Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 16, 2018 | Jun. 30, 2017 | |
Document And Entity Information | |||
Entity Registrant Name | PROVECTUS BIOPHARMACEUTICALS, INC. | ||
Entity Central Index Key | 315,545 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | No | ||
Entity's Reporting Status Current | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 11,013,814 | ||
Entity Common Stock, Shares Outstanding | 378,888,190 | ||
Trading Symbol | PVCT | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Cash and cash equivalents | $ 105,504 | $ 1,165,738 |
Short-term receivable - settlement and other | 452,376 | 300,000 |
Prepaid expenses | 400,416 | 360,562 |
Total Current Assets | 958,296 | 1,826,300 |
Equipment and furnishings, less accumulated depreciation of $36,445 and $464,140, respectively | 86,569 | 72,033 |
Patents, net of accumulated amortization of $10,145,098 and $9,473,978, respectively | 1,570,347 | 2,241,467 |
Long-term receivable - reimbursable legal fees, net of reserve for uncollectibility of $455,500 | 455,500 | 455,500 |
Long-term receivable - settlement, net of discount and reserve for uncollectibility of $1,549,043 | 365,685 | 1,015,710 |
Total Assets | 3,436,397 | 5,611,010 |
Current Liabilities: | ||
Accounts payable - trade | 3,270,505 | 1,919,870 |
Other accrued expenses | 728,735 | 221,956 |
Total Current Liabilities | 3,999,240 | 2,141,826 |
Convertible notes payable | 4,456,000 | |
Convertible notes payable - related parties | 5,000,000 | |
Total Liabilities | 13,455,240 | 2,141,826 |
Commitments and contingencies | ||
Stockholders' (Deficiency) Equity: | ||
Preferred stock; par value $0.001 per share; 25,000,000 shares authorized; Series B Convertible Preferred Stock; 240,000 shares designated; 100 and 8,600 shares issued and outstanding at December 31, 2017 and December 31, 2016, respectively; aggregate liquidation preference of $3,500 and $301,000 at December 31, 2017 and December 31, 2016, respectively | 9 | |
Common stock; par value $0.001 per share; 1,000,000,000 shares authorized; 370,961,451 and 364,773,297 shares issued and outstanding at December 31, 2017 and December 31, 2016, respectively | 370,962 | 364,773 |
Additional paid-in capital | 208,351,431 | 208,327,822 |
Accumulated deficit | (218,741,236) | (205,223,420) |
Total Stockholder's (Deficiency) Equity | (10,018,843) | 3,469,184 |
Total Liabilities and Stockholders' (Deficiency) Equity | $ 3,436,397 | $ 5,611,010 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Accumulated depreciation on equipment and furnishings | $ 36,445 | $ 464,140 |
Accumulated amortization on patents | 10,145,098 | 9,473,978 |
Reimbursable legal fees, reserve for uncollectibility | 455,500 | 455,500 |
Settlement, discount and reserve for uncollectibility | $ 1,549,043 | $ 1,549,043 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 25,000,000 | 25,000,000 |
Preferred stock, shares issued | 100 | 8,600 |
Preferred stock, shares outstanding | 100 | 8,600 |
Aggregate liquidation preference | $ 3,500 | $ 301,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 370,961,451 | 364,773,297 |
Common stock, shares outstanding | 370,961,451 | 364,773,297 |
Series B Convertible Preferred Stock [Member] | ||
Preferred stock, shares authorized | 240,000 | |
Preferred stock, shares designated | 240,000 | 240,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Operating Expenses: | ||
Research and development | $ 8,203,926 | $ 8,212,390 |
General and administrative | 5,517,570 | 16,299,633 |
Total Operating Loss | (13,721,496) | (24,512,023) |
Recovery of expenses and settlement of lawsuit | 172,376 | |
Investment income | 31,304 | 2,126 |
Public offering issuance expense | (436,248) | |
Gain on change in fair value of warrant liability | 518,875 | |
Net Loss | (13,517,816) | (24,427,270) |
Issuance in-kind of preferred stock dividends | (14,107) | (2,386,453) |
Deemed dividend | (2,045,789) | |
Net Loss Applicable to Common Shareholders | $ (13,531,923) | $ (28,859,512) |
Basic and Diluted Loss Per Common Share | $ (0.04) | $ (0.12) |
Weighted Average Number of Common Shares Outstanding - Basic and Diluted | 369,231,518 | 233,849,589 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' (Deficiency) Equity - USD ($) | Series B Preferred Stock [Member] | Other Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Beginning Balance at Dec. 31, 2015 | $ 204,979 | $ 196,908,112 | $ (180,796,150) | $ 16,316,941 | |
Beginning Balance, shares at Dec. 31, 2015 | 204,979,100 | ||||
Reclassification of warrant liability | 3,160,114 | 3,160,114 | |||
Issuance of common stock and warrants pursuant to warrant exchange offer | $ 7,798 | 6,345,649 | 6,353,447 | ||
Issuance of common stock and warrants pursuant to warrant exchange offer, shares | 7,798,507 | ||||
Issuance of preferred stock and warrants | $ 240 | 2,045,549 | 2,045,789 | ||
Issuance of preferred stock and warrants, shares | 240,000 | ||||
Preferred stock conversions into common stock | $ (231) | $ 142,467 | (142,236) | ||
Preferred stock conversions into common stock, shares | (231,400) | 142,466,533 | |||
Dividend paid in-kind to preferred shareholders | $ 9,477 | (9,477) | |||
Dividend paid in-kind to preferred shareholders, shares | 9,477,412 | ||||
Common stock issued for services | $ 52 | 20,111 | $ 20,163 | ||
Common stock issued for services, shares | 51,745 | 51,475 | |||
Net loss | (24,427,270) | $ (24,427,270) | |||
Ending Balance at Dec. 31, 2016 | $ 9 | $ 364,773 | 208,327,822 | (205,223,420) | 3,469,184 |
Ending Balance, shares at Dec. 31, 2016 | 8,600 | 364,773,297 | |||
Preferred stock conversions into common stock | $ (9) | $ 3,987 | (3,978) | ||
Preferred stock conversions into common stock, shares | (8,500) | 3,986,676 | |||
Dividend paid in-kind to preferred shareholders | $ 1,595 | (1,595) | |||
Dividend paid in-kind to preferred shareholders, shares | 1,594,670 | ||||
Common stock issued upon exercise of warrants | $ 234 | 12,254 | 12,488 | ||
Common stock issued upon exercise of warrants, shares | 234,308 | ||||
Common stock issued for trade payables | $ 373 | 16,928 | 17,301 | ||
Common stock issued for trade payables, shares | 372,500 | ||||
Net loss | (13,517,816) | (13,517,816) | |||
Ending Balance at Dec. 31, 2017 | $ 370,962 | $ 208,351,431 | $ (218,741,236) | $ (10,018,843) | |
Ending Balance, shares at Dec. 31, 2017 | 100 | 370,961,451 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Cash Flows From Operating Activities | ||
Net loss | $ (13,517,816) | $ (24,427,270) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 15,864 | 13,112 |
Amortization of patents | 671,120 | 671,121 |
Warrant incentive expense | 2,718,407 | |
Issuance of stock for services | 20,163 | |
Public offering issuance expense | 436,248 | |
Gain on change in fair value of warrant liability | (518,875) | |
Reserve for uncollectibility of settlement receivable | 678,465 | |
Reserve for uncollectibility of legal fees receivable | 227,750 | |
Changes in operating assets and liabilities | ||
Settlement receivable | 216,826 | 517,560 |
Other current assets | (39,854) | (292,370) |
Accounts payable - trade | 1,798,759 | 32,699 |
Accrued settlement expense | (1,850,000) | |
Other accrued expenses | 506,779 | (163,744) |
Net Cash Used In Operating Activities | (10,348,322) | (21,936,734) |
Cash Flows From Investing Activities | ||
Purchase of fixed assets | (30,400) | |
Net Cash Used In Operating Activities | (30,400) | |
Cash Flows From Financing Activities | ||
Gross proceeds from sales of convertible preferred stock and warrants | 6,000,000 | |
Payment of offering costs in connection with August 2016 financing | (711,470) | |
Net proceeds from the issuance of common stock and warrants pursuant to warrant exchange offer | 3,635,040 | |
Proceeds from issuance of convertible notes payable | 4,306,000 | |
Proceeds from issuance of convertible notes payable - related party | 5,000,000 | |
Proceeds from exercise of warrants | 12,488 | |
Net Cash Provided By Financing Activities | 9,318,488 | 8,923,570 |
Net Change In Cash and Cash Equivalents | (1,060,234) | (13,013,164) |
Cash and Cash Equivalents, Beginning of Period | 1,165,738 | 14,178,902 |
Cash and Cash Equivalents, End of Period | 105,504 | 1,165,738 |
Supplemental Disclosures of Cash Flow Information: | ||
Interest | ||
Taxes | ||
Non-cash investing and financing activities: | ||
Conversion of preferred stock into common stock | 3,987 | 151,944 |
Contractual dividends on preferred stock | 2,045,789 | |
Issuance in-kind of preferred stock dividends | 1,595 | 2,386,453 |
Reclassification of warrant liability | 3,160,144 | |
Common stock issued in satisfaction of trade payables | 17,301 | |
Convertible notes payable issued in satisfaction of trade payables | 150,000 | |
Offset of related party receivable and payable | $ 280,823 |
Business Organization and Natur
Business Organization and Nature of Operations | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business Organization and Nature of Operations | 1. Business Organization and Nature of Operations Provectus Biopharmaceuticals, Inc., a Delaware corporation (together with its subsidiaries, “Provectus” or the “Company”), is a clinical-stage biotechnology company developing a new class of drugs based on halogenated xanthenes. Intralesional PV-10 is undergoing clinical study for adult solid tumor cancers, like melanoma and gastrointestinal cancers, and preclinical study for pediatric cancers. Topical PH-10 is undergoing clinical study for inflammatory dermatoses, like psoriasis and atopic dermatitis. To date, the Company has not generated any revenues from planned principal operations. The Company’s activities are subject to significant risks and uncertainties, including failing to successfully develop and license or commercialize the Company’s prescription drug candidates. |
Liquidity and Going Concern
Liquidity and Going Concern | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Liquidity and Going Concern | 2. Liquidity and Going Concern The Company’s cash and cash equivalents were $105,504 at December 31, 2017, compared with $1,165,738 at December 31, 2016. The Company continues to incur significant operating losses and management expects that significant on-going operating expenditures will be necessary to successfully implement the Company’s business plan and develop and market its products. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. Implementation of the Company’s plans and its ability to continue as a going concern will depend upon the Company’s ability to develop PV-10 and PH-10 and raise additional capital. The Company plans to access capital resources through possible public or private equity offerings, including the 2017 Financing (as defined in Note 4), exchange offers, debt financings, corporate collaborations or other means. In addition, the Company continues to explore opportunities to strategically monetize its lead drug candidates, PV-10 and PH-10, through potential co-development and licensing transactions, although there can be no assurance that the Company will be successful with such plans. The Company has historically been able to raise capital through equity offerings, although no assurance can be provided that it will continue to be successful in the future. If the Company is unable to raise sufficient capital through the 2017 Financing or otherwise, it will not be able to pay its obligations as they become due. Subsequent to December 31, 2017, the Company received aggregate Loans of $1,356,000 in connection with the 2017 Financing. See Note 14 – Subsequent Events. The primary business objective of management is to build the Company into a fully integrated global biotechnology company. The Company, however, cannot assure you that they will be successful in co-developing or licensing PV-10, PH-10, or any other halogenated xanthene-based drug candidate developed by the Company, or entering into any financial transaction. Moreover, even if the Company is successful in improving its current cash flow position, the Company nonetheless plans to seek additional funds to meet its long-term requirements in 2018 and beyond. The Company anticipates that these funds will otherwise come from the proceeds of private placement transactions, including the 2017 Financing, the exercise of existing warrants and outstanding stock options, or public offerings of debt or equity securities. While the Company believes that it has a reasonable basis for its expectation that it will be able to raise additional funds, the Company cannot provide assurance that it will be able to complete additional financing in a timely manner. In addition, any such financing may result in significant dilution to stockholders. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | 3. Significant Accounting Policies Principles of Consolidation Intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s significant estimates and assumptions include the collectability of long-term receivables, the recoverability and useful lives of long-lived assets, stock-based compensation, derivative liabilities and the valuation allowance related to the Company’s deferred tax assets. Certain of the Company’s estimates, including the carrying amount of the intangible assets, could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates. Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. As of December 31, 2017, the Company’s cash equivalent consists of Treasury bills. Cash Concentrations Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits of $250,000, although the Company seeks to minimize this through treasury management. The Company has never experienced any losses related to these balances although no assurance can be provided that it will not experience any losses in the future. Equipment and Furnishings, net Equipment and furnishings are stated at cost less accumulated depreciation. Depreciation of equipment is provided for using the straight-line method over the estimated useful lives of the assets. Computers, leasehold improvements and office equipment are being depreciated over five years; furniture and fixtures are being depreciated over ten years. Maintenance and repairs are charged to operations as incurred. The Company capitalizes cost attributable to the betterment of property and equipment when such betterment extends the useful life of the assets. Long-Lived Assets The Company reviews the carrying values of its long-lived assets for possible impairment whenever an event or change in circumstances indicates that the carrying amount of the assets may not be recoverable. Any long-lived assets held for disposal are reported at the lower of their carrying amounts or fair value less cost to sell. Management has determined there to be no impairment during the years ended December 31, 2017 and 2016. Patent Costs, net Internal patent costs are expensed in the period incurred. Patents purchased are capitalized and amortized over the remaining estimated useful life of the patent. The Company’s patents were acquired as a result of the merger with Valley Pharmaceuticals, Inc. (“Valley”) on November 19, 2002. At the time of the merger, the majority stockholders of Provectus also owned all of the shares of Valley and therefore the assets acquired from Valley were recorded at their carry-over basis. The patents are being amortized over the remaining estimated useful lives of the patents, which range from 1 to 3 years. Annual amortization of the patents is expected to approximate $671,000 in 2018 and 2019, and $228,000 in 2020. Long-Term Related Party Receivables The Company carries long-term receivables from certain current and former employees in connection with the Kleba Shareholder Derivative Lawsuit. See Note 13 - Litigation. The long-term receivables are carried at their contractual amounts, less a reserve for any amounts deemed by management to be uncollectible. Management evaluates the collectability of the receivables at least quarterly. Management estimates the reserve for uncollectibility based on existing economic conditions, the financial conditions of the current and former employees, and the amount and age of past due receivables. Receivables are considered past due if full payment is not received by the contractual due date. Past due amounts are generally written off against the reserve for uncollectibility only after all collection attempts have been exhausted. See Note 6 – Receivables. Research and Development Research and development costs are charged to expense when incurred. An allocation of payroll expenses to research and development is made based on a percentage estimate of time spent. The research and development costs include the following: payroll, consulting and contract labor, lab supplies and pharmaceutical preparations, insurance, rent and utilities, and depreciation and amortization. Income Taxes The Company accounts for income taxes under the liability method in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740 “Income Taxes”. Under this method, deferred income tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established if it is more likely than not that all, or some portion, of deferred income tax assets will not be realized. The Company has recorded a full valuation allowance to reduce its net deferred income tax assets to zero. In the event the Company were to determine that it would be able to realize some or all its deferred income tax assets in the future, an adjustment to the deferred income tax asset would increase income in the period such determination was made. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained upon an examination. Any recognized income tax positions would be measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement would be reflected in the period in which the change in judgment occurs. The Company would recognize any corresponding interest and penalties associated with its income tax positions in income tax expense. There were no income taxes, interest or penalties incurred in 2017 or 2016. Tax years going back to 2014 remain open for examination by the IRS. Basic and Diluted Loss Per Common Share Basic loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other instruments to issue common stock were exercised or converted into common stock. The following securities are excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive: December 31, 2017 2016 Warrants 186,873,032 189,991,541 Options 3,350,000 3,500,000 Convertible preferred stock 65,663 5,647,009 Total potentially dilutive shares 190,288,695 199,138,550 Derivative Instruments The Company evaluates its convertible instruments to determine if those contracts or embedded components of those contracts qualify as derivative financial instruments to be separately accounted for in accordance with FASB ASC Topic 815. The accounting treatment of derivative financial instruments requires that the Company record warrants and conversion options at their fair values as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense for each reporting period at each balance sheet date. The Company reassesses the classification of its derivative instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. Warrants and conversion options are recorded as a discount to the host instrument. The Monte-Carlo Simulation model was used to estimate the fair value of the warrants that were classified as derivative liabilities. The model includes subjective input assumptions that can materially affect the fair value estimates. The expected volatility is estimated based on the most recent historical period of time equal to the weighted average life of the warrants. Fair Value of Financial Instruments The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The Company determines the estimated fair value of amounts presented in these consolidated financial statements using available market information and appropriate methodologies. However, considerable judgment is required in interpreting market data to develop the estimates of fair value. The estimates presented in the financial statements are not necessarily indicative of the amounts that could be realized in a current exchange between buyer and seller. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. These fair value estimates were based upon pertinent information available as of December 31, 2017 and 2016. The carrying amounts of the Company’s financial assets and liabilities, such as cash and cash equivalents, short-term settlement receivable, other current assets and accrued expenses approximate fair values due to the short-term nature of these instruments. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value: Level 1 Inputs use quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 Inputs use directly or indirectly observable inputs. These inputs include quoted prices for similar assets and liabilities in active markets as well as other inputs such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 Inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related asset or liability. In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The Company’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability. Both observable and unobservable inputs may be used to determine the fair value of positions that are classified within the Level 3 category. As a result, the unrealized gains and losses for assets within the Level 3 category may include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in historical company data) inputs. Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. See Note 12 - Fair Value of Financial Instruments. Stock-Based Compensation The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is measured on the measurement date and re-measured on vesting dates and interim financial reporting dates until the service period is complete. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. The Company computes the fair value of equity-classified warrants and options granted using the Black-Scholes option pricing model. Option valuation models require the input of highly subjective assumptions including the expected volatility factor of the market price of the Company’s common stock which is determined by reviewing its historical public market closing prices. Reclassifications Certain prior period amounts have been reclassified for comparative purposes to conform with the fiscal 2017 presentation. These reclassifications have no impact on the previously reported net loss. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers,” (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in ASC 605 - Revenue Recognition (“ASC 605”) and most industry-specific guidance throughout ASC 605. The core principle of the standard requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing U.S. GAAP including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The guidance in ASU 2014-09 was revised in July 2015 to be effective for interim periods beginning on or after December 15, 2017 and should be applied on a transitional basis either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. In 2016, FASB issued additional ASUs that clarify the implementation guidance on principal versus agent considerations (ASU 2016-08), on identifying performance obligations and licensing (ASU 2016-10), and on narrow-scope improvements and practical expedients (ASU 2016-12) as well as on the revenue recognition criteria and other technical corrections (ASU 2016-20). The Company has not generated any revenues since its inception. The guidance is required to be adopted on January 1, 2018; as a result, these ASUs are not expected to have a material impact on the consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, “Leases” (“ASU 2016-02”), which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 will be effective beginning in the first quarter of 2019. Early adoption of ASU 2016-02 is permitted. The new standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company is currently evaluating the impact of adopting ASU 2016-02 on its consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” This ASU makes targeted amendments to the accounting for employee share-based payments. This guidance is to be applied using various transition methods such as full retrospective, modified retrospective, and prospective based on the criteria for the specific amendments as outlined in the guidance. The guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. Early adoption is permitted, as long as all of the amendments are adopted in the same period. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements. In September 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,” which clarifies whether the following items should be categorized as operating, investing or financing in the statement of cash flows: (i) debt prepayments and extinguishment costs, (ii) settlement of zero-coupon debt, (iii) settlement of contingent consideration, (iv) insurance proceeds, (v) settlement of corporate-owned life insurance (COLI) and bank-owned life insurance (BOLI) policies, (vi) distributions from equity method investees, (vii) beneficial interests in securitization transactions, and (viii) receipts and payments with aspects of more than one class of cash flows. The new standard takes effect in 2018 for public companies. If an entity elects early adoption, it must adopt all of the amendments in the same period. This ASU is not expected to have a material impact on the consolidated financial statements. In October 2016, the FASB issued ASU No. 2016-17, “Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control” (“ASU 2016-17”). ASU 2016-17 requires, when assessing which party is the primary beneficiary in a variable interest entity (VIE), that the decision maker considers interests held by entities under common control on a proportionate basis instead of treating those interests as if they were that of the decision maker itself, as current GAAP requires. The ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2016. Early application is permitted in any interim or annual period. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements. In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash” (“ASU 2016-18”). ASU 2016-18 requires that restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The ASU is effective beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The ASU should be applied using a retrospective transition method to each period presented. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09, “Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting” (“ASU 2017-09”). ASU 2017-09 provides clarity on the accounting for modifications of stock-based awards. ASU 2017-09 requires adoption on a prospective basis in the annual and interim periods beginning after December 15, 2017 for share-based payment awards modified on or after the adoption date. The Company is currently evaluating the effect that adopting this new accounting guidance will have on its consolidated financial statements and related disclosures. In July 2017, the FASB issued ASU No. 2017-11, “Earnings Per Share (Topic 260) and Derivatives and Hedging (Topic 815) - Accounting for Certain Financial Instruments with Down Round Features” (“ASU 2017-11”). Equity-linked instruments, such as warrants and convertible instruments may contain down round features that result in the strike price being reduced on the basis of the pricing of future equity offerings. Under ASU 2017-11, a down round feature will no longer require a freestanding equity-linked instrument (or embedded conversion option) to be classified as a liability that is re-measured at fair value through the income statement (i.e. marked-to-market). However, other features of the equity-linked instrument (or embedded conversion option) must still be evaluated to determine whether liability or equity classification is appropriate. Equity classified instruments are not marked-to-market. For earnings per share (“EPS”) reporting, the ASU requires companies to recognize the effect of the down round feature only when it is triggered by treating it as a dividend and as a reduction of income available to common shareholders in basic EPS. The amendments in this ASU are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in any interim period. The Company is currently evaluating ASU 2017-11 and its impact on its consolidated financial statements. |
Convertible Notes Payable
Convertible Notes Payable | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Convertible Notes Payable | 4. Convertible Notes Payable On March 23, 2017, the Company entered into an exclusive Definitive Financing Commitment Term Sheet with a group of the Company’s stockholders (the “PRH Group”), which was amended and restated effective as of March 19, 2017 (the “Term Sheet”) that set forth the terms on which the PRH Group would use their best efforts to arrange for a financing of a minimum of $10,000,000 and maximum of $20,000,000 (the “2017 Financing”). As of December 31, 2017, the Company had received aggregate Loans (as defined below) of $9,456,000 in connection with the 2017 Financing. Subsequent to December 31, 2017, the Company received aggregate Loans of $1,356,000 in connection with the 2017 Financing. See Note 14 – Subsequent Events. The 2017 Financing is in the form of a secured convertible loan (the “Loan”) from the PRH Group or other investors in the 2017 Financing (the “Investors”). The Loan is evidenced by secured convertible promissory notes (individually a “PRH Note” and collectively, the “PRH Notes”) from the Company to the PRH Group or the Investors. In addition to the customary provisions, the PRH Note contains the following provisions: (i) It is secured by a first priority security interest on the Company’s intellectual property (the “IP”); (ii) The Loan bears interest at the rate of eight percent (8%) per annum on the outstanding principal amount of the Loan that has been funded to the Company; (iii) The Loan proceeds are held in one or more accounts (the “Escrow”) pending the funding of the tranches of the 2017 Financing pursuant to borrowing requests made by the Company; (iv) The PRH Notes, including interest and principal, are due and payable in full on the earlier of: (i) on such date upon which the Company defaults under the PRH Notes, (ii) upon a change of control of the Company, or (iii) dates ranging from April 2, 2019 to the twenty-four (24) month anniversary of the funding of the Final Tranche. In the event there is a change of control of the Company’s board of directors (the “Board”) as proposed by any person or group other than the Investors, the term of the PRH Notes will be accelerated and all amounts due under the PRH Notes will be immediately due and payable, plus interest at the rate of eight percent (8%) per annum, plus a penalty in the amount equal to ten times (10x) the outstanding principal amount of the Loan that has been funded to the Company; (v) The outstanding principal amount and interest payable under the Loan would be convertible at the sole discretion of the Investors into shares of the Company’s Series D Preferred Stock, a new series of preferred stock, that the Company’s Board may designate in the future, at a price per share equal to $0.2862; and (vi) Notwithstanding (v) above, the principal amounts of the PRH Notes and the interest payable under the Loan would automatically convert into shares of the Company’s Series D Preferred Stock at a price per share equal to $0.2862 effective on the 24-month anniversary of the funding of the final tranche of the 2017 Financing subject to certain exceptions if the Company’s Board designates such series of preferred stock in the future. As of December 31, 2017, and through the date of filing, the Series D Preferred Stock had not been designated by the Board. As a result, the Company did not analyze the Loan for a potential beneficial conversion feature as the definition of a firm commitment has not been met since the PRH Notes were not convertible as of their respective dates of issuance or as of December 31, 2017. Convertible Notes Payable – Related Parties On February 21, 2017, the Company issued a promissory note in favor of Eric A. Wachter, Ph.D., the Company’s Chief Technology Officer (“Wachter”), evidencing an unsecured loan from Wachter to the Company in the original principal amount of up to $2,500,000 (the “Wachter Note”). Interest accrues on the outstanding balance of the Wachter Note at six percent (6%) per annum calculated on a 360-day basis. As of March 31, 2017, the Company had borrowed the entire $2,500,000 principal amount under the Wachter Note. The Company evaluated the terms of the Wachter Note and determined that since the conversion price is not yet fixed and will be based upon the price per New Security (as defined in the Wachter Note) issued upon the completion of a future Qualified Equity Financing (as defined in the Wachter Note), that the measurement of a beneficial conversion feature cannot be completed. On April 3, 2017, the Wachter Note was amended and restated in order to modify its terms to mirror the PRH Notes and to convert the Wachter Note into the 2017 Financing. The Company accounted for the amendment as a debt modification. There was no material impact as a result of applying debt modification accounting. On April 3, 2017, the Company entered into a PRH Note with Cal Enterprises LLC, a Nevada limited liability company, an affiliate of Dominic Rodrigues, a director of the Company, in the principal amount of up to $2,500,000. As of December 31, 2017, the Company had borrowed the entire $2,500,000 under this note. Convertible Notes Payable – Non-Related Parties During the year ended December 31, 2017, the Company entered into additional PRH Notes with accredited investors in the aggregate principal amount of $4,456,000, of which, $150,000 was issued in satisfaction of trade debt. As of December 31, 2017, the Company had borrowed the entire $4,456,000 under these notes. See Note 2 – Liquidity and Going Concern for the terms of the PRH Notes. As of December 31, 2017, and through the date of filing, the Series D Preferred Stock had not been designated by the Board and therefore, as a result, the Company did not analyze the Loan for a potential beneficial conversion feature as the definition of a firm commitment has not been met since the PRH Notes were not convertible as of their respective dates of issuance or as of December 31, 2017. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 5. Related Party Transactions During the year ended December 31, 2017, the Company paid Bruce Horowitz (Capital Strategists) $180,000 for services rendered and $75,000 for director fees. See Note 4 and Note 13 for details of other related party transactions. Also, director fees during the years ended December 31, 2017 and 2016 were $148,333 and $335,000, respectively. |
Receivables
Receivables | 12 Months Ended |
Dec. 31, 2017 | |
Receivables [Abstract] | |
Receivables | 6. Receivables The following table summarizes the receivables at December 31, 2017 and 2016: December 31, 2017 Legal Fees Settlement Total Gross receivable $ 911,000 $ 2,214,728 $ 3,125,728 Reserve for uncollectibility (455,500 ) (1,549,043 ) (2,004,543 ) Net receivable 455,500 665,685 1,121,185 Short-term receivable - 300,000 300,000 Long-term receivable $ 455,500 $ 365,685 $ 821,185 December 31, 2016 Legal Fees Settlement Total Gross receivable $ 911,000 $ 2,864,753 $ 3,775,753 Reserve for uncollectibility (455,500 ) (1,549,043 ) (2,004,543 ) Net receivable 455,500 1,315,710 1,771,210 Short-term receivable - 300,000 300,000 Long-term receivable $ 455,500 $ 1,015,710 $ 1,471,210 During the year ended December 31, 2016, the Company recorded a reserve for uncollectibility of settlement receivable of $678,465 in its consolidated statements of operations. Also, during the year ended December 31, 2016, the Company recorded a reserve for uncollectibility of legal fees receivable of $227,750 in its consolidated statements of operations. During the quarter ended December 31, 2017, an officer of the Company offset his receivable and trade payable totaling $280,823. This offset reduced the amount of the settlement. There was no change in the reserve for 2017. In December 2017, former CFO, Culpepper settled an administrative proceeding with the SEC. As a result of this settlement, Culpepper was required to disgorge himself of $140,115 along with interest of $12,261 for a total payment to the Company of $152,376. The Company recorded the settlement as an account receivable at December 2017 and received payment in January 2018. See Note 5 - Related Party Transactions and Note 13 – Litigation for additional details associated with the Company’s receivables. |
Stockholders' Deficiency
Stockholders' Deficiency | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Stockholders' Deficiency | 7. Stockholders’ Deficiency Authorized Capital As of December 31, 2017, the Company was authorized to issue 1,000,000,000 shares of common stock, $0.001 par value, and 25,000,000 shares of preferred stock, $0.001 par value. The holders of the Company’s common stock are entitled to one vote per share. The preferred stock is designated as follows: 240,000 shares to Series B Convertible Preferred Stock and 24,760,000 shares undesignated. Series B Convertible Preferred Stock On August 25, 2016, the Company filed the Series B Certificate of Designation with the Delaware Secretary of State. The Series B Certificate of Designation provides for the issuance of the Series B Convertible Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”). In the event of the Company’s liquidation, dissolution, or winding up, holders of Series B Preferred Stock will be entitled to receive the amount of cash, securities or other property to which such holder would be entitled to receive with respect to such shares of Series B Preferred Stock if such shares had been converted to common stock immediately prior to such event (without giving effect for such purposes to any beneficial ownership limitation), subject to the preferential rights of holders of any class or series of the Company’s capital stock specifically ranking by its terms senior to the Series B Preferred Stock as to distributions of assets upon such event, whether voluntarily or involuntarily. The Series B Preferred Stock has no voting rights. The holders of Series B Preferred Stock will be entitled to receive cumulative dividends at the rate per share of 8% per annum of the stated value per share, until the fifth anniversary of the date of issuance of the Series B Preferred Stock. The dividends become payable, at the Company’s option in either cash or in shares of common stock, (i) upon any conversion of the Series B Preferred Stock, (ii) on each such other date as the Board may determine, subject to written consent of the holders of Series B Preferred Stock holding a majority of the then issued and outstanding Series B Preferred Stock, (iii) upon the Company’s liquidation, dissolution or winding up, and (iv) upon occurrence of a fundamental transaction, which includes any merger or consolidation, sale of all or substantially all of the Company’s assets, exchange or conversion of all of the common stock by tender offer, exchange offer or reclassification; provided, however, that if Series B Preferred Stock is converted into shares of common stock at any time prior to the fifth anniversary of the date of issuance of the Series B Preferred Stock, the holder will receive a make-whole payment in an amount equal to all of the dividends that, but for the early conversion, would have otherwise accrued on the applicable shares of Series B Preferred Stock being converted for the period commencing on the conversion date and ending on the fifth anniversary of the date of issuance, less the amount of all prior dividends paid on such converted Series B Preferred Stock before the date of conversion. Make-whole payments are payable at the Company’s option in either cash or in shares of common stock. With respect to any dividend payments and make-whole payments paid in shares of common stock, the number of shares of common stock to be issued to a holder of Series B Preferred Stock will be an amount equal to the quotient of (i) the amount of the dividend payable to such holder divided by (ii) the conversion price then in effect. Warrant Exchange Programs As of January 1, 2016, the Company had outstanding warrants to purchase an aggregate of 59,861,601 shares of common stock, which were issued between January 6, 2011 and November 1, 2015 in transactions exempt from registration under the Securities Act (the “Existing Warrants”). Each Existing Warrant had an exercise price of between $1.00 and $3.00 per share, and expiration dates between January 6, 2016 and November 1, 2020. On December 31, 2015, the Company offered pursuant to an Offer Letter/Prospectus 59,861,601 shares of its common stock for issuance upon exercise of the Existing Warrants. The shares issued upon exercise of the Existing Warrants are unrestricted and freely transferable. The offer was to temporarily modify the terms of the Existing Warrants so that each holder who tendered Existing Warrants during the offer period for early exercise were able to do so at a discounted exercise price of $0.50 per share. Each Existing Warrant holder who tendered Existing Warrants for early exercise during the offer period received, in addition to the shares of common stock purchased upon exercise, an equal number of new warrants to purchase common stock, with an exercise price of $0.85 per share, expiring June 19, 2020 (the “Replacement Warrants”). The modification of the exercise price of the Existing Warrants and the Replacement Warrants are treated as an inducement to enter into the exchange offer and were accounted for as of the closing date. The exchange offer expired at 4:00 p.m., Eastern Time, on March 28, 2016. The Company accepted for purchase approximately 7,798,507 Existing Warrants properly tendered, resulting in the issuance of approximately 7,798,507 shares of common stock upon exercise of Existing Warrants and the issuance of approximately 7,798,507 Replacement Warrants, resulting in gross proceeds of $3,899,254 upon closing of the exchange offer. The placement agents received a total of $264,214 in placement agent fees and 467,910 warrants with a cash exercise price of $0.85 per share which expire on June 19, 2020, unless sooner exercised. In connection with the exchange offer, a warrant incentive expense totaling $2,718,407 was recorded during the year ended December 31, 2016. The value was determined using the Black-Scholes option-pricing model between the Existing Warrants exchanged and the common stock and Replacement Warrants received. See Note 12. Other Common Stock Issuances During the year ended December 31, 2017, the Company issued 372,500 shares of common stock as payment of trade payables, with a grant date fair value of $17,301. During the year ended December 31, 2016, the Company issued 51,745 shares of common stock in payment of services rendered with a grant date fair value of $20,163. As the fair market of these services was not readily determinable, these services were valued based on the fair market value of stock at grant date. August 2016 Public Offering On August 30, 2016, the Company closed a public offering (the “August 2016 Offering”) of 240,000 shares of its Series B Preferred Stock (which were initially convertible into an aggregate of 24,000,000 shares of the Company’s common stock) and warrants, which were initially exercisable to purchase an aggregate of 24,000,000 shares of common stock at an exercise price of $0.275 per share of common stock (the “August 2016 Warrants”). The Series B Preferred Stock and August 2016 Warrants were sold together at a price of $25.00 for a combination of one share of Series B Preferred Stock and 100 August 2016 Warrants to purchase one share of common stock each, resulting in aggregate net proceeds of $5,288,530 (gross proceeds of $6,000,000 less issuance costs of $711,470) to the Company. The conversion feature embedded within the Series B Preferred Stock was subject to anti-dilution price protection such that if the conversion price in effect on the 60th trading day following the date of issuance of the Series B Preferred Stock (the “Price Reset Date”) exceeded 85% of the average of the 45 lowest volume weighted average trading prices of the common stock during the period commencing on the date of issuance of the Series B Preferred Stock and ending on the Price Reset Date (as adjusted for stock splits, stock dividends, recapitalizations, reorganizations, reclassification, combinations, reverse stock splits or other similar events during such period) (the “Adjusted Conversion Price”), then the conversion price shall be reset to the Adjusted Conversion Price and shall be further subject to adjustment as provided in the Series B Certificate of Designation. In either case, if a holder of Series B Preferred Stock converted its shares of Series B Preferred Stock prior to any such price reset event, then such holder was entitled to receive additional shares of common stock equal to the number of shares of common stock that would have been issued assuming for such purposes the Adjusted Conversion Price were in effect at such time less the shares issued at the then Conversion Price (subject to being held in abeyance based on beneficial ownership limitations). On the Price Reset Date, the Adjusted Conversion Price was set at $0.0533 pursuant to the terms of the Series B Certificate of Designation. During the year ended December 31, 2016, the Company issued to holders who converted their shares of Series B Preferred Stock an aggregate of 151,943,945 shares of common stock, which included dividends paid in kind which is discussed below. The August 2016 Warrants expire on August 30, 2021. Pursuant to the terms of the August 2016 Warrants, because the exercise price in effect on the Price Reset Date exceeded 85% of the average of the 45 lowest volume weighted average trading prices of the common stock during the period commencing on the date of issuance of the August 2016 Warrants and ending on the Price Reset Date (as adjusted for stock splits, stock dividends, recapitalizations, reorganizations, reclassification, combinations, reverse stock splits or other similar events during such period) (the “Adjusted Exercise Price”), then (i) the exercise price was reset to the Adjusted Exercise Price (and without giving effect to any prior conversions) and shall be further subject to adjustment as provided in the August 2016 Warrants, and (ii) the number of shares of common stock issuable upon exercise of the August 2016 Warrants will be reset to equal the number of shares of common stock issuable upon conversion of Series B Preferred Stock after giving effect to the Adjusted Exercise Price. If a holder of August 2016 Warrants exercised its August 2016 Warrants prior to such repricing, then such holder was entitled to receive shares of common stock equal to the difference between the exercise price and the Adjusted Exercise Price. The exercise price of the August 2016 Warrants is further subject to appropriate adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the common stock. On the Price Reset Date, the Adjusted Exercise Price was set at $0.0533 pursuant to the terms of the August 2016 Warrants. No holder of August 2016 Warrants had exercised its August 2016 Warrants prior to the Price Reset Date, so no additional shares of common stock were due to holders of August 2016 Warrants as of the Price Reset Date. Holders of August 2016 Warrants are entitled to exercise their August 2016 Warrants at the Adjusted Exercise Price and will receive an aggregate of 112,570,356 shares of common stock upon exercise of the August 2016 Warrants. The Series B Preferred Stock does not contain a redemption provision and an overall analysis of its features performed by the Company determined that it is more akin to equity and therefore, has been classified within stockholders’ equity on the consolidated balance sheet. While the embedded conversion option (“ECO”) is subject to an anti-dilution price adjustment, since the ECO is clearly and closely related to the equity host, it is not required to be bifurcated and accounted for as a derivative liability under ASC 815. To analyze whether the Series B Preferred Stock included a beneficial conversion feature (“BCF”), the Company allocated the $6,000,000 of the gross proceeds between the August 2016 Warrants and the Series B Preferred Stock. The Company allocated the commitment date fair value of $3,678,989 to the August 2016 Warrants (which is allocated at fair value because the August 2016 Warrants were determined to be derivative liabilities as discussed in Note 12) resulting in an amount allocated to the Series B Preferred Stock of $2,321,011. Next, the Company computed the number of shares of common stock issuable at the commitment date to be 24,000,000 in order to arrive at an effective conversion price of $0.097 per share. When compared to the market price of the Company’s common stock of $0.127 per share as of the commitment date, it was determined that a BCF did exist and, as a result, the Company recorded a deemed dividend in net loss available to common stockholders of $726,989. On November 23, 2016, the Series B Preferred Stock conversion price became fixed and, as a result, the contingency was resolved. Accordingly, the Company analyzed for a BCF. The Company computed the number of shares of common stock issuable by the Company at the commitment date to be 112,570,356 to arrive at an effective conversion price of $0.021 per share. When compared to the market price of the Company’s common stock of $0.038 per share as of the commitment date, it was determined that a BCF did exist and, as a result, the Company recognized a deemed dividend of $1,318,801. The net carrying value of the Series B Preferred Stock is $2,045,789 (gross proceeds of $6,000,000 less preferred stock discount associated with August 2016 Warrants of $3,678,989 less issuance costs allocated to Series B Preferred Stock of $275,222). Since the Series B Preferred Stock doesn’t contain a redemption provision, it is not probable that the Series B Preferred Stock will become redeemable, therefore the preferred stock discount is not amortized. The August 2016 Warrants were determined to be derivative liabilities at issuance due to the presence of an anti-dilution feature whereby the Company may not have a sufficient number of authorized and unissued shares, which resulted in the assumption of a cash settlement of the warrant. Utilizing a Monte Carlo valuation method, the Company, with the assistance of a valuation specialist, determined that the August 2016 Warrants had an issuance date value of $3,678,989. The derivative liability was marked-to-the-market on November 23, 2016, when the exercise price became fixed, at which time the $3,160,114 value of the August 2016 Warrants was reclassified to equity because the August 2016 Warrants were no longer subject to the anti-dilution adjustment. As a result, the Company recognized a gain on change in fair value of warrant liability of $518,875 during the year ended December 31, 2016. In connection with the closing of the August 2016 Offering, the Company incurred $711,470 of cash issuance costs. $436,248 of the issuance costs were allocated to the August 2016 Warrants (the August 2016 Warrants comprised $3,678,989, or 61%, of the aggregate gross proceeds of $6,000,000), which were classified at issuance as a derivative liability and, as a result, were expensed immediately (and included within other expense (non-operating) on the consolidated statement of operations) and $275,222 of the issuance costs were allocated to the Series B Preferred Stock, which is classified as equity and, as a result, were charged against additional paid-in capital. During the year ended December 31, 2017, holders converted 8,500 shares of Series B Preferred Stock into 3,986,676 shares of common stock such that they were entitled to dividends, including a make-whole payment, of $14,107 that the Company elected to pay in shares of common stock. As a result, the Company issued 1,594,670 shares of common stock related to the Series B Preferred Stock dividends during the year ended December 31, 2017. The Company recorded aggregate dividends paid in kind of $14,107 during the year ended December 31, 2017. During the year ended December 31, 2016, holders converted 231,400 shares of Series B Preferred Stock such that they were entitled to dividends, including a make-whole payment, of $2,314,000 that the Company elected to pay in shares of common stock. As a result, the Company issued 9,477,412 shares of common stock related to the Series B Preferred Stock dividends during the year ended December 31, 2016 and included the $2,314,000 of dividends paid in kind in its computation of net loss applicable to common shareholders during the year ended December 31, 2016. The Company accounted for the dividends on the Series B Preferred Stock by recording a debit and credit to additional paid-in capital for $2,314,000. In addition, the Company included $72,453 as dividends paid in kind in its computation of net loss applicable to common shareholders during the year ended December 31, 2016 for the 8% dividends related to the shares of Series B Preferred Stock that were not converted as of December 31, 2016. |
Stock Incentive Plan and Warran
Stock Incentive Plan and Warrants | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Incentive Plan and Warrants | 8. Stock Incentive Plan and Warrants The Provectus Biopharmaceuticals, Inc. 2014 Equity Compensation Plan provides for the issuance of up to 20,000,000 shares of common stock pursuant to stock options for the benefit of eligible employees and directors of the Company. Options granted under the 2014 Equity Compensation Plan are either “incentive stock options” within the meaning of Section 422 of the Internal Revenue Code or options which are not incentive stock options. The stock options are exercisable over a period determined by the Board of Directors (through its Compensation Committee), but generally no longer than 10 years after the date they are granted. As of December 31, 2017, there were 18,900,000 shares available for issuance under the 2014 Equity Compensation Plan. There were no stock options granted to employees during 2017 or 2016. The following table summarizes option activity during the years ended December 31, 2017 and 2016: Exercise Price Weighted Average Shares Per Share Exercise Price Outstanding and exercisable at January 1, 2016 10,630,000 $ 0.67 - 1.50 $ 0.96 Granted - - - Exercised - - - Forfeited (7,130,000 ) 0.67 - 1.50 0.97 Outstanding and exercisable at December 31, 2016 3,500,000 $ 0.67 - 1.50 $ 0.93 Granted - - - Exercised - - - Forfeited (150,000 ) 1.50 0.90 Outstanding and exercisable at December 31, 2017 3,350,000 $ 0.67 - 1.50 $ 0.90 The following table summarizes information about stock options outstanding at December 31, 2017. Number Outstanding Weighted Average Number Exercisable at December 31, Remaining Contractual at December 31, Exercise Price 2017 Life 2017 $ 0.67 200,000 5.60 200,000 $ 0.75 950,000 6.13 950,000 $ 0.84 150,000 4.50 150,000 $ 0.88 150,000 6.60 150,000 $ 0.93 575,000 3.76 575,000 $ 0.99 50,000 3.50 50,000 $ 1.00 625,000 2.26 625,000 $ 1.04 400,000 2.50 400,000 $ 1.16 250,000 2.08 250,000 3,350,000 3,350,000 As of December 31, 2017, there was no intrinsic value of outstanding and exercisable options. Exercise of Warrants During the year-ended December 31, 2017, holders of warrants exercised warrants to purchase 234,308 shares of common stock at a price of $0.053 per share. In connection with the exercises, the Company received $12,488. The following table summarizes warrant activity during the years ended December 31, 2017 and 2016: Exercise Price Weighted Average Warrants Per Warrant Exercise Price Outstanding and exercisable at January 1, 2016 80,121,595 $ 0.68 - 3.00 $ 1.05 Granted 32,357,344 0.28 - 0.85 0.42 Warrant repricing 88,570,356 0.05 [1 ] Exercised (7,798,507 ) 0.50 0.50 Forfeited (3,259,247 ) 0.68 - 2.00 1.27 Outstanding and exercisable at December 31, 2016 189,991,541 $ 0.05 - 3.00 $ 0.44 Granted - - - Exercised (234,308 ) 0.05 0.05 Forfeited (2,884,201 ) 0.05 - 1.15 1.04 Outstanding and exercisable at December 31, 2017 186,873,032 $ 0.05 - 3.00 $ 0.43 [1] On November 23, 2016, the exercise price of the August 2016 Warrants was reset to $0.0533 per share and holders will receive an aggregate of 112,564,968 shares upon exercise. See Note 7 – Stockholders’ Deficiency – August 2016 Public Offering. The following table summarizes information about warrants outstanding at December 31, 2017. Number Outstanding Weighted Average Number Exercisable at December 31, Remaining Contractual at December 31, Exercise Price 2017 Life 2017 $ 0.053 112,336,048 3.66 112,336,048 $ 0.85 28,482,344 2.48 28,482,344 $ 1.00 39,790,044 0.71 39,790,044 $ 1.12 452,500 0.57 452,500 $ 1.25 4,474,520 1.93 4,474,520 $ 2.00 123,000 0.88 123,000 $ 2.50 280,276 1.33 280,276 $ 3.00 934,300 1.33 934,300 186,873,032 186,873,032 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 9. Income Taxes The income tax provision (benefit) consists of the following: Year Ended December 31 2017 2016 Federal: Current $ - $ - Deferred 13,026,000 (4,195,688 ) State and local: Current - - Deferred 1,724,000 (555,312 ) 14,750,000 (4,751,000 ) Change in valuation allowance (14,750,000 ) 4,751,000 Income tax provision (benefit) $ - $ - The reconciliations between the statutory federal income tax rate and the Company’s effective tax rate is as follows: Year Ended December 31 2017 2016 Tax provision (benefit) at federal statutory rate (34.0 )% (34.0 )% State income taxes, net of federal provision (benefit) (4.5 )% (4.5 )% Permanent differences (1.9 )% 4.2 % Prior period adjustments 0.0 % 15.5 % Effect of change in federal income tax rates on deferred taxes 147.4 % 0.0 % Change in valuation allowance (109.0 )% 18.8 % Miscellaneous 2.0 % 0.0 % Effective income tax rate 0.0 % (0.0 )% The components of the Company’s deferred income taxes are summarized below: Year Ended December 31 2017 2016 Deferred Tax Assets: Net operating loss carryforwards $ 40,156,000 $ 53,961,000 Stock-based compensation 2,207,000 3,251,000 Research and development credits 2,591,000 2,162,000 Contribution carryovers 10,000 - Receivable allowance - 771,000 Gross deferred tax assets 44,964,000 60,145,000 Deferred Tax Liabilities: Intangible assets (410,000 ) (862,000 ) Other (21,000 ) - Gross deferred tax liabilities (431,000 ) (862,000 ) Valuation allowance (44,533,000 ) (59,283,000 ) Deferred tax asset, net of valuation allowance $ - $ - Changes in valuation allowance $ 14,750,000 $ (4,751,000 ) Under ASC 740, Accounting for Income Taxes, the enactment of the Tax Act requires companies to recognize the effects of changes in tax laws and rates on deferred tax assets and liabilities and the retroactive effects of changes in tax laws in the period in which the new legislation is enacted. There is no further change to its assertion on maintaining a full valuation allowance against its U.S. deferred tax assets. The Company’s gross deferred tax assets have been revalued using the new enacted rate of 21% effective January 1, 2018 with a corresponding offset to the valuation allowance and any potential other taxes arising due to the Tax Act will result in reductions to its net operating loss carryforward and valuation allowance. Deferred tax assets of approximately $60,148,509 will be revalued to approximately $44,966,584 with a corresponding decrease to the Company’s valuation allowance. This adjustment is the cause of the Company incurring an income tax provision in the current year as opposed to the recognition of a benefit in the prior year. Upon completion of our 2017 U.S. income tax return in 2018 we may identify additional remeasurement adjustments to our recorded deferred tax liabilities and the one-time transition tax. We will continue to assess our provision for income taxes as future guidance is issued, but do not currently anticipate significant revisions will be necessary. Any such revisions will be treated in accordance with the measurement period guidance outlined in Staff Accounting Bulletin No. 118. Upon completion of our 2017 U.S. income tax return in 2018 we may identify additional remeasurement adjustments to our recorded deferred tax liabilities. We will continue to assess our provision for income taxes as future guidance is issued, but do not currently anticipate significant revisions will be necessary. Any such revisions will be treated in accordance with the measurement period guidance outlined in Staff Accounting Bulletin No. 118. A valuation allowance against deferred tax assets is required if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets may not be realized. The Company is in the early stages of development and realization of the deferred tax assets is not considered more likely than not. As a result, the Company has recorded a full valuation allowance for the net deferred tax asset. Since inception of the Company on January 17, 2002, the Company has generated tax net operating losses of approximately $154 million, expiring in 2022 through 2037. The Company has reduced its Deferred Tax Asset and the related Valuation Allowance by $20,000,000 to give effect of changes made to the tax law, which become effective in 2018. The tax loss carry-forwards of the Company may be subject to limitation by Section 382 of the Internal Revenue Code with respect to the amount utilizable each year. This limitation reduces the Company’s ability to utilize net operating loss carry-forwards. The Company has determined that there are no uncertain tax positions as of December 31, 2017 or 2016 and does not expect any significant change within the next year. The Company files income tax returns in the U.S. federal jurisdiction and the state of Tennessee. |
Commitments
Commitments | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | 10. Commitments Leases The Company leases office space in Knoxville, Tennessee for a term of five years ending on June 30, 2022. Rent expense was $44,335 and $60,000 for the years ended December 31, 2017 and 2016, respectively. The Company’s lease obligations are as follows: Period Ending Amount December 31, 2018 $ 88,004 December 31, 2019 $ 88,884 December 31, 2020 $ 90,666 December 31, 2021 $ 92,471 December 31, 2022 $ 46,687 $ 406,712 |
401(K) Profit Sharing Plan
401(K) Profit Sharing Plan | 12 Months Ended |
Dec. 31, 2017 | |
Retirement Benefits [Abstract] | |
401(K) Profit Sharing Plan | 11. 401(K) Profit Sharing Plan The Company maintains a retirement plan under Section 401(k) of the Internal Revenue Code, which covers all eligible employees. All employees with U.S. source income are eligible to participate in the plan immediately upon employment. Contributions made by the Company totaled approximately $159,000 in 2016. There was no contribution made by the Company in 2017. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | 12. Fair Value of Financial Instruments The FASB’s authoritative guidance on fair value measurements establishes a framework for measuring fair value and expands disclosure about fair value measurements. This guidance enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. Under this guidance, assets and liabilities carried at fair value must be classified and disclosed in one of the following three categories: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3: Unobservable inputs that are not corroborated by market data. In determining the appropriate levels, the Company performs a detailed analysis of the assets and liabilities that are measured and reported on a fair value basis. At each reporting period, all assets and liabilities for which the fair value measurement is based on significant unobservable inputs are classified as Level 3. The fair value of certain of the Company’s financial instruments. The fair value of derivative instruments is determined by management with the assistance of an independent third-party valuation specialist. The warrant liability is a derivative instrument and is classified as Level 3. The Company used the Monte-Carlo Simulation model to estimate the fair value of the warrants using the following assumptions: For the Years Ended December 31, 2017 2016 2016 Warrants: Expected term N/A 4.77 - 5.00 years Expected dividends N/A 0 % Volatility N/A 107.8% - 114.7 % Risk free interest rate N/A 0.88% - 1.40 % A reconciliation of the warranty liability measured at fair value on a recurring basis with the use of significant unobservable inputs (Level 3) from January 1, 2016 to December 31, 2016 follows: Balance at January 1, 2016 $ - Issuance of warrants 3,678,989 Gain on change in fair value of warrant liability (518,875 ) Reclassification to warrant liability (3,160,114 ) Balance at December 31, 2016 $ - |
Litigation
Litigation | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation | 13. Litigation Kleba Shareholder Derivative Lawsuit On June 6, 2014, the Company, in its capacity as a nominal defendant, entered into a Stipulated Settlement Agreement and Mutual Release (the “Derivative Lawsuit Settlement”) in the shareholder derivative lawsuit filed by Glenn Kleba, derivatively on behalf of the Company, and later amended to include Don B. Dale as a plaintiff, in the Circuit Court for the State of Tennessee, Knox County (the “Court”), against H. Craig Dees (“Dees”), Ph.D., Timothy C. Scott, Ph.D., Eric A. Wachter, Ph.D., and Peter R. Culpepper (“Culpepper”) (collectively, the “Executives”), Stuart Fuchs, Kelly M. McMasters, and Alfred E. Smith, IV (collectively, together with the Executives, the “Individual Defendants”), and against the Company as a nominal defendant (the “Shareholder Derivative Lawsuit”), which alleged (i) breach of fiduciary duties; (ii) waste of corporate assets; and (iii) unjust enrichment. Under the terms of the Derivative Lawsuit Settlement, among other things, the Executives each agreed (A) to re-pay to the Company $2.24 million of the cash bonuses they each received in 2010 and 2011, which amount equals 70% of such bonuses or an estimate of the after-tax net proceeds to each Executive; provided, however, that subject to certain terms and conditions set forth in the Derivative Lawsuit Settlement, the Executives are entitled to a 2:1 credit such that total actual repayment may be $1.12 million each; (B) to reimburse the Company for 25% of the actual costs, net of recovery from any other source, incurred by the Company as a result of the Shareholder Derivative Lawsuit; and (C) to grant to the Company a first priority security interest in 1,000,000 shares of the Company’s common stock owned by each such Executive to serve as collateral for the amounts due to the Company under the Derivative Lawsuit Settlement. On July 24, 2014, the Court approved the terms of the Derivative Lawsuit Settlement and awarded $911,000 to plaintiffs’ counsel for attorneys’ fees and reimbursement of expenses in connection with their role in the Shareholder Derivative Lawsuit. The payment to plaintiff’s counsel was made by the Company during October 2014 and was recorded as other current assets at December 31, 2014, as the Company is seeking reimbursement of the full amount from its insurance carrier. If the full amount is not received from insurance, the amount remaining will be reimbursed to the Company from the Individual Defendants. As of December 31, 2017, the net amount of the receivable of $455,500 is reported as non-current assets on the condensed consolidated balance sheets. On October 3, 2014, the Derivative Lawsuit Settlement was effective and an aggregate of 2,800,000 stock options for Dees, Dr. Scott and Culpepper were rescinded. A total of $1,574,314 had been repaid by the Executives as of December 31, 2017. The remaining cash settlement amounts will continue to be repaid to the Company with the final payment to be received by October 3, 2019. The remaining balance of the Executives’ repayment due the Company as of December 31, 2017 is $665,686, including a reserve for uncollectibility of $1,549,043 in connection with the resignation of Dees, the Company’s former Chairman and Chief Executive Officer, and termination of Culpepper, the Company’s former Chief Financial Officer and Chief Operating Officer, and former interim Chief Executive Officer following Dees’ resignation, with a present value discount remaining of $26,774. As a result of his resignation, Dees is no longer entitled to the 2:1 credit, such that his total repayment obligation of $2,040,000 (the total $2.24 million owed by Dees pursuant to the Derivative Lawsuit Settlement less the $200,000 that he repaid), plus Dees’ proportionate share of the litigation costs, is immediately due and payable. The Company sent Dees a notice of default in March 2016 for the total amount he owes the Company. On July 25, 2017, the United States District Court for the Eastern District of Tennessee at Knoxville issued a Memorandum Opinion finding, among other findings, that the Company is entitled to receive total damages in the amount of $6,027,652, including $2,494,525 for Dees’ breach of the Derivative Lawsuit Settlement. See “Dees Collection Lawsuit” below. As a result of his termination “for cause,” Culpepper is no longer entitled to the 2:1 credit, such that his total repayment obligation of $2,051,083 (the total $2.24 million owed by Culpepper pursuant to the Derivative Lawsuit Settlement plus Culpepper’s proportionate share of the litigation cost of $227,750 less the $416,667 that he repaid) is immediately due and payable. The Company sent Culpepper a notice of default in January 2017 for the total amount he owes the Company. Culpepper disputes that he was terminated “for cause” and thus disputes that he owes the full $2,051,083 repayment amount under the Derivative Lawsuit Settlement. See “Culpepper Travel Expenses and Related Collection Efforts” below. Dees Collection Lawsuit On May 5, 2016, the Company filed a lawsuit (the “Dees Collection Lawsuit”) in the United States District Court for the Eastern District of Tennessee at Knoxville (the “Court”) against Dees and his wife, Virginia Godfrey (together with Dees, the “Defendants”). The Company alleged that between 2013 and 2015, Dees received approximately $2.4 million in advanced or reimbursed travel and entertainment expenses from the Company and that Dees did not use these funds for legitimate travel and entertainment expenses as he requested and the Company intended. Instead, the Company alleged that Dees created false receipts and documentation for the expenses and applied the funds to personal use. The Company and Dees are parties to the Derivative Lawsuit Settlement that was negotiated to resolve certain claims asserted against Dees derivatively. Pursuant to the terms of the Derivative Lawsuit Settlement, Dees agreed to repay the Company compensation that was paid to him along with legal fees and other expenses incurred by the Company. As of the date of his resignation, Dees still owed the Company $2,267,750 under the Derivative Lawsuit Settlement. Dees has failed to make such payment, and the Company has notified him that he is in default and demanded payment in full. The Company established a reserve of $2,267,750 as of December 31, 2017, which amount represents the amount the Company believes Dees owed to the Company as of that date. Therefore, the Company alleged counts of conversion, fraud, breach of fiduciary duty, breach of contract, breach of the Derivative Lawsuit Settlement, unjust enrichment and punitive damages in this lawsuit. The Company sought an order that the Defendants be prohibited from disposing of any property that may have been paid for with the misappropriated funds, the Defendants be disgorged of any funds shown to be fraudulently misappropriated and that the Company be awarded compensatory damages in an amount not less than $5 million. Furthermore, the Company sought for the damages to be joint and several as to the Defendants and that punitive damages be awarded against Dees in the Company’s favor. The Company also sought foreclosure of the Company’s first-priority security interest in the 1,000,000 shares of common stock granted by Dees to the Company as collateral pursuant to that certain Stock Pledge Agreement dated October 3, 2014, between Dees and the Company in order to secure Dees’ obligations under the Derivative Lawsuit Settlement. The Court entered a default judgment against the Defendants on July 20, 2016. On March 15, 2017, the Court granted Ms. Godfrey’s motion to set aside the default judgment against her and set a deadline of March 30, 2017 for Ms. Godfrey to file an answer to the Company’s complaint. Ms. Godfrey filed her answer on March 28, 2017 demanding that the complaint against her be dismissed. The Court held a hearing on April 26, 2017 to determine damages with respect to the motion for default judgment against Dees. On July 25, 2017, the Court issued a Memorandum Opinion finding that the Company is entitled to receive total damages in the amount of $6,027,652, comprising compensatory damages for misappropriation of travel and expense funds, compensatory damages for Dees’ breach of the Derivative Lawsuit Settlement, and punitive damages, plus costs. There can be no assurance, however, that the Company will be able to recover any or all of the damages awarded to the Company. The Court also entered a permanent injunction enjoining Dees from selling or dissipating assets until the judgment against him is satisfied. On September 1, 2017, the Company filed a motion with the Court to appoint a receiver to sell 1,000,000 shares of the Company’s common stock held by Dees and pledged as security pursuant to the Derivative Lawsuit Settlement, and to remit the proceeds of this sale to the Company. On November 8, 2017, the Court granted the Company’s motion to return 1,497,859 shares of Company common stock held by Dees. The Court also appointed a receiver to undertake the disposition of such stock in a commercially reasonable manner and remit all funds received pursuant to such sale(s) to the Company, less reasonable costs and expenses incurred as a result of serving as the receiver. On November 21, 2017, the Company entered into a settlement agreement with Ms. Godfrey, which provides for the settlement and release of all claims against Ms. Godfrey in connection with the Dees Collection Lawsuit, and the payment of $20,000 by Ms. Godfrey to the Company. On December 27, 2016, the Company’s Board of Directors unanimously voted to terminate Culpepper, effective immediately, from all positions he held with the Company and each of its subsidiaries, including interim Chief Executive Officer and Chief Operating Officer of the Company, “for cause”, in accordance with the terms of the Amended and Restated Executive Employment Agreement entered into by Culpepper and the Company on April 28, 2014 (the “Culpepper Employment Agreement”) based on the results of the investigation conducted by a Special Committee of the Board of Directors regarding improper travel expense advancements and reimbursements to Culpepper. The Special Committee retained independent counsel and an advisory firm with forensic accounting expertise to assist the Special Committee in conducting the investigation. The Special Committee found that Culpepper received $294,255 in travel expense reimbursements and advances that were unsubstantiated or otherwise improper. The Company seeks to recover from Culpepper the entire $294,255 in travel expense reimbursements and advances, as well as all attorney’s fees and auditors’/experts’ fees incurred by the Company in connection with the examination of his travel expense reimbursements. On December 12, 2017, Culpepper agreed to an order by the SEC to pay disgorgement of $140,115, prejudgment interest of $12,261, for a total of $152,376, to the Company within 30 days. The Company received the payment of $152,376 in January 2018. Under the terms of the Culpepper Employment Agreement, Culpepper is owed no severance payments as a result of his termination “for cause” as that term is defined in the Culpepper Employment Agreement. Furthermore, Culpepper is no longer entitled to the 2:1 credit under the Derivative Lawsuit Settlement such that the total $2,240,000 owed by Culpepper pursuant to the Derivative Lawsuit Settlement plus Culpepper’s proportionate share of the litigation cost in the amount of $227,750 less the amount that he repaid as of December 31, 2016 is immediately due and payable. The Company sent Culpepper a notice of default in January 2017 for the total amount he owes the Company and is in the process of resolving these claims pursuant to the alternative dispute resolution provision of the Culpepper Employment Agreement. The Company has established a reserve of $2,051,083 as of December 31, 2017, which amount represents the amount the Company currently believes Culpepper owes to the Company, while the Company pursues collection of this amount. Culpepper disputes that he was terminated “for cause” under the Culpepper Employment Agreement. Pursuant to the alternative dispute resolution provisions of that agreement, the Company and Culpepper participated in a mediation of their dispute on June 28, 2017. Having reached no resolution during the mediation, the parties are proceeding to arbitration, under the commercial rules of the American Arbitration Association, which will include, among other claims, both Culpepper’s claim for severance against Provectus and Provectus’ claims against Culpepper for improper expense reimbursements and amounts Culpepper owes Provectus under the Derivative Lawsuit Settlement. The Bible Harris Smith Lawsuit On November 17, 2016, the Company filed a lawsuit in the Circuit Court for Knox County, Tennessee against Bible Harris Smith PC (“BHS”) for professional negligence, common law negligence and breach of fiduciary duty arising from accounting services provided by BHS to the Company. The Company alleges that between 2013 and 2015, Dees received approximately $2.4 million in advanced or reimbursed travel and entertainment expenses from the Company and that Dees did not submit back-up documentation in support of substantially all of the advances he received purportedly for future travel and entertainment expenses. The Company further alleges that had BHS provided competent accounting and tax preparation services, it would have discovered Dees’ failure to submit back-up documentation supporting the advanced travel funds at the inception of Dees’ conduct, and prevented the misuse of these and future funds. The Company has made a claim for damages against BHS in an amount in excess of $3 million. The complaint against BHS has been filed and served, an answer has been received, and the parties are in the midst of discovery. The RSM Lawsuit On June 9, 2017, the Company filed a lawsuit in the Circuit Court of Mecklenburg County, North Carolina against RSM USA LLP (“RSM”) for professional negligence, common law negligence, gross negligence, intentional misrepresentation, negligent misrepresentation and breach of fiduciary duty arising from accounting, internal auditing and consulting services provided by RSM to the Company. The Company alleges that between 2013 and 2015, Dees received approximately $2.4 million in advanced or reimbursed travel and entertainment expenses from the Company and that Dees did not submit back-up documentation in support of substantially all of the advances he received purportedly for future travel and entertainment expenses. The Company similarly alleges that Culpepper received $294,255 in travel expense reimbursements and advances that were unsubstantiated. The Company further alleges that had RSM provided competent accounting, internal audit and consulting services, it would have discovered Dees’ and Culpepper’s conduct at its inception and prevented the misuse of these and future funds. The Company has made a claim for damages against RSM in an amount in excess of $10 million. The Complaint against RSM has been filed and RSM has moved to dismiss the Complaint. The motion to dismiss has been briefed and argued and the parties are awaiting a ruling. The BDO Lawsuit On November 16, 2017, the Company filed a demand for arbitration with the American Arbitration Association that alleges professional negligence, common law negligence, gross negligence, intentional misrepresentation, negligent misrepresentation, and breach of fiduciary duty by the Company’s former external audit firm, BDO USA LLP (“BDO”), arising from accounting, external auditing, and consulting services provided by BDO related to travel and expense advances and reimbursements received by Dees and former Company executive Culpepper. This lawsuit seeks damages in excess of $10 million from BDO. The Company and BDO participated in a mediation on March 9, 2018. No resolution has been reached, although negotiations continue. Other Regulatory Matters From time to time the Company receives subpoenas and/or requests for information from governmental agencies with respect to its business. The Company received a subpoena from the staff of the SEC related to the travel expense advancements and reimbursements received by Dees. The Company also received a subsequent subpoena from the staff of the SEC related to the travel expense advancements and reimbursements received by Culpepper. On December 12, 2017, the Company reached a settlement with the SEC in connection with these investigations. Under the terms of the SEC settlement, the Company, without admitting or denying the findings of the SEC, consented to the entry of an administrative order that requires the Company to cease and desist from committing or causing any violations and any future violations of Sections 13(a), 13(b)(2)(A), 13(b)(2)(B), and 14(a) of the Securities Exchange Act of 1934 and Rules 12b-20, 13a-1, 14a-3, and 14a-9 thereunder. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | 14. Subsequent Events Convertible Notes Payable – Related Parties Subsequent to December 31, 2017, the Company entered into PRH Notes with accredited investors in the aggregate principle amount of $1,356,000 in connection with Loans received by the Company for the same amount. $750,000 of the proceeds were received from a related party. See Note 2 – Liquidity and Going Concern for the terms of the PRH Notes. Exercise of Warrants In addition, holders of 7,926,739 warrants to purchase the common stock of the Company at $0.0533 per share, have exercised these warrants. The Company has received proceeds in the aggregate amount of $422,495. |
Significant Accounting Polici21
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation Intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s significant estimates and assumptions include the collectability of long-term receivables, the recoverability and useful lives of long-lived assets, stock-based compensation, derivative liabilities and the valuation allowance related to the Company’s deferred tax assets. Certain of the Company’s estimates, including the carrying amount of the intangible assets, could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. As of December 31, 2017, the Company’s cash equivalent consists of Treasury bills. |
Cash Concentrations | Cash Concentrations Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits of $250,000, although the Company seeks to minimize this through treasury management. The Company has never experienced any losses related to these balances although no assurance can be provided that it will not experience any losses in the future. |
Equipment and Furnishings, Net | Equipment and Furnishings, net Equipment and furnishings are stated at cost less accumulated depreciation. Depreciation of equipment is provided for using the straight-line method over the estimated useful lives of the assets. Computers, leasehold improvements and office equipment are being depreciated over five years; furniture and fixtures are being depreciated over ten years. Maintenance and repairs are charged to operations as incurred. The Company capitalizes cost attributable to the betterment of property and equipment when such betterment extends the useful life of the assets. |
Long-Lived Assets | Long-Lived Assets The Company reviews the carrying values of its long-lived assets for possible impairment whenever an event or change in circumstances indicates that the carrying amount of the assets may not be recoverable. Any long-lived assets held for disposal are reported at the lower of their carrying amounts or fair value less cost to sell. Management has determined there to be no impairment during the years ended December 31, 2017 and 2016. |
Patent Costs, Net | Patent Costs, net Internal patent costs are expensed in the period incurred. Patents purchased are capitalized and amortized over the remaining estimated useful life of the patent. The Company’s patents were acquired as a result of the merger with Valley Pharmaceuticals, Inc. (“Valley”) on November 19, 2002. At the time of the merger, the majority stockholders of Provectus also owned all of the shares of Valley and therefore the assets acquired from Valley were recorded at their carry-over basis. The patents are being amortized over the remaining estimated useful lives of the patents, which range from 1 to 3 years. Annual amortization of the patents is expected to approximate $671,000 in 2018 and 2019, and $228,000 in 2020. |
Long-Term Related Party Receivables | Long-Term Related Party Receivables The Company carries long-term receivables from certain current and former employees in connection with the Kleba Shareholder Derivative Lawsuit. See Note 13 - Litigation. The long-term receivables are carried at their contractual amounts, less a reserve for any amounts deemed by management to be uncollectible. Management evaluates the collectability of the receivables at least quarterly. Management estimates the reserve for uncollectibility based on existing economic conditions, the financial conditions of the current and former employees, and the amount and age of past due receivables. Receivables are considered past due if full payment is not received by the contractual due date. Past due amounts are generally written off against the reserve for uncollectibility only after all collection attempts have been exhausted. See Note 6 – Receivables. |
Research and Development | Research and Development Research and development costs are charged to expense when incurred. An allocation of payroll expenses to research and development is made based on a percentage estimate of time spent. The research and development costs include the following: payroll, consulting and contract labor, lab supplies and pharmaceutical preparations, insurance, rent and utilities, and depreciation and amortization. |
Income Taxes | Income Taxes The Company accounts for income taxes under the liability method in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740 “Income Taxes”. Under this method, deferred income tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established if it is more likely than not that all, or some portion, of deferred income tax assets will not be realized. The Company has recorded a full valuation allowance to reduce its net deferred income tax assets to zero. In the event the Company were to determine that it would be able to realize some or all its deferred income tax assets in the future, an adjustment to the deferred income tax asset would increase income in the period such determination was made. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained upon an examination. Any recognized income tax positions would be measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement would be reflected in the period in which the change in judgment occurs. The Company would recognize any corresponding interest and penalties associated with its income tax positions in income tax expense. There were no income taxes, interest or penalties incurred in 2017 or 2016. Tax years going back to 2014 remain open for examination by the IRS. |
Basic and Diluted Loss Per Common Share | Basic and Diluted Loss Per Common Share Basic loss per common share is computed by dividing net loss by the weighted average number of vested common shares outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other instruments to issue common stock were exercised or converted into common stock. The following securities are excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive: December 31, 2017 2016 Warrants 186,873,032 189,991,541 Options 3,350,000 3,500,000 Convertible preferred stock 65,663 5,647,009 Total potentially dilutive shares 190,288,695 199,138,550 |
Derivative Instruments | Derivative Instruments The Company evaluates its convertible instruments to determine if those contracts or embedded components of those contracts qualify as derivative financial instruments to be separately accounted for in accordance with FASB ASC Topic 815. The accounting treatment of derivative financial instruments requires that the Company record warrants and conversion options at their fair values as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense for each reporting period at each balance sheet date. The Company reassesses the classification of its derivative instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. Warrants and conversion options are recorded as a discount to the host instrument. The Monte-Carlo Simulation model was used to estimate the fair value of the warrants that were classified as derivative liabilities. The model includes subjective input assumptions that can materially affect the fair value estimates. The expected volatility is estimated based on the most recent historical period of time equal to the weighted average life of the warrants. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”) which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The Company determines the estimated fair value of amounts presented in these consolidated financial statements using available market information and appropriate methodologies. However, considerable judgment is required in interpreting market data to develop the estimates of fair value. The estimates presented in the financial statements are not necessarily indicative of the amounts that could be realized in a current exchange between buyer and seller. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. These fair value estimates were based upon pertinent information available as of December 31, 2017 and 2016. The carrying amounts of the Company’s financial assets and liabilities, such as cash and cash equivalents, short-term settlement receivable, other current assets and accrued expenses approximate fair values due to the short-term nature of these instruments. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value: Level 1 Inputs use quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 Inputs use directly or indirectly observable inputs. These inputs include quoted prices for similar assets and liabilities in active markets as well as other inputs such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 Inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related asset or liability. In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The Company’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability. Both observable and unobservable inputs may be used to determine the fair value of positions that are classified within the Level 3 category. As a result, the unrealized gains and losses for assets within the Level 3 category may include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in historical company data) inputs. Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. See Note 12 - Fair Value of Financial Instruments. |
Stock-Based Compensation | Stock-Based Compensation The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees, the fair value of the award is measured on the grant date and for non-employees, the fair value of the award is measured on the measurement date and re-measured on vesting dates and interim financial reporting dates until the service period is complete. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. The Company computes the fair value of equity-classified warrants and options granted using the Black-Scholes option pricing model. Option valuation models require the input of highly subjective assumptions including the expected volatility factor of the market price of the Company’s common stock which is determined by reviewing its historical public market closing prices. |
Reclassifications | Reclassifications Certain prior period amounts have been reclassified for comparative purposes to conform with the fiscal 2017 presentation. These reclassifications have no impact on the previously reported net loss. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers,” (“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in ASC 605 - Revenue Recognition (“ASC 605”) and most industry-specific guidance throughout ASC 605. The core principle of the standard requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing U.S. GAAP including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The guidance in ASU 2014-09 was revised in July 2015 to be effective for interim periods beginning on or after December 15, 2017 and should be applied on a transitional basis either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application. In 2016, FASB issued additional ASUs that clarify the implementation guidance on principal versus agent considerations (ASU 2016-08), on identifying performance obligations and licensing (ASU 2016-10), and on narrow-scope improvements and practical expedients (ASU 2016-12) as well as on the revenue recognition criteria and other technical corrections (ASU 2016-20). The Company has not generated any revenues since its inception. The guidance is required to be adopted on January 1, 2018; as a result, these ASUs are not expected to have a material impact on the consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, “Leases” (“ASU 2016-02”), which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU 2016-02 will be effective beginning in the first quarter of 2019. Early adoption of ASU 2016-02 is permitted. The new standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company is currently evaluating the impact of adopting ASU 2016-02 on its consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” This ASU makes targeted amendments to the accounting for employee share-based payments. This guidance is to be applied using various transition methods such as full retrospective, modified retrospective, and prospective based on the criteria for the specific amendments as outlined in the guidance. The guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. Early adoption is permitted, as long as all of the amendments are adopted in the same period. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements. In September 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,” which clarifies whether the following items should be categorized as operating, investing or financing in the statement of cash flows: (i) debt prepayments and extinguishment costs, (ii) settlement of zero-coupon debt, (iii) settlement of contingent consideration, (iv) insurance proceeds, (v) settlement of corporate-owned life insurance (COLI) and bank-owned life insurance (BOLI) policies, (vi) distributions from equity method investees, (vii) beneficial interests in securitization transactions, and (viii) receipts and payments with aspects of more than one class of cash flows. The new standard takes effect in 2018 for public companies. If an entity elects early adoption, it must adopt all of the amendments in the same period. This ASU is not expected to have a material impact on the consolidated financial statements. In October 2016, the FASB issued ASU No. 2016-17, “Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control” (“ASU 2016-17”). ASU 2016-17 requires, when assessing which party is the primary beneficiary in a variable interest entity (VIE), that the decision maker considers interests held by entities under common control on a proportionate basis instead of treating those interests as if they were that of the decision maker itself, as current GAAP requires. The ASU is effective for annual periods, and interim periods therein, beginning after December 15, 2016. Early application is permitted in any interim or annual period. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements. In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash” (“ASU 2016-18”). ASU 2016-18 requires that restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The ASU is effective beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The ASU should be applied using a retrospective transition method to each period presented. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements. In May 2017, the FASB issued ASU No. 2017-09, “Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting” (“ASU 2017-09”). ASU 2017-09 provides clarity on the accounting for modifications of stock-based awards. ASU 2017-09 requires adoption on a prospective basis in the annual and interim periods beginning after December 15, 2017 for share-based payment awards modified on or after the adoption date. The Company is currently evaluating the effect that adopting this new accounting guidance will have on its consolidated financial statements and related disclosures. In July 2017, the FASB issued ASU No. 2017-11, “Earnings Per Share (Topic 260) and Derivatives and Hedging (Topic 815) - Accounting for Certain Financial Instruments with Down Round Features” (“ASU 2017-11”). Equity-linked instruments, such as warrants and convertible instruments may contain down round features that result in the strike price being reduced on the basis of the pricing of future equity offerings. Under ASU 2017-11, a down round feature will no longer require a freestanding equity-linked instrument (or embedded conversion option) to be classified as a liability that is re-measured at fair value through the income statement (i.e. marked-to-market). However, other features of the equity-linked instrument (or embedded conversion option) must still be evaluated to determine whether liability or equity classification is appropriate. Equity classified instruments are not marked-to-market. For earnings per share (“EPS”) reporting, the ASU requires companies to recognize the effect of the down round feature only when it is triggered by treating it as a dividend and as a reduction of income available to common shareholders in basic EPS. The amendments in this ASU are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in any interim period. The Company is currently evaluating ASU 2017-11 and its impact on its consolidated financial statements. |
Significant Accounting Polici22
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Securities Excluded from Calculation of Weighted Average Dilutive Common Shares | The following securities are excluded from the calculation of weighted average dilutive common shares because their inclusion would have been anti-dilutive: December 31, 2017 2016 Warrants 186,873,032 189,991,541 Options 3,350,000 3,500,000 Convertible preferred stock 65,663 5,647,009 Total potentially dilutive shares 190,288,695 199,138,550 |
Receivables (Tables)
Receivables (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Receivables [Abstract] | |
Summary of Receivables | The following table summarizes the receivables at December 31, 2017 and 2016: December 31, 2017 Legal Fees Settlement Total Gross receivable $ 911,000 $ 2,214,728 $ 3,125,728 Reserve for uncollectibility (455,500 ) (1,549,043 ) (2,004,543 ) Net receivable 455,500 665,685 1,121,185 Short-term receivable - 300,000 300,000 Long-term receivable $ 455,500 $ 365,685 $ 821,185 December 31, 2016 Legal Fees Settlement Total Gross receivable $ 911,000 $ 2,864,753 $ 3,775,753 Reserve for uncollectibility (455,500 ) (1,549,043 ) (2,004,543 ) Net receivable 455,500 1,315,710 1,771,210 Short-term receivable - 300,000 300,000 Long-term receivable $ 455,500 $ 1,015,710 $ 1,471,210 |
Stock Incentive Plan and Warr24
Stock Incentive Plan and Warrants (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Option Activity | The following table summarizes option activity during the years ended December 31, 2017 and 2016: Exercise Price Weighted Average Shares Per Share Exercise Price Outstanding and exercisable at January 1, 2016 10,630,000 $ 0.67 - 1.50 $ 0.96 Granted - - - Exercised - - - Forfeited (7,130,000 ) 0.67 - 1.50 0.97 Outstanding and exercisable at December 31, 2016 3,500,000 $ 0.67 - 1.50 $ 0.93 Granted - - - Exercised - - - Forfeited (150,000 ) 1.50 0.90 Outstanding and exercisable at December 31, 2017 3,350,000 $ 0.67 - 1.50 $ 0.90 |
Summary of Stock Options Outstanding | The following table summarizes information about stock options outstanding at December 31, 2017. Number Outstanding Weighted Average Number Exercisable at December 31, Remaining Contractual at December 31, Exercise Price 2017 Life 2017 $ 0.67 200,000 5.60 200,000 $ 0.75 950,000 6.13 950,000 $ 0.84 150,000 4.50 150,000 $ 0.88 150,000 6.60 150,000 $ 0.93 575,000 3.76 575,000 $ 0.99 50,000 3.50 50,000 $ 1.00 625,000 2.26 625,000 $ 1.04 400,000 2.50 400,000 $ 1.16 250,000 2.08 250,000 3,350,000 3,350,000 |
Warrant [Member] | |
Summary of Warrant Activity | The following table summarizes warrant activity during the years ended December 31, 2017 and 2016: Exercise Price Weighted Average Warrants Per Warrant Exercise Price Outstanding and exercisable at January 1, 2016 80,121,595 $ 0.68 - 3.00 $ 1.05 Granted 32,357,344 0.28 - 0.85 0.42 Warrant repricing 88,570,356 0.05 [1 ] Exercised (7,798,507 ) 0.50 0.50 Forfeited (3,259,247 ) 0.68 - 2.00 1.27 Outstanding and exercisable at December 31, 2016 189,991,541 $ 0.05 - 3.00 $ 0.44 Granted - - - Exercised (234,308 ) 0.05 0.05 Forfeited (2,884,201 ) 0.05 - 1.15 1.04 Outstanding and exercisable at December 31, 2017 186,873,032 $ 0.05 - 3.00 $ 0.43 [1] On November 23, 2016, the exercise price of the August 2016 Warrants was reset to $0.0533 per share and holders will receive an aggregate of 112,564,968 shares upon exercise. See Note 7 – Stockholders’ Deficiency – August 2016 Public Offering. |
Summary of Warrants Outstanding | The following table summarizes information about warrants outstanding at December 31, 2017. Number Outstanding Weighted Average Number Exercisable at December 31, Remaining Contractual at December 31, Exercise Price 2017 Life 2017 $ 0.053 112,336,048 3.66 112,336,048 $ 0.85 28,482,344 2.48 28,482,344 $ 1.00 39,790,044 0.71 39,790,044 $ 1.12 452,500 0.57 452,500 $ 1.25 4,474,520 1.93 4,474,520 $ 2.00 123,000 0.88 123,000 $ 2.50 280,276 1.33 280,276 $ 3.00 934,300 1.33 934,300 186,873,032 186,873,032 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Summary of Income Tax Provision (Benefit) | The income tax provision (benefit) consists of the following: Year Ended December 31 2017 2016 Federal: Current $ - $ - Deferred 13,026,000 (4,195,688 ) State and local: Current - - Deferred 1,724,000 (555,312 ) 14,750,000 (4,751,000 ) Change in valuation allowance (14,750,000 ) 4,751,000 Income tax provision (benefit) $ - $ - |
Schedule of Statutory Federal Income Tax Rate and Effective Tax Rate | The reconciliations between the statutory federal income tax rate and the Company’s effective tax rate is as follows: Year Ended December 31 2017 2016 Tax provision (benefit) at federal statutory rate (34.0 )% (34.0 )% State income taxes, net of federal provision (benefit) (4.5 )% (4.5 )% Permanent differences (1.9 )% 4.2 % Prior period adjustments 0.0 % 15.5 % Effect of change in federal income tax rates on deferred taxes 147.4 % 0.0 % Change in valuation allowance (109.0 )% 18.8 % Miscellaneous 2.0 % 0.0 % Effective income tax rate 0.0 % (0.0 )% |
Schedule of Components of Deferred Income Taxes | The components of the Company’s deferred income taxes are summarized below: Year Ended December 31 2017 2016 Deferred Tax Assets: Net operating loss carryforwards $ 40,156,000 $ 53,961,000 Stock-based compensation 2,207,000 3,251,000 Research and development credits 2,591,000 2,162,000 Contribution carryovers 10,000 - Receivable allowance - 771,000 Gross deferred tax assets 44,964,000 60,145,000 Deferred Tax Liabilities: Intangible assets (410,000 ) (862,000 ) Other (21,000 ) - Gross deferred tax liabilities (431,000 ) (862,000 ) Valuation allowance (44,533,000 ) (59,283,000 ) Deferred tax asset, net of valuation allowance $ - $ - Changes in valuation allowance $ 14,750,000 $ (4,751,000 ) |
Commitments (Tables)
Commitments (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Lease Obligations | The Company’s lease obligations are as follows: Period Ending Amount December 31, 2018 $ 88,004 December 31, 2019 $ 88,884 December 31, 2020 $ 90,666 December 31, 2021 $ 92,471 December 31, 2022 $ 46,687 $ 406,712 |
Fair Value of Financial Instr27
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of Estimated Fair Value of Warrants | The Company used the Monte-Carlo Simulation model to estimate the fair value of the warrants using the following assumptions: For the Years Ended December 31, 2017 2016 2016 Warrants: Expected term N/A 4.77 - 5.00 years Expected dividends N/A 0 % Volatility N/A 107.8% - 114.7 % Risk free interest rate N/A 0.88% - 1.40 % |
Schedule of Reconciliation of Warranty Liability Measured at Fair Value on Recurring Basis | A reconciliation of the warranty liability measured at fair value on a recurring basis with the use of significant unobservable inputs (Level 3) from January 1, 2016 to December 31, 2016 follows: Balance at January 1, 2016 $ - Issuance of warrants 3,678,989 Gain on change in fair value of warrant liability (518,875 ) Reclassification to warrant liability (3,160,114 ) Balance at December 31, 2016 $ - |
Liquidity and Going Concern (De
Liquidity and Going Concern (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash and cash equivalents | $ 105,504 | $ 1,165,738 | $ 14,178,902 |
Subsequent to December 31, 2017 [Member] | |||
Loans received in connection with financing | $ 1,356,000 |
Significant Accounting Polici29
Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Summary Of Significant Accounting Policy [Line Items] | ||
Maturity of highly liquid investments | Three months or less | |
Amount of insurance coverage | $ 250,000 | |
Impairment of long lived assets | ||
Impairment | 0 | |
Reduced amount of deferred tax asset | $ 0 | |
Recognized income tax positions measured | 50.00% | |
Income taxes, interest or penalties incurred | $ 0 | $ 0 |
Computer Equipment [Member] | ||
Summary Of Significant Accounting Policy [Line Items] | ||
Estimated useful lives of the assets | 5 years | |
Leasehold Improvements [Member] | ||
Summary Of Significant Accounting Policy [Line Items] | ||
Estimated useful lives of the assets | 5 years | |
Office Equipment [Member] | ||
Summary Of Significant Accounting Policy [Line Items] | ||
Estimated useful lives of the assets | 5 years | |
Furniture and Fixtures [Member] | ||
Summary Of Significant Accounting Policy [Line Items] | ||
Estimated useful lives of the assets | 10 years | |
Patents [Member] | ||
Summary Of Significant Accounting Policy [Line Items] | ||
Amortization of patents, 2018 | $ 671,000 | |
Amortization of patents, 2019 | 671,000 | |
Amortization of patents, 2020 | $ 228,000 | |
Patents [Member] | Minimum [Member] | ||
Summary Of Significant Accounting Policy [Line Items] | ||
Remaining lives of the patents | 1 year | |
Patents [Member] | Maximum [Member] | ||
Summary Of Significant Accounting Policy [Line Items] | ||
Remaining lives of the patents | 3 years |
Significant Accounting Polici30
Significant Accounting Policies - Schedule of Securities Excluded from Calculation of Weighted Average Dilutive Common Shares (Details) - shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive common shares excluded from the calculation of loss per share | 190,288,695 | 199,138,550 |
Convertible Preferred Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive common shares excluded from the calculation of loss per share | 65,663 | 5,647,009 |
Warrant [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive common shares excluded from the calculation of loss per share | 186,873,032 | 189,991,541 |
Option [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive common shares excluded from the calculation of loss per share | 3,350,000 | 3,500,000 |
Convertible Notes Payable (Deta
Convertible Notes Payable (Details Narrative) - USD ($) | Feb. 21, 2017 | Dec. 31, 2017 | Apr. 03, 2017 | Mar. 31, 2017 | Mar. 23, 2017 | Dec. 31, 2016 |
Related Party Transaction [Line Items] | ||||||
Preferred stock, par or stated value per share | $ 0.001 | $ 0.001 | ||||
Wachter Note [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Principal amount borrowed | $ 2,500,000 | |||||
PRH Note [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Principal amount borrowed | $ 4,456,000 | |||||
Borrowed under note | 4,456,000 | |||||
Trade debt | $ 150,000 | |||||
Chief Technology Officer [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Interest rate | 6.00% | |||||
Promissory note issuance date | Feb. 21, 2017 | |||||
Interest payments | Calculated on a 360-day basis | |||||
Cal Enterprises LLC [Member] | PRH Note [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Borrowed under note | $ 2,500,000 | |||||
Series D Preferred Stock [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Preferred stock, par or stated value per share | $ 0.2862 | |||||
Subsequent to December 31, 2017 [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Loans received in connection with financing | $ 1,356,000 | |||||
2017 Financing [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Interest rate | 8.00% | |||||
2017 Financing [Member] | Series D Preferred Stock [Member] | Final Tranche [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Preferred stock, par or stated value per share | $ 0.2862 | |||||
2017 Financing [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Loans received in connection with financing | $ 9,456,000 | |||||
Minimum [Member] | 2017 Financing [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Due to stockholders | $ 10,000,000 | |||||
Maximum [Member] | Cal Enterprises LLC [Member] | PRH Note [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Principal amount borrowed | $ 2,500,000 | |||||
Maximum [Member] | Unsecured Promissory Note [Member] | Chief Technology Officer [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Principal amount borrowed | $ 2,500,000 | |||||
Maximum [Member] | 2017 Financing [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Due to stockholders | $ 20,000,000 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Director fees | $ 148,333 | $ 335,000 |
Bruce Horowitz [Member] | ||
Payments for services rendered | 180,000 | |
Director fees | $ 75,000 |
Receivables (Details Narrative)
Receivables (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Reserve for uncollectibility of settlement receivable | $ 678,465 | |
Reserve for uncollectibility of legal fees receivable | $ 227,750 | |
Officer's offset receivable and trade payable | 280,823 | |
Former CFO [Member] | ||
Amount required for settlement | 140,115 | |
Amount required for settlement, interest | 12,261 | |
Amount required for settlement, total | $ 152,376 |
Receivables - Summary of Receiv
Receivables - Summary of Receivables (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Jul. 25, 2017 | Jun. 06, 2014 | |
Receivables [Abstract] | ||||
Gross receivable, Legal Fees | $ 911,000 | $ 911,000 | ||
Reserve for uncollectibility, Legal Fees | (455,500) | (455,500) | ||
Net receivable, Legal Fees | 455,500 | 455,500 | ||
Short-term receivable, Legal Fees | ||||
Long-term receivable, Legal Fees | 455,500 | 455,500 | ||
Gross receivable, Settlement | 2,214,728 | 2,864,753 | ||
Reserve for uncollectibility, Settlement | (1,549,043) | (1,549,043) | ||
Net receivable, Settlement | 665,685 | 1,315,710 | $ 6,027,652 | $ 2,240,000 |
Short-term receivable, Settlement | 452,376 | 300,000 | ||
Long-term receivable, Settlement | 365,685 | 1,015,710 | ||
Gross receivable, Total | 3,125,728 | 3,775,753 | ||
Reserve for uncollectibility, Total | (2,004,543) | (2,004,543) | ||
Net receivable, Total | 1,121,185 | 1,771,210 | ||
Short-term receivable, Total | 300,000 | 300,000 | ||
Long-term receivable, Total | $ 821,185 | $ 1,471,210 |
Stockholders' Deficiency (Detai
Stockholders' Deficiency (Details Narrative) - USD ($) | Nov. 23, 2016 | Aug. 30, 2016 | Jan. 02, 2016 | Aug. 30, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Aug. 25, 2016 |
Class of Stock [Line Items] | |||||||
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 | |||||
Common stock, par value | $ 0.001 | $ 0.001 | |||||
Preferred stock, shares authorized | 25,000,000 | 25,000,000 | |||||
Preferred stock, par value | $ 0.001 | $ 0.001 | |||||
Warrant to purchase shares of common stock | 234,308 | ||||||
Exercise price of warrant | $ .053 | ||||||
Number of shares issued for services, share | 51,475 | ||||||
Value of services settled in stock | $ 20,163 | ||||||
Preferred stock issued upon public offering, number of shares | 100 | 8,600 | |||||
Gross proceeds | $ 6,000,000 | ||||||
Cash issuance costs | 711,470 | ||||||
Reclassification of warrant liability | 3,160,114 | ||||||
Gain on change in fair value of warrant liability | (518,875) | ||||||
Preferred stock dividends paid in kind | 14,107 | 2,386,453 | |||||
August 2016 Public Offering [Member] | |||||||
Class of Stock [Line Items] | |||||||
Fair value at the commitment date | $ 3,678,989 | ||||||
Effective conversion price | $ 0.097 | ||||||
Issuance date value of warrants | $ 3,678,989 | ||||||
Warrant Exchange Program [Member] | |||||||
Class of Stock [Line Items] | |||||||
Warrant to purchase shares of common stock | 59,861,601 | ||||||
Exercise price of warrant | $ 0.85 | ||||||
Number of shares issuable on exercises of warrants issued | 59,861,601 | ||||||
Discounted exercise price of warrants | $ 0.50 | ||||||
Warrants purchased | 7,798,507 | ||||||
Warrant Exchange Program [Member] | Minimum [Member] | |||||||
Class of Stock [Line Items] | |||||||
Exercise price of warrant | $ 1 | ||||||
Warrant Exchange Program [Member] | Maximum [Member] | |||||||
Class of Stock [Line Items] | |||||||
Exercise price of warrant | $ 3 | ||||||
Warrant Purchase Program [Member] | |||||||
Class of Stock [Line Items] | |||||||
Warrants expiration period | Jun. 19, 2020 | ||||||
Proceeds from warrants | $ 3,899,254 | ||||||
Placement agent fees | $ 264,214 | ||||||
Number of warrants issued | 467,910 | ||||||
Warrants incentive expenses | $ 2,718,407 | ||||||
Other Common Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Issuance of common stock to consultants | 372,500 | ||||||
Issuance of common stock to consultants, value | 17,301 | ||||||
Number of shares issued for services, share | 51,745 | ||||||
Reclassification of warrant liability | |||||||
Conversion of preferred stock to common stock | 3,986,676 | 142,466,533 | |||||
Payment of dividend in shares of common stock | $ 14,107 | ||||||
August 2016 Warrants [Member] | |||||||
Class of Stock [Line Items] | |||||||
Number of shares issuable on exercises of warrants issued | 112,564,968 | ||||||
Gross proceeds | 6,000,000 | ||||||
Adjusted conversion price | $ 0.0533 | ||||||
Cash issuance costs | $ 711,470 | ||||||
Reclassification of warrant liability | $ 3,160,114 | ||||||
Gain on change in fair value of warrant liability | $ 518,875 | ||||||
Warrants as percentage of aggregate gross proceeds | 61.00% | ||||||
Series B Convertible Preferred Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Preferred stock, shares authorized | 240,000 | ||||||
Preferred stock, par value | $ 0.001 | ||||||
Preferred stock, dividend percentage | 8.00% | ||||||
Series B Convertible Preferred Stock [Member] | August 2016 Public Offering [Member] | |||||||
Class of Stock [Line Items] | |||||||
Issuance costs allocated to preferred stock | $ 275,222 | ||||||
Fair value at the commitment date | 2,321,011 | ||||||
Deemed dividend on preferred stock | $ 726,989 | ||||||
Market price per share of common stock | $ 0.127 | ||||||
Cash issuance costs | $ 275,222 | ||||||
Preferred stock converted into shares | 2,314,000 | ||||||
Preferred stock dividends paid in kind | $ 2,314,000 | $ 2,314,000 | |||||
Convertible preferred stock and preferred stock dividends | 231,400 | 231,400 | |||||
Undesignated Preferred Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Preferred stock, shares authorized | 24,760,000 | ||||||
Replacement Warrants [Member] | Warrant Exchange Program [Member] | |||||||
Class of Stock [Line Items] | |||||||
Warrant to purchase shares of common stock | 7,798,507 | ||||||
Exercise price of warrant | $ 0.85 | ||||||
Warrants expiration period | Jun. 19, 2020 | ||||||
Existing Warrants [Member] | Warrant Exchange Program [Member] | |||||||
Class of Stock [Line Items] | |||||||
Warrant to purchase shares of common stock | 7,798,507 | ||||||
Series B Preferred Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Preferred stock, dividend percentage | 8.00% | ||||||
Common stock issued for preferred stock, shares | 1,594,670 | 9,477,412 | |||||
Offering gross proceeds allocated to analyze beneficial conversion feature | $ 6,000,000 | ||||||
Net carrying value of preferred stock | $ 2,045,789 | ||||||
Preferred stock converted into shares | 8,500 | ||||||
Preferred stock dividends paid in kind | $ 72,453 | ||||||
Series B Preferred Stock [Member] | August 2016 Public Offering [Member] | |||||||
Class of Stock [Line Items] | |||||||
Exercise price of warrant | $ 0.275 | $ 0.275 | |||||
Preferred stock issued upon public offering, number of shares | 240,000 | 240,000 | |||||
Number of common shares initially convertible upon preferred stock conversion shares | 24,000,000 | ||||||
Exercisable warrants to purchase common stock | 24,000,000 | ||||||
Sale of stock, price per share | $ 25 | $ 25 | |||||
Stockholders' equity note, stock split | Series B Preferred Stock and August 2016 Warrants were sold together at a price of $25.00 for a combination of one share of Series B Preferred Stock and 100 August 2016 Warrants to purchase one share of common stock each | ||||||
Aggregate net proceeds | $ 5,288,530 | ||||||
Gross proceeds | 6,000,000 | ||||||
Issuance costs allocated to preferred stock | $ 711,470 | ||||||
Conversion price exceeds percentage | 85.00% | ||||||
Adjusted conversion price | $ 0.0533 | 0.0533 | |||||
Common stock issued for preferred stock, shares | 24,000,000 | 151,943,945 | |||||
Effective conversion price | $ 0.021 | ||||||
Deemed dividend on preferred stock | $ 1,318,801 | ||||||
Number of shares of common stock potentially issuable | 112,570,356 | 112,570,356 | |||||
Market price per share of common stock | $ 0.038 | ||||||
Warrant [Member] | |||||||
Class of Stock [Line Items] | |||||||
Exercise price of warrant | $ 0.85 | $ 0.85 | |||||
Number of shares issuable on exercises of warrants issued | 112,570,356 | 112,570,356 | |||||
Warrants expiration period | Aug. 30, 2021 | ||||||
Adjusted conversion price | $ 0.0533 | $ 0.0533 |
Stock Incentive Plan and Warr36
Stock Incentive Plan and Warrants (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Number of common stock issued | ||
Warrants to purchase shares of common stock | 234,308 | |
Warrants exercise price | $ .053 | |
Warrants received | $ 12,488 | |
Employees [Member] | ||
Number of common stock issued | ||
2014 Equity Compensation Plan [Member] | ||
Number of available for issuance | 18,900,000 | |
2014 Equity Compensation Plan [Member] | Maximum [Member] | ||
Number of common stock issued | 20,000,000 | |
Period of plan | 10 years |
Stock Incentive Plan and Warr37
Stock Incentive Plan and Warrants - Summary of Option Activity (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Number of Shares Outstanding and exercisable, beginning balance | 3,500,000 | 10,630,000 |
Number of Shares, Granted | ||
Number of Shares, Exercised | ||
Number of Shares, Forfeited | (150,000) | (7,130,000) |
Number of Shares Outstanding and exercisable, closing balance | 3,350,000 | 3,500,000 |
Exercise Price Per Share, Granted | ||
Exercise Price Per Share, Exercised | ||
Exercise Price Per Share, Forfeited | 1.50 | |
Weighted Average Exercise Price Outstanding and exercisable, beginning balance | 0.93 | 0.96 |
Weighted Average Exercise Price, Granted | ||
Weighted Average Exercise Price, Exercised | ||
Weighted Average Exercise Price, Forfeited | 0.90 | 0.97 |
Weighted Average Exercise Price Outstanding and exercisable, closing balance | 0.90 | 0.93 |
U S Deferred Tax Assets [Member] | ||
Exercise Price Per Share, Forfeited | ||
Minimum [Member] | ||
Exercise Price Per Share Outstanding and exercisable, beginning balance | 0.67 | 0.67 |
Exercise Price Per Share, Forfeited | 1.50 | 0.67 |
Exercise Price Per Share Outstanding and exercisable, closing balance | 0.67 | 0.67 |
Maximum [Member] | ||
Exercise Price Per Share Outstanding and exercisable, beginning balance | 1.50 | 1.50 |
Exercise Price Per Share, Forfeited | 1.50 | |
Exercise Price Per Share Outstanding and exercisable, closing balance | $ 1.50 | $ 1.50 |
Stock Incentive Plan and Warr38
Stock Incentive Plan and Warrants - Summary of Stock Options Outstanding (Details) | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Number Outstanding | 3,350,000 |
Number Exercisable | 3,350,000 |
Range One [Member] | |
Exercise price | $ / shares | $ 0.67 |
Number Outstanding | 200,000 |
Weighted Average Remaining Contractual Life | 5 years 7 months 6 days |
Number Exercisable | 200,000 |
Range Two [Member] | |
Exercise price | $ / shares | $ 0.75 |
Number Outstanding | 950,000 |
Weighted Average Remaining Contractual Life | 6 years 1 month 16 days |
Number Exercisable | 950,000 |
Range Three [Member] | |
Exercise price | $ / shares | $ 0.84 |
Number Outstanding | 150,000 |
Weighted Average Remaining Contractual Life | 4 years 6 months |
Number Exercisable | 150,000 |
Range Four [Member] | |
Exercise price | $ / shares | $ 0.88 |
Number Outstanding | 150,000 |
Weighted Average Remaining Contractual Life | 6 years 7 months 6 days |
Number Exercisable | 150,000 |
Range Five [Member] | |
Exercise price | $ / shares | $ 0.93 |
Number Outstanding | 575,000 |
Weighted Average Remaining Contractual Life | 3 years 9 months 3 days |
Number Exercisable | 575,000 |
Range Six [Member] | |
Exercise price | $ / shares | $ 0.99 |
Number Outstanding | 50,000 |
Weighted Average Remaining Contractual Life | 3 years 6 months |
Number Exercisable | 50,000 |
Range Seven [Member] | |
Exercise price | $ / shares | $ 1 |
Number Outstanding | 625,000 |
Weighted Average Remaining Contractual Life | 2 years 3 months 4 days |
Number Exercisable | 625,000 |
Range Eight [Member] | |
Exercise price | $ / shares | $ 1.04 |
Number Outstanding | 400,000 |
Weighted Average Remaining Contractual Life | 2 years 6 months |
Number Exercisable | 400,000 |
Range Nine [Member] | |
Exercise price | $ / shares | $ 1.16 |
Number Outstanding | 250,000 |
Weighted Average Remaining Contractual Life | 2 years 29 days |
Number Exercisable | 250,000 |
Stock Incentive Plan and Warr39
Stock Incentive Plan and Warrants - Summary of Warrant Activity (Details) - Warrant [Member] - $ / shares | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | ||
Warrants Outstanding and exercisable, beginning balance | 189,991,541 | 80,121,595 | |
Warrants, Granted | 32,357,344 | ||
Warrants, Warrant repricing | 88,570,356 | ||
Warrants, Exercised | (234,308) | (7,798,507) | |
Warrants, Forfeited | (2,884,201) | (3,259,247) | |
Warrants Outstanding and exercisable, ending balance | 186,873,032 | 189,991,541 | |
Exercise Price Per Warrant, Granted | |||
Exercise Price Per Warrant, Warrant repricing | $ 0.05 | ||
Exercise Price Per Warrant, Exercised | 0.05 | 0.50 | |
Weighted Average Exercise Price Outstanding and exercisable, beginning balance | 0.44 | 1.05 | |
Weighted Average Exercise Price, Granted | 0.42 | ||
Weighted Average Exercise Price, Warrant repricing | [1] | ||
Weighted Average Exercise Price, Exercised | 0.05 | 0.50 | |
Weighted Average Exercise Price, Forfeited | 1.04 | 1.27 | |
Weighted Average Exercise Price Outstanding and exercisable, ending balance | 0.43 | 0.44 | |
Minimum [Member] | |||
Exercise Price Per Warrant Outstanding and exercisable, beginning balance | 0.05 | 0.68 | |
Exercise Price Per Warrant, Granted | 0.28 | ||
Exercise Price Per Warrant, Forfeited | 0.05 | 0.68 | |
Exercise Price Per Warrant Outstanding and exercisable, ending balance | 0.05 | 0.05 | |
Maximum [Member] | |||
Exercise Price Per Warrant Outstanding and exercisable, beginning balance | 3 | 3 | |
Exercise Price Per Warrant, Granted | 0.85 | ||
Exercise Price Per Warrant, Forfeited | 1.15 | 2 | |
Exercise Price Per Warrant Outstanding and exercisable, ending balance | $ 3 | $ 3 | |
[1] | On November 23, 2016, the exercise price of the August 2016 Warrants was reset to $0.0533 per share and holders will receive an aggregate of 112,564,968 shares upon exercise. See Note 7 - Stockholders' Deficiency - August 2016 Public Offering. |
Stock Incentive Plan and Warr40
Stock Incentive Plan and Warrants - Summary of Warrant Activity (Details) (Parenthetical) - August 2016 Warrants [Member] | Nov. 23, 2016$ / sharesshares |
Adjusted conversion price | $ / shares | $ 0.0533 |
Shares of common stock issued upon exercise of warrants | shares | 112,564,968 |
Stock Incentive Plan and Warr41
Stock Incentive Plan and Warrants - Summary of Warrants Outstanding (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Weighted Average Exercise price | ||
Number Outstanding | 3,350,000 | |
Number Exercisable | 3,350,000 | |
Range One [Member] | ||
Number Outstanding | 200,000 | |
Number Exercisable | 200,000 | |
Range Two [Member] | ||
Number Outstanding | 950,000 | |
Number Exercisable | 950,000 | |
Range Three [Member] | ||
Number Outstanding | 150,000 | |
Number Exercisable | 150,000 | |
Range Four [Member] | ||
Number Outstanding | 150,000 | |
Number Exercisable | 150,000 | |
Range Five [Member] | ||
Number Outstanding | 575,000 | |
Number Exercisable | 575,000 | |
Range Six [Member] | ||
Number Outstanding | 50,000 | |
Number Exercisable | 50,000 | |
Range Seven [Member] | ||
Number Outstanding | 625,000 | |
Number Exercisable | 625,000 | |
Range Eight [Member] | ||
Number Outstanding | 400,000 | |
Number Exercisable | 400,000 | |
Warrant [Member] | ||
Number Outstanding | 186,873,032 | |
Number Exercisable | 186,873,032 | |
Warrant [Member] | Range One [Member] | ||
Weighted Average Exercise price | $ 0.053 | |
Number Outstanding | 112,336,048 | |
Weighted Average Remaining Contractual Life | 3 years 7 months 28 days | |
Number Exercisable | 112,336,048 | |
Warrant [Member] | Range Two [Member] | ||
Weighted Average Exercise price | $ 0.85 | |
Number Outstanding | 28,482,344 | |
Weighted Average Remaining Contractual Life | 2 years 5 months 23 days | |
Number Exercisable | 28,483,344 | |
Warrant [Member] | Range Three [Member] | ||
Weighted Average Exercise price | $ 1 | |
Number Outstanding | 39,790,044 | |
Weighted Average Remaining Contractual Life | 8 months 16 days | |
Number Exercisable | 39,790,044 | |
Warrant [Member] | Range Four [Member] | ||
Weighted Average Exercise price | $ 1.12 | |
Number Outstanding | 452,500 | |
Weighted Average Remaining Contractual Life | 6 months 25 days | |
Number Exercisable | 452,500 | |
Warrant [Member] | Range Five [Member] | ||
Weighted Average Exercise price | $ 1.25 | |
Number Outstanding | 4,474,520 | |
Weighted Average Remaining Contractual Life | 1 year 11 months 4 days | |
Number Exercisable | 4,474,520 | |
Warrant [Member] | Range Six [Member] | ||
Weighted Average Exercise price | $ 2 | |
Number Outstanding | 123,000 | |
Weighted Average Remaining Contractual Life | 10 months 17 days | |
Number Exercisable | 123,000 | |
Warrant [Member] | Range Seven [Member] | ||
Weighted Average Exercise price | $ 2.50 | |
Number Outstanding | 280,276 | |
Weighted Average Remaining Contractual Life | 1 year 3 months 29 days | |
Number Exercisable | 280,276 | |
Warrant [Member] | Range Eight [Member] | ||
Weighted Average Exercise price | $ 3 | |
Number Outstanding | 934,300 | |
Weighted Average Remaining Contractual Life | 1 year 3 months 29 days | |
Number Exercisable | 934,300 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Taxes [Line Items] | ||
Deferred tax assets | $ 60,148,509 | |
Decrease in valuation allowance revalued | 44,966,584 | |
Tax net operating losses | 154,000,000 | |
Reduction of deferred tax asset and the related valuation allowance | 20,000,000 | |
Uncertain tax positions | ||
Earliest Tax Year [Member] | ||
Income Taxes [Line Items] | ||
Operating losses expiration period | 2,022 | |
Latest Tax Year [Member] | ||
Income Taxes [Line Items] | ||
Operating losses expiration period | 2,037 | |
U S Deferred Tax Assets [Member] | ||
Income Taxes [Line Items] | ||
Deferred tax assets valuation allowance revalued, percentage | 21.00% |
Income Taxes - Summary of Incom
Income Taxes - Summary of Income Tax Provision (Benefit) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Federal: Current | ||
Federal: Deferred | 13,026,000 | (4,195,688) |
State and local: Current | ||
State and local: Deferred | 1,724,000 | (555,312) |
Current income tax expense (benefit) | 14,750,000 | (4,751,000) |
Change in valuation allowance | (14,750,000) | 4,751,000 |
Income tax provision (benefit) |
Income Taxes - Schedule of Stat
Income Taxes - Schedule of Statutory Federal Income Tax Rate and Effective Tax Rate (Details) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Tax provision (benefit) at federal statutory rate | (34.00%) | (34.00%) |
State income taxes, net of federal provision (benefit) | (4.50%) | (4.50%) |
Permanent differences | (1.90%) | 4.20% |
Prior period adjustments | 0.00% | 15.50% |
Effect of change in federal income tax rates on deferred taxes | 147.40% | 0.00% |
Change in valuation allowance | (109.00%) | 18.80% |
Miscellaneous | 2.00% | 0.00% |
Effective income tax rate | 0.00% | (0.00%) |
Income Taxes - Schedule of Comp
Income Taxes - Schedule of Components of Deferred Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforwards | $ 40,156,000 | $ 53,961,000 |
Stock-based compensation | 2,207,000 | 3,251,000 |
Research and development credits | 2,591,000 | 2,162,000 |
Contribution carryovers | 10,000 | |
Receivable allowance | 771,000 | |
Gross deferred tax assets | 44,964,000 | 60,145,000 |
Intangible assets | (410,000) | (862,000) |
Other | (21,000) | |
Gross deferred tax liabilities | (431,000) | (862,000) |
Valuation allowance | (44,533,000) | (59,283,000) |
Deferred tax asset, net of valuation allowance | ||
Changes in valuation allowance | $ (14,750,000) | $ 4,751,000 |
Commitments (Details Narrative)
Commitments (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Rent expenses | $ 44,335 | $ 60,000 |
Knoxville, Tennessee [Member] | ||
Lease agreement description | The Company leases office space in Knoxville, Tennessee for a term of five years ending on June 30, 2022. |
Commitments - Schedule of Lease
Commitments - Schedule of Lease Obligations (Details) | Dec. 31, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
December 31 2018 | $ 88,004 |
December 31 2019 | 88,884 |
December 31 2020 | 90,666 |
December 31 2021 | 92,471 |
December 31 2022 | 46,687 |
Total Obligation | $ 406,712 |
401(K) Profit Sharing Plan (Det
401(K) Profit Sharing Plan (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Retirement Benefits [Abstract] | ||
Contributions to the 401(K) Profit Sharing Plan | $ 159,000 |
Fair Value of Financial Instr49
Fair Value of Financial Instruments - Schedule of Estimated Fair Value of Warrants (Details) - 2016 Warrant [Member] | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Expected term | 0 years | |
Expected dividends | 0.00% | |
Volatility | ||
Risk free interest rate | ||
Minimum [Member] | ||
Expected term | 4 years 9 months 7 days | |
Volatility | 107.80% | |
Risk free interest rate | 0.88% | |
Maximum [Member] | ||
Expected term | 5 years | |
Volatility | 114.70% | |
Risk free interest rate | 1.40% |
Fair Value of Financial Instr50
Fair Value of Financial Instruments - Schedule of Reconciliation of Warranty Liability Measured at Fair Value on Recurring Basis (Details) - Fair Value, Measurements, Recurring [Member] - Warrant [Member] | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Beginning Balance | |
Issuance of warrants | 3,678,989 |
Gain on change in fair value of warrant liability | (518,875) |
Reclassification to warrant liability | (3,160,114) |
Ending Balance |
Litigation (Details Narrative)
Litigation (Details Narrative) - USD ($) | Dec. 12, 2017 | Nov. 16, 2017 | Nov. 08, 2017 | Sep. 01, 2017 | Jun. 09, 2017 | Dec. 27, 2016 | Nov. 17, 2016 | May 05, 2016 | Oct. 03, 2014 | Jul. 24, 2014 | Jun. 06, 2014 | Dec. 31, 2017 | Dec. 31, 2016 | Nov. 21, 2017 | Jul. 25, 2017 |
Loss Contingencies [Line Items] | |||||||||||||||
Damages sought to be receivable | $ 2,240,000 | $ 665,685 | $ 1,315,710 | $ 6,027,652 | |||||||||||
Estimated bonus percentage | 70.00% | ||||||||||||||
Future payment ratio of contingent consideration | 2:1 | ||||||||||||||
Repayment under contingency | $ 1,120,000 | ||||||||||||||
Reimbursement cost percentage | 25.00% | ||||||||||||||
Attorney's fees and reimbursement of expenses | $ 911,000 | ||||||||||||||
Long-term receivable | 455,500 | 455,500 | |||||||||||||
Stock options | 2,800,000 | ||||||||||||||
Litigation settlement, remaining balance due | 665,686 | ||||||||||||||
Litigation settlement, reserve for un-collectability | 1,549,043 | ||||||||||||||
Litigation settlement, present value of discount remaining | $ 26,774 | ||||||||||||||
Reserve for litigation | (1,549,043) | (1,549,043) | |||||||||||||
Litigation settlement, Amount | 2,214,728 | $ 2,864,753 | |||||||||||||
Collection Lawsuit [Member] | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Stock options | 1,497,859 | ||||||||||||||
Loss contingency amount advanced or reimbursed | $ 2,400,000 | ||||||||||||||
Loss contingency amount of remaining obligation | $ 2,267,750 | $ 2,267,750 | |||||||||||||
First-priority security common stock interest under Temporary restraining Order | 1,000,000 | ||||||||||||||
Litigation commitment due date | Apr. 26, 2017 | ||||||||||||||
Number of common stock shares to be sell | 1,000,000 | ||||||||||||||
Collection Lawsuit [Member] | Maximum [Member] | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Amount of damages awarded | $ 5,000,000 | ||||||||||||||
Bible Harris Smith Lawsuit [Member] | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Loss contingency amount advanced or reimbursed | $ 2,400,000 | ||||||||||||||
Amount of damages awarded | $ 3,000,000 | ||||||||||||||
RSM Lawsuit [Member] | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Loss contingency amount of remaining obligation | $ 10,000,000 | ||||||||||||||
BDO Lawsuit [Member] | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Loss contingency amount of remaining obligation | $ 10,000,000 | ||||||||||||||
Ms. Godfrey [Member] | Collection Lawsuit [Member] | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Litigation settlement, remaining balance due | $ 20,000 | ||||||||||||||
Executive Officer [Member] | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Repayment under contingency | $ 1,574,314 | ||||||||||||||
Number of shares acquired under litigation | 1,000,000 | ||||||||||||||
Executive Officer One [Member] | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Damages sought to be receivable | 2,240,000 | $ 2,494,525 | |||||||||||||
Repayment under contingency | 200,000 | ||||||||||||||
Reserve for litigation | 2,040,000 | ||||||||||||||
Executive Officer One [Member] | RSM Lawsuit [Member] | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Loss contingency amount advanced or reimbursed | 2,400,000 | ||||||||||||||
Executive Officer Two [Member] | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Damages sought to be receivable | 2,240,000 | ||||||||||||||
Repayment under contingency | 416,667 | ||||||||||||||
Reserve for litigation | 2,051,083 | ||||||||||||||
Litigation cost | $ 227,750 | 227,750 | |||||||||||||
Travel expense reimbursements and advances without receipt | $ 294,255 | ||||||||||||||
Litigation settlement, Amount | $ 140,115 | ||||||||||||||
Litigation settlement, interest | 12,261 | ||||||||||||||
Litigation settlement, Amount paid | 152,376 | ||||||||||||||
Executive Officer Two [Member] | January 2018 [Member] | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Litigation settlement, Amount paid | $ 152,376 | ||||||||||||||
Executive Officer Two [Member] | RSM Lawsuit [Member] | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Loss contingency amount advanced or reimbursed | $ 294,255 | ||||||||||||||
Executive Officer Two [Member] | Officer [Member] | |||||||||||||||
Loss Contingencies [Line Items] | |||||||||||||||
Damages sought to be receivable | $ 2,051,083 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) | 12 Months Ended |
Dec. 31, 2017USD ($)$ / sharesshares | |
Exercised price per share | $ / shares | $ .053 |
Subsequent Event [Member] | |
Proceeds from related party | $ 422,495 |
warrant to purchase common stock | shares | 7,926,739 |
Exercised price per share | $ / shares | $ 0.0533 |
Subsequent Event [Member] | Accredited Investors [Member] | |
Aggregate principle amount | $ 1,356,000 |
Proceeds from related party | $ 750,000 |