EQUITY BASED COMPENSATION (Summary of All Stock Option Activity) (Details) - Employee Stock Option [Member] - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2017 | Dec. 31, 2016 | |
Number of Options | ||
Options Outstanding, Beginning of Period | 5,650,679 | 3,161,642 |
Granted | 1,372,000 | 2,489,037 |
Exercised | (56,991) | |
Options Outstanding, End of Period | 6,965,688 | 5,650,679 |
Exercisable, End of Period | 3,663,334 | |
Weighted Average Exercise Price | ||
Options Outstanding, Beginning of Period | $ 1.04 | $ 1.10 |
Granted | 1.39 | 0.97 |
Exercised | 0.72 | |
Options Outstanding, End of Period | 1.12 | $ 1.04 |
Exercisable, End of Period | $ 1.11 | |
Weighted Average Remaining Contractual Term | ||
Options Outstanding, End of Period | 7 years 3 months 18 days | |
Exercisable, End of Period | 6 years 2 months 12 days | |
Aggregate Intrinsic Value | ||
Options Outstanding, End of Period | $ 4,681,882 | |
Exercisable, End of Period | $ 2,611,378 |
SUBSEQUENT EVENTS (Narrative) (
SUBSEQUENT EVENTS (Narrative) (Details) - USD ($) | Aug. 04, 2017 | Aug. 09, 2017 | Jul. 31, 2017 | Jun. 19, 2017 | Jul. 27, 2016 | Jan. 25, 2016 | Mar. 31, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 |
Subsequent Event [Line Items] | |||||||||||
Number Of Warrants Exercised | 67,042 | 202,500 | 843,110 | 5,657,159 | 67,042 | ||||||
Proceeds from Warrant Exercises | $ 6,212,712 | $ 196 | |||||||||
Class of Warrant or Right,Exercise Price One [Member] | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 1 | $ 1 | |||||||||
Number Of Warrants Exercised | 3,229,711 | 3,229,711 | |||||||||
Class of Warrant or Right,Exercise Price Two [Member] | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 1.45 | ||||||||||
Number Of Warrants Exercised | 2,354,948 | ||||||||||
New Warrants [Member] | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Fair Value of Warrants | $ 6,913,808 | ||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 2.15 | $ 2.15 | |||||||||
Number Of Warrants Issued | 5,584,659 | ||||||||||
Subsequent Event [Member] | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Proceeds from Warrant Exercises | $ 6,167,646 | $ 6,167,646 | |||||||||
Subsequent Event [Member] | Class of Warrant or Right,Exercise Price One [Member] | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 1 | ||||||||||
Number Of Warrants Exercised | 3,813,500 | 3,813,500 | 3,813,500 | ||||||||
Subsequent Event [Member] | Class of Warrant or Right,Exercise Price Two [Member] | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 1.45 | ||||||||||
Number Of Warrants Exercised | 1,895,052 | 1,895,052 | 1,895,052 | ||||||||
Subsequent Event [Member] | New Warrants [Member] | |||||||||||
Subsequent Event [Line Items] | |||||||||||
Fair Value of Warrants | $ 9,100,000 | ||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 2.15 | ||||||||||
Warrants Expiration Period | 5 years | ||||||||||
Number Of Warrants Issued | 5,708,552 | 5,708,552 | 5,708,552 |