| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis
of Presentation The
accompanying unaudited consolidated financial statements and related notes have been prepared in accordance with accounting principles
generally accepted in the United States of America (U.S. GAAP) for interim unaudited consolidated financial information. Accordingly,
they do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements.
The unaudited consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) which are,
in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Interim results
are not necessarily indicative of the results for the full year. These unaudited consolidated financial statements should be read
in conjunction with the audited consolidated financial statements of the Company for the year ended June 30, 2019 and notes thereto
contained in the Company's Annual Report on Form 10-K. On September 26, 2019, the Company's
Board of Directors approved a 1-to-4 reverse split of the Common Stock, which was effective on the NASDAQ Capital Market on September
30, 2019. As a result of the reverse stock split, every 4 shares of issued and outstanding common stock were converted into 1 share
of issued and outstanding common stock, with all fractional shares rounded up to the nearest whole share, and the Company's
authorized share of common stock were reduced from 200,000,000 to 50,000,000 shares. All share and per share amounts have been
retroactively restated to reflect this reverse stock split. Liquidity As shown in the accompanying financial statements,
the Company incurred negative operating cash flows of $2,534,151 for the quarter ended September 30, 2019 and has an accumulated
deficit of $115,331,861 from inception through September 30, 2019. Relmada has funded its past operations through equity raises and most recently in the year ended June
30, 2019. Relmada raised net proceeds from the sale of common stock and warrants of $17,760,635. Further, the Company was able
to reduce its debt obligations during the year ended June 30, 2019 by converting $8,030,365 of promissory notes and accrued interest
into common stock. The Company also raised an additional $1,275,749 during the three months ended September 30, 2019 from the sale
of common stock and warrant exercises. Management believes that due to the recent
equity raises completed and the current cash position on its balance sheet, it has obtained sufficient funding to continue ongoing
operations for at least the next twelve months from the issuance of these consolidated quarterly financial statements. Since September
30, 2019 and to date, the Company has received approximately $2,017,000 in cash from exercises of outstanding warrants, which resulted in
the Company having approximately $8,010,000 in cash and cash equivalents at November 8, 2019. Based on its budgeted cash flow requirements,
the Company believes these funds are sufficient to fund its ongoing operations for at least one year after the issuance of these
consolidated quarterly financial statements. The Company expects that the cash burn rate for the 12 months ended December 31, 2020,
will be between $5-6 million, which includes approximately $2 million of discretionary research and development (R&D) spending,
as the data analysis on the Phase 2a clinical trial is completed and the planning and preparation for the next clinical trial is
conducted. Regardless of the results of any ongoing clinical trial, we have control over our expenditures and have the ability
to adjust spending accordingly based on the budgeted cash flow requirements developed and the excess cash on hand. Given the positive results of the
Company's Phase 2 clinical trial, management will evaluate the size and scope of any subsequent trials that will affect
the timing of additional financings through public or private sales of equity or debt securities or from bank or other loans
or through strategic collaboration and/or licensing agreements. Any such expenditures related to any subsequent trials will
not be incurred until such additional financing is raised. Further, additional financing related to subsequent trials does
not affect the Company's conclusion that based on the cash on hand and the budgeted cash flow requirements, the Company
has sufficient funds to maintain operations for the next twelve months from the issuance of these consolidated quarterly
financial statements. Principles
of Consolidation The
unaudited consolidated financial statements include the Company's accounts and those of the Company's wholly-owned
subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation. Use
of Estimates The
preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses for the reporting period. Actual results could differ from those
estimates. The significant estimates are the valuation of derivative liabilities, stock-based compensation expenses and recorded
amounts related to income taxes. Cash
and Cash Equivalents The
Company considers cash deposits and all highly liquid investments with a maturity of three months or less when purchased to be
cash equivalents. The Company's cash deposits are held at two high-credit-quality financial institutions. The Company's
cash deposits at these institutions exceed federally insured limits. Patents Costs
related to filing and pursuing patent applications are recorded as general and administrative expense and expensed as incurred
since recoverability of such expenditures is uncertain. Fixed
Assets Fixed
assets are stated at cost less accumulated depreciation. Fixed assets are comprised of computers and software, leasehold improvements,
and furniture and fixtures. Depreciation is calculated using the straight-line method over the estimated useful life of the assets.
Computers and software have an estimated useful life of three years. Furniture and fixtures have an estimated useful life of approximately
seven years. Fair
Value of Financial Instruments The Company's financial instruments
primarily include cash, receivables and accounts payable. Due to the short-term nature of cash, receivables and accounts payable
the carrying amounts of these assets and liabilities approximate their fair value. Fair
value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction
between market participants. A fair value hierarchy has been established for valuation inputs that gives the highest priority
to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair
value hierarchy is as follows: Level
1 Inputs - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability
to access at the measurement date. Level
2 Inputs - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly
or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical
or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset
or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally
from or corroborated by market data by correlation or other means. Level
3 Inputs - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable
(supported by little or no market activity). Fair
Value on a Recurring Basis As
required by Accounting Standard Codification (ASC) Topic No. 820 - 10 Fair Value Measurement The Company's financial liabilities
accounted for at fair value were all converted to equity during the year ended June 30, 2019 so that there were no financial liabilities
accounted for at fair value, See Note 7. Income
Taxes The
Company accounts for income taxes using the asset and liability method. Accordingly, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in the tax rate is recognized in income or expense in the period that the change
is effective. Tax benefits are recognized when it is probable that the deduction will be sustained. A valuation allowance is established
when it is more likely than not that all or a portion of a deferred tax asset will either expire before the Company is able to
realize the benefit, or that future deductibility is uncertain. As of September 30, 2019 and June 30, 2019, the Company had recognized
a valuation allowance to the full extent of the Company's net deferred tax assets since the likelihood of realization of
the benefit does not meet the more likely than not threshold. The
Company files a U.S. Federal income tax return and, various state returns. Uncertain tax positions taken on the Company's
tax returns will be accounted for as liabilities for unrecognized tax benefits. The Company will recognize interest and penalties,
if any, related to unrecognized tax benefits in general and administrative expenses in the statements of operations. There were
no liabilities recorded for uncertain tax positions at September 30, 2019 and June 30, 2019. The open tax years, subject to potential
examination by the applicable taxing authority, for the Company are from June 30, 2016 through June 30, 2019. Research
and Development Research
and development costs primarily consist of research contracts for the advancement of product development, salaries and benefits,
stock-based compensation, and consultants. The Company expenses all research and development costs in the period incurred. The
Company makes an estimate of costs in relation to clinical study contracts. The Company analyzes the progress of studies, including
the progress of clinical studies and phases, invoices received and contracted costs when evaluating the adequacy of the amount
expensed and the related prepaid asset and accrued liability. Stock-Based
Compensation The
Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date
fair value of the award. That cost is recognized over the period during which an employee is required to provide service in exchange
for the award - the requisite service period. The grant-date fair value of employee share options is estimated using the Black-Scholes
option pricing model adjusted for the unique characteristics of those instruments. Compensation expense for warrants granted to
non-employees is determined by the fair value of the consideration received or the fair value of the equity instruments issued,
whichever is more reliably measured, and is recognized over the service period. The expense is subsequently adjusted to fair value
at the end of each reporting period until such warrants vest, and the fair value of such instruments, as adjusted, is expensed
over the related vesting period. Adjustments to fair value at each reporting date may result in income or expense, depending upon
the estimate of fair value and the amount of expense recorded prior to the adjustment. The Company reviews its agreements and
the future performance obligation with respect to the unvested warrants for its vendors or consultants. When appropriate, the
Company will expense the unvested warrants at the time when management deems the service obligation for future services has ceased. Net
Loss per Common Share Basic
net loss per common share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders
by the weighted-average number of common shares outstanding for the period, without consideration for common stock equivalents.
Diluted net loss per common share attributable to common stockholders is computed by dividing the net loss attributable to common
stockholders by the weighted-average number of common share equivalents outstanding for the period determined using the treasury-stock
method. Dilutive common stock equivalents are comprised of Class A convertible preferred stock, Series A preferred stock, restricted
stock awards, options and warrants to purchase common stock. For all periods presented, there is no difference in the number of
shares used to calculate basic and diluted shares outstanding due to the Company's net loss position. For
the three months ended September 30, 2019 and 2018, the following potentially dilutive securities were excluded from the computation
of diluted net loss per share, as the inclusion of such shares would be anti-dilutive:
Three
months ended
September 30, September 30,
Stock options 2,373,314 760,810
Common stock warrants 4,308,762 2,451,882
Total 6,682,076 3,212,692 Recent
Accounting Pronouncements In February 2016, the Financial Accounting
Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842) In
July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share Distinguishing Liabilities from Equity Derivatives and Hedging Accounting for Certain Financial Instruments with Down Round Features. |
