Document_And_Entity_Informatio
Document And Entity Information | 3 Months Ended | |
Mar. 31, 2015 | 14-May-15 | |
Document Information [Line Items] | ||
Entity Registrant Name | REGENERX BIOPHARMACEUTICALS INC | |
Entity Central Index Key | 707511 | |
Current Fiscal Year End Date | -19 | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | RGRX | |
Entity Common Stock, Shares Outstanding | 101,596,251 | |
Document Type | 10-Q | |
Amendment Flag | FALSE | |
Document Period End Date | 31-Mar-15 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 |
Condensed_Balance_Sheets
Condensed Balance Sheets (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Current assets | ||
Cash and cash equivalents | $1,062,499 | $844,043 |
Prepaid expenses and other current assets | 51,754 | 86,525 |
Total current assets | 1,114,253 | 930,568 |
Property and equipment, net of accumulated depreciation of $86,300 and $121,727 | 11,962 | 12,871 |
Other assets | 5,752 | 5,752 |
Total assets | 1,131,967 | 949,191 |
Current liabilities | ||
Accounts payable | 261,145 | 232,610 |
Accrued expenses | 206,347 | 177,009 |
Total current liabilities | 467,492 | 409,619 |
Long-Term liabilities | ||
Unearned revenue | 900,000 | 400,000 |
Convertible promisory note | 300,000 | 300,000 |
Convertible promisory notes, net of derivative liability | 296,309 | 266,021 |
Fair value of derivative liability | 2,570,336 | 1,285,170 |
Total liabilities | 4,534,137 | 2,660,810 |
Commitments and contingencies | 0 | 0 |
Stockholders' deficit | ||
Preferred stock, $.001 par value per share, 1,000,000 shares authorized; no shares issued | 0 | 0 |
Common stock, par value $.001 per share, 200,000,000 shares authorized, 101,316,580 and 101,316,580 issued and outstanding | 101,317 | 101,317 |
Additional paid-in capital | 98,019,558 | 97,991,419 |
Accumulated deficit | -101,523,045 | -99,804,355 |
Total stockholders' deficit | -3,402,170 | -1,711,619 |
Total liabilities and stockholders' deficit | $1,131,967 | $949,191 |
Condensed_Balance_Sheets_Paren
Condensed Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Property and equipment, accumulated depreciation (in dollars) | $86,300 | $121,727 |
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 101,316,580 | 101,316,580 |
Common stock, shares, outstanding | 101,316,580 | 101,316,580 |
Condensed_Statements_of_Operat
Condensed Statements of Operations (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Revenues | $40,000 | $0 |
Operating expenses | ||
Research and development | 36,472 | 74,700 |
General and administrative | 394,500 | 288,857 |
Total operating expenses | 430,972 | 363,557 |
Loss from operations | -390,972 | -363,557 |
Interest and other income | 77 | 3 |
Interest expense | -42,629 | -45,706 |
Change in fair value of derivative | -1,285,166 | -1,715,834 |
Net loss | ($1,718,690) | ($2,125,094) |
Basic and diluted net loss per common share (in dollors per share) | ($0.02) | ($0.03) |
Weighted average number of common shares outstanding (in shares) | 101,316,580 | 82,233,247 |
Condensed_Statements_of_Cash_F
Condensed Statements of Cash Flows (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Operating activities: | ||
Net loss | ($1,718,690) | ($2,125,094) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 909 | 916 |
Share-based compensation | 28,139 | 83,567 |
Non-cash interest expense | 30,288 | 33,418 |
Change in fair value of derivative | 1,285,166 | 1,715,834 |
Changes in operating assets and liabilities: | ||
Unearned revenue | 500,000 | 0 |
Prepaid expenses and other current assets | 34,771 | -23,095 |
Accounts payable | 28,535 | -27,364 |
Accrued expenses | 29,338 | 80,440 |
Net cash provided by (used in) operating activities | 218,456 | -261,378 |
Financing activities: | ||
Proceeds from sale of common stock and issuance of warrants | 0 | 1,500,000 |
Proceeds from issuance of debt | 0 | 55,000 |
Cash provided by financing activities | 0 | 1,555,000 |
Net increase in cash and cash equivalents | 218,456 | 1,293,622 |
Cash and cash equivalents at beginning of period | 844,043 | 6,306 |
Cash and cash equivalents at end of period | 1,062,499 | 1,299,928 |
Supplemental Disclosure of Non-Cash Operating and Financing Activities | ||
Fair value of derivative liability at issuance | $0 | $55,000 |
ORGANIZATION_BUSINESS_OVERVIEW
ORGANIZATION, BUSINESS OVERVIEW AND BASIS OF PRESENTATION | 3 Months Ended | ||
Mar. 31, 2015 | |||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block] | 1 | organization, business overview and basis of presentation | |
Organization and Nature of Operations. | |||
RegeneRx Biopharmaceuticals, Inc. (“RegeneRx”, the “Company”, “We”, “Us”, “Our”), a Delaware corporation, was incorporated in 1982. We are focused on the discovery and development of novel molecules to accelerate tissue and organ repair. Our operations are confined to one business segment: the development and marketing of product candidates based on Thymosin Beta 4 (“Tβ4”), an amino acid peptide. | |||
Management Plans to Address Operating Conditions. | |||
On January 28, 2015, we announced that we had entered into a Joint Venture Agreement (the “Joint Venture Agreement”) with G-treeBNT Co., Ltd., a Korean pharma company (“G-treeBNT”) and shareholder of the Company. The Joint Venture Agreement provides for the creation of an entity (the “Joint Venture” or “ReGenTree”), jointly owned by us and G-treeBNT, that will commercialize RGN-259 for treatment of dry eye and neurotrophic keratopathy, an orphan indication in the United States. G-treeBNT will be responsible for funding all product development and commercialization efforts, and holds a majority interest of ReGenTree that varies depending on development milestones achieved and eventual commercialization path, if successful. In conjunction with the Joint Venture Agreement, we also entered into a royalty-bearing license agreement (the “License Agreement”) with ReGenTree pursuant to which we granted to ReGenTree the right to develop and exclusively commercialize RGN-259 in the United States. We will receive a total of $1 million in two tranches under the terms of the License Agreement, the first tranche of $500,000 which was received in March 2015 and a second in the amount of $500,000, within forty-five business days after enrollment of the first patient in an ophthalmic trial in the U.S. We are also entitled to royalties as a percentage of net of sales ranging from the mid-single digits to the low-double digits based on the medical indications approved and whether the Joint Venture commercializes products directly or through a third party. RegeneRx possesses one of three board seats and certain major decisions within ReGenTree, such as commercialization strategy, mergers, acquisitions, require unanimous consent of the board. On March 9, 2015, RegeneRx announced that its joint venture partner and licensee, G-treeBNT, will receive $7.28 million to expand international development of its product candidate, RGN-259 (designated GBT-201 in Korea). The $7.28 million will be used for development of RGN-259/GBT-201 for dry eye syndrome and neurotrophic keratopathy (an orphan indication) in the U.S. through the U.S. joint venture, ReGenTree, LLC. | |||
Currently, we have active partnerships in three major territories: the U.S., China and Pan Asia. Our partners have been moving forward and making significant progress in each territory and are prepared to initiate their clinical trials programs this year. In each case, the cost of development is being borne by our partners with no financial obligation for RegeneRx. Patient accrual, treatment, and follow-up for the ophthalmic trials are relatively fast, as opposed to most other clinical efforts, so data should be forthcoming in months, not years, after patients begin enrollment. We believe we should be able to maintain our existing operations at the current level while we await results from these trials and continue to seek additional partnership opportunities. | |||
We still have significant clinical assets to develop, primarily RGN-352 (injectable formulation of Tβ4 for cardiac and CNS disorders) in the U.S., Pan Asia, and Europe, and RGN-259 in the EU. Our goal is to wait until the results are obtained from the current ophthalmic clinical trials before moving into the EU with RGN-259. If successful, this should allow us to obtain a higher value for the asset at that time. However, we intend to continue to develop RGN-352, either by obtaining grants to fund a Phase 2a clinical trial in the cardiovascular or central nervous system fields or finding a suitable partner with the resources and capabilities to develop it as we have with RGN-259. | |||
We anticipate incurring additional losses in the future as we continue to explore the potential clinical benefits of Tβ4-based product candidates over multiple indications. We have entered into a series of strategic partnerships under licensing and joint venture agreements (see Note 7) where our partners are responsible to advance development of our product candidates with multiple clinical trials starting in 2015. | |||
After extending the maturity date of our October 2012 Notes ($300,000 face value) until October 2017, we will need substantial additional funds if we wish to internally advance development of our unlicensed programs and to fund our operations for the twelve months subsequent to March 31, 2015. Accordingly, we will continue to evaluate opportunities to raise additional capital and are in the process of exploring various alternatives, including, without limitation, a public or private placement of our securities, debt financing, corporate collaboration and licensing arrangements, government grants, or the sale of our company or certain of our intellectual property rights. | |||
These factors raise substantial doubt about our ability to continue as a going concern. The accompanying condensed financial statements have been prepared assuming that we will continue as a going concern. This basis of accounting contemplates the recovery of our assets and the satisfaction of our liabilities in the normal course of business. | |||
Although we intend to continue to seek additional financing and additional strategic partners, we may not be able to complete a financing or corporate transaction, either on favorable terms or at all. If we are unable to complete a financing or strategic transaction, we may not be able to continue as a going concern after our funds have been exhausted, and we could be required to significantly curtail or cease operations, file for bankruptcy or liquidate and dissolve. There can be no assurance that we will be able to obtain any sources of funding. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should we be forced to take any such actions. | |||
In order to operate as efficiently and effectively as possible, we continually refine our operating strategy and evaluate new ways to develop Tβ4. However, substantial additional resources will be needed before we will be able to achieve sustained profitability. Consequently, we continually evaluate alternative sources of financing such as the sharing of development costs through strategic collaboration agreements and grants. There can be no assurance that any future financing initiatives will be successful and, if we are not able to obtain sufficient levels of financing, it would delay certain clinical and/or research activities not currently funded by our partners and our financial condition would be materially and adversely affected. Even if we are able to obtain sufficient funding, other factors including competition, dependence on third parties, uncertainty regarding patents, protection of proprietary rights, manufacturing of peptides, and technology obsolescence could have a significant impact on us and our operations. | |||
To achieve profitability we, and/or a partner, must successfully conduct pre-clinical studies and clinical trials, obtain required regulatory approvals and successfully manufacture and market those pharmaceuticals we wish to commercialize. The time required to reach profitability is highly uncertain, and there can be no assurance that we will be able to achieve sustained profitability, if at all. | |||
Basis of Presentation. | |||
The accompanying unaudited consolidated interim financial statements reflect, in the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of our financial position, results of operations and cash flows for each period presented. These statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and with the rules and regulations of the SEC, for interim financial statements. Accordingly, they do not include all of the information and footnotes required by GAAP. The accounting policies underlying our unaudited consolidated interim financial statements are consistent with those underlying our audited annual financial statements. These unaudited consolidated interim financial statements should be read in conjunction with the audited annual financial statements as of and for the year ended December 31, 2014, and related notes thereto, included in our Annual Report on Form 10-K for the year ended December 31, 2014 (the “Annual Report”). | |||
The accompanying December 31, 2014 financial information was derived from our audited financial statements included in the Annual Report. Operating results for the three-month period ended March 31, 2015 are not necessarily indicative of the results to be expected for the year ending December 31, 2015 or any other future period. | |||
References in this Quarterly Report on Form 10-Q to “authoritative guidance” are to the Accounting Standards Codification issued by the Financial Accounting Standards Board (“FASB”). | |||
Use of Estimates. | |||
The preparation of financial statements in conformity with accounting principles generally accepted in the United Stated of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Critical accounting policies involved in applying our accounting policies are those that require management to make assumptions about matters that are highly uncertain at the time the accounting estimate was made and those for which different estimates reasonably could have been used for the current period. Critical accounting estimates are also those which are reasonably likely to change from period to period, and would have a material impact on the presentation of our financial condition, changes in financial condition or results of operations. Our most critical accounting estimates relate to accounting policies for fair value measurements in connection with derivative liabilities, clinical trial accruals and share-based arrangements. Management bases its estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances. Actual results could differ from those estimates. | |||
Convertible Notes with Detachable Warrants. | |||
In accordance with Accounting Standards Codification (ASC) 470-20, Debt with Conversion and Other Options, the proceeds received from convertible notes are allocated between the convertible notes and the detachable warrants based on the relative fair value of the convertible notes without the warrants and the relative fair value of the warrants. The portion of the proceeds allocated to the warrants is recognized as additional paid-in capital and a debt discount. The debt discount related to warrants is accreted into interest expense through maturity of the notes. | |||
Derivative Financial Instruments | |||
Derivative financial instruments consist of financial instruments or other contracts that contain a notional amount and one or more underlying variables (e.g. interest rate, security price or other variable), which require no initial net investment and permit net settlement. Derivative financial instruments may be free-standing or embedded in other financial instruments. Further, derivative financial instruments are initially, and subsequently, measured at fair value and recorded as liabilities or, in rare instances, assets. | |||
The Company does not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, the Company has issued financial instruments including warrants that are either (i) not afforded equity classification, (ii) embody risks not clearly and closely related to host contracts, or (iii) may be net-cash settled by the counterparty. In certain instances, these instruments are required to be carried as derivative liabilities, at fair value, in the Company’s financial statements. In other instances these instruments are classified as equity instruments in the Company’s financial statements. | |||
The Company estimates the fair values of its derivative financial instrument using the Black-Scholes option pricing model because it embodies all of the requisite assumptions (including trading volatility, estimated terms and risk free rates) necessary to fair value these instruments. Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques are highly volatile and sensitive to changes in the trading market price of the Company’s common stock, which has a high-historical volatility. Since derivative financial instruments are initially and subsequently carried at fair values, the Company’s operating results reflect the volatility in these estimate and assumption changes in each reporting period. | |||
Revenue Recognition. | |||
We recognize revenue in accordance with the authoritative guidance for revenue recognition. We recognize revenue when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) delivery (or passage of title) has occurred or services have been rendered, (iii) the seller's price to the buyer is fixed or determinable, and (iv) collectability is reasonably assured. We also comply with the authoritative guidance for revenue recognition regarding arrangements with multiple deliverables. Multiple-element arrangements are analyzed to determine whether the deliverables, which may include a license together with performance obligations such as providing a clinical supply of product and steering committee services, can be separated or whether they must be accounted for as a single unit of accounting. Revenue associated with licensing agreements consists of non-refundable upfront license fees and milestone payments. Non-refundable upfront license fees received under license agreements, whereby continued performance or future obligations are considered inconsequential to the relevant license technology, are recognized as revenue upon delivery of the technology. | |||
Whenever we determine that an arrangement should be accounted for as a single unit of accounting, we must determine the period over which the performance obligations will be performed and revenue will be recognized. Revenue will be recognized using either a relative performance or straight-line method. We recognize revenue using the relative performance method provided that the we can reasonably estimate the level of effort required to complete our performance obligations under an arrangement and such performance obligations are provided on a best-efforts basis. Revenue recognized is limited to the lesser of the cumulative amount of payments received or the cumulative amount of revenue earned, as determined using the relative performance method, as of each reporting period. | |||
If we cannot reasonably estimate the level of effort required to complete our performance obligations under an arrangement, the performance obligations are provided on a best-efforts basis and we can reasonably estimate when the performance obligation ceases or the remaining obligations become inconsequential and perfunctory, then the total payments under the arrangement, excluding royalties and payments contingent upon achievement of substantive milestones, would be recognized as revenue on a straight-line basis over the period we expect to complete our performance obligations. Revenue is limited to the lesser of the cumulative amount of payments received or the cumulative amount of revenue earned, as determined using the straight-line basis, as of the period ending date. | |||
If we cannot reasonably estimate when our performance obligation either ceases or becomes inconsequential and perfunctory, then revenue is deferred until we can reasonably estimate when the performance obligation ceases or becomes inconsequential. Revenue is then recognized over the remaining estimated period of performance. | |||
We recognize consideration that is contingent upon the achievement of a milestone in its entirety as revenue in the period in which the milestone is achieved only if the milestone is substantive in its entirety. A milestone is considered substantive when it meets all of the following criteria: | |||
· | The consideration is commensurate with either the entity's performance to achieve the milestone or the enhancement of the value of the delivered item(s) as a result of a specific outcome resulting from the entity's performance to achieve the milestone; | ||
· | The consideration relates solely to past performance; and | ||
· | The consideration is reasonable relative to all of the deliverables and payment terms within the arrangement. | ||
A milestone is defined as an event (i) that can only be achieved based in whole or in part on either the entity's performance or on the occurrence of a specific outcome resulting from the entity's performance, (ii) for which there is substantive uncertainty at the date the arrangement is entered into that the event will be achieved and (iii) that would result in additional payments being due to us. | |||
Amounts received prior to satisfying the above revenue recognition criteria are recorded as deferred revenue in our accompanying balance sheets. | |||
Variable Interest Entities | |||
The Company has determined that the Joint Venture is a “variable interest entity”, since the total equity investment at risk is not sufficient to permit the Joint Venture to finance its activities without additional subordinated financial support.. Further, because of G-treeBNT’s majority equity stake in the Joint Venture, voting control, control of the board of directors, and substantive management rights, and given that the Company does not have the power to direct the Joint Venture’s activities that most significantly impact its economic performance, the Company determined that it is not the primary beneficiary of the Joint Venture and therefore is not required to consolidate the Joint Venture. The Company reports its equity stake in the Joint Venture using the equity method of accounting because, while it does not control the Joint Venture, the Company can exert significant influence over the Joint Ventures activities by virtue of its board representation. | |||
Because the Company is not obligated to fund the Joint Venture, and has not provided any financial support to the Joint Venture, the carrying value of its investment in the Joint Venture is zero. As a result, the Company is not recognizing its share (49%) of the Joint Venture’s operating losses and will not recognize any such losses until the Joint Venture produces net income (as opposed to net losses) and at that point the Company will reduce its share of the Joint Venture’s net income by its share of previously suspended net losses. As of March 31, 2015, because it has not provided any financial support, the Company has no financial exposure as a result of its variable interest in the Joint Venture. | |||
Research and Development. | |||
Research and development (“R&D”) costs are expensed as incurred and include all of the wholly-allocable costs associated with our various clinical programs passed through to us by our outsourced vendors. Those costs include: manufacturing Tβ4; formulation of Tβ4 into the various product candidates; stability for both Tβ4 and the various formulations; pre-clinical toxicology; safety and pharmacokinetic studies; clinical trial management; medical oversight; laboratory evaluations; statistical data analysis; regulatory compliance; quality assurance; and other related activities. R&D includes cash and non-cash compensation, payroll taxes, travel and other miscellaneous costs of our internal R&D personnel, part-time hourly employees and external consultants dedicated to R&D efforts. R&D also includes a pro-ration of our common infrastructure costs for office space and communications. | |||
Cost of Preclinical Studies and Clinical Trials. | |||
We accrue estimated costs for preclinical studies based on estimates of work performed. We estimate expenses incurred for clinical trials that are in process based on patient enrollment and based on clinical data collection and management. Costs based on clinical data collection and management are recognized based on estimates of unbilled goods and services received in the reporting period. We monitor the progress of the trials and their related activities and adjust the accruals accordingly. Adjustments to accruals are charged to expense in the period in which the facts that give rise to the adjustment become known. In the event of early termination of a clinical trial, we would accrue an amount based on estimates of the remaining non-cancelable obligations associated with winding down the clinical trial. | |||
Recent Accounting Pronouncements. | |||
In August 2014, the FASB issued Accounting Standard Update (“ASU”) 2014-15, Presentation of Financial Statements – Going Concern. The new standard requires management to evaluate on a regular basis whether any conditions or events have arisen that could raise substantial doubt about the entity’s ability to continue as a going concern. The guidance 1) provides a definition for the term “substantial doubt,” 2) requires an evaluation every reporting period, interim periods included, 3) provides principles for considering the mitigating effect of management’s plans to alleviate the substantial doubt, 4) requires certain disclosures if the substantial doubt is alleviated as a result of management’s plans, 5) requires an express statement, as well as other disclosures, if the substantial doubt is not alleviated, and 6) requires an assessment period of one year from the date the financial statements are issued. The standard is effective for the Company’s reporting year beginning January 1, 2017 and early adoption is not permitted. The Company is currently evaluating the impact, if any, that this new accounting pronouncement will have on its financial statements. | |||
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which provides guidance for revenue recognition for contracts, superseding the previous revenue recognition requirements, along with most existing industry-specific guidance. The guidance requires an entity to review contracts in five steps: 1) identify the contract, 2) identify performance obligations, 3) determine the transaction price, 4) allocate the transaction price, and 5) recognize revenue. The new standard will result in enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue arising from contracts with customers. The standard is effective for the Company’s reporting year beginning January 1, 2017 and early adoption is not permitted. The Company is currently evaluating the impact, if any, that this new accounting pronouncement will have on its financial statements. | |||
In April 2015, the FASB issued an accounting standards update amending the presentation of debt issuance costs. These costs will now be presented as a direct reduction from the carrying amount of that debt liability. The update is effective for financial statements issued for reporting periods beginning after December 15, 2015. This guidance should be applied on a retrospective basis with disclosures for a change in accounting principle applicable. The Company has not yet adopted this update and is currently evaluating the impact, if any, it may have on its financial condition and results of operations. | |||
NET_LOSS_PER_COMMON_SHARE
NET LOSS PER COMMON SHARE - | 3 Months Ended | ||
Mar. 31, 2015 | |||
Earnings Per Share [Abstract] | |||
Earnings Per Share [Text Block] | 2 | Net Loss per Common Share – | |
Net loss per common share for the three-month periods ended March 31, 2015 and 2014, respectively, is based on the weighted-average number of shares of common stock outstanding during the periods. Basic and diluted loss per share are identical for all periods presented as potentially dilutive securities have been excluded from the calculation of the diluted net loss per common share because the inclusion of such securities would be antidilutive. The potentially dilutive securities include 28,875,092 shares and 45,641,175 shares in 2015 and 2014, respectively, reserved for the conversion of convertible debt or exercise of outstanding options, warrants, including 13,833,333 related to G-treeBNT’s second equity purchase and related purchase option in 2014. | |||
STOCKBASED_COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | 3 | Stock-Based Compensation | ||||||
We measure stock-based compensation expense based on the grant date fair value of the awards, which is then recognized over the period which service is required to be provided. We estimate the value of our stock option awards on the date of grant using the Black-Scholes option pricing model and amortize that cost over the expected term of the grant. We recognized $28,139 and $83,567 in stock-based compensation expense for the three months ended March 31, 2015 and 2014, respectively. We expect to recognize the compensation cost related to non-vested options as of March 31, 2015 of $79,411 over the weighted average remaining recognition period of 1.79 years. | ||||||||
We used the following forward-looking range of assumptions to value the 325,000 stock options granted to employees, consultants and directors during the three months ended March 31, 2015 and the 2,035,000 stock options granted to employees, consultants and directors during the three months ended March 31, 2014: | ||||||||
2015 | 2014 | |||||||
Dividend yield | 0 | % | 0 | % | ||||
Risk-free rate of return | 1.53 | % | 1.76 | % | ||||
Expected life in years | 4.75 | 4 - 5 | ||||||
Volatility | 92 | % | 91-98 | % | ||||
Forfeiture rate | 2.6 | % | 2.6 | % | ||||
INCOME_TAXES
INCOME TAXES | 3 Months Ended | |
Mar. 31, 2015 | ||
Income Tax Disclosure [Abstract] | ||
Income Tax Disclosure [Text Block] | 4 | Income Taxes |
As of March 31, 2015, there have been no material changes to our uncertain tax positions disclosures as provided in Note 9 of the Annual Report. The tax returns for all years in the Company’s major tax jurisdictions are not settled as of January 1, 2015; no changes in settled tax years have occurred through March 31, 2015. Due to the existence of tax attribute carryforwards (which are currently offset by a full valuation allowance), the Company treats all years’ tax positions as unsettled due to the taxing authorities’ ability to modify these attributes. | ||
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||
Fair Value Disclosures [Text Block] | 5 | Fair Value Measurements | |||||||||||||||
The authoritative guidance for fair value measurements 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 the most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact, and (iv) willing to transact. The guidance describes a fair value hierarchy based on the levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following: | |||||||||||||||||
• | Level 1 — Quoted prices in active markets for identical assets and liabilities. | ||||||||||||||||
• | Level 2 — Observable inputs other than quoted prices in active markets for identical assets and liabilities. | ||||||||||||||||
• | Level 3 — Unobservable inputs. | ||||||||||||||||
As of March 31, 2015 and 2014, our only qualifying assets that required measurement under the foregoing fair value hierarchy were money market funds included in Cash and Cash Equivalents valued at $1,062,000 and $1,300,000, respectively, using Level 1 inputs. Our March 31, 2015 and December 31, 2014 balance sheets reflect qualifying liabilities resulting from the price protection provision in the convertible promissory notes issued in March, July and September of 2013 and January 2014 (see Note 6). We evaluated the derivative liability embedded in the series of convertible notes to determine if an adjustment to the carrying value of the liability was required at March 31, 2015 using the following assumptions. | |||||||||||||||||
March 2013 | July 2013 | Sept 2013 | Jan 2014 | ||||||||||||||
Dividend yield | 0 | % | 0 | % | 0 | % | 0 | % | |||||||||
Risk-free rate of return | 1.02 | % | 1.02 | % | 1.02 | % | 1.02 | % | |||||||||
Expected life in years | 3 | 3.25 | 3.45 | 3.75 | |||||||||||||
Volatility | 102.4 | % | 100.3 | % | 103.4 | % | 99.7 | % | |||||||||
Given the conditions surrounding the trading of the Company’s equity securities, the Company values its derivative instruments related to embedded conversion features from the issuance of convertible debentures in accordance with the Level 3 guidelines. For the period ended March 31, 2015, the following table reconciles the beginning and ending balances for financial instruments that are recognized at fair value in these financial statements. | |||||||||||||||||
Balance at | Balance at | ||||||||||||||||
December 31, | New | Change in | March 31, | ||||||||||||||
2014 | Issuances | Fair Values | 2015 | ||||||||||||||
Level 3 - | |||||||||||||||||
Derivative liabilities from: | |||||||||||||||||
Conversion features | |||||||||||||||||
Mar-13 | $ | 412,500 | $ | - | $ | 412,500 | $ | 825,000 | |||||||||
Jul-13 | 183,334 | - | 183,333 | 366,667 | |||||||||||||
Sep-13 | 588,500 | - | 588,500 | 1,177,000 | |||||||||||||
Jan-14 | 100,836 | - | 100,833 | 201,669 | |||||||||||||
Derivative instruments | $ | 1,285,170 | $ | - | $ | 1,285,166 | $ | 2,570,336 | |||||||||
CONVERTIBLE_NOTES
CONVERTIBLE NOTES | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Debt Disclosure [Abstract] | ||||||||
Debt Disclosure [Text Block] | 6 | Convertible Notes | ||||||
2012 Convertible Note | ||||||||
On October 19, 2012 we completed a private placement of convertible notes (the “2012 Notes”) raising an aggregate of $300,000 in gross proceeds. The 2012 Notes were originally to mature after twenty-four (24) months from issuance. In order to conserve the Company’s capital, in October 2014 the Investors agreed to extend the maturity date to October 19, 2017, all other terms were unchanged. The 2012 Notes bear interest at a rate of five percent (5%) per annum and are convertible into shares of our common stock at a conversion price of fifteen cents ($0.15) per share (subject to adjustment as described in the 2012 Notes) at any time prior to repayment, at the election of the Investors. In the aggregate, the 2012 Notes are convertible into up to 2,000,000 shares of our common stock excluding interest. | ||||||||
At any time prior to maturity of the 2012 Notes, with the consent of the holders of a majority in interest of the 2012 Notes, we may prepay the outstanding principal amount of the 2012 Notes plus unpaid accrued interest without penalty. Upon the commission of any act of bankruptcy by the Company, the execution by the Company of a general assignment for the benefit of creditors, the filing by or against the Company of a petition in bankruptcy or any petition for relief under the federal bankruptcy act or the continuation of such petition without dismissal for a period of ninety (90) days or more, or the appointment of a receiver or trustee to take possession of the property or assets of the Company, the outstanding principal and all accrued interest on the 2012 Notes will accelerate and automatically become immediately due and payable. | ||||||||
In connection with the issuance of the 2012 Notes we also issued warrants to each Investor. The warrants are exercisable for an aggregate of 400,000 shares of common stock with an exercise price of fifteen cents ($0.15) per share for a period of five years. The relative fair value of the warrants issued is $27,097, calculated using the Black-Scholes-Merton valuation model value of $0.07 with an expected and contractual life of 5 years, an assumed volatility of 74.36%, and a risk-free interest rate of 0.77%. The warrants were recorded as additional paid-in-capital and a discount on the 2012 Notes of $27,097. Non-cash interest expense related to the debt discount during the three months ended March 31, 2014 totaled $3,341. | ||||||||
The Investors, and the principal amount of their respective 2012 Notes and number of shares of common stock issuable upon exercise of their respective warrants, are as set forth below: | ||||||||
Investor | Note Principal | Warrants | ||||||
Sinaf S.A. | $ | 200,000 | 266,667 | |||||
Joseph C. McNay | $ | 50,000 | 66,667 | |||||
Allan L. Goldstein | $ | 35,000 | 46,666 | |||||
J.J. Finkelstein | $ | 15,000 | 20,000 | |||||
Sinaf S. A. is a direct wholly-owned subsidiary of Aptafin S.p.A., or Aptafin. Aptafin is owned directly by Paolo Cavazza and members of his family, who directly and indirectly own 38% of Sigma-Tau, our largest stockholder. The other Investors are members of our Board of Directors including Mr. Finkelstein who serves as our CEO and also the Chairman of our Board of Directors and Dr. Goldstein who also serves as our Chief Scientific Advisor. | ||||||||
In the fourth quarter of 2014, the Company amended the existing October 2012 convertible debt agreement with the lenders, solely to extend the due date of the principal and accrued unpaid until interest October 19, 2017. No other terms of the original debt were amended or modified, and the lenders did not reduce the borrowed amount or change the interest rate of the debt. The Company considered the restructuring a troubled debt restructuring as a result of the Company’s financial condition (see Note 1 discussion of “going concern”). At the date of the amendment, all existing debt discounts and deferred financing fees were fully amortized and the amendment did not involve any additional fees paid to the lender or third parties; as such there was no gain recognized as a result of the amendment. | ||||||||
2013 Convertible Notes | ||||||||
On March 29, 2013, we completed a private placement of convertible notes (the “March 2013 Notes”) raising an aggregate of $225,000 in gross proceeds. The March 2013 Notes bear interest at a rate of five percent (5%) per annum, mature sixty (60) months after their date of issuance and are convertible into shares of our common stock at a conversion price of six cents ($0.06) per share (subject to adjustment as described in the March 2013 Notes) at any time prior to repayment, at the election of the investor. In the aggregate, the March 2013 Notes are initially convertible into up to 3,750,000 shares of our common stock. | ||||||||
At any time prior to maturity of the March 2013 Notes, with the consent of the holders of a majority in interest of the March 2013 Notes, we may prepay the outstanding principal amount of the March 2013 Notes plus unpaid accrued interest without penalty. Upon the commission of any act of bankruptcy by the Company, the execution by the Company of a general assignment for the benefit of creditors, the filing by or against the Company of a petition in bankruptcy or any petition for relief under the Federal bankruptcy act or the continuation of such petition without dismissal for a period of ninety (90) days or more, or the appointment of a receiver or trustee to take possession of the property or assets of the Company, the outstanding principal and all accrued interest on the March 2013 Notes will accelerate and automatically become immediately due and payable. | ||||||||
The investors in the offering included two directors of the Company, Dr. Goldstein and Joseph C. McNay, an outside director. The principal amounts of their respective March 2013 Notes are as set forth below: | ||||||||
Investor | Note Principal | |||||||
Joseph C. McNay | $ | 50,000 | ||||||
Allan L. Goldstein | $ | 25,000 | ||||||
The Company has evaluated the terms of the March 2013 Notes which contain a down round provision under which the conversion price could be decreased as a result of future equity offerings, as defined in the March 2013 Notes. The adjustment would reduce the conversion price of the March 2013 Notes to be equivalent to that of the newly issued stock or stock-related instruments. As a result, the Company concluded that the conversion feature represented an embedded conversion feature for accounting purposes and should be recognized as a derivative liability, requiring a mark-to-market adjustment at the end of each reporting period until the related March 2013 Notes have been settled. The bifurcated liability of $225,000 was recorded on the date of issuance which resulted in a residual debt value of $0. The discount related to the embedded feature will be accreted back to debt through the maturity of the notes. | ||||||||
On July 5, 2013, we completed a private placement of convertible notes (the “July 2013 Notes”) raising an aggregate of $100,000 in gross proceeds. The July 2013 Notes bear interest at a rate of five percent (5%) per annum, mature sixty (60) months after their date of issuance and are convertible into shares of our common stock at a conversion price of six cents ($0.06) per share (subject to adjustment as described in the July 2013 Notes) at any time prior to repayment, at the election of the investor. In the aggregate, the July 2013 Notes are initially convertible into up to 1,666,667 shares of our common stock. | ||||||||
At any time prior to maturity of the July 2013 Notes, with the consent of the holders of a majority in interest of the July 2013 Notes, we may prepay the outstanding principal amount of the July 2013 Notes plus unpaid accrued interest without penalty. Upon the commission of any act of bankruptcy by the Company, the execution by the Company of a general assignment for the benefit of creditors, the filing by or against the Company of a petition in bankruptcy or any petition for relief under the Federal bankruptcy act or the continuation of such petition without dismissal for a period of ninety (90) days or more, or the appointment of a receiver or trustee to take possession of the property or assets of the Company, the outstanding principal and all accrued interest on the July 2013 Notes will accelerate and automatically become immediately due and payable. | ||||||||
The investors in the offering included four directors of the Company, Mr. Finkelstein, Dr. Goldstein, Mr. McNay and L. Thompson Bowles, an outside director. The principal amounts of their respective July 2013 Notes are as set forth below: | ||||||||
Investor | Note Principal | |||||||
Joseph C. McNay | $ | 50,000 | ||||||
Allan L. Goldstein | $ | 10,000 | ||||||
J.J. Finkelstein | $ | 5,000 | ||||||
L. Thompson Bowles | $ | 5,000 | ||||||
The Company has evaluated the terms of the July 2013 Notes which contain a down round provision under which the conversion price could be decreased as a result of future equity offerings, as defined in the July 2013 Notes. The adjustment would reduce the conversion price of the July 2013 Notes to be equivalent to that of the newly issued stock or stock-related instruments. As a result, the Company concluded that the conversion feature represented an embedded conversion feature for accounting purposes and should be recognized as a derivative liability, requiring a mark-to-market adjustment at the end of each reporting period until the related July 2013 Notes have been settled. The bifurcated liability of $66,667 was recorded on the date of issuance which resulted in a residual debt value of $33,333. The discount related to the embedded feature will be accreted back to debt through the maturity of the notes. | ||||||||
On September 11, 2013, we completed a private placement of convertible notes raising an aggregate of $321,000 in gross proceeds (the “September 2013 Notes”). The September 2013 Notes bear interest at a rate of five percent (5%) per annum, mature sixty (60) months after their date of issuance and are convertible into shares of our common stock at a conversion price of six cents ($0.06) per share (subject to adjustment as described in the September 2013 Notes) at any time prior to repayment, at the election of the investor. In the aggregate, the September 2013 Notes are initially convertible into up to 5,350,000 shares of our common stock. | ||||||||
At any time prior to maturity of the September 2013 Notes, with the consent of the holders of a majority in interest of the September 2013 Notes, we may prepay the outstanding principal amount of the September 2013 Notes plus unpaid accrued interest without penalty. Upon the commission of any act of bankruptcy by the Company, the execution by the Company of a general assignment for the benefit of creditors, the filing by or against the Company of a petition in bankruptcy or any petition for relief under the federal bankruptcy act or the continuation of such petition without dismissal for a period of ninety (90) days or more, or the appointment of a receiver or trustee to take possession of the property or assets of the Company, the outstanding principal and all accrued interest on the September 2013 Notes will accelerate and automatically become immediately due and payable. | ||||||||
The investors in the offering included an affiliate and four directors of the Company. The principal amounts of the affiliate and directors respective September 2013 Notes are as set forth below: | ||||||||
Investor | Note Principal | |||||||
SINAF S.A. | $ | 150,000 | ||||||
Joseph C. McNay | $ | 100,000 | ||||||
Allan L. Goldstein | $ | 11,000 | ||||||
L. Thompson Bowles | $ | 5,000 | ||||||
R. Don Elsey | $ | 5,000 | ||||||
The Company has evaluated the terms of the September 2013 Notes which contain a down round provision under which the conversion price could be decreased as a result of future equity offerings, as defined in the September 2013 Notes. The adjustment would reduce the conversion price of the September 2013 Notes to be equivalent to that of the newly issued stock or stock-related instruments. As a result, the Company concluded that the conversion feature represented an embedded conversion feature for accounting purposes and should be recognized as a derivative liability, requiring a mark-to-market adjustment at the end of each reporting period until the related September 2013 Notes have been settled. The bifurcated liability of $267,500 was recorded on the date of issuance which resulted in a residual debt value of $53,500. The discount related to the embedded feature will be accreted back to debt through the maturity of the notes. | ||||||||
2014 Convertible Notes | ||||||||
On January 7, 2014, we completed a private placement of convertible notes raising an aggregate of $55,000 in gross proceeds (the “January 2014 Notes”). The January 2014 Notes will pay interest at a rate of 5% per annum, mature 60 months after their date of issuance and are convertible into shares of our common stock at a conversion price of $0.06 per share (subject to adjustment as described in the January 2014 Notes) at any time prior to repayment, at the election of the Investor. In the aggregate, the Notes are initially convertible into up to 916,667 shares of our common stock. | ||||||||
At any time prior to maturity of the January 2014 Notes, with the consent of the holders of a majority in interest of the January 2014 Notes, we may prepay the outstanding principal amount of the January 2014 Notes plus unpaid accrued interest without penalty. Upon the commission of any act of bankruptcy by the Company, the execution by the Company of a general assignment for the benefit of creditors, the filing by or against the Company of a petition in bankruptcy or any petition for relief under the federal bankruptcy act or the continuation of such petition without dismissal for a period of 90 days or more, or the appointment of a receiver or trustee to take possession of the property or assets of the Company, the outstanding principal and all accrued interest on the January 2014 Notes will accelerate and automatically become immediately due and payable. | ||||||||
The Investors in the offering included three directors of the Company. The principal amounts of their respective Notes are as set forth below: | ||||||||
Investor | Note Principal | |||||||
Joseph C. McNay | $ | 25,000 | ||||||
Allan L. Goldstein | $ | 10,000 | ||||||
L. Thompson Bowles | $ | 5,000 | ||||||
The Company has evaluated the terms of the January 2014 Notes which contain a down round provision under which the conversion price could be decreased as a result of future equity offerings, as defined in the January 2014 Notes. The adjustment would reduce the conversion price of the January 2014 Notes to be equivalent to that of the newly issued stock or stock-related instruments. As a result, the Company concluded that the conversion feature represented an embedded conversion feature for accounting purposes and should be recognized as a derivative liability, requiring a mark-to-market adjustment at the end of each reporting period until the related January 2014 Notes have been settled. The bifurcated liability of $55,000 was recorded on the date of issuance which resulted in a residual debt value of $0. The discount related to the embedded feature will be accreted back to debt through the maturity of the notes. | ||||||||
The Company recorded interest expense and discount accretion as set forth below: | ||||||||
For the three months ended | ||||||||
March 31, 2015 | March 31, 2014 | |||||||
2012 Notes | $ | 3,699 | $ | 7,039 | ||||
March 2013 Notes | 13,870 | 13,870 | ||||||
July 2013 Notes | 4,521 | 4,521 | ||||||
September 2013 Notes | 17,149 | 17,149 | ||||||
January 2014 notes | 3,390 | 3,127 | ||||||
Total interest expense | $ | 42,629 | $ | 45,706 | ||||
The fair value of the derivative liability is as follows: | ||||||||
March 31, 2015 | December 31, 2014 | |||||||
March 2013 Notes | $ | 825,000 | $ | 412,500 | ||||
July 2013 Notes | 366,667 | 183,334 | ||||||
September 2013 Notes | 1,177,000 | 588,500 | ||||||
January 2014 notes | 201,669 | 100,836 | ||||||
Total Fair value of derivative liability | $ | 2,570,336 | $ | 1,285,170 | ||||
The change in fair value of derivative liability is as below: | ||||||||
For the three months ended | ||||||||
March 31, 2015 | March 31, 2014 | |||||||
March 2013 Notes | $ | 412,500 | $ | 562,500 | ||||
July 2013 Notes | 183,333 | 250,000 | ||||||
September 2013 Notes | 588,500 | 802,500 | ||||||
January 2014 notes | 100,833 | 100,833 | ||||||
Total change in fair value of derivative | $ | 1,285,166 | $ | 1,715,833 | ||||
LICENSE_AGREEMENT
LICENSE AGREEMENT | 3 Months Ended | |
Mar. 31, 2015 | ||
License Agreement [Abstract] | ||
License Agreement [Text Block] | 7 | License agreement |
Joint Venture Agreement with G-treeBNT | ||
On January 28, 2015, the Company entered into the Joint Venture Agreement with G-treeBNT, a shareholder in the Company. The Joint Venture Agreement provides for the creation of the Joint Venture, jointly owned by the Company and G-treeBNT, that will commercialize RGN-259 for treatment of dry eye and neurotrophic keratopathy in the United States. | ||
G-treeBNT is solely responsible for funding all the product development and commercialization efforts of the Joint Venture. G-treeBNT made an initial contribution of $3 million in cash and received an initial equity stake of 51%. G-treeBNT’s equity stake may increase upon the Joint Venture achieving certain product development milestones (including receipt of a new drug application (NDA) by the U.S. FDA) and the additional funding by G-treeBNT. | ||
Pursuant to the Joint Venture Agreement, the Company and the Joint Venture entered into a royalty-bearing license agreement (the “License Agreement”) pursuant to which the Company granted to the Joint Venture the right to develop and exclusively commercialize RGN-259 in the United States, and received an initial equity stake in the Joint Venture of 49% which may be diluted as G-treeBNT’s ownership increases. The Company is not required or otherwise obligated to provide financial support to the Joint Venture. | ||
The Joint Venture is responsible for executing all development and commercialization activities under the License Agreement, which activities will be directed by a joint development committee comprised of representatives of the Company and G-treeBNT. The License Agreement has a term that extends to the later of the expiration of the last patent covered by the License Agreement or 25 years from the first commercial sale under the License Agreement. The License Agreement may be earlier terminated if the Joint Venture fails to meet certain commercialization milestones, if either party breaches the License Agreement and fails to cure such breach, as a result of government action that limits the ability of the Joint Venture to commercialize the product, as a result of a challenge to a licensed patent, following termination of the license between the Company and certain agencies of the United States federal government, or upon the bankruptcy of either party. | ||
Under the License Agreement, the Company received $0.5 million in up-front payments and is also entitled to an additional payment of $0.5 million upon the achievement of certain defined milestones, and to royalties on the Joint Venture’s future sales of products. The Company is accounting for the License Agreement with the Joint Venture as a revenue arrangement. The Company has determined that the deliverables within the License Agreement, including a delivered element (providing the license) and an undelivered element (participation on the joint development committee), do not have stand-alone value and, as such, are treated as a single unit of accounting. As a result, the Company is recognizing the up-front milestone payments as revenue ratably over the anticipated life of the joint development committee, or 25 years. The joint development committee had not commenced activities as of March 31, 2015 therefore the recognition of the license fee has not yet begun. Revenue will be recognized for future royalty payments as they are earned. | ||
STOCKHOLDERS_EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended | ||
Mar. 31, 2015 | |||
Stockholders' Equity Note [Abstract] | |||
Stockholders' Equity Note Disclosure [Text Block] | 8 | Stockholders’ Equity | |
On August 29, 2014, the Company received gross proceeds of $1,000,000 and issued 8,333,333 shares of common stock at $0.12 per share pursuant to the securities purchase and licensing agreements signed with G-treeBNT on March 7, 2014. Under the securities purchase agreement, G-treeBNT invested $1,350,000 for the issuance of 11,250,000 common shares at $0.12 per share and was required to invest an additional $1,000,000 at $0.12 per share on or before August 31, 2014. Under the terms of the security purchase agreement, G-treeBNT also has the right to make an optional investment to acquire an additional 5.5 million shares of common stock at $0.15 per share. Such optional investment right expired on January 31, 2015. | |||
COMMITMENTS
COMMITMENTS | 3 Months Ended | |
Mar. 31, 2015 | ||
Commitments and Contingencies Disclosure [Abstract] | ||
Commitments and Contingencies Disclosure [Text Block] | 9 | Commitments |
In June 2014 we reduced our office space and amended our lease agreement for the reduced space. The new lease commitment is for 36 months and our rental payments for this period will be approximately $4,500 per month. | ||
SUBSEQUENT_EVENT
SUBSEQUENT EVENT | 3 Months Ended | |
Mar. 31, 2015 | ||
Subsequent Events [Abstract] | ||
Subsequent Events [Text Block] | 10 | Subsequent Event |
In April 2015 we entered into a contract with an investor relations firm to provide services for six months. Under the agreement the Company will pay $5,000 per month and has issued 30,000 shares of common stock as compensation. In addition, in May 2015 the Company has issued 249,671 shares of common stock pursuant to the “cashless” exercise of warrants issued in 2011. | ||
ORGANIZATION_BUSINESS_OVERVIEW1
ORGANIZATION, BUSINESS OVERVIEW AND BASIS OF PRESENTATION (Policies) | 3 Months Ended | ||
Mar. 31, 2015 | |||
Accounting Policies [Abstract] | |||
Basis of Accounting, Policy [Policy Text Block] | Basis of Presentation. | ||
The accompanying unaudited consolidated interim financial statements reflect, in the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of our financial position, results of operations and cash flows for each period presented. These statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and with the rules and regulations of the SEC, for interim financial statements. Accordingly, they do not include all of the information and footnotes required by GAAP. The accounting policies underlying our unaudited consolidated interim financial statements are consistent with those underlying our audited annual financial statements. These unaudited consolidated interim financial statements should be read in conjunction with the audited annual financial statements as of and for the year ended December 31, 2014, and related notes thereto, included in our Annual Report on Form 10-K for the year ended December 31, 2014 (the “Annual Report”). | |||
The accompanying December 31, 2014 financial information was derived from our audited financial statements included in the Annual Report. Operating results for the three-month period ended March 31, 2015 are not necessarily indicative of the results to be expected for the year ending December 31, 2015 or any other future period. | |||
References in this Quarterly Report on Form 10-Q to “authoritative guidance” are to the Accounting Standards Codification issued by the Financial Accounting Standards Board (“FASB”). | |||
Use of Estimates, Policy [Policy Text Block] | Use of Estimates. | ||
The preparation of financial statements in conformity with accounting principles generally accepted in the United Stated of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Critical accounting policies involved in applying our accounting policies are those that require management to make assumptions about matters that are highly uncertain at the time the accounting estimate was made and those for which different estimates reasonably could have been used for the current period. Critical accounting estimates are also those which are reasonably likely to change from period to period, and would have a material impact on the presentation of our financial condition, changes in financial condition or results of operations. Our most critical accounting estimates relate to accounting policies for fair value measurements in connection with derivative liabilities, clinical trial accruals and share-based arrangements. Management bases its estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances. Actual results could differ from those estimates. | |||
Convertible Notes with Detachable Warrants [Policy Text Block] | Convertible Notes with Detachable Warrants. | ||
In accordance with Accounting Standards Codification (ASC) 470-20, Debt with Conversion and Other Options, the proceeds received from convertible notes are allocated between the convertible notes and the detachable warrants based on the relative fair value of the convertible notes without the warrants and the relative fair value of the warrants. The portion of the proceeds allocated to the warrants is recognized as additional paid-in capital and a debt discount. The debt discount related to warrants is accreted into interest expense through maturity of the notes. | |||
Derivatives, Reporting of Derivative Activity [Policy Text Block] | Derivative Financial Instruments | ||
Derivative financial instruments consist of financial instruments or other contracts that contain a notional amount and one or more underlying variables (e.g. interest rate, security price or other variable), which require no initial net investment and permit net settlement. Derivative financial instruments may be free-standing or embedded in other financial instruments. Further, derivative financial instruments are initially, and subsequently, measured at fair value and recorded as liabilities or, in rare instances, assets. | |||
The Company does not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, the Company has issued financial instruments including warrants that are either (i) not afforded equity classification, (ii) embody risks not clearly and closely related to host contracts, or (iii) may be net-cash settled by the counterparty. In certain instances, these instruments are required to be carried as derivative liabilities, at fair value, in the Company’s financial statements. In other instances these instruments are classified as equity instruments in the Company’s financial statements. | |||
The Company estimates the fair values of its derivative financial instrument using the Black-Scholes option pricing model because it embodies all of the requisite assumptions (including trading volatility, estimated terms and risk free rates) necessary to fair value these instruments. Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques are highly volatile and sensitive to changes in the trading market price of the Company’s common stock, which has a high-historical volatility. Since derivative financial instruments are initially and subsequently carried at fair values, the Company’s operating results reflect the volatility in these estimate and assumption changes in each reporting period. | |||
Revenue Recognition, Policy [Policy Text Block] | Revenue Recognition. | ||
We recognize revenue in accordance with the authoritative guidance for revenue recognition. We recognize revenue when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) delivery (or passage of title) has occurred or services have been rendered, (iii) the seller's price to the buyer is fixed or determinable, and (iv) collectability is reasonably assured. We also comply with the authoritative guidance for revenue recognition regarding arrangements with multiple deliverables. Multiple-element arrangements are analyzed to determine whether the deliverables, which may include a license together with performance obligations such as providing a clinical supply of product and steering committee services, can be separated or whether they must be accounted for as a single unit of accounting. Revenue associated with licensing agreements consists of non-refundable upfront license fees and milestone payments. Non-refundable upfront license fees received under license agreements, whereby continued performance or future obligations are considered inconsequential to the relevant license technology, are recognized as revenue upon delivery of the technology. | |||
Whenever we determine that an arrangement should be accounted for as a single unit of accounting, we must determine the period over which the performance obligations will be performed and revenue will be recognized. Revenue will be recognized using either a relative performance or straight-line method. We recognize revenue using the relative performance method provided that the we can reasonably estimate the level of effort required to complete our performance obligations under an arrangement and such performance obligations are provided on a best-efforts basis. Revenue recognized is limited to the lesser of the cumulative amount of payments received or the cumulative amount of revenue earned, as determined using the relative performance method, as of each reporting period. | |||
If we cannot reasonably estimate the level of effort required to complete our performance obligations under an arrangement, the performance obligations are provided on a best-efforts basis and we can reasonably estimate when the performance obligation ceases or the remaining obligations become inconsequential and perfunctory, then the total payments under the arrangement, excluding royalties and payments contingent upon achievement of substantive milestones, would be recognized as revenue on a straight-line basis over the period we expect to complete our performance obligations. Revenue is limited to the lesser of the cumulative amount of payments received or the cumulative amount of revenue earned, as determined using the straight-line basis, as of the period ending date. | |||
If we cannot reasonably estimate when our performance obligation either ceases or becomes inconsequential and perfunctory, then revenue is deferred until we can reasonably estimate when the performance obligation ceases or becomes inconsequential. Revenue is then recognized over the remaining estimated period of performance. | |||
We recognize consideration that is contingent upon the achievement of a milestone in its entirety as revenue in the period in which the milestone is achieved only if the milestone is substantive in its entirety. A milestone is considered substantive when it meets all of the following criteria: | |||
· | The consideration is commensurate with either the entity's performance to achieve the milestone or the enhancement of the value of the delivered item(s) as a result of a specific outcome resulting from the entity's performance to achieve the milestone; | ||
· | The consideration relates solely to past performance; and | ||
· | The consideration is reasonable relative to all of the deliverables and payment terms within the arrangement. | ||
A milestone is defined as an event (i) that can only be achieved based in whole or in part on either the entity's performance or on the occurrence of a specific outcome resulting from the entity's performance, (ii) for which there is substantive uncertainty at the date the arrangement is entered into that the event will be achieved and (iii) that would result in additional payments being due to us. | |||
Amounts received prior to satisfying the above revenue recognition criteria are recorded as deferred revenue in our accompanying balance sheets. | |||
Consolidation, Variable Interest Entity, Policy [Policy Text Block] | Variable Interest Entities | ||
The Company has determined that the Joint Venture is a “variable interest entity”, since the total equity investment at risk is not sufficient to permit the Joint Venture to finance its activities without additional subordinated financial support.. Further, because of G-treeBNT’s majority equity stake in the Joint Venture, voting control, control of the board of directors, and substantive management rights, and given that the Company does not have the power to direct the Joint Venture’s activities that most significantly impact its economic performance, the Company determined that it is not the primary beneficiary of the Joint Venture and therefore is not required to consolidate the Joint Venture. The Company reports its equity stake in the Joint Venture using the equity method of accounting because, while it does not control the Joint Venture, the Company can exert significant influence over the Joint Ventures activities by virtue of its board representation. | |||
Because the Company is not obligated to fund the Joint Venture, and has not provided any financial support to the Joint Venture, the carrying value of its investment in the Joint Venture is zero. As a result, the Company is not recognizing its share (49%) of the Joint Venture’s operating losses and will not recognize any such losses until the Joint Venture produces net income (as opposed to net losses) and at that point the Company will reduce its share of the Joint Venture’s net income by its share of previously suspended net losses. As of March 31, 2015, because it has not provided any financial support, the Company has no financial exposure as a result of its variable interest in the Joint Venture. | |||
Research and Development Expense, Policy [Policy Text Block] | Research and Development. | ||
Research and development (“R&D”) costs are expensed as incurred and include all of the wholly-allocable costs associated with our various clinical programs passed through to us by our outsourced vendors. Those costs include: manufacturing Tβ4; formulation of Tβ4 into the various product candidates; stability for both Tβ4 and the various formulations; pre-clinical toxicology; safety and pharmacokinetic studies; clinical trial management; medical oversight; laboratory evaluations; statistical data analysis; regulatory compliance; quality assurance; and other related activities. R&D includes cash and non-cash compensation, payroll taxes, travel and other miscellaneous costs of our internal R&D personnel, part-time hourly employees and external consultants dedicated to R&D efforts. R&D also includes a pro-ration of our common infrastructure costs for office space and communications. | |||
Preclinical Studies and Clinical Trials [Policy Text Block] | Cost of Preclinical Studies and Clinical Trials. | ||
We accrue estimated costs for preclinical studies based on estimates of work performed. We estimate expenses incurred for clinical trials that are in process based on patient enrollment and based on clinical data collection and management. Costs based on clinical data collection and management are recognized based on estimates of unbilled goods and services received in the reporting period. We monitor the progress of the trials and their related activities and adjust the accruals accordingly. Adjustments to accruals are charged to expense in the period in which the facts that give rise to the adjustment become known. In the event of early termination of a clinical trial, we would accrue an amount based on estimates of the remaining non-cancelable obligations associated with winding down the clinical trial. | |||
New Accounting Pronouncements, Policy [Policy Text Block] | Recent Accounting Pronouncements. | ||
In August 2014, the FASB issued Accounting Standard Update (“ASU”) 2014-15, Presentation of Financial Statements – Going Concern. The new standard requires management to evaluate on a regular basis whether any conditions or events have arisen that could raise substantial doubt about the entity’s ability to continue as a going concern. The guidance 1) provides a definition for the term “substantial doubt,” 2) requires an evaluation every reporting period, interim periods included, 3) provides principles for considering the mitigating effect of management’s plans to alleviate the substantial doubt, 4) requires certain disclosures if the substantial doubt is alleviated as a result of management’s plans, 5) requires an express statement, as well as other disclosures, if the substantial doubt is not alleviated, and 6) requires an assessment period of one year from the date the financial statements are issued. The standard is effective for the Company’s reporting year beginning January 1, 2017 and early adoption is not permitted. The Company is currently evaluating the impact, if any, that this new accounting pronouncement will have on its financial statements. | |||
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which provides guidance for revenue recognition for contracts, superseding the previous revenue recognition requirements, along with most existing industry-specific guidance. The guidance requires an entity to review contracts in five steps: 1) identify the contract, 2) identify performance obligations, 3) determine the transaction price, 4) allocate the transaction price, and 5) recognize revenue. The new standard will result in enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue arising from contracts with customers. The standard is effective for the Company’s reporting year beginning January 1, 2017 and early adoption is not permitted. The Company is currently evaluating the impact, if any, that this new accounting pronouncement will have on its financial statements. | |||
In April 2015, the FASB issued an accounting standards update amending the presentation of debt issuance costs. These costs will now be presented as a direct reduction from the carrying amount of that debt liability. The update is effective for financial statements issued for reporting periods beginning after December 15, 2015. This guidance should be applied on a retrospective basis with disclosures for a change in accounting principle applicable. The Company has not yet adopted this update and is currently evaluating the impact, if any, it may have on its financial condition and results of operations. | |||
STOCKBASED_COMPENSATION_Tables
STOCK-BASED COMPENSATION (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | We used the following forward-looking range of assumptions to value the 325,000 stock options granted to employees, consultants and directors during the three months ended March 31, 2015 and the 2,035,000 stock options granted to employees, consultants and directors during the three months ended March 31, 2014: | |||||||
2015 | 2014 | |||||||
Dividend yield | 0 | % | 0 | % | ||||
Risk-free rate of return | 1.53 | % | 1.76 | % | ||||
Expected life in years | 4.75 | 4 - 5 | ||||||
Volatility | 92 | % | 91-98 | % | ||||
Forfeiture rate | 2.6 | % | 2.6 | % | ||||
FAIR_VALUE_MEASUREMENTS_Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Table Text Block] | We evaluated the derivative liability embedded in the series of convertible notes to determine if an adjustment to the carrying value of the liability was required at March 31, 2015 using the following assumptions. | ||||||||||||||||
March 2013 | July 2013 | Sept 2013 | Jan 2014 | ||||||||||||||
Dividend yield | 0 | % | 0 | % | 0 | % | 0 | % | |||||||||
Risk-free rate of return | 1.02 | % | 1.02 | % | 1.02 | % | 1.02 | % | |||||||||
Expected life in years | 3 | 3.25 | 3.45 | 3.75 | |||||||||||||
Volatility | 102.4 | % | 100.3 | % | 103.4 | % | 99.7 | % | |||||||||
Fair Value Measurement Derivative Liabilities Disclosure [Table Text Block] | For the period ended March 31, 2015, the following table reconciles the beginning and ending balances for financial instruments that are recognized at fair value in these financial statements. | ||||||||||||||||
Balance at | Balance at | ||||||||||||||||
December 31, | New | Change in | March 31, | ||||||||||||||
2014 | Issuances | Fair Values | 2015 | ||||||||||||||
Level 3 - | |||||||||||||||||
Derivative liabilities from: | |||||||||||||||||
Conversion features | |||||||||||||||||
Mar-13 | $ | 412,500 | $ | - | $ | 412,500 | $ | 825,000 | |||||||||
Jul-13 | 183,334 | - | 183,333 | 366,667 | |||||||||||||
Sep-13 | 588,500 | - | 588,500 | 1,177,000 | |||||||||||||
Jan-14 | 100,836 | - | 100,833 | 201,669 | |||||||||||||
Derivative instruments | $ | 1,285,170 | $ | - | $ | 1,285,166 | $ | 2,570,336 | |||||||||
CONVERTIBLE_NOTES_Tables
CONVERTIBLE NOTES (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Debt Disclosure [Abstract] | ||||||||
Schedule of Convertible Note Principal and Exercise of Warrant [Table Text Block] | The Investors, and the principal amount of their respective 2012 Notes and number of shares of common stock issuable upon exercise of their respective warrants, are as set forth below: | |||||||
Investor | Note Principal | Warrants | ||||||
Sinaf S.A. | $ | 200,000 | 266,667 | |||||
Joseph C. McNay | $ | 50,000 | 66,667 | |||||
Allan L. Goldstein | $ | 35,000 | 46,666 | |||||
J.J. Finkelstein | $ | 15,000 | 20,000 | |||||
The principal amounts of their respective March 2013 Notes are as set forth below: | ||||||||
Investor | Note Principal | |||||||
Joseph C. McNay | $ | 50,000 | ||||||
Allan L. Goldstein | $ | 25,000 | ||||||
The principal amounts of their respective July 2013 Notes are as set forth below: | ||||||||
Investor | Note Principal | |||||||
Joseph C. McNay | $ | 50,000 | ||||||
Allan L. Goldstein | $ | 10,000 | ||||||
J.J. Finkelstein | $ | 5,000 | ||||||
L. Thompson Bowles | $ | 5,000 | ||||||
The principal amounts of the affiliate and directors respective September 2013 Notes are as set forth below: | ||||||||
Investor | Note Principal | |||||||
SINAF S.A. | $ | 150,000 | ||||||
Joseph C. McNay | $ | 100,000 | ||||||
Allan L. Goldstein | $ | 11,000 | ||||||
L. Thompson Bowles | $ | 5,000 | ||||||
R. Don Elsey | $ | 5,000 | ||||||
The principal amounts of their respective Notes are as set forth below: | ||||||||
Investor | Note Principal | |||||||
Joseph C. McNay | $ | 25,000 | ||||||
Allan L. Goldstein | $ | 10,000 | ||||||
L. Thompson Bowles | $ | 5,000 | ||||||
Schedule of Derivative Liabilities at Fair Value [Table Text Block] | The Company recorded interest expense and discount accretion as set forth below: | |||||||
For the three months ended | ||||||||
March 31, 2015 | March 31, 2014 | |||||||
2012 Notes | $ | 3,699 | $ | 7,039 | ||||
March 2013 Notes | 13,870 | 13,870 | ||||||
July 2013 Notes | 4,521 | 4,521 | ||||||
September 2013 Notes | 17,149 | 17,149 | ||||||
January 2014 notes | 3,390 | 3,127 | ||||||
Total interest expense | $ | 42,629 | $ | 45,706 | ||||
Schedule Of Change In Fair Value Of The Derivative Liability [Table Text Block] | The fair value of the derivative liability is as follows: | |||||||
March 31, 2015 | December 31, 2014 | |||||||
March 2013 Notes | $ | 825,000 | $ | 412,500 | ||||
July 2013 Notes | 366,667 | 183,334 | ||||||
September 2013 Notes | 1,177,000 | 588,500 | ||||||
January 2014 notes | 201,669 | 100,836 | ||||||
Total Fair value of derivative liability | $ | 2,570,336 | $ | 1,285,170 | ||||
Interest Income and Interest Expense Disclosure [Table Text Block] | The change in fair value of derivative liability is as below: | |||||||
For the three months ended | ||||||||
March 31, 2015 | March 31, 2014 | |||||||
March 2013 Notes | $ | 412,500 | $ | 562,500 | ||||
July 2013 Notes | 183,333 | 250,000 | ||||||
September 2013 Notes | 588,500 | 802,500 | ||||||
January 2014 notes | 100,833 | 100,833 | ||||||
Total change in fair value of derivative | $ | 1,285,166 | $ | 1,715,833 | ||||
ORGANIZATION_BUSINESS_OVERVIEW2
ORGANIZATION, BUSINESS OVERVIEW AND BASIS OF PRESENTATION (Details Textual) (USD $) | 0 Months Ended | 3 Months Ended |
Mar. 09, 2015 | Mar. 31, 2015 | |
ORGANIZATION AND BUSINESS [Line Items] | ||
Business Development | $7,280,000 | |
Accrued Fees and Other Revenue Receivable | 1,000,000 | |
First Tranch Amount Recievable After Enrollment Of The First Patient In An Ophthalmic Trial | 500,000 | |
Second Tranch Amount Receivable After Enrollment Of The First Patient In An Ophthalmic Trial | 500,000 | |
Percentage Of Joint Venture Operating Loss Used In Share Calculation | 49.00% | |
Proceeds From Convertible Debt | $300,000 |
NET_LOSS_PER_COMMON_SHARE_Deta
NET LOSS PER COMMON SHARE - (Details Textual) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 28,875,092 | 45,641,175 |
Incremental Common Shares Attributable to Dilutive Effect of Conversion of Debt Securities | 13,833,333 |
STOCKBASED_COMPENSATION_Detail
STOCK-BASED COMPENSATION (Details) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Dividend yield | 0.00% | 0.00% |
Risk-free rate of return | 1.53% | 1.76% |
Expected life in years | 4 years 9 months | |
Volatility | 92.00% | |
Forfeiture rate | 2.60% | 2.60% |
Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected life in years | 5 years | |
Volatility | 98.00% | |
Minimum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected life in years | 4 years | |
Volatility | 91.00% |
STOCKBASED_COMPENSATION_Detail1
STOCK-BASED COMPENSATION (Details Textual) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Allocated Share-based Compensation Expense, Total | $28,139 | $83,567 |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options | $79,411 | |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 1 year 9 months 14 days | |
Employees Consultants And Directors [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 325,000 | 2,035,000 |
FAIR_VALUE_MEASUREMENTS_Detail
FAIR VALUE MEASUREMENTS (Details) | 3 Months Ended |
Mar. 31, 2015 | |
March 2013 [Member] | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Dividend yield | 0.00% |
Risk-free rate of return | 1.02% |
Expected life in years | 3 years |
Volatility | 102.40% |
July 2013 [Member] | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Dividend yield | 0.00% |
Risk-free rate of return | 1.02% |
Expected life in years | 3 years 3 months |
Volatility | 100.30% |
September 2013 [Member] | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Dividend yield | 0.00% |
Risk-free rate of return | 1.02% |
Expected life in years | 3 years 5 months 12 days |
Volatility | 103.40% |
Jan 2014 [Member] | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Dividend yield | 0.00% |
Risk-free rate of return | 1.02% |
Expected life in years | 3 years 9 months |
Volatility | 99.70% |
FAIR_VALUE_MEASUREMENTS_Detail1
FAIR VALUE MEASUREMENTS (Details 1) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative liabilities, Beginning Balance | $1,285,170 | |
Derivative liabilities, Ending Balance | 2,570,336 | 1,285,170 |
Conversion Features [Member] | Fair Value, Inputs, Level 3 [Member] | March 2013 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative liabilities, Beginning Balance | 412,500 | |
Derivative liabilities, New Issuances | 0 | |
Derivative liabilities, Change in Fair Values | 412,500 | |
Derivative liabilities, Ending Balance | 825,000 | |
Conversion Features [Member] | Fair Value, Inputs, Level 3 [Member] | July 2013 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative liabilities, Beginning Balance | 183,334 | |
Derivative liabilities, New Issuances | 0 | |
Derivative liabilities, Change in Fair Values | 183,333 | |
Derivative liabilities, Ending Balance | 366,667 | |
Conversion Features [Member] | Fair Value, Inputs, Level 3 [Member] | September 2013 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative liabilities, Beginning Balance | 588,500 | |
Derivative liabilities, New Issuances | 0 | |
Derivative liabilities, Change in Fair Values | 588,500 | |
Derivative liabilities, Ending Balance | 1,177,000 | |
Conversion Features [Member] | Fair Value, Inputs, Level 3 [Member] | January 2014 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative liabilities, Beginning Balance | 100,836 | |
Derivative liabilities, New Issuances | 0 | |
Derivative liabilities, Change in Fair Values | 100,833 | |
Derivative liabilities, Ending Balance | 201,669 | |
Derivative Instruments [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative liabilities, Beginning Balance | 1,285,170 | |
Derivative liabilities, New Issuances | 0 | |
Derivative liabilities, Change in Fair Values | 1,285,166 | |
Derivative liabilities, Ending Balance | $2,570,336 |
FAIR_VALUE_MEASUREMENTS_Detail2
FAIR VALUE MEASUREMENTS (Details Textual) (USD $) | Mar. 31, 2015 | Mar. 31, 2014 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and Cash Equivalents, Fair Value Disclosure | $1,062,000 | $1,300,000 |
CONVERTIBLE_NOTES_Details
CONVERTIBLE NOTES (Details) (USD $) | Mar. 31, 2015 |
Sinaf S.A. [Member] | September 2013 [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Face Amount | $150,000 |
Sinaf S.A. [Member] | Notes 2012 [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Face Amount | 200,000 |
Class of Warrant or Right, Outstanding | 266,667 |
Joseph C. McNay [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Face Amount | 25,000 |
Joseph C. McNay [Member] | March 2013 [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Face Amount | 50,000 |
Joseph C. McNay [Member] | July 2013 [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Face Amount | 50,000 |
Joseph C. McNay [Member] | September 2013 [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Face Amount | 100,000 |
Joseph C. McNay [Member] | Notes 2012 [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Face Amount | 50,000 |
Class of Warrant or Right, Outstanding | 66,667 |
Allan L. Goldstein [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Face Amount | 10,000 |
Allan L. Goldstein [Member] | March 2013 [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Face Amount | 25,000 |
Allan L. Goldstein [Member] | July 2013 [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Face Amount | 10,000 |
Allan L. Goldstein [Member] | September 2013 [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Face Amount | 11,000 |
Allan L. Goldstein [Member] | Notes 2012 [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Face Amount | 35,000 |
Class of Warrant or Right, Outstanding | 46,666 |
J.J. Finkelstein [Member] | July 2013 [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Face Amount | 5,000 |
J.J. Finkelstein [Member] | Notes 2012 [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Face Amount | 15,000 |
Class of Warrant or Right, Outstanding | 20,000 |
L. Thompson Bowles [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Face Amount | 5,000 |
L. Thompson Bowles [Member] | July 2013 [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Face Amount | 5,000 |
L. Thompson Bowles [Member] | September 2013 [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Face Amount | 5,000 |
R. Don Elsey [Member] | September 2013 [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Face Amount | $5,000 |
CONVERTIBLE_NOTES_Details_1
CONVERTIBLE NOTES (Details 1) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Debt Instrument [Line Items] | ||
Total interest expense | $42,629 | $45,706 |
March 2013 Notes [Member] | ||
Debt Instrument [Line Items] | ||
Total interest expense | 13,870 | 13,870 |
July 2013 Notes [Member] | ||
Debt Instrument [Line Items] | ||
Total interest expense | 4,521 | 4,521 |
September 2013 Notes [Member] | ||
Debt Instrument [Line Items] | ||
Total interest expense | 17,149 | 17,149 |
January 2014 Notes [Member] | ||
Debt Instrument [Line Items] | ||
Total interest expense | 3,390 | 3,127 |
Notes 2012 [Member] | ||
Debt Instrument [Line Items] | ||
Total interest expense | $3,699 | $7,039 |
CONVERTIBLE_NOTES_Details_2
CONVERTIBLE NOTES (Details 2) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Debt Instrument [Line Items] | ||
Total Fair value of derivative liability | $2,570,336 | $1,285,170 |
March 2013 Notes [Member] | ||
Debt Instrument [Line Items] | ||
Total Fair value of derivative liability | 825,000 | 412,500 |
July 2013 Notes [Member] | ||
Debt Instrument [Line Items] | ||
Total Fair value of derivative liability | 366,667 | 183,334 |
September 2013 Notes [Member] | ||
Debt Instrument [Line Items] | ||
Total Fair value of derivative liability | 1,177,000 | 588,500 |
January 2014 Notes [Member] | ||
Debt Instrument [Line Items] | ||
Total Fair value of derivative liability | $201,669 | $100,836 |
CONVERTIBLE_NOTES_Details_3
CONVERTIBLE NOTES (Details 3) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Debt Instrument [Line Items] | ||
Total change in fair value of derivative | ($1,285,166) | ($1,715,834) |
March 2013 Notes [Member] | ||
Debt Instrument [Line Items] | ||
Total change in fair value of derivative | 412,500 | 562,500 |
July 2013 Notes [Member] | ||
Debt Instrument [Line Items] | ||
Total change in fair value of derivative | 183,333 | 250,000 |
September 2013 Notes [Member] | ||
Debt Instrument [Line Items] | ||
Total change in fair value of derivative | 588,500 | 802,500 |
January 2014 Notes [Member] | ||
Debt Instrument [Line Items] | ||
Total change in fair value of derivative | $100,833 | $100,833 |
CONVERTIBLE_NOTES_Details_Text
CONVERTIBLE NOTES (Details Textual) (USD $) | 3 Months Ended | 0 Months Ended | 1 Months Ended | 12 Months Ended | ||||
Mar. 31, 2015 | Mar. 31, 2014 | Jan. 07, 2014 | Sep. 11, 2013 | Jul. 05, 2013 | Mar. 29, 2013 | Oct. 19, 2012 | Dec. 31, 2012 | |
Convertible Note Principal And Exercise Of Warrant [Line Items] | ||||||||
Proceeds from Convertible Debt | $300,000 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term | 4 years 9 months | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 92.00% | |||||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 1.53% | 1.76% | ||||||
Non-cash interest expense | 30,288 | 33,418 | ||||||
Convertible Notes [Member] | ||||||||
Convertible Note Principal And Exercise Of Warrant [Line Items] | ||||||||
Proceeds from Convertible Debt | 55,000 | 321,000 | 100,000 | 225,000 | 300,000 | |||
Debt Instrument, Interest Rate, Stated Percentage | 5.00% | 5.00% | 5.00% | 5.00% | 5.00% | |||
Debt Instrument, Maturity Date, Description | 60 months | (60) months | (60) months | (60) months | (24) months | |||
Debt Instrument, Convertible, Conversion Price | $0.06 | $0.06 | $0.06 | $0.06 | $0.15 | |||
Debt Conversion, Converted Instrument, Shares Issued | 916,667 | 5,350,000 | 1,666,667 | 3,750,000 | 2,000,000 | |||
Convertible Notes [Member] | March 2013 [Member] | ||||||||
Convertible Note Principal And Exercise Of Warrant [Line Items] | ||||||||
Bifurcated Liability | 225,000 | |||||||
Residual Debt Value | 0 | |||||||
Convertible Notes [Member] | July 2013 [Member] | ||||||||
Convertible Note Principal And Exercise Of Warrant [Line Items] | ||||||||
Bifurcated Liability | 66,667 | |||||||
Residual Debt Value | 33,333 | |||||||
Convertible Notes [Member] | September 2013 [Member] | ||||||||
Convertible Note Principal And Exercise Of Warrant [Line Items] | ||||||||
Bifurcated Liability | 267,500 | |||||||
Residual Debt Value | 53,500 | |||||||
Convertible Notes [Member] | January 2014 [Member] | ||||||||
Convertible Note Principal And Exercise Of Warrant [Line Items] | ||||||||
Bifurcated Liability | 55,000 | |||||||
Residual Debt Value | 0 | |||||||
Warrant [Member] | ||||||||
Convertible Note Principal And Exercise Of Warrant [Line Items] | ||||||||
Debt Conversion, Converted Instrument, Warrants or Options Issued | 400,000 | |||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $0.15 | |||||||
StockAndWarrantsIssuedDuringPeriodValuePreferredStockAndWarrants | 27,097 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Exercise Price | $0.07 | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term | 5 years | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 74.36% | |||||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 0.77% | |||||||
Adjustments to Additional Paid in Capital, Warrant Issued | 27,097 | |||||||
Non-cash interest expense | $3,341 | |||||||
Sigma Tau [Member] | ||||||||
Convertible Note Principal And Exercise Of Warrant [Line Items] | ||||||||
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 38.00% |
LICENSE_AGREEMENT_Details_Text
LICENSE AGREEMENT (Details Textual) (USD $) | 1 Months Ended | 3 Months Ended |
In Millions, unless otherwise specified | Jan. 28, 2015 | Mar. 31, 2015 |
License Agreement [Line Items] | ||
Initial Contribution Received In Related To Joint Venture | $3 | |
Initial Equity Stake | 51.00% | |
Additional Proceeds From License Fees Received | 0.5 | |
Percentage Of Joint Venture Operating Loss Used In Share Calculation | 49.00% | |
Proceeds from License Fees Received | $0.50 |
STOCKHOLDERS_EQUITY_Details_Te
STOCKHOLDERS' EQUITY (Details Textual) (Securities Purchase Agreement [Member], USD $) | 1 Months Ended | 3 Months Ended | |
Aug. 29, 2014 | Mar. 07, 2014 | Mar. 31, 2015 | |
Securities Purchase Agreement [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Common Stock Purchased By Agreement Party | $1,350,000 | ||
Common Stock Shares Purchased By Agreement Party | 11,250,000 | ||
Additional Common Stock Purchased By Agreement Party | 1,000,000 | ||
Common Stock Purchase Price | $0.12 | $0.12 | $0.12 |
Additional Common Stock Purchase Date | 31-Aug-14 | ||
Common Stock, Option To Purchase Additional Shares | 5,500,000 | ||
Additional Common Stock Option To Purchase Price | $0.15 | ||
Additional Common Stock option To Purchase Expire date | 31-Jan-15 | ||
Proceeds from Issuance of Common Stock | $1,000,000 | ||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 8,333,333 |
COMMITMENTS_Details_Textual
COMMITMENTS (Details Textual) (Commitments [Member], USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Commitments [Member] | |
Operating Leased Assets [Line Items] | |
Operating Leases, Rent Expense, Net | $4,500 |
Long-term Purchase Commitment, Period | 36 months |
SUBSEQUENT_EVENT_Details_Textu
SUBSEQUENT EVENT (Details Textual) (Subsequent Event [Member], USD $) | 1 Months Ended | |
31-May-15 | Apr. 30, 2015 | |
Subsequent Event [Member] | ||
Subsequent Event [Line Items] | ||
Professional Fees | $5,000 | |
Stock Issued During Period, Shares, Issued for Services | 249,671 | 30,000 |