Document and Entity Information
Document and Entity Information | 3 Months Ended |
Mar. 31, 2020 | |
Document and Entity Information [Abstract] | |
Entity Registrant Name | Emerald Bioscience, Inc. |
Entity Central Index Key | 0001516551 |
Entity Filer Category | Non-accelerated Filer |
Document Type | S-1/A |
Amendment Flag | false |
Entity Small Business | true |
Entity Emerging Growth Company | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets | |||
Cash | $ 563,864 | $ 1,829,977 | $ 1,853,373 |
Restricted cash | 4,538 | 4,538 | 4,512 |
Prepaid expenses | 99,067 | 152,695 | 93,193 |
Other current assets | 3,888 | 7,550 | 2,609 |
Total current assets | 671,357 | 1,994,760 | 1,953,687 |
Property and equipment, net | 1,618 | 1,983 | 3,445 |
Total assets | 672,975 | 1,996,743 | 1,957,132 |
Current liabilities | |||
Accounts payable | 937,266 | 129,809 | 15,597 |
Accounts payable to related party | 40,903 | 10,000 | |
Accrued interest due to related party | 35,645 | ||
Other current liabilities | 405,344 | 420,406 | 184,461 |
Derivative liabilities | 248,052 | 410,603 | 15,738,913 |
Total current liabilities | 1,667,210 | 970,818 | 15,938,971 |
Noncurrent liabilities | |||
Convertible multi-draw credit agreement - related party, net of discount | 517,780 | 387,070 | 1,360,960 |
Derivative liabilities, non-current | 190,882 | 90,797 | 219,453 |
Total liabilities | 2,375,872 | 1,448,685 | 17,519,384 |
Commitments and contingencies | |||
Stockholders' (deficit) equity | |||
Preferred stock, $0.001 par value; 20,000,000 shares authorized; no shares issued and outstanding at March 31, 2020, December 31, 2019 and December 31, 2018 | 0 | 0 | 0 |
Common stock, $0.001 par value; 500,000,000 shares authorized; 183,207,747 and 182,895,247 and 133,907,747 shares issued and outstanding at March 31, 2020, December 31, 2019 and December 31, 2018, respectively | 183,208 | 182,895 | 133,908 |
Additional paid-in-capital | 32,628,837 | 32,538,445 | 17,528,947 |
Accumulated deficit | (34,514,942) | (32,173,282) | (33,225,107) |
Total stockholders' (deficit) equity | (1,702,897) | 548,058 | (15,562,252) |
Total liabilities and stockholders' (deficit) equity | $ 672,975 | $ 1,996,743 | $ 1,957,132 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Statement Of Financial Position [Abstract] | |||
Preferred stock (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 | 0 |
Preferred stock, shares outstanding | 0 | 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 | 183,207,747 | 182,895,247 | 133,907,747 |
Common stock, shares outstanding | 183,207,747 | 182,895,247 | 133,907,747 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (unaudited) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Operating expenses | ||||
Research and development | $ 799,612 | $ 320,986 | $ 2,237,956 | $ 329,966 |
General and administrative | 1,411,596 | 1,194,081 | 4,394,622 | 4,362,557 |
Total operating expenses | 2,211,208 | 1,515,067 | 6,632,578 | 4,692,523 |
Operating loss | (2,211,208) | (1,515,067) | (6,632,578) | (4,692,523) |
Other expense (income) | ||||
Change in fair value of derivative liabilities | 35,903 | 12,820,618 | (9,734,759) | 6,503,174 |
Fair value of derivative liabilities in excess of proceeds | (322,644) | 322,644 | 7,174,634 | |
Financing transaction costs | (137,192) | |||
Loss on extinguishment of debt - related party | 725,425 | 590,392 | ||
Interest expense | 166,355 | 116,063 | 1,000,713 | 94,763 |
Interest income | (26) | (84) | ||
Total other expense, net | (130,452) | 13,259,325 | (7,686,003) | 14,500,071 |
Income (loss) before income taxes | 1,053,425 | (19,192,594) | ||
Provision for income taxes | 1,600 | 1,642 | ||
Net loss and comprehensive loss | $ (2,341,660) | $ (14,774,392) | $ 1,051,825 | $ (19,194,236) |
Loss per common share: | ||||
Basic (in dollars per share) | $ (0.01) | $ (0.11) | $ 0.01 | $ (0.16) |
Diluted (in dollars per share) | $ (0.01) | $ (0.11) | $ (0.05) | $ (0.16) |
Weighted average shares of common stock outstanding used to compute loss per share: | ||||
Basic | 182,256,966 | 132,729,246 | 135,154,931 | 121,154,334 |
Diluted (in shares) | 183,737,415 | 132,729,246 | 169,560,265 | 121,154,334 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flows from operating activities: | ||||
Net income (loss) | $ (2,341,660) | $ (14,774,392) | $ 1,051,825 | $ (19,194,236) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Depreciation | 365 | 366 | 1,462 | 1,544 |
Stock-based compensation expense | 64,142 | 171,493 | 680,455 | 674,961 |
Loss on disposal of assets | 803 | |||
Change in fair value of derivative liabilities | (35,903) | 12,820,618 | (9,734,759) | 6,503,174 |
Fair value of derivative liabilities in excess of proceeds | 0 | 322,644 | 322,644 | 7,174,634 |
Financing transaction costs | 137,192 | |||
Loss on extinguishment of debt - related party | (725,425) | (590,392) | ||
Loss on common stock issuance from conversion of accrued interest | 9,794 | |||
Amortization of debt discount | 130,710 | 56,952 | 629,293 | 58,536 |
Changes in assets and liabilities | ||||
Prepaid expenses | 53,628 | (208,619) | (59,502) | 198,235 |
Other current assets | 3,662 | (4,941) | (2,609) | |
Accounts payable | 807,457 | 152,684 | 124,212 | (85,324) |
Accounts payable to related party | 30,903 | 10,000 | ||
Accrued interest due to related party | 35,645 | |||
Other current liabilities | (15,062) | 27,134 | 225,945 | (10,110) |
Net cash used in operating activities | (1,266,113) | (1,431,120) | (6,027,941) | (3,943,014) |
Cash flows from investing activities: | ||||
Purchases of property and equipment | (4,385) | |||
Net cash used in investing activities | (4,385) | |||
Cash flows from financing activities: | ||||
Proceeds from the issuance of Common stock and warrants, net of $80,628 and $154,092 of issuance costs in 2019 and 2018, respectively | 1,919,372 | 3,095,908 | ||
Proceeds from warrant exercises | 4,080,000 | 98,700 | ||
Proceeds from secured convertible promissory note - related party | 400,000 | |||
Proceeds from convertible multi-draw credit agreement - related party, net of issuance costs | 3,990,699 | 3,990,699 | 1,946,293 | |
Prepayment of convertible multi-draw credit agreement - related party | (3,985,500) | |||
Net cash provided by financing activities | 3,990,699 | 6,004,571 | 5,540,901 | |
Net (decrease) increase in cash and restricted cash | (1,266,113) | 2,559,579 | (23,370) | 1,593,502 |
Cash and restricted cash, beginning of year | 1,834,515 | 1,857,885 | 1,857,885 | 264,383 |
Cash and restricted cash, end of year | 568,402 | 4,417,464 | 1,834,515 | 1,857,885 |
Reconciliation of cash and restricted cash: | ||||
Cash | 563,864 | 4,412,952 | 1,829,977 | 1,853,373 |
Restricted cash | 4,538 | 4,512 | 4,538 | 4,512 |
Total cash and restricted cash shown in the consolidated statements of cash flows | 568,402 | 4,417,464 | 1,834,515 | 1,857,885 |
Cash paid during the year for: | ||||
Interest | 59,111 | 371,420 | 23,334 | |
Income taxes | 1,600 | 1,642 | ||
Supplemental disclosures of non-cash financing activities | ||||
Beneficial conversion feature on convertible multi-draw credit agreement | 1,584,850 | 1,584,850 | 90,080 | |
Proceeds allocated to equity classified warrants issued with convertible multi-draw credit agreement | 716,110 | 716,110 | 315,080 | |
Fair value of compound derivative liability bifurcated from convertible multi-draw credit agreement | $ 193,414 | 193,414 | 204,102 | |
Reclassification of warrant liabilities to equity from exercise of warrants | $ 26,563 | $ 6,077,698 | 1,539,866 | |
Fair value of warrants issued in connection with financings | 10,424,634 | |||
Conversion of outstanding preferred stock into common stock | 1,947,228 | |||
Fair value of common stock issued in extinguishment of convertible debt and accrued interest | 1,713,766 | |||
Conversion of outstanding preferred stock subject to redemption into common stock | $ 828,915 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parentheticals) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Statement of Cash Flows [Abstract] | ||
Common stock issuance costs | $ 80,628 | $ 154,092 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) | Convertible Series F Preferred Stock | Convertible Series D Preferred Stock | Redeemable Convertible Series B Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2017 | $ 1,777,781 | $ 169,447 | $ 822,201 | $ 33,623 | $ 10,427,742 | $ (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 | 674,961 | 674,961 | |||||
Common stock issued for services | $ 3,143 | (3,143) | |||||
Common stock issued for services (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 $0.10 and $0.001 per share | $ (822,201) | $ 28,385 | 800,530 | 828,915 | |||
Conversion of Series B Preferred Stock and conversion liability into common stock at $0.10 and $0.001 per share (in shares) | (2,834) | 28,385,000 | |||||
Conversion of Series D Preferred Stock to common stock at $0.10 per share | $ (169,447) | $ 2,000 | 167,447 | 169,447 | |||
Conversion of Series D Preferred Stock to common stock at $0.10 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 | $ 9,038 | 1,714,522 | 1,723,560 | ||||
Conversion of secured convertible promissory note - related party and accrued interest (in shares) | 9,037,667 | ||||||
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 | |||||
Series B warrant exercises | $ 5,219 | 1,633,347 | 1,638,566 | ||||
Series B warrant exercises (in shares) | 5,218,750 | ||||||
Net loss for the year | (19,194,236) | (19,194,236) | |||||
Balance at Dec. 31, 2018 | $ 133,908 | 17,528,947 | (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 at Dec. 31, 2018 | $ 133,908 | 17,528,947 | (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 | 680,455 | 680,455 | |||||
Issuance of common stock and warrants, net of issuance costs of $80,628 | $ 8,000 | 1,911,372 | 1,919,372 | ||||
Issuance of common stock and warrants, net of issuance costs of $80,628 (in shares) | 8,000,000 | ||||||
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 | |||||
Series B warrant exercises | $ 187 | 144,188 | 144,375 | ||||
Series B warrant exercises (in shares) | 187,500 | ||||||
Exercise of Emerald financing warrants | $ 40,800 | 9,972,523 | 10,013,323 | ||||
Exercise of Emerald financing warrants (in shares) | 40,800,000 | ||||||
Net loss for the year | 1,051,825 | 1,051,825 | |||||
Balance at Dec. 31, 2019 | $ 182,895 | 32,538,445 | (32,173,282) | 548,058 | |||
Balance (in shares) at Dec. 31, 2019 | 182,895,247 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Stock based compensation expense | 64,142 | 64,142 | |||||
Series B warrant exercises | $ 313 | 26,250 | 26,563 | ||||
Series B warrant exercises (in shares) | 312,500 | ||||||
Net loss for the year | (2,341,660) | (2,341,660) | |||||
Balance at Mar. 31, 2020 | $ 183,208 | $ 32,628,837 | $ (34,514,942) | $ (1,702,897) | |||
Balance (in shares) at Mar. 31, 2020 | 183,207,747 |
CONSOLIDATED STATEMENTS OF ST_2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (Parentheticals) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Share issuance costs | $ 16,900 | |
Shares and warrants issuance costs | $ 80,628 | |
Series F Preferred Stock | ||
Conversion of preferred stock price per share | $ 0.10 | |
Series D Preferred Stock | ||
Conversion of preferred stock price per share | 0.10 | |
Series B Preferred Stock | ||
Conversion of preferred stock price per share | 0.10 | |
Conversion liability into common stock per share | $ 0.001 |
Nature of Operations and Busine
Nature of Operations and Business Activities | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
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 January 2018, the Company entered into a securities purchase agreement with Emerald Health Sciences, Inc. (“Emerald Health Sciences”), pursuant to which Emerald Health Sciences purchased a majority of the equity interest in the Company, resulting in a change in control (the “Emerald Financing”). 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. 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. 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 December 17, 2019, Dr. Avtar Dhillon resigned as the Chairman of the Company’s Board and the Company entered into a Board Observer Agreement with Emerald Health Sciences. Refer to Note 7 - Related Party Matters for additional information. The Company 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. As of March 31, 2020, 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 March 31, 2020, had an accumulated deficit of $34,514,942, a stockholders’ deficit of $1,702,897 and a working capital deficit of $995,853. $563,864 as compared to $1,829,977 as of December 31, 2019. As the Company approaches its first clinical trial, it expects to ramp up research and development spending and projects to increase cash used in operating activities. However, based on the Company’s current cash position and expected cash requirements, without obtaining additional funding during the second quarter of 2020, management believes that the Company will not have enough funds to meet its current obligations or commence clinical studies. 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 sufficient additional 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). On April 29, 2020, the Company entered into an Amended and Restated Multi-Draw Credit Agreement (the “Amended Credit Agreement”) with Emerald Health Sciences, which amends and restates the Credit Agreement. The Amended Credit Agreement provides for a credit facility in the principal amount of up to $20,000,000, which includes, without limitation, the advances totaling $6,000,000 that were granted prior to the amendment and advances of at least $150,000 for each of May, June and July 2020. Prior to the date of the Amended Credit Agreement, the Company had made three drawdowns in an aggregate principal amount of $6,000,000, and had issued to Emerald Health Sciences warrants to purchase an aggregate of 7,500,000 shares of common stock of the Company at an exercise price of $0.50 per share of Common Stock, in accordance with the terms of the Credit Agreement. Immediately upon entering into the Amended Credit Agreement, the Company effected a fourth advance in the amount of $150,000. The advance bears an interest at 7% per annum and matures on October 5, 2022. The Company intends to use the net proceeds of the advance for general corporate and working capital purposes. The Lender has elected that the fourth advance will not be convertible into shares of Common Stock and gave notice to the Company that no warrant will be issued in connection with the advance at this time. On April 22, 2020, the Company entered into a Paycheck Protection Program Promissory Note (the “PPP Note”) in the principal amount of $116,700 (the “PPP Loan”) from City National Bank (the “PPP Loan Lender”). The PPP Loan was obtained pursuant to the Paycheck Protection Program (the “PPP”) of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) administered by the U.S. Small Business Administration (“SBA”). Funds from the PPP Loan may only be used by the Company for payroll costs, costs for continuing group healthcare benefits, mortgage interest payments, rent, utility and interest on any other debt obligations that were incurred before February 15, 2020. All or a portion of principal of the PPP Loan may be forgiven by the SBA and the PPP Loan Lender upon application by the Company within 60 days but not later than 120 days after loan approval and upon documentation of expenditures in accordance with the SBA requirements. 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. Effective March 23, 2020, the Company approved a plan to defer up to 50% of the members of senior management’s compensation indefinitely. Certain members of senior management have accepted the plan and the aggregate deferred compensation, together with a retention bonus of 10% of the amount being deferred will be payable to senior management when decided by the Board. Effective March 30, 2020, the Directors of the Company entered into agreements to defer payment of 100% of their Board of Director and committee fees indefinitely. The accrued fees, plus a 10% bonus of such accrued fees will be payable to the members of the Board within 30 days of the Board of Directors determining that the Company has been sufficiently financed to make such payments. In December 2019, a novel strain of coronavirus (“COVID-19”) emerged in Wuhan, China. Since then, it has spread to the United States and infections have been reported around the world. On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 as a global pandemic, which continues to spread throughout the United States, Australia and around the world, where the Company has operations and conducts laboratory research and clinical studies. In response to the outbreak, federal and state authorities in the United States have introduced various recommendations and measures to try to limit the pandemic, including travel restrictions, border closures, nonessential business closures, quarantines, self-isolations, shelters-in-place and social distancing. The COVID-19 outbreak and the response of governmental authorities to try to limit it are having a significant impact on the private sector and individuals, including unprecedented business, employment and significant economic disruptions to the global financial markets. These disruptions are likely to impact the Company’s ability to raise additional capital and obtain the necessary funds. Notably, the Company relies on third-party manufacturers to produce its product candidates. The manufacturing of the active pharmaceutical ingredient of NB1111 is conducted in the United States. Formulation of the eye drop for testing is also performed in the United States but can rely on regulatory-accepted excipients that can be sourced from countries outside the United States, such as China. In lieu of the recent pandemic of a COVID-19, there could possibly be an impact on sourcing materials that are part of the eye drop formulation, as well as impacting volunteer and/or patient recruitment in Australia for clinical studies. Therefore, the Company has shifted its first-in-human studies of NB1111 from the second half of 2020, to the 2021 timeframe. After considering the plans to alleviate substantial doubt, management has concluded that there is substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. | 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 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. 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. 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 December 17, 2019, Dr. Avtar Dhillon resigned as the Chairman of the Company’s Board and the Company entered into a Board Observer Agreement with Emerald Health Sciences. Refer to Note 11 - Related Party Matters for additional information. The Company 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. As of December 31, 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 December 31, 2019, had an accumulated deficit of $32,173,282. As of December 31, 2019 and filing date of our 2019 Annual Report on Form 10K, the Company had cash in the amount of $1,829,977 During the year ended December 31, 2019, the Company received net cash proceeds of $3,990,699 from the Credit Agreement (defined below) with Emerald Health Sciences and raised $1,919,372 in net proceeds pursuant to the sale of common stock and warrants under a registered direct offering. However, the Company’s cash flows from its financing efforts have been offset by cash used in operating activities of $6,027,941 for the year ended December 31, 2019. The Company’s continued existence is dependent on its ability to raise sufficient additional 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). As of December 31, 2019, under the Credit Agreement, the Company may draw down up to the remaining amount under the Credit Agreement of $14,000,000 $250,000. The drawdowns are subject to approval by the Company’s Board, which is controlled by the directors of Emerald Health Sciences. We do not consider the facility available until advance requests are approved, drawn down and funded. The Credit Agreement is still in place, however, there is no guarantee of continued funding. 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. Effective March 23, 2020, the Company approved a plan to defer 50% of senior management’s compensation indefinitely. If the members of senior management accept the plan, the aggregate deferred compensation, together with a retention bonus of 10% of the amount being deferred will be payable to senior management when decided by the Board. This measure, in conjunction with management’s plan to negotiate extended payment terms with its vendors and service providers, is intended to slow cash burn. The Company’s Board plans on further assessing the financial condition of the Company to determine what additional measures, if any, will be implemented. If the Company is unable to secure adequate additional funding, the Company may be forced to reduce spending further, liquidate assets where possible, suspend or curtail planned programs or cease operations. On March 11, 2020, the World Health Organization declared the outbreak of a respiratory disease caused by a new COVID-19 as a “pandemic”. Notably, the Company relies on third-party manufacturers to produce its product candidates. The manufacturing of the active pharmaceutical ingredient of NB1111 is conducted in the United States. Formulation of the eye drop for testing is also performed in the United States but can rely on regulatory-accepted excipients that can be sourced from countries outside the United States, such as China. In lieu of the recent pandemic of a COVID-19, there could possibly be an impact on sourcing materials that are part of the eye drop formulation, as well as impacting volunteer and/or patient recruitment in Australia for clinical studies. Therefore, the Company anticipates shifting its first-in-human studies of the lead drug candidate, NB1111, from the second half of 2020, to the 2021 timeframe. Additionally, COVID-19 has caused significant disruptions to the global financial markets which could impact the Company’s ability to raise additional capital. After considering the plans to alleviate substantial doubt, management has concluded that there is substantial doubt about the Company's ability to continue as a going concern within one year after the date that the financial statements are issued. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
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, 2019, 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 months ended March 31, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020 or any future periods. The Condensed Consolidated Balance Sheet as of December 31, 2019 was derived from the Company’s audited financial statements as of December 31, 2019, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 20, 2020. The unaudited financial statements included in this Quarterly Report on Form 10-Q 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, 2019, 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’ equity, net losses and cash flows. Use of Estimates The preparation of the 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, 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 Australia, 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 Credit Agreement 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 are valued on a recurring basis utilizing Level 3 inputs. Advances under the Credit Agreement 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). As of March 31, 2020 and December 31, 2019, the fair value of the advances under the Credit Agreement was $1,639,245 and $1,877,938, respectively. The carrying amount of the liability at March 31, 2020 and December 31, 2019, was $517,780 and $387,070, respectively, and is included in Convertible multi-draw credit agreement - related party, net of discount in the Company’s Condensed Consolidated 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 the 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 expense (income) 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; 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 Expense Stock-based compensation expense 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. Net Income (Loss) Per Share of Common Stock The Company applies FASB ASC No. 260, Earnings per Share Three Months Ended March 31, 2020 2019 Stock options 4,512,715 3,600,073 Unvested restricted stock 643,501 1,093,501 Common shares underlying convertible debt 5,125,363 15,000,000 Warrants 23,593,356 58,130,750 Recent Accounting Pronouncements In December 2019, the FASB issued ASU No. 2019-12 Income Taxes Recently Adopted Accounting Standards In November 2018, the FASB issued ASU No. 2018-08 Collaborative Arrangements Revenue from Contracts with Customers | 2. Summary of Significant Accounting Policies Basis of Presentation The preparation of financial statements in conformity with U.S. 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 the prior year’s total assets, total liabilities, total stockholders’ deficit, net loss, and cash flows. 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 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, 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 Australia, 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 values of those investments approximate their fair value due to their short maturity and liquidity. Cash includes 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, 2019, the Company has no cash equivalents. Restricted Cash A deposit of $4,538 and $4,512 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 Credit Agreement 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 are valued on a recurring basis utilizing Level 3 inputs. Advances under the Credit Agreement 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). As of December 31, 2019 and 2018, the fair value of the advances under the Credit Agreement was $1,877,938 and $3,176,824, respectively. The carrying amount of the liability at December 31, 2019 and 2018, was $387,070 and $1,360,960, respectively, and is included in Convertible multi-draw credit agreement - related party, net of discount in the Company’s Consolidated Balance Sheets. Property and Equipment, Net Property and equipment, net, consist 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 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, net operating loss carryforwards (the “NOLs”) and other tax credit carryforwards. 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 Consolidated Statements of Comprehensive Income (Loss) in the period incurred. When necessary, the Company recognizes interest and penalties related to income tax matters in income tax expense. 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, 2019 and 2018. As a result of this valuation allowance, there are no income tax benefits reflected in the accompanying Consolidated Statements of Comprehensive Income (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. 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 (“ASC 470-20”) if it is determined that the conversion feature should not be bifurcated from their host instruments. Under ASC 470-20, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the difference between the fair value of the underlying common stock at the commitment date and the embedded effective conversion price. When the Company determines that the embedded conversion option should be bifurcated from its host instrument, the embedded feature is accounted for in accordance with ASC 815. Under ASC 815, a portion of the proceeds received upon the issuance of the hybrid contract is allocated to the fair value of the derivative. The derivative is subsequently marked to market at each reporting date based on current fair value, with the changes in fair value reported in the results of operations. 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 make 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 Comprehensive Income (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; 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 Expense Stock-based compensation expense 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 - Comprehensive Income (Loss) Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. ASC 220 Comprehensive Income Net Income (Loss) Per Share of Common Stock The Company applies FASB ASC No. 260, Earnings per Share Recent Accounting Pronouncements In December 2019, the FASB issued ASU No. 2019-12 Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes. The Board issued this Update as part of its Simplification Initiative to improve areas of GAAP and reduce cost and complexity while maintaining usefulness. The main provisions remove certain exceptions, including the exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. In addition, the amendments simplify income tax accounting in the areas such as income-based franchise taxes, eliminating the requirements to allocate consolidated current and deferred tax expense in certain instances and a requirement that an entity reflects the effect of enacted changes in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. For public companies, the standard is effective for fiscal years beginning after December 15, 2019, and interim periods therein. The Company plans to adopt this ASU on the effective date of January 1, 2020. The amendments in the update related to foreign subsidiaries will be applied on a modified retrospective basis, the amendments to franchise taxes will be applied on either a retrospective or modified retrospective basis and all other amendments will be applied on a prospective basis. The Company is still evaluating the impact from adopting this standard. However, because the Company’s deferred tax assets and liabilities are fully reserved, it does not expect a material impact from the adoption of this standard. In November 2018, the FASB issued ASU No. 2018-08 Collaborative Arrangements Revenue from Contracts with Customers Recently Adopted Accounting Standards 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 (“ASU 2017-11”). Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable non-controlling interests. The amendments in Part II of this update do not have an accounting effect. The Company adopted this ASU on the effective date of January 1, 2019. The adoption of this standard using a retrospective cumulative-effect adjustment approach had no impact on the Company’s accumulated deficit. The outstanding warrants issued in the Emerald Financing contain a down-round provision. However, in the absence of the down-round provision, these warrants would still require liability accounting and be considered derivatives (See Note 3). As such, the adoption of ASU 2017-11 on January 1, 2019, did not have an impact on the Company’s Consolidated Financial Statements and Notes thereto. In February 2016, the FASB issued ASU No. 2016-02 Leases |
Warrants and Derivative Liabili
Warrants and Derivative Liabilities | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
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 include assumptions regarding the Company’s 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 March 31, 2020 are summarized as follows: Number of Warrants 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 5 718,750 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 3,400,000 Emerald Multi-Draw Credit Agreement Warrants $ 0.50 5 7,500,000 2019 Common Stock Warrants $ 0.35 5 8,000,000 Total warrants vested and outstanding as of March 31, 2020 24,830,750 Emerald Multi-Draw Credit Agreement Warrants During the three months ended March 31, 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 Merton option pricing model with the following assumptions: At Dividend yield 0.00 % Volatility factor 91.6 - % Risk-free interest rate 2.23 - % Expected term (years) 5.0 Underlying common stock price $ 0.33—0.69 Derivative Liabilities The following tables summarize the activity of derivative liabilities for the periods indicated: Three Months Ended March 31, 2020 December 31, 2019, Fair Value of Derivative Liabilities Fair Value of Derivative Liabilities Change in Fair value of Liabilities Reclassification of Derivatives to Equity March 31, 2020, Fair Value of Derivative Liabilities Emerald Multi-Draw Credit Agreement - compound derivative liability (1) $ 90,797 $ — $ 100,085 $ — $ 190,882 Emerald Financing - warrant liability (2) 276,024 — (81,879 ) — 194,145 Series B - warrant liability (3) 134,579 — (54,109 ) (26,563 ) 53,907 Total derivative liabilities $ 501,400 $ — $ (35,903 ) $ (26,563 ) $ 438,934 Less, noncurrent portion of derivative liabilities (90,797 ) (190,882 ) Current balance of derivative liabilities $ 410,603 $ 248,052 Three Months Ended March 31, 2019 December 31, 2018, Fair Value of Derivative Liabilities Fair Value of Derivative Liabilities Change in Fair value of Derivative Liabilities Reclassification of Derivatives to Equity March 31, 2019, Fair Value of Derivative Liabilities Emerald Multi-Draw Credit Agreement - compound derivative liability (1) $ 219,453 $ 516,058 $ 227,858 $ — $ 963,369 Emerald Financing - warrant liability (2) 15,251,413 — 12,239,322 — 27,490,735 Series B - warrant liability (3) 487,500 — 353,438 — 840,938 Total derivative liabilities $ 15,958,366 $ 516,058 $ 12,820,618 $ — $ 29,295,042 Less, noncurrent portion of derivative liabilities (219,453 ) (963,369 ) Current balance of derivative liabilities $ 15,738,913 $ 28,331,673 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. In determining the fair value of the debt and contingent interest feature the Company used the following assumptions at the balance sheet date: March 31, 2020 Volatility factor 79.8 % Benchmarked yield 18.46 % Remaining term (years) 2.55 Underlying common stock price $ 0.08 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. 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. In December 2019, Emerald Health Sciences paid the aggregate exercise price of $4,080,000 in the form of a reduction of the corresponding amount of obligations outstanding under the Credit Agreement to exercise 40,800,000 Emerald Financing Warrants. Under the Warrant Exercise Agreement between the Company and Emerald Health Sciences, the proceeds from the warrants were first applied directly to the accrued interest balance at the exercise date with the remainder applied to the oldest outstanding principal balances under the Credit Agreement. Immediately prior to exercise, the warrants were adjusted to fair value which considered the closing trading price on the exercise date (See Note 4). 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 were valued using Monte Carlo simulations conducted at the balance sheet dates using the following assumptions: March 31, 2020 December 31, 2019 Dividend yield 0.00 % 0.00 % Volatility factor 81.4 % 79.5 % Risk-free interest rate 0.28 % 1.62 % Expected term (years) 2.88 3.13 Underlying common stock price $ 0.08 $ 0.13 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. 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. 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 March 31, 2020 As of December 31, 2019 Dividend yield 0.00 % 0.00 % Volatility factor 79.8 % 79.2 % Risk-free interest rate 0.13 % 1.60 % Expected term (years) 0.39 0.64 Underlying common stock price $ 0.08 $ 0.13 During the three months ended March 31, 2020, 312,500 Series B Common Stock Warrants with an intrinsic value of $26,563 were exercised for no consideration per share, which resulted in the issuance of 312,500 shares of common stock. Prior to exercise, these Series B Warrants were adjusted to fair 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. | 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 include assumptions regarding the Company’s 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, 2019 are summarized as follows: Number of Warrantsv Exercise Term Vested 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 3,400,000 Emerald Multi Draw Credit Agreement Warrants $ 0.50 5 7,500,000 2019 Common Stock Warrants $ 0.35 5 8,000,000 Total warrants vested and outstanding as of December 31, 2019 25,143,250 2019 Common Stock Warrants During the year ended December 31, 2019, the Company issued 8,000,000 fully vested common stock warrants to investors, in conjunction with the November 2019 Common Stock Offering discussed below (See Note 5). The warrants are equity classified at issuance and the Company allocated an aggregate of $722,208 of the gross proceeds to the warrants on a relative fair value basis. The warrants vested immediately and had an estimated aggregate fair value of $1,130,400 utilizing the Black-Scholes option pricing model with the following assumptions: At Issuance Dividend yield 0.00 % Volatility factor 93.08 % Risk-free interest rate 1.62 % Expected term (years) 5.0 Underlying common stock price $ 0.22 Emerald Multi-Draw Credit Agreement Warrants During the year ended December 31, 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 On November 1, 2018, the Company issued 2,500,000 $315,080 $593,629 At Issuance Dividend yield 0.00 % Volatility factor 92.5 % 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 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: Year Ended December 31, 2019 December 31, 2018, Fair Value of Derivative Liabilities Fair Value of Derivative Liabilities Issued Change in Fair value of Liabilities Reclassification of Derivatives to Equity or Extinguishment December 31, 2019, Fair Value of Derivative Liabilities Emerald Multi Draw Credit Agreement - compound derivative liability (1) $ 219,453 $ 516,058 $ (484,147 ) $ (160,567 )* $ 90,797 Emerald Financing - warrant liability (2) 15,251,413 — (9,042,066 ) (5,933,323 ) 276,024 Series B - warrant liability (3) 487,500 — (208,546 ) (144,375 ) 134,579 Total derivative liabilities $ 15,958,366 $ 516,058 $ (9,734,759 ) $ (6,238,265 ) $ 501,400 Less, noncurrent portion of derivative liabilities (219,453 ) (90,797 ) Current balance of derivative liabilities $ 15,738,913 $ 410,603 *This amount has been included in the calculation of the extinguishment loss recorded in connection with the prepayment of the Emerald Credit Agreement as described in Note 4 below. 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 derivative liabilities $ 823,037 $ 10,988,736 $ 6,503,174 $ (2,356,581 ) $ 15,958,366 Less, noncurrent portion of derivative liabilities (551,322 ) (219,453 ) Current balance of derivative liabilities $ 271,715 $ 15,738,913 **The change in fair value of derivative liabilities for the year ended December 31, 2018, relate partially to the Company determining it had 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) 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. In December 2019, Emerald Health Sciences paid the aggregate exercise price of $4,080,000 in the form of a reduction of the corresponding amount of obligations outstanding under the Credit Agreement to exercise 40,800,000 Emerald Financing Warrants. Under the Warrant Exercise Agreement between the Company and Emerald Health Sciences, the proceeds from the warrants were first applied directly to the accrued interest balance at the exercise date with the remainder applied to the oldest outstanding principal balances under the Credit Agreement. Immediately prior to exercise, the warrants were adjusted to fair value which considered the closing trading price on the exercise date (See Note 4). The Company reviewed the warrants for liability or equity classification under the guidance of ASC 480-10, Distinguishing Liabilities from Equity The Company also reviewed the warrants under ASC 815, Derivatives and Hedging/Contracts in Entity’s Own Equity Fair Value Measurement $4,717,211 and $5,707,423, respectively. The warrant liabilities were 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: December 31, 2019 December 31, 2018 At Issuance Dividend yield 0.00 % 0.00 % 0.00 % Volatility factor 79.5 % 92.1—92.4 % 70.0 % Risk-free interest rate 1.62 % 2.49 % 2.45—2.60 % Expected term (years) 3.13 4.05—4.13 5.0 Underlying common stock price $ 0.13 $ 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 Comprehensive Income (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 the 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 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. 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 December 31, 2019 2018 Dividend yield 0.00 % 0.00 % Volatility factor 79.2 % 93.0 % Risk-free interest rate 1.60 % 2.79 % Expected term (years) 0.64 1.64—1.65 Underlying common stock price $ 0.13 $ 0.40 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. 4,231,750 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 Dividend yield 0.00 % Volatility factor 70.0 % Risk-free interest rate 1.29 % Expected term (years) 0.003 Underlying common stock price $ 0.19 The fair value of the conversion liability on January 19, 2018 was $360,000 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 the 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 |
Convertible Debt - Related Part
Convertible Debt - Related Party | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
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 March 31, 2020 As of December 31, 2019 Total principal value $ 2,014,500 $ 2,014,500 Unamortized debt discount (1,491,997 ) (1,622,344 ) Unamortized debt issuance costs (4,723 ) (5,086 ) Carrying value of total convertible debt - related party $ 517,780 $ 387,070 Less, noncurrent portion (517,780 ) (387,070 ) Current convertible debt - related party $ — $ — The Company’s interest expense consists of the following: Three Months Ended March 31, 2020 2019 Interest expense - stated rate $ 35,645 $ 59,111 Non-cash interest expense: Amortization of debt discount 130,347 53,979 Amortization of transaction costs 363 2,973 $ 166,355 $ 116,063 Multi-Draw Credit Agreement On October 5, 2018, the Company entered into the Credit Agreement with Emerald Health Sciences, a related party (See Note 7). 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 March 31, 2020, the unused portion of the credit facility is $14,000,000. The drawdowns are subject to approval by the Company’s Board, which is controlled by the directors of Emerald Health Sciences. As such, we do not consider the facility available until advance requests are approved, drawn down and funded. The Credit Agreement is still in place, however, there is no guarantee of continued funding. 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 three months ended March 31, 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 three months ended March 31, 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. During the year ended December 31, 2019, the Company used $3,985,500 in proceeds from the exercise of the 2018 Emerald Financing Warrants to prepay a portion of the principal balance on the Credit Agreement. In connection with the prepayment, the Company recorded an extinguishment loss of $725,425 in the fourth quarter of 2019. The extinguishment loss was calculated as the difference between the fair value of the consideration paid to extinguish the debt and carrying value of the debt host plus the related compound derivative liability. As of March 31, 2020, the unamortized debt discount will be amortized over a remaining period of approximately 2.52 years. The fair value of the underlying shares of the convertible multi draw credit agreement was $377,719 at March 31, 2020. As of March 31, 2020, the if-converted value did not exceed the principal balance. | 4. Convertible Debt – Related Party The Company’s Convertible Debt with Emerald Health Sciences consists of the following: As of December 31, 2019 2018 Total principal value $ 2,014,500 $ 2,000,000 Unamortized debt discount (1,622,344 ) (587,617 ) Unamortized debt issuance costs (5,086 ) (51,423 ) Carrying value of total convertible debt - related party $ 387,070 $ 1,360,960 Less, noncurrent portion (387,070 ) (1,360,960 ) Current convertible debt – related party $ — $ — The Company’s interest expense consists of the following: Year Ended December 31, 2019 2018 Interest expense - stated rate $ 371,420 $ 26,433 Non-cash interest expense: Amortization of debt discount 616,383 56,253 Amortization of transaction costs 12,910 2,283 Other interest expense — 9,794 $ 1,000,713 $ 94,763 Multi-Draw Credit Agreement On October 5, 2018, the Company entered into the Credit Agreement with Emerald Health Sciences, a related party (See 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 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 December 31, 2019, the unused portion of the credit facility is $14,000,000. The drawdowns are subject to approval by the Company’s Board, which is controlled by the directors of Emerald Health Sciences. As such, we do not consider the facility available until advance requests are approved, drawn down and funded. The Credit Agreement is still in place, however, there is no guarantee of continued funding. 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 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). 1,684,920 $315,080 $90,080 $204,102 During the year ended December 31, 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 Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 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. During the year ended December 31, 2019, the Company used $3,985,500 in proceeds from the exercise of the 2018 Emerald Financing Warrants (Note 3) to prepay a portion of the principal balance on the Credit Agreement. In connection with the prepayment, the Company recorded an extinguishment loss of $725,425. For the years ended December 31, 2019 and 2018, the effective interest rate related to the Credit Agreement was 32.05% and 10.57%, respectively. As of December 31, 2019, the unamortized debt discount will be amortized over a remaining period of 2.76 years. The fair value of the underlying shares of the Credit Agreement was $657,231 at December 31, 2019. As of December 31, 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 to other expense for the year ended December 31, 2018. For the year ended December 31, 2018, the effective interest rate related to the Convertible Promissory Note was 13.94%. |
Stockholders' Deficit and Capit
Stockholders' Deficit and Capitalization | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Stockholders' Deficit and Capitalization | 5. Stockholders’ Equity (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. November 2019 Common Stock Offering In November 2019, the Company sold in a registered direct offering an aggregate of 8,000,000 shares of its common stock, par value $0.001 per share, and warrants to purchase 8,000,000 shares of common stock (Note 3). The aggregate net proceeds of the transaction were $1,919,372. Warrant Exercises During the year ended December 31, 2019, Emerald Health Sciences exercised 40,800,000 2018 Emerald Financing Warrants with an intrinsic value of $4,284,000, which resulted in the issuance of 40,800,000 shares of common stock. During the year ended December 31, 2018, the Series B warrant holders exercised warrants with an intrinsic value of $144,375, which resulted in the issuance of 187,500 shares of common stock. 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 (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. Conversion of Preferred Stock During the year ended December 31, 2018, all remaining Preferred Series B, D, and F shares were converted to common stock as follows: • For the year ended December 31, 2018, 2,833.55 shares of Series B Preferred stock were converted, resulting in the issuance of shares of common stock. • For the year ended December 31, 2018, 200 shares of Series D Preferred stock were converted, resulting in the issuance of 2,000,000 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. Preferred Stock The Company has 20,000,000 authorized shares of preferred stock, with a par value of $0.001 per share. As of December 31, 2019, there were no shares of preferred stock issued and outstanding. During the year ended December 31, 2018, all remaining Preferred Series B, D, and F shares that were previously issued and outstanding were converted to common stock. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | ||
Stock-Based Compensation | 5. 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. 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 March 31, 2020, the Company had 13,159,631 shares available for future grant under the 2014 Plan. Stock Options There was no option activity under the Company’s 2014 Plan during the three months ended March 31, 2020. Restricted Stock Awards There was no restricted stock award (“RSA”) activity under the Company’s 2014 Plan during the three months ended March 31, 2020. Awards Granted Outside the 2014 Plan Options There was no option activity outside of the 2014 Plan during the three months ended March 31, 2020. Restricted Stock Awards The following is a summary of RSA activity outside of the Company’s 2014 Plan during the three months ended March 31, 2020: Number of Shares Weighted Average Grant Date Fair Value Unvested, December 31, 2019 450,000 $ 0.19 Granted — — Released (450,000 ) 0.19 Unvested, March 31, 2020 — $ — Stock-Based Compensation Expense The Company recognizes compensation expense using the straight-line method over the requisite service period. For the three months ended March 31, 2020 and 2019, the Company recognized stock-based compensation expense of $64,142 and $171,493, 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 $248,264 as of March 31, 2020. This amount will be recognized over a weighted average period of 1.74 years. | 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. 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 December 31, 2019, the shares available for future grant under the 2014 Plan are as follows: Shares Available for Grant Available as of December 31, 2018 9,142,273 Share pool increase 4,898,750 Forfeited 153,125 Cancelled 196,875 Granted (1,262,642 ) Available as of December 31, 2019 13,128,381 Stock Options Options granted under the 2014 Plan expire no later than ten 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 activities under the Company’s 2014 Plan for the year ended December 31, 2019: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value* 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, December 31, 2019 3,317,642 $ 0.33 8.34 $ — Exercisable, December 31, 2019 2,399,356 $ 0.34 7.84 $ — Vested and expected to vest, December 31, 2019 3,317,642 $ 0.33 8.34 $ — *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, 2019 for those stock options for which the quoted market price was in excess of the exercise price (“in-the-money options”). The weighted-average grant-date fair value of stock options granted for the years ended December 31, 2019 and 2018 was $0.22 and $0.30, respectively. The total fair value of the stock options that vested during the years ended December 31, 2019 and 2018 was $473,030 and $418,688, respectively. 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, 2019 2018 Dividend yield 0.00 % 0.00 % Risk-free interest rate 1.49 % 3.06—3.10 % Expected term (years) 5.65 5.27—5.58 Volatility 93.72 % 70.00—93.60 % Restricted Stock Awards There was no restricted stock award (“RSA”) activity under the Company’s 2014 Plan during the year ended December 31, 2019. On February 28, 2018, in conjunction with the signing of the K2C separation agreement discussed in Note 11 below, Mr. Lykos’ RSAs amounting to shares vested immediately resulting in a Type III award modification and a credit to stock compensation of $ 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 There was no option activity outside of the 2014 Plan during the year ended December 31, 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 $0.245 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 0.00 % 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, 2019, these options have a remaining contractual life of 8.57 years. At December 31, 2019, 760,501 options are exercisable and have no intrinsic value. At December 31, 2019, 1,195,073 options are vested and are expected to vest and have no intrinsic value. 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 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 the Company 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 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 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 Company’s former 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 during the year ended December 31, 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, December 31, 2019 450,000 $ 0.19 Stock-Based Compensation Expense The Company recognizes stock-based compensation expense using the straight-line method over the requisite service period. For the years ended December 31, 2019 and 2018, the Company recognized stock-based compensation expense of $680,455 and $674,961, $312,405 |
Net Income (Loss) Per Share of
Net Income (Loss) Per Share of Common Stock | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share of Common Stock | 7. Net Income (Loss) Per Share of Common Stock The following tables are a reconciliation of the numerators and denominators used in the calculation of basic and diluted net income (loss) per share computations: For the Year Ended December 31, 2019 Income (Numerator) Shares (Denominator) Per-Share Amount Net income $ 1,051,825 Basic EPS Income available to common stockholders 1,051,825 135,154,931 $ 0.01 Effect of Dilutive Securities Unvested restricted stock 858,856 Options 392,784 Warrants 447,431 Warrants – liability classified (9,250,612 ) 32,706,263 Diluted EPS Loss available to common stockholders + assumed conversions $ (8,198,787 ) 169,560,265 $ (0.05 ) For the Year Ended December 31, 2018 Income (Numerator) Shares (Denominator) Per-Share Amount Net loss $ (19,194,236 ) Basic and Diluted EPS Loss available to common stockholders $ (19,194,236 ) 121,154,334 $ (0.16 ) 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 anti-dilutive: Year Ended December 31, 2019 2018 Stock options 4,119,931 3,600,073 Unvested restricted stock 234,645 1,543,501 Common shares underlying convertible debt 5,036,250 5,000,000 Warrants 20,712,000 53,130,750 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 8. Income Taxes The components of income (loss) before the income tax provision (benefit) consist of the following: Year Ended December 31, 2019 2018 US $ 1,120,521 $ (19,192,594 ) Foreign (67,096 ) — Pre-tax income (loss) from operations $ 1,053,425 $ (19,192,594 ) 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 periods, disclosure and transition. The Company had no accrual for interest or penalties on the Company’s Balance Sheets at December 31, 2019 and 2018, and has not recognized interest and/or penalties in the Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2019 or 2018. The Company is subject to taxation in the United States and California. The Company’s tax years for 2016 (federal) and 2015 (California) and 2019 (Australia) and forward are subject to examination by the United States, California and Australia tax authorities. At December 31, 2019, the Company had federal and California NOLs aggregating $13,213,037 and $24,481,423, respectively, which, if not used, it will begin to expire from 2033 and the Company had federal NOLs that do not expire but utilization is limited to 80% of taxable income for any given tax year in the amount of $11,275,349. At December 31, 2019, the Company had Australia NOLs aggregating $67,096 which do not expire. Utilization of the domestic 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 NOLs 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 NOLs 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 before utilization. The multiple ownership changes may have already occurred as the Company raised capital through the issuance of stock. 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): 2019 2018 State taxes $ 336 $ 345 Capitalized research and development costs — 10,327 Other 112,222 187,377 Net operating loss 6,434,544 5,104,432 Gross deferred tax assets 6,547,102 5,302,481 Valuation allowance (6,206,450 ) (5,302,481 ) Net deferred tax assets $ 340,652 $ — Deferred tax liabilities Note discount $ (340,652 ) $ — Total deferred tax liabilities (340,652 ) — Net deferred tax assets $ — $ — The provision for income taxes on earnings subject to income taxes differs from the statutory Federal rate at December 31, 2019 and 2018, due to the following: As of December 31, 2019 2018 Expected income tax benefit at federal statutory tax rate $ 221,219 $ (4,030,454 ) State income taxes, net of federal benefit (434,881 ) (319,816 ) Change in fair value of warrants (1,874,873 ) 2,869,116 Change in valuation allowance 1,469,187 1,286,995 Uncertain tax positions 436,145 — Change in compound derivative (101,671 ) 3,224 Loss on extinguishment of debt 117,198 123,982 Stock compensation 121,289 67,966 Rate adjustment 49,338 — Other permanent difference (1,351 ) 629 Provision for Income Taxes $ 1,600 $ 1,642 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, 2019. As a result of this valuation allowance, there are no income tax benefits reflected in the accompanying statement of operations to offset pre-tax losses. The Tax Cuts and Jobs Act of 2017 subjects a U.S. shareholder to tax on global intangible low-taxed income ("GILTI") earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740, No. 5, Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting policy election to recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. The Company elects to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. A reconciliation of the beginning and ending amounts of unrecognized tax positions are as follows: As of December 31, 2019 2018 Unrecognized tax positions, beginning of the year $ — $ — Gross increase - current period tax positions 552,082 — Unrecognized tax positions, end of year $ 552,082 $ — If recognized, none of the unrecognized tax positions would impact the Company’s income tax benefit or effective tax rate as long as the Company’s net deferred tax assets remain subject to a full valuation allowance. The Company does not expect any significant increases or decreases to the Company’s unrecognized tax positions within the next twelve months. |
Significant Contracts - Univers
Significant Contracts - University of Mississippi | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Significant Contracts [Abstract] | ||
Significant Contracts - University of Mississippi | 6. 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. In addition, in March 2020, the Company was notified by the United States Patent and Trademark Office, that a notice of allowance was issued for the proprietary analog of cannabidiol, CBDVHS, under the UM 8930 License Agreement. As a result, the Company was required to pay UM a fee of $200,000. 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 ten 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. As of March 31, 2020, with the exception of the fee due for the notice of allowance for CBDVHS, none of the other milestones under these license agreements have been met. 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. As of March 31, 2020, none of the milestones under this license agreement have been met. | 9. 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 ten 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. As of December 31, 2019, none of the milestones under the license agreements have been met. 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. As of December 31, 2019, none of the milestones under this license agreement have been met. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
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, 2019, 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. 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, 2019, 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 resignation for a 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 the 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. |
Related Party Matters
Related Party Matters | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Related Party Transactions [Abstract] | ||
Related Party Matters | 7. Related Party Matters 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 included, but were 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 had an initial term of 10 years and specified compensation which was 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 was payable on a monthly basis. Effective December 31, 2019, the Independent Contractor Agreement was terminated. As of March 31, 2020, the Company maintains an accrual of $7,032 in expenses under the Independent Contractor Agreement which have yet to be paid. Under this agreement, no expenses were incurred for the three months ended March 31, 2020. For the three months ended March 31, 2019, the Company incurred expenses of $150,000. On December 17, 2019, Dr. Avtar Dhillon resigned as the Chairman of the Board and the position of Chairman of the Finance and Business Development Committee of the Board. Concurrently, the Company entered into a Board Observer Agreement with Emerald Health Sciences to allow Dr. Dhillon to continue as a representative of Emerald Health Sciences as a non-voting observer in future meetings of the Board. 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 the 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. On March 30, 2020, the Company and Dr. Dhillon amended the Independent Contractor Services Agreement by agreeing to accrue 100% of Dr. Dhillon’s consulting fees until the Board of Directors determines that the Company has been sufficiently financed to make such payments at which point the Company agrees to pay Dr. Dhillon all of his accrued consulting fees, and a bonus of 10% of his accrued consulting fees, less applicable tax and other withholdings. As of March 31, 2020, the Company has accrued $33,871 in expense related to the Independent Contractor Services Agreement. | 11. 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 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 year ended December 31, 2019, no expense was incurred under this agreement. For the year ended December 31, 2018, total expense incurred under this agreement was $220,000 (including the previously discussed lump sum payment). 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 included, but were 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 had an initial term of 10 years and specified compensation which was 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 was payable on a monthly basis. Under this agreement, for the years ended December 31, 2019 and 2018, the Company incurred expenses of $542,000 and $550,000, respectively. At December 31, 2019, the Company has accrued $10,000 in expense under this agreement. Effective December 31, 2019, the Independent Contractor Agreement has been terminated. 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. $60,000, 120 days $45,000. On December 17, 2019, Dr. Avtar Dhillon resigned as the Chairman of the Board and the position of Chairman of the Finance and Business Development Committee of the Board. Concurrently, the Company entered into a Board Observer Agreement with Emerald Health Sciences to allow Dr. Dhillon to continue as a representative of Emerald Health Sciences as a non-voting observer in future meetings of the Board. 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 the 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. |
Subsequent Events
Subsequent Events | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Subsequent Events [Abstract] | ||
Subsequent Events | 8. Subsequent Events Amended and Restated Multi-Draw Credit Agreement On April 29, 2020, the Company entered into an Amended and Restated Multi-Draw Credit Agreement with Emerald Health Sciences, which amends and restates the Credit Agreement, dated October 5, 2018. The Amended Credit Agreement provides for a credit facility in the principal amount of up to $20,000,000, which includes, without limitation, the advances totaling $6,000,000 that were granted prior to the amendment and advances of at least $150,000 for each of May, June and July 2020. In connection with each advance under the Amended Credit Agreement, the Company shall, absent the Lender’s notice not to issue any warrant, continue to issue to Emerald Health Sciences, a warrant to purchase up to the number of shares of the Common Stock of the Company equal to the dollar amount of such advance divided by 0.50. However, warrants issued under the Amended Credit Agreement will have an exercise price of $0.35 per share of Common Stock. Warrants issued prior to the date of the Amended Credit Agreement shall not be modified, amended or altered by the terms of the Amended Credit Agreement and shall remain in full force and effect. Emerald Health Science will, in its sole discretion, at the time of an advance, determine as to whether such advance will or will not be convertible into shares of Common Stock in the future. Advances under the Amended Credit Agreement are convertible into shares of Common Stock at a reduced fixed conversion price of $0.25 per share of Common Stock. However, the conversion price of all advances outstanding under the Credit Agreement as of the date of the Amended Credit Agreement shall be deemed convertible by the Lender at a conversion price of $0.40 per share of Common Stock as set forth in the Existing Credit Agreement. Pursuant to the Amended Credit Agreement, the Company and the Lender have agreed to terminate that certain Registration Rights Agreement, dated as of October 5, 2018, by and between the Company and the Lender, and the Lender has agreed to defer all interest accrued and/or due under the Amended Credit Agreement, beginning the quarter ended June 30, 2020, until the Company completes a capital raise of at least $5,000,000. All other material terms of the Credit Agreement, including, without limitation, the maturity date and interest rate, remain the same in the Amended Credit Agreement. Immediately upon entering into the Amended Credit Agreement, the Company effected a fourth advance in the amount of $150,000. The advance bears an interest at 7% per annum and matures on October 5, 2022. The Company intends to use the net proceeds of the advance for general corporate and working capital purposes. The Lender has elected that the fourth advance will not be convertible into shares of Common Stock and gave notice to the Company that no warrant will be issued in connection with the advance at this time. Paycheck Protection Program Promissory Note On April 22, 2020, the Company entered into a PPP Note in the principal amount of $116,700 from the PPP Loan Lender. The PPP Loan was obtained pursuant to the PPP of the CARES Act administered by the SBA. The PPP Loan was disbursed by the PPP Loan Lender to the Company on April 24, 2020 and will mature two years from the Disbursement Date. The PPP Loan bears an interest at 1.00% per annum and is payable monthly commencing seven months from the Disbursement Date. The PPP Loan may be prepaid at any time prior to maturity with no prepayment penalties. Funds from the PPP Loan may only be used by the Company for payroll costs, costs for continuing group healthcare benefits, mortgage interest payments, rent, utility and interest on any other debt obligations that were incurred before February 15, 2020. All or a portion of principal of the PPP Loan may be forgiven by the SBA and the PPP Loan Lender upon application by the Company within 60 days but not later than 120 days after loan approval and upon documentation of expenditures in accordance with the SBA requirements. Under the CARES Act, loan forgiveness is available for the sum of documented payroll costs, covered rent payments, and covered utilities during the eight-week period commencing on the date of loan approval. For purposes of the CARES Act, payroll costs exclude compensation of an individual employee in excess of $100,000, prorated annually. Not more than 25% of the forgiveness amount may be for non-payroll costs. Forgiveness is reduced if full-time headcount declines, or if salaries and wages of employees with salaries of $100,000 or less annually are reduced by more than 25%. After approval of the forgiveness amount and six-month deferral period, the PPP Loan Lender will provide the Company with written notification of re-amortization of the PPP Loan and the remaining balance. Separation of Chief Financial Officer On April 29, 2020, the Company entered into a separation and release agreement (the “Separation Agreement”) with Douglas Cesario, Chief Financial Officer. Mr. Cesario’s separation will be effective May 15, 2020 (the “Separation Date”), and he will remain the Company’s principal financial officer until the Separation Date. Pursuant to the Separation Agreement, Mr. Cesario has agreed to certain ongoing cooperation obligations and to provide certain releases and waivers as contained in the Separation Agreement. As consideration under the Separation Agreement, the Company has agreed to provide Mr. Cesario compensation and benefits as follows: (i) through the Separation Date, an annualized base salary at the rate in effect for him as of the date of the Separation Agreement; (ii) a gross payment of $125,000 in consideration for the restrictive covenants contained in the Separation Agreement; and (iii) a continuation of health insurance benefits for a period of six months following the Separation Date. In connection with the termination of the Company’s Chief Financial Officer 325,929 unvested stock options will be cancelled on May 15, 2020. Events subsequent to the original issuance of the condensed consolidated financial statements (unaudited) On June 17, 2020, the Company effected the fifth advance in the amount of $300,000. The advance bears interest at 7% per annum and matures on October 5, 2022. The Company intends to use the net proceeds for general corporate and working capital purposes. The Lender has elected that this advance will not be convertible into shares of Common Stock and gave notice to the Company that no warrant will be issued in connection with the advance. | 12. Subsequent Events In March 2020, the Company was notified by the United States Patent and Trademark Office, that a notice of allowance has been issued for the proprietary analog of cannabidiol, CBDVHS, under the UM 8930 License Agreement. As a result, the Company is required to pay UM a fee of $200,000 within 30 days from when the notice was received (Note 9). Refer to Note 1 for disclosure of the salary deferral program that was put in place during March 2020. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
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, 2019, 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 months ended March 31, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020 or any future periods. The Condensed Consolidated Balance Sheet as of December 31, 2019 was derived from the Company’s audited financial statements as of December 31, 2019, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 20, 2020. The unaudited financial statements included in this Quarterly Report on Form 10-Q 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, 2019, 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’ equity, net losses and cash flows. | Basis of Presentation The preparation of financial statements in conformity with U.S. 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 the prior year’s total assets, total liabilities, total stockholders’ deficit, net loss, and cash flows. |
Use of Estimates | Use of Estimates The preparation of the 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, 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 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, equity securities, derivative liabilities, and 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 Australia, 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 United States and Australia, 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 values of those investments approximate their fair value due to their short maturity and liquidity. Cash includes 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, 2019, the Company has no cash equivalents. | |
Restricted Cash | Restricted Cash A deposit of $4,538 and $4,512 | |
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 Credit Agreement 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 are valued on a recurring basis utilizing Level 3 inputs. Advances under the Credit Agreement 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). As of March 31, 2020 and December 31, 2019, the fair value of the advances under the Credit Agreement was $1,639,245 and $1,877,938, respectively. The carrying amount of the liability at March 31, 2020 and December 31, 2019, was $517,780 and $387,070, respectively, and is included in Convertible multi-draw credit agreement - related party, net of discount in the Company’s Condensed Consolidated 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 the Company’s financial instruments, with the exception of the Credit Agreement 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 are valued on a recurring basis utilizing Level 3 inputs. Advances under the Credit Agreement 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). As of December 31, 2019 and 2018, the fair value of the advances under the Credit Agreement was $1,877,938 and $3,176,824, respectively. The carrying amount of the liability at December 31, 2019 and 2018, was $387,070 and $1,360,960, respectively, and is included in Convertible multi-draw credit agreement - related party, net of discount in the Company’s Consolidated Balance Sheets. |
Property and Equipment, Net | Property and Equipment, Net Property and equipment, net, consist 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 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, net operating loss carryforwards (the “NOLs”) and other tax credit carryforwards. 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 Consolidated Statements of Comprehensive Income (Loss) in the period incurred. When necessary, the Company recognizes interest and penalties related to income tax matters in income tax expense. 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, 2019 and 2018. As a result of this valuation allowance, there are no income tax benefits reflected in the accompanying Consolidated Statements of Comprehensive Income (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. | |
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 the 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 (“ASC 470-20”) if it is determined that the conversion feature should not be bifurcated from their host instruments. Under ASC 470-20, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the difference between the fair value of the underlying common stock at the commitment date and the embedded effective conversion price. When the Company determines that the embedded conversion option should be bifurcated from its host instrument, the embedded feature is accounted for in accordance with ASC 815. Under ASC 815, a portion of the proceeds received upon the issuance of the hybrid contract is allocated to the fair value of the derivative. The derivative is subsequently marked to market at each reporting date based on current fair value, with the changes in fair value reported in the results of operations. 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 make 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 expense (income) 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 Comprehensive Income (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. |
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; 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 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; 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 Expense | Stock-Based Compensation Expense Stock-based compensation expense 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 Expense Stock-based compensation expense 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 - |
Comprehensive Income (Loss) | Comprehensive Income (Loss) Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. ASC 220 Comprehensive Income | |
Net Income (Loss) Per Share of Common Stock | Net Income (Loss) Per Share of Common Stock The Company applies FASB ASC No. 260, Earnings per Share Three Months Ended March 31, 2020 2019 Stock options 4,512,715 3,600,073 Unvested restricted stock 643,501 1,093,501 Common shares underlying convertible debt 5,125,363 15,000,000 Warrants 23,593,356 58,130,750 | Net Income (Loss) Per Share of Common Stock The Company applies FASB ASC No. 260, Earnings per Share |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In December 2019, the FASB issued ASU No. 2019-12 Income Taxes Recently Adopted Accounting Standards In November 2018, the FASB issued ASU No. 2018-08 Collaborative Arrangements Revenue from Contracts with Customers | Recent Accounting Pronouncements In December 2019, the FASB issued ASU No. 2019-12 Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes. The Board issued this Update as part of its Simplification Initiative to improve areas of GAAP and reduce cost and complexity while maintaining usefulness. The main provisions remove certain exceptions, including the exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. In addition, the amendments simplify income tax accounting in the areas such as income-based franchise taxes, eliminating the requirements to allocate consolidated current and deferred tax expense in certain instances and a requirement that an entity reflects the effect of enacted changes in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. For public companies, the standard is effective for fiscal years beginning after December 15, 2019, and interim periods therein. The Company plans to adopt this ASU on the effective date of January 1, 2020. The amendments in the update related to foreign subsidiaries will be applied on a modified retrospective basis, the amendments to franchise taxes will be applied on either a retrospective or modified retrospective basis and all other amendments will be applied on a prospective basis. The Company is still evaluating the impact from adopting this standard. However, because the Company’s deferred tax assets and liabilities are fully reserved, it does not expect a material impact from the adoption of this standard. In November 2018, the FASB issued ASU No. 2018-08 Collaborative Arrangements Revenue from Contracts with Customers Recently Adopted Accounting Standards 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 (“ASU 2017-11”). Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable non-controlling interests. The amendments in Part II of this update do not have an accounting effect. The Company adopted this ASU on the effective date of January 1, 2019. The adoption of this standard using a retrospective cumulative-effect adjustment approach had no impact on the Company’s accumulated deficit. The outstanding warrants issued in the Emerald Financing contain a down-round provision. However, in the absence of the down-round provision, these warrants would still require liability accounting and be considered derivatives (See Note 3). As such, the adoption of ASU 2017-11 on January 1, 2019, did not have an impact on the Company’s Consolidated Financial Statements and Notes thereto. In February 2016, the FASB issued ASU No. 2016-02 Leases |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | ||
Schedule of outstanding shares of common stock equivalents were excluded from the computation of diluted earnings per share | Three Months Ended March 31, 2020 2019 Stock options 4,512,715 3,600,073 Unvested restricted stock 643,501 1,093,501 Common shares underlying convertible debt 5,125,363 15,000,000 Warrants 23,593,356 58,130,750 | Year Ended December 31, 2019 2018 Stock options 4,119,931 3,600,073 Unvested restricted stock 234,645 1,543,501 Common shares underlying convertible debt 5,036,250 5,000,000 Warrants 20,712,000 53,130,750 |
Warrants and Derivative Liabi_2
Warrants and Derivative Liabilities (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Derivative Liabilities [Line Items] | ||
Schedule of warrants vested and outstanding | Number of Warrants 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 5 718,750 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 3,400,000 Emerald Multi-Draw Credit Agreement Warrants $ 0.50 5 7,500,000 2019 Common Stock Warrants $ 0.35 5 8,000,000 Total warrants vested and outstanding as of March 31, 2020 24,830,750 | Number of Warrantsv Exercise Term Vested 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 3,400,000 Emerald Multi Draw Credit Agreement Warrants $ 0.50 5 7,500,000 2019 Common Stock Warrants $ 0.35 5 8,000,000 Total warrants vested and outstanding as of December 31, 2019 25,143,250 |
Schedule of the activity of derivative liabilities | Three Months Ended March 31, 2020 December 31, 2019, Fair Value of Derivative Liabilities Fair Value of Derivative Liabilities Change in Fair value of Liabilities Reclassification of Derivatives to Equity March 31, 2020, Fair Value of Derivative Liabilities Emerald Multi-Draw Credit Agreement - compound derivative liability (1) $ 90,797 $ — $ 100,085 $ — $ 190,882 Emerald Financing - warrant liability (2) 276,024 — (81,879 ) — 194,145 Series B - warrant liability (3) 134,579 — (54,109 ) (26,563 ) 53,907 Total derivative liabilities $ 501,400 $ — $ (35,903 ) $ (26,563 ) $ 438,934 Less, noncurrent portion of derivative liabilities (90,797 ) (190,882 ) Current balance of derivative liabilities $ 410,603 $ 248,052 Three Months Ended March 31, 2019 December 31, 2018, Fair Value of Derivative Liabilities Fair Value of Derivative Liabilities Change in Fair value of Derivative Liabilities Reclassification of Derivatives to Equity March 31, 2019, Fair Value of Derivative Liabilities Emerald Multi-Draw Credit Agreement - compound derivative liability (1) $ 219,453 $ 516,058 $ 227,858 $ — $ 963,369 Emerald Financing - warrant liability (2) 15,251,413 — 12,239,322 — 27,490,735 Series B - warrant liability (3) 487,500 — 353,438 — 840,938 Total derivative liabilities $ 15,958,366 $ 516,058 $ 12,820,618 $ — $ 29,295,042 Less, noncurrent portion of derivative liabilities (219,453 ) (963,369 ) Current balance of derivative liabilities $ 15,738,913 $ 28,331,673 | Year Ended December 31, 2019 December 31, 2018, Fair Value of Derivative Liabilities Fair Value of Derivative Liabilities Issued Change in Fair value of Liabilities Reclassification of Derivatives to Equity or Extinguishment December 31, 2019, Fair Value of Derivative Liabilities Emerald Multi Draw Credit Agreement - compound derivative liability (1) $ 219,453 $ 516,058 $ (484,147 ) $ (160,567 )* $ 90,797 Emerald Financing - warrant liability (2) 15,251,413 — (9,042,066 ) (5,933,323 ) 276,024 Series B - warrant liability (3) 487,500 — (208,546 ) (144,375 ) 134,579 Total derivative liabilities $ 15,958,366 $ 516,058 $ (9,734,759 ) $ (6,238,265 ) $ 501,400 Less, noncurrent portion of derivative liabilities (219,453 ) (90,797 ) Current balance of derivative liabilities $ 15,738,913 $ 410,603 *This amount has been included in the calculation of the extinguishment loss recorded in connection with the prepayment of the Emerald Credit Agreement as described in Note 4 below. 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 derivative liabilities $ 823,037 $ 10,988,736 $ 6,503,174 $ (2,356,581 ) $ 15,958,366 Less, noncurrent portion of derivative liabilities (551,322 ) (219,453 ) Current balance of derivative liabilities $ 271,715 $ 15,738,913 **The change in fair value of derivative liabilities for the year ended December 31, 2018, relate partially to the Company determining it had 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. |
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 the Emerald Financing 1,500,000 1,750,000 3,250,000 Excess over proceeds adjustment 3,217,211 $ 3,957,423 $ 7,174,634 | |
2019 Common Stock Warrants | ||
Derivative Liabilities [Line Items] | ||
Schedule of input and valuation technique used to value warrant liabilities | At Issuance Dividend yield 0.00 % Volatility factor 93.08 % Risk-free interest rate 1.62 % Expected term (years) 5.0 Underlying common stock price $ 0.22 | |
Series B - warrant liability | ||
Derivative Liabilities [Line Items] | ||
Schedule of input and valuation technique used to value warrant liabilities | As of March 31, 2020 As of December 31, 2019 Dividend yield 0.00 % 0.00 % Volatility factor 79.8 % 79.2 % Risk-free interest rate 0.13 % 1.60 % Expected term (years) 0.39 0.64 Underlying common stock price $ 0.08 $ 0.13 | As of December 31, 2019 2018 Dividend yield 0.00 % 0.00 % Volatility factor 79.2 % 93.0 % Risk-free interest rate 1.60 % 2.79 % Expected term (years) 0.64 1.64—1.65 Underlying common stock price $ 0.13 $ 0.40 |
Emerald Multi-Draw Credit Agreement Warrants | ||
Derivative Liabilities [Line Items] | ||
Schedule of input and valuation technique used to value derivative liabilities | At Dividend yield 0.00 % Volatility factor 91.6 - % Risk-free interest rate 2.23 - % Expected term (years) 5.0 Underlying common stock price $ 0.33—0.69 | |
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 92.5 % Risk-free interest rate 2.96 % Expected term (years) 5.0 Underlying common stock price $ 0.36 | |
Emerald Multi-Draw Credit Agreement Warrants | ||
Derivative Liabilities [Line Items] | ||
Schedule of input and valuation technique used to value derivative liabilities | March 31, 2020 Volatility factor 79.8 % Benchmarked yield 18.46 % Remaining term (years) 2.55 Underlying common stock price $ 0.08 | |
Emerald Convertible Promissory Note Conversion Liability | ||
Derivative Liabilities [Line Items] | ||
Schedule of input and valuation technique used to value warrant liabilities | January 19, 2018 Dividend yield 0.00 % Volatility factor 70.0 % Risk-free interest rate 1.29 % Expected term (years) 0.003 Underlying common stock price $ 0.19 | |
Emerald Financing Warrant Liability | ||
Derivative Liabilities [Line Items] | ||
Schedule of input and valuation technique used to value warrant liabilities | March 31, 2020 December 31, 2019 Dividend yield 0.00 % 0.00 % Volatility factor 81.4 % 79.5 % Risk-free interest rate 0.28 % 1.62 % Expected term (years) 2.88 3.13 Underlying common stock price $ 0.08 $ 0.13 | |
Emerald Financing Warrant Liability | ||
Derivative Liabilities [Line Items] | ||
Schedule of input and valuation technique used to value warrant liabilities | December 31, 2019 December 31, 2018 At Issuance Dividend yield 0.00 % 0.00 % 0.00 % Volatility factor 79.5 % 92.1—92.4 % 70.0 % Risk-free interest rate 1.62 % 2.49 % 2.45—2.60 % Expected term (years) 3.13 4.05—4.13 5.0 Underlying common stock price $ 0.13 $ 0.40 $ 0.29—0.30 |
Convertible Debt - Related Pa_2
Convertible Debt - Related Party (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Debt Disclosure [Abstract] | ||
Schedule of convertible debt | As of March 31, 2020 As of December 31, 2019 Total principal value $ 2,014,500 $ 2,014,500 Unamortized debt discount (1,491,997 ) (1,622,344 ) Unamortized debt issuance costs (4,723 ) (5,086 ) Carrying value of total convertible debt - related party $ 517,780 $ 387,070 Less, noncurrent portion (517,780 ) (387,070 ) Current convertible debt - related party $ — $ — | As of December 31, 2019 2018 Total principal value $ 2,014,500 $ 2,000,000 Unamortized debt discount (1,622,344 ) (587,617 ) Unamortized debt issuance costs (5,086 ) (51,423 ) Carrying value of total convertible debt - related party $ 387,070 $ 1,360,960 Less, noncurrent portion (387,070 ) (1,360,960 ) Current convertible debt – related party $ — $ — |
Schedule of interest expense | Three Months Ended March 31, 2020 2019 Interest expense - stated rate $ 35,645 $ 59,111 Non-cash interest expense: Amortization of debt discount 130,347 53,979 Amortization of transaction costs 363 2,973 $ 166,355 $ 116,063 | Year Ended December 31, 2019 2018 Interest expense - stated rate $ 371,420 $ 26,433 Non-cash interest expense: Amortization of debt discount 616,383 56,253 Amortization of transaction costs 12,910 2,283 Other interest expense — 9,794 $ 1,000,713 $ 94,763 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
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, 2019 450,000 $ 0.19 Granted — — Released (450,000 ) 0.19 Unvested, March 31, 2020 — $ — | |
Stock options | 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, 2018 9,142,273 Share pool increase 4,898,750 Forfeited 153,125 Cancelled 196,875 Granted (1,262,642 ) Available as of December 31, 2019 13,128,381 | |
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, 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, December 31, 2019 3,317,642 $ 0.33 8.34 $ — Exercisable, December 31, 2019 2,399,356 $ 0.34 7.84 $ — Vested and expected to vest, December 31, 2019 3,317,642 $ 0.33 8.34 $ — *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, 2019 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, 2019 2018 Dividend yield 0.00 % 0.00 % Risk-free interest rate 1.49 % 3.06—3.10 % Expected term (years) 5.65 5.27—5.58 Volatility 93.72 % 70.00—93.60 % | |
Stock options | 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 0.00 % Risk-free interest rate 2.79 % Expected term (in years) 5.54 Volatility 70 % | |
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, 2018 900,000 $ 0.19 Granted — — Released (450,000 ) 0.19 Unvested, December 31, 2019 450,000 $ 0.19 |
Net Income (Loss) Per Share o_2
Net Income (Loss) Per Share of Common Stock (Tables) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Earnings Per Share [Abstract] | ||
Schedule of basic and diluted net loss per share | For the Year Ended December 31, 2019 Income (Numerator) Shares (Denominator) Per-Share Amount Net income $ 1,051,825 Basic EPS Income available to common stockholders 1,051,825 135,154,931 $ 0.01 Effect of Dilutive Securities Unvested restricted stock 858,856 Options 392,784 Warrants 447,431 Warrants – liability classified (9,250,612 ) 32,706,263 Diluted EPS Loss available to common stockholders + assumed conversions $ (8,198,787 ) 169,560,265 $ (0.05 ) For the Year Ended December 31, 2018 Income (Numerator) Shares (Denominator) Per-Share Amount Net loss $ (19,194,236 ) Basic and Diluted EPS Loss available to common stockholders $ (19,194,236 ) 121,154,334 $ (0.16 ) | |
Schedule of anti-dilutive securities | Three Months Ended March 31, 2020 2019 Stock options 4,512,715 3,600,073 Unvested restricted stock 643,501 1,093,501 Common shares underlying convertible debt 5,125,363 15,000,000 Warrants 23,593,356 58,130,750 | Year Ended December 31, 2019 2018 Stock options 4,119,931 3,600,073 Unvested restricted stock 234,645 1,543,501 Common shares underlying convertible debt 5,036,250 5,000,000 Warrants 20,712,000 53,130,750 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of components of income (loss) before the income tax provision (benefit) | Year Ended December 31, 2019 2018 US $ 1,120,521 $ (19,192,594 ) Foreign (67,096 ) — Pre-tax income (loss) from operations $ 1,053,425 $ (19,192,594 ) |
Schedule for significant portions of deferred income tax assets | As of December 31, Current deferred tax assets/(liabilities): 2019 2018 State taxes $ 336 $ 345 Capitalized research and development costs — 10,327 Other 112,222 187,377 Net operating loss 6,434,544 5,104,432 Gross deferred tax assets 6,547,102 5,302,481 Valuation allowance (6,206,450 ) (5,302,481 ) Net deferred tax assets $ 340,652 $ — Deferred tax liabilities Note discount $ (340,652 ) $ — Total deferred tax liabilities (340,652 ) — Net 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, 2019 2018 Expected income tax benefit at federal statutory tax rate $ 221,219 $ (4,030,454 ) State income taxes, net of federal benefit (434,881 ) (319,816 ) Change in fair value of warrants (1,874,873 ) 2,869,116 Change in valuation allowance 1,469,187 1,286,995 Uncertain tax positions 436,145 — Change in compound derivative (101,671 ) 3,224 Loss on extinguishment of debt 117,198 123,982 Stock compensation 121,289 67,966 Rate adjustment 49,338 — Other permanent difference (1,351 ) 629 Provision for Income Taxes $ 1,600 $ 1,642 |
Schedule of reconciliation of beginning and ending amounts of unrecognized tax positions | As of December 31, 2019 2018 Unrecognized tax positions, beginning of the year $ — $ — Gross increase - current period tax positions 552,082 — Unrecognized tax positions, end of year $ 552,082 $ — |
Nature of Operations and Busi_2
Nature of Operations and Business Activities (Detail Textuals) - USD ($) | Oct. 05, 2018 | Jul. 31, 2020 | Jun. 30, 2020 | May 31, 2020 | May 11, 2020 | Apr. 29, 2020 | Mar. 23, 2020 | Feb. 16, 2018 | Jan. 19, 2018 | Jun. 17, 2020 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Apr. 22, 2020 | Dec. 31, 2017 |
Nature Of Operations And Business Activities [Line Items] | ||||||||||||||||
Accumulated deficit | $ (34,514,942) | $ (32,173,282) | $ (33,225,107) | |||||||||||||
Stockholders' deficit | (1,702,897) | $ (27,864,191) | 548,058 | (15,562,252) | $ (3,569,506) | |||||||||||
Working capital deficit | (995,853) | |||||||||||||||
Cash and cash equivalents | 563,864 | 1,829,977 | 1,853,373 | |||||||||||||
Description of senior management's compensation plan | Effective March 23, 2020, the Company approved a plan to defer up to 50% of the members of senior management’s compensation indefinitely. Certain members of senior management have accepted the plan and the aggregate deferred compensation, together with a retention bonus of 10% of the amount being deferred will be payable to senior management when decided by the Board. Effective March 30, 2020, the Directors of the Company entered into agreements to defer | |||||||||||||||
Cash | 667,000 | 1,829,977 | ||||||||||||||
Cash used in operating activities | $ (1,266,113) | (1,431,120) | (6,027,941) | (3,943,014) | ||||||||||||
Proceeds from the issuance of common stock and warrants | 1,919,372 | 3,095,908 | ||||||||||||||
Proceeds from convertible multi-draw credit agreement | $ 3,990,699 | 3,990,699 | 1,946,293 | |||||||||||||
Subsequent Event | ||||||||||||||||
Nature Of Operations And Business Activities [Line Items] | ||||||||||||||||
Unrestricted cash position decreased | $ 228,000 | |||||||||||||||
Additional of restricted cash | 87,000 | |||||||||||||||
Remaining funds from promissory note | $ 82,000 | |||||||||||||||
Subsequent Event | Paycheck Protection Program Promissory Note (PPP Note) | ||||||||||||||||
Nature Of Operations And Business Activities [Line Items] | ||||||||||||||||
Principal amount of promissory Note | $ 116,700 | |||||||||||||||
Amended and Restated Multi-Draw Credit Agreement | Subsequent Event | ||||||||||||||||
Nature Of Operations And Business Activities [Line Items] | ||||||||||||||||
Principal amount of credit facility | $ 20,000,000 | |||||||||||||||
Credit facility advances | $ 150,000 | 6,000,000 | $ 300,000 | |||||||||||||
Credit facility advances per month | $ 150,000 | $ 150,000 | $ 150,000 | |||||||||||||
Draw downs loans In aggregate principal amount | $ 6,000,000 | |||||||||||||||
Warrants to purchase an aggregate shares of common stock | 7,500,000 | |||||||||||||||
Exercise Price | $ 0.50 | |||||||||||||||
Interest rates per annum | 7.00% | 7.00% | ||||||||||||||
Maturity date | Oct. 5, 2022 | Oct. 5, 2022 | ||||||||||||||
Emerald Financing Warrant Liability | ||||||||||||||||
Nature Of Operations And Business Activities [Line Items] | ||||||||||||||||
Exercise Price | $ 0.10 | $ 0.10 | ||||||||||||||
Proceeds from the issuance of common stock and warrants | $ (1,750,000) | $ (1,500,000) | $ (3,250,000) | |||||||||||||
Emerald Financing Warrant Liability | Multi-Draw Credit Agreement | ||||||||||||||||
Nature Of Operations And Business Activities [Line Items] | ||||||||||||||||
Credit facility advances | $ 20,000,000 | |||||||||||||||
Exercise Price | $ 0.50 | |||||||||||||||
Interest rates per annum | 7.00% | |||||||||||||||
Maturity date | Oct. 5, 2022 | |||||||||||||||
Maximum borrowing capacity | $ 14,000,000 | |||||||||||||||
Principal amounts of borrowing capacity | $ 250,000 | |||||||||||||||
Proceeds from the issuance of common stock and warrants | 1,919,372 | |||||||||||||||
Proceeds from convertible multi-draw credit agreement | $ 3,990,699 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Warrants | ||
Nature of Operations, Business Activities and Summary of Significant Accounting Policies [Line Items] | ||
Anti-dilutive excluded from the calculation of diluted net loss per share | 23,593,356 | 58,130,750 |
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 net loss per share | 5,125,363 | 15,000,000 |
Stock Incentive Plan | ||
Nature of Operations, Business Activities and Summary of Significant Accounting Policies [Line Items] | ||
Anti-dilutive excluded from the calculation of diluted net loss per share | 4,512,715 | 3,600,073 |
Unvested restricted stock | ||
Nature of Operations, Business Activities and Summary of Significant Accounting Policies [Line Items] | ||
Anti-dilutive excluded from the calculation of diluted net loss per share | 643,501 | 1,093,501 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Detail Textuals) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 31, 2020 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | |||
Fair value of advance under credit agreement | $ 1,877,938 | $ 1,639,245 | $ 3,176,824 |
Carrying value of total convertible debt - related party | 387,070 | 517,780 | 1,360,960 |
Restricted cash | $ 4,538 | $ 4,538 | $ 4,512 |
Property, plant and equipment, depreciation methods | straight-line method | ||
Estimated useful life | two to three years |
Warrants and Derivative Liabi_3
Warrants and Derivative Liabilities (Details) - $ / shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Class of Warrant or Right [Line Items] | ||
Amount Vested and Outstanding | 24,830,750 | 25,143,250 |
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 |
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 | 718,750 | 1,031,250 |
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 | 3,400,000 | 3,400,000 |
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 | 7,500,000 |
2019 Common Stock Warrants | ||
Class of Warrant or Right [Line Items] | ||
Exercise Price | $ 0.35 | $ 0.35 |
Term (Years) | 5 years | 5 years |
Amount Vested and Outstanding | 8,000,000 | 8,000,000 |
Warrants and Derivative Liabi_4
Warrants and Derivative Liabilities (Details 1) - Black-Scholes option pricing model - 2019 Common Stock Warrants | Dec. 31, 2019$ / shares |
Class of Warrant or Right [Line Items] | |
Underlying common stock price | $ 0.22 |
Dividend yield | |
Class of Warrant or Right [Line Items] | |
Warrants and rights outstanding measurement input (in percent) | 0 |
Volatility factor | |
Class of Warrant or Right [Line Items] | |
Warrants and rights outstanding measurement input (in percent) | 93.08 |
Risk-free interest rate | |
Class of Warrant or Right [Line Items] | |
Warrants and rights outstanding measurement input (in percent) | 1.62 |
Expected term (years) | |
Class of Warrant or Right [Line Items] | |
Expected Term (years) | 5 years |
Warrants and Derivative Liabi_5
Warrants and Derivative Liabilities (Details 2) - Emerald Multi-Draw Credit Agreement Warrants | Mar. 31, 2020Percent$ / shares | Dec. 31, 2019$ / shares | Nov. 01, 2018$ / shares |
Black-Scholes option pricing model | |||
Class of Warrant or Right [Line Items] | |||
Underlying common stock price | $ 0.36 | ||
Monte Carlo simulations | |||
Class of Warrant or Right [Line Items] | |||
Underlying common stock price | $ 0.08 | ||
Minimum | Black-Scholes option pricing model | |||
Class of Warrant or Right [Line Items] | |||
Underlying common stock price | 0.33 | $ 0.33 | |
Maximum | Black-Scholes option pricing model | |||
Class of Warrant or Right [Line Items] | |||
Underlying common stock price | $ 0.69 | $ 0.69 | |
Dividend yield | Black-Scholes option pricing model | |||
Class of Warrant or Right [Line Items] | |||
Warrants and rights outstanding measurement input (in percent) | 0 | 0 | 0 |
Dividend yield | Monte Carlo simulations | |||
Class of Warrant or Right [Line Items] | |||
Warrants and rights outstanding measurement input (in percent) | Percent | 18.46 | ||
Volatility factor | Black-Scholes option pricing model | |||
Class of Warrant or Right [Line Items] | |||
Warrants and rights outstanding measurement input (in percent) | 92.5 | ||
Volatility factor | Monte Carlo simulations | |||
Class of Warrant or Right [Line Items] | |||
Warrants and rights outstanding measurement input (in percent) | Percent | 79.8 | ||
Volatility factor | Minimum | Black-Scholes option pricing model | |||
Class of Warrant or Right [Line Items] | |||
Warrants and rights outstanding measurement input (in percent) | 91.6 | 91.6 | |
Volatility factor | Maximum | Black-Scholes option pricing model | |||
Class of Warrant or Right [Line Items] | |||
Warrants and rights outstanding measurement input (in percent) | 92.1 | 0.921 | |
Risk-free interest rate | Black-Scholes option pricing model | |||
Class of Warrant or Right [Line Items] | |||
Warrants and rights outstanding measurement input (in percent) | 2.96 | ||
Risk-free interest rate | Minimum | Black-Scholes option pricing model | |||
Class of Warrant or Right [Line Items] | |||
Warrants and rights outstanding measurement input (in percent) | 2.23 | 0.0223 | |
Risk-free interest rate | Maximum | Black-Scholes option pricing model | |||
Class of Warrant or Right [Line Items] | |||
Warrants and rights outstanding measurement input (in percent) | 2.51 | 0.0251 | |
Expected term (years) | Black-Scholes option pricing model | |||
Class of Warrant or Right [Line Items] | |||
Expected Term (years) | 5 years | 5 years | 5 years |
Expected term (years) | Monte Carlo simulations | |||
Class of Warrant or Right [Line Items] | |||
Expected Term (years) | 2 years 6 months 18 days |
Warrants and Derivative Liabi_6
Warrants and Derivative Liabilities (Details 3) - USD ($) | Nov. 01, 2018 | Feb. 16, 2018 | Jan. 19, 2018 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Fair Value Of Derivative Liabilities [Roll Forward] | ||||||||
Fair Value of Derivative Liabilities | $ 823,037 | $ 501,400 | $ 15,958,366 | $ 15,958,366 | $ 823,037 | |||
Fair Value of Derivative Liabilities Issued | 0 | 516,058 | 516,058 | 10,988,736 | ||||
Change in Fair value of Derivative Liabilities | (35,903) | 12,820,618 | (9,734,759) | 6,503,174 | ||||
Reclassification of Derivatives to Equity or Extinguishment | (26,563) | 0 | (6,238,265) | (2,356,581) | ||||
Fair Value of Derivative Liabilities | 438,934 | 29,295,042 | 501,400 | 15,958,366 | ||||
Less, noncurrent portion of derivative liabilities | (190,882) | (963,369) | (90,797) | (219,453) | $ (551,322) | |||
Current balance of derivative liabilities | 248,052 | 28,331,673 | 410,603 | 15,738,913 | $ 271,715 | |||
Series B Preferred Stock - conversion liability | ||||||||
Fair Value Of Derivative Liabilities [Roll Forward] | ||||||||
Fair Value of Derivative Liabilities | 6,715 | 0 | 0 | 6,715 | ||||
Fair Value of Derivative Liabilities Issued | 0 | |||||||
Change in Fair value of Derivative Liabilities | 0 | |||||||
Reclassification of Derivatives to Equity or Extinguishment | (6,715) | |||||||
Fair Value of Derivative Liabilities | 0 | |||||||
Emerald Financing - Warrant Liability | ||||||||
Fair Value Of Derivative Liabilities [Roll Forward] | ||||||||
Fair Value of Derivative Liabilities | 0 | 276,024 | 15,251,413 | 15,251,413 | 0 | |||
Fair Value of Derivative Liabilities Issued | $ 5,707,423 | 4,717,211 | 0 | 0 | 0 | 10,424,634 | ||
Change in Fair value of Derivative Liabilities | (81,879) | 12,239,322 | (9,042,066) | 4,826,779 | ||||
Reclassification of Derivatives to Equity or Extinguishment | 0 | 0 | (5,933,323) | 0 | ||||
Fair Value of Derivative Liabilities | 194,145 | 27,490,735 | 276,024 | 15,251,413 | ||||
Emerald Multi-Draw Credit Agreement - compound derivative liability | ||||||||
Fair Value Of Derivative Liabilities [Roll Forward] | ||||||||
Fair Value of Derivative Liabilities | 90,797 | 219,453 | 219,453 | |||||
Fair Value of Derivative Liabilities Issued | 0 | 516,058 | ||||||
Change in Fair value of Derivative Liabilities | $ 593,629 | 100,085 | 227,858 | 1,830,573 | ||||
Reclassification of Derivatives to Equity or Extinguishment | 0 | 0 | ||||||
Fair Value of Derivative Liabilities | 190,882 | 963,369 | 90,797 | 219,453 | ||||
Emerald Multi-Draw Credit Agreement - compound derivative liability | ||||||||
Fair Value Of Derivative Liabilities [Roll Forward] | ||||||||
Fair Value of Derivative Liabilities | 0 | 90,797 | 219,453 | 219,453 | 0 | |||
Fair Value of Derivative Liabilities Issued | 516,058 | 204,102 | ||||||
Change in Fair value of Derivative Liabilities | (484,147) | 15,351 | ||||||
Reclassification of Derivatives to Equity or Extinguishment | (160,567) | 0 | ||||||
Fair Value of Derivative Liabilities | 90,797 | 219,453 | ||||||
Series B - warrant liability | ||||||||
Fair Value Of Derivative Liabilities [Roll Forward] | ||||||||
Fair Value of Derivative Liabilities | 551,322 | 134,579 | 487,500 | 487,500 | 551,322 | |||
Fair Value of Derivative Liabilities Issued | 0 | 0 | 0 | 0 | ||||
Change in Fair value of Derivative Liabilities | (54,109) | 353,438 | (208,546) | 1,476,044 | ||||
Reclassification of Derivatives to Equity or Extinguishment | (26,563) | 0 | (144,375) | (1,539,866) | ||||
Fair Value of Derivative Liabilities | $ 53,907 | 840,938 | 134,579 | 487,500 | ||||
Emerald Convertible Promissory Note - conversion liability | ||||||||
Fair Value Of Derivative Liabilities [Roll Forward] | ||||||||
Fair Value of Derivative Liabilities | 265,000 | $ 0 | $ 0 | 265,000 | ||||
Fair Value of Derivative Liabilities Issued | 360,000 | |||||||
Change in Fair value of Derivative Liabilities | $ 360,000 | 185,000 | ||||||
Reclassification of Derivatives to Equity or Extinguishment | (810,000) | |||||||
Fair Value of Derivative Liabilities | $ 0 |
Warrants and Derivative Liabi_7
Warrants and Derivative Liabilities (Details 5) - Emerald Financing Warrant Liability | Mar. 31, 2020Percent$ / shares | Dec. 31, 2019 | Dec. 31, 2019Percent | Dec. 31, 2019$ / shares | Dec. 31, 2019USD_per_warrants | Dec. 31, 2019 | Dec. 31, 2018USD_per_warrants$ / shares | Feb. 16, 2018USD_per_warrants$ / shares | Jan. 19, 2018USD_per_warrants$ / shares |
Class of Warrant or Right [Line Items] | |||||||||
Expected Term (years) | 5 years | 5 years | |||||||
Monte Carlo simulations | |||||||||
Class of Warrant or Right [Line Items] | |||||||||
Underlying common stock price | $ 0.08 | $ 0.13 | $ 0.40 | ||||||
Monte Carlo simulations | Minimum | |||||||||
Class of Warrant or Right [Line Items] | |||||||||
Underlying common stock price | $ 0.29 | $ 0.29 | |||||||
Monte Carlo simulations | Maximum | |||||||||
Class of Warrant or Right [Line Items] | |||||||||
Underlying common stock price | $ 0.30 | $ 0.30 | |||||||
Dividend yield | Monte Carlo simulations | |||||||||
Class of Warrant or Right [Line Items] | |||||||||
Warrants and rights outstanding measurement input (in percent) | 0 | 0 | 0 | 0 | 0 | 0 | |||
Volatility factor | Monte Carlo simulations | |||||||||
Class of Warrant or Right [Line Items] | |||||||||
Warrants and rights outstanding measurement input (in percent) | 81.4 | 79.5 | 79.5 | 70 | 70 | ||||
Volatility factor | Monte Carlo simulations | Minimum | |||||||||
Class of Warrant or Right [Line Items] | |||||||||
Warrants and rights outstanding measurement input (in percent) | 92.1 | ||||||||
Volatility factor | Monte Carlo simulations | Maximum | |||||||||
Class of Warrant or Right [Line Items] | |||||||||
Warrants and rights outstanding measurement input (in percent) | 92.4 | ||||||||
Risk-free interest rate | Monte Carlo simulations | |||||||||
Class of Warrant or Right [Line Items] | |||||||||
Warrants and rights outstanding measurement input (in percent) | 0.28 | 1.62 | 1.62 | 2.49 | |||||
Risk-free interest rate | Monte Carlo simulations | Minimum | |||||||||
Class of Warrant or Right [Line Items] | |||||||||
Warrants and rights outstanding measurement input (in percent) | USD_per_warrants | 2.45 | 2.45 | |||||||
Risk-free interest rate | Monte Carlo simulations | Maximum | |||||||||
Class of Warrant or Right [Line Items] | |||||||||
Warrants and rights outstanding measurement input (in percent) | USD_per_warrants | 2.60 | 2.60 | |||||||
Expected term (years) | Monte Carlo simulations | |||||||||
Class of Warrant or Right [Line Items] | |||||||||
Expected Term (years) | 2 years 10 months 17 days | 3 years 1 month 17 days | 5 years | 5 years | |||||
Expected term (years) | Monte Carlo simulations | Minimum | |||||||||
Class of Warrant or Right [Line Items] | |||||||||
Expected Term (years) | 4 years 18 days | ||||||||
Expected term (years) | Monte Carlo simulations | Maximum | |||||||||
Class of Warrant or Right [Line Items] | |||||||||
Expected Term (years) | 4 years 1 month 17 days |
Warrants and Derivative Liabi_8
Warrants and Derivative Liabilities (Details 6) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||
Feb. 16, 2018 | Jan. 19, 2018 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Derivative Liabilities [Line Items] | ||||||
Initial fair value of Emerald Financing Warrant Liability | $ 0 | $ 516,058 | $ 516,058 | $ 10,988,736 | ||
Less: proceeds from the Emerald Financing | (1,919,372) | (3,095,908) | ||||
Emerald Financing - Warrant Liability | ||||||
Derivative Liabilities [Line Items] | ||||||
Initial fair value of Emerald Financing Warrant Liability | $ 5,707,423 | $ 4,717,211 | $ 0 | $ 0 | $ 0 | 10,424,634 |
Less: proceeds from the Emerald Financing | 1,750,000 | 1,500,000 | 3,250,000 | |||
Excess over proceeds adjustment | $ 3,957,423 | $ 3,217,211 | $ 7,174,634 |
Warrants and Derivative Liabi_9
Warrants and Derivative Liabilities (Details 7) - Black-Scholes option pricing model - Series B Warrant Liability | Mar. 31, 2020Percent$ / shares | Dec. 31, 2019 | Dec. 31, 2019Percent | Dec. 31, 2019$ / shares | Dec. 31, 2019 | Dec. 31, 2018$ / shares |
Class of Warrant or Right [Line Items] | ||||||
Underlying common stock price | $ 0.08 | $ 0.13 | $ 0.40 | |||
Dividend yield | ||||||
Class of Warrant or Right [Line Items] | ||||||
Warrants and rights outstanding measurement input (in percent) | 0 | 0 | 0 | 0 | ||
Volatility factor | ||||||
Class of Warrant or Right [Line Items] | ||||||
Warrants and rights outstanding measurement input (in percent) | 79.8 | 79.2 | 79.2 | 93 | ||
Risk-free interest rate | ||||||
Class of Warrant or Right [Line Items] | ||||||
Warrants and rights outstanding measurement input (in percent) | 0.13 | 1.60 | 1.60 | 2.79 | ||
Expected term (years) | ||||||
Class of Warrant or Right [Line Items] | ||||||
Expected Term (years) | 4 months 20 days | 7 months 20 days | ||||
Expected term (years) | Minimum | ||||||
Class of Warrant or Right [Line Items] | ||||||
Expected Term (years) | 1 year 7 months 20 days | |||||
Expected term (years) | Maximum | ||||||
Class of Warrant or Right [Line Items] | ||||||
Expected Term (years) | 1 year 7 months 24 days |
Warrants and Derivative Liab_10
Warrants and Derivative Liabilities (Details 8) - Black-Scholes option pricing model - Emerald Convertible Promissory Note - conversion liability | Jan. 19, 2018$ / shares |
Class of Warrant or Right [Line Items] | |
Underlying common stock price | $ 0.19 |
Dividend yield | |
Class of Warrant or Right [Line Items] | |
Warrants and rights outstanding measurement input (in percent) | 0 |
Volatility factor | |
Class of Warrant or Right [Line Items] | |
Warrants and rights outstanding measurement input (in percent) | 70 |
Risk-free interest rate | |
Class of Warrant or Right [Line Items] | |
Warrants and rights outstanding measurement input (in percent) | 1.29 |
Expected term (years) | |
Class of Warrant or Right [Line Items] | |
Expected Term (years) | 1 day |
Warrants and Derivative Liab_11
Warrants and Derivative Liabilities (Detail Textuals) - USD ($) | Nov. 01, 2018 | Dec. 20, 2019 | Feb. 16, 2018 | Jan. 31, 2018 | Jan. 19, 2018 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 28, 2017 |
Class of Warrant or Right [Line Items] | |||||||||||
Warrants issued in connection with convertible multi draw credit agreement related party value | $ 716,110 | $ 716,110 | $ 315,080 | ||||||||
Warrant vested aggregate fair value utilizing the Black-Scholes option pricing model | $ (35,903) | 12,820,618 | (9,734,759) | 6,503,174 | |||||||
Proceeds from Issuance of Warrants | 4,080,000 | 98,700 | |||||||||
Payments of Derivative Issuance Costs | (137,192) | ||||||||||
Reduction of equity liability | (26,563) | 0 | (6,238,265) | (2,356,581) | |||||||
Series B Preferred Stock - conversion liability | |||||||||||
Class of Warrant or Right [Line Items] | |||||||||||
Warrant vested aggregate fair value utilizing the Black-Scholes option pricing model | 0 | ||||||||||
Reduction of equity liability | (6,715) | ||||||||||
Emerald Health Sciences Inc | |||||||||||
Class of Warrant or Right [Line Items] | |||||||||||
Conversion price, per share (in dollars per share) | $ 0.10 | ||||||||||
Emerald Financing Warrant Liability | |||||||||||
Class of Warrant or Right [Line Items] | |||||||||||
Number of warrants issued | 44,200,000 | 44,200,000 | |||||||||
Warrant exercise price | $ 0.10 | $ 0.10 | |||||||||
Warrant vested aggregate fair value utilizing the Black-Scholes option pricing model | (81,879) | 12,239,322 | (9,042,066) | 4,826,779 | |||||||
Fair value of common stock warrants issued | $ 5,707,423 | $ 4,717,211 | |||||||||
Reduction of equity liability | $ 0 | $ 0 | $ (5,933,323) | 0 | |||||||
2019 Common Stock Warrants | |||||||||||
Class of Warrant or Right [Line Items] | |||||||||||
Number of warrants issued | 8,000,000 | ||||||||||
Warrant exercise price | $ 0.35 | $ 0.35 | |||||||||
Term of warrant | 5 years | 5 years | |||||||||
Warrant vested aggregate fair value utilizing the Black-Scholes option pricing model | $ 1,130,400 | ||||||||||
Proceeds from Issuance of Warrants | 722,208 | ||||||||||
Emerald Multi-Draw Credit Agreement Warrants | |||||||||||
Class of Warrant or Right [Line Items] | |||||||||||
Warrant vested aggregate fair value utilizing the Black-Scholes option pricing model | (484,147) | 15,351 | |||||||||
Reduction of equity liability | (160,567) | $ 0 | |||||||||
Emerald Financing Warrant Liability | |||||||||||
Class of Warrant or Right [Line Items] | |||||||||||
Total number of warrants issued | 44,200,000 | 44,200,000 | |||||||||
Warrant exercise price | $ 0.10 | $ 0.10 | |||||||||
Term of warrant | 5 years | 5 years | |||||||||
Aggregate exercise price of outstanding credit agreement | $ 4,080,000 | ||||||||||
Emerald Multi-Draw Credit Agreement Warrants | |||||||||||
Class of Warrant or Right [Line Items] | |||||||||||
Number of warrants issued | 2,500,000 | 5,000,000 | 5,000,000 | ||||||||
Warrant exercise price | $ 0.50 | $ 0.50 | |||||||||
Term of warrant | 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 | $ 593,629 | $ 100,085 | 227,858 | $ 1,830,573 | |||||||
Proceeds from Issuance of Warrants | $ 315,080 | $ 716,110 | |||||||||
Reduction of equity liability | $ 0 | 0 | |||||||||
Emerald Multi-Draw Credit Agreement Warrants | Warrants | |||||||||||
Class of Warrant or Right [Line Items] | |||||||||||
Warrant vested aggregate fair value utilizing the Black-Scholes option pricing model | 1,830,573 | ||||||||||
2018 Emerald Financing Warrants | |||||||||||
Class of Warrant or Right [Line Items] | |||||||||||
Number of warrants issued | 3,400,000 | 40,800,000 | |||||||||
Total number of warrants issued | 40,800,000 | ||||||||||
Warrant exercise price | $ 0.10 | $ 0.10 | |||||||||
Term of warrant | 5 years | 5 years | |||||||||
Warrants aggregate exercise price | $ 4,080,000 | $ 4,080,000 | |||||||||
Warrants exercise | 40,800,000 | 40,800,000 | |||||||||
Series B Warrants | |||||||||||
Class of Warrant or Right [Line Items] | |||||||||||
Number of warrants issued | 312,500 | ||||||||||
Value of common stock called by warrants | $ 26,563 | ||||||||||
Total number of warrants issued | 312,500 | 187,500 | 187,500 | ||||||||
Warrant exercise price | $ 0 | $ 0.10 | |||||||||
Conversion price, per share (in dollars per share) | $ 0 | ||||||||||
Series B Warrants | Warrants | |||||||||||
Class of Warrant or Right [Line Items] | |||||||||||
Warrant exercise price | $ 1.15 | ||||||||||
Emerald Convertible Promissory Note Conversion Liability | |||||||||||
Class of Warrant or Right [Line Items] | |||||||||||
Warrant vested aggregate fair value utilizing the Black-Scholes option pricing model | $ 360,000 | $ 185,000 | |||||||||
Reduction of equity liability | (810,000) | ||||||||||
Series B - warrant liability | |||||||||||
Class of Warrant or Right [Line Items] | |||||||||||
Warrant exercise price | $ 0.10 | $ 0 | $ 1.15 | $ 0.10 | |||||||
Warrant vested aggregate fair value utilizing the Black-Scholes option pricing model | $ (54,109) | 353,438 | $ (208,546) | $ 1,476,044 | |||||||
Warrants exercise | 4,231,750 | 187,500 | 987,000 | ||||||||
Proceeds from Warrant Exercises | $ 98,700 | ||||||||||
Reduction of equity liability | $ (26,563) | $ 0 | $ (144,375) | $ (1,539,866) |
Convertible Debt - Related Pa_3
Convertible Debt - Related Party (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Short-term Debt [Line Items] | |||
Less, noncurrent portion | $ (517,780) | $ (387,070) | $ (1,360,960) |
Convertible debt | Emerald Health Sciences Inc | |||
Short-term Debt [Line Items] | |||
Total principal value | 2,014,500 | 2,014,500 | 2,000,000 |
Unamortized debt discount | (1,491,997) | (1,622,344) | (587,617) |
Unamortized debt issuance costs | (4,723) | (5,086) | (51,423) |
Current convertible debt - related party | 517,780 | 387,070 | 1,360,960 |
Less, noncurrent portion | (517,780) | (387,070) | (1,360,960) |
Current convertible debt - related party | $ 0 | $ 0 | $ 0 |
Convertible Debt - Related Pa_4
Convertible Debt - Related Party (Details 1) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Debt Disclosure [Abstract] | ||||
Interest expense - stated rate | $ 35,645 | $ 59,111 | $ 371,420 | $ 26,433 |
Non-cash interest expense: | ||||
Amortization of debt discount | 130,347 | 53,979 | 616,383 | 56,253 |
Amortization of transaction costs | 363 | 2,973 | 12,910 | 2,283 |
Other interest expense | 0 | 9,794 | ||
Interest Expense | $ 166,355 | $ 116,063 | $ 1,000,713 | $ 94,763 |
Convertible Debt - Related Pa_5
Convertible Debt - Related Party (Detail Textuals) - USD ($) | Nov. 01, 2018 | Nov. 01, 2018 | Oct. 05, 2018 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Feb. 16, 2018 | Jan. 19, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||||||||||
Derivative liability | $ 438,934 | $ 29,295,042 | $ 501,400 | $ 15,958,366 | $ 823,037 | |||||
Fair value of derivative liabilities in excess of proceeds recorded as other expense | 322,644 | (322,644) | (7,174,634) | |||||||
Loss on extinguishment of debt - related party | (725,425) | $ (590,392) | ||||||||
Multi-Draw Credit Agreement | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Warrants | 2,000,000 | |||||||||
Aggregate Principal Amount | $ 4,000,000 | |||||||||
Proceeds from related party debt | $ 2,000,000 | $ 2,000,000 | $ 4,000,000 | |||||||
Number of warrant issued | 2,500,000 | 2,500,000 | 5,000,000 | 5,000,000 | ||||||
Allocation of debt on the basis of relative fair value | $ 1,684,920 | $ 1,684,920 | $ 3,283,890 | $ 3,283,890 | ||||||
Allocation of warrant on the basis of relative fair value | 315,080 | 315,080 | 716,110 | 716,110 | ||||||
Beneficial conversion feature | 90,080 | 1,584,850 | 1,584,850 | |||||||
Derivative liability | $ 204,102 | $ 204,102 | 516,058 | 516,058 | ||||||
Convertible multi-draw credit agreement issuance costs | $ 63,007 | 63,007 | ||||||||
Fair value of derivative liabilities in excess of proceeds recorded as other expense | 322,644 | |||||||||
Proceeds from warrant exercises | 3,985,500 | |||||||||
Loss on extinguishment of debt - related party | $ (725,425) | |||||||||
Effective interest rate | 32.05% | 10.57% | ||||||||
Unamortized debt discount period | 2 years 6 months 7 days | |||||||||
Unamortized debt discount periods | 2 years 9 months 3 days | |||||||||
Fair value of derivative liabilities in excess of proceeds | 322,644 | |||||||||
Fair value of underlying shares | $ 657,231 | |||||||||
Carrying value of the equity component | $ 377,719 | |||||||||
Amount of each warrant outstanding | 2,000,000 | |||||||||
Emerald Financing Warrant Liability | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Warrant exercise price | $ 0.10 | $ 0.10 | ||||||||
Derivative liability | 194,145 | $ 27,490,735 | $ 276,024 | $ 15,251,413 | $ 0 | |||||
Emerald Financing Warrant Liability | 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 | $ 14,000,000 | $ 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) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Jan. 19, 2018 | Dec. 28, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | |
Short-term Debt [Line Items] | ||||
Proceeds from convertible debt issuance | $ 400,000 | |||
Loss on extinguishment of debt | $ 725,425 | $ 590,392 | ||
Emerald Health Sciences Inc | ||||
Short-term Debt [Line Items] | ||||
Initial conversion price | $ 0.10 | |||
Number of notes converted into common stock | 9,000,000 | |||
Effective interest rate | 13.94% | |||
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 | $ 0.10 | |||
Proceeds from convertible debt issuance | $ 500,000 | |||
Funding of remaining bridge loan | $ 400,000 | |||
Convertible debt | 265,000 | |||
Additional conversion liability | $ 360,000 |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) and Capitalization (Detail Textuals) - USD ($) | 1 Months Ended | 12 Months Ended | |||||||
Dec. 20, 2019 | Nov. 30, 2019 | Feb. 16, 2018 | Jan. 19, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2020 | Nov. 15, 2018 | Dec. 28, 2017 | |
Equity [Line Items] | |||||||||
Common stock, shares authorized | 500,000,000 | 500,000,000 | 500,000,000 | 500,000,000 | |||||
Common stock gross proceeds | $ 1,919,372 | $ 3,095,908 | |||||||
Warrant liability, issuance costs | 137,192 | ||||||||
2018 Emerald Financing Warrants | |||||||||
Equity [Line Items] | |||||||||
Warrants exercise | 40,800,000 | 40,800,000 | |||||||
Intrinsic value of warrant exercises | $ 4,284,000 | ||||||||
Number of warrants issued | 40,800,000 | ||||||||
Warrant exercise price | $ 0.10 | $ 0.10 | |||||||
Series B Warrants | |||||||||
Equity [Line Items] | |||||||||
Intrinsic value of warrant exercises | $ 144,375 | ||||||||
Number of warrants issued | 187,500 | 312,500 | |||||||
Warrant exercise price | $ 0 | $ 0.10 | |||||||
Direct offering | |||||||||
Equity [Line Items] | |||||||||
Number of stock sold | 8,000,000 | ||||||||
Common stock, par value (per share) | $ 0.001 | ||||||||
Net proceeds from the transaction | $ 1,919,372 | ||||||||
Number of warrants issued | 8,000,000 | ||||||||
Private placement | |||||||||
Equity [Line Items] | |||||||||
Emerald financing issuance costs | $ 154,092 | ||||||||
Warrant liability, issuance costs | 137,192 | ||||||||
Reduction to APIC from the issuance of common stock | $ 16,900 | ||||||||
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 Health Sciences 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 |
Stockholders' Equity (Deficit_2
Stockholders' Equity (Deficit) and Capitalization (Detail Textuals 1) - $ / shares | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 31, 2020 | Dec. 31, 2019 | |
Equity [Line Items] | |||
Preferred stock, shares authorized | 20,000,000 | 20,000,000 | 20,000,000 |
Preferred stock (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 |
Preferred stock, shares issued | 0 | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 | 0 |
Series B Preferred Stock | |||
Equity [Line Items] | |||
Number of shares converted | 2,833.55 | ||
Number of shares issued in conversion | 28,385,000 | ||
Series D Preferred Stock | |||
Equity [Line Items] | |||
Number of shares converted | 200 | ||
Number of shares issued in conversion | 2,000,000 | ||
Series F Preferred Stock | |||
Equity [Line Items] | |||
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, 2019shares | |
Shares Available for Grant | |
Balance at the beginning | 9,142,273 |
Share pool increase | 4,898,750 |
Forfeited | 153,125 |
Cancelled | 196,875 |
Granted | (1,262,642) |
Balance at the ending | 13,128,381 |
Stock-Based Compensation (Det_2
Stock-Based Compensation (Details 1) - Omnibus Incentive Plan 2014 - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Number of Shares | ||
Balance at the beginning | 9,142,273 | |
Granted | 1,262,642 | |
Cancelled | (196,875) | |
Forfeited | (153,125) | |
Balance at the ending | 13,128,381 | 9,142,273 |
Stock options | ||
Number of Shares | ||
Balance at the beginning | 2,405,000 | |
Granted | 1,262,642 | |
Cancelled | (196,875) | |
Forfeited | (153,125) | |
Balance at the ending | 3,317,642 | 2,405,000 |
Exercisable | 2,399,356 | |
Vested and expected to vest | 3,317,642 | |
Weighted Average Exercise Price | ||
Balance at the beginning | $ 0.33 | |
Granted | 0.30 | |
Cancelled | 0.26 | |
Forfeited | 0.26 | |
Balance at the ending | 0.33 | $ 0.33 |
Exercisable | 0.34 | |
Vested and expected to vest | $ 0.33 | |
Share-based compensation arrangement by share-based payment award, options, additional disclosures | ||
Weighted Average Remaining Contractual Term (Years) | 8 years 4 months 2 days | 8 years 8 months 15 days |
Weighted Average Remaining Contractual Term (Years), Exercisable | 7 years 10 months 2 days | |
Weighted Average Remaining Contractual Term (Years), Vested and Expected to Vest | 8 years 4 months 2 days | |
Aggregate Intrinsic Value | $ 0 | |
Aggregate Intrinsic Value, Exercisable | 0 | |
Aggregate Intrinsic Value, Vested and expected to vest | $ 0 |
Stock-Based Compensation (Det_3
Stock-Based Compensation (Details 2) - Stock options - Omnibus Incentive Plan 2014 | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
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 (years) | 5 years 7 months 24 days | |
Volatility | 93.72% | |
Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk-free interest rate | 3.06% | |
Expected term (years) | 5 years 3 months 7 days | |
Volatility | 70.00% | |
Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk-free interest rate | 3.10% | |
Expected term (years) | 5 years 6 months 29 days | |
Volatility | 93.60% |
Stock-Based Compensation (Det_4
Stock-Based Compensation (Details 3) - Stock options - Awards Granted Outside the 2014 Plan | 1 Months Ended |
May 25, 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 14 days |
Volatility | 70.00% |
Stock-Based Compensation (Det_5
Stock-Based Compensation (Details 4) - Restricted Stock Awards - $ / shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Number of Shares | ||
Unvested, Opening balance | 450,000 | 900,000 |
Granted | 0 | 0 |
Released | (450,000) | (450,000) |
Unvested, Ending balance | 0 | 450,000 |
Weighted Average Grant Date Fair Value | ||
Unvested, Opening balance | $ 0.19 | $ 0.19 |
Granted | 0 | 0 |
Released | 0.19 | 0.19 |
Unvested, Ending balance | $ 0 | $ 0.19 |
Stock-Based Compensation (Det_6
Stock-Based Compensation (Detail Textuals) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
May 25, 2018 | Feb. 28, 2018 | Jan. 18, 2018 | Oct. 31, 2014 | Mar. 31, 2020 | Dec. 31, 2019 | 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 | 325,000 | ||||||
Stock compensation expenses | $ 98,042 | ||||||
Restricted Stock Awards | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of restricted common stock vested | 450,000 | 450,000 | |||||
Number of restricted common stock granted | 0 | 0 | |||||
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 | 13,159,631 | ||||||
Omnibus Incentive Plan 2014 | Stock options | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of shares reserved for future grants | 3,200,000 | ||||||
Percentage of share reserve of the number of issued and outstanding shares | 10.00% | ||||||
Weighted-average fair value of stock options granted | $ 0.22 | $ 0.30 | |||||
Fair value of stock options vested | $ 473,030 | $ 418,688 | |||||
Elizabeth Berecz, CFO | Restricted Stock Agreements | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of restricted common stock vested | 350,000 | ||||||
Stock compensation expenses | 97,183 | ||||||
Elizabeth Berecz, CFO | Restricted Stock Awards | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Stock compensation expenses | $ 184,800 | ||||||
Number of restricted common stock granted | 700,000 | 700,000 |
Stock-Based Compensation (Det_7
Stock-Based Compensation (Detail Textuals 1) - Douglas Cesario, CFO - Restricted Stock Agreements - USD ($) | 1 Months Ended | 12 Months Ended | |
May 25, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Granted | 1,195,073 | ||
Granted | $ 0.245 | ||
Fair market value of stock options | $ 200,772 | ||
Vesting percentage | 25.00% | ||
Description of stock option agreement | The options vested 25% on July 23, 2018, and the remaining 75% will vest 1/33 on each of the next 33 months thereafter. | ||
Remaining contractual life | 8 years 6 months 25 days | ||
Options exercised | 760,501 | ||
Options vested | 1,195,073 | ||
Fair value of stock options vested | $ 54,756 | $ 73,008 |
Stock-Based Compensation (Det_8
Stock-Based Compensation (Detail Textuals 2) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
May 25, 2018 | Feb. 28, 2018 | Jan. 18, 2018 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Total stock-based compensation expense | $ 64,142 | $ 171,493 | $ 680,455 | $ 674,961 | |||
Total amount of unrecognized compensation cost | $ 248,264 | $ 312,405 | |||||
Recognized weighted average period | 1 year 8 months 26 days | 2 years 25 days | |||||
Restricted Stock Awards | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of restricted common stock granted | 0 | 0 | |||||
Fair market value of shares granted | $ 475,000 | ||||||
Restricted stock 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 | ||||||
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 Income (Loss) Per Share o_3
Net Income (Loss) Per Share of Common Stock (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Effect of Dilutive Securities | ||||
Net income | $ (2,341,660) | $ (14,774,392) | $ 1,051,825 | $ (19,194,236) |
Basic EPS | ||||
Income available to common stockholders, Income (Numerator) | $ 1,051,825 | $ (19,194,236) | ||
Income available to common stockholders Shares (Denominator) | 182,256,966 | 132,729,246 | 135,154,931 | 121,154,334 |
Income available to common stockholders, Per-Share Amount | $ (0.01) | $ (0.11) | $ 0.01 | $ (0.16) |
Diluted EPS | ||||
Loss available to common stockholders + assumed conversions, Income (Numerator) | $ (8,198,787) | |||
Loss available to common stockholders + assumed conversions, Shares (Denominator) | 183,737,415 | 132,729,246 | 169,560,265 | 121,154,334 |
Loss available to common stockholders + assumed conversions, Per-Share Amount | $ (0.01) | $ (0.11) | $ (0.05) | $ (0.16) |
Unvested restricted stock | ||||
Effect of Dilutive Securities | ||||
Shares (Denominator) | 858,856 | |||
Options | ||||
Effect of Dilutive Securities | ||||
Shares (Denominator) | 392,784 | |||
Warrants | ||||
Effect of Dilutive Securities | ||||
Shares (Denominator) | 447,431 | |||
Warrants - liability classified | ||||
Effect of Dilutive Securities | ||||
Income (Numerator) | $ (9,250,612) | |||
Shares (Denominator) | 32,706,263 |
Net Income (Loss) Per Share o_4
Net Income (Loss) Per Share of Common Stock (Details 1) - shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive excluded from the calculation of diluted net loss per share | 4,119,931 | 3,600,073 |
Unvested restricted stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive excluded from the calculation of diluted net loss per share | 234,645 | 1,543,501 |
Common shares underlying convertible debt | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive excluded from the calculation of diluted net loss per share | 5,036,250 | 5,000,000 |
Warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive excluded from the calculation of diluted net loss per share | 20,712,000 | 53,130,750 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
US | $ 1,120,521 | $ (19,192,594) |
Foreign | (67,096) | 0 |
Pre-tax income (loss) from operations | $ 1,053,425 | $ (19,192,594) |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Current deferred tax assets/(liabilities): | ||
State taxes | $ 336 | $ 345 |
Capitalized research and development costs | 0 | 10,327 |
Other | 112,222 | 187,377 |
Net operating loss | 6,434,544 | 5,104,432 |
Gross deferred tax assets | 6,547,102 | 5,302,481 |
Valuation allowance | (6,206,450) | (5,302,481) |
Net deferred tax assets | 340,652 | 0 |
Note discount | 340,652 | 0 |
Total deferred tax liabilities | 340,652 | 0 |
Net deferred tax assets | $ 0 | $ 0 |
Income Taxes (Details 2)
Income Taxes (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Expected income tax benefit at federal statutory tax rate | $ 221,219 | $ (4,030,454) |
State income taxes, net of federal benefit | (434,881) | (319,816) |
Change in fair value of warrants | (1,874,873) | 2,869,116 |
Change in valuation allowance | 1,469,187 | 1,286,995 |
Uncertain tax positions | 436,145 | 0 |
Change in compound derivative | (101,671) | 3,224 |
Loss on extinguishment of debt | 117,198 | 123,982 |
Stock Compensation | 121,289 | 67,966 |
Rate adjustment | 49,338 | 0 |
Other permanent difference | (1,351) | 629 |
Provision for Income Taxes | $ 1,600 | $ 1,642 |
Income Taxes (Details 3)
Income Taxes (Details 3) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Unrecognized tax positions, beginning of the year | $ 0 | $ 0 |
Gross increase - current period tax positions | 552,082 | 0 |
Unrecognized tax positions, end of year | $ 552,082 | $ 0 |
Income Taxes (Detail Textuals)
Income Taxes (Detail Textuals) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Operating Loss Carryforwards [Line Items] | ||
Operating loss carry forwards | $ 13,213,037 | |
California net operating loss carry forwards | 24,481,423 | |
Net operating loss | $ 6,434,544 | $ 5,104,432 |
Tax credit limitation on use | 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. | |
Australia | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carry forwards | $ 67,096 | $ 11,275,349 |
Significant Contracts - Unive_2
Significant Contracts - University of Mississippi (Detail Textuals) - USD ($) | Jan. 10, 2017 | Jul. 31, 2018 | Mar. 31, 2020 | Dec. 31, 2019 |
University Of Mississippi Agreements [Line Items] | ||||
Annual maintenance fee payable | $ 75,000 | $ 75,000 | ||
UM 5050 pro-drug agreements | University of Mississippi | Intellectual Property | ||||
University Of Mississippi Agreements [Line Items] | ||||
Payment for upfront fees | $ 100,000 | |||
UM 8930 analogue agreements | University of Mississippi | Intellectual Property | ||||
University Of Mississippi Agreements [Line Items] | ||||
Payment for upfront fees | 200,000 | |||
Annual fees for license agreement | $ 200,000 | |||
UM 5070 license agreement | University of Mississippi | Intellectual Property | ||||
University Of Mississippi Agreements [Line Items] | ||||
Term of agreement | 1 year | |||
Notice period for termination | 60 days | |||
Aggregate milestone payments if milestones achieved | $ 700,000 | |||
Um 5050 Pro-Drug And Um 8930 Analog Agreements | University of Mississippi | Intellectual Property | Milestone 1 | ||||
University Of Mississippi Agreements [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 | ||||
University Of Mississippi Agreements [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 | ||||
University Of Mississippi Agreements [Line Items] | ||||
Term of agreement | 30 days | |||
Aggregate milestone payments if milestones achieved | $ 400,000 |
Related Party Matters (Detail T
Related Party Matters (Detail Textuals) - USD ($) | Feb. 06, 2018 | Apr. 01, 2017 | Mar. 30, 2020 | Dec. 19, 2019 | Feb. 28, 2018 | Jun. 30, 2014 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Independent contractor agreement | Dr. Avtar Dhillon | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Monthly fee | $ 10,000 | |||||||||
Monthly fee paid each month | 5,000 | |||||||||
Monthly fee accruing from effective date | $ 5,000 | |||||||||
Percentage of accrued consulting fees | 100.00% | |||||||||
Percentage of bonus for accrued consulting fees | 10.00% | |||||||||
Accrued expense under agreement | $ 33,871 | |||||||||
Independent contractor agreement | Emerald Health Sciences Inc | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Initial term of agreement | 10 years | 10 years | ||||||||
Total expense incurred under agreement | $ 150,000 | $ 542,000 | $ 550,000 | |||||||
Accrued expense under agreement | $ 7,032 | $ 10,000 | ||||||||
Independent contractor agreement | K2C, Inc. | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Total expense incurred under agreement | 220,000 | |||||||||
Monthly fee | $ 20,000 | $ 10,000 | ||||||||
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 | |||||||||
Separation and release agreement | K2C, Inc. | January 18, 2018 | ||||||||||
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 | $ 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) - Subsequent Event - USD ($) | 1 Months Ended | 3 Months Ended | |||||||
Jul. 31, 2020 | Jun. 30, 2020 | May 31, 2020 | May 15, 2020 | Apr. 29, 2020 | Apr. 24, 2020 | Mar. 31, 2020 | Jun. 17, 2020 | Apr. 22, 2020 | |
Subsequent Event [Line Items] | |||||||||
Payment of upfront license fee | $ 200,000 | ||||||||
Amended and Restated Multi-Draw Credit Agreement | |||||||||
Subsequent Event [Line Items] | |||||||||
Principal amount of credit facility | $ 20,000,000 | ||||||||
Credit facility advances | $ 150,000 | $ 6,000,000 | $ 300,000 | ||||||
Credit facility advances per month | $ 150,000 | $ 150,000 | $ 150,000 | ||||||
Warrant to purchase number of shares of Common Stock equal to dollar amount | $ 0.50 | ||||||||
Price per share of common stock | 0.35 | ||||||||
Reduced fixed conversion price of common stock | 0.25 | ||||||||
Conversion price | $ 0.40 | ||||||||
Capital Raise | $ 5,000,000 | ||||||||
Interest rates per annum | 7.00% | 7.00% | |||||||
Maturity date | Oct. 5, 2022 | Oct. 5, 2022 | |||||||
Separation Agreement | Douglas Cesario | |||||||||
Subsequent Event [Line Items] | |||||||||
Payment in consideration for restrictive covenants in Separation Agreement | $ 125,000 | ||||||||
Options cancelled | 325,929 | ||||||||
Paycheck Protection Program Promissory Note (PPP Note) | |||||||||
Subsequent Event [Line Items] | |||||||||
Principal amount of promissory Note | $ 116,700 | ||||||||
Maturity period of promissory note | 2 years | ||||||||
Interest rate | 1.00% | ||||||||
Debt forgiveness, CARES Act, description | For purposes of the CARES Act, payroll costs exclude compensation of an individual employee in excess of $100,000, prorated annually. Not more than 25% of the forgiveness amount may be for non-payroll costs. Forgiveness is reduced if full-time headcount declines, or if salaries and wages of employees with salaries of $100,000 or less annually are reduced by more than 25%. |