Cover
Cover - shares | 12 Months Ended | |
Dec. 31, 2021 | Mar. 21, 2022 | |
Cover [Abstract] | ||
Document Type | 10-K | |
Amendment Flag | false | |
Document Annual Report | true | |
Document Transition Report | false | |
Document Period End Date | Dec. 31, 2021 | |
Document Fiscal Period Focus | FY | |
Document Fiscal Year Focus | 2021 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 001-41210 | |
Entity Registrant Name | HILLSTREAM BIOPHARMA, INC. | |
Entity Central Index Key | 0001861657 | |
Entity Tax Identification Number | 84-2642541 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 1200 Route 22 East | |
Entity Address, Address Line Two | Suite 2000 | |
Entity Address, City or Town | Bridgewater | |
Entity Address, State or Province | NJ | |
Entity Address, Postal Zip Code | 08807 | |
City Area Code | (908) | |
Local Phone Number | 955-3140 | |
Title of 12(b) Security | Common stock, $0.0001 par value | |
Trading Symbol | HILS | |
Security Exchange Name | NASDAQ | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | No | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Elected Not To Use the Extended Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 11,364,444 | |
Documents Incorporated by Reference [Text Block] | None. | |
ICFR Auditor Attestation Flag | false | |
Auditor Firm ID | 199 | |
Auditor Name | Mayer Hoffman McCann P.C | |
Auditor Location | Los Angeles, California |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash | $ 4,356 | $ 191,852 |
Prepaid expenses and other current assets | 70,670 | 102,946 |
Deferred offering costs | 546,651 | |
Total current assets | 621,677 | 294,798 |
Total assets | 621,677 | 294,798 |
Current liabilities: | ||
Accounts payable | 1,463,059 | 514,828 |
Accrued interest | 179,621 | 73,066 |
Due to founder | 200,000 | 200,000 |
Accrued expenses | 318,223 | 48,777 |
Redemption liability | 980,233 | 1,325,288 |
Short-term portion of related-party convertible notes, net | 1,392,544 | 563,425 |
Total current liabilities | 4,533,680 | 2,725,384 |
Related-party convertible notes, net, less short-term portion | 772,899 | 1,286,942 |
Total liabilities | 5,306,579 | 4,012,326 |
Commitments and contingencies (See Note 10) | ||
Stockholders’ deficit: | ||
Preferred stock, $0.0001 par value, 10,000,000 shares authorized; no shares issued and outstanding as of December 31, 2021 and 2020 | ||
Common stock, $0.0001 par value, 250,000,000 shares authorized; 6,357,314 shares issued and outstanding as of December 31, 2021 and 2020 | 636 | 636 |
Additional paid-in capital | 2,225,712 | 986,443 |
Accumulated deficit | (6,911,250) | (4,704,607) |
Total stockholders’ deficit | (4,684,902) | (3,717,528) |
Total liabilities and stockholders’ deficit | $ 621,677 | $ 294,798 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) | Dec. 31, 2020$ / sharesshares |
Statement of Financial Position [Abstract] | |
Preferred Stock, Par or Stated Value Per Share | $ / shares | $ 0.0001 |
Preferred Stock, Shares Authorized | 10,000,000 |
Preferred Stock, Shares Outstanding | 0 |
Common Stock, Par or Stated Value Per Share | $ / shares | $ 0.0001 |
Common Stock, Shares Authorized | 250,000,000 |
Common Stock, Shares, Outstanding | 6,357,314 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Operating expenses: | ||
Research and development | $ 1,842,803 | $ 847,272 |
Acquired in-process research and development | 289,200 | |
General and administrative | 1,365,214 | 671,879 |
Total operating expenses | 3,208,017 | 1,808,351 |
Loss from operations | (3,208,017) | (1,808,351) |
Other income (expenses): | ||
Interest expense | (831,277) | (246,534) |
Change in redemption value | 1,832,651 | (362,486) |
Total other income (expenses), net | 1,001,374 | (609,020) |
Net loss | $ (2,206,643) | $ (2,417,371) |
Net loss per share: | ||
Basic and diluted | $ (0.35) | $ (0.38) |
Weighted average number of common shares outstanding: | ||
Basic and diluted | 6,357,314 | 6,347,144 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Deficit - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Dec. 31, 2019 | $ 628 | $ 462,671 | $ (2,085,499) | $ (1,622,200) |
Beginning balance, shares at Dec. 31, 2019 | 6,281,557 | |||
Issuance of shares for the acquisition of Farrington Therapeutics LLC | $ 8 | 289,192 | 289,200 | |
Issuance of shares for the acquisition of Farrington Therapeutics LLC, shares | 75,757 | |||
Stock based compensation | 234,580 | 234,580 | ||
Deemed dividend upon debt exchange | (201,737) | (201,737) | ||
Net loss | (2,417,371) | (2,417,371) | ||
Ending balance, value at Dec. 31, 2020 | $ 636 | 986,443 | (4,704,607) | (3,717,528) |
Ending balance, shares at Dec. 31, 2020 | 6,357,314 | |||
Stock based compensation | 1,239,269 | 1,239,269 | ||
Net loss | (2,206,643) | (2,206,643) | ||
Ending balance, value at Dec. 31, 2021 | $ 636 | $ 2,225,712 | $ (6,911,250) | $ (4,684,902) |
Ending balance, shares at Dec. 31, 2021 | 6,357,314 |
Consolidated Statement of Cash
Consolidated Statement of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities | ||
Net loss | $ (2,206,643) | $ (2,417,371) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
In-process research and development expense | 289,200 | |
Amortization of debt discount | 666,566 | 145,356 |
Stock based compensation | 1,239,269 | 234,580 |
Change in fair value of redemption liability | (1,832,651) | 362,486 |
Changes in operating accounts: | ||
Changes in prepaid expenses and other current assets | 32,276 | (100,346) |
Changes in accounts payable and accrued expenses | 850,293 | 306,570 |
Changes in accrued interest | 164,646 | 101,093 |
Net cash used in operating activities | (1,086,244) | (1,078,432) |
Cash flows from financing activities | ||
Proceeds from related-party convertible notes | 1,078,015 | 1,232,003 |
Deferred offering costs | (179,267) | |
Net cash provided by financing activities | 898,748 | 1,232,003 |
Net (decrease) increase in cash | (187,496) | 153,571 |
Cash - beginning of year | 191,852 | 38,281 |
Cash - end of year | 4,356 | 191,852 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Shares issued upon acquisition | 289,200 | |
Deemed dividend | 201,737 | |
Accrued interest roll-over to new notes payable | 58,091 | 89,456 |
Due to founder converted to note payable | 55,068 | |
Unpaid deferred offering costs | $ 367,384 |
DESCRIPTION OF BUSINESS AND LIQ
DESCRIPTION OF BUSINESS AND LIQUIDITY | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
DESCRIPTION OF BUSINESS AND LIQUIDITY | DESCRIPTION OF BUSINESS AND LIQUIDITY Hillstream BioPharma, Inc. (“HBI”) was incorporated on March 28, 2017, as a Delaware C-corporation. At December 31, 2021, Hillstream BioPharma, Inc. had two wholly-owned subsidiaries: HB Pharma Corp. (“HB”) and Farrington Therapeutics LLC (“Farrington” and together with HBI and HB, the “Company”). The Company is a pre-clinical biotechnology company developing novel therapeutic candidates targeting ferroptosis, an emerging new anti-cancer mechanism resulting in iron mediated cell death (“IMCD”) for treatment resistant cancers. The Company’s most advanced product candidate is HSB-1216, an IMCD modulator, targeting a variety of solid tumors. The active drug in HSB-1216 was found to reduce tumor burden in a clinical pilot study in Germany in treatment resistant cancers, including triple negative breast cancer and epithelial carcinomas. The Company’s goal is to file an investigational new drug application (“IND”) with the U.S. Food and Drug Administration (“FDA”) in 2023 and start a clinical study with HSB-1216 in 2023; however, no assurance can be provided that the Company’s IND will be accepted by the FDA in 2023, if at all. If the IND is accepted by the FDA, the HSB-1216 clinical study will focus on expanding upon the clinical pilot study conducted in Germany. If the Company is able to start the clinical study with HSB-1216 in 2023, the Company anticipates that initial data from such trial will be released either at the end of 2023 or early 2024. The Company uses Quatramer™, the proprietary tumor targeting platform, to enhance the uptake of HSB-1216 in the tumor microenvironment with an extended duration of action and minimal off-target toxicity. In addition, Trident Artificial Intelligence, the Company’s artificial intelligence precision medicine platform, is used to identify biomarkers in its clinical programs to target specific patient segments. The discovery of regulated cell death processes, such as apoptosis and autophagy, has enabled novel target discovery for drug development. Ferroptosis, a form of IMCD, is an emerging regulated cell death process which decreases intracellular iron or the Labile Iron Pool (“LIP”). Cancer cells increase the LIP leading to unregulated cell growth and metabolism. Decreasing the LIP, induces iron-led reactive oxygen species production and lipid peroxidation, two key hallmarks of ferroptosis/IMCD. HSB-1216 binds iron in the cytoplasm of cancer cells and decreases the LIP, thereby inducing ferroptosis/IMCD, leading to regulated cell death. Areas of interest for the development of HSB-1216 are as a treatment of solid tumors, including triple negative breast cancer, uveal melanoma, glioblastoma multiforme, head and neck squamous cell carcinoma and other treatment resistant cancers with high unmet need. Liquidity The accompanying consolidated financial statements have been prepared on the basis that the Company is a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. For the year ended December 31, 2021, the Company incurred operating losses in the amount of approximately $ 3.2 million and had an accumulated deficit of approximately $ 6.9 million at December 31, 2021. The Company financed its working capital requirements through December 31, 2021 primarily through the issuance of convertible promissory notes payable issued to related parties. On January 14, 2022, the Company closed its initial public offering (“IPO”) of 3,750,000 shares of the Company’s common stock at a public offering price of $ 4.00 per share. The gross proceeds to the Company from the IPO were $ 15.0 million, prior to deducting underwriting discounts, commissions, and other offering expenses. The net proceeds to the Company from the IPO were approximately $ 13.0 million. The Company granted the underwriters a 45-day option to purchase up to an additional 562,500 shares of common stock at the public offering price less discounts and commissions, to cover over-allotments; however, this option expired unexercised. Additionally, and as a result of the completion of the IPO, all of the related party convertible debt and accrued interest was converted into an aggregate of 1,225,384 shares of the Company’s common stock pursuant to the terms of the convertible notes. The shares of the Company’s common stock began trading on The Nasdaq Capital Market on January 12, 2022 under the ticker symbol “HILS”. The Company believes its cash on hand after the completion of the IPO is sufficient to meet its operating obligations and capital requirements for at least twelve months from the issuance of these financial statements. Thereafter, the Company may need to raise further capital through the sale of additional equity or debt securities or other debt instruments to support its future operations. Other risks and uncertainties There can be no assurance that the Company’s products, if approved, will be accepted in the marketplace, nor can there be any assurance that any future products can be developed or manufactured at an acceptable cost and with appropriate performance characteristics, or that such products will be successfully marketed, if at all. The Company is subject to risks common to biopharmaceutical companies including, but not limited to, the development of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations, product liability, uncertainty of market acceptance of products and the need to obtain additional financing. The Company is dependent on third party suppliers. The Company’s products require approval or clearance from the FDA prior to commencing commercial sales in the United States. Approvals or clearances are also required in foreign jurisdictions in which the Company may license or sell its products. There can be no assurance that the Company’s products will receive all of the required approvals or clearances. COVID-19 In December 2019, a novel strain of coronavirus (“COVID-19”) was reported globally. The World Health Organization declared COVID-19 to constitute a “Public Health Emergency of International Concern” on January 30, 2020 and a global pandemic on March 11, 2020. In March 2020, individual states mandated “stay at home orders”, restricted access to hospitals, prohibited elective surgeries and instituted other restrictions in connection with the COVID-19 outbreak. The extent of the impact of COVID-19 on the Company’s operational and financial performance will depend on future developments, including access to products, potential disruptions in global freight networks, domestic and foreign government actions and changes in demand based on the duration and severity of the COVID-19 outbreak. As of December 31, 2021, the Company’s operations have not been materially affected by COVID-19. |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Note 2 - Basis of Presentation and Summary of Significant Accounting Policies BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation These accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The Company operates in one segment. Reverse stock split On September 16, 2021, the Company effectuated a reverse split of shares of its common stock at a ratio of 1-for-26.4 pursuant to an amendment to the Company’s Certificate of Incorporation, as amended, filed with the Delaware Secretary of State and approved by the Company’s board of directors and stockholders. The par value of the Company’s common stock was not adjusted as a result of the reverse split. All issued and outstanding common stock share and per share amounts contained in the financial statements have been retroactively adjusted to reflect this reverse split for all periods presented. Principles of consolidation The consolidated financial statements include the accounts of Hillstream BioPharma, Inc. and its wholly-owned subsidiaries, HB Pharma Corp., Nanoproteagen and Farrington. All significant intercompany balances and transactions have been eliminated in consolidation. Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosures in the financial statements and accompanying notes. Management bases its estimates on historical experience and on assumptions believed to be reasonable under the circumstances. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes, and management must select an amount that falls within that range of reasonable estimates. Estimates are used in the following areas, among others: research and development expense recognition, valuation of common shares and stock options, allowances of deferred tax assets, valuation of debt related instruments, accrued expenses and liabilities, and cash flow assumptions regarding going concern considerations. Cash The Company from time to time during the period covered by these financial statements may have had bank account balances in excess of federally insured limits. The Company has not experienced losses in such accounts. The Company believes that it is not subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. Research and development Research and development costs are expensed as incurred. Research and development expenses include personnel costs associated with research and development activities, including third party contractors to perform research, conduct clinical trials and manufacture drug supplies and materials. The Company accrues for costs incurred by external service providers, including contract research organizations and clinical investigators, based on its estimates of service performed and costs incurred. These estimates include the level of services performed by third parties, patient enrolment in clinical trials, administrative costs incurred by third parties, and other indicators of the services completed. Substantially all of the prepaid expenses at December 31, 2021 relate to a manufacturing services agreement. Substantially all of the prepaid expenses at December 31, 2020 relate to the purchase of an active pharmaceutical ingredient. Acquired in-process research and development The Company has acquired, and may in the future acquire, rights to develop and commercialize new product candidates and/or other in-process research and development assets. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 730-10-25-1, Research and Development, Stock based compensation The Company recognizes compensation costs resulting from the issuance of stock-based awards to employees, non-employees and directors as an expense in the consolidated statements of operations over the requisite service period based on a measurement of fair value for each stock-based award. The fair value of each option grant to employees, non-employees and directors is estimated as of the date of grant using the Black-Scholes option-pricing model, net of actual forfeitures. The fair value is amortized as compensation cost on a straight-line basis over the requisite service period of the awards, which is generally the vesting period. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. At December 31, 2021, the Company was a private company and lacked company-specific historical and implied volatility information. Therefore, it estimated its expected stock volatility based on the historical data regarding the volatility of a publicly traded set of peer companies. The expected term of stock options granted was between five and seven years. The risk-free interest rate was determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Common stock valuations The Company was required to periodically estimate the fair value of common stock with the assistance of an independent third-party valuation expert when issuing stock options and computing its estimated stock-based compensation expense and value of shares issued in acquiring product candidates. The assumptions underlying these valuations represented management’s best estimates, which involved inherent uncertainties and the application of significant levels of management judgment. In order to determine the fair value, the Company considered, among other things, contemporaneous valuations of the Company’s common stock, the Company’s business, financial condition and results of operations, including related industry trends affecting its operations; the likelihood of achieving various liquidity events; the lack of marketability of the Company’s common stock; the market performance of comparable publicly traded companies; and U.S. and global economic and capital market conditions. Debt discount and derivative instruments The initial fair value of the redemption feature relating to the convertible debt instruments is treated as a debt discount and amortized over the term of the related debt using the straight-line method, which approximates the interest method. If a loan is paid in full, any unamortized financing costs will be removed from the related accounts and charged to operations. Amortization of debt discount is recorded as a component of interest expense. In accordance with Accounting Standards Update (“ASU”) 2015-03, Interest — Imputation of Interest The Company accounts for derivative instruments in accordance with ASC 815, Derivative and Hedging Fair value measurements The Company applies ASC 820, Fair Value Measurement The carrying value of the Company’s prepaid expenses, accounts payable and accrued expenses approximate fair value because of the short-term maturity of these financial instruments. The redemption feature of the debt instruments is recorded at fair value. See Note 5. The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels within the valuation hierarchy are described below: Level 1 - Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2 - Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 - Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. Deferred Offering Costs Deferred offering costs consisted of legal, accounting, printing, and filing fees that the Company capitalized which will be offset against the proceeds from the IPO. Income taxes The Company accounts for income taxes using the asset-and-liability method in accordance with ASC 740, Income Taxes Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on the deferred tax assets and liabilities of a change in tax rate is recognized in the period that includes the enactment date. A valuation allowance has been recognized for all periods since it is “more likely than not” that some portion or all of the deferred tax assets will not be realized in future periods. The Company follows the guidance in ASC Topic 740-10 in assessing uncertain tax positions. The standard applies to all tax positions and clarifies the recognition of tax benefits in the financial statements by providing for a two-step approach of recognition and measurement. The first step involves assessing whether the tax position is more-likely-than-not to be sustained upon examination based upon its technical merits. The second step involves measurement of the amount to be recognized. Tax positions that meet the more-likely than-not threshold are measured at the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate finalization with the taxing authority. The Company recognizes the impact of an uncertain income tax position in the financial statements if it believes that the position is more likely than not to be sustained by the relevant taxing authority. The Company will recognize interest and penalties related to tax positions in income tax expense. At December 31, 2021 and 2020, the Company had no unrecognized uncertain income tax positions, and therefore no amounts have been recognized in the consolidated financial statements. Net loss per share The Company reports loss per share in accordance with ASC 260-10, Earnings Per Share Potentially dilutive securities not included in the computation of earnings (loss) per share for the years ended December 31, 2021 and 2020 included options to purchase 903,468 and 675,731 shares of common stock, respectively. The number of shares issuable upon the conversion of convertible debt and accrued interest (which was 1,225,384 shares at the IPO date of January 14, 2022) is not included in the denominator since their inclusion would be anti-dilutive. All common share amounts and per share amounts have been adjusted to reflect a 1-for-26.4 reverse stock split of the Company’s common stock effectuated on September 16, 2021. Management concluded that the deemed dividend (see Note 4) is analogous to a return on equity classified preference shares, therefore the deemed dividend is added to the net loss for purposes of the basic and diluted loss per share calculation. Accordingly, the numerator of the loss per share calculation (basic and diluted) is $ 2,619,108 for the year ended December 31, 2020. New accounting pronouncements not yet adopted: The Company has evaluated all recent accounting pronouncements and believes that none of them will have a material effect on the Company’s financial position, results of operations or cash flows except as discussed below. Leases In February 2016, the FASB issued ASU No. 2016-02, “ Leases (Topic 842) Leases Debt with Conversion and Other Options and Derivatives and Hedging The FASB recently issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity Earnings Per Share Earnings Per Share In May 2021, the FASB issued ASU 2021-04, Earnings Per Share Compensation-Stock Compensation Derivatives and Hedging-Contracts in Entity’s Own Equity Recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statement presentation or disclosures. Codification Improvements In October 2020, the FASB issued ASU 2020-10, Codification Improvements |
ACQUISITION
ACQUISITION | 12 Months Ended |
Dec. 31, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
ACQUISITION | Note 3 - Acquisition ACQUISITION Farrington On November 12, 2020, the Company acquired 100 % of the member interests of Farrington, an early-stage biotech company which owned a next generation anthracycline, HSB-888, for pediatric osteosarcoma. Pursuant to an Exchange Agreement, the Company issued 75,757 shares of its common stock to the seller as consideration for the purchase. The transaction did not meet the definition of a business combination for financial reporting purposes, since there were no business inputs, employees acquired, processes or outputs at the time of the transaction. The fair value of the common stock issued was estimated to be approximately $ 289,200 , for which the single asset was recognized as a component of acquired in-process research and development expense in the accompanying consolidated statements of operations in the year ended December 31, 2020. |
CONVERTIBLE NOTES - RELATED PAR
CONVERTIBLE NOTES - RELATED PARTIES | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE NOTES - RELATED PARTIES | Note 4 - Convertible Notes - Related Parties CONVERTIBLE NOTES - RELATED PARTIES Commencing in May 2017, the Company entered into Subordinated Convertible Promissory Note Agreements (the “Agreements”) with certain lenders (together, the “Holders” or individually, the “Holder”), pursuant to which the Company issued Subordinated Convertible Promissory Notes (individually the “Note” or together the “Notes”) to the Holders, principally all to the Chief Executive Officer and founder of the Company, a member of the Company’s board of directors and third parties that are family members of the founder and Chief Executive Officer. See Note 9. Interest on the unpaid principal balance accrues at a rate of 5 % per annum, computed on the basis of the actual number of days elapsed and a year of 365 days. Unless earlier converted into shares of the Company’s common stock or preferred stock (collectively, the “Equity Securities”), the principal and accrued interest shall be due and payable by the Company on demand by the Holders at any time after the earlier of (i) the Maturity Date (as defined in each Agreement) and (ii) the closing of the Next Equity Financing. “Next Equity Financing” means the next sale, or series of related sales, by the Company of its Equity Securities pursuant to which the Company receives gross proceeds of not less than $ 5,000,000 for Notes issued in 2017 and through November 2020 and $ 7,500,000 for Notes issued after November 2020 (including the aggregate amount of debt securities converted into Equity Securities upon conversion or cancellation of the Notes). In general, the stated maturity date was two years from the date of issuance, except for the Notes entered into in December 2020 and thereafter (in the aggregate principal amount of approximately $ 2,135,000 ) which have a stated maturity date of three years . For Notes entered into in 2017 and through September 2018, the default interest rate of 20 % was added to the Notes for the period after the maturity date. The Notes will automatically convert into the type of Equity Securities issued in the Next Equity Financing upon closing. The number of shares of such Equity Securities to be issued will be equal to the quotient obtained by dividing the outstanding principal and unpaid accrued interest due on the Note on the date of conversion by the lesser of (i) 80% of the price paid per share for Equity Securities by the investors in the Next Equity Financing, or (ii) an equity valuation of $ 25 million ($ 50 million for Notes issued after December 2020). No Next Equity Financing occurred through December 31, 2021; however on January 14, 2022, all outstanding Notes and accrued interest were converted into an aggregate of 1,225,384 shares of the Company’s common stock as the IPO qualified as a Next Equity Financing. Certain embedded features contained in the Notes in the aggregate are embedded derivative instruments, which were recorded as a debt discount and derivative liability at the issuance date at their estimated fair value for all Notes of approximately $ 2,421,000 . Accretion of debt discount for the Notes was recorded as interest expense was approximately $ 667,000 and $ 145,000 for the years ended December 31, 2021 and 2020, respectively. Accrued interest expense associated with the Notes at December 31, 2021 and December 31, 2020 amounted to approximately $ 180,000 and $ 73,000 , respectively. Interest expense, including accretion of the debt discount, amounted to approximately $ 831,000 and $ 246,000 for the years ended December 31, 2021 and 2020, respectively. As of December 31, 2021 and 2020, all convertible debt instruments which had matured had been rolled over into new notes as described below. SCHEDULE OF CONVERTIBLE DEBT 2021 2020 December 31, 2021 2020 Principal amount outstanding $ 3,734,446 $ 2,598,340 Less: debt discount, net of accretion (1,569,003 ) (747,973 ) Carrying value $ 2,165,443 $ 1,850,367 Current portion $ 1,392,544 $ 563,425 Long term portion 772,899 1,286,942 Total carrying value $ 2,165,443 $ 1,850,367 Exchange notes On September 27, 2020, the Company agreed to issue a related party Note holder notes (“Exchange Notes”) in exchange for seven Notes payable which were in default (“Original Notes”) at such time by more than 90 days. The Original Notes had a principal amount of approximately $ 265,000 and accrued interest of $ 37,000 at December 31, 2019. As of September 27, 2020, the aggregate outstanding principal was approximately $ 265,000 and accrued interest, which included the default interest rate of 20 % as described above, was approximately $ 71,000 . The Exchange Notes took the then principal and accrued interest of the Original Notes and added an original issue discount of 37.5 % to determine the new principal amount which amounted to an aggregate of $ 537,968 . The Company accounted for this transaction as a debt extinguishment, and the incremental amount of the principal of the Exchange Notes payable of $ 201,737 was recorded to accumulated deficit (analogous to a “deemed dividend”) in the year ended December 31, 2020, since the Exchange Notes are with related parties, and included in the calculation of loss per share. On September 27, 2020, the Company issued certain related party Noteholders notes (“September Exchange Notes”) in exchange for five Notes payable, which were in default. As of such date, the aggregate outstanding principal and interest was approximately $ 26,000 , which included the default interest rate of 20 % as described above. The September Exchange Notes in the aggregate principal amount of approximately $ 26,000 were issued with substantially the same terms as the Original Notes. There were no accounting entries required upon the re-issuance of such Exchange Notes. Roll-over notes Effective October 1, 2020, all Notes which matured, and were not repaid or converted, were rolled over on substantially the same terms as the Original Notes (“Rolled Over”). Approximately $ 805,000 of such Original Notes were Rolled Over through December 31, 2021, of which approximately $ 166,000 occurred prior to December 31, 2020 and $ 639,000 occurred between January 1, 2021 and December 31, 2021. Since the terms of the new notes are not substantially different from the Original Notes, this was not accounted for as a debt modification or debt extinguishment. |
REDEMPTION LIABILITY
REDEMPTION LIABILITY | 12 Months Ended |
Dec. 31, 2021 | |
Redemption Liability | |
REDEMPTION LIABILITY | Note 5 - Redemption Liability REDEMPTION LIABILITY The fair value of the redemption liability is calculated under Level 3 of the fair value hierarchy, determined based upon a Probability-Weighted Expected Returns Method (“PWERM”). This PWERM was determined to be the most appropriate method of estimating the value of possible redemption or conversion outcomes over time, since the Company has not entered into a priced equity round through December 31, 2021. The significant assumptions utilized in these calculations are the possible exit scenarios (either a conversion of the principal and accrued interest of the Notes in the event of a Next Equity Financing, a repayment of the Notes and accrued interest in the event of a Corporate Transaction (as defined in the Notes) or a repayment of the Notes and accrued interest at maturity), the pre-money valuation of the Company’s common stock, the probabilities of such exit events occurring and discounts/premiums available to the noteholders at such measurement dates. At December 31, 2020, the Company assumed a 40% probability of a Next Equity Financing event occurring at IPO pricing. At December 31, 2020, the Company assumed a 5% probability of a Corporate Transaction. The calculation of the redemption liability at December 31, 2021 is based upon the actual incremental value derived by the Holders at the IPO date. The calculation of the redemption liability also used the following assumptions during the years: SCHEDULE OF ASSUMPTIONS OF REDEMPTION LIABILITY December 31, 2020 Assumed ranges pre-money valuation at time of Next Equity Financing $ 5 – 50 million Discount rate 8.86 - 11.13 % Expected coupon interest rate on Notes 5.0 % Expected term to exit event 2.0 - 3.0 years The fair value of the redemption liability is re-measured at each period and is summarized as follows: SCHEDULE OF FAIR VALUE OF THE REDEMPTION LIABILITY December 31, 2021 2020 Beginning balance $ 1,325,288 $ 126,183 Initial embedded redemption value 1,487,596 836,619 Change in fair value (1,832,651 ) 362,486 Ending balance $ 980,233 $ 1,325,288 The change in fair value of a gain of $ 1,832,651 and loss of $ 362,486 for the years ended December 31, 2021 and 2020, respectively, is recorded as a component of other income (expenses), net in the accompanying consolidated statements of operations. |
STOCK BASED COMPENSATION
STOCK BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
STOCK BASED COMPENSATION | Note 6 - Stock Based Compensation STOCK BASED COMPENSATION Under the Company’s 2017 Stock Incentive Plan (the “2017 Stock Incentive Plan”) the Company may grant incentive stock options, non-statutory stock options, rights to purchase common stock, stock appreciation rights, restricted stock, performance shares and performance units to employees, directors and consultants of the Company and its affiliates. Up to 94,696 shares of the Company’s common stock may be issued pursuant to the 2017 Stock Incentive Plan. The Company has granted options to acquire 92,801 shares of common stock at $ 13.20 per share under the 2017 Stock Incentive Plan, and 1,895 remains available for issuance. At each of December 31, 2021 and December 31, 2020, there were options outstanding to acquire 92,801 shares of common stock. As of December 31, 2021, all such options were fully vested, and the weighted average remaining contractual life for such options was approximately 6.2 years. In July 2019, the Company authorized a new plan (the “2019 Stock Incentive Plan”). The Company initially reserved 284,090 shares of its common stock for issuance pursuant to the 2019 Stock Incentive Plan in the form of incentive stock options, non-statutory stock options, rights to purchase common stock, stock appreciation rights, restricted stock, restricted stock, performance shares and performance units to employees, directors and consultants of the Company and its affiliates. On August 30, 2019, the Company approved an increase in the number of shares authorized for issuance under the 2019 Stock Incentive Plan by 2,575,757 shares. In January 2021, the Company approved an increase in the number of shares reserved for issuance under the 2019 Stock Incentive Plan by 574,494 shares. On May 31, 2021, the Company approved an increase in the number of shares reserved for issuance under the 2019 Stock Incentive Plan by 467,171 shares. At December 31, 2021, a total of 3,901,512 shares are authorized for issuance under the 2019 Stock Incentive Plan. The Company has granted options to acquire 2,420,514 shares of common stock under the 2019 Stock Incentive Plan, and 1,480,998 remain available for issuance at December 31, 2021. The shares issued in 2021 and 2020 and the shares exercised under the 2019 Stock Incentive Plan are included in the table below. At December 31, 2021, there are stock options outstanding to acquire 810,667 shares of common stock with a weighted average exercise price of $ 3.25 and a weighted average contractual term of 8.0 years. The following table summarizes stock-based activities under the 2017 Stock Incentive Plan and 2019 Stock Incentive Plans: SCHEDULE OF STOCK OPTION ACTIVITY Shares Underlying Options Weighted Average Exercise Price Weighted Average Contractual Terms Outstanding at December 31, 2019 475,368 $ 3.22 9.4 years Granted 200,363 2.80 Exercised - - Forfeited/cancelled - - Outstanding at December 31, 2020 675,731 3.09 8.8 years Granted 227,737 7.76 Exercised - - Forfeited/cancelled - - Outstanding at December 31, 2021 903,468 $ 4.27 7.9 years Exercisable options at December 31, 2021 580,642 $ 5.98 8.0 years Vested and expected to vest at December 31, 2021 658,206 $ 5.72 8.5 years The following table summarizes the exercise price range as of December 31, 2021: SCHEDULE OF EXERCISE PRICE RANGE Exercise Price Outstanding Options Exercisable Options $ 0.08 275,564 33,261 0.31 78,212 78,133 2.64 107,004 65,564 3.82 73,857 73,857 5.28 48,294 19,044 7.03 18,940 18,940 7.82 208,797 204,180 $ 13.20 92,800 87,663 903,468 580,642 The fair value of stock option awards is estimated at the date of grant using the Black-Scholes option-pricing model. The estimated fair value of each stock option is then expensed over the requisite service period, which is generally the vesting period (ranging between immediate vesting and 4 years). The determination of fair value using the Black-Scholes model is affected by the Company’s share price as well as assumptions regarding a number of complex and subjective variables, including expected price volatility, risk-free interest rate and forfeitures. Stock options granted during the years ended December 31, 2021 and 2020 were valued using the Black-Scholes option-pricing model with the following weighted average assumptions: SCHEDULE OF BLACK-SCHOLES OPTION PRICING MODEL WEIGHTED AVERAGE ASSUMPTIONS December 31, 2021 2020 Expected volatility 111.3 % 83.0 % Risk-free interest rate 0.6 % 0.7 % Expected dividend yield - - Expected life of options in years 5.0 5.0 Estimated fair value of common stock $ 7.03 $ 2.455 The weighted average grant date fair value of stock options granted during the years ended December 31, 2021 and 2020 was approximately $ 5.48 and $ 1.53 , respectively. The weighted average fair value of stock options vested in the years ended December 2021 and 2020 was approximately $ 5.47 and $ 1.37, respectively. Stock based compensation expense was approximately $ 1,239,000 ($ 531,000 included in research and development expense and $ 708,000 included in general and administrative expenses) and approximately $ 234,000 ($ 124,000 included in research and development expense and $ 110,000 included in general and administrative expenses) for the years ended December 2021 and 2020, respectively, and is included in the accompanying consolidated statements of operations. At December 31, 2021, the total unrecognized compensation expense related to non-vested options was approximately $ 75,000 and is expected to be recognized over the remaining weighted average service period of approximately 0.5 years. Included in the above table are stock options granted in 2019 to purchase 231,058 shares of the Company’s common stock at an exercise price of $ 0.079 per share and stock options granted in 2020 to purchase 14,204 shares of common stock at an exercise price of $ 5.28 per share, which vest upon a specified performance condition. Since the occurrence of this condition was not considered probable as of December 31, 2021 and 2020, the Company has not recognized any expense for such grants through December 31, 2021. In March 2021, the Company modified the stock option exercise price for stock options granted during 2020, increasing the exercise price of such stock options from $0.18 or $2.598 to $0.314 or $3.817 per share, respectively. The increase in the stock option exercise price was accounted for as a modification of the stock grant in 2021; however, the impact on the Company’s consolidated statements of operations was immaterial. |
STOCKHOLDERS_ DEFICIT
STOCKHOLDERS’ DEFICIT | 12 Months Ended |
Dec. 31, 2021 | |
Equity [Abstract] | |
STOCKHOLDERS’ DEFICIT | Note 7 – Stockholders’ deficit STOCKHOLDERS’ DEFICIT Pursuant to an amendment to the Company’s Certificate of Incorporation filed in April 2019, the Company increased the number of authorized shares of common stock to 250 million shares. See Note 2 for a discussion of the reverse stock split. During the year ended December 31, 2020, the Company issued 75,757 shares of common stock for the Farrington acquisition transaction described in Note 3. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | Note 8 – income taxes INCOME TAXES The Company does not have any significant current income taxes due because of the losses generated in each period. Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company’s deferred tax assets relate primarily to its net operating loss carryforwards and other balance sheet basis differences. In accordance with ASC 740, the Company recorded a valuation allowance to fully offset the gross deferred tax asset because it is not more likely than not that the Company will realize future benefits associated with these deferred tax assets at December 31, 2021 and 2020. The valuation allowance increased by approximately $ 652,000 and $ 589,000 for the years ended December 31, 2021 and 2020, respectively. Significant components of the Company’s deferred tax assets at December 31, 2021 and 2020 are as follows: SCHEDULE OF SIGNIFICANT COMPONENTS OF COMPANY’S DEFERRED TAX ASSETS 2021 2020 December 31, 2021 2020 Deferred tax assets: Federal net operating loss carryforward $ 702,000 $ 424,000 State net operating loss carryforward 238,000 182,000 Capitalized costs 394,000 199,000 Acquired In-process research and development 178,000 205,000 Research and development credit 45,000 66,000 Stock compensation 336,000 17,000 Accrued expenses and other (66,000 ) 82,000 Total deferred tax assets 1,827,000 1,175,000 Valuation allowance (1,827,000 ) (1,175,000 ) Deferred tax asset, net of valuation allowance $ - $ - The income tax benefit for the years ended December 31, 2021 and 2020 differ from the amounts computed by applying the U.S. Federal income tax rate of 21 % to loss before income tax benefit as a result of non-deductible expenses, tax credits generated and increases in the Company’s valuation allowance. SCHEDULE OF EFFECTIVE INCOME TAX EXPENSE 2021 2020 December 31, 2021 2020 Income tax benefit at the federal statutory rate $ (463,000 ) $ (508,000 ) Permanent differences and other (61,000 ) 117,000 State income taxes (118,000 ) (167,000 ) Research and development credit (40,000 ) (31,000 ) Other 30,000 - Change in Valuation allowance 652,000 589,000 Effective income tax expense $ - $ - A valuation allowance is required to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. After consideration of the available evidence, both positive and negative, the Company determined that valuation allowances of $ 1,827,000 million and $ 1,175,000 At December 31, 2021, the Company had available net operating loss carryforwards of approximately $ 3.3 million for federal income tax purposes, all of which was generated after 2017 and can be carried forward indefinitely under the Tax Cuts and Jobs Act. At December 31, 2021, the Company had approximately $ 46 thousand of federal research and development (“R&D”) tax credit carryforwards. If not utilized, the federal R&D credits will begin to expire in 2038. The Company also had $ 3.3 million of state net operating losses that will begin to expire in 2037. Sections 382 and 383 of the Internal Revenue Code, and similar state regulations, contain provisions that may limit the NOL carryforwards available to be used to offset income in any given year upon the occurrence of certain events, including changes in the ownership interests of significant stockholders. In the event of a cumulative change in ownership in excess of 50% over a three-year period, the amount of the NOL carryforwards that the Company may utilize in any one year may be limited. Although the Company has not undertaken a formal analysis, it is likely that such an ownership change occurred during 2021. On March 27, 2020, the United States enacted the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”). The CARES Act is an emergency economic stimulus package that includes spending and tax breaks to strengthen the United States economy and fund a nationwide effort to curtail the effect of COVID-19. While the CARES Act provides sweeping tax changes in response to the COVID-19 pandemic, some of the more significant provisions which are expected to impact the Company’s financial statements include removal of certain limitations on utilization of NOLs, increasing the loss carryback period for certain losses to five years, and increasing the ability to deduct interest expense, as well as amending certain provisions of the previously enacted Tax Cuts and Jobs Act. The Company has concluded that the CARES Act did not have a material impact on its financial position, results of operations, or cash flows. On December 27, 2020, the United States enacted the Consolidated Appropriations Act which extended many of the benefits of the CARES Act that were scheduled to expire. The Company evaluated the impact of the Consolidated Appropriations Act on its consolidated financial statements and related disclosures and concluded that the impact is immaterial. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2021 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | Note 9 - Related Party Transactions RELATED PARTY TRANSACTIONS As described in Note 4, the Company entered into the Notes with the Holders commencing in May 2017. The Holders of substantially all of the Notes are the Company’s founder and Chief Executive Officer, a member of the Company’s board of directors and third parties that are family members of the founder and Chief Executive Officer. In addition to the above Notes, the Company has amounts due to the founder and Chief Executive Officer that totaled $ 200,000 at December 31, 2021 and December 31, 2020 for accrued compensation. See Note 10. There are no established terms for repayment of such amounts. During the year ended December 31, 2020, expenses paid on behalf of the Company by the Chief Executive Officer of $ 55,068 were converted into a convertible promissory note and is included in convertible notes-related parties on the accompanying balance sheet. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Note 10 - Commitments And Contingencies COMMITMENTS AND CONTINGENCIES Small molecule analogues On December 30, 2019, the Company acquired a series of small molecule analogues pursuant to an asset purchase agreement (“APA”). Pursuant to the APA, the Company is required to make a payment of $50,000 upon raising of at least $2 million in funding, and up to $1.75 million based upon successfully meeting clinical and sales milestones. As of December 31, 2021, such fund-raising requirement was not met and no payments were made pursuant to the APA. The Company included, in accounts payable at December 31, 2021 and December 31, 2020, the $ 50,000 required initial payment. Milestone based payments, if any, will be expensed as incurred. Employment agreement In January 2019, the Company entered into a three-year employment agreement with its Chief Executive Officer which provides a specified base salary and bonus. The employment agreement also provides the Chief Executive Officer with certain benefits while employed and if employment ceases. The Company accrued $ 200,000 in 2019 related to the Chief Executive Officer’s base salary as per the employment agreement, which is included in due to founder, which remains outstanding as of December 31, 2021. No bonus was approved by the board of directors of the Company for any period through December 31, 2021. In January 2020, the Company amended the employment agreement pursuant to which, in lieu of a cash base salary, the Chief Executive Officer will be compensated with stock options to purchase 7,575 shares of common stock per month (at an exercise price based upon the most recent 409A valuation) effective January 1, 2020 until the Company receives a minimum of $ 3,000,000 of gross proceeds from the sale of the Company’s securities, after which time, cash compensation, pursuant to the employment agreement, shall be paid. Effective January 1, 2021, the Company amended the employment agreement with its Chief Executive Officer to provide a revised base salary pre-funding (as defined in the employment agreement). In lieu of cash base salary, the Chief Executive Officer will be compensated with stock options to purchase 18,939 shares of the Company’s common stock per month (an exercise price of $ 7.82 per share) effective January 1, 2021 until funding meets or exceeds $ 5,000,000 , after which time, cash compensation, pursuant to his employment agreement, shall be paid. The amended employment agreement also provides for a future base salary for the Chief Executive Officer after the Company receives funding greater than $ 5,000,000 or completes an initial public offering or similar transaction as set forth in the employment agreement. In addition, if the Chief Executive Officer acts as the “finder” of an investor who purchases more than $ 5,000,000 of the Company’s equity, he will receive a grant of stock options to acquire 757,575 shares of common stock of the Company at an exercise price equal to the most recent fair value of the Company’s common stock. This grant has not been earned as of December 31, 2021. On June 1, 2021, the Company entered into an Amended and Restated Employment Agreement, as amended on September 24, 2021 (the “Amended and Restated Employment Agreement”) with the Company’s President and Chief Executive Officer. The term of the Amended and Restated Employment Agreement will commence upon the closing of the Company’s initial public offering of its securities and continues for a period of five years and automatically renews for successive one-year periods at the end of each term unless either party provides written notice of their intent not to review at least 60 days prior to the expiration of the then effective term. Pursuant to the Amended and Restated Employment Agreement, the Chief Executive Officer will receive an annual base salary of $ 485,000 , which may be increased from time to time, and shall be eligible to receive an annual cash bonus equal to 55 % of his then base salary based upon the achievement of Company and individual performance targets established by the Company’s board of directors. In addition, in the first year in which the Company’s market capitalization (as defined in the Amended and Restated Employment Agreement) equals or exceeds (i) $250 million, the Chief Executive Officer shall receive a cash payment of $150,000; (ii) $500 million, the Chief Executive Officer shall receive a cash payment of $350,000; and (iii) $1 billion, the Chief Executive Officer shall receive a cash payment of $750,000. Furthermore, on or as soon as reasonably practicable following the date of the consummation the Company’s initial public offering of its securities, the Chief Executive Officer shall be granted 757,575 shares of the Company’s common stock at the public offering price per share of common stock sold in the Company’s initial public offering of its securities which shall vest over a 48-month period commencing 12 months after the date of grant. This shall be in addition to any additional equity-based compensation awards the Company may grant the Chief Executive Officer from time to time. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2021 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | Note 11 - Subsequent Events SUBSEQUENT EVENTS A. IPO On January 14, 2022, the Company closed its IPO pursuant to which it issued 3,750,000 shares of the Company’s common stock at a public offering price of $ 4.00 per share. The gross proceeds to the Company from the IPO were $ 15,000,000 , prior to deducting underwriting discounts, commissions, and other offering expenses. The net proceeds to the Company from the IPO were $ 13.0 million. The Company granted the underwriters a 45-day option to purchase up to an additional 562,500 shares of common stock at the public offering price less discounts and commissions, to cover over-allotments; however, this option expired unexercised. Additionally, and as a result of the completion of the IPO, all of the Company’s convertible debt and accrued interest was converted into an aggregate of 1,225,384 shares of the Company’s common stock pursuant to the terms of the convertible notes. B. Notes payable On January 4, 2022 and January 6, 2022, the Company issued unsecured promissory notes in the aggregate principal amount of $ 138,887 (including an original issuance discount of an aggregate of $ 13,887 ) to three related-party investors. The notes accrue interest at a rate of 12 % per annum and mature upon the earlier of (i) June 30, 2022, and (ii) the closing of a Subsequent Equity Financing. “Subsequent Equity Financing” means the next sale (or series of related sales) by the Company of its Equity Securities following the date of the notes pursuant to which the Company receives gross proceeds of not less than $ 5,000,000 . The notes were repaid in full on January 21, 2022. C. Stock option grant On January 14, 2022, the Company granted its Chief Executive Officer a stock option to purchase up to 757,575 shares of the Company’s common stock at an exercise price of $ 4.00 per share in accordance with his employment agreement. See Note 10. On March 21, 2022, the Company granted options to purchase up to an aggregate of 247,500 shares of the Company’s common stock at an exercise price of $ 1.33 per share to the independent members of the Company’s board of directors and members of the Company’s Scientific Advisory Board. |
BASIS OF PRESENTATION AND SUM_2
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation These accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The Company operates in one segment. |
Reverse stock split | Reverse stock split On September 16, 2021, the Company effectuated a reverse split of shares of its common stock at a ratio of 1-for-26.4 pursuant to an amendment to the Company’s Certificate of Incorporation, as amended, filed with the Delaware Secretary of State and approved by the Company’s board of directors and stockholders. The par value of the Company’s common stock was not adjusted as a result of the reverse split. All issued and outstanding common stock share and per share amounts contained in the financial statements have been retroactively adjusted to reflect this reverse split for all periods presented. |
Principles of consolidation | Principles of consolidation The consolidated financial statements include the accounts of Hillstream BioPharma, Inc. and its wholly-owned subsidiaries, HB Pharma Corp., Nanoproteagen and Farrington. All significant intercompany balances and transactions have been eliminated in consolidation. |
Use of estimates | Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosures in the financial statements and accompanying notes. Management bases its estimates on historical experience and on assumptions believed to be reasonable under the circumstances. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes, and management must select an amount that falls within that range of reasonable estimates. Estimates are used in the following areas, among others: research and development expense recognition, valuation of common shares and stock options, allowances of deferred tax assets, valuation of debt related instruments, accrued expenses and liabilities, and cash flow assumptions regarding going concern considerations. |
Cash | Cash The Company from time to time during the period covered by these financial statements may have had bank account balances in excess of federally insured limits. The Company has not experienced losses in such accounts. The Company believes that it is not subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. |
Research and development | Research and development Research and development costs are expensed as incurred. Research and development expenses include personnel costs associated with research and development activities, including third party contractors to perform research, conduct clinical trials and manufacture drug supplies and materials. The Company accrues for costs incurred by external service providers, including contract research organizations and clinical investigators, based on its estimates of service performed and costs incurred. These estimates include the level of services performed by third parties, patient enrolment in clinical trials, administrative costs incurred by third parties, and other indicators of the services completed. Substantially all of the prepaid expenses at December 31, 2021 relate to a manufacturing services agreement. Substantially all of the prepaid expenses at December 31, 2020 relate to the purchase of an active pharmaceutical ingredient. |
Acquired in-process research and development | Acquired in-process research and development The Company has acquired, and may in the future acquire, rights to develop and commercialize new product candidates and/or other in-process research and development assets. In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 730-10-25-1, Research and Development, |
Stock based compensation | Stock based compensation The Company recognizes compensation costs resulting from the issuance of stock-based awards to employees, non-employees and directors as an expense in the consolidated statements of operations over the requisite service period based on a measurement of fair value for each stock-based award. The fair value of each option grant to employees, non-employees and directors is estimated as of the date of grant using the Black-Scholes option-pricing model, net of actual forfeitures. The fair value is amortized as compensation cost on a straight-line basis over the requisite service period of the awards, which is generally the vesting period. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. At December 31, 2021, the Company was a private company and lacked company-specific historical and implied volatility information. Therefore, it estimated its expected stock volatility based on the historical data regarding the volatility of a publicly traded set of peer companies. The expected term of stock options granted was between five and seven years. The risk-free interest rate was determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. |
Common stock valuations | Common stock valuations The Company was required to periodically estimate the fair value of common stock with the assistance of an independent third-party valuation expert when issuing stock options and computing its estimated stock-based compensation expense and value of shares issued in acquiring product candidates. The assumptions underlying these valuations represented management’s best estimates, which involved inherent uncertainties and the application of significant levels of management judgment. In order to determine the fair value, the Company considered, among other things, contemporaneous valuations of the Company’s common stock, the Company’s business, financial condition and results of operations, including related industry trends affecting its operations; the likelihood of achieving various liquidity events; the lack of marketability of the Company’s common stock; the market performance of comparable publicly traded companies; and U.S. and global economic and capital market conditions. |
Debt discount and derivative instruments | Debt discount and derivative instruments The initial fair value of the redemption feature relating to the convertible debt instruments is treated as a debt discount and amortized over the term of the related debt using the straight-line method, which approximates the interest method. If a loan is paid in full, any unamortized financing costs will be removed from the related accounts and charged to operations. Amortization of debt discount is recorded as a component of interest expense. In accordance with Accounting Standards Update (“ASU”) 2015-03, Interest — Imputation of Interest The Company accounts for derivative instruments in accordance with ASC 815, Derivative and Hedging |
Fair value measurements | Fair value measurements The Company applies ASC 820, Fair Value Measurement The carrying value of the Company’s prepaid expenses, accounts payable and accrued expenses approximate fair value because of the short-term maturity of these financial instruments. The redemption feature of the debt instruments is recorded at fair value. See Note 5. The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The levels within the valuation hierarchy are described below: Level 1 - Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2 - Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 - Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little or no market data exists for the assets or liabilities. |
Deferred Offering Costs | Deferred Offering Costs Deferred offering costs consisted of legal, accounting, printing, and filing fees that the Company capitalized which will be offset against the proceeds from the IPO. |
Income taxes | Income taxes The Company accounts for income taxes using the asset-and-liability method in accordance with ASC 740, Income Taxes Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on the deferred tax assets and liabilities of a change in tax rate is recognized in the period that includes the enactment date. A valuation allowance has been recognized for all periods since it is “more likely than not” that some portion or all of the deferred tax assets will not be realized in future periods. The Company follows the guidance in ASC Topic 740-10 in assessing uncertain tax positions. The standard applies to all tax positions and clarifies the recognition of tax benefits in the financial statements by providing for a two-step approach of recognition and measurement. The first step involves assessing whether the tax position is more-likely-than-not to be sustained upon examination based upon its technical merits. The second step involves measurement of the amount to be recognized. Tax positions that meet the more-likely than-not threshold are measured at the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate finalization with the taxing authority. The Company recognizes the impact of an uncertain income tax position in the financial statements if it believes that the position is more likely than not to be sustained by the relevant taxing authority. The Company will recognize interest and penalties related to tax positions in income tax expense. At December 31, 2021 and 2020, the Company had no unrecognized uncertain income tax positions, and therefore no amounts have been recognized in the consolidated financial statements. |
Net loss per share | Net loss per share The Company reports loss per share in accordance with ASC 260-10, Earnings Per Share Potentially dilutive securities not included in the computation of earnings (loss) per share for the years ended December 31, 2021 and 2020 included options to purchase 903,468 and 675,731 shares of common stock, respectively. The number of shares issuable upon the conversion of convertible debt and accrued interest (which was 1,225,384 shares at the IPO date of January 14, 2022) is not included in the denominator since their inclusion would be anti-dilutive. All common share amounts and per share amounts have been adjusted to reflect a 1-for-26.4 reverse stock split of the Company’s common stock effectuated on September 16, 2021. Management concluded that the deemed dividend (see Note 4) is analogous to a return on equity classified preference shares, therefore the deemed dividend is added to the net loss for purposes of the basic and diluted loss per share calculation. Accordingly, the numerator of the loss per share calculation (basic and diluted) is $ 2,619,108 for the year ended December 31, 2020. |
New accounting pronouncements not yet adopted: | New accounting pronouncements not yet adopted: The Company has evaluated all recent accounting pronouncements and believes that none of them will have a material effect on the Company’s financial position, results of operations or cash flows except as discussed below. Leases In February 2016, the FASB issued ASU No. 2016-02, “ Leases (Topic 842) Leases Debt with Conversion and Other Options and Derivatives and Hedging The FASB recently issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity Earnings Per Share Earnings Per Share In May 2021, the FASB issued ASU 2021-04, Earnings Per Share Compensation-Stock Compensation Derivatives and Hedging-Contracts in Entity’s Own Equity Recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statement presentation or disclosures. Codification Improvements In October 2020, the FASB issued ASU 2020-10, Codification Improvements |
CONVERTIBLE NOTES - RELATED P_2
CONVERTIBLE NOTES - RELATED PARTIES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
SCHEDULE OF CONVERTIBLE DEBT | As of December 31, 2021 and 2020, all convertible debt instruments which had matured had been rolled over into new notes as described below. SCHEDULE OF CONVERTIBLE DEBT 2021 2020 December 31, 2021 2020 Principal amount outstanding $ 3,734,446 $ 2,598,340 Less: debt discount, net of accretion (1,569,003 ) (747,973 ) Carrying value $ 2,165,443 $ 1,850,367 Current portion $ 1,392,544 $ 563,425 Long term portion 772,899 1,286,942 Total carrying value $ 2,165,443 $ 1,850,367 |
REDEMPTION LIABILITY (Tables)
REDEMPTION LIABILITY (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Redemption Liability | |
SCHEDULE OF ASSUMPTIONS OF REDEMPTION LIABILITY | SCHEDULE OF ASSUMPTIONS OF REDEMPTION LIABILITY December 31, 2020 Assumed ranges pre-money valuation at time of Next Equity Financing $ 5 – 50 million Discount rate 8.86 - 11.13 % Expected coupon interest rate on Notes 5.0 % Expected term to exit event 2.0 - 3.0 years |
SCHEDULE OF FAIR VALUE OF THE REDEMPTION LIABILITY | The fair value of the redemption liability is re-measured at each period and is summarized as follows: SCHEDULE OF FAIR VALUE OF THE REDEMPTION LIABILITY December 31, 2021 2020 Beginning balance $ 1,325,288 $ 126,183 Initial embedded redemption value 1,487,596 836,619 Change in fair value (1,832,651 ) 362,486 Ending balance $ 980,233 $ 1,325,288 |
STOCK BASED COMPENSATION (Table
STOCK BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
SCHEDULE OF STOCK OPTION ACTIVITY | The following table summarizes stock-based activities under the 2017 Stock Incentive Plan and 2019 Stock Incentive Plans: SCHEDULE OF STOCK OPTION ACTIVITY Shares Underlying Options Weighted Average Exercise Price Weighted Average Contractual Terms Outstanding at December 31, 2019 475,368 $ 3.22 9.4 years Granted 200,363 2.80 Exercised - - Forfeited/cancelled - - Outstanding at December 31, 2020 675,731 3.09 8.8 years Granted 227,737 7.76 Exercised - - Forfeited/cancelled - - Outstanding at December 31, 2021 903,468 $ 4.27 7.9 years Exercisable options at December 31, 2021 580,642 $ 5.98 8.0 years Vested and expected to vest at December 31, 2021 658,206 $ 5.72 8.5 years |
SCHEDULE OF EXERCISE PRICE RANGE | The following table summarizes the exercise price range as of December 31, 2021: SCHEDULE OF EXERCISE PRICE RANGE Exercise Price Outstanding Options Exercisable Options $ 0.08 275,564 33,261 0.31 78,212 78,133 2.64 107,004 65,564 3.82 73,857 73,857 5.28 48,294 19,044 7.03 18,940 18,940 7.82 208,797 204,180 $ 13.20 92,800 87,663 903,468 580,642 |
SCHEDULE OF BLACK-SCHOLES OPTION PRICING MODEL WEIGHTED AVERAGE ASSUMPTIONS | Stock options granted during the years ended December 31, 2021 and 2020 were valued using the Black-Scholes option-pricing model with the following weighted average assumptions: SCHEDULE OF BLACK-SCHOLES OPTION PRICING MODEL WEIGHTED AVERAGE ASSUMPTIONS December 31, 2021 2020 Expected volatility 111.3 % 83.0 % Risk-free interest rate 0.6 % 0.7 % Expected dividend yield - - Expected life of options in years 5.0 5.0 Estimated fair value of common stock $ 7.03 $ 2.455 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
SCHEDULE OF SIGNIFICANT COMPONENTS OF COMPANY’S DEFERRED TAX ASSETS | Significant components of the Company’s deferred tax assets at December 31, 2021 and 2020 are as follows: SCHEDULE OF SIGNIFICANT COMPONENTS OF COMPANY’S DEFERRED TAX ASSETS 2021 2020 December 31, 2021 2020 Deferred tax assets: Federal net operating loss carryforward $ 702,000 $ 424,000 State net operating loss carryforward 238,000 182,000 Capitalized costs 394,000 199,000 Acquired In-process research and development 178,000 205,000 Research and development credit 45,000 66,000 Stock compensation 336,000 17,000 Accrued expenses and other (66,000 ) 82,000 Total deferred tax assets 1,827,000 1,175,000 Valuation allowance (1,827,000 ) (1,175,000 ) Deferred tax asset, net of valuation allowance $ - $ - |
SCHEDULE OF EFFECTIVE INCOME TAX EXPENSE | SCHEDULE OF EFFECTIVE INCOME TAX EXPENSE 2021 2020 December 31, 2021 2020 Income tax benefit at the federal statutory rate $ (463,000 ) $ (508,000 ) Permanent differences and other (61,000 ) 117,000 State income taxes (118,000 ) (167,000 ) Research and development credit (40,000 ) (31,000 ) Other 30,000 - Change in Valuation allowance 652,000 589,000 Effective income tax expense $ - $ - |
DESCRIPTION OF BUSINESS AND L_2
DESCRIPTION OF BUSINESS AND LIQUIDITY (Details Narrative) - USD ($) | Jan. 14, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Subsequent Event [Line Items] | ||||
Operating Income (Loss) | $ 3,208,017 | $ 1,808,351 | ||
Retained Earnings (Accumulated Deficit) | $ 6,911,250 | $ 4,704,607 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 903,468 | 675,731 | 475,368 | |
Subsequent Event [Member] | Common Stock [Member] | ||||
Subsequent Event [Line Items] | ||||
Conversion of Stock, Shares Converted | 1,225,384 | |||
Subsequent Event [Member] | IPO [Member] | ||||
Subsequent Event [Line Items] | ||||
Stock Issued During Period, Shares, New Issues | 3,750,000 | |||
Shares Issued, Price Per Share | $ 4 | |||
Gross proceeds from issuance initial public offering | $ 15,000,000 | |||
Proceeds from Issuance Initial Public Offering | $ 13,000,000 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 562,500 | |||
Conversion of Stock, Shares Converted | 1,225,384 | |||
Subsequent Event [Member] | IPO [Member] | Common Stock [Member] | ||||
Subsequent Event [Line Items] | ||||
Conversion of Stock, Shares Converted | 1,225,384 |
BASIS OF PRESENTATION AND SUM_3
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | Jan. 14, 2022 | Sep. 16, 2021 | Dec. 31, 2021 | Dec. 31, 2020 |
Subsequent Event [Line Items] | ||||
Stockholders' Equity, Reverse Stock Split | 1-for-26.4 | 1-for-26.4 | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 903,468 | 675,731 | ||
[custom:BacisAndDilutedLoss] | $ 2,619,108 | |||
Subsequent Event [Member] | Common Stock [Member] | ||||
Subsequent Event [Line Items] | ||||
Conversion of Stock, Shares Converted | 1,225,384 | |||
Subsequent Event [Member] | IPO [Member] | ||||
Subsequent Event [Line Items] | ||||
Conversion of Stock, Shares Converted | 1,225,384 | |||
Subsequent Event [Member] | IPO [Member] | Common Stock [Member] | ||||
Subsequent Event [Line Items] | ||||
Conversion of Stock, Shares Converted | 1,225,384 |
ACQUISITION (Details Narrative)
ACQUISITION (Details Narrative) - USD ($) | Nov. 12, 2020 | Dec. 31, 2020 |
Business Acquisition [Line Items] | ||
Stock Issued During Period, Value, Acquisitions | $ 289,200 | |
Farrington [Member] | Exchange Agreement [Member] | ||
Business Acquisition [Line Items] | ||
Business Acquisition, Percentage of Voting Interests Acquired | 100.00% | |
Stock Issued During Period, Shares, Acquisitions | 75,757 | |
Stock Issued During Period, Value, Acquisitions | $ 289,200 |
SCHEDULE OF CONVERTIBLE DEBT (D
SCHEDULE OF CONVERTIBLE DEBT (Details) - Rolled Over in toNew Notes [Member] - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Short-term Debt [Line Items] | ||
Principal amount outstanding | $ 3,734,446 | $ 2,598,340 |
Less: debt discount, net of accretion | (1,569,003) | (747,973) |
Total carrying value | 2,165,443 | 1,850,367 |
Current portion | 1,392,544 | 563,425 |
Long term portion | $ 772,899 | $ 1,286,942 |
CONVERTIBLE NOTES - RELATED P_3
CONVERTIBLE NOTES - RELATED PARTIES (Details Narrative) - USD ($) | Jan. 14, 2022 | Dec. 31, 2020 | Sep. 27, 2020 | May 31, 2017 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2019 | Sep. 30, 2018 |
Short-term Debt [Line Items] | |||||||||
Interest Expense | $ 831,277 | $ 246,534 | |||||||
Interest Payable, Current | $ 73,066 | 179,621 | 73,066 | $ 179,621 | |||||
Original Notes [Member] | Exchange Notes [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Debt Instrument, Interest Rate, Stated Percentage | 20.00% | ||||||||
Debt Instrument, Face Amount | $ 265,000 | $ 265,000 | |||||||
Interest Payable, Current | $ 71,000 | $ 37,000 | |||||||
Debt Instrument, Interest Rate, Effective Percentage | 37.50% | ||||||||
Debt Conversion, Original Debt, Amount | $ 537,968 | ||||||||
Notes Payable | 201,737 | 201,737 | |||||||
Five Notes Payable [Member] | Exchange Notes [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Debt Instrument, Interest Rate, Stated Percentage | 20.00% | ||||||||
Five Notes Payable [Member] | September Exchange Notes [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Debt Instrument, Face Amount | $ 26,000 | ||||||||
Rolled Over [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Debt Conversion, Original Debt, Amount | $ 639,000 | 166,000 | 805,000 | ||||||
Subsequent Event [Member] | Common Stock [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Conversion of Stock, Shares Converted | 1,225,384 | ||||||||
Convertible Promissory Note Agreements [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Debt Instrument, Interest Rate, Stated Percentage | 5.00% | 20.00% | |||||||
Proceeds from Issuance or Sale of Equity | $ 7,500,000 | $ 5,000,000 | |||||||
Debt Instrument, Term | 2 years | 3 years | |||||||
Debt Instrument, Face Amount | $ 21,350 | 21,350 | |||||||
Debt Instrument, Description | (i) 80% of the price paid per share for Equity Securities by the investors in the Next Equity Financing, or (ii) an equity valuation of $ | ||||||||
[custom:EquityValuation-0] | $ 25,000,000 | 25,000,000 | |||||||
Notes Issued | $ 50,000,000 | ||||||||
Interest Expense | 667,000 | 145,000 | |||||||
Interest Payable, Current | 73,000 | 180,000 | 73,000 | 180,000 | |||||
Debt Instrument, Unamortized Discount | $ 246,000 | 831,000 | $ 246,000 | 831,000 | |||||
Convertible Promissory Note Agreements [Member] | Embedded Derivative Financial Instruments [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Debt Instrument, Fair Value Disclosure | $ 2,421,000 | $ 2,421,000 |
SCHEDULE OF ASSUMPTIONS OF REDE
SCHEDULE OF ASSUMPTIONS OF REDEMPTION LIABILITY (Details) $ in Millions | Dec. 31, 2020USD ($) |
[custom:EquityFinancingRangeValuationAssumedExpectedInterestRate-0] | 0.050 |
Minimum [Member] | |
[custom:EquityFinancingRangeValuationAssumedPercentage-0] | $ 5 |
[custom:EquityFinancingRangeValuationAssumedDiscountRate-0] | 0.0886 |
[custom:EquityFinancingRangeValuationAssumedExpectedTerm-0] | 2 years |
Maximum [Member] | |
[custom:EquityFinancingRangeValuationAssumedPercentage-0] | $ 50 |
[custom:EquityFinancingRangeValuationAssumedDiscountRate-0] | 0.1113 |
[custom:EquityFinancingRangeValuationAssumedExpectedTerm-0] | 3 years |
SCHEDULE OF FAIR VALUE OF THE R
SCHEDULE OF FAIR VALUE OF THE REDEMPTION LIABILITY (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Redemption Liability | ||
Beginning balance | $ 1,325,288 | $ 126,183 |
Initial embedded redemption value | 1,487,596 | 836,619 |
Change in fair value | (1,832,651) | 362,486 |
Ending balance | $ 980,233 | $ 1,325,288 |
REDEMPTION LIABILITY (Details N
REDEMPTION LIABILITY (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Redemption Liability | ||
Gain on redemption value | $ 1,832,651 | |
Loss on redemption value | $ 362,486 |
SCHEDULE OF STOCK OPTION ACTIVI
SCHEDULE OF STOCK OPTION ACTIVITY (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | ||
Shares underlying option, Beginning outstanding | 675,731 | 475,368 |
Weigthed average exercise price, Beginning outstanding | $ 3.09 | $ 3.22 |
[custom:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm1] | 8 years 9 months 18 days | 9 years 4 months 24 days |
Shares underlying options, granted | 227,737 | 200,363 |
Weigthed average exercise price, granted | $ 7.76 | $ 2.80 |
Shares underlying options, exercised | ||
Weigthed average exercise price, exercised | ||
Shares underlying options, Forfeited | ||
Weigthed average exercise price, forfeited | ||
Shares underlyling options, Ending outstanding | 903,468 | 675,731 |
Weigthed average exercise price, Ending outstanding | $ 4.27 | $ 3.09 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | 7 years 10 months 24 days | |
Shares underlyling options, exercisable | 580,642 | |
Weigthed average exercise price, exercisable | $ 5.98 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term | 8 years | |
Shares underlying options, Vested and expected to vest | 658,206 | |
Weighted average exercise price, Vested and expected to vest | $ 5.72 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Weighted Average Remaining Contractual Term | 8 years 6 months |
SCHEDULE OF EXERCISE PRICE RANG
SCHEDULE OF EXERCISE PRICE RANGE (Details) | Dec. 31, 2021$ / sharesshares |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Outstanding Options | 903,468 |
Exercisable Options | 580,642 |
Exercise Price One [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
[custom:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePrice-0] | $ / shares | $ 0.08 |
Outstanding Options | 275,564 |
Exercisable Options | 33,261 |
Exercise Price Two [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
[custom:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePrice-0] | $ / shares | $ 0.31 |
Outstanding Options | 78,212 |
Exercisable Options | 78,133 |
Exercise Price Three [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
[custom:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePrice-0] | $ / shares | $ 2.64 |
Outstanding Options | 107,004 |
Exercisable Options | 65,564 |
Exercise Price Four [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
[custom:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePrice-0] | $ / shares | $ 3.82 |
Outstanding Options | 73,857 |
Exercisable Options | 73,857 |
Exercise Price Five [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
[custom:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePrice-0] | $ / shares | $ 5.28 |
Outstanding Options | 48,294 |
Exercisable Options | 19,044 |
Exercise Price Six [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
[custom:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePrice-0] | $ / shares | $ 7.03 |
Outstanding Options | 18,940 |
Exercisable Options | 18,940 |
Exercise Price Seven [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
[custom:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePrice-0] | $ / shares | $ 7.82 |
Outstanding Options | 208,797 |
Exercisable Options | 204,180 |
Exercise Price Eigjht [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
[custom:ShareBasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePrice-0] | $ / shares | $ 13.20 |
Outstanding Options | 92,800 |
Exercisable Options | 87,663 |
SCHEDULE OF BLACK-SCHOLES OPTIO
SCHEDULE OF BLACK-SCHOLES OPTION PRICING MODEL WEIGHTED AVERAGE ASSUMPTIONS (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | ||
Expected volatility | 111.30% | 83.00% |
Risk-free interest rate | 0.60% | 0.70% |
Expected dividend yield | ||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term | 5 years | 5 years |
Estimated fair value of common stock | $ 7.03 | $ 2.455 |
STOCK BASED COMPENSATION (Detai
STOCK BASED COMPENSATION (Details Narrative) - USD ($) | May 31, 2021 | Mar. 31, 2021 | Jan. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Aug. 30, 2019 | Jul. 31, 2019 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 227,737 | 200,363 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 903,468 | 675,731 | 475,368 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | 7 years 10 months 24 days | |||||||
Common Stock, Shares Authorized | 250,000,000 | 250,000,000 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price | $ 4.27 | $ 3.09 | $ 3.22 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | 5.48 | 1.53 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested, Weighted Average Grant Date Fair Value | $ 5.47 | $ 1.37 | ||||||
Share-based Payment Arrangement, Expense | $ 1,239,000 | $ 234,000 | ||||||
Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount | $ 75,000 | |||||||
Weighted average contractual term | 6 months | |||||||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ 7.76 | $ 2.80 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Terms of Award | the Company modified the stock option exercise price for stock options granted during 2020, increasing the exercise price of such stock options from $0.18 or $2.598 to $0.314 or $3.817 per share, respectively. | |||||||
Share-based Payment Arrangement, Option [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 14,204 | 231,058 | ||||||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $ 5.28 | $ 0.079 | ||||||
Research and Development Expense [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share-based Payment Arrangement, Expense | $ 531,000 | $ 124,000 | ||||||
General and Administrative Expense [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share-based Payment Arrangement, Expense | $ 708,000 | $ 110,000 | ||||||
2017 Stock Incentive Plan [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Stock Issued During Period, Shares, New Issues | 94,696 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 92,801 | |||||||
Shares Issued, Price Per Share | $ 13.20 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 1,895 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 92,801 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | 6 years 2 months 12 days | |||||||
2019 Stock Incentive Plan [Member] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 2,420,514 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 1,480,998 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 810,667 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | 8 years | |||||||
Common Stock, Capital Shares Reserved for Future Issuance | 284,090 | |||||||
Common Stock, Shares Authorized | 3,901,512 | 2,575,757 | ||||||
[custom:IncreaseInSharesReservedForIssuance] | 467,171 | 574,494 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price | $ 3.25 |
STOCKHOLDERS_ DEFICIT (Details
STOCKHOLDERS’ DEFICIT (Details Narrative) - shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2021 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Common Stock, Shares Authorized | 250,000,000 | 250,000,000 |
Common Stock [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Stock Issued During Period, Shares, Acquisitions | 75,757 |
SCHEDULE OF SIGNIFICANT COMPONE
SCHEDULE OF SIGNIFICANT COMPONENTS OF COMPANY’S DEFERRED TAX ASSETS (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Income Tax Disclosure [Abstract] | ||
Federal net operating loss carryforward | $ 702,000 | $ 424,000 |
State net operating loss carryforward | 238,000 | 182,000 |
Capitalized costs | 394,000 | 199,000 |
Acquired In-process research and development | 178,000 | 205,000 |
Research and development credit | 45,000 | 66,000 |
Stock compensation | 336,000 | 17,000 |
Accrued expenses and other | (66,000) | 82,000 |
Total deferred tax assets | 1,827,000 | 1,175,000 |
Valuation allowance | (1,827,000) | (1,175,000) |
Deferred tax asset, net of valuation allowance |
SCHEDULE OF EFFECTIVE INCOME TA
SCHEDULE OF EFFECTIVE INCOME TAX EXPENSE (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Income tax benefit at the federal statutory rate | $ (463,000) | $ (508,000) |
Permanent differences and other | (61,000) | 117,000 |
State income taxes | (118,000) | (167,000) |
Research and development credit | (40,000) | (31,000) |
Other | 30,000 | |
Change in Valuation allowance | 652,000 | 589,000 |
Effective income tax expense |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Operating Loss Carryforwards [Line Items] | ||
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount | $ 652,000 | $ 589,000 |
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | |
Operating Loss Carryforwards, Valuation Allowance | 1,827,000 | $ 1,175,000 |
Deferred Tax Assets, Tax Credit Carryforwards, Research | 45,000 | $ 66,000 |
Domestic Tax Authority [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Operating Loss Carryforwards | 3,300,000 | |
Deferred Tax Assets, Tax Credit Carryforwards, Research | 46,000 | |
State and Local Jurisdiction [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Operating Loss Carryforwards | $ 3,300,000 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||
Due to Related Parties, Current | $ 200,000 | $ 200,000 |
Due to founder converted to note payable | 55,068 | |
Founder and Chief Executive Officer [Member] | ||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||
Due to Related Parties, Current | 200,000 | |
Chief Executive Officer [Member] | ||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | ||
Due to founder converted to note payable | $ 55,068 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | Jun. 01, 2021 | Jan. 01, 2021 | Dec. 30, 2019 | Jan. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Jan. 31, 2019 |
Loss Contingencies [Line Items] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 227,737 | 200,363 | |||||
Asset Purchase Agreement [Member] | |||||||
Loss Contingencies [Line Items] | |||||||
[custom:AssetAcquisitionDescription] | the Company acquired a series of small molecule analogues pursuant to an asset purchase agreement (“APA”). Pursuant to the APA, the Company is required to make a payment of $50,000 upon raising of at least $2 million in funding, and up to $1.75 million based upon successfully meeting clinical and sales milestones. | ||||||
Payments to Acquire Productive Assets | $ 0 | ||||||
[custom:MilestonePayment] | $ 50,000 | ||||||
Employee Agreement [Member] | Chief Executive Officer [Member] | |||||||
Loss Contingencies [Line Items] | |||||||
Accrued Salaries | $ 200,000 | ||||||
Accrued Employee Benefits, Current | $ 0 | ||||||
Stock Issued During Period, Shares, Employee Stock Purchase Plans | 18,939 | 7,575 | |||||
Proceeds from Issuance or Sale of Equity | $ 5,000,000 | $ 3,000,000 | |||||
Shares Issued, Price Per Share | $ 7.82 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 757,575 | ||||||
Employee Agreement [Member] | Chief Executive Officer [Member] | Minimum [Member] | |||||||
Loss Contingencies [Line Items] | |||||||
Proceeds from Issuance or Sale of Equity | $ 5,000,000 | ||||||
Employee Agreement [Member] | Chief Executive Officer [Member] | Minimum [Member] | Investor [Member] | |||||||
Loss Contingencies [Line Items] | |||||||
Proceeds from Issuance or Sale of Equity | $ 5,000,000 | ||||||
Restated Employment Agreement [Member] | Chief Executive Officer [Member] | |||||||
Loss Contingencies [Line Items] | |||||||
Professional Fees | $ 485,000 | ||||||
[custom:CashBonusReceived] | 55.00% | ||||||
Other Commitments, Description | (i) $250 million, the Chief Executive Officer shall receive a cash payment of $150,000; (ii) $500 million, the Chief Executive Officer shall receive a cash payment of $350,000; and (iii) $1 billion, the Chief Executive Officer shall receive a cash payment of $750,000. Furthermore, on or as soon as reasonably practicable following the date of the consummation the Company’s initial public offering of its securities, the Chief Executive Officer shall be granted | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Granted | 757,575 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | Mar. 21, 2022 | Jan. 14, 2022 | Jan. 06, 2022 | Jan. 01, 2021 | Jan. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Subsequent Event [Line Items] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 903,468 | 675,731 | 475,368 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 227,737 | 200,363 | ||||||
Chief Executive Officer [Member] | Employee Agreement [Member] | ||||||||
Subsequent Event [Line Items] | ||||||||
Shares Issued, Price Per Share | $ 7.82 | |||||||
Proceeds from Issuance or Sale of Equity | $ 5,000,000 | $ 3,000,000 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 757,575 | |||||||
Subsequent Event [Member] | Chief Executive Officer [Member] | Employee Agreement [Member] | ||||||||
Subsequent Event [Line Items] | ||||||||
Shares Issued, Price Per Share | $ 4 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 757,575 | |||||||
Subsequent Event [Member] | Board of Directors and Scientific Advisory Board [Member] | ||||||||
Subsequent Event [Line Items] | ||||||||
Shares Issued, Price Per Share | $ 1.33 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 247,500 | |||||||
Subsequent Event [Member] | Promissory Notes Payable [Member] | ||||||||
Subsequent Event [Line Items] | ||||||||
Proceeds from Issuance or Sale of Equity | $ 5,000,000 | |||||||
Subsequent Event [Member] | Unsecured Promissory Notes [Member] | ||||||||
Subsequent Event [Line Items] | ||||||||
Debt Instrument, Face Amount | 138,887 | |||||||
Debt Instrument, Unamortized Discount | $ 13,887 | |||||||
Debt Instrument, Interest Rate, Effective Percentage | 12.00% | |||||||
Subsequent Event [Member] | IPO [Member] | ||||||||
Subsequent Event [Line Items] | ||||||||
Stock Issued During Period, Shares, New Issues | 3,750,000 | |||||||
Shares Issued, Price Per Share | $ 4 | |||||||
Gross proceeds from issuance initial public offering | $ 15,000,000 | |||||||
Proceeds from Issuance Initial Public Offering | $ 13,000,000 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 562,500 | |||||||
Conversion of Stock, Shares Converted | 1,225,384 |