Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 20, 2017 | Jun. 30, 2016 | |
Document And Entity Information | |||
Entity Registrant Name | EMMAUS LIFE SCIENCES, INC. | ||
Entity Central Index Key | 1,420,031 | ||
Document Type | 10-K | ||
Trading Symbol | EMMA | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | No | ||
Entity's Reporting Status Current | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 128,544,048 | ||
Entity Common Stock, Shares Outstanding | 34,714,219 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,016 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 1,317,340 | $ 472,341 |
Accounts receivable | 14,221 | 101,639 |
Inventories, net | 166,209 | 219,163 |
Investment in available-for-sale securities | 10,917,301 | |
Marketable securities, pledged to creditor | 179,765 | 219,015 |
Prepaid expenses and other current assets | 129,204 | 131,113 |
Total current assets | 12,724,040 | 1,143,271 |
PROPERTY AND EQUIPMENT, net | 53,730 | 58,227 |
OTHER ASSETS | ||
Deposits | 214,808 | 275,500 |
Total other assets | 214,808 | 275,500 |
Total Assets | 12,992,578 | 1,476,998 |
CURRENT LIABILITIES | ||
Accounts payable and accrued expenses | 3,201,154 | 4,580,494 |
Other current liability | 88,331 | |
Notes payable, net | 4,094,429 | 4,656,749 |
Notes payable to related parties, net | 1,924,850 | 2,766,304 |
Convertible notes payable, net | 9,205,007 | 6,000,347 |
Convertible notes payable to related parties, net | 474,000 | 298,000 |
Total current liabilities | 18,899,440 | 18,390,225 |
LONG-TERM LIABILITIES | ||
Deferred rent | 57,081 | 59,886 |
Warrant derivative liabilities | 10,600,000 | 7,863,000 |
Convertible notes payable, net | 997,957 | 4,206,873 |
Convertible notes payable to related parties, net | 320,000 | |
Total long-term liabilities | 11,655,038 | 12,449,759 |
Total Liabilities | 30,554,478 | 30,839,984 |
STOCKHOLDERS' DEFICIT | ||
Preferred stock - par value $0.001 per share, 20,000,000 shares authorized, none issued and outstanding | ||
Common stock - par value $0.001 per share, 100,000,000 shares authorized, 34,701,219 and 28,163,478 shares issued and outstanding at December 31, 2016 and December 31, 2015, respectively | 34,701 | 28,163 |
Additional paid-in capital | 92,614,801 | 56,508,984 |
Accumulated other comprehensive loss | (3,450,746) | (318,324) |
Accumulated deficit | (106,760,656) | (85,581,809) |
Total Stockholders' Deficit | (17,561,900) | (29,362,986) |
Total Liabilities & Stockholders' Deficit | $ 12,992,578 | $ 1,476,998 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized | 20,000,000 | 20,000,000 |
Common stock, par (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized | 100,000,000 | 100,000,000 |
Common stock, issued | 34,701,219 | 28,163,478 |
Common stock, outstanding | 34,701,219 | 28,163,478 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Statement [Abstract] | ||
REVENUES, Net | $ 461,591 | $ 590,114 |
COST OF GOODS SOLD | 221,250 | 286,687 |
GROSS PROFIT | 240,341 | 303,427 |
OPERATING EXPENSES | ||
Research and development | 1,987,966 | 1,579,112 |
Selling | 438,242 | 428,643 |
General and administrative | 9,342,635 | 10,219,683 |
Impairment of intangible assets | 678,571 | |
[us-gaap:OperatingExpenses] | 11,768,843 | 12,906,009 |
LOSS FROM OPERATIONS | (11,528,502) | (12,602,582) |
OTHER INCOME (EXPENSE) | ||
Realized loss on securities available-for-sale | (48,709) | |
Gain on debt extinguishment | 1,019 | |
Loss on debt settlement | (266,736) | |
Gain on derecognition of accounts payable and settlement of litigation | 418,366 | |
Change in fair value of liability classified warrants | 661,000 | |
Change in fair value of warrant derivative liabilities | (2,745,890) | 1,202,000 |
Convertible note inducement expense | (1,444,863) | |
Interest and other income | 1,538 | 102,676 |
Interest expense | (5,191,720) | (3,227,160) |
[us-gaap:NonoperatingIncomeExpense] | (9,646,652) | (891,827) |
LOSS BEFORE INCOME TAXES | (21,175,154) | (13,494,409) |
INCOME TAXES | 3,693 | 3,564 |
NET LOSS | (21,178,847) | (13,497,973) |
COMPONENTS OF OTHER COMPREHENSIVE LOSS | ||
Unrealized holding loss on securities available-for-sale | (3,121,949) | (123,113) |
Unrealized foreign currency translation effect | (10,473) | (1,196) |
[us-gaap:OtherComprehensiveIncomeLossNetOfTaxPortionAttributableToParent] | (3,132,422) | (124,309) |
COMPREHENSIVE LOSS | $ (24,311,269) | $ (13,622,282) |
NET LOSS PER COMMON SHARE (in dollars per share) | $ (0.70) | $ (0.47) |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (in shares) | 30,194,085 | 28,958,580 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Other Comprehensive Loss [Member] | Accumulated Deficit [Member] | Total |
Balance, beginning at Dec. 31, 2014 | $ 30,512 | $ 51,068,677 | $ (194,015) | $ (72,083,836) | $ (21,178,662) |
Balance, beginning (in shares) at Dec. 31, 2014 | 30,511,573 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Warrants issued in conjunction with convertible note | 220,071 | 220,071 | |||
Beneficial conversion feature related to convertible and promissory notes payable | 1,388,201 | 1,388,201 | |||
Proceeds from exercise of warrants | $ 148 | 102,737 | 102,885 | ||
Proceeds from exercise of warrants (in shares) | 148,256 | ||||
Share-based compensation | 3,708,801 | 3,708,801 | |||
Conversion of notes payable to common stock | $ 5 | 17,995 | 18,000 | ||
Conversion of notes payable to common stock (in shares) | 5,898 | ||||
Exercise of common stock options (cashless) | $ 2 | (2) | |||
Exercise of common stock options (cashless) (in shares) | 2,000 | ||||
Stock cancelled | $ (2,504) | 2,504 | |||
Stock cancelled (in shares) | (2,504,249) | ||||
Unrealized loss on marketable securities, net of tax | (123,113) | (123,113) | |||
Foreign currency translation effect | (1,196) | (1,196) | |||
Net loss | (13,497,973) | (13,497,973) | |||
Balance, ending at Dec. 31, 2015 | $ 28,163 | 56,508,984 | (318,324) | (85,581,809) | (29,362,986) |
Balance, ending (in shares) at Dec. 31, 2015 | 28,163,478 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Warrants issued in conjunction with convertible note | 644,550 | 644,550 | |||
Beneficial conversion feature related to convertible and promissory notes payable | 3,463,281 | 3,463,281 | |||
Stock issued for cash | $ 5,125 | 22,336,031 | 22,341,156 | ||
Stock issued for cash (in shares) | 5,124,702 | ||||
Share-based compensation | 3,328,400 | 3,328,400 | |||
Conversion of notes payable to common stock | $ 1,397 | 4,888,708 | 4,890,105 | ||
Conversion of notes payable to common stock (in shares) | 1,397,173 | ||||
Convertible note inducement | 1,444,863 | 1,444,863 | |||
Exercise of common stock options (cashless) | $ 16 | (16) | |||
Exercise of common stock options (cashless) (in shares) | 15,866 | ||||
Unrealized loss on marketable securities, net of tax | (3,121,949) | (3,121,949) | |||
Foreign currency translation effect | (10,473) | (10,473) | |||
Net loss | (21,178,847) | (21,178,847) | |||
Balance, ending at Dec. 31, 2016 | $ 34,701 | $ 92,614,801 | $ (3,450,746) | $ (106,760,656) | $ (17,561,900) |
Balance, ending (in shares) at Dec. 31, 2016 | 34,701,219 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (21,178,847) | $ (13,497,973) |
Adjustments to reconcile net loss to net cash flows used in operating activities | ||
Depreciation and amortization | 15,198 | 233,179 |
Impairment of intangible assets | 678,571 | |
Interest expense accrued from discount of convertible notes | 3,132,857 | 1,597,064 |
Foreign exchange adjustments on convertible notes and notes payable | 57,563 | 474 |
Realized loss on marketable securities available-for-sale | 48,709 | |
Gain/Loss on debt extinguishment | (1,019) | |
Gain/Loss on debt settlement | 266,736 | |
Gain on settlement of litigation | (418,366) | |
Share-based compensation | 3,328,400 | 3,708,801 |
Convertible Note Inducement Expense | 1,444,863 | |
Change in fair value of liability classified warrants | (661,000) | |
Change in fair value of warrant derivative liabilities | 2,745,890 | (1,202,000) |
Net changes in operating assets and liabilities | ||
Accounts receivable | 92,590 | (58,904) |
Inventories | 52,287 | 31,251 |
Prepaid expenses and other current assets | (3,400) | (1,559) |
Deposits | 61,557 | 30,879 |
Accounts payable and accrued expenses | 43,672 | 2,407,203 |
Other current liability | (88,331) | 88,331 |
Deferred rent | (2,929) | 56,157 |
Net cash flows used in operating activities | (10,032,913) | (6,959,183) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Proceeds from sales of investment securities available-for-sale | (14,000,000) | 46,728 |
Purchases of property and equipment | (10,369) | (4,731) |
Net cash flows from (used in) investing activities | (14,010,369) | 41,997 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from notes payable issued | 2,754,700 | 4,235,566 |
Proceeds from convertible notes payable issued | 4,640,904 | 3,024,558 |
Payments of notes payable | (3,639,971) | (250,000) |
Payments of convertible notes payable | (1,202,852) | (279,800) |
Proceeds from exercise of warrants | 102,885 | |
Proceeds from issuance of common stock | 22,341,156 | |
Net cash flows from financing activities | 24,893,937 | 6,833,209 |
Effect of exchange rate changes on cash | (5,656) | |
Net increase (decrease) in cash and cash equivalents | 844,999 | (83,977) |
Cash and cash equivalents, beginning of period | 472,341 | 556,318 |
Cash and cash equivalents, end of period | 1,317,340 | 472,341 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES | ||
Interest paid | 683,038 | 319,282 |
Income taxes paid | 3,693 | 3,364 |
Conversion of notes payable to common stock | 4,600,931 | $ 18,000 |
Conversion of accrued interest payable to common stock | $ 289,175 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS | NOTE 1—DESCRIPTION OF BUSINESS Organization Emmaus Medical is a Delaware corporation originally incorporated on September 12, 2003. Emmaus Medical, LLC was organized on December 20, 2000. In October 2003, Emmaus Medical, LLC conducted a reorganization and merged with Emmaus Medical. As a result of the merger, Emmaus Medical acquired the exclusive patent rights for a treatment for sickle cell disease ("SCD"). In October 2010, the Company established Emmaus Medical Japan, Inc., a Japanese corporation ("EM Japan") by funding 97% of the initial capital. EM Japan is engaged in the business of trading in nutritional supplements and other medical products and drugs. The results of EM Japan have been included in the consolidated financial statements of the Company since the date of formation. The aggregate formation cost was $52,500. Emmaus Medical acquired the additional 3% of the outstanding shares of EM Japan during the three months ended March 31, 2011 and is now the 100% owner of the outstanding share capital. In November 2011, the Company formed Emmaus Medical Europe, Ltd. ("EM Europe"), a wholly owned subsidiary of Emmaus Medical. EM Europe's primary focus is expanding the business of Emmaus Medical in Europe. In December 2016, the Company formed Emmaus Life Sciences Korea Co. Ltd. ("ELSK"), a wholly owned subsidiary of Emmaus Medical. ELSK's primary focus is expanding the business of Emmaus Medical in Korea. Emmaus, its wholly-owned subsidiary, Emmaus Medical, and Emmaus Medical's wholly-owned subsidiaries, Newfield Nutrition Corporation ("Newfield Nutrition"), EM Japan, ELSK and EM Europe, are collectively referred to herein as the "Company." Nature of Business To a lesser extent, the Company is also engaged in the marketing and sale of NutreStore®, which has received approval from the U.S. Food and Drug Administration ("FDA"), as a treatment for short bowel syndrome ("SBS") in patients receiving specialized nutritional support when used in conjunction with a recombinant human growth hormone that is approved for this indication. The Company's indirect wholly-owned subsidiary, Newfield Nutrition, sells L- glutamine as a nutritional supplement under the brand name AminoPure® through retail stores in multiple states in the United States and via importers and distributors in Japan, Taiwan and South Korea. The Company also owns a minority interest of less than 1% in CellSeed, Inc., a Japanese company listed on the Tokyo Stock Exchange ("CellSeed"), which is engaged in research and development of regenerative medicine products and the manufacture and sale of temperature- responsive cell culture equipment. The Company also is involved in research focused on providing innovative solutions for tissue-engineering through the development of novel cell harvest methods and three-dimensional living tissue replacement products for "cell sheet therapy" and regenerative medicine and the future commercialization of such products. Immaterial corrections of prior year amounts As previously disclosed in the Company's Quarterly Report on Form 10-Q for the periods ended September 30, 2015 and June 30, 2015, on April 28, 2015, Dr. Yutaka Niihara, the Company's President, Chief Executive Officer and Chairman of the Board, filed a complaint in the Court of Chancery of the State of Delaware under Section 225 of the Delaware General Corporation Law against Tracey C. Doi, Henry A. McKinnell, Jr., Akiko M. Miyashita, Phillip M. Satow and Mayuran Sriskandarajah, each of whom was a member of the Board as of April 24, 2015 ("Incumbant Directors"), Sarissa Capital Management L.P. ("Sarissa") and T.R. Winston & Company, LLC ("TRW"), as defendants, and the Company as nominal defendant. Among other things, the lawsuit sought an order to void any actions taken by Incumbent Directors since April 24, 2015 and an order for maintaining the company status quo during pendency of the suit. On June 10, 2015, the Delaware court issued a Status Quo Order until conclusion of the lawsuit. On November 19, 2015, Sarissa, Niihara and Emmaus entered a three-party settlement agreement that provided Sarissa or its designee would be paid $800,000. The agreement was signed by "Yutaka Niihara, M.D., M.P.H.", and it was made in connection with an agreement entitled "Amendment No. 1 to Agreement" also executed on November 19,2015. The Amendment No. 1 to Agreement terminated a September 11, 2013 agreement among Emmaus, Niihara, Winston and Sarissa. On November 19, 2015, Niihara, Sarissa and Emmaus filed a joint stipulation to dismiss the lawsuit filed April 24, 2015 against Sarissa. By stipulation, the September 11, 2013 agreement among Emmaus, Niihara, Winston and Sarissa was terminated. The November 19, 2015 settlement agreement and the amount of $800,000 was not recorded as a liability and legal settlement expense by the Company for the year ended December 31, 2015. The primary reason for this lack of accounting recognition is due to a misunderstanding by the Company of this matter at the time of filing 2015 Form 10-K that the settlement entered did not involve the Company and was of personal matter in nature for Dr. Yutaka Niihara. However, upon further examination of this matter on or about November 2016, it was then determined by management, board of directors and concurred by the Company’s outside legal counsel that Dr. Yutaka Niihara was in fact acting as an agent of the Company and thus the settlement amount should have been accounted for by the Company for the year ended December 31, 2015. Accordingly, on November 17, 2016, the Board of Directors of Emmaus unanimously approved that for the legal conflict with Sarissa in 2015, Niihara was acting as an agent for Emmaus and that the related, incurred settlement expenses would be paid by Emmaus. A reconciliation of the effects of the adjustments to the previously reported consolidated balance sheet at December 31, 2015 follows: As Previously Reported Adjustment As Revised As of December 31, 2015 Accounts payable and accrued expenses 3,780,494 800,000 4,580,494 Total current liabilities 17,590,225 800,000 18,390,225 Total liabilities 30,039,984 800,000 30,839,984 Accumulated deficit (84,781,809 ) (800,000 ) (85,581,809 ) Total stockholders' deficit (28,562,986 ) (800,000 ) (29,362,986 ) A reconciliation of the effect of the adjustments to the previously reported consolidated statement of comprehensive loss for the year ended December 31, 2015 follows: As Previously Reported Adjustment As Revised General and administrative 9,419,683 800,000 10,219,683 Loss from operations (11,802,582 ) (800,000 ) (12,602,582 ) Loss before income taxes (12,694,409 ) (800,000 ) (13,494,409 ) A reconciliation of the effect of the adjustments to the previously reported consolidated statement of cash flows for the year ended December 31, 2015 follows: As Previously Reported Adjustment As Revised Net loss (12,697,973 ) (800,000 ) (13,497,973 ) Accounts payable and accrued expenses 1,607,203 800,000 2,407,203 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation Going concern Principles of consolidation Estimates The warrants issued by the Company in a private placement in September 2013 and replacement warrants issued in June 2014 contain non-standard anti- dilution protection and, consequently, are being accounted for as liabilities that are remeasured to fair market value at each reporting period (Note 6). In addition, the remaining initial private placement warrants may now utilize a cashless exercise feature since the shares associated with them were not registered by the one-year anniversary of their issue. These warrants have now been reclassified from liability classified warrants to warrant derivative liabilities and to continue to be remeasured at fair value each reporting period. The initial value as well as the fair value of all such warrants were determined using a Binomial Monte-Carlo Cliquet (aka Ratchet) Option Pricing Model. The model is similar to traditional Black-Scholes-type option pricing models except that the exercise price resets at certain dates in the future. Actual results could differ from those estimates. Cash and cash equivalents Inventories All of the raw material purchases during the year ended December 31, 2016 and 2015 was from one vendor. The below table presents inventory by category: December 31, Inventory by category 2016 2015 Raw materials and components $ — $ — Work-in-process 34,462 45,355 Finished goods 131,747 173,808 Total $ 166,209 $ 219,163 Prepaid expenses and other current assets December 31, 2016 December 31, 2015 Prepaid insurance $ 100,060 $ 97,708 Other prepaid expenses and current assets 29,144 33,405 $ 129,204 $ 131,113 Deposits Revenue recognition With prior written approval of the Company, in certain situations, product is returnable only by its direct customers for a returned goods credit, for product that is expired, damaged in transit, or which is discontinued, withdrawn or recalled. The Company estimates its sales returns based upon its prior sales and return history and accrues a sales return allowance at the time of sale. Historically, sales returns have been immaterial. The Company pays royalties on an annual basis based on existing license arrangements. These royalties are recognized as cost of goods sold upon sale of the products. Allowance for doubtful accounts Advertising cost Property and equipment Intangibles Impairment of long-lived assets If the Company determines that the carrying values of long-lived assets may not be recoverable based upon the existence of one or more indicators of impairment, the Company performs an undiscounted cash flow analysis to determine if impairment exists. If impairment exists, the Company measures the impairment based on the difference between the asset's carrying amount and its fair value, and the impairment is charged to the consolidated statement of comprehensive loss in the period in which the long-lived asset impairment is determined to have occurred. The Company has determined that an impairment of the carrying value of its long-lived assets existed at December 31, 2015 and no impairment existed at December 31, 2016. Research and development Share-based compensation Income taxes For balance sheet presentation, current deferred tax assets and liabilities within each tax jurisdiction have been offset and presented as a single amount and non-current deferred tax assets and liabilities within each tax jurisdiction have been offset and presented as a single amount. When tax returns are filed, it is highly probable that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more- likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits along with any associated interest and penalties that would be payable to the taxing authorities upon examination. As of December 31, 2016, the Company had no unrecognized tax benefits, and the Company had no positions which, in the opinion of management, would be reversed if challenged by a taxing authority. In the event the Company is assessed interest and/or penalties, such amounts will be classified as income tax expense in the financial statements. As of December 31, 2016, all federal tax returns since 2013 and state tax returns since 2012 are still subject to adjustment upon audit. No tax returns are currently being examined by taxing authorities. Comprehensive income (loss) Marketable securities As of December 31, 2016, 39,250 shares of CellSeed stock are pledged to secure a $300,000 convertible note issued to Mitsubishi UFJ Capital III Limited Partnership that is due on demand and are classified as current assets, as marketable securities, pledged to creditor. Gain on derecognition of accounts payable and settlement of litigation Foreign Currency Translation Financial Instruments Fair value measurements Level 1: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access. Level 2: Inputs to the valuation methodology include: • Quoted prices for similar assets or liabilities in active markets; • Quoted prices for identical or similar assets or liabilities in inactive markets; • Inputs other than quoted prices that are observable for the asset or liability; • Inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified (contractual) term, the Level 2 inputs must be observable for substantially the full term of the asset or liability. Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The asset's or liability's fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value assigned to marketable securities is determined by obtaining quoted prices on nationally recognized securities exchanges, and are classified as Level 1 investments at December 31, 2016 and 2015. The fair value of the Company's debt instruments is not materially different from their carrying values as presented. The fair value of the Company's convertible debt instruments was determined based on Level 2 inputs. The carrying value of the debt was discounted based on allocating proceeds to other financial instruments within the arrangement as discussed in Note 5. The Company issued stock purchase warrants in conjunction with its September 2013 private placement and issued replacement warrants upon the exercise of certain of such warrants in June 2014 (see Note 1 and Note 6). Such warrants and replacement warrants contain non-standard anti-dilution protection, and consequently, are accounted for as liabilities measured at fair value on a recurring basis, whose fair value is determined using Level 3 inputs. In addition, the remaining initial private placement warrants may now utilize a cashless exercise feature since the shares associated with them were not registered by the one-year anniversary of their issue. These warrants have now been reclassified from liability classified warrants to warrant derivative liabilities and continue to be remeasured at fair value each reporting period. The Level 3 inputs in the valuation of warrants include expected term and expected volatility. The following tables present the activity for those items measured at fair value on a recurring basis using Level 3 inputs during 2016 and 2015: Year ended December 31, Liability Classified Warrants—Stock Purchase Warrants 2016 2015 Balance, beginning of period $ — $ 3,206,000 Fair value at issuance date — — Settlement of liability associated with warrants exercised — — Reclassification to warrant derivative liabilities — (2,545,000 ) Reduction of the warrants exercised to intrinsic value included in the statement of comprehensive loss — — Change in fair value included in the statement of comprehensive loss — (661,000 ) ​ ​ ​ ​ ​ ​ ​ ​ Balance, end of period $ — $ — Year ended December 31, Warrant Derivative Liabilities—Stock Purchase Warrants 2016 2015 Balance, beginning of period $ 7,863,000 $ 6,520,000 Reclassification from liability classified warrants — 2,545,000 Change in fair value included in the statement of comprehensive loss 2,737,000 (1,202,000 ) ​ ​ ​ ​ ​ ​ ​ ​ Balance, end of period $ 10,600,000 $ 7,863,000 The value of the liability classified warrants , the value of warrant derivative liability and the change in fair value of the liability classified warrants and warrant derivative liability were determined using a Binomial Monte-Carlo Cliquet (aka Ratchet) Option Pricing Model. The model is similar to traditional Black-Scholes-type option pricing models except that the exercise price resets at certain dates in the future. The values as of December 31, 2016, December 31, 2015, December 31, 2014, December 31, 2013, and the initial value as of September 11, 2013 were calculated based on the following assumptions: December 31, 2016 December 31, 2015 December 31, 2014 December 31, 2013 Initial Value Stock price $ 6.00 $ 4.70 $ 4.90 $ 3.60 $ 3.60 Risk-free interest rate 1.09 % 1.23 % 1.38 % 1.75 % 1.72 % Expected volatility (peer group) 68.30 % 64.10 % 71.50 % 63.20 % 72.40 % Expected life (in years) 1.70 2.70 3.70 4.70 5.00 Expected dividend yield — — — — — Number outstanding 3,320,501 3,320,501 3,320,501 3,320,501 3,320,501 Balance, end of period: Liability classified warrants $ — $ — $ 3,206,000 $ 6,517,000 $ 7,541,000 Warrant derivative liabilities $ 10,600,000 $ 7,863,000 $ 6,520,000 $ — $ — Debt and Related Party Debt Debt with Conversion and Other Options Type of Loan Term of Loan Stated Annual Interest Rate Original Loan Principal Amount Conversion Rate Beneficial Conversion Discount Amount Warrants Issued with Notes Exercise Price Warrant FMV Discount Amount Effective Interest Rate Including Discounts 2015 convertible notes payable Due on demand ~ 2 years 10 % $ 4,051,022 $3.05 ~ $4.50 $ 1,388,201 110,417 $ 4.90 $ 220,071 14% ~ 109% 2016 convertible notes payable Due on demand ~ 2 years 10 % 10,866,291 $3.50 ~ $4.50 3,196,544 75,000 $ 4.70 161,658 14% ~ 102% 2016 promissory notes payable 11.5 ~ 12.5 months 10 % 1,295,000 — — 118,750 $ 4.50 474,002 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total $ 16,212,313 $ 4,584,745 304,167 $ 855,731 Related party notes are disclosed as separate line items in the Company's balance sheet presentation. Net loss per share "Earnings per Share, Recent accounting pronouncements Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. In January 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities In February 2016, the FASB issued ASU No. 2016-02, Leases In March 2016, the FASB issued ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 3—PROPERTY AND EQUIPMENT Property and equipment consisted of the following at: December 31, 2016 December 31, 2015 Equipment $ 175,410 $ 164,931 Leasehold improvements 30,804 30,579 Furniture and fixtures 74,760 74,682 280,974 270,192 Less: accumulated depreciation (227,244 ) (211,965 ) Total $ 53,730 $ 58,227 During the years ended December 31, 2016 and 2015, depreciation expense was $15,279 and $18,893, respectively. |
ACCOUNTS PAYABLE AND ACCRUED EX
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2016 | |
Payables and Accruals [Abstract] | |
ACCOUNTS PAYABLE AND ACCRUED EXPENSES | NOTE 4—ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses consisted of the following at: December 31, 2016 December 31, 2015 Accounts payable Clinical and regulatory expenses $ 145,239 $ 322,193 Legal expenses 43,700 242,384 Consulting fees 99,800 74,700 Accounting fees 65,267 230,598 Selling expenses 60,724 34,279 Investor relations and public relations expenses 19,931 18,097 Other vendors 41,640 318,269 Total accounts payable 476,301 1,240,520 Accrued interest payable, related parties 274,851 176,940 Accrued interest payable 1,441,450 1,586,472 Accrued expenses 716,886 1,284,896 Deferred salary 291,666 291,666 Total accounts payable and accrued expenses $ 3,201,154 $ 4,580,494 |
NOTES PAYABLE
NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | NOTE 5—NOTES PAYABLE Notes payable consisted of the following at December 31, 2016 and 2015: Year Issued Interest Rate Range Term of Notes Conversion Price Principal Outstanding December 31, 2016 Discount Amount December 31, 2016 Carrying Amount December 31 2016 Shares Underlying Notes December 31, 2016 Principal Outstanding December 31, 2015 Discount Amount December 31, 2015 Carrying Amount December 31, 2015 Shares Underlying Notes December 31, 2015 Notes payable 2013 10% Due on demand — 2014 11% Due on demand ~ 2 years — — — — — 1,446,950 — 1,446,950 — 2015 11% Due on demand — 2,406,194 — 2,406,194 — 2,379,799 — 2,379,799 — 2016 11% Due on demand — 833,335 — 833,335 — — — — — $ 4,094,429 — $ 4,094,429 — $ 4,656,749 $ — $ 4,656,749 — Current $ 4,094,429 $ — $ 4,094,429 — $ 4,656,749 $ — $ 4,656,749 — Long-term $ — $ — $ — — $ — $ — $ — — Notes payable—related party 2012 8% Due on demand — 2013 8% Due on demand — 50,000 — 50,000 — 50,000 — 50,000 — 2014 11% Due on demand ~ 2 years — — — — — 240,308 — 240,308 — 2015 10% ~ 11% Due on demand — 514,340 — 514,340 — 1,849,266 — 1,849,266 — 2016 10% ~ 11% Due on demand — 860,510 — 860,510 — — — — — $ 1,924,850 $ — $ 1,924,850 — $ 2,766,304 $ — $ 2,766,304 — Current $ 1,924,850 $ — $ 1,924,850 — $ 2,766,304 $ — $ 2,766,304 — Long-term $ — $ — $ — — $ — $ — $ — — Year Issued Interest Rate Range Term of Notes Conversion Price Principal Outstanding December 31, 2016 Discount Amount December 31, 2016 Carrying Amount December 31 2016 Shares Underlying Notes December 31, 2016 Principal Outstanding December 31, 2015 Discount Amount December 31, 2015 Carrying Amount December 31, 2015 Shares Underlying Notes December 31, 2015 Convertible notes payable 2010 6% 5 years $3.05 2011 10% 5 years $3.05 300,000 — 300,000 98,285 500,000 — 500,000 163,809 2013 10% 2 years $3.60 — — — — 525,257 — 525,257 185,553 2014 10% Due on demand ~ 2 years $3.05 ~$3.60 452,168 — 452,168 152,986 4,378,563 353,700 4,024,863 1,120,470 2015 10% 2 years $3.50 ~$3.60 2,904,800 104,389 2,800,411 889,115 5,681,166 526,066 5,155,100 1,517,996 2016 10% Due on demand ~ 1 year $3.50 ~$4.50 8,126,129 1,475,744 6,650,385 2,193,687 — — — — $ 11,783,097 $ 1,580,133 $ 10,202,964 3,334,073 $ 11,086,986 $ 879,766 $ 10,207,220 2,988,484 Current $ 10,499,303 $ 1,294,296 $ 9,205,007 2,984,161 $ 6,358,698 $ 358,351 $ 6,000,347 1,762,849 Long-term $ 1,283,794 $ 285,837 $ 997,957 349,912 $ 4,728,288 $ 521,415 $ 4,206,873 1,225,635 Convertible notes payable—related party 2012 10% Due on demand $3.30 2015 10% 2 years $4.50 220,000 — 220,000 54,463 320,000 — 320,000 72,354 $ 474,000 $ — $ 474,000 148,995 $ 618,000 $ — $ 618,000 180,859 Current $ 474,000 $ — $ 474,000 148,995 $ 298,000 $ — $ 298,000 108,505 Long-term $ — $ — $ — — $ 320,000 $ — $ 320,000 72,354 Grand Total $ 18,276,376 $ 1,580,133 $ 16,696,243 3,483,068 $ 19,128,039 $ 879,766 $ 18,248,273 3,169,343 The average stated interest rate of notes payable for the years ended December 31, 2016 and 2015 was 10% in each period. The average effective interest rate of notes payable for the years ended December 31, 2016 and 2015 was 27% and 23% respectively, after giving effect to discounts relating to beneficial conversion features and the fair value of warrants issued in connection with these notes. The notes payable and convertible notes payable do not have restrictive financial covenants or acceleration clauses associated with a material adverse change event. The holders of the convertible notes have the option to convert their notes into the Company's common stock at the stated conversion price during the term of their convertible notes. Conversion prices on these convertible notes payable range from $3.05 to $3.60 per share. Certain notes with a $4.50 and a $7.00 stated conversion price in the second year of their two-year term are subject to automatic conversion into shares of the Company's common stock at a conversion price equal to 80% of the initial public offering price at the time of a qualified public offering. All due on demand notes are treated as current liabilities. Contractual principal payments due on notes payable are as follows: Year Ending at December 31, 2016 2017 $ 16,992,582 2018 1,283,794 Total $ 18,276,376 The Company estimated the total fair value of any beneficial conversion feature and accompanying warrants in allocating the debt proceeds. The proceeds allocated to the beneficial conversion feature were determined by taking the estimated fair value of shares issuable under the convertible notes less the fair value of the number of shares that would be issued if the conversion rate equaled the fair value of the Company's common stock as of the date of issuance (see Note 2). The fair value of the warrants issued in conjunction with notes was determined using the Black-Scholes-Merton option pricing model with the following inputs for the years ended: 2016 2015 Stock price $5.00 $4.50 Exercise price $4.50 - 4.70 $4.90 Term 5 years 5 years Risk-free interest rate 1.01 - 1.28% 1.57% Expected dividend yield — — Expected volatility 65.4 - 69.6% 67.3% In situations where the debt included both a beneficial conversion feature and a warrant, the proceeds were allocated to the warrants and beneficial conversion feature based on the pro-rata fair value. |
STOCKHOLDERS' DEFICIT
STOCKHOLDERS' DEFICIT | 12 Months Ended |
Dec. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' DEFICIT | NOTE 6—STOCKHOLDERS' DEFICIT Private Placement The warrants issued in the Private Placement and the Broker Warrants entitle the holders thereof to purchase, at any time on or prior to September 11, 2018, shares of common stock of the Company at an exercise price of $3.50 per share. The warrants contain non-standard anti-dilution protection and, consequently, are being accounted for as liabilities, were originally recorded at fair value, and are adjusted to fair market value each reporting period. Because the shares of common stock underlying the Private Placement warrants and Broker Warrants were not effectively registered for resale by September 11, 2014, the warrant holders have an option to exercise the warrants using a cashless exercise feature. The shares have not been registered for resale as of December 31, 2016. The availability to warrant holders of the cashless exercise feature as of September 11, 2014 caused the then-outstanding 2,225,036 Private Placement warrants and Broker Warrants with fair value of $7,068,000 to be reclassified from liability classified warrants to warrant derivative liabilities and to continue to be remeasured at fair value each reporting period. On June 10, 2014, certain warrant holders exercised 1,095,465 warrants issued in the Private Placement for the exercise price of $3.50 per share, resulting in the Company receiving aggregate exercise proceeds of $3.8 million and issuing 1,095,465 shares of common stock. Prior to exercise, these Private Placement warrants were accounted for at fair value as liability classified warrants. As of June 10, 2014, immediately prior to exercise, the carrying value of these Private Placement warrants was reduced to their fair value immediately prior to exercise of $1.8 million, representing their intrinsic value, with this adjusted carrying value of $1.8 million being transferred to additional paid-in capital. Also on June 10, 2014, based on an offer made to holders of Private Placement warrants in connection with such exercises, the Company issued an aggregate of 1,095,465 replacement warrants to holders exercising Private Placement warrants, which replacement warrants have terms that are generally the same as the exercised warrants, including an expiration date of September 11, 2018 and an exercise price of $3.50 per share. The replacement warrants are treated for accounting purposes as liability classified warrants, and their issuance gave rise to a $3.5 million warrant exercise inducement expense based on their fair value as of issuance as determined using a Binomial Monte-Carlo Cliquet (aka Ratchet) Option Pricing Model. Because the shares of common stock underlying the replacement warrants were not effectively registered for resale by June 10, 2015, the warrant holders have an option to exercise the warrants using a cashless exercise feature. The shares have not been registered for resale as of December 31, 2016. The availability to warrant holders of the cashless exercise feature as of June 10, 2015 caused the then-outstanding 1,095,465 replacement warrants with fair value of $2,545,000 to be reclassified from liability classified warrants to warrant derivative liabilities and to continue to be remeasured at fair value each reporting period. As of December 31, 2016 and 2015, the aggregate fair value of the Private Placement warrants, replacement warrants, and the Broker Warrants were $10,600,000 and $7,863,000, respectively (see Note 2). For further details regarding registration rights associated with the Private Placement warrants, replacement warrants, and Broker Warrants, see the Registration Rights section below in this footnote. A summary of outstanding warrants as of December 31, 2016 and 2015 is presented below. Year ended December 31, 2016 Year ended December 31, 2015 Warrants outstanding, beginning of period 3,530,918 5,101,450 Granted 1,493,750 110,417 Exercised — (148,256 ) Cancelled, forfeited and expired — (1,532,693 ) Warrants outstanding, end of period 5,024,668 3,530,918 ​ ​ ​ ​ ​ ​ ​ ​ A summary of outstanding warrants by year issued and exercise price as of December 31, 2016 is presented below. Outstanding Weighted Average Remaining Contractual Life (Years) Exercisable Exercise Price Number of Warrants Issued Weighted Average Exercise Price Total Weighted Average Exercise Price At December 31, 2013 $3.30 50,000 1.33 $ 3.30 50,000 $ 3.30 $3.50 2,225,036 1.70 $ 3.50 2,225,036 $ 3.50 2013 total 2,275,036 2,275,036 At December 31, 2014 $3.50 1,145,465 1.72 $ 3.50 1,145,465 $ 3.50 2014 total 1,145,465 1,145,465 At December 31, 2015 $4.90 110,417 3.18 $ 4.90 110,417 $ 4.90 2015 total 110,417 110,417 During 2016 $4.50 118,750 4.50 $ 4.50 118,750 $ 4.50 $4.70 75,000 4.33 $ 4.70 75,000 $ 4.70 $5.00 1,300,000 4.36 $ 5.00 1,300,000 $ 5.00 Total 5,024,668 5,024,668 Stock options Management has valued stock options at their date of grant utilizing the Black-Scholes-Merton Option pricing model. The fair value of the underlying shares was determined by the market value of stock of similar companies and recent arm's length transactions involving the sale of the Company's common stock. The expected volatility was calculated using the historical volatility of a similar public entity in the industry through August 2013 and a group of similar public entities thereafter. The following table presents the assumptions used on recent dates on which options were granted by the Board of Directors. May 10, 2016 January 14, 2016 Stock price $ 5.00 $ 4.70 Exercise price $ 5.00 $ 4.70 Term 10 years 10 years Risk-Free Interest Rate 1.36 % 1.70 % Dividend Yield 0.00 % 0.00 % Volatility 65.55 % 64.14 % In making the determination of fair value and finding similar companies, the Company considered the industry, stage of life cycle, size and financial leverage of such other entities. While the Company was initially able to identify only one similar public company using these criteria, based on the more advanced stage of development of the Company additional similar companies with enough historical data that met the industry criterion have now been identified. Accordingly, the Company has based its expected volatility on the historical stock prices of a group peer of companies since September 2013. The risk-free interest rate is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the expected life of the options depending on the date of the grant and expected life of the options. During the year ended December 31, 2016, the Company's Board of Directors granted 2,596,200 options to its officers, directors and employees. Of these options, 300,000 granted to its directors will vest in equal one-third installments on each of the first three anniversaries of the grant date, have an exercise price of $4.70 per share and are exercisable through 2026. The remaining 2,296,200 options will vest as follows: one-third (1/3) will vest on the first anniversary of the grant date, and the remaining two-thirds (2/3) will vest in twenty-four approximately equal monthly installments over a period of two years thereafter, except for 300,000 options granted to its directors which will vest in equal one-third installments over three years starting May 10, 2017. These options have an exercise price of $5.00 per share and are exercisable through 2026. During the year ended December 31, 2015, no options were granted by the Company's Board of Directors. As of December 31, 2016, there were 6,955,200 options outstanding under the 2011 Stock Incentive Plan. A summary of the Company's stock option activity for the years ended December 31, 2016 and 2015 is presented below. December 31, 2016 December 31, 2015 Number of Options Weighted- Average Exercise Price Number of Options Weighted- Average Exercise Price Options outstanding, beginning of period 4,753,335 $ 3.60 5,669,000 $ 3.68 Granted or deemed issued 2,596,200 $ 4.97 — — Exercised (15,866 ) $ 3.60 (2,000 ) $ 3.60 Cancelled, forfeited and expired (378,469 ) $ 3.91 (913,665 ) $ 4.05 Options outstanding, end of period 6,955,200 $ 4.10 4,753,335 $ 3.60 Options exercisable at end of year 4,372,667 $ 3.59 4,379,335 $ 3.60 Options available for future grant 2,044,800 4,246,665 During the years ended December 31, 2016 and 2015, the Company recognized $3.3 million and $3.7 million, respectively, of share-based compensation cost arising from stock option grants. As of December 31, 2016, there was $8.0 million of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under the 2011 Stock Incentive Plan. That cost is expected to be recognized over the weighted average remaining period of 2.1 years. Registration rights If the shares of common stock underlying these warrants to purchase 3,320,501 shares are not registered for resale at the time of exercise, and the registration rights described above then apply with respect to the holder of such warrants, such holder may exercise such warrants on a cashless basis. In such a cashless exercise of all the shares covered by the warrant, the warrant holder would receive a number of shares equal to the quotient of (i) the difference between the fair market value of the common stock, as defined, and the $3.50 exercise price, as adjusted, multiplied by the number of shares exercisable under the warrant, divided by (ii) the fair market value of the common stock, as defined. As of December 31, 2016, based on a fair market value of a share of Company common stock of $6.00 and 3,320,501 warrants issued and outstanding and eligible for cashless exercise, the maximum number of shares the Company would be required to issue, if the warrant holders elected to exercise the cashless exercise feature with respect to all then eligible warrants, is 1,383,542 shares. If the fair market value of a share of Company common stock were to increase by $1.00 from $6.00 to $7.00, the maximum number of shares the Company would be required to issue, if the warrant holders elected to exercise the cashless exercise feature with respect to all then eligible warrants, would increase to 1,660,251 shares as of December 31, 2016. The Company has not yet filed a registration statement with respect to the resale of the Registrable Securities The Company believes that it has used commercially reasonable efforts to file a registration statement with respect to the resale of Registrable Securities. Korean Private Placement On September 29, 2016, KPM and Hanil purchased and acquired from the Company 3,777,778 shares and 666,667 shares, respectively, of common stock at a price of $4.50 a share for $17 million and $3 million, respectively, for a gross total of $20 million. The Company recognized $720,000 as a reduction to its additional paid-in-capital for fees and commissions payable by the Company in connection with the transaction. Pursuant to the terms of the Letter of Agreement dated September 12, 2016, the Company invested $13 million and $1 million in capital increases by KPM and Hanil, respectively, at $15.32 and $3.68, respectively, per capita share. Pursuant to the terms of a subscription agreement dated as of September 11, 2013 among the Company and certain purchasers of shares of our common stock and warrants to purchase shares of our common stock, the purchasers are entitled to participation rights with respect to the sale of shares pursuant to the Letter of Agreement. To the extent the purchasers exercise their participation rights, we may be obliged to sell to them a specified number of shares of our common stock at the price per share and other terms set forth in the Letter of Agreement. There can be no assurance that any purchaser will exercise its participation rights or that any shares of our common stock will be issued to any purchaser. On August 26, 2016, the Company offered all note holders an opportunity to convert all or a portion of the principal amount of and accrued interest on their notes into shares of Company common stock at a price of $3.50 per share. Pursuant to the offer, 19 note holders elected to convert a total of $4,007,598 of principal and $260,124 of accrued interest on their notes. The conversion price of $3.50 per share was less than the stated conversion price of the convertible notes that were converted, which conversion prices ranged from $4.50 to $7.00 per share. Accordingly, the conversion resulted in the Company recognizing an inducement expense of $1,444,863, which represents the fair value of the incremental increase in the number of shares of Company common stock received by the convertible note holders. The note holders of a total of $622,384 of principal and accrued interest on non-convertible notes participated in the offer. Under the guidance of ASC 405-20, the Company de-recognized the principal and accrued interest on these non-convertible notes in consideration for issuing Company common stock. As a result of delivering its common stock to the holders of these non-convertible notes holders, the Company concluded that it has satisfied and is released from its legal obligation for the notes. The fair value of the common stock provided as consideration was $889,120 whereas the face value of the principal and accrued interest was $622,384, resulting in a loss on the debt settlement of $266,736 charged in full against the earning during the year ended December 31, 2016. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 7—INCOME TAXES The provision for income taxes consists of the following for the years ended December 31: 2016 2015 Current U.S. $ 2,400 $ 2,400 International 1,293 1,164 Deferred U.S. — — International — — $ 3,693 $ 3,564 A valuation allowance for the net deferred tax assets has been recorded as it is more likely than not that these benefits will not be realized through future operations. Deferred tax assets consist of the following as of December 31, 2016 and 2015: 2016 2015 Net operating loss carryforward $ 20,881,231 $ 16,650,797 General business tax credit 7,504,146 6,510,162 Stock options 7,633,468 6,271,690 Charitable contribution 56,617 79,944 Accrued expenses 384,690 290,083 Other 412,630 444,929 Total gross deferred tax assets 36,872,782 30,247,605 Less valuation allowance (36,740,418 ) (30,116,742 ) Net deferred tax assets $ 132,364 $ 130,863 Deferred tax liabilities consist of the following as of December 31, 2016 and 2015: 2016 2015 Unrealized gain on foreign exchange translation and others $ (83,880 ) $ (99,228 ) Unrealized gain on securities available-for-sale (48,484 ) (31,635 ) Total deferred tax liability $ (132,364 ) $ (130,863 ) During 2016 and 2015, the valuation allowance increased by $6,623,676 and $4,932,738, respectively. As of December 31, 2016 and 2015, the Company had net operating loss carryforwards for federal reporting purposes of approximately $51,240,000 and $42,909,000, which are available to offset future federal taxable income, if any, through 2036. In addition, the Company had net operating loss carryforwards for state income tax purposes of approximately $49,561,000 and $40,440,000 respectively, which expire in various years through 2036. The utilization of our net operating losses could be subject to an annual limitation as a result of certain past and future events, such as acquisition or other significant equity events, which may be deemed as a "change in ownership" under the provisions of the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitations could result in the expiration of net operating losses and tax credits before utilization. As of December 31, 2016 and 2015, the Company has general business tax credits of $7,504,000 and $6,510,000, respectively, for federal tax purposes. The tax credits are available to offset future tax liabilities, if any, through 2026. The income tax provision differs from that computed using the statutory federal tax rate of 34%, due to the following: 2016 2015 Tax benefit at statutory federal rate $ (7,481,009 ) $ (4,295,120 ) State taxes, net of federal tax benefit (695,697 ) (469,692 ) Increase in valuation allowance 6,640,524 4,948,921 Permanent items 3,633,702 675,959 General business tax credit (993,983 ) (789,556 ) Other (1,099,844 ) (66,948 ) $ 3,693 $ 3,564 As of December 31, 2016 and 2015, the Company had no unrecognized tax benefits, and the Company had no positions which, in the opinion of management, would be reversed if challenged by a taxing authority. In the event the Company is assessed interest and/or penalties, such amounts will be classified as income tax expense in the financial statements. As of December 31, 2016, all federal tax returns since 2013 and state tax returns since 2012 are still subject to adjustment upon audit. No tax returns are currently being examined by taxing authorities. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 8—COMMITMENTS AND CONTINGENCIES Distribution contract Operating leases Future minimum lease payments under the agreements are as follows: Year Amount 2017 553,956 2018 538,498 2019 126,115 Total $ 1,218,569 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 9—RELATED PARTY TRANSACTIONS The following table sets forth information relating to the Company's loans from related persons outstanding as of December 31, 2016. Class Lender Annual Interest Rate Date of Loan Term of Loan Principal Amount Outstanding at December 31, 2016 Highest Principal Outstanding Amount of Principal Repaid or Converted into Stock Amount of Interest Paid Conversion Rate Shares Underlying Notes at December 31, 2016 Notes payable to related parties—current: Hope Hospice(1) 8 % 1/17/2012 Due on demand $ 200,000 $ 200,000 $ — $ 20,000 $ — — Hope Hospice(1) 8 % 6/14/2012 Due on demand 200,000 200,000 — 20,000 — — Hope Hospice(1) 8 % 6/21/2012 Due on demand 100,000 100,000 — 10,000 — — Hope Hospice(1) 8 % 2/11/2013 Due on demand 50,000 50,000 — 5,000 — — Hope Hospice(1) 10 % 1/7/2015 Due on demand 100,000 100,000 — — — — Lan T. Tran(2) 10 % 2/9/2015 Due on demand 10,000 10,000 — — — — IRA Service Trust Co. FBO Peter B. Ludlum(2) 10 % 2/20/2015 Due on demand 10,000 10,000 — — — — Yutaka Niihara(2)(3) 10 % 5/21/2015 Due on demand 94,340 826,105 731,765 47,822 — — Masaharu & Emiko Osato(3) 11 % 12/29/2015 Due on demand 300,000 300,000 — — — — Lan T. Tran(2) 11 % 2/10/2016 Due on demand 130,510 130,510 — — — — Hideki & Eiko Uehara(4) 11 % 2/15/2016 Due on demand — 133,333 133,333 12,226 3.50 — Masaharu & Emiko Osato(3) 11 % 2/25/2016 Due on demand 400,000 400,000 — — — — Hope Hospice(1) 10 % 4/4/2016 Due on demand 50,000 50,000 — — — — Willis C. Lee(2)(3) 10 % 4/8/2016 Due on demand — 79,700 79,700 1,288 — — Lan T. Tran(2) 10 % 4/29/2016 Due on demand 20,000 20,000 — — — — IRA Service Trust Co. FBO Peter B. Ludlum(2) 10 % 5/5/2016 Due on demand 10,000 10,000 — — — — Hope Hospice(1) 10 % 6/3/2016 Due on demand 250,000 250,000 — — — — Sub total $ 1,924,850 $ 2,869,648 $ 944,798 $ 116,336 $ — — Convertible notes payable to related parties—current: Yasushi Nagasaki(2) 10 % 6/29/2012 Due on demand $ 254,000 $ 388,800 $ 134,800 $ 27,824 $ 3.30 94,532 Charles & Kimxa Stark(2) 10 % 10/1/2015 2 years 20,000 20,000 — — 4.50 5,002 Yutaka & Soomi Niihara(2)(3) 10 % 11/16/2015 2 years 200,000 200,000 — — 4.50 49,461 Sub total $ 474,000 $ 608,800 $ 134,800 $ 27,824 — 148,995 Total $ 2,398,850 $ 3,478,448 $ 1,079,598 $ 144,160 — 148,995 (1) Dr. Niihara, who is the Company's CEO, is also the CEO of Hope Hospice. (2) Officer (3) Director (4) Family of Officer/Director The following table sets forth information relating to the Company's loans from related persons outstanding as of December 31, 2015. Class Lender Annual Interest Rate Date of Loan Term of Loan Principal Amount Outstanding at December 31, 2015 Highest Principal Outstanding Amount of Principal Repaid Amount of Interest Paid Conversion Rate Shares Underlying Notes at December 31, 2015 Notes payable to related parties—current: Hope Hospice(1) 8 % 1/17/2012 Due on demand $ 200,000 $ 200,000 $ — $ 8,000 $ — — Hope Hospice(1) 8 % 6/14/2012 Due on demand 200,000 200,000 — 8,000 — — Hope Hospice(1) 8 % 6/21/2012 Due on demand 100,000 100,000 — 4,000 — — Yutaka Niihara(2)(4) 10 % 12/5/2012 Due on demand 126,729 1,213,700 1,086,970 56,722 — — Hope Hospice(1) 8 % 2/11/2013 Due on demand 50,000 50,000 — 2,000 — — Lan T. Tran(2) 11 % 2/10/2014 Due on demand 106,976 106,976 — — — — Hideki & Eiko Uehara(5) 11 % 2/15/2014 2 years 133,333 133,333 — — — — Hope Hospice(1) 10 % 1/7/2015 Due on demand 100,000 100,000 — — — — James Lee(5) 10 % 1/26/2015 Due on demand 50,000 50,000 — — — — Hope Hospice(1) 10 % 1/29/2015 Due on demand 30,000 30,000 — — — — Yutaka Niihara(2)(4) 10 % 1/29/2015 Due on demand — 20,000 20,000 773 Lan T. Tran(2) 10 % 2/9/2015 Due on demand 10,000 10,000 — — — — Charles Stark(2) 10 % 2/10/2015 Due on demand 10,000 10,000 — — — — IRA Service Trust Co. FBO Peter B. Ludlum(2) 10 % 2/20/2015 Due on demand 10,000 10,000 — — — — Cuc T. Tran(5) 11 % 3/5/2015 1 year 13,161 13,161 — — — — Yutaka Niihara(2)(4) 10 % 4/7/2015 Due on demand 500,000 500,000 — — — — Yutaka Niihara(2)(4) 10 % 5/21/2015 Due on demand 826,105 826,105 — — — — Masaharu & Emiko Osato(4) 11 % 12/29/2015 Due on demand 300,000 300,000 — — — — Sub total $ 2,766,304 $ 3,873,275 $ 1,106,970 $ 79,495 $ — — Convertible notes payable to related parties—current: Yasushi Nagasaki(2) 10 % 6/29/2012 Due on demand $ 298,000 $ 388,800 $ 90,800 $ — $ 3.30 108,505 Sub total $ 298,000 $ 388,800 $ 90,800 $ — $ — 108,505 Non-Current, convertible notes payable to related parties: Yutaka Niihara(2)(4) 10 % 9/29/2015 2 years $ 100,000 $ 100,000 $ — $ — $ 4.50 22,794 Charles & Kimxa Stark(2) 10 % 10/1/2015 2 years 20,000 20,000 — — 4.50 4,556 Yutaka & Soomi Niihara(2)(4) 10 % 11/16/2015 2 years 200,000 200,000 4.50 45,004 Sub total 320,000 320,000 $ — $ — $ — 72,354 Total $ 3,384,304 $ 4,582,075 $ 1,197,770 $ 79,495 $ — 180,859 (1) Dr. Niihara is the Chief Executive Officer of Hope Hospice. (2) Officer. (3) Director. (4) Family of officer or director. Litigation with AFH Advisory L-glutamine Therapy for SCD and Thalassemia Patent License |
GEOGRAPHIC INFORMATION
GEOGRAPHIC INFORMATION | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
GEOGRAPHIC INFORMATION | NOTE 10—GEOGRAPHIC INFORMATION For the years ended December 31, 2016 and 2015, the Company earned revenue from countries outside of the United States as outlined in the table below. Country Revenue for the year ended December 31, 2016 % of Total Revenue year ended December 31, 2016 Revenue for the year ended December 31, 2015 % of Total Revenue year ended December 31, 2015 Japan $ 160,543 35 % $ 194,142 33 % Taiwan 220,397 48 % 277,637 47 % South Korea — 0 % 39,660 7 % The Company did not have any significant currency translation or foreign transaction adjustments during the years ended December 31, 2016 and 2015. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 11—SUBSEQUENT EVENTS Subsequent to the year ended December 31, 2016, the Company issued the following: Notes Issued after December 31, 2016 Principal Amounts Annual Interest Rate Term of Notes Conversion Price Convertible notes(1) $ 504,312 10 % Due on Demand to 2 Years $ 3.60 Convertible notes(1) 1,130,536 10 % 6 Months to 2 Years $ 3.50 Convertible note 200,000 10 % Due on Demand to 6 Months $ 7.60 Promissory note(1)(2) 605,315 11 % Due on Demand Promissory notes—related party(1) 12,000 10 % Due on Demand — Total $ 2,452,163 (1) Refinancings of prior notes already outstanding. (2) Principal amount of note is JPY68,320,000 which was converted into US dollars using an exchange rate of 0.008860 as of February 17, 2017. Subsequent to December 31, 2016, the Company issued 13,000 shares of common stock for gross proceeds of $98,000. As previously reported, on January 16, 2017, the Company entered into a letter of intent ("LOI") with Generex Biotechnology Corporation ("Generex") which contemplates that Generex will acquire a controlling interest in the Company for a total consideration of $225,000,000, payable $10,000,000 in cash and $215,000,000 in shares of Generex's common stock, which the Company refers to as the "Generex shares." The Generex shares are to be valued for this purpose at $3.80 per share, subject to adjustment in certain events. Under the LOI, Generex paid the Company $500,000 as a deposit for an initial cash consideration and was to pay the Company another deposit of $1,500,000 by February 6, 2017. On February 6, 2017, the Company granted Generex an extension of the payment date to February 16, 2017 and, by a letter amendment dated February 16, 2017, the Company granted Generex another extension of the payment date to February 24, 2017 and otherwise amended the LOI. On March 3, 2017, Generex and the Company further amended the LOI to provide as follows: • Generex agreed to pay the Company an additional deposit of $500,000 on or prior to March 6, 2017, which the Company has received. • Within ten trading days after March 14, 2017, the date of effectiveness of a reverse stock split of Generex common stock, Generex must pay the Company another deposit of $3,000,000, which the Company has received. • The parties will use their best efforts to negotiate and sign a definitive purchase agreement no later than March 30, 2017. • The remaining $6,000,000 of the cash consideration will be paid to the Company at the closing under a definitive purchase agreement, which is to occur no later than five trading days after the date Generex amends its certificate of incorporation to effect an increase in its authorized capital, but no later than May 1, 2017. • The closing of the proposed acquisition by Generex is to occur no later than May 8, 2017. • If a definitive purchase agreement is not executed or the closing does not occur by the required deadlines, and the LOI is terminated by either party, the Company will refund and return to Generex all deposits within 60 days after the termination. In consideration for the foregoing waivers, extensions and amendments, Generex has agreed to issue to the Company 24,414,063 of restricted shares of Generex common stock within three trading days after Generex effects the planned increase in its authorized capital. The parties' respective obligations under the LOI to consummate the proposed acquisition are subject to a number of conditions, including completion of due diligence to each party's satisfaction parties and the negotiation and execution of a definitive purchase agreement, and there is no assurance these conditions will be satisfied. Any definitive purchase agreement also would contain customary conditions to closing, which may or may not be satisfied or waived by the parties. Although the Company has no present intention to terminate the LOI or to abandon the proposed acquisition, the Company may choose to do so if the conditions to the proposed acquisition have not been satisfied by the required deadlines, unless such deadlines are extended. If one or more of the conditions are not satisfied, the Company may decide to abandon the proposed acquisition if the board of directors determines that it is in the best interests of the Company to do so. For all of the foregoing reasons, there is no assurance that the proposed acquisition by Generex and the payment to the Company of the cash consideration and the Generex shares will be completed on time, or at all, and the discussions in the Annual Report assume that the proposed acquisition will not be completed. If the proposed acquisition by Generex is completed, the Company's capitalization, the risks related to its common stock and other information in the Annual Report would change materially from the descriptions in this Annual Report. |
SUMMARY OF SIGNIFICANT ACCOUN18
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation |
Going concern | Going concern |
Principles of consolidation | Principles of consolidation |
Estimates | Estimates The warrants issued by the Company in a private placement in September 2013 and replacement warrants issued in June 2014 contain non-standard anti- dilution protection and, consequently, are being accounted for as liabilities that are remeasured to fair market value at each reporting period (Note 6). In addition, the remaining initial private placement warrants may now utilize a cashless exercise feature since the shares associated with them were not registered by the one-year anniversary of their issue. These warrants have now been reclassified from liability classified warrants to warrant derivative liabilities and to continue to be remeasured at fair value each reporting period. The initial value as well as the fair value of all such warrants were determined using a Binomial Monte-Carlo Cliquet (aka Ratchet) Option Pricing Model. The model is similar to traditional Black-Scholes-type option pricing models except that the exercise price resets at certain dates in the future. Actual results could differ from those estimates. |
Cash and cash equivalents | Cash and cash equivalents—Cash and cash equivalents include short-term securities with original maturities of less than ninety days. The Company maintains its cash and cash equivalents at insured financial institutions, the balances of which may, at times, exceed federally insured limits. Management believes that the risk of loss due to the concentrations is minimal. |
Inventories | Inventories All of the raw material purchases during the year ended December 31, 2016 and 2015 was from one vendor. The below table presents inventory by category: December 31, Inventory by category 2016 2015 Raw materials and components $ — $ — Work-in-process 34,462 45,355 Finished goods 131,747 173,808 ​ ​ ​ ​ ​ ​ ​ ​ Total $ 166,209 $ 219,163 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Prepaid expenses and other current assets | Prepaid expenses and other current assets December 31, 2016 December 31, 2015 Prepaid insurance $ 100,060 $ 97,708 Other prepaid expenses and current assets 29,144 33,405 ​ ​ ​ ​ ​ ​ ​ ​ $ 129,204 $ 131,113 |
Deposits | Deposits |
Revenue recognition | Revenue recognition With prior written approval of the Company, in certain situations, product is returnable only by its direct customers for a returned goods credit, for product that is expired, damaged in transit, or which is discontinued, withdrawn or recalled. The Company estimates its sales returns based upon its prior sales and return history and accrues a sales return allowance at the time of sale. Historically, sales returns have been immaterial. The Company pays royalties on an annual basis based on existing license arrangements. These royalties are recognized as cost of goods sold upon sale of the products. |
Allowance for doubtful accounts | Allowance for doubtful accounts |
Advertising cost | Advertising cost |
Property and equipment | Property and equipment |
Intangibles | Intangibles |
Impairment of long-lived assets | Impairment of long-lived assets If the Company determines that the carrying values of long-lived assets may not be recoverable based upon the existence of one or more indicators of impairment, the Company performs an undiscounted cash flow analysis to determine if impairment exists. If impairment exists, the Company measures the impairment based on the difference between the asset's carrying amount and its fair value, and the impairment is charged to the consolidated statement of comprehensive loss in the period in which the long-lived asset impairment is determined to have occurred. The Company has determined that an impairment of the carrying value of its long-lived assets existed at December 31, 2015 and no impairment existed at December 31, 2016. |
Research and development | Research and development |
Share-based compensation | Share-based compensation |
Income taxes | Income taxes For balance sheet presentation, current deferred tax assets and liabilities within each tax jurisdiction have been offset and presented as a single amount and non-current deferred tax assets and liabilities within each tax jurisdiction have been offset and presented as a single amount. When tax returns are filed, it is highly probable that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more- likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits along with any associated interest and penalties that would be payable to the taxing authorities upon examination. As of December 31, 2016, the Company had no unrecognized tax benefits, and the Company had no positions which, in the opinion of management, would be reversed if challenged by a taxing authority. In the event the Company is assessed interest and/or penalties, such amounts will be classified as income tax expense in the financial statements. As of December 31, 2016, all federal tax returns since 2013 and state tax returns since 2012 are still subject to adjustment upon audit. No tax returns are currently being examined by taxing authorities. |
Comprehensive income (loss) | Comprehensive income (loss) |
Marketable securities | Marketable securities As of December 31, 2016, 39,250 shares of CellSeed stock are pledged to secure a $300,000 convertible note issued to Mitsubishi UFJ Capital III Limited Partnership that is due on demand and are classified as current assets, as marketable securities, pledged to creditor. |
Gain on derecognition of accounts payable and settlement of litigation | Gain on derecognition of accounts payable and settlement of litigation |
Foreign Currency Translation | Foreign Currency Translation |
Financial Instruments | Financial Instruments |
Fair value measurements | Fair value measurements Level 1: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access. Level 2: Inputs to the valuation methodology include: • Quoted prices for similar assets or liabilities in active markets; • Quoted prices for identical or similar assets or liabilities in inactive markets; • Inputs other than quoted prices that are observable for the asset or liability; • Inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified (contractual) term, the Level 2 inputs must be observable for substantially the full term of the asset or liability. Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement. The asset's or liability's fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value assigned to marketable securities is determined by obtaining quoted prices on nationally recognized securities exchanges, and are classified as Level 1 investments at December 31, 2016 and 2015. The fair value of the Company's debt instruments is not materially different from their carrying values as presented. The fair value of the Company's convertible debt instruments was determined based on Level 2 inputs. The carrying value of the debt was discounted based on allocating proceeds to other financial instruments within the arrangement as discussed in Note 5. The Company issued stock purchase warrants in conjunction with its September 2013 private placement and issued replacement warrants upon the exercise of certain of such warrants in June 2014 (see Note 1 and Note 6). Such warrants and replacement warrants contain non-standard anti-dilution protection, and consequently, are accounted for as liabilities measured at fair value on a recurring basis, whose fair value is determined using Level 3 inputs. In addition, the remaining initial private placement warrants may now utilize a cashless exercise feature since the shares associated with them were not registered by the one-year anniversary of their issue. These warrants have now been reclassified from liability classified warrants to warrant derivative liabilities and continue to be remeasured at fair value each reporting period. The Level 3 inputs in the valuation of warrants include expected term and expected volatility. The following tables present the activity for those items measured at fair value on a recurring basis using Level 3 inputs during 2016 and 2015: Year ended December 31, Liability Classified Warrants—Stock Purchase Warrants 2016 2015 Balance, beginning of period $ — $ 3,206,000 Fair value at issuance date — — Settlement of liability associated with warrants exercised — — Reclassification to warrant derivative liabilities — (2,545,000 ) Reduction of the warrants exercised to intrinsic value included in the statement of comprehensive loss — — Change in fair value included in the statement of comprehensive loss — (661,000 ) ​ ​ ​ ​ ​ ​ ​ ​ Balance, end of period $ — $ — Year ended December 31, Warrant Derivative Liabilities—Stock Purchase Warrants 2016 2015 Balance, beginning of period $ 7,863,000 $ 6,520,000 Reclassification from liability classified warrants — 2,545,000 Change in fair value included in the statement of comprehensive loss 2,737,000 (1,202,000 ) ​ ​ ​ ​ ​ ​ ​ ​ Balance, end of period $ 10,600,000 $ 7,863,000 The value of the liability classified warrants , the value of warrant derivative liability and the change in fair value of the liability classified warrants and warrant derivative liability were determined using a Binomial Monte-Carlo Cliquet (aka Ratchet) Option Pricing Model. The model is similar to traditional Black-Scholes-type option pricing models except that the exercise price resets at certain dates in the future. The values as of December 31, 2016, December 31, 2015, December 31, 2014, December 31, 2013, and the initial value as of September 11, 2013 were calculated based on the following assumptions: December 31, 2016 December 31, 2015 December 31, 2014 December 31, 2013 Initial Value Stock price $ 6.00 $ 4.70 $ 4.90 $ 3.60 $ 3.60 Risk-free interest rate 1.09 % 1.23 % 1.38 % 1.75 % 1.72 % Expected volatility (peer group) 68.30 % 64.10 % 71.50 % 63.20 % 72.40 % Expected life (in years) 1.70 2.70 3.70 4.70 5.00 Expected dividend yield — — — — — Number outstanding 3,320,501 3,320,501 3,320,501 3,320,501 3,320,501 Balance, end of period: Liability classified warrants $ — $ — $ 3,206,000 $ 6,517,000 $ 7,541,000 Warrant derivative liabilities $ 10,600,000 $ 7,863,000 $ 6,520,000 $ — $ — |
Debt and Related Party Debt | Debt and Related Party Debt Debt with Conversion and Other Options Type of Loan Term of Loan Stated Annual Interest Rate Original Loan Principal Amount Conversion Rate Beneficial Conversion Discount Amount Warrants Issued with Notes Exercise Price Warrant FMV Discount Amount Effective Interest Rate Including Discounts 2015 convertible notes payable Due on demand ~ 2 years 10 % $ 4,051,022 $3.05 ~ $4.50 $ 1,388,201 110,417 $ 4.90 $ 220,071 14% ~ 109% 2016 convertible notes payable Due on demand ~ 2 years 10 % 10,866,291 $3.50 ~ $4.50 3,196,544 75,000 $ 4.70 161,658 14% ~ 102% 2016 promissory notes payable 11.5 ~ 12.5 months 10 % 1,295,000 — — 118,750 $ 4.50 474,002 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total $ 16,212,313 $ 4,584,745 304,167 $ 855,731 Related party notes are disclosed as separate line items in the Company's balance sheet presentation. |
Net loss per share | Net loss per share "Earnings per Share, |
Recent accounting pronouncements | Recent accounting pronouncements Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. In January 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities In February 2016, the FASB issued ASU No. 2016-02, Leases In March 2016, the FASB issued ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business |
DESCRIPTION OF BUSINESS (Tables
DESCRIPTION OF BUSINESS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of reconciliation of the effects of the adjustments to the previously reported balance sheet | A reconciliation of the effects of the adjustments to the previously reported consolidated balance sheet at December 31, 2015 follows: As Previously Reported Adjustment As Revised As of December 31, 2015 Accounts payable and accrued expenses 3,780,494 800,000 4,580,494 Total current liabilities 17,590,225 800,000 18,390,225 Total liabilities 30,039,984 800,000 30,839,984 Accumulated deficit (84,781,809 ) (800,000 ) (85,581,809 ) Total stockholders' deficit (28,562,986 ) (800,000 ) (29,362,986 ) |
Schedule of reconciliation of the effect of the adjustments to the previously reported statement of operations | A reconciliation of the effect of the adjustments to the previously reported consolidated statement of comprehensive loss for the year ended December 31, 2015 follows: As Previously Reported Adjustment As Revised General and administrative 9,419,683 800,000 10,219,683 Loss from operations (11,802,582 ) (800,000 ) (12,602,582 ) Loss before income taxes (12,694,409 ) (800,000 ) (13,494,409 ) |
Schedule of A reconciliation of the effect of the adjustments to the previously reported statement of cash flows | A reconciliation of the effect of the adjustments to the previously reported consolidated statement of cash flows for the year ended December 31, 2015 follows: As Previously Reported Adjustment As Revised Net loss (12,697,973 ) (800,000 ) (13,497,973 ) Accounts payable and accrued expenses 1,607,203 800,000 2,407,203 |
SUMMARY OF SIGNIFICANT ACCOUN20
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Schedule of inventory | All of the raw material purchases during the year ended December 31, 2016 and 2015 was from one vendor. The below table presents inventory by category: December 31, Inventory by category 2016 2015 Raw materials and components $ — $ — Work-in-process 34,462 45,355 Finished goods 131,747 173,808 ​ ​ ​ ​ ​ ​ ​ ​ Total $ 166,209 $ 219,163 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of prepaid expenses and other current assets | Prepaid expenses and other current assets December 31, 2016 December 31, 2015 Prepaid insurance $ 100,060 $ 97,708 Other prepaid expenses and current assets 29,144 33,405 ​ ​ ​ ​ ​ ​ ​ ​ $ 129,204 $ 131,113 ​ |
Schedule of changes in fair value of Level 3 liabilities | The following tables present the activity for those items measured at fair value on a recurring basis using Level 3 inputs during 2016 and 2015: Year ended December 31, Liability Classified Warrants—Stock Purchase Warrants 2016 2015 Balance, beginning of period $ — $ 3,206,000 Fair value at issuance date — — Settlement of liability associated with warrants exercised — — Reclassification to warrant derivative liabilities — (2,545,000 ) Reduction of the warrants exercised to intrinsic value included in the statement of comprehensive loss — — Change in fair value included in the statement of comprehensive loss — (661,000 ) ​ ​ ​ ​ ​ ​ ​ ​ Balance, end of period $ — $ — Year ended December 31, Warrant Derivative Liabilities—Stock Purchase Warrants 2016 2015 Balance, beginning of period $ 7,863,000 $ 6,520,000 Reclassification from liability classified warrants — 2,545,000 Change in fair value included in the statement of comprehensive loss 2,737,000 (1,202,000 ) ​ ​ ​ ​ ​ ​ ​ ​ Balance, end of period $ 10,600,000 $ 7,863,000 |
Schedule of assumptions used in the valuation of warrants | The values as of December 31, 2016, December 31, 2015, December 31, 2014, December 31, 2013, and the initial value as of September 11, 2013 were calculated based on the following assumptions: December 31, 2016 December 31, 2015 December 31, 2014 December 31, 2013 Initial Value Stock price $ 6.00 $ 4.70 $ 4.90 $ 3.60 $ 3.60 Risk-free interest rate 1.09 % 1.23 % 1.38 % 1.75 % 1.72 % Expected volatility (peer group) 68.30 % 64.10 % 71.50 % 63.20 % 72.40 % Expected life (in years) 1.70 2.70 3.70 4.70 5.00 Expected dividend yield — — — — — Number outstanding 3,320,501 3,320,501 3,320,501 3,320,501 3,320,501 Balance, end of period: Liability classified warrants $ — $ — $ 3,206,000 $ 6,517,000 $ 7,541,000 Warrant derivative liabilities $ 10,600,000 $ 7,863,000 $ 6,520,000 $ — $ — |
Schedule of notes payable with beneficial conversion feature or warrants attached | The following table presents the effective interest rates on the original loan principal amount for loans originated in the respective periods that either had a beneficial conversion interest or an attached warrant: Type of Loan Term of Loan Stated Annual Interest Rate Original Loan Principal Amount Conversion Rate Beneficial Conversion Discount Amount Warrants Issued with Notes Exercise Price Warrant FMV Discount Amount Effective Interest Rate Including Discounts 2015 convertible notes payable Due on demand ~ 2 years 10 % $ 4,051,022 $3.05 ~ $4.50 $ 1,388,201 110,417 $ 4.90 $ 220,071 14% ~ 109% 2016 convertible notes payable Due on demand ~ 2 years 10 % 10,866,291 $3.50 ~ $4.50 3,196,544 75,000 $ 4.70 161,658 14% ~ 102% 2016 promissory notes payable 11.5 ~ 12.5 months 10 % 1,295,000 — — 118,750 $ 4.50 474,002 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total $ 16,212,313 $ 4,584,745 304,167 $ 855,731 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment consisted of the following at: December 31, 2016 December 31, 2015 Equipment $ 175,410 $ 164,931 Leasehold improvements 30,804 30,579 Furniture and fixtures 74,760 74,682 280,974 270,192 Less: accumulated depreciation (227,244 ) (211,965 ) Total $ 53,730 $ 58,227 |
ACCOUNTS PAYABLE AND ACCRUED 22
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Payables and Accruals [Abstract] | |
Schedule of accounts payable and accrued expenses | Accounts payable and accrued expenses consisted of the following at: December 31, 2016 December 31, 2015 Accounts payable Clinical and regulatory expenses $ 145,239 $ 322,193 Legal expenses 43,700 242,384 Consulting fees 99,800 74,700 Accounting fees 65,267 230,598 Selling expenses 60,724 34,279 Investor relations and public relations expenses 19,931 18,097 Other vendors 41,640 318,269 ​ ​ ​ ​ ​ ​ ​ ​ Total accounts payable 476,301 1,240,520 ​ ​ ​ ​ ​ ​ ​ ​ Accrued interest payable, related parties 274,851 176,940 Accrued interest payable 1,441,450 1,586,472 Accrued expenses 716,886 1,284,896 Deferred salary 291,666 291,666 ​ ​ ​ ​ ​ ​ ​ ​ Total accounts payable and accrued expenses $ 3,201,154 $ 4,580,494 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ F-20 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of notes payable | Notes payable consisted of the following at December 31, 2016 and 2015: Year Issued Interest Rate Range Term of Notes Conversion Price Principal Outstanding December 31, 2016 Discount Amount December 31, 2016 Carrying Amount December 31 2016 Shares Underlying Notes December 31, 2016 Principal Outstanding December 31, 2015 Discount Amount December 31, 2015 Carrying Amount December 31, 2015 Shares Underlying Notes December 31, 2015 Notes payable 2013 10% Due on demand — 2014 11% Due on demand ~ 2 years — — — — — 1,446,950 — 1,446,950 — 2015 11% Due on demand — 2,406,194 — 2,406,194 — 2,379,799 — 2,379,799 — 2016 11% Due on demand — 833,335 — 833,335 — — — — — $ 4,094,429 — $ 4,094,429 — $ 4,656,749 $ — $ 4,656,749 — Current $ 4,094,429 $ — $ 4,094,429 — $ 4,656,749 $ — $ 4,656,749 — Long-term $ — $ — $ — — $ — $ — $ — — Notes payable—related party 2012 8% Due on demand — 2013 8% Due on demand — 50,000 — 50,000 — 50,000 — 50,000 — 2014 11% Due on demand ~ 2 years — — — — — 240,308 — 240,308 — 2015 10% ~ 11% Due on demand — 514,340 — 514,340 — 1,849,266 — 1,849,266 — 2016 10% ~ 11% Due on demand — 860,510 — 860,510 — — — — — $ 1,924,850 $ — $ 1,924,850 — $ 2,766,304 $ — $ 2,766,304 — Current $ 1,924,850 $ — $ 1,924,850 — $ 2,766,304 $ — $ 2,766,304 — Long-term $ — $ — $ — — $ — $ — $ — — Year Issued Interest Rate Range Term of Notes Conversion Price Principal Outstanding December 31, 2016 Discount Amount December 31, 2016 Carrying Amount December 31 2016 Shares Underlying Notes December 31, 2016 Principal Outstanding December 31, 2015 Discount Amount December 31, 2015 Carrying Amount December 31, 2015 Shares Underlying Notes December 31, 2015 Convertible notes payable 2010 6% 5 years $3.05 2011 10% 5 years $3.05 300,000 — 300,000 98,285 500,000 — 500,000 163,809 2013 10% 2 years $3.60 — — — — 525,257 — 525,257 185,553 2014 10% Due on demand ~ 2 years $3.05 ~$3.60 452,168 — 452,168 152,986 4,378,563 353,700 4,024,863 1,120,470 2015 10% 2 years $3.50 ~$3.60 2,904,800 104,389 2,800,411 889,115 5,681,166 526,066 5,155,100 1,517,996 2016 10% Due on demand ~ 1 year $3.50 ~$4.50 8,126,129 1,475,744 6,650,385 2,193,687 — — — — $ 11,783,097 $ 1,580,133 $ 10,202,964 3,334,073 $ 11,086,986 $ 879,766 $ 10,207,220 2,988,484 Current $ 10,499,303 $ 1,294,296 $ 9,205,007 2,984,161 $ 6,358,698 $ 358,351 $ 6,000,347 1,762,849 Long-term $ 1,283,794 $ 285,837 $ 997,957 349,912 $ 4,728,288 $ 521,415 $ 4,206,873 1,225,635 Convertible notes payable—related party 2012 10% Due on demand $3.30 2015 10% 2 years $4.50 220,000 — 220,000 54,463 320,000 — 320,000 72,354 $ 474,000 $ — $ 474,000 148,995 $ 618,000 $ — $ 618,000 180,859 Current $ 474,000 $ — $ 474,000 148,995 $ 298,000 $ — $ 298,000 108,505 Long-term $ — $ — $ — — $ 320,000 $ — $ 320,000 72,354 Grand Total $ 18,276,376 $ 1,580,133 $ 16,696,243 3,483,068 $ 19,128,039 $ 879,766 $ 18,248,273 3,169,343 |
Schedule of contractual principal payments of notes payable | Contractual principal payments due on notes payable are as follows: Year Ending at December 31, 2016 2017 $ 16,992,582 2018 1,283,794 Total $ 18,276,376 |
Schedule of fair value assumptions for warrants issued in conjunction with notes | The fair value of the warrants issued in conjunction with notes was determined using the Black-Scholes-Merton option pricing model with the following inputs for the years ended: 2016 2015 Stock price $5.00 $4.50 Exercise price $4.50 - 4.70 $4.90 Term 5 years 5 years Risk-free interest rate 1.01 - 1.28% 1.57% Expected dividend yield — — Expected volatility 65.4 - 69.6% 67.3% |
STOCKHOLDERS' DEFICIT (Tables)
STOCKHOLDERS' DEFICIT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |
Schedule of outstanding warrants | A summary of outstanding warrants as of December 31, 2016 and 2015 is presented below. Year ended December 31, 2016 Year ended December 31, 2015 Warrants outstanding, beginning of period 3,530,918 5,101,450 Granted 1,493,750 110,417 Exercised — (148,256 ) Cancelled, forfeited and expired — (1,532,693 ) Warrants outstanding, end of period 5,024,668 3,530,918 |
Schedule of outstanding warrants by year issued and exercise price | A summary of outstanding warrants by year issued and exercise price as of December 31, 2016 is presented below. Outstanding Weighted Average Remaining Contractual Life (Years) Exercisable Exercise Price Number of Warrants Issued Weighted Average Exercise Price Total Weighted Average Exercise Price At December 31, 2013 $3.30 50,000 1.33 $ 3.30 50,000 $ 3.30 $3.50 2,225,036 1.70 $ 3.50 2,225,036 $ 3.50 2013 total 2,275,036 2,275,036 At December 31, 2014 $3.50 1,145,465 1.72 $ 3.50 1,145,465 $ 3.50 2014 total 1,145,465 1,145,465 At December 31, 2015 $4.90 110,417 3.18 $ 4.90 110,417 $ 4.90 2015 total 110,417 110,417 During 2016 $4.50 118,750 4.50 $ 4.50 118,750 $ 4.50 $4.70 75,000 4.33 $ 4.70 75,000 $ 4.70 $5.00 1,300,000 4.36 $ 5.00 1,300,000 $ 5.00 Total 5,024,668 5,024,668 |
Schedule of valuation assumptions | Management has valued stock options at their date of grant utilizing the Black-Scholes-Merton Option pricing model. The fair value of the underlying shares was determined by the market value of stock of similar companies and recent arm's length transactions involving the sale of the Company's common stock. The expected volatility was calculated using the historical volatility of a similar public entity in the industry through August 2013 and a group of similar public entities thereafter. The following table presents the assumptions used on recent dates on which options were granted by the Board of Directors. May 10, 2016 January 14, 2016 Stock price $ 5.00 $ 4.70 Exercise price $ 5.00 $ 4.70 Term 10 years 10 years Risk-Free Interest Rate 1.36 % 1.70 % Dividend Yield 0.00 % 0.00 % Volatility 65.55 % 64.14 % |
Schedule of option activity | A summary of the Company's stock option activity for the years ended December 31, 2016 and 2015 is presented below. December 31, 2016 December 31, 2015 Number of Options Weighted- Average Exercise Price Number of Options Weighted- Average Exercise Price Options outstanding, beginning of period 4,753,335 $ 3.60 5,669,000 $ 3.68 Granted or deemed issued 2,596,200 $ 4.97 — — Exercised (15,866 ) $ 3.60 (2,000 ) $ 3.60 Cancelled, forfeited and expired (378,469 ) $ 3.91 (913,665 ) $ 4.05 Options outstanding, end of period 6,955,200 $ 4.10 4,753,335 $ 3.60 Options exercisable at end of year 4,372,667 $ 3.59 4,379,335 $ 3.60 Options available for future grant 2,044,800 4,246,665 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of provision (benefit) for income taxes | The provision for income taxes consists of the following for the years ended December 31: 2016 2015 Current U.S. $ 2,400 $ 2,400 International 1,293 1,164 Deferred U.S. — — International — — $ 3,693 $ 3,564 |
Schedule of deferred tax assets and liabilities | Deferred tax assets consist of the following as of December 31, 2016 and 2015: 2016 2015 Net operating loss carryforward $ 20,881,231 $ 16,650,797 General business tax credit 7,504,146 6,510,162 Stock options 7,633,468 6,271,690 Charitable contribution 56,617 79,944 Accrued expenses 384,690 290,083 Other 412,630 444,929 Total gross deferred tax assets 36,872,782 30,247,605 Less valuation allowance (36,740,418 ) (30,116,742 ) Net deferred tax assets $ 132,364 $ 130,863 Deferred tax liabilities consist of the following as of December 31, 2016 and 2015: 2016 2015 Unrealized gain on foreign exchange translation and others $ (83,880 ) $ (99,228 ) Unrealized gain on securities available-for-sale (48,484 ) (31,635 ) Total deferred tax liability $ (132,364 ) $ (130,863 ) |
Schedule of income tax provision computed using the statutory federal tax rate | The income tax provision differs from that computed using the statutory federal tax rate of 34%, due to the following: 2016 2015 Tax benefit at statutory federal rate $ (7,481,009 ) $ (4,295,120 ) State taxes, net of federal tax benefit (695,697 ) (469,692 ) Increase in valuation allowance 6,640,524 4,948,921 Permanent items 3,633,702 675,959 General business tax credit (993,983 ) (789,556 ) Other (1,099,844 ) (66,948 ) $ 3,693 $ 3,564 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum lease payments | Future minimum lease payments under the agreements are as follows: Year Amount 2017 553,956 2018 538,498 2019 126,115 Total $ 1,218,569 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
Schedule of related parties outstanding loans | The following table sets forth information relating to the Company's loans from related persons outstanding as of December 31, 2016. Class Lender Annual Interest Rate Date of Loan Term of Loan Principal Amount Outstanding at December 31, 2016 Highest Principal Outstanding Amount of Principal Repaid or Converted into Stock Amount of Interest Paid Conversion Rate Shares Underlying Notes at December 31, 2016 Notes payable to related parties—current: Hope Hospice(1) 8 % 1/17/2012 Due on demand $ 200,000 $ 200,000 $ — $ 20,000 $ — — Hope Hospice(1) 8 % 6/14/2012 Due on demand 200,000 200,000 — 20,000 — — Hope Hospice(1) 8 % 6/21/2012 Due on demand 100,000 100,000 — 10,000 — — Hope Hospice(1) 8 % 2/11/2013 Due on demand 50,000 50,000 — 5,000 — — Hope Hospice(1) 10 % 1/7/2015 Due on demand 100,000 100,000 — — — — Lan T. Tran(2) 10 % 2/9/2015 Due on demand 10,000 10,000 — — — — IRA Service Trust Co. FBO Peter B. Ludlum(2) 10 % 2/20/2015 Due on demand 10,000 10,000 — — — — Yutaka Niihara(2)(3) 10 % 5/21/2015 Due on demand 94,340 826,105 731,765 47,822 — — Masaharu & Emiko Osato(3) 11 % 12/29/2015 Due on demand 300,000 300,000 — — — — Lan T. Tran(2) 11 % 2/10/2016 Due on demand 130,510 130,510 — — — — Hideki & Eiko Uehara(4) 11 % 2/15/2016 Due on demand — 133,333 133,333 12,226 3.50 — Masaharu & Emiko Osato(3) 11 % 2/25/2016 Due on demand 400,000 400,000 — — — — Hope Hospice(1) 10 % 4/4/2016 Due on demand 50,000 50,000 — — — — Willis C. Lee(2)(3) 10 % 4/8/2016 Due on demand — 79,700 79,700 1,288 — — Lan T. Tran(2) 10 % 4/29/2016 Due on demand 20,000 20,000 — — — — IRA Service Trust Co. FBO Peter B. Ludlum(2) 10 % 5/5/2016 Due on demand 10,000 10,000 — — — — Hope Hospice(1) 10 % 6/3/2016 Due on demand 250,000 250,000 — — — — Sub total $ 1,924,850 $ 2,869,648 $ 944,798 $ 116,336 $ — — Convertible notes payable to related parties—current: Yasushi Nagasaki(2) 10 % 6/29/2012 Due on demand $ 254,000 $ 388,800 $ 134,800 $ 27,824 $ 3.30 94,532 Charles & Kimxa Stark(2) 10 % 10/1/2015 2 years 20,000 20,000 — — 4.50 5,002 Yutaka & Soomi Niihara(2)(3) 10 % 11/16/2015 2 years 200,000 200,000 — — 4.50 49,461 Sub total $ 474,000 $ 608,800 $ 134,800 $ 27,824 — 148,995 Total $ 2,398,850 $ 3,478,448 $ 1,079,598 $ 144,160 — 148,995 (1) Dr. Niihara, who is the Company's CEO, is also the CEO of Hope Hospice. (2) Officer (3) Director (4) Family of Officer/Director The following table sets forth information relating to the Company's loans from related persons outstanding as of December 31, 2015. Class Lender Annual Interest Rate Date of Loan Term of Loan Principal Amount Outstanding at December 31, 2015 Highest Principal Outstanding Amount of Principal Repaid Amount of Interest Paid Conversion Rate Shares Underlying Notes at December 31, 2015 Notes payable to related parties—current: Hope Hospice(1) 8 % 1/17/2012 Due on demand $ 200,000 $ 200,000 $ — $ 8,000 $ — — Hope Hospice(1) 8 % 6/14/2012 Due on demand 200,000 200,000 — 8,000 — — Hope Hospice(1) 8 % 6/21/2012 Due on demand 100,000 100,000 — 4,000 — — Yutaka Niihara(2)(4) 10 % 12/5/2012 Due on demand 126,729 1,213,700 1,086,970 56,722 — — Hope Hospice(1) 8 % 2/11/2013 Due on demand 50,000 50,000 — 2,000 — — Lan T. Tran(2) 11 % 2/10/2014 Due on demand 106,976 106,976 — — — — Hideki & Eiko Uehara(5) 11 % 2/15/2014 2 years 133,333 133,333 — — — — Hope Hospice(1) 10 % 1/7/2015 Due on demand 100,000 100,000 — — — — James Lee(5) 10 % 1/26/2015 Due on demand 50,000 50,000 — — — — Hope Hospice(1) 10 % 1/29/2015 Due on demand 30,000 30,000 — — — — Yutaka Niihara(2)(4) 10 % 1/29/2015 Due on demand — 20,000 20,000 773 Lan T. Tran(2) 10 % 2/9/2015 Due on demand 10,000 10,000 — — — — Charles Stark(2) 10 % 2/10/2015 Due on demand 10,000 10,000 — — — — IRA Service Trust Co. FBO Peter B. Ludlum(2) 10 % 2/20/2015 Due on demand 10,000 10,000 — — — — Cuc T. Tran(5) 11 % 3/5/2015 1 year 13,161 13,161 — — — — Yutaka Niihara(2)(4) 10 % 4/7/2015 Due on demand 500,000 500,000 — — — — Yutaka Niihara(2)(4) 10 % 5/21/2015 Due on demand 826,105 826,105 — — — — Masaharu & Emiko Osato(4) 11 % 12/29/2015 Due on demand 300,000 300,000 — — — — Sub total $ 2,766,304 $ 3,873,275 $ 1,106,970 $ 79,495 $ — — Convertible notes payable to related parties—current: Yasushi Nagasaki(2) 10 % 6/29/2012 Due on demand $ 298,000 $ 388,800 $ 90,800 $ — $ 3.30 108,505 Sub total $ 298,000 $ 388,800 $ 90,800 $ — $ — 108,505 Non-Current, convertible notes payable to related parties: Yutaka Niihara(2)(4) 10 % 9/29/2015 2 years $ 100,000 $ 100,000 $ — $ — $ 4.50 22,794 Charles & Kimxa Stark(2) 10 % 10/1/2015 2 years 20,000 20,000 — — 4.50 4,556 Yutaka & Soomi Niihara(2)(4) 10 % 11/16/2015 2 years 200,000 200,000 4.50 45,004 Sub total 320,000 320,000 $ — $ — $ — 72,354 Total $ 3,384,304 $ 4,582,075 $ 1,197,770 $ 79,495 $ — 180,859 (1) Dr. Niihara is the Chief Executive Officer of Hope Hospice. (2) Officer. (3) Director. (4) Family of officer or director. |
GEOGRAPHIC INFORMATION (Tables)
GEOGRAPHIC INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
Schedule of revenue earned from countries outside of the United States | For the years ended December 31, 2016 and 2015, the Company earned revenue from countries outside of the United States as outlined in the table below. Country Revenue for the year ended December 31, 2016 % of Total Revenue year ended December 31, 2016 Revenue for the year ended December 31, 2015 % of Total Revenue year ended December 31, 2015 Japan $ 160,543 35 % $ 194,142 33 % Taiwan 220,397 48 % 277,637 47 % South Korea — 0 % 39,660 7 % |
SUBSEQUENT EVENTS (Tables)
SUBSEQUENT EVENTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
Schedule of subsequent events | Subsequent to the year ended December 31, 2016, the Company issued the following: Notes Issued after December 31, 2016 Principal Amounts Annual Interest Rate Term of Notes Conversion Price Convertible notes(1) $ 504,312 10 % Due on Demand to 2 Years $ 3.60 Convertible notes(1) 1,130,536 10 % 6 Months to 2 Years $ 3.50 Convertible note 200,000 10 % Due on Demand to 6 Months $ 7.60 Promissory note(1)(2) 605,315 11 % Due on Demand Promissory notes—related party(1) 12,000 10 % Due on Demand — Total $ 2,452,163 (1) Refinancings of prior notes already outstanding. (2) Principal amount of note is JPY68,320,000 which was converted into US dollars using an exchange rate of 0.008860 as of February 17, 2017. |
DESCRIPTION OF BUSINESS (Detail
DESCRIPTION OF BUSINESS (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Accounts payable and accrued expenses | $ 3,201,154 | $ 4,580,494 | |
Total current liabilities | 18,899,440 | 18,390,225 | |
Total liabilities | 30,554,478 | 30,839,984 | |
Accumulated deficit | (106,760,656) | (85,581,809) | |
Total stockholder's deficit | $ (17,561,900) | (29,362,986) | $ (21,178,662) |
As Previously Reported [Member] | |||
Accounts payable and accrued expenses | 3,780,494 | ||
Total current liabilities | 17,590,225 | ||
Total liabilities | 30,039,984 | ||
Accumulated deficit | (84,781,809) | ||
Total stockholder's deficit | (28,562,986) | ||
Adjustment [Member] | |||
Accounts payable and accrued expenses | 800,000 | ||
Total current liabilities | 800,000 | ||
Total liabilities | 800,000 | ||
Accumulated deficit | (800,000) | ||
Total stockholder's deficit | $ (800,000) |
DESCRIPTION OF BUSINESS (Deta31
DESCRIPTION OF BUSINESS (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
General and adminstrative | $ 9,342,635 | $ 10,219,683 |
Loss from operations | (11,528,502) | (12,602,582) |
Loss before income taxes | $ (21,175,154) | (13,494,409) |
As Previously Reported [Member] | ||
General and adminstrative | 9,419,683 | |
Loss from operations | (11,802,582) | |
Loss before income taxes | (12,694,409) | |
Adjustment [Member] | ||
General and adminstrative | 800,000 | |
Loss from operations | (800,000) | |
Loss before income taxes | $ (800,000) |
DESCRIPTION OF BUSINESS (Deta32
DESCRIPTION OF BUSINESS (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Net loss | $ (21,178,847) | $ (13,497,973) |
Accounts payable and accrued expenses | $ 43,672 | 2,407,203 |
As Previously Reported [Member] | ||
Net loss | (12,697,973) | |
Accounts payable and accrued expenses | 1,607,203 | |
Adjustment [Member] | ||
Net loss | (800,000) | |
Accounts payable and accrued expenses | $ 800,000 |
DESCRIPTION OF BUSINESS (Deta33
DESCRIPTION OF BUSINESS (Details Narrative) - USD ($) | Nov. 19, 2015 | Mar. 31, 2011 | Oct. 31, 2010 |
Settlement Agreement [Member] | Sarissa Capital Management L.P. [Member] | |||
Settlement amount payable but not recorded in prior year report | $ 800,000 | ||
Emmaus Medical Japan, Inc [Member] | |||
Percentage of acquired interest | 3.00% | 97.00% | |
Aggregate formation cost | $ 52,500 |
SUMMARY OF SIGNIFICANT ACCOUN34
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Accounting Policies [Abstract] | ||
Work-in-process | $ 34,462 | $ 45,355 |
Finished goods | 131,747 | 173,808 |
Total | $ 166,209 | $ 219,163 |
SUMMARY OF SIGNIFICANT ACCOUN35
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Accounting Policies [Abstract] | ||
Prepaid insurance | $ 100,060 | $ 97,708 |
Other prepaid expenses and current assets | 29,144 | 33,405 |
Prepaid expenses and other current assets | $ 129,204 | $ 131,113 |
SUMMARY OF SIGNIFICANT ACCOUN36
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Liability Classified Warrants - Stock Purchase Warrants [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance, beginning of period | $ 3,206,000 | |
Reclassification to warrant derivative liabilities | (2,545,000) | |
Change in fair value included in the statement of comprehensive loss | (661,000) | |
Warrant Derivative Liabilities - Stock Purchase Warrants [Member] | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance, beginning of period | $ 7,863,000 | 6,520,000 |
Reclassification from liability classified warrants | 2,545,000 | |
Change in fair value included in the statement of comprehensive loss | 2,737,000 | (1,202,000) |
Balance, end of period | $ 10,600,000 | $ 7,863,000 |
SUMMARY OF SIGNIFICANT ACCOUN37
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) - USD ($) | Sep. 11, 2013 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Balance, end of period: | |||||
Warrant derivative liabilities | $ 10,600,000 | $ 7,863,000 | |||
Warrants [Member] | |||||
Stock price | $ 3.60 | $ 6 | $ 4.70 | $ 4.90 | $ 3.60 |
Risk-free interest rate | 1.72% | 1.09% | 1.23% | 1.38% | 1.75% |
Expected volatility (peer group) | 72.40% | 68.30% | 64.10% | 71.50% | 63.20% |
Expected life (in years) | 5 years | 1 year 8 months 12 days | 2 years 8 months 12 days | 3 years 8 months 12 days | 4 years 8 months 12 days |
Number outstanding | 3,320,501 | 3,320,501 | 3,320,501 | 3,320,501 | 3,320,501 |
Balance, end of period: | |||||
Liability classified warrants | $ 7,541,000 | $ 3,206,000 | $ 6,517,000 | ||
Warrant derivative liabilities | $ 10,600,000 | $ 7,863,000 | $ 6,520,000 |
SUMMARY OF SIGNIFICANT ACCOUN38
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) | 12 Months Ended |
Dec. 31, 2016USD ($)$ / shares$ / Warrantsshares | |
Original Loan Principal Amount | $ 16,212,313 |
Beneficial Conversion Discount Amount | $ 4,584,745 |
Warrants Issued with Notes (in shares) | shares | 304,167 |
Warrant FMV Discount Amount | $ 855,731 |
Minimum [Member] | |
Conversion Rate (in dollars per share) | $ / shares | $ 3.05 |
Maximum [Member] | |
Conversion Rate (in dollars per share) | $ / shares | $ 3.60 |
2015 Convertible Notes Payable [Member] | |
Stated Annual Interest Rate | 10.00% |
Original Loan Principal Amount | $ 4,051,022 |
Beneficial Conversion Discount Amount | $ 1,388,201 |
Warrants Issued with Notes (in shares) | shares | 110,417 |
Excrcise Price (in dollars per share) | $ / Warrants | 4.90 |
Warrant FMV Discount Amount | $ 220,071 |
2015 Convertible Notes Payable [Member] | Minimum [Member] | |
Term of Notes | Due on demand |
Conversion Rate (in dollars per share) | $ / shares | $ 3.05 |
Effective Interest Rate Including Discounts | 14.00% |
2015 Convertible Notes Payable [Member] | Maximum [Member] | |
Term of Notes | 2 years |
Conversion Rate (in dollars per share) | $ / shares | $ 4.50 |
Effective Interest Rate Including Discounts | 109.00% |
2016 Convertible Notes Payable [Member] | |
Term of Notes | Due on demand ~ 1 year |
Stated Annual Interest Rate | 10.00% |
Original Loan Principal Amount | $ 10,866,291 |
Beneficial Conversion Discount Amount | $ 3,196,544 |
Warrants Issued with Notes (in shares) | shares | 75,000 |
Excrcise Price (in dollars per share) | $ / Warrants | 4.70 |
Warrant FMV Discount Amount | $ 161,658 |
2016 Convertible Notes Payable [Member] | Minimum [Member] | |
Term of Notes | Due on demand |
Conversion Rate (in dollars per share) | $ / shares | $ 3.50 |
Effective Interest Rate Including Discounts | 14.00% |
2016 Convertible Notes Payable [Member] | Maximum [Member] | |
Term of Notes | 2 years |
Conversion Rate (in dollars per share) | $ / shares | $ 4.50 |
Effective Interest Rate Including Discounts | 102.00% |
2016 Promissory Notes Payable [Member] | |
Stated Annual Interest Rate | 10.00% |
Original Loan Principal Amount | $ 1,295,000 |
Warrants Issued with Notes (in shares) | shares | 118,750 |
Excrcise Price (in dollars per share) | $ / Warrants | 4.50 |
Warrant FMV Discount Amount | $ 474,002 |
2016 Promissory Notes Payable [Member] | Minimum [Member] | |
Term of Notes | 11 months 15 days |
2016 Promissory Notes Payable [Member] | Maximum [Member] | |
Term of Notes | 12 months 15 days |
SUMMARY OF SIGNIFICANT ACCOUN39
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | Oct. 31, 2016USD ($)Number$ / shares | Jan. 31, 2009USD ($)Number$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares |
Net loss | $ | $ (21,178,847) | $ (13,497,973) | ||
Advertising costs | $ | $ 35,622 | 62,388 | ||
Impairment of intangible assets | $ | $ 678,571 | |||
Potentially dilutive securities outstanding | shares | 15,462,936 | 11,453,596 | ||
AFH Advisory [Member] | ||||
Gain on derecognition of amounts due to related party | $ | $ 394,446 | |||
2011 Convertible notes payable [Member] | ||||
Convertible notes payable, carrying amount | $ | $ 300,000 | |||
Cell Seed Inc [Member] | ||||
Shares held as marketable securities | shares | 39,250 | |||
Shares originally purchased (in shares) | shares | 147,100 | |||
Investment, in dollars | $ | $ 1,109,819 | |||
Investment, closing price | $ 5.74 | $ 5.58 | ||
Stock pledged against note | shares | 39,250 | |||
Cell Seed Inc [Member] | Japanese Yen [Member] | ||||
Investment, in yen | Number | 100,028,000 | |||
Investment, in per share | $ 680 | |||
Investment, closing price | $ 536 | $ 672 | ||
KPM Tech [Member] | ||||
Shares held as marketable securities | shares | 849,744 | |||
Investment, in dollars | $ | $ 13,000,000 | |||
Investment, closing price | $ 12.08 | |||
KPM Tech [Member] | South Korean Won [Member] | ||||
Investment, in won | Number | 14,318,186,400 | |||
Investment, in per share | $ 16,850 | |||
Investment, closing price | $ 14,600 | |||
Hanil Vacuum [Member] | ||||
Shares held as marketable securities | shares | 271,950 | |||
Investment, in dollars | $ | $ 1,000,000 | |||
Investment, closing price | $ 2.40 | |||
Hanil Vacuum [Member] | South Korean Won [Member] | ||||
Investment, in won | Number | 1,101,397,500 | |||
Investment, in per share | $ 4,050 | |||
Investment, closing price | $ 2,895 | |||
Minimum [Member] | ||||
Intangible assets, useful life | 3 years | |||
Maximum [Member] | ||||
Intangible assets, useful life | 7 years | |||
Furniture and Fixtures [Member] | Minimum [Member] | ||||
Useful life | 5 years | |||
Furniture and Fixtures [Member] | Maximum [Member] | ||||
Useful life | 7 years |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Property and equipment | ||
Property and equipment, gross | $ 280,974 | $ 270,192 |
Less: accumulated depreciation | (227,244) | (211,965) |
Property and equipment, net | 53,730 | 58,227 |
Equipment [Member] | ||
Property and equipment | ||
Property and equipment, gross | 175,410 | 164,931 |
Leasehold Improvements [Member] | ||
Property and equipment | ||
Property and equipment, gross | 30,804 | 30,579 |
Furniture and Fixtures [Member] | ||
Property and equipment | ||
Property and equipment, gross | $ 74,760 | $ 74,682 |
PROPERTY AND EQUIPMENT (Detai41
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 15,279 | $ 18,893 |
ACCOUNTS PAYABLE AND ACCRUED 42
ACCOUNTS PAYABLE AND ACCRUED EXPENSES (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Accounts payable | ||
Clinical and regulatory expenses | $ 145,239 | $ 322,193 |
Legal expenses | 43,700 | 242,384 |
Consulting fees | 99,800 | 74,700 |
Accounting fees | 65,267 | 230,598 |
Selling expenses | 60,724 | 34,279 |
Investor relations and public relations expenses | 19,931 | 18,097 |
Other vendors | 41,640 | 318,269 |
Total accounts payable | 476,301 | 1,240,520 |
Accrued interest payable, related parties | 274,851 | 176,940 |
Accrued interest payable | 1,441,450 | 1,586,472 |
Accrued expenses | 716,886 | 1,284,896 |
Deferred salary | 291,666 | 291,666 |
Total accounts payable and accrued expenses | $ 3,201,154 | $ 4,580,494 |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Principal Outstanding | $ 18,276,376 | $ 19,128,039 |
Discount Amount | 1,580,133 | 879,766 |
Carrying Amount | 16,696,243 | 18,248,273 |
Notes payable, current | $ 4,094,429 | 4,656,749 |
Minimum [Member] | ||
Conversion price | $ 3.05 | |
Maximum [Member] | ||
Conversion price | $ 3.60 | |
2013 Notes payable [Member] | ||
Interest rate | 10.00% | |
Term of Notes | Due on demand | |
Principal Outstanding | $ 854,900 | 830,000 |
Carrying Amount | $ 854,900 | $ 830,000 |
2014 Notes payable [Member] | ||
Interest rate | 11.00% | |
Term of Notes | Due on demand ~ 2 years | |
Principal Outstanding | $ 1,446,950 | |
Carrying Amount | 1,446,950 | |
2015 Notes payable [Member] | ||
Interest rate | 11.00% | |
Term of Notes | Due on demand | |
Principal Outstanding | $ 2,406,194 | 2,379,799 |
Carrying Amount | $ 2,406,194 | 2,379,799 |
2016 Notes payable [Member] | ||
Interest rate | 11.00% | |
Term of Notes | Due on demand | |
Principal Outstanding | $ 833,335 | |
Carrying Amount | 833,335 | |
Notes Payable [Member] | ||
Principal Outstanding | 4,094,429 | 4,656,749 |
Carrying Amount | 4,094,429 | 4,656,749 |
Principal Outstanding, current | 4,094,429 | 4,656,749 |
Notes payable, current | $ 4,094,429 | 4,656,749 |
2012 Notes payable - related party [Member] | ||
Interest rate | 8.00% | |
Term of Notes | Due on demand | |
Principal Outstanding | $ 500,000 | 626,730 |
Carrying Amount | $ 500,000 | 626,730 |
2013 Notes payable - related party [Member] | ||
Interest rate | 8.00% | |
Term of Notes | Due on demand | |
Principal Outstanding | $ 50,000 | 50,000 |
Carrying Amount | $ 50,000 | $ 50,000 |
2014 Notes payable - related party [Member] | ||
Interest rate | 11.00% | |
Term of Notes | Due on demand ~ 2 years | |
Principal Outstanding | $ 240,308 | |
Carrying Amount | 240,308 | |
2015 Notes payable - related party [Member] | ||
Term of Notes | Due on demand | |
Principal Outstanding | $ 514,340 | 1,849,266 |
Carrying Amount | $ 514,340 | 1,849,266 |
2015 Notes payable - related party [Member] | Minimum [Member] | ||
Interest rate | 10.00% | |
2015 Notes payable - related party [Member] | Maximum [Member] | ||
Interest rate | 11.00% | |
2016 Notes payable - related party [Member] | ||
Term of Notes | Due on demand | |
Principal Outstanding | $ 860,510 | |
Carrying Amount | $ 860,510 | |
2016 Notes payable - related party [Member] | Minimum [Member] | ||
Interest rate | 10.00% | |
2016 Notes payable - related party [Member] | Maximum [Member] | ||
Interest rate | 11.00% | |
Notes payable - related party [Member] | ||
Principal Outstanding | $ 1,924,850 | 2,766,304 |
Carrying Amount | 1,924,850 | 2,766,304 |
Principal Outstanding, current | 1,924,850 | 2,766,304 |
Notes payable, current | $ 1,924,850 | $ 2,766,304 |
NOTES PAYABLE (Details 1)
NOTES PAYABLE (Details 1) | 12 Months Ended | ||
Dec. 31, 2016USD ($)Number$ / shares | Dec. 31, 2015USD ($)Number | Aug. 26, 2016$ / shares | |
Principal Outstanding | $ 18,276,376 | $ 19,128,039 | |
Discount Amount | 1,580,133 | 879,766 | |
Total Carrying Amount | $ 16,696,243 | $ 18,248,273 | |
Shares Underlying Principal | Number | 3,483,068 | 3,169,343 | |
Convertible notes payable, Current | $ 9,205,007 | $ 6,000,347 | |
Convertible notes payable, Non Current | $ 997,957 | 4,206,873 | |
Minimum [Member] | |||
Conversion price | $ / shares | $ 3.05 | ||
Maximum [Member] | |||
Conversion price | $ / shares | $ 3.60 | ||
2010 Convertible notes payable [Member] | |||
Interest rate | 6.00% | ||
Term of Notes | 5 years | ||
Conversion price | $ / shares | $ 3.05 | ||
Principal Outstanding | 2,000 | ||
Total Carrying Amount | $ 2,000 | ||
Shares Underlying Principal | Number | 656 | ||
2011 Convertible notes payable [Member] | |||
Interest rate | 10.00% | ||
Term of Notes | 5 years | ||
Conversion price | $ / shares | $ 3.05 | ||
Principal Outstanding | $ 300,000 | $ 500,000 | |
Total Carrying Amount | $ 300,000 | $ 500,000 | |
Shares Underlying Principal | Number | 98,285 | 163,809 | |
2013 Convertible notes payable [Member] | |||
Interest rate | 10.00% | ||
Term of Notes | 2 years | ||
Conversion price | $ / shares | $ 3.60 | ||
Principal Outstanding | $ 525,257 | ||
Total Carrying Amount | $ 525,257 | ||
Shares Underlying Principal | Number | 185,553 | ||
2014 Convertible notes payable [Member] | |||
Interest rate | 10.00% | ||
Term of Notes | Due on demand ~ 2 years | ||
Principal Outstanding | $ 452,168 | $ 4,378,563 | |
Discount Amount | 353,700 | ||
Total Carrying Amount | $ 452,168 | $ 4,024,863 | |
Shares Underlying Principal | Number | 152,986 | 1,120,470 | |
2014 Convertible notes payable [Member] | Minimum [Member] | |||
Conversion price | $ / shares | $ 3.05 | ||
2014 Convertible notes payable [Member] | Maximum [Member] | |||
Conversion price | $ / shares | $ 3.60 | ||
2015 Convertible notes payable [Member] | |||
Interest rate | 10.00% | ||
Term of Notes | 2 years | ||
Principal Outstanding | $ 2,904,800 | $ 5,681,166 | |
Discount Amount | 104,389 | 526,066 | |
Total Carrying Amount | $ 2,800,411 | $ 5,155,100 | |
Shares Underlying Principal | Number | 889,115 | 1,517,996 | |
2015 Convertible notes payable [Member] | Minimum [Member] | |||
Conversion price | $ / shares | $ 3.50 | ||
2015 Convertible notes payable [Member] | Maximum [Member] | |||
Conversion price | $ / shares | $ 3.60 | ||
2016 Convertible Notes Payable [Member] | |||
Interest rate | 10.00% | ||
Term of Notes | Due on demand ~ 1 year | ||
Principal Outstanding | $ 8,126,129 | ||
Discount Amount | 1,475,744 | ||
Total Carrying Amount | $ 6,650,385 | ||
Shares Underlying Principal | Number | 2,193,687 | ||
2016 Convertible Notes Payable [Member] | Minimum [Member] | |||
Term of Notes | Due on demand | ||
Conversion price | $ / shares | $ 3.50 | ||
2016 Convertible Notes Payable [Member] | Maximum [Member] | |||
Term of Notes | 2 years | ||
Conversion price | $ / shares | $ 4.50 | ||
Convertible Notes Payable [Member] | |||
Conversion price | $ / shares | $ 3.50 | ||
Principal Outstanding | $ 11,783,097 | $ 11,086,986 | |
Discount Amount | 1,580,133 | 879,766 | |
Total Carrying Amount | $ 10,202,964 | $ 10,207,220 | |
Shares Underlying Principal | Number | 3,334,073 | 2,988,484 | |
Principal Outstanding, Current | $ 10,499,303 | $ 6,358,698 | |
Principal Outstanding, Non Current | 1,283,794 | 4,728,288 | |
Discount Amount Current | 1,294,296 | 358,351 | |
Discount Amount Non Current | 285,837 | 521,415 | |
Convertible notes payable, Current | 9,205,007 | 6,000,347 | |
Convertible notes payable, Non Current | $ 997,957 | $ 4,206,873 | |
Shares Underlying Principal Current | Number | 2,984,161 | 1,762,849 | |
Shares Underlying Principal Non Current | Number | 349,912 | 1,225,635 | |
2012 Convertible notes payable - related party [Member] | |||
Interest rate | 10.00% | ||
Term of Notes | Due on demand | ||
Conversion price | $ / shares | $ 3.30 | ||
Principal Outstanding | $ 254,000 | $ 298,000 | |
Total Carrying Amount | $ 254,000 | $ 298,000 | |
Shares Underlying Principal | Number | 94,532 | 108,505 | |
2015 Convertible notes payable - related party [Member] | |||
Interest rate | 10.00% | ||
Term of Notes | 2 years | ||
Conversion price | $ / shares | $ 4.50 | ||
Principal Outstanding | $ 220,000 | $ 320,000 | |
Total Carrying Amount | $ 220,000 | $ 320,000 | |
Shares Underlying Principal | Number | 54,463 | 72,354 | |
Convertible notes payable - related party [Member] | |||
Principal Outstanding | $ 474,000 | $ 618,000 | |
Total Carrying Amount | $ 474,000 | $ 618,000 | |
Shares Underlying Principal | Number | 148,995 | 108,859 | |
Principal Outstanding, Current | $ 474,000 | $ 298,000 | |
Principal Outstanding, Non Current | 320,000 | ||
Convertible notes payable related parties, Current | $ 474,000 | 298,000 | |
Convertible notes payable related parties, Non Current | $ 320,000 | ||
Shares Underlying Principal Current | Number | 148,995 | 108,505 | |
Shares Underlying Principal Non Current | Number | 72,354 |
NOTES PAYABLE (Details 2)
NOTES PAYABLE (Details 2) | Dec. 31, 2015USD ($) |
Contractual principal payments due on loans and notes payable for the year ending | |
2,017 | $ 16,992,582 |
2,018 | 1,283,794 |
Total | $ 18,276,376 |
NOTES PAYABLE (Details 3)
NOTES PAYABLE (Details 3) - $ / shares | Sep. 11, 2013 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | May 10, 2016 | Jan. 14, 2016 | Sep. 09, 2013 | Dec. 31, 2012 |
Stock price | $ 5 | $ 4.70 | |||||||
Warrants [Member] | |||||||||
Stock price | $ 6 | $ 4.70 | $ 4.90 | $ 3.60 | $ 3.60 | ||||
Term | 5 years | 1 year 8 months 12 days | 2 years 8 months 12 days | 3 years 8 months 12 days | 4 years 8 months 12 days | ||||
Risk-free interest rate | 1.72% | 1.09% | 1.23% | 1.38% | 1.75% | ||||
Expected volatility | 72.40% | 68.30% | 64.10% | 71.50% | 63.20% | ||||
Warrants [Member] | Convertible Notes Payable [Member] | |||||||||
Stock price | $ 5 | $ 4.50 | |||||||
Exercise Price | $ 4.90 | ||||||||
Term | 5 years | 5 years | |||||||
Risk-free interest rate | 1.57% | ||||||||
Expected volatility | 67.30% | ||||||||
Warrants [Member] | Convertible Notes Payable [Member] | Minimum [Member] | |||||||||
Exercise Price | $ 4.50 | ||||||||
Risk-free interest rate | 1.01% | ||||||||
Expected volatility | 65.40% | ||||||||
Warrants [Member] | Convertible Notes Payable [Member] | Maximum [Member] | |||||||||
Exercise Price | $ 4.70 | ||||||||
Risk-free interest rate | 1.28% | ||||||||
Expected volatility | 69.60% |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Average stated interest rate | 10.00% | 10.00% |
Average effective interest rate | 27.00% | 23.00% |
Description of debt conversion | Certain notes with a $4.50 and a $7.00 stated conversion price in the second year of their two-year term are subject to automatic conversion into shares of the Company's common stock at a conversion price equal to 80% of the initial public offering price at the time of a qualified public offering. | |
Warrants [Member] | ||
Method of calculation of fair value of warrants | Black-Scholes-Merton option pricing model | |
Minimum [Member] | ||
Conversion price | $ 3.05 | |
Maximum [Member] | ||
Conversion price | $ 3.60 |
STOCKHOLDERS' DEFICIT (Details)
STOCKHOLDERS' DEFICIT (Details) - shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Warrants outstanding summary | ||
Warrants outstanding, ending | 5,024,668 | |
Warrants [Member] | ||
Warrants outstanding summary | ||
Warrants outstanding, beginning | 3,530,918 | 5,101,450 |
Granted | 1,493,750 | 110,417 |
Exercised | (148,256) | |
Cancelled, forfeited and expired | (1,532,693) | |
Warrants outstanding, ending | 5,024,668 | 3,530,918 |
STOCKHOLDERS' DEFICIT (Details
STOCKHOLDERS' DEFICIT (Details 1) | 12 Months Ended |
Dec. 31, 2016Numbershares | |
Outstanding | |
Warrants outstanding | 5,024,668 |
Exercisable | 5,024,668 |
Warrants Issued in 2013 - Exercise Price $3.30 [Member] | |
Outstanding | |
Warrants outstanding | 50,000 |
Weighted Average Remaining Contractual Life (Years) | 1 year 3 months 29 days |
Weighted Average Exercise Price | Number | 3.30 |
Exercisable | 50,000 |
Weighted Average Exercise Price | Number | 3.30 |
Warrants Issued in 2013 - Exercise Price $3.50 [Member] | |
Outstanding | |
Warrants outstanding | 2,225,036 |
Weighted Average Remaining Contractual Life (Years) | 1 year 8 months 12 days |
Weighted Average Exercise Price | Number | 3.50 |
Exercisable | 2,225,036 |
Weighted Average Exercise Price | Number | 3.50 |
Warrants Issued in 2013 [Member] | |
Outstanding | |
Warrants outstanding | 2,275,036 |
Exercisable | 2,275,036 |
Warrants Issued in 2014 - Exercise Price $3.50 [Member] | |
Outstanding | |
Warrants outstanding | 1,145,465 |
Weighted Average Remaining Contractual Life (Years) | 1 year 8 months 19 days |
Weighted Average Exercise Price | Number | 3.50 |
Exercisable | 1,145,465 |
Weighted Average Exercise Price | Number | 3.50 |
Warrants Issued in 2014 [Member] | |
Outstanding | |
Warrants outstanding | 1,145,465 |
Exercisable | 1,145,465 |
Warrants Issued in 2015 - Exercise Price $4.90 [Member] | |
Outstanding | |
Warrants outstanding | 110,417 |
Weighted Average Remaining Contractual Life (Years) | 3 years 2 months 5 days |
Weighted Average Exercise Price | Number | 4.90 |
Exercisable | 110,417 |
Weighted Average Exercise Price | Number | 4.90 |
Warrants Issued in 2015 [Member] | |
Outstanding | |
Warrants outstanding | 110,417 |
Exercisable | 110,417 |
Warrants Issued in 2016 - Exercise Price $4.50 [Member] | |
Outstanding | |
Warrants outstanding | 118,750 |
Weighted Average Remaining Contractual Life (Years) | 4 years 6 months |
Weighted Average Exercise Price | Number | 4.50 |
Exercisable | 118,750 |
Weighted Average Exercise Price | Number | 4.50 |
Warrants Issued in 2016 - Exercise Price $4.70 [Member] | |
Outstanding | |
Warrants outstanding | 75,000 |
Weighted Average Remaining Contractual Life (Years) | 4 years 3 months 29 days |
Weighted Average Exercise Price | Number | 4.70 |
Exercisable | 75,000 |
Weighted Average Exercise Price | Number | 4.70 |
Warrants Issued in 2016 - Exercise Price $5.00 [Member] | |
Outstanding | |
Warrants outstanding | 1,300,000 |
Weighted Average Remaining Contractual Life (Years) | 4 years 4 months 10 days |
Weighted Average Exercise Price | Number | 5 |
Exercisable | 1,300,000 |
Weighted Average Exercise Price | Number | 5 |
STOCKHOLDERS' DEFICIT (Detail50
STOCKHOLDERS' DEFICIT (Details 2) - $ / shares | May 10, 2016 | Jan. 14, 2016 |
Stockholders' Equity Note [Abstract] | ||
Stock price | $ 5 | $ 4.70 |
Exercise price | $ 5 | $ 4.70 |
Term | 10 years | 10 years |
Risk-Free Interest Rate | 1.36% | 1.70% |
Dividend Yield | 0.00% | 0.00% |
Volatility | 65.55% | 64.14% |
STOCKHOLDERS' DEFICIT (Detail51
STOCKHOLDERS' DEFICIT (Details 3) - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Options, Outstanding [Roll Forward] | ||
Granted or deemed issued | 2,596,200 | |
2011 Stock Incentive Option Plan [Member] | ||
Options, Outstanding [Roll Forward] | ||
Options outstanding, beginning | 4,753,335 | 5,669,000 |
Granted or deemed issued | 2,596,200 | |
Exercised | (15,866) | (2,000) |
Cancelled, forfeited and expired | (378,469) | (913,665) |
Options outstanding, end | 6,955,200 | 4,753,335 |
Options exercisable | 4,372,667 | 4,379,335 |
Options available for future grant | 2,044,800 | 4,246,665 |
Weighted Average Exercise Price [Roll Forward] | ||
Options outstanding, beginning | $ 3.60 | $ 3.68 |
Granted or deemed issued | 4.97 | |
Exercised | 3.60 | 3.60 |
Cancelled, forfeited and expired | 3.91 | 4.05 |
Options outstanding, end | 4.10 | 3.60 |
Options exercisable | $ 3.59 | $ 3.60 |
STOCKHOLDERS' DEFICIT (Detail52
STOCKHOLDERS' DEFICIT (Details Narrative) | Sep. 12, 2016USD ($)$ / sharesshares | Aug. 26, 2016USD ($)Number$ / shares | Jun. 10, 2014USD ($)$ / sharesshares | Sep. 11, 2013USD ($)$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares | May 10, 2016$ / shares | Jan. 14, 2016$ / shares | Jun. 10, 2015USD ($)shares | Dec. 31, 2014$ / sharesshares | Sep. 11, 2014USD ($)shares | Jul. 14, 2014shares | Dec. 31, 2013$ / shares | Sep. 09, 2013$ / shares | Feb. 28, 2013shares | Feb. 27, 2013shares | Dec. 31, 2012$ / shares |
Warrants outstanding | shares | 5,024,668 | ||||||||||||||||
Fair value of outstanding warrants | $ 10,600,000 | $ 7,863,000 | |||||||||||||||
Proceeds from exercise of warrants | $ 4,890,105 | 18,000 | |||||||||||||||
Issuance of warrants (in shares) | shares | 304,167 | ||||||||||||||||
Options granted | shares | 2,596,200 | ||||||||||||||||
Share-based compensation | $ 3,328,400 | 3,708,801 | |||||||||||||||
Share price | $ / shares | $ 5 | $ 4.70 | |||||||||||||||
Convertible note inducement expense | 1,444,863 | ||||||||||||||||
Loss on debt settlement | $ (266,736) | ||||||||||||||||
Conversion of nonconvertible notes payable to common stock | $ 102,885 | ||||||||||||||||
Convertible Notes Payable [Member] | |||||||||||||||||
Converted debt amount | $ 4,007,598 | ||||||||||||||||
Conversion price | $ / shares | $ 3.50 | ||||||||||||||||
Accrued interest | $ 260,124 | ||||||||||||||||
Number of note holders | Number | 19 | ||||||||||||||||
Convertible note inducement expense | $ 1,444,863 | ||||||||||||||||
Notes Payable [Member] | |||||||||||||||||
Converted debt amount | 622,384 | ||||||||||||||||
Loss on debt settlement | (266,736) | ||||||||||||||||
Conversion of nonconvertible notes payable to common stock | $ 889,120 | ||||||||||||||||
KPM Tech Co., Ltd [Member] | Letter of Agreement [Member] | |||||||||||||||||
Common stock price | $ / shares | $ 15.32 | ||||||||||||||||
Future capital increases | $ 13,000,000 | ||||||||||||||||
Hanil Vacuum Co Ltd [Member] | Letter of Agreement [Member] | |||||||||||||||||
Common stock price | $ / shares | $ 3.68 | ||||||||||||||||
Future capital increases | $ 1,000,000 | ||||||||||||||||
Maximum [Member] | |||||||||||||||||
Conversion price | $ / shares | $ 3.60 | ||||||||||||||||
Minimum [Member] | |||||||||||||||||
Conversion price | $ / shares | $ 3.05 | ||||||||||||||||
2011 Stock Incentive Option Plan [Member] | |||||||||||||||||
Options granted | shares | 2,596,200 | ||||||||||||||||
Exercise price - options | $ / shares | $ 4.10 | $ 3.60 | $ 3.68 | ||||||||||||||
Options outstanding | shares | 6,955,200 | 4,753,335 | 5,669,000 | ||||||||||||||
Total unrecognized compensation cost | $ 8,000,000 | ||||||||||||||||
Period remaining for recognition of unrecognized compensation cost | 2 years 1 month 6 days | ||||||||||||||||
2011 Stock Incentive Option Plan [Member] | Stock Options [Member] | |||||||||||||||||
Number of shares authorized under the plan | shares | 9,000,000 | 9,000,000 | 6,000,000 | 3,000,000 | |||||||||||||
Expiration period | 10 years | ||||||||||||||||
Vesting period | 3 years | ||||||||||||||||
Share-based compensation | $ 3,300,000 | $ 3,700,000 | |||||||||||||||
2011 Stock Incentive Option Plan [Member] | 2016 Stock Options Tranche 1 [Member] | |||||||||||||||||
Options granted | shares | 300,000 | ||||||||||||||||
Exercise price - options | $ / shares | $ 4.70 | ||||||||||||||||
Vesting percentage | 33.00% | ||||||||||||||||
2011 Stock Incentive Option Plan [Member] | 2016 Stock Options Tranche 2 [Member] | |||||||||||||||||
Options granted | shares | 2,296,200 | ||||||||||||||||
Exercise price - options | $ / shares | $ 5 | ||||||||||||||||
Vesting percentage | 33.00% | ||||||||||||||||
Warrants [Member] | |||||||||||||||||
Share price | $ / shares | $ 6 | $ 4.70 | $ 4.90 | $ 3.60 | $ 3.60 | ||||||||||||
Warrants [Member] | Convertible Notes Payable [Member] | |||||||||||||||||
Share price | $ / shares | $ 5 | $ 4.50 | |||||||||||||||
Cashless Exercise Warrants [Member] | |||||||||||||||||
Warrants outstanding | shares | 3,320,501 | ||||||||||||||||
Number of shares callable by warrants | shares | 1,660,251 | ||||||||||||||||
Increase fair value of common stock | $ / shares | $ 1 | ||||||||||||||||
Cashless Exercise Warrants [Member] | Maximum [Member] | |||||||||||||||||
Number of shares callable by warrants | shares | 1,383,542 | ||||||||||||||||
Share price | $ / shares | $ 6 | ||||||||||||||||
Cashless Exercise Warrants [Member] | Minimum [Member] | |||||||||||||||||
Share price | $ / shares | $ 7 | ||||||||||||||||
Private Placement [Member] | |||||||||||||||||
Units issued in offering (in units) | shares | 3,020,501 | ||||||||||||||||
Unit price of offering | shares | 2.50 | ||||||||||||||||
Units issued in offering | $ 7,551,253 | ||||||||||||||||
Warrants issued to broker of the offering | shares | 300,000 | ||||||||||||||||
Exercise price | $ / shares | $ 3.50 | $ 3.50 | |||||||||||||||
Warrants outstanding | shares | 2,225,036 | ||||||||||||||||
Fair value of outstanding warrants | $ 1,800,000 | $ 7,068,000 | |||||||||||||||
Number of warrants exercised | shares | 1,095,465 | ||||||||||||||||
Proceeds from exercise of warrants | $ 3,800,000 | ||||||||||||||||
Issuance of common stock for exercise of warrants | shares | 1,095,465 | ||||||||||||||||
Adjustment ot additional paid-in capital - warrants | $ 1,800,000 | ||||||||||||||||
Number of registrable securities (shares) | shares | 4,115,966 | ||||||||||||||||
Private Placement [Member] | Letter of Agreement [Member] | |||||||||||||||||
Common stock price | $ / shares | $ 4.50 | ||||||||||||||||
Reduction in additional paid in capital | $ 720,000 | ||||||||||||||||
Private Placement [Member] | KPM Tech Co., Ltd [Member] | Letter of Agreement [Member] | |||||||||||||||||
Purchase of common stock | $ 17,000,000 | ||||||||||||||||
Common stock price | $ / shares | $ 4.50 | ||||||||||||||||
Future capital investment | $ 13,000,000 | ||||||||||||||||
Number of shares issued | shares | 3,777,778 | ||||||||||||||||
Private Placement [Member] | Hanil Vacuum Co Ltd [Member] | Letter of Agreement [Member] | |||||||||||||||||
Purchase of common stock | $ 3,000,000 | ||||||||||||||||
Common stock price | $ / shares | $ 4.50 | ||||||||||||||||
Future capital investment | $ 1,000,000 | ||||||||||||||||
Number of shares issued | shares | 666,667 | ||||||||||||||||
Private Placement [Member] | Maximum [Member] | Letter of Agreement [Member] | |||||||||||||||||
Conversion price | $ / shares | $ 7 | ||||||||||||||||
Private Placement [Member] | Minimum [Member] | Letter of Agreement [Member] | |||||||||||||||||
Conversion price | $ / shares | $ 4.50 | ||||||||||||||||
Private Placement [Member] | Replacement Warrants [Member] | |||||||||||||||||
Exercise price | $ / shares | $ 3.50 | ||||||||||||||||
Warrants outstanding | shares | 1,095,465 | ||||||||||||||||
Fair value of outstanding warrants | $ 2,545,000 | ||||||||||||||||
Issuance of warrants (in shares) | shares | 1,095,465 | ||||||||||||||||
Warrant exercise inducement expense | $ 3,500,000 | ||||||||||||||||
Private Placement [Member] | Warrants [Member] | |||||||||||||||||
Number of registrable securities (shares) | shares | 3,320,501 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Current | ||
U.S. | $ 2,400 | $ 2,400 |
International | 1,293 | 1,164 |
Deferred | ||
INCOME TAXES (BENEFIT) | $ 3,693 | $ 3,564 |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Components of net deferred tax assets | ||
Net operating loss carryforward | $ 20,881,231 | $ 16,650,797 |
General business tax credit | 7,504,146 | 6,510,162 |
Stock options | 7,633,468 | 6,271,690 |
Charitable contribution | 56,617 | 79,944 |
Accrued expenses | 384,690 | 290,083 |
Other | 412,630 | 444,929 |
Total gross deferred tax assets | 36,872,782 | 30,247,605 |
Less valuation allowance | (36,740,418) | (30,116,742) |
Net deferred tax assets | $ 132,364 | $ 130,863 |
INCOME TAXES (Details 2)
INCOME TAXES (Details 2) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Income Tax Disclosure [Abstract] | ||
Unrealized gain on foreign exchange translation and others | $ (83,880) | $ (99,228) |
Unrealized gain on securities available-for-sale | (48,484) | (31,635) |
Total deferred tax liability | $ (132,364) | $ (130,863) |
INCOME TAXES (Details 3)
INCOME TAXES (Details 3) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Reconciliation of effective income tax | ||
Tax benefit at statutory federal rate | $ (7,481,009) | $ (4,295,120) |
State taxes, net of federal tax benefit | (695,697) | (469,692) |
Increase in valuation allowance | 6,640,524 | 4,948,921 |
Permanent items | 3,633,702 | 675,959 |
General business tax credit | (993,983) | (789,556) |
Other | (1,099,844) | (66,948) |
INCOME TAXES (BENEFIT) | $ 3,693 | $ 3,564 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Operating Loss Carryforwards [Line Items] | ||
Change in valuation allowance | $ 6,623,676 | $ 4,923,738 |
Statutory federal tax rate (in percent) | 34.00% | |
General business tax credits | $ 7,504,000 | 6,510,000 |
Federal | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforwards expiration | Dec. 31, 2036 | |
Business credits expiration | Dec. 31, 2026 | |
Net operating loss carryforwards | $ 51,240,000 | 42,909,000 |
State and Local | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carryforwards expiration | Dec. 31, 2036 | |
Net operating loss carryforwards | $ 49,561,000 | $ 40,440,000 |
COMMITMENTS AND CONTINGENCIES58
COMMITMENTS AND CONTINGENCIES (Details) | Dec. 31, 2016USD ($) |
Future minimum lease payments | |
2,017 | $ 553,956 |
2,018 | 538,498 |
2,019 | 126,115 |
Total | $ 1,218,569 |
COMMITMENTS AND CONTINGENCIES59
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Monthly commercialization management fee | $ 4,500 | |
Rent expense | $ 589,769 | $ 492,919 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) | 12 Months Ended | ||||
Dec. 31, 2016USD ($)Number$ / shares | Dec. 31, 2015USD ($)$ / shares | Dec. 31, 2015USD ($)Number$ / shares | |||
Short-term Debt [Line Items] | |||||
Principal Amount Outstanding | $ 16,696,243 | $ 18,248,273 | $ 18,248,273 | ||
Shares Underlying Principal | Number | 3,483,068 | 3,169,343 | |||
Less discount | $ (1,580,133) | (879,766) | $ (879,766) | ||
Total | $ 18,276,376 | $ 18,276,376 | |||
Hope Hospice [Member] | |||||
Short-term Debt [Line Items] | |||||
Annual Interest Rate | [1] | 8.00% | 8.00% | 8.00% | |
Date of Loan | [1] | Jan. 17, 2012 | Jan. 17, 2012 | ||
Term of Loan | [1] | Due on demand | Due on demand | ||
Principal Amount Outstanding | [1] | $ 200,000 | $ 200,000 | $ 200,000 | |
Highest Principal Outstanding | [1] | 200,000 | $ 200,000 | 200,000 | |
Amount of Interest Paid | [1] | $ 20,000 | $ 8,000 | ||
Hope Hospice [Member] | |||||
Short-term Debt [Line Items] | |||||
Annual Interest Rate | [1] | 8.00% | 8.00% | 8.00% | |
Date of Loan | [1] | Jun. 14, 2012 | Jun. 14, 2012 | ||
Term of Loan | [1] | Due on demand | Due on demand | ||
Principal Amount Outstanding | [1] | $ 200,000 | $ 200,000 | $ 200,000 | |
Highest Principal Outstanding | [1] | 200,000 | $ 200,000 | 200,000 | |
Amount of Interest Paid | [1] | $ 20,000 | $ 8,000 | ||
Hope Hospice [Member] | |||||
Short-term Debt [Line Items] | |||||
Annual Interest Rate | 8.00% | [1] | 8.00% | 8.00% | |
Date of Loan | [1] | Jun. 21, 2012 | Jun. 21, 2012 | ||
Term of Loan | [1] | Due on demand | Due on demand | ||
Principal Amount Outstanding | [1] | $ 100,000 | $ 100,000 | $ 100,000 | |
Highest Principal Outstanding | [1] | 100,000 | $ 100,000 | 100,000 | |
Amount of Interest Paid | [1] | $ 10,000 | $ 4,000 | ||
Yutaka Niihara [Member] | |||||
Short-term Debt [Line Items] | |||||
Annual Interest Rate | [2],[3] | 10.00% | 10.00% | ||
Date of Loan | [2],[3] | Dec. 5, 2012 | |||
Term of Loan | [2],[3] | Due on demand | |||
Principal Amount Outstanding | [2],[3] | $ 126,729 | $ 126,729 | ||
Highest Principal Outstanding | [2],[3] | $ 1,213,700 | 1,213,700 | ||
Amount of Principal Repaid | [2],[3] | 1,086,970 | |||
Amount of Interest Paid | [2],[3] | $ 56,722 | |||
Hope Hospice [Member] | |||||
Short-term Debt [Line Items] | |||||
Annual Interest Rate | [1] | 8.00% | 8.00% | 8.00% | |
Date of Loan | [1] | Feb. 11, 2013 | Feb. 11, 2013 | ||
Term of Loan | [1] | Due on demand | Due on demand | ||
Principal Amount Outstanding | [1] | $ 50,000 | $ 50,000 | $ 50,000 | |
Highest Principal Outstanding | [1] | 50,000 | $ 50,000 | 50,000 | |
Amount of Interest Paid | [1] | $ 5,000 | $ 2,000 | ||
Lan T. Tran [Member] | |||||
Short-term Debt [Line Items] | |||||
Annual Interest Rate | [3] | 11.00% | 11.00% | ||
Date of Loan | [3] | Feb. 10, 2014 | |||
Term of Loan | [3] | Due on demand | |||
Principal Amount Outstanding | [3] | $ 106,976 | $ 106,976 | ||
Highest Principal Outstanding | [3] | $ 106,976 | $ 106,976 | ||
Hideki & Eiko Uehara [Member] | |||||
Short-term Debt [Line Items] | |||||
Annual Interest Rate | [4] | 11.00% | 11.00% | ||
Date of Loan | [4] | Feb. 15, 2014 | |||
Term of Loans | [4] | 2 years | |||
Principal Amount Outstanding | [4] | $ 133,333 | $ 133,333 | ||
Highest Principal Outstanding | [4] | $ 133,333 | $ 133,333 | ||
Hope Hospice [Member] | |||||
Short-term Debt [Line Items] | |||||
Annual Interest Rate | [1] | 10.00% | 10.00% | 10.00% | |
Date of Loan | [1] | Jan. 7, 2015 | Jan. 7, 2015 | ||
Term of Loan | [1] | Due on demand | Due on demand | ||
Principal Amount Outstanding | [1] | $ 100,000 | $ 100,000 | $ 100,000 | |
Highest Principal Outstanding | [1] | $ 100,000 | $ 100,000 | $ 100,000 | |
James Lee [Member] | |||||
Short-term Debt [Line Items] | |||||
Annual Interest Rate | [4] | 10.00% | 10.00% | ||
Date of Loan | [4] | Jan. 26, 2015 | |||
Term of Loan | [4] | Due on demand | |||
Principal Amount Outstanding | [4] | $ 50,000 | $ 50,000 | ||
Highest Principal Outstanding | [4] | $ 50,000 | $ 50,000 | ||
Hope Hospice [Member] | |||||
Short-term Debt [Line Items] | |||||
Annual Interest Rate | [1] | 10.00% | 10.00% | ||
Date of Loan | [1] | Jan. 29, 2015 | |||
Term of Loan | [1] | Due on demand | |||
Principal Amount Outstanding | [1] | $ 30,000 | $ 30,000 | ||
Highest Principal Outstanding | [1] | $ 30,000 | $ 30,000 | ||
Yutaka Niihara [Member] | |||||
Short-term Debt [Line Items] | |||||
Annual Interest Rate | [2],[3] | 10.00% | 10.00% | ||
Date of Loan | [2],[3] | Jan. 29, 2015 | |||
Term of Loan | [2],[3] | Due on demand | |||
Principal Amount Outstanding | [2],[3] | ||||
Highest Principal Outstanding | [2],[3] | $ 20,000 | 20,000 | ||
Amount of Principal Repaid | [2],[3] | 20,000 | |||
Amount of Interest Paid | [2],[3] | $ 773 | |||
Lan T. Tran [Member] | |||||
Short-term Debt [Line Items] | |||||
Annual Interest Rate | [3] | 10.00% | 10.00% | 10.00% | |
Date of Loan | [3] | Feb. 9, 2015 | Feb. 9, 2015 | ||
Term of Loan | [3] | Due on demand | Due on demand | ||
Principal Amount Outstanding | [3] | $ 10,000 | $ 10,000 | $ 10,000 | |
Highest Principal Outstanding | [3] | $ 10,000 | $ 10,000 | $ 10,000 | |
Charles Stark [Member] | |||||
Short-term Debt [Line Items] | |||||
Annual Interest Rate | [3] | 10.00% | 10.00% | ||
Date of Loan | [3] | Feb. 10, 2015 | |||
Term of Loan | [3] | Due on demand | |||
Principal Amount Outstanding | [3] | $ 10,000 | $ 10,000 | ||
Highest Principal Outstanding | [3] | $ 10,000 | $ 10,000 | ||
IRA Service Trust Co. FBO Peter B. Ludlum [Member] | |||||
Short-term Debt [Line Items] | |||||
Annual Interest Rate | [3] | 10.00% | 10.00% | 10.00% | |
Date of Loan | [3] | Feb. 20, 2015 | Feb. 20, 2015 | ||
Term of Loan | [3] | Due on demand | Due on demand | ||
Principal Amount Outstanding | [3] | $ 10,000 | $ 10,000 | $ 10,000 | |
Highest Principal Outstanding | [3] | $ 10,000 | $ 10,000 | $ 10,000 | |
Cuc T. Tran [Member] | |||||
Short-term Debt [Line Items] | |||||
Annual Interest Rate | [4] | 11.00% | 11.00% | ||
Date of Loan | [4] | Mar. 5, 2015 | |||
Term of Loans | [4] | 1 year | |||
Principal Amount Outstanding | [4] | $ 13,161 | $ 13,161 | ||
Highest Principal Outstanding | [4] | $ 13,161 | $ 13,161 | ||
Yutaka Niihara [Member] | |||||
Short-term Debt [Line Items] | |||||
Annual Interest Rate | [2],[3] | 10.00% | 10.00% | ||
Date of Loan | [2],[3] | Apr. 7, 2015 | |||
Term of Loan | [2],[3] | Due on demand | |||
Principal Amount Outstanding | [2],[3] | $ 500,000 | $ 500,000 | ||
Highest Principal Outstanding | [2],[3] | $ 500,000 | $ 500,000 | ||
Yutaka Niihara [Member] | |||||
Short-term Debt [Line Items] | |||||
Annual Interest Rate | [2],[3] | 10.00% | 10.00% | 10.00% | |
Date of Loan | [2],[3] | May 21, 2015 | May 21, 2015 | ||
Term of Loan | [2],[3] | Due on demand | Due on demand | ||
Principal Amount Outstanding | [2],[3] | $ 94,340 | $ 826,105 | $ 826,105 | |
Highest Principal Outstanding | [2],[3] | 826,105 | $ 826,105 | $ 826,105 | |
Amount of Principal Repaid | [2],[3] | 731,765 | |||
Amount of Interest Paid | [2],[3] | $ 47,822 | |||
Masaharu & Emiko Osato [Member] | |||||
Short-term Debt [Line Items] | |||||
Annual Interest Rate | [2] | 11.00% | 11.00% | 11.00% | |
Date of Loan | [2] | Dec. 29, 2015 | Dec. 29, 2015 | ||
Term of Loan | Due on demand | [2] | Due on demand | ||
Principal Amount Outstanding | [2] | $ 300,000 | $ 300,000 | $ 300,000 | |
Highest Principal Outstanding | [2] | 300,000 | 300,000 | 300,000 | |
Notes payable - related party [Member] | |||||
Short-term Debt [Line Items] | |||||
Principal Amount Outstanding | 1,924,850 | 2,766,304 | 2,766,304 | ||
Highest Principal Outstanding | 2,869,648 | $ 3,873,275 | 3,873,275 | ||
Amount of Principal Repaid | 944,798 | 1,106,970 | |||
Amount of Interest Paid | $ 116,336 | $ 79,495 | |||
Yasushi Nagasaki [Member] | |||||
Short-term Debt [Line Items] | |||||
Annual Interest Rate | [3] | 10.00% | 10.00% | 10.00% | |
Date of Loan | [3] | Jun. 29, 2012 | Jun. 29, 2012 | ||
Term of Loan | [3] | Due on demand | Due on demand | ||
Principal Amount Outstanding | [3] | $ 254,000 | $ 298,000 | $ 298,000 | |
Highest Principal Outstanding | [3] | 388,800 | $ 388,800 | 388,800 | |
Amount of Principal Repaid | [3] | 134,800 | $ 90,800 | ||
Amount of Interest Paid | [3] | $ 27,824 | |||
Conversion price | $ / shares | [3] | $ 3.3 | $ 3.3 | $ 3.3 | |
Shares Underlying Principal | Number | [3] | 94,532 | 108,505 | ||
Long-term convertible notes payable - related party [Member] | |||||
Short-term Debt [Line Items] | |||||
Principal Amount Outstanding | $ 320,000 | $ 320,000 | |||
Highest Principal Outstanding | $ 320,000 | $ 320,000 | |||
Shares Underlying Principal | Number | 72,354 | ||||
Yutaka Niihara [Member] | |||||
Short-term Debt [Line Items] | |||||
Annual Interest Rate | [2],[3] | 10.00% | 10.00% | ||
Date of Loan | [2],[3] | Sep. 29, 2015 | |||
Term of Loans | [2],[3] | 2 years | |||
Principal Amount Outstanding | [2],[3] | $ 100,000 | $ 100,000 | ||
Highest Principal Outstanding | [2],[3] | $ 100,000 | $ 100,000 | ||
Conversion price | $ / shares | [2],[3] | $ 4.50 | $ 4.50 | ||
Shares Underlying Principal | Number | [2],[3] | 22,794 | |||
Notes payable and convertible notes payable - related party [Member] | |||||
Short-term Debt [Line Items] | |||||
Principal Amount Outstanding | $ 2,398,850 | $ 3,384,304 | $ 3,384,304 | ||
Highest Principal Outstanding | 3,478,448 | 4,582,075 | 4,582,075 | ||
Amount of Principal Repaid | 1,079,598 | 1,197,770 | |||
Amount of Interest Paid | $ 144,160 | $ 79,495 | |||
Shares Underlying Principal | Number | 148,995 | 180,859 | |||
Convertible notes payable - related party [Member] | |||||
Short-term Debt [Line Items] | |||||
Principal Amount Outstanding | $ 474,000 | 618,000 | $ 618,000 | ||
Highest Principal Outstanding | 608,800 | $ 388,800 | 388,800 | ||
Amount of Principal Repaid | 134,800 | $ 90,800 | |||
Amount of Interest Paid | $ 27,824 | ||||
Shares Underlying Principal | Number | 148,995 | 108,859 | |||
Charles & Kimxa Stark [Member] | |||||
Short-term Debt [Line Items] | |||||
Annual Interest Rate | [3] | 10.00% | 10.00% | 10.00% | |
Date of Loan | [3] | Oct. 1, 2015 | Oct. 1, 2015 | ||
Term of Loans | [3] | 2 years | 2 years | ||
Principal Amount Outstanding | [3] | $ 20,000 | $ 20,000 | $ 20,000 | |
Highest Principal Outstanding | [3] | $ 20,000 | $ 20,000 | $ 20,000 | |
Conversion price | $ / shares | [3] | $ 4.50 | $ 4.50 | $ 4.50 | |
Shares Underlying Principal | Number | [3] | 5,002 | 4,556 | ||
Yutaka & Soomi Niihara [Member] | |||||
Short-term Debt [Line Items] | |||||
Annual Interest Rate | [2],[3] | 10.00% | 10.00% | 10.00% | |
Date of Loan | [2],[3] | Nov. 16, 2015 | Nov. 16, 2015 | ||
Term of Loans | [2],[3] | 2 years | 2 years | ||
Principal Amount Outstanding | [2],[3] | $ 200,000 | $ 200,000 | $ 200,000 | |
Highest Principal Outstanding | [2],[3] | $ 200,000 | $ 200,000 | $ 200,000 | |
Conversion price | $ / shares | [2],[3] | $ 4.50 | $ 4.50 | $ 4.50 | |
Shares Underlying Principal | Number | [2],[3] | 49,461 | 45,004 | ||
Lan T. Tran [Member] | |||||
Short-term Debt [Line Items] | |||||
Annual Interest Rate | [3] | 11.00% | |||
Date of Loan | [3] | Feb. 10, 2016 | |||
Term of Loan | [3] | Due on demand | |||
Principal Amount Outstanding | [3] | $ 130,510 | |||
Highest Principal Outstanding | [3] | $ 130,510 | |||
Hideki & Eiko Uehara [Member] | |||||
Short-term Debt [Line Items] | |||||
Annual Interest Rate | [4] | 11.00% | |||
Date of Loan | [4] | Feb. 15, 2016 | |||
Term of Loan | [4] | Due on demand | |||
Highest Principal Outstanding | [4] | $ 133,333 | |||
Amount of Principal Repaid | [4] | 133,333 | |||
Amount of Interest Paid | [4] | $ 12,226 | |||
Conversion price | $ / shares | [4] | $ 3.5 | |||
Masaharu & Emiko Osato [Member] | |||||
Short-term Debt [Line Items] | |||||
Annual Interest Rate | [2] | 11.00% | |||
Date of Loan | [2] | Feb. 25, 2016 | |||
Term of Loan | [2] | Due on demand | |||
Principal Amount Outstanding | [2] | $ 400,000 | |||
Highest Principal Outstanding | [2] | $ 400,000 | |||
Hope Hospice [Member] | |||||
Short-term Debt [Line Items] | |||||
Annual Interest Rate | [1] | 10.00% | |||
Date of Loan | [1] | Apr. 4, 2016 | |||
Term of Loan | [1] | Due on demand | |||
Principal Amount Outstanding | [1] | $ 50,000 | |||
Highest Principal Outstanding | [1] | $ 50,000 | |||
Willis C. Lee [Member] | |||||
Short-term Debt [Line Items] | |||||
Annual Interest Rate | [2],[3] | 10.00% | |||
Date of Loan | [2],[3] | Apr. 8, 2016 | |||
Term of Loan | [2],[3] | Due on demand | |||
Highest Principal Outstanding | [2],[3] | $ 79,700 | |||
Amount of Principal Repaid | [2],[3] | 79,700 | |||
Amount of Interest Paid | [2],[3] | $ 1,288 | |||
Lan T. Tran [Member] | |||||
Short-term Debt [Line Items] | |||||
Annual Interest Rate | [3] | 10.00% | |||
Date of Loan | [3] | Apr. 29, 2016 | |||
Term of Loan | [3] | Due on demand | |||
Principal Amount Outstanding | [3] | $ 20,000 | |||
Highest Principal Outstanding | [3] | $ 20,000 | |||
IRA Service Trust Co. FBO Peter B. Ludlum [Member] | |||||
Short-term Debt [Line Items] | |||||
Annual Interest Rate | [3] | 10.00% | |||
Date of Loan | [3] | May 5, 2016 | |||
Term of Loan | [3] | Due on demand | |||
Principal Amount Outstanding | [3] | $ 10,000 | |||
Highest Principal Outstanding | [3] | $ 10,000 | |||
Hope Hospice [Member] | |||||
Short-term Debt [Line Items] | |||||
Annual Interest Rate | [1] | 10.00% | |||
Date of Loan | [1] | Jun. 3, 2016 | |||
Term of Loan | [1] | Due on demand | |||
Principal Amount Outstanding | [1] | $ 250,000 | |||
Highest Principal Outstanding | [1] | $ 250,000 | |||
[1] | Dr. Niihara, who is the Company's CEO, is also the CEO of Hope Hospice. | ||||
[2] | Director. | ||||
[3] | Officer. | ||||
[4] | Family of Officer/Director |
RELATED PARTY TRANSACTIONS (D61
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | Jun. 27, 2013 | Dec. 31, 2016 | Dec. 31, 2015 |
Number of shares cancelled | 2,504,249 | ||
Number of shares issued | $ 22,341,156 | ||
AFH Advisory [Member] | |||
Gain on derecognition of amounts due to related party | $ 394,446 | ||
Targeted Medical Pharma Inc [Member] | |||
Number of shares issued | $ 150,000 |
GEOGRAPHIC INFORMATION (Details
GEOGRAPHIC INFORMATION (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Japan [Member] | ||
Company revenue earned from countries outside of the U.S. | ||
Revenue | $ 160,543 | $ 194,142 |
Percentage of revenue (in percent) | 35.00% | 33.00% |
Taiwan [Member] | ||
Company revenue earned from countries outside of the U.S. | ||
Revenue | $ 220,397 | $ 277,637 |
Percentage of revenue (in percent) | 48.00% | 47.00% |
South Korea [Member] | ||
Company revenue earned from countries outside of the U.S. | ||
Revenue | $ 39,660 | |
Percentage of revenue (in percent) | 0.00% | 7.00% |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) | Jan. 02, 2017 | Dec. 31, 2016 | Aug. 26, 2016 | |
Principal Amounts | $ 16,212,313 | |||
Convertible Notes Payable [Member] | ||||
Conversion Price | $ 3.50 | |||
Subsequent Event [Member] | ||||
Principal Amounts | $ 2,452,163 | |||
Subsequent Event [Member] | Convertible Notes Payable [Member] | ||||
Principal Amounts | [1] | $ 504,312 | ||
Annual Interest Rate | [1] | 10.00% | ||
Term of Notes | [1] | Due on Demand to 2 Years | ||
Conversion Price | [1] | $ 3.60 | ||
Subsequent Event [Member] | Convertible Notes Payable [Member] | ||||
Principal Amounts | [1] | $ 1,130,536 | ||
Annual Interest Rate | [1] | 10.00% | ||
Term of Notes | [1] | 6 Months to 2 Years | ||
Conversion Price | [1] | $ 3.50 | ||
Subsequent Event [Member] | Convertible Notes Payable [Member] | ||||
Principal Amounts | $ 200,000 | |||
Annual Interest Rate | 10.00% | |||
Term of Notes | [1] | Due on Demand to 6 Months | ||
Conversion Price | $ 7.60 | |||
Subsequent Event [Member] | Promissory Notes Payable [Member] | ||||
Principal Amounts | [1],[2] | $ 605,315 | ||
Annual Interest Rate | [1],[2] | 11.00% | ||
Term of Notes | [1],[2] | Due on Demand | ||
Subsequent Event [Member] | Promissory Notes - Related Party [Member] | ||||
Principal Amounts | [1] | $ 12,000 | ||
Annual Interest Rate | [1] | 10.00% | ||
Term of Notes | [1] | Due on Demand | ||
Conversion Price | [1] | |||
[1] | Refinancings of prior notes already outstanding. | |||
[2] | Principal amount of note is JPY68,320,000 which was converted into US dollars using an exchange rate of 0.008860 as of February 17, 2017. |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | Jan. 16, 2017 | Jan. 02, 2017 | Dec. 31, 2016 | May 01, 2017 | Mar. 28, 2017 | Mar. 06, 2017 | Feb. 17, 2017 | Feb. 06, 2017 | |
Principal amounts | $ 16,212,313 | ||||||||
Proceeds from issuance of common stock | $ 22,341,156 | ||||||||
Subsequent Event [Member] | |||||||||
Principal amounts | $ 2,452,163 | ||||||||
Number of shares issued | 13,000 | ||||||||
Proceeds from issuance of common stock | $ 98,000 | ||||||||
Subsequent Event [Member] | Letter of intent ("LOI") [Member] | Generex Biotechnology Corporation ("Generex") [Member] | |||||||||
Total consideration | $ 225,000,000 | ||||||||
Cash consideration | $ 10,000,000 | ||||||||
Number of shares issued | 215,000,000 | ||||||||
Business acquisition, share price | $ 3.80 | ||||||||
Security deposit | $ 500,000 | $ 6,000,000 | $ 3,000,000 | $ 500,000 | $ 1,500,000 | ||||
Subsequent Event [Member] | Letter of intent ("LOI") [Member] | Generex Biotechnology Corporation ("Generex") [Member] | Restricted Stock [Member] | |||||||||
Number of shares issued | 24,414,063 | ||||||||
Subsequent Event [Member] | Promissory Notes Payable [Member] | |||||||||
Principal amounts | [1],[2] | 605,315 | |||||||
Exchange rate | $ 0.008860 | ||||||||
Subsequent Event [Member] | Promissory Notes Payable [Member] | Japanese Yen [Member] | |||||||||
Principal amounts | $ 68,320,000 | ||||||||
[1] | Principal amount of note is JPY68,320,000 which was converted into US dollars using an exchange rate of 0.008860 as of February 17, 2017. | ||||||||
[2] | Refinancings of prior notes already outstanding. |