Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 30, 2019 | |
Document and Entity Information [Abstract] | |
Entity Registrant Name | Emerald Bioscience, Inc. |
Entity Central Index Key | 0001516551 |
Entity Filer Category | Non-accelerated Filer |
Document Type | POS AM |
Document Period End Date | Sep. 30, 2019 |
Amendment Flag | false |
Entity Small Business | true |
Entity Emerging Growth Company | false |
Entity Ex Transition Period | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets | |||
Cash and cash equivalents | $ 1,319,360 | $ 1,853,373 | $ 259,955 |
Restricted cash | 4,512 | 4,512 | 4,428 |
Prepaid expenses | 395,441 | 93,193 | 291,428 |
Other current assets | 3,375 | 2,609 | |
Total current assets | 1,722,688 | 1,953,687 | 555,811 |
Property and equipment, net | 2,349 | 3,445 | 1,407 |
Total assets | 1,725,037 | 1,957,132 | 557,218 |
Current liabilities | |||
Accounts payable | 206,930 | 15,597 | 100,921 |
Other current liabilities | 318,930 | 184,461 | |
Accrued payroll and related expenses | 66,213 | 54,512 | |
Accrued expenses | 118,248 | 143,826 | |
Derivative liabilities | 13,737,783 | 15,738,913 | 271,715 |
Secured convertible promissory note - related party, net of discount | 235,000 | ||
Total current liabilities | 14,263,643 | 15,938,971 | 805,974 |
Noncurrent liabilities | |||
Convertible multi-draw credit agreement - related party, net of discount | 3,296,249 | 1,360,960 | |
Derivative liabilities, noncurrent | 567,606 | 219,453 | 551,322 |
Total liabilities | 18,127,498 | 17,519,384 | 1,357,296 |
Commitments and contingencies | |||
Stockholders� deficit | |||
Common stock, $0.001 par value; 500,000,000 shares authorized; 133,907,747 issued and outstanding as of December 31, 2018 and 33,622,829 issued and outstanding as of December 31, 2017 | 134,095 | 133,908 | 33,623 |
Additional paid-in-capital | 20,488,778 | 17,528,947 | 9,444,831 |
Warrants | 1,297,991 | 982,911 | |
Accumulated deficit | (37,025,334) | (33,225,107) | (14,030,871) |
Total stockholders' deficit | (16,402,461) | (15,562,252) | (3,569,506) |
Total liabilities and stockholders' deficit | $ 1,725,037 | $ 1,957,132 | 557,218 |
Series B Preferred Stock Conversion Liability | |||
Noncurrent liabilities | |||
Redeemable Convertible Preferred Stock, value | 822,201 | ||
Stockholders� deficit | |||
Total stockholders' deficit | 822,201 | ||
Convertible Series D Preferred Stock | |||
Noncurrent liabilities | |||
Redeemable Convertible Preferred Stock, value | 169,447 | ||
Stockholders� deficit | |||
Total stockholders' deficit | 169,447 | ||
Convertible Series F Preferred Stock | |||
Noncurrent liabilities | |||
Redeemable Convertible Preferred Stock, value | 1,777,781 | ||
Stockholders� deficit | |||
Total stockholders' deficit | $ 1,777,781 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 0 | 0 | |
Preferred stock, shares outstanding | 0 | 0 | |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 | 500,000,000 |
Common stock, shares issued | 134,095,247 | 134,095,247 | 33,622,829 |
Common stock, shares outstanding | 134,095,247 | 134,095,247 | 33,622,829 |
Series B Preferred Stock Conversion Liability | |||
Preferred stock, shares issued | 0 | 2,833.55 | |
Preferred stock, shares outstanding | 0 | 2,833.55 | |
Issuance costs (in dollars) | $ 347,091 | ||
Liquidation preference value (in dollars) | $ 2,800,000 | ||
Convertible Series D Preferred Stock | |||
Preferred stock, shares issued | 0 | 200 | |
Preferred stock, shares outstanding | 0 | 200 | |
Issuance costs (in dollars) | $ 30,557 | ||
Liquidation preference value (in dollars) | $ 200,000 | ||
Convertible Series F Preferred Stock | |||
Preferred stock, shares issued | 0 | 2,000 | |
Preferred stock, shares outstanding | 0 | 2,000 | |
Issuance costs (in dollars) | $ 118,855 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Operating expenses | ||||||
Research and development | $ 513,004 | $ 67,291 | $ 1,522,031 | $ 92,291 | $ 329,966 | $ 311,302 |
General and administrative | 990,110 | 978,329 | 3,267,037 | 3,284,880 | 4,362,557 | 3,547,927 |
Total operating expenses | 1,503,114 | 1,045,620 | 4,789,068 | 3,377,171 | 4,692,523 | 3,859,229 |
Operating loss | (1,503,114) | (1,045,620) | (4,789,068) | (3,377,171) | (4,692,523) | (3,859,229) |
Other expense (income) | ||||||
Change in fair value of derivative liabilities | 3,126,464 | 1,050,729 | (2,024,660) | 1,653,477 | 6,503,174 | (767,198) |
Fair value of derivative liabilities in excess of proceeds | 322,644 | 7,174,634 | 7,174,634 | |||
Financing transaction costs | 137,192 | 137,192 | ||||
Loss on extinguishment of secured convertible promissory note - related party | 590,392 | 590,392 | ||||
Interest expense | 301,547 | 0 | 711,575 | 37,708 | 94,763 | 667 |
Interest income | (74) | (84) | ||||
Total other expense (income) | 3,428,011 | 1,050,729 | (990,441) | 9,593,329 | ||
Loss before income taxes | (4,931,125) | (2,096,349) | (3,798,627) | (12,970,500) | (19,192,594) | (3,092,698) |
Provision for income taxes | 1,600 | 1,642 | 1,642 | 1,600 | ||
Net Loss and comprehensive loss | $ (4,931,125) | $ (2,096,349) | $ (3,800,227) | $ (12,972,142) | (19,194,236) | (3,094,298) |
Less: Preferred deemed dividend | 1,044,000 | |||||
Net loss applicable to common shareholders | $ (19,194,236) | $ (4,138,298) | ||||
Loss per common share: | ||||||
Basic (in dollars per share) | $ (0.04) | $ (0.02) | $ (0.03) | $ (0.11) | ||
Diluted (in dollars per share) | $ (0.04) | $ (0.02) | $ (0.03) | $ (0.11) | ||
Weighted average shares of common stock outstanding used to compute earnings per share: | ||||||
Basic (in shares) | 133,001,746 | 131,445,057 | 132,885,675 | 117,434,563 | ||
Diluted (in shares) | 133,001,746 | 131,445,057 | 167,690,989 | 117,434,563 | ||
Basic and diluted net loss per common share (in dollars per share) | $ (0.16) | $ (0.11) | ||||
Weighted average shares of common stock outstanding: basic and diluted (in shares) | 121,154,334 | 27,906,090 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||||||
Sep. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | ||||
Cash flows from operating activities: | |||||||||||||||||
Net loss | $ (4,931,125) | $ (14,774,392) | $ (2,096,349) | $ (8,213,793) | $ (3,800,227) | $ (12,972,142) | $ (19,194,236) | $ (3,094,298) | |||||||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||||||||
Depreciation | 1,096 | 1,178 | 1,544 | 8,039 | |||||||||||||
Loss on disposal of assets | 804 | 803 | 1,788 | ||||||||||||||
Fixed assets provided to university in lieu of cash | 18,004 | ||||||||||||||||
Stock-based compensation expense | 170,106 | 154,508 | 514,683 | 484,720 | 674,961 | 608,676 | |||||||||||
Amortization of warrants and stock issued for services | [1] | 30,000 | |||||||||||||||
Change in fair value of derivative liabilities | (2,024,660) | 1,653,477 | 6,503,174 | (767,198) | |||||||||||||
Fair value of derivative liabilities in excess of proceeds | 322,644 | 7,174,634 | |||||||||||||||
Fair value of warrant liability in excess of proceeds | 7,174,634 | ||||||||||||||||
Financing transaction costs | (137,192) | (137,192) | |||||||||||||||
Loss on common stock issuance from conversion of accrued interest | 9,794 | ||||||||||||||||
Loss on extinguishment of secured convertible promissory note - related party | 590,392 | 590,392 | |||||||||||||||
Amortization of debt discount | 438,964 | 34,608 | 58,536 | ||||||||||||||
Common stock issued for services | 187,550 | ||||||||||||||||
Changes in assets and liabilities: | |||||||||||||||||
Prepaid expenses | (302,248) | 194,906 | 198,235 | [1] | (121,273) | [1] | |||||||||||
Deposits and other assets | 34,290 | ||||||||||||||||
Other current assets | (766) | (2,609) | (2,609) | 7,014 | |||||||||||||
Accounts payable | 191,333 | (55,418) | (85,324) | (173,729) | |||||||||||||
Accounts payable to related party | 15,000 | ||||||||||||||||
Accrued payroll and related expenses | 11,701 | (112,825) | |||||||||||||||
Accrued expenses | (21,811) | 42,677 | |||||||||||||||
Other current liabilities | 134,469 | (48,407) | |||||||||||||||
Net cash used in operating activities | (4,524,712) | (2,928,857) | (3,943,014) | (3,331,285) | |||||||||||||
Cash flows from investing activities: | |||||||||||||||||
Purchases of property and equipment | (4,385) | (4,385) | (19,654) | ||||||||||||||
Net cash used in investing activities | (4,385) | (4,385) | (19,654) | ||||||||||||||
Cash flows from financing activities: | |||||||||||||||||
Proceeds from Common stock issuance, net of $16,901 issuance costs | 3,233,099 | ||||||||||||||||
Proceeds from Emerald Financing, net of $154,092 issuance costs | 3,095,908 | ||||||||||||||||
Proceeds from Series B warrant exercises | 98,700 | 98,700 | |||||||||||||||
Proceeds from secured convertible promissory note - related party | 400,000 | 400,000 | 500,000 | ||||||||||||||
Proceeds from convertible multi-draw credit agreement, net of $9,301 for nine months ended 30 Sep 2019 and $53,707 for the year ended 31 Dec 2018 issuance costs | 3,990,699 | 1,946,293 | |||||||||||||||
Net cash provided by financing activities | 3,990,699 | 3,731,799 | 5,540,901 | 3,513,002 | |||||||||||||
Net (decrease) increase in cash and restricted cash | (534,013) | 798,557 | 1,593,502 | 162,063 | |||||||||||||
Cash, cash equivalents and restricted cash, beginning of period | 1,857,885 | 264,383 | 1,857,885 | 264,383 | 264,383 | 102,320 | |||||||||||
Cash, cash equivalents and restricted cash, end of period | 1,323,872 | 1,062,940 | 1,323,872 | 1,062,940 | 1,857,885 | 264,383 | 102,320 | ||||||||||
Reconciliation of cash and restricted cash: | |||||||||||||||||
Cash and cash equivalents | $ 1,319,360 | $ 1,853,373 | $ 1,058,438 | $ 259,955 | |||||||||||||
Restricted cash | 4,512 | 4,512 | 4,502 | 4,428 | |||||||||||||
Total cash and restricted cash shown in the condensed consolidated statements of cash flows | $ 1,323,872 | $ 1,857,885 | $ 1,062,940 | $ 264,383 | 1,323,872 | 1,062,940 | 1,857,885 | 264,383 | $ 102,320 | $ 1,323,872 | $ 1,857,885 | $ 1,062,940 | $ 264,383 | $ 102,320 | |||
Cash paid during the period for | |||||||||||||||||
Interest | 272,611 | 23,334 | |||||||||||||||
Income taxes | 1,600 | 1,642 | 1,642 | 1,631 | |||||||||||||
Supplemental disclosures of non-cash financing activities: | |||||||||||||||||
Conversion of outstanding preferred stock into common stock | 1,947,227 | 1,947,228 | 1,386,000 | ||||||||||||||
Conversion of outstanding preferred stock subject to redemption into common stock | 828,916 | 828,915 | 1,197,450 | ||||||||||||||
Fair value of warrants issued in connection with financings | 10,424,634 | 10,424,634 | |||||||||||||||
Fair value of common stock issued in extinguishment of convertible debt and accrued interest | 1,710,000 | 1,713,766 | |||||||||||||||
Proceeds allocated to equity classified warrants issued with convertible multi-draw credit agreement | 716,110 | 315,080 | |||||||||||||||
Reclassification of warrant liabilities to equity from exercise of warrants | 144,375 | $ 1,333,866 | 1,539,866 | ||||||||||||||
Fair value of compound derivative liability issued with convertible multi-draw credit agreement | 193,414 | 204,102 | |||||||||||||||
Beneficial conversion feature on convertible multi-draw credit agreement | $ 1,584,850 | $ 90,080 | |||||||||||||||
Series D Preferred Stock | |||||||||||||||||
Cash flows from financing activities: | |||||||||||||||||
Proceeds from Issuance of Preferred Stock and Preference Stock | [2] | 1,131,857 | |||||||||||||||
Series F Preferred stock | |||||||||||||||||
Cash flows from financing activities: | |||||||||||||||||
Proceeds from Issuance of Preferred Stock and Preference Stock | $ 1,881,145 | ||||||||||||||||
[1] | During the year ended December 31, 2017, warrants issued to service providers for consulting services were valued at $30,000 and were recorded as a Prepaid expense and amortized over the service period. | ||||||||||||||||
[2] | During the year ended December 31, 2017 preferred deemed dividends of $333,000 was recognized on Series F Preferred Stock, $536,000 was recognized on Series D Preferred Stock and $175,000 on Series C Preferred Stock. |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parentheticals) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2017 | |
Preferred stock issuance costs | $ 16,901 | |
Issuance costs from convertible multi-draw credit agreement | $ 9,301 | $ 154,092 |
Value of warrants issued to purchase shares of common stock for consulting services | 30,000 | |
Preferred deemed dividend | 1,044,000 | |
Series D Preferred Stock | ||
Preferred stock issuance costs | 183,343 | |
Preferred deemed dividend | 536,000 | |
Series F Preferred stock | ||
Preferred stock issuance costs | 118,855 | |
Preferred deemed dividend | 333,000 | |
Series C Preferred Stock | ||
Preferred deemed dividend | $ 175,000 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) | Convertible Series F Preferred Stock | Convertible Series D Preferred Stock | Convertible Series C Preferred Stock | Series B Preferred Stock Conversion Liability | Common Stock | Additional Paid-In Capital | Warrant | Accumulated deficit | Total |
Balance at Dec. 31, 2016 | $ 293,669 | $ 1,169,663 | |||||||
Balance (Shares) at Dec. 31, 2016 | 386 | 4,031 | |||||||
Balance at Dec. 31, 2016 | $ 21,563 | $ 7,163,064 | $ 837,711 | $ (10,936,573) | $ (2,914,235) | ||||
Balance (in shares) at Dec. 31, 2016 | 21,563,163 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Common stock issued for services | $ 605 | 186,945 | 187,550 | ||||||
Common stock issued for services (in shares) | 605,000 | ||||||||
Common stock warrants issued for services | 145,200 | 145,200 | |||||||
Stock based compensation expense | 608,676 | 608,676 | |||||||
Issuance of Series D Preferred Stock net of issuance costs of $183,343 | $ 1,016,657 | ||||||||
Issuance of Series D Preferred Stock net of issuance costs of $183,343 (in shares) | 1,200 | ||||||||
Issuance of Series F Preferred Stock net of issuance costs of $118,855 and $103,364 put option liability | $ 1,777,781 | ||||||||
Issuance of Series F Preferred Stock net of issuance costs of $118,855 and $103,364 put option liability (in shares) | 2,000 | ||||||||
Conversion of Series B Preferred Stock and conversion liability into common stock at $0.25 and $0.15 per share for December 31, 2017 and $0.10 and $0.001 per share for December 31, 2018 | $ (347,462) | $ 5,911 | 350,810 | 356,721 | |||||
Conversion of Series B Preferred Stock and conversion liability into common stock at $0.80 and $0.40 per share for December 31, 2016 and $0.25 and $0.15 per share for December 31, 2017 (in shares) | (1,197.45) | 5,910,666 | |||||||
Conversion of Series C Preferred Stock to common stock at $0.25 per share for December 31, 2017 | $ (293,669) | $ 1,544 | 292,125 | 293,669 | |||||
Conversion of Series C Preferred Stock to common stock at $0.40 and $0.25 per share for December 31, 2016 and 2017 respectively (in shares) | (386) | 1,544,000 | |||||||
Conversion of Series D Preferred Stock to common stock at $0.25 and $0.10 per share for December 31, 2016 and December 31, 2017, respectively. | $ (847,210) | $ 4,000 | 843,211 | 847,211 | |||||
Conversion of Series D Preferred Stock to common stock at $0.25 per share (in shares) | (1,000) | 4,000,000 | |||||||
Beneficial conversion feature upon issuance of Series C Preferred Stock | 175,000 | 175,000 | |||||||
Deemed dividend from beneficial conversion feature of Series C Preferred Stock | (175,000) | (175,000) | |||||||
Beneficial conversion feature upon issuance of Series D Preferred Stock | 536,000 | 536,000 | |||||||
Deemed dividend from beneficial conversion feature of Series D Preferred Stock | (536,000) | (536,000) | |||||||
Beneficial conversion feature upon issuance of Series F Preferred Stock | 333,000 | 333,000 | |||||||
Deemed dividend from beneficial conversion feature of Series F Preferred Stock | (333,000) | (333,000) | |||||||
Net loss for the year | (3,094,298) | (3,094,298) | |||||||
Balance at Dec. 31, 2017 | $ 1,777,781 | $ 169,447 | $ 822,201 | $ 33,623 | 9,444,831 | 982,911 | (14,030,871) | (3,569,506) | |
Balance (in shares) at Dec. 31, 2017 | 2,000 | 200 | 2,834 | 33,622,829 | |||||
Balance at Dec. 31, 2017 | $ 1,777,781 | $ 169,447 | $ 822,201 | ||||||
Balance (Shares) at Dec. 31, 2017 | 2,000 | 200 | 2,833.55 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Stock based compensation expense | $ 2,500 | 227,109 | 229,609 | ||||||
Stock based compensation expense (in shares) | 2,500,000 | ||||||||
Issuance of common stock net of issuance costs of $16,900 | $ 32,500 | (32,500) | |||||||
Issuance of common stock net of issuance costs of $16,900 (in shares) | 32,500,000 | ||||||||
Conversion of Series B Preferred Stock and conversion liability into common stock at $0.25 and $0.15 per share for December 31, 2017 and $0.10 and $0.001 per share for December 31, 2018 | $ (822,201) | $ 28,385 | 800,530 | 828,915 | |||||
Conversion of Series B Preferred Stock and conversion liability into common stock at $0.80 and $0.40 per share for December 31, 2016 and $0.25 and $0.15 per share for December 31, 2017 (in shares) | (2,834) | 28,385,000 | |||||||
Conversion of Series D Preferred Stock to common stock at $0.25 and $0.10 per share for December 31, 2016 and December 31, 2017, respectively. | $ (169,447) | $ 2,000 | 167,447 | 169,447 | |||||
Conversion of Series D Preferred Stock to common stock at $0.25 per share (in shares) | (200) | 2,000,000 | |||||||
Conversion of Series F Preferred Stock to common stock at $0.10 per share | $ (1,777,781) | $ 20,000 | 1,757,781 | 1,777,781 | |||||
Conversion of Series F Preferred Stock to common stock at $0.10 per share (in shares) | (2,000) | 20,000,000 | |||||||
Conversion of secured convertible promissory note - related party and accrued interest | $ 9,000 | 1,691,878 | 1,700,878 | ||||||
Conversion of secured convertible promissory note - related party and accrued interest (in shares) | 9,000,000 | ||||||||
Series B warrant exercises | $ 4,406 | 1,318,284 | 1,322,690 | ||||||
Series B warrant exercises (in shares) | 4,406,250 | ||||||||
Net loss for the year | (8,213,793) | (8,213,793) | |||||||
Balance at Mar. 31, 2018 | $ 132,414 | 16,358,271 | (22,244,664) | (5,753,979) | |||||
Balance (in shares) at Mar. 31, 2018 | 132,414,079 | ||||||||
Balance at Dec. 31, 2017 | $ 1,777,781 | $ 169,447 | $ 822,201 | ||||||
Balance (Shares) at Dec. 31, 2017 | 2,000 | 200 | 2,833.55 | ||||||
Balance at Dec. 31, 2017 | $ 1,777,781 | $ 169,447 | $ 822,201 | $ 33,623 | 9,444,831 | 982,911 | (14,030,871) | (3,569,506) | |
Balance (in shares) at Dec. 31, 2017 | 2,000 | 200 | 2,834 | 33,622,829 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net loss for the year | (12,972,142) | ||||||||
Balance at Sep. 30, 2018 | $ 133,445 | 16,714,448 | (27,003,013) | (10,155,120) | |||||
Balance (in shares) at Sep. 30, 2018 | 133,445,080 | ||||||||
Balance at Dec. 31, 2017 | $ 1,777,781 | $ 169,447 | $ 822,201 | ||||||
Balance (Shares) at Dec. 31, 2017 | 2,000 | 200 | 2,833.55 | ||||||
Balance at Dec. 31, 2017 | $ 1,777,781 | $ 169,447 | $ 822,201 | $ 33,623 | 9,444,831 | 982,911 | (14,030,871) | (3,569,506) | |
Balance (in shares) at Dec. 31, 2017 | 2,000 | 200 | 2,834 | 33,622,829 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Stock based compensation expense | $ 3,143 | 671,818 | 674,961 | ||||||
Stock based compensation expense (in shares) | 3,143,501 | ||||||||
Issuance of common stock net of issuance costs of $16,900 | $ 32,500 | (49,400) | (16,900) | ||||||
Issuance of common stock net of issuance costs of $16,900 (in shares) | 32,500,000 | ||||||||
Conversion of Series B Preferred Stock and conversion liability into common stock at $0.25 and $0.15 per share for December 31, 2017 and $0.10 and $0.001 per share for December 31, 2018 | $ (822,201) | $ 28,385 | 800,530 | 828,915 | |||||
Conversion of Series B Preferred Stock and conversion liability into common stock at $0.80 and $0.40 per share for December 31, 2016 and $0.25 and $0.15 per share for December 31, 2017 (in shares) | (2,833.55) | 28,385,000 | |||||||
Conversion of Series D Preferred Stock to common stock at $0.25 and $0.10 per share for December 31, 2016 and December 31, 2017, respectively. | $ (169,447) | $ 2,000 | 167,447 | 169,447 | |||||
Conversion of Series D Preferred Stock to common stock at $0.25 per share (in shares) | (200) | 2,000,000 | |||||||
Conversion of Series F Preferred Stock to common stock at $0.10 per share | $ (1,777,781) | $ 20,000 | $ 1,757,781 | $ 1,777,781 | |||||
Conversion of Series F Preferred Stock to common stock at $0.10 per share (in shares) | (2,000) | 20,000,000 | |||||||
Conversion of secured convertible promissory note - related party and accrued interest | $ 9,037,667 | ||||||||
Conversion of secured convertible promissory note - related party and accrued interest (in shares) | 9,038 | 1,714,522 | 1,723,560 | ||||||
Series B warrant exercises | $ 5,219 | $ 1,633,347 | $ 1,638,566 | ||||||
Series B warrant exercises (in shares) | 5,218,750 | ||||||||
Warrants issued in connection with convertible multi-draw credit agreement, related party | 315,080 | 315,080 | |||||||
Beneficial conversion feature in connection with convertible multi-draw credit agreement - related party | 90,080 | 90,080 | |||||||
Net loss for the year | (19,194,236) | (19,194,236) | |||||||
Balance at Dec. 31, 2018 | $ 133,908 | 17,528,947 | 1,297,991 | (33,225,107) | $ (15,562,252) | ||||
Balance (in shares) at Dec. 31, 2018 | 133,907,747 | ||||||||
Balance (Shares) at Dec. 31, 2018 | 0 | 0 | 0 | 0 | |||||
Balance at Mar. 31, 2018 | $ 132,414 | 16,358,271 | (22,244,664) | $ (5,753,979) | |||||
Balance (in shares) at Mar. 31, 2018 | 132,414,079 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Stock based compensation expense | 100,603 | 100,603 | |||||||
Common stock issuance costs paid of $7,778 | (7,778) | (7,778) | |||||||
Series B warrant exercises | $ 288 | 77,587 | 77,875 | ||||||
Series B warrant exercises (in shares) | 287,500 | ||||||||
Net loss for the year | (2,662,000) | (2,662,000) | |||||||
Balance at Jun. 30, 2018 | $ 132,702 | 16,528,683 | (24,906,664) | (8,245,279) | |||||
Balance (in shares) at Jun. 30, 2018 | 132,701,579 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Stock based compensation expense | $ 643 | 153,865 | 154,508 | ||||||
Stock based compensation expense (in shares) | 643,501 | ||||||||
Series B warrant exercises | $ 100 | 31,900 | 32,000 | ||||||
Series B warrant exercises (in shares) | 100,000 | ||||||||
Net loss for the year | (2,096,349) | (2,096,349) | |||||||
Balance at Sep. 30, 2018 | $ 133,445 | 16,714,448 | (27,003,013) | (10,155,120) | |||||
Balance (in shares) at Sep. 30, 2018 | 133,445,080 | ||||||||
Balance at Dec. 31, 2018 | $ 133,908 | 17,528,947 | 1,297,991 | (33,225,107) | (15,562,252) | ||||
Balance (in shares) at Dec. 31, 2018 | 133,907,747 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Stock based compensation expense | 171,493 | 171,493 | |||||||
Warrants issued in connection with convertible multi-draw credit agreement, related party | 716,110 | 716,110 | |||||||
Beneficial conversion feature in connection with convertible multi-draw credit agreement - related party | 1,584,850 | 1,584,850 | |||||||
Net loss for the year | (14,774,392) | (14,774,392) | |||||||
Balance at Mar. 31, 2019 | $ 133,908 | 20,001,400 | (47,999,499) | $ (27,864,191) | |||||
Balance (in shares) at Mar. 31, 2019 | 133,907,747 | ||||||||
Balance (Shares) at Dec. 31, 2018 | 0 | 0 | 0 | 0 | |||||
Balance at Dec. 31, 2018 | $ 133,908 | 17,528,947 | $ 1,297,991 | (33,225,107) | $ (15,562,252) | ||||
Balance (in shares) at Dec. 31, 2018 | 133,907,747 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net loss for the year | (3,800,227) | ||||||||
Balance at Sep. 30, 2019 | $ 134,095 | 20,488,778 | (37,025,334) | $ (16,402,461) | |||||
Balance (in shares) at Sep. 30, 2019 | 134,095,247 | ||||||||
Balance (Shares) at Sep. 30, 2019 | 0 | ||||||||
Balance at Mar. 31, 2019 | $ 133,908 | 20,001,400 | (47,999,499) | $ (27,864,191) | |||||
Balance (in shares) at Mar. 31, 2019 | 133,907,747 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Stock based compensation expense | 173,084 | 173,084 | |||||||
Series B warrant exercises | $ 187 | 144,188 | 144,375 | ||||||
Series B warrant exercises (in shares) | 187,500 | ||||||||
Net loss for the year | 15,905,290 | 15,905,290 | |||||||
Balance at Jun. 30, 2019 | $ 134,095 | 20,318,672 | (32,094,209) | (11,641,442) | |||||
Balance (in shares) at Jun. 30, 2019 | 134,095,247 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Stock based compensation expense | 170,106 | 170,106 | |||||||
Net loss for the year | (4,931,125) | (4,931,125) | |||||||
Balance at Sep. 30, 2019 | $ 134,095 | $ 20,488,778 | $ (37,025,334) | $ (16,402,461) | |||||
Balance (in shares) at Sep. 30, 2019 | 134,095,247 | ||||||||
Balance (Shares) at Sep. 30, 2019 | 0 |
CONSOLIDATED STATEMENTS OF ST_2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (Parentheticals) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share issuance costs | $ 7,778 | $ 16,900 | $ 16,900 | |
Series F put option liability | $ 103,364 | |||
Series F Preferred Stock | ||||
Share issuance costs | 118,855 | |||
Conversion of preferred stock price per share | $ 0.10 | $ 0.10 | ||
Series D Preferred Stock | ||||
Share issuance costs | $ 183,343 | |||
Conversion of preferred stock price per share | 0.10 | 0.10 | $ 0.25 | |
Redeemable Convertible Series B Preferred Stock | ||||
Conversion of preferred stock price per share | 0.10 | 0.10 | 0.25 | |
Conversion liability into common stock per share | $ 0.001 | $ 0.001 | 0.15 | |
Series C Preferred Stock | ||||
Conversion of preferred stock price per share | $ 0.25 |
Nature of Operations and Busine
Nature of Operations and Business Activities | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | ||
Nature of Operations and Business Activities | 1. Nature of Operations and Business Activities Nature of Operations Emerald Bioscience, Inc. (the “Company”) was initially incorporated in Nevada on March 16, 2011 as Load Guard Logistics, Inc. On October 31, 2014, the Company closed a reverse merger transaction (the “Merger”) pursuant to which Nemus, a California corporation (“Nemus Sub”), became the Company’s wholly-owned subsidiary, and the Company assumed the operations of Nemus Sub. Nemus Sub was incorporated in the State of California on July 17, 2012. On November 3, 2014, the Company changed its name to Nemus Bioscience, Inc. by merging with Nemus Sub. In August 2019, the Company formed a new subsidiary in Australia, EMBI Australia Pty Ltd., an Australian proprietary limited company (“EMBI Australia”), in order to qualify for the Australian government’s research and development tax credit for research and development dollars spent in Australia. The primary purpose of EMBI Australia is to conduct clinical trials for the Company’s product candidates. On February 11, 2019, the Company’s Board of Directors (the “Board”) and majority stockholder unanimously approved an amendment to the Company’s articles of incorporation to change the name of the Company to Emerald Bioscience, Inc. Effective March 25, 2019, the Company filed a Certificate of Amendment with the Nevada Secretary of State changing the Company’s name to Emerald Bioscience, Inc. Emerald Bioscience, Inc. is a biopharmaceutical company located in Long Beach, California that plans to research, develop and commercialize therapeutics derived from cannabinoids through several license agreements with the University of Mississippi (“UM”). UM is the only entity federally permitted and licensed to cultivate cannabis for research purposes in the United States. In January 2018, the Company entered into a securities purchase agreement with Emerald Health Sciences, Inc. (“Emerald Health Sciences”) discussed in Note 5, pursuant to which Emerald Health Sciences purchased a majority of the equity interest in the Company, resulting in a change in control. As part of the transaction, the Company’s Board members, with the exception of Dr. Brian Murphy, the Company’s CEO/CMO, tendered their resignation and Emerald Health Sciences appointed two new nominees to the Board. Later, in October 2018, the Board appointed Dr. Avtar Dhillon, the Chairman, Chief Executive Officer and President of Emerald Health Sciences, as the Executive Chairman of the Company’s Board. As of September 30, 2019, the Company has devoted substantially all its efforts to securing product licenses, carrying out research and development, building infrastructure and raising capital. The Company has not yet realized revenue from its planned principal operations and is a number of years from potentially being able to do so. Liquidity and Going Concern The Company has incurred operating losses and negative cash flows from operations since inception and as of September 30, 2019, had an accumulated deficit of $37,025,334, a stockholders’ deficit of $16,402,461 and a working capital deficit of $12,540,955. The Company anticipates that it will continue to incur net losses into the foreseeable future in order to advance and develop a number of potential drug candidates into preclinical and clinical development activities and support its corporate infrastructure which includes the costs associated with being a public company. As of September 30, 2019, the Company had cash in the amount of $1,319,360, as compared to $1,853,373 in cash as of December 31, 2018. During the nine months ended September 30, 2019, the Company received net cash proceeds of $3,990,699 from the Credit Agreement (defined below) with Emerald Health Sciences. However, the Company’s cash balance as of September 30, 2019, including the cash balance as of December 31, 2018 and the net cash proceeds from the Credit Agreement, has been offset by cash used in operating activities of $4,524,712 for the nine months ended September 30, 2019. The Company had operating cash outflows primarily due to net loss from operations and a non-cash adjustment to add back the gain from the change in the fair value of derivative liabilities. Without additional funding, management believes that the Company will not have enough funds to meet its obligations within one year from the date the Condensed 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 Condensed Consolidated Financial Statements do not include any adjustments that might result from the outcome of this uncertainty. The Company’s continued existence is dependent on its ability to raise additional sufficient funding to cover operating expenses and to invest in research and development activities. On October 5, 2018, the Company entered into a Multi Draw Credit Agreement (the “Credit Agreement”) with Emerald Health Sciences (See Note 4). Under the Credit Agreement the Company can draw down up to $20,000,000 from time to time in principal amounts of at least $250,000. The drawdowns are subject to approval by the Company’s Board, which is controlled by the directors and principal executive officer of Emerald Health Sciences. The Company plans to continue to pursue funding through public or private equity or debt financings, licensing arrangements, asset sales, government grants or other arrangements. However, the Company cannot provide any assurances 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 reduce spending, extend payment terms with suppliers, liquidate assets where possible, suspend or curtail planned programs or cease operations. | 1. Nature of Operations and Business Activities Nature of Operations Nemus Bioscience, Inc. is a biopharmaceutical company that plans to research, develop and commercialize therapeutics derived from cannabinoids through a number of license agreements with the University of Mississippi (“UM”). UM is the only entity federally permitted and licensed to cultivate cannabis for research purposes in the United States. Unless otherwise specified, references in these Notes to the 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. The wholly-owned subsidiary of Nemus Bioscience, Inc., Nemus, was incorporated in California on July 17, 2012. Our headquarters are located in Long Beach, California. In January 2018, the Company entered into a securities purchase agreement with Emerald Health Sciences, Inc. (“Emerald”) discussed in Note 5, pursuant to which Emerald purchased a majority of the equity interest in Nemus resulting in a change in control. As part of the transaction, the Company’s Board members, with the exception of Dr. Brian Murphy, the Company’s CEO/CMO, tendered their resignation and Emerald appointed two new nominees to the Board. Later, in October 2018, the Board appointed Dr. Avtar Dhillon, the Chairman, Chief Executive Officer and President of Emerald, as the Executive Chairman of the Company’s Board of Directors. As of December 31, 2018, the Company has devoted substantially all of its efforts to securing product licenses, carrying out research and development, building infrastructure and raising capital. The Company has not yet realized revenue from its planned principal operations and is a number of years from potentially being able to do so. Liquidity and Going Concern The Company has incurred operating losses and negative cash flows from operations since inception and as of December 31, 2018, had an accumulated deficit of $33,225,107, a stockholders’ deficit of $15,562,252 and a working capital deficit of $13,985,284. The Company anticipates that it will continue to incur net losses into the foreseeable future in order to advance and develop a number of potential drug candidates into preclinical and clinical development activities and support its corporate infrastructure which includes the costs associated with being a public company. As of December 31, 2018, the Company had cash and cash equivalents of $1,853,373, as compared to $259,955 of cash and cash equivalents as of December 31, 2017. This increase is primarily attributable to the proceeds of $2,000,000 from the Multi-Draw Credit Agreement with Emerald, $3,250,000 from the Emerald Financing (defined below) along with $400,000 of the $900,000 Secured Convertible Promissory Note from Emerald. However, without additional funding management believes that the Company will not have sufficient funds to meet its obligations within one year from 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’s continued existence is dependent on its ability to raise additional sufficient funding to cover operating expenses and to invest in operations and development activities. On October 5, 2018, the Company entered into a Multi-Draw Credit Agreement (the “Credit Agreement”) with Emerald (Note 4). Under the Credit Agreement the Company is able to draw down up to $20,000,000 from time to time in principal amounts of at least $250,000. The drawdowns are subject to approval by the Company’s Board of Directors, which is controlled by the directors and principal executive officer of Emerald. The Company plans to continue to pursue funding through public or private equity or debt financings, licensing arrangements, asset sales, government grants or other arrangements. However, the Company cannot provide any assurances 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 reduce spending, extend payment terms with suppliers, liquidate assets where possible, suspend or curtail planned programs or cease operations. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | ||
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation In the opinion of management, the accompanying Unaudited Condensed Consolidated Financial Statements have been prepared on a consistent basis with the Company’s Audited Consolidated Financial Statements for the fiscal year ended December 31, 2018, and include all adjustments, consisting of only normal recurring adjustments, necessary to fairly state the information set forth herein. The Condensed Consolidated Financial Statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and therefore, omit certain information and footnote disclosure necessary to present the financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”). The results of operations for the three and nine months ended September 30, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019 or any future periods. The Condensed Consolidated Balance sheet as of December 31, 2018 was derived from the Company’s audited financial statements as of December 31, 2018, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 14, 2019. The unaudited financial statements included herein should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, which includes a broader discussion of the Company’s business and the risks inherent therein. Certain reclassifications have been made to prior year amounts to conform to the current period’s presentation. Such reclassifications had no net effect on total assets, total liabilities, total stockholders’ deficit, net losses and cash flows. Use of Estimates The preparation of the Unaudited Condensed Consolidated Financial Statements in conformity with 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 Condensed Consolidated Financial Statements and the reported amounts of income and expense during the reporting period. Actual results could differ from those estimates. The most significant accounting estimates inherent in the preparation of the Company’s financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources. Such estimates and judgments are utilized for stock-based compensation expense and equity securities, derivative liabilities and debt with embedded features. Risks and Uncertainties The Company’s operations are subject to a number of risks and uncertainties, including but not limited to, changes in the general economy, the size and growth of the potential markets for any of the Company’s product candidates, results of research and development activities, uncertainties surrounding regulatory developments in the United States and the Company’s ability to attract new funding. Fair Value Measurements Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (the “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 liabilities, or other inputs that are observable or can be corroborated by observable market data. 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 the Company’s financial instruments, with the exception of the convertible multi draw credit agreement - related party and derivative liabilities, including, cash, prepaid expenses, accounts payable, and other current liabilities approximate their fair value due to the short maturities of these financial instruments. The derivative liabilities were valued on a recurring basis utilizing Level 3 inputs. Advances under the convertible multi draw credit agreement - related party, noncurrent are not recorded at fair value. However, fair value can be approximated and disclosed utilizing Level 3 inputs and independent third-party valuation techniques (See Note 3). At September 30, 2019, the fair value of the advances under the Credit Agreement were estimated at $8,247,319. The carrying amount of the liability at September 30, 2019 was $3,296,249 and is included in Convertible multi draw credit agreement - related party, net of discount in the Company’s balance sheets. Convertible Instruments The Company accounts for hybrid contracts with embedded conversion features in accordance with GAAP. ASC 815, Derivatives and Hedging Activities The Company accounts for convertible debt instruments with embedded conversion features in accordance with ASC 470-20, Debt with Conversion and Other Options The Company also follows ASC 480-10, Distinguishing Liabilities from Equity When determining short-term vs. long-term classification of derivative liabilities, the Company first evaluates the instruments’ exercise provisions. Generally, if a derivative is a liability and exercisable within one year, it will be classified as short-term. However, because of the unique provisions and circumstances that may impact the accounting for derivative instruments, the Company carefully evaluates all factors that could potentially restrict the instrument from being exercised or create a situation where exercise would be considered remote. The Company re-evaluates its derivative liabilities at each reporting period end and makes updates for any changes in facts and circumstances that may impact classification. Warrants Issued in Connection with Financings The Company generally accounts for warrants issued in connection with debt and equity financings as a component of equity, unless the warrants include a conditional obligation to issue a variable number of shares or there is a deemed possibility that the Company may need to settle the warrants in cash. For warrants issued with a conditional obligation to issue a variable number of shares or the deemed possibility of a cash settlement, the Company records the fair value of the warrants as a liability at each balance sheet date and records changes in fair value in other (income) expense in the Condensed Consolidated Statements of Comprehensive Loss. Debt Issuance Costs and Interest Discounts related to bifurcated derivatives, freestanding instruments issued in bundled transactions and issuance costs are recorded as a reduction to the carrying value of the debt and amortized over the life of the debt using the effective interest method. The Company makes changes to the effective interest rate, as necessary, on a prospective basis. For debt facilities that provide for multiple advances, the Company initially defers any issuance costs until the first advance is made and then amortizes the costs over the life of the facility. Research and Development Expenses and Licensed Technology Research and development 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 and benefits for the personnel involved in the Company’s preclinical and clinical drug development activities; and facilities expense, depreciation and other allocated expenses; and equipment and laboratory supplies. Costs incurred for the rights to use licensed technologies in the research and development process, including licensing fees and milestone payments, are 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. Stock-Based Compensation for Employees 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 with forfeitures accounted for as they occur. The Company uses the Black-Scholes Merton option pricing model for estimating the grant date fair value of stock options using the following assumptions: · Volatility - Stock price volatility is estimated over the expected term based on a blended rate of industry peers and the Company’s actual stock volatility adjusted for periods in which significant financial variability was identified. · Expected term - The expected term is based on a simplified method which defines the life as the weighted average of the contractual term of the options and the vesting period for each award. · Risk-free rate - The risk-free interest rate for the expected term of the option 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 the Company’s history and expectation of paying no dividends in the foreseeable future. Earnings/ Loss Per Share of Common Stock The Company applies FASB ASC No. 260, Earnings per Share The computations of basic and diluted net loss per common share are as follows: Three Months Ended September 30, (Unaudited) Nine Months Ended September 30, (Unaudited) 2019 2018 2019 2018 Basic net loss per share: Net loss $ (4,931,125 ) $ (2,096,349 ) $ (3,800,227 ) $ (12,972,142 ) Weighted average common shares outstanding – basic 133,001,746 131,445,057 132,885,675 117,434,563 Net loss per share - basic $ (0.04 ) $ (0.02 ) $ (0.03 ) $ (0.11 ) Diluted net loss per share: Net loss (as adjusted) $ (4,931,125 ) $ (2,096,349 ) $ (5,656,982 ) $ (12,972,142 ) Weighted average common shares outstanding – diluted 133,001,746 131,445,057 167,690,989 117,434,563 Net loss per share - diluted $ (0.04 ) $ (0.02 ) $ (0.03 ) $ (0.11 ) The following outstanding shares of common stock equivalents were excluded from the computation of diluted earnings per share of common stock for the periods presented because including them would have been antidilutive: As of Three Months Ended September 30, (Unaudited) As of Nine Months Ended September 30, (Unaudited) 2019 2018 2019 2018 Stock options 4,512,715 1,850,073 4,512,715 1,850,073 Unvested restricted stock 1,093,501 1,918,501 1,093,501 1,918,501 Common shares underlying convertible debt 15,000,000 - 15,000,000 - Warrants 57,943,250 51,055,750 23,137,935 51,055,750 Recent Accounting Pronouncements In November 2018, the FASB issued ASU No. 2018-08 Collaborative Arrangements Revenue from Contracts with Customers Recently Adopted Accounting Standards In February 2016, the FASB issued ASU No. 2016-02 Leases In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception Topic 480, Distinguishing Liabilities from Equity | 2. Summary of Significant Accounting Policies Basis of Presentation The preparation of financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and the accompanying notes. Actual results could differ from those estimates. Certain reclassifications have been made to prior year amounts to conform to the current year’s presentation. Such reclassifications had no net effect on previously reported financial results. Use of Estimates The preparation of the Consolidated Financial Statements in conformity with 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. Such estimates and judgments are utilized for stock-based compensation expense and equity securities or debt with embedded features. Risks and Uncertainties The Company’s operations are subject to a number of risks and uncertainties, including but not limited to, changes in the general economy, the size and growth of the potential markets for any of the Company’s product candidates, results of research and development activities, uncertainties surrounding regulatory developments in the Unites States and the Company’s ability to attract new funding. 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. As of December 31, 2018, the Company has no cash equivalents. Restricted Cash A deposit of $4,512 and $4,428 as of December 31, 2018 and December 31, 2017, respectively, 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 GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (the “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 liabilities, or other inputs that are observable or can be corroborated by observable market data. 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, with the exception of the convertible multi-draw credit agreement – related party, noncurrent and derivative liabilities, 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 derivative liabilities were valued on a recurring basis utilizing Level 3 inputs. Advances under the convertible multi-draw credit agreement – related party, noncurrent are not recorded at fair value. However, fair value can be approximated and disclosed utilizing Level 3 inputs and independent third-party valuation techniques (See Note 3). At December 31, 2018, the fair value of the advance under the Credit Agreement was estimated at $3,176,824. Property and Equipment, Net Property and equipment, net, consists primarily of computers and equipment. Expenditures for additions, renewals and improvements are capitalized at cost. Depreciation is computed on a straight-line method based on the estimated useful life of the related asset 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. Income Taxes The Company accounts for 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 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. 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. 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 December 31, 2018. As a result of this valuation allowance there are no income tax benefits reflected in the accompanying Consolidated Statements of Operations and Comprehensive Loss to offset pre-tax losses. The Company recognizes a tax benefit from uncertain tax positions when it is more likely than not (50%) 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. The Company has no material uncertain tax positions as of December 31, 2018. The Company recognizes interest and/or penalties related to income tax matters in income tax expense. Convertible Instruments The Company accounts for hybrid contracts with embedded conversion features in accordance with GAAP. ASC 815, Derivatives and Hedging Activities The Company accounts for convertible debt instruments with embedded conversion features in accordance with ASC 470-20, Debt with Conversion and Other Options The Company also follows ASC 480-10, Distinguishing Liabilities from Equity When determining short-term vs. long-term classification of derivative liabilities, the Company first evaluates the instruments’ exercise provisions. Generally, if a derivative is a liability and exercisable within one year, it will be classified as short-term. However, because of the unique provisions and circumstances that may impact the accounting for derivative instruments, the Company carefully evaluates all factors that could potentially restrict the instrument from being exercised or create a situation where exercise would be considered remote. The Company re-evaluates its derivative liabilities at each reporting period end and makes updates for any changes in facts and circumstances that may impact classification. Warrants Issued in Connection with Financings The Company generally accounts for warrants issued in connection with debt and equity financings as a component of equity, unless the warrants include a conditional obligation to issue a variable number of shares or there is a deemed possibility that the Company may need to settle the warrants in cash. For warrants issued with a conditional obligation to issue a variable number of shares or the deemed possibility of a cash settlement, the Company records the fair value of the warrants as a liability at each balance sheet date and records changes in fair value in other (income) expense in the Consolidated Statements of Operations and Comprehensive Loss. Debt Issuance Costs and Interest Discounts related to bifurcated derivatives, freestanding instruments issued in bundled transactions and issuance costs are recorded as a reduction to the carrying value of the debt and amortized over the life of the debt using the effective interest method. The Company makes changes to the effective interest rate, as necessary, on a prospective basis. For debt facilities that provide for multiple advances, the Company initially defers any issuance costs until the first advance is made and then amortizes the costs over the life of the facility. Revenue Recognition The Company has not begun planned principal operations and has not generated any revenue since inception. Research and Development Expenses and Licensed Technology 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 and benefits 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. Costs incurred for the rights to use licensed technologies in the research and development process, including licensing fees and milestone payments, are 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. Stock-Based Compensation for Employees 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 with forfeitures accounted for as they occur. The Company uses the Black-Scholes Merton option pricing model for estimating the grant date fair value of stock options using the following assumptions: · Volatility - Stock price volatility is estimated over the expected term based on a blended rate of industry peers and the Company’s actual stock volatility adjusted for periods in which significant financial variability was identified. · Expected term - The expected term is based on a simplified method which defines the life as the weighted average of the contractual term of the options and the vesting period for each award. · Risk-free rate - The risk-free interest rate for the expected term of the option 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 in the foreseeable future. Stock-Based Compensation for Non-Employees Upon the adoption of ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, Compensation – Stock Compensation – Overall, Segment Information FASB ASC No. 280, Segment Reporting Comprehensive Loss Comprehensive loss is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. ASC 220 requires that an entity records all components of comprehensive loss, net of their related tax effects, in its financial statements in the period in which they are recognized. For the years ended December 31, 2018 and 2017, the comprehensive loss was equal to the net loss. Net Loss Per Share of Common Stock The Company applies FASB ASC No. 260, Earnings per Share Recent Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02 Leases In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception Topic 480, Distinguishing Liabilities from Equity In November 2018, the FASB issued ASU No. 2018-08 Collaborative Arrangements Revenue from Contracts with Customers Recently Adopted Accounting Standards In August 2018, the FASB issued ASU No. 2018-13 Fair Value Measurement Fair Value Measurement In July 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic ): Scope of Modification Accounting · The award’s fair value (or calculated value or intrinsic value, if those measurement methods are used), · The award’s vesting conditions, and · The award’s classification as an equity or liability instrument. ASU 2017-09 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017 for all entities. Early adoption is permitted, including adoption in any interim period for which financial statements have not yet been issued or made available for issuance. The ASU will be applied prospectively to awards modified on or after the adoption date. The adoption of ASU 2017-09 effective January 1, 2018 did not have a material effect on the Company’s results of operations, financial condition or cash flows. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic ) The Company adopted the new standard effective January 1, 2018 under the modified retrospective transition method, applying the new guidance to the most current period presented. Since the Company has not yet generated revenues the adoption of the new standard resulted in no cumulative effect to the opening accumulated deficit balance. However, the adoption of this standard will impact the Company’s revenue recognition if revenue is generated in future periods. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic ): Restricted Cash In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic ): Classification of Certain Cash Receipts and Cash Payments, |
Warrants and Derivative Liabili
Warrants and Derivative Liabilities | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Warrants And Derivative Liabilities [Abstract] | ||
Warrants and Derivative Liabilities | 3. Warrants and Derivative Liabilities Warrants 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 a liquidity event and the determination of the appropriate valuation methods. If the Company had made different assumptions, the fair value of the warrants could have been significantly different (See Note 2). Warrants vested and outstanding as of September 30, 2019 are summarized as follows: Amount Exercise Term Vested and Source Price (Years) Outstanding Pre 2015 Common Stock Warrants $ 1.00 6-10 4,000,000 2015 Common Stock Warrants $ 1.15-5.00 5-10 442,000 Common Stock Warrants to Series B Stockholders $ 0.00 5 1,031,250 2016 Common Stock Warrants to Service Providers $ 1.15 10 40,000 2016 Series C Common Stock Warrants to Placement Agent $ 0.40 5 125,000 2017 Series D Common Stock Warrants to Placement Agent $ 0.25 5 480,000 2017 Common Stock Warrants to Service Provider $ 0.41 5 125,000 2018 Emerald Financing Warrants $ 0.10 5 44,200,000 Emerald Multi Draw Credit Agreement Warrants $ 0.50 5 7,500,000 Total warrants vested and outstanding as of September 30, 2019 57,943,250 Emerald Multi Draw Credit Agreement Warrants During the nine months ended September 30, 2019, the Company issued 5,000,000 fully vested common stock warrants to Emerald Health Sciences, in conjunction with advances under the Credit Agreement discussed below (See Note 4). The warrants are equity classified at issuance and the Company allocated an aggregate of $716,110 of the gross proceeds to the warrants on a relative fair value basis. The proceeds allocated to the warrants were recorded as discounts to each advance and are being amortized over the term of the debt. The warrants vested immediately and had an estimated aggregate fair value of $1,830,573 utilizing the Black-Scholes option pricing model with the following assumptions: At Issuance Dividend yield 0.00 % Volatility factor 91.6-92.1 % Risk-free interest rate 2.23-2.51 % Expected term (years) 5.0 Underlying common stock price $ 0.33-0.69 2018 Emerald Financing Warrants In January and February 2018, the Company issued an aggregate of 40,800,000 and 3,400,000 fully vested common stock warrants to Emerald Health Sciences and an accredited investor, respectively, in conjunction with the Emerald Financing discussed below (See Note 5). The Company reviewed the warrants for liability or equity classification under the guidance of ASC 480-10, Distinguishing Liabilities from Equity Derivative Liabilities- Emerald Financing Warrant Liability Derivative Liabilities The following tables summarize the activity of derivative liabilities for the periods indicated: Nine Months Ended September 30, 2019 December 31, 2018, Fair Value of Derivative Liabilities Fair Value of Derivative Liabilities Issued Change in Fair value of Derivative Liabilities Reclassification of Derivatives to Equity September 30, 2019, Fair Value of Derivative Liabilities Emerald Multi Draw Credit Agreement - compound derivative liability (1) $ 219,453 $ 516,058 $ (167,905 ) $ - $ 567,606 Emerald Financing - warrant liability (2) 15,251,413 - (1,895,193 ) - 13,356,220 Series B - warrant liability (3) 487,500 - 38,438 (144,375 ) 381,563 Total derivative liabilities $ 15,958,366 $ 516,058 $ (2,024,660 ) $ (144,375 ) $ 14,305,389 Less, noncurrent portion of derivative liabilities (219,453 ) (567,606 ) Current balance of derivative liabilities $ 15,738,913 $ 13,737,783 Nine Months Ended September 30, 2018 December 31, 2017, Fair Value of Derivative Liabilities Fair Value of Derivative Liabilities Issued Change in Fair value of Derivative Liabilities Reclassification of Derivatives to Equity September 30, 2018, Fair Value of Derivative Liabilities Emerald Financing - warrant liability (2) $ - $ 10,424,634 $ 192,808 $ - $ 10,617,442 Series B - warrant liability (3) 551,322 - 1,275,669 (1,333,866 ) 493,125 Emerald Convertible Promissory Note - conversion liability (4) 265,000 360,000 185,000 (810,000 ) - Series B Preferred Stock - conversion liability (5) 6,715 - - (6,715 ) - Total derivative liabilities $ 823,037 $ 10,784,634 $ 1,653,477 $ (2,150,581 ) $ 11,110,567 Less, noncurrent portion of derivative liabilities (551,322 ) - Current balance of derivative liabilities $ 271,715 $ 11,110,567 Emerald Multi Draw Credit Agreement Compound Derivative Liability (1) In connection with the advances under the Credit Agreement (See Note 4), the Company bifurcated a compound derivative liability related to a contingent interest feature and acceleration upon default provision (contingent put option) provided to Emerald Health Sciences. The Company’s estimate of fair value of the compound derivative liability was determined by using a differential cash flows valuation model, wherein the fair value of the underlying debt facility and its conversion right are estimated both with and without the presence of the contingent interest feature, holding all other assumptions constant. The resulting difference between the estimated fair values in both scenarios is the estimated fair value of the compound derivative. The fair value of the underlying debt facility is estimated by calculating the expected cash flows with consideration of the estimated probability of a change in control transaction, defined as an event of default by the agreement, and applying the expected default interest rate from the date of such default through maturity. The expected cash flows are then discounted back to the reporting date using a benchmark market yield. The conversion right component of the compound derivative is measured using a standard Black-Scholes model for each payment period. Because Emerald Health Sciences would forgo the contingent interest if the contingent put option was exercised upon an event of default, the value ascribed to the contingent put option within the compound derivative is de minimis. Emerald Financing Warrant Liability (2) In January and February 2018, the Company issued 44,200,000 warrants to purchase common stock in conjunction with the Emerald Financing discussed above. The warrants vest immediately and have an exercise price of $0.10 per share with a term of five years and are exercisable in cash or through a cashless exercise provision. The warrants contain an anti-dilution 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 $0.10. The exercise price is automatically adjusted down to the price of the instrument being issued. In addition, the warrants contain a contingent put option if the Company undergoes a subsequent financing that results in a change in control. The warrant holders also have the right to participate in subsequent financing transactions on an as-if converted basis. The Company reviewed the warrants for liability or equity classification under the guidance of ASC 480-10, Distinguishing Liabilities from Equity Derivatives and Hedging/Contracts in Entity’s Own Equity Fair Value Measurement The warrant liabilities have been valued using Monte Carlo simulations conducted at the closing dates of January 19, 2018 and February 16, 2018 and at the balance sheet dates using the following assumptions: September 30, 2019 December 31, 2018 At Issuance Dividend yield 0.00 % 0.00 % 0.00 % Volatility factor 81.9-82.1 % 92.1-92.4 % 70.0 % Risk-free interest rate 1.56 % 2.49 % 2.45-2.60 % Expected term (years) 3.31-3.38 4.05-4.13 5.0 Underlying common stock price $ 0.37 $ 0.40 $ 0.29-0.30 Because fair value assigned to the warrants exceeded the proceeds received in the Emerald Financing, none of the consideration was allocated to common stock and the Company recorded an adjustment for the difference between the fair value of the warrant liabilities and the total proceeds received to other expense in the Condensed Consolidated Statements Comprehensive Loss for the nine months ended September 30, 2018 as follows: Closing January 2018 February 2018 Total Initial Fair Value of Emerald Financing Warrant Liability $ 4,717,211 $ 5,707,423 $ 10,424,634 Less: Proceeds from Emerald Financing 1,500,000 1,750,000 3,250,000 Excess over proceeds adjustment $ 3,217,211 $ 3,957,423 $ 7,174,634 In addition, because the aggregate proceeds were allocated to the fair value of the Emerald Financing warrant liability, issuance costs totaling $137,192 were charged to other expense during the nine months ended September 30, 2018. Series B Warrant Liability (3) In conjunction with the Redeemable Convertible Series B Preferred Stock financing, the Company issued the 2015 Series B Financing Warrants originally exercisable at a price of $1.15 per share. The warrants are exercisable in cash or through a cashless exercise provision and contain certain cash redemption rights. The Series B warrants also had a “down-round” protection feature if the Company subsequently issued or sold any shares of common stock, stock options, or convertible securities at a price less than the current exercise price. The down round provision was triggered and automatically adjusted down to $0.10 on December 28, 2017, after the Company entered into the Convertible Promissory Note (See Note 4) and again to $0.00 on January 19, 2018, as a result of the Emerald Financing (See Note 5). The strike price for these warrants is now permanently reset. However, because the remaining warrant holders still have certain cash redemption rights upon the occurrence of certain fundamental transactions, as defined in the Series B warrant agreements, the warrants continue to require liability classification. Subsequent to the repricing that occurred as a result of the Emerald Financing, the warrants have been valued using a Black Scholes Merton Option Pricing Model. The Company reviewed the classification of the warrants as liabilities or equity under the guidance of ASC 480-10, Distinguishing Liabilities from Equity To compute the fair value of the warrants, the Company utilized the following assumptions in the Black Scholes Merton Option Pricing Model for the periods indicated: As of September 30, 2019 As of December 31, 2018 Dividend yield 0.00 % 0.00 % Volatility factor 79.4 % 93.0 % Risk-free interest rate 1.75 % 2.79 % Expected term (years) 0.89 1.64-1.65 Underlying common stock price $ 0.37 $ 0.40 Emerald Convertible Promissory Note Conversion Liability (4) In connection with the Convertible Promissory Note (See Note 4), the Company bifurcated a conversion liability related to an embedded conversion feature with a down-round protection provision. The Company valued the conversion liability pursuant to the accounting guidance of ASC 820-10, Fair Value Measurement January 19, 2018 December 28, 2017 Dividend yield 0.00 % 0.00 % Volatility factor 70.0 % 70.0 % Risk-free interest rate 1.29 % 1.39 % Expected term (years) 0.003 0.25 Underlying common stock price $ 0.19 $ 0.15 The fair values of the conversion liabilities on December 28, 2017 and January 19, 2018 were $265,000 and $360,000, respectively. The change in value related to the conversion liability at December 31, 2017 was deemed immaterial due to no substantial change in the assumptions from issuance until year end. In connection with the Emerald Financing discussed in Note 5 below, the Convertible Promissory Note was converted, and the conversion liability was extinguished with the debt. Series B Preferred Stock Conversion Liability (5) On August 20, 2015, in connection with the Redeemable Convertible Series B Preferred Stock financing, the Company bifurcated a conversion liability related to a down-round protection provided to the Series B investors. The value of this embedded derivative was determined utilizing a “with and without” method by valuing the Series B Preferred Stock with and without the down round protection. During the first fiscal quarter of 2018, all the remaining Series B Preferred Stock was converted to common stock and as a result, the Series B conversion liability was reduced to zero. The reduction of this liability totaling $6,715 was recorded to equity during the nine months ended September 30, 2018. | 3. Warrants and Derivative Liabilities Warrants 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 a liquidity event and the determination of the appropriate valuation methods. If the Company had made different assumptions, the fair value of the warrants could have been significantly different (See Note 2). Warrants vested and outstanding as of December 31, 2018 are summarized as follows: Amount Exercise Term Vested and Source Price (Years) Outstanding Pre 2015 Common Stock Warrants $ 1.00 6-10 4,000,000 2015 Common Stock Warrants $ 1.15-$5.00 5-10 442,000 2015 Series B Financing Common Stock Warrants to Series B Stockholders $ 0.00 5 1,031,250 Placement Agent Warrants $ 0.00 5 187,500 2016 Common Stock Warrants to Service Providers $ 1.15 10 40,000 2016 Series C Common Stock Warrants to Placement Agent $ 0.40 5 125,000 2017 Series D Common Stock Warrants to Placement Agent $ 0.25 5 480,000 2017 Common Stock Warrants to Service Provider $ 0.41 5 125,000 2018 Emerald Financing Warrants $ 0.10 5 44,200,000 2018 Emerald Multi-Draw Credit Agreement Warrants $ 0.50 5 2,500,000 Total warrants vested and outstanding as of December 31, 2018 53,130,750 Emerald Multi-Draw Credit Agreement Warrants On November 1, 2018, the Company issued 2,500,000 fully vested common stock warrants to Emerald, in conjunction with the first advance on the Credit Agreement discussed below (See Note 4). The warrants are equity classified at issuance and the Company allocated $315,080 of the gross proceeds to the warrants on a relative fair value basis. The proceeds allocated to the warrants was recorded as a discount to the November 1, 2018 advance and will be amortized over the term of the debt. The warrants vested immediately and had an estimated fair value of $593,629 utilizing the Black-Scholes option pricing model with the following assumptions: At Issuance Dividend yield 0.00 % Volatility factor 92.50 % Risk-free interest rate 2.96 % Expected term (years) 5.0 Underlying common stock price $ 0.36 2018 Emerald Financing Warrants In January and February 2018, the Company issued an aggregate of 40,800,000 and 3,400,000 fully vested common stock warrants to Emerald and an accredited investor, respectively, in conjunction with the Emerald Financing discussed below (See Note 5). The Company reviewed the warrants for liability or equity classification under the guidance of ASC 480-10, Distinguishing Liabilities from Equity Derivative Liabilities- Emerald Warrant Liability 2017 Series D Placement Agent Warrants In January 2017, the Company issued 480,000 warrants to purchase common stock to its investment banker in exchange for services rendered in conjunction with the Series D Preferred Stock financing. The warrants vested immediately and had an estimated fair value of $115,200 utilizing the Black-Scholes option pricing model, this amount was recorded to issuance costs for the year ended December 31, 2017. 2017 Common Stock Warrants to Service Provider In February 2017, the Company entered into an agreement with one of its investors to provide advisory services on all matters including financing in exchange for 125,000 common stock warrants. The warrants vested immediately and had an estimated fair value of $30,000 utilizing the Black-Scholes option pricing model, this amount was recorded to general and administrative expense during the year ended December 31, 2017. Derivative Liabilities The following tables summarize the activity of derivative liabilities for the periods indicated: Year Ended December 31, 2018 December 31, 2017, Fair Value of Derivative Liabilities Fair Value of Derivative Liabilities Issued Change in Fair value of Derivative Liabilities* Reclassification of Derivatives to Equity December 31, 2018, Fair Value of Derivative Liabilities Emerald Multi-Draw Credit Agreement - compound derivative liability (1) $ - $ 204,102 $ 15,351 $ - $ 219,453 Emerald Financing - warrant liability (2) - 10,424,634 4,826,779 - 15,251,413 Series B - warrant liability (3) 551,322 - 1,476,044 (1,539,866 ) 487,500 Emerald Convertible Promissory Note - conversion liability (4) 265,000 360,000 185,000 (810,000 ) - Series B Preferred Stock - conversion liability (5) 6,715 - - (6,715 ) - Total current derivative liabilities $ 823,037 $ 10,988,736 $ 6,503,174 $ (2,356,581 ) $ 15,958,366 Less, noncurrent portion of derivative liabilities (219,453 ) Current balance of derivative liabilities $ 15,738,913 Year Ended December 31, 2017 December 31, 2016, Fair Value of Derivative Liabilities Fair Value of Derivative Liabilities Issued Change in Fair value of Derivative Liabilities Reclassification of Derivatives to Equity December 31, 2017, Fair Value of Derivative Liabilities Series B - warrant liability (3) $ 1,112,308 $ - $ (560,986 ) $ - $ 551,322 Emerald Convertible Promissory Note - conversion liability (4) - 265,000 - - 265,000 Series B Preferred Stock - conversion liability (5) 118,821 - (102,848 ) (9,258 ) 6,715 Series F Preferred Stock - put option liability (6) - 103,364 (103,364 ) - - Total derivative liabilities $ 1,231,129 $ 368,364 $ (767,198 ) $ (9,258 ) $ 823,037 Less, noncurrent portion of derivative liabilities (551,322 ) Current balance of derivative liabilities $ 271,715 *The change in fair value of derivative liabilities for the year ended December 31, 2018, relate partially to the Company determining it now has sufficient trading activity to utilize the actual volatility of the trading of the Company’s common stock as an input to the volatility assumption when computing the fair value of derivative liabilities. The volatility assumption was updated as of October 1, 2018 to incorporate the Company’s own volatility with six similar companies to develop a blended average. The Company had previously estimated the volatility assumption by averaging the volatility of six similar entities which had resulted in a lower volatility. The increase in value of the volatility assumption has led to a higher valuation of the derivative liabilities as disclosed below. Emerald Multi-Draw Credit Agreement Compound Derivative Liability (1) On November 1, 2018, in connection with the first advance under the Multi-Draw Credit Agreement (See Note 4), the Company bifurcated a compound derivative liability related to a contingent interest feature and acceleration upon default provision (contingent put option) provided to Emerald. The Company’s estimate of fair value of the compound derivative liability was determined by using a differential cash flows valuation model, wherein the fair value of the underlying debt facility and its conversion right are estimated both with and without the presence of the contingent interest feature, holding all other assumptions constant. The resulting difference between the estimated fair values in both scenarios is the estimated fair value of the compound derivative. The fair value of the underlying debt facility is estimated by calculating the expected cash flows with consideration of the estimated probability of a change in control transaction, defined as an event of default by the agreement, and applying the expected default interest rate from the date of such default through maturity. The expected cash flows are then discounted back to the reporting date using a benchmark market yield. The conversion right component of the compound derivative is measured using a standard Black-Scholes model for each payment period. Because Emerald would forgo the contingent interest if the contingent put option was exercised upon an event of default, the value ascribed to the contingent put option within the compound derivative is de minimis. Emerald Financing Warrant Liability (2) In January and February 2018, the Company issued 44,200,000 warrants to purchase common stock in conjunction with the Emerald Financing discussed above. The warrants vest immediately and have an exercise price of $0.10 per share with a term of five years and are exercisable in cash or through a cashless exercise provision. The warrants contain an anti-dilution 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 $0.10. The exercise price is automatically adjusted down to the price of the instrument being issued. In addition, the warrants contain a contingent put option in the event that the Company undergoes a subsequent financing that results in a change in control. The warrant holders also have the right to participate in subsequent financing transactions on an as-if converted basis. The Company reviewed the warrants for liability or equity classification under the guidance of ASC 480-10, Distinguishing Liabilities from Equity Derivatives and Hedging/Contracts in Entity’s Own Equity Fair Value Measurement The warrant liabilities have been valued using Monte Carlo simulations conducted at the closing dates of January 19, 2018 and February 16, 2018 and at December 31, 2018 using the following assumptions: December 31, 2018 At issuance Dividend yield 0.00 % 0.00 % Volatility factor 92.1-92.4 70.00 % Risk-free interest rate 2.49 % 2.45-2.6 Expected term (years) 4.05-4.13 5.0 Underlying common stock price $ 0.40 $ 0.29-0.30 Because fair value assigned to the warrants exceeded the proceeds received in the Emerald Financing, none of the consideration was allocated to common stock and the Company recorded an adjustment for the difference between the fair value of the warrant liabilities and the total proceeds received to other expense in the Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2018 as follows: Closing January 2018 February 2018 Total Initial Fair Value of Emerald Financing Warrant Liability $ 4,717,211 $ 5,707,423 $ 10,424,634 Less: Proceeds from Emerald Financing 1,500,000 1,750,000 3,250,000 Excess over proceeds adjustment $ 3,217,211 $ 3,957,423 $ 7,174,634 In addition, because the aggregate proceeds were allocated to the fair value of the Emerald Financing warrant liability, issuance costs totaling $137,192 were charged to other expense for the year ended December 31, 2018. Series B Warrant Liability (3) In conjunction with the Redeemable Convertible Series B Preferred Stock financing (Note 5), the Company issued 6,437,500 common stock warrants exercisable at an original price of $1.15 per share, the warrants expire five years from the issuance date. The warrants were initially valued at $2,935,800 utilizing a Monte Carlo pricing model. The warrants are exercisable in cash or through a cashless exercise provision and contain certain cash redemption rights. The Series B warrants also had a “down-round” protection feature if the Company subsequently issued or sold any shares of common stock, stock options, or convertible securities at a price less than the current exercise price. The down round provision was triggered and automatically adjusted down to $0.10 on December 28, 2017, after the Company entered into the Convertible Promissory Note (See Note 4) and again to $0.00 on January 19, 2018, as a result of the Emerald Financing. The strike price for these warrants is now permanently reset. However, because the remaining warrant holders still have certain cash redemption rights upon the occurrence of certain fundamental transactions, as defined in the Series B warrant agreements, the warrants continue to require liability classification. Subsequent to the repricing that occurred as a result of the Emerald Financing, the warrants have been valued using a Black Scholes Merton Option Pricing Model. The Company reviewed the classification of the warrants as liabilities or equity under the guidance of ASC 480-10, Distinguishing Liabilities from Equity To compute the fair value of the warrants, the Company utilized the Black Scholes Merton Option Pricing Model and Monte Carlo Option Pricing Model for the years ended December 31, 2018 and 2017, respectively. The assumptions are as follows: As of December 31, 2018 2017 Dividend yield 0.00 % 0.00 % Volatility factor 93.00 % 70.00 % Risk-free interest rate 2.786-2.789 1.39 % Expected term (years) 1.64-1.65 0.25 Weighted average fair value of warrants $ 0.40 $ 0.15 In January 2018, 987,000 Series B warrants were exercised at a price of $0.10 resulting in cash proceeds to the Company of $98,700. Prior to exercise, these Series B Warrants were adjusted to fair market value using a Black Scholes Merton Option Pricing Model which considered the closing trading price on the exercise dates. From January 19, 2018 through December 31, 2018, 4,231,750 Series B warrants were exercised for no consideration. Prior to exercise, these Series B Warrants were adjusted to fair market value using a Black Scholes Merton Option Pricing Model which considered the closing trading price on the exercise dates. Because the exercise price of these options had been reset to $0.00, the fair value derived from the valuation model approximated the market value of the Company’s common stock on the exercise dates. Emerald Convertible Promissory Note Conversion Liability (4) In connection with the Convertible Promissory Note (Note 4), the Company bifurcated a conversion liability related to an embedded conversion feature with a down-round protection provision. The Company valued the conversion liability pursuant to the accounting guidance of ASC 820-10, Fair Value Measurement January 19, 2018 December 28, 2017 Dividend yield 0.00 % 0.00 % Volatility factor 70.00 % 70.00 % Risk-free interest rate 1.29 % 1.39 % Expected term (years) 0.003 0.25 Underlying common stock price $ 0.19 $ 0.15 The fair values of the conversion liabilities on December 28, 2017 and January 19, 2018, were $265,000 and $360,000 respectively. The change in value related to the conversion liability at December 31, 2018 was deemed immaterial due to no substantial change in the assumptions from issuance until year end. In connection with the Emerald Financing discussed in Note 5 below, the Convertible Promissory Note was converted and the conversion liability was extinguished with the debt. Series B Preferred Stock Conversion Liability (5) On August 20, 2015, in connection with the Redeemable Convertible Series B Preferred Stock financing, the Company bifurcated a conversion liability related to a down-round protection provided to the Series B investors. The value of this embedded derivative was determined utilizing a “with and without” method by valuing the Series B Preferred Stock with and without the down round protection. During the first fiscal quarter of 2018, all of the remaining Series B Preferred Stock was converted to common stock (See Note 5) and as a result, the Series B conversion liability was reduced to zero. The reduction of this liability totaling $6,715 was recorded to equity for the year ended December 31, 2018. Series F Preferred Stock Put Option Liability (6) On November 1, 2017, in connection with the Series F Preferred Stock financing, the Company recorded a put option liability related to discretionary redemption provided to the stockholders in the event that the Company would undergo a subsequent financing that would result in a change in control. 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 Measurement Derivatives and Hedging/Contracts in Entity’s Own Equity As of December 31, 2017, 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 was classified as a current liability and was considered de minimis as of December 31, 2017. The change in fair market value was recorded as non-operating income of $103,364 for the year ended December 31, 2017. |
Convertible Debt - Related Part
Convertible Debt - Related Party | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Debt Disclosure [Abstract] | ||
Convertible Debt - Related Party | 4. Convertible Debt - Related Party The Company’s Convertible Debt with Emerald Health Sciences consists of the following: As of September 30, 2019 As of December 31, 2018 Total principal value $ 6,000,000 $ 2,000,000 Unamortized debt discount (2,652,112 ) (587,617 ) Unamortized debt issuance costs (51,639 ) (51,423 ) Carrying value of total convertible debt - related party $ 3,296,249 $ 1,360,960 Less, noncurrent portion (3,296,249 ) (1,360,960 ) Current convertible debt - related party $ - $ - The Company’s interest expense consists of the following: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Interest expense – stated rate $ 107,334 $ - $ 272,611 $ 3,100 Non-cash interest expense: Amortization of debt discount 190,886 - 429,355 34,608 Amortization of transaction costs 3,327 - 9,609 - $ 301,547 $ - $ 711,575 $ 37,708 Multi Draw Credit Agreement On October 5, 2018, the Company entered into the Credit Agreement with Emerald Health Sciences, a related party (See Note 8). The Credit Agreement provides for a credit facility to the Company of up to $20,000,000 and is unsecured. Advances under the Credit Agreement bear interest at an annual rate of 7% (payable quarterly in arrears) and mature on October 5, 2022. At Emerald Health Sciences’ election, advances and unpaid interest may be converted into common stock at a fixed conversion price of $0.40, subject to customary adjustments for stock splits, stock dividends, recapitalizations, etc. As of September 30, 2019, the unused portion of the credit facility is $14,000,000. The Credit Agreement provides for customary events of default which may result in the acceleration of the maturity of the advances in addition to, but not limited to, cross acceleration to certain other indebtedness of the Company or a change in control. In the case of an event of default arising from specified events of bankruptcy or insolvency or reorganization, all outstanding advances will become due and payable immediately without further action or notice. If any other event of default under the Credit Agreement occurs or is continuing, Emerald Health Sciences may, by written notice, terminate its commitment to make any advances and/or declare all the advances with any other amounts payable due immediately. If any amount under the Credit Agreement is not paid when due, such overdue amount shall bear interest at an annual default interest rate of the applicable rate plus 10%, until such amount is paid in full. In connection with each advance under the Credit Agreement, the Company agreed to issue to Emerald Health Sciences warrants to purchase shares of common stock in an amount equal to 50% of the number of shares of common stock that each advance may be converted into. The warrants have an exercise price of $0.50 per share, a term of five years and are immediately exercisable upon issuance. The exercise price is subject to adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events or upon any distributions of assets, including cash, stock or other property to the Company’s stockholders (See Note 3). In accounting for each convertible advance and the warrants issued under the Credit Agreement, the Company allocates the proceeds between the debt host and the freestanding warrants on a relative fair value basis for each advance. On the date of each advance if the effective conversion rate of the debt is less than the market value of the Company’s common stock the Company records a beneficial conversion feature as a discount to the debt and an increase to additional paid in capital. The debt discounts related to the warrants, beneficial conversion features and compound derivatives, if any, are being amortized over the term of the Credit Agreement using the effective interest rate method. Amortization of the debt discount is recognized as non-cash interest expense and the compound derivatives related to the contingent interest feature and acceleration upon default provision are remeasured at fair value in subsequent periods in the Company’s Condensed Consolidated Balance Sheets. On November 1, 2018, the initial advance under Credit Agreement was made for $2,000,000 and the Company issued 2,500,000 warrants (See Note 3). In accounting for the convertible advances and warrants under the Credit Agreement $1,684,920 of the proceeds was allocated to the debt and $315,080 was allocated to equity classified warrants. A beneficial conversion feature of $90,080 and a compound derivative liability of $204,102 were also recorded. During the nine months ended September 30, 2019, the Company initiated two advances under Credit Agreement, each in the amount of $2,000,000, for an aggregate principal amount of $4,000,000, and the Company issued an aggregate of 5,000,000 warrants to Emerald Health Sciences (See Note 3). In accounting for the convertible advances and warrants issued under the Credit Agreement, an aggregate amount of $3,283,890 was allocated to the debt and $716,110 was allocated to equity classified warrants. A beneficial conversion feature of $1,584,850 and compound derivative liabilities of an aggregate of $516,058 have been recorded (See Note 3). Of the $516,058 in compound derivatives, $322,644 was recorded as other expense in the Condensed Consolidated Statements of Comprehensive Loss for the nine months ended September 30, 2019 as the value of the beneficial conversion feature exceeded the proceeds allocated to the third draw. Aggregate financing costs of $63,007 incurred in connection with the Credit Agreement have been recorded as a discount to the debt host and are being amortized using the effective interest rate method and recognized as non-cash interest expense over the term of the Credit Agreement. As of September 30, 2019, the unamortized debt discount will be amortized over a remaining period of approximately 3.02 years. The fair value of the underlying shares of the convertible multi draw credit agreement was $5,550,000 at September 30, 2019. As of September 30, 2019, the if-converted value did not exceed the principal balance. Secured Convertible Promissory Note On December 28, 2017, the Company entered into a convertible Secured Promissory Note and Security Agreement with Emerald Health Sciences (the “Convertible Promissory Note”). The Convertible Promissory Note provided for aggregate gross proceeds to the Company of up to $900,000 and was secured by all the Company’s assets. Drawdowns on the Convertible Promissory Note were interest bearing at an annual rate of 12% (compounding semi-annually), payable at maturity. The Convertible Promissory Note matured upon the earlier of June 30, 2018 or upon a default event, as defined, and elected by Emerald Health Sciences. At Emerald Health Sciences’ election, drawdowns and unpaid interest were convertible into common stock at a conversion price of $0.10, subject to a full-ratchet antidilution right. The Convertible Promissory Note was automatically converted upon the occurrence of the private placement transaction with Emerald Health Sciences (the Emerald Financing) in January 2018. The Company received proceeds of $500,000 on December 28, 2017, and on January 19, 2018 the Company received the remaining $400,000 in funding as it had satisfied the conditions required. These conditions required receipt of conversion notices from all the existing Series B stockholders to convert their preferred shares to common stock. Such conversions occurred in January and February of 2018. On each financing date, the Company bifurcated a conversion liability from the Convertible Promissory Note related to the embedded conversion feature with a down-round protection provision (See Note 3). This resulted in a conversion liability of $265,000 at the first financing date which was one trading day prior to December 31, 2017. The second funding in January 2018 resulted in an additional conversion liability of $360,000. The conversion liabilities were recorded as a discount to the debt at each draw down date and were being amortized to interest expense. On January 19, 2018, in conjunction with the Emerald Financing (See Note 5), the Convertible Promissory Note was automatically converted into common stock at a conversion price of $0.10 per share for 9,000,000 shares of common stock. Upon conversion, the debt and associated conversion liability were extinguished resulting in a loss on extinguishment of $590,392 which was recorded as other expense for the nine months ended September 30, 2018. For the nine months ended September 30, 2018, the effective interest rate related to the Convertible Promissory Note was 13.94%. | 4. Convertible Debt – Related Party As of December 31, 2018 and 2017, the Company’s Convertible Debt with Emerald consists of the following: As of December 31, 2018 2017 Total principal value $ 2,000,000 $ 500,000 Unamortized debt discount (587,617 ) (265,000 ) Unamortized debt issuance costs (51,423 ) - Carrying value of total convertible debt – related party $ 1,360,960 $ 235,000 Less, noncurrent portion (1,360,960 ) - Current convertible debt – related party $ - $ 235,000 For the years ended December 31, 2018 and 2017, the Company’s interest expense consists of the following: Years Ended December 31, 2018 2017 Coupon interest expense $ 26,433 $ 667 Noncash Interest Expense Amortization of debt discount 56,253 - Amortization of transaction costs 2,283 - Other interest expense 9,794 $ 94,763 $ 667 Multi-Draw Credit Agreement On October 5, 2018, the Company entered into a Multi-Draw Credit Agreement with Emerald, a related party (Note 11). The Credit Agreement provides for a credit facility to the Company of up to $20,000,000 and is unsecured. Advances under the Credit Agreement bear interest at an annual rate of 7% (payable quarterly in arrears) and mature on October 5, 2022. At Emerald’s election, advances and unpaid interest may be converted into Common Stock at a fixed conversion price of $0.40, subject to customary adjustments for stock splits, stock dividends, recapitalizations, etc. As of December 31, 2018, the unused portion of the credit facility is $18,000,000. The Credit Agreement provides for customary events of default which may result in the acceleration of the maturity of the advances in addition to, but not limited to, cross acceleration to certain other indebtedness of the Company or a change in control. In the case of an event of default arising from specified events of bankruptcy or insolvency or reorganization, all outstanding advance will become due and payable immediately without further action or notice. If any other event of default under the Credit Agreement occurs or is continuing, Emerald may, by written notice, terminate its commitment to make any advances and/or declare all the advances with any other amounts payable due and payable immediately. If any amount under the Credit Agreement is not paid when due, such overdue amount shall bear interest at an annual default interest rate of the applicable rate plus 10%, until such amount is paid in full. In connection with each advance under the Credit Agreement, the Company has agreed to issue Emerald warrants to purchase shares of common stock in an amount equal to 50% of the number of shares of common stock that each advance may be converted into. The warrants have an exercise price of $0.50 per share, a term of five years and will be immediately exercisable upon issuance. The exercise price is subject to adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events or upon any distributions of assets, including cash, stock or other property to the Company’s shareholders (See Note 3). On November 1, 2018, an initial advance under Credit Agreement was made for $2,000,000 and the Company issued 2,500,000 warrants (See Note 3). In accounting for the convertible advance and warrants under the Credit Agreement, the Company allocated the proceeds between the debt host and the freestanding warrants on a relative fair value basis, under which $1,684,920 was allocated to the debt and $315,080 was allocated to the warrants. On the date of the advance, because the effective conversion rate of the debt was less than the market value of the Company’s common stock, a beneficial conversion feature of $90,080 has been recorded as a discount to the debt and an increase to additional paid in capital. In addition, a compound derivative liability of $204,102 related to the contingent interest feature and acceleration upon default provision was bifurcated and will be remeasured at fair value in subsequent periods (See Note 3). The debt discounts related to the warrants, beneficial conversion feature and compound derivative will be amortized over the term of the Credit Agreement using the effective interest rate method. Amortization of the debt discount is recognized as non-cash interest expense. The effective interest rate of the liability component was equal to 10.57% for the year ended December 31, 2018. The financing costs of $53,707 incurred in connection with the Credit Agreement have been recorded as a discount to the debt host and are being amortized using the effective interest rate method and recognized as non-cash interest expense over the term of the Credit Agreement. As of December 31, 2018, the unamortized debt discount will be amortized over a remaining period of approximately 3.76 years. The carrying value of the equity component was $2,000,000 at December 31, 2018. The if-converted value as of December 31, 2018, does not exceed the principal balance of the advance under the Credit Agreement. Secured Convertible Promissory Note On December 28, 2017, the Company entered into a convertible Secured Promissory Note and Security Agreement with Emerald (the “Convertible Promissory Note”). The Convertible Promissory Note provided for aggregate gross proceeds to the Company of up to $900,000 and was secured by all of the Company’s assets. Drawdowns on the Convertible Promissory Note were interest bearing at an annual rate of 12% (compounding semi-annually), payable at maturity. The Convertible Promissory Note matured upon the earlier of June 30, 2018 or upon a default event, as defined, and elected by Emerald. At Emerald’s election, drawdowns and unpaid interest were convertible into Common Stock at a conversion price of $0.10, subject to a full-ratchet antidilution right. The Convertible Promissory Note was automatically converted upon the occurrence of the Private Placement Transaction with Emerald (the Emerald Financing). The Company received proceeds of $500,000 on December 28, 2017 and on January 19, 2018 the Company received the remaining $400,000 in funding as it had satisfied the conditions required. These conditions required receipt of conversion notices from all the existing Series B shareholders to convert their preferred shares to common stock. Such conversions occurred in January and February of 2018. On each financing date, the Company bifurcated a conversion liability from the Convertible Promissory Note related to the embedded conversion feature with a down-round protection provision (See Note 3). This resulted in a conversion liability of $265,000 at the first financing date which was one trading day prior to December 31, 2017. The second funding in January 2018, resulted in an additional conversion liability of $360,000. The conversion liabilities were recorded as a discount to the debt at each draw down date and were being amortized to interest expense. On January 19, 2018, in conjunction with the Emerald Financing (Note 5), the Convertible Promissory Note was automatically converted into common stock at a conversion price of $0.10 per share for 9,000,000 common shares. Upon conversion, the debt and associated conversion liability were extinguished resulting in a loss on extinguishment of $590,392 which was recorded as other expense for the year ended December 31, 2018. For the years ended December 31, 2018 and 2017, the effective interest rate on the related to the Convertible Promissory Note was 13.94%. |
Stockholders' Deficit and Capit
Stockholders' Deficit and Capitalization | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Equity [Abstract] | ||
Stockholders' Deficit and Capitalization | 5. Stockholders’ Deficit and Capitalization Common Stock On November 14, 2018, the Company amended its articles of incorporation to increase the number of authorized shares of common stock available for issuance to 500,000,000. Emerald Financing On January 19, 2018, the Company entered into a Securities Purchase Agreement pursuant to which the Company sold to Emerald Health Sciences 15,000,000 shares of common stock and a warrant to purchase 20,400,000 shares of common stock at an exercise price of $0.10 for aggregate gross proceeds of $1,500,000 (the “Emerald Financing”). This transaction also resulted in the conversion of the $900,000 Convertible Promissory Note (See Note 4). As part of the transaction, the Company’s Board members, with the exception of Dr. Brian Murphy, the Company’s CEO/CMO, tendered their resignation and Emerald Health Sciences appointed two new nominees to the Board. The Securities Purchase Agreement also provides that in the case of a subsequent financing in which the purchase price is less than $0.10 per share, Emerald Health Sciences shall be issued additional shares in order to protect against anti-dilution. The second closing under the Emerald Financing occurred on February 16, 2018, pursuant to which the Company issued and sold to Emerald Health Sciences 15,000,000 shares of the Company’s common stock, and a warrant to purchase 20,400,000 shares of common stock at an exercise price of $0.10 per share for a term of five years. In addition, an accredited investor purchased 2,500,000 shares of common stock and a warrant to purchase 3,400,000 shares of common stock at an exercise price of $0.10 per share for a term of five years. The Company received aggregate gross proceeds of $1,750,000 from the second closing. In connection with the private placement, the Company incurred issuance costs of $154,092, of which $137,192 was allocated to the warrant liability and expensed during the period and $16,900 was recorded as a reduction to additional paid in capital from the issuance of common stock. Preferred Stock The Company has 20,000,000 authorized shares of preferred stock, with a par value of $0.001 per share. As of September 30, 2019, there were no shares of preferred stock issued and outstanding. During the nine months ended September 30, 2018, all remaining Preferred Series B, D, and F shares that were previously issued and outstanding were converted to common stock. | 5. Stockholders’ Deficit and Capitalization Common Stock On November 14, 2018, the Company amended its articles of incorporation to increase the number of authorized common shares available for issuance to 500,000,000. Emerald Financing On January 19, 2018, the Company entered into a Securities Purchase Agreement in which the Company sold to Emerald 15,000,000 shares of common stock and a warrant to purchase 20,400,000 shares of common stock at an exercise price of $0.10 for aggregate gross proceeds of $1,500,000 (“the Emerald Financing”). This transaction also resulted in the conversion of the $900,000 Secured Convertible Promissory Note (Note 4). As part of the transaction, the Company’s Board members, with the exception of Dr. Brian Murphy, the Company’s CEO/CMO, tendered their resignation and Emerald appointed two new nominees to the Board. The Securities Purchase Agreement also provides that in the case of a subsequent financing in which the purchase price is less than $0.10 per share, Emerald shall be issued additional shares in order to protect against anti-dilution. The second closing under the Emerald Financing occurred on February 16, 2018, pursuant to which Nemus issued and sold to Emerald 15,000,000 shares of Nemus’ common stock, and a warrant to purchase 20,400,000 shares of Common Stock at an exercise price of $0.10 per share for a term of five years. In addition, an accredited investor purchased 2,500,000 shares of common stock and a warrant to purchase 3,400,000 shares of common stock at an exercise price of $0.10 per share for a term of five years. The Company received aggregate gross proceeds of $1,750,000 from the second closing. In connection with the private placement, the Company incurred issuance cost of $154,092 of which $137,192 were allocated to the warrant liability and expensed during the period and $16,900 were recorded as a reduction to APIC from the issuance of common stock. Conversion of Preferred Stock During the years ended December 31, 2018 and 2017, all remaining Preferred Series B, C, D, and F shares were converted to common stock as follows (see “ Preferred Stock · For the years ended December 31, 2018 and 2017, 2,833.55 and 1,197.45 shares of Series B Preferred stock were converted resulting in the issuance of 28,385,000 and 5,910,666 shares of common stock. · For the year ended December 31, 2017, 386 shares of a Series C Preferred stock outstanding were converted resulting in the issuance of 1,544,000 shares of common stock at an effective price of $0.25 per share. · For the years ended December 31, 2018 and 2017, 200 and 1,000 shares of Series D Preferred stock were converted resulting in the issuance of 2,000,000 and 4,000,000 shares of common stock. · For the year ended December 31, 2018, 2,000 shares of Series F Preferred stock were converted resulting in the issuance of 20,000,000 shares of common stock. Warrant Exercises During the year ended December 31, 2018, the Series B warrant holders exercised warrants with an intrinsic value of $1,514,175 which resulted in the issuance of 5,218,750 shares of common stock. Stock Issued for Services In March 2017, the Company issued 605,000 shares of common stock with par value of $0.001 to a third party in exchange for advisory services performed related to raising additional capital. The Company recorded $187,550 as general and administrative expense for the first quarter of 2017 to reflect the fair market value of the common stock issued. The fair market value was determined utilizing the Company’s closing stock price as of the approval date of the advisory fee by the Company’s Board of Directors. Preferred Stock The Company has authorized 20,000,000 shares of preferred stock with a par value of $0.001 per share. As of December 31, 2018, all of the Redeemable Convertible Series B and Convertible Series C, D and F Preferred Stock were fully converted, as disclosed above under “Common Stock” and is no longer outstanding. A description of each Series of the Preferred Stock outstanding as of December 31, 2017 is as follows: Redeemable Convertible Series B Preferred Stock: In August 2015, the Company sold 5,000 shares of Series B Convertible Preferred Stock and warrants to purchase 6,250,000 shares of the Company’s common stock for an aggregate purchase price of $1,000 per share resulting in gross proceeds of $5.0 million. Each share of preferred stock was convertible into 1,250 shares of common stock which resulted in an effective conversion price of $0.80 per common share and could be converted by the holder at any time. The Series B Preferred Stock also had a “down-round” protection feature provided to the investors if the Company subsequently issued or sold any shares of common stock, stock options, or convertible securities at a price less than the conversion price of $0.80 per common share. The conversion price was automatically adjustable down to the price of the instrument being issued. On November 1, 2017, as a result of the Series F Preferred Stock Agreement, the conversion price of the Series B Preferred Stock was reset from $0.25 per share to $0.15 per share. On December 28, 2017 as a result of entering into the Secured Convertible Promissory Note, the Series B Preferred Stock conversion price was reset to $0.10 per share. The Series B Preferred Stock had a liquidation preference over other preferred shares and common stock and had voting rights equal to the number of common shares into which each holder’s preferred stock was convertible as of the record date. If dividends were declared on the common stock, the holders of the preferred stock were entitled to participate in such dividends on an as-if converted basis. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, Series B Preferred stockholders would have received an amount per share equal to the conversion price of $0.10, subject to down-round adjustment, multiplied by the as-if converted share amount of 28,335,500 common shares, totaling $2,833,550 as of December 31, 2017. If upon the liquidation, the assets are insufficient to permit payments to the Series B holders, all assets legally available would 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 would be distributed pro rata among the common stockholders. Subject to certain trigger events occurring, the Series B Preferred stockholders had 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 Securities and Exchange Commission, or 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; and · 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 was considered to be contingently redeemable and as a result, was classified as mezzanine equity in the Company’s balance sheet. During 2018, 2,833.5 shares of Series B Preferred stock with an effective conversion price of $0.10 were converted at a rate of 10,000:1, resulting in the issuance of 28,335,000 shares of common stock. During 2018, 0.05 shares of Series B Preferred stock with an effective conversion price of $0.001 were converted at a rate of 1,000,000:1, resulting in the issuance of 50,000 shares of common stock. From January 1, 2017 through October 31, 2017, 777.125 shares of Series B Preferred stock with an effective conversion price of $0.25 were converted at a rate of 4000:1, resulting in the issuance of 3,108,500 shares of common stock. From November 1, 2017 through December 28, 2017, 420.325 shares of Series B Preferred stock with an effective conversion price of $0.15 were converted at a rate of 6666.67:1, resulting in the issuance of 2,802,166 shares of common stock. Convertible Series D Preferred Stock: In January 2017, the Company sold 1,200 shares of Series D convertible preferred stock with a purchase price of $1,000 per share for gross proceeds of $1,200,000 to a healthcare investment fund and other private investors under the Series D Preferred Stock Agreement. Each share of Series D Preferred Stock was convertible into 4,000 shares of common stock and had and initial effective conversion price of $0.25 per common share. On November 1, 2017, as a result of the Series F Preferred Stock Agreement, the conversion price of the Series D Preferred Stock was reset from $0.25 to $0.15 per share. On December 28, 2017 as a result of entering into a Secured Convertible Promissory Note, the Series D Preferred Stock conversion price was reset to $0.10 per share. As part of the terms of the Series D Preferred Stock Agreement, the Company entered into a Registration Rights Agreement with the purchasers to file a registration statement to register for resale the shares of common stock underlying the preferred shares within 30 days following the closing of the agreement. The Series D Convertible Preferred Stock was convertible into common stock at any time at the election of the investor. The terms of the Series D Convertible Preferred Stock were as follows: · Dividends: · Conversion: · Down-Round Protection: · Voting Rights: · Most Favored Nation Provision: · Participation Rights: · Liquidation Provision: The Series D stock had a liquidation preference over common stock. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, Series D Preferred stockholders would have received an amount per share equal to the conversion price of $0.10, subject to down-round adjustment, multiplied by the as-if converted share amount of 2,000,000 common shares, totaling $200,000 as of December 31, 2017. The Company also considered the classification of the Series D Preferred Stock Agreement, the Series D Preferred Stock was considered contingently redeemable and as a result, was classified as mezzanine equity in the Company’s balance sheet because the Most Favored Nation provision is a redemption feature that is outside the control of the Company. At the date of the financing, because the effective conversion rate of the preferred stock was less than the market value of the Company’s common stock, a beneficial conversion feature of $536,000 was recorded as a discount to the preferred stock and an increase to additional paid in capital. Because the preferred stock is perpetual, in January 2017, the Company fully amortized the discount related to the beneficial conversion feature on the deemed dividend in the consolidated statement of operations. For the year ended December 31, 2018, 200 shares of Series D Preferred stock with an effective conversion price of $0.10 were converted at a rate of 10,000:1, resulting in the issuance of 2,000,000 shares of common stock. For the year ended December 31, 2017, 1,000 shares of Series D Preferred stock with an effective conversion price of $0.25 were converted at a rate of 4000:1, resulting in the issuance of 4,000,000 shares of common stock. Convertible Series F Preferred Stock: In November 2017, the Company sold 2,000 shares of Series F convertible preferred stock with a purchase price of $1,000 per share for gross proceeds of $2,000,000 to a healthcare fund under the Series F Preferred Stock Agreement. Each share of Series F Preferred Stock was initially convertible into 6,666.67 shares and had an initial conversion price of $0.15 per common share. On December 28, 2017, as a result of entering into a Secured Convertible Promissory Note (See Note 4), the conversion price of the Series F Preferred Stock was reset to $0.10. As part of the terms of the Series F Preferred Stock Agreement, the Company entered into a Registration Rights Agreement with the purchaser to file a registration statement to register for resale the shares of common stock underlying the preferred shares within 30 days following the closing of the agreement. Each share of Series F Preferred Stock was convertible into common stock at any time at the election of the investor. The terms of the Series F Convertible Preferred Stock were as follows: · Dividends: · Conversion: · Down-Round Protection: · Voting Rights: · Discretionary Redemption Provision: · Participation Rights: · Liquidation Provision: Subject to certain trigger events occurring, the Series F Preferred stockholders had 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) 130% 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 included: · Failure of the Series F Registration Statement to be declared effective by the Securities and Exchange Commission, or the SEC, on or prior to the date that is one hundred and eighty (180) days after the Effectiveness Deadline; · Suspension of the Company’s common stock from trading for a period of five (5) 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 F 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 F Certificate of Designation or Rule 144 requirements; and · A change in control that would result in the holder exercising its put option (discussed in Note 3). As certain of these triggering events are considered to be outside the control of the Company, the Series F Preferred Stock was considered to be contingently redeemable and as a result, was classified as mezzanine equity in the Company’s balance sheet. At the date of the financing, because the conversion of the preferred stock was contingent upon certain events, the conversion feature was not beneficial. In addition, on December 28, 2017, as a result of entering into a Secured Convertible Promissory Note which resulted in the adjustment of the conversion price to $0.10, a beneficial conversion feature of $333,333 has been recorded as a discount to the preferred stock and an increase to additional paid in capital. Because the preferred stock was perpetual, in December 2017, the Company fully amortized the discount related to the beneficial conversion feature on the deemed dividend in the consolidated statement of operations. For the year ended December 31, 2018, 2,000 shares of Series F Preferred stock with an effective conversion price of $0.10 were converted at a rate of 10,000:1, resulting in the issuance of 20,000,000 shares of common stock. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Stock-Based Compensation | 6. Stock-Based Compensation Stock Incentive Plan On October 31, 2014, after the closing of the Merger, the Board approved the Company’s 2014 Omnibus Incentive Plan (the “2014 Plan”). The 2014 Plan initially reserved 3,200,000 shares for future grants, and in October 2018, the Company increased the share reserve under the 2014 Plan to equal 10% of the number of issued and outstanding shares of common stock of the Company. The 2014 Plan authorizes the issuance of awards including stock options, stock appreciation rights, restricted stock, stock units and performance units to employees, directors, and consultants of the Company. As of September 30, 2019, the Company had 8,248,381 shares available for future grant under the 2014 Plan. Stock Options The following is a summary of option activities under the Company’s 2014 Plan for the nine months ended September 30, 2019: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Outstanding, December 31, 2018 2,405,000 $ 0.33 8.71 Granted 1,262,642 0.30 Cancelled (196,875 ) 0.26 Forfeited (153,125 ) 0.26 Outstanding, September 30, 2019 3,317,642 $ 0.33 8.59 Exercisable, September 30, 2019 1,807,333 $ 0.43 7.90 During the nine months ended September 30, 2019, no stock options were exercised. The weighted-average fair value of stock options granted during the nine months ended September 30, 2019 was $0.22. No options were granted to non-employees during the three and nine months ended September 30, 2019. The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option pricing model under the following assumptions: Nine Months Ended September 30, 2019 Dividend yield 0.00 % Risk-free interest rate 1.49 % Expected term (years) 5.65 Volatility 93.72 % Restricted Stock Awards There was no restricted stock award (“RSA”) activity under the Company’s 2014 Plan during the three and nine months ended September 30, 2019. On February 28, 2018, in conjunction with the signing of the K2C separation agreement discussed in Note 8 below, Mr. Lykos’ RSAs amounting to 325,000 shares vested immediately resulting in a Type III award modification and a credit to stock compensation of $98,042 for the nine months ended September 30, 2018 due to a lower fair value of those shares as of the modification date. On May 25, 2018, in conjunction with the signing of her separation agreement, the former Nemus CFO, Ms. Elizabeth Berecz’s RSA’s amounting to 350,000 shares vested immediately resulting in a Type III award modification and a credit to stock compensation of $97,183 for the nine months ended September 30, 2018 due to a lower fair market value of those shares as of the modification date as compared to the fair value immediately prior to acceleration. Awards Granted Outside the 2014 Plan Options There was no option activity outside of the 2014 Plan during the three and nine months ended September 30, 2019. On May 25, 2018, the Company entered into Stock Option Agreement with Douglas Cesario, CFO, granting 1,195,073, stock options with an exercise price equal to $0.25 and a grant date fair market value of $200,172. The options vest 25% on July 23, 2018, and the remaining 75% vest 1/33 on each of the next 33 months thereafter. Options will fully vest upon a Triggering Event (as defined in the Stock Option Agreement), including a Sale of the Company (as defined in the Stock Option Agreement) or a Merger (as defined in the Stock Option Agreement) that results in change of control. Restricted Stock Awards The following is a summary of RSA activity outside of the Company’s 2014 Plan during the nine months ended September 30, 2019: Number of Shares Weighted Average Grant Date Fair Value Unvested, December 31, 2018 900,000 $ 0.19 Granted - - Released (450,000 ) 0.19 Unvested, September 30, 2019 450,000 $ 0.19 On February 28, 2018, in conjunction with the signing of the K2C separation agreement discussed in Note 8 below, Mr. Lykos’ Restricted stock awards amounting to 900,000 shares became immediately vested resulting in a Type III award modification and stock compensation expense of $216,000 for the nine months ended September 30, 2018, due to an increase in the fair value of the award immediately before and after the modification date. On May 25, 2018, in conjunction with the signing of her separation agreement discussed above, the former Nemus CFO, Ms. Elizabeth Berecz’s Restricted stock awards amounting to 700,000 shares became immediately vested resulting in the recording of compensation expense of $184,800 for the nine months ended September 30, 2018, due to an increase in the fair value of the award immediately before and after the modification date. Stock-Based Compensation Expense The Company recognizes stock-based compensation expense using the straight-line method over the requisite service period. For the three months ended September 30, 2019 and 2018, the Company recognized stock-based compensation expense of $170,106 and $154,508, respectively (including compensation expense for RSAs discussed above), which was recorded as a general and administrative expense in the Condensed Consolidated Statements of Comprehensive Loss. For the nine months ended September 30, 2019 and 2018, the Company recognized stock-based compensation expense of $514,683 and $484,720, respectively (including compensation expense for RSAs discussed above), which was recorded as a general and administrative expense in the Condensed Consolidated Statements of Comprehensive Loss. The total amount of unrecognized compensation cost was $478,442 as of September 30, 2019. This amount will be recognized over a weighted average period of 0.99 years. | 6. Stock-Based Compensation Stock Incentive Plan On October 31, 2014, after the closing of the Merger, our Board of Directors approved the 2014 Omnibus Incentive Plan (the “2014 Plan”). The 2014 Plan initially reserved 3,200,000 shares for future grants and on October 16, 2018, the Company increased the share reserve under the 2014 Plan to equal 10% of the number of issued and outstanding shares of common stock of the Company. The 2014 Plan authorizes the issuance of awards including stock options, stock appreciation rights, restricted stock, stock units and performance units to employees, directors, and consultants of the Company. As of December 31, 2018, the shares available for future grant under the 2014 Plan as follows: Shares Available for Grant Available as of December 31, 2017 870,000 Share pool increase 10,190,774 Forfeited 427,000 Expired 48,000 Granted (2,393,501 ) Available as of December 31, 2018 9,142,273 Stock Options 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 issued generally vest over a period of one to five years from the date of grant. The following is a summary of option activity under the Company’s 2014 Plan for the year ended December 31, 2018: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value* Outstanding, December 31, 2017 1,130,000 $ 0.60 6.89 Granted 1,750,000 0.30 Expired (48,000 ) 2.57 Forfeited (427,000 ) 0.66 Outstanding, December 31, 2018 2,405,000 $ 0.33 8.71 $ 182,000 Exercisable, December 31, 2018 859,417 $ 0.37 7.39 $ 36,458 Vested and Expected to Vest, December 31, 2018 2,405,000 $ 0.33 8.71 $ 182,000 *The 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 December 31, 2018 for those stock options for which the quoted market price was in excess of the exercise price (“in-the-money options”). The weighted-average fair value of stock options granted for the year ended December 31, 2018 was $0.30. There were no stock option grants to employees during the year ended December 31, 2017 and no options were granted to non-employees during the years ended December 31, 2018 and 2017. The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option pricing model under the following assumptions: Year Ended December 31, 2018 Dividend Yield – Risk-free interest rate 3.06 – 3.1 % Expected term (in years) 5.27-5.58 Volatility 70-93.6 % Restricted Stock Awards The following is a summary of RSA activity under the Company’s 2014 Plan for the year ended December 31, 2018: Number of Shares Weighted Average Grant Date Fair Value Unvested, December 31, 2017 1,050,000 $ 0.75 Granted 643,501 0.26 Released (1,050,000 ) 0.75 Unvested, December 31, 2018 643,501 $ 0.26 On February 28, 2018, in conjunction with the signing of the K2C separation agreement discussed in Note 11 below, Mr. Lykos’ RSA’s amounting to 325,000 shares vested immediately resulting in a Type III award modification and a credit to stock compensation of $98,042 for the year ended December 31, 2018 due to a lower fair value of those shares as of the modification date. On May 25, 2018, in conjunction with the signing of her separation agreement, the former Nemus CFO, Ms. Elizabeth Berecz’s RSA’s amounting to 350,000 shares vested immediately resulting in a Type III award modification and a credit to stock compensation of $97,183 for the year ended December 31, 2018 due to a lower fair value of those shares as of the modification date as compared to the fair value immediately prior to acceleration. Awards Granted Outside the 2014 Plan Options On May 25, 2018, the Company entered into Stock Option Agreement with Douglas Cesario, CFO, granting 1,195,073 stock options with an exercise price equal to $0.245 and a grant date fair value of $200,772 or $0.26 per share based on the following assumptions estimated on the date of grant using the Black-Scholes option pricing model: At Issuance Dividend Yield – Risk-free interest rate 2.79 % Expected term (in years) 5.54 Volatility 70 % The options vested 25% on July 23, 2018, and the remaining 75% will vest 1/33 on each of the next 33 months thereafter. Options will fully vest upon a Triggering Event, including a Sale of the Company or a Merger that results in a change of control. At December 31, 2018, these options have a remaining contractual life of 9.57 years. At December 31, 2018, 434,572 options are exercisable and have an aggregate intrinsic value of $67,359. At December 31, 2018, 1,195,073 options are vested and are expected to vest and have an aggregate intrinsic value of $185,236. Restricted Stock Awards On January 18, 2018, the Company entered into Restricted Stock Agreements with each of Dr. Murphy, Elizabeth Berecz, CFO, and Cosmas N. Lykos, the Company’s Founder granting 900,000, 700,000, and 900,000 shares of restricted common stock, respectively, with a fair market value of $475,000. These agreements were issued outside of the 2014 Omnibus Incentive Plan. The restricted stock vests in equal 50% installments on the first and second anniversaries of the grant date, subject to continued employment with Nemus through the applicable vesting date. Each Restricted Stock Agreement provides that if an executive’s employment or service is terminated by the Company without cause, or is terminated by the grantee for good reason, then the executive shall be entitled to receive a cash severance payment equal to six months of their base compensation, payable in substantially equal installments during the six-month period following the separation along with accelerated vesting of all outstanding stock awards. On February 28, 2018, in conjunction with the signing of the K2C separation agreement discussed in Note 10 below, Mr. Lykos’ Restricted stock awards amounting to 900,000 shares became immediately vested resulting in a Type III award modification and stock compensation expense of $216,000 for the year ended December 31, 2018, due to an increase in the fair value of the award immediately before and after the modification date. On May 25, 2018, in conjunction with the signing of her separation agreement discussed above, the former Nemus CFO, Ms. Elizabeth Berecz’s Restricted stock awards amounting to 700,000 shares became immediately vested resulting in the recording of compensation expense of $184,800 for the year ended December 31, 2018, due to an increase in the fair value of the award immediately before and after the modification date. The following is a summary of RSA activity outside of the Company’s 2014 Plan for the year ended December 31, 2018: Number of Shares Weighted Average Grant Date Fair Value Unvested, December 31, 2017 - $ - Granted 2,500,000 0.19 Released (1,600,000 ) 0.19 Unvested, December 31, 2018 900,000 $ 0.19 Stock-Based Compensation Expense The Company recognizes compensation expense using the straight-line method over the requisite service period. For the years ended December 31, 2018 and 2017, the Company recognized stock-based compensation expense of $674,961 and $608,676, respectively (including compensation expense for RSAs discussed above), which was recorded as a general and administrative expense in the Consolidated Statements of Operations and Comprehensive Loss. The total amount of unrecognized compensation cost was $748,616 as of December 31, 2018. This amount will be recognized over a weighted average period of 1.43 years. |
Net Loss Per Share of Common St
Net Loss Per Share of Common Stock | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share of Common Stock | 7. Net Loss Per Share of Common Stock The following table is a reconciliation of the numerators and denominators used in the calculation of basic and diluted net loss per share computations for the years ended December 31, 2018 and 2017: Year Ended December 31, 2018 2017 Net loss $ (19,194,236 ) $ (4,138,298 ) Weighted average common shares outstanding – basic and diluted 121,154,334 27,906,090 Net loss per share – basic and diluted $ (0.16 ) $ (0.11 ) The following outstanding shares of common stock equivalents were excluded from the computation of diluted net loss per share of common stock for the periods presented because including them would have been antidilutive: Year Ended December 31, 2018 2017 Stock options 3,600,073 1,130,000 Unvested restricted stock 1,543,501 1,050,000 Common shares underlying convertible debt 5,000,000 4,000,000 Common shares underlying convertible preferred stock - 50,335,500 Warrants 53,130,750 11,649,500 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 8. Income Taxes Under the FASB’s accounting guidance related to income tax positions, among other things, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Additionally, the guidance provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition. The Company had no accrual for interest or penalties on the Company’s Balance Sheets at December 31, 2018 and 2017, and has not recognized interest and/or penalties in the statements of operations for the years ended December 31, 2018 or 2017. The Company is subject to taxation in the United States and California. The Company’s tax years for 2015 (federal) and 2014 (California) and forward are subject to examination by the United States and California tax authorities. On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (the “Act”). The Act amends the Internal Revenue Code to reduce tax rates and modify policies, credits, and deductions for individuals and business. For businesses, the Act reduces the corporate tax rate from a maximum of 35% to a flat 21% rate. The rate reduction is effective on January 1, 2018. As a result of the rate reduction, the Company has reduced the deferred tax asset balance as of December 31, 2017 by $1,831,610. As a result of the full valuation allowance on the net deferred tax assets, there was a corresponding adjustment to the valuation allowance for this same amount. Therefore, there is no impact on the Company’s net loss and comprehensive loss for the year ended December 31, 2017 due to the law change. The SEC has issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of US GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Act. In accordance with SAB 118, the Company has determined that there is no deferred tax benefit or expense with respect to the re-measurement of certain deferred tax assets and liabilities due to the full valuation allowance against net deferred tax assets. We have completed our analysis of the Act’s income tax effects. At December 31, 2018, the Company had federal and California net operating loss carry forwards (‘NOLs’) aggregating $18,242,333 and $18,236,157 respectively, which, if not used, it will begin to expire from 2035. Utilization of the domestic net operating loss (NOL) will be subject to a substantial annual limitation due to ownership change limitations that may have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended (the Code), as well as similar state provisions. These ownership changes may limit the amount of NOL carryforwards that can be utilized annually to offset future taxable income and tax, respectively. In general, an “ownership change” as defined by Section 382 of the Code, results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percentage points of the outstanding stock of a company by certain stockholders. Upon the occurrence of an ownership change under Section 382 as outlined above, utilization of the NOL carryforwards are subject to an annual limitation under Section 382 of the Code, which is determined by first multiplying the value of the Company’s stock at the time of the ownership change by the applicable long-term, tax-exempt rate, and then could be subject to additional adjustments, as required. Any limitation may result in expiration of a portion of the NOL credit carryforwards before utilization. However, due to the existence of the valuation allowance for deferred tax assets, any potential change in ownership will not impact the Company’s effective tax rate. The tax effects of temporary differences and carryforwards that give rise to significant portions of the deferred income tax assets are as follows: As of December 31, Current deferred tax assets/(liabilities): 2018 2017 State taxes $ 345 $ 336 Capitalized research and development costs 10,327 22,717 Other 187,377 295,265 Net operating loss 5,104,432 3,697,169 Gross deferred tax assets 5,302,481 4,015,487 Valuation allowance (5,302,481 ) (4,015,487 ) Total deferred tax assets $ - $ - The provision for income taxes on earnings subject to income taxes differs from the statutory Federal rate at December 31, 2018 and 2017, due to the following: As of December 31, 2018 2017 Expected income tax benefit at federal statutory tax rate $ (4,030,454 ) $ (1,082,444 ) State income taxes, net of federal benefit (319,816 ) (208,619 ) Change in fair value of Warrant 2,869,116 (268,519 ) Change in valuation allowance 1,286,995 (344,321 ) Stock Compensation 67,966 73,881 Other Perm Difference 127,835 12 Tax Cuts and Jobs Act - 1,831,610 Provision for Income Taxes $ 1,642 $ 1,600 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 December 31, 2018. 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. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 10. Commitments and Contingencies Legal Matters General Litigation and Disputes From time to time, in the normal course of our operations, we may be a party to litigation and other dispute matters and claims. Litigation can be expensive and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict. An unfavorable outcome to any legal matter, if material, could have a materially adverse effect on our operations or our financial position, liquidity or results of operations. As of December 31, 2018, there were no pending or threatened lawsuits or claims that could reasonably be expected to have a material effect on the Company’s financial position or results of operations, but the Company has filed a petition commencing arbitration as described below. Pending Series E Preferred Stock Financing and Filing for Arbitration On May 3, 2017, the Company entered into a securities purchase agreement with a purchaser to sell 1,000,000 shares of a new Series E Preferred Stock, par value $0.001 per share, at a purchase price of $20.00 for each preferred share for aggregate gross proceeds of $20,000,000. The securities purchase agreement provides for no conditions precedent to the close and that closing is not to occur later than July 10, 2017. The purchaser did not provide funding to close the transaction on July 10, 2017 as required under the securities purchase agreement and requested an extension of the closing date. In connection with the signing of the securities purchase agreement, an affiliate of the purchaser entered into a financial guarantee to the benefit of the Company that provided for payment of the purchase price in full within 90 days of exercise. The Company exercised this guarantee on July 12, 2017. The guarantor has failed to pay the $20,000,000 within 90 days of notice of the purchaser’s default, as required by the terms of the guaranty. On November 8, 2017, the Company filed a petition commencing arbitration against the purchaser and guarantor as well as other related individuals. In the petition, the Company asserts, among other things, breach of contract against the purchaser for its failure to close its purchase of Series E Preferred Stock as required by the securities purchase agreement. The Company also asserts a breach of contract claim against the guarantor for its failure to honor its guarantee of the transaction. The petition was filed with Judicial Arbitration and Mediation Services, Inc., ENDISPUTE in Orange County, California, as required by the securities purchase agreement. The Company has engaged its legal counsel in the matter on a contingent-fee basis, other than costs, but that firm has subsequently decided to not proceed with the case. The Company is currently assessing its intent to continue pursue damages and remedies in connection with these agreements. 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 December 31, 2018, the Company had no 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. Leases On September 1, 2014, the Company signed an operating lease for laboratory and office space at the Innovation Hub, Insight Park located on the UM campus. The lease term commenced on October 1, 2014 and expired on December 31, 2017. There is annual escalating rent provisions and two months of free rent in the agreement. The total cash payments were straight-lined over the life of the lease and the monthly amount charged to rent expense was $9,267. Upon expiration, the Company did not renew the laboratory lease but has retained office space under a month-to-month agreement at the rate of $300 per month. The Company maintained its principal executive offices located in a shared office suite located at 600 Anton Blvd., Suite 1100, Costa Mesa, CA, 92626 under a month-to-month agreement. Effective March 1, 2018, the Company moved its corporate offices to 130 North Marina Drive, Long Beach, CA 90803 under a month-to-month agreement at a rate of approximately $2,600 per month. 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 monthly lease payments were $7,559. In November 2017, the Company bought out the remaining portion of the lease for $32,128 which covered the remaining lease payments as well as the value of the furniture amounting to $19,654. The lab furnishings were donated to the University of Mississippi and the office furnishings were written off due to non-use for a loss on disposal of $1,650. Total net rent expense related to our operating leases for the years ended December 31, 2018 and 2017 was $43,102 and $253,437, respectively. There are no future minimum payments under non-cancellable operating leases. |
Significant Contracts - Univers
Significant Contracts - University of Mississippi | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Significant Contracts [Abstract] | ||
Significant Contracts - University of Mississippi | 7. Significant Contracts - University of Mississippi UM 5050 Pro-Drug and UM 8930 Analog Agreements In July 2018, the Company renewed its ocular licenses for UM 5050, related to the pro-drug formulation of tetrahydrocannabinol (“THC”), and UM 8930, related to an analog formulation of cannabidiol (“CBD”). On May 24, 2019, the ocular delivery licenses were replaced by “all fields of use” licenses for both UM 5050 and UM 8930 (collectively, the “License Agreements”). Pursuant to the License Agreements, UM granted the Company an exclusive, perpetual license, including, with the prior written consent of UM, the right to sublicense, to intellectual property related to UM 5050 and UM 8930 for all fields of use. The License Agreements contain certain milestone payments, royalty and sublicensing fees payable by the Company, as defined therein. Each License Agreement provides for an annual maintenance fee of $75,000 payable on the anniversary of the effective date. The upfront payment for UM 5050 is $100,000 and the upfront payment for UM 8930 is $200,000. Additionally, there is also a $200,000 fee due within 30 days upon receipt of the first United States Patent and Trademark Office Notice of Allowance for UM 8930. The milestone payments payable for each license are as follows: i) $100,000 paid within 30 days following the submission of the first Investigational New Drug Application to the Food and Drug Administration or an equivalent application to a regulatory agency anywhere in the world, for a product; ii) $200,000 paid within 30 days following the first submission of an NDA, or an equivalent application to a regulatory agency anywhere in the world, for each product that is administered in a different route of administration from that of the early submitted product(s); and iii) $400,000 paid within 30 days following the approval of an NDA, or an equivalent application to a regulatory agency anywhere in the world, for each product that is administered in a different route of administration from that of the early approved product(s). The royalty percentage due on net sales under each License Agreement is in the mid-single digits. The Company must also pay to UM a portion of all licensing fees received from any sublicensees, subject to a minimum royalty on net sales, and the Company is required to reimburse patent costs incurred by UM related to the licensed products. The royalty obligations apply by country and by licensed product, and end upon the later of the date that no valid claim of a licensed patent covers a licensed product in a given country, or 10 years after the first commercial sale of such licensed product in such country. Each License Agreement continues, unless terminated, until the later of the expiration of the last to expire of the patents or patent applications within the licensed technology or the expiration of the Company’s payment obligations under such License Agreement. UM may terminate each License Agreement, by giving written notice of termination, upon the Company’s material breach of such License Agreement, including failure to make payments or satisfy covenants, representations or warranties without cure, noncompliance, a bankruptcy event, the Company’s dissolution or cessation of operations, the Company’s failure to make reasonable efforts to commercialize at least one product or failure to keep at least one product on the market after the first commercial sale for a continuous period of one year, other than for reasons outside the Company’s control, or the Company’s failure to meet certain pre-established development milestones. The Company may terminate each License Agreement upon 60 days’ written notice to UM. UM 5070 License Agreement In January 2017, the Company entered into a license agreement with UM pursuant to which UM granted us an exclusive, perpetual license, including the right to sublicense, to intellectual property related to a platform of cannabinoid-based molecules (“UM 5070”), to research, develop and commercialize products for the treatment of infectious diseases. The license agreement culminates roughly one year of screening and target molecule identification studies especially focused on therapy-resistant infectious organisms like Methicillin-resistant Staphylococcus aureus (“MRSA”). The Company paid UM an upfront license fee under the license agreement. Under the license agreement, the Company is also responsible for annual maintenance fees that will be credited against royalties in the current fiscal year, contingent milestone payments upon achievement of development and regulatory milestones, and royalties on net sales of licensed products sold for commercial use. The aggregate milestone payments due under the license agreement if all the milestones are achieved is $700,000 and the royalty percentage due on net sales is in the mid-single digits. The Company must also pay to UM a percentage of all licensing fees we receive from any sublicensees, subject to a minimum royalty on net sales by such sublicensees. The Company’s royalty obligations apply on a country by country and licensed product by licensed product basis, and end upon the later of the date that no valid claim of a licensed patent covers a licensed product in a given country, or ten years after first commercial sale of such licensed product in such country. The license agreement continues, unless terminated, until the later of the expiration of the last to expire of the patents or patent applications within the licensed technology or expiration of the Company’s payment obligations under the license. UM may terminate the license agreement, effective with the giving of notice, if: (a) the Company fails to pay any material amount payable to UM under the license agreement and do not cure such failure within 60 days after UM notifies us of such failure, (b) the Company materially breaches any covenant, representation or warranty in the license agreement and do not cure such breach within 60 days after UM notifies the Company of such breach, (c) the Company fails to comply in any material respect with the terms of the license and do not cure such noncompliance within 60 days after UM notifies us of such failure, (d) the Company is subject to a bankruptcy event, (e) the Company dissolves or ceases operations or (f) if after the first commercial sale of a product during the term of the license agreement, the Company materially fails to make reasonable efforts to commercialize at least one product or fail to keep at least one product on the market after the first commercial sale for a continuous period of one year, other than for reasons outside of the Company’s control. The Company may terminate the license agreement upon 60 days’ written notice to UM. | 9. Significant Contracts University of Mississippi 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 cannabinoids in certain forms to develop intellectual property (IP) with the intention to create and commercialize therapeutic medicines. This MOU resulted in Nemus entering into several licenses and research agreements with UM, related to a prodrug of tetrahydrocannabinol (THC) and an analog of cannabidiol (CBD). The term of the MOU agreement expired in 2018 and was not renewed since the Company and the University had entered into a number of licenses for the aforementioned compounds. UM 5050 Pro-Drug Agreements On September 29, 2014, the Company executed three license agreements with UM pursuant to which UM granted the Company 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. Nemus has decided to initially focus UM 5050 product development on developing ocular medicines for the treatment of ophthalmic-related diseases of the eye. In July 2018, the Company notified UM that it will renew the license for UM 5050 related to ocular delivery of the prodrug of THC. The license agreement for ocular delivery contains certain milestone payments, royalty and sublicensing fees, as defined therein. There is an annual fee of $25,000, payable on the anniversary of the effective date and this amount was paid in September 2018. The aggregate milestone payments under the license agreement, if all of the milestones are achieved, is $700,000 The license agreement also requires the Company to reimburse UM for patent costs incurred related to these products under license. The license agreement will terminate upon expiration of the patents, breach or default of the license agreement, or upon 60 days written notice by the Company to UM. On October 15, 2014, the Company signed a renewable option agreement for the rights to explore other routes of delivery of UM 5050 not yet agreed upon and/or in combination with other cannabinoids or other compatible compounds. The Company has been working with UM to establish new agreements derived from this option agreement and let the other routes of administration option expire. UM 8930 Analog 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, an analog formulation of CBD, for products administered through each of ocular or rectal delivery. In July 2018, the Company renewed the ocular delivery license. The license agreement for ocular delivery contains certain milestone payments, royalty and sublicensing fees, as defined therein. There is an annual fee of $25,000, payable on the anniversary of the effective date and this amount was paid in December 2018. The aggregate milestone payments under the license agreement, if all of the milestones are achieved, is $700,000. The license agreement also requires the Company to reimburse UM for patent costs incurred related to these products under license. The license agreement will terminate upon expiration of the patents, breach or default of the license agreement, or upon 60 days’ written notice by the Company to UM. On December 14, 2015, the Company signed a renewable option agreement for the rights to explore other routes of delivery of UM 8930 not yet agreed upon and/or in combination with other cannabinoids or other compatible compounds. The Company has been working with UM to establish new licenses derived from this option agreement and let the other routes of administration option expire. UM 5070 License Agreement On January 10, 2017, the Company entered into a license agreement with UM pursuant to which UM granted the Company an exclusive, perpetual license, including the right to sublicense, under intellectual property related to UM 5070, a platform of cannabinoid-based molecules to research, develop and commercialize products for the treatment of infectious diseases. The license agreement culminates roughly one year of screening and target molecule identification studies especially focused on therapy-resistant infectious organisms like methicillin-resistant Staphylococcus aureus (MRSA). The license agreement contains certain milestone payments, royalty and sublicensing fees, as defined therein. There is an annual fee of $25,000, payable on the anniversary of the effective date and this amount was paid in January 2018 and January 2019. The aggregate milestone payment under the license agreement, if all of the milestones are achieved, is $700,000. This license agreement also requires the Company to reimburse UM for patent costs incurred related to these products under the license. This license agreement will terminate upon expiration of the patents, breach or default of the license agreement, or upon 60 days’ written notice by the Company to UM. UM Research Agreement In August 2018, we entered into a research agreement with UM to conduct an animal study in normotensive animals to assess the use of NB1111, the prodrug of THC, using nanoemulsion delivery of the Company’s proprietary molecule when compared to a prostaglandin standard of care. Safety data will also be collected. The original term of the Research Agreement was through January 31, 2019. In February 2019 the term of the research agreement was extended through May 31, 2019. The agreement may be terminated for convenience or cause by either party at any time without penalty. The aggregate amount of payments due by the Company under the contract for services rendered by UM is up to $155,156. Upon cancellation, the Company is responsible for paying any amounts incurred by UM in connection with the services through the termination date. AMRI Agreement On July 31, 2018, the Company entered into a letter agreement with Albany Molecular Research Inc., or AMRI, pursuant to which AMRI is to provide services to the Company for process development and analytical method development and qualification for the Company’s prodrug of tetrahydrocannabinol, or THC, as well as for sample production and a stability study. Pursuant to the terms of the agreement, the Company will pay an estimated $64,200 in fees and expenses for the initial evaluation and development of a process for the production of the Company’s pro-drug of THC to ensure reproducibility, quality and safety. In December 2018, we entered into an agreement with AMRI to extend the initial process development phase for the production of our prodrug of by approximately two months and to pay up to an incremental $71,800 for this phase. After the initial evaluation, the Company has agreed to pay additional fees and expenses for manufacturing and sample production of our prodrug of THC and a stability study, as well as possible extensions or modification of the aforementioned projects. We may at any time cancel or delay any project under the agreement prior to the scheduled start date, provided that we must reimburse AMRI 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 AMRI’s loss of revenue incurred as a result of reserving production facilities for our exclusive use. We may terminate the agreement in whole or in part at any time upon 30 days’ written notice to AMRI. Either party may terminate the agreement in writing in the event of default by the other party which is not cured within 30 days of receipt of notice of default for the following events of default: (i) insolvency of such party, (ii) any assignment for the benefit of creditors of such party, (iii) voluntary or involuntary filing of a petition, order or other decree in bankruptcy by or against such party, (iv) commencement of any proceeding for liquidation of, reorganization of, or the composition, extension, arrangement or readjustment of the obligations of such party, (v) failure by such party to comply with any provision of the agreement in any material respect, and (vi) proof that any representations made by such party were false when made. Glauconix Agreement In November 2018 we executed a master service agreement and a statement of work with Glauconix Biosciences, Inc. to research the mechanism of action of and IOP lowering ability of THC when exposed to the 3D-human trabecular meshwork tissue constructs (3D-HTMTM) using both healthy and diseased tissue constructs. The expected term of the study is approximately 12 weeks and may be terminated for convenience by Nemus with a minimum of 30 days written notice or by either party, if the other party breaches any material term or becomes insolvent. If termination is sought by either party, Nemus is responsible for all work performed (including any partially completed work based on percentage completion) and expenses incurred through the date of termination. The aggregate amount of payments due by the Company under the contract for services rendered by Glauconix is $180,424. |
Related Party Matters
Related Party Matters | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Related Party Transactions [Abstract] | ||
Related Party Matters | 8. Related Party Matters K2C, Inc. In June 2014, the Company’s U.S. subsidiary entered into an independent contractor agreement with K2C, Inc. (“K2C”), which is wholly owned by the Company’s former Executive Chairman and Co-Founder, Mr. Cosmas N. Lykos, pursuant to which the Company paid K2C a monthly fee for services performed by Mr. Lykos for the Company. The agreement expired on June 1, 2017 and was automatically renewed for one year pursuant to the terms of the agreement. The monthly fee under the agreement was $10,000 and increased to $20,000 effective April 1, 2017. In February 2018, the Company entered into a separation and release agreement with K2C, which provided for a lump sum payment of $180,000 and the immediate vesting of 900,000 shares of restricted common stock granted on January 18, 2018, 325,000 shares of restricted common stock granted on October 20, 2015, and 125,000 options granted on November 21, 2014, in exchange for a release of claims and certain other agreements. During the nine months ended September 30, 2018, the Company recognized additional stock-based compensation expense of $112,270 for these restricted stock and option awards. For the three and nine months ended September 30, 2018, total expense incurred under this agreement was $-0- and $220,000 (including the previously discussed lump sum payment), respectively. For the three and nine months ended September 30, 2019, no expense was incurred under this agreement. Under the separation agreement, Mr. Lykos was allowed to participate in the Company’s health, death and disability insurance plans for six months subsequent to K2C’s separation. Emerald Health Sciences On February 1, 2018, the Company entered into an Independent Contractor Agreement with Emerald Health Sciences, pursuant to which Emerald Health Sciences agreed to provide such services as are mutually agreed between the Company and Emerald Health Sciences, including reimbursement for reasonable expenses incurred in the performance of the Independent Contractor Agreement. These services can include, but are not limited to, corporate advisory services and technical expertise in the areas of business development, marketing, investor relations, information technology and product development. The Independent Contractor Agreement has an initial term of 10 years and specifies compensation which is agreed upon between the Company’s Chief Executive Officer and Emerald Health Sciences’ Chairman, CEO and President on a month-to-month basis. The fee due under this agreement is payable on a monthly basis; however, if the Company is unable to make payments due to insufficient funds, then interest on the outstanding balance will accrue at a rate of 12% per annum, calculated semi-annually. Under this agreement, for the three months ended September 30, 2019 and 2018, the Company incurred expenses of $150,000 in each period. For the nine months ended September 30, 2019 and 2018, the Company incurred expenses of $450,000 and $400,000, respectively. On February 6, 2018, the Company entered into a Consulting Agreement with Dr. Avtar Dhillon, the Chairman, Chief Executive Officer and President of Emerald Health Sciences. The services under the Consulting Agreement included corporate finance and strategic business advisory services. The Consulting Agreement had an initial term of one year and was renewable automatically unless terminated by either party. The agreement specified an annual fee of $60,000, payable semi-monthly in installments, and included reimbursement for reasonable expenses incurred in the performance of the services. Under the agreement, Dr. Avtar Dhillon was also entitled to a discretionary annual bonus, payable 120 days after each fiscal year end, to be determined by the Board upon its annual review. Under this agreement, for the three and nine months ended September 30, 2018, the Company incurred $15,000 and $45,000, respectively. The Consulting Agreement was canceled on October 5, 2018 in connection with the Company’s entry into the Credit Agreement with Emerald Health Sciences (See Note 4), and Dr. Avtar Dhillon was appointed as the Executive Chairman of the Company’s Board. | 11. Related Party Matters K2C, Inc. In June 2014, our subsidiary entered into an independent contractor agreement with K2C, Inc. (“K2C”), which is wholly owned by the Company’s then Executive Chairman and Co-Founder, Mr. Cosmas N. Lykos, pursuant to which the Company paid K2C a monthly fee for services performed by Mr. Lykos for the Company. The agreement expired on June 1, 2017 and was automatically renewed for one year pursuant to the terms of the agreement. The monthly fee under the agreement was $10,000 and increased to $20,000 effective April 1, 2017. In February 2018, the Company entered into a separation and release agreement with K2C, which provided for a lump sum payment of $180,000 and the immediate vesting of 900,000 shares of restricted common stock granted on January 18, 2018, 325,000 shares of restricted common stock granted on October 20, 2015, and 125,000 options granted on November 21, 2014, in exchange for a release of claims and certain other agreements. For the year ended December 31, 2018, the Company recognized additional stock-based compensation expense of $112,270 for these restricted stock and option awards. For the years ended December 31, 2018 and 2017, total expense incurred under this agreement was $220,000 (including the previously discussed lump sum payment) and $210,000 respectively. Under the separation agreement, Mr. Lykos was allowed to participate in the Company’s health, death and disability insurance plans for six months subsequent to K2C’s separation. Emerald Health Sciences On February 1, 2018, the Company entered into an Independent Contractor Agreement with Emerald, pursuant to which Emerald agreed to provide such services as are mutually agreed between the Company and Emerald, including reimbursement for reasonable expenses incurred in the performance of the Independent Contractor Agreement. These services can include, but are not limited to, corporate advisory services and technical expertise in the areas of business development, marketing, investor relations, information technology and product development. The Independent Contractor Agreement has an initial term of ten years and specifies compensation which is agreed upon between the Company’s chief executive officer and Emerald’s Chairman, CEO and President on a month-to-month basis. The fee due under this agreement is payable on a monthly basis, however, if the Company is unable to make payments due to insufficient funds, then interest on the outstanding balance will accrued at a rate of 12% per annum, calculated semi-annually. Under this agreement, for the year ended December 31, 2018, the Company incurred expenses of $550,000. On February 6, 2018, the Company entered into a Consulting Agreement with Dr. Avtar Dhillon, the Chairman, Chief Executive Officer and President of Emerald. The services under the Consulting Agreement included, corporate finance and strategic business advisory. The Consulting Agreement had an initial term of one year and was renewable automatically unless terminated by either party. The agreement specified an annual fee of $60,000 payable semi-monthly in installments and included reimbursement for reasonable expenses incurred in the performance of the services. The contractor was also entitled to a discretionary annual bonus, payable 120 days after each fiscal year end, to be determined by the Board upon its annual review. Under this agreement, for the year ended December 31, 2018, the Company incurred $45,000. The Consulting Agreement was canceled on October 5, 2018 in connection with the Company’s entry into the Credit Agreement with Emerald (Note 4), and Dr. Avtar Dhillon was appointed as the Executive Chairman of the Company’s Board of Directors. |
Subsequent Events
Subsequent Events | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Subsequent Events [Abstract] | ||
Subsequent Events | 9. Subsequent Events There were no subsequent events from September 30, 2019 through the date the condensed consolidated financial statements were originally issued. Events subsequent to original issuance of condensed consolidated financial statements (unaudited) In connection with the reissuance of the condensed consolidated financial statements, the Company evaluated subsequent events through December 23, 2019, the date on which the condensed consolidated financial statements were available to be reissued. Subsequent to the quarterly report on Form 10-Q for the period ended September 30, 2019, filed with the SEC on November 13, 2019, the following events occurred: Termination of Independent Contractor Agreement with Emerald Health Sciences On December 17, 2019, the Board of Directors of the Company (the “Board”) approved the termination of the Independent Contractor Agreement, dated as of February 1, 2018, between the Company and Emerald Health Sciences, pursuant to which EHS provided to the Company corporate advisory services and services related to business development, marketing, investor relations, information technology and product development. The termination of the Independent Contractor Agreement was executed on December 19, 2019 and will become effective as of December 31, 2019. Changes in Board of Director Composition On December 17, 2019, the Board accepted the resignation of Dr. Avtar Dhillon, who offered his resignation as the Executive Chairman of the Board and the position of Chairman of the Finance and Business Development Committee of the Board. The Company entered into a Board Observer Agreement with EHS to allow Dr. Dhillon to continue as a representative of EHS as a non-voting observer in future meetings of the Board, and into an Independent Contractor Services Agreement with Dr. Dhillon, pursuant to which Dr. Dhillon will provide ongoing corporate finance and strategic business advisory services to the Company. The Board also appointed Punit Dhillon, an existing member of the Board, as Chairman of the Board and as Chairman of the Finance and Business Development Committee of the Board, to fill the vacancies in such offices created by the resignation of Dr. Dhillon. Board Approval of Corporate Name Change On December 17, 2019, the Board has approved the change of the name of the Company to “EMBI Pharmaceuticals, Inc.” subject to regulatory and stockholder approval Board Observer Agreement with Emerald Health Sciences On December 19, 2019, the Company entered into a Board Observer Agreement with EHS. The Board Observer Agreement gives a right to EHS to designate one observer to the Board of Directors of the Company for so long as EHS maintains ownership of any securities in the Company. Under the Board Observer Agreement, the board observer will be permitted to attend all meetings (whether in person, telephonically or otherwise) of the board of directors of the Company in a non-voting, observer capacity. EHS appointed Dr. Avtar Dhillon as an initial board observer. The Board Observer Agreement may be terminated by either party for cause upon written notice to the other party if the other party defaults in the performance of the agreement in any material respect or materially breaches the terms of the agreement, or without cause upon 30 days’ prior written notice to the other party. Execution of Independent Contractor Services Agreement with Dr. Avtar Dhillon On December 19, 2019, the Company entered into an Independent Contractor Services Agreement with Dr. Avtar Dhillon, pursuant to which Dr. Dhillon will provide ongoing corporate finance and strategic business advisory services to the Company. In exchange for his services, Dr. Dhillon will receive a monthly fee of $10,000, with (i) $5,000 paid each month and (ii) $5,000 accruing from the effective date and payable upon Company’s completion of a material financing. The Board will review the monthly rate paid to Dr. Dhillon within 90 days of the end of each fiscal year. The Independent Contractor Services Agreement has an initial term of one year and will renew automatically thereafter unless terminated earlier by either party. The Independent Contractor Services Agreement may be terminated by either party for cause upon written notice to the other party if the other party defaults in the performance of the agreement in any material respect or materially breaches the terms of the agreement, or without cause upon 30 days’ prior written notice to the other party. Warrant Exercise Agreement with Emerald Health Sciences On December 20, 2019, the Company entered into an warrant exercise agreement with Emerald Health Sciences (“EHS”), pursuant to which EHS, as warrant holder and lender under the Multi Draw Credit Agreement, dated as of October 5, 2018, between EHS and the Company (the “Credit Agreement”), exercised 40.80 million of the Company’s warrants previously issued to EHS under the terms of the Credit Agreement. EHS paid the aggregate exercise price of approximately $4.08 million for the related warrant shares in the form of a reduction of the corresponding amount of obligations outstanding under the Credit Agreement. Upon consummation of the transactions contemplated by the warrant exercise agreement, the total outstanding principal amount excluding discounts under the Credit Agreement were $2,014,500. | 12. Subsequent Events Pharmaceuticals International, Inc. Agreement In January 2019 we executed an agreement with Pharmaceuticals International, Inc. (“Pii”) to conduct studies to determine options for producing a sterile dosage form which can be dosed in humans in a phase I study. Pii will focus efforts on an immediate release formulation and will conduct appropriate formulation studies to determine processing options and formulations which can either be sterile filtered, radiated or terminally sterilized. Pursuant to the terms of the agreement, the Company will pay an estimated $72,500 to initiate the project. After the initial evaluation, the Company has agreed to pay additional fees and expenses upon completion of certain milestones. Nemus may terminate this Agreement at any time and for any reason at the sole discretion upon thirty days advance written notice to Pii. Upon such termination, Nemus shall pay all costs incurred by Pii for work performed prior to the effective date of termination, provided Pii provides written evidence that such costs have been incurred and such work performed. Either party may terminate this Agreement if the other party is in default of any of its material obligations set forth herein, and such breach is not cured within 60 days, which time period shall be reduced to thirty days for any default of any monetary obligation, after the breaching party’s receipt of a written notice from the nonbreaching party that describes such breach in reasonable detail. RRD International Agreement In January 2019 we entered into work orders #2 and #3 with RRD International, LLC (“RRD”) which relate to the Master Services Agreement dated March 10, 2016. Under the terms of these additional work orders, RRD shall provide strategic 505(b)(2) regulatory planning, prepare a Pre-IND (“PIND”) meeting information package and set up and attend a PIND meeting with the FDA. The term of the work order shall continue until the earlier of April 30, 2019 or the date upon which the services are complete unless this Work Order is terminated by the Parties. The aggregate amount of payments due by the Company under the contract is $78,680 plus an estimated $22,000 of pass through expenses and consulting fees. 2 nd On February 1, 2019, the Company effected the second draw under the Credit Agreement in the amount of $2,000,000 and issued Emerald a warrant to purchase 2,500,000 shares of common stock at an exercise price of $0.50 per share, in accordance with the terms of the Credit Agreement. Corporate Name Change At the Board of Director meeting held on February 4, 2019 it was unanimously approved to proceed with changing the Company’s name from Nemus Bioscience, Inc. to Emerald Bioscience, Inc. The amendment to the Company’s articles of incorporation will be effective upon the filing of a Certificate of Amendment with the Nevada Secretary of State, which is expected to occur on or about March 25, 2019. Noramco Agreement In February 2019, we entered into a master development and clinical supply agreement with Noramco, Inc. (“Noramco”) to provide manufacturing and product development services for the Company’s analog formulation of cannabidiol (“CBD”). The Company will pay $146,386 upfront and additional payments will be made upon Noramco shipping of the active pharmaceutical ingredient to the Company. Either party may terminate this Agreement immediately without further action if (i) the other party files a petition in bankruptcy, or enters into an agreement with its creditors, or applies for or consents to the appointment of a receiver, administrative receiver, trustee or administrator, or makes an assignment for the benefit of creditors, or suffers or permits the entry of any order adjudicating it to be bankrupt or insolvent and such order is not discharged within 30 days, or takes any equivalent or similar action in consequence of debt in any jurisdiction; or (ii) the other party materially breaches any of the provisions of this Agreement, and such breach is not cured within 45 days after the giving of written notice requiring the breach to be remedied; provided, that in the case of a failure of the Company to make payments in accordance with the terms of this Agreement, Noramco may terminate this Agreement if such payment breach is not cured within 30 days of receipt of notice of non-payment from Noramco. In addition, either Party may terminate this Agreement at any time upon four (4) months prior written notice to Noramco. In the event of termination, the Company shall pay Noramco for all Services performed up to the date of termination and all non-cancelable commitments made specifically in performance of the master development and clinical supply agreement. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | ||
Basis of Presentation | Basis of Presentation In the opinion of management, the accompanying Unaudited Condensed Consolidated Financial Statements have been prepared on a consistent basis with the Company’s Audited Consolidated Financial Statements for the fiscal year ended December 31, 2018, and include all adjustments, consisting of only normal recurring adjustments, necessary to fairly state the information set forth herein. The Condensed Consolidated Financial Statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and therefore, omit certain information and footnote disclosure necessary to present the financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”). The results of operations for the three and nine months ended September 30, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019 or any future periods. The Condensed Consolidated Balance sheet as of December 31, 2018 was derived from the Company’s audited financial statements as of December 31, 2018, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 14, 2019. The unaudited financial statements included herein should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, which includes a broader discussion of the Company’s business and the risks inherent therein. Certain reclassifications have been made to prior year amounts to conform to the current period’s presentation. Such reclassifications had no net effect on total assets, total liabilities, total stockholders’ deficit, net losses and cash flows. | Basis of Presentation The preparation of financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and the accompanying notes. Actual results could differ from those estimates. Certain reclassifications have been made to prior year amounts to conform to the current year’s presentation. Such reclassifications had no net effect on previously reported financial results. |
Use of Estimates | Use of Estimates The preparation of the Unaudited Condensed Consolidated Financial Statements in conformity with 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 Condensed Consolidated Financial Statements and the reported amounts of income and expense during the reporting period. Actual results could differ from those estimates. The most significant accounting estimates inherent in the preparation of the Company’s financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources. Such estimates and judgments are utilized for stock-based compensation expense and equity securities, derivative liabilities and debt with embedded features. | Use of Estimates The preparation of the Consolidated Financial Statements in conformity with 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. Such estimates and judgments are utilized for stock-based compensation expense and equity securities or debt with embedded features. |
Risks and Uncertainties | Risks and Uncertainties The Company’s operations are subject to a number of risks and uncertainties, including but not limited to, changes in the general economy, the size and growth of the potential markets for any of the Company’s product candidates, results of research and development activities, uncertainties surrounding regulatory developments in the United States and the Company’s ability to attract new funding. | Risks and Uncertainties The Company’s operations are subject to a number of risks and uncertainties, including but not limited to, changes in the general economy, the size and growth of the potential markets for any of the Company’s product candidates, results of research and development activities, uncertainties surrounding regulatory developments in the Unites States and the Company’s ability to attract new funding. |
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. As of December 31, 2018, the Company has no cash equivalents. | |
Restricted cash | Restricted Cash A deposit of $4,512 and $4,428 as of December 31, 2018 and December 31, 2017, respectively, 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 GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (the “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 liabilities, or other inputs that are observable or can be corroborated by observable market data. 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 the Company’s financial instruments, with the exception of the convertible multi draw credit agreement - related party and derivative liabilities, including, cash, prepaid expenses, accounts payable, and other current liabilities approximate their fair value due to the short maturities of these financial instruments. The derivative liabilities were valued on a recurring basis utilizing Level 3 inputs. Advances under the convertible multi draw credit agreement - related party, noncurrent are not recorded at fair value. However, fair value can be approximated and disclosed utilizing Level 3 inputs and independent third-party valuation techniques (See Note 3). At September 30, 2019, the fair value of the advances under the Credit Agreement were estimated at $8,247,319. The carrying amount of the liability at September 30, 2019 was $3,296,249 and is included in Convertible multi draw credit agreement - related party, net of discount in the Company’s balance sheets. | Fair Value Measurements Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (the “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 liabilities, or other inputs that are observable or can be corroborated by observable market data. 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, with the exception of the convertible multi-draw credit agreement – related party, noncurrent and derivative liabilities, 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 derivative liabilities were valued on a recurring basis utilizing Level 3 inputs. Advances under the convertible multi-draw credit agreement – related party, noncurrent are not recorded at fair value. However, fair value can be approximated and disclosed utilizing Level 3 inputs and independent third-party valuation techniques (See Note 3). At December 31, 2018, the fair value of the advance under the Credit Agreement was estimated at $3,176,824. |
Property and Equipment, Net | Property and Equipment, Net Property and equipment, net, consists primarily of computers and equipment. Expenditures for additions, renewals and improvements are capitalized at cost. Depreciation is computed on a straight-line method based on the estimated useful life of the related asset 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. | |
Income taxes | Income Taxes The Company accounts for 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 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. 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. 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 December 31, 2018. As a result of this valuation allowance there are no income tax benefits reflected in the accompanying Consolidated Statements of Operations and Comprehensive Loss to offset pre-tax losses. The Company recognizes a tax benefit from uncertain tax positions when it is more likely than not (50%) 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. The Company has no material uncertain tax positions as of December 31, 2018. The Company recognizes interest and/or penalties related to income tax matters in income tax expense. | |
Convertible Instruments | Convertible Instruments The Company accounts for hybrid contracts with embedded conversion features in accordance with GAAP. ASC 815, Derivatives and Hedging Activities The Company accounts for convertible debt instruments with embedded conversion features in accordance with ASC 470-20, Debt with Conversion and Other Options The Company also follows ASC 480-10, Distinguishing Liabilities from Equity When determining short-term vs. long-term classification of derivative liabilities, the Company first evaluates the instruments’ exercise provisions. Generally, if a derivative is a liability and exercisable within one year, it will be classified as short-term. However, because of the unique provisions and circumstances that may impact the accounting for derivative instruments, the Company carefully evaluates all factors that could potentially restrict the instrument from being exercised or create a situation where exercise would be considered remote. The Company re-evaluates its derivative liabilities at each reporting period end and makes updates for any changes in facts and circumstances that may impact classification. | Convertible Instruments The Company accounts for hybrid contracts with embedded conversion features in accordance with GAAP. ASC 815, Derivatives and Hedging Activities The Company accounts for convertible debt instruments with embedded conversion features in accordance with ASC 470-20, Debt with Conversion and Other Options The Company also follows ASC 480-10, Distinguishing Liabilities from Equity When determining short-term vs. long-term classification of derivative liabilities, the Company first evaluates the instruments’ exercise provisions. Generally, if a derivative is a liability and exercisable within one year, it will be classified as short-term. However, because of the unique provisions and circumstances that may impact the accounting for derivative instruments, the Company carefully evaluates all factors that could potentially restrict the instrument from being exercised or create a situation where exercise would be considered remote. The Company re-evaluates its derivative liabilities at each reporting period end and makes updates for any changes in facts and circumstances that may impact classification. |
Warrants Issued in Connection with Financings | Warrants Issued in Connection with Financings The Company generally accounts for warrants issued in connection with debt and equity financings as a component of equity, unless the warrants include a conditional obligation to issue a variable number of shares or there is a deemed possibility that the Company may need to settle the warrants in cash. For warrants issued with a conditional obligation to issue a variable number of shares or the deemed possibility of a cash settlement, the Company records the fair value of the warrants as a liability at each balance sheet date and records changes in fair value in other (income) expense in the Condensed Consolidated Statements of Comprehensive Loss. | Warrants Issued in Connection with Financings The Company generally accounts for warrants issued in connection with debt and equity financings as a component of equity, unless the warrants include a conditional obligation to issue a variable number of shares or there is a deemed possibility that the Company may need to settle the warrants in cash. For warrants issued with a conditional obligation to issue a variable number of shares or the deemed possibility of a cash settlement, the Company records the fair value of the warrants as a liability at each balance sheet date and records changes in fair value in other (income) expense in the Consolidated Statements of Operations and Comprehensive Loss. |
Debt Issuance Costs and Interest | Debt Issuance Costs and Interest Discounts related to bifurcated derivatives, freestanding instruments issued in bundled transactions and issuance costs are recorded as a reduction to the carrying value of the debt and amortized over the life of the debt using the effective interest method. The Company makes changes to the effective interest rate, as necessary, on a prospective basis. For debt facilities that provide for multiple advances, the Company initially defers any issuance costs until the first advance is made and then amortizes the costs over the life of the facility. | Debt Issuance Costs and Interest Discounts related to bifurcated derivatives, freestanding instruments issued in bundled transactions and issuance costs are recorded as a reduction to the carrying value of the debt and amortized over the life of the debt using the effective interest method. The Company makes changes to the effective interest rate, as necessary, on a prospective basis. For debt facilities that provide for multiple advances, the Company initially defers any issuance costs until the first advance is made and then amortizes the costs over the life of the facility. |
Revenue Recognition | Revenue Recognition The Company has not begun planned principal operations and has not generated any revenue since inception. | |
Research and Development Expenses and Licensed Technology | Research and Development Expenses and Licensed Technology Research and development 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 and benefits for the personnel involved in the Company’s preclinical and clinical drug development activities; and facilities expense, depreciation and other allocated expenses; and equipment and laboratory supplies. Costs incurred for the rights to use licensed technologies in the research and development process, including licensing fees and milestone payments, are 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. | Research and Development Expenses and Licensed Technology 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 and benefits 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. Costs incurred for the rights to use licensed technologies in the research and development process, including licensing fees and milestone payments, are 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. |
Stock-Based Compensation for Employees | Stock-Based Compensation for Employees 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 with forfeitures accounted for as they occur. The Company uses the Black-Scholes Merton option pricing model for estimating the grant date fair value of stock options using the following assumptions: · Volatility - Stock price volatility is estimated over the expected term based on a blended rate of industry peers and the Company’s actual stock volatility adjusted for periods in which significant financial variability was identified. · Expected term - The expected term is based on a simplified method which defines the life as the weighted average of the contractual term of the options and the vesting period for each award. · Risk-free rate - The risk-free interest rate for the expected term of the option 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 the Company’s history and expectation of paying no dividends in the foreseeable future. | Stock-Based Compensation for Employees 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 with forfeitures accounted for as they occur. The Company uses the Black-Scholes Merton option pricing model for estimating the grant date fair value of stock options using the following assumptions: · Volatility - Stock price volatility is estimated over the expected term based on a blended rate of industry peers and the Company’s actual stock volatility adjusted for periods in which significant financial variability was identified. · Expected term - The expected term is based on a simplified method which defines the life as the weighted average of the contractual term of the options and the vesting period for each award. · Risk-free rate - The risk-free interest rate for the expected term of the option 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 in the foreseeable future. |
Stock-Based Compensation for Non-Employees | Stock-Based Compensation for Non-Employees Upon the adoption of ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, Compensation – Stock Compensation – Overall, | |
Segment Information | Segment Information FASB ASC No. 280, Segment Reporting | |
Comprehensive Loss | Comprehensive Loss Comprehensive loss is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. ASC 220 requires that an entity records all components of comprehensive loss, net of their related tax effects, in its financial statements in the period in which they are recognized. For the years ended December 31, 2018 and 2017, the comprehensive loss was equal to the net loss. | |
Net Loss Per Share of Common Stock | Earnings/ Loss Per Share of Common Stock The Company applies FASB ASC No. 260, Earnings per Share The computations of basic and diluted net loss per common share are as follows: Three Months Ended September 30, (Unaudited) Nine Months Ended September 30, (Unaudited) 2019 2018 2019 2018 Basic net loss per share: Net loss $ (4,931,125 ) $ (2,096,349 ) $ (3,800,227 ) $ (12,972,142 ) Weighted average common shares outstanding – basic 133,001,746 131,445,057 132,885,675 117,434,563 Net loss per share - basic $ (0.04 ) $ (0.02 ) $ (0.03 ) $ (0.11 ) Diluted net loss per share: Net loss (as adjusted) $ (4,931,125 ) $ (2,096,349 ) $ (5,656,982 ) $ (12,972,142 ) Weighted average common shares outstanding – diluted 133,001,746 131,445,057 167,690,989 117,434,563 Net loss per share - diluted $ (0.04 ) $ (0.02 ) $ (0.03 ) $ (0.11 ) The following outstanding shares of common stock equivalents were excluded from the computation of diluted earnings per share of common stock for the periods presented because including them would have been antidilutive: As of Three Months Ended September 30, (Unaudited) As of Nine Months Ended September 30, (Unaudited) 2019 2018 2019 2018 Stock options 4,512,715 1,850,073 4,512,715 1,850,073 Unvested restricted stock 1,093,501 1,918,501 1,093,501 1,918,501 Common shares underlying convertible debt 15,000,000 - 15,000,000 - Warrants 57,943,250 51,055,750 23,137,935 51,055,750 | Net Loss Per Share of Common Stock The Company applies FASB ASC No. 260, Earnings per Share |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In November 2018, the FASB issued ASU No. 2018-08 Collaborative Arrangements Revenue from Contracts with Customers Recently Adopted Accounting Standards In February 2016, the FASB issued ASU No. 2016-02 Leases In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception Topic 480, Distinguishing Liabilities from Equity | Recent Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02 Leases In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception Topic 480, Distinguishing Liabilities from Equity In November 2018, the FASB issued ASU No. 2018-08 Collaborative Arrangements Revenue from Contracts with Customers Recently Adopted Accounting Standards In August 2018, the FASB issued ASU No. 2018-13 Fair Value Measurement Fair Value Measurement In July 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic ): Scope of Modification Accounting · The award’s fair value (or calculated value or intrinsic value, if those measurement methods are used), · The award’s vesting conditions, and · The award’s classification as an equity or liability instrument. ASU 2017-09 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017 for all entities. Early adoption is permitted, including adoption in any interim period for which financial statements have not yet been issued or made available for issuance. The ASU will be applied prospectively to awards modified on or after the adoption date. The adoption of ASU 2017-09 effective January 1, 2018 did not have a material effect on the Company’s results of operations, financial condition or cash flows. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic ) The Company adopted the new standard effective January 1, 2018 under the modified retrospective transition method, applying the new guidance to the most current period presented. Since the Company has not yet generated revenues the adoption of the new standard resulted in no cumulative effect to the opening accumulated deficit balance. However, the adoption of this standard will impact the Company’s revenue recognition if revenue is generated in future periods. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic ): Restricted Cash In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic ): Classification of Certain Cash Receipts and Cash Payments, |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | ||
Schedule of basic and diluted net loss per share | Three Months Ended September 30, (Unaudited) Nine Months Ended September 30, (Unaudited) 2019 2018 2019 2018 Basic net loss per share: Net loss $ (4,931,125 ) $ (2,096,349 ) $ (3,800,227 ) $ (12,972,142 ) Weighted average common shares outstanding – basic 133,001,746 131,445,057 132,885,675 117,434,563 Net loss per share - basic $ (0.04 ) $ (0.02 ) $ (0.03 ) $ (0.11 ) Diluted net loss per share: Net loss (as adjusted) $ (4,931,125 ) $ (2,096,349 ) $ (5,656,982 ) $ (12,972,142 ) Weighted average common shares outstanding – diluted 133,001,746 131,445,057 167,690,989 117,434,563 Net loss per share - diluted $ (0.04 ) $ (0.02 ) $ (0.03 ) $ (0.11 ) | Year Ended December 31, 2018 2017 Net loss $ (19,194,236 ) $ (4,138,298 ) Weighted average common shares outstanding – basic and diluted 121,154,334 27,906,090 Net loss per share – basic and diluted $ (0.16 ) $ (0.11 ) |
Schedule of outstanding shares of common stock equivalents were excluded from the computation of diluted earnings per share | As of Three Months Ended September 30, (Unaudited) As of Nine Months Ended September 30, (Unaudited) 2019 2018 2019 2018 Stock options 4,512,715 1,850,073 4,512,715 1,850,073 Unvested restricted stock 1,093,501 1,918,501 1,093,501 1,918,501 Common shares underlying convertible debt 15,000,000 - 15,000,000 - Warrants 57,943,250 51,055,750 23,137,935 51,055,750 | Year Ended December 31, 2018 2017 Stock options 3,600,073 1,130,000 Unvested restricted stock 1,543,501 1,050,000 Common shares underlying convertible debt 5,000,000 4,000,000 Common shares underlying convertible preferred stock - 50,335,500 Warrants 53,130,750 11,649,500 |
Warrants and Derivative Liabi_2
Warrants and Derivative Liabilities (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Derivative Liabilities Line Items | ||
Schedule of warrants vested and outstanding | Amount Exercise Term Vested and Source Price (Years) Outstanding Pre 2015 Common Stock Warrants $ 1.00 6-10 4,000,000 2015 Common Stock Warrants $ 1.15-5.00 5-10 442,000 Common Stock Warrants to Series B Stockholders $ 0.00 5 1,031,250 2016 Common Stock Warrants to Service Providers $ 1.15 10 40,000 2016 Series C Common Stock Warrants to Placement Agent $ 0.40 5 125,000 2017 Series D Common Stock Warrants to Placement Agent $ 0.25 5 480,000 2017 Common Stock Warrants to Service Provider $ 0.41 5 125,000 2018 Emerald Financing Warrants $ 0.10 5 44,200,000 Emerald Multi Draw Credit Agreement Warrants $ 0.50 5 7,500,000 Total warrants vested and outstanding as of September 30, 2019 57,943,250 | Amount Exercise Term Vested and Source Price (Years) Outstanding Pre 2015 Common Stock Warrants $ 1.00 6-10 4,000,000 2015 Common Stock Warrants $ 1.15-$5.00 5-10 442,000 2015 Series B Financing Common Stock Warrants to Series B Stockholders $ 0.00 5 1,031,250 Placement Agent Warrants $ 0.00 5 187,500 2016 Common Stock Warrants to Service Providers $ 1.15 10 40,000 2016 Series C Common Stock Warrants to Placement Agent $ 0.40 5 125,000 2017 Series D Common Stock Warrants to Placement Agent $ 0.25 5 480,000 2017 Common Stock Warrants to Service Provider $ 0.41 5 125,000 2018 Emerald Financing Warrants $ 0.10 5 44,200,000 2018 Emerald Multi-Draw Credit Agreement Warrants $ 0.50 5 2,500,000 Total warrants vested and outstanding as of December 31, 2018 53,130,750 |
Schedule summary of the activity of derivative liabilities | Nine Months Ended September 30, 2019 December 31, 2018, Fair Value of Derivative Liabilities Fair Value of Derivative Liabilities Issued Change in Fair value of Derivative Liabilities Reclassification of Derivatives to Equity September 30, 2019, Fair Value of Derivative Liabilities Emerald Multi Draw Credit Agreement - compound derivative liability (1) $ 219,453 $ 516,058 $ (167,905 ) $ - $ 567,606 Emerald Financing - warrant liability (2) 15,251,413 - (1,895,193 ) - 13,356,220 Series B - warrant liability (3) 487,500 - 38,438 (144,375 ) 381,563 Total derivative liabilities $ 15,958,366 $ 516,058 $ (2,024,660 ) $ (144,375 ) $ 14,305,389 Less, noncurrent portion of derivative liabilities (219,453 ) (567,606 ) Current balance of derivative liabilities $ 15,738,913 $ 13,737,783 Nine Months Ended September 30, 2018 December 31, 2017, Fair Value of Derivative Liabilities Fair Value of Derivative Liabilities Issued Change in Fair value of Derivative Liabilities Reclassification of Derivatives to Equity September 30, 2018, Fair Value of Derivative Liabilities Emerald Financing - warrant liability (2) $ - $ 10,424,634 $ 192,808 $ - $ 10,617,442 Series B - warrant liability (3) 551,322 - 1,275,669 (1,333,866 ) 493,125 Emerald Convertible Promissory Note - conversion liability (4) 265,000 360,000 185,000 (810,000 ) - Series B Preferred Stock - conversion liability (5) 6,715 - - (6,715 ) - Total derivative liabilities $ 823,037 $ 10,784,634 $ 1,653,477 $ (2,150,581 ) $ 11,110,567 Less, noncurrent portion of derivative liabilities (551,322 ) - Current balance of derivative liabilities $ 271,715 $ 11,110,567 | Year Ended December 31, 2018 December 31, 2017, Fair Value of Derivative Liabilities Fair Value of Derivative Liabilities Issued Change in Fair value of Derivative Liabilities* Reclassification of Derivatives to Equity December 31, 2018, Fair Value of Derivative Liabilities Emerald Multi-Draw Credit Agreement - compound derivative liability (1) $ - $ 204,102 $ 15,351 $ - $ 219,453 Emerald Financing - warrant liability (2) - 10,424,634 4,826,779 - 15,251,413 Series B - warrant liability (3) 551,322 - 1,476,044 (1,539,866 ) 487,500 Emerald Convertible Promissory Note - conversion liability (4) 265,000 360,000 185,000 (810,000 ) - Series B Preferred Stock - conversion liability (5) 6,715 - - (6,715 ) - Total current derivative liabilities $ 823,037 $ 10,988,736 $ 6,503,174 $ (2,356,581 ) $ 15,958,366 Less, noncurrent portion of derivative liabilities (219,453 ) Current balance of derivative liabilities $ 15,738,913 Year Ended December 31, 2017 December 31, 2016, Fair Value of Derivative Liabilities Fair Value of Derivative Liabilities Issued Change in Fair value of Derivative Liabilities Reclassification of Derivatives to Equity December 31, 2017, Fair Value of Derivative Liabilities Series B - warrant liability (3) $ 1,112,308 $ - $ (560,986 ) $ - $ 551,322 Emerald Convertible Promissory Note - conversion liability (4) - 265,000 - - 265,000 Series B Preferred Stock - conversion liability (5) 118,821 - (102,848 ) (9,258 ) 6,715 Series F Preferred Stock - put option liability (6) - 103,364 (103,364 ) - - Total derivative liabilities $ 1,231,129 $ 368,364 $ (767,198 ) $ (9,258 ) $ 823,037 Less, noncurrent portion of derivative liabilities (551,322 ) Current balance of derivative liabilities $ 271,715 |
Schedule of the adjustment for the difference between the fair value of the warrant liabilities and the total proceeds received | Closing January 2018 February 2018 Total Initial Fair Value of Emerald Financing Warrant Liability $ 4,717,211 $ 5,707,423 $ 10,424,634 Less: Proceeds from Emerald Financing 1,500,000 1,750,000 3,250,000 Excess over proceeds adjustment $ 3,217,211 $ 3,957,423 $ 7,174,634 | Closing January 2018 February 2018 Total Initial Fair Value of Emerald Financing Warrant Liability $ 4,717,211 $ 5,707,423 $ 10,424,634 Less: Proceeds from Emerald Financing 1,500,000 1,750,000 3,250,000 Excess over proceeds adjustment $ 3,217,211 $ 3,957,423 $ 7,174,634 |
Series B warrant | ||
Derivative Liabilities Line Items | ||
Schedule of input and valuation technique used to value warrant liabilities | As of September 30, 2019 As of December 31, 2018 Dividend yield 0.00 % 0.00 % Volatility factor 79.4 % 93.0 % Risk-free interest rate 1.75 % 2.79 % Expected term (years) 0.89 1.64-1.65 Underlying common stock price $ 0.37 $ 0.40 | As of December 31, 2018 2017 Dividend yield 0.00 % 0.00 % Volatility factor 93.00 % 70.00 % Risk-free interest rate 2.786-2.789 1.39 % Expected term (years) 1.64-1.65 0.25 Weighted average fair value of warrants $ 0.40 $ 0.15 |
Emerald Financing Warrant Liability | ||
Derivative Liabilities Line Items | ||
Schedule of input and valuation technique used to value warrant liabilities | September 30, 2019 December 31, 2018 At Issuance Dividend yield 0.00 % 0.00 % 0.00 % Volatility factor 81.9-82.1 % 92.1-92.4 % 70.0 % Risk-free interest rate 1.56 % 2.49 % 2.45-2.60 % Expected term (years) 3.31-3.38 4.05-4.13 5.0 Underlying common stock price $ 0.37 $ 0.40 $ 0.29-0.30 | |
Emerald Multi-Draw Credit Agreement Warrants | ||
Derivative Liabilities Line Items | ||
Schedule of input and valuation technique used to value warrant liabilities | At Issuance Dividend yield 0.00 % Volatility factor 91.6-92.1 % Risk-free interest rate 2.23-2.51 % Expected term (years) 5.0 Underlying common stock price $ 0.33-0.69 | At Issuance Dividend yield 0.00 % Volatility factor 92.50 % Risk-free interest rate 2.96 % Expected term (years) 5.0 Underlying common stock price $ 0.36 |
Emerald Convertible Promissory Note Conversion Liability | ||
Derivative Liabilities Line Items | ||
Schedule of input and valuation technique used to value warrant liabilities | January 19, 2018 December 28, 2017 Dividend yield 0.00 % 0.00 % Volatility factor 70.0 % 70.0 % Risk-free interest rate 1.29 % 1.39 % Expected term (years) 0.003 0.25 Underlying common stock price $ 0.19 $ 0.15 | January 19, 2018 December 28, 2017 Dividend yield 0.00 % 0.00 % Volatility factor 70.00 % 70.00 % Risk-free interest rate 1.29 % 1.39 % Expected term (years) 0.003 0.25 Underlying common stock price $ 0.19 $ 0.15 |
Emerald Financing | ||
Derivative Liabilities Line Items | ||
Schedule of input and valuation technique used to value warrant liabilities | December 31, 2018 At issuance Dividend yield 0.00 % 0.00 % Volatility factor 92.1-92.4 70.00 % Risk-free interest rate 2.49 % 2.45-2.6 Expected term (years) 4.05-4.13 5.0 Underlying common stock price $ 0.40 $ 0.29-0.30 |
Convertible Debt - Related Pa_2
Convertible Debt - Related Party (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Debt Disclosure [Abstract] | ||
Schedule of convertible debt | As of September 30, 2019 As of December 31, 2018 Total principal value $ 6,000,000 $ 2,000,000 Unamortized debt discount (2,652,112 ) (587,617 ) Unamortized debt issuance costs (51,639 ) (51,423 ) Carrying value of total convertible debt - related party $ 3,296,249 $ 1,360,960 Less, noncurrent portion (3,296,249 ) (1,360,960 ) Current convertible debt - related party $ - $ - | As of December 31, 2018 2017 Total principal value $ 2,000,000 $ 500,000 Unamortized debt discount (587,617 ) (265,000 ) Unamortized debt issuance costs (51,423 ) - Carrying value of total convertible debt – related party $ 1,360,960 $ 235,000 Less, noncurrent portion (1,360,960 ) - Current convertible debt – related party $ - $ 235,000 |
Schedule of interest expense | Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Interest expense – stated rate $ 107,334 $ - $ 272,611 $ 3,100 Non-cash interest expense: Amortization of debt discount 190,886 - 429,355 34,608 Amortization of transaction costs 3,327 - 9,609 - $ 301,547 $ - $ 711,575 $ 37,708 | Years Ended December 31, 2018 2017 Coupon interest expense $ 26,433 $ 667 Noncash Interest Expense Amortization of debt discount 56,253 - Amortization of transaction costs 2,283 - Other interest expense 9,794 $ 94,763 $ 667 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Schedule of summary of stock option activity | Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Outstanding, December 31, 2018 2,405,000 $ 0.33 8.71 Granted 1,262,642 0.30 Cancelled (196,875 ) 0.26 Forfeited (153,125 ) 0.26 Outstanding, September 30, 2019 3,317,642 $ 0.33 8.59 Exercisable, September 30, 2019 1,807,333 $ 0.43 7.90 | |
Schedule of fair value assumptions of stock option granted | Nine Months Ended September 30, 2019 Dividend yield 0.00 % Risk-free interest rate 1.49 % Expected term (years) 5.65 Volatility 93.72 % | |
Schedule of RSA activity | Number of Shares Weighted Average Grant Date Fair Value Unvested, December 31, 2018 900,000 $ 0.19 Granted - - Released (450,000 ) 0.19 Unvested, September 30, 2019 450,000 $ 0.19 | |
Stock Option | Omnibus Incentive Plan 2014 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Schedule of shares available for future grant | Shares Available for Grant Available as of December 31, 2017 870,000 Share pool increase 10,190,774 Forfeited 427,000 Expired 48,000 Granted (2,393,501 ) Available as of December 31, 2018 9,142,273 | |
Schedule of summary of stock option activity | Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value* Outstanding, December 31, 2017 1,130,000 $ 0.60 6.89 Granted 1,750,000 0.30 Expired (48,000 ) 2.57 Forfeited (427,000 ) 0.66 Outstanding, December 31, 2018 2,405,000 $ 0.33 8.71 $ 182,000 Exercisable, December 31, 2018 859,417 $ 0.37 7.39 $ 36,458 Vested and Expected to Vest, December 31, 2018 2,405,000 $ 0.33 8.71 $ 182,000 *The 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 December 31, 2018 for those stock options for which the quoted market price was in excess of the exercise price (“in-the-money options”). | |
Schedule of fair value assumptions of stock option granted | Year Ended December 31, 2018 Dividend Yield – Risk-free interest rate 3.06–3.1 % Expected term (in years) 5.27-5.58 Volatility 70-93.6% | |
Stock Option | Awards Granted Outside the 2014 Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Schedule of fair value assumptions of stock option granted | At Issuance Dividend Yield – Risk-free interest rate 2.79 % Expected term (in years) 5.54 Volatility 70 % | |
Restricted stock awards | Omnibus Incentive Plan 2014 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Schedule of RSA activity | Number of Shares Weighted Average Grant Date Fair Value Unvested, December 31, 2017 1,050,000 $ 0.75 Granted 643,501 0.26 Released (1,050,000 ) 0.75 Unvested, December 31, 2018 643,501 $ 0.26 | |
Restricted stock awards | Awards Granted Outside the 2014 Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Schedule of RSA activity | Number of Shares Weighted Average Grant Date Fair Value Unvested, December 31, 2017 - $ - Granted 2,500,000 0.19 Released (1,600,000 ) 0.19 Unvested, December 31, 2018 900,000 $ 0.19 |
Net Loss Per Share of Common _2
Net Loss Per Share of Common Stock (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Earnings Per Share [Abstract] | ||
Schedule of basic and diluted net loss per share | Three Months Ended September 30, (Unaudited) Nine Months Ended September 30, (Unaudited) 2019 2018 2019 2018 Basic net loss per share: Net loss $ (4,931,125 ) $ (2,096,349 ) $ (3,800,227 ) $ (12,972,142 ) Weighted average common shares outstanding – basic 133,001,746 131,445,057 132,885,675 117,434,563 Net loss per share - basic $ (0.04 ) $ (0.02 ) $ (0.03 ) $ (0.11 ) Diluted net loss per share: Net loss (as adjusted) $ (4,931,125 ) $ (2,096,349 ) $ (5,656,982 ) $ (12,972,142 ) Weighted average common shares outstanding – diluted 133,001,746 131,445,057 167,690,989 117,434,563 Net loss per share - diluted $ (0.04 ) $ (0.02 ) $ (0.03 ) $ (0.11 ) | Year Ended December 31, 2018 2017 Net loss $ (19,194,236 ) $ (4,138,298 ) Weighted average common shares outstanding – basic and diluted 121,154,334 27,906,090 Net loss per share – basic and diluted $ (0.16 ) $ (0.11 ) |
Schedule of anti-dilutive securities | As of Three Months Ended September 30, (Unaudited) As of Nine Months Ended September 30, (Unaudited) 2019 2018 2019 2018 Stock options 4,512,715 1,850,073 4,512,715 1,850,073 Unvested restricted stock 1,093,501 1,918,501 1,093,501 1,918,501 Common shares underlying convertible debt 15,000,000 - 15,000,000 - Warrants 57,943,250 51,055,750 23,137,935 51,055,750 | Year Ended December 31, 2018 2017 Stock options 3,600,073 1,130,000 Unvested restricted stock 1,543,501 1,050,000 Common shares underlying convertible debt 5,000,000 4,000,000 Common shares underlying convertible preferred stock - 50,335,500 Warrants 53,130,750 11,649,500 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule for significant portions of deferred income tax assets | As of December 31, Current deferred tax assets/(liabilities): 2018 2017 State taxes $ 345 $ 336 Capitalized research and development costs 10,327 22,717 Other 187,377 295,265 Net operating loss 5,104,432 3,697,169 Gross deferred tax assets 5,302,481 4,015,487 Valuation allowance (5,302,481 ) (4,015,487 ) Total deferred tax assets $ - $ - |
Schedule of provision for income taxes on earnings subject to income taxes differs from the statutory Federal rate | As of December 31, 2018 2017 Expected income tax benefit at federal statutory tax rate $ (4,030,454 ) $ (1,082,444 ) State income taxes, net of federal benefit (319,816 ) (208,619 ) Change in fair value of Warrant 2,869,116 (268,519 ) Change in valuation allowance 1,286,995 (344,321 ) Stock Compensation 67,966 73,881 Other Perm Difference 127,835 12 Tax Cuts and Jobs Act - 1,831,610 Provision for Income Taxes $ 1,642 $ 1,600 |
Nature of Operations and Busi_2
Nature of Operations and Business Activities (Detail Textuals) - USD ($) | 9 Months Ended | 12 Months Ended | ||||||||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2019 | Mar. 31, 2019 | Oct. 05, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2016 | |
Nature Of Operations And Business Activities [Line Items] | ||||||||||
Accumulated deficit | $ (37,025,334) | $ (33,225,107) | $ (14,030,871) | |||||||
Stockholders' deficit | (16,402,461) | $ (10,155,120) | (15,562,252) | (3,569,506) | $ (11,641,442) | $ (27,864,191) | $ (8,245,279) | $ (5,753,979) | $ (2,914,235) | |
Working capital deficit | (12,540,955) | (13,985,284) | ||||||||
Cash and cash equivalents | 1,319,360 | 1,058,438 | 1,853,373 | 259,955 | ||||||
Proceeds from convertible multi-draw credit agreement | 3,990,699 | 1,946,293 | ||||||||
Net cash used in operating activities | $ (4,524,712) | $ (2,928,857) | (3,943,014) | $ (3,331,285) | ||||||
Aggregate gross proceeds | 900,000 | |||||||||
Emerald Financing | ||||||||||
Nature Of Operations And Business Activities [Line Items] | ||||||||||
Proceeds from Emerald Financing | 3,250,000 | |||||||||
Aggregate gross proceeds | $ 400,000 | |||||||||
Emerald Financing | Multi-Draw Credit Agreement | ||||||||||
Nature Of Operations And Business Activities [Line Items] | ||||||||||
Maximum borrowing capacity | $ 20,000,000 | |||||||||
Principal amounts of borrowing capacity | $ 250,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Basic net loss per share: | ||||||||||
Net loss | $ (4,931,125) | $ 15,905,290 | $ (14,774,392) | $ (2,096,349) | $ (2,662,000) | $ (8,213,793) | $ (3,800,227) | $ (12,972,142) | $ (19,194,236) | $ (3,094,298) |
Weighted average common shares outstanding � basic | 133,001,746 | 131,445,057 | 132,885,675 | 117,434,563 | ||||||
Net loss per share - basic | $ (0.04) | $ (0.02) | $ (0.03) | $ (0.11) | ||||||
Diluted net loss per share: | ||||||||||
Net loss (as adjusted) | $ (4,931,125) | $ (2,096,349) | $ (5,656,982) | $ (12,972,142) | ||||||
Weighted average common shares outstanding - diluted | 133,001,746 | 131,445,057 | 167,690,989 | 117,434,563 | ||||||
Net loss per share - diluted | $ (0.04) | $ (0.02) | $ (0.03) | $ (0.11) |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Warrant | ||||
Nature of Operations, Business Activities and Summary of Significant Accounting Policies [Line Items] | ||||
Anti-dilutive excluded from the calculation of diluted loss per common share | 57,943,250 | 51,055,750 | 23,137,935 | 51,055,750 |
Common shares underlying convertible debt | ||||
Nature of Operations, Business Activities and Summary of Significant Accounting Policies [Line Items] | ||||
Anti-dilutive excluded from the calculation of diluted loss per common share | 15,000,000 | 0 | 15,000,000 | 0 |
Stock Option | ||||
Nature of Operations, Business Activities and Summary of Significant Accounting Policies [Line Items] | ||||
Anti-dilutive excluded from the calculation of diluted loss per common share | 4,512,715 | 1,850,073 | 4,512,715 | 1,850,073 |
Unvested restricted stock | ||||
Nature of Operations, Business Activities and Summary of Significant Accounting Policies [Line Items] | ||||
Anti-dilutive excluded from the calculation of diluted loss per common share | 1,093,501 | 1,918,501 | 1,093,501 | 1,918,501 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Detail Textuals) | 12 Months Ended | ||||
Dec. 31, 2018USD ($)segment | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Property, Plant and Equipment [Line Items] | |||||
Restricted cash | $ 4,512 | $ 4,512 | $ 4,502 | $ 4,428 | |
Property, plant and equipment, depreciation methods | straight-line method | ||||
Number of reportable segments | segment | 1 | ||||
Fair value of advance under credit agreement | $ 3,176,824 | 8,247,319 | |||
Carrying value of total convertible debt - related party | $ 3,296,249 | ||||
Minimum | |||||
Property, Plant and Equipment [Line Items] | |||||
Estimated useful life | 2 years | ||||
Maximum | |||||
Property, Plant and Equipment [Line Items] | |||||
Estimated useful life | 3 years |
Warrants and Derivative Liabi_3
Warrants and Derivative Liabilities (Details) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Class of Warrant or Right [Line Items] | ||
Amount Vested and Outstanding | 57,943,250 | 53,130,750 |
Pre 2015 Common Stock Warrants | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 1 | $ 1 |
Amount Vested and Outstanding | 4,000,000 | 4,000,000 |
Pre 2015 Common Stock Warrants | Minimum | ||
Class of Warrant or Right [Line Items] | ||
Term (Years) | 6 years | 6 years |
Pre 2015 Common Stock Warrants | Maximum | ||
Class of Warrant or Right [Line Items] | ||
Term (Years) | 10 years | 10 years |
2015 Common Stock Warrants | ||
Class of Warrant or Right [Line Items] | ||
Amount Vested and Outstanding | 442,000 | 442,000 |
2015 Common Stock Warrants | Minimum | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 1.15 | $ 1.15 |
Term (Years) | 5 years | 5 years |
2015 Common Stock Warrants | Maximum | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 5 | $ 5 |
Term (Years) | 10 years | 10 years |
2015 series B financing Common Stock Warrants to Series B Stockholders | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 0 | $ 0 |
Term (Years) | 5 years | 5 years |
Amount Vested and Outstanding | 1,031,250 | 1,031,250 |
2015 Series B financing Placement Agent Warrants | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 0 | |
Term (Years) | 5 years | |
Amount Vested and Outstanding | 187,500 | |
2016 Common Stock Warrants to Service Providers | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 1.15 | $ 1.15 |
Term (Years) | 10 years | 10 years |
Amount Vested and Outstanding | 40,000 | 40,000 |
2016 Series C Common Stock Warrants to Placement Agent | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 0.40 | $ 0.40 |
Term (Years) | 5 years | 5 years |
Amount Vested and Outstanding | 125,000 | 125,000 |
2017 Series D Common Stock Warrants to Placement Agent | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 0.25 | $ 0.25 |
Term (Years) | 5 years | 5 years |
Amount Vested and Outstanding | 480,000 | 480,000 |
2017 Common Stock Warrants to Service Provider | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 0.41 | $ 0.41 |
Term (Years) | 5 years | 5 years |
Amount Vested and Outstanding | 125,000 | 125,000 |
2018 Emerald Financing Warrants | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 0.10 | $ 0.10 |
Term (Years) | 5 years | 5 years |
Amount Vested and Outstanding | 44,200,000 | 44,200,000 |
2018 Emerald Multi-Draw Credit Agreement Warrants | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 0.50 | $ 0.50 |
Term (Years) | 5 years | 5 years |
Amount Vested and Outstanding | 7,500,000 | 2,500,000 |
Warrants and Derivative Liabi_4
Warrants and Derivative Liabilities (Details 1) - Pricing Model - Emerald Multi-Draw Credit Agreement Warrants | Sep. 30, 2019Percent$ / shares | Nov. 01, 2018Percent$ / shares |
Class of Warrant or Right [Line Items] | ||
Underlying common stock price | $ / shares | $ 0.36 | |
Minimum | ||
Class of Warrant or Right [Line Items] | ||
Underlying common stock price | $ / shares | $ 0.33 | |
Maximum | ||
Class of Warrant or Right [Line Items] | ||
Underlying common stock price | $ / shares | $ 0.69 | |
Dividend yield | ||
Class of Warrant or Right [Line Items] | ||
Warrants and rights outstanding measurement input | 0 | 0 |
Volatility factor | ||
Class of Warrant or Right [Line Items] | ||
Warrants and rights outstanding measurement input | 92.50 | |
Volatility factor | Minimum | ||
Class of Warrant or Right [Line Items] | ||
Warrants and rights outstanding measurement input | 91.6 | |
Volatility factor | Maximum | ||
Class of Warrant or Right [Line Items] | ||
Warrants and rights outstanding measurement input | 92.1 | |
Risk-free interest rate | ||
Class of Warrant or Right [Line Items] | ||
Warrants and rights outstanding measurement input | 2.96 | |
Risk-free interest rate | Minimum | ||
Class of Warrant or Right [Line Items] | ||
Warrants and rights outstanding measurement input | 2.23 | |
Risk-free interest rate | Maximum | ||
Class of Warrant or Right [Line Items] | ||
Warrants and rights outstanding measurement input | 2.51 | |
Expected term (years) | ||
Class of Warrant or Right [Line Items] | ||
Expected Term | 5 years | 5 years |
Warrants and Derivative Liabi_5
Warrants and Derivative Liabilities (Details 2) - USD ($) | Nov. 01, 2017 | Feb. 16, 2018 | Jan. 19, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Fair Value Of Derivative Liabilities [Roll Forward] | |||||||
Fair Value of Derivative Liabilities | $ 823,037 | $ 15,958,366 | $ 823,037 | $ 823,037 | $ 1,231,129 | ||
Fair Value of Derivative Liabilities Issued | 516,058 | 10,784,634 | 10,988,736 | 368,364 | |||
Change in Fair value of Derivative Liabilities | (2,024,660) | 1,653,477 | 6,503,174 | (767,198) | |||
Reclassification of Derivatives to Equity | (144,375) | (2,150,581) | (2,356,581) | (9,258) | |||
Fair Value of Derivative Liabilities | 14,305,389 | 11,110,567 | 15,958,366 | 823,037 | |||
Less, noncurrent portion of derivative liabilities | (567,606) | 0 | (219,453) | (551,322) | |||
Current balance of derivative liabilities | 13,737,783 | 11,110,567 | 15,738,913 | 271,715 | |||
Emerald Multi-Draw Credit Agreement - compound derivative liability | |||||||
Fair Value Of Derivative Liabilities [Roll Forward] | |||||||
Fair Value of Derivative Liabilities | 0 | 219,453 | 0 | 0 | |||
Fair Value of Derivative Liabilities Issued | 516,058 | 204,102 | |||||
Change in Fair value of Derivative Liabilities | (167,905) | 15,351 | |||||
Reclassification of Derivatives to Equity | 0 | 0 | |||||
Fair Value of Derivative Liabilities | 567,606 | 219,453 | 0 | ||||
Series B Warrant Liability | |||||||
Fair Value Of Derivative Liabilities [Roll Forward] | |||||||
Fair Value of Derivative Liabilities | 551,322 | 487,500 | 551,322 | 551,322 | 1,112,308 | ||
Fair Value of Derivative Liabilities Issued | 0 | 0 | 0 | 0 | |||
Change in Fair value of Derivative Liabilities | 38,438 | 1,275,669 | 1,476,044 | (560,986) | |||
Reclassification of Derivatives to Equity | (144,375) | (1,333,866) | (1,539,866) | 0 | |||
Fair Value of Derivative Liabilities | 381,563 | 493,125 | 487,500 | 551,322 | |||
Emerald Convertible Promissory Note - conversion liability | |||||||
Fair Value Of Derivative Liabilities [Roll Forward] | |||||||
Fair Value of Derivative Liabilities | 265,000 | 0 | 265,000 | 265,000 | 0 | ||
Fair Value of Derivative Liabilities Issued | 360,000 | 360,000 | 265,000 | ||||
Change in Fair value of Derivative Liabilities | 185,000 | 185,000 | 0 | ||||
Reclassification of Derivatives to Equity | (810,000) | (810,000) | 0 | ||||
Fair Value of Derivative Liabilities | 0 | 0 | 265,000 | ||||
Series B conversion liability | |||||||
Fair Value Of Derivative Liabilities [Roll Forward] | |||||||
Fair Value of Derivative Liabilities | 6,715 | 0 | 6,715 | 6,715 | 118,821 | ||
Fair Value of Derivative Liabilities Issued | 0 | 0 | 0 | ||||
Change in Fair value of Derivative Liabilities | 0 | 0 | (102,848) | ||||
Reclassification of Derivatives to Equity | (6,715) | (6,715) | (9,258) | ||||
Fair Value of Derivative Liabilities | 0 | 0 | 6,715 | ||||
Series F Preferred Stock Put Option Liability | |||||||
Fair Value Of Derivative Liabilities [Roll Forward] | |||||||
Fair Value of Derivative Liabilities | 0 | 0 | 0 | 0 | |||
Fair Value of Derivative Liabilities Issued | $ 103,364 | 103,364 | |||||
Change in Fair value of Derivative Liabilities | (103,364) | ||||||
Reclassification of Derivatives to Equity | 0 | ||||||
Fair Value of Derivative Liabilities | 0 | ||||||
Emerald Financing - Warrant Liability | |||||||
Fair Value Of Derivative Liabilities [Roll Forward] | |||||||
Fair Value of Derivative Liabilities | 0 | 15,251,413 | 0 | 0 | |||
Fair Value of Derivative Liabilities Issued | $ 5,707,423 | $ 4,717,211 | 0 | 10,424,634 | 10,424,634 | ||
Change in Fair value of Derivative Liabilities | (1,895,193) | 192,808 | 4,826,779 | ||||
Reclassification of Derivatives to Equity | 0 | 0 | 0 | ||||
Fair Value of Derivative Liabilities | $ 13,356,220 | $ 10,617,442 | $ 15,251,413 | $ 0 |
Warrants and Derivative Liabi_6
Warrants and Derivative Liabilities (Details 3) - Monte Carlo simulations - Emerald Financing | Sep. 30, 2019Percent$ / shares | Dec. 31, 2018Percent$ / shares | Feb. 16, 2018Percent$ / shares | Jan. 19, 2018Percent$ / shares |
Class of Warrant or Right [Line Items] | ||||
Underlying common stock price | $ / shares | $ 0.37 | $ 0.40 | ||
Minimum | ||||
Class of Warrant or Right [Line Items] | ||||
Underlying common stock price | $ / shares | $ 0.29 | $ 0.29 | ||
Maximum | ||||
Class of Warrant or Right [Line Items] | ||||
Underlying common stock price | $ / shares | $ 0.30 | $ 0.30 | ||
Dividend yield | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants and rights outstanding measurement input | 0 | 0 | 0 | 0 |
Volatility factor | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants and rights outstanding measurement input | 70 | 70 | ||
Volatility factor | Minimum | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants and rights outstanding measurement input | 81.9 | 92.1 | ||
Volatility factor | Maximum | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants and rights outstanding measurement input | 82.1 | 92.4 | ||
Risk-free interest rate | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants and rights outstanding measurement input | 1.56 | 2.49 | ||
Risk-free interest rate | Minimum | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants and rights outstanding measurement input | 2.45 | 2.45 | ||
Risk-free interest rate | Maximum | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants and rights outstanding measurement input | 2.6 | 2.6 | ||
Expected term (years) | ||||
Class of Warrant or Right [Line Items] | ||||
Expected Term | 5 years | 5 years | ||
Expected term (years) | Minimum | ||||
Class of Warrant or Right [Line Items] | ||||
Expected Term | 3 years 3 months 22 days | 4 years 18 days | ||
Expected term (years) | Maximum | ||||
Class of Warrant or Right [Line Items] | ||||
Expected Term | 3 years 4 months 17 days | 4 years 1 month 17 days |
Warrants and Derivative Liabi_7
Warrants and Derivative Liabilities (Details 4) - USD ($) | 1 Months Ended | 9 Months Ended | 12 Months Ended | |||
Feb. 16, 2018 | Jan. 19, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Derivative Liabilities Line Items | ||||||
Initial Fair Value of Emerald Financing Warrant Liability | $ 516,058 | $ 10,784,634 | $ 10,988,736 | $ 368,364 | ||
Less: Proceeds from Emerald Financing | 3,233,099 | |||||
Emerald Financing - Warrant Liability | ||||||
Derivative Liabilities Line Items | ||||||
Initial Fair Value of Emerald Financing Warrant Liability | $ 5,707,423 | $ 4,717,211 | $ 0 | 10,424,634 | 10,424,634 | |
Less: Proceeds from Emerald Financing | 1,750,000 | 1,500,000 | 3,250,000 | 3,250,000 | ||
Excess over proceeds adjustment | $ 3,957,423 | $ 3,217,211 | $ 7,174,634 | $ 7,174,634 |
Warrants and Derivative Liabi_8
Warrants and Derivative Liabilities (Details 5) - Pricing Model - Series B warrant | Sep. 30, 2019Percent$ / shares | Dec. 31, 2018PercentUSD_per_warrants$ / shares | Dec. 31, 2017Percent$ / shares |
Class of Warrant or Right [Line Items] | |||
Expected Term | 3 months | ||
Underlying common stock price | $ / shares | $ 0.37 | $ 0.40 | $ 0.15 |
Dividend yield | |||
Class of Warrant or Right [Line Items] | |||
Warrants and rights outstanding measurement input | 0 | 0 | 0 |
Volatility factor | |||
Class of Warrant or Right [Line Items] | |||
Warrants and rights outstanding measurement input | 79.4 | 93 | 70 |
Risk-free interest rate | |||
Class of Warrant or Right [Line Items] | |||
Warrants and rights outstanding measurement input | 1.75 | 2.79 | 1.39 |
Risk-free interest rate | Minimum | |||
Class of Warrant or Right [Line Items] | |||
Warrants and rights outstanding measurement input | USD_per_warrants | 2.786 | ||
Risk-free interest rate | Maximum | |||
Class of Warrant or Right [Line Items] | |||
Warrants and rights outstanding measurement input | USD_per_warrants | 2.789 | ||
Expected term (years) | |||
Class of Warrant or Right [Line Items] | |||
Expected Term | 10 months 21 days | ||
Expected term (years) | Minimum | |||
Class of Warrant or Right [Line Items] | |||
Expected Term | 1 year 7 months 21 days | ||
Expected term (years) | Maximum | |||
Class of Warrant or Right [Line Items] | |||
Expected Term | 1 year 7 months 24 days |
Warrants and Derivative Liabi_9
Warrants and Derivative Liabilities (Details 6) - Pricing Model - Emerald Convertible Promissory Note - conversion liability | Jan. 19, 2018Percent$ / shares | Dec. 28, 2017Percent$ / shares |
Class of Warrant or Right [Line Items] | ||
Underlying common stock price | $ / shares | $ 0.19 | $ 0.15 |
Dividend yield | ||
Class of Warrant or Right [Line Items] | ||
Warrants and rights outstanding measurement input | 0 | 0 |
Volatility factor | ||
Class of Warrant or Right [Line Items] | ||
Warrants and rights outstanding measurement input | 70 | 70 |
Risk-free interest rate | ||
Class of Warrant or Right [Line Items] | ||
Warrants and rights outstanding measurement input | 1.29 | 1.39 |
Expected term (years) | ||
Class of Warrant or Right [Line Items] | ||
Expected Term | 1 day | 3 months |
Warrants and Derivative Liab_10
Warrants and Derivative Liabilities (Detail Textuals) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Feb. 28, 2018USD ($)Investor$ / sharesshares | Feb. 16, 2018USD ($)$ / sharesshares | Jan. 19, 2018USD ($)$ / sharesshares | Mar. 31, 2019USD ($) | Sep. 30, 2019USD ($)shares | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Jan. 31, 2017shares | |
Class of Warrant or Right [Line Items] | |||||||||
Financing transaction costs | $ (137,192) | $ (137,192) | |||||||
Warrants issued in connection with convertible multi draw credit agreement related party value | $ 716,110 | 315,080 | |||||||
Warrant vested aggregate fair value utilizing the Black-Scholes option pricing model | $ (2,024,660) | $ 1,653,477 | 6,503,174 | $ (767,198) | |||||
Warrant | |||||||||
Class of Warrant or Right [Line Items] | |||||||||
Value of common stock called by warrants | $ 30,000 | ||||||||
Total number of warrants issued | shares | 125,000 | ||||||||
Number of investors | Investor | 1 | ||||||||
Warrants issued in connection with convertible multi draw credit agreement related party value | $ 315,080 | ||||||||
Warrant | Emerald Health Sciences Inc | |||||||||
Class of Warrant or Right [Line Items] | |||||||||
Number of warrants issued | shares | 5,000,000 | ||||||||
Value of common stock called by warrants | $ 3,400,000 | $ 3,400,000 | $ 40,800,000 | ||||||
Total number of warrants issued | shares | 44,200,000 | 44,200,000 | 44,200,000 | ||||||
Warrant exercise price | $ / shares | $ 0.10 | $ 0.10 | $ 0.10 | ||||||
Term of warrant | 5 years | 5 years | 5 years | ||||||
Warrants issued in connection with convertible multi draw credit agreement related party value | $ 716,110 | ||||||||
Warrant vested aggregate fair value utilizing the Black-Scholes option pricing model | $ 1,830,573 | ||||||||
Series D Preferred Stock | Warrant | |||||||||
Class of Warrant or Right [Line Items] | |||||||||
Value of common stock called by warrants | $ 115,200 | ||||||||
Total number of warrants issued | shares | 480,000 | ||||||||
Securities purchase agreement | Emerald Health Sciences Inc | |||||||||
Class of Warrant or Right [Line Items] | |||||||||
Total number of warrants issued | shares | 20,400,000 | 20,400,000 | |||||||
Warrant exercise price | $ / shares | $ 0.10 | $ 0.10 | |||||||
Securities purchase agreement | Accredited investor | Emerald Health Sciences Inc | |||||||||
Class of Warrant or Right [Line Items] | |||||||||
Total number of warrants issued | shares | 3,400,000 | ||||||||
Warrant exercise price | $ / shares | $ 0.10 | ||||||||
Emerald Warrant Liabilities | |||||||||
Class of Warrant or Right [Line Items] | |||||||||
Value of common stock called by warrants | $ 5,700,000 | $ 4,700,000 |
Warrants and Derivative Liab_11
Warrants and Derivative Liabilities (Detail Textuals 1) - USD ($) | Nov. 01, 2017 | Jan. 31, 2018 | Jan. 19, 2018 | Dec. 28, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Class of Warrant or Right [Line Items] | ||||||||
Value of warrants | $ 1,297,991 | $ 982,911 | ||||||
Proceeds from Warrant Exercises | $ 98,700 | |||||||
Less, noncurrent portion of derivative liabilities | $ 567,606 | 0 | 219,453 | 551,322 | ||||
Change in fair market value at the re-measurement date recorded as non-operating income | (2,024,660) | 1,653,477 | 6,503,174 | (767,198) | ||||
Fair value of derivative liabilities | 516,058 | 10,784,634 | 10,988,736 | 368,364 | ||||
Series F Preferred Stock Put Option Liability | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Change in fair market value at the re-measurement date recorded as non-operating income | (103,364) | |||||||
Fair value of derivative liabilities | $ 103,364 | 103,364 | ||||||
Series B Preferred Stock - conversion liability | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Change in fair market value at the re-measurement date recorded as non-operating income | 0 | 0 | (102,848) | |||||
Provision for conversion of Series B preferred stock | 6,715 | 6,715,000 | ||||||
Fair value of derivative liabilities | 0 | 0 | 0 | |||||
Emerald Convertible Promissory Note - conversion liability | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Change in fair market value at the re-measurement date recorded as non-operating income | 185,000 | 185,000 | 0 | |||||
Fair value of derivative liabilities | $ 360,000 | 360,000 | $ 265,000 | |||||
Change in fair value of warrant liability | $ 360,000 | $ 265,000 | ||||||
Emerald Multi-Draw Credit Agreement Warrants | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Change in fair market value at the re-measurement date recorded as non-operating income | (167,905) | 15,351 | ||||||
Fair value of derivative liabilities | 516,058 | $ 204,102 | ||||||
Series B Warrants | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Number of warrants issued | 6,437,500 | |||||||
Warrant exercise price | $ 0.10 | $ 0 | $ 0.10 | |||||
Value of warrants | $ 2,935,800 | |||||||
Proceeds from financing between conversion liability and warrants | $ 5,000,000 | $ 5,000,000 | ||||||
Number of warrants exercisable | 987,000 | 3,806,750 | 4,231,750 | |||||
Proceeds from Warrant Exercises | $ 98,700 | |||||||
Series B Warrants | Bridge Loan | Secured promissory note and security agreement | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Initial conversion price | $ 0 | |||||||
2015 Common Stock Warrants | Minimum | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Warrant exercise price | $ 1.15 | $ 1.15 |
Convertible Debt - Related Pa_3
Convertible Debt - Related Party (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Short-term Debt [Line Items] | |||
Carrying value of total convertible debt - related party | $ 235,000 | ||
Less, noncurrent portion | $ (3,296,249) | $ (1,360,960) | |
Convertible debt | Emerald Health Sciences Inc | |||
Short-term Debt [Line Items] | |||
Total principal value | 6,000,000 | 2,000,000 | 500,000 |
Unamortized debt discount | (2,652,112) | (587,617) | (265,000) |
Unamortized debt issuance costs | (51,639) | (51,423) | 0 |
Carrying value of total convertible debt - related party | 3,296,249 | 1,360,960 | 235,000 |
Less, noncurrent portion | (3,296,249) | (1,360,960) | 0 |
Current convertible debt - related party | $ 0 | $ 0 | $ 235,000 |
Convertible Debt - Related Pa_4
Convertible Debt - Related Party (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Debt Disclosure [Abstract] | ||||||
Coupon interest expense | $ 107,334 | $ 0 | $ 272,611 | $ 3,100 | $ 26,433 | $ 667 |
Noncash Interest Expense | ||||||
Amortization of debt discount | 190,886 | 0 | 429,355 | 34,608 | 56,253 | 0 |
Amortization of transaction costs | 3,327 | 0 | 9,609 | 0 | 2,283 | 0 |
Other interest expense | 9,794 | |||||
Interest Expense | $ 301,547 | $ 0 | $ 711,575 | $ 37,708 | $ 94,763 | $ 667 |
Convertible Debt - Related Pa_5
Convertible Debt - Related Party (Detail Textuals) - USD ($) | Nov. 01, 2018 | Oct. 05, 2018 | Sep. 30, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | |||||||
Warrants | $ 1,297,991 | $ 982,911 | |||||
Derivative liability | $ 14,305,389 | 15,958,366 | $ 11,110,567 | 823,037 | $ 1,231,129 | ||
Convertible multi-draw credit agreement issuance costs | 53,707 | ||||||
Multi-Draw Credit Agreement | |||||||
Debt Instrument [Line Items] | |||||||
Warrants | $ 2,000,000 | $ 2,000,000 | |||||
Number of warrant issued | 2,500,000 | 5,000,000 | |||||
Allocation of debt on the basis of relative fair value | $ 1,684,920 | $ 3,283,890 | |||||
Allocation of warrant on the basis of relative fair value | 315,080 | 716,110 | |||||
Beneficial conversion feature | 90,080 | 1,584,850 | |||||
Derivative liability | $ 204,102 | 516,058 | |||||
Convertible multi-draw credit agreement issuance costs | $ 63,007 | $ 53,707 | |||||
Unamortized debt discount period | 3 years 7 days | 3 years 9 months 4 days | |||||
Carrying value of the equity component | $ 5,550,000 | $ 2,000,000 | |||||
Emerald Financing | |||||||
Debt Instrument [Line Items] | |||||||
Derivative liability | 13,356,220 | $ 15,251,413 | $ 10,617,442 | $ 0 | |||
Emerald Financing | Multi-Draw Credit Agreement | |||||||
Debt Instrument [Line Items] | |||||||
Maximum amount that can be borrowed over the life of the credit facility | $ 20,000,000 | ||||||
The annual stated interest rate on the debt instrument | 7.00% | ||||||
Maturity date | Oct. 5, 2022 | ||||||
Conversion price | $ 0.40 | ||||||
Unused portion of the credit facility | $ 18,000,000 | $ 14,000,000 | |||||
Warrant coverage on the debt facility | 50.00% | ||||||
Warrant exercise price | $ 0.50 |
Convertible Debt - Related Pa_6
Convertible Debt - Related Party (Detail Textuals 1) | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Jan. 19, 2019$ / sharesshares | Jan. 19, 2018$ / sharesshares | Dec. 28, 2017USD ($)Day$ / shares | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Short-term Debt [Line Items] | |||||||
Aggregate gross proceeds | $ 900,000 | ||||||
Proceeds from secured convertible promissory note - related party | $ 400,000 | 400,000 | $ 500,000 | ||||
Funding of remaining bridge loan | $ 9,301 | 154,092 | |||||
Convertible debt | $ 235,000 | ||||||
Loss on extinguishment of secured convertible promissory note - related party | $ (590,392) | $ (590,392) | |||||
Emerald Health Sciences Inc | |||||||
Short-term Debt [Line Items] | |||||||
Initial conversion price | $ / shares | $ 0.10 | ||||||
Number of notes converted into common stock | shares | 9,000,000 | ||||||
Effective interest rate | 13.94% | 13.94% | 13.94% | ||||
Emerald Health Sciences Inc | Subsequent Event | |||||||
Short-term Debt [Line Items] | |||||||
Initial conversion price | $ / shares | $ 0.10 | ||||||
Number of notes converted into common stock | shares | 9,000,000 | ||||||
Bridge Loan | Secured promissory note and security agreement | Emerald Health Sciences Inc | |||||||
Short-term Debt [Line Items] | |||||||
Aggregate gross proceeds | $ 900,000 | ||||||
Bridge loan interest rate | 12.00% | ||||||
Initial conversion price | $ / shares | $ 0.10 | $ 0.10 | |||||
Proceeds from secured convertible promissory note - related party | $ 500,000 | ||||||
Funding of remaining bridge loan | 400,000 | ||||||
Convertible debt | 265,000 | ||||||
Additional conversion liability | $ 360,000 | ||||||
Number of trading days as of financing close date | Day | 1 |
Stockholders' Deficit and Cap_2
Stockholders' Deficit and Capitalization (Detail Textuals) - USD ($) | 1 Months Ended | 9 Months Ended | 12 Months Ended | |||
Feb. 16, 2018 | Jan. 19, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Equity [Line Items] | ||||||
Common stock, shares authorized | 500,000,000 | 500,000,000 | 500,000,000 | |||
Common stock gross proceeds | $ 3,233,099 | |||||
Aggregate gross proceeds | $ 900,000 | |||||
Emerald financing issuance costs | 154,092 | |||||
Warrant liability, issuance costs | $ (137,192) | (137,192) | ||||
Reduction to APIC from the issuance of common stock | $ 16,900 | 16,900 | ||||
Bridge Loan | $ 900,000 | |||||
Temporary Equity, Shares Authorized | 20,000,000 | 20,000,000 | 20,000,000 | |||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | ||||
Emerald Health Sciences Inc | ||||||
Equity [Line Items] | ||||||
Debt Instrument, Convertible, Conversion Price | $ 0.10 | |||||
Securities purchase agreement | Emerald Health Sciences Inc | ||||||
Equity [Line Items] | ||||||
Common stock issued | 15,000,000 | 15,000,000 | ||||
Number of warrants issued | 20,400,000 | 20,400,000 | ||||
Warrant exercise price | $ 0.10 | $ 0.10 | ||||
Common stock gross proceeds | $ 1,500,000 | |||||
Subsequent financing purchase price, description | The Securities Purchase Agreement also provides that in the case of a subsequent financing in which the purchase price is less than $0.10 per share, Emerald shall be issued additional shares in order to protect against anti-dilution. | |||||
Term of warrants | 5 years | |||||
Securities purchase agreement | Emerald Health Sciences Inc | Accredited investor | ||||||
Equity [Line Items] | ||||||
Common stock issued | 2,500,000 | |||||
Number of warrants issued | 3,400,000 | |||||
Warrant exercise price | $ 0.10 | |||||
Common stock gross proceeds | $ 1,750,000 | |||||
Term of warrants | 5 years | |||||
Securities purchase agreement | Emerald Health Sciences Inc | Bridge Loan [Member] | ||||||
Equity [Line Items] | ||||||
Aggregate gross proceeds | $ 900,000 | |||||
Subsequent financing purchase price, description | The Securities Purchase Agreement also provides that in the case of a subsequent financing in which the purchase price is less than $0.10 per share, Emerald Health Sciences shall be issued additional shares in order to protect against anti-dilution. | |||||
Bridge Loan | $ 900,000 | |||||
Debt Instrument, Convertible, Conversion Price | $ 0.10 |
Stockholders' Deficit and Cap_3
Stockholders' Deficit and Capitalization (Detail Textuals 1) - USD ($) | 1 Months Ended | 2 Months Ended | 3 Months Ended | 9 Months Ended | 10 Months Ended | 12 Months Ended | ||||||||
Dec. 28, 2017 | Nov. 30, 2017 | Mar. 31, 2017 | Jan. 31, 2017 | Aug. 31, 2015 | Dec. 28, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Mar. 31, 2017 | Sep. 30, 2019 | Sep. 30, 2018 | Oct. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Equity [Line Items] | ||||||||||||||
Common stock issued for services (in shares) | 605,000 | |||||||||||||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | ||||||||
General and administrative expense | $ 990,110 | $ 978,329 | $ 187,550 | $ 3,267,037 | $ 3,284,880 | $ 4,362,557 | $ 3,547,927 | |||||||
Redeemable Convertible Series B Preferred Stock | ||||||||||||||
Equity [Line Items] | ||||||||||||||
Number of shares converted | 1,250 | 420.325 | 777.125 | 2,833.55 | 1,197.45 | |||||||||
Number of shares issued in conversion | 2,802,166 | 3,108,500 | 28,385,000 | 5,910,666 | ||||||||||
Conversion price | $ 0.80 | $ 0.15 | $ 0.25 | |||||||||||
Series C Preferred Stock | ||||||||||||||
Equity [Line Items] | ||||||||||||||
Number of shares converted | 386 | |||||||||||||
Number of shares issued in conversion | 1,544,000 | |||||||||||||
Conversion price | $ 0.25 | |||||||||||||
Series D Preferred Stock | ||||||||||||||
Equity [Line Items] | ||||||||||||||
Number of shares converted | 200 | 1,000 | ||||||||||||
Number of shares issued in conversion | 2,000,000 | 4,000,000 | ||||||||||||
Conversion price | $ 0.10 | $ 0.15 | $ 0.25 | $ 0.10 | $ 0.25 | |||||||||
Series F Preferred Stock | ||||||||||||||
Equity [Line Items] | ||||||||||||||
Number of shares converted | 2,000 | |||||||||||||
Number of shares issued in conversion | 20,000,000 | |||||||||||||
Conversion price | $ 0.10 | $ 0.15 | $ 0.10 | |||||||||||
Series B Warrant Liability | ||||||||||||||
Equity [Line Items] | ||||||||||||||
Intrinsic value of warrant exercises | $ 1,514,175 | |||||||||||||
Common stock issued | 5,218,750 |
Stockholders' Deficit and Cap_4
Stockholders' Deficit and Capitalization (Detail Textuals 2) - USD ($) | 1 Months Ended | 2 Months Ended | 9 Months Ended | 10 Months Ended | 12 Months Ended | ||||
Dec. 28, 2017 | Nov. 30, 2017 | Aug. 31, 2015 | Dec. 28, 2017 | Sep. 30, 2018 | Oct. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2019 | |
Equity [Line Items] | |||||||||
Preferred stock, shares authorized | 20,000,000 | 20,000,000 | 20,000,000 | ||||||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 | ||||||
Conversion of Stock, Amount Converted | $ 1,947,227 | $ 1,947,228 | $ 1,386,000 | ||||||
Redeemable Convertible Series B Preferred Stock | |||||||||
Equity [Line Items] | |||||||||
Number of preferred stock and warrants sold | 5,000 | ||||||||
Number of common stock called by warrant | 6,250,000 | ||||||||
Aggregate purchase price | $ 1,000 | ||||||||
Proceeds from issuance of preferred stock and warrants | $ 5,000,000 | ||||||||
Number of shares converted | 1,250 | 420.325 | 777.125 | 2,833.55 | 1,197.45 | ||||
Conversion price | $ 0.80 | $ 0.15 | $ 0.25 | ||||||
Reduction of conversion price of preferred stock | $ 0.10 | $ 0.15 | |||||||
Conversion of Stock, Amount Converted | $ 28,335,500 | ||||||||
Liquidation preference value | $ 2,833,550 | ||||||||
Percentage of conversion amount | 115.00% | ||||||||
Value of final judgment rendered against company | $ 100,000 | ||||||||
Preferred stock, conversion rate | 6666.67:1 | 4000:1 | |||||||
Number of shares issued in conversion | 2,802,166 | 3,108,500 | 28,385,000 | 5,910,666 | |||||
Redeemable Convertible Series B Preferred Stock | Converted rate of 10,000:1 | |||||||||
Equity [Line Items] | |||||||||
Number of shares converted | 2,833.5 | ||||||||
Conversion price | $ 0.10 | ||||||||
Preferred stock, conversion rate | 10,000:1 | ||||||||
Number of shares issued in conversion | 28,335,000 | ||||||||
Redeemable Convertible Series B Preferred Stock | Converted rate of 1,000,000:1 | |||||||||
Equity [Line Items] | |||||||||
Number of shares converted | 0.05 | ||||||||
Conversion price | $ 0.001 | ||||||||
Preferred stock, conversion rate | 1,000,000:1 | ||||||||
Number of shares issued in conversion | 50,000 |
Stockholders' Deficit and Cap_5
Stockholders' Deficit and Capitalization (Detail Textuals 3) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Dec. 28, 2017 | Nov. 30, 2017 | Jan. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Equity [Line Items] | |||||
Beneficial conversion feature upon issuance of Series C Preferred Stock | $ 175,000 | ||||
Series D Preferred Stock | |||||
Equity [Line Items] | |||||
Number of preferred stock and warrants sold | 1,200 | ||||
Conversion price | $ 0.10 | $ 0.15 | $ 0.25 | $ 0.10 | $ 0.25 |
Aggregate purchase price | $ 1,000 | ||||
Proceeds from issuance of preferred stock and warrants | $ 1,200,000 | ||||
Number of common stock issued upon conversion of preferred stock | 4,000 | ||||
Liquidation provision common stock equivalent shares | 2,000,000 | ||||
Liquidation provision common stock equivalent value | $ 200,000 | ||||
Shares issued, price per share (in shares) | 0.10 | ||||
Beneficial conversion feature upon issuance of Series C Preferred Stock | $ 536,000 | ||||
Number of shares converted | 200 | 1,000 | |||
Number of shares issued in conversion | 2,000,000 | 4,000,000 | |||
Preferred stock, conversion rate | 10,000:1 | 4000:1 |
Stockholders' Deficit and Cap_6
Stockholders' Deficit and Capitalization (Detail Textuals 4) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Dec. 28, 2017 | Nov. 30, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Equity [Line Items] | ||||
Beneficial conversion feature upon issuance of Series C Preferred Stock | $ 175,000 | |||
Series F Preferred Stock | ||||
Equity [Line Items] | ||||
Number of preferred stock and warrants sold | 2,000 | |||
Aggregate purchase price | $ 1,000 | |||
Proceeds from issuance of preferred stock and warrants | $ 2,000,000 | |||
Number of common stock issued upon conversion of preferred stock | 6,666.67 | |||
Conversion price | $ 0.10 | $ 0.15 | $ 0.10 | |
Preferred stock, conversion rate | 10,000:1 | |||
Percentage of shares to be redeemed | 150.00% | |||
Proceeds from triggering transaction | $ 6,000,000 | |||
Redemption amount percentage | 50.00% | |||
Percentage of conversion amount | 130.00% | |||
Value of final judgment rendered against company | $ 100,000 | |||
Beneficial conversion feature upon issuance of Series C Preferred Stock | $ 333,333 | |||
Number of shares converted | 2,000 | |||
Number of shares issued in conversion | 20,000,000 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - Omnibus Incentive Plan 2014 | 12 Months Ended |
Dec. 31, 2018shares | |
Shares Available for Grant | |
Outstanding, Balance at the beginning | 870,000 |
Share pool increase | 10,190,774 |
Forfeited | 427,000 |
Expired | 48,000 |
Granted | (2,393,501) |
Outstanding, Balance at the ending | 9,142,273 |
Stock-Based Compensation (Det_2
Stock-Based Compensation (Details 1) - Omnibus Incentive Plan 2014 - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | ||
Number of Shares | ||||
Outstanding, Balance at the beginning | 9,142,273 | 870,000 | ||
Granted | 2,393,501 | |||
Expired | (48,000) | |||
Forfeited | (427,000) | |||
Outstanding, Balance at the ending | 9,142,273 | 870,000 | ||
Stock Option | ||||
Number of Shares | ||||
Outstanding, Balance at the beginning | 2,405,000 | 1,130,000 | ||
Granted | 1,262,642 | 1,750,000 | ||
Expired | (196,875) | (48,000) | ||
Forfeited | (153,125) | (427,000) | ||
Outstanding, Balance at the ending | 3,317,642 | 2,405,000 | 1,130,000 | |
Exercisable | 1,807,333 | 859,417 | ||
Vested and Expected to Vest | 2,405,000 | |||
Weighted Average Exercise Price | ||||
Outstanding, Balance at the beginning | $ 0.33 | $ 0.60 | ||
Exercise Price | 0.30 | 0.30 | ||
Expired | 0.26 | 2.57 | ||
Forfeited | 0.26 | 0.66 | ||
Outstanding, Balance at the ending | 0.33 | 0.33 | $ 0.60 | |
Exercisable | $ 0.43 | 0.37 | ||
Vested and expected to vest | $ 0.33 | |||
Weighted Average Remaining Contractual Term (Years) | 8 years 7 months 2 days | 8 years 8 months 16 days | 6 years 10 months 21 days | |
Weighted Average Remaining Contractual Term (Years), Exercisable | 7 years 10 months 24 days | 7 years 4 months 21 days | ||
Weighted Average Remaining Contractual Term (Years), Vested and Expected to Vest | 8 years 8 months 16 days | |||
Aggregate Intrinsic Value | [1] | $ 182,000 | ||
Aggregate Intrinsic Value, Exercisable | [1] | 36,458 | ||
Aggregate Intrinsic Value, Vested and Expected to Vest | [1] | $ 182,000 | ||
[1] | The 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 December 31, 2018 for those stock options for which the quoted market price was in excess of the exercise price ("in-the-money options"). |
Stock-Based Compensation (Det_3
Stock-Based Compensation (Details 2) - Stock Option | 1 Months Ended | 9 Months Ended | 12 Months Ended |
May 25, 2018 | Sep. 30, 2019 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Dividend Yield | 0.00% | ||
Risk-free interest rate | 2.79% | ||
Expected term (in years) | 5 years 6 months 15 days | ||
Volatility | 70.00% | ||
Omnibus Incentive Plan 2014 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Dividend Yield | 0.00% | 0.00% | |
Risk-free interest rate | 1.49% | ||
Expected term (in years) | 5 years 7 months 24 days | ||
Volatility | 93.72% | ||
Omnibus Incentive Plan 2014 | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Risk-free interest rate | 3.06% | ||
Expected term (in years) | 5 years 3 months 7 days | ||
Volatility | 70.00% | ||
Omnibus Incentive Plan 2014 | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Risk-free interest rate | 3.10% | ||
Expected term (in years) | 5 years 6 months 29 days | ||
Volatility | 93.60% |
Stock-Based Compensation (Det_4
Stock-Based Compensation (Details 3) - Restricted stock awards - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Number of Shares | ||
Unvested, Balance at the beginning | 900,000 | 0 |
Granted | 0 | 2,500,000 |
Released | (450,000) | (1,600,000) |
Unvested, Balance at the ending | 450,000 | 900,000 |
Weighted Average Grant Date Fair Value | ||
Unvested, Balance at the beginning | $ 0.19 | $ 0 |
Granted | 0 | 0.19 |
Released | 0.19 | 0.19 |
Unvested, Balance at the ending | $ 0.19 | $ 0.19 |
Omnibus Incentive Plan 2014 | ||
Number of Shares | ||
Unvested, Balance at the beginning | 643,501 | 1,050,000 |
Granted | 643,501 | |
Released | (1,050,000) | |
Unvested, Balance at the ending | 643,501 | |
Weighted Average Grant Date Fair Value | ||
Unvested, Balance at the beginning | $ 0.26 | $ 0.75 |
Granted | 0.26 | |
Released | 0.75 | |
Unvested, Balance at the ending | $ 0.26 |
Stock-Based Compensation (Det_5
Stock-Based Compensation (Detail Textuals) - USD ($) | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||||
May 25, 2018 | Feb. 28, 2018 | Jan. 18, 2018 | Oct. 31, 2014 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Restricted Stock Agreements | K2C, Inc. | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of restricted common stock vested | 350,000 | 325,000 | |||||
Stock compensation expenses | $ 98,042 | $ 98,042 | |||||
Separation and release agreement | K2C, Inc. | Immediate vesting | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of restricted common stock vested | 900,000 | ||||||
Stock compensation expenses | 216,000 | ||||||
Restricted stock awards | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of restricted common stock vested | 450,000 | 1,600,000 | |||||
Number of restricted common stock granted | 0 | 2,500,000 | |||||
Restricted stock awards | K2C, Inc. | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Stock compensation expenses | $ 216,000 | ||||||
Number of restricted common stock granted | 900,000 | ||||||
Omnibus Incentive Plan 2014 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares reserved for future grants | 8,248,381 | ||||||
Omnibus Incentive Plan 2014 | Stock Option | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares reserved for future grants | 3,200,000 | ||||||
Weighted-average fair value of stock options granted | $ 0.22 | $ 0.30 | |||||
Percentage of share reserve of the number of issued and outstanding shares | 10.00% | ||||||
Omnibus Incentive Plan 2014 | Restricted stock awards | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of restricted common stock vested | 1,050,000 | ||||||
Number of restricted common stock granted | 643,501 | ||||||
Elizabeth Berecz, CFO | Restricted Stock Agreements | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares reserved for future grants | 350,000 | ||||||
Stock compensation expenses | 97,183 | $ 97,183 | |||||
Elizabeth Berecz, CFO | Restricted stock awards | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Stock compensation expenses | $ 184,800 | $ 184,800 | |||||
Number of restricted common stock granted | 700,000 | 700,000 |
Stock-Based Compensation (Det_6
Stock-Based Compensation (Detail Textuals 1) - Douglas Cesario, CFO - Restricted Stock Agreements - USD ($) | 1 Months Ended | 12 Months Ended |
May 25, 2018 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 1,195,073 | |
Exercise Price | $ 0.25 | |
Fair market value of stock options | $ 200,172 | |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | 25.00% | |
Description of stock option agreement | The options vest 25% on July 23, 2018, and the remaining 75% vest 1/33 on each of the next 33 months thereafter. | |
Options exercised | 434,572 | |
Aggregate intrinsic value of the awards exercisable | $ 67,359 | |
Options vested | 1,195,073 | |
Aggregate intrinsic value of the awards expected to vest | $ 185,236 | |
Remaining contractual life | 9 years 6 months 26 days |
Stock-Based Compensation (Det_7
Stock-Based Compensation (Detail Textuals 2) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
May 25, 2018 | Feb. 28, 2018 | Jan. 18, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Total stock-based compensation expense | $ 170,106 | $ 154,508 | $ 514,683 | $ 484,720 | $ 674,961 | $ 608,676 | |||
Total amount of unrecognized compensation cost | $ 478,442 | $ 478,442 | $ 748,616 | ||||||
Recognized weighted average period | 11 months 26 days | 1 year 5 months 5 days | |||||||
Restricted stock awards | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Number of restricted common stock granted | 0 | 2,500,000 | |||||||
Fair market value of shares granted | $ 475,000 | ||||||||
Vesting percentage | 50.00% | ||||||||
Restricted stock awards | K2C, Inc. | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Number of restricted common stock granted | 900,000 | ||||||||
Stock compensation expenses | $ 216,000 | ||||||||
Restricted stock awards | Dr. Brian S. Murphy | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Number of restricted common stock granted | 900,000 | ||||||||
Restricted stock awards | Elizabeth Berecz, CFO | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Number of restricted common stock granted | 700,000 | 700,000 | |||||||
Stock compensation expenses | $ 184,800 | $ 184,800 | |||||||
Restricted stock awards | Cosmas N. Lykos | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Number of restricted common stock granted | 900,000 |
Net Loss Per Share of Common _3
Net Loss Per Share of Common Stock (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Earnings Per Share [Abstract] | ||
Net loss | $ (19,194,236) | $ (4,138,298) |
Weighted average common shares outstanding - basic and diluted | 121,154,334 | 27,906,090 |
Net loss per share - basic and diluted | $ (0.16) | $ (0.11) |
Net Loss Per Share of Common _4
Net Loss Per Share of Common Stock (Details 1) - shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Stock Option | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive excluded from the calculation of diluted loss per common share | 3,600,073 | 1,130,000 |
Unvested restricted stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive excluded from the calculation of diluted loss per common share | 1,543,501 | 1,050,000 |
Common shares underlying convertible debt | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive excluded from the calculation of diluted loss per common share | 5,000,000 | 4,000,000 |
Common shares underlying convertible preferred stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive excluded from the calculation of diluted loss per common share | 0 | 50,335,500 |
Warrant | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive excluded from the calculation of diluted loss per common share | 53,130,750 | 11,649,500 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Current deferred tax assets/(liabilities): | ||
State taxes | $ 345 | $ 336 |
Capitalized research and development costs | 10,327 | 22,717 |
Other | 187,377 | 295,265 |
Net operating loss | 5,104,432 | 3,697,169 |
Gross deferred tax assets | 5,302,481 | 4,015,487 |
Valuation allowance | (5,302,481) | (4,015,487) |
Total deferred tax assets | $ 0 | $ 0 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Expected income tax benefit at federal statutory tax rate | $ (4,030,454) | $ (1,082,444) | ||
State income taxes, net of federal benefit | (319,816) | (208,619) | ||
Change in fair value of Warrant | 2,869,116 | (268,519) | ||
Change in valuation allowance | 1,286,995 | (344,321) | ||
Stock Compensation | 67,966 | 73,881 | ||
Other Perm Difference | 127,835 | 12 | ||
Tax Cuts and Jobs Act | 0 | 1,831,610 | ||
Provision for Income Taxes | $ 1,600 | $ 1,642 | $ 1,642 | $ 1,600 |
Income Taxes (Detail Textuals)
Income Taxes (Detail Textuals) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Corporate tax rate | 21.00% | 35.00% |
Reduction in deferred tax asset balance | $ 1,831,610 | |
Federal operating loss carry forwards | $ 18,242,333 | |
California net operating loss carry forwards | $ 18,236,157 |
Significant Contracts (Detail T
Significant Contracts (Detail Textuals) | Jan. 10, 2017USD ($) | Dec. 14, 2015USD ($)License_agreement | Dec. 31, 2018USD ($) | Jul. 31, 2018USD ($) | Sep. 29, 2014USD ($)License_agreement | Sep. 30, 2019USD ($) | Nov. 30, 2018USD ($) | Aug. 31, 2018USD ($) |
Significant Contracts [Line Items] | ||||||||
Annual fees for license agreement | $ 75,000 | |||||||
UM 5050 pro-drug agreements | University of Mississippi | Intellectual Property | ||||||||
Significant Contracts [Line Items] | ||||||||
Payment for upfront fees | $ 100,000 | |||||||
Number of license agreements | License_agreement | 3 | |||||||
Notice period for termination | 60 days | |||||||
Annual fees for license agreement | $ 25,000 | |||||||
Aggregate milestone payments if milestones achieved | $ 700,000 | |||||||
UM 8930 analogue agreements | University of Mississippi | Intellectual Property | ||||||||
Significant Contracts [Line Items] | ||||||||
Payment for upfront fees | 200,000 | |||||||
Number of license agreements | License_agreement | 2 | |||||||
Notice period for termination | 60 days | |||||||
Annual fees for license agreement | $ 25,000 | 200,000 | ||||||
Aggregate milestone payments if milestones achieved | $ 700,000 | |||||||
UM 5070 license agreement | University of Mississippi | Intellectual Property | ||||||||
Significant Contracts [Line Items] | ||||||||
Term of agreement | 1 year | |||||||
Notice period for termination | 60 days | |||||||
Annual fees for license agreement | $ 25,000 | |||||||
Aggregate milestone payments if milestones achieved | $ 700,000 | |||||||
Research Agreement | University of Mississippi | ||||||||
Significant Contracts [Line Items] | ||||||||
Payments due for aggregate amount | $ 155,156 | |||||||
Master service agreement | Glauconix Biosciences, Inc | ||||||||
Significant Contracts [Line Items] | ||||||||
Payments due for aggregate amount | $ 180,424 | |||||||
Letter agreement ("Agreement") | AMRI | ||||||||
Significant Contracts [Line Items] | ||||||||
Estimated agreement fees and expenses | $ 64,200 | |||||||
Incremental agreement fees and expenses | $ 71,800 | |||||||
Um 5050 Pro-Drug And Um 8930 Analog Agreements | University of Mississippi | Intellectual Property | Milestone 1 | ||||||||
Significant Contracts [Line Items] | ||||||||
Term of agreement | 30 days | |||||||
Aggregate milestone payments if milestones achieved | $ 100,000 | |||||||
Um 5050 Pro-Drug And Um 8930 Analog Agreements | University of Mississippi | Intellectual Property | Milestone 2 | ||||||||
Significant Contracts [Line Items] | ||||||||
Term of agreement | 30 days | |||||||
Aggregate milestone payments if milestones achieved | $ 200,000 | |||||||
Um 5050 Pro-Drug And Um 8930 Analog Agreements | University of Mississippi | Intellectual Property | Milestone 3 | ||||||||
Significant Contracts [Line Items] | ||||||||
Term of agreement | 30 days | |||||||
Aggregate milestone payments if milestones achieved | $ 400,000 |
Commitments and Contingencies (
Commitments and Contingencies (Detail Textuals) - USD ($) | Mar. 01, 2018 | Jul. 12, 2017 | May 03, 2017 | Apr. 01, 2017 | Nov. 30, 2017 | Nov. 30, 2015 | Sep. 30, 2014 | Jun. 30, 2014 | Sep. 30, 2018 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2019 |
Operating Leased Assets [Line Items] | |||||||||||||
Rent expense | $ 2,600 | $ 32,128 | $ 7,559 | $ 9,267 | $ 43,102 | $ 253,437 | |||||||
Lease expenses per month | 19,654 | $ 300 | |||||||||||
Value of furniture lease payment | $ 1,650 | ||||||||||||
Loss on disposal of fixed assets | $ (804) | $ (803) | (1,788) | ||||||||||
Total expense incurred under agreement | $ 0 | $ 220,000 | |||||||||||
Convertible preferred stock, shares authorized | 20,000,000 | 20,000,000 | |||||||||||
Convertible preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | |||||||||||
Series E Preferred Stock | |||||||||||||
Operating Leased Assets [Line Items] | |||||||||||||
Number of common shares issued to individual investors | 1,000,000 | ||||||||||||
Convertible preferred stock, par value (in dollars per share) | $ 0.001 | ||||||||||||
Shares issued, price per share (in dollars per share) | $ 20 | ||||||||||||
Aggregate gross proceeds | $ 20,000,000 | ||||||||||||
Guarantor failed to pay within 90 days of notice of purchaser | $ 20,000,000 | ||||||||||||
Independent contractor agreement | K2C, Inc. | |||||||||||||
Operating Leased Assets [Line Items] | |||||||||||||
Monthly fee | $ 20,000 | $ 10,000 | |||||||||||
Total expense incurred under agreement | $ 220,000 | $ 210,000 |
Related Party Matters (Detail T
Related Party Matters (Detail Textuals) - USD ($) | Feb. 06, 2018 | Apr. 01, 2017 | Feb. 28, 2018 | Jun. 30, 2014 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Related Party Transaction [Line Items] | ||||||||||
Total expense incurred under agreement | $ 0 | $ 220,000 | ||||||||
Independent contractor agreement | K2C, Inc. | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Monthly fee | $ 20,000 | $ 10,000 | ||||||||
Total expense incurred under agreement | $ 220,000 | $ 210,000 | ||||||||
Independent contractor agreement | Emerald Health Sciences Inc | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Initial term of agreement | 10 years | |||||||||
Total expense incurred under agreement | $ 150,000 | 150,000 | $ 450,000 | 400,000 | 550,000 | |||||
Percentage of accrued interest on outstanding balance | 12.00% | |||||||||
Separation and release agreement | K2C, Inc. | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Lump sum payment in agreement | $ 180,000 | |||||||||
Recognized additional stock based compensation expense of restricted stock and option awards | 112,270 | 112,270 | ||||||||
Separation and release agreement | K2C, Inc. | Immediate vesting | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Number of restricted common stock vested | 900,000 | |||||||||
Separation and release agreement | K2C, Inc. | October 20, 2015 | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Number of restricted common stock vested | 325,000 | |||||||||
Separation and release agreement | K2C, Inc. | November 21, 2014 | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Number of restricted common stock vested | 125,000 | |||||||||
Consulting Agreement | Emerald Health Sciences Inc | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Initial term of agreement | 1 year | |||||||||
Total expense incurred under agreement | $ 15,000 | $ 45,000 | $ 45,000 | |||||||
Annual fee | $ 60,000 | |||||||||
Period of discretionary annual bonus payable to contractor after each fiscal year end | 120 days |
Subsequent Events (Detail Textu
Subsequent Events (Detail Textuals) - USD ($) | 1 Months Ended | 12 Months Ended | ||||
Dec. 20, 2019 | Dec. 19, 2019 | Feb. 28, 2019 | Feb. 01, 2019 | Jan. 31, 2019 | Dec. 31, 2017 | |
Subsequent Event [Line Items] | ||||||
Value of warrants issued | $ 145,200 | |||||
Subsequent Event | Pharmaceuticals International, Inc. Agreement | ||||||
Subsequent Event [Line Items] | ||||||
Estimated initial payment for contract | $ 72,500 | |||||
Subsequent Event | RRD International Agreement | ||||||
Subsequent Event [Line Items] | ||||||
Amount of payments due under the contract | 78,680 | |||||
Amount of pass through expenses and consulting fees | $ 22,000 | |||||
Subsequent Event | 2nd Draw on Multi Draw Credit Facility | ||||||
Subsequent Event [Line Items] | ||||||
Value of warrants issued | $ 2,000,000 | |||||
Number of warrants issued | 2,500,000 | |||||
Warrant exercise price | $ 0.50 | |||||
Subsequent Event | Noramco Agreement | ||||||
Subsequent Event [Line Items] | ||||||
Upfront payment | $ 146,386 | |||||
Subsequent Event | Independent Contractor Services Agreement | Dr. Avtar Dhillon | ||||||
Subsequent Event [Line Items] | ||||||
Monthly fee | $ 10,000 | |||||
Monthly fee paid each month | 5,000 | |||||
Monthly fee accruing from effective date | $ 5,000 | |||||
Subsequent Event | Warrant Exercise Agreement | Emerald Health Sciences Inc | ||||||
Subsequent Event [Line Items] | ||||||
Number of warrants exercised | 40,800,000 | |||||
Aggregate exercise price of warrants | $ 4,080,000 | |||||
Remaining balance of credit facility | $ 2,014,500 |