Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 11, 2020 | Jun. 30, 2019 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2019 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity File Number | 001-39126 | ||
Entity Registrant Name | CNS Pharmaceuticals, Inc. | ||
Entity Central Index Key | 0001729427 | ||
Entity Incorporation, State or Country Code | NV | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | No | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Elected Not To Use the Extended Transition Period | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 0 | ||
Entity Common Stock, Shares Outstanding | 16,450,234 |
Balance Sheets
Balance Sheets - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Current Assets: | ||
Cash and cash equivalents | $ 7,241,288 | $ 282,736 |
Restricted cash | 0 | 272,397 |
Prepaid expenses | 652,622 | 33,000 |
Total current assets | 7,893,910 | 588,133 |
Fixed Assets: | ||
Furniture and equipment, net | 18,165 | 0 |
Long-Term Assets: | ||
Deferred issuance costs | 0 | 95,200 |
Total Assets | 7,912,075 | 683,333 |
Current Liabilities: | ||
Accounts payable | 243,666 | 128,071 |
Accounts payable and accrued expenses - related party | 45,833 | 794 |
Accrued expenses | 21,500 | 23,599 |
Convertible notes payable, net of discount | 0 | 281,918 |
Notes payable | 0 | 35,000 |
SAFE agreements | 0 | 763,249 |
Total current liabilities | 310,999 | 1,232,631 |
Total Liabilities | 310,999 | 1,232,631 |
Commitments and contingencies | ||
Stockholders' Equity (Deficit): | ||
Preferred stock, $0.001 par value, 5,000,000 shares authorized and 0 shares issued and outstanding | 0 | 0 |
Common stock, $0.001 par value, 75,000,000 shares authorized and 16,450,234 and 12,694,504 shares issued and outstanding, respectively | 16,450 | 12,695 |
Additional paid-in capital | 19,073,098 | 7,049,268 |
Accumulated Deficit | (11,488,472) | (7,611,261) |
Total Stockholders' Equity (Deficit) | 7,601,076 | (549,298) |
Total Liabilities and Stockholders' Equity (Deficit) | $ 7,912,075 | $ 683,333 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock shares authorized | 75,000,000 | 75,000,000 |
Common stock shares issued | 16,450,234 | 12,694,504 |
Common stock shares outstanding | 16,450,234 | 12,694,504 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock shares authorized | 5,000,000 | 5,000,000 |
Preferred stock shares issued | 0 | 0 |
Preferred stock shares outstanding | 0 | 0 |
Statements of Operations
Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Operating expenses: | ||
General and administrative | $ 1,978,643 | $ 860,520 |
Research and Development | 1,854,334 | 21,267 |
Total operating expenses | 3,832,977 | 881,787 |
Loss from operations | (3,832,977) | (881,787) |
Other expenses: | ||
Loss on settlement of liabilities | 0 | (6,286,841) |
Loss on change in fair value of SAFE agreements | 0 | (122,120) |
SAFE agreement expenses | 0 | (54,454) |
Interest expense | (26,152) | (28,615) |
Amortization of debt discount | (18,082) | (18,082) |
Total other expense | (44,234) | (6,510,112) |
Net loss | $ (3,877,211) | $ (7,391,899) |
Loss per share - basic and diluted | $ (0.28) | $ (0.70) |
Weighted average shares outstanding - basic and diluted | 13,647,908 | 10,510,551 |
Statements of Stockholders' Equ
Statements of Stockholders' Equity (Deficit) - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning balance, shares at Dec. 31, 2017 | 10,270,667 | |||
Beginning balance, value at Dec. 31, 2017 | $ 10,271 | $ 150,559 | $ (219,362) | $ (58,532) |
Common stock issued for cash, shares | 260,337 | |||
Common stock issued for cash, value | $ 260 | 390,240 | 390,500 | |
Common stock issued for services, shares | 5,000 | |||
Common stock issued for services, value | $ 5 | 7,495 | 7,500 | |
Stock-based compensation | 102,740 | 102,740 | ||
Placement agent warrrants issued with convertible notes | 15,163 | 15,163 | ||
Common stock and warrants issued for extinguishment of convertible notes payable and accrued interest, shares | 2,158,500 | |||
Common stock and warrants issued for extinguishment of convertible notes payable and accrued interest, value | $ 2,159 | 6,383,071 | 6,385,230 | |
Net loss | (7,391,899) | (7,391,899) | ||
Ending balance, shares at Dec. 31, 2018 | 12,694,504 | |||
Ending balance, value at Dec. 31, 2018 | $ 12,695 | 7,049,268 | (7,611,261) | (549,298) |
Common stock issued for cash, shares | 3,261,250 | |||
Common stock issued for cash, value | $ 3,261 | 10,291,486 | 10,294,747 | |
Common stock issued for services, shares | 75,000 | |||
Common stock issued for services, value | $ 75 | 149,925 | 150,000 | |
Stock-based compensation | 477,096 | 477,096 | ||
Common stock and warrants issued for extinguishment of convertible notes payable and accrued interest, shares | 228,329 | |||
Common stock and warrants issued for extinguishment of convertible notes payable and accrued interest, value | $ 228 | 342,265 | 342,493 | |
Conversion of SAFE agreements, shares | 191,151 | |||
Conversion of SAFE agreements, value | $ 191 | 763,058 | 763,249 | |
Net loss | (3,877,211) | (3,877,211) | ||
Ending balance, shares at Dec. 31, 2019 | 16,450,234 | |||
Ending balance, value at Dec. 31, 2019 | $ 16,450 | $ 19,073,098 | $ (11,488,472) | $ 7,601,076 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Cash Flows from Operating Acitivites | ||
Net loss | $ (3,877,211) | $ (7,391,899) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Stock-based compensation | 477,096 | 110,240 |
Common stock issued for services | 150,000 | 0 |
Amortization of debt discount | 18,082 | 18,082 |
Deferred financing costs | 102,225 | 0 |
Depreciation | 1,955 | 0 |
Loss on change in fair value of SAFE agreements | 0 | 122,120 |
SAFE agreement expenses | 0 | 54,454 |
Loss on settlement of convertible notes payable | 0 | 6,286,841 |
Changes in operating assets and liabilities | ||
Prepaid expenses | (619,622) | 18,651 |
Accounts payable | 108,570 | 85,574 |
Accounts payable - related party | 45,039 | (14,206) |
Accrued expenses | 40,394 | (6,242) |
Net cash used in operating activities | (3,553,472) | (716,385) |
Cash Flows from Investing Activities: | ||
Purchase of furniture and equipment | (20,120) | 0 |
Net cash used in investing activities | (20,120) | 0 |
Cash Flows from Financing Activities: | ||
Proceeds from convertible notes payable | 0 | 300,000 |
Payment of placement agent fee | 0 | (21,000) |
Payments of deferred issuance costs | 0 | (95,200) |
Payments on notes payable | (35,000) | 0 |
Proceeds from SAFE agreements | 0 | 586,675 |
Proceeds from sale of common stock | 10,294,747 | 390,500 |
Net cash provided by financing activities | 10,259,747 | 1,160,975 |
Net change in cash, cash equivalents and restricted cash | 6,686,155 | 444,590 |
Cash, cash equivalents and restricted cash, at beginning of period | 555,133 | 110,543 |
Cash, cash equivalents and restricted cash, at end of period | 7,241,288 | 555,133 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 3,993 | 0 |
Cash paid for income taxes | 0 | 0 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Conversion of SAFE agreements | 763,249 | 0 |
Common stock and warrants issued for extinguishment of convertible notes payable and accrued interest | 342,493 | 98,389 |
Placement agent warrants issued with convertible notes payable | $ 0 | $ 15,163 |
1. Nature of Business
1. Nature of Business | 12 Months Ended |
Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business | Note 1 – Nature of Business CNS Pharmaceuticals, Inc. is a clinical pharmaceutical company organized as a Nevada corporation on July 27, 2017 to focus on the development of anti-cancer drug candidates. |
2. Summary of Significant Accou
2. Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 – Summary of Significant Accounting Policies The accompanying financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). The Company’s fiscal year end is December 31. Use of Estimates in Financial Statement Presentation - Liquidity Cash and Cash Equivalents - Restricted Cash December 31, 2019 December 31, 2018 Cash and cash equivalents $ 7,241,288 $ 282,736 Restricted cash – 272,397 Total $ 7,241,288 $ 555,133 Property and Equipment - Leasehold improvement Shorter of estimated useful lives or the term of the lease Computer equipment 2 years Machinery and equipment 5 years Furniture and office equipment 7 years Repairs and maintenance costs are expensed as incurred. Long-lived Asset - Beneficial Conversion Feature Fair Value of Financial Instruments - Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company utilizes a three-level valuation hierarchy for disclosures of fair value measurements, defined as follows: Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value. The Company does not have any assets or liabilities that are required to be measured and recorded at fair value on a recurring basis. Related Parties - Related Party Disclosures, Income Taxes - The Company accounts for uncertain tax positions in accordance with the provisions of Accounting Standards Codification (ASC) 740-10 which prescribes a recognition threshold and measurement attribute for financial statement disclosure of tax positions taken, or expected to be taken, on its tax return. The Company evaluates and records any uncertain tax positions based on the amount that management deems is more likely than not to be sustained upon examination and ultimate settlement with the tax authorities in the tax jurisdictions in which it operates. Stock-based Compensation – Loss Per Common Share Research and Development Costs - Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606), which will replace numerous requirements in U.S. GAAP, including industry-specific requirements, and provide companies with a single revenue recognition model for recognizing revenue from contracts with customers. The core principle of the new standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In August 2015, the FASB approved a proposal to defer the effective date of the guidance until annual and interim reporting periods beginning after December 15, 2017. The Company adopted this standard as of January 1, 2018. The adoption of this standard did not have an impact on the Company’s financial statements as the Company has generated no revenue to date. In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 affects the accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements of financial instruments. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company adopted this standard as of January 1, 2018. The adoption of this standard did not have a significant impact on the Company’s financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). Under ASU 2016-02, an entity will be required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. For public companies, ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. The Company adopted this standard as of January 1, 2019. The adoption of this standard did not have an impact on the Company’s financial statements due to the lack of lease agreements for the Company at this time. The Company elected the short-term lease recognition exemption for its leases. For those leases with a lease term of 12 months or less, the Company will not recognize ROU assets or lease liabilities. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230). This ASU applies to all entities that are required to present a statement of cash flows under Topic 230. The amendments provide guidance on eight specific cash flow issues and includes clarification on how these items should be classified in the statement of cash flows and is designed to help eliminate diversity in practice as to where items are classified in the cash flow statement. Furthermore, in November 2016, the FASB issued additional guidance on this Topic that requires amounts generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with earlier application permitted for all entities. The Company adopted this standard as of January 1, 2018. The adoption of this standard did not have a significant impact on the Company’s financial statements. In June 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation (Topic 718) - Improvements to Nonemployee Share-Based Payment Accounting, which aligns the accounting for share-based payment awards issued to employees and nonemployees. Under ASU No. 2018-07, the existing employee guidance will apply to nonemployee share-based transactions (as long as the transaction is not effectively a form of financing), with the exception of specific guidance related to the attribution of compensation cost. The cost of nonemployee awards will continue to be recorded as if the grantor had paid cash for the goods or services. In addition, the contractual term will be able to be used in lieu of an expected term in the option-pricing model for nonemployee awards. The Company adopted this guidance on January 1, 2019 with no impact to its consolidated financial statements. The Company does not believe that any other recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying financial statements. |
3. Notes Payable
3. Notes Payable | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Notes Payable | Note 3 –Notes Payable Convertible Notes Payable On June 14, 2018, the Company entered into an agreement to issue a 10% convertible note in an aggregate of $300,000 in principal amount of convertible notes, which principal and accrued interest automatically converted into shares of common stock upon the closing of the Company’s IPO at a conversion rate of $1.50 per share. In conjunction with this convertible note payable a placement fee of 14,000 warrants were issued. The warrants have a 5-year life and an exercise price of $1.50. These warrants were recorded for $15,163 as a debt discount. In addition, $21,000 of placement agent fees were paid related to this note which was also recorded as a debt discount. As of December 31, 2019, the debt discount was fully amortized. On November 13, 2019, upon the closing of the IPO, the 10% convertible note of $300,000 in principal plus accrued interest of $42,493 automatically converted into 228,329 shares of common stock at a conversion rate of $1.50 per share. On December 31, 2018, the Company amended the convertible notes it issued in 2017 to allow the notes to be converted prior to the Company’s IPO at the holders’ option. Certain debtholders then exercised their right to convert the outstanding principal and accrued interest of their outstanding notes on December 31, 2018. A total of $38,670 of outstanding principal and $3,128 of accrued interest was converted into 2,158,500 shares of common stock. Additionally, certain note holders entered into settlement agreements to extinguish their remaining principal balance of $48,155 and remaining accrued interest of $8,434 in exchange for 2,454,071 warrants to purchase common stock at an exercise price of $0.70 per share for a term of five years. The December 31, 2018 amendment, conversion and settlement was accounted for as an extinguishment of debt and a loss on extinguishment of $6,286,841 was recognized. Notes Payable During 2017, the Company issued two notes payable for total cash proceeds of $35,000. The notes bear interest at the rate of 10% per year and originally matured on January 31, 2018. Prior to maturity, the notes were extended through September 30, 2018, and again extended through December 31, 2018. The notes and accrued interest were paid in full in January 2019. |
4. SAFE Agreements
4. SAFE Agreements | 12 Months Ended |
Dec. 31, 2019 | |
Safe Agreements | |
SAFE Agreements | Note 4 – SAFE Agreements During the year ended December 31, 2018, the Company entered into SAFE agreements (Simple Agreement for Future Equity) with investors through a Regulation Crowdfunding campaign in exchange for cash investments totaling $628,558. Upon an initial public offering of the Company’s common shares or a change of control, the amount invested under the SAFE agreements automatically converted into the Company’s common shares. The number of shares the SAFE agreement investors received was based on a 16% discount to the pricing in the triggering equity financing. The SAFE agreements had no interest rate or maturity date and the SAFE investors had no voting right prior to conversion. In accordance with the SAFE agreements, 50% of the funds raised, net of all fees associated with the use of a campaign platform were held in an escrow account to be released to the Company upon successfully acquiring the patent rights from HPI and upon the Company’s spending on Phase 2 clinical trials of an amount equal to at least half of the escrow funds prior to December 28, 2019. The SAFE agreements were recorded as a liability of $763,249 as of December 31, 2018. On November 13, 2019, upon the closing of the IPO, the amount invested under the SAFE agreements automatically converted into 191,151 common shares, and the $269,399 of funds held in escrow were released to the Company. |
5. Equity
5. Equity | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Equity | Note 5 – Equity In October 2018 the Company amended the articles of incorporation to increase the authorized shares of common stock to 75,000,000 having a par value of $0.001 per share. In addition, the Company authorized 5,000,000 shares of preferred stock to be issued having a par value of $0.001. The specific rights of the preferred stock shall be determined by the board of directors. Common Stock On January 12, 2018, the Company issued 5,000 shares of common stock valued at $7,500 to a consultant for services. On April 10, 2018, the Company engaged Boustead Securities, LLC (“Boustead”) to act as exclusive financial advisor related to the Company’s IPO. The agreement expired in April 2019 prior to the Company completing its IPO. Upon expiration of the agreement, $102,225 of underwriting fees previously capitalized as deferred issuance costs were expensed. In addition, an entity related to Boustead was a holder of the Company’s outstanding convertible debt. On November 13, 2019, upon the closing of the IPO, the 10% convertible note of $300,000 in principal plus accrued interest of $42,493 automatically converted into 228,329 shares of common stock at a conversion rate of $1.50 per share. During the year ended December 31, 2018, the Company issued 260,337 shares of common stock for cash proceeds of $390,500. On December 31, 2018, the Company issued 2,158,500 shares of common stock upon conversion of debt and accrued interest. See Note 3. On April 11, 2019, the Company’s board of directors approved a Bridge Offering private placement up to a maximum of 817,500 shares of common stock at $2.00 per share. As of December 31, 2019, 817,500 shares have been sold for proceeds net of fundraising expenses of $1,507,170. On April 11, 2019, the Company entered into a consulting agreement with a consultant to provide services and advice related to social media, investor relations, marketing and public markets. The initial term of the agreement is twelve months. As consideration for entering into this agreement the Company issued a total of 75,000 shares of common stock. The shares vest over an eight-month period in equal monthly installments provided that the consultant is providing services on each vesting date. If the agreement is terminated prior to full vesting the Company shall have the right to repurchase unvested shares from the consultant for $0.001 per share. During the year ended December 31, 2019, $150,000 of expense has been recognized related to this agreement. On November 13, 2019, the Company closed its IPO of 2,125,000 shares of its common stock at a price to the public of $4.00 per share. The net proceeds from the offering were $7,601,827 after deducting $898,173 of underwriting fees and other offering expenses. On November 20, 2019, the Company closed the issuance of an additional 318,750 shares of its common stock pursuant to the exercise in full of the underwriters’ over-allotment option in connection with its IPO. The additional shares were sold at the IPO price of $4.00 per share less underwriting discounts and commissions of $89,250 for total net proceeds of $1,185,750. Stock Options In 2017, the Board of Directors of the Company approved the CNS Pharmaceuticals, Inc. 2017 Stock Plan (the “Plan”). The Plan allows for the Board of Directors to grants various forms of incentive awards for up to 2,000,000 shares of common stock. No key employee may receive more than 500,000 shares of common stock (or options to purchase more than 500,000 shares of common stock) in a single year. On February 19, 2018, the Company issued non-qualified stock options to a new member of our Scientific Advisory Committee. The options cover 100,000 shares, have an original life of ten years and vest in four equal installments on each of the succeeding four anniversary dates. The exercise price is $1.50 for these options. The fair value of the options was $138,017 on the grant date. On June 25, 2018, the Company issued non-qualified stock options to a new member of the board of directors. The options cover 100,000 shares, have an original life of ten years and vest over 36 months. The options had a fair value of $138,016 at grant date. The exercise price per share is $1.50 for these shares. On July 9, 2018, the Company issued non-qualified stock options to two new members of the board of directors. The options cover 200,000 shares, have an original life of ten years and vest over 36 months. The options had a fair value of $276,024 at grant date. The exercise price per share is $1.50 for these shares. On June 28, 2019, the Board of Directors approved a grant 889,500 to officers and employees of the Company. The options vest in four equal annual instalments beginning on the first anniversary following issuance. The options have a ten-year term and have an exercise price of $2.00 per share. The fair value of the options at issuance was $1,631,737. On September 14, 2019, the Company, entered into an employment agreement with Christopher Downs to serve as its Chief Financial Officer commencing on the closing date of the Company’s IPO, which occurred on November 13, 2019. Under the agreement, upon the closing of the IPO, Mr. Downs was granted a ten-year option to purchase 300,000 shares at an exercise price per share equal to the public offering price per share of the shares sold in the IPO. The option vests in four equal installments on each of the succeeding four anniversary dates of the option grant, provided Mr. Downs is employed by the Company on each such vesting date. The fair value of the options at issuance was $1,085,708. During the years ended December 31, 2019 and 2018, the Company recognized $400,834 and $102,740 of stock-based compensation, respectively, related to outstanding stock options. At December 31, 2019, the Company had $2,753,499 of unrecognized expenses related to options. The following table summarizes the stock option activity for the years ended December 31, 2019 and 2018: Options Weighted- Outstanding, December 31, 2017 275,000 $ 0.045 Granted 400,000 1.5 Exercised – – Forfeited – – Expired – – Outstanding, December 31, 2018 675,000 $ 0.91 Granted 1,189,500 2.50 Exercised – – Forfeited (100,000 ) 2.00 Expired – – Outstanding, December 31, 2019 1,764,500 $ 1.92 The following table discloses information regarding outstanding and exercisable options at December 31, 2019: Outstanding Exercisable Exercise Price Number of Weighted Weighted Number of Weighted $4.00 300,000 9.86 – $2.00 789,500 9.50 – $1.50 400,000 8.42 175,012 $0.045 275,000 7.89 181,956 Total 1,764,500 $1.92 9.06 356,968 $0.76 As of December 31, 2019, the aggregate intrinsic value of options vested and outstanding was $1,139,318. The aggregate fair value of the options measured during the years ended December 31, 2019 and 2018 were calculated using the Black-Scholes option pricing model based on the following assumptions: Year Ended December 31, 2019 Year Ended December 31,2018 Fair value of common stock on measurement date $2.00 to $4.00 per share $1.50 per share Risk free interest rate (1) 1.74% to 2.00% 2.5% to 2.88% Volatility (2) 102.55% to 106.71% 106.4% to 106.9% Dividend yield (3) 0% 0% Expected term (in years) 10 10 (1) The risk-free interest rate was determined by management using the market yield on U.S. Treasury securities with comparable terms as of the measurement date. (2) The trading volatility was determined by calculating the volatility of the Company’s peer group. (3) The Company does not expect to pay a dividend in the foreseeable future. As of December 31, 2019, there are 235,500 awards remaining to be issued under the Plan. Stock Warrants The following table summarizes the stock warrant activity for the year ended December 31, 2019: Warrants Weighted- Outstanding, December 31, 2017 1,206,059 $ 11.00 Granted 2,468,071 0.70 Exercised – – Forfeited – – Expired – – Outstanding, December 31, 2018 3,674,130 $ 4.08 Granted 312,500 2.87 Exercised – – Forfeited – – Expired – – Outstanding, December 31, 2019 3,986,630 $ 3.99 In April 2019, the Company entered into two consulting agreements with consultants to provide services and advice related to company operations, investor relations, marketing, corporate structure, financing and public markets. The initial term of the agreement is eighteen months. As consideration for entering into this agreement the Company issued to each consultant 50,000 common stock warrants with a term of five years and an exercise price of $1.75. The warrants vest over an eighteen-month period in equal monthly installments provided that the consultant is providing services on each vesting date. In addition, each consultant will earn $5,000 per month for these services. Payment of the cash portion of the fee were accrued until the Company completed its IPO on November 13, 2019. During the year ended 2019, the Company paid $80,000 related to the two consulting agreements. The common stock warrants were valued at $161,500 and were recognized over the 18-month vesting term. During the year ended December 31, 2019, $76,262 has been recognized as an expense. At December 31, 2019, the Company had $85,238 of unrecognized expenses related to options. The following table discloses information regarding outstanding and exercisable warrants at December 31, 2019: Outstanding Exercisable Exercise Price Number of Weighted Weighted Average Number of Weighted $11.00 1,206,059 2.64 1,206,059 $2.00 63,750 4.43 63,750 $4.00 148,750 4.86 – $1.75 100,000 4.29 44,448 $1.50 14,000 3.45 14,000 $0.70 2,454,071 4.00 2,454,071 Total 3,986,630 $3.99 3.63 3,782,328 $4.02 As of December 31, 2019, the aggregate intrinsic value of warrants vested and outstanding was $8,232,129. Other On April 17, 2019, the Company entered into an agreement with a foreign registered broker dealer to assist in fundraising on the Company’s behalf. Fees for these services consisted of a cash fee of 10% of amounts raised and an equity fee of 10% of the amounts raised. The equity fee was payable in five-year common stock warrants with an exercise price of $2.00 per share. The Company used the Black-Scholes option valuation model to estimate the fair value of the warrants. As of December 31, 2019, 63,750 warrants with a fair value of $101,206 were issued under this agreement and recorded to additional paid in capital as a cost of capital. On June 3, 2019, the Company engaged The Benchmark Company, LLC (“Benchmark”) to act as exclusive financial advisor related to the Company’s NASDAQ Initial Public Offering. Benchmark was compensated a success fee of 7% of the gross offering proceeds, expense allowance of 1% of the gross offering proceeds and warrants equal to 7% of the shares sold with a five-year term and an exercise price equal to the price of the initial public offering. In addition, the Company agreed to reimburse Benchmark for expenses. On November 13, 2019, the Company closed its initial public offering of 2,125,000 shares of its common stock at a price to the public of $4.00 per share. In conjunction with the closing Benchmark was issued 148,750 common stock warrants with a term of five years and an exercise price of $4.00. The warrants become exercisable on May 5, 2020. The Company used the Black-Scholes option valuation model to estimate the fair value of the warrants. As of December 31, 2019, the fair value of the 148,750 warrants issued was $451,722 and recorded to additional paid in capital as a cost of capital. |
6. Income Taxes
6. Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 6 – Income Taxes The Company is subject to United States federal income taxes at an approximate rate of 21%. The reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax expense as reported is as follows: Year Ended Year Ended Income tax benefit computed at the statutory rate $ 814,200 1,552,300 Non-deductible expenses (83,400 ) (1,369,000 ) Change in valuation allowance (730,800 ) (183,300 ) Provision for income taxes $ – – Significant components of the Company’s deferred tax assets after applying enacted corporate income tax rates are as follows: As of As of Deferred income tax assets Net operating losses $ 947,600 $ 216,800 Valuation allowance (947,600 ) (216,800 ) Net deferred income tax assets $ – $ – The Company has an operating loss carry forward of approximately $4,512,000, which expires commencing in 2037. |
7. Commitments and Contingencie
7. Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 7 – Commitments and Contingencies Employment and Consulting Agreements On September 1, 2017, the Company entered into an employment agreement with Mr. John Climaco pursuant to which Mr. Climaco agreed to serve as Chief Executive Officer and Director of the Company commencing on such date for an initial term of three years. The agreement provides for an initial annual salary of $150,000. The annual salary shall increase at the completion of the Company’s initial public offering to an annual salary of $300,000. Pursuant to the employment agreement, the Company and Mr. Climaco agreed to issue Mr. Climaco 900,000 shares of common stock in exchange for $900, which purchase was finalized on September 30, 2017. The common shares may be reacquired by the Company if employment is terminated prior to the initial public offering. After the completion of the initial public offering a portion of the shares may be reacquired by the Company if employment is terminated prior to the expiration of the agreement. Effective March 1, 2019, the employment agreement was amended to increase the annual salary to $186,000 and establish Mr. Climaco as a full-time employee. On June 28, 2019, the compensation committee of the board of directors agreed to modify Mr. Climaco’s compensation to increase the annual base salary to $440,000 and Mr. Climaco will be entitled to a cash bonus with a target of 55% of his base salary following the initial public offering. On July 27, 2017, the Company entered into a consulting agreement with a company owned by Mr. Matthew Lourie pursuant to which Mr. Lourie agreed to serve as Chief Financial Officer of the Company on a part time basis commencing on such date for an initial term of one year, which will be automatically renewed for additional one-year terms unless either party chooses to cancel the agreement with 30 days-notice. The agreement provides for a monthly compensation of $5,000 and a one-time right to purchase 15,000 shares of common stock at $0.001 per share. The common shares may be reacquired by the Company if the agreement is terminated by Mr. Lourie prior to the initial public offering. After the completion of the initial public offering a portion of the shares may be reacquired by the Company if the agreement is terminated by Mr. Lourie prior to two years after the initial public offering. The board agreed to waive the reacquisition right on these shares. On November 13, 2019, upon the closing of the IPO, Mr. Lourie resigned as Chief Financial Officer but continued to provide consulting services based on an hourly rate. On September 14, 2019, the Company, entered into an employment agreement with Christopher Downs to serve as its Chief Financial Officer commencing on the closing date of the Company’s IPO, which occurred on November 13, 2019. The initial term of the Employment Agreement will continue for a period of three years. The Employment Agreement provides for an initial annual base salary of $300,000. Mr. Downs may receive an annual bonus (pro rated for 2019), targeted at 35% of base salary. Under the agreement, upon the closing of the IPO, Mr. Downs was granted a ten-year option to purchase 300,000 shares at an exercise price per share equal to the public offering price per share of the shares sold in the IPO. The option vests in four equal installments on each of the succeeding four anniversary dates of the option grant, provided Mr. Downs is employed by the Company on each such vesting date. WP744 Portfolio (Berubicin) On November 21, 2017, the Company entered into a Collaboration and Asset Purchase Agreement with Reata Pharmaceuticals, Inc. (“Reata”). Through this agreement, the Company purchased all of Reata’s rights, title, interest and previously conducted research and development results in the chemical compound commonly known as Berubicin. In exchange for these rights, the Company agreed to pay Reata an amount equal to 2.25% of the net sales of Berubicin for a period of 10 years from the Company’s first commercial sale of Berubicin plus $10,000. Reata also agreed to collaborate with the Company on the development of Berubicin, from time to time. On December 28, 2017, the Company entered into a Technology Rights and Development Agreement with Houston Pharmaceuticals, Inc. (“HPI”). HPI is owned by the person who controls a majority of our shares. Pursuant to this agreement, the Company obtained a worldwide exclusive license to the chemical compound commonly known as WP744. In exchange for these rights, the Company agreed to pay consideration to HPI as follows: (i) a royalty of 2% of net sales of any product utilizing WP744 for a period of ten years after the first commercial sale of such; and (ii) $100,000 upon beginning Phase II clinical trials; and (iii) $200,000 upon the approval by the FDA of a New Drug Application for any product utilizing WP744; and (iv) a series of quarterly development payments totaling $750,000 beginning immediately after the Company’s raise of $7,000,000 of investment capital. In addition, the Company issued 200,000 shares of the Company’s common stock valued at $0.045 per share to HPI upon execution of the agreement. Our rights pursuant to the HPI License are contingent on us raising at least $7.0 million within 12 months from the effective date of the HPI License, a date which was extended by an additional 12 months by the payment of $40,000. On November 13, 2019, the Company closed its IPO and as a result completed the acquisition of the intellectual property discussed in the HPI agreement. Unrelated to this agreement the Company purchased $385,000 of pharmaceutical products from HPI for use in their clinical trials. As of December 31, 2019, $45,833 is payable to HPI related to the above agreements. On August 30, 2018, we entered into a sublicense agreement with WPD Pharmaceuticals, Inc. (“WPD”). Pursuant to the agreement, the Company granted WPD an exclusive sublicense, even as to us, for the patent rights we licensed pursuant to the HPI License within the following countries: Poland, Estonia, Latvia, Lithuania, Belarus, Ukraine, Moldova, Romania, Bulgaria, Serbia, Macedonia, Albania, Armenia, Azerbaijan, Georgia, Montenegro, Bosnia, Croatia, Slovenia, Slovakia, Czech Republic, Hungary, Chechnya, Uzbekistan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Greece, Austria, and Russia. The sublicense agreement provides that WPD must use commercially reasonable development efforts to attempt to develop and commercialize licensed products in the above mentioned territories, which means the expenditure of at least $2.0 million on the development, testing, regulatory approval or commercialization of the licensed products during the three year period immediately following the date of the sublicense agreement. In the event that WPD fails to use commercially reasonable development efforts by the foregoing three-year deadline, we have the right to terminate this sublicense agreement. In consideration for the rights granted under the sublicense agreement, to the extent we are required to make any payments to HPI pursuant to the HPI License as a result of this sublicense agreement, WPD agreed to advance us such payments, and to pay us a royalty equal to 1% of such payments. WPD is a Polish corporation that is majority-owned by an entity controlled by Dr. Priebe, our founder and largest shareholder. On August 31, 2018, the Company entered into a sublicense agreement with Animal Life Sciences, LLC (“ALI”), a related party, pursuant to which we granted ALI an exclusive sublicense, even as to us, for the patent rights we licensed pursuant to the HPI License solely for the treatment of cancer in non-human animals through any type of administration. In consideration for the rights granted under the sublicense agreement, ALI agreed to issue us membership interests in ALI equal to 1.52% of the outstanding ALI membership interests. As additional consideration for the rights granted, to the extent we are required to make any payments to HPI pursuant to the HPI License as a result of this sublicense agreement, ALI agreed to advance us such payments, and to pay us a royalty equal to 1% of such payments. Dr. Waldemar Priebe, our founder and largest shareholder, is also the founder and a shareholder of ALI, holds 38% of the membership interests of ALI. On January 29, 2019, the Company entered into a consulting agreement with WPD, a related party. The agreement is for a period of one year, with compensation of $5,000 per month. The consulting services include the full-time services of a technical researcher currently employed by WPD. During the year ended December 31, 2019, the Company paid $30,000 to WPD related to the consulting agreement. |
8. Subsequent Events
8. Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 8 – Subsequent Events On January 10, 2020, Company entered into a Patent and Technology License Agreement (“Agreement”) with The Board of Regents of The University of Texas System, an agency of the State of Texas, on behalf of The University of Texas M. D. Anderson Cancer Center (“UTMDACC”). Pursuant to the Agreement, the Company obtained a royalty-bearing, worldwide, exclusive license to certain intellectual property rights, including patent rights, related to the Company’s recently announced WP1244 drug technology. In consideration, the Company must make payments to UTMDACC including an up-front license fee, annual maintenance fee, milestone payments and royalty payments (including minimum annual royalties) on sales of licensed products developed under the Agreement. The term of the Agreement expires on the last to occur of: (a) the expiration of all patents subject to the Agreement, or (b) fifteen years after execution; provided that UTMDACC has the right to terminate this Agreement in the event that the Company fails to meet certain commercial diligence milestones. The commercial diligence milestones are as follows (i) initiated PC toxicology to support filing of Investigational New Drug Application (“IND”) or New Drug Application (“NDA”) for the Licensed Product within the eighteen (18) month period following the Effective Date (ii) file and IND for the Licensed Product within three (3) year period following the Effective Date and (iii) Commencement of Phase I Study within the five (5) year period following the Effective Date. |
2. Summary of Significant Acc_2
2. Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Use of Estimates in Financial Statement Presentation | Use of Estimates in Financial Statement Presentation - |
Liquidity | Liquidity |
Cash and Cash Equivalents | Cash and Cash Equivalents - |
Restricted Cash | Restricted Cash December 31, 2019 December 31, 2018 Cash and cash equivalents $ 7,241,288 $ 282,736 Restricted cash – 272,397 Total $ 7,241,288 $ 555,133 |
Property and Equipment | Property and Equipment - Leasehold improvement Shorter of estimated useful lives or the term of the lease Computer equipment 2 years Machinery and equipment 5 years Furniture and office equipment 7 years Repairs and maintenance costs are expensed as incurred. |
Long-lived Asset | Long-lived Asset - |
Beneficial Conversion Feature | Beneficial Conversion Feature |
Fair Value of Financial Instruments | Fair Value of Financial Instruments - Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company utilizes a three-level valuation hierarchy for disclosures of fair value measurements, defined as follows: Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value. The Company does not have any assets or liabilities that are required to be measured and recorded at fair value on a recurring basis. |
Related Parties | Related Parties - Related Party Disclosures, |
Income Taxes | Income Taxes - The Company accounts for uncertain tax positions in accordance with the provisions of Accounting Standards Codification (ASC) 740-10 which prescribes a recognition threshold and measurement attribute for financial statement disclosure of tax positions taken, or expected to be taken, on its tax return. The Company evaluates and records any uncertain tax positions based on the amount that management deems is more likely than not to be sustained upon examination and ultimate settlement with the tax authorities in the tax jurisdictions in which it operates. |
Stock-based Compensation | Stock-based Compensation – |
Loss Per Common Share | Loss Per Common Share |
Research and Development Costs | Research and Development Costs - |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606), which will replace numerous requirements in U.S. GAAP, including industry-specific requirements, and provide companies with a single revenue recognition model for recognizing revenue from contracts with customers. The core principle of the new standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In August 2015, the FASB approved a proposal to defer the effective date of the guidance until annual and interim reporting periods beginning after December 15, 2017. The Company adopted this standard as of January 1, 2018. The adoption of this standard did not have an impact on the Company’s financial statements as the Company has generated no revenue to date. In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. ASU 2016-01 affects the accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements of financial instruments. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company adopted this standard as of January 1, 2018. The adoption of this standard did not have a significant impact on the Company’s financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). Under ASU 2016-02, an entity will be required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU 2016-02 offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. For public companies, ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. The Company adopted this standard as of January 1, 2019. The adoption of this standard did not have an impact on the Company’s financial statements due to the lack of lease agreements for the Company at this time. The Company elected the short-term lease recognition exemption for its leases. For those leases with a lease term of 12 months or less, the Company will not recognize ROU assets or lease liabilities. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230). This ASU applies to all entities that are required to present a statement of cash flows under Topic 230. The amendments provide guidance on eight specific cash flow issues and includes clarification on how these items should be classified in the statement of cash flows and is designed to help eliminate diversity in practice as to where items are classified in the cash flow statement. Furthermore, in November 2016, the FASB issued additional guidance on this Topic that requires amounts generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with earlier application permitted for all entities. The Company adopted this standard as of January 1, 2018. The adoption of this standard did not have a significant impact on the Company’s financial statements. In June 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation (Topic 718) - Improvements to Nonemployee Share-Based Payment Accounting, which aligns the accounting for share-based payment awards issued to employees and nonemployees. Under ASU No. 2018-07, the existing employee guidance will apply to nonemployee share-based transactions (as long as the transaction is not effectively a form of financing), with the exception of specific guidance related to the attribution of compensation cost. The cost of nonemployee awards will continue to be recorded as if the grantor had paid cash for the goods or services. In addition, the contractual term will be able to be used in lieu of an expected term in the option-pricing model for nonemployee awards. The Company adopted this guidance on January 1, 2019 with no impact to its consolidated financial statements. The Company does not believe that any other recently issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying financial statements. |
2. Summary of Significant Acc_3
2. Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Restricted Cash | The Company’s restricted cash is discussed below in Note 4. December 31, 2019 December 31, 2018 Cash and cash equivalents $ 7,241,288 $ 282,736 Restricted cash – 272,397 Total $ 7,241,288 $ 555,133 |
Schedule of estimated useful lives | Property and equipment will be recorded at cost and depreciated over their estimated useful lives using the straight-line depreciation method as follows: Leasehold improvement Shorter of estimated useful lives or the term of the lease Computer equipment 2 years Machinery and equipment 5 years Furniture and office equipment 7 years |
5. Equity (Tables)
5. Equity (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Schedule of Stock Option Activity | The following table summarizes the stock option activity for the years ended December 31, 2019 and 2018: Options Weighted- Outstanding, December 31, 2017 275,000 $ 0.045 Granted 400,000 1.5 Exercised – – Forfeited – – Expired – – Outstanding, December 31, 2018 675,000 $ 0.91 Granted 1,189,500 2.50 Exercised – – Forfeited (100,000 ) 2.00 Expired – – Outstanding, December 31, 2019 1,764,500 $ 1.92 |
Schedule of Options by exercise price | The following table discloses information regarding outstanding and exercisable options at December 31, 2019: Outstanding Exercisable Exercise Price Number of Weighted Weighted Number of Weighted $4.00 300,000 9.86 – $2.00 789,500 9.50 – $1.50 400,000 8.42 175,012 $0.045 275,000 7.89 181,956 Total 1,764,500 $1.92 9.06 356,968 $0.76 |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The aggregate fair value of the options measured during the years ended December 31,2019 and 2018 were calculated using the Black-Scholes option pricing model based on the following assumptions: Year Ended December 31, 2019 Year Ended December 31,2018 Fair value of common stock on measurement date $2.00 to $4.00 per share $1.50 per share Risk free interest rate (1) 1.74% to 2.00% 2.5% to 2.88% Volatility (2) 102.55% to 106.71% 106.4% to 106.9% Dividend yield (3) 0% 0% Expected term (in years) 10 10 (1) The risk-free interest rate was determined by management using the market yield on U.S. Treasury securities with comparable terms as of the measurement date. (2) The trading volatility was determined by calculating the volatility of the Company’s peer group. (3) The Company does not expect to pay a dividend in the foreseeable future. |
Schedule of warrants activity | The following table summarizes the stock warrant activity for the year ended December 31, 2019: Warrants Weighted- Outstanding, December 31, 2017 1,206,059 $ 11.00 Granted 2,468,071 0.70 Exercised – – Forfeited – – Expired – – Outstanding, December 31, 2018 3,674,130 $ 4.08 Granted 312,500 2.87 Exercised – – Forfeited – – Expired – – Outstanding, December 31, 2019 3,986,630 $ 3.99 |
Schedule of warrants by exercise price | The following table discloses information regarding outstanding and exercisable warrants at December 31, 2019: Outstanding Exercisable Exercise Price Number of Weighted Weighted Average Number of Weighted $11.00 1,206,059 2.64 1,206,059 $2.00 63,750 4.43 63,750 $4.00 148,750 4.86 – $1.75 100,000 4.29 44,448 $1.50 14,000 3.45 14,000 $0.70 2,454,071 4.00 2,454,071 Total 3,986,630 $3.99 3.63 3,782,328 $4.02 |
6. Income Taxes (Tables)
6. Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Income Tax Rate Reconciliation | The reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax expense as reported is as follows: Year Ended Year Ended Income tax benefit computed at the statutory rate $ 814,200 1,552,300 Non-deductible expenses (83,400 ) (1,369,000 ) Change in valuation allowance (730,800 ) (183,300 ) Provision for income taxes $ – – |
Schedule of Deferred Tax Assets | Significant components of the Company’s deferred tax assets after applying enacted corporate income tax rates are as follows: As of As of Deferred income tax assets Net operating losses $ 947,600 $ 216,800 Valuation allowance (947,600 ) (216,800 ) Net deferred income tax assets $ – $ – |
2. Summary of Significant Acc_4
2. Summary of Significant Accounting Policies (Details - Restricted Cash) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | |||
Cash and cash equivalents | $ 7,241,288 | $ 282,736 | |
Restricted cash | 0 | 272,397 | |
Total | $ 7,241,288 | $ 555,133 | $ 110,543 |
2. Summary of Significant Acc_5
2. Summary of Significant Accounting Policies (Details - Estimated useful lives) | 12 Months Ended |
Dec. 31, 2019 | |
Leasehold Improvements [Member] | |
Estimated useful lives | Shorter of estimated useful lives or the term of the lease |
Computer Equipment [Member] | |
Estimated useful Life | 2 years |
Machinery and Equipment [Member] | |
Estimated useful Life | 5 years |
Furniture and office equipment [Member] | |
Estimated useful Life | 7 years |
2. Summary of Significant Acc_6
2. Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 10 Months Ended | 11 Months Ended | 12 Months Ended | |
Nov. 13, 2019 | Nov. 20, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Cash in excess of FDIC | $ 6,991,288 | |||
Warrants [Member] | ||||
Antidilutive shares | 3,986,630 | 3,674,130 | ||
Options [Member] | ||||
Antidilutive shares | 1,764,500 | 675,000 | ||
Convertible Debt Securities [Member] | ||||
Antidilutive shares | 200,000 | |||
Over-Allotment Option [Member] | Underwriter [Member] | ||||
Stock issued new, shares | 318,750 | |||
I P O [Member] | ||||
Stock issued new, shares | 2,125,000 | 318,750 | ||
Stock price | $ 4 |
3. Notes Payable (Details Narra
3. Notes Payable (Details Narrative) - USD ($) | 1 Months Ended | 5 Months Ended | 10 Months Ended | 12 Months Ended | ||
Jan. 31, 2019 | Jun. 14, 2018 | Nov. 13, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Payment of placement fees | $ 0 | $ 21,000 | ||||
Repayment of notes payable | 35,000 | 0 | ||||
Convertible Note 2018 [Member] | ||||||
Debt face amount | $ 300,000 | |||||
Debt stated interest rate | 10.00% | |||||
Debt conversion price per share | $ 1.50 | |||||
Warrants issued, shares | 14,000 | |||||
Warrant term | 5 years | |||||
Warrant exercise price | $ 1.50 | |||||
Unamortized debt discount | $ 15,163 | |||||
Debt discount amortized | $ 15,163 | |||||
Payment of placement fees | $ 21,000 | |||||
Debt converted, amount converted | $ 300,000 | |||||
Debt converted, interest converted | $ 42,493 | |||||
Debt converted, shares issued | 228,329 | |||||
2017 Convertible Note [Member] | ||||||
Debt converted, amount converted | 38,670 | |||||
Debt converted, interest converted | $ 3,128 | |||||
Debt converted, shares issued | 2,158,500 | |||||
2017 Convertible Note [Member] | Certain Note Holders [Member] | ||||||
Warrants issued, shares | 2,454,071 | |||||
Warrant term | 5 years | |||||
Warrant exercise price | $ 0.70 | |||||
Debt converted, amount converted | $ 48,155 | |||||
Debt converted, interest converted | 8,434 | |||||
Loss on extinguishment | $ (6,286,841) | |||||
Notes Payable [Member] | ||||||
Debt face amount | $ 35,000 | |||||
Debt stated interest rate | 10.00% | |||||
Repayment of notes payable | $ 35,000 |
4. SAFE Agreements (Details Nar
4. SAFE Agreements (Details Narrative) - USD ($) | 10 Months Ended | 12 Months Ended | |
Nov. 13, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Proceeds from SAFE agreements | $ 0 | $ 586,675 | |
SAFE agreement liability | $ 0 | 763,249 | |
SAFE Agreements [Member] | |||
Proceeds from SAFE agreements | 628,558 | ||
SAFE agreement liability | $ 763,249 | ||
Stock issued new, shares | 191,151 | ||
SAFE funds allocated to issue stock | $ 269,399 |
5. Equity (Details - Option Act
5. Equity (Details - Option Activity) - Options [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Number of Options | ||
Number of Options Outstanding, Beginning | 675,000 | 275,000 |
Number of Options Granted | 1,189,500 | 400,000 |
Number of Options Exercised | 0 | 0 |
Number of Options Forfeited | (100,000) | 0 |
Number of Options Expired | 0 | 0 |
Number of Options Outstanding, Ending | 1,764,500 | 675,000 |
Weighted Average Exercise Price | ||
Weighted Average Exercise Price Outstanding, Beginning | $ 0.91 | $ 0.045 |
Weighted Average Exercise Price Granted | 2.50 | 1.50 |
Weighted Average Exercise Price Exercised | ||
Weighted Average Exercise Price Forfeited | 2 | |
Weighted Average Exercise Price Expired | ||
Weighted Average Exercise Price Outstanding, Ending | $ 1.92 | $ 0.91 |
5. Equity (Details - Options by
5. Equity (Details - Options by exercise price) - Options [Member] - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Options Outstanding | 1,764,500 | 675,000 | 275,000 |
Weighted Average Remaining Contractual Life | 9 years 22 days | ||
Weighted Average Exercise Price | $ 1.92 | $ 0.91 | $ 0.045 |
Options Exercisable | 356,968 | ||
Weighted Average Exercise Price | $ 0.76 | ||
Option Price $4.00 [Member] | |||
Options Outstanding | 300,000 | ||
Weighted Average Remaining Contractual Life | 9 years 10 months 10 days | ||
Options Exercisable | 0 | ||
Option Price $2.00 [Member] | |||
Options Outstanding | 789,500 | ||
Weighted Average Remaining Contractual Life | 9 years 6 months | ||
Options Exercisable | 0 | ||
Option Price $1.50 [Member] | |||
Options Outstanding | 400,000 | ||
Weighted Average Remaining Contractual Life | 8 years 5 months 1 day | ||
Options Exercisable | 175,012 | ||
Option Price $0.045 [Member] | |||
Options Outstanding | 275,000 | ||
Weighted Average Remaining Contractual Life | 7 years 10 months 21 days | ||
Options Exercisable | 181,956 |
5. Equity (Details - Assumption
5. Equity (Details - Assumptions) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | ||
Equity [Abstract] | |||
Fair value of common stock on measurement date | $2.00 to $4.00 per share | $1.50 per share | |
Risk free interest rate minimum | [1] | 1.74% | 2.50% |
Risk free interest rate maximum | [1] | 2.00% | 2.88% |
Volatility minimum | [2] | 102.55% | 106.40% |
Volatility maximum | [2] | 106.71% | 106.90% |
Dividend yield | [3] | 0.00% | 0.00% |
Expected term (in years) | 10 years | 10 years | |
[1] | The risk-free interest rate was determined by management using the market yield on U.S. Treasury securities with comparable terms as of the measurement date. | ||
[2] | The trading volatility was determined by calculating the volatility of the Company's peer group. | ||
[3] | The Company does not expect to pay a dividend in the foreseeable future. |
5. Equity (Details - Warrant Ac
5. Equity (Details - Warrant Activity) - Warrants [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Number of Warrants | ||
Number of Warrants Outstanding, Beginning | 3,674,130 | 1,206,059 |
Number of Warrants Granted | 312,500 | 2,468,071 |
Number of Warrants Exercised | 0 | 0 |
Number of Warrants Forfeited | 0 | 0 |
Number of Warrants Expired | 0 | 0 |
Number of Warrants Outstanding, Ending | 3,986,630 | 3,674,130 |
Weighted Average Exercise Price | ||
Weighted Average Exercise Price Outstanding, Beginning | $ 4.08 | $ 11 |
Weighted Average Exercise Price Granted | 2.87 | 0.7 |
Weighted Average Exercise Price Exercised | 0 | 0 |
Weighted Average Exercise Price Forfeited | 0 | 0 |
Weighted Average Exercise Price Expired | 0 | 0 |
Weighted Average Exercise Price Outstanding, Ending | $ 3.99 | $ 4.08 |
5. Equity (Details - Warrants b
5. Equity (Details - Warrants by exercise price) - Warrants [Member] - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Warrants outstanding | 3,986,630 | 3,674,130 | 1,206,059 |
Weighed average exercise price, warrants outstanding | $ 3.99 | $ 4.08 | $ 11 |
Weighed average remaining life | 3 years 7 months 17 days | ||
Warrants exercisable | 3,782,328 | ||
Weighed average exercise price, warrants exercisable | $ 4.02 | ||
Warrant price $11.00 [Member] | |||
Warrants outstanding | 1,206,059 | ||
Weighed average remaining life | 2 years 7 months 21 days | ||
Warrants exercisable | 1,206,059 | ||
Warrant price $2.00 [Member] | |||
Warrants outstanding | 63,750 | ||
Weighed average remaining life | 4 years 5 months 5 days | ||
Warrants exercisable | 63,750 | ||
Warrant price $4.00 [Member] | |||
Warrants outstanding | 148,750 | ||
Weighed average remaining life | 4 years 10 months 10 days | ||
Warrants exercisable | 0 | ||
Warrant price $1.75 [Member] | |||
Warrants outstanding | 100,000 | ||
Weighed average remaining life | 4 years 3 months 15 days | ||
Warrants exercisable | 44,448 | ||
Warrant price $1.50 [Member] | |||
Warrants outstanding | 14,000 | ||
Weighed average remaining life | 3 years 5 months 12 days | ||
Warrants exercisable | 14,000 | ||
Warrant price $0.70 [Member] | |||
Warrants outstanding | 2,454,071 | ||
Weighed average remaining life | 4 years | ||
Warrants exercisable | 2,454,071 |
5. Equity (Details Narrative)
5. Equity (Details Narrative) - USD ($) | Jan. 12, 2018 | Feb. 19, 2018 | Apr. 30, 2019 | Apr. 17, 2019 | Jun. 03, 2019 | Jun. 28, 2019 | Jul. 09, 2018 | Jun. 25, 2018 | Sep. 14, 2019 | Nov. 13, 2019 | Nov. 20, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Jan. 19, 2018 | Dec. 31, 2017 |
Stock issued for services, value | $ 150,000 | $ 7,500 | |||||||||||||
Proceeds from issuance of stock | 10,294,747 | 390,500 | |||||||||||||
Share-based compensation expense | 477,096 | 110,240 | |||||||||||||
Underwriting fees and other offering expenses | 0 | 21,000 | |||||||||||||
Fair value of warrants outstanding | 150,000 | 0 | |||||||||||||
Options [Member] | |||||||||||||||
Share-based compensation expense | $ 400,834 | $ 102,740 | |||||||||||||
Options granted | 1,189,500 | 400,000 | |||||||||||||
Option exercise price | $ 2.50 | $ 1.50 | |||||||||||||
Unrecognized compensation expense | $ 2,753,499 | ||||||||||||||
Aggregate intrinsic value options outstanding | 1,139,318 | ||||||||||||||
Warrants [Member] | |||||||||||||||
Share-based compensation expense | 76,262 | ||||||||||||||
Unrecognized compensation expense | $ 85,238 | ||||||||||||||
Warrants granted | 312,500 | 2,468,071 | |||||||||||||
Warrant term | 3 years 7 months 17 days | ||||||||||||||
Warrant exercise price | $ 3.99 | $ 4.08 | $ 11 | ||||||||||||
Aggregate intrinsic value of warrants | $ 8,232,129 | ||||||||||||||
2017 Stock Plan [Member] | |||||||||||||||
Shares authorized under plan | 2,000,000 | ||||||||||||||
Options remaining to be issued | 235,500 | ||||||||||||||
Bridge Offering [Member] | |||||||||||||||
Stock issued new, shares | 817,500 | ||||||||||||||
Proceeds from issuance of stock | $ 1,507,170 | ||||||||||||||
I P O [Member] | |||||||||||||||
Stock issued new, shares | 2,125,000 | 318,750 | |||||||||||||
Stock price | $ 4 | ||||||||||||||
Proceeds from IPO | $ 7,601,827 | $ 1,185,750 | |||||||||||||
Underwriting fees and other offering expenses | $ 898,173 | $ 89,250 | |||||||||||||
Common Stock [Member] | |||||||||||||||
Stock issued new, shares | 260,337 | ||||||||||||||
Proceeds from issuance of stock | $ 390,500 | ||||||||||||||
Debt converted, shares issued | 2,158,500 | ||||||||||||||
Consultant [Member] | |||||||||||||||
Stock issued for services, shares | 5,000 | ||||||||||||||
Stock issued for services, value | $ 7,500 | ||||||||||||||
Stock issued for compensation, shares | 75,000 | ||||||||||||||
Share-based compensation expense | $ 150,000 | ||||||||||||||
Boustead [Member] | |||||||||||||||
Underwriting fees and other offering expenses | $ 102,225 | ||||||||||||||
Entity Related to Boustead [Member] | |||||||||||||||
Debt converted, shares issued | 228,329 | ||||||||||||||
Debt converted, amount converted | $ 300,000 | ||||||||||||||
Debt converted, interest converted | 42,493 | ||||||||||||||
Underwriting costs previously capitalized | $ 102,225 | ||||||||||||||
New Member [Member] | Non-qualified Stock Options [Member] | |||||||||||||||
Options granted | 100,000 | 100,000 | |||||||||||||
Option term | 10 years | 10 years | |||||||||||||
Option exercise price | $ 1.50 | $ 1.50 | |||||||||||||
Fair value of options at issuance | $ 138,016 | $ 138,017 | |||||||||||||
Two New Member [Member] | Non-qualified Stock Options [Member] | |||||||||||||||
Options granted | 200,000 | ||||||||||||||
Option term | 10 years | ||||||||||||||
Option exercise price | $ 1.50 | ||||||||||||||
Fair value of options at issuance | $ 276,024 | ||||||||||||||
Officers and Employees [Member] | Options [Member] | |||||||||||||||
Options granted | 889,500 | ||||||||||||||
Option term | 10 years | ||||||||||||||
Option exercise price | $ 2 | ||||||||||||||
Fair value of options at issuance | $ 1,631,737 | ||||||||||||||
Chief Financial Officer [Member] | Options [Member] | |||||||||||||||
Options granted | 300,000 | ||||||||||||||
Option term | 10 years | ||||||||||||||
Fair value of options at issuance | $ 1,085,708 | ||||||||||||||
Two Consultants [Member] | Warrants [Member] | |||||||||||||||
Warrants granted | 50,000 | ||||||||||||||
Warrant term | 5 years | ||||||||||||||
Warrant exercise price | $ 1.75 | ||||||||||||||
Fair value of warrants at issuance | $ 161,500 | ||||||||||||||
Foreign Broker [Member] | Warrants [Member] | |||||||||||||||
Warrants granted | 63,750 | ||||||||||||||
Fair value of warrants outstanding | $ 101,206 | ||||||||||||||
Benchmark [Member] | Warrants [Member] | |||||||||||||||
Warrants granted | 148,750 | 148,750 | |||||||||||||
Warrant term | 5 years | ||||||||||||||
Warrant exercise price | $ 4 | ||||||||||||||
Fair value of warrants outstanding | $ 451,722 |
6. Income Taxes (Details - Effe
6. Income Taxes (Details - Effective Income Tax Rate Reconciliation) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Income tax benefit computed at the statutory rate | $ 814,200 | $ 1,552,300 |
Non-deductible expenses | (83,400) | (1,369,000) |
Change in valuation allowance | (730,800) | (183,300) |
Provision for income taxes | $ 0 | $ 0 |
6. Income Taxes (Details - Defe
6. Income Taxes (Details - Deferred Tax Assets) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred income tax assets | ||
Net operating losses | $ 947,600 | $ 216,800 |
Valuation allowance | (947,600) | (216,800) |
Net deferred income tax assets | $ 0 | $ 0 |
6. Income Taxes (Details Narrat
6. Income Taxes (Details Narrative) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Income Tax Disclosure [Abstract] | |
Operating loss carry forward | $ 4,512,000 |
Operating Loss Carryforwards, Expiration Date | Dec. 31, 2037 |
7. Commitments and Contingenc_2
7. Commitments and Contingencies (Details Narrative) - USD ($) | 10 Months Ended | 12 Months Ended | ||||
Nov. 13, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 28, 2017 | Sep. 14, 2019 | Jun. 28, 2019 | |
Technology Rights And Development Agreement [Member] | Houston Pharmaceuticals [Member] | ||||||
Contractual obligation | $ 45,833 | |||||
Stock issued for asset acquisition, shares | 200,000 | |||||
Extension payment | $ 40,000 | |||||
Purchase of assets | $ 385,000 | |||||
WPD [Member] | ||||||
Consulting fees | $ 30,000 | |||||
Climaco [Member] | Officer Salary [Member] | ||||||
Contractual obligation | $ 440,000 | |||||
Downs [Member] | ||||||
Option granted | 300,000 | |||||
Option vesting term | 10 years | |||||
Downs [Member] | Officer Salary [Member] | ||||||
Contractual obligation | $ 300,000 |