Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 07, 2018 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
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 | 124,374,919 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 3,373,388 | $ 3,659,534 |
Short-term investment securities | 50,081,013 | 58,975,513 |
Accounts receivable | 1,283,094 | 957,066 |
Inventory, net | 2,942,967 | 3,282,537 |
Prepaid expenses and other assets | 1,321,550 | 746,805 |
Total current assets | 59,002,012 | 67,621,455 |
Machinery and equipment, net | 3,417,162 | 3,316,047 |
Other assets: | ||
Intangible assets, net | 8,640,302 | 7,435,411 |
Investment | 7,513,581 | 1,366,493 |
Total other assets | 16,153,883 | 8,801,904 |
Total assets | 78,573,057 | 79,739,406 |
Current liabilities: | ||
Current portion of note payable | 390,016 | 0 |
Accounts payable | 3,049,808 | 2,080,691 |
Accrued expenses | 1,920,816 | 1,987,675 |
Deferred revenue | 249,972 | 28,350 |
Warrant liability | 167,779 | 216,490 |
Total current liabilities | 5,778,391 | 4,313,206 |
Long-term portion of note payable | 285,210 | 0 |
Total liabilities | 6,063,601 | 4,313,206 |
Commitments and contingencies (Note 10) | 0 | 0 |
Shareholders' equity | ||
Common stock value | 1,243 | 1,236 |
Capital in excess of par value | 169,056,133 | 166,592,536 |
Accumulated other comprehensive loss | (28,184) | 0 |
Accumulated deficit | (96,519,736) | (91,167,572) |
Total shareholders' equity | 72,509,456 | 75,426,200 |
Total liabilities and shareholders' equity | $ 78,573,057 | $ 79,739,406 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 |
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 | 124,311,087 | 123,569,367 |
Common stock, shares outstanding | 124,311,087 | 123,569,367 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenue: | ||||
Sale of products, net | $ 6,914,913 | $ 3,897,206 | $ 13,030,952 | $ 6,128,723 |
Cost of goods sold (exclusive of depreciation shown separately below): | ||||
Products | 6,753,199 | 4,062,261 | 12,797,660 | 6,567,675 |
Gross profit (loss) | 161,714 | (165,055) | 233,292 | (438,952) |
Operating expenses: | ||||
Research and development (including equity-based compensation) | 4,781,407 | 813,287 | 7,298,176 | 1,364,138 |
General and administrative (including equity-based compensation) | 1,914,971 | 1,805,118 | 3,947,363 | 3,425,597 |
Sales and marketing (including equity-based compensation) | 203,629 | 267,591 | 402,738 | 563,304 |
Depreciation | 131,294 | 88,464 | 255,822 | 176,585 |
Amortization | 170,925 | 143,010 | 338,477 | 283,898 |
Total operating expenses | 7,202,226 | 3,117,470 | 12,242,576 | 5,813,522 |
Operating loss | (7,040,512) | (3,282,525) | (12,009,284) | (6,252,474) |
Other income (expense): | ||||
Warrant liability gain (loss) - net | 0 | (77,583) | 48,711 | (82,927) |
Realized loss on short-term investment securities | (42,384) | 0 | (42,189) | 0 |
Unrealized gain on short-term investment securities | 92,574 | 0 | ||
Unrealized gain on investment | 6,147,088 | 346,180 | ||
Interest income, net | 251,670 | 12,125 | 503,510 | 27,880 |
Interest expense | 0 | (7,641) | 0 | (15,560) |
Total other income (expense) | 301,860 | (73,099) | 6,657,120 | 275,573 |
Loss before income taxes | (6,738,652) | (3,355,624) | (5,352,164) | (5,976,901) |
Income taxes | 0 | 0 | 0 | 0 |
Net loss | (6,738,652) | (3,355,624) | (5,352,164) | (5,976,901) |
Other comprehensive loss: | ||||
Unrealized loss on short-term investment securities, net | (28,184) | 0 | (28,184) | 0 |
Comprehensive loss | $ (6,766,836) | $ (3,355,624) | $ (5,380,348) | $ (5,976,901) |
Net loss per common share - basic and diluted | $ (0.05) | $ (0.04) | $ (0.04) | $ (0.07) |
Common shares used in basic and diluted net loss per share calculation | 124,311,087 | 91,577,688 | 124,166,321 | 91,165,770 |
CONSOLIDATED STATEMENTS OF OPE5
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Parenthetical) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Research and Development Expense [Member] | ||||
Allocated Share-based Compensation Expense | $ 1,344,317 | $ 18,250 | $ 1,564,730 | $ 32,200 |
General and Administrative Expense [Member] | ||||
Allocated Share-based Compensation Expense | 291,599 | 105,277 | 599,087 | 233,726 |
Sales and Marketing Costs Expense [Member] | ||||
Allocated Share-based Compensation Expense | $ 46,312 | $ 30,477 | $ 82,287 | $ 57,057 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY - 6 months ended Jun. 30, 2018 - USD ($) | Total | Common Stock [Member] | Capital in Excess of Par Value [Member] | Accumulated Other Comprehensive Loss [Member] | Accumulated Deficit [Member] |
Beginning balance at Dec. 31, 2017 | $ 75,426,200 | $ 1,236 | $ 166,592,536 | $ 0 | $ (91,167,572) |
Beginning balance (in shares) at Dec. 31, 2017 | 123,569,367 | ||||
Stock issued in connection with warrant exercises | 0 | $ 4 | (4) | 0 | 0 |
Stock issued in connection with warrant exercises (in shares) | 426,180 | ||||
Stock issued in connection with option exercises | 217,500 | $ 3 | 217,497 | 0 | 0 |
Stock issued in connection with option exercises (in shares) | 315,540 | ||||
Equity based compensation | 2,246,104 | $ 0 | 2,246,104 | 0 | 0 |
Unrealized loss on short-term investment securities, net | (28,184) | 0 | 0 | (28,184) | 0 |
Net loss | (5,352,164) | 0 | 0 | 0 | (5,352,164) |
Ending balance at Jun. 30, 2018 | $ 72,509,456 | $ 1,243 | $ 169,056,133 | $ (28,184) | $ (96,519,736) |
Ending balance (in shares) at Jun. 30, 2018 | 124,311,087 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (5,352,164) | $ (5,976,901) |
Adjustments to reconcile net loss to cash used in operating activities: | ||
Amortization and depreciation | 545,288 | 411,472 |
Amortization of license fees | 49,011 | 49,011 |
Unrealized gain on investment | (6,147,088) | (346,180) |
Realized loss on short-term investment securities | 42,189 | 0 |
Warrant liability (gain) loss | (48,711) | 82,927 |
Accretion of interest on note payable and accrued severance | 0 | 15,560 |
Equity-based employee compensation expense | 2,246,104 | 322,983 |
Decrease in allowance for doubtful accounts | 0 | (10,000) |
(Decrease) increase in inventory reserve | (35,000) | 95,000 |
(Increase) decrease in assets: | ||
Accounts receivable | (326,028) | (666,927) |
Inventory | 374,570 | (1,290,331) |
Prepaid expenses and other assets | (574,745) | (355,368) |
Increase (decrease) in liabilities: | ||
Accounts payable | 681,026 | 754,236 |
Accrued expenses | (66,860) | (24,339) |
Accrued severance | 0 | (112,500) |
Deferred revenue | 221,622 | 0 |
Net cash used in operating activities | (8,390,786) | (7,051,357) |
Cash flows from investing activities: | ||
Acquisition of patents and trademarks | (137,761) | (133,059) |
Acquisition of machinery and equipment | (299,227) | (13,710) |
Sales and maturities of short-term investment securities | 42,183,538 | 0 |
Purchase of short-term investment securities | (33,359,410) | 0 |
Net cash provided by (used in) investing activities | 8,387,140 | (146,769) |
Cash flows from financing activities: | ||
Net proceeds from exercise of warrants | 0 | 6,212,712 |
Payment on note payable | (500,000) | 0 |
Proceeds from exercise of stock options | 217,500 | 0 |
Net cash (used in) provided by financing activities | (282,500) | 6,212,712 |
Net decrease in cash | (286,146) | (985,414) |
Cash - beginning of period | 3,659,534 | 13,468,188 |
Cash - end of period | 3,373,388 | 12,482,774 |
Net cash paid for: | ||
Cash paid during the period for interest | 0 | 2,943 |
Cash paid during the period for income taxes | 0 | 0 |
Non-cash transactions: | ||
Patent and trademark additions included in accounts payable and accrued expenses | 230,381 | 204,669 |
Machinery and equipment additions included in accounts payable | 57,710 | 0 |
License acquired with note payable | $ 1,175,226 | $ 0 |
NATURE OF BUSINESS AND SUMMARY
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1. - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation - Operating results for the six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. The balance sheet as of December 31, 2017 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, 2017 audited consolidated financial statements and the notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the Securities and Exchange Commission on March 7, 2018. Principles of Consolidation - Nature of Business - manufacturing business in North Carolina. Botanical Genetics is a wholly-owned subsidiary of 22nd Century Group and was incorporated to facilitate an investment in Anandia Laboratories, Inc. more fully described in Note 6. Reclassifications – Preferred stock authorized - Concentration of Credit Risk - Cash and cash equivalents Short-term investment securities . The Company views its available-for-sale securities as available for use in current operations regardless of the stated maturity date of the security. The Company’s investment policy states that all investment securities must have a maximum maturity of twenty-four (24) months or less and the maximum weighted maturity of the investment securities must not exceed twelve (12) months. Unrealized gains and losses on short-term investment securities (the adjustment to fair value) are recorded as comprehensive income or loss on the Company’s Consolidated Statements of Comprehensive Loss. Realized gains and losses on short-term investment securities are recorded in the other income (expense) portion of the Company’s Consolidated Statements of Operations and Comprehensive Loss. Interest earned, net of investment fees, on the short-term investment securities are included in interest income. Accounts receivable Inventory - June 30, December 31, 2018 2017 Inventory - tobacco leaf $ 1,582,976 $ 1,552,474 Inventory - finished goods Cigarettes and filtered cigars 205,617 289,004 Inventory - raw materials Cigarette and filtered cigar components 1,314,374 1,636,059 3,102,967 3,477,537 Less: inventory reserve 160,000 195,000 $ 2,942,967 $ 3,282,537 Machinery and equipment - Intangible Assets - June 30, December 31, 2018 2017 Intangible assets, net Patent and trademark costs $ 6,695,610 $ 6,327,467 Less: accumulated amortization 2,806,932 2,517,465 Patent and trademark costs, net 3,888,678 3,810,002 License fees, net (see Note 10) 2,625,226 1,450,000 Less: accumulated amortization 375,602 326,591 License fees, net 2,249,624 1,123,409 MSA signatory costs 2,202,000 2,202,000 License fee for predicate cigarette brand 300,000 300,000 $ 8,640,302 $ 7,435,411 Amortization expense relating to the above intangible assets for the three and six months ended June 30, 2018 and 2017 amounted to $170,925 and $338,477, respectively ($143,010 and $283,898 for the three and six months ended June 30, 2017, respectively). The estimated annual average amortization expense for the next five years is approximately $355,000 for patent costs and $98,000 for license fees. Impairment of Long-Lived Assets - Income Taxes - 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, 2018 and December 31, 2017. The Company’s federal and state tax returns for the years ended December 31, 2014 through December 31, 2016 are currently open to audit under the statutes of limitations. There were no pending audits as of June 30, 2018. The Tax Cuts and Jobs Act of 2017 (the “TCJA”) was signed into law on December 22, 2017. The TCJA includes significant changes to the U.S. corporate income tax system, including a Federal corporate rate reduction from 35% to 21%. In accordance with a question and answer document issued by the Financial Accounting Standards Board (“FASB”) staff on January 18, 2018, the Company is applying the guidance in Securities and Exchange Commission Staff Accounting Bulletin (“SAB”) 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act, which provides guidance on applying FASB Accounting Standards Codification (“ASC”) 740, Income Taxes, if the accounting for certain income tax effects of the TCJA are incomplete by the time the financial statements are issued for a reporting period. Specifically, SAB 118 permits companies to use reasonable estimates and provisional amounts for some line items for taxes when preparing year-end 2017 financial statements. The Company completed the accounting under the TCJA, and accordingly, has reported the effects in the Company’s consolidated financial statements for the year ended December 31, 2017. Stock Based Compensation - Revenue Recognition - The Company recognizes revenue when it satisfies a performance obligation by transferring control of the product to a customer. The Company’s customer contracts consist of obligations to manufacture the customer’s branded filtered cigars and cigarettes. For certain contracts, the performance obligation is satisfied over time as the Company , due to contract restrictions, it does not have an alternative use of the product, and it has an enforceable right to payment as the product is manufactured. The Company recognizes revenue under those contracts at the unit price stated in the contract based on the units manufactured. The manufacturing process is completed on a daily basis and, therefore, there were no performance obligations partially satisfied at June 30, 2018. For the contract where the performance obligation is satisfied at a point in time, the Company recognizes revenue when the product is transferred to the customer. Revenue from the sale of the Company’s products is recognized net of cash discounts, sales returns and allowances. There was no allowance for discounts or returns and allowances at June 30, 2018 and December 31, 2017. The Company generally requires a down payment from its customers prior to commencement of manufacturing the product. Amounts received in advance of satisfying the performance obligations are recorded as deferred revenue. Customer payment terms vary depending on the terms of each customer contract, but payment is generally due prior to product shipment or within extended credit terms up to twenty-one (21) days after shipment. The Company’s net sales revenue is derived from customers located primarily in the United States of America and is disaggregated by the timing of revenue recognition. For the three and six months ended June 30, 2018, net sales revenue from products transferred over time amounted to approximately $4,569,000 and $8,492,000, respectively, and net sales revenue from products transferred at a point in time amounted to approximately $2,346,000 and $4,539,000, respectively. Derivatives - Comprehensive Loss. 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 - Advertising . Loss Per Common Share - Commitment and Contingency Accounting - Use of Estimates - Fair Value of Financial Instruments - Investments - entity, and such equity investment does not have a readily determinable market value, then the Company accounts for such equity investments in accordance with FASB ASU 2016-01, which the Company adopted in the first quarter of 2018 with respect to the Company’s investment in Anandia Laboratories, Inc. in Canada (see Note 6 for a further discussion). The Company used the cost method of accounting with respect to its investment in Anandia Laboratories for prior periods. Accounting Pronouncements - |
OCTOBER 2017 REGISTERED DIRECT
OCTOBER 2017 REGISTERED DIRECT OFFERING | 6 Months Ended |
Jun. 30, 2018 | |
October 2017 [Member] | |
OCTOBER 2017 REGISTERED DIRECT OFFERING | NOTE 2. – OCTOBER 2017 REGISTERED DIRECT OFFERING On October 10, 2017, the Company closed a registered direct offering (the “Offering”) with institutional investors purchasing an aggregate of 20,570,000 shares of the Company’s common stock at a price of $2.6250 per share generating net cash proceeds for the Company of $50,732,200, after deducting expenses associated with the transaction. The securities purchase agreement entered into with the institutional investors provides that, subject to certain exceptions, for a period of one year following the closing of the Offering, the Company will be prohibited from effecting or entering into an agreement to effect any issuance by the Company or any of its subsidiaries of common stock or common stock equivalents (or a combination of units thereof) involving a variable rate transaction, which generally includes any transaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of common stock either (A) at a conversion price or exchange rate that is based upon and/or varies with the trading prices of or quotations for the shares of common stock at any time after the initial issuance of such securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the common stock or (ii) enters into any agreement, whereby the Company may issue securities at a future determined price. |
JUNE 2017 WARRANT EXERCISE AGRE
JUNE 2017 WARRANT EXERCISE AGREEMENTS | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
JUNE 2017 WARRANT EXERCISE AGREEMENTS | NOTE 3. – 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 shares of common stock of the Company at $1.00 per share and warrants to purchase up to 4,250,000 shares of common stock of the Company at $1.45 per share (collectively, the “Warrants”). These Warrants to purchase shares of the Company’s common stock were acquired by the Holders in registered direct offerings in October of 2016 and in July of 2016, respectively. The Company and the Holders agreed that the Holders would, subject to beneficial ownership limitations on exercise contained in the Warrants, exercise all the Warrants for cash. In June 2017, the Holders exercised 3,229,711 Warrants at $1.00 per share and 2,354,948 Warrants at $1.45 per share, resulting in net proceeds to the Company in the amount of $6,169,212, after deducting expenses associated with the transaction. In July and August of 2017, the Holders exercised 3,813,500 Warrants at $1.00 per share and 1,895,052 Warrants at $1.45 per share, resulting in net proceeds to the Company in the amount of $6,167,646, after deducting expenses associated with the transaction. 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 per share and (ii) are exercisable six months from the date of issuance of the New Warrants for a period of five (5) years. Accordingly, the Company issued an aggregate of 11,293,211 New Warrants to the Holders, upon exercise of the Holder’s Warrants as described above. The New Warrants had a fair value of $16,049,031 at issuance and have been recorded as an adjustment to capital in excess of par value. |
MANUFACTURING FACILITY
MANUFACTURING FACILITY | 6 Months Ended |
Jun. 30, 2018 | |
Other Operating Income And Expense [Line Items] | |
MANUFACTURING FACILITY | NOTE 4. - MANUFACTURING FACILITY The Company’s manufacturing operations at its North Carolina factory began approaching production capacity during the six months ended June 30, 2018. The Company significantly expanded capacity during the second and third quarters of 2017 in order to fulfill anticipated new manufacturing contracts. In mid-May of 2017, the Company began the first phase of a manufacturing contract for an existing brand of filtered cigars under a new contract manufacturing agreement (the “New Agreement”) with a third-party and continued manufacturing a third-party MSA cigarette brand and other filtered cigars on a contract basis. The production volume under the New Agreement continued to increase during the first and second quarters of 2018, has resulted in an increase in the utilization of production capacity, required the hiring of additional personnel, and investment in additional manufacturing equipment for the factory. Raw material component costs, direct manufacturing costs, and an overhead allocation are included in the Cost of goods sold and Finished goods inventory. General and administrative expenses of the factory amounted to $318,511 and $629,439 for the three and six months ended June 30, 2018, respectively ($215,941 and $334,691 for the three and six months ended June 30, 2017, respectively). |
MACHINERY AND EQUIPMENT
MACHINERY AND EQUIPMENT | 6 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
MACHINERY AND EQUIPMENT | NOTE 5. - MACHINERY AND EQUIPMENT Machinery and equipment at June 30, 2018 and December 31, 2017 consisted of the following: Useful Life June 30, 2018 December 31, 2017 Cigarette manufacturing equipment 3 - 10 years $ 4,522,479 $ 4,302,299 Office furniture, fixtures and equipment 5 years 135,909 110,499 Laboratory equipment 5 years 86,609 32,193 Leasehold improvements 6 years 163,359 106,429 4,908,356 4,551,420 Less: accumulated depreciation 1,491,194 1,235,373 Machinery and equipment, net $ 3,417,162 $ 3,316,047 Depreciation expense was $131,294 and $255,822 for the three and six months ended June 30, 2018, respectively ($88,464 and $176,585 for the three and six months ended June 30, 2017, respectively). |
INVESTMENT
INVESTMENT | 6 Months Ended |
Jun. 30, 2018 | |
Equity Method Investments and Joint Ventures [Abstract] | |
INVESTMENT | NOTE 6. - INVESTMENT The Company (through its wholly-owned subsidiary, Botanical Genetics), holds a 14.8% equity investment in Anandia Laboratories, Inc., a Canadian plant biotechnology company (“Anandia”). At June 30, 2018 and December 31, 2017, the Company’s investment balance in Anandia was $7,513,581 and $1,366,493, respectively, and is classified within Other assets on the accompanying Consolidated Balance Sheets. During the first quarter of 2018, the Company began accounting for its equity investment in Anandia in accordance with Financial Accounting Standards Board ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This guidance changes how entities account for equity investments that do not result in consolidation and are not accounted for under the equity method of accounting. Under ASU 2016-01, the Company is required to measure its investment in Anandia at fair value at the end of each reporting period and recognize changes in fair value in net income. s available for equity investments that do not have readily determinable fair values, however; the exception requires the Company to adjust the carrying amount for impairment and observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Accordingly, and as a result of, an equity issuance by Anandia during December of 2017 and January of 2018 (orderly transactions), the Company recorded an unrealized gain on its investment in Anandia in the amount of $6,147,088 during the three months ended March 31, 2018. There was no change in the fair value of the Company’s equity investment in Anandia during the three months ended June 30, 2018. During the first quarter of 2017, a dilutive event occurred bringing the Company’s investment percentage in Anandia below 20%, a threshold for the use of the equity method of accounting that the Company had previously used to account for its investment in Anandia. Accordingly, the Company discontinued applying the equity method of accounting for its investment in Anandia. After the dilutive event, the Company accounted for its investment in Anandia under the cost method of accounting until it adopted ASU 2016-01, as described above. The Company’s gain on the investment in Anandia was $346,180 for the three months ended March 31, 2017. On July 15, 2018, Anandia signed a binding Arrangement Agreement to be acquired by Aurora Cannabis, Inc. (“Aurora”), a Canadian company (TSX: ACB.TO). When this transaction closes, which is expected to occur in August of 2018, Aurora will acquire 100% of the outstanding shares of Anandia in exchange for (i) free trading shares of Aurora common stock based on the 20-day volume weighted average trading price of the Aurora stock for the 20 trading days immediately prior to June 11, 2018, and (ii) warrants with a five-year term to purchase one-half of a share of Aurora common stock for each whole share of Aurora common stock received as part of the transaction. The number and value of the shares of Aurora common stock and warrants that will be issued to 22nd Century in consideration for our Company’s approximately 14.8% equity ownership of Anandia will not be known until the closing of the transaction, which is currently scheduled to occur in August 2018. There is no guarantee that the transaction will be consummated. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | NOTE 7. – FAIR VALUE MEASUREMENTS 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 following table presents information about our assets and liabilities measured at fair value at June 30, 2018 and December 31, 2017, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value: Asset and Liabilities at Fair Value As of June 30, 2018 Level 1 Level 2 Level 3 Total Assets Cash equivalents: Certificate of deposit $ - $ 3,000,000 $ - $ 3,000,000 Short-term investment securities: Money market funds 5,272,629 - - 5,272,629 Corporate bonds - 27,610,232 - 27,610,232 Commercial paper - 2,443,160 - 2,443,160 U.S. treasury securities - 5,985,640 - 5,985,640 U.S. government agency bonds - 8,769,352 - 8,769,352 Total cash equivalents and short-term investment securities $ 5,272,629 $ 47,808,384 $ - $ 53,081,013 Liabilities Warrant liability $ - $ - $ 167,779 $ 167,779 Asset and Liabilities at Fair Value As of December 31, 2017 Level 1 Level 2 Level 3 Total Assets Cash equivalents: Certificate of deposit $ - $ 3,000,000 $ - $ 3,000,000 Short-term investment securities: Certificates of deposit - 6,000,000 - 6,000,000 Money market funds 41,526,540 - - 41,526,540 Corporate bonds 9,450,933 - 9,450,933 U.S. government agency bonds - 1,998,040 - 1,998,040 Total cash equivalents and short-term investment securities $ 41,526,540 $ 20,448,973 $ - $ 61,975,513 Liabilities Warrant liability $ - $ - $ 216,490 $ 216,490 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. |
NOTE PAYABLE FOR LICENSE FEE
NOTE PAYABLE FOR LICENSE FEE | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
NOTE PAYABLE FOR LICENSE FEE | NOTE 8. – NOTE PAYABLE FOR LICENSE FEE On June 22, 2018, the Company entered into the Second Amendment to the License Agreement (the “Second Amendment”) with North Carolina State University (“NCSU”) that amended an original License Agreement between the Company and NCSU, dated December 8, 2015, and the First Amendment, dated February 14, 2018, to the original License Agreement. Under the terms of the Second Amendment, the Company is obligated to pay NCSU milestone payments totaling $1,200,000, of which amount $500,000 was payable upon execution of the Second Amendment, $400,000 will be payable on the first anniversary of the execution of the Second Amendment, and $300,000 will be payable on the second anniversary of the execution of the Second Amendment. The Company has recorded the present value of the obligations under the Second Amendment as a note payable that originally amounted to $1,175,226. After the initial payment of $500,000, the balance remaining as of June 30, 2018 amounted to $675,226, with $390,016 and $285,210 reported as current and long-term portion of the note payable, respectively, on the Company’s Consolidated Balance Sheets. The cost of the of acquired license amount to $1,175,226 and is included in Intangible assets, net on the Company’s Consolidated Balance Sheets, and will be amortized on a straight-line basis over the last-to-expire patent, which is expected to be in 2036. |
WARRANTS FOR COMMON STOCK
WARRANTS FOR COMMON STOCK | 6 Months Ended |
Jun. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
WARRANTS FOR COMMON STOCK | NOTE 9. - WARRANTS FOR COMMON STOCK At June 30, 2018, the Company had outstanding warrants to purchase 11,387,932 shares of common stock of the Company, of which warrants to purchase 94,721 shares contain an anti-dilution feature. In July of 2018, the 94,721 warrants were exercised on a cashless basis resulting in the issuance of 63,832 shares of the Company’s common stock. During the three and six months ended June 30, 2018, warrant holders exercised 0 and 700,148 warrants on a cashless basis During the year ended December 31, 2017, the Company issued 11,293,211 warrants in conjunction with the June 2017 warrant exchange agreements. These warrants have an exercise price equal to $2.15 per share and are exercisable for a period of six months from the date of issuance for a period of five (5) years. See Note 3 for additional details. During the year ended December 31, 2017, warrant holders exercised 12,763,238 warrants, with 1,286,277 of such warrants being exercised on a cashless basis Additionally, 223,814 warrants expired unexercised during the year ended December 31, 2017. Outstanding warrants at June 30, 2018 consisted of the following: Warrant Description Number of Warrants Exercise Price Expiration August 2012 convertible NP warrants (1) (2) 94,721 $ 0.9310 August 8, 2018 June 2017 warrants pursuant to warrant exercise agreements 11,293,211 $ 2.1500 December 20, 2022 Total warrants outstanding 11,387,932 (1) Includes anti-dilution features. (2) Exercised on a cashless basis in July of 2018. 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. The following table is a roll-forward summary of the warrant liability since December 31, 2016: Fair value at December 31, 2016 $ 58,681 Loss as a result of change in fair value 157,809 Fair value at December 31, 2017 216,490 Gain as result of change in fair value (48,711 ) Fair value at June 30, 2018 $ 167,779 The aggregate net gain (loss) as a result of the Company’s warrant liability for the three and six months ended June 30, 2018 amounted to $0 and $48,711, respectively (the aggregate net loss for the three and six months ended June 30, 2017 amounted to $77,583 and $82,927, respectively), which are included in Other income (expense) under Warrant liability gain (loss) - net in the accompanying Consolidated Statements of Comprehensive Loss. The following table summarizes the Company’s warrant activity since December 31, 2016: Number of Warrants Warrants outstanding at December 31, 2016 13,781,921 Warrants exercised during 2017 (1,470,027 ) Warrants expired during 2017 (223,814 ) Warrants issued pursuant to June 2017 warrant exercise agreements 11,293,211 Warrants exercised pursuant to June 2017 warrant exercise agreements (11,293,211 ) Warrants outstanding at December 31, 2017 12,088,080 Warrants exercised during 2018 (700,148 ) Warrants outstanding at June 30, 2018 11,387,932 Composition of outstanding warrants: Warrants containing anti-dilution feature 94,721 Warrants without anti-dilution feature 11,293,211 11,387,932 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 10. - COMMITMENTS AND CONTINGENCIES License agreements and sponsored research – Under its exclusive worldwide license agreement with North Carolina State University (“NCSU”), the Company is required to pay minimum annual royalty payments, which are credited against running royalties on sales of licensed products. The minimum annual royalty is $225,000. The license agreement continues through the life of the last-to-expire patent, which is expected to be 2022. The license agreement also requires a milestone payment of $150,000 upon FDA approval or clearance of a product that uses the NCSU licensed technology. The Company is also responsible for reimbursing NCSU for actual third-party patent costs incurred. These costs vary from year to year and the Company has certain rights to direct the activities that result in these costs. During the three and six months ended June 30, 2018, the aggregate costs incurred related to capitalized patent costs and patent maintenance expense amounted to $4,845 and $34,107, respectively ($4,866 and $31,709 for the three and six months ended June 30, 2017, respectively). 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. Additionally, the License calls for the Company to pay NCSU a non-refundable, non-creditable minimum annual royalty beginning on December 31, 2018 in the amount of $10,000. The minimum annual royalty payment increases to $15,000 in 2019, $25,000 in 2020 and 2021, and $50,000 per year thereafter for the remaining term of the License. The Company is also responsible for reimbursing NCSU for actual third-party patent costs incurred. During the three and six months ended June 30, 2018, the aggregate costs incurred related to capitalized patent costs and patent maintenance expense amounted to $79 and $79, respectively ($199 and $29,866 for the three and six months ended June 30, 2017). This License continues through the life of the last-to-expire patent, expected to be in 2036. 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 over the two-year term of the Agreement, which grants certain licensed rights to the Company. The Company had extended the Agreement through January 31, 2017 at an additional cost of $85,681. In February 2018, the Company finalized an additional extension to this Agreement through April 30, 2018 at a cost of $88,344. . License agreements - On June 22, 2018, the Company entered into the Second Amendment to the License Agreement (the “Second Amendment”) with NCSU that amended an original License Agreement between the Company and NCSU, dated December 8, 2015. Under the terms of the Second Amendment, the Company is obligated to pay NCSU a non-refundable, non-creditable license fee of $1,200,000. The license fee is payable in accordance with a note payable more fully described in Note 8 – Note Payable for License Fee. The present value of the payments in the amount of $1,175,226 are included in Intangible assets, net on the Company’s Consolidated Balance Sheets, and will be amortized on a straight-line basis over the last-to-expire patent, which is expected to be in 2036. 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. The Precision License continues through the life of the last-to-expire patent, which is expected to be in 2028. 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, and the Company must pay to NCSU an additional non-refundable, non-creditable lump sum fee of $75,000 upon issuance of a U.S. utility patent included in the patent rights. A patent was issued during the first quarter of 2017 under this clause, and accordingly, the $75,000 was due and payable to NCSU. The $75,000 cost was included in Research and development costs on the Company’s Consolidated Statements of Operations for the three months ended March 31, 2017 Additionally, the License Agreement calls for the Company to pay NCSU three non-refundable, non-creditable license maintenance fees in the amount of $15,000 per annum in each of December 2015, 2016 and 2017. The Company is obligated to pay to NCSU an annual minimum royalty fee of $20,000 in 2018, $30,000 in 2019, and $50,000 per year thereafter for the remaining term of the License Agreement. The Company is also responsible for reimbursing NCSU for actual third-party patent costs incurred. During the three and six months ended June 30, 2018, the aggregated costs incurred related to capitalized patent costs and patent maintenance expense amounted to $4,995 and $9,465, respectively ($5,173 and $24,242 for the three and six months ended June 30, 2017, respectively). The License Agreement continues through the life of the last-to-expire patent, which is expected to be in 2034. 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, an annual license fee of $10,000, the payment of patent filing and maintenance costs, a running royalty on future net sales of products made from such sublicensed intellectual property, and a sharing of future sublicensing consideration received from sublicensing to third-parties such sublicensed intellectual property. The Anandia Sublicense continues through the life of the last-to- expire patent, which is expected to be in 2035. Other research agreements - Further, the Company has entered into the following three agreements relating to sponsored research. Costs associated with these agreements are expensed when incurred in Research and development costs on the Company’s Consolidated Statements of Operations and Comprehensive Loss. 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 hemp/ plant. The Agreement had an initial term of twelve (12) months from the date of the Agreement and be extended at the sole option of the Company for two (2) additional periods of twelve (12) months each (of which the option on the first twelve (12) month period has been extended). The Company paid Anandia $379,800 over the initial term of the Agreement. On March 13, 2017, the Company entered into Amendment No. 1 to the Agreement (the “Amendment”). The Amendment has a term of twelve (12) months and calls for the Company to pay Anandia a total of $785,100 in equal monthly installments of $65,425. During the three and six months ended June 30, 2018, expenses related to the Agreement amounted to $0 and $130,850, respectively ($196,275 and $261,700 for the three and six months ended June 30, 2017, respectively), and are included in Research and development costs on the Company’s Consolidated Statements of Comprehensive Loss. Under the terms of the Agreement, the Company will have co-exclusive worldwide rights with Anandia to all the intellectual property resulting from the sponsored research between the Company and Anandia. The party that commercializes such intellectual property in the future will pay royalties in varying amounts to the other party, with the amount of such royalties being dependent upon the type of products that are commercialized in the future. If either party sublicenses such intellectual property to a third-party, then the Company and Anandia will share equally in such sublicensing consideration. The Amendment expired on March 12, 2018 and the Company is in negotiations with Anandia regarding exercising its option on the second of the additional twelve (12) month extensions. 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 over a three-year period with UVA to create unique industrial hemp plants with guaranteed levels of THC below the legal limits and optimize other desirable hemp plant characteristics to improve the plant’s suitability for growing in Virginia and other legacy tobacco regions of the United States. This work with UVA will also involve the development and study of medically important cannabinoids to be extracted by UVA from the Company’s hemp plants. UVA and the Company will conduct all activities in this scientific collaboration within the parameters of state and federal licenses and permits held by UVA for such work. The agreements with UVA and UVA LVG grant the Company exclusive rights to commercialize all results of the collaboration in consideration of royalty payments by the Company to UVA LVG. During the three and six months ended June 30, 2018, expenses related to the agreements amounted to $76,211 and $180,178, respectively ($70,729 and $111,574 for the three and six months ended June 30, 2017, respectively), and are included in Research and development costs on the Company’s Consolidated Statements of Operations and Comprehensive Loss. On May 1, 2018, the Company entered into a University Growing and Evaluation Agreement (the “Agreement”) with the University of Kentucky Research Foundation (“UKRF”) whereby UKRF will provide the Company with services relating to growing certain tobacco breeding lines of the Company. Under the Agreement, the Company is obligated to pay $75,000 to UKRF in three installments of $25,000 each through January 31, 2019. During the second quarter of 2018, the Company recorded a R&D expense related to this Agreement in the amount of $25,000. Lease Agreements Year ended December 31, 2018 - $ 85,000 Year ended December 31, 2019 - $ 169,000 Year ended December 31, 2020 - $ 169,000 Year ended December 31, 2021 - $ 141,000 On August 14, 2017, the Company entered into a lease for warehouse space in North Carolina to store and operate tobacco leaf processing equipment, to store the Company’s proprietary tobacco leaf and to store inventory used in the Company’s contract manufacturing business. The lease calls for a monthly payment of $4,665, expires on August 14, 2018 and contains twelve-month renewal options as long as the Company continues to lease the warehouse. Future minimum lease payments will be approximately $56,000 per year for each subsequent year the warehouse space is leased by the Company. On October 4, 2017, the Company entered a lease for office space at a location in Williamsville, New York with an initial three-year term and with a monthly lease payment of $6,375. The Company moved into the leased space in February of 2018. Future minimum annual lease payments under the new office lease will be approximately $38,000, $76,000 and $76,000 for the years December 31, 2018, 2019 and 2020, respectively. On May 1, 2016, the Company entered into a sublease for laboratory space in Buffalo, New York. The sublease called for a monthly payment of $1,471 through April 30, 2018. Additionally, on February 1, 2017, the Company entered into an amendment to the initial sublease calling for the sublease of additional lab space at a cost of $1,219 per month, bringing the total monthly sublease obligation to $2,690. On April 26, 2017, the Company entered into an amendment to the sublease to extend the term of the sublease for an additional twelve (12) months, commencing on May 1, 2017 at a total cost of $2,770 per month for the total lease obligation. On February 21, 2018, the Company entered into a new sublease amendment that increased the lab space, extended the sublease term through June 30, 2019 and calls for a monthly sublease payment of $5,706 beginning on March 1, 2018. Future minimum sublease payments for the years December 31, 2018 and 2019 will be approximately $34,000 and $34,000, respectively. Modified Risk Tobacco Product Application (“MRTP Application”) Brand A 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 On May 19, 2016, Crede filed a motion for preliminary injunction, asking the SDNY Court to require the Company to issue 2,077,555 shares of its common stock to Crede under the exchange provision of the Tranche 1A warrant. After conducting an evidentiary hearing on this motion on June 14, 2016, the SDNY Court denied Crede’s motion and held, among other things, that Crede did not prove the potential for irreparable harm or a likelihood of success on its claim for such 2,077,555 shares under the Tranche 1A warrant, and that there was a likelihood that Crede had violated the activity restrictions of the Tranche 1A warrant, which would bar Crede’s claim for such shares from the Company. 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 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 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. On December 28, 2017, the SDNY Court issued its decision in response to the Company’s motion for summary judgement, with such decision (i) granting the Company’s motion for summary judgement relating to Count II of the Amended Compliant, which Crede’s claim to rescind the prior securities purchase agreement, dated September 17, 2014, and Crede’s claim for the return of any money from the Company under that securities purchase agreement, and (ii) denying the Company’s motion for summary judgement on the remaining Counts of the Amended Compliant. In this decision, the SDNY Court also found that Crede breached the Activity Restrictions as defined and contained in the Tranche 1A warrant. As a result of this decision by the SDNY Court, the parties with discovery in the case in preparation for a trial on the remaining Counts III, IV and V of the Amended Complaint, which relate to Crede’s claim (i) to exchange the Tranche 1A warrant for 2,077,555 shares of our common stock even though Crede breached the Activity Restrictions contained in the Tranche 1A warrant, (ii) for an unquantified additional amount of shares of our common stock that allegedly still remains under the Tranche 1A warrant even though Crede breached the Activity Restrictions contained in the Tranche 1A warrant; and (iii) for alleged damages for the alleged breach of the Tranche 1A warrant in an amount in excess of $18 million, plus costs and interest, even though Crede breached the Activity Restrictions contained in the Tranche 1A warrant. On July 13, 2018, the SDNY Court denied Crede’s request to extend the discovery deadline. As a result of such ruling, the discovery in the Crede case has now been concluded. On July 20, 2018, the SDNY Court granted the request by the Company to file a motion for partial summary judgment to substantially limit the various damage claims by Crede, with the remaining schedule in the case being deferred until after the SDNY Court rules on such motion. The Company is to file its partial summary judgment motion by August 20, 2018, after which Crede is required to file its response by September 20, 2018, after which the Company will then be required to file its reply to Crede’s response by October 14, 2018. The Company believes 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. |
LOSS PER COMMON SHARE
LOSS PER COMMON SHARE | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
LOSS PER COMMON SHARE | NOTE 11. - LOSS PER COMMON SHARE The following table sets forth the computation of basic and diluted loss per common share for the three-month periods ended June 30, 2018 and 2017 : June 30, 2018 June 30, 2017 Net loss attributed to common shareholders $ (6,738,652 ) $ (3,355,624 ) Denominator for basic loss per share-weighted average shares outstanding 124,311,087 91,577,688 Effect of dilutive securities: Warrants and options outstanding - - Denominator for diluted loss per common share-weighted average shares adjusted for dilutive securities 124,311,087 91,577,688 Net loss per common share - basic and diluted $ (0.05 ) $ (0.04 ) The following table sets forth the computation of basic and diluted loss per common share for the six-month periods ended June 30, 2018 and 2017 : June 30, 2018 June 30, 2017 Net loss attributed to common shareholders $ (5,352,164 ) $ (5,976,901 ) Denominator for basic loss per share-weighted average shares outstanding 124,166,321 91,165,770 Effect of dilutive securities: Warrants and options outstanding - - Denominator for diluted loss per common share-weighted average shares adjusted for dilutive securities 124,166,321 91,165,770 Net loss per common share - basic and diluted $ (0.04 ) $ (0.07 ) Dilutive securities outstanding at June 30, 2018 and 2017 are presented below. Securities outstanding were excluded from the computation of loss per share because they would have been anti-dilutive. June 30, 2018 June 30, 2017 Warrants 11,387,932 12,445,247 Options 8,756,560 6,965,688 20,144,492 19,410,935 |
EQUITY BASED COMPENSATION
EQUITY BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
EQUITY BASED COMPENSATION | NOTE 12. – 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 the authorization of 5,000,000 shares thereunder. On April 29, 2017, the stockholders approved an amendment to the OIP to increase the number of shares available for issuance by an additional 5,000,000 shares. The OIP allows for the granting of equity and cash incentive awards to eligible individuals over the life of the OIP, including the issuance of up to an aggregate of 10,000,000 shares of the Company’s common stock pursuant to awards under the OIP. The OIP has a term of ten years and is administered by the Compensation Committee of the Company’s Board of Directors to determine the various types of incentive awards that may be granted to recipients under and the number of shares of common stock to underlie each such award under the OIP. As of June 30, 2018, the Company had available 1,802,115 shares remaining for future awards under the OIP. During the six months ended June 30, 2018, the Company issued stock option awards from the OIP for 1,431,841 shares to eligible individuals. options issued have vesting periods ranging from one to three years from the date of the award, and stock options vest upon the attainment of various milestones . During the six months ended June 30, 2017, the Company issued stock option awards from the OIP for 1,372,000 shares to eligible individuals having vesting periods ranging from one to three years from the date of the award. All stock option awards were valued using the Black-Scholes option-pricing model on the date of the award. For the three and six months ended June 30, 2018, the Company recorded compensation expense related to stock option awards granted under the OIP of $1,682,228 and $2,246,104, respectively ($154,004 and $322,983 for the three and six months ended June 30, 2017, respectively). As of June 30, 2018, unrecognized compensation expense related to non-vested stock options amounted to approximately $3,644,000, which is expected to be recognized as follows: $943,000, $1,113,000, $698,000 and $98,000 during 2018, 2019, 2020 and 2021, respectively. Approximately $792,000 of the unrecognized compensation expense relates to previously issued stock options, with the vesting of such stock options being based on the achievement of a certain . The Company’s Senior Vice President of Science and Regulatory Affairs, James E. Swauger, Ph.D., died on April 19, 2018. As a result, stock options to purchase a total of 900,000 shares of the Company’s common stock with an exercise price of $2.12 per share granted to Dr. Swauger on October 31, 2017 vested upon his death and are exercisable by Dr. Swauger’s beneficiaries for a period of one year from the date of his death. Additional stock options to purchase a total of 300,000 shares of the Company’s common stock with an exercise price of $2.12 per share granted to Dr. Swauger on October 31, 2017 were to vest based on the achievement of certain milestones by Dr. Swauger, and accordingly, will not vest and were cancelled. The unrecognized fair value of Dr. Swauger’s subject stock options to purchase 900,000 shares at the time of his death was $1,226,825 and was recognized as equity-based compensation during the second quarter of 2018. The unrecognized fair value of Dr. Swauger’s subject stock options to purchase 300,000 shares was $443,006. 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, 2018 and 2017: 2018 2017 Risk-free interest rate (weighted average) 2.97 % 2.12 % Expected dividend yield 0 % 0 % Expected stock price volatility 90 % 90 % Expected life of options (weighted average) 5.55 years 5.13 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. A summary of all stock option activity since December 31, 2016 is as follows: Weighted Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Options Price Term Value Outstanding at December 31, 2016 5,650,679 $ 1.04 Granted in 2017 2,692,000 $ 1.76 Exercised in 2017 (85,988 ) $ 0.79 Expired in 2017 (100,000 ) $ 1.43 Outstanding at December 31, 2017 8,156,691 $ 1.28 Granted in 2018 1,431,841 $ 2.66 Exercised in 2018 (327,781 ) $ 0.81 Expired / cancelled in 2018 (504,191 ) $ 1.71 Outstanding at June 30, 2018 8,756,560 $ 1.50 6.2 years $ 8,516,505 Exercisable at June 30, 2018 5,237,804 $ 1.32 4.8 years $ 5,693,556 The weighted average grant date fair value of options issued during the six months ended June 30, 2018 and 2017 was $1.80 and $0.97, respectively. The total fair value of options that vested during the six months ended June 30, 2018 and 2017 amounted to $2,306,867 and $684,265, respectively. There were 327,781 options exercised on a cash and cashless basis during the six months ended June 30, 2018 resulting in the issuance of 315,540 shares and proceeds of $217,500 to the Company. There were 56,991 options exercised on a cashless basis during the six months ended June 30, 2017 resulting in the issuance of 34,953 shares of the Company’s common stock. |
NATURE OF BUSINESS AND SUMMAR20
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation - Operating results for the six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. The balance sheet as of December 31, 2017 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, 2017 audited consolidated financial statements and the notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the Securities and Exchange Commission on March 7, 2018. |
Principles of Consolidation | Principles of Consolidation - |
Nature of Business | Nature of Business - manufacturing business in North Carolina. Botanical Genetics is a wholly-owned subsidiary of 22nd Century Group and was incorporated to facilitate an investment in Anandia Laboratories, Inc. more fully described in Note 6. |
Reclassifications | Reclassifications – |
Preferred stock authorized | Preferred stock authorized - |
Concentration of Credit Risk | Concentration of Credit Risk - |
Cash and cash equivalents | Cash and cash equivalents |
Short-term investment securities | Short-term investment securities . The Company views its available-for-sale securities as available for use in current operations regardless of the stated maturity date of the security. The Company’s investment policy states that all investment securities must have a maximum maturity of twenty-four (24) months or less and the maximum weighted maturity of the investment securities must not exceed twelve (12) months. Unrealized gains and losses on short-term investment securities (the adjustment to fair value) are recorded as comprehensive income or loss on the Company’s Consolidated Statements of Comprehensive Loss. Realized gains and losses on short-term investment securities are recorded in the other income (expense) portion of the Company’s Consolidated Statements of Operations and Comprehensive Loss. Interest earned, net of investment fees, on the short-term investment securities are included in interest income. |
Accounts receivable | Accounts receivable |
Inventory | Inventory - June 30, December 31, 2018 2017 Inventory - tobacco leaf $ 1,582,976 $ 1,552,474 Inventory - finished goods Cigarettes and filtered cigars 205,617 289,004 Inventory - raw materials Cigarette and filtered cigar components 1,314,374 1,636,059 3,102,967 3,477,537 Less: inventory reserve 160,000 195,000 $ 2,942,967 $ 3,282,537 |
Machinery and equipment | Machinery and equipment - |
Intangible Assets | Intangible Assets - June 30, December 31, 2018 2017 Intangible assets, net Patent and trademark costs $ 6,695,610 $ 6,327,467 Less: accumulated amortization 2,806,932 2,517,465 Patent and trademark costs, net 3,888,678 3,810,002 License fees, net (see Note 10) 2,625,226 1,450,000 Less: accumulated amortization 375,602 326,591 License fees, net 2,249,624 1,123,409 MSA signatory costs 2,202,000 2,202,000 License fee for predicate cigarette brand 300,000 300,000 $ 8,640,302 $ 7,435,411 Amortization expense relating to the above intangible assets for the three and six months ended June 30, 2018 and 2017 amounted to $170,925 and $338,477, respectively ($143,010 and $283,898 for the three and six months ended June 30, 2017, respectively). The estimated annual average amortization expense for the next five years is approximately $355,000 for patent costs and $98,000 for license fees. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets - |
Income Taxes | Income Taxes - 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, 2018 and December 31, 2017. The Company’s federal and state tax returns for the years ended December 31, 2014 through December 31, 2016 are currently open to audit under the statutes of limitations. There were no pending audits as of June 30, 2018. The Tax Cuts and Jobs Act of 2017 (the “TCJA”) was signed into law on December 22, 2017. The TCJA includes significant changes to the U.S. corporate income tax system, including a Federal corporate rate reduction from 35% to 21%. In accordance with a question and answer document issued by the Financial Accounting Standards Board (“FASB”) staff on January 18, 2018, the Company is applying the guidance in Securities and Exchange Commission Staff Accounting Bulletin (“SAB”) 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act, which provides guidance on applying FASB Accounting Standards Codification (“ASC”) 740, Income Taxes, if the accounting for certain income tax effects of the TCJA are incomplete by the time the financial statements are issued for a reporting period. Specifically, SAB 118 permits companies to use reasonable estimates and provisional amounts for some line items for taxes when preparing year-end 2017 financial statements. The Company completed the accounting under the TCJA, and accordingly, has reported the effects in the Company’s consolidated financial statements for the year ended December 31, 2017. |
Stock Based Compensation | Stock Based Compensation - |
Revenue Recognition | Revenue Recognition - The Company recognizes revenue when it satisfies a performance obligation by transferring control of the product to a customer. The Company’s customer contracts consist of obligations to manufacture the customer’s branded filtered cigars and cigarettes. For certain contracts, the performance obligation is satisfied over time as the Company , due to contract restrictions, it does not have an alternative use of the product, and it has an enforceable right to payment as the product is manufactured. The Company recognizes revenue under those contracts at the unit price stated in the contract based on the units manufactured. The manufacturing process is completed on a daily basis and, therefore, there were no performance obligations partially satisfied at June 30, 2018. For the contract where the performance obligation is satisfied at a point in time, the Company recognizes revenue when the product is transferred to the customer. Revenue from the sale of the Company’s products is recognized net of cash discounts, sales returns and allowances. There was no allowance for discounts or returns and allowances at June 30, 2018 and December 31, 2017. The Company generally requires a down payment from its customers prior to commencement of manufacturing the product. Amounts received in advance of satisfying the performance obligations are recorded as deferred revenue. Customer payment terms vary depending on the terms of each customer contract, but payment is generally due prior to product shipment or within extended credit terms up to twenty-one (21) days after shipment. The Company’s net sales revenue is derived from customers located primarily in the United States of America and is disaggregated by the timing of revenue recognition. For the three and six months ended June 30, 2018, net sales revenue from products transferred over time amounted to approximately $4,569,000 and $8,492,000, respectively, and net sales revenue from products transferred at a point in time amounted to approximately $2,346,000 and $4,539,000, respectively. |
Derivatives | Derivatives - Comprehensive Loss. 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 - |
Advertising | Advertising . |
Income (Loss) Per Common Share | Loss Per Common Share - |
Commitment and Contingency Accounting | Commitment and Contingency Accounting - |
Use of Estimates | Use of Estimates - |
Fair value of financial instruments | Fair Value of Financial Instruments - |
Investments | Investments - entity, and such equity investment does not have a readily determinable market value, then the Company accounts for such equity investments in accordance with FASB ASU 2016-01, which the Company adopted in the first quarter of 2018 with respect to the Company’s investment in Anandia Laboratories, Inc. in Canada (see Note 6 for a further discussion). The Company used the cost method of accounting with respect to its investment in Anandia Laboratories for prior periods. |
Accounting Pronouncements | Accounting Pronouncements - |
NATURE OF BUSINESS AND SUMMAR21
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Inventory, Current | Inventories at June 30, 2018 and December 31, 2017 consisted of the following: June 30, December 31, 2018 2017 Inventory - tobacco leaf $ 1,582,976 $ 1,552,474 Inventory - finished goods Cigarettes and filtered cigars 205,617 289,004 Inventory - raw materials Cigarette and filtered cigar components 1,314,374 1,636,059 3,102,967 3,477,537 Less: inventory reserve 160,000 195,000 $ 2,942,967 $ 3,282,537 |
Schedule of Intangible Assets and Goodwill | Total intangible assets at June 30, 2018 and December 31, 2017 consisted of the following: June 30, December 31, 2018 2017 Intangible assets, net Patent and trademark costs $ 6,695,610 $ 6,327,467 Less: accumulated amortization 2,806,932 2,517,465 Patent and trademark costs, net 3,888,678 3,810,002 License fees, net (see Note 10) 2,625,226 1,450,000 Less: accumulated amortization 375,602 326,591 License fees, net 2,249,624 1,123,409 MSA signatory costs 2,202,000 2,202,000 License fee for predicate cigarette brand 300,000 300,000 $ 8,640,302 $ 7,435,411 |
MACHINERY AND EQUIPMENT (Tables
MACHINERY AND EQUIPMENT (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
MACHINERY AND EQUIPMENT | Machinery and equipment at June 30, 2018 and December 31, 2017 consisted of the following: Useful Life June 30, 2018 December 31, 2017 Cigarette manufacturing equipment 3 - 10 years $ 4,522,479 $ 4,302,299 Office furniture, fixtures and equipment 5 years 135,909 110,499 Laboratory equipment 5 years 86,609 32,193 Leasehold improvements 6 years 163,359 106,429 4,908,356 4,551,420 Less: accumulated depreciation 1,491,194 1,235,373 Machinery and equipment, net $ 3,417,162 $ 3,316,047 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities Measured at Fair Value | The following table presents information about our assets and liabilities measured at fair value at June 30, 2018 and December 31, 2017, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value: Asset and Liabilities at Fair Value As of June 30, 2018 Level 1 Level 2 Level 3 Total Assets Cash equivalents: Certificate of deposit $ - $ 3,000,000 $ - $ 3,000,000 Short-term investment securities: Money market funds 5,272,629 - - 5,272,629 Corporate bonds - 27,610,232 - 27,610,232 Commercial paper - 2,443,160 - 2,443,160 U.S. treasury securities - 5,985,640 - 5,985,640 U.S. government agency bonds - 8,769,352 - 8,769,352 Total cash equivalents and short-term investment securities $ 5,272,629 $ 47,808,384 $ - $ 53,081,013 Liabilities Warrant liability $ - $ - $ 167,779 $ 167,779 Asset and Liabilities at Fair Value As of December 31, 2017 Level 1 Level 2 Level 3 Total Assets Cash equivalents: Certificate of deposit $ - $ 3,000,000 $ - $ 3,000,000 Short-term investment securities: Certificates of deposit - 6,000,000 - 6,000,000 Money market funds 41,526,540 - - 41,526,540 Corporate bonds 9,450,933 - 9,450,933 U.S. government agency bonds - 1,998,040 - 1,998,040 Total cash equivalents and short-term investment securities $ 41,526,540 $ 20,448,973 $ - $ 61,975,513 Liabilities Warrant liability $ - $ - $ 216,490 $ 216,490 |
WARRANTS FOR COMMON STOCK (Tabl
WARRANTS FOR COMMON STOCK (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
Schedule Of Warrants Outstanding | Outstanding warrants at June 30, 2018 consisted of the following: Warrant Description Number of Warrants Exercise Price Expiration August 2012 convertible NP warrants (1) (2) 94,721 $ 0.9310 August 8, 2018 June 2017 warrants pursuant to warrant exercise agreements 11,293,211 $ 2.1500 December 20, 2022 Total warrants outstanding 11,387,932 (1) Includes anti-dilution features. (2) Exercised on a cashless basis in July of 2018. |
Roll-Forward of Warrant Liability from Intitial Valuation | The following table is a roll-forward summary of the warrant liability since December 31, 2016: Fair value at December 31, 2016 $ 58,681 Loss as a result of change in fair value 157,809 Fair value at December 31, 2017 216,490 Gain as result of change in fair value (48,711 ) Fair value at June 30, 2018 $ 167,779 |
Warrant Activity | The following table summarizes the Company’s warrant activity since December 31, 2016: Number of Warrants Warrants outstanding at December 31, 2016 13,781,921 Warrants exercised during 2017 (1,470,027 ) Warrants expired during 2017 (223,814 ) Warrants issued pursuant to June 2017 warrant exercise agreements 11,293,211 Warrants exercised pursuant to June 2017 warrant exercise agreements (11,293,211 ) Warrants outstanding at December 31, 2017 12,088,080 Warrants exercised during 2018 (700,148 ) Warrants outstanding at June 30, 2018 11,387,932 Composition of outstanding warrants: Warrants containing anti-dilution feature 94,721 Warrants without anti-dilution feature 11,293,211 11,387,932 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | The future minimum annual lease payments if the Company exercises each of the additional extensions are approximately as follows: Year ended December 31, 2018 - $ 85,000 Year ended December 31, 2019 - $ 169,000 Year ended December 31, 2020 - $ 169,000 Year ended December 31, 2021 - $ 141,000 |
LOSS PER COMMON SHARE (Tables)
LOSS PER COMMON SHARE (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Earnings Per Common Share | The following table sets forth the computation of basic and diluted loss per common share for the three-month periods ended June 30, 2018 and 2017 : June 30, 2018 June 30, 2017 Net loss attributed to common shareholders $ (6,738,652 ) $ (3,355,624 ) Denominator for basic loss per share-weighted average shares outstanding 124,311,087 91,577,688 Effect of dilutive securities: Warrants and options outstanding - - Denominator for diluted loss per common share-weighted average shares adjusted for dilutive securities 124,311,087 91,577,688 Net loss per common share - basic and diluted $ (0.05 ) $ (0.04 ) The following table sets forth the computation of basic and diluted loss per common share for the six-month periods ended June 30, 2018 and 2017 : June 30, 2018 June 30, 2017 Net loss attributed to common shareholders $ (5,352,164 ) $ (5,976,901 ) Denominator for basic loss per share-weighted average shares outstanding 124,166,321 91,165,770 Effect of dilutive securities: Warrants and options outstanding - - Denominator for diluted loss per common share-weighted average shares adjusted for dilutive securities 124,166,321 91,165,770 Net loss per common share - basic and diluted $ (0.04 ) $ (0.07 ) |
Schedule Outstanding Excluded from Computation Because they would have bee Anti-dilutive | Dilutive securities outstanding at June 30, 2018 and 2017 are presented below. Securities outstanding were excluded from the computation of loss per share because they would have been anti-dilutive. June 30, 2018 June 30, 2017 Warrants 11,387,932 12,445,247 Options 8,756,560 6,965,688 20,144,492 19,410,935 |
EQUITY BASED COMPENSATION (Tabl
EQUITY BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Fair Value Assumptions | The following assumptions were used for the six months ended June 30, 2018 and 2017: 2018 2017 Risk-free interest rate (weighted average) 2.97 % 2.12 % Expected dividend yield 0 % 0 % Expected stock price volatility 90 % 90 % Expected life of options (weighted average) 5.55 years 5.13 years |
Summary of All Stock Option Activity | A summary of all stock option activity since December 31, 2016 is as follows: Weighted Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Options Price Term Value Outstanding at December 31, 2016 5,650,679 $ 1.04 Granted in 2017 2,692,000 $ 1.76 Exercised in 2017 (85,988 ) $ 0.79 Expired in 2017 (100,000 ) $ 1.43 Outstanding at December 31, 2017 8,156,691 $ 1.28 Granted in 2018 1,431,841 $ 2.66 Exercised in 2018 (327,781 ) $ 0.81 Expired / cancelled in 2018 (504,191 ) $ 1.71 Outstanding at June 30, 2018 8,756,560 $ 1.50 6.2 years $ 8,516,505 Exercisable at June 30, 2018 5,237,804 $ 1.32 4.8 years $ 5,693,556 |
NATURE OF BUSINESS AND SUMMAR28
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Condensed Financial Statements, Captions [Line Items] | ||||||
Amortization of Intangible Assets | $ 170,925 | $ 143,010 | $ 338,477 | $ 283,898 | ||
Allowance for Doubtful Accounts Receivable | 0 | 0 | $ 0 | |||
Advertising Expense | 4,000 | $ 12,000 | 16,000 | $ 43,000 | ||
Transferred at Point in Time [Member] | ||||||
Condensed Financial Statements, Captions [Line Items] | ||||||
Revenue from Contract with Customer, Excluding Assessed Tax | 2,346,000 | 4,539,000 | ||||
Transferred over Time [Member] | ||||||
Condensed Financial Statements, Captions [Line Items] | ||||||
Revenue from Contract with Customer, Excluding Assessed Tax | 4,569,000 | 8,492,000 | ||||
Scenario, Plan [Member] | ||||||
Condensed Financial Statements, Captions [Line Items] | ||||||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | |||||
Patent and Trademarks [Member] | ||||||
Condensed Financial Statements, Captions [Line Items] | ||||||
Finite-Lived Intangible Assets, Amortization Expense, after Year Five | 355,000 | 355,000 | ||||
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 | 5 years | |||||
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 35.00% | |||||
Minimum [Member] | ||||||
Condensed Financial Statements, Captions [Line Items] | ||||||
Property, Plant and Equipment, Estimated Useful Lives | 3 years |
NATURE OF BUSINESS AND SUMMAR29
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Inventory [Line Items] | ||
Inventory - tobacco leaf | $ 1,582,976 | $ 1,552,474 |
Inventory - finished goods | ||
Cigarettes and filtered cigars | 205,617 | 289,004 |
Inventory - raw materials | ||
Cigarette and filtered cigar components | 1,314,374 | 1,636,059 |
Inventory - tobacco leaf, net | 3,102,967 | 3,477,537 |
Less: inventory reserve | 160,000 | 195,000 |
Inventory, Net | $ 2,942,967 | $ 3,282,537 |
NATURE OF BUSINESS AND SUMMAR30
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Intangible assets, net | ||
Intangible assets, net | $ 8,640,302 | $ 7,435,411 |
Patent and Trademark [Member] | ||
Intangible assets, net | ||
Patent and trademark costs | 6,695,610 | 6,327,467 |
Less: accumulated amortization | 2,806,932 | 2,517,465 |
Patent and trademark costs, net | 3,888,678 | 3,810,002 |
Licensing Agreements [Member] | ||
Intangible assets, net | ||
Patent and trademark costs | 2,625,226 | 1,450,000 |
Less: accumulated amortization | 375,602 | 326,591 |
Patent and trademark costs, net | 2,249,624 | 1,123,409 |
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 |
OCTOBER 2017 REGISTERED DIREC31
OCTOBER 2017 REGISTERED DIRECT OFFERING (Narrative) (Details) - October 2017 [Member] | Oct. 10, 2017USD ($)$ / sharesshares |
Stock Issued During Period, Shares, New Issues | shares | 20,570,000 |
Shares Issued, Price Per Share | $ / shares | $ 2.6250 |
Proceeds from Issuance of Common Stock | $ | $ 50,732,200 |
JUNE 2017 WARRANT EXERCISE AG32
JUNE 2017 WARRANT EXERCISE AGREEMENTS (Narrative) (Details) - USD ($) | 1 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Aug. 31, 2017 | Jul. 31, 2017 | Jun. 30, 2017 | Jun. 19, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Number Of Warrants Exercised | (1,470,027) | ||||||
Proceeds from Warrant Exercises | $ 6,169,212 | $ 0 | $ 6,212,712 | ||||
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 | $ 1 | $ 1 | |||
Number Of Warrants Exercised | 3,813,500 | 3,229,711 | |||||
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 | $ 1.45 | $ 1.45 | $ 1.45 | |||
Number Of Warrants Exercised | 1,895,052 | 2,354,948 | |||||
Proceeds from Warrant Exercises | $ 6,167,646 | ||||||
New Warrants [Member] | |||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 2.15 | ||||||
Fair Value of Warrants | $ 16,049,031 | ||||||
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 | 11,293,211 |
MANUFACTURING FACILITY (Narrati
MANUFACTURING FACILITY (Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Manufacturing Facility [Line Items] | ||||
General and Administrative Expense | $ 1,914,971 | $ 1,805,118 | $ 3,947,363 | $ 3,425,597 |
North Carolina Manufacturing Facility [Member] | ||||
Manufacturing Facility [Line Items] | ||||
General and Administrative Expense | $ 318,511 | $ 215,941 | $ 629,439 | $ 334,691 |
MACHINERY AND EQUIPMENT (Narrat
MACHINERY AND EQUIPMENT (Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Property, Plant and Equipment [Line Items] | ||||
Depreciation, Total | $ 131,294 | $ 88,464 | $ 255,822 | $ 176,585 |
MACHINERY AND EQUIPMENT (Detail
MACHINERY AND EQUIPMENT (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 4,908,356 | $ 4,551,420 |
Less: accumulated depreciation | 1,491,194 | 1,235,373 |
Machinery and equipment, net | 3,417,162 | 3,316,047 |
Cigarette manufacturing equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 4,522,479 | 4,302,299 |
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 | $ 135,909 | 110,499 |
Property, Plant and Equipment, Useful Life | 5 years | |
Laboratory equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 86,609 | 32,193 |
Property, Plant and Equipment, Useful Life | 5 years | |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Gross | $ 163,359 | $ 106,429 |
Property, Plant and Equipment, Useful Life | 6 years |
INVESTMENT (Narrative) (Details
INVESTMENT (Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Mar. 31, 2018 | Mar. 31, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Jul. 15, 2018 | Dec. 31, 2017 | |
Schedule of Equity Method Investments [Line Items] | ||||||
Unrealized Gain (Loss) on Investments | $ 6,147,088 | $ 346,180 | ||||
Subsequent Event [Member] | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Business Acquisition, Percentage of Voting Interests Acquired | 100.00% | |||||
Anandia [Member] | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Unrealized Gain (Loss) on Investments | $ 6,147,088 | $ 346,180 | ||||
Noncontrolling Interest, Ownership Percentage by Parent | 20.00% | |||||
Anandia Laboratories, Inc [Member] | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Noncontrolling Interest, Ownership Percentage by Parent | 14.80% | |||||
Anandia Laboratories, Inc [Member] | Other Assets [Member] | ||||||
Schedule of Equity Method Investments [Line Items] | ||||||
Equity Method Investments | $ 7,513,581 | $ 1,366,493 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
U.S. government agency bonds [Member] | ||
Assets | ||
Total cash equivalents and short-term investment securities | $ 8,769,352 | $ 1,998,040 |
US Treasury Securities [Member] | ||
Assets | ||
Total cash equivalents and short-term investment securities | 5,985,640 | |
Warrant Liability [Member] | ||
Liabilities | ||
Warrant liability | 167,779 | 216,490 |
Short-term investment securities [Member] | ||
Assets | ||
Total cash equivalents and short-term investment securities | 3,000,000 | 6,000,000 |
Corporate Bonds [Member] | ||
Assets | ||
Total cash equivalents and short-term investment securities | 27,610,232 | 9,450,933 |
Cash Equivalents and Short-term Investment Securities [Member] | ||
Assets | ||
Total cash equivalents and short-term investment securities | 53,081,013 | 61,975,513 |
Certificates of Deposit [Member] | ||
Assets | ||
Total cash equivalents and short-term investment securities | 3,000,000 | |
Money Market Funds [Member] | ||
Assets | ||
Total cash equivalents and short-term investment securities | 5,272,629 | 41,526,540 |
Commercial Paper [Member] | ||
Assets | ||
Total cash equivalents and short-term investment securities | 2,443,160 | |
Fair Value, Inputs, Level 1 [Member] | U.S. government agency bonds [Member] | ||
Assets | ||
Total cash equivalents and short-term investment securities | 0 | 0 |
Fair Value, Inputs, Level 1 [Member] | US Treasury Securities [Member] | ||
Assets | ||
Total cash equivalents and short-term investment securities | 0 | |
Fair Value, Inputs, Level 1 [Member] | Warrant Liability [Member] | ||
Liabilities | ||
Warrant liability | 0 | 0 |
Fair Value, Inputs, Level 1 [Member] | Short-term investment securities [Member] | ||
Assets | ||
Total cash equivalents and short-term investment securities | 0 | 0 |
Fair Value, Inputs, Level 1 [Member] | Corporate Bonds [Member] | ||
Assets | ||
Total cash equivalents and short-term investment securities | 0 | |
Fair Value, Inputs, Level 1 [Member] | Cash Equivalents and Short-term Investment Securities [Member] | ||
Assets | ||
Total cash equivalents and short-term investment securities | 5,272,629 | 41,526,540 |
Fair Value, Inputs, Level 1 [Member] | Certificates of Deposit [Member] | ||
Assets | ||
Total cash equivalents and short-term investment securities | 0 | |
Fair Value, Inputs, Level 1 [Member] | Money Market Funds [Member] | ||
Assets | ||
Total cash equivalents and short-term investment securities | 5,272,629 | 41,526,540 |
Fair Value, Inputs, Level 1 [Member] | Commercial Paper [Member] | ||
Assets | ||
Total cash equivalents and short-term investment securities | 0 | |
Fair Value, Inputs, Level 2 [Member] | U.S. government agency bonds [Member] | ||
Assets | ||
Total cash equivalents and short-term investment securities | 8,769,352 | 1,998,040 |
Fair Value, Inputs, Level 2 [Member] | US Treasury Securities [Member] | ||
Assets | ||
Total cash equivalents and short-term investment securities | 5,985,640 | |
Fair Value, Inputs, Level 2 [Member] | Warrant Liability [Member] | ||
Liabilities | ||
Warrant liability | 0 | 0 |
Fair Value, Inputs, Level 2 [Member] | Short-term investment securities [Member] | ||
Assets | ||
Total cash equivalents and short-term investment securities | 3,000,000 | 6,000,000 |
Fair Value, Inputs, Level 2 [Member] | Corporate Bonds [Member] | ||
Assets | ||
Total cash equivalents and short-term investment securities | 27,610,232 | 9,450,933 |
Fair Value, Inputs, Level 2 [Member] | Cash Equivalents and Short-term Investment Securities [Member] | ||
Assets | ||
Total cash equivalents and short-term investment securities | 47,808,384 | 20,448,973 |
Fair Value, Inputs, Level 2 [Member] | Certificates of Deposit [Member] | ||
Assets | ||
Total cash equivalents and short-term investment securities | 3,000,000 | |
Fair Value, Inputs, Level 2 [Member] | Money Market Funds [Member] | ||
Assets | ||
Total cash equivalents and short-term investment securities | 0 | 0 |
Fair Value, Inputs, Level 2 [Member] | Commercial Paper [Member] | ||
Assets | ||
Total cash equivalents and short-term investment securities | 2,443,160 | |
Fair Value, Inputs, Level 3 [Member] | U.S. government agency bonds [Member] | ||
Assets | ||
Total cash equivalents and short-term investment securities | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | US Treasury Securities [Member] | ||
Assets | ||
Total cash equivalents and short-term investment securities | 0 | |
Fair Value, Inputs, Level 3 [Member] | Warrant Liability [Member] | ||
Liabilities | ||
Warrant liability | 167,779 | 216,490 |
Fair Value, Inputs, Level 3 [Member] | Short-term investment securities [Member] | ||
Assets | ||
Total cash equivalents and short-term investment securities | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | Corporate Bonds [Member] | ||
Assets | ||
Total cash equivalents and short-term investment securities | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | Cash Equivalents and Short-term Investment Securities [Member] | ||
Assets | ||
Total cash equivalents and short-term investment securities | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | Certificates of Deposit [Member] | ||
Assets | ||
Total cash equivalents and short-term investment securities | 0 | |
Fair Value, Inputs, Level 3 [Member] | Money Market Funds [Member] | ||
Assets | ||
Total cash equivalents and short-term investment securities | 0 | $ 0 |
Fair Value, Inputs, Level 3 [Member] | Commercial Paper [Member] | ||
Assets | ||
Total cash equivalents and short-term investment securities | $ 0 |
NOTE PAYABLE FOR LICENSE FEE (N
NOTE PAYABLE FOR LICENSE FEE (Narrative) (Details) - USD ($) | 1 Months Ended | 6 Months Ended | ||
Jun. 22, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Aggregate Milestone Payments to be Made | $ 1,200,000 | |||
Milestone Payable Upon Execution of Second Amendment | 500,000 | |||
Milestone Payable on First Anniversary of Execution of Second Amendment | 400,000 | |||
Milestone Payable on Second Anniversary of Execution of Second Amendment | 300,000 | |||
Notes Payable | $ 1,175,226 | $ 675,226 | ||
Repayments of Notes Payable | 500,000 | $ 0 | ||
Notes Payable, Current | 390,016 | $ 0 | ||
Notes Payable, Noncurrent | $ 285,210 | $ 0 | ||
Finite-Lived Intangible Assets, Amortization Method | will be amortized on a straight-line basis over the last-to-expire patent, which is expected to be in 2036. |
WARRANTS FOR COMMON STOCK (Narr
WARRANTS FOR COMMON STOCK (Narrative) (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jul. 31, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Class of Warrant or Right [Line Items] | ||||||
Derivative, Gain (Loss) on Derivative, Net | $ 0 | $ (77,583) | $ 48,711 | $ (82,927) | ||
Number Of Warrants Exercised | (1,470,027) | |||||
Warrants Expired And Unexercised | 223,814 | |||||
Number Of Warrants Exercised On Cashless Basis | 1,286,277 | |||||
Number of noncash warrants exercised | 0 | 700,148 | ||||
Conversion of Stock, Shares Issued | 0 | 426,180 | 12,249,327 | |||
Common Stock [Member] | ||||||
Class of Warrant or Right [Line Items] | ||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 11,387,932 | 11,387,932 | ||||
Subsequent Event [Member] | ||||||
Class of Warrant or Right [Line Items] | ||||||
Number Of Warrants Exercised On Cashless Basis | 94,721 | |||||
Stock Issued During Period Shares Warrants Exercise | 63,832 | |||||
June Offering [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 | |||||
June 2017 Warrants Pursuant to Warrant One Exercise Agreements [Member] | ||||||
Class of Warrant or Right [Line Items] | ||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 2.1500 | $ 2.1500 | ||||
Number Of Warrants Issued | 11,293,211 | |||||
Warrant [Member] | ||||||
Class of Warrant or Right [Line Items] | ||||||
Number Of Warrants Exercised | 12,763,238 | |||||
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 |
WARRANTS FOR COMMON STOCK (Outs
WARRANTS FOR COMMON STOCK (Outstanding Warrants) (Details) - $ / shares | 6 Months Ended | |||
Jun. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||
Class of Warrant or Right [Line Items] | ||||
Number of warrants | 11,387,932 | 12,088,080 | 13,781,921 | |
August 2012 Convertible Notes Payable Warrants One [Member] | ||||
Class of Warrant or Right [Line Items] | ||||
Number of warrants | [1],[2] | 94,721 | ||
Exercise Price | [1],[2] | $ 0.9310 | ||
Expiration | [1],[2] | Aug. 8, 2018 | ||
June 2017 Warrants Pursuant to Warrant One Exercise Agreements [Member] | ||||
Class of Warrant or Right [Line Items] | ||||
Number of warrants | 11,293,211 | |||
Exercise Price | $ 2.1500 | |||
Expiration | Dec. 20, 2022 | |||
[1] | Exercised on a cashless basis in July of 2018. | |||
[2] | Includes anti-dilution features. |
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, 2018 | Dec. 31, 2017 | |
Class of Warrant or Right [Line Items] | ||
Warrant liability, Fair value | $ 216,490 | $ 58,681 |
Loss as a result of change in fair value | 157,809 | |
Gain as a result of change in fair value | (48,711) | |
Warrant liability, Fair value | $ 167,779 | $ 216,490 |
WARRANTS FOR COMMON STOCK (Warr
WARRANTS FOR COMMON STOCK (Warrant Activity) (Details) - shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Class of Warrant or Right [Line Items] | ||
Warrant outstanding beginning balance | 12,088,080 | 13,781,921 |
Warrants exercised | (1,470,027) | |
Warrants expired | (223,814) | |
Warrant outstanding ending balance | 11,387,932 | 12,088,080 |
Composition of outstanding warrants: | ||
Warrants containing anti-dilution feature | 94,721 | |
Warrants without anti-dilution feature | 11,293,211 | |
Warrant outstanding and exercisable ending balance | 11,387,932 | |
June 2017 Warrants Pursuant to Warrant Exercise Agreements [Member] | ||
Class of Warrant or Right [Line Items] | ||
Warrants issued | 11,293,211 | |
Warrants exercised | (11,293,211) | |
Warrants exercised in 2018 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Warrants exercised | (700,148) |
COMMITMENTS AND CONTINGENCIES43
COMMITMENTS AND CONTINGENCIES (Narrative) (Details) - USD ($) | Oct. 04, 2017 | Aug. 14, 2017 | Mar. 13, 2017 | Dec. 08, 2015 | Feb. 10, 2014 | Feb. 28, 2018 | Apr. 26, 2017 | Jan. 31, 2017 | Sep. 28, 2015 | Sep. 15, 2014 | Aug. 27, 2014 | Aug. 22, 2014 | Feb. 28, 2014 | Jun. 30, 2018 | Jun. 30, 2017 | Mar. 31, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Mar. 31, 2019 | Aug. 14, 2018 | Jun. 22, 2018 | May 18, 2018 | Feb. 21, 2018 | Dec. 31, 2017 | Dec. 28, 2017 | Feb. 01, 2017 | Dec. 31, 2016 | May 19, 2016 | Apr. 26, 2016 | Mar. 01, 2016 | Dec. 31, 2015 |
Other Commitments [Line Items] | |||||||||||||||||||||||||||||||
Annual minimum royalty payments | $ 225,000 | $ 225,000 | $ 1,219 | $ 1,471 | |||||||||||||||||||||||||||
Milestone payment upon approval of a product | 150,000 | ||||||||||||||||||||||||||||||
Research and Development Expense | $ 162,408 | 4,781,407 | $ 813,287 | 7,298,176 | $ 1,364,138 | ||||||||||||||||||||||||||
Amortization of Other Deferred Charges | 170,925 | 143,010 | 338,477 | 283,898 | |||||||||||||||||||||||||||
Lease Payments | 42,000 | 38,000 | 85,000 | 77,000 | |||||||||||||||||||||||||||
License Maintenance Fees Due Current | $ 75,000 | ||||||||||||||||||||||||||||||
Operating Leases, Future Minimum Payments Due, Next Twelve Months | 85,000 | 85,000 | |||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||
Capitalized Patent Costs Gross | 79 | 199 | 79 | 29,866 | |||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||
Litigation Settlement Shares To Be Issued | 2,077,555 | 2,077,555 | 2,077,555 | ||||||||||||||||||||||||||||
Minimum Annual Royalties In Year One | $ 10,000 | ||||||||||||||||||||||||||||||
Minimum Annual Royalties In Year Two | 15,000 | 15,000 | |||||||||||||||||||||||||||||
Operating Leases Monthly lease payment | $ 5,706 | ||||||||||||||||||||||||||||||
Loss Contingency, Receivable | 18,000,000 | 18,000,000 | |||||||||||||||||||||||||||||
Aggregate Milestone Payments to be Made | $ 1,200,000 | ||||||||||||||||||||||||||||||
Other Commitment | $ 75,000 | ||||||||||||||||||||||||||||||
License Expenses | $ 85,681 | 2,725,000 | 4,021,000 | ||||||||||||||||||||||||||||
License Acquired With Note Payable | 1,175,226 | 0 | |||||||||||||||||||||||||||||
Other Commitment First Installments [Member] | |||||||||||||||||||||||||||||||
Other Commitments [Line Items] | |||||||||||||||||||||||||||||||
Other Commitment | 25,000 | ||||||||||||||||||||||||||||||
Other Commitment Second Installments [Member] | |||||||||||||||||||||||||||||||
Other Commitments [Line Items] | |||||||||||||||||||||||||||||||
Other Commitment | 25,000 | ||||||||||||||||||||||||||||||
Other Commitment Third Installments [Member] | |||||||||||||||||||||||||||||||
Other Commitments [Line Items] | |||||||||||||||||||||||||||||||
Other Commitment | $ 25,000 | ||||||||||||||||||||||||||||||
Research and Development Arrangement [Member] | |||||||||||||||||||||||||||||||
Other Commitments [Line Items] | |||||||||||||||||||||||||||||||
Research and Development Expense | 25,000 | ||||||||||||||||||||||||||||||
Long-term Purchase Commitment, Amount | $ 785,100 | ||||||||||||||||||||||||||||||
License Expenses | $ 88,344 | $ 121,357 | |||||||||||||||||||||||||||||
University of Virginia [Member] | |||||||||||||||||||||||||||||||
Other Commitments [Line Items] | |||||||||||||||||||||||||||||||
Research and Development Expense | 76,211 | 70,729 | 180,178 | 111,574 | |||||||||||||||||||||||||||
Research and Development Arrangement, Investment Amount | 1,000,000 | 1,000,000 | |||||||||||||||||||||||||||||
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 | 0 | 196,275 | 130,850 | $ 261,700 | |||||||||||||||||||||||||||
Office space in Clarence, New York [Member] | |||||||||||||||||||||||||||||||
Other Commitments [Line Items] | |||||||||||||||||||||||||||||||
Operating Leases, Rent Expense, Minimum Rentals | $ 6,375 | ||||||||||||||||||||||||||||||
Lessee, Operating Lease, Term | 1 year | ||||||||||||||||||||||||||||||
Warehouse Space in North Carolina [Member] | |||||||||||||||||||||||||||||||
Other Commitments [Line Items] | |||||||||||||||||||||||||||||||
Operating Leases, Future Minimum Payments Due, Next Twelve Months | 38,000 | 38,000 | |||||||||||||||||||||||||||||
Operating Leases, Future Minimum Payments, Due in Two Years | 76,000 | 76,000 | |||||||||||||||||||||||||||||
Operating Leases, Future Minimum Payments, Due in Three Years | 76,000 | 76,000 | |||||||||||||||||||||||||||||
Lease And Rental Expense | $ 4,665 | ||||||||||||||||||||||||||||||
Future Minimum Sublease Rentals, Sale Leaseback Transactions, within Two Years | $ 56,000 | ||||||||||||||||||||||||||||||
Laboratory space in Buffalo [Member] | |||||||||||||||||||||||||||||||
Other Commitments [Line Items] | |||||||||||||||||||||||||||||||
Annual minimum royalty payments | $ 2,690 | ||||||||||||||||||||||||||||||
Operating Leases, Future Minimum Payments Due, Next Twelve Months | 34,000 | 34,000 | |||||||||||||||||||||||||||||
Operating Leases, Future Minimum Payments, Due in Two Years | 34,000 | 34,000 | |||||||||||||||||||||||||||||
Operating Leases, Rent Expense, Sublease Rentals | $ 2,770 | ||||||||||||||||||||||||||||||
Licensing Agreements [Member] | |||||||||||||||||||||||||||||||
Other Commitments [Line Items] | |||||||||||||||||||||||||||||||
Research and Development Expense | 75,000 | $ 75,000 | 75,000 | $ 75,000 | |||||||||||||||||||||||||||
Licensing Agreements One [Member] | |||||||||||||||||||||||||||||||
Other Commitments [Line Items] | |||||||||||||||||||||||||||||||
Research and Development Expense | 83,838 | 56,250 | 221,070 | 119,640 | |||||||||||||||||||||||||||
License Maintenance Fees Due Current | $ 15,000 | $ 15,000 | $ 15,000 | ||||||||||||||||||||||||||||
Minimum Royalty Fee Payments Due In Year Two | $ 30,000 | ||||||||||||||||||||||||||||||
Minimum Royalty Fee Payments Due Thereafter | 50,000 | 50,000 | |||||||||||||||||||||||||||||
Capitalized Patent Costs Gross | 4,995 | 5,173 | 9,465 | 24,242 | |||||||||||||||||||||||||||
Minimum Royalty Fee Payments Due In Year One | 20,000 | 20,000 | |||||||||||||||||||||||||||||
License Expenses | $ 150,000 | $ 125,000 | |||||||||||||||||||||||||||||
Patents [Member] | |||||||||||||||||||||||||||||||
Other Commitments [Line Items] | |||||||||||||||||||||||||||||||
Capitalized Patent Costs Gross | 4,845 | $ 4,866 | 34,107 | 31,709 | |||||||||||||||||||||||||||
Precision License [Member] | |||||||||||||||||||||||||||||||
Other Commitments [Line Items] | |||||||||||||||||||||||||||||||
Amortization of Other Deferred Charges | $ 24,505 | $ 24,505 | 49,011 | $ 49,011 | |||||||||||||||||||||||||||
License Expenses | $ 1,250,000 | ||||||||||||||||||||||||||||||
Anandia Sublicense [Member] | |||||||||||||||||||||||||||||||
Other Commitments [Line Items] | |||||||||||||||||||||||||||||||
Upfront Fee | $ 75,000 | ||||||||||||||||||||||||||||||
License Expenses | $ 10,000 | ||||||||||||||||||||||||||||||
Licensing Agreements Two [Member] | |||||||||||||||||||||||||||||||
Other Commitments [Line Items] | |||||||||||||||||||||||||||||||
Capitalized Patent Costs Gross | $ 0 | ||||||||||||||||||||||||||||||
Lessee, Operating Lease, Renewal Term | 2 years | 2 years | |||||||||||||||||||||||||||||
Modified Risk Tobacco Products Application [Member] | |||||||||||||||||||||||||||||||
Other Commitments [Line Items] | |||||||||||||||||||||||||||||||
Annual minimum royalty payments | $ 7,500,000 | $ 7,500,000 |
COMMITMENTS AND CONTINGENCIES44
COMMITMENTS AND CONTINGENCIES (Future Minimum Lease Payments) (Details) | Jun. 30, 2018USD ($) |
Other Commitments [Line Items] | |
Year ended December 31, 2018 - | $ 85,000 |
Year ended December 31, 2019 - | 169,000 |
Year ended December 31, 2020 - | 169,000 |
Year ended December 31, 2021 - | $ 141,000 |
LOSS PER COMMON SHARE (Computat
LOSS PER COMMON SHARE (Computation of Basic and Diluted Earnings Per Common Share) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Net income (loss) attributed to common shareholders | $ (6,738,652) | $ (3,355,624) | $ (5,352,164) | $ (5,976,901) |
Denominator for basic loss per share-weighted average shares outstanding | 124,311,087 | 91,577,688 | 124,166,321 | 91,165,770 |
Effect of dilutive securities: | ||||
Warrants and options outstanding | 0 | 0 | 0 | 0 |
Denominator for diluted loss per common share-weighted average shares adjusted for dilutive securities | 124,311,087 | 91,577,688 | 124,166,321 | 91,165,770 |
Net income (loss) per common share - basic and diluted | $ (0.05) | $ (0.04) | $ (0.04) | $ (0.07) |
LOSS PER COMMON SHARE (Anti-Dil
LOSS PER COMMON SHARE (Anti-Dilutive Securities Outstanding Excluded from Computation) (Details) - shares | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Securities outstanding but excluded from computation of earnings per share | 20,144,492 | 19,410,935 |
Warrants [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Securities outstanding but excluded from computation of earnings per share | 11,387,932 | 12,445,247 |
Options [ Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Securities outstanding but excluded from computation of earnings per share | 8,756,560 | 6,965,688 |
EQUITY BASED COMPENSATION (Narr
EQUITY BASED COMPENSATION (Narrative) (Details) - USD ($) | Apr. 12, 2014 | Oct. 31, 2017 | Apr. 29, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Equity based employee compensation expense | $ 2,246,104 | $ 322,983 | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 1.80 | $ 0.97 | |||||||||
Proceeds from Stock Options Exercised | $ 217,500 | $ 0 | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested in Period, Fair Value | $ 2,306,867 | $ 684,265 | |||||||||
Share-based Compensation Award, Tranche One [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 | 1,131,841 | ||||||||||
Share-based Compensation Award, Tranche Two [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 | 300,000 | ||||||||||
Maximum [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 3 years | ||||||||||
Minimum [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 1 year | ||||||||||
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 | 315,540 | 34,953 | |||||||||
Omnibus Incentive Plan [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 5,000,000 | ||||||||||
Equity based employee compensation expense | $ 1,682,228 | $ 154,004 | $ 2,246,104 | $ 322,983 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 1,431,841 | 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 | 1,802,115 | 1,802,115 | |||||||||
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] | |||||||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $ 98,000 | $ 698,000 | $ 1,113,000 | $ 943,000 | |||||||
Employee Stock Option [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $ 792,000 | $ 792,000 | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 327,781 | 56,991 | |||||||||
Non vested stock options [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | 3,644,000 | $ 3,644,000 | |||||||||
Employee Stock Option One [Member] | Vice President [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | 1,226,825 | 1,226,825 | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Number of Shares | 900,000 | ||||||||||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ 2.12 | ||||||||||
Employee Stock Option Two [Member] | Vice President [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $ 443,006 | $ 443,006 | |||||||||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ 2.12 | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares | 300,000 |
EQUITY BASED COMPENSATION (Sche
EQUITY BASED COMPENSATION (Schedule of Fair Value Assumptions) (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items] | ||
Risk-free interest rate (weighted average) | 2.97% | 2.12% |
Expected dividend yield | $ 0 | $ 0 |
Expected stock price volatility | 90.00% | 90.00% |
Expected life of options (weighted average) | 5 years 6 months 18 days | 5 years 1 month 17 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, 2018 | Dec. 31, 2017 | |
Number of Options | ||
Options Outstanding, Beginning of Period | 8,156,691 | 5,650,679 |
Granted | 1,431,841 | 2,692,000 |
Exercised | (327,781) | (85,988) |
Expired / cancelled | (504,191) | (100,000) |
Options Outstanding, End of Period | 8,756,560 | 8,156,691 |
Exercisable, End of Period | 5,237,804 | |
Weighted Average Exercise Price | ||
Options Outstanding, Beginning of Period | $ 1.28 | $ 1.04 |
Granted | 2.66 | 1.76 |
Exercised | 0.81 | 0.79 |
Expired / cancelled | 1.71 | 1.43 |
Options Outstanding, End of Period | 1.50 | $ 1.28 |
Exercisable, End of Period | $ 1.32 | |
Weighted Average Remaining Contractual Term | ||
Options Outstanding, End of Period | 6 years 2 months 12 days | |
Exercisable, End of Period | 4 years 9 months 18 days | |
Aggregate Intrinsic Value | ||
Options Outstanding, End of Period | $ 8,516,505 | |
Exercisable, End of Period | $ 5,693,556 |