Document and Entity Information
Document and Entity Information | 6 Months Ended |
Jun. 30, 2018 | |
Document And Entity Information | |
Entity Registrant Name | Processa Pharmaceuticals, Inc. |
Entity Central Index Key | 1,533,743 |
Document Type | S-1/A |
Document Period End Date | Jun. 30, 2018 |
Amendment Flag | true |
Amendment Description | Amendment No. 3 |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | true |
Trading Symbol | PCSA |
Document Fiscal Year Focus | 2,018 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Current Assets | |||
Cash and cash equivalents | $ 2,850,453 | $ 2,847,429 | $ 1,071,894 |
Certificates of deposit | 496,201 | 1,019,294 | |
Due from related party | 56,512 | 62,709 | |
Vendor deposit | 227,657 | ||
Prepaid expenses and other | 83,513 | 41,446 | 18,147 |
Notes receivable | 107,490 | ||
Total Current Assets | 3,594,169 | 2,951,584 | 2,336,992 |
Property And Equipment | |||
Software | 19,740 | 19,740 | 15,330 |
Equipment | 9,327 | 9,327 | 8,445 |
Total Cost | 29,067 | 29,067 | 23,775 |
Less: accumulated depreciation | 7,469 | 3,246 | 1,381 |
Property and equipment, net | 21,598 | 25,821 | 22,394 |
Other Assets | |||
Security deposit | 5,535 | 5,535 | 5,535 |
Intangible asset, net of accumulated amortization | 10,816,370 | ||
Total Other Assets | 10,821,905 | 5,535 | 5,535 |
Total Assets | 14,437,672 | 2,982,940 | 2,364,921 |
Current Liabilities | |||
Senior convertible notes, net of debt issuance costs | 224,063 | 2,448,570 | |
Accrued interest | 11,143 | 35,693 | |
Accounts payable | 251,399 | 50,686 | 14,593 |
Due to related parties | 1,116 | 436 | 95 |
Accrued expenses | 161,913 | 64,428 | 83,004 |
Total Current Liabilities | 649,634 | 2,599,813 | 97,692 |
Non-current Liabilities | |||
Accrued rent liability | 3,321 | 9,963 | |
Deferred tax liability | 2,477,830 | ||
Total Liabilities | 3,130,785 | 2,609,776 | 97,692 |
COMMITMENTS AND CONTINGENCIES - SEE NOTE | |||
Stockholders' Equity | |||
Preferred stock, par value $0.0001, 10,000,000 shares authorized; zero shares issued and outstanding | |||
Common stock, value | 3,867 | 3,527 | 3,175 |
Additional paid-in capital | 19,264,976 | 4,228,723 | 4,266,825 |
Subscription receivable | (1,800,000) | ||
Accumulated deficit | (6,161,956) | (3,859,086) | (2,002,771) |
Total Stockholders' Equity | 11,306,887 | 373,164 | 2,267,229 |
Total Liabilities and Stockholders' Equity | $ 14,437,672 | $ 2,982,940 | $ 2,364,921 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | |||
Preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 | 0 |
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 350,000,000 | 350,000,000 | 43,261,049 |
Common stock, shares issued | 38,674,265 | 35,272,626 | 31,745,242 |
Common stock, shares outstanding | 38,674,265 | 35,272,626 | 31,745,242 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Operating Expenses: | ||||||
Research and development costs | $ 1,077,643 | $ 160,867 | $ 1,865,921 | $ 311,164 | ||
General and administrative expenses | 350,581 | 119,467 | 853,918 | 192,759 | ||
Total operating expenses | 1,428,224 | 280,334 | 2,719,839 | 503,923 | $ 1,802,433 | $ 1,921,520 |
Operating Loss | (1,428,224) | (280,334) | (2,719,839) | (503,923) | (1,802,433) | (1,921,520) |
Other Income (Expense): | ||||||
Interest expense | (58,314) | (146,054) | (59,063) | |||
Interest income | 2,681 | 1,889 | 3,706 | 3,387 | 5,181 | 4,454 |
Total other income (expense) | (55,633) | 1,889 | (142,348) | 3,387 | (53,882) | 4,454 |
Net Loss Before Income Tax Benefit | (1,483,857) | (278,445) | (2,862,187) | (500,536) | ||
Income tax benefit | 277,783 | 559,317 | ||||
Net Loss | $ (1,206,074) | $ (278,445) | $ (2,302,870) | $ (500,536) | $ (1,856,315) | $ (1,917,066) |
Net Loss per Common Share - Basic and Diluted | $ (0.03) | $ (0.01) | $ (0.06) | $ (0.02) | $ (0.06) | $ (0.07) |
Weighted Average Common Shares Used to Compute Net Loss Applicable to Common Shares - Basic and Diluted | 36,623,697 | 31,745,242 | 35,951,894 | 31,745,242 | 32,595,680 | 29,321,049 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholders' Equity - USD ($) | Common Stock [Member] | Preferred Stock [Member] | Additional Paid-In Capital [Member] | Subscription Receivable [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2015 | $ (85,705) | $ (85,705) | ||||
Balance, shares at Dec. 31, 2015 | ||||||
Issuance of Common Stock, $0.0001 Par Value/Share | $ 3,175 | 4,266,825 | 4,270,000 | |||
Issuance of Common Stock, $0.0001 Par Value/Share, shares | 31,745,242 | |||||
Net Loss | (1,917,066) | (1,917,066) | ||||
Balance at Dec. 31, 2016 | $ 3,175 | 4,266,825 | (2,002,771) | 2,267,229 | ||
Balance, shares at Dec. 31, 2016 | 31,745,242 | |||||
Fair value of Heatwurx net liabilities obtained in reverse acquisition | $ 352 | (38,102) | (37,750) | |||
Fair value of Heatwurx net liabilities obtained in reverse acquisition, shares | 3,527,384 | |||||
Net Loss | (1,856,315) | (1,856,315) | ||||
Balance at Dec. 31, 2017 | $ 3,527 | $ 4,228,723 | $ (3,859,086) | $ 373,164 | ||
Balance, shares at Dec. 31, 2017 | 35,272,626 | |||||
Recognize the fair value of exclusive license intangible asset acquired from CoNCERT in exchange for 2,090,301 common shares of Processa owned by Promet | 8,000,000 | 8,000,000 | ||||
Conversion of Senior convertible notes for common stock and stock purchase warrants, net of costs of $4,742 | $ 121 | $ 2,390,248 | $ 2,390,369 | |||
Conversion of Senior convertible notes for common stock and stock purchase warrants, net of costs of $4,742, shares | 1,206,245 | |||||
Issuance of common stock units for cash, net of costs of $219,954 | $ 140 | 2,963,423 | 2,963,563 | |||
Issuance of common stock units for cash, net of costs of $219,954, shares | 1,402,442 | |||||
Issuance of common stock units for a future research funding commitment, net of costs of $117,339 | $ 79 | 1,682,582 | (1,800,000) | (117,339) | ||
Issuance of common stock units for a future research funding commitment, net of costs of $117,339, shares | 792,952 | |||||
Net Loss | (2,302,870) | (2,302,870) | ||||
Balance at Jun. 30, 2018 | $ 3,867 | $ 19,264,976 | $ (1,800,000) | $ (6,161,956) | $ 11,306,887 | |
Balance, shares at Jun. 30, 2018 | 38,674,265 |
Consolidated Statement of Cha_2
Consolidated Statement of Changes in Stockholders' Equity (Parenthetical) | 6 Months Ended |
Jun. 30, 2018USD ($)$ / sharesshares | |
Statement of Stockholders' Equity [Abstract] | |
Issuance of Common Stock, $0.0001 Par Value | $ / shares | $ 0.0001 |
Common stock, shares exchanged | shares | 2,090,301 |
Conversion of stock, costs | $ 4,742 |
Issuance of common stock units for cash, cost | 219,954 |
Issuance of common stock units for a future research funding commitment, cost | $ 117,339 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||||
Net Loss | $ (2,302,870) | $ (500,536) | $ (1,856,315) | $ (1,917,066) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Depreciation | 4,223 | 933 | 1,865 | 1,381 |
Amortization of intangible asset | 222,559 | |||
Deferred income tax (benefit) expense | (559,317) | |||
Amortization of debt issuance costs | 61,132 | 23,370 | ||
Accrued interest on investments | (201) | (471) | ||
Impairment of software costs | 15,330 | |||
Net changes in operating assets and liabilities: | ||||
Prepaid expenses and other | (42,067) | (511) | (23,299) | (16,278) |
Vendor deposit | 227,657 | 227,657 | (227,657) | |
Security deposit | (5,535) | |||
Accrued interest | 84,922 | 35,693 | ||
Accounts payable | 200,713 | 1,225 | 9,995 | 3,707 |
Due from related parties | 6,877 | (7,817) | (62,368) | (69,379) |
Accrued rent liability | 9,963 | 13,284 | ||
Accrued liabilities | 90,843 | (76,019) | (39,829) | 75,790 |
Net cash used in operating activities | (2,233,186) | (355,928) | (1,654,617) | (2,155,037) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||||
Proceeds from (purchase of) certificates of deposit | (496,000) | 1,019,294 | (1,019,294) | |
Purchase of property and equipment | (882) | (20,622) | (23,775) | |
Cash received in a reverse acquisition transaction | 6,280 | |||
Acquisition of intangible asset | (1,782) | |||
Net cash used in investing activities | (497,782) | (882) | 1,004,952 | (1,043,069) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||||
Net Proceeds from issuance of common stock | 2,856,073 | 4,270,000 | ||
Transaction costs incurred on Senior Convertible Notes | (4,742) | 2,580,000 | ||
Payment of placement agent and legal fees associated with clinical funding commitment | (117,339) | |||
Payment of debt issuance costs | (154,800) | |||
Net cash provided by financing activities | 2,733,992 | 2,425,200 | 4,270,000 | |
NET DECREASE IN CASH AND CASH EQUIVALENTS | 3,024 | (356,810) | 1,775,535 | 1,071,894 |
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD | 2,847,429 | 1,071,894 | 1,071,894 | |
CASH AND CASH EQUIVALENTS - END OF PERIOD | 2,850,453 | 715,084 | $ 2,847,429 | $ 1,071,894 |
NON-CASH FINANCING AND INVESTING ACTIVITIES | ||||
Recognize exclusive license intangible asset acquired from CoNCERT | (11,037,147) | |||
Recognize deferred tax liability for basis difference for intangible asset | 3,037,147 | |||
Recognize additional paid-in capital for consideration paid from the transfer of 2,090,301 common shares of Processa owned by Promet to CoNCERT | 8,000,000 | |||
Cash paid for intangible asset acquired from CoNCERT | ||||
Conversion of $2,350,000 of Senior Convertible Debt and related accrued interest into 1,206,245 shares of common stock and warrants | 2,395,111 | |||
Common stock and stock purchase warrants issued in connection with a clinical trial funding commitment | 1,800,000 | |||
Note receivable related to the sale of common stock and stock purchase warrants | $ 107,490 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) | 6 Months Ended |
Jun. 30, 2018USD ($)shares | |
Statement of Cash Flows [Abstract] | |
Common stock, shares transferred | 2,090,301 |
Conversion of senior convertible debt, value | $ | $ 2,350,000 |
Accrued interest converted into shares of common stock | 1,206,245 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | ||
Organization and Summary of Significant Accounting Policies | Note 1 - Organization and Summary of Significant Accounting Policies Business Activities and Organization Company Overview Processa Pharmaceuticals, Inc. (the “Company” and formerly known as “Heatwurx” ) and its wholly-owned subsidiary, Processa Therapeutics LLC (“Processa”), a Delaware limited liability company, acquired the assets of a private company, including the rights to the CoNCERT Agreement mentioned below, Promet Therapeutics, LLC (“Promet”), a Delaware limited liability company on October 4, 2017 in exchange for 31,745,242 shares of the common stock of the Company which, at the closing, constituted approximately 90% of the Company’s issued and outstanding common stock on a fully diluted basis accounted for as a tax-free contribution under Internal Revenue Code Section 351. Immediately following the closing, there were 35,272,626 shares of common stock issued and outstanding. At the closing, Processa was assigned the assets and operations of Promet that constituted the operating business of Promet, while Promet, which continues as an active company, received the Processa shares mentioned above and agreed to provide the Processa shares needed if the option in the CoNCERT Agreement (see below) was exercised. Upon closing on October 4, 2017, there was a change in control of the Company to Promet. The Company abandoned its prior business plan and adopted Promet’s business plan focused on developing drugs to treat patients that have a high unmet medical need. Subsequent to closing and effective October 10, 2017, the Company changed its trading symbol to “PCSA” on the OTC Pink Marketplace. The Company effected a one-for-seven reverse split of its shares in December 2017. As a result, the 2017 condensed consolidated financial statements have been retrospectively adjusted to reflect shares outstanding after the one-for-seven reverse split. The net asset acquisition transaction was accounted for as a reverse acquisition. Prior to the acquisition, Heatwurx (subsequently renamed Processa Pharmaceuticals, Inc.) had nominal net liabilities and operations. It was considered a non-operating public shell corporation. Therefore, Promet was considered the accounting acquirer (and legal wholly-owned subsidiary of Heatwurx, now called Processa Pharmaceuticals, Inc.) and Heatwurx was considered the accounting acquiree (and legal acquirer). As a result, the consolidated financial statements of the Company reflect the financial condition, results of operations and cash flows of Promet for all periods presented prior to October 4, 2017 and Processa for the periods subsequent to October 4, 2017. The legal capital stock (number and type of equity interests issued) is that of Processa Pharmaceuticals, Inc., the legal parent, in accordance with guidance on reverse acquisitions accounted for as a capital transaction instead of a business combination (See Note 2 – Basis of Presentation and Earnings Per Share and Note 3 – Reverse Acquisition in Item 8 of the Company’s Annual Report on Form 10-K filed with the SEC on April 17, 2018). All references to the “Company” and Processa Pharmaceuticals, Inc. refer to Heatwurx, Inc., Processa Therapeutics, LLC, and the net assets acquired from Promet Therapeutics, LLC, which were assigned at acquisition to Processa Therapeutics, LLC and Promet’s operations prior to October 4, 2017. On March 19, 2018, Promet, Processa and CoNCERT Pharmaceuticals Inc. (“CoNCERT”) amended the Option and License Agreement (the “Agreement”) executed in October 2017. The Amendment allowed for the Option and License Agreement to be formally assigned to Processa, and Processa exercised the exclusive option for the PCS-499 compound. The option was exercised in exchange for CoNCERT receiving (i) $8 million of common stock of Company that was owned by Promet (or 2,090,301 shares representing 6.58% of Promet’s common stock holding or 5.93% of total the Company’s common stock issued and outstanding), and (ii) 15% of any sublicense revenue earned by the Company for a period equivalent to the royalty term (as defined in the Agreement) until the earliest of (a) Processa raising $8 million of gross proceeds; and (b) CoNCERT can sell its shares of Processa common stock without restrictions pursuant to the terms of the amended Agreement. All other terms of the Agreement remain unchanged. As a result, the Company recognized an intangible asset and additional paid-in capital in the amount of $8 million resulting from Promet satisfying Processa’s liability to CoNCERT (see Note 2 Intangible Asset for the income tax effect of this transaction). There was no change in the total shares issued and outstanding, however, Promet’s controlling interest in Processa was reduced from 90% to 84%. Description of Business Processa is an emerging pharmaceutical company focused on the clinical development of drug products that are intended to improve the survival and/or quality of life for patients who have a high unmet medical need or who have no alternative treatment. Within this group of pharmaceutical products, we currently are developing one product for two indications (i.e., the use of a drug to treat a particular disease) and searching for additional products for our portfolio. Processa’s lead product, PCS-499 is an oral tablet that is an analog of an active metabolite of an already approved FDA drug. The advantage of PCS-499 is that it potentially may work in many conditions because it has multiple pharmacological targets it affects that are important in the treatment of these conditions. Based on its pharmacological activity, Processa has identified multiple unmet medical need conditions where the use of PCS-499 may result in clinical efficacy. The lead indication currently under development for PCS-499 is Necrobiosis Lipoidica (NL). Processa has met with the FDA on the NL condition and has developed a strategy for moving the program for NL forward starting with a Phase 2 clinical trial in NL patients in late 2018 (see Note 4 for clinical trial funding). Processa will continue to evaluate other unmet need conditions for PCS-499 as well as other potential assets and develop strategies including the regulatory pathway and commercialization plans for the product(s) for these unmet need conditions over the next year. Processa is looking to acquire additional drug candidates to help patients who have an unmet medical need. Our operations are performed in the state of Maryland and are still in the organizational and research and development phase of operations. As a result, we have a limited operating history and only a preliminary business plan from which investors may evaluate our future prospects. We have not had any sources of revenue from inception (August 31, 2015) through June 30, 2018 and have a history of operating losses from operations. Our ability to generate meaningful revenue from any products in the United States depends on obtaining FDA authorization. Even if our products are authorized and approved by the FDA, we must still meet the challenges of successful marketing, distribution and consumer acceptance. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instruction of the Securities and Exchange Commission (“SEC”) on Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. All material intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of the Company’s financial position and of the results of operations and cash flows for the periods presented. These consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the SEC on April 17, 2018. The results of operations for the interim period shown in this report are not necessarily indicative of the results that may be expected for any other interim period or for the full year. As a result of the modification of the Agreement with CoNCERT and the acquisition of an exclusive license intangible asset used in research and development activities described above, the Company adopted a new intangible asset policy and disclosure (see Intangible Assets below and Note 2 – Intangible Asset) and recognized a deferred tax liability for the acquired temporary difference between the financial reporting basis and the tax basis of the intangible asset (see Note 5 – Income Taxes). Going Concern and Management’s Plan The Company’s consolidated financial statements are prepared using U.S. GAAP and are based on the assumption that the Company will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company faces certain risks and uncertainties that are present in many emerging growth companies regarding product development and commercialization, limited working capital, recurring losses and negative cash flow from operations, future profitability, ability to obtain future capital, protection of patents, technologies and property rights, competition, rapid technological change, navigating the domestic and major foreign markets’ regulatory and clinical environment, recruiting and retaining key personnel, dependence on third party manufacturing organizations, third party collaboration and licensing agreements, lack of sales and marketing activities, and no customers or pharmaceutical products to sell or distribute. These risks and other factors raise substantial doubt about our ability to continue as a going concern. The Company has relied exclusively on private placements with a small group of accredited investors to finance its business and operations. We do not have any prospective arrangements or credit facilities as a source of future funds. The Company has had no revenue since inception on August 31, 2015. The Company does not currently have any revenue under contract nor does it have any immediate sales prospects. As of June 30, 2018, the Company had an accumulated deficit of approximately $6.2 million incurred since inception. For the six months ended June 30, 2018, the Company incurred a net loss from continuing operations of approximately $2.3 million and used approximately $2.2 million in net cash from operating activities from continuing operations. The Company had total cash and cash equivalents and certificates of deposit of approximately $3.3 million as of June 30, 2018. We are looking at ways to add a revenue stream to offset some of our expenses. We will begin fundraising efforts in the first half of 2019. In addition, we are seeking alternative options to add additional cash. However, no assurance can be given that we will be successful in securing adequate funds that may be required. If we are unable to raise additional capital when required or on acceptable terms, we may have to significantly delay, scale back or discontinue the development or commercialization of one or more of our product candidates, restrict our operations or obtain funds by entering into agreements on unattractive terms, which would likely have a material adverse effect on our business, stock price, and our relationships with third parties with whom we have business relationships, at least until additional funding is obtained. Uncertainty concerning our ability to continue as a going concern may hinder our ability to obtain future financing, as well as adversely affect our collaborative drug development relationships. Continued operations and our ability to continue as a going concern are dependent on our ability to obtain additional funding in the near future and thereafter, and no assurances can be given that such funding will be available at all or will be available in sufficient amounts or on reasonable terms. Without additional funds from debt or equity financing, sales of assets, sales or out-licenses of intellectual property or technologies, or other transactions yielding funds, we will rapidly exhaust our resources and will be unable to continue operations. Absent additional funding, we believe that our cash and cash equivalents will not be sufficient to fund our operations for a period of one year or more after the date that these consolidated financial statements are available to be issued based on the timing and amount of our projected net loss from continuing operations and cash to be used in operating activities during that period of time. As a result, substantial doubt exists about the Company’s ability to continue as a going concern within one year after the date that these consolidated financial statements are available to be issued. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be different should the Company be unable to continue as a going concern based on the outcome of these uncertainties described above. Use of Estimates The preparation of the accompanying unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts (including assets, liabilities, revenues and expenses) and related disclosures, including contingent assets and liabilities. Estimates have been prepared on the basis of the most current and best available information. However, actual results could differ materially from those estimates. Cash and Cash Equivalents Cash and cash equivalents include cash on hand and money market funds. The Company considers all highly liquid investments with a maturity at the date of purchase of three months or less to be cash equivalents. Included in cash and cash equivalents were certificates of deposit totaling $496,201 at June 30, 2018. The certificates of deposit will mature in late September 2018. Intangible Assets Intangible assets acquired individually or with a group of other assets from others (other than in a business combination) are recognized at cost, including transaction costs, and allocated to the individual assets acquired based on relative fair values and no goodwill is recognized. Cost is measured based on cash consideration paid. If consideration given is in the form of non-cash assets, liabilities incurred, or equity interests issued, measurement of cost is based on either the fair value of the consideration given or the fair value of the assets (or net assets) acquired, whichever is more clearly evident and more reliably measurable. Costs of internally developing, maintaining or restoring intangible assets that are not specifically identifiable, have indeterminate lives or are inherent in a continuing business are expensed as incurred. Intangible assets purchased from others for use in research and development activities and that have alternative future uses (in research and development projects or otherwise) are capitalized in accordance with ASC Topic 350, Intangibles – Goodwill and Other and those that have no alternative future uses (in research and development projects or otherwise) and therefore no separate economic value are research and development costs expensed as incurred. Amortization of intangibles used in research and development activities is a research and development cost. Intangibles with a finite useful life are amortized and those with an indefinite useful life are not amortized. The useful life is the best estimate of the period over which the asset is expected to contribute directly or indirectly to the future cash flows of the Company. The useful life is based on the duration of the expected use of the asset by the Company and the legal, regulatory or contractual provisions that constrain the useful life and future cash flows of the asset, including regulatory acceptance and approval, obsolescence, demand, competition and other economic factors. If an income approach is used to measure the fair value of an intangible asset, the Company considers the period of expected cash flows used to measure the fair value of the intangible asset, adjusted as appropriate for Company-specific factors discussed above, to determine the useful life for amortization purposes. If no regulatory, contractual, competitive, economic or other factors limit the useful life of the intangible to the Company, the useful life is considered indefinite. Intangibles with a finite useful life are amortized on the straight-line method unless the pattern in which the economic benefits of the intangible asset are consumed or used up are reliably determinable. The Company evaluates the remaining useful life of intangible assets each reporting period to determine whether any revision to the remaining useful life is required. If the remaining useful life is changed, the remaining carrying amount of the intangible asset will be amortized prospectively over the revised remaining useful life. Intangibles with an indefinite useful life are not amortized until its useful life is determined to be no longer indefinite. If the useful life is determined to be finite, the intangible is tested for impairment and the carrying amount is amortized over the remaining useful life in accordance with intangibles subject to amortization. Indefinite-lived intangibles are tested for impairment annually and more frequently if events or circumstances indicate that it is more-likely-than-not that the asset is impaired. Impairment of Long-Lived Assets and Intangibles Other Than Goodwill The Company accounts for the impairment of long-lived assets in accordance with ASC 360, Property, Plant and Equipment and ASC 350, Intangibles – Goodwill and Other which requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that 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 expected future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amounts of the assets exceed the fair value of the assets based on the present value of the expected future cash flows associated with the use of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. Based on management’s evaluation, there was no impairment loss recorded for the three or six-month periods ended June 30, 2018 and 2017, respectively. Fair Value Measurements and Disclosure The Company applies ASC 820, “Fair Value Measurements and Disclosures,” which expands disclosures for assets and liabilities that are measured and reported at fair value on a recurring basis. Fair value is defined as an exit price, representing the amount that would be received upon the sale of an asset or payment to transfer a liability in an orderly transaction between market participants. Fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. A three-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows: Level 1 – Quoted market prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 – Quoted market prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable, either directly or indirectly. Fair value determined through the use of models or other valuation methodologies. Level 3 – Significant unobservable inputs for assets or liabilities that cannot be corroborated by market data. Fair value is determined by the reporting entity’s own assumptions utilizing the best information available and includes situations where there is little market activity for the asset or liability. The asset’s or liability’s fair value measurement within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement. The Company’s policy is to recognize transfers between levels of the fair value hierarchy in the period the event or change in circumstances that caused the transfer. There were no transfers into or out of Level 1, 2, or 3 during the periods presented. Net Income (Loss) per Share The Company computes basic and diluted earnings per share amounts pursuant to ASC 260-10-45. Basic earnings per share is computed by dividing net income (loss) available to common shareholders, by the weighted average number of shares of common stock outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted earnings per share is computed by dividing net income (loss) available to common shareholders by the diluted weighted average number of shares of common stock during the period. Since the Company had a net loss for each of the periods presented, basic and diluted net loss per share are the same. The computation of diluted net loss per share for the periods presented does not assume the impact of the conversion of the Senior Convertible Notes or the exercise or contingent exercise of securities since that would have an anti-dilutive effect on loss per share during the three and six months ended June 30, 2018 and 2017. Recent Accounting Pronouncements From time to time, the Financial Accounting Standards Board (“FASB”) or other standard setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standards Codification are communicated through issuance of an Accounting Standards Update (“ASU”). The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements. It has evaluated recently issued accounting pronouncements and determined that there was no material impact on its financial position or results of operations. From May 2014 through June 30, 2018, the FASB issued several ASUs related to ASU 2014-09, “Revenue from Contracts with Customers (Topic 606). The new guidance is effective for interim and annual periods beginning after December 15, 2017, although entities may adopt one year earlier if they choose. The two permitted transition methods under the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented and the cumulative effect of applying the standard would be recognized at the earliest period shown, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. The Company is currently in the pre-revenue stages of operations; therefore, we do not currently anticipate there would be any change to timing or method of recognizing revenue. As such, the adoption of this standard did not have a material impact on our results of operations, financial condition or cash flows. In February 2016 through June 30, 2018, the FASB issued several ASUs related to ASU-2016-02, “Leases (Topic 842).” The guidance requires that a lessee recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right of use asset representing its right to use the underlying asset for the lease term. For operating leases: the right-of-use asset and a lease liability will be initially measured at the present value of the lease payments, in the statement of financial position; a single lease cost will be recognized, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis; and all cash payments will be classified within operating activities in the statement of cash flows. The amendments in Topic 842 are effective for the Company beginning January 1, 2019. The Company’s office lease expires September 30, 2019. Management is currently evaluating the impact of adopting the new guidance on the Company’s consolidated financial statements. In July 2017, the FASB issued Accounting Standards Update 2017-11 (ASU 2017-11”), which allows companies to exclude a down round feature when determining whether a financial instrument is considered indexed to the entity’s own stock. As a result, financial instruments with down round features are no longer classified as liabilities and embedded conversion options with down round features are no longer bifurcated. For equity-classified freestanding financial instruments, such as warrants, an entity will treat the value of the effect of the down round, when triggered, as a dividend and a reduction of income available to common shareholders in computing basic earnings per share. For convertible instruments with embedded conversion options that have down round features, an entity will recognize the intrinsic value of the feature only when the feature becomes beneficial. The guidance in ASU 2017-11 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. We early adopted ASU 2017-11 effective January 1, 2018 without a material impact on our condensed consolidated financial statements. | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Earnings per Share The accompanying consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”), and reflect all of our activities, including those of our wholly-owned subsidiary. All material intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. These adjustments consist of normal and recurring accruals, as well as non-recurring charges. The acquisition of Promet by Heatwurx has been accounted for as a reverse acquisition in accordance with U.S. GAAP, Financial Accounting Standards Board (“FASB”), Accounting Standards Codification (“ASC”) 805-40-45, Business Combinations - Reverse Acquisitions As a result of the above, the operations prior to the asset purchase transaction are those of Promet. The assets and liabilities of Promet are recognized and measured at the historical carrying amounts. The accumulated deficit and other equity balances of Promet have been carried forward and adjusted to reflect the legal shares and par value of Heatwurx with the difference allocated to additional paid-in capital. Additional paid-in capital is also reduced by the fair value over the historical cost of the net liabilities assumed from Heatwurx, since the transaction is accounted for as a capital transaction, not a business combination. Earnings per share (“EPS”) is calculated using the equity structure of Processa Pharmaceuticals, Inc., including the equity interests issued to Promet in the asset acquisition transaction (see Note 3). Prior to the reverse acquisition, EPS is based on Promet’s net income and weighted average common shares outstanding that were received in the asset purchase transaction. Subsequent to the reverse acquisition, EPS is based on the actual number of common shares of Processa Pharmaceuticals, Inc. outstanding during that period. The Company completed a reverse split or a one-for-seven exchange of its shares. As a result, the consolidated financial statements have been retrospectively adjusted to reflect the one-for-seven reverse split. Segments The Company operates in one segment. Management uses one measurement of profitability and does not segregate its business for internal reporting. During 2017 and 2016 all of the Company’s long-lived assets were located within the United States. Going Concern and Management’s Plan The Company’s consolidated financial statements are prepared using U.S. GAAP and are based on the assumption that the Company will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company faces certain risks and uncertainties that are present in many emerging growth companies regarding product development and commercialization, limited working capital, recurring losses and negative cash flow from operations, future profitability, ability to obtain future capital, protection of patents, technologies and property rights, competition, rapid technological change, navigating the domestic and major foreign markets’ regulatory and clinical environment, recruiting and retaining key personnel, dependence on third party manufacturing organizations, third party collaboration and licensing agreements, lack of sales and marketing activities and no customers or pharmaceutical products to sell or distribute. These risks and other factors raise substantial doubt about our ability to continue as a going concern. The Company has relied exclusively on private placements with a small group of accredited investors to finance its business and operations. We do not have any prospective arrangements or credit facilities as a source of future funds. The Company has had no revenue since inception on August 31, 2015. The Company does not currently have any revenue under contract nor does it have any immediate sales prospects. As of December 31, 2017, the Company had an accumulated deficit of approximately $3.859 million incurred since inception. For the year ended December 31, 2017, the Company incurred a net loss from continuing operations of approximately $1.856 million and used approximately $1.655 million in net cash from operating activities from continuing operations. The Company had total cash and cash equivalents of approximately $2.847 million as of December 31, 2017. We have raised proceeds of $2.58 million from the Senior Convertible Notes issued through December 31, 2017. No additional Senior Convertible Notes have been issued through the date this report was issued. On March 19, 2018, we modified the Option and License Agreement with CoNCERT Pharmaceuticals, Inc. effective January 2018 (see Notes 10 and 14), which enabled us to exercise our option to license the CoNCERT patent rights and know-how to develop and commercialize compounds (CTP-499 and each metabolite thereof) and products, as defined in the agreement. Although we have other drugs being positioned into our pipeline, the loss of our rights to CTP-499 would have materially and adversely affected our planned growth and business plan. We expect our operating costs to be substantial as we incur costs related to the clinical trials for our product candidates and that we will operate at a loss for the foreseeable future. We are in the process of raising additional funds by potentially selling additional Senior Convertible Notes, convertible loans or other securities. However, no assurance can be given that we will be successful in raising adequate funds needed. If we are unable to raise additional capital when required or on acceptable terms, we may have to significantly delay, scale back or discontinue the development or commercialization of one or more of our product candidates, restrict our operations or obtain funds by entering into agreements on unattractive terms, which would likely have a material adverse effect on our business, stock price and our relationships with third parties with whom we have business relationships, at least until additional funding is obtained. Uncertainty concerning our ability to continue as a going concern may hinder our ability to obtain future financing, as well as adversely affect our collaborative drug development relationships. Continued operations and our ability to continue as a going concern are dependent on our ability to obtain additional funding in the near future and thereafter, and no assurances can be given that such funding will be available at all or will be available in sufficient amounts or on reasonable terms. Without additional funds from debt or equity financing, sales of assets, sales or out-licenses of intellectual property or technologies, or other transactions yielding funds, we will rapidly exhaust our resources and will be unable to continue operations. Absent additional funding, we believe that our cash and cash equivalents will not be sufficient to fund our operations for a period of one year or more after the date that these consolidated financial statements are available to be issued based on the timing and amount of our projected net loss from continuing operations and cash to be used in operating activities during that period of time. As a result, substantial doubt exists about the Company’s ability to continue as a going concern within one year after the date that these consolidated financial statements are available to be issued. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be different should the Company be unable to continue as a going concern based on the outcome of these uncertainties described above. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires the use of estimates and assumptions by management that affect reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions are continuously evaluated and are based on management’s experience and knowledge of the relevant facts and circumstances. While management believes the estimates to be reasonable, actual results could differ materially from those estimates and could impact future results of operations and cash flows. Cash and Cash Equivalents Cash and cash equivalents includes cash on hand and money market funds. The Company considers all highly liquid investments with a maturity at the date of purchase of three months or less to be cash equivalents. Money market funds were $1,300,815 and $0 at December 31, 2017 and 2016, respectively. Certificates of Deposit The certificates of deposit were purchased through an investment company and were held at multiple banks. The maturities of the certificates of deposit are typically six months or less. Fair Value Measurements and Disclosure The Company applies ASC 820, “Fair Value Measurements and Disclosures,” which expands disclosures for assets and liabilities that are measured and reported at fair value on a recurring basis. Fair value is defined as an exit price, representing the amount that would be received upon the sale of an asset or payment to transfer a liability in an orderly transaction between market participants. Fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. A three-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows: Level 1 – Quoted market prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 – Quoted market prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable, either directly or indirectly. Fair value determined through the use of models or other valuation methodologies. Level 3 – Significant unobservable inputs for assets or liabilities that cannot be corroborated by market data. Fair value is determined by the reporting entity’s own assumptions utilizing the best information available, and includes situations where there is little market activity for the asset or liability. The asset’s or liability’s fair value measurement within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement. Fair Value of Financial Instruments The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and the senior convertible notes approximate fair value because of the short-term maturity of these instruments, including the mandatory conversion of the senior convertible notes into the common stock of the Company upon the earlier of (i) meeting certain funding levels on the next Private Investment in Public Equity (“PIPE”) financing we undertake or (ii) the one-year anniversary of the issuance of the senior convertible note. Due From/To Related Parties and Administrative Fees Administrative fees are collected from a related party, Corlyst, LLC (“Corlyst”), for shared costs related to payroll, health care insurance and rent based on actual costs incurred and recognized as a reduction of the operating expense being reimbursed (see Note 4). Corlyst pays certain operating expenses on behalf of the Company and the Company reimburses Corlyst based on actual costs incurred and recognizes the appropriate expense. The amounts due from and due to Corlyst are billed monthly and are due on demand at the beginning of each month. Property and Depreciation Property is stated at cost, less accumulated depreciation. Depreciation is computed under the straight-line method over the estimated useful lives of the assets. Expenditures for maintenance and routine repairs are charged to expense as incurred; expenditures for improvements and major repairs that materially extend the useful lives of assets are capitalized. Depreciation expense for the years ended December 31, 2017 and 2016 was $1,865 and $1,381, respectively. Following are the estimated useful lives for the various classifications of assets: Software 3 years Equipment 5 years Impairment of Long-lived Assets The Company periodically reviews its long-lived assets to determine potential impairment by comparing the carrying value of the long-lived assets with the estimated future net undiscounted cash flows expected to result from the use of the assets, including cash flows from disposition, at least annually or more frequently if events or changes in circumstances indicate a potential impairment may exist. Should the sum of the expected future net cash flows be less than the carrying value, the Company would recognize an impairment loss at that date. An impairment loss would be measured by comparing the amount by which the carrying value exceeds the fair value (estimated discounted future cash flows) of the long-lived assets. The Company performs its impairment analysis in October of each year. Based on management’s evaluation, $15,330 of carrying costs related to the software was impaired and an impairment loss recorded for the year ended December 31, 2017. No impairment of long-lived assets was recognized for the year ended December 31, 2016. Debt Issuance Costs The Company recognizes debt issuance costs incurred on the Senior Convertible Notes as a reduction of the carrying amount of the Senior Convertible Notes on the face of the consolidated balance sheet. The debt issuance costs are amortized to interest expense using the interest method over the term of the Senior Convertible Notes. The amortization of the debt issuance costs was $23,370 for the year ended December 31, 2017 and zero for the year ended December 31, 2016. Compensated Absences For the years ended December 31, 2017 and 2016, the Company recorded a liability for paid time off earned by permanent employees but not taken, in accordance with human resource policies. Advertising Costs Advertising costs are recognized as expense in the year incurred. Total advertising and marketing expense for the years ended December 31, 2017 and 2016 was $135 and $3,850, respectively. Research and development Research and development costs are expensed as incurred and consist of direct and overhead-related expenses. Research and development costs totaled $926,117 and $1,536,996 for the years ended December 31, 2017 and 2016, respectively. Expenditures to acquire technologies, including licenses, which are utilized in research and development and that have no alternative future use are expensed when incurred. Technology the Company develops for use in its products is expensed as incurred until technological feasibility has been established after which it is capitalized and depreciated. No costs have been capitalized during the years ended December 31, 2017 and 2016. Stock-Based Compensation The Company accounts for the cost of employee services received in exchange for the award of equity instruments based on the fair value of the award, determined on the date of grant. Significant assumptions utilized in determining the fair value of our stock options include the volatility rate, estimated term of the options, risk-free interest rate and forfeiture rate. The term of the options will be based on the contractual term of the options as determined by the Board of Directors when the 2011 Equity Incentive Plan is amended or terminated and approved by the stockholders to the extent required by applicable laws and regulations. The expense is to be recognized over the period during which an employee is required to provide services in exchange for the award. The Company estimates forfeitures at the time of grant and makes revisions, if necessary, at each reporting period if actual forfeitures differ from those estimates. The Company has not estimated future unvested forfeitures since there were no option grants outstanding at December 31, 2017. Upon the issuance of 90% of Heatwurx’s common stock to Promet on October 4, 2017, there was a Change in Control event, as defined in the Amended and Restated Heatwurx, Inc. 2011 Equity Incentive Plan. As of September 30, 2017, prior to the Change in Control event, all 269,500 unexercised options and all 40,000-unexercised performance options outstanding at December 31, 2016 were cancelled. Non-employee share-based compensation charges generally are immediately vested and have no future performance requirements by the non-employee and the total share-based compensation charge is recorded in the period of the measurement date. Income Taxes As a result of the asset purchase transaction (see Note 1 Company Overview above and Note 3), there was a change in control of the Company. Prior to the closing of the asset purchase transaction, Promet was treated as a partnership for federal income tax purposes and thus was not subject to income tax at the entity level. Therefore, no provision or liability for income taxes has been included in these financial statements through the date of the asset purchase on October, 4, 2017. In addition, Promet determined that it was not required to record a liability related to uncertain tax positions as a result of the requirements of ASC 740-10-25 Income Taxes. The net deferred tax assets of Heatwurx were principally federal and state net operating loss carry forwards. The Heatwurx net deferred tax assets were fully reserved with a valuation allowance. Subsequent to the closing of the asset purchase, Processa Pharmaceuticals, Inc. will file a consolidated federal income tax return in the United States, which includes eligible subsidiaries. In addition, we file income tax returns in state and local jurisdictions as applicable. The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The provision for income taxes includes federal and state income taxes currently payable and deferred taxes resulting from temporary differences between the financial statement and tax basis of assets and liabilities at the enacted tax rates. Changes in deferred income tax assets and liabilities are included as a component of income tax expense. The effect on deferred income tax assets and liabilities attributable to changes in enacted tax rates are charged or credited to income tax expense in the period of enactment. Valuation allowances are recorded to reduce deferred tax assets when it is more-likely-than-not that a tax benefit will not be realized. A full valuation allowance was recorded against the Company’s deferred tax assets at December 31, 2017. The Company had no deferred tax assets and no valuation allowance at December 31, 2016. With respect to uncertain tax positions, the Company would recognize the tax benefit from an uncertain tax position only if it is more-likely-than-not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position. Estimated interest and penalties related to uncertain tax positions are included as a component of interest expense and general and administrative expense, respectively. The Company had no unrecognized tax benefits or uncertain tax positions at December 31, 2017 or 2016. Net Income (Loss) per Share The Company computes basic and diluted earnings per share amounts pursuant to ASC 260-10-45. Basic earnings per share is computed by dividing net income (loss) available to common shareholders, by the weighted average number of shares of common stock outstanding during the period, as retrospectively restated for the one-for-seven reverse stock split, excluding the effects of any potentially dilutive securities. Diluted earnings per share is computed by dividing net income (loss) available to common shareholders by the diluted weighted average number of shares of common stock during the period. The diluted weighted average number of common shares outstanding is the basic weighted number of shares adjusted for any potentially diluted debt or equity. The computation does not assume conversion, exercise or contingent exercise of securities since that would have an anti-dilutive effect on earnings (loss) during the years ended December 31, 2017 and 2016. Equity The asset purchase of Promet by Heatwurx is accounted for as a reverse acquisition. As a result, these consolidated financial statements represent Promet as the accounting acquirer (legal acquiree) and Heatwurx from October 4, 2017 forward as the accounting acquiree (legal acquirer). However, the legal capital stock (number and type of equity interests issued) is that of Heatwurx, which subsequently changed its name to Processa Pharmaceuticals, Inc., the legal parent, in accordance with guidance on reverse acquisitions accounted for as a capital transaction (See Note 2 – Basis of Presentation and Earnings per Share and Note 3 – Reverse Acquisition). The accumulated deficit and other equity balances of Promet have been carried forward and adjusted to reflect the legal capital shares and par value of Heatwurx, including the shares issued to Promet in the reverse acquisition transaction with the difference allocated to additional paid-in capital. Additional paid-in capital is also reduced by the fair value/ historical cost of the net liabilities assumed from Heatwurx since the transaction is accounted for as a capital transaction, not a business combination. Subsequent events The Company has evaluated subsequent events and transactions for potential recognition or disclosure through April 16, 2018, the date the financial statements were issued, in accordance with ASC 855-10-50. Refer to Note 14 below for further information. Recent Accounting Pronouncements From time to time, the Financial Accounting Standards Board (“FASB”) or other standard setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standards Codification are communicated through issuance of an Accounting Standards Update (“ASU”). The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements. It has evaluated recently issued accounting pronouncements and determined that there was no material impact on its financial position or results of operations. From May 2014 through December 2017, the FASB issued several ASUs related to ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. These ASUs are intended to provide greater insight into both revenue that has been recognized and revenue that is expected to be recognized in the future from existing contracts. The new guidance is effective for interim and annual periods beginning after December 15, 2017, although entities may adopt one year earlier if they choose. The two permitted transition methods under the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented and the cumulative effect of applying the standard would be recognized at the earliest period shown, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. The Company is currently in the pre-revenue stages of operations; therefore, we do not currently anticipate there would be any change to timing or method of recognizing revenue. As such, we do not believe this new standard will have a material impact on our results of operations, financial condition or cash flows. In February 2016 through December 2017, the FASB issued several ASUs related to ASU-2016-02, “Leases (Topic 842).” The guidance requires that a lessee recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right of use asset representing its right to use the underlying asset for the lease term. For finance leases: the right-of-use asset and a lease liability will be initially measured at the present value of the lease payments, in the statement of financial position; interest on the lease liability will be recognized separately from amortization of the right-of-use asset in the statement of comprehensive income; and repayments of the principal portion of the lease liability will be classified within financing activities and payments of interest on the lease liability and variable lease payments within operating activities in the statement of cash flows. For operating leases: the right-of-use asset and a lease liability will be initially measured at the present value of the lease payments, in the statement of financial position; a single lease cost will be recognized, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis; and all cash payments will be classified within operating activities in the statement of cash flows. Under Topic 842 the accounting applied by a lessor is largely unchanged from that applied under previous GAAP. The amendments in Topic 842 are effective for the Company beginning January 1, 2019. Management is currently evaluating the impact of adopting the new guidance on the Company’s financial statements. |
Nature of Business
Nature of Business | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business | NOTE 1 – NATURE OF BUSINESS Company Overview Promet Therapeutics, LLC (“Promet”), a Delaware limited liability company, was a private company founded on August 31, 2015 (inception). On October 2, 2017, Heatwurx, Inc. (“Heatwurx”), a nonoperating public shell corporation, entered into an Asset Purchase Agreement with Promet and Heatwurx’s wholly-owned subsidiary, Processa Therapeutics LLC (“Processa”), a Delaware limited liability company, and closed on this agreement effective October 4, 2017. Under this agreement, Heatwurx acquired the assets and assumed all the liabilities of Promet, in exchange for 222,217,112 shares of the common stock of Heatwurx, which, at the closing, constituted 90% of the Company’s issued and outstanding common stock on a fully diluted basis accounted for as a tax-free contribution under Internal Revenue Code Section 351. Immediately following the closing, there were 246,907,902 shares of common stock issued and outstanding, of which the prior Heatwurx shareholders own 24,690,790 shares after giving effect to 13,673,402 shares issued for Heatwurx’s Series D Preferred stock and existing debt that converted into common stock prior to closing of the asset purchase transaction. At the closing, Heatwurx assigned to Processa the assets and operations of Promet that constitutes the operating business of Promet. Authorized capital stock consists of 350,000,000 shares of $0.0001 par value common stock and 10,000,000 shares of $0.0001 par value preferred stock. The closing of the Asset Purchase Agreement on October 4, 2017 resulted in a change in control of Heatwurx by Promet (see Note 3). The Heatwurx executive management, officers and directors resigned and Promet executive management, officers and directors were appointed. Following the closing, Heatwurx changed its trading symbol from “HUWX” to “PCSA” on the OTC Pink exchange effective as of October 10, 2017. Heatwurx changed its name to Processa Pharmaceuticals, Inc. (the “Company”) and authorized a one-for-seven exchange, or reverse split, of its shares effective October 23, 2017. On December 8, 2017, the Company received approval from the Financial Industry Regulatory Authority to implement the one-for-seven reverse split in trading markets. As a result, the consolidated financial statements have been retrospectively adjusted to reflect shares outstanding after the one-for-seven reverse split. Following the asset purchase transaction, the Company abandoned Heatwurx’s prior business plan and is now only pursuing Promet’s proposed business with a focus on developing drugs to treat patients that have a high unmet medical need. As a result of the above, these consolidated financial statements represent Promet as the accounting acquirer (legal acquiree) and Processa Pharmaceuticals, Inc. from October 4, 2017 forward as the accounting acquiree (legal acquirer) and the legal capital stock (number and type of equity interests issued) is that of Heatwurx, which subsequently changed its name to Processa Pharmaceuticals, Inc., the legal parent, in accordance with guidance on reverse acquisitions accounted for as a capital transaction instead of a business combination (See Note 2 – Basis of Presentation and Earnings Per Share and Note 3 – Reverse Acquisition). All references to the “Company” and Processa Pharmaceuticals, Inc. refer to Heatwurx, Inc., Processa Therapeutics, LLC, and Promet Therapeutics, LLC, which was assigned at acquisition to Processa Therapeutics, LLC. Description of Business We are an emerging clinical stage biopharmaceutical company focused on the development of drug products that are intended to provide treatment for and improve the survival and/or quality of life of patients who have a high unmet medical need condition or who have no alternative treatment. Within this group of pharmaceutical products, we currently are developing one product for two indications (i.e., the use of a drug to treat a particular disease) and searching for additional products for our portfolio. Our operations are performed in the state of Maryland and are still in the organizational and research and development phase of operations. As a result, we have a limited operating history and only a preliminary business plan from which investors may evaluate our future prospects. We have not had any sources of revenue from inception through December 31, 2017 and have a history of operating losses from operations. As of December 31, 2017, the Company had an accumulated deficit of approximately $3.859 million incurred over approximately 28 months of its existence. Our current capital is insufficient to fully fund our total business plan and the development of our planned product candidates. Our ability to achieve revenue-generating operations and, ultimately, achieve profitability will depend on whether we can obtain additional capital when we need it, complete the development of our technology, receive regulatory approval of our planned product candidates and find strategic collaborators that can incorporate our planned product candidates into new or existing drugs which can be successfully commercialized. There can be no assurance that we will ever generate revenues or achieve profitability. Recent Developments On or about October 4, 2017, the Company received $1.25 million from the first tranche of Senior Convertible Notes that are expected to convert into securities of the Company that are placed in the next placement round at a price that will not be greater than 90% of the offering price in that placement (See Note 6). This first tranche was from current Heatwurx and Promet shareholders. On November 21, 2017, an additional tranche of $1,330,000 of Senior Convertible Notes was issued to third party accredited investors. We are in the process of raising additional funds by potentially selling additional Senior Convertible Notes, convertible loans or other securities. No assurance however can be given that the Company will be successful in doing so. On October 4, 2017, the Company and CoNCERT Pharmaceuticals Inc. (“CoNCERT”) entered into an exclusive option and license agreement for the CTP-499 compound. However, under the terms of this agreement, if the Company fails to meet the conditions set forth in the agreement, which include a requirement for us to have not less than $8 million in funding for the support of the drug as defined within the agreement, or if the Company elects not to exercise the option, then the product reverts back to ownership by CoNCERT. Since CPT-499 is currently our drug product lead candidate, should we lose our rights to CTP-499, our planned growth and business plan would be materially and adversely affected. On March 19, 2018, we modified the Option and License Agreement with CoNCERT effective January 2018 (see Notes 10 and 14), which enabled us to exercise our option to license the CoNCERT patent rights and know-how to develop and commercialize compounds (CTP-499 and each metabolite thereof) and products, as defined in the agreement. Status as an Emerging Growth Company We are an “emerging growth company” as that term is defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (i.e., those that have not had a registration statement declared effective under the Securities Act of 1933, as amended (the “Securities Act”), or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are required to comply with such new or revised financial accounting standards. The JOBS Act also provides that an emerging growth company can elect to opt out of the extended transition period provided by Section 102(b)(1) of the JOBS Act and comply with the requirements that apply to nonemerging growth companies, but any such election to opt out is irrevocable. We may still take advantage of all of the other provisions of the JOBS Act, which include, but are not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, the reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and the exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. |
Intangible Asset
Intangible Asset | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Asset | Note 2 – Intangible Asset Intangible assets consist of the capitalized costs of $11,038,929, including transaction costs of $1,782, associated with the exercise of the option to acquire the exclusive license from CoNCERT related to patent rights and know-how to develop and commercialize compounds and products for PCS-499 and each metabolite thereof and the related income tax effects. The capitalized costs include $3,037,147 associated with the initial recognition of an offsetting deferred tax liability related to the acquired temporary difference for an asset purchased that is not a business combination and has a tax basis of $1,782 in accordance with ASC 740-10-25-51 Income Taxes Research and Development The negotiation of the modification to the Agreement was finalized in mid-February 2018 and the legal documents were executed and the option was exercised on March 19, 2018 in exchange for CoNCERT receiving (i) $8 million of common stock of Processa that was owned by Promet (or 2,090,301 shares representing 6.58% of Promet’s common stock holding or 5.93% of total Processa common stock issued and outstanding), and (ii) 15% of any sublicense revenue earned by Processa for a period equivalent to the royalty term (as defined in the Agreement) until the earliest to occur of (a) Processa raising $8 million of gross proceeds; and (b) CoNCERT can sell its shares of Processa common stock without restrictions pursuant to the terms of the amended Agreement. All other terms of the Agreement remained unchanged. The license agreement was assigned to and deemed to have been exercised by the Company. As a result of the transaction, the Company recognized an intangible asset for the fair value of the common stock consideration paid of $8 million with an offsetting amount in additional paid-in capital resulting from Promet satisfying Processa’s liability to CoNCERT. The Company estimated the fair value of the common stock issued based on the market approach and CoNCERT’s requirement to receive shares valued at $8 million. The market approach was based on the final negotiated number of shares of stock determined on a volume weighted average price of Processa common stock quoted on the OTC over a 45 day period preceding the mid-February 2018 finalized negotiation of the modification to the option and license agreement with CoNCERT, an unrelated third party, for the exclusive license rights to PCS-499 however, Processa has less than 300 shareholders, the volume of shares trading for Processa’s common stock is not significant and the OTCQB is not a national exchange; therefore, the volume weighted average price quotes for the Processa stock are from markets that are not active and consequently are Level 2 inputs. The total cost recognized for the exclusive license acquired represents the allocated fair value related to the stock transferred to CoNCERT plus the recognition of the deferred tax liability related to the acquired temporary difference and the transaction costs incurred to complete the transaction as discussed above. Intangible assets consist of the following: June 30, 2018 Gross intangible assets Exclusive license rights to CTP-499 $ 11,038,929 Less: Accumulated amortization (222,559 ) Total intangible assets, net $ 10,816,370 Amortization expense was $197,124 and $222,559 for the three and six months ended June 30, 2018, respectively. The weighted average amortization period for the intangible asset is 14 years based on the average remaining patent lives for PCS-499 and the estimated royalty period for a fully paid-up license under the terms of the license agreement. Amortization expense is included within research and development expense in the accompanying consolidated statements of operations. As of June 30, 2018, the estimated future amortization expense each year for the next five years and annual periods thereafter until fully amortized amounts to $788,495 per year. |
Senior Convertible Notes
Senior Convertible Notes | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Debt Disclosure [Abstract] | ||
Senior Convertible Notes | Note 3 – Senior Convertible Notes The balance of our Senior Convertible Notes (“Senior Notes”) and accrued interest at June 30, 2018 and December 31, 2017 was as follows: Unamortized Senior Debt Senior Convertible Issuance Convertible Accrued Notes Costs Notes, Net Interest Balance, December 31, 2017 $ 2,580,000 $ (131,430 ) $ 2,448,570 $ 35,693 Conversion of debt $ (2,350,000 ) $ 64,361 $ (2,285,639 ) $ (109,472 ) Accrued interest - - - 84,922 Amortize debt issuance costs - 61,132 61,132 - Balance, June 30, 2018 230,000 (5,937 ) 224,063 11,143 Current portion (230,000 ) 5,937 (224,063 ) (11,143 ) Long-term portion $ - $ - $ - $ - Interest expense totaled $58,314 for the three months ended June 30, 2018, consisting of interest on the Senior Notes at 8% of $24,992 and the amortization of debt issuance costs of $33,322. Interest expense totaled $146,054 for the six months ended June 30, 2018 consisting of interest on the Senior Notes at 8% of $84,922 and the amortization of debt issuance costs of $61,132. The Senior Notes and related accrued interest are classified as a current liability in our balance sheet. Issuance of our Senior Convertible Notes As of October 4, 2017, certain entities affiliated with current shareholders had purchased $1.25 million of our Senior Notes in a bridge financing undertaken by us to support our operations. On November 21, 2017, additional third-party accredited investors contributed $1.33 million in financing proceeds. On May 25, 2018, $2,350,000 of Senior Notes was converted, as described below, leaving $230,000 of Senior Notes outstanding at June 30, 2018. Principal and interest under each Senior Note is due on the earlier of (i) the mandatory and automatic conversion of the Senior Note into the next Private Investment in Public Equity (“PIPE”) financing we undertake, provided the PIPE financing yields minimum gross proceeds and a pre-money valuation as defined in the financing agreement or (ii) the one-year anniversary of that Senior Note (Maturity Date). The Senior Notes bear interest at 8% per year and are payable in kind (in common stock). Holders of Senior Notes (a) may elect to receive 110% of principal plus accrued interest in the event there is a change of control prior to conversation of the Senior Notes, (b) are entitled to full ratchet anti-dilution protection in event of any sale of securities at a net consideration per share that is less than the applicable conversion price per share to the holder, (c) are entitled to certain registration rights for the securities underlying the Senior Notes and (d) have been granted certain preemptive rights pro rata to their respective interests through December 31, 2018. The Senior Notes can be prepaid by the Company at any time following the date of issuance with seven days prior written notice to the note holder. The Senior Notes are secured by a security interest in the assets of the Company and contain negative covenants that do not permit the Company to incur additional indebtedness or liens on property or assets owned, repurchase common stock, pay dividends, or enter into any transaction with affiliates of the Company that would require disclosure in a public filing with the Securities and Exchange Commission. Upon an event of default, the outstanding principal amount of the Senior Notes, plus accrued but unpaid interest and other amounts owing in respect thereof through the date of acceleration, shall become immediately due and payable in cash at the holder’s election, if not cured within the cure period. The Company retained a placement agent and agreed to pay the placement agent (i) six percent (6%) of gross proceeds received by the Company and (ii) warrants to purchase securities in the amount of three percent (3%) of the equity issued or issuable in connection with the Senior Notes bridge financing. These warrants will be issued upon achieving certain financing levels under the next PIPE financing we undertake. Additional financing was received in May and June 2018. As a result, warrants to purchase a total of 72,375 shares of common stock were issued to the placement agent, with a three-year term, at an exercise price equal to $2.452. The Company incurred $154,800 in debt issuance costs on the Senior Notes in connection with a payment to the placement agent, which was reported as a reduction of the carrying amount of the Senior Convertible Notes on the face of the consolidated balance sheets. The debt issuance costs are amortized to interest expense using the interest method over the term of the Senior Convertible Notes. The effective interest rate on the Senior Notes was 7.72% before debt issuance costs since no payments of interest are due until maturity and 13.96% including the debt issuance costs based on the repayment terms of the Senior Notes. Conversion of Our Senior Convertible Notes On May 25, 2018, pursuant to the mandatory and automatic conversion provisions of the Senior Notes, we converted $2,350,000 of the $2,580,000 outstanding Senior Notes, along with any accrued interest into 1,206,245 shares of common stock (at a conversion price of $2.043 per share) and a warrant to purchase one share of common stock for three years, at an exercise price of $2.452. Senior Notes totaling $230,000 held by Canadian individuals cannot be converted until the Company completes certain regulatory matters and filings in Canada. Once these regulatory matters and filings have been met, the Senior Notes held by these individuals will automatically convert on the same terms as the other noteholders. The Company completed an evaluation of the warrants issued in this transaction and determined the warrants should be classified as equity. | NOTE 6 – SENIOR CONVERTIBLE NOTES As of October 4, 2017, certain entities affiliated with current shareholders (see Note 4) had purchased $1.25 million of our senior secured convertible notes (“Senior Notes”) in a bridge financing undertaken by us to support the Processa operations. On November 21, 2017, additional third party accredited investors contributed $1.33 million in financing proceeds. As of December 31, 2017, $2.58 million of Senior Notes were issued and outstanding. Principal and interest under each Senior Note is due on the earlier of (i) the mandatory and automatic conversion of the Senior Note into the next Private Investment in Public Equity (“PIPE”) financing we undertake, provided the PIPE financing yields gross proceeds of at least $4 million at a conversion price per share equal to the lower of (a) $72 million pre-money valuation or (b) a 10% discount to the pre-money valuation (Qualified Financing) or (ii) the one-year anniversary of that Senior Note (Maturity Date). The Senior Notes bear interest at 8% per year, and are payable in kind (in common stock). At the Maturity Date, the outstanding principal and accrued interest on the Senior Note will be automatically converted into shares of common stock of the Company equal to the lesser of (i) $72 million pre-money valuation or (ii) any adjusted price resulting from the application of down round pricing during the anti-dilution period through December 31, 2018. In such event, the anti-dilution period, as defined, will be extended for a further 12 months. There can be no assurance that we will be successful in achieving the financing levels targeted under the Senior Convertible Notes or the PIPE financing. Holders of Senior Notes (a) may elect to receive 110% of principal plus accrued interest in the event there is a change of control prior to conversion of the Senior Notes, (b) are entitled to full ratchet anti-dilution protection in event of any sale of securities at a net consideration per share that is less than the applicable conversion price per share to the holder, (c) are entitled to certain registration rights for the securities underlying the Senior Notes and (d) have been granted certain preemptive rights pro rata to their respective interests through December 31, 2018. The Senior Notes can be prepaid by the Company at any time following the date of issuance with seven days prior written notice to the note holder. The Senior Notes are secured by a security interest in the assets of the Company and contain negative covenants that do not permit the Company to incur additional indebtedness or liens on property or assets owned, repurchase common stock, pay dividends, or enter into any transaction with affiliates of the Company that would require disclosure in a public filing with the Securities and Exchange Commission. Upon an event of default, the outstanding principal amount of the Senior Notes, plus accrued but unpaid interest and other amounts owing in respect thereof through the date of acceleration, shall become immediately due and payable in cash at the holder’s election, if not cured within the cure period. The Company retained Boustead Securities Ltd. (“Boustead”), a registered broker-dealer, as its exclusive financial adviser and has agreed to pay Boustead (i) six percent (6%) of gross proceeds received by the Company and (ii) warrants to purchase securities in the amount of three percent (3%) of the equity issued or issuable in connection with the Senior Notes bridge financing. These warrants will be issued upon achieving certain financing levels under the next PIPE financing we undertake. No warrants are issuable, and none have been issued as of December 31, 2017. To the extent that the Company raises more than $8 million (the “Excess Investment”) then as to that portion of the Excess Investment that is attributable to funds provided by existing holders of Company equity or by shareholders of the Company, including their respective affiliated holders (the “Affiliated Excess Investment”), the Company shall pay Boustead a cash fee equal to two percent (2%) of the Excess Investment and six percent (6%) of the balance of the Excess Investment, if any. Boustead may allow a portion of its fees payable hereunder to be shared with another registered broker-dealer assisting in the private capital raise. Senior Notes and the underlying common stock that the Senior Notes will convert into have not been registered under the United States Securities Act of 1933, as amended (the “Act”). The Senior Notes and the underlying common stock that the Senior Notes will convert into shall be issued solely to investors who are “accredited investors” within the meaning of Rule 501(a) of Regulation D promulgated under the Act. There is no public market for the Senior Notes and there is no public market for the securities of the Company (or shares of common stock of the Company issued to Promet at the closing of the Asset Purchase Agreement discussed in Note 1) upon conversion of the Senior Notes. Debt and accrued interest at December 31, 2017 and interest expense for the year ended December 31, 2017 are as follows: Debt Balance Accrued Interest Interest Expense Senior Convertible Notes $ 2,580,000 $ 35,693 $ 35,693 Unamortized Debt Issuance Cost (131,430 ) - 23,370 Balance, December 31, 2017 $ 2,448,570 $ 35,693 $ 59,063 The Company incurred $154,800 in debt issuance costs on the Senior Notes with Boustead, which were offset against the debt balance. All debt issuance costs are being amortized over the term of the Senior Notes using the effective interest method. The face interest rate of the Senior Notes is 8 percent. The effective interest rate on the Senior Notes was 7.72 percent before debt issuance costs since no payments of interest are due until maturity and 13.96 percent including the debt issuance costs based on the repayment terms of the Senior Notes. Future maturities of debt and accrued interest, contractual interest expense to be incurred and amortization of debt issuance costs as of December 31, 2017 are $2,580,000, $206,400, $170,707 and $131,430, respectively, for the year ended December 31, 2018. |
Reverse Acquisition
Reverse Acquisition | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Reverse Acquisition | NOTE 3 – REVERSE ACQUISITION On October 4, 2017, Heatwurx acquired Promet’s net assets of $1,017,342 at historical cost in exchange for approximately 90 percent or 222,217,112 shares of common stock issued by the Company (or 31,745,242 shares post reverse split). Immediately following the transaction, total shares issued and outstanding were 246,907,902 (or 35,272,626 shares post reverse split), representing the total legal capital of the Company. The transaction has been accounted for as a reverse acquisition in accordance with ASC 805-40-45, Business Combinations - Reverse Acquisitions Promet’s assets and liabilities are recognized and measured at their precombination carrying amounts. Heatwurx, which subsequently changed its name to Processa Pharmaceuticals, Inc., recognized and measured its assets and liabilities at October 4, 2017 in accordance with guidance applicable to business combinations. The net liabilities were all short term in nature and were recognized at their precombination carrying amounts. The accumulated deficit reflects Promet balances before the reverse acquisition. See Note 2 – Basis of Presentation and Earnings per Share and Note 2 – Equity for the recognition and measurement of common stock and additional paid-in capital. Promet incurred acquisition-related transaction costs of $58,763, which are included in general and administrative expense, a component of operating expenses in the consolidated statements of operations. The operating results for Heatwurx are included in the accompanying consolidated financial statements from October 4, 2017 forward. Heatwurx’s assets acquired and liabilities assumed (see below) and the par value of the common stock allocated to Heatwurx stockholders is recognized as a reduction of additional paid-in capital at the acquisition date. Net recognized values of Heatwurx identifiable assets and liabilities Cash 6,280 Accounts payable (26,098 ) Accrued expenses (17,932 ) Net liabilities assumed $ (37,750 ) |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Equity [Abstract] | ||
Stockholders' Equity | Note 4 – Stockholders’ Equity 2018 Private Placement Transactions Between May 15, 2018 and June 29, 2018, the Company sold an aggregate of 1,402,442 units in a private placement transaction at a purchase price equal to $2.27 per unit for gross proceeds of approximately $3.2 million. Each unit consisted of one share of our common stock and a warrant to purchase one share of our common stock for $2.724, subject to adjustment thereunder for a period of three years. The Company paid $167,526 to their placement agent and issued placement agent warrants to purchase up to 84,146 shares of common stock, with a three-year term, at an exercise price equal to $2.724. The issuance costs were charged against additional paid in capital. The Company also recorded a note receivable of $107,490, which represented proceeds from one non-affiliated investor in the June 29, 2018 transaction that was not received until July 6, 2018. On May 25, 2018, we entered into an Agreement with PoC Capital, LLC (“PoC”), where PoC has agreed to finance $1,800,000 in study costs associated with certain clinical studies, including our Phase 2a study to evaluate the safety, tolerability, efficacy and pharmacodynamics of PCS 499 in patients with Necrosis Lipoidica in exchange for 792,952 shares of our common stock and a warrant for the purchase of 792,952 shares of common stock with an exercise price of $2.724, expiring on July 29, 2021. Any study costs in excess of that amount will be our responsibility. PoC will not make payments to us, but directly to the contract research organization based on their invoices. We paid $108,000 to our placement agent and issued our placement agent warrants to purchase 47,578 shares of common stock, with a three-year term, at an exercise price equal to $2.724. The issuance costs were charged against additional paid in capital. The Company also entered into a pledge agreement with PoC, under which the Company received a security interest in 396,476 shares, or half the shares we issued to them. These shares will be released in two tranches of 198,238 shares each, with each tranche released upon PoC making payments totaling $720,000. As of June 30, 2018, no proceeds have been paid by PoC and the Company holds 396,476 shares as collateral. The common stock, but not the warrants, issued for the 2018 Private Placement Transactions and the conversion of the Senior Convertible Notes have, subject to certain customary exceptions, full ratchet anti-dilution protection. Until the Company has issued equity securities or securities convertible into equity securities for a total of an additional $20.0 million in cash or assets, including the proceeds from the exercise of the warrants issued above, in the event we issue additional equity securities or securities convertible into equity securities at a purchase price less than $2.27 per share of common stock, the above purchase price shall be adjusted and new shares of common stock issued as if the purchase price was such lower amount (or, if such additional securities are issued without consideration, to a price equal to $0.01 per share). The Company completed an evaluation of the warrants issued in the 2018 Private Placement Transactions and the conversion of the Senior Convertible Notes and determined the warrants should be classified as equity. Purchase of the CoNCERT License On March 19, 2018, Promet, Processa and CoNCERT amended the Agreement executed in October 2017. The Agreement was assigned to Processa and Processa exercised the exclusive option for the PCS-499 compound (see Note 1 – Company Overview and Note 2 – Intangible Asset) in exchange for CoNCERT receiving, in part, $8 million of common stock of the Company that was owned directly by Promet (or 2,090,301 shares at $3.83 per share representing 6.58% of Promet’s common stock holding or 5.93% of the Company’s total common stock issued and outstanding) in satisfaction of the obligation due for the exclusive license for CTP-499 acquired by Processa. There was no change in the total shares issued and outstanding of 35,272,626, however, Promet’s controlling interest was reduced from 90% to 84%. Promet contributed the payment of the obligation due for the exclusive license to the Company without consideration paid to them. As a result of the transaction, the Company recognized an exclusive license intangible asset with a fair value of $8 million and an offsetting increase in additional paid-in capital resulting from Promet satisfying Processa’s liability to CoNCERT (see Note 2 Intangible Asset for the income tax effect of this transaction). | NOTE 8 –STOCKHOLDERS’ EQUITY On December 8, 2017, we completed a one-for-seven reverse split in trading markets. As a result, the consolidated financial statements have been retrospectively adjusted to reflect shares outstanding after the one-for-seven reverse split. Common Stock – As of December 31, 2017 and 2016, the Company had authorized 350,000,000 and 43,261,049 shares of common stock with a $0.0001 par value. At December 31, 2017 and 2016 there were 35,272,626 and 31,745,242 common shares issued and outstanding, respectively. Common shares attributable to Promet’s controlling interest were 31,745,242 at December 31, 2017 and 2016. Common shares attributable to the minority shareholders’ interest were 3,527,384 and zero at December 31, 2017 and 2016, respectively. Preferred Stock On September 29, 2017, prior to the asset purchase closing, Heatwurx converted 178,924 shares of Series D Preferred Stock and all accrued dividends in the amount of $118,658 into 719,500 shares of common stock or 102,789 shares of common stock restated for the reverse stock split. Stock and Performance Options During the year ended December 31, 2016, there were no options or performance options granted or exercised and 321,667 unexercised options with a weighted average exercise price of $1.69 were cancelled. At December 31, 2016, there were 269,500 unexercised options with a weighted average exercise price of $1.88 and a weighted average remaining life of 2.04 years and 40,000 unexercised performance options with a weighted average exercise price of $2.00. Upon the issuance of 90% of Heatwurx’s common stock to Promet on October 4, 2017, there was a Change in Control event, as defined in the Plan. As of September 30, 2017, prior to the Change in Control event, all 269,500 unexercised options and all 40,000-unexercised performance options outstanding at December 31, 2016 were cancelled. No stock-based compensation expense was recognized for the years ended December 31, 2017 and 2016. Warrants |
Income Taxes
Income Taxes | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Income Taxes | Note 5 – Income Taxes The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. As of June 30, 2018, and December 31, 2017, the Company recorded a valuation allowance equal to the full recorded amount of the Company’s net deferred tax assets related to intangible start-up costs since it is more-likely-than-not that such benefits will not be realized. The valuation allowance is reviewed quarterly and is maintained until sufficient positive evidence exists to support its reversal. As described more fully in Note 1, Promet and Processa entered into an Asset Purchase Agreement pursuant to which Processa acquired, in an IRC Section 351 tax-free contribution of assets solely for over 80% of the voting stock of Processa (the “Section 351 Transaction”) by Promet, for properties, rights and assets, including liabilities and commitments, owned by Promet. (the “Contributed Assets”). Contemplated in the Contributed Assets were rights, title and interest under a certain option and license agreement with CoNCERT with respect to certain know-how, patent rights and compounds developed or obtained by CoNCERT (the “CoNCERT Assets”) for which voting securities of Processa were expressly contemplated to be issued as part and parcel with, and integrated into, the Section 351 Transaction to CoNCERT because all Contributed Assets including the CoNCERT Assets were contemplated to be integral to each other and were considered to be an integrated undertaking as the primary target, purpose and reason for the overall transaction itself. A deferred tax liability was recorded when CoNCERT sold its license and “Know-How” to Processa for stock in an Internal Revenue Code Section 351 transaction on March 19, 2018 (see Note 1 – Company Overview and Note 2 – Intangible Asset). A Section 351 transaction treats the acquisition of the license and Know-How for stock as a tax-free exchange. As a result, under ASC 740-10-25-51 Income Taxes Income Taxes – Interim Reporting As required under ASC 740-270, Interim Financial Reporting As discussed in Note 2 – Income Taxes in the consolidated financial statements included in Item 8 of the 2017 Form 10-K filed with the SEC on April 17, 2018, the historical information presented in the consolidated financial statements prior to October 4, 2017 is that of Promet in accordance with Accounting Standards Codification (“ASC”) 805-40-45, Business Combinations – Reverse Acquisitions The Company expects to be in an overall taxable loss position for 2018. However, the Company expects to recognize a deferred tax benefit in 2018 to the extent the 2017 net operating loss carryover and the 2018 net operating losses can be used to offset the deferred tax liability related to the intangible asset. No current income tax expense is expected for the foreseeable future as the Company expects to generate taxable net operating losses. | NOTE 7 – INCOME TAXES The Company files income tax returns in the U.S. federal jurisdiction and in the state of Maryland. There are currently no income tax examinations underway for these jurisdictions. The Company provides deferred income taxes for differences between the tax reporting bases and the financial reporting bases of assets and liabilities at the enacted tax rates. The Company determined that it was not required to record a liability related to uncertain tax positions as a result of implementing the requirements of ASC 740-10-25 Income Taxes. Should the Company incur interest and penalties relating to tax uncertainties, such amounts would be classified as a component of interest expense and general and administrative expense, respectively. The liability related to uncertain tax positions is not expected to increase or decrease within the next twelve months. As of December 31, 2017, the Company’s tax year for 2016, 2015 and 2014 are subject to examination by the Internal Revenue Service and the state taxing authorities of Maryland, Colorado, Utah, North Dakota and California. As discussed in Note 2 – Income Taxes, the historical information presented in the financial statements is that of Promet. Prior to the closing of the asset purchase transaction on October 4, 2017, Promet was treated as a partnership for federal income tax purposes and thus the partners were taxed separately on their proportionate share of Promet’s income, deductions, losses and credits. Therefore, no provision or liability for income taxes has been included in these financial statements through the date of the asset purchase on October 4, 2017. In addition, as a result of the asset purchase transaction, Promet was issued 90 percent of the total issued and outstanding common stock of Heatwurx, including the shares issued to Promet. The transaction resulted in an ownership change as defined by Internal Revenue Code Section 382. The net deferred tax assets of Heatwurx, prior to the asset purchase transaction, were principally federal and state net operating loss carry forwards. The Heatwurx net deferred tax assets were fully reserved with a valuation allowance. The Company has no current federal or state tax provision recognized in the consolidated financial statements. Since the asset purchase transaction, the Company has incurred operating losses of approximately $606,400. The total deferred tax asset as of December 31, 2017 includes approximately $347,500 ($95,632 net of tax) of general and administrative expenses treated as deferred start-up expenditures for tax purposes and approximately $258,600 ($71,155 net of tax) of tax losses resulting in tax loss carryforwards. The Company has had no revenues and recognized cumulative loses since inception. Due to the uncertainty regarding future profitability and recognition of taxable income to utilize the amortization of deferred start-up expenditures and the tax loss carryforwards, a full valuation allowance against any potential deferred tax assets has been recognized for the year ended December 31, 2017 as discussed below. As of December 31, 2017, the Company is evaluating its qualified research expenditures for application to federal and state research and development tax credits to offset potential future tax liabilities. The federal research and development tax credits have a 20-year carryforward period. The Maryland research and development tax credits have a 7-year carryforward period. There is no recognition of a deferred tax asset for research and development tax credits as of December 31, 2017. The Company is subject to U.S. Federal and state income taxes. The provision (benefit) for income taxes for the tax years ended December 31, 2017 and 2016 are as follows: Years Ended December 31, 2017 2016 Current: Federal $ - $ - State - - Total current - - Deferred: Federal (116,783 ) - State (50,004 ) - Total deferred tax benefit (166,787 ) - Valuation allowance 166,787 - Net deferred tax benefit - - Total tax provision (benefit) $ - $ - On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (“TCJA”) was signed into law. Among its provisions, the TCJA reduces the statutory U.S. Corporate income tax rate from 34% to 21% effective January 1, 2018. The TCJA includes provisions that, in certain instances, impose U.S. income tax liabilities on future earnings of foreign subsidiaries and limit the deductibility of future interest expenses. The TCJA also provides for accelerated deductions of certain capital expenditures made after September 27, 2017 through bonus depreciation and an indefinite tax loss carryforward period for losses incurred after December 31, 2017. However, these tax loss carry forwards can only offset 80 percent of future taxable income. Losses incurred prior to January 1, 2018 continue to carry forward for twenty years. The application of the TCJA may change due to regulations subsequently issued by the U.S. Treasury Department. Upon the enactment of the TCJA, we recorded a reduction in our deferred income tax assets of approximately $72,300 for the effect of the aforementioned change in the U.S. statutory income tax rate with an offsetting decrease in the valuation allowance established against the deferred tax assets. As a result, there was no change or recognition of an income tax provision or benefit in the consolidated statement of operations for the year ended December 31, 2017. In December 2017, the Securities and Exchange Commission issued Staff Accounting Bulletin 118 (“SAB 118”) to provide clarification in implementing the TCJA when registrants do not have the necessary information available to complete the accounting for an element of the TCJA in the period of its enactment. SAB 118 provides for tax amounts to be classified as provisional and subject to remeasurement for up to one year from the enactment date for such elements when the accounting effect is not complete, but can be reasonably estimated. We consider our estimates of the tax effects of the TCJA on the components of our tax provision to be reasonable and no provisional estimates subject to remeasurement will be necessary to complete the accounting. Deferred Income Taxes The net operating losses are available for application against future taxable income for 20 years, expiring in 2037. The benefit associated with the amortization of the deferred start-up expenditures and the net operating loss carry forward will more-likely-than-not go unrealized unless future operations are successful. Since the success of future operations is indeterminable, the potential benefits resulting from these deferred tax assets have not been recorded in the financial statements. December 31, 2017 December 31, 2016 Deferred Tax Assets: Non-current Net operating loss carry forward - Federal $ 49,822 $ - Net operating loss carry forward - State 21,333 - Start-up expenditures and amortization 95,632 - Total non-current deferred tax assets 166,787 - Valuation allowance for deferred tax assets (166,787 ) - Total deferred tax assets $ - $ - The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, the projected future taxable income and tax planning strategies in making this assessment. Based on management’s analysis, a full reserve has been established against this asset. The change in the valuation allowance in 2017 and 2016 was $166,787 and $0, respectively. A reconciliation of the Company’s effective income tax rate and statutory income tax rate at December 31, 2017 and 2016 is as follows: December 31, 2017 December 31, 2016 Federal statutory income tax rate 34.00 % 0.00 % State tax rate, net 5.45 % 0.00 % Permanent differences -0.02 % 0.00 % Impact of change in federal income tax rates -11.92 % 0.00 % Deferred tax asset valuation allowance -27.51 % 0.00 % Effective income tax rate 0.00 % 0.00 % |
Net Loss Per Share of Common St
Net Loss Per Share of Common Stock | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Earnings Per Share [Abstract] | ||
Net Loss Per Common Share | Note 6 – Net Loss per Share of Common Stock Basic net loss per share is computed by dividing net loss by the weighted average common shares outstanding. Diluted net loss per share is computed by dividing net loss by the weighted average common shares outstanding without the impact of potential dilutive common shares outstanding because they would have an anti-dilutive impact on diluted net loss per share. The treasury-stock method is used to determine the dilutive effect of the Company’s stock warrants grants, and the if-converted method is used to determine the dilutive effect of the Company’s Senior Convertible Notes. The computation of net loss per share for the three and six months ended June 30, 2018 and 2017 is shown below. Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Basic and diluted net loss per share: Net loss $ (1,206,074 ) $ (278,445 ) $ (2,302,870 ) $ (500,536 ) Weighted-average number of common shares-basic and diluted 36,623,697 31,745,242 35,951,894 31,745,242 Basic and diluted net loss per share $ (0.03 ) $ (0.01 ) $ (0.06 ) $ (0.02 ) The outstanding warrants to purchase common stock and the shares issuable under the Senior Convertible Note were excluded from the computation of diluted net income per share as their effect would have been anti-dilutive for the periods presented below: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Stock purchase warrants 3,612,786 - 3,612,786 - Senior Convertible Notes 115,128 - 115,128 - | NOTE 9 – NET LOSS PER COMMON SHARE The Company computes loss per share of common stock using the two-class method required for participating securities. The Company’s participating securities include all series of its convertible preferred stock. Undistributed earnings allocated to these participating securities are added to net loss in determining net loss applicable to common stockholders. The Company has preferred stock authorized but no preferred stock issued and outstanding at December 31, 2017 and 2016. The dilutive effect of convertible securities, including the preferred stock, if issued, and the Senior Convertible Notes, are reflected in diluted earnings per share using the if-converted method. As a result, (i) the preferred dividends applicable to the convertible preferred stock are deducted from income from continuing operations and net income in computing income available to common stockholders and, (ii) the interest expense and nondiscretionary adjustments on income that would have been calculated differently had the interest on the Senior Convertible Notes never been recognized, both net of income tax, are added back to the numerator. The convertible preferred stock and the Senior Convertible Notes assume the conversion to common stock at the beginning of the period or the date of issuance, if later, resulting in common shares being included in the denominator. Other convertible securities that may be dilutive on their own but antidilutive when included with other potential common shares in computing diluted earnings per share include options and warrants since the treasury stock method applied to options and warrants has no effect on the numerator in the calculation. However, including potential common shares in the denominator (including convertible preferred stock and Senior Convertible Notes) of a diluted per share computation for continuing operations will always result in an antidilutive per share amount when the Company reports a loss from continuing operations or a loss from continuing operations available to common stockholders (after any preferred dividend deductions). No potential common shares shall be included in the computation of any diluted per share amount when a loss from continuing operations or a loss from continuing operations available to common stockholders (after preferred dividend deduction) exists, even if the entity reports net income (as a result of discontinued operations) since it would be antidilutive. As a result, if there is a loss from continuing operations or a loss from continuing operations available to common stockholders, diluted earnings per share would be computed in the same manner as basic loss per share. There were no outstanding options or warrants issued for the period from August 31, 2015 (inception) through December 31, 2017. See Notes 6 and 8 for further discussion of warrants related to the Senior Convertible Notes and the PIPE financing. The Company has reported a loss from continuing operations and a loss from continuing operations available to common stockholders for all periods presented. As a result, there is no assumed conversion, exercise or contingent exercise of potential common shares included in the computation of the diluted per share amounts since it would have an antidilutive effect, therefore, basic and diluted loss per share are computed by dividing net loss applicable to common stockholders by the weighted-average number of shares of common stock outstanding. The calculation of the numerator and denominator for basic and diluted net loss per common share is shown in the table below. The weighted-average shares of common stock used in calculating basic earnings per share for the 2017 calculation uses the number of shares issued to Promet in the asset purchase transaction from January 1, 2017 through the acquisition date of October 4, 2017 plus all the legal capital issued and outstanding of Heatwurx, including Promet’s shares, from the closing date through December 31, 2017. All shares were restated for the one-for-seven reverse split. The 2016 calculation uses the common shares issued to Promet in the asset purchase transaction, restated for the one-for-seven reverse split and weighted for the issuance dates of Promet’s member interests. For the year ended December 31, 2017 December 31, 2016 Net loss from continuing operations $ (1,856,315 ) $ (1,917,066 ) Less: Preferred stock dividends - - Net loss from continuing operations applicable to common stockholders - basic (1,856,315 ) (1,917,066 ) Dilution adjustments (not computed since they are antidilutive): Preferred stock dividend - - Interest on senior convertible notes, net of tax - - Net loss from continuing operations applicable to common stockholders - diluted $ (1,856,315 ) $ (1,917,066 ) Promet common shares issued and outstanding 31,745,242 31,745,242 Heatwurx common shares issued and outstanding 3,527,384 - Total common shares issued and outstanding - basic 35,272,626 31,745,242 Potential common shares (not computed since they are antidilutive): Warrants - - Conversion of preferred stock to common shares - - Conversion of senior convertible notes to common shares - - Total common shares issued and outstanding - diluted 35,272,626 31,745,242 Weighted average shares outstanding used in calculating net loss per common share - basic 32,595,680 29,321,049 Weighted average shares outstanding used in calculating net loss per common share - diluted 32,595,680 29,321,049 Net loss per share - basic $ (0.06 ) $ (0.07 ) Net loss per share - diluted $ (0.06 ) $ (0.07 ) |
Related Party Transactions
Related Party Transactions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Related Party Transactions [Abstract] | ||
Related Party Transactions | Note 7 – Related Party Transactions A shareholder, Corlyst, LLC, reimburses the Company for shared costs related to payroll, health care insurance and rent based on actual costs incurred and recognized as a reduction of the general and administrative operating expenses being reimbursed in the Company’s condensed consolidated statement of operations. The reimbursed amounts totaled $0 and $19,660 for the three months ended June 30, 2018 and 2017, respectively, and $27,480 and $49,089 for the six months ended June 30, 2018 and 2017, respectively. Amounts due from Corlyst at June 30, 2018 and December 31, 2017 were $53,501 and $62,709, respectively. During 2017 and 2018, Corlyst paid certain operating expenses on behalf of the Company and the Company reimbursed Corlyst based on actual costs incurred at later dates. The accounts payable amounts due to Corlyst at June 30, 2018 and December 31, 2017 were $900 and $0, respectively. In 2018, Promet paid CA state and FUTA payroll taxes on behalf of Processa. As a result, the accounts payable amount due to Promet at June 30, 2018 and December 31, 2017 were $116 and $336, respectively. In addition, there was $100 due to an officer included in due to related parties as of June 30, 2018 and December 31, 2017. Corlyst also purchased 132,159 shares of common stock in a private placement transaction. A Director of the Company is the manager of the JMW Fund, LLC, San Gabriel Fund, LLC, and Richland Fund, LLC, collectively known as the “Funds”. The Funds received 515,583 shares of our common stock and warrants to purchase 515,583 shares of our common stock upon the conversion of $1 million of Senior Convertible Notes held by the Funds purchased on October 4, 2017. At June 30, 2018, the Funds owned a total of 2,065,789 shares of common stock and warrants to purchase 515,583 shares of common stock. Entities affiliated with our Chairman of the Board of Directors and Chief Executive Officer (CEO) received 103,117 shares of our common stock and warrants to purchase 103,117 shares of our common stock upon the conversion of $200,000 in Senior Convertible Notes purchased on October 4, 2017. Our CEO and entities affiliated with our CEO also purchased a total of 132,160 shares of common stock and warrants to purchase 132,160 shares of common stock in private placement transactions. | NOTE 4 – RELATED PARTY TRANSACTIONS A shareholder, Corlyst, LLC, pays the Company for administrative services performed by the Company. These administrative fees are included as a reduction of the related general and administrative expenses in the Company’s statement of operations. These fees were charged beginning in October 2016 and totaled $111,799 and $32,327 for the years ended December 31, 2017 and 2016, respectively. The receivable balances due from Corlyst at December 31, 2017 and 2016 were $62,709 and $0, respectively. During 2016 and 2017, Corlyst paid certain operating expenses on behalf of the Company and the Company reimbursed Corlyst based on actual costs incurred at later dates. The accounts payable amounts due to Corlyst at December 31, 2017 and 2016 were $336 and $95, respectively. In addition, there was $100 due to an officer included in due to related parties as of December 31, 2017. A director of the Company is the manager of the JMW Fund, LLC, the San Gabriel Fund, LLC, and the Richland Fund, LLC, collectively known as the “Funds”. These Funds own 14,180,543 shares of common stock in the aggregate at December 31, 2017 or 2,025,792 shares of common stock restated for the reverse stock split. In addition, the Funds own $1 million in Senior Convertible Notes at December 31, 2017. Entities affiliated with the Chairman of the Board of Directors, Chief Executive Officer and Interim Chief Financial Officer of the Company own $250,000 in Senior Convertible Notes at December 31, 2017. Heatwurx had secured notes payable with the Funds in the aggregate amount of $1,289,361; on September 29, 2017, prior to the asset purchase closing, Heatwurx converted the principal and accrued interest of $412,716 into 8,510,386 shares of common stock or 1,215,813 shares of common stock restated for the reverse stock split. The Funds also had an aggregate principal balance of $138,000 and accrued interest of $50,887 on the Heatwurx revolving line of credit converted into 944,436 shares of common stock on September 29, 2017 or 134,924 shares of common stock restated for the reverse stock split. |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Notes Payable | NOTE 5– NOTES PAYABLE On September 29, 2017, prior to the Asset Purchase closing, principal of all existing Heatwurx notes payable in the amount of $1,939,341 and related accrued interest in the amount of $613,114 were converted to 12,953,902 shares of common stock or 1,850,625 shares of common stock restated for the reverse stock split. As of December 31, 2017, there were no Heatwurx notes payable outstanding. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Commitments and Contingencies | Note 8 – Commitments and Contingencies Purchase Obligations The Company enters into contracts in the normal course of business with contract research organizations and subcontractors to further develop its products. The contracts are cancellable, with varying provisions regarding termination. If a contract with a specific vendor were to be terminated, the Company would only be obligated for products or services that it received as of the effective date of the termination and any applicable cancellation fees. The Company had purchase obligations of approximately $110,000 and $896,000 at June 30, 2018 and December 31, 2017, respectively. Cybersecurity Fraud In January 2018, the Company incurred a loss of $144,200 due to fraud from a cybersecurity breach. As a result, we have implemented certain review and approval procedures internally and with our banks; our technology consultants have implemented system changes; and, we reported the fraud to our banks and the Federal Bureau of Investigation Cyber Crimes Unit. The Company does not have insurance coverage against the type of fraud that occurred, therefore, recovery of the loss is remote. While we are taking steps to prevent such an event from reoccurring, we cannot provide assurance that similar issues will not reoccur. The loss is included in general and administrative expenses in the consolidated statement of operations for the six months ended June 30, 2018. | NOTE 10 – COMMITMENTS AND CONTINGENCIES Operating Lease Obligations The Promet leases office space and equipment from third parties under non-cancelable operating leases. The office lease commenced on October 1, 2016 and expires September 30, 2019 with monthly rent at inception of $5,535 that escalates $1,107 annually on each October. Rent expense under the current office lease for the years ended December 31, 2017 and 2016 was $105,954 and $50,997, respectively. Rent expense for the year ended December 31, 2017 includes straight-line rent expense of $13,284 and $22,929 of common area maintenance and real estate tax reimbursements. At December 31, 2017, the accrued rent liability was $13,284, of which $3,321 was a current liability and $9,963 was a non-current liability. The equipment lease commenced in June 2017 and expires in August 2020. Monthly rent of $586 over the 39-month lease term includes a monthly operating usage cost allowance of $125. Additional charges for excess usage, as defined in the agreement, are charged quarterly. The lessor charges monthly sales tax of 6 percent. Rent expense under the equipment lease for the years ended December 31, 2017 and 2016 was $6,626 and $5,362, respectively. Future minimum rental payments under the leases as of December 31, 2017, are as follows: Office Equipment Total 2018 $ 83,025 $ 7,036 $ 90,061 2019 69,741 7,036 76,777 2020 - 4,691 4,691 Total future minimum lease payments $ 152,766 $ 18,762 $ 171,528 Option and License Agreement with CoNCERT Pharmaceuticals On October 4, 2017, Promet entered into an option and license agreement with CoNCERT Pharmaceuticals, Inc. (“CoNCERT”). The agreement provides the Company with an option to license the CoNCERT patent rights and know-how to develop and commercialize compounds (CTP-499 and each metabolite thereof) and products, as defined in the agreement. The option period ends, and the agreement terminates nine months from the date of the agreement if not exercised. Promet has the right to exercise the option during the option period; provided Promet (i) has raised gross proceeds of at least $8 million in one or more equity or other financings after the date of the agreement, and (ii) has a post-money valuation, following its then most recent equity financing, of at least $40.5 million. Upon exercise of the option, Promet will have an exclusive, royalty-bearing right and license, including a right to sublicense, under CoNCERT intellectual property and joint intellectual property, to develop, manufacture, use and commercialize, including filing for, obtaining and maintaining regulatory approval for, products in all medical fields on a global basis. Promet shall control and be solely responsible for the commercialization of products in all medical fields on a global basis, including all costs and expenses. On March 19, 2018, we modified the Option and License Agreement with CoNCERT effective March 2018 (see Note 14), which enabled us to exercise our option to license the CoNCERT patent rights and know-how to develop and commercialize compounds (CTP-499 and each metabolite thereof) and products, as defined in the agreement. In addition, Promet will have the right and license, including a right to sublicense, under CoNCERT intellectual property and joint intellectual property, to develop compounds and products in all medical fields on a global basis. Promet shall control and be solely responsible for the development of and regulatory activities with respect to compounds and products in all medical fields on a global basis, including all costs and expenses. Promet shall use commercially reasonable efforts to develop and obtain regulatory approval for one product in the U.S. and at least one other major market and subject to obtaining regulatory approval in the applicable major market, commercialize one product in the U.S. and at least one other major market. Failure to comply with the diligence obligation under the license agreement may result in the termination of the license agreement by CoNCERT in accordance with the relevant terms of the agreement. In partial consideration for the rights granted to Promet , if the option is exercised, pursuant to the terms of a customary stock purchase agreement on mutually acceptable terms based on shares issued that enabled Promet to exercise the option under the license agreement discussed above, Promet shall issue to CoNCERT, for no additional consideration, shares representing the lesser of (a) the number of shares determined by dividing $8 million by the price per share paid by other investors in the financing round that enabled Promet to exercise the option under the license agreement discussed above or (b) the number of shares rounded down to the nearest whole share equal to 19.9 percent of the issued and outstanding shares of Promet immediately following the issuance of shares to CoNCERT. Following the execution of the stock purchase agreement, CoNCERT shall also be entitled to the same right to participate in future financing rounds of Promet (and subject to the same exceptions) as applicable to any investor in the financing round that enabled Promet to exercise the option under the license agreement. Promet will incur royalty obligations to CoNCERT on a country-by-country and product-by-product basis that commence on the date of this agreement and expire on a country-by-country and product-by-product basis on the later of (i) expiration or invalidation of the last valid claim covering such product in such country or (ii) the tenth anniversary of the date of the first commercial sale to a non-sublicensee third party of such product in such country. Promet shall pay to CoNCERT royalties, on a product-by-product basis, on worldwide net sales of products during each year as follows: (a) four percent (4%) of sales less than or equal to $100 million; (b) five percent (5%) of sales greater than $100 million and less than or equal to $500 million; (c) six percent (6%) of sales greater than $500 million and less than or equal to $1 billion; and, (d) for that portion greater than $1 billion, (i) with respect to net sales made by Promet or any of its affiliates, ten percent (10%) of net sales, and (ii) with respect to net sales made by any sub-licensee, the greater of (1) 6% of such net sales or (2) 50% of all payments received by Promet or any of its affiliates with respect to such net sales. Royalties are subject to adjustment as provided in the terms of the agreement. CoNCERT’s Board Observer right will expire when CoNCERT’s ownership interest in Promet decreases below ten percent of the outstanding voting stock of Promet. The term of the agreement commences on the date of the agreement and shall continue in full force and effect until the expiration of the last royalty term. On a country-by-country and product-by-product basis, upon the expiration of the royalty term in such country with respect to such product, Promet shall have a fully paid-up, perpetual, irrevocable license under the CoNCERT intellectual property and CoNCERT’s interest in the joint intellectual property with respect to such product in such country. Purchase Obligations The Company enters into contracts in the normal course of business with contract research organizations and subcontractors to further develop its products. The contracts are cancellable, with varying provisions regarding termination. If a contract with a specific vendor were to be terminated, the Company would only be obligated for products or services that it received as of the effective date of the termination and any applicable cancellation fees. The Company had purchase obligations of $895,740 and $0 at December 31, 2017 and 2016, respectively. |
Concentration of Credit Risk
Concentration of Credit Risk | 12 Months Ended |
Dec. 31, 2017 | |
Risks and Uncertainties [Abstract] | |
Concentration of Credit Risk | NOTE 11 – CONCENTRATION OF CREDIT RISK The Company maintains its operating cash in two commercial banks. Balances on deposit are insured by the Federal Deposit Insurance Corporation (FDIC) up to specified limits. Total cash held by one bank was $2,900,393 and the second bank held a cash balance of $2,184 at December 31, 2017. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 12 Months Ended |
Dec. 31, 2017 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Cash Flow Information | NOTE 12 – SUPPLEMENTAL CASH FLOW INFORMATION December 31, 2017 December 31, 2016 Supplemental cash flow information Cash paid for interest $ - $ - Cash paid for income taxes $ - $ - Noncash financing and investing activities Assumption of liabilities related to reverse acquisition Accounts payable $ 26,098 $ - Accrued expenses 17,932 - Issuance of common stock related to reverse acquisition recognized in: Common stock 352 - Additional paid-in capital (38,102 ) - Total (37,750 ) - Cash received related to net liabilities assumed in a reverse acquisition transaction $ 6,280 $ - |
Quarterly Data
Quarterly Data | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Data | NOTE 13 – QUARTERLY DATA A summary of revenues, operating expenses, other income and net loss attributable to common stockholders for each of the last two years follows (this information is unaudited): 1st 2nd 3rd 4th Quarter Quarter Quarter Quarter Annual 2017 Revenues $ - $ - $ - $ - $ - Operating expenses (233,940 ) (280,335 ) (712,852 ) (575,306 ) (1,802,433 ) Interest expense - - - (59,063 ) (59,063 ) Other income 1,498 1,889 1,285 509 5,181 Net loss attributable to common stockholders $ (232,442 ) $ (278,446 ) $ (711,567 ) $ (633,860 ) $ (1,856,315 ) Weighted-average common shares - basic and diluted 31,745,242 31,745,242 31,745,242 35,119,261 32,595,680 Net loss per common share - basic and diluted $ (0.01 ) $ (0.01 ) $ (0.02 ) $ (0.02 ) $ (0.06 ) 2016 Revenues $ - $ - $ - $ - $ - Operating expenses (280,956 ) (575,281 ) (829,064 ) (236,219 ) (1,921,520 ) Interest expense - - - - - Other income 7 869 1,698 1,880 4,454 Net loss attributable to common stockholders $ (280,949 ) $ (574,412 ) $ (827,366 ) $ (234,339 ) $ (1,917,066 ) Weighted-average common shares - basic and diluted 26,870,217 26,870,217 31,745,242 31,745,242 29,321,049 Net loss per common share - basic and diluted $ (0.01 ) $ (0.02 ) $ (0.03 ) $ (0.01 ) $ (0.07 ) |
Subsequent Events
Subsequent Events | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Subsequent Events [Abstract] | ||
Subsequent Events | Note 9 - Subsequent Events The Company has evaluated all subsequent events through the date of filing of this Quarterly Report on Form 10-Q with the SEC, to ensure that this filing includes appropriate disclosure of events both recognized in the financial statements as of June 30, 2018, and events which occurred subsequent to June 30, 2018, but which were not recognized in the financial statements. The Company has determined that there were no subsequent events which required recognition, adjustment to or disclosure in the financial statements. | NOTE 14 – SUBSEQUENT EVENTS Amendment of Option and License Agreement between Promet Therapeutics, LLC and CoNCERT Pharmaceuticals, Inc. Promet Therapeutics, LLC (“Promet”) and CoNCERT Pharmaceuticals Inc. (“CoNCERT”) entered into an exclusive option and license agreement for the CTP-499 compound (the “Agreement”) in October 2017 (see Note 10). On March 19, 2018, Promet and CoNCERT amended the Agreement and Promet exercised the exclusive option for the CTP-499 compound and assigned the Agreement to Processa. The option was exercised in March 2018 in exchange for CoNCERT receiving (i) $8 million of common stock of Processa that was owned by Promet or approximately 2,090,300 shares representing 6.58% of Promet’s common stock holding or 5.93% of total Processa common stock issued and outstanding, and (ii) 15% of any sublicense revenue earned by Processa for a period equivalent to the royalty term (as defined in the Agreement) until (a) Processa raises $8 million of gross proceed; after the $8M is raised CoNCERT receives 0% sublicense revenue and (b) CoNCERT can sell its shares of Processa common stock without restrictions pursuant to the terms of the amended Agreement. All other terms of the Agreement remain unchanged. Cybersecurity Fraud In January 2018, we incurred a loss of $144,200 due to fraud from a cybersecurity breach. As a result, we have implemented certain review and approval procedures internally and with our banks; our technology consultants have implemented system changes; and, we reported the fraud to our banks and to a national law enforcement agency. We do not have insurance coverage against the type of fraud that occurred, therefore, recovery of the loss is remote. While we are taking steps to prevent such an event from reoccurring, we cannot provide assurance that similar issues will not reoccur. Failure of our control systems to prevent or detect and correct errors or fraud could have a material and adverse effect on our financial condition. |
Organization and Summary of S_2
Organization and Summary of Significant Accounting Policies (Policies) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | ||
Business Activities and Organization | Business Activities and Organization Company Overview Processa Pharmaceuticals, Inc. (the “Company” and formerly known as “Heatwurx” ) and its wholly-owned subsidiary, Processa Therapeutics LLC (“Processa”), a Delaware limited liability company, acquired the assets of a private company, including the rights to the CoNCERT Agreement mentioned below, Promet Therapeutics, LLC (“Promet”), a Delaware limited liability company on October 4, 2017 in exchange for 31,745,242 shares of the common stock of the Company which, at the closing, constituted approximately 90% of the Company’s issued and outstanding common stock on a fully diluted basis accounted for as a tax-free contribution under Internal Revenue Code Section 351. Immediately following the closing, there were 35,272,626 shares of common stock issued and outstanding. At the closing, Processa was assigned the assets and operations of Promet that constituted the operating business of Promet, while Promet, which continues as an active company, received the Processa shares mentioned above and agreed to provide the Processa shares needed if the option in the CoNCERT Agreement (see below) was exercised. Upon closing on October 4, 2017, there was a change in control of the Company to Promet. The Company abandoned its prior business plan and adopted Promet’s business plan focused on developing drugs to treat patients that have a high unmet medical need. Subsequent to closing and effective October 10, 2017, the Company changed its trading symbol to “PCSA” on the OTC Pink Marketplace. The Company effected a one-for-seven reverse split of its shares in December 2017. As a result, the 2017 condensed consolidated financial statements have been retrospectively adjusted to reflect shares outstanding after the one-for-seven reverse split. The net asset acquisition transaction was accounted for as a reverse acquisition. Prior to the acquisition, Heatwurx (subsequently renamed Processa Pharmaceuticals, Inc.) had nominal net liabilities and operations. It was considered a non-operating public shell corporation. Therefore, Promet was considered the accounting acquirer (and legal wholly-owned subsidiary of Heatwurx, now called Processa Pharmaceuticals, Inc.) and Heatwurx was considered the accounting acquiree (and legal acquirer). As a result, the consolidated financial statements of the Company reflect the financial condition, results of operations and cash flows of Promet for all periods presented prior to October 4, 2017 and Processa for the periods subsequent to October 4, 2017. The legal capital stock (number and type of equity interests issued) is that of Processa Pharmaceuticals, Inc., the legal parent, in accordance with guidance on reverse acquisitions accounted for as a capital transaction instead of a business combination (See Note 2 – Basis of Presentation and Earnings Per Share and Note 3 – Reverse Acquisition in Item 8 of the Company’s Annual Report on Form 10-K filed with the SEC on April 17, 2018). All references to the “Company” and Processa Pharmaceuticals, Inc. refer to Heatwurx, Inc., Processa Therapeutics, LLC, and the net assets acquired from Promet Therapeutics, LLC, which were assigned at acquisition to Processa Therapeutics, LLC and Promet’s operations prior to October 4, 2017. On March 19, 2018, Promet, Processa and CoNCERT Pharmaceuticals Inc. (“CoNCERT”) amended the Option and License Agreement (the “Agreement”) executed in October 2017. The Amendment allowed for the Option and License Agreement to be formally assigned to Processa, and Processa exercised the exclusive option for the PCS-499 compound. The option was exercised in exchange for CoNCERT receiving (i) $8 million of common stock of Company that was owned by Promet (or 2,090,301 shares representing 6.58% of Promet’s common stock holding or 5.93% of total the Company’s common stock issued and outstanding), and (ii) 15% of any sublicense revenue earned by the Company for a period equivalent to the royalty term (as defined in the Agreement) until the earliest of (a) Processa raising $8 million of gross proceeds; and (b) CoNCERT can sell its shares of Processa common stock without restrictions pursuant to the terms of the amended Agreement. All other terms of the Agreement remain unchanged. As a result, the Company recognized an intangible asset and additional paid-in capital in the amount of $8 million resulting from Promet satisfying Processa’s liability to CoNCERT (see Note 2 Intangible Asset for the income tax effect of this transaction). There was no change in the total shares issued and outstanding, however, Promet’s controlling interest in Processa was reduced from 90% to 84%. Description of Business Processa is an emerging pharmaceutical company focused on the clinical development of drug products that are intended to improve the survival and/or quality of life for patients who have a high unmet medical need or who have no alternative treatment. Within this group of pharmaceutical products, we currently are developing one product for two indications (i.e., the use of a drug to treat a particular disease) and searching for additional products for our portfolio. Processa’s lead product, PCS-499 is an oral tablet that is an analog of an active metabolite of an already approved FDA drug. The advantage of PCS-499 is that it potentially may work in many conditions because it has multiple pharmacological targets it affects that are important in the treatment of these conditions. Based on its pharmacological activity, Processa has identified multiple unmet medical need conditions where the use of PCS-499 may result in clinical efficacy. The lead indication currently under development for PCS-499 is Necrobiosis Lipoidica (NL). Processa has met with the FDA on the NL condition and has developed a strategy for moving the program for NL forward starting with a Phase 2 clinical trial in NL patients in late 2018 (see Note 4 for clinical trial funding). Processa will continue to evaluate other unmet need conditions for PCS-499 as well as other potential assets and develop strategies including the regulatory pathway and commercialization plans for the product(s) for these unmet need conditions over the next year. Processa is looking to acquire additional drug candidates to help patients who have an unmet medical need. Our operations are performed in the state of Maryland and are still in the organizational and research and development phase of operations. As a result, we have a limited operating history and only a preliminary business plan from which investors may evaluate our future prospects. We have not had any sources of revenue from inception (August 31, 2015) through June 30, 2018 and have a history of operating losses from operations. Our ability to generate meaningful revenue from any products in the United States depends on obtaining FDA authorization. Even if our products are authorized and approved by the FDA, we must still meet the challenges of successful marketing, distribution and consumer acceptance. | |
Basis of Presentation and Earnings Per Share | Basis of Presentation and Earnings per Share The accompanying consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”), and reflect all of our activities, including those of our wholly-owned subsidiary. All material intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. These adjustments consist of normal and recurring accruals, as well as non-recurring charges. The acquisition of Promet by Heatwurx has been accounted for as a reverse acquisition in accordance with U.S. GAAP, Financial Accounting Standards Board (“FASB”), Accounting Standards Codification (“ASC”) 805-40-45, Business Combinations - Reverse Acquisitions As a result of the above, the operations prior to the asset purchase transaction are those of Promet. The assets and liabilities of Promet are recognized and measured at the historical carrying amounts. The accumulated deficit and other equity balances of Promet have been carried forward and adjusted to reflect the legal shares and par value of Heatwurx with the difference allocated to additional paid-in capital. Additional paid-in capital is also reduced by the fair value over the historical cost of the net liabilities assumed from Heatwurx, since the transaction is accounted for as a capital transaction, not a business combination. Earnings per share (“EPS”) is calculated using the equity structure of Processa Pharmaceuticals, Inc., including the equity interests issued to Promet in the asset acquisition transaction (see Note 3). Prior to the reverse acquisition, EPS is based on Promet’s net income and weighted average common shares outstanding that were received in the asset purchase transaction. Subsequent to the reverse acquisition, EPS is based on the actual number of common shares of Processa Pharmaceuticals, Inc. outstanding during that period. The Company completed a reverse split or a one-for-seven exchange of its shares. As a result, the consolidated financial statements have been retrospectively adjusted to reflect the one-for-seven reverse split. | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instruction of the Securities and Exchange Commission (“SEC”) on Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. All material intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of the Company’s financial position and of the results of operations and cash flows for the periods presented. These consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the SEC on April 17, 2018. The results of operations for the interim period shown in this report are not necessarily indicative of the results that may be expected for any other interim period or for the full year. As a result of the modification of the Agreement with CoNCERT and the acquisition of an exclusive license intangible asset used in research and development activities described above, the Company adopted a new intangible asset policy and disclosure (see Intangible Assets below and Note 2 – Intangible Asset) and recognized a deferred tax liability for the acquired temporary difference between the financial reporting basis and the tax basis of the intangible asset (see Note 5 – Income Taxes). | |
Segments | Segments The Company operates in one segment. Management uses one measurement of profitability and does not segregate its business for internal reporting. During 2017 and 2016 all of the Company’s long-lived assets were located within the United States. | |
Going Concern and Management's Plan | Going Concern and Management’s Plan The Company’s consolidated financial statements are prepared using U.S. GAAP and are based on the assumption that the Company will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company faces certain risks and uncertainties that are present in many emerging growth companies regarding product development and commercialization, limited working capital, recurring losses and negative cash flow from operations, future profitability, ability to obtain future capital, protection of patents, technologies and property rights, competition, rapid technological change, navigating the domestic and major foreign markets’ regulatory and clinical environment, recruiting and retaining key personnel, dependence on third party manufacturing organizations, third party collaboration and licensing agreements, lack of sales and marketing activities, and no customers or pharmaceutical products to sell or distribute. These risks and other factors raise substantial doubt about our ability to continue as a going concern. The Company has relied exclusively on private placements with a small group of accredited investors to finance its business and operations. We do not have any prospective arrangements or credit facilities as a source of future funds. The Company has had no revenue since inception on August 31, 2015. The Company does not currently have any revenue under contract nor does it have any immediate sales prospects. As of June 30, 2018, the Company had an accumulated deficit of approximately $6.2 million incurred since inception. For the six months ended June 30, 2018, the Company incurred a net loss from continuing operations of approximately $2.3 million and used approximately $2.2 million in net cash from operating activities from continuing operations. The Company had total cash and cash equivalents and certificates of deposit of approximately $3.3 million as of June 30, 2018. We are looking at ways to add a revenue stream to offset some of our expenses. We will begin fundraising efforts in the first half of 2019. In addition, we are seeking alternative options to add additional cash. However, no assurance can be given that we will be successful in securing adequate funds that may be required. If we are unable to raise additional capital when required or on acceptable terms, we may have to significantly delay, scale back or discontinue the development or commercialization of one or more of our product candidates, restrict our operations or obtain funds by entering into agreements on unattractive terms, which would likely have a material adverse effect on our business, stock price, and our relationships with third parties with whom we have business relationships, at least until additional funding is obtained. Uncertainty concerning our ability to continue as a going concern may hinder our ability to obtain future financing, as well as adversely affect our collaborative drug development relationships. Continued operations and our ability to continue as a going concern are dependent on our ability to obtain additional funding in the near future and thereafter, and no assurances can be given that such funding will be available at all or will be available in sufficient amounts or on reasonable terms. Without additional funds from debt or equity financing, sales of assets, sales or out-licenses of intellectual property or technologies, or other transactions yielding funds, we will rapidly exhaust our resources and will be unable to continue operations. Absent additional funding, we believe that our cash and cash equivalents will not be sufficient to fund our operations for a period of one year or more after the date that these consolidated financial statements are available to be issued based on the timing and amount of our projected net loss from continuing operations and cash to be used in operating activities during that period of time. As a result, substantial doubt exists about the Company’s ability to continue as a going concern within one year after the date that these consolidated financial statements are available to be issued. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be different should the Company be unable to continue as a going concern based on the outcome of these uncertainties described above. | Going Concern and Management’s Plan The Company’s consolidated financial statements are prepared using U.S. GAAP and are based on the assumption that the Company will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company faces certain risks and uncertainties that are present in many emerging growth companies regarding product development and commercialization, limited working capital, recurring losses and negative cash flow from operations, future profitability, ability to obtain future capital, protection of patents, technologies and property rights, competition, rapid technological change, navigating the domestic and major foreign markets’ regulatory and clinical environment, recruiting and retaining key personnel, dependence on third party manufacturing organizations, third party collaboration and licensing agreements, lack of sales and marketing activities and no customers or pharmaceutical products to sell or distribute. These risks and other factors raise substantial doubt about our ability to continue as a going concern. The Company has relied exclusively on private placements with a small group of accredited investors to finance its business and operations. We do not have any prospective arrangements or credit facilities as a source of future funds. The Company has had no revenue since inception on August 31, 2015. The Company does not currently have any revenue under contract nor does it have any immediate sales prospects. As of December 31, 2017, the Company had an accumulated deficit of approximately $3.859 million incurred since inception. For the year ended December 31, 2017, the Company incurred a net loss from continuing operations of approximately $1.856 million and used approximately $1.655 million in net cash from operating activities from continuing operations. The Company had total cash and cash equivalents of approximately $2.847 million as of December 31, 2017. We have raised proceeds of $2.58 million from the Senior Convertible Notes issued through December 31, 2017. No additional Senior Convertible Notes have been issued through the date this report was issued. On March 19, 2018, we modified the Option and License Agreement with CoNCERT Pharmaceuticals, Inc. effective January 2018 (see Notes 10 and 14), which enabled us to exercise our option to license the CoNCERT patent rights and know-how to develop and commercialize compounds (CTP-499 and each metabolite thereof) and products, as defined in the agreement. Although we have other drugs being positioned into our pipeline, the loss of our rights to CTP-499 would have materially and adversely affected our planned growth and business plan. We expect our operating costs to be substantial as we incur costs related to the clinical trials for our product candidates and that we will operate at a loss for the foreseeable future. We are in the process of raising additional funds by potentially selling additional Senior Convertible Notes, convertible loans or other securities. However, no assurance can be given that we will be successful in raising adequate funds needed. If we are unable to raise additional capital when required or on acceptable terms, we may have to significantly delay, scale back or discontinue the development or commercialization of one or more of our product candidates, restrict our operations or obtain funds by entering into agreements on unattractive terms, which would likely have a material adverse effect on our business, stock price and our relationships with third parties with whom we have business relationships, at least until additional funding is obtained. Uncertainty concerning our ability to continue as a going concern may hinder our ability to obtain future financing, as well as adversely affect our collaborative drug development relationships. Continued operations and our ability to continue as a going concern are dependent on our ability to obtain additional funding in the near future and thereafter, and no assurances can be given that such funding will be available at all or will be available in sufficient amounts or on reasonable terms. Without additional funds from debt or equity financing, sales of assets, sales or out-licenses of intellectual property or technologies, or other transactions yielding funds, we will rapidly exhaust our resources and will be unable to continue operations. Absent additional funding, we believe that our cash and cash equivalents will not be sufficient to fund our operations for a period of one year or more after the date that these consolidated financial statements are available to be issued based on the timing and amount of our projected net loss from continuing operations and cash to be used in operating activities during that period of time. As a result, substantial doubt exists about the Company’s ability to continue as a going concern within one year after the date that these consolidated financial statements are available to be issued. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be different should the Company be unable to continue as a going concern based on the outcome of these uncertainties described above. |
Use of Estimates | Use of Estimates The preparation of the accompanying unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts (including assets, liabilities, revenues and expenses) and related disclosures, including contingent assets and liabilities. Estimates have been prepared on the basis of the most current and best available information. However, actual results could differ materially from those estimates. | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires the use of estimates and assumptions by management that affect reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions are continuously evaluated and are based on management’s experience and knowledge of the relevant facts and circumstances. While management believes the estimates to be reasonable, actual results could differ materially from those estimates and could impact future results of operations and cash flows. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include cash on hand and money market funds. The Company considers all highly liquid investments with a maturity at the date of purchase of three months or less to be cash equivalents. Included in cash and cash equivalents were certificates of deposit totaling $496,201 at June 30, 2018. The certificates of deposit will mature in late September 2018. | Cash and Cash Equivalents Cash and cash equivalents includes cash on hand and money market funds. The Company considers all highly liquid investments with a maturity at the date of purchase of three months or less to be cash equivalents. Money market funds were $1,300,815 and $0 at December 31, 2017 and 2016, respectively. |
Intangible Assets | Intangible Assets Intangible assets acquired individually or with a group of other assets from others (other than in a business combination) are recognized at cost, including transaction costs, and allocated to the individual assets acquired based on relative fair values and no goodwill is recognized. Cost is measured based on cash consideration paid. If consideration given is in the form of non-cash assets, liabilities incurred, or equity interests issued, measurement of cost is based on either the fair value of the consideration given or the fair value of the assets (or net assets) acquired, whichever is more clearly evident and more reliably measurable. Costs of internally developing, maintaining or restoring intangible assets that are not specifically identifiable, have indeterminate lives or are inherent in a continuing business are expensed as incurred. Intangible assets purchased from others for use in research and development activities and that have alternative future uses (in research and development projects or otherwise) are capitalized in accordance with ASC Topic 350, Intangibles – Goodwill and Other and those that have no alternative future uses (in research and development projects or otherwise) and therefore no separate economic value are research and development costs expensed as incurred. Amortization of intangibles used in research and development activities is a research and development cost. Intangibles with a finite useful life are amortized and those with an indefinite useful life are not amortized. The useful life is the best estimate of the period over which the asset is expected to contribute directly or indirectly to the future cash flows of the Company. The useful life is based on the duration of the expected use of the asset by the Company and the legal, regulatory or contractual provisions that constrain the useful life and future cash flows of the asset, including regulatory acceptance and approval, obsolescence, demand, competition and other economic factors. If an income approach is used to measure the fair value of an intangible asset, the Company considers the period of expected cash flows used to measure the fair value of the intangible asset, adjusted as appropriate for Company-specific factors discussed above, to determine the useful life for amortization purposes. If no regulatory, contractual, competitive, economic or other factors limit the useful life of the intangible to the Company, the useful life is considered indefinite. Intangibles with a finite useful life are amortized on the straight-line method unless the pattern in which the economic benefits of the intangible asset are consumed or used up are reliably determinable. The Company evaluates the remaining useful life of intangible assets each reporting period to determine whether any revision to the remaining useful life is required. If the remaining useful life is changed, the remaining carrying amount of the intangible asset will be amortized prospectively over the revised remaining useful life. Intangibles with an indefinite useful life are not amortized until its useful life is determined to be no longer indefinite. If the useful life is determined to be finite, the intangible is tested for impairment and the carrying amount is amortized over the remaining useful life in accordance with intangibles subject to amortization. Indefinite-lived intangibles are tested for impairment annually and more frequently if events or circumstances indicate that it is more-likely-than-not that the asset is impaired. | |
Certificates of Deposit | Certificates of Deposit The certificates of deposit were purchased through an investment company and were held at multiple banks. The maturities of the certificates of deposit are typically six months or less. | |
Impairment of Long-lived Assets and Intangibles Other Than Goodwill | Impairment of Long-Lived Assets and Intangibles Other Than Goodwill The Company accounts for the impairment of long-lived assets in accordance with ASC 360, Property, Plant and Equipment and ASC 350, Intangibles – Goodwill and Other which requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that 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 expected future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amounts of the assets exceed the fair value of the assets based on the present value of the expected future cash flows associated with the use of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. Based on management’s evaluation, there was no impairment loss recorded for the three or six-month periods ended June 30, 2018 and 2017, respectively. | Impairment of Long-lived Assets The Company periodically reviews its long-lived assets to determine potential impairment by comparing the carrying value of the long-lived assets with the estimated future net undiscounted cash flows expected to result from the use of the assets, including cash flows from disposition, at least annually or more frequently if events or changes in circumstances indicate a potential impairment may exist. Should the sum of the expected future net cash flows be less than the carrying value, the Company would recognize an impairment loss at that date. An impairment loss would be measured by comparing the amount by which the carrying value exceeds the fair value (estimated discounted future cash flows) of the long-lived assets. The Company performs its impairment analysis in October of each year. Based on management’s evaluation, $15,330 of carrying costs related to the software was impaired and an impairment loss recorded for the year ended December 31, 2017. No impairment of long-lived assets was recognized for the year ended December 31, 2016. |
Fair Value Measurements and Disclosure | Fair Value Measurements and Disclosure The Company applies ASC 820, “Fair Value Measurements and Disclosures,” which expands disclosures for assets and liabilities that are measured and reported at fair value on a recurring basis. Fair value is defined as an exit price, representing the amount that would be received upon the sale of an asset or payment to transfer a liability in an orderly transaction between market participants. Fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. A three-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows: Level 1 – Quoted market prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 – Quoted market prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable, either directly or indirectly. Fair value determined through the use of models or other valuation methodologies. Level 3 – Significant unobservable inputs for assets or liabilities that cannot be corroborated by market data. Fair value is determined by the reporting entity’s own assumptions utilizing the best information available and includes situations where there is little market activity for the asset or liability. The asset’s or liability’s fair value measurement within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement. The Company’s policy is to recognize transfers between levels of the fair value hierarchy in the period the event or change in circumstances that caused the transfer. There were no transfers into or out of Level 1, 2, or 3 during the periods presented. | Fair Value Measurements and Disclosure The Company applies ASC 820, “Fair Value Measurements and Disclosures,” which expands disclosures for assets and liabilities that are measured and reported at fair value on a recurring basis. Fair value is defined as an exit price, representing the amount that would be received upon the sale of an asset or payment to transfer a liability in an orderly transaction between market participants. Fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. A three-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows: Level 1 – Quoted market prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 – Quoted market prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable, either directly or indirectly. Fair value determined through the use of models or other valuation methodologies. Level 3 – Significant unobservable inputs for assets or liabilities that cannot be corroborated by market data. Fair value is determined by the reporting entity’s own assumptions utilizing the best information available, and includes situations where there is little market activity for the asset or liability. The asset’s or liability’s fair value measurement within the fair value hierarchy is based upon the lowest level of any input that is significant to the fair value measurement. |
Net Income (Loss) Per Share | Net Income (Loss) per Share The Company computes basic and diluted earnings per share amounts pursuant to ASC 260-10-45. Basic earnings per share is computed by dividing net income (loss) available to common shareholders, by the weighted average number of shares of common stock outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted earnings per share is computed by dividing net income (loss) available to common shareholders by the diluted weighted average number of shares of common stock during the period. Since the Company had a net loss for each of the periods presented, basic and diluted net loss per share are the same. The computation of diluted net loss per share for the periods presented does not assume the impact of the conversion of the Senior Convertible Notes or the exercise or contingent exercise of securities since that would have an anti-dilutive effect on loss per share during the three and six months ended June 30, 2018 and 2017. | Net Income (Loss) per Share The Company computes basic and diluted earnings per share amounts pursuant to ASC 260-10-45. Basic earnings per share is computed by dividing net income (loss) available to common shareholders, by the weighted average number of shares of common stock outstanding during the period, as retrospectively restated for the one-for-seven reverse stock split, excluding the effects of any potentially dilutive securities. Diluted earnings per share is computed by dividing net income (loss) available to common shareholders by the diluted weighted average number of shares of common stock during the period. The diluted weighted average number of common shares outstanding is the basic weighted number of shares adjusted for any potentially diluted debt or equity. The computation does not assume conversion, exercise or contingent exercise of securities since that would have an anti-dilutive effect on earnings (loss) during the years ended December 31, 2017 and 2016. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and the senior convertible notes approximate fair value because of the short-term maturity of these instruments, including the mandatory conversion of the senior convertible notes into the common stock of the Company upon the earlier of (i) meeting certain funding levels on the next Private Investment in Public Equity (“PIPE”) financing we undertake or (ii) the one-year anniversary of the issuance of the senior convertible note. | |
Due From/to Related Parties and Administrative Fees | Due From/To Related Parties and Administrative Fees Administrative fees are collected from a related party, Corlyst, LLC (“Corlyst”), for shared costs related to payroll, health care insurance and rent based on actual costs incurred and recognized as a reduction of the operating expense being reimbursed (see Note 4). Corlyst pays certain operating expenses on behalf of the Company and the Company reimburses Corlyst based on actual costs incurred and recognizes the appropriate expense. The amounts due from and due to Corlyst are billed monthly and are due on demand at the beginning of each month. | |
Property and Depreciation | Property and Depreciation Property is stated at cost, less accumulated depreciation. Depreciation is computed under the straight-line method over the estimated useful lives of the assets. Expenditures for maintenance and routine repairs are charged to expense as incurred; expenditures for improvements and major repairs that materially extend the useful lives of assets are capitalized. Depreciation expense for the years ended December 31, 2017 and 2016 was $1,865 and $1,381, respectively. Following are the estimated useful lives for the various classifications of assets: Software 3 years Equipment 5 years | |
Debt Issuance Costs | Debt Issuance Costs The Company recognizes debt issuance costs incurred on the Senior Convertible Notes as a reduction of the carrying amount of the Senior Convertible Notes on the face of the consolidated balance sheet. The debt issuance costs are amortized to interest expense using the interest method over the term of the Senior Convertible Notes. The amortization of the debt issuance costs was $23,370 for the year ended December 31, 2017 and zero for the year ended December 31, 2016. | |
Compensated Absences | Compensated Absences For the years ended December 31, 2017 and 2016, the Company recorded a liability for paid time off earned by permanent employees but not taken, in accordance with human resource policies. | |
Advertising Costs | Advertising Costs Advertising costs are recognized as expense in the year incurred. Total advertising and marketing expense for the years ended December 31, 2017 and 2016 was $135 and $3,850, respectively. | |
Research and Development | Research and development Research and development costs are expensed as incurred and consist of direct and overhead-related expenses. Research and development costs totaled $926,117 and $1,536,996 for the years ended December 31, 2017 and 2016, respectively. Expenditures to acquire technologies, including licenses, which are utilized in research and development and that have no alternative future use are expensed when incurred. Technology the Company develops for use in its products is expensed as incurred until technological feasibility has been established after which it is capitalized and depreciated. No costs have been capitalized during the years ended December 31, 2017 and 2016. | |
Stock-based Compensation | Stock-Based Compensation The Company accounts for the cost of employee services received in exchange for the award of equity instruments based on the fair value of the award, determined on the date of grant. Significant assumptions utilized in determining the fair value of our stock options include the volatility rate, estimated term of the options, risk-free interest rate and forfeiture rate. The term of the options will be based on the contractual term of the options as determined by the Board of Directors when the 2011 Equity Incentive Plan is amended or terminated and approved by the stockholders to the extent required by applicable laws and regulations. The expense is to be recognized over the period during which an employee is required to provide services in exchange for the award. The Company estimates forfeitures at the time of grant and makes revisions, if necessary, at each reporting period if actual forfeitures differ from those estimates. The Company has not estimated future unvested forfeitures since there were no option grants outstanding at December 31, 2017. Upon the issuance of 90% of Heatwurx’s common stock to Promet on October 4, 2017, there was a Change in Control event, as defined in the Amended and Restated Heatwurx, Inc. 2011 Equity Incentive Plan. As of September 30, 2017, prior to the Change in Control event, all 269,500 unexercised options and all 40,000-unexercised performance options outstanding at December 31, 2016 were cancelled. Non-employee share-based compensation charges generally are immediately vested and have no future performance requirements by the non-employee and the total share-based compensation charge is recorded in the period of the measurement date. | |
Income Taxes | Income Taxes As a result of the asset purchase transaction (see Note 1 Company Overview above and Note 3), there was a change in control of the Company. Prior to the closing of the asset purchase transaction, Promet was treated as a partnership for federal income tax purposes and thus was not subject to income tax at the entity level. Therefore, no provision or liability for income taxes has been included in these financial statements through the date of the asset purchase on October, 4, 2017. In addition, Promet determined that it was not required to record a liability related to uncertain tax positions as a result of the requirements of ASC 740-10-25 Income Taxes. The net deferred tax assets of Heatwurx were principally federal and state net operating loss carry forwards. The Heatwurx net deferred tax assets were fully reserved with a valuation allowance. Subsequent to the closing of the asset purchase, Processa Pharmaceuticals, Inc. will file a consolidated federal income tax return in the United States, which includes eligible subsidiaries. In addition, we file income tax returns in state and local jurisdictions as applicable. The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The provision for income taxes includes federal and state income taxes currently payable and deferred taxes resulting from temporary differences between the financial statement and tax basis of assets and liabilities at the enacted tax rates. Changes in deferred income tax assets and liabilities are included as a component of income tax expense. The effect on deferred income tax assets and liabilities attributable to changes in enacted tax rates are charged or credited to income tax expense in the period of enactment. Valuation allowances are recorded to reduce deferred tax assets when it is more-likely-than-not that a tax benefit will not be realized. A full valuation allowance was recorded against the Company’s deferred tax assets at December 31, 2017. The Company had no deferred tax assets and no valuation allowance at December 31, 2016. With respect to uncertain tax positions, the Company would recognize the tax benefit from an uncertain tax position only if it is more-likely-than-not that the tax position will be sustained upon examination by the taxing authorities, based on the technical merits of the position. Estimated interest and penalties related to uncertain tax positions are included as a component of interest expense and general and administrative expense, respectively. The Company had no unrecognized tax benefits or uncertain tax positions at December 31, 2017 or 2016. | |
Equity | Equity The asset purchase of Promet by Heatwurx is accounted for as a reverse acquisition. As a result, these consolidated financial statements represent Promet as the accounting acquirer (legal acquiree) and Heatwurx from October 4, 2017 forward as the accounting acquiree (legal acquirer). However, the legal capital stock (number and type of equity interests issued) is that of Heatwurx, which subsequently changed its name to Processa Pharmaceuticals, Inc., the legal parent, in accordance with guidance on reverse acquisitions accounted for as a capital transaction (See Note 2 – Basis of Presentation and Earnings per Share and Note 3 – Reverse Acquisition). The accumulated deficit and other equity balances of Promet have been carried forward and adjusted to reflect the legal capital shares and par value of Heatwurx, including the shares issued to Promet in the reverse acquisition transaction with the difference allocated to additional paid-in capital. Additional paid-in capital is also reduced by the fair value/ historical cost of the net liabilities assumed from Heatwurx since the transaction is accounted for as a capital transaction, not a business combination. | |
Subsequent Events | Subsequent events The Company has evaluated subsequent events and transactions for potential recognition or disclosure through April 16, 2018, the date the financial statements were issued, in accordance with ASC 855-10-50. Refer to Note 14 below for further information. | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements From time to time, the Financial Accounting Standards Board (“FASB”) or other standard setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standards Codification are communicated through issuance of an Accounting Standards Update (“ASU”). The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements. It has evaluated recently issued accounting pronouncements and determined that there was no material impact on its financial position or results of operations. From May 2014 through June 30, 2018, the FASB issued several ASUs related to ASU 2014-09, “Revenue from Contracts with Customers (Topic 606). The new guidance is effective for interim and annual periods beginning after December 15, 2017, although entities may adopt one year earlier if they choose. The two permitted transition methods under the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented and the cumulative effect of applying the standard would be recognized at the earliest period shown, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. The Company is currently in the pre-revenue stages of operations; therefore, we do not currently anticipate there would be any change to timing or method of recognizing revenue. As such, the adoption of this standard did not have a material impact on our results of operations, financial condition or cash flows. In February 2016 through June 30, 2018, the FASB issued several ASUs related to ASU-2016-02, “Leases (Topic 842).” The guidance requires that a lessee recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right of use asset representing its right to use the underlying asset for the lease term. For operating leases: the right-of-use asset and a lease liability will be initially measured at the present value of the lease payments, in the statement of financial position; a single lease cost will be recognized, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis; and all cash payments will be classified within operating activities in the statement of cash flows. The amendments in Topic 842 are effective for the Company beginning January 1, 2019. The Company’s office lease expires September 30, 2019. Management is currently evaluating the impact of adopting the new guidance on the Company’s consolidated financial statements. In July 2017, the FASB issued Accounting Standards Update 2017-11 (ASU 2017-11”), which allows companies to exclude a down round feature when determining whether a financial instrument is considered indexed to the entity’s own stock. As a result, financial instruments with down round features are no longer classified as liabilities and embedded conversion options with down round features are no longer bifurcated. For equity-classified freestanding financial instruments, such as warrants, an entity will treat the value of the effect of the down round, when triggered, as a dividend and a reduction of income available to common shareholders in computing basic earnings per share. For convertible instruments with embedded conversion options that have down round features, an entity will recognize the intrinsic value of the feature only when the feature becomes beneficial. The guidance in ASU 2017-11 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. We early adopted ASU 2017-11 effective January 1, 2018 without a material impact on our condensed consolidated financial statements. | Recent Accounting Pronouncements From time to time, the Financial Accounting Standards Board (“FASB”) or other standard setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standards Codification are communicated through issuance of an Accounting Standards Update (“ASU”). The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements. It has evaluated recently issued accounting pronouncements and determined that there was no material impact on its financial position or results of operations. From May 2014 through December 2017, the FASB issued several ASUs related to ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. These ASUs are intended to provide greater insight into both revenue that has been recognized and revenue that is expected to be recognized in the future from existing contracts. The new guidance is effective for interim and annual periods beginning after December 15, 2017, although entities may adopt one year earlier if they choose. The two permitted transition methods under the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented and the cumulative effect of applying the standard would be recognized at the earliest period shown, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. The Company is currently in the pre-revenue stages of operations; therefore, we do not currently anticipate there would be any change to timing or method of recognizing revenue. As such, we do not believe this new standard will have a material impact on our results of operations, financial condition or cash flows. In February 2016 through December 2017, the FASB issued several ASUs related to ASU-2016-02, “Leases (Topic 842).” The guidance requires that a lessee recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right of use asset representing its right to use the underlying asset for the lease term. For finance leases: the right-of-use asset and a lease liability will be initially measured at the present value of the lease payments, in the statement of financial position; interest on the lease liability will be recognized separately from amortization of the right-of-use asset in the statement of comprehensive income; and repayments of the principal portion of the lease liability will be classified within financing activities and payments of interest on the lease liability and variable lease payments within operating activities in the statement of cash flows. For operating leases: the right-of-use asset and a lease liability will be initially measured at the present value of the lease payments, in the statement of financial position; a single lease cost will be recognized, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis; and all cash payments will be classified within operating activities in the statement of cash flows. Under Topic 842 the accounting applied by a lessor is largely unchanged from that applied under previous GAAP. The amendments in Topic 842 are effective for the Company beginning January 1, 2019. Management is currently evaluating the impact of adopting the new guidance on the Company’s financial statements. |
Summary of Significant Accounti
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Estimated Useful Lives of Asset | Following are the estimated useful lives for the various classifications of assets: Software 3 years Equipment 5 years |
Intangible Asset (Tables)
Intangible Asset (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Intangible Assets | Intangible assets consist of the following: June 30, 2018 Gross intangible assets Exclusive license rights to CTP-499 $ 11,038,929 Less: Accumulated amortization (222,559 ) Total intangible assets, net $ 10,816,370 |
Senior Convertible Notes (Table
Senior Convertible Notes (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Debt Disclosure [Abstract] | ||
Schedule of Debt, Accrued Interest and Interest Expense | The balance of our Senior Convertible Notes (“Senior Notes”) and accrued interest at June 30, 2018 and December 31, 2017 was as follows: Unamortized Senior Debt Senior Convertible Issuance Convertible Accrued Notes Costs Notes, Net Interest Balance, December 31, 2017 $ 2,580,000 $ (131,430 ) $ 2,448,570 $ 35,693 Conversion of debt $ (2,350,000 ) $ 64,361 $ (2,285,639 ) $ (109,472 ) Accrued interest - - - 84,922 Amortize debt issuance costs - 61,132 61,132 - Balance, June 30, 2018 230,000 (5,937 ) 224,063 11,143 Current portion (230,000 ) 5,937 (224,063 ) (11,143 ) Long-term portion $ - $ - $ - $ - | Debt and accrued interest at December 31, 2017 and interest expense for the year ended December 31, 2017 are as follows: Debt Balance Accrued Interest Interest Expense Senior Convertible Notes $ 2,580,000 $ 35,693 $ 35,693 Unamortized Debt Issuance Cost (131,430 ) - 23,370 Balance, December 31, 2017 $ 2,448,570 $ 35,693 $ 59,063 |
Reverse Acquisition (Tables)
Reverse Acquisition (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Schedule of Assets Acquired and Liabilities Assumed | Heatwurx’s assets acquired and liabilities assumed (see below) and the par value of the common stock allocated to Heatwurx stockholders is recognized as a reduction of additional paid-in capital at the acquisition date. Net recognized values of Heatwurx identifiable assets and liabilities Cash 6,280 Accounts payable (26,098 ) Accrued expenses (17,932 ) Net liabilities assumed $ (37,750 ) |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of Provision for Income Taxes | The Company is subject to U.S. Federal and state income taxes. The provision (benefit) for income taxes for the tax years ended December 31, 2017 and 2016 are as follows: Years Ended December 31, 2017 2016 Current: Federal $ - $ - State - - Total current - - Deferred: Federal (116,783 ) - State (50,004 ) - Total deferred tax benefit (166,787 ) - Valuation allowance 166,787 - Net deferred tax benefit - - Total tax provision (benefit) $ - $ - |
Schedule of Deferred Tax Assets | December 31, 2017 December 31, 2016 Deferred Tax Assets: Non-current Net operating loss carry forward - Federal $ 49,822 $ - Net operating loss carry forward - State 21,333 - Start-up expenditures and amortization 95,632 - Total non-current deferred tax assets 166,787 - Valuation allowance for deferred tax assets (166,787 ) - Total deferred tax assets $ - $ - |
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation of the Company’s effective income tax rate and statutory income tax rate at December 31, 2017 and 2016 is as follows: December 31, 2017 December 31, 2016 Federal statutory income tax rate 34.00 % 0.00 % State tax rate, net 5.45 % 0.00 % Permanent differences -0.02 % 0.00 % Impact of change in federal income tax rates -11.92 % 0.00 % Deferred tax asset valuation allowance -27.51 % 0.00 % Effective income tax rate 0.00 % 0.00 % |
Net Loss Per Share of Common _2
Net Loss Per Share of Common Stock (Tables) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Earnings Per Share [Abstract] | ||
Schedule of Earnings Per Share Basic and Diluted | The computation of net loss per share for the three and six months ended June 30, 2018 and 2017 is shown below. Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Basic and diluted net loss per share: Net loss $ (1,206,074 ) $ (278,445 ) $ (2,302,870 ) $ (500,536 ) Weighted-average number of common shares-basic and diluted 36,623,697 31,745,242 35,951,894 31,745,242 Basic and diluted net loss per share $ (0.03 ) $ (0.01 ) $ (0.06 ) $ (0.02 ) | The 2016 calculation uses the common shares issued to Promet in the asset purchase transaction, restated for the one-for-seven reverse split and weighted for the issuance dates of Promet’s member interests. For the year ended December 31, 2017 December 31, 2016 Net loss from continuing operations $ (1,856,315 ) $ (1,917,066 ) Less: Preferred stock dividends - - Net loss from continuing operations applicable to common stockholders - basic (1,856,315 ) (1,917,066 ) Dilution adjustments (not computed since they are antidilutive): Preferred stock dividend - - Interest on senior convertible notes, net of tax - - Net loss from continuing operations applicable to common stockholders - diluted $ (1,856,315 ) $ (1,917,066 ) Promet common shares issued and outstanding 31,745,242 31,745,242 Heatwurx common shares issued and outstanding 3,527,384 - Total common shares issued and outstanding - basic 35,272,626 31,745,242 Potential common shares (not computed since they are antidilutive): Warrants - - Conversion of preferred stock to common shares - - Conversion of senior convertible notes to common shares - - Total common shares issued and outstanding - diluted 35,272,626 31,745,242 Weighted average shares outstanding used in calculating net loss per common share - basic 32,595,680 29,321,049 Weighted average shares outstanding used in calculating net loss per common share - diluted 32,595,680 29,321,049 Net loss per share - basic $ (0.06 ) $ (0.07 ) Net loss per share - diluted $ (0.06 ) $ (0.07 ) |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The outstanding warrants to purchase common stock and the shares issuable under the Senior Convertible Note were excluded from the computation of diluted net income per share as their effect would have been anti-dilutive for the periods presented below: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Stock purchase warrants 3,612,786 - 3,612,786 - Senior Convertible Notes 115,128 - 115,128 - |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental Payments | Future minimum rental payments under the leases as of December 31, 2017, are as follows: Office Equipment Total 2018 $ 83,025 $ 7,036 $ 90,061 2019 69,741 7,036 76,777 2020 - 4,691 4,691 Total future minimum lease payments $ 152,766 $ 18,762 $ 171,528 |
Supplemental Cash Flow Inform_2
Supplemental Cash Flow Information (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Supplemental Cash Flow Elements [Abstract] | |
Schedule of Supplemental Cash Flow Information | December 31, 2017 December 31, 2016 Supplemental cash flow information Cash paid for interest $ - $ - Cash paid for income taxes $ - $ - Noncash financing and investing activities Assumption of liabilities related to reverse acquisition Accounts payable $ 26,098 $ - Accrued expenses 17,932 - Issuance of common stock related to reverse acquisition recognized in: Common stock 352 - Additional paid-in capital (38,102 ) - Total (37,750 ) - Cash received related to net liabilities assumed in a reverse acquisition transaction $ 6,280 $ - |
Quarterly Data (Tables)
Quarterly Data (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Information | A summary of revenues, operating expenses, other income and net loss attributable to common stockholders for each of the last two years follows (this information is unaudited): 1st 2nd 3rd 4th Quarter Quarter Quarter Quarter Annual 2017 Revenues $ - $ - $ - $ - $ - Operating expenses (233,940 ) (280,335 ) (712,852 ) (575,306 ) (1,802,433 ) Interest expense - - - (59,063 ) (59,063 ) Other income 1,498 1,889 1,285 509 5,181 Net loss attributable to common stockholders $ (232,442 ) $ (278,446 ) $ (711,567 ) $ (633,860 ) $ (1,856,315 ) Weighted-average common shares - basic and diluted 31,745,242 31,745,242 31,745,242 35,119,261 32,595,680 Net loss per common share - basic and diluted $ (0.01 ) $ (0.01 ) $ (0.02 ) $ (0.02 ) $ (0.06 ) 2016 Revenues $ - $ - $ - $ - $ - Operating expenses (280,956 ) (575,281 ) (829,064 ) (236,219 ) (1,921,520 ) Interest expense - - - - - Other income 7 869 1,698 1,880 4,454 Net loss attributable to common stockholders $ (280,949 ) $ (574,412 ) $ (827,366 ) $ (234,339 ) $ (1,917,066 ) Weighted-average common shares - basic and diluted 26,870,217 26,870,217 31,745,242 31,745,242 29,321,049 Net loss per common share - basic and diluted $ (0.01 ) $ (0.02 ) $ (0.03 ) $ (0.01 ) $ (0.07 ) |
Organization and Summary of S_3
Organization and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | Mar. 19, 2018 | Oct. 04, 2017 | Jun. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Number of shares acquired in exchange for common stock | 31,745,242 | 2,090,301 | ||||
Precentage of issued and outstanding common stock diluted basis | 90.00% | |||||
Common stock issued | 38,674,265 | 38,674,265 | 35,272,626 | 31,745,242 | ||
Common stock shares outstanding | 38,674,265 | 38,674,265 | 35,272,626 | 31,745,242 | ||
Accumulated deficit | $ (6,161,956) | $ (6,161,956) | $ (3,859,086) | $ (2,002,771) | ||
Net loss from continuing operations | 2,300,000 | (1,856,315) | (1,917,066) | |||
Net cash used in operating activities from continuing operations | 2,200,000 | |||||
Cash and cash equivalents and certificates of deposit | 3,300,000 | |||||
Certificates of deposit | 496,201 | $ 496,201 | 1,019,294 | |||
Certificates of deposit maturity date | The certificates of deposit will mature in late September 2018. | |||||
Impairment of long lived assets | $ 0 | $ 0 | $ 15,330 | |||
Subscription Receivable [Member] | ||||||
Proceeds from royalty receivable | $ 8,000,000 | |||||
CoNCERT Pharmaceuticals, Inc [Member] | ||||||
Number of shares acquired in exchange for common stock | 2,090,301 | |||||
Precentage of issued and outstanding common stock diluted basis | 5.93% | |||||
Common stock issued | 35,272,626 | |||||
Common stock shares outstanding | 35,272,626 | |||||
Option exercised in exchange for common stock | $ 8,000,000 | |||||
Percentage of common stock holdings | 6.58% | |||||
Percentage of royalty | 15.00% | |||||
Proceeds from royalty receivable | $ 8,000,000 | |||||
Controlling interest, description | Promet's controlling interest was reduced from 90% to 84%. | |||||
CoNCERT Pharmaceuticals, Inc [Member] | Option and License Agreement [Member] | ||||||
Number of shares acquired in exchange for common stock | 2,090,301 | |||||
Precentage of issued and outstanding common stock diluted basis | 5.93% | |||||
Option exercised in exchange for common stock | $ 8,000,000 | |||||
Percentage of common stock holdings | 6.58% | |||||
Percentage of royalty | 15.00% | |||||
Proceeds from royalty receivable | $ 8,000,000 | |||||
Controlling interest, description | Promet's controlling interest in Processa was reduced from 90% to 84%. | |||||
CoNCERT Pharmaceuticals, Inc [Member] | Option and License Agreement [Member] | Additional Paid-In Capital [Member] | ||||||
Proceeds from royalty receivable | $ 8,000,000 |
Nature of Business (Details Nar
Nature of Business (Details Narrative) (10-K) - USD ($) | May 25, 2018 | Nov. 21, 2017 | Oct. 04, 2017 | Oct. 04, 2017 | Oct. 02, 2017 | Jun. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Number of shares acquired in exchange for common stock | 31,745,242 | 2,090,301 | ||||||
Percentage of issued and outstanding common stock diluted basis | 90.00% | |||||||
Common stock issued | 38,674,265 | 35,272,626 | 31,745,242 | |||||
Common stock shares outstanding | 38,674,265 | 35,272,626 | 31,745,242 | |||||
Capital stock shares authorized | 350,000,000 | 350,000,000 | 43,261,049 | |||||
Common stock par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||
Preferred stock shares authorized | 10,000,000 | 10,000,000 | 10,000,000 | |||||
Preferred stock par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||
Accumulated deficit | $ 6,161,956 | $ 3,859,086 | $ 2,002,771 | |||||
Senior convertible notes convert into securities | $ 2,350,000 | |||||||
Funding of drugs | $ 8,000,000 | |||||||
Prior Heatwurx shareholders [Member] | ||||||||
Number of shares owned by shareholders | 24,690,790 | |||||||
First Tranche [Member] | ||||||||
Senior convertible notes convert into securities | $ 1,250,000 | |||||||
Senior convertible notes offering percentage | greater than 90% | |||||||
Additional Tranche [Member] | Investors [Member] | ||||||||
Senior convertible notes convert into securities | $ 1,330,000 | |||||||
Parent Company [Member] | ||||||||
Number of shares acquired in exchange for common stock | 222,217,112 | |||||||
Percentage of issued and outstanding common stock diluted basis | 90.00% | |||||||
Common stock issued | 246,907,902 | |||||||
Common stock shares outstanding | 246,907,902 | |||||||
Number of shares owned by shareholders | 246,907,902 | |||||||
Capital stock shares authorized | 350,000,000 | |||||||
Common stock par value | $ 0.0001 | |||||||
Preferred stock shares authorized | 10,000,000 | |||||||
Preferred stock par value | $ 0.0001 | |||||||
Parent Company [Member] | Series D Preferred Stock [Member] | ||||||||
Common stock issued | 13,673,402 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Details Narrative) (10-K) | Oct. 04, 2017 | Jun. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Sep. 30, 2017shares | Dec. 31, 2017USD ($)Integer | Dec. 31, 2016USD ($)shares |
Percentage of private operating issuance | 90.00% | ||||||
Number of operating segment | Integer | 1 | ||||||
Accumulated deficit | $ 6,161,956 | $ 6,161,956 | $ 3,859,086 | $ 2,002,771 | |||
Net loss from continuing operations | (2,300,000) | 1,856,315 | 1,917,066 | ||||
Net cash used in operating activities from continuing operations | (2,233,186) | $ (355,928) | (1,654,617) | (2,155,037) | |||
Cash and cash equivalents | 2,850,453 | 2,850,453 | 715,084 | 2,847,429 | 1,071,894 | ||
Money market funds | 1,300,815 | 0 | |||||
Depreciation expenses | 4,223 | $ 933 | 1,865 | 1,381 | |||
Impairment of long lived assets | $ 0 | $ 0 | 15,330 | ||||
Amortization of debt discount | 23,370 | 0 | |||||
Advertising costs | 135 | 3,850 | |||||
Research and development cost | $ 926,117 | $ 1,536,996 | |||||
Unexercised options outstanding | shares | 269,500 | ||||||
Unexercised options outstanding cancelled | shares | 40,000 | ||||||
Parent Company [Member] | |||||||
Issuance of common stock percentage | 90.00% | 90.00% | |||||
Convertible Debt [Member] | |||||||
Aggregate cash received on senior secured deposit | $ 2,580,000 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Schedule of Estimated Useful Lives of Asset (Details) (10-K) | 12 Months Ended |
Dec. 31, 2017 | |
Software [Member] | |
Estimated useful lives | 3 years |
Equipment [Member] | |
Estimated useful lives | 5 years |
Intangible Asset (Details Narra
Intangible Asset (Details Narrative) - USD ($) | Mar. 19, 2018 | Oct. 04, 2017 | Jun. 30, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 |
Capitalized cost | $ 3,037,147 | $ 3,037,147 | |||||
Business combination of tax basis | 1,782 | $ 1,782 | |||||
Number of shares acquired in exchange for common stock | 31,745,242 | 2,090,301 | |||||
Precentage of issued and outstanding common stock diluted basis | 90.00% | ||||||
Proceeds from common stock | $ 2,856,073 | $ 4,270,000 | |||||
Amortization expense | 197,124 | $ 222,559 | |||||
Weighted average amortization period for intangible asset | 14 years | ||||||
Future amortization expense, twelve months | 788,495 | $ 788,495 | |||||
Future amortization expense, year two | 788,495 | 788,495 | |||||
Future amortization expense, year three | 788,495 | 788,495 | |||||
Future amortization expense, year four | 788,495 | 788,495 | |||||
Future amortization expense, year five | 788,495 | 788,495 | |||||
Subscription Receivable [Member] | |||||||
Proceeds from royalty receivable | 8,000,000 | ||||||
CoNCERT Pharmaceuticals, Inc [Member] | |||||||
Capitalized cost | 11,038,929 | 11,038,929 | |||||
Transaction costs | $ 1,782 | $ 1,782 | |||||
Option exercised in exchange for common stock | $ 8,000,000 | ||||||
Number of shares acquired in exchange for common stock | 2,090,301 | ||||||
Percentage of common stock holdings | 6.58% | ||||||
Precentage of issued and outstanding common stock diluted basis | 5.93% | ||||||
Percentage of royalty | 15.00% | ||||||
Proceeds from royalty receivable | $ 8,000,000 | ||||||
Proceeds from common stock | $ 8,000,000 |
Intangible Asset - Summary of I
Intangible Asset - Summary of Intangible Assets (Details) | Jun. 30, 2018USD ($) |
Less: Accumulated amortization | $ (222,559) |
Total intangible assets, net | 10,816,370 |
Exclusive License Rights to CTP-499 [Member] | |
Gross intangible assets | $ 11,038,929 |
Senior Convertible Notes (Detai
Senior Convertible Notes (Details Narrative) - USD ($) | May 25, 2018 | Nov. 21, 2017 | Jun. 30, 2018 | May 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Oct. 04, 2017 |
Interest expense | $ 58,314 | $ 59,063 | $ 146,054 | $ 59,063 | ||||||||||||||
Senior secured convertible notes | $ 2,580,000 | |||||||||||||||||
Conversion of senior notes | $ 2,350,000 | |||||||||||||||||
Warrants exercise price | $ 2.452 | |||||||||||||||||
Accrued interest into shares converted | 1,206,245 | |||||||||||||||||
Conversion of senior notes, conversion price | $ 2.043 | |||||||||||||||||
Boustead Securities Ltd [Member] | ||||||||||||||||||
Debt interest rate | 13.96% | 13.96% | 13.96% | 13.96% | 13.96% | |||||||||||||
Gross proceeds from debt percentage | 6.00% | 6.00% | ||||||||||||||||
Warrant to purchase securities percentage | 3.00% | 3.00% | ||||||||||||||||
Warrants to purchase shares of common stock | 72,375 | |||||||||||||||||
Warrants exercise term | 3 years | |||||||||||||||||
Warrants exercise price | $ 2.452 | |||||||||||||||||
Debt issuance costs | $ 154,800 | $ 154,800 | $ 154,800 | $ 154,800 | $ 154,800 | |||||||||||||
Debt effective interest rate | 7.72% | 7.72% | 7.72% | 7.72% | 7.72% | |||||||||||||
Boustead Securities Ltd [Member] | Placement Agent [Member] | ||||||||||||||||||
Warrants to purchase shares of common stock | 72,375 | |||||||||||||||||
Warrants exercise term | 3 years | |||||||||||||||||
Warrants exercise price | $ 2.452 | |||||||||||||||||
Accredited Investors [Member] | ||||||||||||||||||
Proceeds from financing cost | $ 1,330,000 | |||||||||||||||||
Canadian Individuals [Member] | ||||||||||||||||||
Senior note outstanding | $ 230,000 | $ 230,000 | $ 230,000 | |||||||||||||||
Senior Notes [Member] | ||||||||||||||||||
Interest expense | $ 58,314 | $ 146,054 | ||||||||||||||||
Debt interest rate | 8.00% | 8.00% | 8.00% | 8.00% | 8.00% | |||||||||||||
Interest on senior notes | $ 24,992 | $ 84,922 | ||||||||||||||||
Amortization of debt issuance costs | 33,322 | 61,132 | $ 131,430 | |||||||||||||||
Senior secured convertible notes | $ 1,250,000 | |||||||||||||||||
Conversion of senior notes | $ 2,350,000 | |||||||||||||||||
Senior notes outstanding | $ 230,000 | $ 230,000 | $ 230,000 | |||||||||||||||
Debt interest term | May elect to receive 110% of principal plus accrued interest in the event there is a change of control prior to conversation of the Senior Notes | May elect to receive 110% of principal plus accrued interest in the event there is a change of control prior to conversion of the Senior Notes |
Senior Convertible Notes (Det_2
Senior Convertible Notes (Details Narrative) (10-K) - USD ($) | Nov. 21, 2017 | Jun. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | May 25, 2018 | Oct. 04, 2017 | Dec. 31, 2016 |
Senior secured convertible notes | $ 2,580,000 | ||||||
Accrued interest | $ 11,143 | $ 11,143 | $ 35,693 | ||||
Boustead Securities Ltd [Member] | |||||||
Debt interest rate | 13.96% | 13.96% | 13.96% | ||||
Gross proceeds from debt percentage | 6.00% | 6.00% | |||||
Warrant to purchase securities percentage | 3.00% | 3.00% | |||||
Excess investment | $ 8,000,000 | ||||||
Excess investment description | The Company shall pay Boustead a cash fee equal to two percent (2%) of the Excess Investment and six percent (6%) of the balance of the Excess Investment | ||||||
Debt issuance costs | $ 154,800 | $ 154,800 | $ 154,800 | ||||
Debt effective interest rate | 7.72% | 7.72% | 7.72% | ||||
Private Investment in Public Equity [Member] | |||||||
Gross proceeds from convertible debt | $ 4,000,000 | ||||||
Accredited Investors [Member] | |||||||
Proceeds from financing cost | $ 1,330,000 | ||||||
Senior Notes [Member] | |||||||
Senior secured convertible notes | $ 1,250,000 | ||||||
Senior notes issued and outstanding | 2,580,000 | ||||||
Pre-money valuation in investment | $ 72,000,000 | ||||||
Pre-money valuation discount percentage | 10.00% | ||||||
Debt maturity term | 1 year | ||||||
Debt interest rate | 8.00% | 8.00% | 8.00% | ||||
Debt interest term | May elect to receive 110% of principal plus accrued interest in the event there is a change of control prior to conversation of the Senior Notes | May elect to receive 110% of principal plus accrued interest in the event there is a change of control prior to conversion of the Senior Notes | |||||
Future maturities of debt | $ 2,580,000 | ||||||
Accrued interest | 206,400 | ||||||
Contractual interest expense | 170,707 | ||||||
Amortization of debt issuance costs | $ 33,322 | $ 61,132 | 131,430 | ||||
Senior Notes [Member] | December 31, 2018 [Member] | |||||||
Future maturities of debt | 2,580,000 | ||||||
Accrued interest | 206,400 | ||||||
Contractual interest expense | 170,707 | ||||||
Amortization of debt issuance costs | $ 131,430 |
Senior Convertible Notes - Sche
Senior Convertible Notes - Schedule of Debt, Accrued Interest and Interest Expense (Details) - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Debt Balance | $ 2,448,570 | ||
Accrued Interest | 11,143 | 35,693 | |
Debt Balance | 224,063 | 2,448,570 | |
Senior Convertible Notes [Member] | |||
Debt Balance | 2,580,000 | 2,580,000 | |
Conversion of debt | (2,350,000) | ||
Accrued Interest | 35,693 | ||
Amortize debt issuance costs | |||
Interest Expense | 35,693 | ||
Debt Balance | 230,000 | 2,580,000 | |
Current portion | (230,000) | ||
Long-term portion | |||
Unamortized Debt Issuance Cost [Member] | |||
Debt Balance | (131,430) | (131,430) | |
Conversion of debt | 64,361 | ||
Accrued Interest | |||
Amortize debt issuance costs | 61,132 | ||
Interest Expense | 23,370 | ||
Debt Balance | (5,937) | (131,430) | |
Current portion | 5,937 | ||
Long-term portion | |||
Senior Convertible Notes, Net [Member] | |||
Debt Balance | 2,448,570 | 2,448,570 | |
Conversion of debt | (2,285,639) | ||
Accrued Interest | 35,693 | ||
Amortize debt issuance costs | 61,132 | ||
Interest Expense | 59,063 | ||
Debt Balance | 224,063 | 2,448,570 | |
Current portion | (224,063) | ||
Long-term portion | |||
Accrued Interest [Member] | |||
Debt Balance | 35,693 | ||
Conversion of debt | (109,472) | ||
Accrued Interest | 84,922 | ||
Amortize debt issuance costs | |||
Debt Balance | 11,143 | $ 35,693 | |
Current portion | (11,143) | ||
Long-term portion |
Reverse Acquisition (Details Na
Reverse Acquisition (Details Narrative) (10-K) - USD ($) | Oct. 04, 2017 | Sep. 29, 2017 | Dec. 31, 2017 | Jun. 30, 2018 | Dec. 31, 2016 |
Common stock shares issued | 35,272,626 | 38,674,265 | 31,745,242 | ||
Common stock shares outstanding | 35,272,626 | 38,674,265 | 31,745,242 | ||
Promet Therapeutics LLC [Member] | |||||
General and administrative expense | $ 58,763 | ||||
Parent Company [Member] | |||||
Business acquisition acquired value | $ 1,017,342 | ||||
Business acquisition exchange percentage | 90.00% | ||||
Business acquisition of common stock issued shares | 222,217,112 | ||||
Stock issued during reserve split | 31,745,242 | 1,850,625 | 35,272,626 | ||
Common stock shares issued | 246,907,902 | ||||
Common stock shares outstanding | 246,907,902 |
Reverse Acquisition - Schedule
Reverse Acquisition - Schedule of Assets Acquired and Liabilities Assumed (Details) (10-K) - Parent Company [Member] | Dec. 31, 2017USD ($) |
Cash | $ 6,280 |
Accounts payable | (26,098) |
Accrued expenses | (17,932) |
Net liabilities assumed | $ (37,750) |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | May 25, 2018 | Mar. 19, 2018 | Oct. 04, 2017 | Jun. 29, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Number of shares acquired in exchange for common stock | 31,745,242 | 2,090,301 | |||||
Precentage of issued and outstanding common stock diluted basis | 90.00% | ||||||
Common stock issued | 38,674,265 | 35,272,626 | 31,745,242 | ||||
Common stock shares outstanding | 38,674,265 | 35,272,626 | 31,745,242 | ||||
Recognization of license intangible asset | 8,000,000 | ||||||
Additional Paid-In Capital [Member] | |||||||
Recognization of license intangible asset | 8,000,000 | ||||||
CoNCERT Pharmaceuticals, Inc [Member] | |||||||
Common stock and a warrant purchase price per share | $ 3.83 | ||||||
Option exercised in exchange for common stock | $ 8,000,000 | ||||||
Number of shares acquired in exchange for common stock | 2,090,301 | ||||||
Percentage of common stock holdings | 6.58% | ||||||
Precentage of issued and outstanding common stock diluted basis | 5.93% | ||||||
Common stock issued | 35,272,626 | ||||||
Common stock shares outstanding | 35,272,626 | ||||||
Controlling interest, description | Promet's controlling interest was reduced from 90% to 84%. | ||||||
CoNCERT Pharmaceuticals, Inc [Member] | Additional Paid-In Capital [Member] | |||||||
Recognization of license intangible asset | 8,000,000 | ||||||
2018 Private Placement Transactions [Member] | |||||||
Number of units sold | 1,402,442 | ||||||
Purchase price per unit | $ 2.27 | ||||||
Gross proceeds from unit sold | $ 3,200,000 | ||||||
Common stock and a warrant purchase price per share | $ 2.724 | ||||||
Amount paid to placement agent | $ 167,526 | ||||||
Issued placement agent warrants to purchase shares | 84,146 | ||||||
Warrants term | 3 years | ||||||
Notes receivable | $ 107,490 | ||||||
PoC Capital, LLC [Member] | |||||||
Number of units sold | 792,952 | ||||||
Purchase price per unit | $ 2.724 | ||||||
Common stock and a warrant purchase price per share | $ 2.724 | ||||||
Warrant expiry date | Jul. 29, 2021 | ||||||
Amount paid to placement agent | $ 108,000 | ||||||
Issued placement agent warrants to purchase shares | 47,578 | ||||||
Warrants term | 3 years | ||||||
Amount financed under agreement | $ 1,800,000 | ||||||
Pledge Agreement with PoC [Member] | |||||||
Number of units sold | 396,476 | ||||||
Purchase price per unit | $ 2.27 | ||||||
Gross proceeds from unit sold | $ 20,000,000 | ||||||
Common stock and a warrant purchase price per share | $ 0.01 | ||||||
Amount paid to placement agent | $ 720,000 | ||||||
Pledge Agreement with PoC [Member] | First Tranche [Member] | |||||||
Number of units sold | 198,238 | ||||||
Pledge Agreement with PoC [Member] | Second Tranche [Member] | |||||||
Number of units sold | 198,238 |
Stockholders' Equity (Details_2
Stockholders' Equity (Details Narrative) (10-K) - USD ($) | Sep. 29, 2017 | Oct. 30, 2012 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2018 | Oct. 04, 2017 | Oct. 02, 2017 |
Common stock, shares authorized | 350,000,000 | 43,261,049 | 350,000,000 | |||||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||
Common stock, shares issued | 35,272,626 | 31,745,242 | 38,674,265 | |||||
Common stock, shares outstanding | 35,272,626 | 31,745,242 | 38,674,265 | |||||
Common shares attributable to Promet's controlling interest | 31,745,242 | 31,745,242 | ||||||
Common shares attributable to the minority shareholders' interest | 3,527,384 | 0 | ||||||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | 10,000,000 | |||||
Preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||
Preferred stock, shares issued | 0 | 0 | 0 | |||||
Preferred stock, shares outstanding | 0 | 0 | 0 | |||||
Number of options granted | ||||||||
Unvested options | 321,667 | |||||||
Unvested options exercise price | $ 1.69 | |||||||
Weighted average remaining contractual terms | 2 years 15 days | |||||||
Number of unexercised options during period | 269,500 | 269,500 | ||||||
Options, nonvested, weighted average grant date fair value | $ 1.88 | |||||||
Stock-based compensation expense | ||||||||
Number of warrants outstanding | 0 | 2,000,304 | ||||||
Warrant exercisable price | $ 2.36 | |||||||
Weighted average remaining life of warrants | 7 months 17 days | |||||||
Warrant One [Member] | ||||||||
Number of warrants outstanding | 723,181 | |||||||
Warrant exercisable price | $ 2.99 | |||||||
Warrant Two [Member] | ||||||||
Number of warrants outstanding | 1,277,123 | |||||||
Warrant exercisable price | $ 2 | |||||||
Weighted average remaining life of warrants | 29 days | |||||||
Parent Company [Member] | ||||||||
Common stock, shares authorized | 350,000,000 | |||||||
Common stock, par value | $ 0.0001 | |||||||
Common stock, shares issued | 246,907,902 | |||||||
Common stock, shares outstanding | 246,907,902 | |||||||
Preferred stock, shares authorized | 10,000,000 | |||||||
Preferred stock, par value | $ 0.0001 | |||||||
Percentage of common stock issued during period | 90.00% | |||||||
Performance Stock Options [Member] | ||||||||
Number of unexercised options during period | 40,000 | |||||||
Options, nonvested, weighted average grant date fair value | $ 2 | |||||||
2011 Equity Incentive Plan [Member] | Board of Directors and Stockholders [Member] | ||||||||
Common stock issued during period | 1,800,000 | |||||||
Stock issued during period, shares, reverse stock splits | 257,143 | |||||||
Plan termination date | Apr. 15, 2021 | |||||||
Series D Preferred Stock [Member] | ||||||||
Number of preferred shares converted | 178,924 | |||||||
Accrued dividends on preferred stock | $ 118,658 | |||||||
Common stock issued for conversion | 719,500 | |||||||
Common stock restated for the reverse stock split | 102,789 | |||||||
Series D Preferred Stock [Member] | Parent Company [Member] | ||||||||
Common stock, shares issued | 13,673,402 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Oct. 04, 2017 | Dec. 31, 2016 | |
Reimbursement amount | $ 0 | $ 19,660 | $ 27,480 | $ 49,089 | |||
Accounts payable related party | $ 900 | $ 900 | $ 0 | ||||
Number of common stock and warrants to purchase shares | 2,065,789 | 2,065,789 | |||||
Senior Convertible Notes [Member] | Chairman of the Board of Directors [Member] | |||||||
Shares purchased in private placement transaction | 132,160 | 132,160 | |||||
Number of common stock and warrants to purchase shares | 103,117 | 103,117 | |||||
Convertible debt | $ 200,000 | $ 200,000 | |||||
Senior Convertible Notes [Member] | Chief Executive Officer [Member] | |||||||
Shares purchased in private placement transaction | 132,160 | 132,160 | |||||
Number of common stock and warrants to purchase shares | 103,117 | 103,117 | |||||
Convertible debt | $ 200,000 | $ 200,000 | |||||
Corlyst [Member] | |||||||
Accounts receivable related party | 53,501 | 53,501 | 62,709 | $ 0 | |||
Accounts payable related party | $ 116 | $ 116 | 336 | $ 95 | |||
Shares purchased in private placement transaction | 132,159 | 132,159 | |||||
Officer [Member] | |||||||
Due to related party and officer | $ 100 | $ 100 | 100 | ||||
Funds [Member] | Senior Convertible Notes [Member] | |||||||
Number of common stock and warrants to purchase shares | 515,583 | 515,583 | 515,583 | ||||
Convertible debt | $ 1,000,000 | $ 1,000,000 |
Related Party Transactions (D_2
Related Party Transactions (Details Narrative) (10-K) - USD ($) | May 25, 2018 | Oct. 04, 2017 | Sep. 29, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2018 |
Fees charged | $ 111,799 | $ 32,327 | ||||
Accounts payable related party | 0 | $ 900 | ||||
Debt instrument converted amount | $ 2,350,000 | |||||
Debt face amount | $ 138,000 | |||||
Parent Company [Member] | ||||||
Stock issued during reserve stock split | 31,745,242 | 1,850,625 | 35,272,626 | |||
Parent Company [Member] | Notes Payable [Member] | ||||||
Stock issued during reserve stock split | 1,215,813 | |||||
Secured notes payable | $ 1,289,361 | |||||
Debt instrument converted amount | $ 412,716 | |||||
Debt instrument converted shares | 8,510,386 | |||||
Parent Company [Member] | Revolving Line of Credit [Member] | ||||||
Stock issued during reserve stock split | 134,924 | |||||
Debt instrument principal | $ 50,887 | |||||
Line of credit converted into shares | 944,436 | |||||
Senior Convertible Notes [Member] | Chairman of the Board of Directors [Member] | ||||||
Convertible debt | 200,000 | |||||
Entities affiliated owned | 250,000 | |||||
Senior Convertible Notes [Member] | Chief Executive Officer [Member] | ||||||
Convertible debt | 200,000 | |||||
Entities affiliated owned | 250,000 | |||||
Senior Convertible Notes [Member] | Interim Chief Financial Officer [Member] | ||||||
Entities affiliated owned | 250,000 | |||||
Corlyst [Member] | ||||||
Accounts receivable related party | 62,709 | 0 | 53,501 | |||
Accounts payable related party | 336 | $ 95 | 116 | |||
Officer [Member] | ||||||
Due to related party and officer | 100 | $ 100 | ||||
Funds [Member] | Senior Convertible Notes [Member] | ||||||
Convertible debt | $ 1,000,000 | $ 1,000,000 | ||||
Funds [Member] | Common Stock [Member] | ||||||
Funds owned | 14,180,543 | |||||
Stock issued during reserve stock split | 2,025,792 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||||||
Deferred tax liability | $ 3,037,147 | $ 3,037,147 | ||||
Deferred tax liability, financial reporting basis | 11,038,929 | 11,038,929 | ||||
Deferred tax liability, tax basis | 1,782 | 1,782 | ||||
Income tax benefit | $ (277,783) | $ (559,317) |
Income Taxes (Details Narrati_2
Income Taxes (Details Narrative) (10-K) - USD ($) | Oct. 04, 2017 | Dec. 31, 2017 | Dec. 31, 2016 |
Net operating loss carryforward | $ 606,400 | ||
Deferred tax start-up expenditures for tax purposes | 347,500 | ||
Deferred tax assets | 95,632 | ||
Deferred tax loss carryforward | 258,600 | ||
Deferred tax loss carryforward, net of tax | $ 71,155 | ||
Research and development tax credits carryforward period | 20 years | ||
Income tax reconciliation description | the Tax Cuts and Jobs Act of 2017 ("TCJA") was signed into law. Among its provisions, the TCJA reduces the statutory U.S. Corporate income tax rate from 34% to 21% effective January 1, 2018. | ||
Corporate income tax rate reduced | 21.00% | ||
Future taxable income tax rate | 80.00% | ||
Reduction in deferred income tax assets | $ 72,300 | ||
Net operating loss carryforward description | The net operating losses are available for application against future taxable income for 20 years, expiring in 2037. | ||
Change in valuation of allowance | $ 166,787 | $ 0 | |
Federal [Member] | |||
Net operating loss carryforward | 166,787 | ||
State [Member] | |||
Net operating loss carryforward | $ 166,787 | ||
Maryland [Member] | |||
Research and development tax credits carryforward period | 7 years | ||
Parent Company [Member] | |||
Issuance of common stock percentage | 90.00% | 90.00% |
Income Taxes - Schedule of Prov
Income Taxes - Schedule of Provision for Income Taxes (Details) (10-K) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||||||
Current, Federal | ||||||
Current, State | ||||||
Total current | ||||||
Deferred, Federal | (116,783) | |||||
Deferred, State | (50,004) | |||||
Total deferred tax benefit | (166,787) | |||||
Valuation allowance | 166,787 | |||||
Net deferred tax benefit | ||||||
Total tax provision (benefit) | $ (277,783) | $ (559,317) |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets (Details) (10-K) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carry forward - Federal | $ 49,822 | |
Net operating loss carry forward - State | 21,333 | |
Start-up expenditures and amortization | 95,632 | |
Total non-current deferred tax assets | 166,787 | |
Valuation allowance for deferred tax assets | (166,787) | |
Total deferred tax assets |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effective Income Tax Rate Reconciliation (Details) (10-K) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Federal statutory income tax rate | 34.00% | 0.00% |
State tax rate, net | 5.45% | 0.00% |
Permanent differences | (0.02%) | 0.00% |
Impact of change in federal income tax rates | (11.92%) | 0.00% |
Deferred tax asset valuation allowance | (27.51%) | 0.00% |
Effective income tax rate | 0.00% | 0.00% |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) (10-K) - USD ($) | Oct. 04, 2017 | Sep. 29, 2017 | Dec. 31, 2017 |
Parent Company [Member] | |||
Notes payable | $ 1,939,341 | ||
Accrued interest | $ 613,114 | ||
Stock issued during reserve stock split | 31,745,242 | 1,850,625 | 35,272,626 |
Common Stock [Member] | |||
Conversion debt into shares | 12,953,902 |
Net Loss Per Share of Common _3
Net Loss Per Share of Common Stock (Details Narrative) (10-K) - shares | 12 Months Ended | ||
Dec. 31, 2017 | Jun. 30, 2018 | Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |||
Preferred stock, shares issued | 0 | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 | 0 |
Reverse stock split | one-for-seven |
Net Loss Per Share of Common _4
Net Loss Per Share of Common Stock - Schedule of Earnings Per Share Basic and Diluted (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||||||
Jun. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Net loss from continuing operations | $ 2,300,000 | $ (1,856,315) | $ (1,917,066) | ||||||||||
Less: Preferred stock dividends | |||||||||||||
Net loss from continuing operations applicable to common stockholders - basic | (1,856,315) | (1,917,066) | |||||||||||
Preferred stock dividend | |||||||||||||
Interest on senior convertible notes, net of tax | |||||||||||||
Net loss from continuing operations applicable to common stockholders - diluted | $ (1,856,315) | $ (1,917,066) | |||||||||||
Total common shares issued and outstanding - basic | 35,272,626 | 31,745,242 | |||||||||||
Warrants | |||||||||||||
Conversion of preferred stock to common shares | |||||||||||||
Conversion of senior convertible notes to common shares | |||||||||||||
Total common shares issued and outstanding - diluted | 35,272,626 | 31,745,242 | |||||||||||
Weighted average shares outstanding used in calculating net loss per common share - basic | 32,595,680 | 29,321,049 | |||||||||||
Weighted average shares outstanding used in calculating net loss per common share - diluted | 32,595,680 | 29,321,049 | |||||||||||
Net loss per share - basic | $ (0.06) | $ (0.07) | |||||||||||
Net loss per share - diluted | $ (0.06) | $ (0.07) | |||||||||||
Net loss | $ (1,206,074) | $ (633,860) | $ (711,567) | $ (278,445) | $ (232,442) | $ (234,339) | $ (827,366) | $ (574,412) | $ (280,949) | $ (2,302,870) | $ (500,536) | $ (1,856,315) | $ (1,917,066) |
Weighted average shares outstanding used in calculating net loss per common share - basic and diluted | 36,623,697 | 35,119,261 | 31,745,242 | 31,745,242 | 31,745,242 | 31,745,242 | 31,745,242 | 26,870,217 | 26,870,217 | 35,951,894 | 31,745,242 | 32,595,680 | 29,321,049 |
Net loss per common share - basic and diluted | $ (0.03) | $ (0.02) | $ (0.02) | $ (0.01) | $ (0.01) | $ (0.01) | $ (0.03) | $ (0.02) | $ (0.01) | $ (0.06) | $ (0.02) | $ (0.06) | $ (0.07) |
Promet [Member] | |||||||||||||
Total common shares issued and outstanding - basic | 31,745,242 | 31,745,242 | |||||||||||
Heatwurx [Member] | |||||||||||||
Total common shares issued and outstanding - basic | 3,527,384 |
Net Loss Per Share of Common _5
Net Loss Per Share of Common Stock - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Stock Purchase Warrants [Member] | ||||
Senior Convertible Note were excluded from the computation of diluted net income per share | 3,612,786 | 3,612,786 | ||
Senior Convertible Notes [Member] | ||||
Senior Convertible Note were excluded from the computation of diluted net income per share | 115,128 | 115,128 |
Commitments and Contingencies_2
Commitments and Contingencies (Details Narrative) - USD ($) | 6 Months Ended | ||
Jun. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Purchase of obligations | $ 110,000 | $ 895,740 | $ 0 |
Loss on cybersecurity fraud | $ 144,200 |
Commitments and Contingencies_3
Commitments and Contingencies (Details Narrative) (10-K) - USD ($) | Oct. 04, 2017 | Aug. 31, 2015 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 |
Rent expense | $ 5,535 | |||||
Change in rent | $ 1,107 | |||||
Accrued rent liability | 13,284 | |||||
Accrued rent, current | 3,321 | |||||
Accrued rent, non-current | $ 3,321 | 9,963 | ||||
Gross proceeds from equity or other financing | 117,339 | |||||
Purchase obligations | $ 110,000 | $ 895,740 | 0 | |||
CoNCERT Pharmaceuticals, Inc [Member] | ||||||
Gross proceeds from equity or other financing | $ 8,000,000 | |||||
Stock purchase agreement term | Promet shall issue to CoNCERT, for no additional consideration, shares representing the lesser of (a) the number of shares determined by dividing $8 million by the price per share paid by other investors in the financing round that enabled Promet to exercise the option under the license agreement discussed above or (b) the number of shares rounded down to the nearest whole share equal to 19.9 percent of the issued and outstanding shares of Promet immediately following the issuance of shares to CoNCERT. | |||||
Royalties agreement term | Promet shall pay to CoNCERT royalties, on a product-by-product basis, on worldwide net sales of products during each year as follows: (a) four percent (4%) of sales less than or equal to $100 million; (b) five percent (5%) of sales greater than $100 million and less than or equal to $500 million; (c) six percent (6%) of sales greater than $500 million and less than or equal to $1 billion; and, (d) for that portion greater than $1 billion, (i) with respect to net sales made by Promet or any of its affiliates, ten percent (10%) of net sales, and (ii) with respect to net sales made by any sub-licensee, the greater of (1) 6% of such net sales or (2) 50% of all payments received by Promet or any of its affiliates with respect to such net sales. Royalties are subject to adjustment as provided in the terms of the agreement. | |||||
CoNCERT Pharmaceuticals, Inc [Member] | Post-Money Valuation [Member] | ||||||
Gross proceeds from equity or other financing | $ 40,500,000 | |||||
Office Lease [Member] | ||||||
Lease description | The office lease commenced on October 1, 2016 and expires September 30, 2019 with monthly rent at inception of $5,535 that escalates $1,107 annually on each October. | |||||
Rent expense | $ 105,954 | 50,997 | ||||
Common Area Maintenance [Member] | ||||||
Rent expense | 13,284 | |||||
Real Estate Tax Reimbursements [Member] | ||||||
Rent expense | $ 22,929 | |||||
Equipment Lease [Member] | ||||||
Lease description | The equipment lease commenced in June 2017 and expires in August 2020. | |||||
Rent expense | $ 6,626 | $ 5,362 | ||||
Lease term | 39 months | |||||
Monthly operating usage cost allowance | $ 125 | |||||
Sales tax percentage | 6.00% | |||||
Equipment Lease [Member] | Base Rent [Member] | ||||||
Rent expense | $ 586 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Future Minimum Rental Payments (Details) (10-K) | Dec. 31, 2017USD ($) |
2,018 | $ 90,061 |
2,019 | 76,777 |
2,020 | 4,691 |
Total future minimum lease payments | 171,528 |
Office [Member] | |
2,018 | 83,025 |
2,019 | 69,741 |
2,020 | |
Total future minimum lease payments | 152,766 |
Equipment [Member] | |
2,018 | 7,036 |
2,019 | 7,036 |
2,020 | 4,691 |
Total future minimum lease payments | $ 18,762 |
Concentration of Credit Risk (D
Concentration of Credit Risk (Details Narrative) (10-K) | Dec. 31, 2017USD ($)Integer |
Number of commercial banks has companies operating cash | Integer | 2 |
Commercial Bank One [Member] | |
Cash FDIC insured amount | $ 2,900,393 |
Commercial Bank Two [Member] | |
Cash FDIC insured amount | $ 2,184 |
Supplemental Cash Flow Inform_3
Supplemental Cash Flow Information - Schedule of Supplemental Cash Flow Information (Details) (10-K) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Supplemental Cash Flow Elements [Abstract] | ||
Cash paid for interest | ||
Cash paid for income taxes | ||
Assumption of liabilities related to reverse acquisition, Accounts payable | 26,098 | |
Assumption of liabilities related to reverse acquisition, Accrued expenses | 17,932 | |
Issuance of common stock related to reverse acquisition recognized in: Common stock | 352 | |
Issuance of common stock related to reverse acquisition recognized in: Additional paid-in capital | (38,102) | |
Total | (37,750) | |
Cash received related to net liabilities assumed in a reverse acquisition transaction | $ 6,280 |
Quarterly Data - Schedule of Qu
Quarterly Data - Schedule of Quarterly Financial Information (Details) (10-K) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||||||
Jun. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||
Revenues | |||||||||||||
Operating expenses | $ (1,428,224) | (575,306) | (712,852) | (280,334) | (233,940) | (236,219) | (829,064) | (575,281) | (280,956) | $ (2,719,839) | $ (503,923) | (1,802,433) | (1,921,520) |
Interest expense | (58,314) | (59,063) | (146,054) | (59,063) | |||||||||
Other income | 509 | 1,285 | 1,889 | 1,498 | 1,880 | 1,698 | 869 | 7 | 5,181 | 4,454 | |||
Net loss attributable to common stockholders | $ (1,206,074) | $ (633,860) | $ (711,567) | $ (278,445) | $ (232,442) | $ (234,339) | $ (827,366) | $ (574,412) | $ (280,949) | $ (2,302,870) | $ (500,536) | $ (1,856,315) | $ (1,917,066) |
Weighted-average common shares - basic and diluted | 36,623,697 | 35,119,261 | 31,745,242 | 31,745,242 | 31,745,242 | 31,745,242 | 31,745,242 | 26,870,217 | 26,870,217 | 35,951,894 | 31,745,242 | 32,595,680 | 29,321,049 |
Net loss per common share - basic and diluted | $ (0.03) | $ (0.02) | $ (0.02) | $ (0.01) | $ (0.01) | $ (0.01) | $ (0.03) | $ (0.02) | $ (0.01) | $ (0.06) | $ (0.02) | $ (0.06) | $ (0.07) |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) (10-K) - USD ($) | Oct. 04, 2017 | Mar. 31, 2018 | Jan. 31, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Mar. 19, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Number of common stock shares outstanding | 38,674,265 | 35,272,626 | 31,745,242 | |||||
Gross proceeds from equity or other financing | $ 117,339 | |||||||
Loss on cyber security fraud | $ 144,200 | |||||||
Parent Company [Member] | ||||||||
Number of common stock shares outstanding | 246,907,902 | |||||||
CoNCERT Pharmaceuticals, Inc [Member] | ||||||||
Number of common stock shares outstanding | 35,272,626 | |||||||
Gross proceeds from equity or other financing | $ 8,000,000 | |||||||
Subsequent Event [Member] | ||||||||
Percentage of sublicense revenue earned | 15.00% | |||||||
Loss on cyber security fraud | $ 144,200 | |||||||
Subsequent Event [Member] | Parent Company [Member] | ||||||||
Percentage of sublicense revenue earned | 0.00% | |||||||
Gross proceeds from equity or other financing | $ 8,000,000 | |||||||
Sublicense revenue | 8,000,000 | |||||||
Subsequent Event [Member] | CoNCERT Pharmaceuticals, Inc [Member] | ||||||||
Amount of common stock owned | $ 8,000,000 | |||||||
Number of common stock shares outstanding | 2,090,300 | |||||||
Subsequent Event [Member] | Promet Therapeutics, LLC [Member] | ||||||||
Common stock percentage | 6.58% | |||||||
Common stock issued and outstanding percentage | 5.93% |