Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 13, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | AzurRx BioPharma, Inc. | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2020 | |
Amendment Flag | false | |
Entity Central Index Key | 0001604191 | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 30,412,100 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | DE | |
Entity File Number | 001-37853 | |
Entity Current Reporting Status | Yes | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Current Assets: | ||
Cash | $ 11,368,680 | $ 175,796 |
Other receivables | 20,688 | 2,637,303 |
Prepaid expenses | 148,604 | 595,187 |
Total Current Assets | 11,537,972 | 3,408,286 |
Property, equipment, and leasehold improvements, net | 54,070 | 77,391 |
Other Assets: | ||
Patents, net | 3,011,423 | 3,407,084 |
Goodwill | 1,968,519 | 1,886,686 |
Operating lease right-of-use assets | 104,196 | 82,386 |
Deposits | 45,841 | 41,047 |
Total Other Assets | 5,129,979 | 5,417,203 |
Total Assets | 16,722,021 | 8,902,880 |
Current Liabilities: | ||
Accounts payable and accrued expenses | 1,686,003 | 1,754,682 |
Accounts payable and accrued expenses - related party | 38,453 | 533,428 |
Notes payable | 0 | 444,364 |
Accrued Dividends Payable | 408,043 | 0 |
Convertible debt | 0 | 1,076,938 |
Other current liabilities | 492,815 | 476,224 |
Total Current Liabilities | 2,625,314 | 4,285,636 |
Other liabilities | 31,469 | 0 |
Total Liabilities | 2,656,783 | 4,285,636 |
Stockholders' Equity: | ||
Common stock - Par value $0.0001 per share; 150,000,000 shares authorized; 28,881,984 and 26,800,519 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively. | 2,888 | 2,680 |
Series B preferred stock- Par value $0.0001 per share; 5,194.805195 shares authorized; 2,878.455557 and 0 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively. | 0 | 0 |
Additional paid in capital | 93,239,704 | 68,575,851 |
Accumulated deficit | (77,965,806) | (62,694,732) |
Accumulated other comprehensive loss | (1,211,548) | (1,266,555) |
Total Stockholders' Equity | 14,065,238 | 4,617,244 |
Total Liabilities and Stockholders' Equity | $ 16,722,021 | $ 8,902,880 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Common stock shares, par value | $ .0001 | $ 0.0001 |
Common stock shares, authorized | 150,000,000 | 150,000,000 |
Common stock shares, issued | 28,881,984 | 26,800,519 |
Common stock shares, outstanding | 28,881,984 | 26,800,519 |
Preferred stock shares, par value | $ 0.0001 | $ 0 |
Preferred stock shares, authorized | 5,195 | 0 |
Preferred stock shares, issued | 2,878 | 0 |
Preferred stock shares, outstanding | 2,878 | 0 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement [Abstract] | ||||
Research and development expenses | $ 1,795,684 | $ 2,221,933 | $ 4,438,229 | $ 7,927,907 |
General and administrative expenses | 1,916,250 | 1,860,141 | 4,595,860 | 5,690,001 |
Loss from operations | (3,711,934) | (4,082,074) | (9,034,089) | (13,617,908) |
Other: | ||||
Interest expense | (1,203,404) | (110,398) | (5,838,417) | (278,155) |
Gain (Loss) on Settlement | 211,430 | 0 | 211,430 | 0 |
Gain (Loss) on Debt Extinguishment | (609,998) | 0 | (609,998) | 0 |
Total other | (1,601,972) | (110,398) | (6,236,985) | (278,155) |
Loss before income taxes | (5,313,906) | (4,192,472) | (15,271,074) | (13,896,063) |
Income taxes | 0 | 0 | 0 | 0 |
Net loss | (5,313,906) | (4,192,472) | (15,271,074) | (13,896,063) |
Other comprehensive loss: | ||||
Foreign currency translation adjustment | 108,712 | (138,241) | (55,007) | (207,034) |
Total comprehensive loss | (5,205,194) | (4,330,713) | (15,326,081) | (14,103,097) |
Net loss | (5,313,906) | (4,192,472) | (15,271,074) | (13,896,063) |
Deemed dividend of preferred stock | 8,155,212 | 0 | 8,155,212 | 0 |
Net loss applicable to common stockholders | $ (13,469,118) | $ (4,192,472) | $ (23,426,286) | $ (13,896,063) |
Basic and diluted weighted average shares outstanding | 28,518,835 | 24,962,691 | 27,828,235 | 21,080,701 |
Loss per share - basic and diluted | $ (0.47) | $ (0.17) | $ (0.84) | $ (0.66) |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity (Deficit) - USD ($) | Convertible Preferred Stock | Common Stock | Additional Paid In Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total |
Beginning balance, shares at Dec. 31, 2018 | 0 | 17,704,925 | ||||
Beginning balance, amount at Dec. 31, 2018 | $ 0 | $ 1,771 | $ 5,139,259 | $ (47,517,046) | $ (1,150,112) | $ 4,473,872 |
Common stock issued from public offerings, shares | 7,522,097 | |||||
Common stock issued from public offerings, amount | $ 752 | 9,491,265 | 9,492,017 | |||
Common stock issued to consultants, shares | 62,158 | |||||
Common stock issued to consultants, amount | $ 6 | 112,494 | 112,500 | |||
Common stock issued to Mayoly patents, shares | 775,931 | |||||
Common stock issued for warrant exercises, amount | $ 77 | 1,740,882 | 1,740,959 | |||
Stock-based compensation | 541,725 | 541,725 | ||||
Restricted stock granted to employees/directors,, shares | 90,000 | |||||
Restricted stock granted to employees/directors, amount | $ 9 | 556,879 | 556,888 | |||
Warrant modification, amount | 325,320 | 325,320 | ||||
Received from stockholder in relation to warrant modification | 61,590 | 61,590 | ||||
Foreign currency translation adjustment | (207,034) | (207,034) | ||||
Net loss | (13,896,063) | (13,896,063) | ||||
Ending balance, shares at Sep. 30, 2019 | 0 | 26,155,111 | ||||
Ending balance, amount at Sep. 30, 2019 | $ 0 | $ 2,615 | 65,969,414 | (61,413,109) | (1,357,146) | 3,201,774 |
Beginning balance, shares at Dec. 31, 2019 | 0 | 26,800,519 | ||||
Beginning balance, amount at Dec. 31, 2019 | $ 0 | $ 2,680 | 68,575,851 | (62,694,732) | (1,266,555) | 4,617,244 |
Issuance of Series B preferred stock and warrants for cash, conversion of promissory notes, net of offering costs, shares | 2,912 | |||||
Issuance of Series B preferred stock and warrants for cash, conversion of promissory notes, net of offering costs, amount | 14,460,155 | 14,460,155 | ||||
Warrants issued in connection with Series B convertible preferred stock private placement | 5,952,516 | 5,952,516 | ||||
Warrants issued as inducement to exchange promissory notes into Series B convertible preferred stock private placement | 986,526 | 986,526 | ||||
Beneficial conversion feature of Series B preferred stock | 8,155,212 | 8,155,212 | ||||
Deemed dividend of preferred stock | (8,155,212) | (8,155,212) | ||||
Accrued dividends on Series B preferred stock | (412,829) | (412,829) | ||||
Deemed dividend related to exchange of promissory notes into Series B preferred stock | (1,129,742) | (1,129,742) | ||||
Conversion of Series B preferred shares into common stock, shares | (34) | 341,274 | ||||
Conversion of Series B preferred shares into common stock, amount | $ 0 | $ 34 | (34) | |||
Issuance of common stock for accrued dividends upon conversion of Series B preferred stock, shares | 6,214 | |||||
Issuance of common stock for accrued dividends upon conversion of Series B preferred stock, amount | $ 1 | 4,785 | 4,786 | |||
Common stock issued to settle accounts payable, shares | 105,937 | |||||
Common stock issued to settle accounts payable, amount | $ 11 | 131,126 | 131,137 | |||
Common stock issued to consultants, shares | 132,841 | |||||
Common stock issued to consultants, amount | $ 13 | 109,592 | 109,605 | |||
Common stock issued to Lincoln Park for Equity Purchase Agreement, shares | 1,495,199 | |||||
Common stock issued to Lincoln Park for Equity Purchase Agreement, amount | $ 149 | 988,199 | 988,348 | |||
Warrants issued in association with convertible debt issuances | 1,252,558 | 1,252,558 | ||||
Beneficial conversion feature on convertible debt issuances | 1,838,422 | 1,838,422 | ||||
Stock-based compensation | 396,809 | 396,809 | ||||
Settlement with former chief executive officer | $ 85,770 | 85,770 | ||||
Received from stockholder in relation to warrant modification | 0 | |||||
Foreign currency translation adjustment | $ 55,007 | (55,007) | ||||
Net loss | $ (15,271,074) | (15,271,074) | ||||
Ending balance, amount at Sep. 30, 2020 | $ 14,065,238 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (15,271,074) | $ (13,896,063) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 26,556 | 51,261 |
Amortization | 395,661 | 825,063 |
Non-cash lease expense | (4,855) | (3,218) |
Common stock issued to settle accounts payable | 131,137 | 0 |
Stock-based compensation | 369,517 | 541,725 |
Restricted stock granted to employees/directors | 27,292 | 556,888 |
Common stock granted to consultants | 109,605 | 112,500 |
Accreted interest on convertible debt | 234,334 | 124,932 |
Accretion of debt discount | 4,580,167 | 147,461 |
Loss on Debt Extinguishment | (609,998) | 0 |
Gain on Settlement | 211,430 | 0 |
Beneficial conversion feature related to promissory note exchange | (798,413) | 0 |
Changes in assets and liabilities, net of effects of acquisition: | ||
Accounts receivables | (220,094) | 0 |
Other receivables | 2,121,336 | (261,981) |
Prepaid expenses | 446,766 | 420,218 |
Deposits | (4,180) | (4,125) |
Accounts payable and accrued expenses | 90,147 | 601,096 |
Accrued dividends payable | 408,043 | 0 |
Other liabilities | 31,104 | (23,274) |
Net cash used in operating activities | (5,331,557) | (10,807,517) |
Cash flows from investing activities: | ||
Purchase of property and equipment | (2,808) | (17,243) |
Net cash used in investing activities | (2,808) | (17,243) |
Cash flows from financing activities: | ||
Proceeds from issuance of notes payable, net | 179,408 | 0 |
Proceeds issuances of common stock, net | 988,348 | 9,492,016 |
Proceeds issuances of convertible debt, net | 3,227,002 | 2,000,000 |
Proceeds from issuance of preferred stock, net | 13,197,740 | 0 |
Received from stockholder in relation to warrant modification | 0 | 61,590 |
Repayments of convertible debt | (475,000) | 0 |
Repayments of notes payable | (623,772) | (255,032) |
Net cash provided by financing activities | 16,493,726 | 11,298,574 |
Increase in cash | 11,159,361 | 473,814 |
Effect of exchange rate changes on cash | 33,523 | (38,332) |
Cash, beginning balance | 175,796 | 1,114,343 |
Cash, ending balance | 11,368,680 | 1,549,825 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 105,460 | 5,762 |
Non-cash investing and financing activities: | ||
Common stock issued for patents purchased from Mayoly | 0 | 1,740,959 |
Warrant modification related to convertible debt issuance | 0 | 325,320 |
Deemed dividend on preferred stock | 8,155,212 | 0 |
Accrued dividends on preferred stock | 408,043 | 0 |
Exchange of promissory notes into preferred stock and warrants | $ 609,998 | $ 0 |
The Company and Basis of Presen
The Company and Basis of Presentation | 9 Months Ended |
Sep. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
The Company and Basis of Presentation | Description of Business AzurRx BioPharma, Inc. (“ AzurRx Parent ABS Company The Company is engaged in the research and development of non-systemic biologics for the treatment of patients with gastrointestinal disorders. Non-systemic biologics are non-absorbable drugs that act locally, i.e. the intestinal lumen, skin or mucosa, without reaching an individual’s systemic circulation. The Company is currently focused on developing its lead drug candidate, MS1819, EPI CF CP Yarrowia lipolytica The Company is currently conducting two Phase 2 clinical trials of MS1819: the OPTION 2 monotherapy trial in the U.S. and Europe, and the Combination therapy trial in Europe, consisting of MS1819 in conjunction with porcine-derived pancreatic enzyme replacement therapy, the current standard of care. Basis of Presentation and Principles of Consolidation The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“ U.S. GAAP (“SEC” The unaudited interim consolidated financial statements include the accounts of AzurRx and its wholly-owned subsidiary, AzurRx SAS. Intercompany transactions and balances have been eliminated upon consolidation. Going Concern Uncertainty The accompanying unaudited interim consolidated financial statements have been prepared as if the Company will continue as a going concern. The Company has incurred significant operating losses and negative cash flows from operations since inception and had an accumulated deficit of approximately $78.0 million at September 30, 2020. The Company is dependent on obtaining, and continues to pursue, additional working capital funding from the sale of securities and debt in order to continue to execute its development plan and continue operations. Without adequate working capital, the Company may not be able to meet its obligations and continue as a going concern. These conditions raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our primary sources of liquidity come from capital raises through additional equity and/or debt financings. This may be impacted by the novel coronavirus (" COVID-19 |
Significant Accounting Policies
Significant Accounting Policies and Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies and Recent Accounting Pronouncements | Use of Estimates The accompanying unaudited consolidated financial statements are prepared in conformity with U.S. GAAP and include certain estimates and assumptions which affect the reported amounts of assets and liabilities at the date of the financial statements (including goodwill, intangible assets and contingent consideration), and the reported amounts of revenues and expenses during the reporting period, including contingencies. Accordingly, actual results may differ from those estimates. Cash and Cash Equivalents The Company considers all highly liquid investments with maturities of three months or less from date of purchase to be cash equivalents. All cash balances were highly liquid at September 30, 2020 and December 31, 2019, respectively. Concentrations of Credit Risk Financial instruments that potentially expose the Company to concentrations of credit risk consist of cash. The Company primarily maintains its cash balances with financial institutions in federally insured accounts in the U.S. The Company may from time to time have cash in banks in excess of FDIC insurance limits. At September 30, 2020 and December 31, 2019, the Company had approximately $11.1 million and $0, respectively, in one account in the U.S. in excess of these limits. The Company has not experienced any losses to date resulting from this practice. The Company mitigates its risk by maintaining the majority of its cash and cash equivalents with high quality financial institutions. The Company also has exposure to foreign currency risk as its subsidiary in France has a functional currency in Euros. Debt Instruments Detachable warrants issued in conjunction with debt are measured at their relative fair value, if they are determined to be equity instrument, or their fair value, if they are determined to be liability instruments, and recorded as a debt discount. Conversion features that are in the money at the commitment date constitute a beneficial conversion feature that is measured at its intrinsic value and recognized as debt discount. Debt discount is amortized as interest expense over the maturity period of the debt using the effective interest method. Contingent beneficial conversion features are recognized when the contingency has been resolved. Debt Issuance Costs Debt issuance costs are recorded as a direct reduction of the carrying amount of the related debt. Debt issuance costs are amortized over the maturity period of the related debt instrument using the effective interest method. Equity-Based Payments to Non-Employees Equity-based payments to non-employees are measured at fair value on the grant date per ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting. Fair Value Measurements The Company follows Accounting Standards Codification (“ASC” (“ASC 820” As a basis for considering such assumptions, a three-tier fair value hierarchy has been established, which prioritizes the inputs used in measuring fair value as follows: Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions, which reflect those that a market participant would use. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the overall fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument. The Company recognizes transfers between levels as if the transfers occurred on the last day of the reporting period. Foreign Currency Translation For foreign subsidiaries with operations denominated in a foreign currency, assets and liabilities are translated to U.S. dollars, which is the functional currency, at period end exchange rates. Income and expense items are translated at average rates of exchange prevailing during the periods presented. Gains and losses from translation adjustments are accumulated in a separate component of stockholders’ equity. Goodwill and Intangible Assets Goodwill represents the excess of the purchase price of the acquired business over the fair value of amounts assigned to assets acquired and liabilities assumed. Goodwill and other intangible assets with indefinite useful lives are reviewed for impairment annually or more frequently if events or circumstances indicate impairment may be present. Any excess in carrying value over the estimated fair value is charged to results of operations. The Company has not recognized any impairment charges through September 30, 2020. Intangible assets subject to amortization consist of in process research and development, license agreements, and patents reported at the fair value at date of the acquisition less accumulated amortization. Amortization expense is provided using the straight-line method over the estimated useful lives of the assets as follows: Patents 7.2 years In Process Research & Development 12 years License Agreements 5 years Impairment of Long-Lived Assets The Company periodically evaluates its long-lived assets for potential impairment in accordance with ASC Topic 360, Property, Plant and Equipment (“ASC 360” Income Taxes Income taxes are recorded in accordance with ASC 740, Accounting for Income Taxes (“ASC 740” The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. At September 30, 2020 and December 31, 2019, the Company does not have any significant uncertain tax positions. All tax years are still open for audit. Leases Effective January 1, 2019, the Company adopted Accounting Standards Update ( “ASU” Research and Development Research and development (“ R&D Stock-Based Compensation The Company’s board of directors (the “ Board 2014 Plan 2020 Plan ASC 718 For awards with performance conditions that affect their vesting, such as the occurrence of certain transactions or the achievement of certain operating or financial milestones, recognition of fair value of the award occurs when vesting becomes probable. The Company estimates the grant date fair value of stock option awards using the Black-Scholes option-pricing model. The use of the Black-Scholes option-pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the Common Stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the Common Stock. Sublicense Agreement As more fully discussed in Note 14, the Company entered into a sublicense agreement with TransChem, Inc. (“ TransChem Subsequent Events The Company considered events or transactions occurring after the balance sheet date but prior to the date the consolidated financial statements are available to be issued for potential recognition or disclosure in its consolidated financial statements. Recent Accounting Pronouncements In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other, Simplifying the Accounting for Goodwill Impairment. ASU 2017-04 removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance will remain largely unchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. This new guidance will be applied prospectively and is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. This ASU, which the Company adopted as of January 1, 2020, did not have a material effect on the Company’s consolidated financial statements. In August 2020, the Financial Accounting Standards Board (“FASB”) issued an accounting pronouncement (ASU 2020-06) related to the measurement and disclosure requirements for convertible instruments and contracts in an entity's own equity. The pronouncement simplifies and adds disclosure requirements for the accounting and measurement of convertible instruments and the settlement assessment for contracts in an entity's own equity. As a smaller reporting company, as defined by the SEC, this pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2023. The Company is currently evaluating the impact of this ASU on the financial statements. |
Fair Value Disclosures
Fair Value Disclosures | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Disclosures | Fair value is the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date. U.S. GAAP establishes a hierarchical disclosure framework that prioritizes and ranks the level of observability of inputs used in measuring fair value. The fair value of the Company's financial instruments are as follows: Fair Value Measured a Reporting Date Using Carrying Amount Level 1 Level 2 Level 3 Fair Value At September 30, 2020: Cash $ 11,368,680 $ $ 11,368,680 $ $ 11,368,680 Other receivables $ 20,688 $ $ 20,688 $ 20,688 At December 31, 2019: Cash $ 175,796 $ - $ 175,796 $ - $ 175,796 Other receivables $ 2,637,303 $ - $ - $ 2,637,303 $ 2,637,303 Note payable $ 444,364 $ - $ - $ 444,364 $ 444,364 Convertible debt $ 1,076,938 $ - $ - $ 1,076,938 $ 1,076,938 At September 30, 2020, the fair value of other receivables approximates carrying value as these consist primarily of refundable tax credits. At December 31, 2019, the fair value of other receivables approximates carrying value as these consist primarily of French R&D tax credits that are normally received the following year. The fair value of the note payable in connection with the financing of directors and officer’s liability insurance approximates carrying value due to the terms of such instruments and applicable interest rates. The convertible debt is based on its fair value less unamortized debt discount plus accrued interest through the date of reporting (see Note 9). |
Other Receivables
Other Receivables | 9 Months Ended |
Sep. 30, 2020 | |
Receivables [Abstract] | |
Other Receivables | Other receivables consisted of the following: September 30, December 31, 2020 2019 R&D tax credits $ - $ 2,566,281 Other 20,688 71,022 Total other receivables $ 20,688 $ 2,637,303 At September 30, 2020, the R&D tax credits were comprised of a portion of the 2019 refundable tax credits for research conducted in France. At December 31, 2019, the R&D tax credits were comprised of the 2017, 2018, and 2019 refundable tax credits for research conducted in France. In the nine months ended September 30, 2020, the Company received both the 2017 and 2018 and partial 2019 refundable tax credits totaling approximately $2,289,096. At December 31, 2019, Other consisted of amounts due from U.S. R&D tax credits. |
Property, Equipment, and Leaseh
Property, Equipment, and Leasehold Improvements | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property, Equipment, and Leasehold Improvements | Property, equipment and leasehold improvements consisted of the following: S eptember 30, December 31, 2020 2019 Laboratory equipment $ 193,661 $ 193,661 Computer equipment 77,850 74,836 Office equipment 36,703 36,703 Leasehold improvements 29,162 35,711 Total property, plant and equipment 337,376 340,911 Less accumulated depreciation (283,306 ) (263,520 ) Property, plant and equipment, net $ 54,070 $ 77,391 Depreciation expense for the three months ended September 30, 2020 and 2019 was $8,188 and $17,220, respectively. Depreciation expense for the nine months ended September 30, 2020 and 2019 was $26,556 and $51,261, respectively. For the three months ended September 30, 2020, $4,881 of depreciation is included in R&D expense and $3,307 of depreciation is included in G&A expense. For the nine months ended September 30, 2020, $14,372 of depreciation is included in R&D expense and $12,184 of depreciation is included in G&A expense. For the three months ended September 30, 2019, $11,842 of depreciation has been reclassified to R&D expense and $5,149 of depreciation remains in G&A expense. For the nine months ended September 30, 2019, $35,442 of depreciation is included in R&D expense and $15,343 of depreciation is included in G&A expense. |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets and Goodwill | Patents Pursuant to the Mayoly APA entered into on March 27, 2019, in which the Company purchased all rights, title and interest in and to MS1819 (see Note 14), the Company recorded Patents in the amount of $3,802,745 as follows: Common stock issued at signing to Mayoly $ 1,740,959 Due to Mayoly at 12/31/19 - €400,000 449,280 Due to Mayoly at 12/31/20 - €350,000 393,120 Assumed Mayoly liabilities and forgiveness of Mayoly debt 1,219,386 $ 3,802,745 Intangible assets are as follows: September 30, December 31, 2020 2019 Patents $ 3,802,745 $ 3,802,745 Less accumulated amortization (791,322 ) (395,661 ) Patents, net $ 3,011,423 $ 3,407,084 Amortization expense for the three months ended September 30, 2020 and 2019 was $131,887 and $131,887, respectively. Amortization expense for the nine months ended September 30, 2020 and 2019 was $395,661 and $825,063, respectively. Amortization expense for the nine months ended September 30, 2019 included $384,234 from In process research and development and License agreements written off as a result of the Mayoly APA. As of September 30, 2020, amortization expense related to patents is expected to be as follows for the next five years (2020 through 2025): 2020 (balance of year) $ 395,661 2021 527,548 2022 527,548 2023 527,548 2024 527,548 2025 527,548 Goodwill is as follows: Goodwill Balance at January 1, 2019 $ 1,924,830 Foreign currency translation (38,144 ) Balance at December 31, 2019 1,886,686 Foreign currency translation 81,833 Balance at September 30, 2020 $ 1,968,519 |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 9 Months Ended |
Sep. 30, 2020 | |
Payables and Accruals [Abstract] | |
Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses consisted of the following: September 30, December 31, 2020 2019 Trade payables $ 1,422,066 $ 1,683,505 Accrued expenses 263,937 71,177 Total accounts payable and accrued expenses $ 1,686,003 $ 1,754,682 At September 30, 2020, and December 31, 2019, trade payables included $0, and $1,683,505, respectively, due to related parties. |
Notes Payable
Notes Payable | 9 Months Ended |
Sep. 30, 2020 | |
Notes Payable [Abstract] | |
Notes Payable | Directors and Officer’s Liability Insurance On December 5, 2019, the Company entered into a 9-month financing agreement for its directors and officer’s liability insurance in the amount of $498,783 that bears interest at an annual rate of 5.461%. Monthly payments, including principal and interest, are $56,689 per month. The balance due under this financing agreement at September 30, 2020 was $0. CARES ACT PPP Loan In April 2020, the Company applied for and received a CARES Act Paycheck Protection Program (“PPP”) loan of $179,418 through the Small Business Administration (SBA). In May 2020, the Company returned the loan of $179,418 after analysis of the updated guidance from the U.S. Department of Treasury and the SBA regarding the eligibility for such loans. |
Convertible Notes
Convertible Notes | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Convertible Notes | ADEC Notes On February 14, 2019, the Company entered into a Note Purchase Agreement (the “ADEC NPA” “ADEC” “Note A” “Note B,” “ADEC Note,” “ADEC Notes” ADEC Note Offering The ADEC Notes accrued interest at a rate of 10% per annum; provided, however, that in the event the Company should elect to repay the full balance due under the terms of both ADEC Notes prior to December 31, 2019, then the interest rate would be reduced to 6% per annum. Interest would be payable at the time all outstanding principal amounts owed under each ADEC Note were repaid. The ADEC Notes were scheduled to mature on the earlier to occur of (i) the tenth business day following the receipt by ABS of certain tax credits that the Company expects to receive prior to July 2019 in the case of Note A (the “2019 Tax Credit” “2020 Tax Credit” “Maturity Dates” Each of the ADEC Notes was convertible, at ADEC’s option, into shares of Common Stock, at a conversion price equal to $2.50 per share; provided, however, that pursuant to the term of the ADEC Notes, ADEC could not convert all or a portion of the ADEC Notes if such conversion would result in the significant stockholder and/or entities affiliated with him beneficially owning in excess of 19.99% of the shares of Common Stock issued and outstanding immediately after giving effect to the issuance of the shares issuable upon conversion of the ADEC Notes (the “ ADEC Note Conversion Shares As additional consideration for entering into the ADEC NPA, the Company entered into a warrant amendment agreement, whereby the Company agreed to reduce the exercise price of 1,009,565 outstanding warrants previously issued by the Company to ADEC and its affiliates (the “ADEC Warrants” ADEC Warrant Amendment In December 2019, the Company repaid $1,550,000 principal amount of the ADEC Notes and on January 2, 2020 repaid the remaining principal balance of $450,000 plus outstanding accrued interest of $104,153. As of September 30, 2020, no ADEC Notes were outstanding. Senior Convertible Promissory Note Offering On December 20, 2019, the Company began an offering of (i) Senior Convertible Promissory Notes (each a “ Promissory Note Promissory Notes Note Investors Note Warrants Promissory Promissory Note Offering In December 2019, the Company issued Promissory Notes to the Note Investors in the aggregate principal amount of $3,386,300. The Promissory Notes were scheduled to mature on September 20, 2020, accrue interest at a rate of 9% per annum, and were convertible, at the sole option of the holder, into shares of Common Stock (the “ Promissory Note Conversion Shares Conversion Option Prepayment Option On January 2, 2020, January 3, 2020, and January 9, 2020, the Company issued Promissory Notes to the Note Investors in the aggregate principal amount of $3,517,700. As additional consideration for the execution of the Promissory NPA, each Note Investor also received Note Warrants to purchase that number of shares of Common Stock equal to one-half (50%) of the Promissory Note Conversion Shares issuable upon conversion of the Promissory Notes (the “ Note Warrant Shares RRA In connection with the four closings in December 2019 of the Promissory January Placement Agent Warrants In connection with the three closings in January 2020 of the Promissory The Company determined the Prepayment Option feature represents a contingent call option. The Company evaluated the Prepayment Option in accordance with ASC 815-15-25. The Company determined that the Prepayment Option feature is clearly and closely related to the debt host instrument and is not an embedded derivative requiring bifurcation. Additionally, the Company determined the Conversion Option represents an embedded call option. The Company evaluated the Conversion Option in accordance with ASC 815-15-25. The Company determined that the Conversion Option feature meets the scope exception from ASC 815 and is not an embedded derivative requiring bifurcation. The Company evaluated the Promissory Notes for a beneficial conversion feature in accordance with ASC 470-20. The Company determined that at each commitment date the effective conversion price was below the closing stock price (market value), and the Convertible Notes contained a beneficial conversion feature. Pursuant to the December 2019 closings of the Promissory Note Offering, the principal amount of $3,386,300 was first allocated based on the relative fair value of the Promissory Notes and the Note Warrants. The fair value of the Note Warrants amounted to $912,648. Then the beneficial conversion feature was calculated, which amounted to $1,359,284. The Company incurred debt issuance costs of $588,017 related to the offering. The initial carrying value of the Promissory Notes issued amounted to $526,351. Pursuant to the January 2020 closings of the Promissory Note Offering, the principal amount of $3,517,700 was first allocated based on the relative fair value of the Promissory Notes and the Note Warrants. The fair value of the Note Warrants amounted to $2,439,272. Then the beneficial conversion feature was calculated, which amounted to $1,838,422. The Company incurred debt issuance costs of $472,326 related to the offering. The initial carrying value of the Promissory Notes issued amounted to $128,524. On June 1, 2020, the Company entered into an amendment to a certain Promissory Note in the principal amount of $100,000 issued on December 20, 2019 to Edward J. Borkowski, the chairman of the Board, to increase the Conversion Price to $1.07 per share (the “ Note Amendment During the three months ended September 30, 2020, the Company recognized $404,222 of interest expense related to these Promissory Notes, including amortization of debt discount related to the value of the Note Warrants of $120,165, amortization of the beneficial conversion feature of $193,555, amortization of debt discount related to debt issuance costs of $63,264, and accrued interest expense of $27,238. During the nine months ended September 30, 2020, the Company recognized $4,912,396 of interest expense related to these Promissory Notes, including amortization of debt discount related to the value of the Note Warrants of $1,461,728, amortization of the beneficial conversion feature of $2,347,763, amortization of debt discount related to debt issuance costs of $771,675, and accrued interest expense of $332,230. Exchange of Promissory Notes into Series B Convertible Preferred Stock As more fully discussed in Note 11, on July 16, 2020, in connection with the Series B Private Placement, 937.004177 shares of Series B Preferred Stock, Series B Warrants to purchase 4,684,991 shares of Common Stock, and Exchange Warrants to purchase 1,772,937 shares of Common Stock were issued to certain holders of the Promissory Notes in exchange for such Promissory Notes for aggregate consideration of approximately $7.2 million consisting of approximately $6.9 million aggregate outstanding principal amount, together with accrued and unpaid interest thereon through the date of the Series B Private Placement of approximately $0.3 million. The Company prepaid the remaining outstanding balance of $25,000 aggregate principal amount of Promissory Notes, together with accrued and unpaid interest thereon through the prepayment date of $1,307, held by those holders who did not participate in the Exchange. Following these transactions, no Promissory Notes remain outstanding. Accounting for the Exchange of Promissory Notes into Series B Private Placement The Company determined the Exchange of the Promissory Notes into Series B Preferred Stock and related warrants should be recognized as an extinguishment of the Promissory Notes which resulted in a loss on extinguishment of approximately $0.6 million. Additionally, the Company recorded interest expense of approximately $0.8 million related to the remaining unamortized discount resulting from initial beneficial conversion feature of the Promissory Notes on closing date of the Exchange. Convertible Debt consisted of: Total Promissory Notes ADEC Notes Total September 30, September 30, September 30, December 31, 2020 2020 2020 2019 Convertible debt $ - $ - $ - $ 3,836,300 Unamortized debt discount - revalued warrants - - - (118,356 ) Unamortized debt discount - warrants - - - (878,979 ) Unamortized debt discount - BCF - - - (1,307,755 ) Unamortized debt discount - debt issuance costs - - - (566,815 ) Accrued interest - - - 112,543 Total convertible debt $ - $ - $ - $ 1,076,938 |
Other Liabilities
Other Liabilities | 9 Months Ended |
Sep. 30, 2020 | |
Other Liabilities [Abstract] | |
Other Liabilities | Other liabilities consisted of the following: September 30, December 31, Current 2020 2019 Due to Mayoly $ 410,026 $ 392,989 Lease liabilities 74,156 83,235 Other liabilities 8,633 - $ 492,815 $ 476,224 September 30, December 31, Long-term 2020 2019 Lease liabilities 31,469 - $ 31,469 $ - |
Equity
Equity | 9 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Equity | Our certificate of incorporation, as amended and restated on December 20, 2019 (the “ Charter On December 19, 2019, the Company held its Annual Meeting of Stockholders (the “ 2019 Annual Meeting Reverse Split Common Stock The Company had 28,881,984 and 26,800,519 shares of its Common Stock issued and outstanding at September 30, 2020 and December 31, 2019, respectively. Each holder of Common Stock is entitled to one vote for each share of Common Stock held on all matters submitted to a vote of the stockholders. Our Charter and Amended and Restated Bylaws (the “ Bylaws In addition, the holders of our Common Stock will be entitled to receive ratably such dividends, if any, as may be declared by the Board out of legally available funds; however, the current policy of our Board is to retain earnings, if any, for operations and growth. Upon liquidation, dissolution or winding-up, the holders of our Common Stock will be entitled to share ratably in all assets that are legally available for distribution. Holders of our Common Stock have no preemptive, conversion or subscription rights, and there are no redemption or sinking fund provisions applicable to the Common Stock. The rights, preferences and privileges of the holders of Common Stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of our preferred stock that we may designate and issue in the future. Preferred Stock We have 10,000,000 shares of preferred stock, par value $0.0001 per share, authorized and available for issuance in one or more series. The Board is authorized to divide the preferred stock into any number of series, fix the designation and number of each such series, and determine or change the designation, relative rights, preferences, and limitations of any series of preferred stock. The Board of may increase or decrease the number of shares initially fixed for any series, but no decrease may reduce the number below the shares then outstanding and duly reserved for issuance. On July 16, 2020, we authorized 5,194.805195 shares as Series B Preferred Stock and issued 2,912.583005 shares of Series B Preferred Stock, with 2,282.222190 shares of Series B Preferred Stock remaining authorized but unissued. Following such transactions, we currently have 2,912.583005 shares of preferred stock issued and outstanding with 9,997,087.416995 shares of preferred stock remaining authorized but unissued. Series B Convertible Preferred Stock Pursuant to the Certificate of Designation of Rights and Preferences of the Series B Preferred Stock (the “ Series B Certificate of Designation Ranking The Series B Preferred Stock will rank senior to the Common Stock with respect to distributions of assets upon the liquidation, dissolution or winding up of the Company. Stated Value Each share of Series B Preferred Stock has a stated value of $7,700, subject to adjustment for stock splits, combinations and similar events (the “ Series B Stated Value Dividends Each holder of shares of Series B Preferred Stock, in preference and priority to the holders of all other classes or series of stock of the Company, is entitled to receive dividends, commencing from the date of issuance. Such dividends may be paid by the Company only when, as and if declared by the Board, out of assets legally available therefor, semiannually in arrears on the last day of June and December in each year, commencing December 31, 2020, at the dividend rate of 9.0% per year, which is cumulative and continues to accrue on a daily basis whether or not declared and whether or not the Company has assets legally available therefor. The Company may pay such dividends at its option either in cash or in kind in additional shares of Series B Preferred Stock (rounded down to the nearest whole share), provided the Company must pay in cash the fair value of any such fractional shares in excess of $100.00. At September 30, 2020 the dividend payable to the holders of the Series B Preferred Stock aggregated to approximately $408,043. Liquidation Preference; Liquidation Rights Under the Certificate of Designations, each share of Series B Preferred Stock carries a liquidation preference equal to the Series B Stated Value (as adjusted thereunder) plus accrued and unpaid dividends thereon (the “ Liquidation Preference If the Company voluntarily or involuntarily liquidates, dissolves or winds up its affairs, each holder of the Series B Preferred Stock will be entitled to receive out of the Company’s assets available for distribution to stockholders, after satisfaction of liabilities to creditors, if any, but before any distribution of assets is made on the Common Stock or any of the Company’s shares of stock ranking junior as to such a distribution to the Series B Preferred Stock, a liquidating distribution in the amount of the Stated Value of all such holder’s Series B Preferred Stock plus all accrued and unpaid dividends thereon. At September 30, 2020, the value of the liquidation preference of the Series B Preferred stocks aggregated to approximately $22.6 million. Conversion Each share of Series B Preferred Stock will be convertible at the holder’s option at any time, into Common Stock at a conversion rate equal to the quotient of (i) the Series B Stated Value divided by (ii) the initial conversion price of $0.77, subject to specified adjustments for stock splits, cash or stock dividends, reorganizations, reclassifications other similar events as set forth in the Series B Certificate of Designations. In addition, at any time after the six month anniversary of the Series B Closing Date, if the closing sale price per share of Common Stock exceeds 250% of the initial conversion price, or $1.925, for 20 consecutive trading days, then all of the outstanding shares of Series B Preferred Stock will automatically convert (the “ Automatic Conversion Most Favored Nations Exchange Right In the event the Company effects any issuance by the Company or any of its subsidiaries of Common Stock or Common Stock equivalents for cash consideration, or a combination of units thereof (a “ Subsequent Financing Voting The holders of the Series B Preferred Stock, voting as a separate class, will have customary consent rights with respect to certain corporate actions of the Company. The Company may not take the following actions without the prior consent of the holders of at least a majority of the Series B Preferred Stock then outstanding: (a) authorize, create, designate, establish, issue or sell an increased number of shares of Series B Preferred Stock or any other class or series of capital stock ranking senior to or on parity with the Series B Preferred Stock as to dividends or upon liquidation; (b) reclassify any shares of Common Stock or any other class or series of capital stock into shares having any preference or priority as to dividends or upon liquidation superior to or on parity with any such preference or priority of Series B Preferred Stock; (c) amend, alter or repeal the Certificate of Incorporation or Bylaws of the Company and the powers, preferences, privileges, relative, participating, optional and other special rights and qualifications, limitations and restrictions thereof, which would adversely affect any right, preference, privilege or voting power of the Series B Preferred Stock; (d) issue any indebtedness or debt security, other than trade accounts payable, insurance premium financings and/or letters of credit, performance bonds or other similar credit support incurred in the ordinary course of business, or amend, renew, increase, or otherwise alter in any material respect the terms of any such indebtedness existing as of the date of first issuance of shares of Series B Preferred Stock; (e) redeem, purchase, or otherwise acquire or pay or declare any dividend or other distribution on (or pay into or set aside for a sinking fund for any such purpose) any capital stock of the Company; (f) declare bankruptcy, dissolve, liquidate, or wind up the affairs of the Company; (g) effect, or enter into any agreement to effect, a Change of Control (as defined in the Certificate of Designations); or (h) materially modify or change the nature of the Company’s business. 2014 Equity Incentive Plan The Company’s Board and stockholders adopted and approved the Amended and Restated 2014 Omnibus Equity Incentive Plan (the “ 2014 Plan The 2014 Plan allowed for the issuance of securities, including stock options to employees, Board members and consultants. The number of shares of Common Stock reserved for issuance under the 2014 Plan could not exceed ten percent (10%) of the issued and outstanding shares of Common Stock on an as converted basis (the “ As Converted Shares On July 16, 2020, the Board approved an amendment to the 2014 Plan. The amendment eliminates individual grant limits under the 2014 Plan that were intended to comply with the exemption for “performance-based compensation” under Section 162(m) of the Internal Revenue Code, which section has been repealed. The Company issued an aggregate of 795,006 and 0 stock options, during the nine months ended September 30, 2020 and 2019, respectively, under the 2014 Plan (see Note 13). Upon adoption of the 2020 Omnibus Equity Incentive Plan on September 11, 2020, the Company will no longer make grants under the 2014 Plan. 2020 Equity Incentive Plan The Company’s Board and stockholders adopted and approved the 2020 Omnibus Equity Incentive Plan (the “ 2020 Plan SOs As of September 30, 2020, no grants were issued under the 2020 Plan and an aggregate of 10,000,000 total shares are available under the 2020 Plan. Equity Line with Lincoln Park On November 13, 2019, the Company entered into a purchase agreement (the “ Equity Line Agreement Lincoln Park Registration Rights Agreement Equity Line Commitment Shares Under the Equity Line Agreement, on any business day over the term of the Equity Line Agreement, the Company has the right, in its sole discretion, to present Lincoln Park with a purchase notice (each, a “ Purchase Notice Regular Purchase Purchase Price ● the lowest sale price of Common Stock on the purchase date; and; ● the average of the three lowest closing sale prices for the Common Stock during the ten consecutive business days ending on the business day immediately preceding the purchase date of such shares; In addition, on any date on which the Company submits a Purchase Notice to Lincoln Park, the Company also has the right, in its sole discretion, to present Lincoln Park with an accelerated purchase notice (each, an “ Accelerated Purchase Notice Accelerated Purchase Accelerated Purchase Measurement Period ● 97% of the volume weighted average price of the Company’s common stock during the applicable Accelerated Purchase Measurement Period on the applicable Accelerated Purchase date; and ● the closing sale price of Common Stock on the applicable Accelerated Purchase Date. The Company may also direct Lincoln Park on any business day on which an Accelerated Purchase has been completed and all of the shares to be purchased thereunder have been properly delivered to Lincoln Park in accordance with the Equity Line Agreement, to purchase an amount of stock (the “ Additional Accelerated Purchase Additional Accelerated Purchase Measurement Period ● 97% of the volume weighted average price of the Company’s common stock during the applicable Additional Accelerated Purchase Measurement Period on the applicable Additional Accelerated Purchase date; and ● the closing sale price of Common Stock on the applicable Additional Accelerated Purchase. During the three and nine months ended September 30, 2020, the Company issued an aggregate of 0, and 1,495,199 shares of Common Stock, respectively, in connection with the Equity Line Agreement, resulting in net proceeds to the Company of approximately $0, and $988,348, respectively. Pursuant to the terms of the Equity Line Agreement, without first obtaining stockholder approval, the aggregate number of shares that the Company is permitted to sell to Lincoln Park thereunder, when aggregated with certain other private offerings of Common Stock, as applicable, may not exceed 19.99% of the Common Stock outstanding immediately prior to the execution of the Equity Line Agreement on November 13, 2019, unless the average price of all applicable sales thereunder exceeds $0.70 per share calculated by reference to the “Minimum Price” under Nasdaq Listing Rule 5635(d). On September 11, 2020, the Company received stockholder approval for the issuances of the full $15 million available under the Equity Line Agreement. Generally, there is approximately $14 million of availability left for issuance pursuant to the Equity Line Agreement. Common Stock Issuances During the three months ended September 30, 2020, holders of shares of Series B Preferred Stock converted 34.127448 shares of Series B Preferred Stock into an aggregate of 341,274 shares of Common Stock at the stated conversion price of $0.77 per share, plus the issuance of 4,610 shares of Common Stock for accrued dividends of $3,551 through such conversion dates. During the three months ended September 30, 2020, the Company issued an aggregate of 31,646 shares of its Common Stock to consultants with a total grant date fair value of approximately $25,000 for investor relations services provided, which was recorded as stock-based compensation and included as part of general and administrative expense. During the nine months ended September 30, 2020, the Company issued an aggregate of 132,841 shares of its Common Stock to consultants with a total grant date fair value of approximately $112,105 for investor relations services provided, which was recorded was recorded as stock-based compensation and included as part of general and administrative expense. During the nine months ended September 30, 2020, the Company issued an aggregate of 105,937 shares of its Common Stock to outside Board members as payment of Board fees with an aggregate grant date fair value of approximately $131,137 that was recorded as stock-based compensation, included as part of general and administrative expense. The aggregate effective settlement price was $1.24 per share, and each individual stock issuance was based on the closing stock price of the Common Stock on the initial date the payable was accrued. During the three and nine months ended September 30, 2019, the Company issued 21,677 and 62,518 shares of Common Stock, respectively, to a consultant as payment of $22,500 and $112,500, respectively, of accounts payable related to investor relations services. During the three and nine months ended September 30, 2019, the Company issued an aggregate of 0 and 60,000 shares of its Common Stock, respectively, to outside Board members as payment of Board fees with an aggregate grant date fair value of approximately $0 and $123,000, respectively that was recorded as stock-based compensation, included as part of general and administrative expense. During the period from April 6, 2020 through May 22, 2020, the Company sold an aggregate of 1,345,199 shares of Common Stock pursuant to the Equity Line, from which the Company derived approximately $869,000 in net proceeds. The sales of these shares were exempt from registration under the Securities Act of 1933, as amended, in reliance upon Section 4(a)(2) (or Regulation D promulgated thereunder). Restricted Stock and Restricted Stock Units Restricted stock refers to shares of Common Stock subject to vesting based on certain service, performance, and market conditions. Restricted stock unit awards (“ RSUs During the three months ended September 30, 2020, an aggregate of 1,746 unvested restricted shares of Common Stock, subject to service conditions, vested with a total grant date fair value of approximately $6,289 and was recorded as stock-based compensation, included as part of general and administrative expense. During the nine months ended September 30, 2020, an aggregate of 10,080 unvested restricted shares of Common Stock, subject to service conditions, vested with a total grant date fair value of approximately $36,289 and was recorded as stock-based compensation, included as part of general and administrative expense. During the three and nine months ended September 30, 2020, an aggregate of 0, and 4,000 unvested restricted shares of Common Stock were forfeited, respectively. During the three months ended September 30, 2019, the Company issued 21,677 restricted shares of Common Stock to a consultant as payment of $22,500 of accounts payable for investor relations services. During the nine months ended September 30, 2019, the Company issued 62,518 shares of Common Stock to a consultant as payment of $112,500 of accounts payable for investor relations services. During the three months ended September 30, 2019, an aggregate of 43,750 unvested restricted shares of Common Stock vested with a total grant date fair value of approximately $63,434. 13,750 of these restricted shares vested during the three months ended September 30, 2019 due to the terms of such grants with a total grant date fair value of approximately $44,834. 30,000 of these restricted shares were issued during the three months ended September 30, 2019 to our directors as a part of Board compensation with a total grant date fair value of approximately $18,600. During the nine months ended September 30, 2019, an aggregate of 223,417 unvested restricted shares of Common Stock vested with a total grant date fair value of approximately $556,888. 33,334 of these restricted shares with a total grant date fair value of approximately $101,335 vested during the nine months ended September 30, 2019 due to the Company achieving certain clinical milestones. 41,250 of these restricted shares with a total grant date fair value of approximately $134,501 vested during the nine months ended September 30, 2019 due to the satisfaction of service conditions 30,000 of these restricted shares were issued during the three months ended September 30, 2019 to our directors as a part of Board compensation with a total grant date fair value of approximately $142,200. As of September 30, 2020, the Company had unrecognized restricted common stock expense of approximately $393,250. Approximately $196,625 of this unrecognized expense vests upon the first commercial sale in the United States of MS1819 and approximately $196,625 of this unrecognized expense vests upon the total market capitalization of the Company exceeding $1.0 billion for 20 consecutive trading days. These milestones were not considered probable at September 30, 2020. The Series B Private Placement and the Exchange On July 16, 2020 (the “ Series B Closing Date Series B Private Placement Series B Purchase Agreement Series B Investors Series B Preferred Stock Series B Warrants In connection with the Series B Private Placement, an aggregate of 1,975.578828 shares of Series B Preferred Stock initially convertible into 19,755,748 shares of Common Stock and related 9,877,835 Series B Warrants were issued for cash consideration, resulting in aggregate gross proceeds of approximately $15.2 million and aggregate net proceeds to the Company of approximately $13.2 million after deducting placement agent compensation and offering expenses. An aggregate of 937.004177 shares of Series B Preferred Stock initially convertible into 9,370,008 shares of Common Stock and related Series B Warrants to purchase 4,684,991 shares of Common Stock were issued to certain Series B Investors (the “ Exchange Investors Promissory Notes Exchange Exchange Addendum Exchange Warrants Pursuant to the Series B Private Placement and the Series B Purchase Agreement, for purposes of complying with Nasdaq Listing Rule 5635(c) and 5635(d), the Company was required to hold a meeting of its stockholders not later than 60 days following the Series B Closing Date to seek approval (the “ Stockholder Approval The Company prepaid the remaining outstanding balance of $25,000 aggregate principal amount of Promissory Notes, together with accrued and unpaid interest thereon through the prepayment date of $1,307, held by those holders who did not participate in the Exchange. Following these transactions, no Promissory Notes remain outstanding. In connection with the Series B Private Placement, the Company paid the placement agent 9.0% of the gross cash proceeds received by the Company from investors introduced by the placement agent and 4.0% of the gross cash proceeds received by the Company for all other investors, or approximately $1.3 million. The Company also paid the placement agent a non-accountable cash fee equal to 1.0% of the gross cash proceeds and a cash financial advisory fee equal to 3.0% of the outstanding principal balance of the Promissory Notes that were submitted in the Exchange, or approximately $0.3 million in additional cash fees in the aggregate. In addition, the Company issued to the placement agent warrants to purchase up to 1,377,458 shares of Common Stock (the “ July Placement Agent Warrants Accounting for the Series B Private Placement Upon receiving Shareholder Approval on September 11, 2020, the Company classified the Series B Preferred Stock as permanent equity because no features provide for redemption by the holders of the Series B Preferred Stock or conditional redemption, which is not solely within the Company’s control, and there are no unconditional obligations in that (1) the Company must or may settle in a variable number of its equity shares and (2) the monetary value is predominantly fixed, varying with something other than the fair value of the Company’s equity shares or varying inversely in relation to the Company’s equity shares. Because the Series B Preferred Stock contain certain embedded features that could affect the ultimate settlement of the Series B Preferred Stock, the Company analyzed the instrument for embedded derivatives that require bifurcation. The Company’s analysis began with determining whether the Series B Preferred Stock is more akin to equity or debt. The Company evaluated the following criteria/features in this determination: redemption, voting rights, collateral requirements, covenant provisions, creditor and liquidation rights, dividends, conversion rights and exchange rights. The Company determined that the Series B Preferred Stock was more akin to equity than to debt when evaluating the economic characteristics and risks of the entire Series B Preferred Stock, including the embedded features. The Company then evaluated the embedded features to determine whether their economic characteristics and risks were clearly and closely related to the economic characteristics and risks of the Series B Preferred Stock. Since the Series B Preferred Stock was determined to be more akin to equity than debt, and the underlying that causes the value of the embedded features to fluctuate would be the value of the Company’s common stock, the embedded features were considered clearly and closely related to the Series B Preferred Stock. As a result, the embedded features would not need to be bifurcated from the Series B Preferred Stock. Any beneficial conversion features related to the exercise of the Most Favored Nation exchange right or the application of the Mandatory Conversion provision will be recognized upon the occurrence of the contingent events based on its intrinsic value at the commitment date. The Company concluded the freestanding Series B Warrants did not contain any provision that would require liability classification and therefore should be classified in stockholder’s equity, based on their relative fair value. The proceeds from the Series B Private Placement were allocated to the Series B Preferred Stock and Series B Warrants based on their relative fair values. The After allocation of the proceeds, the effective conversion price of the Series B Preferred Stock was determined to be beneficial and, as a result, the Company recorded a deemed dividend of $8,155,212 equal to the intrinsic value of the beneficial conversion feature and recognized on the closing date and recorded as a reduction of income available to common stockholders in computing basic and diluted loss per share. The total offering costs of approximately $2,014,218 were recognized in equity. |
Warrants
Warrants | 9 Months Ended |
Sep. 30, 2020 | |
WarrantsDisclosureTextBlock | |
Warrants | For For the nine months ended September 30, 2020, in connection with the January 2020 closings of the Promissory Note Offering, the Company issued the January Placement Agent Warrants to purchase an aggregate of 199,732 shares of Common Stock to the placement agent and/or their designees. The January Placement Agent Warrants were issued between January 2, 2020 and January 9, 2020, vested immediately, and expire five years from issuance. 41,495 of these January Placement Agent Warrants are exercisable at $1.21 per share and 158,237 are exercisable at $1.42 per share. The total grant date fair value of the January Placement Agent Warrants was determined to be approximately $174,130, as calculated using the Black-Scholes model, and was charged to debt discount that will be amortized over the life of the debt. For the three and nine months ended September 30, 2020, in connection with the closing of the Series B Private Placement, the Company issued Series B Warrants to investors to purchase an aggregate of 14,562,826 shares of Common Stock with the issuance of the Series B Preferred Stock as referenced in Note 11. These Series B Warrants were issued on July 16, 2020, are exercisable commencing six (6) months following the issuance date at $0.85 per share and expire five years from issuance. The total grant date fair value of the Series B Warrants was determined to be approximately $8,103,277, as calculated using the Black-Scholes model, and were recorded as equity based on their relative fair value (See Note 11). For the three and nine months ended September 30, 2020, in connection with the closing of the Exchange (See Note 11), the Company issued Exchange Warrants to certain investors to purchase an aggregate of 1,772,937 shares of Common Stock with the issuance of the Series B Preferred Stock as referenced in Note 11. These Exchange Warrants were issued on July 16, 2020, are exercisable commencing six (6) months following the issuance date at $0.85 per share and expire five years from issuance. The total grant date fair value of the Exchange warrants was determined to be approximately $986,526, as calculated using the Black-Scholes model, and were recorded as part of the loss on extinguishment (See Note 9). For the three and nine months ended September 30, 2020, in connection with the closing of the Series B Private Placement, the Company issued the July Placement Agent Warrants to purchase an aggregate of 1,377,458 shares of Common Stock to the placement agent and/or their designees as referenced in Note 11. The July Placement Agent Warrants were issued on July 16, 2020, are exercisable commencing six (6) months following the issuance date at $0.96 per share and expire five years from issuance. The total grant date fair value of the July Placement Agent Warrants was determined to be approximately $744,378, as calculated using the Black-Scholes model, and were recorded as equity (See Note 11). For the three and nine months ended September 30, 2020, in connection with the Spoor Settlement and Release (See Note 18), on July 14, 2020 the Company granted Mr. Spoor warrants to purchase an aggregate of 150,000 shares of Common Stock. The warrants were immediately exercisable, have an exercise price equal to $1.00 per share, a five-year term and may be exercised pursuant to a cashless exercise provision commencing six months from the issuance date. The total grant date fair value of these warrants was determined to be approximately $85,770, as calculated using the Black-Scholes model, and were included in the gain on settlement (See Note 18). During the nine months ended September 30, 2020, warrants to purchase an aggregate of 59,774 shares of Common Stock expired with exercise prices ranging between $3.25 and $7.37 per share. Exercise Weighted Price Per Average Warrants Share Exercise Price Warrants outstanding and exercisable at January 1, 2019 3,112,715 $ 2.55 - 7.37 $ 4.83 Granted during the period 275,663 $ 2.55 – 2.82 $ 2.68 Expired during the period - - - Exercised during the period - - - Warrants outstanding and exercisable at September 30, 2019 3,388,378 $ 1.50 - 7.37 $ 3.51 Warrants outstanding and exercisable at January 1, 2020 5,378,288 $ 1.07 - 7.37 $ 2.53 Granted during the period 19,881,654 $ 0.85 - 1.42 $ 0.88 Expired during the period (59,774 ) $ 3.25 - 7.37 $ 5.15 Exercised during the period - - - Warrants outstanding and exercisable at September 30, 2020 25,200,168 $ 0.85 - 7.37 $ 1.22 Number of Weighted Average Weighted Shares Under Remaining Contract Average Exercise Price Warrants Life in Years Exercise Price $ 0.00 - 0.99 17,718,665 4.79 $ 1.00 - 1.99 5,362,464 3.65 $ 2.00 - 2.99 320,063 2.82 $ 3.00 - 3.99 635,019 1.57 $ 4.00 - 4.99 164,256 1.53 $ 5.00 - 5.99 783,132 1.42 $ 6.00 - 6.99 187,750 1.01 $ 7.00 - 7.37 28,819 0.28 Totals 25,200,168 4.28 $1.22 The weighted average fair value of warrants granted during the nine months ended September 30, 2020 was $0.88 per share. The fair value was estimated on the grant dates using the Black-Scholes option-pricing model with the following weighted average assumptions: September 30, 2020 Expected life (in years) 5 Volatility 84 % Risk-free interest rate % Dividend yield - % |
Stock Options
Stock Options | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement, Noncash Expense [Abstract] | |
Stock Options | Under the 2014 Plan and the 2020 Plan, the fair value of options granted is estimated on the grant date using the Black-Scholes option valuation model. This valuation model for stock-based compensation expense requires the Company to make assumptions and judgments about the variables used in the calculation, including the expected term (weighted-average period of time that the options granted are expected to be outstanding), the volatility of the common stock price and the assumed risk-free interest rate. The Company recognizes stock-based compensation expense for only those shares expected to vest over the requisite service period of the award. No compensation cost is recorded for options that do not vest and the compensation cost from vested options, whether forfeited or not, is not reversed. During the three months ended September 30, 2020, the Company issued stock options to purchase an aggregate of 2,040,000 shares of Common Stock with a strike price of $0.85 per share and a term of ten years to its employees. These options had a total grant date fair value of approximately $1,449,130, as calculated using the Black-Scholes model. During the three months ended September 30, 2020, the Board approved an amended and restated option grant to its chief financial officer, amending and restating a grant previously made on January 2, 2020, to reduce the amount of shares issuable upon exercise of such option to be the maximum number of shares Mr. Schneiderman was eligible to receive under the 2014 Incentive Plan on the original grant date, or 300,000 shares, due to the 2014 Incentive Plan provisions relating to the Section 162(m) limitations described above. The Board also approved the issuance of a replacement option covering the balance of shares intended to be issued at that time, or 35,006 shares. The original stock option has an exercise price of $1.03, the closing sale price of Common Stock on January 2, 2020, which was the date of its original grant, and the replacement stock option has an exercise price of $0.85, the closing sale price of the Common Stock on its date of grant. Both the original stock option and the replacement stock option vest over a term of three years, in 36 equal monthly installments on each monthly anniversary of January 2, 2020. On the issuance date, 6,336 shares had vested, and 28,670 shares were unvested with $24,102 of unrecognized expense. The Company determined the cancellation and reissue of these stock options resulted in an effective repricing of the stock options and modification accounting should be applied under ASC 718. The fair value of the original stock options immediately prior to the modification was $23,454 and the grant date fair value of the replacement stock options was $24,154. The Company will recognize a total of $24,802 over the remaining requisite service period through January 1, 2023. During the nine months ended September 30, 2020, the Company issued stock options to purchase an aggregate of 335,006 shares of Common Stock with a strike price of $1.03 per share and a term of ten years to its chief financial officer that vest quarterly over three years. These options had a total grant date fair value of approximately $281,405, as calculated using the Black-Scholes model. During the nine months ended September 30, 2020, the Company issued stock options to purchase an aggregate of 460,000 shares of Common Stock with a strike price of $0.97 per share and a term of ten years to its non-executive directors. These options had a total grant date fair value of approximately $210,284, as calculated using the Black-Scholes model. During the nine months ended September 30, 2020, stock options to purchase an aggregate of 235,006 shares of Common Stock were cancelled with strike prices ranging between $0.97 and $3.60 per share. During the three months ended September 30, 2020, stock options to purchase an aggregate of 234,252 shares of Common Stock, subject to service conditions, vested with a total grant date fair value of approximately $139,392 and recorded as stock-based compensation, of which $119,514 was included as part of general and administrative expense and $19,878 was included as part of research and development expense. During the nine months ended September 30, 2020, stock options to purchase an aggregate of 600,086 shares of Common Stock, subject to service conditions, vested with a total grant date fair value of approximately $360,519 and recorded as stock-based compensation, of which $340,640 was included as part of general and administrative expense and $19,878 was included as part of research and development expense. During the nine months ended September 30, 2020, stock options to purchase an aggregate of 50,000 shares of Common Stock, subject to performance conditions vesting, vested with a total grant date fair value of approximately $20,150 and were recorded as stock-based compensation, and included as part of general and administrative expense due to the Company initiating the Option 2 Clinical Trial. During the three and nine months ended September 30, 2020, stock options to purchase an aggregate of 35,006, and 235,006 shares of Common Stock were cancelled, respectively, with strike prices ranging between $0.97 and $3.60 per share. During the three and nine months ended September 30, 2019, stock options to purchase an aggregate of 893,500 shares of Common Stock were granted with an exercise price of $1.75 and a term of five years. During the three months ended September 30, 2019, no options vested. During the nine months ended September 30, 2019, stock options to purchase an aggregate 244,500 shares of Common Stock vested with a total grant date fair value of approximately $511,335. stock options to purchase an aggregate 242,000 shares of Common Stock with a total grant date fair value of approximately $501,666 vested due to the Company achieving certain clinical milestones. The fair values were estimated on the grant dates using the Black-Scholes option-pricing model with the following weighted-average assumptions: September 30, 2020 Expected life (in years) 10 Volatility 84.0 % Risk-free interest rate 0.62- 1.88 % Dividend yield - % The expected term of the options is based on expected future employee exercise behavior. Volatility is based on the historical volatility of the Company’s Common Stock if available or of several public entities that are similar to the Company. The Company bases volatility this way because it may not have sufficient historical transactions in its own shares on which to solely base expected volatility. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected term at the grant date. The Company has not historically declared any dividends and does not expect to in the future. Since the adoption of the 2020 Plan on September 11, 2020, no awards have yet been made thereunder. During the nine months ended September 30, 2020 and 2019, stock option activity under the 2014 Plan was as follows: Number Average Remaining Contract Intrinsic of Shares Exercise Price Life in Years Value Stock options outstanding at January 1, 2019 994,000 $ 3.58 5.42 $ - Granted during the period 893,500 $ 1.70 4.96 - Expired during the period - - - - Canceled during the period - - - - Exercised during the period - - - - Stock options outstanding at September 30, 2019 1,887,500 $ 2.58 4.69 $ - Exercisable at September 30, 2019 994,000 $ 3.58 5.17 $ - Non-vested stock options outstanding at January 1, 2019 244,500 $ 3.05 4.53 $ - Granted during the period 893,500 $ 1.70 4.96 - Vested during the period (274,500 ) $ 2.91 3.88 - Expired during the period - - - - Canceled during the period - - - - Exercised during the period - - - - Non-vested stock options outstanding at September 30, 2019 863,500 $ 1.70 4.77 $ - Stock options outstanding at January 1, 2020 1,677,5000 $ 2.17 5.37 $ - Granted during the period 2,870,012 $ 0.89 9.79 $ - Expired during the period - - Canceled during the period (235,006 ) $ 1.94 3.28 $ - Exercised during the period - - Stock options outstanding at September 30, 2020 4,312,506 $ 1.38 7.94 $ - Exercisable at September 30, 2020 1,084,834 $ 2.59 5.60 $ - Non-vested stock options outstanding at January 1, 2020 883,500 $ 1.33 6.26 $ - Granted during the period 2,870,012 $ 0.98 10.00 $ - Vested during the period (593,750 ) $ 2.59 6.88 $ - Expired during the period - - - Canceled during the period (160,006 ) $ 1.30 7.10 $ - Exercised during the period - - - Non-vested stock options outstanding at September 30, 2020 2,999,756 $ 0.98 8.75 $ - As of September 30, 2020, the Company had unrecognized stock-based compensation expense of approximately $2,190,131. Approximately $1,189,036 of this unrecognized expense will be recognized over the average remaining vesting term of the options of.8.75 years. Approximately $440,213 of this unrecognized expense will vest upon enrollment completion of the next MS1819 Phase II clinical trial in the U.S. for CF (the OPTION 2 Trial). Approximately $41,213 of this unrecognized expense will vest upon enrollment completion of the ongoing Combination Trial in Europe. Approximately $20,150 of this unrecognized expense will vest upon trial completion of the next MS1819 Phase II clinical trial in the U.S. for CF (the OPTION 2 Trial). Approximately $40,300 of this unrecognized expense vests upon the Company initiating a Phase III clinical trial in the U.S. for MS1819. Approximately $40,300 of this unrecognized expense vests upon initiating a U.S. Phase I clinical trial for any product other than MS1819. Approximately, $139,640 of this unrecognized expense vests upon the public release of topline data of the complete Combination Trial results. Approximately, $139,640 of this unrecognized expense vests upon the public release of topline data of the complete OPTION 2 Trial results. Approximately, $139,640 of this unrecognized expense vests upon signing of a definitive term sheet with Board approval for either (i) a strategic licensing, distribution or commercialization agreement for MS1819 with a bona fide partner, or (ii) the substantial sale of the Company or the MS1819 asset, on or before December 31, 2021. The Company will recognize the expense related to these milestones when the milestones become probable. |
Agreements
Agreements | 9 Months Ended |
Sep. 30, 2020 | |
Agreements | |
Agreements | Mayoly Agreement On March 27, 2019, the Company and Laboratories Mayoly Spinder (“ Mayoly Mayoly APA JDLA During the three and nine months ended September 30, 2019, the Company charged $0 and $403,020, respectively, to Mayoly under the JDLA that was in effect during both periods. TransChem Sublicense On August 7, 2017, the Company and TransChem entered into the TransChem Sublicense Agreement pursuant to which TransChem granted to us an exclusive license to certain patents (the “TransChem Licensed Patents” On March 11, 2020, the Company provided TransChem with sixty (60) days prior written notice of its intent to terminate the TransChem Sublicense Agreement. No payments were made under this Sublicense Agreement during in the three and nine months ended September 30, 2020 and 2019, respectively. Employment Agreements James Sapirstein Effective October 8, 2019, the Company entered into an employment agreement with Mr. Sapirstein to serve as its President and Chief Executive Officer for a term of three years, subject to further renewal upon agreement of the parties. The employment agreement with Mr. Sapirstein provides for a base salary of $450,000 per year. In addition to the base salary, Mr. Sapirstein is eligible to receive (i) a cash bonus of up to 40% of his base salary on an annual basis, based on certain milestones that are yet to be determined; (ii) 1% of net fees received by the Company upon entering into license agreements with any third-party with respect to any product current in development or upon the sale of all or substantially all assets of the Company; (iii) an award grant of 200,000 restricted stock units (“ RSUs In the event that Mr. Sapirstein’s employment is terminated by the Company for Cause, as defined in his employment agreement, or by Mr. Sapirstein voluntarily, then he will not be entitled to receive any payments beyond amounts already earned, and any unvested equity awards will terminate. In the event that Mr. Sapirstein’s employment is terminated as a result of an Involuntary Termination Other than for Cause, as defined in his employment agreement, Mr. Sapirstein will be entitled to receive the following compensation: (i) severance in the form of continuation of his salary (at the base salary rate in effect at the time of termination, but prior to any reduction triggering Good Reason (as such term is defined in Mr. Sapirstein’s employment agreement) for a period of twelve months following the termination date; (ii) payment of Mr. Sapirstein’s premiums to cover COBRA for a period of twelve months following the termination date; and (iii) a prorated annual bonus. Daniel Schneiderman Effective January 2, 2020, the Company entered into an employment agreement with Mr. Schneiderman to serve as the Company’s Chief Financial Officer for a term of three years, subject to further renewal upon agreement of the parties. The employment agreement with Mr. Schneiderman provides for a base salary of $285,000 per year. In addition to the base salary, Mr. Schneiderman is eligible to receive (a) an annual milestone cash bonus based on certain milestones that will be established by the Company’s Board or the Compensation Committee, and (b) a grant of stock options to purchase 335,006 shares of common stock with an exercise price of $1.03 per share, which shall vest in three equal portions on each anniversary date of the execution of Mr. Schneiderman’s employment agreement, commencing on January 2, 2021, the first anniversary date of the agreement. Mr. Schneiderman is entitled to receive 20 days of paid vacation, participate in full employee health benefits and receive reimbursement for all reasonable expenses incurred in connection with his service to the Company. The Company may terminate Mr. Schneiderman’s employment agreement at any time, with or without Cause, as such term is defined in his employment agreement. In the event that Mr. Schneiderman’s employment is terminated by the Company for Cause, as defined in Mr. Schneiderman’s employment agreement, or by Mr. Schneiderman voluntarily, then he will not be entitled to receive any payments beyond amounts already earned, and any unvested equity awards will terminate. If the Company terminates his employment agreement without Cause, not in connection with a Change of Control, as such term is defined in Mr. Schneiderman’s employment agreement, he will be entitled to (i) all salary owed through the date of termination; (ii) any unpaid annual milestone bonus; (iii) severance in the form of continuation of his salary for the greater of a period of six months following the termination date or the remaining term of the employment agreement; (iv) payment of premiums to cover COBRA for a period of six months following the termination date; (v) a prorated annual bonus equal to the target annual milestone bonus, if any, for the year of termination multiplied by the formula set forth in the agreement. If the Company terminates Mr. Schneiderman’s employment agreement without Cause, in connection with a Change of Control, he will be entitled to the above and immediate accelerated vesting of any unvested options or other unvested awards. Dr. James E. Pennington Effective May 28, 2018, the Company entered into an employment agreement with Dr. Pennington to serve as its Chief Medical Officer. The employment agreement with Dr. Pennington provides for a base annual salary of $250,000. In addition to his salary, Dr. Pennington is eligible to receive an annual milestone bonus, awarded at the sole discretion of the Board based on his attainment of certain financial, clinical development, and/or business milestones established annually by the Board or Compensation Committee. The Company may terminate Dr. Pennington’s employment agreement at any time, with or without Cause, as such term is defined in Dr. Pennington’s employment agreement. In the event of termination by the Company other than for Cause, Dr. Pennington is entitled to three months’ severance payable over such period. In the event of termination by the Company other than for Cause in connection with a Change of Control as such term is defined in Dr. Pennington’s employment agreement, Dr. Pennington will receive six months’ severance payable over such period. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Leases | The Company adopted ASU 2016-02, Leases, as of January 1, 2019, using the modified retrospective approach. Prior year financial statements were not recast under the new standard. The Company leases its office and research facilities under operating leases which are subject to various rent provisions and escalation clauses. During the three months ended September 30, 2020, the Company entered into a month-to-month lease for office space in Delray Beach, FL and one-year residential lease in Delray Beach, FL. During the nine months ended September 30, 2020, the Company entered into a two-year lease extension (amendment) to is Hayward, CA office. The Company determined that the lease modification did not grant an additional right of use and concluded that the modification was not a separate new lease, but rather that it should reassess and remeasure the entire modified lease on the effective date of the modification. The Company accounted for the lease amendment prospectively. The Company’s leases expire at various dates through 2022. The escalation clauses are indeterminable and considered not material and have been excluded from minimum future annual rental payments. Lease expense amounted to $55,418 and $52,057, respectively, in the three months ended September 30, 2020 and 2019. Lease expense amounted to $128,663 and $153,723, respectively, in the nine months ended September 30, 2020 and 2019. The weighted-average remaining lease term and weighted-average discount rate under operating leases at September 30, 2020 are: September 30, 2020 Lease term and discount rate Weighted-average remaining lease term 1.16 years Weighted-average discount rate 6.0% Maturities of operating lease liabilities at September 30, 2020 are as follows: 2020 $ 30,565 2021 55,420 2022 23,375 Total lease payments 109,360 Less imputed interest (3,736 ) Present value of lease liabilities $ 105,624 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | The Company is subject to taxation at the federal level in both the United States and France and at the state level in the United States. At September 30, 2020 and December 31, 2019, the Company had no tax provision for either jurisdiction. At September 30, 2020 and December 31, 2019, the Company had gross deferred tax assets of approximately $20,059,000 and $16,372,000, respectively. As the Company cannot determine that it is more likely than not that the Company will realize the benefit of the deferred tax asset, a valuation allowance of approximately $20,059,000 and $16,372,000, respectively, has been established at September 30, 2020 and December 31, 2019. The change in the valuation allowance in the nine months ended September 30, 2020 and 2019 was $3,687,000 and $2,108,000, respectively. At September 30, 2020, the Company has gross net operating loss (“ NOL Section 382 At September 30, 2020 and December 31, 2019, the Company had approximately $22,120,000 and $19,425,000, respectively, in net operating losses which it can carryforward indefinitely to offset against future French income. At September 30, 2020 and December 31, 2019, the Company had taken no uncertain tax positions that would require disclosure under ASC 740, Accounting for Income Taxes. |
Net Loss per Common Share
Net Loss per Common Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Net Loss per Common Share | Basic net loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect, in periods in which they have a dilutive effect, the impact of common shares issuable upon exercise of stock options and warrants and conversion of convertible debt that are not deemed to be anti-dilutive. The dilutive effect of the outstanding stock options and warrants is computed using the treasury stock method. At September 30, 2020, diluted net loss per share did not include the effect of 29,314,408 shares of Common Stock issuable upon the conversion of Series B Preferred Stock including accrued and unpaid dividends, 25,200,168 shares of Common Stock issuable upon the exercise of outstanding warrants, 387,000 shares of Common Stock pursuant to unearned and unissued restricted stock and RSUs, and 4,312,506 shares of Common Stock issuable upon the exercise of outstanding options as their effect would be antidilutive during the periods prior to conversion. At September 30, 2019, diluted net loss per share did not include the effect of 3,388,378 shares of Common Stock issuable upon the exercise of outstanding warrants, 416,000 shares of restricted Common Stock not yet issued, and 1,887,500 shares of Common Stock issuable upon the exercise of outstanding options as their effect would be antidilutive during the periods prior to conversion. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Johan (Thijs) Spoor During the year ended December 31, 2015, the Company employed the services of JIST Consulting (“ JIST On June 29, 2019, the Company accrued an incentive bonus in the amount of $255,000 payable to Mr. Spoor. Subsequent to Mr. Spoor’s resignation, the Compensation Committee reviewed the accrued bonus and determined that such amount was not owed by the Company, which determination is being challenged by Mr. Spoor. As a result of management’s determination, the Company reversed the accrual in the quarter ended December 31, 2019. All unvested shares of restricted stock and stock options subject to time and other performance-based vesting conditions have been forfeited in connection with Mr. Spoor's resignation as the Company’s President and Chief Executive Officer. Mr. Spoor also declined the right to receive 241,667 earned, but unissued shares of restricted stock on April 29, 2020 in connection with his resignation from the Board. On July 9, 2020, the Company and Johan (Thijs) Spoor, its former Chief Executive Officer, entered into a settlement and general release (the “ Spoor Settlement and Release Spoor Settlement Date Maged Shenouda From October 1, 2016 until his appointment as the Company’s Chief Financial Officer on September 25, 2017, the Company employed the services of Maged Shenouda as a financial consultant. Included in accounts payable at September 30, 2020 and 2019 is $10,000 and $50,000, respectively, for Mr. Shenouda’s services. On November 1, 2019, Mr. Shenouda submitted his resignation as Chief Financial Officer of the Company, effective November 30, 2019. On June 29, 2019, the Company accrued an incentive bonus in the amount of $100,000 payable to Mr. Shenouda. Subsequent to Mr. Shenouda’s resignation, the Compensation Committee reviewed the accrued bonus and determined that such amount should not be paid, and the Company reversed the accrual in the quarter ended December 31, 2019. On July 2, 2020, the Company and Maged Shenouda, its former Chief Financial Officer also entered into a settlement and general release (the “ Shenouda Settlement and Release |
Significant Accounting Polici_2
Significant Accounting Policies and Recent Accounting Pronouncements (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Use of Estimates | The accompanying unaudited consolidated financial statements are prepared in conformity with U.S. GAAP and include certain estimates and assumptions which affect the reported amounts of assets and liabilities at the date of the financial statements (including goodwill, intangible assets and contingent consideration), and the reported amounts of revenues and expenses during the reporting period, including contingencies. Accordingly, actual results may differ from those estimates. |
Cash and Cash Equivalents | The Company considers all highly liquid investments with maturities of three months or less from date of purchase to be cash equivalents. All cash balances were highly liquid at September 30, 2020 and December 31, 2019, respectively. |
Concentrations of Credit Risk | Financial instruments that potentially expose the Company to concentrations of credit risk consist of cash. The Company primarily maintains its cash balances with financial institutions in federally insured accounts in the U.S. The Company may from time to time have cash in banks in excess of FDIC insurance limits. At September 30, 2020 and December 31, 2019, the Company had approximately $11.1 million and $0, respectively, in one account in the U.S. in excess of these limits. The Company has not experienced any losses to date resulting from this practice. The Company mitigates its risk by maintaining the majority of its cash and cash equivalents with high quality financial institutions. The Company also has exposure to foreign currency risk as its subsidiary in France has a functional currency in Euros. |
Debt Instruments | Detachable warrants issued in conjunction with debt are measured at their relative fair value, if they are determined to be equity instrument, or their fair value, if they are determined to be liability instruments, and recorded as a debt discount. Conversion features that are in the money at the commitment date constitute a beneficial conversion feature that is measured at its intrinsic value and recognized as debt discount. Debt discount is amortized as interest expense over the maturity period of the debt using the effective interest method. Contingent beneficial conversion features are recognized when the contingency has been resolved. |
Debt Issuance Costs | Debt issuance costs are recorded as a direct reduction of the carrying amount of the related debt. Debt issuance costs are amortized over the maturity period of the related debt instrument using the effective interest method. |
Equity-Based Payments to Non-Employees | Equity-based payments to non-employees are measured at fair value on the grant date per ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting. |
Fair Value Measurements | The Company follows Accounting Standards Codification (“ASC” (“ASC 820” As a basis for considering such assumptions, a three-tier fair value hierarchy has been established, which prioritizes the inputs used in measuring fair value as follows: Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions, which reflect those that a market participant would use. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the overall fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument. The Company recognizes transfers between levels as if the transfers occurred on the last day of the reporting period. |
Foreign Currency Translation | For foreign subsidiaries with operations denominated in a foreign currency, assets and liabilities are translated to U.S. dollars, which is the functional currency, at period end exchange rates. Income and expense items are translated at average rates of exchange prevailing during the periods presented. Gains and losses from translation adjustments are accumulated in a separate component of stockholders’ equity. |
Goodwill and Intangible Assets | Goodwill represents the excess of the purchase price of the acquired business over the fair value of amounts assigned to assets acquired and liabilities assumed. Goodwill and other intangible assets with indefinite useful lives are reviewed for impairment annually or more frequently if events or circumstances indicate impairment may be present. Any excess in carrying value over the estimated fair value is charged to results of operations. The Company has not recognized any impairment charges through September 30, 2020. Intangible assets subject to amortization consist of in process research and development, license agreements, and patents reported at the fair value at date of the acquisition less accumulated amortization. Amortization expense is provided using the straight-line method over the estimated useful lives of the assets as follows: Patents 7.2 years In Process Research & Development 12 years License Agreements 5 years |
Impairment of Long-Lived Assets | The Company periodically evaluates its long-lived assets for potential impairment in accordance with ASC Topic 360, Property, Plant and Equipment (“ASC 360” |
Income Taxes | Income taxes are recorded in accordance with ASC 740, Accounting for Income Taxes (“ASC 740” The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. At September 30, 2020 and December 31, 2019, the Company does not have any significant uncertain tax positions. All tax years are still open for audit. |
Leases | Effective January 1, 2019, the Company adopted Accounting Standards Update ( “ASU” |
Research and Development | Research and development (“ R&D |
Stock-Based Compensation | The Company’s board of directors (the “ Board 2014 Plan 2020 Plan ASC 718 For awards with performance conditions that affect their vesting, such as the occurrence of certain transactions or the achievement of certain operating or financial milestones, recognition of fair value of the award occurs when vesting becomes probable. The Company estimates the grant date fair value of stock option awards using the Black-Scholes option-pricing model. The use of the Black-Scholes option-pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the Common Stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the Common Stock. |
Sublicense Agreement | As more fully discussed in Note 14, the Company entered into a sublicense agreement with TransChem, Inc. (“ TransChem |
Subsequent Events | The Company considered events or transactions occurring after the balance sheet date but prior to the date the consolidated financial statements are available to be issued for potential recognition or disclosure in its consolidated financial statements. |
Recent Accounting Pronouncements | In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other, Simplifying the Accounting for Goodwill Impairment. ASU 2017-04 removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance will remain largely unchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. This new guidance will be applied prospectively and is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. This ASU, which the Company adopted as of January 1, 2020, did not have a material effect on the Company’s consolidated financial statements. In August 2020, the Financial Accounting Standards Board (“FASB”) issued an accounting pronouncement (ASU 2020-06) related to the measurement and disclosure requirements for convertible instruments and contracts in an entity's own equity. The pronouncement simplifies and adds disclosure requirements for the accounting and measurement of convertible instruments and the settlement assessment for contracts in an entity's own equity. As a smaller reporting company, as defined by the SEC, this pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2023. The Company is currently evaluating the impact of this ASU on the financial statements. |
Significant Accounting Polici_3
Significant Accounting Policies and Recent Accounting Pronouncements (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Goodwill and intangible assets | Patents 7.2 years In Process Research & Development 12 years License Agreements 5 years |
Fair Value Disclosures (Tables)
Fair Value Disclosures (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Financial instruments measured at fair value on a recurring basis | Fair Value Measured a Reporting Date Using Carrying Amount Level 1 Level 2 Level 3 Fair Value At September 30, 2020: Cash $ 11,368,680 $ $ 11,368,680 $ $ 11,368,680 Other receivables $ 20,688 $ $ 20,688 $ 20,688 At December 31, 2019: Cash $ 175,796 $ - $ 175,796 $ - $ 175,796 Other receivables $ 2,637,303 $ - $ - $ 2,637,303 $ 2,637,303 Note payable $ 444,364 $ - $ - $ 444,364 $ 444,364 Convertible debt $ 1,076,938 $ - $ - $ 1,076,938 $ 1,076,938 |
Other Receivables (Tables)
Other Receivables (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Receivables [Abstract] | |
Other receivables | September 30, December 31, 2020 2019 R&D tax credits $ - $ 2,566,281 Other 20,688 71,022 Total other receivables $ 20,688 $ 2,637,303 |
Property, Equipment, and Leas_2
Property, Equipment, and Leasehold Improvements (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property, equipment and leasehold improvements | S eptember 30, December 31, 2020 2019 Laboratory equipment $ 193,661 $ 193,661 Computer equipment 77,850 74,836 Office equipment 36,703 36,703 Leasehold improvements 29,162 35,711 Total property, plant and equipment 337,376 340,911 Less accumulated depreciation (283,306 ) (263,520 ) Property, plant and equipment, net $ 54,070 $ 77,391 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Patents | Common stock issued at signing to Mayoly $ 1,740,959 Due to Mayoly at 12/31/19 - €400,000 449,280 Due to Mayoly at 12/31/20 - €350,000 393,120 Assumed Mayoly liabilities and forgiveness of Mayoly debt 1,219,386 $ 3,802,745 |
Intangible assets | September 30, December 31, 2020 2019 Patents $ 3,802,745 $ 3,802,745 Less accumulated amortization (791,322 ) (395,661 ) Patents, net $ 3,011,423 $ 3,407,084 |
Future amortization expense | 2020 (balance of year) $ 395,661 2021 527,548 2022 527,548 2023 527,548 2024 527,548 2025 527,548 |
Goodwill | Goodwill Balance at January 1, 2019 $ 1,924,830 Foreign currency translation (38,144 ) Balance at December 31, 2019 1,886,686 Foreign currency translation 81,833 Balance at September 30, 2020 $ 1,968,519 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Payables and Accruals [Abstract] | |
Accounts payable and accrued expenses | September 30, December 31, 2020 2019 Trade payables $ 1,422,066 $ 1,683,505 Accrued expenses 263,937 71,177 Total accounts payable and accrued expenses $ 1,686,003 $ 1,754,682 |
Convertible Notes (Tables)
Convertible Notes (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
Convertible notes | Total Promissory Notes ADEC Notes Total September 30, September 30, September 30, December 31, 2020 2020 2020 2019 Convertible debt $ - $ - $ - $ 3,836,300 Unamortized debt discount - revalued warrants - - - (118,356 ) Unamortized debt discount - warrants - - - (878,979 ) Unamortized debt discount - BCF - - - (1,307,755 ) Unamortized debt discount - debt issuance costs - - - (566,815 ) Accrued interest - - - 112,543 Total convertible debt $ - $ - $ - $ 1,076,938 |
Other Liabilities (Tables)
Other Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Other Liabilities [Abstract] | |
Other liabilities | September 30, December 31, Current 2020 2019 Due to Mayoly $ 410,026 $ 392,989 Lease liabilities 74,156 83,235 Other liabilities 8,633 - $ 492 $ 476,224 September 30, December 31, Long-term 2020 2019 Lease liabilities 31,469 - $ 31,469 $ - |
Warrants (Tables)
Warrants (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
WarrantsDisclosureTextBlock | |
Stock warrant transactions | Exercise Weighted Price Per Average Warrants Share Exercise Price Warrants outstanding and exercisable at January 1, 2019 3,112,715 $ 2.55 - 7.37 $ 4.83 Granted during the period 275,663 $ 2.55 – 2.82 $ 2.68 Expired during the period - - - Exercised during the period - - - Warrants outstanding and exercisable at September 30, 2019 3,388,378 $ 1.50 - 7.37 $ 3.51 Warrants outstanding and exercisable at January 1, 2020 5,378,288 $ 1.07 - 7.37 $ 2.53 Granted during the period 19,881,654 $ 0.85 - 1.42 $ 0.88 Expired during the period (59,774 ) $ 3.25 - 7.37 $ 5.15 Exercised during the period - - - Warrants outstanding and exercisable at September 30, 2020 25,200,168 $ 0.85 - 7.37 $ 1.22 |
Warrants by exercise price | Number of Weighted Average Weighted Shares Under Remaining Contract Average Exercise Price Warrants Life in Years Exercise Price $ 0.00 - 0.99 17,718,665 4.79 $ 1.00 - 1.99 5,362,464 3.65 $ 2.00 - 2.99 320,063 2.82 $ 3.00 - 3.99 635,019 1.57 $ 4.00 - 4.99 164,256 1.53 $ 5.00 - 5.99 783,132 1.42 $ 6.00 - 6.99 187,750 1.01 $ 7.00 - 7.37 28,819 0.28 Totals 25,200,168 4.28 $1.22 |
Share-based payment weighted average assumptions | September 30, 2020 Expected life (in years) 5 Volatility % Risk-free interest rate % Dividend yield - % |
Stock-Based Compensation Plan (
Stock-Based Compensation Plan (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement, Noncash Expense [Abstract] | |
Share-based payment weighted average assumptions | September 30, 2020 Expected life (in years) 10 Volatility 84.0 % Risk-free interest rate 0.62- 1.88 % Dividend yield - % |
Stock option activity | Number Average Remaining Contract Intrinsic of Shares Exercise Price Life in Years Value Stock options outstanding at January 1, 2019 994,000 $ 3.58 5.42 $ - Granted during the period 893,500 $ 1.70 4.96 - Expired during the period - - - - Canceled during the period - - - - Exercised during the period - - - - Stock options outstanding at September 30, 2019 1,887,500 $ 2.58 4.69 $ - Exercisable at September 30, 2019 994,000 $ 3.58 5.17 $ - Non-vested stock options outstanding at January 1, 2019 244,500 $ 3.05 4.53 $ - Granted during the period 893,500 $ 1.70 4.96 - Vested during the period (274,500 ) $ 2.91 3.88 - Expired during the period - - - - Canceled during the period - - - - Exercised during the period - - - - Non-vested stock options outstanding at September 30, 2019 863,500 $ 1.70 4.77 $ - Stock options outstanding at January 1, 2020 1,677,5000 $ 2.17 5.37 $ - Granted during the period 2,870,012 $ 0.89 9.79 $ - Expired during the period - - Canceled during the period (235,006 ) $ 1.94 3.28 $ - Exercised during the period - - Stock options outstanding at September 30, 2020 4,312,506 $ 1.38 7.94 $ - Exercisable at September 30, 2020 1,084,834 $ 2.59 5.60 $ - Non-vested stock options outstanding at January 1, 2020 883,500 $ 1.33 6.26 $ - Granted during the period 2,870,012 $ 0.98 10.00 $ - Vested during the period (593,750 ) $ 2.59 6.88 $ - Expired during the period - - - Canceled during the period (160,006 ) $ 1.30 7.10 $ - Exercised during the period - - - Non-vested stock options outstanding at September 30, 2020 2,999,756 $ 0.98 8.75 $ - |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Operating lease information | September 30, 2020 Lease term and discount rate Weighted-average remaining lease term 1.16 years Weighted-average discount rate 6.0% |
Maturities of operating lease liabilities | 2020 $ 30,565 2021 55,420 2022 23,375 Total lease payments 109,360 Less imputed interest (3,736 ) Present value of lease liabilities $ 105,624 |
The Company and Basis of Pres_2
The Company and Basis of Presentation (Details Narrative) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accumulated deficit | $ (77,965,806) | $ (62,694,732) |
Significant Accounting Polici_4
Significant Accounting Policies and Recent Accounting Pronouncements (Details) | 9 Months Ended |
Sep. 30, 2020 | |
Patents | |
Useful life | 7 years 2 months 12 days |
In Process Research & Development | |
Useful life | 12 years |
License Agreements | |
Useful life | 5 years |
Significant Accounting Polici_5
Significant Accounting Policies and Recent Accounting Pronouncements (Details Narrative) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Accounting Policies [Abstract] | ||
Cash in excess of FDIC limit | $ 11,100,000 | $ 0 |
Fair Value Disclosures (Details
Fair Value Disclosures (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Cash | $ 11,368,680 | $ 175,796 |
Other receivables | 20,688 | 2,637,303 |
Notes payable | 0 | 444,364 |
Convertible debt | 0 | 1,076,938 |
Level 1 | ||
Cash | 11,368,680 | 0 |
Other receivables | 0 | |
Notes payable | 0 | 0 |
Convertible debt | 0 | 0 |
Level 2 | ||
Cash | 175,796 | |
Other receivables | 20,688 | 0 |
Notes payable | 0 | 0 |
Convertible debt | 0 | 0 |
Level 3 | ||
Cash | 0 | |
Other receivables | 2,637,303 | |
Notes payable | 0 | 444,364 |
Convertible debt | 0 | 1,076,938 |
Carrying Amount | ||
Cash | 11,368,680 | 175,796 |
Other receivables | 20,688 | 2,637,303 |
Notes payable | 0 | 444,364 |
Convertible debt | $ 0 | $ 1,076,938 |
Other Receivables (Details)
Other Receivables (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Receivables [Abstract] | ||
R&D tax credits | $ 0 | $ 2,566,281 |
Accounts receivable | ||
Other | 20,688 | 71,022 |
Other receivables | $ 20,688 | $ 2,637,303 |
Property, Equipment, and Leas_3
Property, Equipment, and Leasehold Improvements (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Property, equipment and leasehold improvements, gross | $ 337,376 | $ 340,911 |
Less accumulated depreciation | (283,306) | (263,520) |
Property, equipment and leasehold improvements, net | 54,070 | 77,391 |
Laboratory Equipment | ||
Property, equipment and leasehold improvements, gross | 193,661 | 74,836 |
Computer Equipment | ||
Property, equipment and leasehold improvements, gross | 77,850 | 36,703 |
Office Equipment | ||
Property, equipment and leasehold improvements, gross | 36,703 | 193,661 |
Leasehold Improvements | ||
Property, equipment and leasehold improvements, gross | $ 29,162 | $ 35,711 |
Property, Equipment, and Leas_4
Property, Equipment, and Leasehold Improvements (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Depreciation expense | $ 8,188 | $ 17,220 | $ 26,556 | $ 51,261 |
Research and Development Expense | ||||
Depreciation expense | 4,881 | 11,842 | 14,372 | 35,442 |
G&A Expense | ||||
Depreciation expense | $ 3,307 | $ 5,149 | $ 12,184 | $ 15,343 |
Intangible Assets and Goodwil_2
Intangible Assets and Goodwill (Details) | Sep. 30, 2020USD ($) |
Patents | $ 3,802,745 |
Common Stock Issued at Signing to Mayoly | |
Patents | 1,740,959 |
Due to Mayoly at 12/31/19 | |
Patents | 449,280 |
Due to Mayoly at 12/31/20 | |
Patents | 393,120 |
Assumed Mayoly Liabilties and Forgiveness of Mayoly Debt | |
Patents | $ 1,219,386 |
Intangible Assets and Goodwil_3
Intangible Assets and Goodwill (Details 1) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Intangible assets, gross | $ 3,802,745 | |
Patents | ||
Intangible assets, gross | 3,802,745 | $ 3,802,745 |
Less accumulated amortization | (791,322) | (395,661) |
Intangible assets, net | $ 3,011,423 | $ 3,407,804 |
Intangible Assets and Goodwil_4
Intangible Assets and Goodwill (Details 2) | Sep. 30, 2020USD ($) |
Amortization expense | |
2020 (balance of year) | $ 395,661 |
2021 | 527,548 |
2022 | 527,548 |
2023 | 527,548 |
2024 | 527,548 |
2025 | $ 527,548 |
Intangible Assets and Goodwil_5
Intangible Assets and Goodwill (Details 3) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill, beginning | $ 1,886,686 | $ 1,924,830 |
Foreign currency translation | 81,833 | (38,144) |
Goodwill, ending | $ 1,968,519 | $ 1,886,686 |
Intangible Assets and Goodwil_6
Intangible Assets and Goodwill (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 131,887 | $ 131,887 | $ 395,661 | $ 825,063 |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Expenses (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||
Trade payables | $ 1,422,066 | $ 1,683,505 |
Accrued expenses | 263,937 | 71,177 |
Total accounts payable and accrued expenses | $ 1,686,003 | $ 1,754,682 |
Accounts Payable and Accrued _4
Accounts Payable and Accrued Expenses (Details Narrative) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||
Due to related parties | $ 0 | $ 1,683,505 |
Convertible Notes (Details)
Convertible Notes (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Convertible debt, gross | $ 0 | |
Unamortized debt discount - revalued warrants | 0 | |
Unamortized debt discount - warrants | 0 | |
Unamortized debt discount - BCF | 0 | |
Unamortized debt discount - debt issuance costs | 0 | |
Accrued interest | 0 | |
Convertible debt, net | ||
Promissory Notes | ||
Convertible debt, gross | 0 | |
Unamortized debt discount - revalued warrants | 0 | |
Unamortized debt discount - warrants | 0 | |
Unamortized debt discount - BCF | 0 | |
Unamortized debt discount - debt issuance costs | 0 | |
Accrued interest | 0 | |
ADEC Notes | ||
Convertible debt, gross | 0 | |
Unamortized debt discount - revalued warrants | 0 | |
Unamortized debt discount - warrants | 0 | |
Unamortized debt discount - BCF | 0 | |
Unamortized debt discount - debt issuance costs | 0 | |
Accrued interest | $ 0 |
Other Liabilities (Details)
Other Liabilities (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Other Liabilities [Abstract] | ||
Due to Mayoly, current | $ 410,026 | $ 392,989 |
Lease liabilities, current | 74,156 | 83,235 |
Other liabilities, current | 8,633 | 0 |
Total other liabilities, current | 492,815 | 476,224 |
Lease liabilities, noncurrent | 31,469 | 0 |
Total other liabilities, noncurrent | $ 31,469 | $ 0 |
Equity (Details Narrative)
Equity (Details Narrative) - shares | Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2019 |
Equity [Abstract] | |||
Common stock shares, issued | 28,881,984 | 26,800,519 | 28,881,984 |
Common stock shares, outstanding | 28,881,984 | 26,800,519 | 28,881,984 |
Warrants (Details)
Warrants (Details) - $ / shares | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Warrants issued and exercisable, beginning | 5,378,288 | 3,112,715 |
Granted | 19,881,654 | 275,663 |
Expired | (59,774) | 0 |
Exercised | 0 | 0 |
Warrants issued and exercisable, ending | 25,200,168 | 3,388,378 |
Weighted average exercise price, beginning | $ 2.53 | $ 4.83 |
Weighted average exercise price, granted | 0.88 | 2.68 |
Weighted average exercise price warrants, expired | 5.15 | 0 |
Weighted average exercise price warrants, exercised | 0 | 0 |
Weighted average exercise price, ending | 1.22 | 3.51 |
Minimum | ||
Exercise price outstanding, beginning | 1.07 | 2.55 |
Exercise price granted | 0.85 | 2.55 |
Exercise price expired | 3.25 | |
Exercise price outstanding, ending | 0.85 | 1.50 |
Maximum | ||
Exercise price outstanding, beginning | 7.37 | 7.37 |
Exercise price granted | 1.42 | 2.82 |
Exercise price expired | 7.37 | |
Exercise price outstanding, ending | $ 7.37 | $ 7.37 |
Warrants (Details 1)
Warrants (Details 1) | 9 Months Ended |
Sep. 30, 2020$ / sharesshares | |
Number of shares under warrants | 25,200,168 |
Weighted average remaining contract life in years | 4 years 3 months 11 days |
Weighted average exercise price | $ / shares | $ 1.22 |
Warrant 1 | |
Exercise price | 0.00 - 0.99 |
Number of shares under warrants | 17,718,665 |
Weighted average remaining contract life in years | 4 years 9 months 15 days |
Warrant 2 | |
Exercise price | 1.00 - 1.99 |
Number of shares under warrants | 5,362,464 |
Weighted average remaining contract life in years | 3 years 7 months 24 days |
Warrant 3 | |
Exercise price | 2.00 - 2.99 |
Number of shares under warrants | 320,063 |
Weighted average remaining contract life in years | 2 years 9 months 25 days |
Warrant 4 | |
Exercise price | 3.00 - 3.99 |
Number of shares under warrants | 635,019 |
Weighted average remaining contract life in years | 1 year 6 months 25 days |
Warrant 5 | |
Exercise price | 4.00 - 4.99 |
Number of shares under warrants | 164,256 |
Weighted average remaining contract life in years | 1 year 6 months 11 days |
Warrant 6 | |
Exercise price | 5.00 - 5.99 |
Number of shares under warrants | 783,132 |
Weighted average remaining contract life in years | 1 year 4 months 28 days |
Warrant 7 | |
Exercise price | 6.00 - 6.99 |
Number of shares under warrants | 187,750 |
Weighted average remaining contract life in years | 1 year 4 days |
Warrant 8 | |
Exercise price | 7.00 - 7.37 |
Number of shares under warrants | 28,819 |
Weighted average remaining contract life in years | 3 months 11 days |
Warrants (Details 2)
Warrants (Details 2) | 9 Months Ended |
Sep. 30, 2020 | |
Expected life (in years) | 5 years |
Volatility | 84.70% |
Dividend yield | 0.00% |
Minimum | |
Risk-free interest rate | 0.28% |
Maximum | |
Risk-free interest rate | 1.67% |
Stock Options (Details)
Stock Options (Details) | 9 Months Ended |
Sep. 30, 2020 | |
Expected life (in years) | 5 years |
Volatility | 84.70% |
Dividend yield | 0.00% |
Stock Option | |
Expected life (in years) | 10 years |
Volatility | 84.00% |
Risk-free interest rate, minimum | 0.62% |
Risk-free interest rate, maximum | 1.88% |
Dividend yield | 0.00% |
Stock Options (Details 1)
Stock Options (Details 1) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Stock Option | ||
Number of options outstanding, beginning | 16,775,000 | 994,000 |
Number of options granted | 2,870,012 | 893,500 |
Number of options expired | 0 | 0 |
Number of options canceled | (235,006) | 0 |
Number of options exercised | 0 | 0 |
Number of options outstanding, ending | 4,312,506 | 1,887,500 |
Number of options exercisable | 1,084,834 | 994,000 |
Weighted average exercise price outstanding, beginning | $ 2.17 | $ 3.58 |
Weighted average exercise price granted | 0.89 | 1.70 |
Weighted average exercise price expired | 0 | 0 |
Weighted average exercise price canceled | 1.94 | 0 |
Weighted average exercise price exercised | 0 | 0 |
Weighted average exercise price outstanding,ending | $ 1.38 | $ 2.58 |
Weighted average remaining contract life in years, beginning | 5 years 4 months 13 days | 5 years 5 months 1 day |
Weighted average remaining contract life in years granted | 9 years 9 months 15 days | 4 years 11 months 16 days |
Weighted average remaining contract life in years canceled | 3 years 3 months 11 days | |
Weighted average remaining contract life in years, ending | 7 years 11 months 8 days | 4 years 8 months 8 days |
Weighted average remaining contract life in years exercisable | 5 years 2 months 1 day | |
Aggregate intrinsic value outstanding, beginning | $ 0 | $ 0 |
Aggregate intrinsic value granted | 0 | 0 |
Aggregate intrinsic value expired | 0 | 0 |
Aggregate intrinsic value canceled | 0 | 0 |
Aggregate intrinsic value exercised | 0 | 0 |
Aggregate intrinsic value outstanding, ending | $ 0 | $ 0 |
Non-vested Stock Option | ||
Number of options outstanding, beginning | 883,500 | 244,500 |
Number of options granted | 2,870,012 | 893,500 |
Number of options vested | (593,750) | (274,500) |
Number of options expired | 0 | 0 |
Number of options canceled | (160,006) | 0 |
Number of options exercised | 0 | 0 |
Number of options outstanding, ending | 2,999,756 | 863,500 |
Weighted average exercise price outstanding, beginning | $ 1.33 | $ 3.05 |
Weighted average exercise price granted | 0.98 | 1.70 |
Weighted average exercise price vested | 2.59 | 2.91 |
Weighted average exercise price expired | 0 | 0 |
Weighted average exercise price canceled | 1.30 | 0 |
Weighted average exercise price exercised | 0 | 0 |
Weighted average exercise price outstanding,ending | $ 0.98 | $ 1.70 |
Weighted average remaining contract life in years, beginning | 6 years 3 months 4 days | 4 years 6 months 11 days |
Weighted average remaining contract life in years granted | 10 years | 4 years 11 months 16 days |
Weighted average remaining contract life in years vested | 6 years 10 months 17 days | 3 years 10 months 17 days |
Weighted average remaining contract life in years canceled | 7 years 1 month 6 days | |
Weighted average remaining contract life in years, ending | 8 years 9 months | 4 years 9 months 7 days |
Aggregate intrinsic value outstanding, beginning | $ 0 | $ 0 |
Aggregate intrinsic value granted | 0 | 0 |
Aggregate intrinsic value vested | 0 | 0 |
Aggregate intrinsic value expired | 0 | 0 |
Aggregate intrinsic value canceled | 0 | 0 |
Aggregate intrinsic value exercised | 0 | 0 |
Aggregate intrinsic value outstanding, ending | $ 0 | $ 0 |
Leases (Details)
Leases (Details) | Sep. 30, 2020 |
Leases [Abstract] | |
Weighted-average remaining lease term | 1 year 1 month 28 days |
Weighted-average discount rate | 6.00% |
Leases (Details 1)
Leases (Details 1) | Sep. 30, 2020USD ($) |
Leases [Abstract] | |
2020 | $ 30,565 |
2021 | 55,420 |
2022 | 23,375 |
Total lease payments | 109,360 |
Less: imputed interest | (3,736) |
Present value of lease liabilities | $ 105,624 |
Leases (Details Narrative)
Leases (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Leases [Abstract] | ||||
Lease expense | $ 55,418 | $ 52,057 | $ 128,663 | $ 153,723 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |||
Gross deferred tax asset | $ 20,059,000 | $ 16,372,000 | |
Deferred tax asset valuation allowance | 20,059,000 | 16,372,000 | |
Change in valuation allowance | 3,687,000 | $ 2,108,000 | |
Net operating loss carry-forwards | $ 22,120,000 | $ 19,475,000 |
Net Loss per Common Share (Deta
Net Loss per Common Share (Details Narrative) - shares | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Convertible Debt | ||
Anti-dilutive shares excluded from earnings per share | 29,314,408 | 0 |
Warrants | ||
Anti-dilutive shares excluded from earnings per share | 25,200,168 | 3,388,378 |
Restricted stock | ||
Anti-dilutive shares excluded from earnings per share | 387,000 | 416,000 |
Stock Option | ||
Anti-dilutive shares excluded from earnings per share | 4,312,506 | 1,887,500 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Accounts payable | $ 1,686,003 | $ 1,754,682 | |
JIST | |||
Accounts payable | 348,400 | $ 478,400 | |
Consultant | |||
Accounts payable | $ 10,000 | $ 50,000 |