Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Aug. 12, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Nemus Bioscience, Inc. | |
Entity Central Index Key | 1,516,551 | |
Trading Symbol | nmus | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 19,913,163 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2016 | Dec. 31, 2015 |
Current assets | ||
Cash and cash equivalents | $ 831,658 | $ 3,221,209 |
Restricted cash | 37,500 | 37,500 |
Prepaid expenses | 122,543 | 158,946 |
Other current assets | 28,626 | 36,126 |
Total current assets | 1,020,327 | 3,453,781 |
Property and equipment, net | 16,896 | 13,383 |
Other assets | ||
Deposits and other assets | 43,884 | 43,884 |
Total other assets | 43,884 | 43,884 |
Total assets | 1,081,107 | 3,511,048 |
Current liabilities | ||
Accounts payable | 183,216 | 125,357 |
Accrued payroll and related expenses | 34,584 | 46,268 |
Accrued license and patent reimbursement fees | 97,500 | |
Accrued expenses | 166,740 | 228,645 |
Provision for conversion of Series B preferred stock | 105,660 | 84,090 |
Income taxes payable | 800 | |
Total current liabilities | 491,000 | 581,860 |
Noncurrent liabilities | ||
Deferred rent | 3,256 | 3,233 |
Series B warrants | 842,325 | 2,454,959 |
Total noncurrent liabilities | 845,581 | 2,458,192 |
Total liabilities | 1,336,581 | 3,040,052 |
Commitments and contingencies (Note 3) | ||
Redeemable Convertible Series B Preferred Stock, $0.001 par value, 20 million shares authorized; 4,492 issued and outstanding as of June 30, 2016 and 4,500 issued and outstanding as of December 31, 2015, net of $493,770 of issuance costs; $4.5 million liquidation preference as of June 30, 2016 | 1,359,899 | 1,363,200 |
Stockholders' deficit | ||
Common stock, $0.001 par value; 236 million shares authorized; 19,913,163 issued and outstanding as of June 30, 2016 and 19,903,163 issued and outstanding as of December 31, 2015 | 19,913 | 19,903 |
Additional paid-in-capital | 6,453,737 | 6,086,987 |
Warrants | 781,811 | 759,386 |
Accumulated deficit | (8,870,834) | (7,758,480) |
Total stockholders' deficit | (1,615,373) | (892,204) |
Total liabilities and stockholders' deficit | $ 1,081,107 | $ 3,511,048 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) | Jun. 30, 2016 | Dec. 31, 2015 |
Statement Of Financial Position [Abstract] | ||
Redeemable Convertible Series B Preferred Stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Redeemable Convertible Series B Preferred Stock, shares authorized | 20,000,000 | 20,000,000 |
Redeemable Convertible Series B Preferred Stock, shares issued | 4,492 | 4,500 |
Redeemable Convertible Series B Preferred Stock, shares outstanding | 4,492 | 4,500 |
Redeemable Convertible Series B Preferred Stock, issuance costs | $ 493,770 | $ 493,770 |
Redeemable Convertible Series B Preferred Stock, liquidation preference value | $ 4,500,000 | |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 236,000,000 | 236,000,000 |
Common stock, shares issued | 19,913,163 | 19,903,163 |
Common stock, shares outstanding | 19,913,163 | 19,903,163 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Operating expenses | ||||
Research and development | $ 459,957 | $ 43,374 | $ 595,316 | $ 80,574 |
General and administrative | 1,022,078 | 1,313,170 | 2,107,058 | 2,185,795 |
Total operating expenses | 1,482,035 | 1,356,544 | 2,702,374 | 2,266,369 |
Operating loss | (1,482,035) | (1,356,544) | (2,702,374) | (2,266,369) |
Other expense (income) | ||||
Change in fair value of warrant liability | (2,024,114) | (1,612,634) | ||
Income (Loss) before income taxes | 573,493 | (2,056,544) | (1,111,554) | (2,966,369) |
Provision for income taxes | 400 | 416 | 800 | 816 |
Net income (loss) | $ 573,093 | $ (2,056,960) | $ (1,112,354) | $ (2,967,185) |
Basic earnings per common share (in dollars per share) | $ 0.03 | $ (0.13) | $ (0.06) | $ (0.18) |
Diluted earnings per common share (in dollars per share) | $ 0.03 | $ (0.13) | $ (0.06) | $ (0.18) |
Weighted average shares of common stock outstanding | ||||
Basic (in shares) | 19,913,163 | 16,265,663 | 19,909,042 | 16,248,597 |
Diluted (in shares) | 20,135,645 | 16,265,663 | 19,909,042 | 16,248,597 |
Series A preferred stock | ||||
Other expense (income) | ||||
Change in fair value of conversion rights of preferred stock | $ 700,000 | $ 700,000 | ||
Series B Preferred Stock | ||||
Other expense (income) | ||||
Change in fair value of conversion rights of preferred stock | $ (31,414) | $ 21,814 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | ||
Cash flows from operating activities: | |||
Net loss | $ (1,112,354) | $ (2,967,185) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation | 7,603 | 4,626 | |
Stock-based compensation expense | 363,216 | 259,699 | |
Amortization of warrants and stock issued for services | [1],[2] | 51,539 | 459,316 |
Change in fair value of warrant liabilities | (1,612,634) | ||
Changes in assets and liabilities: | |||
Prepaid expenses | [1] | 7,289 | 29,728 |
Other current assets | 7,500 | 4,470 | |
Accounts payable | [2] | 57,859 | (113,601) |
Accrued payroll and related expenses | (11,684) | 82,393 | |
Accrued license and patent reimbursement fees | (97,500) | ||
Stock subscription liability | 288,000 | ||
Accrued expenses and other liabilities | (61,083) | (66,879) | |
Net cash used in operating activities | (2,378,435) | (1,319,433) | |
Cash flows from investing activities: | |||
Purchases of property and equipment | (11,116) | ||
Net cash used in investing activities | (11,116) | ||
Cash flows from financing activities: | |||
Proceeds from common stock issuance, net of $3,920 issuance costs | 713,369 | ||
Proceeds from Series A preferred stock issuance | 1,000,000 | ||
Net cash provided by financing activities | 1,713,369 | ||
Net increase (decrease) in cash and cash equivalents | (2,389,551) | 393,936 | |
Cash and cash equivalents, beginning of period | 3,221,209 | 207,330 | |
Cash and cash equivalents, end of period | 831,658 | 601,266 | |
Cash paid during the period for: | |||
Interest | |||
Income taxes | 816 | ||
Series A preferred stock | |||
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Change in fair value of conversion rights of preferred stock | $ 700,000 | ||
Series B Preferred Stock | |||
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Change in fair value of conversion rights of preferred stock | $ 21,814 | ||
[1] | During the six months ended June 30, 2015, the Company issued warrants of our common stock for consulting services. The warrants were valued at $328,650 and were recorded as a Prepaid expense and are being amortized over the service period During the six months ended June 30, 2015, the Company also issued shares of common stock for consulting services valued at $168,000. Such amounts were recorded as a Prepaid expense and are being amortized over the service period. During the six months ended June 30, 2016, warrants issued to service providers for consulting services were valued at $22,425 and recorded as a Prepaid expense and are being amortized over the service period. | ||
[2] | During the six months ended June 30, 2015, the Company issued warrants of our common stock to a service provider in exchange for extinguishment of $10,000 of trade accounts payable owed to this vendor. |
CONSOLIDATED STATEMENTS OF CAS6
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (Parentheticals) - USD ($) | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Statement of Cash Flows [Abstract] | ||
Common stock issuance costs | $ 3,920 | |
Value of warrants issued to purchase shares of common stock for consulting services | $ 22,425 | 328,650 |
Value of common stock issued for consulting services | 168,000 | |
Value of warrants issued in exchange for extinguishment of trade accounts payable | $ 10,000 |
Nature of Operations, Business
Nature of Operations, Business Activities and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Nature of Operations, Business Activities and Summary of Significant Accounting Policies | Nature of Operations and Basis of Presentation Nemus Bioscience, Inc. is a biopharmaceutical company that plans to develop and commercialize therapeutics from cannabinoids through a partnership with the University of Mississippi. The University of Mississippi ("UM") is federally permitted and licensed to cultivate cannabis for research and commercial purposes. Unless otherwise specified, references in these Notes to the Unaudited Consolidated Financial Statements to the "Company," "we" or "our" refer to Nemus Bioscience, Inc., a Nevada corporation formerly known as Load Guard Logistics, Inc. ("LGL"), together with its wholly-owned subsidiary, Nemus, a California corporation ("Nemus"). Nemus became the wholly owned subsidiary of Nemus Bioscience, Inc. through the Merger (as defined below). Nemus Bioscience, Inc. (formerly LGL) was incorporated in Nevada on March 16, 2011. Nemus was incorporated in California on July 17, 2012. Our headquarters are located in Costa Mesa, California. As of June 30, 2016, the Company has devoted substantially all of its efforts to securing product licenses, raising capital, and building infrastructure, and has not realized revenue from its planned principal operations. Business Activities On October 31, 2014, pursuant to an Agreement and Plan of Merger, dated October 17, 2014 (the "Merger Agreement"), LGL, Nemus Acquisition Corp. ("Acquisition Sub"), Nemus Bioscience, Inc. ("Name Change Merger Sub"), and Nemus Acquisition Sub merged with and into Nemus and Nemus survived as a wholly-owned subsidiary of LGL (the "Merger"). Immediately after the Merger, LGL changed its name to "Nemus Bioscience, Inc." by merging with Name Change Merger Sub. At the closing of the Merger and pursuant to the Merger Agreement, Nemus issued an aggregate of 3,120,000 shares of its common stock to the former stockholders of LGL in exchange for all of the outstanding shares of LGL's capital stock, which when combined with the 12,880,000 shares of Nemus common stock outstanding, amounted to 16,000,000 total shares outstanding upon completion of the merger. The Merger is being accounted for as a reverse-merger and recapitalization. Nemus is the acquirer for financial reporting purposes and LGL is the acquired company. Consequently, the assets and liabilities and the operations that will be reflected in the historical consolidated financial statements prior to the Merger will be those of Nemus and will be recorded at the historical cost basis of Nemus, and the consolidated financial statements after completion of the Merger will include the assets and liabilities of LGL and Nemus, the historical operations of Nemus and the operations of the Nemus from and after the closing date of the Merger. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates. The most significant accounting estimates inherent in the preparation of our financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources. Liquidity and Going Concern The Company has incurred operating losses and negative cash flows from operations since our inception. As of June 30, 2016, we had cash and cash equivalents of $831,658. The Company anticipates that it will continue to incur net losses into the foreseeable future as it continues to advance and develop a number of potential drug candidates into preclinical development activities and expands its corporate infrastructure which includes the costs associated with being a public company. Without additional funding, management believes that the Company will not have sufficient funds to meet its obligations within one year after the date the consolidated financial statements are issued. These conditions give rise to substantial doubt as to the Company's ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company plans to continue to fund its losses from operations and capital funding needs through public or private equity or debt financings, strategic collaborations, licensing arrangements, asset sales, government grants or other arrangements. However, the Company cannot be sure that such additional funds will be available on reasonable terms, or at all. If the Company raises additional funds by issuing equity securities, substantial dilution to existing stockholders would result. If the Company is unable to secure adequate additional funding, the Company may be forced to make a reduction in spending, extend payment terms with suppliers, liquidate assets where possible, and/or suspend or curtail planned programs. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The carrying value of those investments approximates their fair market value due to their short maturity and liquidity. Cash and cash equivalents include cash on hand and amounts on deposit with financial institutions, which amounts may at times exceed federally insured limits. The Company has not experienced any losses on such accounts and does not believe it is exposed to any significant credit risk. Restricted Cash A deposit of $37,500 as of June 30, 2016 and December 31, 2015 was restricted from withdrawal and held by a bank in the form of a certificate of deposit. This certificate serves as collateral for payment of the Company's credit cards. Fair Value Measurements Certain assets and liabilities are carried at fair value under U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. A fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last is considered unobservable, is used to measure fair value: Level 1: Valuations for assets and liabilities traded in active markets from readily available pricing sources such as quoted prices in active markets for identical assets or liabilities. Level 2: Observable inputs (other than Level 1 quoted prices) such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. The carrying values of our financial instruments, including, cash and cash equivalents, prepaid expenses, accounts payable, and accrued expenses approximate their fair value due to the short maturities of these financial instruments. The Series B warrant liability and the conversion liability for the Series B preferred stock were valued utilizing Level 3 inputs primarily from a third party independent appraisal conducted as of June 30, 2016. Property and Equipment, Net As of June 30, 2016, property and equipment, net, was $16,896, consisting primarily of computers and equipment. The Company had $13,383 of property and equipment, net, as of December 31, 2015. Expenditures for additions, renewals and improvements will be capitalized at cost. Depreciation will generally be computed on a straight-line method based on the estimated useful life of the related assets currently ranging from two to three years. Maintenance and repairs that do not extend the life of assets are charged to expense when incurred. When properties are disposed of, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is reported in the period the transaction takes place. Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted cash flows expected to be generated by the asset. If the carrying amount exceeds its estimated future undiscounted cash flows, an impairment charge is recognized by the amount by which the carrying amount exceeds the fair value of the asset. The costs incurred for the rights to use licensed technologies in the research and development process, including licensing fees and milestone payments, will be charged to research and development expense as incurred in situations where the Company has not identified an alternative future use for the acquired rights, and are capitalized in situations where there is an identified alternative future use. No cost associated with the use of licensed technologies has been capitalized to date. Income Taxes The Company accounts for our deferred income tax assets and liabilities based on differences between the financial reporting and tax bases of assets and liabilities, and net operating loss carry forwards (the "NOLs") and other tax credit carry forwards. These items are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the period that includes the enactment date. Any interest or penalties would be recorded in the Company's statement of operations in the period incurred. The Company records a valuation allowance to reduce the deferred income tax assets to the amount that is more likely than not to be realized. In making such determinations, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. As a result there are no income tax benefits reflected in the statement of operations to offset pre-tax losses. The Company recognizes a tax benefit from uncertain tax positions when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits of the position. Revenue Recognition The Company has not begun planned principal operations and has not generated any revenue since inception. Research and Development Expenses Research and development ("R&D") costs are expensed when incurred. These costs may consist of external research and development expenses incurred under agreements with third-party contract research organizations and investigative sites, third-party manufacturing organizations and consultants; license fees; employee-related expenses, which include salaries, benefits and stock-based compensation for the personnel involved in our preclinical and clinical drug development activities; and facilities expense, depreciation and other allocated expenses; and equipment and laboratory supplies. Stock-Based Compensation Expenses Stock-based compensation cost is estimated at the grant date based on the fair value of the award, and the cost is recognized as expense ratably over the vesting period. We use the Black-Scholes option pricing model for estimating the grant date fair value of stock options and warrants using the following assumptions: · Exercise price - We determined the exercise price based on valuations using the best information available to management at the time of the valuations. · Volatility - We estimate the stock price volatility based on industry peers who are also in the early development stage given the limited market data available in the public arena. · Expected term - The expected term is based on a simplified method which defines the life as the average of the contractual term of the options and warrants and the weighted-average vesting period for all open awards. · Risk-free rate - The risk-free interest rate for the expected term of the option or warrant is based on the average market rate on U.S. treasury securities in effect during the period in which the awards were granted. · Dividends – The dividend yield assumption is based on our history and expectation of paying no dividends. Stock-Based Compensation for Non-Employees The Company accounts for warrants and options issued to non-employees under ASC 505-50, Equity – Equity Based Payments to Non-Employees, Segment Information The Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") No. 280, "Segment Reporting" establishes standards for reporting information about reportable segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group ("CODM"), in deciding how to allocate resources and in assessing performance. The CODM evaluates revenues and gross profits based on product lines and routes to market. Based on the early development stage of our operation, we operate in a single reportable segment. Comprehensive Income (Loss) Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. The Company is required to record all components of comprehensive loss in the consolidated financial statements in the period in which they are recognized. Net income (loss) and other comprehensive income (loss), net of their related tax effect, arrived at a comprehensive income (loss). For the three and six months ended June 30, 2016, the comprehensive income (loss) was equal to the net income (loss). Earnings per share The Company applies FASB ASC 260, "Earnings per Share." Basic earnings (loss) per share is computed by dividing earnings (loss) available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings or loss per share would include the dilutive effect of awards granted to employees under stock-based compensation plans, if any. No dilutive effect was calculated for the three and six months ended June 30, 2015 as the effect would be anti-dilutive. For the three months ended June 30, 2016 the dilutive effects of common stock options and restricted stock awards were included in the calculation of the weighted-average number of common shares outstanding by applying the treasury stock method to the assumed exercise of outstanding stock options. For the six months ended June 30, 2016, no dilutive effect was calculated as the effect would be anti-dilutive. We computed earnings per common share for each period as follows: Three Months Three Months Six Months Six Months Ended Ended Ended Ended June 30, June 30, June 30, June 30, 2016 2015 2016 2015 Net income (loss) $ 573,093 $ (2,056,960 ) $ (1,112,354 ) $ (2,967,185 ) Weighted average shares of common stock outstanding - basic 19,913,163 16,265,663 19,909,042 16,248,597 Dilutive effect of common stock options and restricted stock awards 222,482 - - - Weighted average shares of common stock outstanding - diluted 20,135,645 16,265,663 19,909,042 16,248,597 Basic earnings per share $ 0.03 $ (0.13 ) $ (0.06 ) $ (0.18 ) Diluted earnings per share $ 0.03 $ (0.13 ) $ (0.06 ) $ (0.18 ) Recent accounting pronouncements In February 2016, the FASB issued ASU No. 2016-02 "Leases" (Topic 842) intended to improve financial reporting around leasing transactions. The ASU affects all companies and other organizations that lease assets such as real estate, airplanes, and manufacturing equipment. The ASU will require organizations that lease assets – referred to as "lessees"- to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. For public companies, the standard is effective for fiscal years beginning after December 15, 2018 and interim periods therein. Earlier adoption is permitted for any annual or interim period for which consolidated financial statements have not yet been issued. The Company is currently evaluating the potential impact that adoption may have on its consolidated financial statements. |
University of Mississippi ("UM"
University of Mississippi ("UM") Agreements | 6 Months Ended |
Jun. 30, 2016 | |
University Of Mississippi Agreements [Abstract] | |
University of Mississippi ("UM") Agreements | 2. University of Mississippi ("UM") Agreements In July 2013, the Company entered into a Memorandum of Understanding (MOU) with UM to engage in joint research of extracting, manipulating, and studying cannabis in certain forms to develop intellectual property (IP) with the intention to create and commercialize therapeutic medicines. Nemus will own all IP developed solely by its employees and will jointly own all IP developed jointly between Nemus and UM employees. The term of the MOU agreement is five years and the parties agree to negotiate separate research agreements upon the identification of patentable technologies as well as any deemed to be a trade secret. The agreement may be terminated by either party with three months written notice to the other party. UM 5050 pro-drug agreements On September 29, 2014, the Company executed three license agreements with UM pursuant to which UM granted us exclusive, perpetual, worldwide licenses, including the right to sublicense, to intellectual property related to UM 5050, a pro-drug formulation of tetrahydrocannabinol, or THC for products administered through each of ocular, oral or rectal delivery. The license agreement for the field of oral delivery also includes rights to UM 1250, a bio-adhesive hot melt extruded film for topical and mucosal adhesion application and drug delivery. The license agreements contain certain milestone and royalty payments, as defined therein. The aggregate milestone payments under the license agreements if the milestones are achieved is $2.1 million. These licenses also require the Company to reimburse UM for patent costs incurred related to these products under license. The agreements will terminate upon expiration of the patents, breach or default of the license agreements, or upon 60 days written notice by the Company to UM. On October 15, 2014, we signed a renewable option agreement for the rights to explore other routes of delivery of UM5050 not yet agreed upon and/or in combination with other cannabinoids or other compatible compounds. There was a one-time up-front option payment of $10,000 for a six-month option period that has subsequently been renewed under the same financial terms and conditions. The most recent renewal occurred for the six month period beginning April 1, 2016 under the same financial terms and conditions. UM 8930 pro-drug agreements: On December 14, 2015, the Company executed two license agreements with UM pursuant to which UM granted us exclusive, perpetual, worldwide licenses, including the right to sublicense, to intellectual property related to UM 8930, a pro-drug formulation of cannabidiol ("CBD") for products administered through each of ocular or rectal delivery. The license agreements contain certain milestone and royalty payments, as defined therein. There is a one-time upfront payment of $65,000 per license agreement, payable in four equal monthly installments that started on December 15, 2015. There is an annual fee of $25,000 per license agreement, payable on the anniversary of each effective date. The aggregate milestone payments under the license agreements if the milestones are achieved is $1.4 million. These licenses also require the Company to reimburse UM for patent costs incurred related to these products under license. These license agreements will terminate upon expiration of the patents, breach or default of the license agreements, or upon 60 days written notice by the Company to UM. On December 14, 2015, we signed a renewable option agreement for the rights to explore other routes of delivery of UM8930 not yet agreed upon and/or in combination with other cannabinoids or other compatible compounds. There was a one-time up-front option payment of $10,000 for an option period ending March 31, 2016. This option was subsequently renewed for a six month period ending September 30, 2016, under the same financial terms and conditions. Other pro-drugs and potential formulations: On December 19, 2015, the Company entered into a research agreement with UM to advance specialized cannabinoid derivatives of cannabidiol for the treatment of chemo-therapy induced peripheral neuropathy (CIPN). The fee payable to UM is based on the achievement of certain milestones in the project. The Company recognized $27,804 and $46,340 as research and development expense for the three and six months ended June 30, 2016 for work completed under this contract. The agreement also grants an exclusive option to license the technology from the University within 180 days from the commencement of the agreement. However, the studies have been extended through the end of the year to better understand the pharmacokinetics of the CBD derivative relative to different routes of administration. Either party may terminate the agreement with 30 days' written notice. On April 11, 2016, the Company entered into a research agreement with UM that examines the efficacy of cannabinoids at the genetic level of pathological organisms such as MRSA. The fee payable is based on the achievement of certain milestones in the project. The Company recognized $52,380 of research and development expense for the three and six months ended June 30, 2016 for work completed under this contract. Testing is scheduled for completion in the third quarter of 2016. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 3. Commitments and Contingencies Lease Commitments On September 1, 2014, the Company signed an operating lease for laboratory and office space at the Innovation Hub, Insight Park located on the University of Mississippi campus. The lease term commenced on October 1, 2014 and expires on December 31, 2017. There are annual escalating rent provisions and two months of free rent in the agreement. The total cash payments over the life of the lease are divided by the total number of months in the lease period and the average rent will be charged to expense each month during the lease period. The monthly amount charged to rent expense is $9,267. In October 2014, we signed a lease agreement for our corporate office headquarters that consists of approximately 4,087 square feet located at 650 Town Center Drive, Suite 1770, Costa Mesa, CA 92626. The lease expires on October 31, 2016 and our monthly rent is $5,373, payable in equal monthly installments with annual escalations. In November 2015, the Company entered into an operating lease for its office and lab furnishings both in Costa Mesa and the Innovation Hub laboratory. The lease expires on November 3, 2017 and the monthly lease payments are $7,559. Total net rent expense related to our operating leases for the three months ended June 30, 2016 and 2015, was $81,203 and $56,692, respectively. For the six months ended June 30, 2016 and 2015, total net rent expense from operating leases was $160,974 and $114,251 respectively. Future minimum payments under the non-cancelable portion of our operating leases as of June 30, 2016 are as follows: 2016 $ 123,260 2017 161,962 2018 - 2019 - 2020 - Thereafter - Total $ 285,222 Legal Matters General Litigation and Disputes On August 3, 2016, John B. Hollister filed to dismiss his complaint against the Company and its Executive Chairman, and the Company and its Executive Chairman filed to dismiss their complaint against Hollister filed on January 25, 2016 containing claims against him for defamation, false light, unfair competition, breach of contract, breach of fiduciary duty and fraud. Hollister's employment as the Company's Chief Executive Officer was terminated by the Company on August 24, 2015 for good and lawful reasons by the Company's Board of Directors as the Company decided to go in a different direction. As stated in the Company's December 28, 2015 Form 8-K, the Company maintains that Hollister's complaint and subsequent pleadings were grossly inaccurate and his claims were entirely without merit alleging various causes of action arising out of his termination, including a breach of contract claim. Neither the Company nor its Executive Chairman made any payment to Hollister to resolve the lawsuit or otherwise. According to the Orange County Superior Court's online case records posted on August 11, 2016, the court entered the order for dismissal of the entire action with prejudice effective as of the August 3, 2016 filing date. Government Proceedings Like other companies in the pharmaceutical industry, we are subject to extensive regulation by national, state and local government agencies in the United States. As a result, interaction with government agencies occurs in the normal course of our operations. It is possible that criminal charges and substantial fines and/or civil penalties or damages could result from any government investigation or proceeding. As of June 30, 2016, the Company had no current proceedings or inquiries. Change in Control Severance Plan In February 2015, we adopted a change in control severance plan, in which our named executive officers participate, that provides for the payment of severance benefits if the executive's service is terminated within twelve months following a change in control, either due to a termination without cause or upon a resignation for good reason (as each term is defined in the plan). In either such event, and provided the executive timely executes and does not revoke a general release of claims against the Company, he or she will be entitled to receive: (i) a lump sum cash payment equal to at least six months of the executive's monthly compensation, plus an additional month for each full year of service over six years, (ii) Company-paid premiums for continued health insurance for a period equal to length of the cash severance period or, if earlier, when executive becomes covered under a subsequent employer's healthcare plan, and (iii) full vesting of all then-outstanding unvested stock options and restricted stock awards. Contract Manufacturing Organization ("CMO") Agreement On February 5, 2016, the Company entered into a letter agreement ("Agreement") with a third party contract manufacturing organization ("CMO") pursuant to which the CMO is to provide services to Nemus for process development and analytical method development and qualification for Nemus' prodrug of tetrahydrocannabinol, or THC, as well as for sample production and a stability study. Pursuant to the terms of the Agreement, Nemus will pay an estimated $154,000 to $183,000 in fees and expenses for the initial evaluation and development of a process for the production of Nemus' pro-drug of THC to ensure reproducibility, quality and safety and an estimated $142,900 for analytical method development and qualification. The Company recognized $36,600 and $206,348 respectively as research and development expense towards these fees for the three and six months ended June 30, 2016. After the initial evaluation and development, Nemus has agreed to pay additional fees and expenses for sample production of Nemus' pro-drug of THC and a stability study, as well as possible extensions to or modifications of the aforementioned projects. Nemus may at any time cancel or delay any project under the Agreement prior to the scheduled start date. Nemus must reimburse the CMO for costs incurred prior to and including the date of cancellation plus any reasonable and foreseeable costs associated with stopping work on any project, including the CMO's loss of revenue incurred as the result of reserving production facilities for Nemus' exclusive use. Nemus may terminate the Agreement in whole or in part at any time upon 30 days' written notice. |
Stockholders' Deficit and Redee
Stockholders' Deficit and Redeemable Convertible Series B Preferred Stock | 6 Months Ended |
Jun. 30, 2016 | |
Equity [Abstract] | |
Stockholders' Deficit and Redeemable Convertible Series B Preferred Stock | 4. Stockholders' Deficit and Redeemable Convertible Series B Preferred Stock Common Stock In June 2014, the Company sold 1,800,000 shares of common stock with no par value and warrants for a purchase price of $900,000 (the "June 2014 Stock Purchase Agreement") to a group of private investors. See additional discussion on warrants below. In August 2014, the Company sold 2,200,000 shares of common stock with no par value and warrants for a purchase price of $1,100,000 to a group of private investors. See additional discussion on warrants below. In October 2014, the Company issued 1,110,000 shares of common stock with no par value to eighteen individual investors that had participated in a prior entity founded by Nemus' then current president. Such entity has been insolvent and not operating since the inception date of Nemus. The issuance of these shares was in exchange for the signing of a release of claims against the Company, its President, and the former entity. The Company recorded a general and administrative expense of $466,200 in the fourth quarter of 2014 to reflect the fair market value of the common stock issued in exchange for the release of claims. The fair market value of the common stock issued was determined via an independent third-party valuation conducted as of October 31, 2014. In January 2015, the Company sold 241,663 shares of common stock with par value of $0.001 for a purchase price of $724,989 to a group of private investors. In March 2015, the Company issued 24,000 shares of common stock with par value of $0.001 to a third party in exchange for services to be performed related to raising additional capital. The Company recorded a prepaid expense of $168,000 in the first quarter of 2015 to reflect the fair market value of the common stock issued and is amortizing this expense over the contract service period which is one year. The fair market value was determined utilizing the Company's closing stock price as of the commencement date of the contract service period. For three months ended March 31, 2016, the Company amortized $12,194 to general and administrative expense which represented the completion of this agreement. In August 2015, in conjunction with the Series B Preferred Stock sale (discussed below), the Company raised $5.0 million at $1,000 per share resulting in the automatic conversion of the Series A Preferred Stock to common stock. This resulted in the conversion of 580,000 shares of Series A Preferred Stock at $2.50 per share to the equivalent of 1,812,500 shares of common stock. In December 2015, a Series B Preferred Stockholder converted 500 shares of their preferred stock to common stock as allowed under the Series B Stock Agreement (discussed below), resulting in the issuance of 625,000 shares of common stock at an effective price of $0.80 per share. In March 2016, another Series B Preferred Stockholder converted 8 shares of their preferred stock to common stock, resulting in the issuance of 10,000 shares of common stock at an effective price of $0.80 per share. Preferred Stock The Company has authorized 20,000,000 shares of preferred stock with a par value of $0.001 per share. Series A Preferred Stock: The Series A preferred stock issued also has a "down-round" protection feature provided to the investors if the Company subsequently issues or sells any shares in a round of equity financing of at least $1,000,000 prior to October 1, 2015 in which the shares of common stock to be acquired are at a price less than $2.50 per share. The Company is required to issue additional shares of common stock to the investors in an amount such that the subscription price paid, when divided by the total number of shares issued will result in an actual price paid per share of common stock equal to such lower price. This conversion occurred as discussed above in conjunction with the Series B Preferred Stock financing totaling $5.0 million and resulted in the conversion of 580,000 shares of Series A Preferred Stock at to 1,812,500 shares of common stock. Redeemable Convertible Series B Preferred Stock: In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, Series B preferred stockholders receive an amount per share equal to the conversion price of $0.80, subject to down-round adjustment, multiplied by the as-if converted share amount of 5,615,000 common shares, totaling $4.5 million. If upon the liquidation, the assets are insufficient to permit payments to the Series B holders, all assets legally available will be distributed in a pro rata basis among the Series B holders in proportion to the full amounts they would otherwise be entitled to receive. Any remaining assets are distributed pro rata among the common stockholders. Subject to certain trigger events occurring, the Series B preferred stock holders have the right to force the Company to redeem the shares of preferred stock at a price per preferred share equal to the greater of (A) 115% of the conversion amount and (B) the product of (1) the conversion rate in effect at such time and (2) the greatest closing sale price of the Common Stock during the period beginning on the date immediately preceding such triggering event and ending on the date such holder delivers the notice of redemption. Such triggering events include: - Failure of the Series B Registration Statement to be declared effective by the SEC on or prior to the date that is ninety days after the Effectiveness Deadline; - Suspension of the Company's common stock from trading for a period of (2) consecutive trading days; - Failure of the Company to deliver all the shares of the common stock or make the appropriate cash payments in a timely manner upon conversion of the Series B Preferred; - Any default of indebtedness; - Any filing of voluntary or involuntary bankruptcy by the Company; - A final judgment in excess of $100,000 rendered against the Company; - Breach of representations and warranties in the Stock Purchase Agreement; - Failure to comply with the Series B Certificate of Designation or Rule 144 requirements. As certain of these triggering events are considered to be outside the control of the Company, the Series B preferred stock is considered to be contingently redeemable convertible and as a result, has been classified as mezzanine equity in the Company's balance sheet. In December 2015, a Series B Preferred Stock holder converted 500 shares of their preferred stock to common stock at the conversion rate of 1,250:1 resulting in the issuance of 625,000 shares of common stock In March 2016, another Series B Preferred Stockholder converted 8 shares of their preferred stock to common stock at the same ratio resulting in the issuance of 10,000 shares of common stock. As a result of these conversions, the liquidation preference for the Series B Preferred Stock has been reduced to $4.5 million at both June 30, 2016 and December 31, 2015. Warrants On July 17, 2012, the Company issued warrants to purchase up to 3,000,000 shares of our common stock to its founders and two advisors in consideration for services provided in the start-up of operations. The warrants are exercisable at a price of $1.00 per share and expire on June 20, 2023. The Company valued these warrants utilizing the Black-Scholes valuation model and they were determined to be of nominal value given the start-up nature of the Company's operations at the time of grant. In conjunction with the June 2014 Stock Purchase Agreement, the Company issued warrants to purchase up to 450,000 shares of common stock to a group of private investors. The warrants are exercisable at a price of $1.00 per share and expire on June 12, 2020. The Company valued these warrants at $85,500. This amount was recorded as warrants and was reclassified from the total consideration received for both the common stock and warrants purchased. In August 2014 as part of the June 2014 Stock Purchase Agreement, the Company issued warrants to purchase up to 550,000 shares of common stock with an exercise price of $1.00 per share that expire in August 2020. The Company valued these warrants at $104,500. This amount was recorded as warrants and was reclassified from the total consideration received for both the common stock and warrants purchased. In March 2015, the Company entered into an agreement with a financial advisory and public relations consulting firm which included the issuance of warrants to purchase up to 90,000 shares of common stock with an exercise price of $2.50 per share with a term of five years and vest quarterly over one year. These warrants were in exchange for services performed beginning in the first quarter and were subsequently issued in April 2015. The Company estimated the vested warrant value to be $85,950 utilizing the Black Scholes option pricing model and amortized $5,145 for services provided for the six months ended June 30, 2016 and $46,810 for the six months ended June 30, 2015. In April 2015, the Company entered into an agreement with one of its investors to provide advisory services on all matters including financing. In conjunction with this agreement, the Company issued warrants that vest immediately to purchase 100,000 shares of common stock with an exercise price of $5.00 per share with a term of ten years. The Company estimated the warrant value to be $326,000 utilizing the Black Scholes option pricing model and recorded this amount to general and administrative expense for the quarter due to the immediate vesting. In April 2015, the Company issued to a former service provider in exchange for payment of its outstanding invoice warrants that vest immediately to purchase 6,000 shares of common stock with an exercise price of $2.50 per share. The Company estimated the warrant value to be $10,000 which represented the value of the trade debt extinguished. In April 2015, the Company issued 50,000 warrants to purchase the Company's common stock in conjunction with its Series A Preferred Stock financing. The warrants are exercisable at a price of $5.00 per share and expire five years from the issuance date. In May 2015, the Company issued 30,000 warrants and in July 2015, 36,000 warrants under the same terms and conditions. In June 2015, the Company issued to a service provider in exchange for consulting services warrants that vest immediately to purchase 10,000 shares of common stock with an exercise price of $5.00 per share with a term of five years. The Company estimated the warrant value to be $14,700 utilizing the Black Scholes option pricing model. In August 2015, the Company issued 6,250,000 warrants to purchase common stock in conjunction with its Series B Preferred Stock financing. See further discussion in Note 6 below. In August 2015, the Company issued 187,500 warrants to purchase common stock to its investment banker in exchange for services rendered in conjunction with the Series B Preferred Stock financing. The warrants vest immediately and have an exercise price of $1.15 per share. The Company estimated the value of the warrants to be $86,250 utilizing the Black Scholes option pricing model and recorded this amount to offering costs. In November 2015, the Company entered into an agreement with a financial advisory and public relations consulting firm which included the issuance of warrants to purchase up to 120,000 shares of common stock with an exercise price of $1.15 per share with a term of five years. These warrants are in exchange for services to be performed from November 25, 2015 to May 25, 2016 and 60,000 shares vest immediately with the remainder in one quarter. The Company estimated the warrant value of vested warrants to be $42,000 utilizing the Black Scholes option pricing model and amortized $7,800 during the fiscal year ended December 31, 2015 and $34,200 in the six months ended June 30, 2016. The Company's board of directors considered various objective and subjective factors, along with input from management, to determine the fair value of the warrants, including: · Contemporaneous valuation prepared by an independent third-party valuation specialist effective as of April 1, 2015, August 20, 2015, December 31, 2015, March 31, 2016, and June 30, 2016, · Its results of operations, financial position and the status of research and development efforts and achievement of enterprise milestones, · The composition of, and changes to, the Company's management team and board of directors, · The lack of liquidity of its common stock as a newly public company, · The Company's stage of development, business strategy and the material risks related to its business and industry, · The valuation of publicly-traded companies in the biotechnology sectors, · External market conditions affecting the biotechnology industry sectors, · The likelihood of achieving a liquidity event for the holders of its common stock, such as an initial public offering, or IPO, or a sale of the Company, given prevailing market conditions, and · The state of the IPO market for similarly situated biotechnology companies, · Discussions held with bankers, potential investors, and preliminary term sheets received as part of management's capital raise efforts. There are significant judgments and estimates inherent in the determination of the fair value of the Company's warrants. These judgments and estimates included the assumptions regarding its future operating performance, the time to completing an IPO or other liquidity event and the determination of the appropriate valuation methods. If the Company had made different assumptions, its warrant valuation could have been significantly different. Stock Option Plans: 2014 Omnibus Incentive Plan The 2014 Omnibus Incentive Plan (the "2014 Plan") was adopted to provide a means by which officers, non-employee directors, and employees of and consultants to the Company and its affiliates could be given an opportunity to acquire an equity interest in the Company. All officers, non-employee directors, and employees of and consultants to the Company are eligible to participate in the 2014 Plan. On October 31, 2014, after the closing of the Merger, our Board of Directors approved the 2014 Plan. The 2014 Plan reserved 3,200,000 shares for future grants. As of June 30, 2016, options (net of canceled or expired options) covering an aggregate of 1,180,000 shares of the Company's common stock had been granted under the 2014 Plan, and the Company had 1,180,000 options outstanding and 820,000 shares available for future grants under the 2014 Plan. Options granted under the 2014 Plan expire no later than 10 years from the date of grant. Options granted under the 2014 Plan may be either incentive or non-qualified stock options. For incentive and non-qualified stock option grants, the option price shall be at least 100% of the fair value on the date of grants, as determined by the Company's Board of Directors. If at any time the Company grants an option, and the optionee directly or by attribution owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, the option price shall be at least 110% of the fair value and shall not be exercisable more than five years after the date of grant. Options granted under the 2014 Plan may be immediately exercisable if permitted in the specific grant approved by the Board of Directors and, if exercised early may be subject to repurchase provisions. The shares acquired generally vest over a period of five years from the date of grant. The Company granted options to purchase 1,180,000 shares net of cancellations through June 30, 2016, under the 2014 Plan. The following is a summary of activity under the 2014 Plan as of June 30, 2016: Shares for Grant of Options Outstanding Weighted Average Options & Number of Shares Price per Share Exercise Price Balance at December 31, 2015 2,020,000 1,180,000 $ 0.42-$3.00 $ 0.63 Options granted - - $ - $ - Options exercised - - $ - $ - Options cancelled - - $ - $ - Subtotal 2,020,000 1,180,000 $ 0.42-$3.00 $ 0.63 Shares used for restricted stock awards (see discussion below) (1,200,000 ) Balance at June 30, 2016 820,000 The weighted average remaining contractual life in years of the options outstanding as of June 30, 2016 was 8.43 years. Aggregate intrinsic value is the sum of the amounts by which the quoted market price of the Company's stock exceeded the exercise price of the stock options at June 30, 2016 for those stock options for which the quoted market price was in excess of the exercise price ("in-the-money options"). As of June 30, 2016, the aggregate intrinsic value of options outstanding was $73,500. As of June 30, 2016, 226,000 options to purchase shares of common stock were exercisable. Restricted Stock Awards Restricted stock awards ("RSAs") are granted to our board of directors and members of senior management and are issued pursuant to the Company's 2014 Omnibus Incentive Plan. On October 20, 2015, a total of 1,200,000 RSAs were granted to members of the Company's senior management and board of directors with a fair market value of approximately $900,000. These RSAs vest from one to three years from the grant date as services are rendered to the Company. For the three and six months ended June 30, 2016, the Company recorded $93,750 and $187,500 respectively in stock-based compensation expense related to these awards. (See discussion below). Stock Based Compensation Expense The Company recognizes stock-based compensation expense based on the fair value of that portion of stock options that are ultimately expected to vest during the period. Stock-based compensation expense recognized in the consolidated statements of operations includes compensation expense for stock-based awards based on the estimated grant date fair value over the requisite service period. For the three and six months ended June 30, 2016, the Company recognized stock-based compensation expense of $181,608 and $363,216 (including compensation expense for RSAs discussed above) which was recorded as a general and administrative expense in the consolidated statements of operations. For the three and six months ended June 30, 2015, stock-based compensation expense was $123,351 and $259,699, respectively. The total amount of unrecognized compensation cost related to non-vested stock options was $1,213,571 as of June 30, 2016. This amount will be recognized over a weighted average period of 3.39 years. Valuation Assumptions The fair value of options was estimated at the date of grant using the Black-Scholes option pricing model. Expected volatility is based on the historical volatility of the Company's common stock for similar terms. The expected term was estimated using the simplified method as permitted under SAB No. 110, since the Company has no recent exercise or forfeiture history that is representative of options granted during the year. The expected term represents the estimated period of time that stock options are expected to be outstanding, which is less than the contractual term which is generally ten years. The risk-free interest rate is based on the U.S. Treasury yield. The expected dividend yield is zero, as the Company does not anticipate paying dividends in the near future. There were no options granted in the six months ended June 30, 2016; the assumptions for options granted in the six months ended June 30, 2015 are as follows: Six Months Ended June 30, 2016 2015 Dividend yield NA 0.00 % Volatility factor NA 75.00 % Risk-free interest rate NA 1.85 % Expected term (years) NA 6.5 Weighted-average fair value of options granted during the periods NA $ 2.13 |
Provision for Conversion of Pre
Provision for Conversion of Preferred Stock | 6 Months Ended |
Jun. 30, 2016 | |
Provision For Conversion Of Preferred Stock [Abstract] | |
Provision for Conversion of Preferred Stock | 5. Provision for Conversion of Preferred Stock Series A Preferred Stock Conversion Liability In connection with the Series A preferred stock financing, the Company recorded a liability related to down-round protection provided to the stockholders in the event that the Company does another offering of common stock greater than $1,000,000 at a price below $2.50 per share. The down-round provision expires at the closing of a subsequent financing round or October 1, 2015 whichever is earlier. With the assistance of a third-party valuation specialist, the Company valued the conversion liability pursuant to the accounting guidance of ASC 820-10, Fair Value Measurements As of June 30, 2015, the Company re-evaluated the likelihood and valuation of a potential down-round given that management has been actively pursuing capital raising efforts. In the absence of any definitive agreement, the Company calculated the fair value of the conversion feature to be $700,000 by determining the highest probability of a per share price in the next anticipated round of financing, after considering all discussions with bankers, potential investors, and preliminary term sheets. This amount was booked as a current liability as of June 30, 2015 and was charged as a non-operating expense for the period. In July 2015, the Company increased its down-round provision by $286,000 based on the closing of an additional round of 180,000 Series A shares by determining the highest probability of a per share price in the next anticipated round of financing, after considering all discussions with bankers, potential investors, and preliminary term sheets. This amount was charged to non-operating expense for the three months ended September 30, 2015. As of August 21, 2015, upon the closing of the Series B Preferred Stock sale with proceeds totaling $5.0 million, the Company issued 1,232,000 additional shares of common stock at $0.80 per share thereby eliminating this liability of $986,000 and offsetting it to Additional Paid-in-Capital. This amount was calculated by determining the difference in per share pricing between the Series A Preferred Stock financing of $2.50 per share and the Series B Preferred Stock Financing of $0.80 per share multiplied by the 580,000 total shares included in the Series A offering. Series B Preferred Stock Conversion Liability As of August 20, 2015, in connection with the Series B preferred stock financing, the Company recorded a liability related to down-round protection provided to the stockholders in the event that the Company does another sale or issuance of common stock, stock options or convertible securities where the share price is below $0.80 per share. With the assistance of a third-party valuation specialist, the Company valued the conversion liability pursuant to the accounting guidance of ASC 820-10, Fair Value Measurements Derivatives and Hedging/Contracts in Entity's Own Equity As of June 30, 2016, the Company engaged a third-party valuation specialist to re-measure the conversion liability to fair market value as of that date utilizing the same methodology previously performed. The derivative which was classified as a current liability was adjusted to $105,660 as of June 30, 2016. The change in fair market value was recorded as non-operating income of $31,414 for the three months ended June 30, 2016 and $21,814 as non-operating expense for the six months ended June 30, 2016. |
Series B Warrants
Series B Warrants | 6 Months Ended |
Jun. 30, 2016 | |
Series B Warrants [Abstract] | |
Series B Warrants | 6. Series B Warrants In conjunction with the Series B Preferred Stock financing, the Company issued 6,437,500 common stock warrants that are exercisable at a price of $1.15 per share and expire five years from the issuance date. The warrants were initially valued at $2,935,800 utilizing the Black-Scholes pricing model. The warrants are exercisable in cash or through a cashless exercise provision. The Series B warrants also have a "down-round" protection feature provided to the investors if the Company subsequently issues or sells any shares of common stock, stock options, or convertible securities at a price less than the exercise price of $1.15 per each warrant. The conversion price is automatically adjusted down to the price of the instrument being issued. The Company reviewed the classification of the warrants as liabilities or equity under the guidance of ASC 480-10, Distinguishing Liabilities from Equity Six Months Ended June 30, 2016 2015 Dividend yield 0.00 % NA Volatility factor 70.00 % NA Risk-free interest rate 1.11 – 1.29 % NA Expected term (years) 4.14 – 4.15 NA Weighted-average fair value of warrants $ 0.13 NA This resulted in a warrant value of $842,325 as of June 30, 2016. The change in fair market value at the re-measurement date was recorded as non-operating income totaling $2,024,114 for the three months ended June 30, 2016. and non-operating income totaling $1,612,634 for the six months ended June 30, 2016. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 7. Income Taxes The Company records a valuation allowance against deferred tax assets to the extent that it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Due to the substantial doubt related to the Company's ability to utilize its deferred tax assets, a valuation allowance for the full amount of the deferred tax assets has been established at June 30, 2016. As a result of this valuation allowance there are no income tax benefits reflected in the accompanying statement of operations to offset pre-tax losses. The Company has no uncertain tax positions as of June 30, 2016. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | 8. Subsequent Events Legal Settlement On August 3, 2016, John B. Hollister filed to dismiss his complaint against the Company and its Executive Chairman, and the Company and its Executive Chairman filed to dismiss their complaint against Hollister filed on January 25, 2016 containing claims against him for defamation, false light, unfair competition, breach of contract, breach of fiduciary duty and fraud. Hollister's employment as the Company's Chief Executive Officer was terminated by the Company on August 24, 2015 for good and lawful reasons by the Company's Board of Directors as the Company decided to go in a different direction. As stated in the Company's December 28, 2015 Form 8-K, the Company maintains that Hollister's complaint and subsequent pleadings were grossly inaccurate and his claims were entirely without merit alleging various causes of action arising out of his termination, including a breach of contract claim. Neither the Company nor its Executive Chairman made any payment to Hollister to resolve the lawsuit or otherwise. According to the Orange County Superior Court's online case records posted on August 11, 2016, the court entered the order for dismissal of the entire action with prejudice effective as of the August 3, 2016 filing date. |
Nature of Operations, Busines15
Nature of Operations, Business Activities and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates. The most significant accounting estimates inherent in the preparation of our financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources. |
Liquidity and Going Concern | Liquidity and Going Concern The Company has incurred operating losses and negative cash flows from operations since our inception. As of June 30, 2016, we had cash and cash equivalents of $831,658. The Company anticipates that it will continue to incur net losses into the foreseeable future as it continues to advance and develop a number of potential drug candidates into preclinical development activities and expands its corporate infrastructure which includes the costs associated with being a public company. Without additional funding, management believes that the Company will not have sufficient funds to meet its obligations within one year after the date the consolidated financial statements are issued. These conditions give rise to substantial doubt as to the Company's ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. The Company plans to continue to fund its losses from operations and capital funding needs through public or private equity or debt financings, strategic collaborations, licensing arrangements, asset sales, government grants or other arrangements. However, the Company cannot be sure that such additional funds will be available on reasonable terms, or at all. If the Company raises additional funds by issuing equity securities, substantial dilution to existing stockholders would result. If the Company is unable to secure adequate additional funding, the Company may be forced to make a reduction in spending, extend payment terms with suppliers, liquidate assets where possible, and/or suspend or curtail planned programs. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The carrying value of those investments approximates their fair market value due to their short maturity and liquidity. Cash and cash equivalents include cash on hand and amounts on deposit with financial institutions, which amounts may at times exceed federally insured limits. The Company has not experienced any losses on such accounts and does not believe it is exposed to any significant credit risk. |
Restricted Cash | Restricted Cash A deposit of $37,500 as of June 30, 2016 and December 31, 2015 was restricted from withdrawal and held by a bank in the form of a certificate of deposit. This certificate serves as collateral for payment of the Company's credit cards. |
Fair Value Measurements | Fair Value Measurements Certain assets and liabilities are carried at fair value under U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. A fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last is considered unobservable, is used to measure fair value: Level 1: Valuations for assets and liabilities traded in active markets from readily available pricing sources such as quoted prices in active markets for identical assets or liabilities. Level 2: Observable inputs (other than Level 1 quoted prices) such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. The carrying values of our financial instruments, including, cash and cash equivalents, prepaid expenses, accounts payable, and accrued expenses approximate their fair value due to the short maturities of these financial instruments. The Series B warrant liability and the conversion liability for the Series B preferred stock were valued utilizing Level 3 inputs primarily from a third party independent appraisal conducted as of June 30, 2016. |
Property and Equipment, Net | Property and Equipment, Net As of June 30, 2016, property and equipment, net, was $16,896, consisting primarily of computers and equipment. The Company had $13,383 of property and equipment, net, as of December 31, 2015. Expenditures for additions, renewals and improvements will be capitalized at cost. Depreciation will generally be computed on a straight-line method based on the estimated useful life of the related assets currently ranging from two to three years. Maintenance and repairs that do not extend the life of assets are charged to expense when incurred. When properties are disposed of, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is reported in the period the transaction takes place. Property and equipment are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted cash flows expected to be generated by the asset. If the carrying amount exceeds its estimated future undiscounted cash flows, an impairment charge is recognized by the amount by which the carrying amount exceeds the fair value of the asset. The costs incurred for the rights to use licensed technologies in the research and development process, including licensing fees and milestone payments, will be charged to research and development expense as incurred in situations where the Company has not identified an alternative future use for the acquired rights, and are capitalized in situations where there is an identified alternative future use. No cost associated with the use of licensed technologies has been capitalized to date. |
Income Taxes | Income Taxes The Company accounts for our deferred income tax assets and liabilities based on differences between the financial reporting and tax bases of assets and liabilities, and net operating loss carry forwards (the "NOLs") and other tax credit carry forwards. These items are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the period that includes the enactment date. Any interest or penalties would be recorded in the Company's statement of operations in the period incurred. The Company records a valuation allowance to reduce the deferred income tax assets to the amount that is more likely than not to be realized. In making such determinations, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. As a result there are no income tax benefits reflected in the statement of operations to offset pre-tax losses. The Company recognizes a tax benefit from uncertain tax positions when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits of the position. |
Revenue Recognition | Revenue Recognition The Company has not begun planned principal operations and has not generated any revenue since inception. |
Research and Development Expenses | Research and Development Expenses Research and development ("R&D") costs are expensed when incurred. These costs may consist of external research and development expenses incurred under agreements with third-party contract research organizations and investigative sites, third-party manufacturing organizations and consultants; license fees; employee-related expenses, which include salaries, benefits and stock-based compensation for the personnel involved in our preclinical and clinical drug development activities; and facilities expense, depreciation and other allocated expenses; and equipment and laboratory supplies. |
Stock-Based Compensation Expenses | Stock-Based Compensation Expenses Stock-based compensation cost is estimated at the grant date based on the fair value of the award, and the cost is recognized as expense ratably over the vesting period. We use the Black-Scholes option pricing model for estimating the grant date fair value of stock options and warrants using the following assumptions: · Exercise price - We determined the exercise price based on valuations using the best information available to management at the time of the valuations. · Volatility - We estimate the stock price volatility based on industry peers who are also in the early development stage given the limited market data available in the public arena. · Expected term - The expected term is based on a simplified method which defines the life as the average of the contractual term of the options and warrants and the weighted-average vesting period for all open awards. · Risk-free rate - The risk-free interest rate for the expected term of the option or warrant is based on the average market rate on U.S. treasury securities in effect during the period in which the awards were granted. · Dividends – The dividend yield assumption is based on our history and expectation of paying no dividends. |
Stock-Based Compensation for Non-Employees | Stock-Based Compensation for Non-Employees The Company accounts for warrants and options issued to non-employees under ASC 505-50, Equity – Equity Based Payments to Non-Employees, |
Segment Information | Segment Information The Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") No. 280, "Segment Reporting" establishes standards for reporting information about reportable segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group ("CODM"), in deciding how to allocate resources and in assessing performance. The CODM evaluates revenues and gross profits based on product lines and routes to market. Based on the early development stage of our operation, we operate in a single reportable segment. |
Comprehensive Income (Loss) | Comprehensive Income (Loss) Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. The Company is required to record all components of comprehensive loss in the consolidated financial statements in the period in which they are recognized. Net income (loss) and other comprehensive income (loss), net of their related tax effect, arrived at a comprehensive income (loss). For the three and six months ended June 30, 2016, the comprehensive income (loss) was equal to the net income (loss). |
Earnings per share | Earnings per share The Company applies FASB ASC 260, "Earnings per Share." Basic earnings (loss) per share is computed by dividing earnings (loss) available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings or loss per share would include the dilutive effect of awards granted to employees under stock-based compensation plans, if any. No dilutive effect was calculated for the three and six months ended June 30, 2015 as the effect would be anti-dilutive. For the three months ended June 30, 2016 the dilutive effects of common stock options and restricted stock awards were included in the calculation of the weighted-average number of common shares outstanding by applying the treasury stock method to the assumed exercise of outstanding stock options. For the six months ended June 30, 2016, no dilutive effect was calculated as the effect would be anti-dilutive. We computed earnings per common share for each period as follows: Three Months Three Months Six Months Six Months Ended Ended Ended Ended June 30, June 30, June 30, June 30, 2016 2015 2016 2015 Net income (loss) $ 573,093 $ (2,056,960 ) $ (1,112,354 ) $ (2,967,185 ) Weighted average shares of common stock outstanding - basic 19,913,163 16,265,663 19,909,042 16,248,597 Dilutive effect of common stock options and restricted stock awards 222,482 - - - Weighted average shares of common stock outstanding - diluted 20,135,645 16,265,663 19,909,042 16,248,597 Basic earnings per share $ 0.03 $ (0.13 ) $ (0.06 ) $ (0.18 ) Diluted earnings per share $ 0.03 $ (0.13 ) $ (0.06 ) $ (0.18 ) |
Recent accounting pronouncements | Recent accounting pronouncements In February 2016, the FASB issued ASU No. 2016-02 "Leases" (Topic 842) intended to improve financial reporting around leasing transactions. The ASU affects all companies and other organizations that lease assets such as real estate, airplanes, and manufacturing equipment. The ASU will require organizations that lease assets – referred to as "lessees"- to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. For public companies, the standard is effective for fiscal years beginning after December 15, 2018 and interim periods therein. Earlier adoption is permitted for any annual or interim period for which consolidated financial statements have not yet been issued. The Company is currently evaluating the potential impact that adoption may have on its consolidated financial statements. |
Nature of Operations, Busines16
Nature of Operations, Business Activities and Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Schedule of earnings per common share | Three Months Three Months Six Months Six Months Ended Ended Ended Ended June 30, June 30, June 30, June 30, 2016 2015 2016 2015 Net income (loss) $ 573,093 $ (2,056,960 ) $ (1,112,354 ) $ (2,967,185 ) Weighted average shares of common stock outstanding - basic 19,913,163 16,265,663 19,909,042 16,248,597 Dilutive effect of common stock options and restricted stock awards 222,482 - - - Weighted average shares of common stock outstanding - diluted 20,135,645 16,265,663 19,909,042 16,248,597 Basic earnings per share $ 0.03 $ (0.13 ) $ (0.06 ) $ (0.18 ) Diluted earnings per share $ 0.03 $ (0.13 ) $ (0.06 ) $ (0.18 ) |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum payments under non-cancelable operating leases | 2016 $ 123,260 2017 161,962 2018 - 2019 - 2020 - Thereafter - Total $ 285,222 |
Stockholders'Deficit and Prefer
Stockholders'Deficit and Preferred Stock Subject to Redemption (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Equity [Abstract] | |
Schedule of summary of stock option activity | Shares for Grant of Options Outstanding Weighted Average Options & Number of Shares Price per Share Exercise Price Balance at December 31, 2015 2,020,000 1,180,000 $ 0.42-$3.00 $ 0.63 Options granted - - $ - $ - Options exercised - - $ - $ - Options cancelled - - $ - $ - Subtotal 2,020,000 1,180,000 $ 0.42-$3.00 $ 0.63 Shares used for restricted stock awards (see discussion below) (1,200,000 ) Balance at June 30, 2016 820,000 |
Schedule of weighted average assumptions for employee options | Six Months Ended June 30, 2016 2015 Dividend yield NA 0.00 % Volatility factor NA 75.00 % Risk-free interest rate NA 1.85 % Expected term (years) NA 6.5 Weighted-average fair value of options granted during the periods NA $ 2.13 |
Series B Warrants (Tables)
Series B Warrants (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Series B Warrants [Abstract] | |
Schedule of Series B Warrants | Six Months Ended June 30, 2016 2015 Dividend yield 0.00 % NA Volatility factor 70.00 % NA Risk-free interest rate 1.11 – 1.29 % NA Expected term (years) 4.14 – 4.15 NA Weighted-average fair value of warrants $ 0.13 NA |
Nature of Operations, Busines20
Nature of Operations, Business Activities and Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Accounting Policies [Abstract] | ||||
Net income (loss) | $ 573,093 | $ (2,056,960) | $ (1,112,354) | $ (2,967,185) |
Weighted average shares of common stock outstanding - basic | 19,913,163 | 16,265,663 | 19,909,042 | 16,248,597 |
Dilutive effect of common stock options and restricted stock awards | 222,482 | |||
Weighted average shares of common stock outstanding - diluted | 20,135,645 | 16,265,663 | 19,909,042 | 16,248,597 |
Basic earnings per share (in dollars per share) | $ 0.03 | $ (0.13) | $ (0.06) | $ (0.18) |
Diluted earnings per share (in dollars per share) | $ 0.03 | $ (0.13) | $ (0.06) | $ (0.18) |
Nature of Operations, Busines21
Nature of Operations, Business Activities and Summary of Significant Accounting Policies (Detail Textuals) | 1 Months Ended | 6 Months Ended | |||
Oct. 31, 2014shares | Jun. 30, 2016USD ($)Segmentshares | Dec. 31, 2015USD ($)shares | Jun. 30, 2015USD ($) | Dec. 31, 2014USD ($) | |
Nature of Operations, Business Activities and Summary of Significant Accounting Policies [Line Items] | |||||
Common stock outstanding | 19,913,163 | 19,903,163 | |||
Cash and cash equivalents | $ | $ 831,658 | $ 3,221,209 | $ 601,266 | $ 207,330 | |
Restricted cash | $ | 37,500 | 37,500 | |||
Property and equipment, net | $ | $ 16,896 | $ 13,383 | |||
Property, plant and equipment, depreciation methods | straight-line method | ||||
Property plant and equipment estimated useful life | Two to three years | ||||
Number of reportable segment | Segment | 1 | ||||
Nemus Acquisition Corp | |||||
Nature of Operations, Business Activities and Summary of Significant Accounting Policies [Line Items] | |||||
Reverse merger common stock issuance with par value (in shares) | 3,120,000 | ||||
Number of shares exchanged | 12,880,000 | ||||
Common stock outstanding | 16,000,000 |
University of Mississippi ("U22
University of Mississippi ("UM") Agreements (Detail Textuals) | Dec. 14, 2015USD ($)License_agreement | Oct. 15, 2014USD ($) | Sep. 29, 2014USD ($)License_agreement | Jul. 31, 2013 | Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) |
University Of Mississippi Agreements [Line Items] | ||||||||
Research and development expense | $ 459,957 | $ 43,374 | $ 595,316 | $ 80,574 | ||||
University of Mississippi ("UM") Agreements | University of Mississippi | Intellectual Property | ||||||||
University Of Mississippi Agreements [Line Items] | ||||||||
Term of memorandum of understanding agreement | 5 years | |||||||
Notice period for termination | 3 months | |||||||
UM 5050 pro-drug agreements | University of Mississippi | Intellectual Property | ||||||||
University Of Mississippi Agreements [Line Items] | ||||||||
Number of license agreements | License_agreement | 3 | |||||||
Notice period for termination | 60 days | |||||||
Aggregate milestone payments if milestones achieved | $ 2,100,000 | |||||||
UM 5050 pro-drug agreements | University of Mississippi | Intellectual Property | October 2014 | ||||||||
University Of Mississippi Agreements [Line Items] | ||||||||
One time up front payment | $ 10,000 | |||||||
Other pro-drugs and potential formulations | University of Mississippi | Intellectual Property | December 2015 | ||||||||
University Of Mississippi Agreements [Line Items] | ||||||||
Notice period for termination | 30 days | |||||||
Research and development expense | 27,804 | $ 46,340 | ||||||
Other pro-drugs and potential formulations | University of Mississippi | Intellectual Property | April 2016 | ||||||||
University Of Mississippi Agreements [Line Items] | ||||||||
Research and development expense | $ 52,380 | $ 52,380 | ||||||
UM 8930 pro-drug agreements | University of Mississippi | Intellectual Property | ||||||||
University Of Mississippi Agreements [Line Items] | ||||||||
Number of license agreements | License_agreement | 2 | |||||||
Notice period for termination | 60 days | |||||||
One time up front payment | $ 65,000 | |||||||
Annual fees for license agreement | 25,000 | |||||||
Aggregate milestone payments if milestones achieved | 1,400,000 | |||||||
UM 8930 pro-drug agreements | University of Mississippi | Intellectual Property | December 2015 | ||||||||
University Of Mississippi Agreements [Line Items] | ||||||||
One time up front payment | $ 10,000 |
Commitments and Contingencies -
Commitments and Contingencies - Summary of Future minimum payments (Details) | Jun. 30, 2016USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,016 | $ 123,260 |
2,017 | 161,962 |
2,018 | |
2,019 | |
2,020 | |
Thereafter | |
Total | $ 285,222 |
Commitments and Contingencies24
Commitments and Contingencies (Detail Textuals) | Feb. 05, 2016USD ($) | Nov. 30, 2015USD ($) | Oct. 31, 2014USD ($)ft² | Sep. 30, 2014USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) |
Operating Leased Assets [Line Items] | ||||||||
Rent expense | $ 7,559 | $ 9,267 | $ 81,203 | $ 56,692 | $ 160,974 | $ 114,251 | ||
Research and development expense | 459,957 | $ 43,374 | 595,316 | $ 80,574 | ||||
Lease agreement | ||||||||
Operating Leased Assets [Line Items] | ||||||||
Area of corporate office headquarters | ft² | 4,087 | |||||||
Rent expense | $ 5,373 | |||||||
Letter agreement ("Agreement") | Contract manufacturing organization ("CMO") | ||||||||
Operating Leased Assets [Line Items] | ||||||||
Research and development expense | $ 36,600 | $ 206,348 | ||||||
Estimated analytical method development and qualification | $ 142,900 | |||||||
Letter agreement ("Agreement") | Contract manufacturing organization ("CMO") | Minimum | ||||||||
Operating Leased Assets [Line Items] | ||||||||
Fees and expenses for the initial evaluation and development | 154,000 | |||||||
Letter agreement ("Agreement") | Contract manufacturing organization ("CMO") | Maximum | ||||||||
Operating Leased Assets [Line Items] | ||||||||
Fees and expenses for the initial evaluation and development | $ 183,000 |
Stockholders' Deficit and Prefe
Stockholders' Deficit and Preferred Stock Subject to Redemption - Summary of option activity under 2014 Plan (Details) - Omnibus Incentive Plan 2014 | 6 Months Ended |
Jun. 30, 2016USD ($)$ / sharesshares | |
Stock Option | |
Shares Available For Grant Of Options | |
Balance at December 31, 2015 | 2,020,000 |
Options granted | |
Options exercised | |
Options cancelled | |
Subtotal | 2,020,000 |
Balance at June 30, 2016 | 820,000 |
Number of Shares | |
Balance at the beginning | 1,180,000 |
Options granted | |
Options exercised | |
Options cancelled | |
Balance at the ending | 1,180,000 |
Price Per Share | |
Options granted | $ | |
Options cancelled | $ / shares | |
Weighted Average Exercise Price | |
Balance at the beginning | $ / shares | 0.63 |
Options granted | $ / shares | |
Options cancelled | $ / shares | |
Balance at the ending | $ / shares | 0.63 |
Stock Option | Minimum | |
Price Per Share | |
Balance at the beginning | $ / shares | 0.42 |
Balance at the ending | $ / shares | 0.42 |
Stock Option | Maximum | |
Price Per Share | |
Balance at the beginning | $ / shares | 3 |
Balance at the ending | $ / shares | $ 3 |
Restricted stock awards | |
Shares Available For Grant Of Options | |
Shares used for restricted stock awards (see discussion below) | $ | $ (1,200,000) |
Stockholders' Deficit and Pre26
Stockholders' Deficit and Preferred Stock Subject to Redemption - Summary of weighted average assumptions for employee option (Details 1) - Stock Option - $ / shares | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Dividend yield | 0.00% | |
Volatility factor | 75.00% | |
Risk-free interest rate | 1.85% | |
Expected term (years) | 6 years 5 months | |
Weighted-average fair value of options granted during the periods | $ 2.13 |
Stockholders' Deficit and Pre27
Stockholders' Deficit and Preferred Stock Subject to Redemption (Detail Textuals) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||||||||||||||
Mar. 31, 2016$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares | Nov. 30, 2015USD ($)$ / sharesshares | Aug. 31, 2015USD ($)$ / sharesshares | Aug. 21, 2015USD ($)$ / sharesshares | Jul. 31, 2015USD ($)shares | Jun. 30, 2015USD ($)$ / sharesshares | May 31, 2015$ / sharesshares | Apr. 30, 2015USD ($)$ / sharesshares | Mar. 31, 2015$ / sharesshares | Jan. 31, 2015USD ($)$ / sharesshares | Oct. 31, 2014Investorshares | Aug. 31, 2014USD ($)$ / sharesshares | Jun. 30, 2016USD ($)$ / sharesshares | Mar. 31, 2016USD ($) | Jun. 30, 2015USD ($)$ / sharesshares | Mar. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2014USD ($) | Jun. 30, 2016USD ($)$ / sharesshares | Jun. 30, 2015USD ($)$ / sharesshares | Dec. 31, 2015USD ($)$ / shares | Jun. 30, 2014USD ($)shares | Jul. 17, 2012Adviser$ / sharesshares | |
Equity [Line Items] | |||||||||||||||||||||||
Number of shares called by warrants | shares | 100,000 | ||||||||||||||||||||||
Warrant exercise price (in dollars per share) | $ / shares | $ 5 | ||||||||||||||||||||||
Term of warrant | 10 years | ||||||||||||||||||||||
Value of common stock called by warrants | $ | $ 85,950 | $ 85,950 | |||||||||||||||||||||
Amortization of warrant service cost | $ | $ 5,145 | $ 46,810 | |||||||||||||||||||||
Number of shares issued for services | shares | 1,110,000 | ||||||||||||||||||||||
Amortized general and administrative expense | $ | $ 12,194 | ||||||||||||||||||||||
Fair market value of common stock issued recorded as prepaid expense | $ | $ 168,000 | ||||||||||||||||||||||
Number of shares issued to group of private investors | shares | 24,000 | 241,663 | |||||||||||||||||||||
Value of shares issued to group of private investors | $ | $ 724,989 | ||||||||||||||||||||||
Par value of common stock issued (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | ||||||||||||||||
Number of individual investor | Investor | 18 | ||||||||||||||||||||||
General and administrative expense | $ | $ 1,022,078 | $ 1,313,170 | $ 872,625 | $ 466,200 | $ 2,107,058 | $ 2,185,795 | |||||||||||||||||
Preferred stock, shares authorized | shares | 20,000,000 | 20,000,000 | |||||||||||||||||||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | |||||||||||||||||||||
Series A preferred stock | |||||||||||||||||||||||
Equity [Line Items] | |||||||||||||||||||||||
Number of shares issued to group of private investors | shares | 180,000 | 150,000 | 250,000 | ||||||||||||||||||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.001 | ||||||||||||||||||||||
Minimum equity financing under down-round protection feature | $ | $ 286,000 | $ 1,000,000 | $ 1,000,000 | ||||||||||||||||||||
Maximum common stock issuance price per share (in dollars per share) | $ / shares | $ 2.50 | $ 2.50 | $ 2.50 | ||||||||||||||||||||
Conversion price | $ / shares | $ 2.50 | ||||||||||||||||||||||
Number of shares converted | shares | 580,000 | 580,000 | |||||||||||||||||||||
Number of shares issued in conversion | shares | 1,812,500 | ||||||||||||||||||||||
Series B Preferred Stock | |||||||||||||||||||||||
Equity [Line Items] | |||||||||||||||||||||||
Number of preferred stock and warrants sold | shares | 5,000 | ||||||||||||||||||||||
Maximum common stock issuance price per share (in dollars per share) | $ / shares | $ 1,000 | ||||||||||||||||||||||
Conversion price | $ / shares | $ 0.80 | $ 0.80 | $ 0.80 | $ 2.50 | |||||||||||||||||||
Number of shares converted | shares | 8 | 500 | 5,615,000 | ||||||||||||||||||||
Number of shares issued in conversion | shares | 10,000 | 625,000 | 1,812,500 | ||||||||||||||||||||
Proceeds received from the Series B financing | $ | $ 5,000,000 | $ 5,000,000 | |||||||||||||||||||||
Share price (in dollars per share) | $ / shares | $ 1,000 | ||||||||||||||||||||||
Preferred stock, redemption terms | (A) 115% of the conversion amount and (B) the product of (1) the conversion rate in effect at such time and (2) the greatest closing sale price of the Common Stock during the period beginning on the date immediately preceding such triggering event and ending on the date such holder delivers the notice of redemption. | ||||||||||||||||||||||
Preferred stock, conversion rate | 1,250:1 | ||||||||||||||||||||||
Liquidation preference value | $ | $ 4,500,000 | $ 4,500,000 | $ 4,500,000 | $ 4,500,000 | $ 4,500,000 | ||||||||||||||||||
General and administrative expense | |||||||||||||||||||||||
Equity [Line Items] | |||||||||||||||||||||||
Value of common stock called by warrants | $ | $ 326,000 | ||||||||||||||||||||||
Warrants | |||||||||||||||||||||||
Equity [Line Items] | |||||||||||||||||||||||
Number of shares called by warrants | shares | 120,000 | 6,250,000 | 10,000 | 90,000 | 6,000 | 90,000 | 2,200,000 | 10,000 | 90,000 | 10,000 | 3,000,000 | ||||||||||||
Warrant exercise price (in dollars per share) | $ / shares | $ 1.15 | $ 1.15 | $ 5 | $ 2.50 | $ 2.50 | $ 2.50 | $ 5 | $ 2.50 | $ 5 | $ 1 | |||||||||||||
Term of warrant | 5 years | 5 years | 5 years | 5 years | |||||||||||||||||||
Number of advisors | Adviser | 2 | ||||||||||||||||||||||
Value of common stock called by warrants | $ | $ 42,000 | $ 86,250 | $ 14,700 | $ 10,000 | $ 1,100,000 | $ 14,700 | $ 14,700 | ||||||||||||||||
Amortization of warrant service cost | $ | 34,200 | $ 7,800 | |||||||||||||||||||||
Number of shares issued to group of private investors | shares | 187,500 | 36,000 | 30,000 | 50,000 | |||||||||||||||||||
Value of warrants issued | $ | $ 1,000 | $ 625,000 | |||||||||||||||||||||
Number of shares vested | shares | 60,000 | ||||||||||||||||||||||
Minimum equity financing under down-round protection feature | $ | $ 1,000,000 | ||||||||||||||||||||||
Maximum common stock issuance price per share (in dollars per share) | $ / shares | $ 2.50 | $ 2.50 | |||||||||||||||||||||
Warrants | Series A preferred stock | |||||||||||||||||||||||
Equity [Line Items] | |||||||||||||||||||||||
Number of shares called by warrants | shares | 50,000 | ||||||||||||||||||||||
Warrant exercise price (in dollars per share) | $ / shares | $ 5 | ||||||||||||||||||||||
Term of warrant | 5 years | ||||||||||||||||||||||
Warrants | June 2014 Stock Purchase Agreement | |||||||||||||||||||||||
Equity [Line Items] | |||||||||||||||||||||||
Number of shares called by warrants | shares | 450,000 | 550,000 | 550,000 | 1,800,000 | |||||||||||||||||||
Warrant exercise price (in dollars per share) | $ / shares | $ 1 | $ 1 | $ 1 | ||||||||||||||||||||
Value of common stock called by warrants | $ | $ 900,000 | ||||||||||||||||||||||
Value of warrants issued | $ | $ 85,500 | $ 104,500 | |||||||||||||||||||||
Common Stock | |||||||||||||||||||||||
Equity [Line Items] | |||||||||||||||||||||||
Conversion price | $ / shares | $ 0.80 | ||||||||||||||||||||||
Number of shares converted | shares | 1,250 |
Stockholders' Deficit and Pre28
Stockholders' Deficit and Preferred Stock Subject to Redemption (Detail Textuals 1) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Oct. 20, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Equity [Line Items] | ||||||
Recognized stock-based compensation expense | $ 123,351 | $ 259,699 | ||||
Total amount of unrecognized compensation cost related to non-vested stock options | $ 1,213,571 | $ 1,213,571 | ||||
Recognized period of non-vested stock options | 3 years 4 months 21 days | |||||
General and administrative expense | ||||||
Equity [Line Items] | ||||||
Recognized stock-based compensation expense | $ 181,608 | $ 363,216 | ||||
Stock Option | ||||||
Equity [Line Items] | ||||||
Dividend yield | 0.00% | |||||
Omnibus Incentive Plan 2014 | Stock Option | ||||||
Equity [Line Items] | ||||||
Number of shares reserved for future grants | 3,200,000 | 3,200,000 | ||||
Aggregate number of shares granted | 1,180,000 | |||||
Number of shares available for future grant | 820,000 | 820,000 | ||||
Expiry period of options granted | 10 years | |||||
Percentage of option price at least of fair value on date of grants | 100.00% | |||||
Voting percentage of common stock | 10.00% | |||||
Percentage of fair value option price at date of grants | 110.00% | |||||
Maximum exercisable period of fair value of option | 5 years | |||||
Vested period of shares | 5 years | |||||
Remaining contractual life of options outstanding | 8 years 5 months 5 days | |||||
Aggregate intrinsic value of options outstanding | $ 73,500 | $ 73,500 | ||||
Options outstanding | 1,180,000 | 1,180,000 | 1,180,000 | |||
Options to purchase shares of common stock, exercisable | 226,000 | 226,000 | ||||
Omnibus Incentive Plan 2014 | Restricted stock awards | ||||||
Equity [Line Items] | ||||||
Number of restricted stock awards granted | $ 1,200,000 | |||||
Omnibus Incentive Plan 2014 | Restricted stock awards | Senior management and board of directors | ||||||
Equity [Line Items] | ||||||
Number of restricted stock awards granted | $ 1,200,000 | |||||
Recognized stock-based compensation expense | $ 93,750 | $ 187,500 | ||||
Fair market value of shares granted | $ 900,000 | |||||
Omnibus Incentive Plan 2014 | Restricted stock awards | Minimum | Senior management and board of directors | ||||||
Equity [Line Items] | ||||||
Vested period of shares | 1 year | |||||
Omnibus Incentive Plan 2014 | Restricted stock awards | Maximum | Senior management and board of directors | ||||||
Equity [Line Items] | ||||||
Vested period of shares | 3 years |
Provision for Conversion of P29
Provision for Conversion of Preferred Stock (Detail Textuals) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||||
Mar. 31, 2016 | Dec. 31, 2015 | Aug. 31, 2015 | Aug. 21, 2015 | Jul. 31, 2015 | Apr. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Conversion of Stock [Line Items] | ||||||||||
Fair value of the conversion feature | $ 84,090 | $ 105,660 | $ 105,660 | |||||||
Series A preferred stock | ||||||||||
Conversion of Stock [Line Items] | ||||||||||
Minimum equity financing under down-round protection feature | $ 286,000 | $ 1,000,000 | $ 1,000,000 | |||||||
Maximum common stock issuance price per share (in dollars per share) | $ 2.50 | $ 2.50 | $ 2.50 | |||||||
Fair value of the conversion feature | $ 700,000 | $ 700,000 | ||||||||
Number of additional shares issued | 180,000 | |||||||||
Shares issued, price per share (in dollars per share) | $ 2.50 | |||||||||
Change in fair value of conversion rights of preferred stock | $ 700,000 | $ 700,000 | ||||||||
Number of shares converted | 580,000 | 580,000 | ||||||||
Conversion price | $ 2.50 | |||||||||
Series B Preferred Stock | ||||||||||
Conversion of Stock [Line Items] | ||||||||||
Maximum common stock issuance price per share (in dollars per share) | $ 1,000 | |||||||||
Proceeds received from the Series B financing | $ 5,000,000 | $ 5,000,000 | ||||||||
Number of additional shares issued | 1,232,000 | |||||||||
Shares issued, price per share (in dollars per share) | $ 0.80 | |||||||||
Change in fair value of conversion rights of preferred stock | $ 986,000 | $ (31,414) | $ 21,814 | |||||||
Number of shares converted | 8 | 500 | 5,615,000 | |||||||
Conversion price | $ 0.80 | $ 0.80 | $ 0.80 | $ 2.50 |
Series B Warrants (Details)
Series B Warrants (Details) - Series B Warrants - $ / shares | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Class of Warrant or Right [Line Items] | ||
Dividend yield | 0.00% | |
Volatility factor | 70.00% | |
Weighted-average fair value of warrants granted during the periods | $ 0.13 | |
Minimum | ||
Class of Warrant or Right [Line Items] | ||
Risk-free interest rate | 1.11% | |
Expected term (years) | 4 years 1 month 21 days | |
Maximum | ||
Class of Warrant or Right [Line Items] | ||
Risk-free interest rate | 1.29% | |
Expected term (years) | 4 years 1 month 24 days |
Series B Warrants (Detail Textu
Series B Warrants (Detail Textuals) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2016 | Apr. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2016 | Dec. 31, 2015 | |
Class of Warrant or Right [Line Items] | |||||
Warrant exercise price (in dollars per share) | $ 5 | ||||
Warrants | $ 781,811 | $ 781,811 | $ 759,386 | ||
Series B warrants | 842,325 | 842,325 | $ 2,454,959 | ||
Term of warrant | 10 years | ||||
Change in fair market value at the re-measurement date recorded as non-operating expense | $ (2,024,114) | $ (1,612,634) | |||
Series B Warrants | |||||
Class of Warrant or Right [Line Items] | |||||
Number of warrants issued | 6,437,500 | 6,437,500 | |||
Warrant exercise price (in dollars per share) | $ 1.15 | $ 1.15 | |||
Warrants | $ 2,935,800 | $ 2,935,800 | |||
Proceeds received from the Series B financing | $ 5,000,000 | ||||
Series B warrants | $ 2,866,439 | ||||
Term of warrant | 4 years 4 months 21 days | ||||
Change in fair market value at the re-measurement date recorded as non-operating expense | $ 411,480 | ||||
Warrants, expiration period | 5 years |