Document and Entity Information
Document and Entity Information - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Apr. 01, 2019 | Jun. 30, 2017 | |
Document And Entity Information | |||
Entity Registrant Name | Inspyr Therapeutics, Inc. | ||
Entity Central Index Key | 0001421204 | ||
Document Type | 10-K | ||
Trading Symbol | NSPX | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | No | ||
Entity's Reporting Status Current | Yes | ||
Entity Small Business | true | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Ex Transition Period | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 811,209 | ||
Entity Common Stock, Shares Outstanding | 150,000,000 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2017 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash | $ 10 | $ 547 |
Prepaid expenses | 5 | 112 |
Total current assets | 15 | 659 |
Office and lab equipment, net of accumulated depreciation of $2 and $0 | 4 | 4 |
Intangible assets, net of accumulated amortization of $162 and $144 | 50 | 68 |
Other assets | 3 | |
Total assets | 69 | 734 |
Current liabilities: | ||
Accounts payable | 1,968 | 1,238 |
Accrued expenses | 1,539 | 384 |
Convertible debentures, net of unamortized discount of $227 | 2,476 | |
Derivative liability | 2,934 | |
Total current liabilities | 8,917 | 1,622 |
Total liabilities | 8,917 | 1,622 |
Commitments and contingencies | ||
Stockholders' deficit: | ||
Convertible preferred stock, par value $.0001 per share; 30,000,000 shares authorized, 495 and 2,828 shares issued and outstanding, respectively | ||
Common stock, par value $.0001 per share; 150,000,000 shares authorized, 10,888,929 and 1,398,832 shares issued and outstanding, respectively | 1 | |
Additional paid-in capital | 50,885 | 47,746 |
Accumulated deficit | (59,734) | (48,634) |
Total stockholders' deficit | (8,848) | (888) |
Total liabilities and stockholders' deficit | $ 69 | $ 734 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Office and lab equipment, accumulated depreciation | $ 2 | $ 0 |
Intangible assets, accumulated amortization | 162 | $ 144 |
Net of unamortized discount of, convertible debentures | $ 227 | |
Convertible preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Convertible preferred stock, shares authorized | 30,000,000 | 30,000,000 |
Convertible preferred stock, shares issued | 495 | 2,828 |
Convertible preferred stock, shares outstanding | 495 | 2,828 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 10,888,929 | 1,398,832 |
Common stock, shares outstanding | 10,888,929 | 1,398,832 |
CONSOLIDATED STATEMENTS OF LOSS
CONSOLIDATED STATEMENTS OF LOSSES - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Operating expenses: | ||
Research and development | $ 1,695 | $ 1,101 |
General and administrative | 1,665 | 2,089 |
Impairment of goodwill | 2,159 | |
Impairment of equipment | 332 | |
Total operating expenses | 5,851 | 3,190 |
Loss from operations | (5,851) | (3,190) |
Other income (expense): | ||
Loss on change in fair value of derivative liability | (103) | |
Gain on conversion of debt | 88 | |
Interest income (expense), net | (5,234) | 3 |
Loss before provision for income taxes | (11,100) | (3,187) |
Provision for income taxes | ||
Net loss | (11,100) | (3,187) |
Deemed dividend | (2,204) | (1,046) |
Net loss attributable to common shareholders | $ (13,304) | $ (4,233) |
Net loss per common share, basic and diluted (in dollars per share) | $ (2.74) | $ (3.04) |
Weighted average shares outstanding (in shares) | 4,855,784 | 1,394,065 |
CONSOLIDATED STATEMENT OF STOCK
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT - USD ($) $ in Thousands | Convertible Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at beginning at Dec. 31, 2015 | $ 44,715 | $ (45,447) | $ (732) | ||
Balance at beginning (in shares) at Dec. 31, 2015 | 1,853 | 1,392,079 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation | 113 | 113 | |||
Adjustment for reverse split (in shares) | 1,197 | ||||
Conversion of preferred stock to common stock | |||||
Conversion of preferred stock to common stock (in shares) | (25) | 5,556 | |||
Reversal of prior year accrued officer compensation | 2,053 | 2,053 | |||
Sale of preferred stock and warrants | 900 | 900 | |||
Sale of preferred stock and warrants (in shares) | 1,000 | ||||
Cost of preferred stock sale | (35) | (35) | |||
Net loss | (3,187) | (3,187) | |||
Balance at ending at Dec. 31, 2016 | 47,746 | (48,634) | (888) | ||
Balance at ending (in shares) at Dec. 31, 2016 | 2,828 | 1,398,832 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation | 202 | 202 | |||
Conversion of preferred stock to common stock | |||||
Conversion of preferred stock to common stock (in shares) | (118) | 223,585 | |||
Preferred stock exchanged for convertible notes payable | |||||
Preferred stock exchanged for convertible notes payable (in shares) | (2,505) | ||||
Conversion of notes | 155 | 155 | |||
Conversion of notes (in shares) | 2,144,340 | ||||
Common stock issued for acquisition | $ 1 | 2,492 | 2,493 | ||
Common stock issued for acquisition (in shares) | 7,122,172 | ||||
Sale of preferred stock and warrants | 285 | 285 | |||
Sale of preferred stock and warrants (in shares) | 285 | ||||
Preferred stock and warrants issued for services | 5 | 5 | |||
Preferred stock and warrants issued for services (in shares) | 5 | ||||
Net loss | (11,100) | (11,100) | |||
Balance at ending at Dec. 31, 2017 | $ 1 | $ 50,885 | $ (59,734) | $ (8,848) | |
Balance at ending (in shares) at Dec. 31, 2017 | 495 | 10,888,929 |
CONSOLIDATED STATEMENT OF STO_2
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Preferred Stock And Warrants [Member] [Member] | ||
Share price | $ 1 | $ 0.75 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Cash flows from operating activities: | ||
Net loss | $ (11,100) | $ (3,187) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 40 | 21 |
Stock-based compensation | 207 | 113 |
Loss on change in fair value of derivative liability | 103 | |
Loss on sale of assets | 4 | |
Gain on conversion of debt | (88) | |
Amortization of debt discount | 93 | |
Finance cost | 5,137 | |
Impairment of goodwill | 2,159 | |
Impairment of equipment | 332 | |
Decrease in operating assets: | ||
Prepaid expenses and other assets | 114 | 2 |
Increase in operating liabilities: | ||
Accounts payable and accrued expenses | 1,911 | 314 |
Cash used in operating activities | (1,092) | (2,733) |
Cash flows from investing activities: | ||
Cash from acquisition | 23 | |
Proceeds from sale of assets | 4 | |
Acquisition of office equipment | (3) | (4) |
Cash provided by investing activities | 20 | |
Cash flows from financing activities: | ||
Proceeds from convertible notes | 250 | |
Proceeds from sale of stock and warrants | 285 | 850 |
Cost of sale of common stock and warrants | (35) | |
Cash provided by financing activities | 535 | 815 |
Net decrease in cash | (537) | (1,918) |
Cash, beginning of year | 547 | 2,465 |
Cash, end of year | $ 10 | $ 547 |
BACKGROUND
BACKGROUND | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BACKGROUND | NOTE 1 – BACKGROUND Inspyr Therapeutics, Inc. (“we”, “us”, “our company”, “our”, “Inspyr” or the “Company”) was formed under the laws of the State of Delaware in November 2003, and has its principal office in Westlake Village, California. We are an early-stage, pre-revenue, pharmaceutical company focused on the discovery and development of prodrug cancer therapeutics for the treatment of solid tumors, including brain, liver, prostate and other cancers. We plan to develop a series of therapies based on our target-activated prodrug technology platform. Effective August 1, 2016, pursuant to a certificate of amendment to our amended and restated certificate of incorporation, we changed our corporate name from GenSpera, Inc. to Inspyr Therapeutics, Inc. Effective August 1, 2016, our common stock ceased trading under the symbol “GNSZ” and began trading under the symbol NSPX on August 2, 2016. Effective November 17, 2016 at 5:00 p.m. Eastern Time, we effected a one (1) for thirty (30) reverse stock split of our common stock. Accordingly, each of our shareholders received one (1) new share of common stock for every thirty (30) shares of common stock such shareholder held immediately prior to the effective time of the reverse split. The reverse stock split affected all of our issued and outstanding shares of common stock as well as the number of shares of common stock underlying stock options, warrants and other exercisable or convertible instruments outstanding at the effective time of the reverse split. The reverse split also has the effect of proportionately increasing the applicable conversion or exercise price of such convertible securities. The shareholders received no fractional shares and instead had every fractional share rounded up to the next whole number. All references to common stock, share and per share amounts have been retroactively restated to reflect the 1:30 reverse stock split as if it had taken place as of the beginning of the earliest period presented. We are a clinical-stage, pre-revenue, pharmaceutical company primarily focused on the development of therapeutics for the treatment of diseases. Through our acquisition of Lewis and Clark Pharmaceuticals, Inc., we currently are focusing on a pipeline of small molecule adenosine receptor modulators. The adenosine receptor modulators include A 2B 2A 2B 2A During February 2018, due to a lack of capital, we curtailed our business operations. In the event that we are able to raise sufficient capital, our major focus would be: (i) further characterization, in conjunction with Ridgeway Therapeutics, of anti-cancer activity of the current pipeline of A 2B 2A 2B 2A 2B 2A 2B 2A Our ability to execute our business plan is dependent on the amount and timing of capital, if any, that we are able to raise. During July 2018, we were able to raise approximately $500,000 through the sale of debt securities. We are currently using such funds to attempt to become current in our SEC reporting requirements, pay outstanding invoices to our independent registered accounting firm, and other outstanding obligations directly related to our SEC reporting requirements, the payment of which we believe to be vital to our future operations. Should we fail to further raise sufficient funds to execute our business plan, our priority would be to maintain our intellectual property portfolio and continue, to the best of our ability, our public company reporting requirements. |
MANAGEMENT'S PLANS TO CONTINUE
MANAGEMENT'S PLANS TO CONTINUE AS A GOING CONCERN | 12 Months Ended |
Dec. 31, 2017 | |
Management Plans to Continue as Going Concern [Abstract] | |
MANAGEMENT'S PLANS TO CONTINUE AS A GOING CONCERN | NOTE 2 – MANAGEMENT’S PLANS TO CONTINUE AS A GOING CONCERN Basis of Presentation The opinion of our independent registered accounting firm on our financial statements contains explanatory going concern language. We have prepared our financial statements on the basis that we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. We have incurred losses since inception and have an accumulated deficit of $59.7 million as of December 31, 2017. We anticipate incurring additional losses for the foreseeable future until such time, if ever, that we can generate significant sales from our therapeutic product candidates which are currently in development or we enter into cash flow positive business development transactions. To date, we have generated no sales or revenues, have incurred significant losses and expect to incur significant additional losses as we advance mipsagargin through clinical studies. Consequently, our operations are subject to all the risks inherent in the establishment of a pre-revenue business enterprise as well as those risks associated with a company engaged in the research and development of pharmaceutical compounds. Our cash and cash equivalents balance at December 31, 2017 was approximately $10,000, representing 14.5% of our total assets. Based on our current expected level of operating expenditures, we expect to be able to fund our operations into the third quarter of 2018. We curtailed our operations in February 2018. We will require additional cash to fund and continue our operations beyond that point. This period could be shortened if there are any unanticipated increases in planned spending on development programs or other unforeseen events. We anticipate raising additional funds through collaborative arrangements, licensing agreements, public or private sales of debt or equity securities, or some combination thereof. There is no assurance that any such arrangement will be entered into or that financing will be available when needed in order to allow us to continue our operations, or if available, on terms favorable or acceptable to us. We raised $500,000 in July 2018, which we expect will enable us to bring our required annual and quarterly filings current, which will enable us to seek additional financing. In the event additional financing is not obtained, we may pursue cost cutting measures as well as explore the sale of selected assets to generate additional funds. If we are required to significantly reduce operating expenses and delay, reduce the scope of, or eliminate any of our development programs or clinical trials, these events could have a material adverse effect on: our business, results of operations, and financial condition. These factors raise significant doubt about our ability to continue as a going concern. The financial statements do not include any adjustments relating to recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern. Our auditors’ report issued in connection with our December 31, 2017 financial statements expressed an opinion that our capital resources as of the date of their audit report were not sufficient to sustain operations or complete our planned activities for the upcoming year unless we raised additional funds. Accordingly, our current cash level raises substantial doubt about our ability to continue as a going concern past the third quarter of 2018. If we do not obtain additional funds by such time, we may no longer be able to continue as a going concern and will cease operation which means that our shareholders will lose their entire investment. |
SUMMARY OF CRITICAL ACCOUNTING
SUMMARY OF CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
SUMMARY OF CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES | NOTE 3 – SUMMARY OF CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures. Significant estimates include the fair value of derivative instruments, stock-based compensation, recognition of clinical trial costs and other accrued liabilities. Actual results may differ from those estimates. Research and Development Research and development costs are charged to expense as incurred. Our research and development expenses consist primarily of expenditures for toxicology and other studies, manufacturing, clinical trials, compensation and consulting costs. We incurred research and development expenses of $1.7 and $1.1 million for the years ended December 31, 2017 and 2016, respectively. Cash Equivalents For purposes of the statements of cash flows, we consider all highly liquid debt instruments purchased with a maturity date of three months or less to be cash equivalents. We maintain our cash in bank deposit accounts which, at times, may exceed applicable government mandate insurance limits. We have not experienced any losses in our accounts. Concentrations of Credit Risk Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. The Company places its cash and temporary cash investments with credit quality institutions. At times, such investments may exceed applicable government mandated insurance limits. Cash was $0.01 million and $0.5 million at December 31, 2017 and 2016, respectively. As of December 31, 2017 and 2016, there was approximately $0 million and $0.3 million in cash over the federally insured limit, respectively. Intangible Assets Intangible assets consist of licensed technology, patents, and patent applications (see Note 5). The assets associated with licensed technology are recorded at cost and are being amortized on the straight line basis over their estimated useful lives of twelve to seventeen years. Office and Lab Equipment Equipment is stated at cost less accumulated depreciation. Depreciation is calculated on the straight line basis over the estimated useful lives of the assets of three to seven years. Expenditures for repair and maintenance which do not materially extend the useful lives of property and equipment are charged to expense. When property or equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective accounts with the resulting gain or loss reflected in operations. Management periodically reviews the carrying value of its equipment for impairment. Due to the curtailment of business activity in February 2018, the Company determined that the office and lab equipment acquired pursuant to the Lewis & Clark, Pharmaceuticals, Inc. acquisition had become fully impaired as of December 31, 2017. Accordingly, we recorded an impairment charge of $0.3 million during the year ended December 31, 2017. Depreciation expense was approximately $23,000 and $4,000 for the years ended December 31, 2017 and 2016, respectively. Loss per Share Basic loss per share is calculated by dividing net loss and net loss attributable to common shareholders by the weighted average number of common shares outstanding for the period. Basic and diluted loss per share are the same, in that any potential common stock equivalents would have the effect of being anti-dilutive in the computation of net loss per share. The following potentially dilutive securities have been excluded from the computations of weighted average shares outstanding as of December 31, 2017 and 2016, as they would be anti-dilutive: Year Ended December 31, 2017 2016 Shares underlying options outstanding 356,280 268,876 Shares underlying warrants outstanding 3,045,740 5,203,436 Shares underlying convertible notes outstanding 135,122,128 — Shares underlying convertible preferred stock outstanding 18,324,050 3,770,833 156,848,198 9,243,145 Derivative Liability The Company has financial instruments that are considered derivatives or contain embedded features subject to derivative accounting. Embedded derivatives are valued separately from the host instrument and are recognized as derivative liabilities in the Company’s balance sheet. The Company measures these instruments at their estimated fair value and recognizes changes in their estimated fair value in results of operations during the period of change. The Company values its derivative liabilities using the Black-Scholes option valuation model. The resulting liability is valued at each reporting date and the change in the liability is reflected as change in derivative liability in the statement of operations. Goodwill Our goodwill consists of the excess purchase price paid in business combinations over the fair value of assets acquired. Goodwill is considered to have an indefinite life. The Company has decided to perform its annual goodwill and impairment assessment on December 31st of each year. The Company employs the non-amortization approach to account for goodwill. Under the non-amortization approach, goodwill is not amortized into the results of operations, but instead is reviewed annually or more frequently if events or changes in circumstances indicate that the asset might be impaired, to assess whether the fair value exceeds the carrying value. When evaluating the potential impairment of goodwill, we first assess a range of qualitative factors, including but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for the Company’s products and services, regulatory and political developments, entity specific factors such as strategy and changes in key personnel, and the overall financial performance for each of the Company’s reporting units. If, after completing this assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we then proceed to a two-step impairment testing methodology using the income approach (discounted cash flow method). In the first step of the two-step testing methodology, we compare the carrying value of the reporting unit, including goodwill, with its fair value, as determined by its estimated discounted cash flows. If the carrying value of a reporting unit exceeds its fair value, we then complete the second step of the impairment test to determine the amount of impairment to be recognized. In the second step, we estimate an implied fair value of the reporting unit’s goodwill by allocating the fair value of the reporting unit to 100% of the assets and liabilities other than goodwill (including any unrecognized intangible assets). If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, the Company records an impairment loss equal to the difference in that period. When required, we arrive at our estimates of fair value using a discounted cash flow methodology which includes estimates of future cash flows to be generated by specifically identified assets, as well as selecting a discount rate to measure the present value of those anticipated cash flows. Estimating future cash flows requires significant judgment and includes making assumptions about projected growth rates, industry-specific factors, working capital requirements, weighted average cost of capital, and current and anticipated operating conditions. The use of different assumptions or estimates for future cash flows could produce different results. Due to the curtailment of business activity in February 2018, the Company determined that the goodwill assigned to the Lewis & Clark, Pharmaceuticals, Inc. acquisition had become fully impaired as of December 31, 2017. Accordingly, we recorded a goodwill impairment charge of $2.2 million during the year ended December 31, 2017. Fair Value of Financial Instruments Our short-term financial instruments, including cash, accounts payable and other liabilities, consist primarily of instruments with maturities of three months or less when acquired. We believe that the fair values of our current assets and current liabilities approximate their reported carrying amounts. The derivative liability consists of our convertible notes with a variable conversion feature. The Company uses the Black-Scholes option-pricing model to value its derivative liability which incorporate the Company’s stock price, volatility, U.S. risk-free interest rate, dividend rate, and estimated life. Fair Value Measurements The U.S. GAAP Valuation Hierarchy establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The Company has recorded a derivative liability for its convertible notes with a variable conversion feature, as of December 31, 2017. The tables below summarize the fair values of our financial liabilities as of December 31, 2017 (in thousands): Fair Value at December 31, Fair Value Measurement Using 2017 Level 1 Level 2 Level 3 Derivative liability $ 2,934 $ — $ — $ 2,934 The reconciliation of the derivative liability measured at fair value on a recurring basis using unobservable inputs (Level 3) is as follows (in thousands): Balance, December 31, 2016 $ — Additions to derivative instruments 2,952 Conversions (121 ) Loss on change in fair value of derivative liability 103 Balance, December 31, 2017 $ 2,934 Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the reversal of deferred tax liabilities during the period in which the related temporary difference becomes deductible. Stock-Based Compensation We measure the cost of employee services received in exchange for equity awards based on the grant-date fair value of the awards. All awards under our stock-based compensation programs are accounted for at fair value and that cost is recognized over the period during which an employee is required to provide service in exchange for the award (the vesting period). Compensation expense for options granted to non-employees is determined in accordance with the fair value of the consideration received or the fair value of the equity instruments issued, whichever is a more reliable measurement. Compensation expense for awards granted to non-employees is re-measured on each accounting period. Determining the appropriate fair value of stock-based compensation requires the input of subjective assumptions, including the expected life of the stock-based compensation and the volatility of our stock price. We use the Black-Scholes option-pricing model to value our stock option awards which incorporates our stock price, volatility, U.S. risk-free interest rate, dividend rate, and estimated life. Effect of ASU No. 2017-11 on Previously Issued Financial Statements In July 2017, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): Part 1 – Accounting for Certain Financial Instruments with Down Round Features and Part 2 – Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with Scope Exception (“ASU No. 2017-11”). Part 1 of ASU No. 2017-11 addresses the complexity of accounting for certain financial instruments with down round features. Down round features are provisions in certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of ASU No. 2017-11 addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification®. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests. For public business entities, the amendments in Part I of this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company has early adopted the guidance under ASU 2017-11 for the year end December 31, 2017. Adjustments to the Company’s previously issued financial statements were required for the full retrospective application of this standard. As such the financial statements for the year ended December 31, 2016 have been adjusted to reflect the adoption of ASU 2017-11. December 31, Adjustments December 31, ASSETS Current assets: Cash $ 547 $ — $ 547 Prepaid expenses 112 — 112 Total current assets 659 — 659 Office equipment, net of accumulated depreciation of $0 4 — 4 Intangible assets, net of accumulated amortization of $144 68 — 68 Other assets 3 — 3 Total assets $ 734 $ — $ 734 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable $ 1,238 $ — $ 1,238 Accrued expenses 384 — 384 Derivative liability 2,541 (2,541 ) — Total current liabilities 4,163 (2,541 ) 1,622 Total liabilities 4,163 (2,541 ) 1,622 Commitments and contingencies — — — Stockholders’ deficit: Convertible preferred stock, par value $.0001 per share; 30,000,000 shares authorized,2,828 shares issued and outstanding — — — Common stock, par value $.0001 per share; 150,000,000 shares authorized, 1,398,832 shares issued and outstanding — — — Additional paid-in capital 45,391 2,355 47,746 Accumulated deficit (48,820 ) 186 (48,634 ) Total stockholders’ deficit (3,429 ) 2,541 (888 ) Total liabilities and stockholders’ deficit $ 734 $ — $ 734 Year Ended Adjustments Year Ended Operating expenses: Research and development $ 1,101 $ — $ 1,101 General and administrative 2,089 — 2,089 Total operating expenses 3,190 — 3,190 Loss from operations (3,190 ) — (3,190 ) Other income (expense): Gain on change in fair value of derivative liability 2,523 (2,523 ) — Interest income (expense), net (2,888 ) 2,891 3 Loss before provision for income taxes (3,555 ) 368 (3,187 ) Provision for income taxes — — — Net loss $ (3,555 ) 368 $ (3,187 ) Deemed dividend — (1,046 ) (1,046 ) . Net loss attributable to common shareholders $ (3,555 ) $ (678 ) $ (4,233 ) Net loss per common share, basic and diluted $ (2.55 ) $ (3.04 ) Weighted average shares outstanding 1,394,065 1,394,065 Year Ended Adjustments Year Ended Cash flows from operating activities: Net loss $ (3,555 ) $ 368 $ (3,187 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 21 — 21 Stock-based compensation 113 — 113 Loss on change in fair value of derivative liability (2,523 ) 2,523 — Loss on sale of assets 4 — 4 Finance cost 2,891 (2,891 ) — Increase in operating assets: Prepaid expenses and other assets 2 — 2 Increase in operating liabilities: Accounts payable and accrued expenses 314 — 314 Cash used in operating activities (2,733 ) — (2,733 ) Cash flows from investing activities: Proceeds from sale of assets 4 — 4 Acquisition of office equipment (4 ) — (4 ) Cash provided by investing activities — — — Cash flows from financing activities: Proceeds from sale of stock and warrants 850 — 850 Cost of sale of common stock and warrants (35 ) — (35 ) Cash provided by financing activities 815 — 815 Net decrease in cash (1,918 ) — (1,918 ) Cash, beginning of period 2,465 — 2,465 Cash, end of period $ 547 — $ 547 Recent Accounting Pronouncements With the exception of those discussed below, there have not been any recent changes in accounting pronouncements and Accounting Standards Update (ASU) issued by the Financial Accounting Standards Board (FASB) during the year ended December 31, 2017 that are of significance or potential significance to the Company. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases. The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company does not expect any impact from the adoption of this standard on its consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU No. 2017-04”). ASU No. 2017-04 simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. A public business entity that is a SEC filer should adopt the amendments of ASU No. 2017-04 for its annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect any impact from the adoption of this standard on its consolidated financial statements. In May 2017, the FASB issued ASU 2017-09, “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting”, which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes as a result of the change in terms or conditions. If an award is not probable of vesting at the time a change is made, the new guidance clarifies that no new measurement date will be required if there is no change to the fair value, vesting conditions, and classification. This ASU will be applied prospectively and is effective for fiscal years beginning after December 15, 2017, and interim periods within those years, with early adoption permitted. The Company does not expect this standard to have a material impact on its consolidated financial statements. In July 2017, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): Part 1 – Accounting for Certain Financial Instruments with Down Round Features and Part 2 – Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with Scope Exception (“ASU No. 2017-11”). Part 1 of ASU No. 2017-11 addresses the complexity of accounting for certain financial instruments with down round features. Down round features are provisions in certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of ASU No. 2017-11 addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification®. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests. For public business entities, the amendments in Part I of this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company has early adopted the guidance under ASU 2017-11 for the year end December 31, 2017. Adjustments to the Company’s previously issued financial statements were required for the full retrospective application of this standard. As such the financial statements for the year ended December 31, 2016 have been adjusted to reflect the adoption of ASU 2017-11. |
SUPPLEMENTAL CASH FLOW INFORMAT
SUPPLEMENTAL CASH FLOW INFORMATION | 12 Months Ended |
Dec. 31, 2017 | |
Supplemental Cash Flow Information [Abstract] | |
SUPPLEMENTAL CASH FLOW INFORMATION | NOTE 4 – SUPPLEMENTAL CASH FLOW INFORMATION The following table contains additional information for the periods reported (in thousands). Year Ended December 31, 2017 2016 Non-cash financial activities: Reversal of accrued prior year compensation credited to paid-in capital $ — $ 2,053 Derivative liability issued 2,952 — Common/Preferred stock and warrants issued for fees 5 50 Net assets and liabilities recognized with the acquisition of Lewis and Clark Pharmaceuticals, Inc. 2,493 — Accounts payable paid through issuance of debentures 70 — Debentures issued to retire preferred stock 2,505 — Debentures converted to common stock 122 — Common stock issued on conversion of notes payable 155 — There was no cash paid for interest and income taxes for the years ended December 31, 2017 and 2016. |
INTELLECTUAL PROPERTY
INTELLECTUAL PROPERTY | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTELLECTUAL PROPERTY | NOTE 5 – INTELLECTUAL PROPERTY We solely own or have exclusive licenses to all of our patents and patent applications. Between 2008 and 2011, we entered into license and assignment agreements with Johns Hopkins University (JHU), the University of Copenhagen (UC) and certain co-inventors (Assignee Co-Founders), in which we paid $212,000 in cash and common stock. As a result of these payments and pursuant to the agreements, we acquired worldwide, exclusive, fully paid up rights in know-how, pre-clinical data, development data and certain patent portfolios that relate to, and form the basis of, our technology. Under these agreements, we are not required to make any other future payments, including fees or other reimbursements, milestones, or royalties, to JHU, UC, or the Assignee Co-Founders. Amortization expense recorded during the years ended December 31, 2017 and 2016 was approximately $17,000 for both years. Amortization expense is estimated to be approximately $17,000 for each one of the next three fiscal years. |
ACCRUED EXPENSES
ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2017 | |
Accrued Liabilities, Current [Abstract] | |
ACCRUED EXPENSES | NOTE 6 – ACCRUED EXPENSES Accrued expenses consist of the following (in thousands): December 31, 2017 2016 Accrued compensation and benefits $ 1,154 $ 62 Accrued research and development 144 126 Accrued other 241 196 Total accrued expenses $ 1,539 $ 384 During 2016 we reversed approximately $2 million of prior year accrued bonus compensation. It has been determined that attainment of milestones and goals was not met and that the bonuses have not been earned. The reversal of the prior year accrual has been credited to additional paid in capital. |
DERIVATIVE LIABILITY
DERIVATIVE LIABILITY | 12 Months Ended |
Dec. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE LIABILITY | NOTE 7 – DERIVATIVE LIABILITY We account for equity-linked financial instruments, such as our convertible preferred stock, convertible debentures and our common stock warrants as either equity instruments or derivative liabilities depending on the specific terms of the respective agreement. Equity-linked financial instruments are accounted for as derivative liabilities, in accordance with ASC Topic 815 – Derivatives and Hedging, if the instrument allows for cash settlement or issuance of a variable number of shares. We classify derivative liabilities on the balance sheet at fair value, and changes in fair value during the periods presented in the statement of operations, which is revalued at each balance sheet date subsequent to the initial issuance of the stock warrant. In September, we issued convertible debentures which contain a variable conversion feature, anti-dilution protection and other conversion price adjustment provisions. As a result, the Company assessed its outstanding equity-linked financial instruments and concluded that the convertible notes are subject to derivative accounting. The fair value of the conversion feature is classified as a liability in the financial statements, with the change in fair value during the periods presented recorded in the statement of operations. We have recorded a finance cost of approximately $5.1 million due to the excess of the liability over the proceeds received. During the year ended December 31, 2017, we recorded a loss of approximately $0.1 million related to the change in fair value of the derivative liabilities during the period. For purpose of determining the fair market value of the derivative liability, the Company used Black Scholes option valuation model. The significant assumptions used in the Black Scholes valuations of the derivatives at December 31, 2017 are as follows: 2017 Volatility 226% Expected term (years) 8.5 months Risk-free interest rate 1.645% Dividend yield None As of December 31, 2017, the derivative liability recognized in the financial statements was approximately $2.9 million. As disclosed above, in Note 3, the Company has early adopted the guidance under ASU 2017-11 for the year end December 31, 2017. Adjustments to the Company’s previously issued financial statements were required for the retrospective application of this standard. As such the financial statements for the year ended December 31, 2016 have been adjusted to reflect the adoption of ASU 2017-11. As a result our financial instruments (such as warrants and convertible instruments) with down round features that required fair value measurement of the entire instrument or conversion option have been retroactively reclassified to remove their classification as derivative instruments. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 8 – COMMITMENTS AND CONTINGENCIES Operating Leases Inspyr currently does not have any ongoing leases for office space. It has availability to office space on an as needed basis. Its employees work on a remote basis. The lease for the L&C facility expires at the end of each calendar year and we have the right to renew the lease on an annual basis. The lease lapsed in 2018. Rent expense for office space amounted to approximately $52,000 and $49,000 for the years ended December 31, 2017 and 2016, respectively. Employment Agreements We employ our Chief Executive Officer, our Chief Operating Officer and our Chief Medical Officer pursuant to written employment agreements. The employment agreements contain severance provisions and indemnification clauses. The indemnification agreement provides for the indemnification and defense of the executive officers, in the event of litigation, to the fullest extent permitted by law. On February 28, 2017, Russell Richerson, PhD, resigned as chief operating officer of the Company, effective immediately. Dr. Richerson entered into a separation release of claims agreement (“Separation Agreement”) pursuant to which the Company: (i) issued Dr. Richerson a warrant to purchase 76,726 shares of Common Stock with an exercise price of $0.75 per share and a term of three and a half (3.5) years, (ii) agreed to make the vested portion of any options held by Dr. Richerson, exercisable at any time during their remaining term regardless of any termination provisions contained in the applicable equity compensation plans pursuant to which such awards were made (collectively, the “Awards”) and (iii) agreed to reduce the exercise prices of such Awards to $0.75 per share for the duration of their respective terms. In consideration of the foregoing, Dr. Richerson agreed to release the Company from any and all claims, including any rights or obligations as contained in his prior employment agreement, as amended. Severance provisions are not applicable to any other executive officer employment agreements until such time as they have each been employed for at least 6 months and the Company has raised $25 million in gross proceeds from capital raising transactions. Severance provisions pursuant to a termination within 12 months of a Sale Event occurring are not applicable as of December 31, 2017, as no Sale Event has occurred prior to such date. Legal Matters On March 16, 2016, Dr. Craig Dionne provided us his notice of termination as the company’s Chief Executive Officer and Chief Financial Officer. Dr. Dionne’s notice of termination states that such termination was for “Good Reason” as a result of a material change in his authority, functions, duties and responsibilities as chief executive officer. In the event that termination was for “Good Reason”, Dr. Dionne would be entitled to certain severance payments as well as other benefits. The notice of termination, in additional to requesting such severance, also requests the payment of Dr. Dionne’s annual and long term bonus for 2014 and 2015. While the Company disputes that the termination was for “Good Reason,” as well as the amount of the bonuses due Dr. Dionne, if any, at this time the Company is unable to predict the financial outcome of this matter, and any views formed as to the viability of these claims or the financial liability which could result may change from time to time as the matter proceeds through its course. The Company is uncertain whether any litigation may result from the foregoing and the outcome of any such litigation is uncertain. The Company is subject at times to other legal proceedings and claims, which arise in the ordinary course of its business. Although occasional adverse decisions or settlements may occur, the Company believes that the final disposition of such matters should not have a material adverse effect on its financial position, results of operations or liquidity. |
CAPITAL STOCK AND STOCKHOLDER'S
CAPITAL STOCK AND STOCKHOLDER'S EQUITY | 12 Months Ended |
Dec. 31, 2017 | |
Stockholders' Equity Note [Abstract] | |
CAPITAL STOCK AND STOCKHOLDER'S EQUITY | NOTE 9 – CAPITAL STOCK AND STOCKHOLDERS’ EQUITY Preferred Stock In December 2016, we issued 1,000 shares of our Series B 0% Convertible Preferred Stock, with a stated value of $1,000 per share and the common shares are issuable pursuant to conversion of the preferred stock at a conversion price of $0.75 per share, subject to beneficial ownership limitations and subject to adjustment pursuant to stock splits and dividends, and subject to adjustment pursuant to anti-dilution protection for subsequent equity sales and other conversion price adjustments. See “December 2016 Offering” below for further discussion. On November 10, 2016, the Company issued 5,556 common shares to a shareholder pursuant to the conversion of 25.00005 shares of Series A 0% Convertible Preferred Stock at a conversion price of $4.50 per common share. In March and April, 2017, we sold 290.4 shares of Series C 0% Convertible Preferred Stock. The Series C Preferred Stock has a stated value of $1,000 and is immediately convertible into 387,251 shares of the Company’s common stock, subject to certain beneficial ownership limitations, at a conversion price equal to $0.75, subject to adjustment. The Conversion Price is subject to certain reset adjustments as more fully described in the Certificate of Designation (as defined below), including (a) the date of any future amendment to the Company’s certificate of incorporation with respect to a reverse stock split. The Series C Preferred Stock has anti-dilution protection until such the twelve (12) month anniversary of the issuance of the Series C Preferred Stock. See “March 2017 Offering” and “April 2017 Offering” below for further discussion. During 2017, 79.5 shares of Series A Preferred Stock and 39 shares of Series B Preferred Stock were converted into a total of 223,585 shares of common stock. On September 12, 2017 we entered into an exchange agreement (“Exchange Agreement”) with certain holders (the “Investors”) of our Series A 0% Convertible Preferred Stock (“Series A Shares”) and Series B 0% Convertible Preferred Stock (“Series B Shares”). Pursuant to the terms of the Exchange Agreement, we issued to the investors approximately $2.5 million in principal amount of senior convertible debentures in exchange for 1,614.8125 Series A Shares with a stated value of approximately $1.6 million and 890 Series B Shares with a stated value of approximately $0.9 million (collectively, the “Exchange”). In connection with the Exchange, such Series A Shares and Series B Shares have been cancelled and terminated. As a result of recent equity financings and conversions of debentures, the conversion prices of our Series A Preferred Stock has been reduced to $0.53 per share and the conversion price of our Series B Preferred Stock and our Series C preferred stock has been reduced to $0.02 per share at December 31, 2017. Common Stock In September 2015, the board of directors approved amending the Company’s certificate of incorporation to effect a reverse stock split, subject to shareholder approval, of the Company’s issued and outstanding common stock at a ratio of not less than one-for-two (1 for 2), and not more than one-for thirty (1 for 30). Accordingly, the company was given the authority to take the action necessary to obtain shareholder approval at the shareholder meeting scheduled to be held on November 13, 2015. At the meeting, the shareholders approved the amendment. Effective November 4, 2016 at 5:00 p.m. Eastern Time, we effected a one (1) for thirty (30) reverse stock split of our common stock. Accordingly, each of our shareholders received one (1) new share of common stock for every thirty (30) shares of common stock such shareholder held immediately prior to the effective time of the reverse split. The reverse stock split affected all of our issued and outstanding shares of common stock as well as the number of shares of common stock underlying stock options, warrants and other exercisable or convertible instruments outstanding at the effective time of the reverse split. The reverse split also has the effect of proportionately increasing the applicable conversion or exercise price of such convertible securities. The shareholders received no fractional shares and instead had every fractional share rounded up to the next whole number. All references to common stock, share and per share amounts have been retroactively restated to reflect the 1:30 reverse stock split as if it had taken place as of the beginning of the earliest period presented. On November 10, 2016, the Company issued 5,556 common shares to a shareholder pursuant to the conversion of 25.00005 shares of Series A 0% Convertible Preferred Stock at a conversion price of $4.50 per common share. During 2016 we have reversed approximately $2 million of prior year accrued bonus compensation. It has been determined that attainment of milestones and goals was not met and that the bonuses have not been earned. The reversal of the prior year accrual has been credited to additional paid in capital. During 2017, we issued a total of 223,585 shares of common stock upon the conversion of 79.5 shares of Series A Preferred Stock and 39 shares of Series B Preferred Stock. During 2017, we issued a total of 2,144,340 shares of common stock, valued at $155,153, upon the conversion of $122,370 principal amount of our convertible debentures. Effective July 31, 2017 we issued 7,122,172 shares of common stock to acquire 100% of the capital stock of Lewis & Clark, Pharmaceuticals, Inc., a Virginia Corporation, pursuant to the terms of a share exchange agreement dated July 31, 2017. Equity Financings December 2016 Offering In December, 2016, we sold $1,000,000 of the Company’s securities consisting of 1,000 shares of Series B 0% Convertible Preferred Stock and an aggregate of 4,000,008 common stock purchase warrants as described below. The Series B Preferred Stock has a stated value of $1,000 and is immediately convertible into 1,333,336 shares of the Company’s common stock, subject to certain beneficial ownership limitations, at a conversion price equal to $0.75, subject to adjustment. The Conversion Price is subject to certain reset adjustments as more fully described in the Certificate of Designation (as defined below), including (a) the date of any future amendment to the Company’s certificate of incorporation with respect to a reverse stock split, (b) the effective dates of the initial registration statement registering the common shares underlying the Series B Preferred Stock as required under the Registration Rights Agreement (defined below) and (c) in certain cases, the six (6) and twelve (12) month anniversaries of the closing of this offering if certain registration and public information requirements are not met. The Series B Preferred Stock also has a liquidation preference ahead of the Company’s common stock and has anti-dilution protection until such time that the Series B Preferred Stock is no longer outstanding. The Investors also received an aggregate of approximately: (i) 1,333,336 Series J common stock purchase warrants (“Series J Warrants”), (ii) 1,333,336 Series K common stock purchase warrants (“Series K Warrants”) and (iii) 1,333,336 Series L common stock purchase warrants (“Series L Warrants”) (collectively, the “Warrants”). The Series J Warrants have an exercise price of $0.90 per share, subject to adjustment, and a term of five (5) years from the date of issuance, the Series K Warrants have an exercise price of $0.75 per share, subject to adjustment, and a term of six (6) months from the date of issuance and the Series L warrants have an exercise price of $0.75, subject to adjustment, and a term of twelve (12) months from the date of issuance. The Warrants are immediately exercisable and separately transferable from the Series B Preferred Stock. In the event that the shares underlying the Warrants are not subject to a registration statement at the time of exercise, the Warrants may be exercised on a cashless basis after 6 months from the issuance date. The exercise price of the Warrants is subject to certain reset adjustments as more fully described in the form of Warrants, including (i) the date of any future amendment to the Company’s certificate of incorporation with respect to a reverse stock split, (ii) the effective dates of the initial registration statement registering the common shares underlying the Warrants as required under the Registration Rights Agreement (defined below) and (iii) in certain cases, the six (6) and twelve (12) month anniversaries of the date of issuance of the Warrants if certain registration and public information requirements are not met. The Warrants also contain provisions providing for an adjustment in the underlying number of shares and exercise price in the event of stock splits or dividends and fundamental transactions. Additionally, the Warrants contain anti-dilution protection until such time that the Warrants are no longer outstanding. In connection with the Offering, the Investors also entered in a registration rights agreement (“Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, the Company agreed to file a registration statement with the Securities and Exchange Commission (“the Commission”) within 30 days from the date of the Registration Rights Agreement to register the resale of 200% of the shares of common stock underlying the Series B Preferred Stock and 100% of the shares of common stock underlying the Warrants and to maintain the effectiveness thereunder. The Company also agreed to have the registration statement declared effective within 60 days from the date of the Registration Rights Agreement and keep the registration statement continuously effective until the earlier of (i) the date after which all of the securities to be registered thereunder have been sold, or (ii) the date on which all the securities to be registered thereunder may be sold without volume or manner-of-sale restrictions and without current public information pursuant to Rule 144 under the Securities Act of 1933, as amended. We are also obligated to pay the Investors, as partial liquidated damages, a fee of 1.5% of each Investor’s subscription amount per month in cash upon the occurrence of certain events, including our failure to file and / or have the registration statement declared effective within the time provided. The registration statement was filed on January 13, 2017 and was declared effective on January 31, 2017 Our placement agent for the Offering received an aggregate commission of $100,000 and a non-accountable expense allowance of $10,000 and a management fee of $10,000. The Placement Agent has agreed to take $100,000 worth of compensation in securities, upon the same terms as the Investors are purchasing in the Offering. The Placement Agent also received 133,334 common stock purchase warrants with substantially the same terms as the Series J Warrants (“PA Warrants”). The Placement Agent will also receive a cash fee of 10% of gross proceeds received from the exercise of the Warrants. The Placement Agent shall further have a right of first refusal for a twelve (12) month period to act as lead underwriter, placement agent or manager with respect to a public offering transaction of debt or equity of the Company’s securities. Proceeds from the December 2016 offering consisted of $850,000 in cash and the satisfaction of $150,000 of obligations, including the placement agent commission of $100,000 and existing accounts payable of $50,000. The Investors were additionally given a right of participation in future offerings for a period of up to eighteen (18) months from the date in which the shares underlying the Series B Preferred Stock and Warrants are registered as contemplated in the Registration Rights Agreement. The Securities Purchase Agreement also prohibits the Company from issuing any common stock, subject to certain exemptions, for a period of 90 days following the effectiveness of the registration statement as contemplated in the Registration Rights Agreement without the written approval of the Investors owning at least 51% of the securities issued in the Offering. Additionally, until the twelve (12) month anniversary of such effectiveness of the registration statement, the Company is prohibited from entering into any agreement to effect any issuance of common stock in a variable rate transaction. March 2017 Offering In March, 2017, we sold $200,000 of the Company’s securities consisting of 200 shares of Series C 0% Convertible Preferred Stock and an aggregate of 800,019 common stock purchase warrants as described below. The Series C Preferred Stock has a stated value of $1,000 and is immediately convertible into 266,673 shares of the Company’s common stock, subject to certain beneficial ownership limitations, at a conversion price equal to $0.75, subject to adjustment. The Conversion Price is subject to certain reset adjustments including the date of any future amendment to the Company’s certificate of incorporation with respect to a reverse stock split. The Series C Preferred Stock has anti-dilution protection until the twelve month anniversary of the issuance of the Series C Preferred Stock. The Investors also received an aggregate of approximately: (i) 266,673 Series M common stock purchase warrants (“Series M Warrants”), (ii) 266,673 Series N common stock purchase warrants (“Series N Warrants”) and (iii) 266,673 Series O common stock purchase warrants (“Series O Warrants”) (collectively, the “Warrants”). The Series M Warrants have an exercise price of $0.90 per share, subject to adjustment, and a term of five (5) years from the date of issuance, the Series N Warrants have an exercise price of $0.75 per share, subject to adjustment, and a term of six (6) months from the date of issuance and the Series O warrants have an exercise price of $0.75, subject to adjustment, and a term of twelve (12) months from the date of issuance. The Warrants are immediately exercisable and separately transferable from the Series C Preferred Stock. In the event that the shares underlying the Warrants are not subject to a registration statement at the time of exercise, the Warrants may be exercised on a cashless basis after 6 months from the issuance date. The Warrants also contain provisions providing for an adjustment in the underlying number of shares and exercise price in the event of stock splits or dividends and fundamental transactions. Additionally, the Warrants contain anti-dilution protection until the twelve (12) month anniversary of the issuance date. April 2017 Offering In April, 2017, we sold $90,431 of the Company’s securities consisting of 90.4 shares of Series C 0% Convertible Preferred Stock and an aggregate of 361,734 common stock purchase warrants as described below. The Series C Preferred Stock has a stated value of $1,000 and is immediately convertible into 120,578 shares of the Company’s common stock, subject to certain beneficial ownership limitations, at a conversion price equal to $0.75, subject to adjustment. The Conversion Price is subject to certain reset adjustments including the date of any future amendment to the Company’s certificate of incorporation with respect to a reverse stock split. The Series C Preferred Stock has anti-dilution protection until the twelve month anniversary of the issuance of the Series C Preferred Stock. The Investors also received an aggregate of approximately: (i) 120,578 Series M common stock purchase warrants (“Series M Warrants”), (ii) 120,578 Series N common stock purchase warrants (“Series N Warrants”) and (iii) 120,578 Series O common stock purchase warrants (“Series O Warrants”) (collectively, the “Warrants”). The Series M Warrants have an exercise price of $0.90 per share, subject to adjustment, and a term of five (5) years from the date of issuance, the Series N Warrants have an exercise price of $0.75 per share, subject to adjustment, and a term of six (6) months from the date of issuance and the Series O warrants have an exercise price of $0.75, subject to adjustment, and a term of twelve (12) months from the date of issuance. The Warrants are immediately exercisable and separately transferable from the Series C Preferred Stock. In the event that the shares underlying the Warrants are not subject to a registration statement at the time of exercise, the Warrants may be exercised on a cashless basis after 6 months from the issuance date. The Warrants also contain provisions providing for an adjustment in the underlying number of shares and exercise price in the event of stock splits or dividends and fundamental transactions. Additionally, the Warrants contain anti-dilution protection until the twelve (12) month anniversary of the issuance date. Conversion and exercise price resets As a result of recent equity financings and conversions of debentures, the conversion prices of our Series A Preferred Stock has been reduced to $0.53 per share and the conversion price of our Series B Preferred Stock and our Series C preferred stock has been reduced to $0.02 per share. The exercise prices of the warrants issued in conjunction with the Series B and Series C preferred stock have also been reduced to $0.02 per share. As a result of the reductions of the conversion prices of our preferred stock and warrants, we have recorded deemed dividends of approximately $2,204,000 and $1,046,000 during the years ended December 31, 2017 and 2016, respectively. |
STOCK OPTIONS
STOCK OPTIONS | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK OPTIONS | NOTE 10 – STOCK OPTIONS Deferred Compensation Plan In July of 2011, we adopted Executive Deferred Compensation Plan (the Deferred Plan). The Deferred Plan is intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the Code). The Deferred Plan is intended to be an unfunded “top hat” plan which is maintained primarily to provide deferred compensation benefits for a select group of our “management or highly compensated employees” within the meaning of Sections 201, 301, and 401 of the Employee Retirement Income Security Act of 1974, as amended (ERISA), and to therefore be exempt from the provisions of Parts 2, 3, and 4 of Title I of ERISA. The Deferred Plan is intended to help build a supplemental source of savings and retirement income through pre-tax deferrals of eligible compensation, which may include cash, option and stock bonus awards, discretionary cash, option and stock awards and/or any other payments which may be designated by the Deferred Plan administrator, as eligible, for deferral under the Deferred Plan from time to time. As administered, the Deferred Plan is used to defer compensation of stock awards granted under our other equity compensation plans and does not by its terms approve any grants or awards. Inspyr’s Compensation Plans The Company’s 2007 Equity Compensation Plan (2007 Plan), 2009 Executive Compensation Plan (2009 Plan), 2017 Equity Compensation Plan (2017 Plan), and the Inducement Award Stock Option Plan (Inducement Plan) (together, the Plans) provide for the awarding of stock grants, nonqualified and incentive stock options, restricted stock units, performance units or other stock-based awards to officers, directors, employees and consultants of the Company. The purpose of the Plans is to advance the interests of Inspyr and our stockholders by attracting, retaining and rewarding persons performing services for us and to motivate such persons to contribute to our growth and profitability. Our Plans are administered by a committee of non-employee directors (the Committee). The Committee determines: who shall be granted awards; the vesting periods; the exercise price; and any other terms deemed appropriate for any award. Our 2007 Plan is administered by our board or any of its committees. The purposes of the 2007 Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees, Directors and Consultants, and to promote the success of our business. The issuance of awards under our 2007 Plan is at the discretion of the administrator, which has the authority to determine the persons to whom any awards shall be granted and the terms, conditions and restrictions applicable to any award. Under our 2007 Plan, we may grant stock options, restricted stock, stock appreciation rights, restricted stock units, performance units, performance shares and other stock based awards. Our 2007 Plan authorizes the issuance of up to 50,000 shares of common stock for the foregoing awards per fiscal year with an aggregate of 200,000 shares of common stock available for issuance under the 2007 Plan. As of December 31, 2017, we have granted awards under the 2007 Plan equal to approximately 180,699 shares of our common stock, and 79,196 shares have been cancelled or forfeited. Accordingly, there are 98,497 shares of common stock available for future awards under the 2007 Plan. In the event of a change in control, awards under the 2007 Plan will become fully vested unless such awards are assumed or substituted by the successor corporation. Our 2009 Plan, as amended is administered by our Board or any of its committees. The purpose of our 2009 Plan is to advance the interests of the Company and our stockholders by attracting, retaining and rewarding persons performing services for us and to motivate such persons to contribute to our growth and profitability. The issuance of awards under our 2009 Plan is at the discretion of the administrator, which has the authority to determine the persons to whom any awards shall be granted and the terms, conditions and restrictions applicable to any award. Under our 2009 Plan, we may grant stock options, restricted stock, stock appreciation rights, restricted stock units, performance units, performance shares and other stock-based awards. As of December 31, 2017, our 2009 Plan authorizes the issuance of up to 200,000 shares of our common stock for the foregoing awards, and we have granted awards under the plan equal to approximately 164,868 common shares, and 115,782 shares have been cancelled or forfeited. Accordingly, there are 150,914 shares of common stock available for future awards under the 2009 Plan. Our Inducement Plan is administered by our board or our compensation committee. The Plan is intended to be used in connection with the recruiting and inducement of senior management and employees. The issuance of wards under the Inducement Plan is at the discretion of the administrator which has the authority to determine the persons to whom any awards shall be granted and the terms, conditions and restrictions applicable to any award. The Company did not seek approval of the Plan by our stockholders. Pursuant to the Inducement Plan, the Company may grant stock options for up to a total of 300,000 shares of common stock to new employees of the Company. As of December 31, 2017, 211,360 grants have been made pursuant to the Plan. Our 2017 Plan is administered by our Board or any of its committees. The purpose of our 2017 Plan is to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to employees, directors and consultants, and to promote the success of the Company’s business. The issuance of awards under our 2017 Plan is at the discretion of the administrator, which has the authority to determine the persons to whom any awards shall be granted and the terms, conditions and restrictions applicable to any award. Under our 2017 Plan, we may grant stock options, restricted stock, stock appreciation rights, restricted stock units, performance units, performance shares and other stock-based awards. As of December 31, 2017, our 2017 Plan authorizes the issuance of up to 2,000,000 shares of our common stock for the foregoing awards, and we have not granted any awards under the plan. Accordingly, there are 2,000,000 shares of common stock available for future awards under the 2017 Plan. The Company has recorded aggregate stock-based compensation expense related to the issuance of stock option awards in the following line items in the accompanying consolidated statement of losses (in thousands): Year Ended December 31, 2017 2016 Research and development $ 127 $ 41 General and administrative 75 72 Total stock-based compensation expense $ 202 $ 113 As of December 31, 2017, there was approximately $91,000 of total unrecognized compensation cost related to non-vested stock options which vest over time, and is expected to be recognized $68,000 in 2018, $11,000 in 2019, $11,000 in 2020 and $1,000 in 2021. The following table summarizes stock option activity under the Plans: Number of shares Weighted- average exercise price Weighted- average remaining contractual term (in years) Aggregate intrinsic value (in thousands) Outstanding at December 31, 2015 292,172 $ 48.00 Granted 139,253 $ 4.37 Exercised — — Forfeited (162,549 ) $ 49.92 Outstanding at December 31, 2016 268,876 $ 24.15 4.6 $ — Granted 104,747 $ 0.54 Forfeited (17,343 ) $ 41.54 Outstanding at December 31, 2017 356,280 $ 7.45 4.4 $ — Exercisable at December 31, 2017 185,472 $ 11.90 3.2 $ — During 2017 and 2016, the Company issued options to purchase 104,747 and 127,417 shares of common stock, respectively, to employees, and non-employee directors under the Plans. The weighted-average fair value of the options granted to employees and non-employee directors during 2017 and 2016 was estimated at $0.59 and $1.93 per share, respectively, on the date of grant. During 2017 and 2016, the Company issued options to purchase 0 and 11,836 shares of common stock, respectively, to consultants under the Plan. The per-share weighted-average fair value of the options granted to consultants during 2016 was estimated at $2.33 on the date of grant. The following table summarizes weighted-average assumptions using the Black-Scholes option-pricing model used on the date of the grants issued for the years ended December 31, 2017 and 2016: Year Ended December 31, 2017 2016 Volatility 128.5 % 90.6 % Expected term (years) 3.2 1.9 Risk-free interest rate 1.41 % 0.77 % Dividend yield None None No options were exercised during the years ended December 31, 2017 and 2016. |
WARRANTS
WARRANTS | 12 Months Ended |
Dec. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
WARRANTS | NOTE 11 – WARRANTS On February 28, 2017, Russell Richerson, PhD, resigned as chief operating officer of the Company, effective immediately. Dr. Richerson entered into a separation release of claims agreement (“Separation Agreement”) pursuant to which we issued Dr. Richerson a warrant to purchase 76,726 shares of Common Stock with an exercise price of $0.75 per share and a term of 3.5 years. In connection with the sale of our Series C Preferred Stock in March and April 2017, we issued an aggregate of: (i) 387,251 Series M common stock purchase warrants (“Series M Warrants”), (ii) 387,251Series N common stock purchase warrants (“Series N Warrants”) and (iii) 387,251 Series O common stock purchase warrants (“Series O Warrants”) (collectively, the “Warrants”). The Series M Warrants have an exercise price of $0.90 per share, subject to adjustment, and a term of five (5) years from the date of issuance, the Series N Warrants have an exercise price of $0.75 per share, subject to adjustment, and a term of six (6) months from the date of issuance and the Series O warrants have an exercise price of $0.75, subject to adjustment, and a term of twelve (12) months from the date of issuance. The Warrants are immediately exercisable and separately transferable from the Series C Preferred Stock. In the event that the shares underlying the Warrants are not subject to a registration statement at the time of exercise, the Warrants may be exercised on a cashless basis after 6 months from the issuance date. The Warrants also contain provisions providing for an adjustment in the underlying number of shares and exercise price in the event of stock splits or dividends and fundamental transactions. Additionally, the Warrants contain anti-dilution protection until the twelve (12) month anniversary of the issuance date. In December 2016, in connection with a private placement, we issued an aggregate of 4,133,342 common stock purchase warrants, including 4,000,008 to investors; and 133,334 to placement agents. The warrants were issued with exercise prices of $0.75 - $0.90 per share. During 2016, the Company issued warrants to a consultant to purchase 7,215 common shares at a fair value of $1.89 per share on the date of grant. The common stock purchase warrants have an exercise price of $4.35 per share, vest over a two year period and expire on the seven-year anniversary of the date of issuance. During 2016, total stock-based compensation expense of approximately $1,500 was recognized using the straight-line method in the statement of losses for warrants issued to consultants. Transactions involving our warrants are summarized as follows: Number of shares Weighted- average exercise price Weighted- average remaining contractual term (in years) Aggregate intrinsic value (in thousands) Outstanding at December 31, 2015 1,409,367 $ 23.70 Granted 4,140,557 $ 0.81 Forfeited (346,488 ) $ 37.89 Outstanding at December 31, 2016 5,203,436 $ 4.56 2.25 $ — Granted 1,238,479 $ 0.08 Forfeited (3,396,175 ) $ 1.43 Outstanding at December 31, 2017 3,045,740 $ 5.39 3.07 $ 21.9 Exercisable at December 31, 2017 3,040,329 $ 5.39 3.07 $ 21.9 During the years ended December 31, 2017 and 2016, no warrants were exercised into common shares. As a result of recent equity financings and conversions of debentures, the exercise prices of the warrants issued in conjunction with the Series B and Series C preferred stock have also been reduced to $0.02 per share. The following table summarizes outstanding common stock purchase warrants as of December 31, 2017: Number of shares Weighted- average exercise price Expiration Issued to consultants 104,213 $ 7.24 January 2018 through August 2023 Issued pursuant to 2013 financings 143,559 $ 58.64 January 2018 through August 2018 Issued pursuant to 2014 financings 96,412 $ 34.50 June 2019 Issued pursuant to 2015 financings 460,384 $ 8.40 July 2020 through December 2020 Issued pursuant to 2016 financings 1,466,670 $ 0.02 December 2021 Issued pursuant to 2017 financings 774,502 $ 0.02 March 2018 through April 2022 3,045,740 Total stock-based compensation expense of approximately $30,000 and $1,500 was recognized for warrants and included in the statement of operations for the years ended December 31, 2017 and 2016, respectively. |
CONVERTIBLE DEBENTURES
CONVERTIBLE DEBENTURES | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE DEBENTURES | NOTE 12 – CONVERTIBLE DEBENTURES On September 12, 2017 we entered into an exchange agreement (“Exchange Agreement”) with certain holders (the “Investors”) of our Series A 0% Convertible Preferred Stock (“Series A Shares”) and Series B 0% Convertible Preferred Stock (“Series B Shares”). Pursuant to the terms of the Exchange Agreement, we issued to the investors approximately $2.5 million in principal amount of senior convertible debentures (“Debentures”) in exchange for 1,614.8125 Series A Shares with a stated value of approximately $1.6 million and 890 Series B Shares with a stated value of approximately $0.9 million. On September 12, 2017, we sold an aggregate of $320,000 of our Debentures. The sale consisted of $250,000 in cash and the cancellation of $70,000 of obligations of the Company. The Debentures to be issued to the Investors (i) are non-interest bearing, (ii) have a maturity date of September 12, 2018 and (iii) are convertible into shares of common stock (“Common Stock”) of the Company at the election of the Investor at any time, subject to a beneficial ownership limitation of 4.99% which may be increased to 9.99% by the Investor upon 61 days’ notice. The Debentures will have a conversion price equal to the lesser of (i) $0.33 and (ii) 85% of the lesser of (a) the volume weighted average price on the trading day immediately preceding a conversion date and (b) the volume weighted average price on a conversion date. The Debentures also contain provisions providing for an adjustment in the event of stock splits or dividends, and fundamental transactions. The Investors will also have the right to participate in subsequent rights offerings and pro rata distributions. Additionally, the Debentures contain anti-dilution protection in the event of subsequent equity sales at a price that is lower than the then applicable conversion price until such time that the Debentures are no longer outstanding. Additionally, the Company has the option to redeem some or all of the Debentures for cash upon notice of twenty (20) trading days provided certain conditions are met by the Company as more fully described in the Debentures. Furthermore, without the approval of the Investors holding at least 67% of the then outstanding principal amount of the Debentures, the Company may not (i) amend its charter documents in any manner that adversely affects the rights of any Investor, (ii) repay or repurchase or acquire shares of its Common Stock, (iii) repay, repurchase, or acquire certain indebtedness, or (iv) pay cash dividends or distributions on any equity securities of the Company. The Company is also obligated pay Investors, as partial liquidated damages, a fee of 2.0% of each Investor’s initial principal amount of such Investor’s Debenture in cash upon our failure to have current public information available. This requirement has been waived by the Investors through July 5, 2019. In connection with the Offering, the Investors also entered in a registration rights agreement (“Registration Rights Agreement”). Pursuant to the Registration Rights Agreement, the Company agreed to file a registration statement with the Securities and Exchange Commission (“the Commission”) within 45 days from the date of the Registration Rights Agreement to register the resale of 100% of the shares of Common Stock underlying the Debentures and to maintain the effectiveness thereunder. The Company also agreed to have the registration statement declared effective within 75 days from the date of the Registration Rights Agreement and keep the registration statement continuously effective until the earlier of (i) the date after which all of the securities to be registered thereunder have been sold, or (ii) the date on which all the securities to be registered thereunder may be sold without volume or manner-of-sale restrictions and without current public information pursuant to Rule 144 under the Securities Act of 1933, as amended. We are also obligated to pay the Investors, as partial liquidated damages, a fee of 1.5% of each Investor’s subscription amount per month in cash upon the occurrence of certain events, including our failure to file and / or have the registration statement declared effective within the time periods provided. This requirement has been waived by the Investors through July 5, 2019. The Investors were additionally given a right of participation in future offerings for a period of up to eighteen months from the date in which the shares underlying the Debentures are registered as contemplated in the Registration Rights Agreement. The Securities Purchase Agreement also prohibits the Company from issuing any Common Stock, subject to certain exemptions, for a period of 60 days following the closing of the Offering, without the written approval of the Investors owning at least 50.1% of the securities issued in the Offering. Additionally, until the twelve (12) month anniversary of such effectiveness of the registration statement as contemplated in the Registration Rights Agreement, the Company is prohibited from entering into any agreement to effect any issuance of Common Stock in a variable rate transaction. During 2017, we issued a total of 2,144,340 shares of common stock, valued at $155,153, upon the conversion of $122,370 principal amount of our convertible debentures. |
ACQUISITION
ACQUISITION | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
ACQUISITION | NOTE 13 – ACQUISITION On July 31, 2017, we acquired 100% of the capital stock of Lewis & Clark, Pharmaceuticals, Inc., a Virginia Corporation (“L&C”), pursuant to the terms of a share exchange agreement (“Agreement”) dated July 31, 2017 (“Closing Date”), by and among, the Company, L&C, certain principals of L&C (the “Principals”) and all of the existing shareholders of L&C (“Shareholders”). As consideration for the acquisition of L&C, the Company agreed to issue an aggregate of 7,122,172 shares of the Company’s common stock (“Payment Shares”) to the Shareholders, accounting for, subsequent to the closing of the transaction, the Shareholders owning 50% of the issue and outstanding capital stock of the Company (including common shares issuable upon conversion of the Company’s outstanding preferred stock). The shares issued for the acquisition of L&C have been valued at $2,492,760. The Principals have agreed to establish escrow accounts with respect to an aggregate of 973,251 of the Payment Shares pursuant to a share escrow agreement (“Escrow Agreement”) in order to satisfy certain indemnification obligations to the extent such may arise under the Agreement for the benefit of the Company, its shareholders, and its personnel. The Agreement contains certain customary indemnification provisions with respect to the Company one on hand and L&C and the Principals, on the other hand. Additionally, pursuant to the Agreement, all Shareholders that receive at least 5% of the Payment Shares (at least 356,109 shares) (including any shares held in escrow) agree to vote such shares in accordance with the recommendation of the Company’s board of directors (“Board”) with respect to any matter to be voted upon by shareholders of the Company for a period of eighteen (18) months from the Closing Date. Furthermore, each Shareholder agrees that for a period of eighteen (18) months from the Closing Date, it will not sell or transfer any of the Payment Shares it receives pursuant to the Agreement, except that if a Shareholder is employed by the Company, it may sell up to five percent (5%) of Payment Shares it receives on each ninety (90) day period following the one (1) year anniversary of the Closing Date. The preliminary allocation of the purchase price to the assets acquired and liabilities assumed based on the estimated fair values is as follows (in thousands): Cash $ 23 Prepaid expenses 3 Equipment 353 Goodwill 2,159 Total assets acquired 2,538 Accounts payable and other liabilities (45 ) Total $ 2,493 The above estimated fair value of the intangible assets of L&C is based on a preliminary purchase price allocation prepared by management. As a result, during the preliminary purchase price allocation period, which may be up to one year from the business combination date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. After the preliminary purchase price allocation period, we record adjustments to assets acquired or liabilities assumed subsequent to the purchase price allocation period in our operating results in the period in which the adjustments were determined. Due to the curtailment of business activity in February 2018, the Company determined that the goodwill assigned to the Lewis & Clark, Pharmaceuticals, Inc. acquisition had become fully impaired as of December 31, 2017. Accordingly, we recorded a goodwill impairment charge of $2.2 million during the year ended December 31, 2017. The Company also determined that the office and lab equipment acquired pursuant to the Lewis & Clark, Pharmaceuticals, Inc. acquisition had become fully impaired as of December 31, 2017. Accordingly, we recorded an impairment charge of $0.3 million during the year ended December 31, 2017. Pro forma results The following tables set forth the unaudited pro forma results of the Company as if the acquisition of L&C had taken place on the first day of the periods presented. These combined results are not necessarily indicative of the results that may have been achieved had the companies been combined as of the first day of the periods presented. December 31, 2017 2016 Revenue $ — $ — Net loss attributable to common shareholders (13,842 ) (5,281 ) Net loss per share (1.54 ) (0.62 ) The amounts of revenue and loss of L&C since the acquisition date included in the consolidated statement of operations for the year ended December 31, 2017 are approximately $0 and ($2,813,000), respectively, including goodwill impairment of approximately $2,159,000. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 14 — INCOME TAXES On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”), a tax reform bill, was enacted. The Act, among other items, reduces the current federal income tax rate to 21% from 35%. The rate reduction is effective January 1, 2018, and is permanent. The Act has caused the Company’s deferred income taxes to be revalued. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through income tax expense. Pursuant to the guidance within SEC Staff Accounting Bulletin No. 118 (“SAB 118”), as of December 31, 2017, the Company recognized the provisional effects of the enactment of the Act for which measurement could be reasonably estimated. Since the Company has provided a full valuation allowance against its deferred tax assets, the revaluation of the deferred tax assets did not have a material impact on any period presented. The ultimate impact of the Act may differ from these estimates due to the Company’s continued analysis or further regulatory guidance that may be issued as a result of the Act. As a result of the reduction of the federal corporate income tax rate, the Company reduced the value of its net deferred tax asset by approximately $6.1 million which was recorded as a corresponding reduction to the valuation allowance during the fourth quarter of 2017. The Company had, subject to limitation, approximately $39.9 million of net operating loss carryforwards at December 31, 2017, which will expire at various dates through 2037. In addition, the Company has research and development tax credits of approximately $458,000 at December 31, 2017 available to offset future taxable income, which will expire from 2030 through 2037. We have provided a 100% valuation allowance for the deferred tax benefits resulting from the net operating loss carryover and our tax credits due to our lack of earnings history. In addressing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are deductible. The valuation allowance increased by approximately $832,000 and $741,000 for the years ended December 31, 2017 and 2016, respectively. Significant components of deferred tax assets and liabilities are as follows (in thousands): 2017 2016 Deferred tax assets: Net operating loss carryover $ 8,468 $ 7,904 Stock-based compensation 1,920 1,920 Accrued compensation 288 — Other 27 47 Tax credits 458 458 Total deferred tax assets 11,161 10,329 Less: valuation allowance (11,161 ) (10,329 ) Net deferred tax assets $ — $ — The actual tax benefit differs from the expected tax benefit for the years ended December 31, 2017 and 2016 (computed by applying the U.S. Federal Corporate tax rate of 34% to income before taxes) are as follows: 2017 2016 Statutory federal income tax rate -34.0 % -34.0 % State income taxes, net of federal benefit -5.8 % -0.0 % Non-deductible items 28.5 % 0.0 % Valuation allowance 11.3 % 34.0 % Effective income tax rate — % — % The Company’s tax returns for the previous three years remain open for audit by the respective tax jurisdictions. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 15 – SUBSEQUENT EVENTS No material events have occurred after December 31, 2017 that requires recognition or disclosure in the financial statements except as follows: On July 3, 2018, we entered into securities purchase agreements (“Securities Purchase Agreement”) with certain institutional investors (the “Investors”). Pursuant to the Securities Purchase Agreement, we sold an aggregate of $515,000 of senior convertible debentures (“Debentures”) consisting of $500,000 in cash and the cancellation of $15,000 of obligations of the Company (the “Offering”). Pursuant to the terms of the Securities Purchase Agreement, we will issue $515,000 in principal amount of Debentures. The Debentures (i) are non-interest bearing, (ii) have a maturity date one (1) year from the date of issuance and (iii) are convertible into shares of our common stock at the election of the Investor at any time, subject to a beneficial ownership limitation of 4.99% which may be increased to 9.99% by the Investor upon 61 days’ notice. The Debentures will have a conversion price equal to the lesser of (i) $0.33 and (ii) 85% of the lesser of (a) the volume weighted average price on the trading day immediately preceding a conversion date and (b) the volume weighted average price on a conversion date. The Debentures also contain provisions providing for an adjustment in the event of stock splits or dividends, and fundamental transactions. The Investors will also have the right to participate in subsequent rights offerings and pro rata distributions. Additionally, the Debentures contain anti-dilution protection in the event of subsequent equity sales at a price that is lower than the then applicable conversion price until such time that the Debentures are no longer outstanding. Additionally, the Company has the option to redeem some or all of the Debentures for cash upon notice of twenty (20) trading days provided certain conditions are met by the Company as more fully described in the Debentures. Furthermore, without the approval of the Investors holding at least 67% of the then outstanding principal amount of the Debentures, the Company may not (i) amend its charter documents in any manner that adversely affects the rights of any Investor, (ii) repay or repurchase or acquire shares of its Common Stock, (iii) repay, repurchase, or acquire certain indebtedness, or (iv) pay cash dividends or distributions on any equity securities of the Company. The Company is also required under the Securities Purchase Agreement to hold a shareholder meeting by January 3, 2019 in order to increase the number of authorized shares of Common Stock of the Company such that there are sufficient shares of Common Stock available for issuance underlying the Debentures upon their conversion in full. The Company is also obligated under the Securities Purchase Agreement to pay Investors, as partial liquidated damages, a fee of 2.0% of each Investor’s initial principal amount of such Investor’s Debenture in cash upon our failure to have current public information available beginning six (6) months after the issuance date of the Debentures. This requirement has been waived by the Investors through July 5, 2019. The Investors were additionally given a right of participation in future offerings for a period of up to eighteen (18) months from the date on which the shares underlying the Debentures are registered. The Securities Purchase Agreement also prohibits us from issuing any common stock, subject to certain exemptions, for a period of 60 days following the closing of the Offering, without the written approval of the Investors owning at least 50.1% of the securities issued in the Offering. Additionally, until the twelve month anniversary of the registration of the shares underlying the Debentures, we are prohibited from entering into any agreement to effect any issuance of common stock in a variable rate transaction. On December 13, 2018 we issued an aggregate of $25,000 in convertible promissory notes (“Notes”) for cash proceeds of $25,000. The Notes will mature on the earlier of (i) June 30, 2019 or (ii) such time as we raise capital in exchange for the sale of securities (“Maturity Date”) and bear interest at 10% per year, payable on the Maturity Date. Pursuant to the terms of the Notes, the Notes may be converted into shares of common stock upon an Event of Default (as such term is defined in the Notes) or upon the Maturity Date at the election of the holder at a price per share equal to 75% of the lowest trade price of our common stock on the trading day immediately prior to the date such exchange is exercised by the holder. During the year ended December 31, 2018 and through January 22, 2019, we issued a total of 139,111,071 shares of common stock upon the conversion of $565,476 principal amount of our convertible debentures. During December 2018, we designated 5,000 shares of preferred stock as Series D 0% Convertible Preferred Stock (the “Preferred Stock”). Each share of Preferred Stock shall have a par value of $0.0001 per share and a stated value equal to $1.00 (the “Stated Value”). With respect to a vote of stockholders to approve a reverse split of the Common Stock to occur no later than December 31, 2019, only, each share of Series D Preferred Stock held by a Holder, as such, shall be entitled to the whole number of votes equal to 30,001 shares of Common Stock. On any matter presented to the stockholders of the Corporation for their action or consideration at any meeting of stockholders of the Corporation (or by written consent of stockholders in lieu of meeting), each holder of outstanding shares of Preferred Stock shall be entitled to cast the number of votes equal to the number of whole shares of Common Stock into which the shares of Preferred Stock held by such holder are convertible as of the record date for determining stockholders entitled to vote on such matter. Except as provided by law or by the other provisions of the certificate of incorporation, holders of the Preferred Stock shall vote together with the holders of Common Stock as a single class. Each share of Preferred Stock shall be convertible, at any time and from time to time from and after the Original Issue Date at the option of the Holder thereof, into that number of shares of Common Stock (subject to the limitations set forth in Section 6(d)) determined by dividing the Stated Value of such share of Preferred Stock by the Conversion Price. The Conversion Price is $0.005 per share. During January 2019, we issued the 5,000 shares of Series D Convertible Preferred Stock for proceeds of $5,000. |
SUMMARY OF CRITICAL ACCOUNTIN_2
SUMMARY OF CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures. Significant estimates include the fair value of derivative instruments, stock-based compensation, recognition of clinical trial costs and other accrued liabilities. Actual results may differ from those estimates. |
Research and Development | Research and Development Research and development costs are charged to expense as incurred. Our research and development expenses consist primarily of expenditures for toxicology and other studies, manufacturing, clinical trials, compensation and consulting costs. We incurred research and development expenses of $1.7 and $1.1 million for the years ended December 31, 2017 and 2016, respectively. |
Cash Equivalents | Cash Equivalents For purposes of the statements of cash flows, we consider all highly liquid debt instruments purchased with a maturity date of three months or less to be cash equivalents. We maintain our cash in bank deposit accounts which, at times, may exceed applicable government mandate insurance limits. We have not experienced any losses in our accounts. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. The Company places its cash and temporary cash investments with credit quality institutions. At times, such investments may exceed applicable government mandated insurance limits. Cash was $0.01 million and $0.5 million at December 31, 2017 and 2016, respectively. As of December 31, 2017 and 2016, there was approximately $0 million and $0.3 million in cash over the federally insured limit, respectively. |
Intangible Assets | Intangible Assets Intangible assets consist of licensed technology, patents, and patent applications (see Note 5). The assets associated with licensed technology are recorded at cost and are being amortized on the straight line basis over their estimated useful lives of twelve to seventeen years. |
Office and Lab Equipment | Office and Lab Equipment Equipment is stated at cost less accumulated depreciation. Depreciation is calculated on the straight line basis over the estimated useful lives of the assets of three to seven years. Expenditures for repair and maintenance which do not materially extend the useful lives of property and equipment are charged to expense. When property or equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective accounts with the resulting gain or loss reflected in operations. Management periodically reviews the carrying value of its equipment for impairment. Due to the curtailment of business activity in February 2018, the Company determined that the office and lab equipment acquired pursuant to the Lewis & Clark, Pharmaceuticals, Inc. acquisition had become fully impaired as of December 31, 2017. Accordingly, we recorded an impairment charge of $0.3 million during the year ended December 31, 2017. Depreciation expense was approximately $23,000 and $4,000 for the years ended December 31, 2017 and 2016, respectively. |
Loss per Share | Loss per Share Basic loss per share is calculated by dividing net loss and net loss attributable to common shareholders by the weighted average number of common shares outstanding for the period. Basic and diluted loss per share are the same, in that any potential common stock equivalents would have the effect of being anti-dilutive in the computation of net loss per share. The following potentially dilutive securities have been excluded from the computations of weighted average shares outstanding as of December 31, 2017 and 2016, as they would be anti-dilutive: Year Ended December 31, 2017 2016 Shares underlying options outstanding 356,280 268,876 Shares underlying warrants outstanding 3,045,740 5,203,436 Shares underlying convertible notes outstanding 135,122,128 — Shares underlying convertible preferred stock outstanding 18,324,050 3,770,833 156,848,198 9,243,145 |
Derivative Liability | Derivative Liability The Company has financial instruments that are considered derivatives or contain embedded features subject to derivative accounting. Embedded derivatives are valued separately from the host instrument and are recognized as derivative liabilities in the Company’s balance sheet. The Company measures these instruments at their estimated fair value and recognizes changes in their estimated fair value in results of operations during the period of change. The Company values its derivative liabilities using the Black-Scholes option valuation model. The resulting liability is valued at each reporting date and the change in the liability is reflected as change in derivative liability in the statement of operations. |
Goodwill | Goodwill Our goodwill consists of the excess purchase price paid in business combinations over the fair value of assets acquired. Goodwill is considered to have an indefinite life. The Company has decided to perform its annual goodwill and impairment assessment on December 31st of each year. The Company employs the non-amortization approach to account for goodwill. Under the non-amortization approach, goodwill is not amortized into the results of operations, but instead is reviewed annually or more frequently if events or changes in circumstances indicate that the asset might be impaired, to assess whether the fair value exceeds the carrying value. When evaluating the potential impairment of goodwill, we first assess a range of qualitative factors, including but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for the Company’s products and services, regulatory and political developments, entity specific factors such as strategy and changes in key personnel, and the overall financial performance for each of the Company’s reporting units. If, after completing this assessment, it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we then proceed to a two-step impairment testing methodology using the income approach (discounted cash flow method). In the first step of the two-step testing methodology, we compare the carrying value of the reporting unit, including goodwill, with its fair value, as determined by its estimated discounted cash flows. If the carrying value of a reporting unit exceeds its fair value, we then complete the second step of the impairment test to determine the amount of impairment to be recognized. In the second step, we estimate an implied fair value of the reporting unit’s goodwill by allocating the fair value of the reporting unit to 100% of the assets and liabilities other than goodwill (including any unrecognized intangible assets). If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, the Company records an impairment loss equal to the difference in that period. When required, we arrive at our estimates of fair value using a discounted cash flow methodology which includes estimates of future cash flows to be generated by specifically identified assets, as well as selecting a discount rate to measure the present value of those anticipated cash flows. Estimating future cash flows requires significant judgment and includes making assumptions about projected growth rates, industry-specific factors, working capital requirements, weighted average cost of capital, and current and anticipated operating conditions. The use of different assumptions or estimates for future cash flows could produce different results. Due to the curtailment of business activity in February 2018, the Company determined that the goodwill assigned to the Lewis & Clark, Pharmaceuticals, Inc. acquisition had become fully impaired as of December 31, 2017. Accordingly, we recorded a goodwill impairment charge of $2.2 million during the year ended December 31, 2017. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Our short-term financial instruments, including cash, accounts payable and other liabilities, consist primarily of instruments with maturities of three months or less when acquired. We believe that the fair values of our current assets and current liabilities approximate their reported carrying amounts. The derivative liability consists of our convertible notes with a variable conversion feature. The Company uses the Black-Scholes option-pricing model to value its derivative liability which incorporate the Company’s stock price, volatility, U.S. risk-free interest rate, dividend rate, and estimated life. |
Fair Value Measurements | Fair Value Measurements The U.S. GAAP Valuation Hierarchy establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The Company has recorded a derivative liability for its convertible notes with a variable conversion feature, as of December 31, 2017. The tables below summarize the fair values of our financial liabilities as of December 31, 2017 (in thousands): Fair Value at December 31, Fair Value Measurement Using 2017 Level 1 Level 2 Level 3 Derivative liability $ 2,934 $ — $ — $ 2,934 The reconciliation of the derivative liability measured at fair value on a recurring basis using unobservable inputs (Level 3) is as follows (in thousands): Balance, December 31, 2016 $ — Additions to derivative instruments 2,952 Conversions (121 ) Loss on change in fair value of derivative liability 103 Balance, December 31, 2017 $ 2,934 |
Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the reversal of deferred tax liabilities during the period in which the related temporary difference becomes deductible. |
Stock-Based Compensation | Stock-Based Compensation We measure the cost of employee services received in exchange for equity awards based on the grant-date fair value of the awards. All awards under our stock-based compensation programs are accounted for at fair value and that cost is recognized over the period during which an employee is required to provide service in exchange for the award (the vesting period). Compensation expense for options granted to non-employees is determined in accordance with the fair value of the consideration received or the fair value of the equity instruments issued, whichever is a more reliable measurement. Compensation expense for awards granted to non-employees is re-measured on each accounting period. Determining the appropriate fair value of stock-based compensation requires the input of subjective assumptions, including the expected life of the stock-based compensation and the volatility of our stock price. We use the Black-Scholes option-pricing model to value our stock option awards which incorporates our stock price, volatility, U.S. risk-free interest rate, dividend rate, and estimated life. |
Effect of ASU No. 2017-11 on Previously Issued Financial Statements | Effect of ASU No. 2017-11 on Previously Issued Financial Statements In July 2017, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): Part 1 – Accounting for Certain Financial Instruments with Down Round Features and Part 2 – Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with Scope Exception (“ASU No. 2017-11”). Part 1 of ASU No. 2017-11 addresses the complexity of accounting for certain financial instruments with down round features. Down round features are provisions in certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of ASU No. 2017-11 addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification®. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests. For public business entities, the amendments in Part I of this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company has early adopted the guidance under ASU 2017-11 for the year end December 31, 2017. Adjustments to the Company’s previously issued financial statements were required for the full retrospective application of this standard. As such the financial statements for the year ended December 31, 2016 have been adjusted to reflect the adoption of ASU 2017-11. December 31, Adjustments December 31, ASSETS Current assets: Cash $ 547 $ — $ 547 Prepaid expenses 112 — 112 Total current assets 659 — 659 Office equipment, net of accumulated depreciation of $0 4 — 4 Intangible assets, net of accumulated amortization of $144 68 — 68 Other assets 3 — 3 Total assets $ 734 $ — $ 734 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable $ 1,238 $ — $ 1,238 Accrued expenses 384 — 384 Derivative liability 2,541 (2,541 ) — Total current liabilities 4,163 (2,541 ) 1,622 Total liabilities 4,163 (2,541 ) 1,622 Commitments and contingencies — — — Stockholders’ deficit: Convertible preferred stock, par value $.0001 per share; 30,000,000 shares authorized,2,828 shares issued and outstanding — — — Common stock, par value $.0001 per share; 150,000,000 shares authorized, 1,398,832 shares issued and outstanding — — — Additional paid-in capital 45,391 2,355 47,746 Accumulated deficit (48,820 ) 186 (48,634 ) Total stockholders’ deficit (3,429 ) 2,541 (888 ) Total liabilities and stockholders’ deficit $ 734 $ — $ 734 Year Ended Adjustments Year Ended Operating expenses: Research and development $ 1,101 $ — $ 1,101 General and administrative 2,089 — 2,089 Total operating expenses 3,190 — 3,190 Loss from operations (3,190 ) — (3,190 ) Other income (expense): Gain on change in fair value of derivative liability 2,523 (2,523 ) — Interest income (expense), net (2,888 ) 2,891 3 Loss before provision for income taxes (3,555 ) 368 (3,187 ) Provision for income taxes — — — Net loss $ (3,555 ) 368 $ (3,187 ) Deemed dividend — (1,046 ) (1,046 ) . Net loss attributable to common shareholders $ (3,555 ) $ (678 ) $ (4,233 ) Net loss per common share, basic and diluted $ (2.55 ) $ (3.04 ) Weighted average shares outstanding 1,394,065 1,394,065 Year Ended Adjustments Year Ended Cash flows from operating activities: Net loss $ (3,555 ) $ 368 $ (3,187 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 21 — 21 Stock-based compensation 113 — 113 Loss on change in fair value of derivative liability (2,523 ) 2,523 — Loss on sale of assets 4 — 4 Finance cost 2,891 (2,891 ) — Increase in operating assets: Prepaid expenses and other assets 2 — 2 Increase in operating liabilities: Accounts payable and accrued expenses 314 — 314 Cash used in operating activities (2,733 ) — (2,733 ) Cash flows from investing activities: Proceeds from sale of assets 4 — 4 Acquisition of office equipment (4 ) — (4 ) Cash provided by investing activities — — — Cash flows from financing activities: Proceeds from sale of stock and warrants 850 — 850 Cost of sale of common stock and warrants (35 ) — (35 ) Cash provided by financing activities 815 — 815 Net decrease in cash (1,918 ) — (1,918 ) Cash, beginning of period 2,465 — 2,465 Cash, end of period $ 547 — $ 547 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements With the exception of those discussed below, there have not been any recent changes in accounting pronouncements and Accounting Standards Update (ASU) issued by the Financial Accounting Standards Board (FASB) during the year ended December 31, 2017 that are of significance or potential significance to the Company. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases. The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company does not expect any impact from the adoption of this standard on its consolidated financial statements. In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU No. 2017-04”). ASU No. 2017-04 simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. A public business entity that is a SEC filer should adopt the amendments of ASU No. 2017-04 for its annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect any impact from the adoption of this standard on its consolidated financial statements. In May 2017, the FASB issued ASU 2017-09, “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting”, which clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes as a result of the change in terms or conditions. If an award is not probable of vesting at the time a change is made, the new guidance clarifies that no new measurement date will be required if there is no change to the fair value, vesting conditions, and classification. This ASU will be applied prospectively and is effective for fiscal years beginning after December 15, 2017, and interim periods within those years, with early adoption permitted. The Company does not expect this standard to have a material impact on its consolidated financial statements. In July 2017, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): Part 1 – Accounting for Certain Financial Instruments with Down Round Features and Part 2 – Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with Scope Exception (“ASU No. 2017-11”). Part 1 of ASU No. 2017-11 addresses the complexity of accounting for certain financial instruments with down round features. Down round features are provisions in certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of ASU No. 2017-11 addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification®. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests. For public business entities, the amendments in Part I of this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company has early adopted the guidance under ASU 2017-11 for the year end December 31, 2017. Adjustments to the Company’s previously issued financial statements were required for the full retrospective application of this standard. As such the financial statements for the year ended December 31, 2016 have been adjusted to reflect the adoption of ASU 2017-11. |
SUMMARY OF CRITICAL ACCOUNTIN_3
SUMMARY OF CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Schedule of weighted average shares outstanding | The following potentially dilutive securities have been excluded from the computations of weighted average shares outstanding as of December 31, 2017 and 2016, as they would be anti-dilutive: Year Ended December 31, 2017 2016 Shares underlying options outstanding 356,280 268,876 Shares underlying warrants outstanding 3,045,740 5,203,436 Shares underlying convertible notes outstanding 135,122,128 — Shares underlying convertible preferred stock outstanding 18,324,050 3,770,833 156,848,198 9,243,145 |
Schedule of fair values of financial liabilities | The Company has recorded a derivative liability for its convertible notes with a variable conversion feature, as of December 31, 2017. The tables below summarize the fair values of our financial liabilities as of December 31, 2017 (in thousands): Fair Value at December 31, Fair Value Measurement Using 2017 Level 1 Level 2 Level 3 Derivative liability $ 2,934 $ — $ — $ 2,934 |
Schedule of fair value of derivative liability on recurring basis | The reconciliation of the derivative liability measured at fair value on a recurring basis using unobservable inputs (Level 3) is as follows (in thousands): Balance, December 31, 2016 $ — Additions to derivative instruments 2,952 Conversions (121 ) Loss on change in fair value of derivative liability 103 Balance, December 31, 2017 $ 2,934 |
Schedule of financial statements | As such the financial statements for the year ended December 31, 2016 have been adjusted to reflect the adoption of ASU 2017-11. December 31, Adjustments December 31, ASSETS Current assets: Cash $ 547 $ — $ 547 Prepaid expenses 112 — 112 Total current assets 659 — 659 Office equipment, net of accumulated depreciation of $0 4 — 4 Intangible assets, net of accumulated amortization of $144 68 — 68 Other assets 3 — 3 Total assets $ 734 $ — $ 734 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable $ 1,238 $ — $ 1,238 Accrued expenses 384 — 384 Derivative liability 2,541 (2,541 ) — Total current liabilities 4,163 (2,541 ) 1,622 Total liabilities 4,163 (2,541 ) 1,622 Commitments and contingencies — — — Stockholders’ deficit: Convertible preferred stock, par value $.0001 per share; 30,000,000 shares authorized,2,828 shares issued and outstanding — — — Common stock, par value $.0001 per share; 150,000,000 shares authorized, 1,398,832 shares issued and outstanding — — — Additional paid-in capital 45,391 2,355 47,746 Accumulated deficit (48,820 ) 186 (48,634 ) Total stockholders’ deficit (3,429 ) 2,541 (888 ) Total liabilities and stockholders’ deficit $ 734 $ — $ 734 Year Ended Adjustments Year Ended Operating expenses: Research and development $ 1,101 $ — $ 1,101 General and administrative 2,089 — 2,089 Total operating expenses 3,190 — 3,190 Loss from operations (3,190 ) — (3,190 ) Other income (expense): Gain on change in fair value of derivative liability 2,523 (2,523 ) — Interest income (expense), net (2,888 ) 2,891 3 Loss before provision for income taxes (3,555 ) 368 (3,187 ) Provision for income taxes — — — Net loss $ (3,555 ) 368 $ (3,187 ) Deemed dividend — (1,046 ) (1,046 ) . Net loss attributable to common shareholders $ (3,555 ) $ (678 ) $ (4,233 ) Net loss per common share, basic and diluted $ (2.55 ) $ (3.04 ) Weighted average shares outstanding 1,394,065 1,394,065 Year Ended Adjustments Year Ended Cash flows from operating activities: Net loss $ (3,555 ) $ 368 $ (3,187 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 21 — 21 Stock-based compensation 113 — 113 Loss on change in fair value of derivative liability (2,523 ) 2,523 — Loss on sale of assets 4 — 4 Finance cost 2,891 (2,891 ) — Increase in operating assets: Prepaid expenses and other assets 2 — 2 Increase in operating liabilities: Accounts payable and accrued expenses 314 — 314 Cash used in operating activities (2,733 ) — (2,733 ) Cash flows from investing activities: Proceeds from sale of assets 4 — 4 Acquisition of office equipment (4 ) — (4 ) Cash provided by investing activities — — — Cash flows from financing activities: Proceeds from sale of stock and warrants 850 — 850 Cost of sale of common stock and warrants (35 ) — (35 ) Cash provided by financing activities 815 — 815 Net decrease in cash (1,918 ) — (1,918 ) Cash, beginning of period 2,465 — 2,465 Cash, end of period $ 547 — $ 547 |
SUPPLEMENTAL CASH FLOW INFORM_2
SUPPLEMENTAL CASH FLOW INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Supplemental Cash Flow Information [Abstract] | |
Schedule of additional information of cash flow | The following table contains additional information for the periods reported (in thousands). Year Ended December 31, 2017 2016 Non-cash financial activities: Reversal of accrued prior year compensation credited to paid-in capital $ — $ 2,053 Derivative liability issued 2,952 — Common/Preferred stock and warrants issued for fees 5 50 Net assets and liabilities recognized with the acquisition of Lewis and Clark Pharmaceuticals, Inc. 2,493 — Accounts payable paid through issuance of debentures 70 — Debentures issued to retire preferred stock 2,505 — Debentures converted to common stock 122 — Common stock issued on conversion of notes payable 155 — |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accrued Liabilities, Current [Abstract] | |
Schedule of accrued expenses | Accrued expenses consist of the following (in thousands): December 31, 2017 2016 Accrued compensation and benefits $ 1,154 $ 62 Accrued research and development 144 126 Accrued other 241 196 Total accrued expenses $ 1,539 $ 384 |
DERIVATIVE LIABILITY (Tables)
DERIVATIVE LIABILITY (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of black scholes valuations of derivatives | The significant assumptions used in the Black Scholes valuations of the derivatives at December 31, 2017 are as follows: 2017 Volatility 226% Expected term (years) 8.5 months Risk-free interest rate 1.645% Dividend yield None |
STOCK OPTIONS (Tables)
STOCK OPTIONS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of stock-based compensation expense | The Company has recorded aggregate stock-based compensation expense related to the issuance of stock option awards in the following line items in the accompanying consolidated statement of losses (in thousands): Year Ended December 31, 2017 2016 Research and development $ 127 $ 41 General and administrative 75 72 Total stock-based compensation expense $ 202 $ 113 |
Schedule of stock option activity | The following table summarizes stock option activity under the Plans: Number of shares Weighted- average exercise price Weighted- average remaining contractual term (in years) Aggregate intrinsic value (in thousands) Outstanding at December 31, 2015 292,172 $ 48.00 Granted 139,253 $ 4.37 Exercised — — Forfeited (162,549 ) $ 49.92 Outstanding at December 31, 2016 268,876 $ 24.15 4.6 $ — Granted 104,747 $ 0.54 Forfeited (17,343 ) $ 41.54 Outstanding at December 31, 2017 356,280 $ 7.45 4.4 $ — Exercisable at December 31, 2017 185,472 $ 11.90 3.2 $ — |
Schedule of weighted-average assumptions using black-scholes option-pricing model | The following table summarizes weighted-average assumptions using the Black-Scholes option-pricing model used on the date of the grants issued for the years ended December 31, 2017 and 2016: Year Ended December 31, 2017 2016 Volatility 128.5 % 90.6 % Expected term (years) 3.2 1.9 Risk-free interest rate 1.41 % 0.77 % Dividend yield None None |
WARRANTS (Tables)
WARRANTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of transactions involving of warrants | Transactions involving our warrants are summarized as follows: Number of shares Weighted- average exercise price Weighted- average remaining contractual term (in years) Aggregate intrinsic value (in thousands) Outstanding at December 31, 2015 1,409,367 $ 23.70 Granted 4,140,557 $ 0.81 Forfeited (346,488 ) $ 37.89 Outstanding at December 31, 2016 5,203,436 $ 4.56 2.25 $ — Granted 1,238,479 $ 0.08 Forfeited (3,396,175 ) $ 1.43 Outstanding at December 31, 2017 3,045,740 $ 5.39 3.07 $ 21.9 Exercisable at December 31, 2017 3,040,329 $ 5.39 3.07 $ 21.9 |
Schedule of outstanding warrants to purchase common stock | The following table summarizes outstanding common stock purchase warrants as of December 31, 2017: Number of shares Weighted- average exercise price Expiration Issued to consultants 104,213 $ 7.24 January 2018 through August 2023 Issued pursuant to 2013 financings 143,559 $ 58.64 January 2018 through August 2018 Issued pursuant to 2014 financings 96,412 $ 34.50 June 2019 Issued pursuant to 2015 financings 460,384 $ 8.40 July 2020 through December 2020 Issued pursuant to 2016 financings 1,466,670 $ 0.02 December 2021 Issued pursuant to 2017 financings 774,502 $ 0.02 March 2018 through April 2022 3,045,740 |
ACQUISITION (Tables)
ACQUISITION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Schedule of aggregate purchase price | The preliminary allocation of the purchase price to the assets acquired and liabilities assumed based on the estimated fair values is as follows (in thousands): Cash $ 23 Prepaid expenses 3 Equipment 353 Goodwill 2,159 Total assets acquired 2,538 Accounts payable and other liabilities (45 ) Total $ 2,493 |
Schedule of unaudited pro forma information below presents the consolidated results operations | These combined results are not necessarily indicative of the results that may have been achieved had the companies been combined as of the first day of the periods presented. December 31, 2017 2016 Revenue $ — $ — Net loss attributable to common shareholders (13,842 ) (5,281 ) Net loss per share (1.54 ) (0.62 ) |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes Tables Abstract | |
Schedule of deferred tax assets and liabilities | Significant components of deferred tax assets and liabilities are as follows (in thousands): 2017 2016 Deferred tax assets: Net operating loss carryover $ 8,468 $ 7,904 Stock-based compensation 1,920 1,920 Accrued compensation 288 — Other 27 47 Tax credits 458 458 Total deferred tax assets 11,161 10,329 Less: valuation allowance (11,161 ) (10,329 ) Net deferred tax assets $ — $ — |
Schedule of effective income tax rate | The actual tax benefit differs from the expected tax benefit for the years ended December 31, 2017 and 2016 (computed by applying the U.S. Federal Corporate tax rate of 34% to income before taxes) are as follows: 2017 2016 Statutory federal income tax rate -34.0 % -34.0 % State income taxes, net of federal benefit -5.8 % -0.0 % Non-deductible items 28.5 % 0.0 % Valuation allowance 11.3 % 34.0 % Effective income tax rate — % — % |
BACKGROUND (Details Narrative)
BACKGROUND (Details Narrative) | Nov. 17, 2016 | Dec. 31, 2017 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Description of reverse stock split | we effected a one (1) for thirty (30) reverse stock split of our common stock. | 1:30 |
MANAGEMENT'S PLANS TO CONTINU_2
MANAGEMENT'S PLANS TO CONTINUE AS A GOING CONCERN (Details Narrative) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Management Plans to Continue as Going Concern [Abstract] | |||
Accumulated deficit | $ (59,734) | $ (48,634) | $ (45,265) |
Cash | $ 10 | $ 547 | $ 2,465 |
SUMMARY OF CRITICAL ACCOUNTIN_4
SUMMARY OF CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES (Details) - shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Shares underlying, outstanding | 156,848,198 | 9,243,145 |
Series A 0% Convertible Preferred Stock [Member] | ||
Shares underlying, outstanding | 18,324,050 | 3,770,833 |
Convertible debentures [Member] | ||
Shares underlying, outstanding | 135,122,128 | |
Warrant [Member] | ||
Shares underlying, outstanding | 3,045,740 | 5,203,436 |
Employee Stock Option [Member] | ||
Shares underlying, outstanding | 356,280 | 268,876 |
SUMMARY OF CRITICAL ACCOUNTIN_5
SUMMARY OF CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES (Details 1) $ in Thousands | Dec. 31, 2017USD ($) |
Derivative liability | $ 2,934 |
Fair Value, Inputs, Level 1 [Member] | |
Derivative liability | |
Fair Value, Inputs, Level 2 [Member] | |
Derivative liability | |
Fair Value, Inputs, Level 3 [Member] | |
Derivative liability | $ 2,934 |
SUMMARY OF CRITICAL ACCOUNTIN_6
SUMMARY OF CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES (Details 2) $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Accounting Policies [Abstract] | |
Balance at beginning of year | |
Additions to derivative instruments | 2,952 |
Conversions | (121) |
Loss on change in fair value of derivative liability | 103 |
Balance at end of year | $ 2,934 |
SUMMARY OF CRITICAL ACCOUNTIN_7
SUMMARY OF CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES (Details 3) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | |||
Cash | $ 10 | $ 547 | $ 2,465 |
Prepaid expenses | 5 | 112 | |
Total current assets | 15 | 659 | |
Office equipment, net of accumulated depreciation of $0 | 4 | 4 | |
Intangible assets, net of accumulated amortization of $144 | 50 | 68 | |
Other assets | 3 | ||
Total assets | 69 | 734 | |
Current liabilities: | |||
Accounts payable | 1,968 | 1,238 | |
Accrued expenses | 1,539 | 384 | |
Derivative liability | 2,934 | ||
Total current liabilities | 8,917 | 1,622 | |
Total liabilities | 8,917 | 1,622 | |
Commitments and contingencies | |||
Stockholders' deficit: | |||
Convertible preferred stock, par value $.0001 per share; 30,000,000 shares authorized,2,828 shares issued and outstanding | |||
Common stock, par value $.0001 per share; 150,000,000 shares authorized, 1,398,832 shares issued and outstanding | 1 | ||
Additional paid-in capital | 50,885 | 47,746 | |
Accumulated deficit | (59,734) | (48,634) | (45,265) |
Total stockholders' deficit | (8,848) | (888) | (732) |
Total liabilities and stockholders' deficit | $ 69 | 734 | |
Previously Reported [Member] | |||
Current assets: | |||
Cash | 547 | 2,465 | |
Prepaid expenses | 112 | ||
Total current assets | 659 | ||
Office equipment, net of accumulated depreciation of $0 | 4 | ||
Intangible assets, net of accumulated amortization of $144 | 68 | ||
Other assets | 3 | ||
Total assets | 734 | ||
Current liabilities: | |||
Accounts payable | 1,238 | ||
Accrued expenses | 384 | ||
Derivative liability | 2,541 | ||
Total current liabilities | 4,163 | ||
Total liabilities | 4,163 | ||
Commitments and contingencies | |||
Stockholders' deficit: | |||
Convertible preferred stock, par value $.0001 per share; 30,000,000 shares authorized,2,828 shares issued and outstanding | |||
Common stock, par value $.0001 per share; 150,000,000 shares authorized, 1,398,832 shares issued and outstanding | |||
Additional paid-in capital | 45,391 | ||
Accumulated deficit | (48,820) | ||
Total stockholders' deficit | (3,429) | ||
Total liabilities and stockholders' deficit | 734 | ||
Restatement Adjustment [Member] | |||
Current assets: | |||
Cash | |||
Prepaid expenses | |||
Total current assets | |||
Office equipment, net of accumulated depreciation of $0 | |||
Intangible assets, net of accumulated amortization of $144 | |||
Other assets | |||
Total assets | |||
Current liabilities: | |||
Accounts payable | |||
Accrued expenses | |||
Derivative liability | (2,541) | ||
Total current liabilities | (2,541) | ||
Total liabilities | (2,541) | ||
Commitments and contingencies | |||
Stockholders' deficit: | |||
Convertible preferred stock, par value $.0001 per share; 30,000,000 shares authorized,2,828 shares issued and outstanding | |||
Common stock, par value $.0001 per share; 150,000,000 shares authorized, 1,398,832 shares issued and outstanding | |||
Additional paid-in capital | 2,355 | ||
Accumulated deficit | 186 | ||
Total stockholders' deficit | 2,541 | ||
Total liabilities and stockholders' deficit |
SUMMARY OF CRITICAL ACCOUNTIN_8
SUMMARY OF CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES (Details 4) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Operating expenses: | ||
Research and development | $ 1,695 | $ 1,101 |
General and administrative | 1,665 | 2,089 |
Total operating expenses | 5,851 | 3,190 |
Loss from operations | (5,851) | (3,190) |
Other income (expense): | ||
Gain on change in fair value of derivative liability | (103) | |
Interest income (expense), net | (5,234) | 3 |
Loss before provision for income taxes | (11,100) | (3,187) |
Provision for income taxes | ||
Net loss | (11,100) | (3,187) |
Deemed dividend | (2,204) | (1,046) |
Net loss attributable to common shareholders | $ (13,304) | $ (4,233) |
Net loss per common share, basic and diluted (in dollars per share) | $ (2.74) | $ (3.04) |
Weighted average shares outstanding (in shares) | 4,855,784 | 1,394,065 |
Previously Reported [Member] | ||
Operating expenses: | ||
Research and development | $ 1,101 | |
General and administrative | 2,089 | |
Total operating expenses | 3,190 | |
Loss from operations | (3,190) | |
Other income (expense): | ||
Gain on change in fair value of derivative liability | 2,523 | |
Interest income (expense), net | (2,888) | |
Loss before provision for income taxes | (3,555) | |
Provision for income taxes | ||
Net loss | (3,555) | |
Deemed dividend | ||
Net loss attributable to common shareholders | $ (3,555) | |
Net loss per common share, basic and diluted (in dollars per share) | $ (2.55) | |
Weighted average shares outstanding (in shares) | 1,394,065 | |
Restatement Adjustment [Member] | ||
Operating expenses: | ||
Research and development | ||
General and administrative | ||
Total operating expenses | ||
Loss from operations | ||
Other income (expense): | ||
Gain on change in fair value of derivative liability | (2,523) | |
Interest income (expense), net | 2,891 | |
Loss before provision for income taxes | 368 | |
Provision for income taxes | ||
Net loss | 368 | |
Deemed dividend | (1,046) | |
Net loss attributable to common shareholders | $ (678) |
SUMMARY OF CRITICAL ACCOUNTIN_9
SUMMARY OF CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES (Details 5) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Cash flows from operating activities: | ||
Net loss | $ (11,100) | $ (3,187) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 40 | 21 |
Stock-based compensation | 207 | 113 |
Loss on change in fair value of derivative liability | ||
Loss on sale of assets | 4 | |
Finance cost | 5,137 | |
Increase in operating assets: | ||
Prepaid expenses and other assets | 114 | 2 |
Increase in operating liabilities: | ||
Accounts payable and accrued expenses | 1,911 | 314 |
Cash used in operating activities | (1,092) | (2,733) |
Cash flows from investing activities: | ||
Proceeds from sale of assets | 4 | |
Acquisition of office equipment | (3) | (4) |
Cash provided by investing activities | 20 | |
Cash flows from financing activities: | ||
Proceeds from sale of stock and warrants | 285 | 850 |
Cost of sale of common stock and warrants | (35) | |
Cash provided by financing activities | 535 | 815 |
Net decrease in cash | (537) | (1,918) |
Cash, beginning of year | 547 | 2,465 |
Cash, end of year | 10 | 547 |
Previously Reported [Member] | ||
Cash flows from operating activities: | ||
Net loss | (3,555) | |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 21 | |
Stock-based compensation | 113 | |
Loss on change in fair value of derivative liability | (2,523) | |
Loss on sale of assets | 4 | |
Finance cost | 2,891 | |
Increase in operating assets: | ||
Prepaid expenses and other assets | 2 | |
Increase in operating liabilities: | ||
Accounts payable and accrued expenses | 314 | |
Cash used in operating activities | (2,733) | |
Cash flows from investing activities: | ||
Proceeds from sale of assets | 4 | |
Acquisition of office equipment | (4) | |
Cash provided by investing activities | ||
Cash flows from financing activities: | ||
Proceeds from sale of stock and warrants | 850 | |
Cost of sale of common stock and warrants | (35) | |
Cash provided by financing activities | 815 | |
Net decrease in cash | (1,918) | |
Cash, beginning of year | 547 | 2,465 |
Cash, end of year | 547 | |
Restatement Adjustment [Member] | ||
Cash flows from operating activities: | ||
Net loss | 368 | |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | ||
Stock-based compensation | ||
Loss on change in fair value of derivative liability | 2,523 | |
Loss on sale of assets | ||
Finance cost | (2,891) | |
Increase in operating assets: | ||
Prepaid expenses and other assets | ||
Increase in operating liabilities: | ||
Accounts payable and accrued expenses | ||
Cash used in operating activities | ||
Cash flows from investing activities: | ||
Proceeds from sale of assets | ||
Acquisition of office equipment | ||
Cash provided by investing activities | ||
Cash flows from financing activities: | ||
Proceeds from sale of stock and warrants | ||
Cost of sale of common stock and warrants | ||
Cash provided by financing activities | ||
Net decrease in cash | ||
Cash, beginning of year | ||
Cash, end of year |
SUMMARY OF CRITICAL ACCOUNTI_10
SUMMARY OF CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Research and development | $ 1,695 | $ 1,101 | |
Cash | 10 | 547 | $ 2,465 |
Cash, FDIC insured amount | 0 | 300 | $ 2,100 |
Depreciation | 23 | 4 | |
Impairment charges | 332 | ||
Impairment of goodwill | $ 2,159 | ||
Maximum [Member] | |||
Useful life of intangible assets | 17 years | ||
Useful life of office equipment | 7 years | ||
Minimum [Member] | |||
Useful life of intangible assets | 12 years | ||
Useful life of office equipment | 3 years |
SUPPLEMENTAL CASH FLOW INFORM_3
SUPPLEMENTAL CASH FLOW INFORMATION (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Non-cash financial activities: | ||
Reversal of accrued prior year compensation credited to paid-in capital | $ 2,053 | |
Derivative liability issued | $ 2,952 | |
Common/Preferred stock and warrants issued for fees | 5 | 50 |
Net assets and liabilities recognized with the acquisition of Lewis and Clark Pharmaceuticals, Inc. | 2,493 | |
Accounts payable paid through issuance of debentures | 70 | |
Debentures issued to retire preferred stock | 2,505 | |
Debentures converted to common stock | 122 | |
Common stock issued on conversion of notes payable | $ 155 |
INTELLECTUAL PROPERTY (Details
INTELLECTUAL PROPERTY (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | 48 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2011 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Payments to acquire intangible assets | $ 212 | ||
Amortization of intangible assets | $ 17 | $ 17 | |
Finite-Lived Intangible Assets, Amortization Expense, Next Twelve Months | 17 | ||
Finite-Lived Intangible Assets, Amortization Expense, Year Two | 17 | ||
Finite-Lived Intangible Assets, Amortization Expense, Year Three | $ 17 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Accrued Liabilities, Current [Abstract] | ||
Accrued compensation and benefits | $ 1,154 | $ 62 |
Accrued research and development | 144 | 126 |
Accrued other | 241 | 196 |
Total accrued expenses | $ 1,539 | $ 384 |
ACCRUED EXPENSES (Details Narra
ACCRUED EXPENSES (Details Narrative) $ in Thousands | Dec. 31, 2016USD ($) |
Accrued Liabilities, Current [Abstract] | |
Accrued bonus compensation | $ 2,000 |
DERIVATIVE LIABILITY (Details)
DERIVATIVE LIABILITY (Details) | Dec. 31, 2017 |
Measurement Input, Price Volatility [Member] | |
Derivative liability measurement input | 2.26 |
Measurement Input, Expected Term [Member] | |
Derivative liability measurement input | 8.5 |
Measurement Input, Risk Free Interest Rate [Member] | |
Derivative liability measurement input | 0.01645 |
Measurement Input, Expected Dividend Rate [Member] | |
Derivative liability measurement input | 0 |
DERIVATIVE LIABILITY (Details N
DERIVATIVE LIABILITY (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Gain on change in fair value of the derivative liability | $ 100 | |
Derivative Liability | 2,934 | |
Finance cost | $ 5,137 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Feb. 28, 2017 | Dec. 31, 2017 | Dec. 31, 2016 |
Rent expenses | $ 52 | $ 49 | |
Gross proceeds from capital raising transactions | $ 25,000 | ||
Dr. Richerson [Member] | Separation Agreement [Member] | |||
Warrants issued to purchase common stock | 76,726 | ||
Exercise price (in dollars per share) | $ 0.75 | ||
Warrant expiration period | 3 years 6 months |
CAPITAL STOCK AND STOCKHOLDERS'
CAPITAL STOCK AND STOCKHOLDERS' EQUITY (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Sep. 12, 2017 | Jul. 31, 2017 | Nov. 17, 2016 | Nov. 10, 2016 | Apr. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Apr. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 |
Class of Stock [Line Items] | ||||||||||
Stock issued during period, shares | 223,585 | |||||||||
Stock issued during period, value, issued for services | $ 5 | |||||||||
Number of warrants exercised | 11,239 | |||||||||
Preferred stock, par or stated value per share | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||
Proceeds from issuance of warrants | $ 287 | |||||||||
Reverse stock split | we effected a one (1) for thirty (30) reverse stock split of our common stock. | 1:30 | ||||||||
Share based compansation | $ 207 | 113 | ||||||||
Accounts payable | $ 1,238 | 1,968 | 1,238 | |||||||
Accrued bonus compensation | $ 2,000 | 2,000 | ||||||||
Deemed dividend | $ 2,204 | 1,046 | ||||||||
Warrant [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Class of warrant or right, number of securities called by warrants or rights | 361,734 | 800,019 | 361,734 | |||||||
Class of warrant or right, outstanding | 3,045,740 | |||||||||
Placement Agent [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Warrants issued to purchase common stock | 133,334 | |||||||||
Commission | $ 100 | |||||||||
Non-accountable expense allowance | 10 | |||||||||
Management fee | 10 | |||||||||
Share based compansation | 100 | |||||||||
Equity Financings 2016 [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Issuance of public offering | 850 | |||||||||
Obligation satisfied with stock including placement agent commission | 150 | |||||||||
Placement agent commission | 100 | |||||||||
Accounts payable | $ 50 | $ 50 | ||||||||
Series A 0% Convertible Preferred Stock [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Stock issued during period, shares | 5,556 | |||||||||
Preferred stock conversion price per share | $ 4.50 | |||||||||
Number of preferred shares converted to common stock | 25.00005 | 79.5 | ||||||||
Reduction in conversion price (in dollars per share) | $ 0.53 | |||||||||
Series B 0% Convertible Preferred Stock [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Stock issued during period, shares | 1,000 | |||||||||
Value of number of shares issued | $ 1 | |||||||||
Preferred stock conversion price per share | $ 0.75 | |||||||||
Number of preferred shares converted to common stock | 39 | |||||||||
Convertible preferred stock, shares issued upon conversion | 1,000 | 1,000 | ||||||||
Class of warrant or right, number of securities called by warrants or rights | 4,000,008 | 4,000,008 | ||||||||
Reduction in conversion price (in dollars per share) | $ 0.02 | |||||||||
Series C 0% Convertible Preferred Stock [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Stock issued during period, shares | 90.4 | 200 | 290.4 | |||||||
Value of number of shares issued | $ 90,431 | $ 200 | $ 1 | |||||||
Preferred stock conversion price per share | $ 0.75 | $ 0.75 | $ 0.75 | |||||||
Convertible preferred stock, shares issued upon conversion | 120,578 | 266,673 | 120,578 | |||||||
Preferred stock, par or stated value per share | $ 1,000 | $ 1,000 | $ 1,000 | |||||||
Reduction in conversion price (in dollars per share) | $ 0.02 | |||||||||
Series L Common Stock Purchase Warrants [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Class of warrant or right, exercise price of warrants or rights | $ 0.75 | $ 0.75 | ||||||||
Warrant expiration period | 12 months | |||||||||
Class of warrant or right, number of securities called by warrants or rights | 1,333,336 | 1,333,336 | ||||||||
Series K Common Stock Purchase Warrants [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Class of warrant or right, exercise price of warrants or rights | $ 0.75 | $ 0.75 | ||||||||
Warrant expiration period | 6 months | |||||||||
Class of warrant or right, number of securities called by warrants or rights | 1,333,336 | 1,333,336 | ||||||||
Series J Common Stock Purchase Warrants [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Class of warrant or right, exercise price of warrants or rights | $ 0.90 | $ 0.90 | ||||||||
Warrant expiration period | 5 years | |||||||||
Class of warrant or right, number of securities called by warrants or rights | 1,333,336 | 1,333,336 | ||||||||
Series N Common Stock Purchase Warrants [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Class of warrant or right, exercise price of warrants or rights | $ 0.75 | $ 0.75 | $ 0.75 | |||||||
Warrant expiration period | 6 months | 6 months | ||||||||
Class of warrant or right, number of securities called by warrants or rights | 120,578 | 266,673 | 120,578 | |||||||
Series M Common Stock Purchase Warrants [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Class of warrant or right, exercise price of warrants or rights | $ 0.90 | $ 0.90 | $ 0.90 | |||||||
Warrant expiration period | 5 years | 5 years | ||||||||
Class of warrant or right, number of securities called by warrants or rights | 120,578 | 266,673 | 120,578 | |||||||
Series O Common Stock Purchase Warrants [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Class of warrant or right, exercise price of warrants or rights | $ 0.75 | $ 0.75 | $ 0.75 | |||||||
Warrant expiration period | 12 months | 12 months | ||||||||
Class of warrant or right, number of securities called by warrants or rights | 120,578 | 266,673 | 120,578 | |||||||
Senior Convertible Debentures [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Stock issued during period, shares | 2,144,340 | |||||||||
Value of number of shares issued | $ 155,153 | |||||||||
Principal amount upon conversion | $ 122,370 | |||||||||
Exchange Agreement [Member] | Series A 0% Convertible Preferred Stock [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Stock issued during period, shares | 1,614.8125 | |||||||||
Value of number of shares issued | $ 1,600 | |||||||||
Exchange Agreement [Member] | Series B 0% Convertible Preferred Stock [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Stock issued during period, shares | 890 | |||||||||
Value of number of shares issued | $ 900 | |||||||||
Exchange Agreement [Member] | Senior Convertible Debentures [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Principal amount upon conversion | $ 2,500 | |||||||||
Registration Rights Agreement [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Description of agreement | Registration Rights Agreement to register the resale of 200% of the shares of common stock underlying the Series B Preferred Stock and 100% of the shares of common stock underlying the Warrants and to maintain the effectiveness thereunder. The Company also agreed to have the registration statement declared effective within 60 days from the date of the Registration Rights Agreement and keep the registration statement continuously effective until the earlier of (i) the date after which all of the securities to be registered thereunder have been sold, or (ii) the date on which all the securities to be registered thereunder may be sold without volume or manner-of-sale restrictions and without current public information pursuant to Rule 144 under the Securities Act of 1933, as amended. We are also obligated to pay the Investors, as partial liquidated damages, a fee of 1.5% of each Investor’s subscription amount per month in cash upon the occurrence of certain events, including our failure to file and / or have the registration statement declared effective within the time provided. The registration statement was filed on January 13, 2017 and was declared effective on January 31, 2017. | |||||||||
Lewis & Clark, Pharmaceuticals, Inc.Virginia Corporation [Member] | Share Exchange Agreement [Member] | ||||||||||
Class of Stock [Line Items] | ||||||||||
Number of shares acquried | 7,122,172 |
STOCK OPTIONS (Details)
STOCK OPTIONS (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Total stock-based compensation expense | $ 202 | $ 113 |
Research And Development [Member] | ||
Total stock-based compensation expense | 127 | 41 |
General And Administrative [Member] | ||
Total stock-based compensation expense | $ 75 | $ 72 |
STOCK OPTIONS (Details 1)
STOCK OPTIONS (Details 1) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Outstanding at begenning | 268,876 | 292,172 |
Granted | 104,747 | 139,253 |
Exercised | ||
Forfeited | (17,343) | (162,549) |
Outstanding at ending | 356,280 | 268,876 |
Exercisable at ending | 185,472 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | ||
Granted | $ 0.54 | $ 4.37 |
Exercised | ||
Forfeited | 41.54 | $ 49.92 |
Outstanding at ending | 7.45 | |
Exercisable at ending | $ 11.90 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Weighted Average Remaining Contractual Term [Roll Forward] | ||
Outstanding at ending | 4 years 4 months 24 days | 4 years 7 months 6 days |
Exercisable at ending | 3 years 2 months 12 days |
STOCK OPTIONS (Details 2)
STOCK OPTIONS (Details 2) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Volatility | 128.50% | 90.60% |
Expected term (years) | 3 years 2 months 12 days | 1 year 10 months 24 days |
Risk-free interest rate | 1.41% | 0.77% |
Dividend yield | 0.00% | 0.00% |
STOCK OPTIONS (Details Narrativ
STOCK OPTIONS (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Number of shares granted | 104,747 | 139,253 | ||||
Number of shares forfited | 17,343 | 162,549 | ||||
Employee Stock Option [Member] | Employees, And Non-Employee Directors [Member] | ||||||
Maximum grants under plan | 104,747 | 127,417 | ||||
Weighted Average fair value of the options granted | $ 0.59 | $ 1.93 | ||||
Consultant [Member] | Employee Stock Option [Member] | ||||||
Number of shares granted | 0 | 11,836 | ||||
Weighted Average fair value of the options granted | $ 2.33 | |||||
Inducement Award Stock Option Plan [Member] | ||||||
Number of award authorized | 300,000 | |||||
Number of shares granted | 211,360 | |||||
2007 Executive Compensation Plan [Member] | ||||||
Maximum annual grants | 50,000 | |||||
Number of award authorized | 200,000 | |||||
Total unrecognized compensation cost | $ 91 | |||||
2007 Executive Compensation Plan [Member] | Subsequent Event [Member] | ||||||
Total unrecognized compensation cost | $ 1 | $ 11 | $ 11 | $ 68 | ||
2007 Executive Compensation Plan [Member] | Common Stock [Member] | ||||||
Number of shares granted | 180,699 | |||||
Number of shares forfited | 79,196 | |||||
Number of shares available for future issuence | 98,497 | |||||
2009 Executive Compensation Plan [Member] | ||||||
Number of award authorized | 200,000 | |||||
Number of shares granted | 164,868 | |||||
Number of shares forfited | 115,782 | |||||
Number of shares available for future issuence | 150,914 | |||||
2017 Equity Compensation Plan [Member] | ||||||
Number of award authorized | 2,000,000 | |||||
Number of shares available for future issuence | 2,000,000 |
WARRANTS (Details)
WARRANTS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Weighted-average remaining contractual term [Roll Forward] | ||
Exercisable at ending | 3 years 2 months 12 days | |
Warrant [Member] | ||
Number of shares [Roll Forward] | ||
Outstanding at Beginning | 5,203,436 | 1,409,367 |
Granted | 1,238,479 | 4,140,557 |
Forfeited | (3,396,175) | (346,488) |
Outstanding at ending | 3,045,740 | 5,203,436 |
Exercisable at ending | 3,040,329 | |
Weighted-average exercise price [Roll Forward] | ||
Outstanding at Beginning | $ 4.56 | $ 23.7 |
Granted | 0.08 | 0.81 |
Forfeited | 1.43 | 37.89 |
Outstanding at ending | 5.39 | $ 4.56 |
Exercisable at ending | $ 5.39 | |
Weighted-average remaining contractual term [Roll Forward] | ||
Outstanding at ending | 3 years 1 month 25 days | 2 years 3 months 15 days |
Exercisable at ending | 3 years 1 month 25 days | |
Aggregate intrinsic value [Roll Forward] | ||
Outstanding at ending | $ 21,900 | |
Exercisable at ending | $ 21,900 |
WARRANTS (Details 1)
WARRANTS (Details 1) - Warrant [Member] | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Number of shares | 3,045,740 |
Financing 2013 [Member] | |
Number of shares | 143,559 |
Weighted Average Exercise price | $ / shares | $ 58.64 |
Expiration date begenning | 2018-01 |
Expiration date ending | 2018-08 |
Financing 2014 [Member] | |
Number of shares | 96,412 |
Weighted Average Exercise price | $ / shares | $ 34.50 |
Expiration date ending | 2019-06 |
Financing 2015 [Member] | |
Number of shares | 460,384 |
Weighted Average Exercise price | $ / shares | $ 8.40 |
Expiration date begenning | 2020-07 |
Expiration date ending | 2020-12 |
Financings 2016 [Member] | |
Number of shares | 1,466,670 |
Weighted Average Exercise price | $ / shares | $ 0.02 |
Expiration date ending | 2021-12 |
Financings 2017 [Member] | |
Number of shares | 774,502 |
Weighted Average Exercise price | $ / shares | $ 0.02 |
Expiration date begenning | 2018-03 |
Expiration date ending | 2022-04 |
Consultant [Member] | |
Number of shares | 104,213 |
Weighted Average Exercise price | $ / shares | $ 7.24 |
Expiration date begenning | 2018-01 |
Expiration date ending | 2023-08 |
WARRANTS (Details Narrative)
WARRANTS (Details Narrative) - USD ($) | Feb. 28, 2017 | Dec. 31, 2016 | Apr. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2017 |
Warrant [Member] | ||||||
Number of common shares purchased | 361,734 | 800,019 | ||||
Warrant [Member] | Private Placement [Member] | ||||||
Number of common shares purchased | 4,133,342 | 4,133,342 | ||||
Warrant [Member] | Private Placement [Member] | Maximum [Member] | ||||||
Exercise price of warrant (in dollars per share) | $ 0.90 | |||||
Warrant [Member] | Private Placement [Member] | Minimum [Member] | ||||||
Exercise price of warrant (in dollars per share) | $ 0.75 | |||||
Series B And Series C Preferred Stock [Member] | ||||||
Exercise price of warrant (in dollars per share) | $ 0.02 | |||||
Series M Common Stock Purchase Warrants [Member] | ||||||
Number of common shares purchased | 387,251 | |||||
Warrant expiration period | 5 years | |||||
Exercise price (in dollars per share) | $ 0.90 | |||||
Series N Common Stock Purchase Warrants [Member] | ||||||
Number of common shares purchased | 387,251 | |||||
Warrant expiration period | 6 months | |||||
Exercise price (in dollars per share) | $ 0.75 | |||||
Series O Common Stock Purchase Warrants [Member] | ||||||
Number of common shares purchased | 387,251 | |||||
Warrant expiration period | 12 months | |||||
Exercise price (in dollars per share) | $ 0.75 | |||||
Dr. Richerson [Member] | Separation Agreement [Member] | ||||||
Warrants issued to purchase common stock | 76,726 | |||||
Warrant expiration period | 3 years 6 months | |||||
Exercise price (in dollars per share) | $ 0.75 | |||||
Consultant [Member] | Warrant [Member] | ||||||
Number of common shares purchased | 7,215 | 7,215 | ||||
Fair value (in dollars per share) | $ 1.89 | $ 1.89 | ||||
Exercise price of warrant (in dollars per share) | $ 4.35 | |||||
Vesting period | 2 years | |||||
Term of warrant | 7 years | |||||
Total stock-based compensation expense | $ 30,000 | $ 1,500 | ||||
Exercise price (in dollars per share) | $ 7.24 | |||||
Placement Agents [Member] | Warrant [Member] | Private Placement [Member] | ||||||
Number of common shares purchased | 133,334 | 133,334 | ||||
Investors [Member] | Warrant [Member] | Private Placement [Member] | ||||||
Number of common shares purchased | 4,000,008 | 4,000,008 |
CONVERTIBLE DEBENTURES (Details
CONVERTIBLE DEBENTURES (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Sep. 12, 2017 | Dec. 31, 2017 | Dec. 31, 2016 |
Number of shares converted | 2,144,340 | ||
Amount of shares converted | $ 155,153 | ||
Principal amount | 122,370 | ||
Proceeds from debt | $ 250 | ||
Investors [Member] | Exchange Agreement [Member] | |||
Principal amount of senior convertible debentures | $ 2,500 | ||
Series B 0% Convertible Preferred Stock [Member] | Investors [Member] | Series B Preferred Stock [Member] | Exchange Agreement [Member] | |||
Number of shares converted | 890 | ||
SeriesAConvertiblePreferredStockMember | Investors [Member] | Series A Preferred Stock [Member] | Exchange Agreement [Member] | |||
Number of shares converted | 1,614.8125 | ||
Amount of shares converted | $ 1,600 | ||
Convertible debentures [Member] | |||
Conversion price | $ 0.33 | ||
Convertible debentures [Member] | Exchange Agreement [Member] | |||
Payment or cancellation debt | $ 70 | ||
Proceeds from debt | 320 | ||
Received cash from debt | $ 250 | ||
Maturity date | Sep. 12, 2018 | ||
Discreiption of convertible debentures | The Debentures to be issued to the Investors (i) are non-interest bearing, (ii) have a maturity date of September 12, 2018 and (iii) are convertible into shares of common stock (“Common Stock”) of the Company at the election of the Investor at any time, subject to a beneficial ownership limitation of 4.99% which may be increased to 9.99% by the Investor upon 61 days’ notice. The Debentures will have a conversion price equal to the lesser of (i) $0.33 and (ii) 85% of the lesser of (a) the volume weighted average price on the trading day immediately preceding a conversion date and (b) the volume weighted average price on a conversion date. | ||
Percentage of outstanding debentures | 67.00% | ||
Percentage of partial liquidated damages fee for each investor | 2.00% | ||
Convertible debentures [Member] | Registration Rights Agreement [Member] | |||
Percentage of partial liquidated damages fee for each investor | 1.50% | ||
Percentage of securities issued investors | 50.10% |
ACQUISITION (Details)
ACQUISITION (Details) - Lewis & Clark Pharmaceuticals, Inc. [Member] - USD ($) $ in Thousands | Dec. 31, 2017 | Jul. 31, 2017 |
Goodwill | $ 2,200 | |
Share Exchange Agreement [Member] | ||
Cash | $ 23 | |
Prepaid expenses | 3 | |
Equipment | 353 | |
Goodwill | $ 2,159 | 2,159 |
Total assets acquired | 2,538 | |
Accounts payable and other liabilities | (45) | |
Total | $ 2,493 |
ACQUISITION (Details 1)
ACQUISITION (Details 1) - Share Exchange Agreement [Member] - Lewis & Clark Pharmaceuticals, Inc. [Member] - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Revenue | ||
Net loss attributable to common shareholders | $ (13,842) | $ (5,281) |
Net loss per share (in dollars per share) | $ (1.54) | $ (0.62) |
ACQUISITION (Details Narrative)
ACQUISITION (Details Narrative) - Lewis & Clark Pharmaceuticals, Inc. [Member] - USD ($) $ in Thousands | Jul. 31, 2017 | Dec. 31, 2017 |
Percentage of ownership acquired | 100.00% | |
Goodwill | $ 2,200 | |
Office And Lab Equipment [Member] | ||
Goodwill | 300 | |
Escrow Agreement [Member] | ||
Number of shares held in escrow account | $ 973,251 | |
Share Exchange Agreement [Member] | ||
Percentage of ownership acquired | 100.00% | |
Number of shars issued upon acquistion (Purchase consideration) | 7,122,172 | |
Number of shares issued upon acquistion, value (Purchase consideration) | $ 2,492,760 | |
Number of shares received by shareholders (5% of the payment shares) | 356,109 | |
Value of revenue and loss | 0 | |
Value of revenue and loss | (2,813) | |
Goodwill | $ 2,159 | $ 2,159 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets: | ||
Net operating loss carryover | $ 8,468 | $ 7,904 |
Stock-based compensation | 1,920 | 1,920 |
Accrued compensation | 288 | |
Other | 27 | 47 |
Tax credits | 458 | 458 |
Total deferred tax assets | 11,161 | 10,329 |
Less: valuation allowance | (11,161) | (10,329) |
Net deferred tax assets |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Statutory federal income tax rate | (34.00%) | (34.00%) |
State income taxes, net of federal benefit | (5.80%) | 0.00% |
Non-deductible items | 28.50% | 0.00% |
Valuation allowance | 11.30% | (34.00%) |
Effective income tax rate |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
Net operating loss carryforwards | $ 39,900 | $ 39,900 | |
Expiration period | expire at various dates through 2037. | ||
Research and development tax credits | 458 | $ 458 | $ 458 |
Expiration period for tax credit | expire from 2030 through 2037. | ||
Increased in valuation allowance | $ 832 | $ 741 | |
Federal income tax rate | 34.00% | 34.00% | |
Previously federal income tax rate | 35.00% | ||
Deferred tax asset, net | $ 6,100 |
SUBSEQUENT EVENTS (Detail Narra
SUBSEQUENT EVENTS (Detail Narrative) | Dec. 13, 2018USD ($) | Jul. 03, 2018USD ($) | Nov. 17, 2016 | Jan. 31, 2019USD ($)shares | Jan. 22, 2019USD ($)shares | Dec. 31, 2018$ / shares | Dec. 31, 2017shares | Jan. 31, 2018$ / shares | Dec. 31, 2016shares |
Subsequent Event [Line Items] | |||||||||
Preferred stock, authorized | shares | 30,000,000 | 30,000,000 | |||||||
Reverse stock split | we effected a one (1) for thirty (30) reverse stock split of our common stock. | 1:30 | |||||||
Preferred stock issued | shares | 223,585 | ||||||||
Subsequent Event [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Reverse stock split | Each share of Series D Preferred Stock held by a Holder, as such, shall be entitled to the whole number of votes equal to 30,001 shares of Common Stock. | ||||||||
Conversion price | $ / shares | $ 0.01 | ||||||||
Subsequent Event [Member] | Series D 0% Convertible Preferred Stock [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Preferred stock, par value | $ / shares | $ 0.0001 | ||||||||
Preferred stock, stated value | $ / shares | $ 1 | ||||||||
Preferred stock issued | shares | 5,000 | ||||||||
Proceeds from issuance of convertible preferred stock | $ 5,000 | ||||||||
Subsequent Event [Member] | 10% Convertible Promissory Notes [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Face amount | $ 25,000 | $ 565,476,000 | |||||||
Debt face amount in cash | $ 25,000 | ||||||||
Interest rate | 10.00% | ||||||||
Maturity Date | Jun. 30, 2019 | ||||||||
Maturity date, description | The Notes will mature on the earlier of (i) June 30, 2019 or (ii) such time as we raise capital in exchange for the sale of securities (“Maturity Date”) | ||||||||
Terms of conversion feature | Pursuant to the terms of the Notes, the Notes may be converted into shares of common stock upon an Event of Default (as such term is defined in the Notes) or upon the Maturity Date at the election of the holder at a price per share equal to 75% of the lowest trade price of our common stock on the trading day immediately prior to the date such exchange is exercised by the holder. | ||||||||
Number of share issued in conversion of debt | shares | 139,111,071 | ||||||||
Subsequent Event [Member] | Securities Purchase Agreement [Member] | Investor [Member] | Senior Convertible Debentures [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Face amount | $ 515,000 | ||||||||
Debt face amount in cash | 500,000 | ||||||||
Debt cancellation amount | $ 15,000 | ||||||||
Interest rate terms | non-interest bearing | ||||||||
Terms of conversion feature | Convertible into shares of our common stock at the election of the Investor at any time, subject to a beneficial ownership limitation of 4.99% which may be increased to 9.99% by the Investor upon 61 days’ notice. The Debentures will have a conversion price equal to the lesser of (i) $0.33 and (ii) 85% of the lesser of (a) the volume weighted average price on the trading day immediately preceding a conversion date and (b) the volume weighted average price on a conversion date. | ||||||||
Partial liquidated damages fee percentage | 2.00% | ||||||||
Future offerings period | 6 months | ||||||||
Ownership percentage | 50.10% | ||||||||
Subsequent Event [Member] | Securities Purchase Agreement [Member] | Investor [Member] | Senior Convertible Debentures [Member] | Maximum [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Future offerings period | 18 months |