Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 28, 2017 | Jun. 30, 2016 | |
Document And Entity Information | |||
Entity Registrant Name | FLUOROPHARMA MEDICAL, INC. | ||
Entity Central Index Key | 1,402,785 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 7,391,435 | ||
Entity Common Stock, Shares Outstanding | 34,262,264 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,016 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Current Assets: | ||
Cash and cash equivalents | $ 24,723 | $ 290,847 |
Prepaid expenses and other | 23,060 | 218,155 |
Total Current Assets | 47,783 | 509,002 |
Property and equipment, net | 7,424 | 11,049 |
Intangible assets, net | 279,553 | 318,547 |
Total Assets | 334,760 | 838,598 |
Current Liabilities: | ||
Convertible notes payable - short term (see Note 5) | 5,769,558 | 4,349,449 |
Notes payable - short term | 55,000 | 0 |
Accounts payable | 1,413,874 | 1,219,867 |
Derivative liabilities | 251,806 | 1,526,060 |
Deferred revenue | 408,333 | 0 |
Accrued expenses and other | 2,615,481 | 1,603,605 |
Total Current Liabilities | 10,514,052 | 8,698,981 |
Stockholders' Deficit: | ||
Preferred stock Series A; $0.001 par value, 3,500,000 shares designated 9,370 and 150,611 shares issued and outstanding at December 31, 2016 and (preference in liquidation of $7,777 at December 31, 2016) | 11 | 152 |
Preferred stock Series B; $0.001 par value, 12,000,000 shares designated 5,382,071 shares issued and outstanding at December 31, 2016 and 2015 (preference in liquidation of $5,860,248 at December 31, 2016) | 5,382 | 5,382 |
Common stock - Class A - $0.001 par value, 200,000,000 shares authorized, 34,074,284 and 32,908,503 shares issued and outstanding at December 31, 2016 and 2015, respectively | 34,075 | 32,910 |
Additional paid-in capital | 24,958,880 | 24,705,547 |
Accumulated deficit | (35,177,640) | (32,604,374) |
Total Stockholders' Deficit | (10,179,292) | (7,860,383) |
Total Liabilities and Stockholders' Deficit | $ 334,760 | $ 838,598 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Preferred stock Series A, par value | $ 0.001 | $ 0.001 |
Preferred stock Series A,designated | 3,500,000 | 3,500,000 |
Preferred stock Series A, shares issued | 9,370 | 150,611 |
Preferred stock Series A, shares outstanding | 9,370 | 150,611 |
Preference in liquidation | $ 7,777 | $ 7,777 |
Preferred stock Series B, par value | $ 0.001 | $ 0.001 |
Preferred stock Series B, designated | 12,000,000 | 12,000,000 |
Preferred stock Series B, shares issued | 5,382,071 | 5,382,071 |
Preferred stock, Series B, shares outstanding | 5,382,071 | 5,382,071 |
Preference in liquidation | $ 5,860,248 | $ 5,860,248 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, Authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 34,074,284 | 32,908,503 |
Common stock, shares outstanding | 34,074,284 | 32,908,503 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Operating Expenses: | ||
General and administrative | $ 1,691,048 | $ 2,465,478 |
Research and development | 511,381 | 720,861 |
Total Operating Expenses | 2,202,429 | 3,186,339 |
Loss from Operations | (2,202,429) | (3,186,339) |
Other Income (Expense): | ||
Other income | 2,485 | 0 |
Loss on debt extinguishment | (995,735) | 0 |
Gain on settlement of accounts payable | 107,451 | 184,039 |
Loss on sale of trading securities | 0 | (11,946) |
Unrealized gain on trading securities | 0 | 7,986 |
Gain on revaluation and modification of derivative warrant liability | 2,300,341 | 715,962 |
Interest and other expense | (1,261,974) | (873,359) |
Total Other Income, net | 152,568 | 22,682 |
Net Loss | (2,049,861) | (3,163,657) |
Preferred Stock Dividend | (523,405) | (574,034) |
Net Loss Attributable to Common Stockholders | $ (2,573,266) | $ (3,737,691) |
Net loss per common share - Basic and Diluted | $ (0.07) | $ (0.12) |
Weighted Average Shares Used in per Share Calculation - Basic and Diluted | 33,556,201 | 30,038,240 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) | Preferred Stock -Series A | Preferred Stock - Series B | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning Balance, Amount at Dec. 31, 2014 | $ 951 | $ 5,695 | $ 29,199 | $ 24,034,203 | $ (28,866,683) | $ (4,796,635) |
Beginning Balance, Shares at Dec. 31, 2014 | 949,477 | 5,694,571 | 29,197,497 | |||
Share Based Compensation | 135,492 | 135,492 | ||||
Fair value of warrants issued | 80,472 | 80,472 | ||||
Common stock issued in settlement of accounts payable, Amount | $ 739 | 276,511 | 277,250 | |||
Common stock issued in settlement of accounts payable, Shares | 738,572 | |||||
Preferred Stock Dividend - Series A, Amount | $ 57 | $ 46 | 64,532 | (64,635) | ||
Preferred Stock Dividend - Series A, Shares | 57,353 | 45,987 | ||||
Common stock issued for consulting services, Amount | $ 129 | 59,871 | 60,000 | |||
Common stock issued for consulting services, Shares | 128,571 | |||||
Preferred Stock Dividend Accrued - Series B | (509,399) | (509,399) | ||||
Conversion of Series A Preferred to Common Stock, Amount | $ (856) | $ 1,923 | (1,067) | 0 | ||
Conversion of Series A Preferred to Common Stock, Shares | (856,219) | 1,923,324 | ||||
Conversion of Series B Preferred to Common Stock, Amount | $ (313) | $ 714 | (401) | 0 | ||
Conversion of Series B Preferred to Common Stock, Shares | (312,500) | 714,285 | ||||
Common Stock issued in lieu of accumulated dividend on Series B, Amount | $ 160 | 55,934 | 56,094 | |||
Common Stock issued in lieu of accumulated dividend on Series B, Shares | 160,267 | |||||
Net Loss | (3,163,657) | (3,163,657) | ||||
Ending Balance, Amount at Dec. 31, 2015 | $ 152 | $ 5,382 | $ 32,910 | 24,705,547 | (32,604,374) | (7,860,383) |
Ending Balance, Shares at Dec. 31, 2015 | 150,611 | 5,382,071 | 32,908,503 | |||
Share Based Compensation | 32,451 | 32,451 | ||||
Fair value of warrants issued | 22,576 | 22,576 | ||||
Common stock issued in settlement of accounts payable, Amount | $ 61 | 21,345 | 21,406 | |||
Common stock issued in settlement of accounts payable, Shares | 61,159 | |||||
Preferred Stock Dividend - Series A, Amount | $ 10 | $ 10 | 10,688 | (10,708) | 0 | |
Preferred Stock Dividend - Series A, Shares | 9,370 | 10,432 | ||||
Preferred Stock Dividend Accrued - Series B | (512,697) | (512,697) | ||||
Conversion of Series A Preferred to Common Stock, Amount | $ (151) | $ 440 | (289) | 0 | ||
Conversion of Series A Preferred to Common Stock, Shares | (150,611) | 440,202 | ||||
Conversion of Convertible Notes Payable to Common Stock, Amount | $ 654 | 166,562 | 167,216 | |||
Conversion of Convertible Notes Payable to Common Stock, Shares | 653,988 | |||||
Net Loss | (2,049,861) | (2,049,861) | ||||
Ending Balance, Amount at Dec. 31, 2016 | $ 11 | $ 5,382 | $ 34,075 | $ 24,958,880 | $ (35,177,640) | $ (10,179,292) |
Ending Balance, Shares at Dec. 31, 2016 | 3,970 | 5,382,071 | 34,074,284 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (2,049,861) | $ (3,163,657) |
Adjustments to reconcile net loss to net cash used by operating activities | ||
Depreciation and amortization | 43,912 | 46,365 |
Amortization of issuance costs and discounts on convertible notes | 751,684 | 511,362 |
Accretion of interests related to convertible notes | 199,515 | 0 |
Fair value of common stock issued for consulting | 0 | 30,000 |
Fair value of warrants | 22,576 | 80,472 |
Share-based compensation related to stock options | 32,451 | 135,492 |
Gain on accounts payable settlement | (107,451) | (184,039) |
Loss on debt extinguishment | (995,735) | 0 |
Net loss on sale of trading securities | 0 | 11,946 |
Change in unrealized loss on trading securities | 0 | (7,986) |
Gain on revaluation and modification of derivative liabilities | (2,300,341) | (715,962) |
(Increase) decrease in: | ||
Prepaid expenses and other | 77,878 | (113,247) |
Increase (decrease) in: | ||
Accounts payable | 322,864 | 616,676 |
Deferred revenue | 408,333 | 0 |
Accrued expenses and other | 722,584 | 75,689 |
Net Cash Used by Operating Activities | (880,121) | (2,676,889) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Proceeds from sale of investments | 0 | 35,970 |
Purchase of equipment | (1,293) | (6,694) |
Net Cash Provided by Investing Activities | (1,293) | 29,276 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of convertible notes payable - short term | 570,000 | 2,980,005 |
Proceeds from other short - term financing | 155,000 | 365,000 |
Notes payable issuance costs | (9,710) | (168,690) |
Repayment of notes payable | (100,000) | (490,000) |
Net Cash Provided by Financing Activities | 615,290 | 2,686,315 |
Net Change in Cash and Cash Equivalents | (266,124) | 38,702 |
Cash and Cash Equivalents, Beginning of Period | 290,847 | 252,145 |
Cash and Cash Equivalents, End of Period | 24,723 | 290,847 |
Supplemental Cash Flow Disclosures: | ||
Interest expense paid in cash | 472 | 3,543 |
Tax paid | 1,662 | 1,912 |
Supplemental Non-Cash Disclosure: | ||
Series B Preferred Stock dividend | 512,697 | 453,305 |
Series A Preferred Stock dividend | 7,777 | 47,602 |
Accounts Payable settled in Common Stock | 21,406 | 277,250 |
Series A Preferred Stock dividend issued upon conversion to Common Stock | 2,931 | 17,033 |
Prepaid consulting services paid in Common Stock | 0 | 30,000 |
Conversion of Series A preferred shares to common stock | 440 | 1,923 |
Conversion of Series B Preferred Stock dividend to Common Stock | 0 | 56,094 |
Conversion of Series B preferred shares to common stock | 0 | 313 |
Conversion of Convertible Notes plus accreted interests | 178,731 | 0 |
Fair value of warrants issued as covenant settlement | 0 | 80,472 |
Fair value of warrants issued with Convertible Notes | 0 | 358,255 |
Fair value of warrants issued to Convertible Notes placement agents | 0 | 39,108 |
Fair value of embedded derivative liability in 2016 Convertible Notes | 95,407 | 0 |
Fair value of embedded derivative liability in 2015 Convertible Notes | 0 | 490,340 |
Fair value of embedded derivative liability in 2014 Convertible Notes | 945,951 | 0 |
Embedded conversion feature -Amended 2014 Notes Converted | $ 15,271 | $ 0 |
Organization and Going Concern
Organization and Going Concern | 12 Months Ended |
Dec. 31, 2016 | |
Organization And Going Concern | |
Organization and Going Concern | FluoroPharma Medical, Inc. (the “Company”) was organized on January 25, 2007 under the laws of the State of Nevada. The Company’s subsidiary, FluoroPharma Inc. (“FPI” or “the Subsidiary”), a Delaware corporation, is a molecular imaging company headquartered in Montclair, NJ. FPI was founded in 2003 to engage in the discovery, development and commercialization of proprietary products for the positron emission tomography (PET) market. The Company’s initial focus has been on the development of novel cardiovascular imaging agents that can more efficiently and effectively detect and assess acute and chronic forms of coronary artery disease (CAD). Molecular imaging pharmaceuticals are radiopharmaceuticals that enable early detection of disease through the visualization of subtle changes in biochemical and biological processes. Going concern The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has experienced net losses and negative cash flows from operations since its inception. The Company has sustained cumulative losses attributable to common stockholders of $35,217,640 as of December 31, 2016. The Company has historically financed its operations through issuances of equity and the proceeds of debt instruments. In the past, the Company has also provided for its cash needs by issuing common stock, options and warrants for certain operating costs, including consulting and professional fees. During the year ended December 31, 2016, the Company raised net cash proceeds of $615,290 through the issuance of notes payable. In addition, during the year ended December 31, 2016, the Company received payments of $775,000 in accordance with two exclusive license agreements. The Company continues to actively pursue various funding options, including equity offerings, to obtain additional funds to continue the development of its products and bring them to commercial markets. Management continues to assess fund raising opportunities to ensure minimal dilution to its existing shareholder base and to obtain the best price for its securities. Management is optimistic based upon its ability to raise funds in prior years, through private placement offerings (see Note 5), that it will be able to raise additional funds in the future. If the Company is unable to raise additional capital as may be needed to meet its projections for operating expenses, it could have a material adverse effect on liquidity or require the Company to cease or significantly delay some of its clinical trials. The outcome of these matters cannot be predicted at this time. The Company is uncertain whether it can obtain financing to complete its clinical trials. These uncertainties cast significant doubt upon the Company’s ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability of recorded asset amounts that might be necessary as a result of the above uncertainty. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Cash and Cash Equivalents The Company considers all highly liquid investments with maturities of three months or less from date of purchase to be cash equivalents. All cash balances were highly liquid at December 31, 2016 and 2015. Use of Estimates The accompanying consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, and include certain estimates and assumptions which affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of expenses during the reporting period, including contingencies. Accordingly, actual results may differ from those estimates. Concentration of Risks Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company primarily maintains its cash balances with financial institutions in federally insured accounts. The Company may from time to time have cash in banks in excess of FDIC insurance limits. The Company has not experienced any losses to date resulting from this practice. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, FluoroPharma, Inc. Intercompany transactions and balances have been eliminated upon consolidation. Property and Equipment Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The Company’s property and equipment at December 31, 2016 and 2015 consisted of computer and office equipment and machinery and equipment with estimated useful lives of three to five years. Depreciation was $4,918 and $7,372 in the years ended December 31, 2016 and 2015, respectively. Intangible Assets The Company’s intangible assets consist of technology licenses and are carried at the legal cost to obtain them. Intangible assets are amortized using the straight-line method over the estimated useful life. Useful lives on technology licenses are 5 to 15 years. Impairments The Company assesses the impairment of long-lived assets, including other intangible assets, whenever events or changes in circumstances indicate that their carrying value may not be recoverable in accordance with ASC Topic 360-10-35, “Impairment or Disposal of Long-Lived Assets.” The determination of related estimated useful lives and whether or not these assets are impaired involves significant judgments, related primarily to the future profitability and/or future value of the assets. The Company records an impairment charge if it believes an investment has experienced a decline in value that is other than temporary. Management has determined that no impairments were required as of December 31, 2016 and 2015, respectively. Derivative financial instruments The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based derivative financial instruments, the Company uses a binomial pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. The Company has derivative liabilities at December 31, 2016 and 2015 relating to certain warrants and embedded conversion features that contain anti-dilution provisions. Fair Value of Financial Instruments The Company's financial instruments primarily consist of cash, trading securities, accounts payable, notes payable and derivative liabilities. The fair value of these instruments is calculated using current market prices, or on a historical cost basis, which, due to the short maturity of these financial instruments, approximates the fair value at the reporting dates of these financial statements. The Company groups its assets and liabilities measured at fair value, in three levels based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Financial instruments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. The three levels of the fair value hierarchy are as follows: Level 1 – Valuation is based on quoted prices in active markets for identical assets or liabilities. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. Level 2 – Valuation is based on observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the financial instrument. The Company recognizes transfers between levels at the end of the reporting period as if the transfers occurred on the last day of the reporting period. Assets and liabilities measured at fair value on a recurring basis are summarized below: December 31, 2016 Level 1 Level 2 Level 3 Fair Value Current Liabilities: Derivative liabilities $ - $ -- $ 251,806 $ 251,806 December 31, 2015 Level 1 Level 2 Level 3 Fair Value Current Liabilities: Derivative liabilities $ - $ -- $ 1,526,060 $ 1,526,060 The following table sets forth the changes in the estimated fair value for our Level 3 classified derivative liabilities: Year Ended Year Ended December 31, 2016 December 31, 2015 Fair value at beginning of the year $ 1,526,060 $ 1,354,319 Issuance of warrants – 2015 Notes - 397,363 Embedded conversion feature – 2015 Notes - 490,340 Embedded conversion feature – Amended 2014 Notes 945,951 - Embedded conversion feature – 2016 Notes 95,407 - Embedded conversion feature – Amended 2014 Notes converted (15,271 ) - Change in fair value (2,300,341 ) (715,962 ) Fair value at end of the year $ 251,806 $ 1,526,060 Revenue Recognition From time to time the Company enters into licensing agreements, the terms of which may include grants of licenses, or options to obtain licenses, to our intellectual property and research and development activities. Payments under these arrangements typically include one or more of the following: non-refundable, up-front license fees; funding of research and/or development efforts; amounts due upon the achievement of specified objectives; and/or royalties on future product sales. The Company recognizes milestone payments as revenue in their entirety upon the achievement of a substantive milestone if the consideration earned from the achievement of the milestone (i) is consistent with performance required to achieve the milestone or the increase in value to the delivered item, (ii) relates solely to past performance and (iii) is reasonable relative to all of the other deliverables and payments within the arrangement. Amounts received contractually designated to fund further research are recorded as a reduction to research and development expenses when the Company has satisfied all performance obligations to the licensee and expenses for specified development activities have been incurred. Income Taxes The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to the differences between the financial statement carrying amounts of the existing assets and liabilities and the respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be realized or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in results of operations in the period that the tax rate change occurs. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company accounts for uncertain tax positions in accordance with FASB ASC Topic 740-10, Accounting for Uncertainty in Income Taxes. Accounting for Share-Based Payments The Company follows the provisions of ASC Topic 718, which establishes the accounting for transactions in which an entity exchanges equity securities for services and requires companies to expense the estimated fair value of these awards over the requisite service period. The Company uses the Black-Scholes option pricing model in determining fair value. Accordingly, compensation cost has been recognized using the fair value method and expected term accrual requirements as prescribed, which resulted in stock-based compensation expense for the years ended December 31, 2016 and 2015 of $32,451 and $135,492, respectively. The Company accounts for share-based payments granted to non-employees in accordance with ASC Topic 505, “Equity Based Payments to Non-Employees.” The Company determines the fair value of the stock-based payment as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s performance is complete. To compute compensation expense, the Company estimated the fair value of each option award on the date of grant using the Black-Scholes-Merton option pricing model for employees, and calculated the fair value of each option award at the end of the period for non-employees. The Company based the expected volatility assumption on a volatility index of peer companies as the Company did not have sufficient historical market information to estimate the volatility of its own stock. The expected term of options granted represents the period of time that options are expected to be outstanding. The Company estimated the expected term of stock options by using the simplified method. The expected forfeiture rates are based on the historical employee forfeiture experiences. To determine the risk-free interest rate, the Company utilized the U.S. Treasury yield curve in effect at the time of grant with a term consistent with the expected term of the Company’s awards. The Company has not declared a dividend on its common stock since its inception and has no intentions of declaring a dividend in the foreseeable future and therefore used a dividend yield of zero. The fair value of each share-based payment is estimated on the measurement date using the Black-Scholes model with the following assumptions: 2016 2015 Risk-free interest rate 1.83 % 2.07 % Expected volatility 68.09 % 49.42 % Dividend yield none none Expected term 5 years 6.5 years Net Loss per Common Share The Company computes net loss per common share in accordance with ASC Topic 260. Net loss per share is based upon the weighted average number of outstanding common shares and the dilutive effect of common share equivalents, such as options and warrants to purchase common stock, and convertible notes, if applicable, that are outstanding each year. Basic and diluted earnings per share were the same for all periods presented as including common stock equivalents in the calculation of diluted earnings per share would have been antidilutive. As of December 31, 2016, the Company had outstanding options exercisable for 2,736,839 shares of its common stock, warrants exercisable for 16,137,761 shares of its common stock, series A preferred stock (the “Series A Preferred Stock”) convertible into 27,775 shares of common stock, and series B preferred stock (the “Series B Preferred Stock”) convertible into 20,929,456 shares of common stock. As of December 31, 2015, the Company had outstanding options exercisable for 4,996,095 shares of its common stock, warrants exercisable for 16,281,164 shares of its common stock, series A preferred stock (the “Series A Preferred Stock”) convertible into 357,163 shares of common stock, and series B preferred stock (the “Series B Preferred Stock”) convertible into 15,278,717 shares of common stock. Research and Development Costs Research and development costs are expensed as incurred. Segment Reporting The Company has determined that it operates in only one segment currently, which is biopharmaceutical research and development. Recent Accounting Pronouncements In August 2014, the FASB issued ASU 2014-15 “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” The core principle of the guidance is that an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are available to be issued. When management identifies conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern, management should consider whether its plans that are intended to mitigate those relevant conditions or events that will alleviate the substantial doubt are adequately disclosed in the footnotes to the financial statements. This guidance will be effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company adopted ASU 2014-15 as of December 31, 2016 and updated the related disclosures. Other than the updates to going concern related disclosures, the adoption of ASU 2014-15 did not have an impact on the Company’s financial statements. In April 2015, the FASB issued ASU 2015-03, 'Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs”. ASU 2015-03 is intended to simplify the presentation of debt issuance costs. These amendments require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The Company adopted ASU 2015-03 on January 1, 2016 and applied the standard retrospectively. The adoption of ASU 2015-03 resulted in the reclassification of $17,116 and $136,260 of unamortized debt issuance costs related to the Company's Convertible Notes (see Note 5) from prepaid expenses and other current assets to convertible notes payable within the Company’s condensed consolidated balance sheets as of December 31, 2016 and December 31, 2015, respectively. Other than this reclassification, the adoption of ASU 2015-03 did not have an impact on the Company's financial statements. In March 2016, the FASB issued ASU No. 2016-09, “Compensation – Stock Compensation”. The areas for simplification in this update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public entities, the amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted in any interim or annual period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The Company is currently evaluating the impact of adopting this ASU on the financial statements. On August 26, 2016, the FASB issued ASU No. 2016-15 “Statement of Cash Flows (Topic 230 )”, Management does not expect the above recently issued, but not yet effective, accounting standards to have a material effect on the accompanying financial statements. |
Other Balance Sheet Information
Other Balance Sheet Information | 12 Months Ended |
Dec. 31, 2016 | |
Other Balance Sheet Information | |
Other Balance Sheet Information | Components of selected captions in the accompanying balance sheets as of December 31, 2016 and 2015 consist of: December 31, 2016 December 31, 2015 Prepaid expenses and other: Prepaid insurance $ 20,038 $ 39,756 Annual license fee - 104,167 Other 3,022 74,232 Prepaid expenses and other $ 23,060 $ 218,155 Property and equipment: Computers and office equipment $ 75,204 $ 73,911 Machinery and equipment 112,421 112,421 Less: accumulated depreciation (180,201 ) (175,283 ) Property and equipment, net $ 7,424 $ 11,049 Accrued expenses and other: Professional fees $ 32,000 $ 49,703 Accrued dividends Series B Preferred Stock 1,554,591 1,041,894 Deferred salary 237,293 88,958 Accrued interest on Notes Payable 523,360 327,203 Accrued research and development 53,995 39,268 Funded research 77,316 - Other 136,926 56,579 Accrued expenses and other $ 2,615,481 $ 1,603,605 |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2016 | |
Intangible Assets | |
Intangible Assets | Intangible assets as of December 31, 2016 and 2015 consist of the following: December 31, 2016 December 31, 2015 Technology license $ 413,398 $ 413,398 Less: accumulated amortization (133,845 ) (94,851 ) Intangibles, net $ 279,553 $ 318,547 Amortization expense relating to intangible assets was $38,994 during the years ended December 31, 2016 and 2015. On June 26, 2014, the Company and The General Hospital Corporation, d/b/a Massachusetts General Hospital (“MGH”) entered into two license agreements, which replaced the single license agreement dated April 27, 2009. The Company paid to MGH an initial license fee of $175,000 for each license. The assumptions and estimates used to determine future values and remaining useful lives of our intangible and other long-lived assets are complex and subjective. They can be affected by various factors, including external factors such as industry and economic trends, and internal factors such as changes in our business strategy. Based on our assessment, we did not recognize any impairment as of December 31, 2016 and 2015. Future amortization will approximate $39,000 for each of the next five years. See Note 12 for commitments and contingencies associated with the Company’s technology licenses. |
Convertible Notes Payable - Sho
Convertible Notes Payable - Short Term | 12 Months Ended |
Dec. 31, 2016 | |
Convertible Notes Payable - Short Term | |
Convertible Notes Payable - Short Term | 2014 Convertible Notes Payable During 2014 and 2015, the Company issued promissory notes (the “2014 Notes”) pursuant to a Note Purchase Agreement entered into with certain accredited investors for an aggregate principal amount of $2,198,416. The 2014 Notes mature one year from the date of issuance and bear interest at the rate of 8% per annum. All principal and accrued interest under the 2014 Notes will automatically convert into the Company’s next equity or equity-linked financing (a “Subsequent Financing”) in accordance with the following formula: (outstanding balance of the Notes as of the closing of the Subsequent Financing) x (1.15) / (the per security price of the securities sold in the Subsequent Financing). The investors shall be considered to be purchasers in the Subsequent Financing by way of their converted 2014 Notes. In addition, upon the closing of a Subsequent Financing, each of the investors shall be issued, in addition to any warrants issued in connection with a Subsequent Financing, an additional warrant to purchase a number of shares of common stock equal to fifty percent (50%) of the number of shares of common stock purchased by such investor in the Subsequent Financing assuming a per share purchase price of the securities to be issued in the Subsequent Financing. In May 2015, in connection with the issuance of the Convertible Notes (as defined and discussed below), the holders of the 2014 Notes, in the outstanding principal amount of $2,198,416, amended their 2014 Notes to (i) extend the maturity date an additional six months, (ii) change the terms of the conversion premium from 1.15 to 1.25 to be consistent with conversion terms of the Convertible Notes, and (iii) provide that the issuance of promissory notes by the Company in a transaction with a substantially similar structure to the transactions contemplated by the 2014 Notes shall not be deemed a Subsequent Financing. On January 20, 2016, the Company further amended the 2014 Notes (the “Amended 2014 Notes”), in order to (i) extend the maturity date for an additional six months, (ii) retroactively increase the interest rate to 12%, (iii) provide the ability to voluntary convert the notes, including principal and interest multiplied by 1.25, at a conversion price of $0.35 per share (which results in an effective conversion price of $0.28 per share), (iv) provide resale registration rights, and (v) provide “full-ratchet” anti-dilutive protection. As a result of this amendment, the conversion price of each of the Company's existing Series A Preferred Stock, Series B Preferred Stock, the Convertible Notes and certain related warrants, has been adjusted to $0.28 per share. The Company applied guidance in FASB ASC 470-50, “Debt Modifications and Extinguishments,” (ASC 470-50) and determined that the amendment qualified as a debt extinguishment (the “Debt Extinguishment”). This determination was made after calculating that the newly amended terms increased the fair value of the embedded conversion feature in excess of 10 percent. In order to account for the Debt Extinguishment, the Company recorded the Amended 2014 Notes and the embedded conversion feature at their then fair values of $2,495,582 and $945,951, respectively. The embedded conversion feature was recorded as a derivative liability after determining the requirements for equity classification, in accordance with ASC Topic 815-40, were not met. The difference between the carrying value of the 2014 Notes, including all principal, accrued interest and deferred financing costs and the fair value of the Amended 2014 Notes and embedded conversion feature was recorded as a loss on debt extinguishment of $1,022,520 in the statement of operations. The difference between the principal amount of the Amended 2014 Notes and the fair value of the Amended 2014 Notes of $238,515 will be amortized to interest expense over the term of the notes. During the year ended December 31, 2016, the Company amortized interest of $199,515 on the Amended 2014 Notes. On July 22, 2016, the Company entered into a further amendment to the 2014 Notes to extend the maturity date of the Notes for an additional ninety days. On November 2, 2016, the Company obtained majority approval to further amend the 2014 Notes to extend the maturity date of the Notes for an additional ninety days, with an effective date of October 22, 2016. On March 13, 2017, the Company obtained majority approval to further amend the 2014 Notes to extend the maturity date of the Notes to June 22, 2017, with an effective date of January 22, 2017. During the year ended December 31, 2016, the Company issued 653,988 shares of common stock pursuant to the conversion of Amended 2014 Notes. The carrying value of the converted Amended 2014 Notes plus accreted interest was approximately $178,731 and the fair value of the derivative related to the embedded conversion feature was $15,271. The Company recorded a gain on extinguishment related to these conversions totaling $26,785. The calculation of the net loss on extinguishment is as follows: December 31, 2016 Fair value – Amended 2014 Notes $ 2,495,582 Fair value – embedded conversion feature 945,951 Total Amended 2014 Notes 3,441,533 Principal – 2014 Notes 2,198,416 Accrued interest – 2014 Notes 232,235 Deferred financing costs – 2014 Notes (11,638 ) Total 2014 Notes 2,419,013 Loss on Extinguishment from 2014 Note Amendment 1,022,520 Carrying value – Amended 2014 Notes converted 175,922 Value of interest accretion – Amended 2014 Notes converted 2,809 Fair value of embedded conversion feature – Amended 2014 Notes converted 15,271 Fair value – common stock issued upon conversion (167,217 ) Gain on Extinguishment from Amended 2014 Note Conversions 26,785 Loss on Extinguishment, net $ 995,735 The derivative liability related to the embedded conversion feature is being re-measured at each balance sheet date based on estimated fair value, and any resultant changes in fair value is being recorded in the Company’s consolidated statement of operations. Upon conversion, the notes and embedded derivatives are removed at their carrying value, after a final mark-to-market of the embedded derivative’s fair value. Common stock issued upon conversion is measured at its current fair value, with any difference recorded as a gain or loss on extinguishment. 2015 Convertible Notes Payable On May 28, 2015, the Company accepted subscriptions pursuant to a new Note and Warrant Purchase Agreement, as amended on August 6, 2015, for the issuance and sale in a private placement of up to $3,000,000 of convertible promissory notes (the “Convertible Notes”). The Convertible Notes mature one year from the date of issuance and bear interest at the rate of 8% per annum. All principal and accrued interest under the Convertible Notes will, at the sole option of the investor (i) convert into the Company’s next equity or equity-linked financing in which the Company raises gross proceeds of at least $3,600,000 (the “Subsequent Financing”), into such securities, including warrants of the Company as are issued in the Subsequent Financing, the amount of which shall be determined in accordance with the following formula: (the outstanding balance of the Convertible Notes plus accrued interest as of the closing of the Subsequent Financing) x (1.25) / (the per security price of the securities sold in the Subsequent Financing), or (ii) convert into a new financing in which the Company shall issue to the investor one share of common stock and one-half of one warrant at a purchase price no greater than $0.35 per share. The per security price of the securities sold in the Subsequent Financing shall not exceed $0.35. In addition, the holders of the Convertible Notes shall have the option, at any time, to convert all principal and accrued interest into common stock at price per share of $0.35. In the event that the Company shall, at any time, issue or sell additional shares of common stock or common stock equivalents, as defined, at a price per share less than $0.35, then the conversion price of the Convertible Notes shall be reduced to a price equal to the consideration paid for these additional shares of common stock. As a result of the 2016 amendment to the 2014 Notes, the conversion price of the Convertible Notes was adjusted to $0.28 per share. Pursuant to the Note and Warrant Purchase Agreement, the Company issued warrants at an initial exercise price per share of $0.50 to purchase a number of shares of common stock equal to fifty percent of the number of shares of common stock such investor would receive upon full conversion of the Convertible Notes at a conversion price of $0.35 per share. As a result of the 2016 amendment to the 2014 Notes, the exercise price of the warrants was adjusted to $0.28 per share. From May through September 2015, the Company issued Convertible Notes in the aggregate principal amount of $2,780,005 and warrants to purchase 3,971,436 shares of common stock at $0.50 per share. In connection with the issuance of the Convertible Notes, the Company paid to placement agents a cash fee of $142,400 and issued 406,859 five-year warrants to purchase shares of common stock at an exercise price of $0.50 per share. On the issuance date, the fair value of the placement agent warrants was $39,108 which was recorded as a deferred offering cost and as a derivative warrant liability. Based upon the Company’s analysis of the criteria contained in ASC Topic 815-40, “Derivatives and Hedging—Contracts in Entity’s Own Equity” (“ASC Topic 815-40”), the Company has determined that since the exercise price of the warrants may be reduced if the Company issues shares at a price below the then-current exercise price, the warrants issued in connection with the Convertible Notes must be classified as derivative instruments. In accordance with ASC Topic 815-40, these warrants are also being re-measured at each balance sheet date based on estimated fair value, and any resultant changes in fair value is being recorded in the Company’s consolidated statement of operations. In order to account for the issuance of the Convertible Notes and warrants, the Company allocated the total gross proceeds of $2,780,005 between the Convertible Notes and the warrants. The warrants were allocated their full fair value as of the respective grant dates totaling $358,255 and the residual net proceeds of $2,421,750 were allocated to the Convertible Notes. The conversion feature of the Convertible Notes was then analyzed. The Company determined that the embedded conversion feature did not meet the requirements for equity classification in accordance with ASC Topic 815-40. Therefore, the conversion feature fair value of $490,340 was bifurcated from the host contract, the Convertible Notes, and recorded as a derivative liability, thereby creating a further discount on the Convertible Notes. The conversion feature is also being re-measured at each balance sheet date based on estimated fair value, and any resultant changes in fair value is being recorded in the Company’s consolidated statement of operations. On May 26, 2016, the 2015 Notes were amended to (i) extend the maturity date an additional six months and (ii) increase the interest rate, from 8% to 12%, applied retroactively from the initial issuance date of the Notes. The Company applied guidance in ASC 470-50 and determined that the amendment did not qualify as a debt extinguishment. This determination was made after calculating that the present value of the cash flows under the modified debt instrument is less than a 10 percent change from the present value of the remaining cash flows under the original debt. On December 5, 2016, the Company obtained majority approval to further amend the 2015 Notes to extend the maturity date of the 2015 Notes for additional six months, with an effective date November 28, 2016. Lewis Opportunity Fund, an affiliate of W. Austin Lewis, IV, a member of the Company’s Board of Directors, participated as an investor in the Convertible Notes in 2015 in an aggregate principal amount of $2,000,000 and was issued warrants to purchase an aggregate of 2,857,143 shares of common stock. 2016 Convertible Notes Payable During 2016, the Company issued convertible promissory notes (the “2016 Convertible Notes”) in the principal amount of $570,000 under the terms of a new Note Purchase Agreement. The Company’s Chief Executive Officer and the W. Austin Lewis Defined Benefit Plan, an affiliate of W. Austin Lewis, IV, a member of the Company’s Board of Directors, participated as an investor in the Convertible Notes in 2016 in an aggregate principal amounts of $150,000 and $160,000, respectively. The 2016 Convertible Notes mature one year from the date of issuance and bear interest at the rate of 12% per annum payable upon the earlier of (i) exchange or voluntary conversion of the 2016 Convertible Notes in accordance with the terms thereof and (ii) the maturity date. All principal and accrued interest under the 2016 Convertible Notes (the “Outstanding Balance”) will automatically convert into the Company’s next equity or equity-linked financing (the “Subsequent Financing”), without any action on the part of the investor, into such securities, including warrants of the Company that are issued in the Subsequent Financing, the amount of which shall be determined in accordance with the following formula: (the Outstanding Balance as of the closing of the Subsequent Financing) x (1.25) / (the per security price of the securities sold in the Subsequent Financing). For the purpose of calculating the formula above, the per security price of the securities sold in the Subsequent Financing shall not exceed $0.35. The issuance of promissory notes by the Company in a transaction with a substantially similar structure to the 2016 Convertible Notes (as determined in good faith by the Company’s board of directors) shall not be deemed a Subsequent Financing. Each investor also has the right, at its option at any time, to convert the Outstanding Balance into shares of common stock as is obtained by dividing (i) the Outstanding Balance to be converted multiplied by 1.25, by (ii) a conversion price, $0.35 per share; provided, however, if an event of default has occurred and is continuing, the conversion price shall be adjusted to $0.15 per share. The 2016 Convertible Notes are subject to customary adjustments for issuances of shares of common stock as a dividend or distribution on shares of the common stock, or mergers or reorganizations, as well as “full-ratchet” anti-dilution adjustments for future issuances of other Company securities (subject to certain standard carve-outs). Upon the closing of a Subsequent Financing, each of the investors shall be issued, in addition to any warrants issued in connection with a Subsequent Financing, an additional warrant (the “Additional Warrant”), to purchase a number of shares of common stock equal to fifty percent (50%) of the number of shares of common stock purchased by such investor in the Subsequent Financing assuming a per share purchase price of the securities to be issued in the Subsequent Financing. The terms of the Additional Warrants shall be substantially identical to the terms of the warrants issued in the Subsequent Financing, except the exercise price per share of the Additional Warrants shall be equal to the per share purchase price of the securities issued in the Subsequent Financing. In the event no warrants are issued in the Subsequent Financing, each of the investors shall nonetheless be entitled to an Additional Warrant, which Additional Warrant shall be non-callable, exercised on a cash only basis and have a term of five (5) years following the closing date of the Subsequent Financing. The conversion feature of the 2016 Convertible Notes was analyzed. The Company determined that the embedded conversion feature did not meet the requirements for equity classification in accordance with ASC Topic 815-40. Therefore, the conversion feature with a fair value of $95,407 was bifurcated from the host contract, the 2016 Convertible Notes, and recorded as a derivative liability, thereby creating a discount on the 2016 Convertible Notes. The conversion feature is also being re-measured at each balance sheet date based on estimated fair value, and any resultant changes in fair value is being recorded in the Company’s consolidated statement of operations. On July 22, 2016, the 2016 Convertible Notes were amended to change the final closing date from 120 days to 240 days after the initial closing of March 23, 2016. A reconciliation of the Company’s Convertible Notes Payable – Short Term, as of December 31, 2016, is as follows: 2014 Amended Notes 2015 Convertible Notes 2016 Convertible Notes Total Principal $ 2,198,416 $ 2,780,005 $ 570,000 $ 5,548,421 Adjustments to fair value, net of accretion 496,681 - - 496,681 Conversions (175,922 ) - - (175,922 ) Debt discount - (44,268 ) (38,238 ) (82,506 ) Deferred financing costs - (13,404 ) (3,712 ) (17,116 ) $ 2,519,175 $ 2,722,333 $ 528,050 $ 5,769,558 In connection with the private placement of the Convertible Notes, the Company entered into a registration rights agreement with the investors, in which the Company agreed to file a registration statement with the SEC to register for resale the shares underlying the Convertible Notes and the warrants within 90 calendar days of the final closing date of the Convertible Notes and to have the registration statement declared effective within 120 calendar days after the filing date. For embedded conversion features that are accounted for as a derivative liability, the Company used a Binomial Options Pricing model. The primary assumptions used to determine the fair values of these embedded conversion features were: risk free interest rate with a range 0.35% - 1.14%, volatility of 68.09%, and actual term of the related convertible notes. Other Notes Payable On September 27, 2016, the Company borrowed $100,000 in the form of a short term promissory note (the “Note”). The Note matures on October 31, 2016 and bears interest at the rate of 5% per annum if the Note is repaid on or prior to the maturity date and 15% if the Note is not repaid by the maturity date. On November 2, 2016, the Company repaid the Note and accumulated interest in the aggregate amount of $100,472. On October 25, 2016, the Company borrowed $5,000 in the form of a promissory note (the “Note”), from a former Director of the Company, which matured on November 25, 2016. The Note has been amended to extend the maturity date to June 30, 2017. On December 22, 2016, the Company borrowed $50,000 in the form of a promissory note (the “Note”). The Note matures on January 31, 2017 and bears interest at the rate of 10% per annum if the Note is repaid on or prior to the maturity date and 15% if the Note is not repaid by the maturity date. In connection with the issuance of the other notes payable and the convertible notes in 2014, 2015 and 2016, the Company incurred $345,836 in issuance costs. These costs are recorded as deferred issuance costs, which are offset against the proceeds from the convertible notes on the Company’s balance sheet and amortized to interest expense over the term of such convertible notes. For the period ended December 31, 2016 and 2015, the Company has amortized $117,217 and $155,479, respectively, of issuance costs to expense. For the period ended December 31, 2016 and 2015, the Company recorded non-cash interest expense related to the amortization of the discount on the convertible notes of $505,613 and $355,883, respectively. Interest expense, including accretion of the 2014 Amended Notes to fair value, amortization of deferred issuance costs and debt discounts related to the warrants and beneficial conversion feature, totaled $1,261,974 and $873,359 for the year ended December 31, 2016 and 2015, respectively. |
License Agreement
License Agreement | 12 Months Ended |
Dec. 31, 2016 | |
License Agreement | |
License Agreement | On June 3, 2016, the Company entered into two exclusive license agreements (the “Licenses”) with Sinotau USA, Inc., a wholly-owned subsidiary of Hainan Sinotau Pharmaceutical Co., Ltd. (“Sinotau”), a pharmaceutical organization. Sinotau is responsible for developing and commercializing the Company’s proprietary cardiac PET imaging assets, CardioPET and BFPET, in China and Canada. Sinotau also retains a first right of refusal to license the technology for development in Australia and Singapore. In accordance with the Licenses, the Company is entitled to upfront payments of $550,000, milestone payments totaling $1,450,000 upon the completion of certain development activities and royalties on future sales made by Sinotau. As of December 31, 2016, the Company has received payments of $775,000 under the terms of the License. As of December 31, 2016, the transfer of technology specified in the Sinotau agreement has not been completed and therefore a portion of the payments received totaling $408,333 has been recorded as deferred revenue. The remaining portion of the payments received, totaling $366,667, is to be used in order to further fund the Company’s research and development activities and is included in accrued expenses and other liabilities until such research and development costs are incurred. As of December 31, 2016, the Company has incurred $289,351 of research and development costs and recorded these amounts as a reduction in research and development expenses. The unused portion of funded research totaling $77,316 remains in accrued expenses and other liabilities as of December 31, 2016. License payments, excluding payments to fund further research, are subject to the Company’s license agreement with MGH (see Note 12). Upon receiving the upfront payment from Sinotau, the Company recorded a royalty expense of $88,750, payable to MGH, within research and development expenses. |
Capital Stock
Capital Stock | 12 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
CAPITAL STOCK | SERIES A PREFERRED STOCK The Company is authorized to issue 100,000,000 shares of preferred stock, $0.001 par value, of which 3,500,000 shares have been designated Series A Preferred Stock. At December 31, 2016 and 2015, 9,370 and 150,611 shares of Series A Preferred Stock, respectively, were issued and outstanding. The material terms of the Series A Preferred Stock, as specified in the Certificate of Designation for the Series A Preferred Stock, are as follows: Conversion Each share of Series A Preferred Stock may, at the holder’s option, convert into common stock. The conversion rate is equal to the sum of the stated value of the Series A Preferred Stock, which is $0.83 per share, plus all accrued and unpaid dividends, divided by the conversion price. As of December 31, 2016, the conversion price was $0.28. During the year ended December 31, 2016, 150,611 shares of Series A Preferred Stock were converted into 440,202 shares of the Company’s common stock. In addition, the Company issued 10,432 shares of the Company’s common stock in satisfaction of $2,931 dividend accrued on the shares of Series A Preferred Stock that were converted. During the year ended December 31, 2015, 856,219 shares of Series A Preferred Stock were converted into 1,923,324 shares of the Company’s common stock. In addition, the Company issued 45,987 shares of the Company’s common stock in satisfaction of $17,033 dividend accrued on the shares of Series A Preferred Stock that were converted. Subject to the specified provisions, the Series A Preferred Stock will automatically convert into common stock at the conversion price on the mandatory conversion date, which is defined as the first date at least six (6) months after the issuance of the Series A Preferred Stock on which each of the following conditions shall have been satisfied: (i) the Company shall have consummated, a qualified financing for aggregate gross proceeds to the Company of $7,000,000, (ii) the volume weighted average trading price for the Company’s common stock for each day on thirty (30) consecutive trading days immediately preceding such date, must be above $1.50 and the trading volume over that period must exceed 1,500,000 shares, and (iii) as of such date, all shares of common stock issuable upon conversion of the Series A Preferred Stock are registered under the Securities Act of 1933, as amended (the “Act”) pursuant to an effective registration statement or are otherwise eligible for sale under Rule 144 under the Act. As of December 31, 2016, no mandatory conversion has taken place as all of the conditions required for such mandatory conversion have not occurred. Dividends (a) Cumulative Preferred Dividends (b) Payment of Dividends For the year ended December 31, 2016, the Company accrued a preferred stock dividend of $10,708 and issued 9,370 shares of Series A Preferred Stock in payment of such dividend. In addition, during the year ended December 31, 2016, the Company issued 10,432 shares of common stock in payment of such dividend as related to the shares of Series A Preferred Stock converted into common stock. For the year ended December 31, 2015, the Company accrued a preferred stock dividend of $64,635 and issued 57,353 shares of Series A Preferred Stock in payment of such dividend. In addition, during the year ended December 31, 2015, the Company issued 45,987 shares of common stock in payment of such dividend as related to the shares of Series A Preferred Stock converted into common stock. Liquidation preference In the event of liquidation, dissolution or winding up of the business of the Company, whether voluntary or involuntary, each holder of Series A Preferred Stock shall be entitled to receive, for each share thereof, out of assets of the Company legally available therefor, a preferential amount in cash, per share of Series A Preferred Stock, equal to (and not more than) the sum of the (x) stated value, plus (y) all accrued and unpaid dividends thereon. All preferential amounts to be paid to the holders of Series A Preferred Stock in connection with such liquidation, dissolution or winding up shall be paid before the payment or setting apart for payment of any amount for, or the distribution of any assets of the Company to the holders of the Company's common stock. If upon any such distribution the assets of the Company shall be insufficient to pay the holders of the outstanding shares of Series A Preferred Stock the full amounts to which they shall be entitled, such holders shall share ratably in any distribution of assets in accordance with the sums which would be payable on such distribution if all sums payable thereon were paid in full. Voting The holders of the Series A Preferred Stock have the right to one vote for each share of common stock into which such Series A Preferred Stock could then convert. SERIES B PREFERRED STOCK The Company is authorized to issue 100,000,000 shares of preferred stock, $0.001 par value, of which 12,000,000 shares have been designated Series B Preferred Stock. At December 31, 2016 and 2015, 5,382,071 shares of Series B Preferred Stock were issued and outstanding. The material terms of the Series B Preferred Stock, as specified in the Certificate of Designation for the Series B Preferred Stock, are as follows: Ranking The Series B Preferred Stock ranks junior to the Company’s Series A Preferred Stock and senior to the Company’s common stock with respect to distributions of assets upon the liquidation, dissolution or winding up of the Company. Stated Value Each share of Series B Preferred Stock will have a stated value of $0.80, subject to adjustment for stock splits, combinations and similar events. Dividends Cumulative dividends on the Series B Preferred Stock accrue at the rate of 10% of the stated value per annum, compounded annually, from and after the date of the initial issuance through the third anniversary of the issuance date; provided, however, that any holder of at least 4,500,000 shares of Series B Preferred Stock after the issuance date and prior to October 1, 2013 (a “Major Holder”) will be entitled to accrued dividends through the fourth anniversary of the issuance date (as applicable, the “Accrual Period”). Accrued dividends are payable upon the earliest to occur of (i) the third anniversary of the issuance date (or, with respect to the Major Holder, the fourth anniversary of the issuance date), (ii) mandatory conversion (as described below) and (iii) an automatic conversion upon a fundamental transaction (as such term is defined in the Certificate of Designation) or triggering event (as described below). Dividends are payable in Series B Preferred Stock valued at the stated value, or in cash upon the mutual agreement of the Company and the holder. For the year ended December 31, 2016, the Company accrued a Series B Preferred Stock dividend of $512,697 which is included in accrued expenses in the Company’s consolidated balance sheet. As of December 31, 2016, no voluntary conversion has taken place. For the year ended December 31, 2015, the Company accrued a Series B Preferred Stock dividend of $509,399 which is included in accrued expenses in the Company’s consolidated balance sheet. In addition, the Company issued 160,267 shares of common stock in payment of such dividend as related to the 312,500 shares of Series B Preferred Stock converted to common stock during the year ended December 31, 2015. Liquidation Preference If the Company voluntarily or involuntarily liquidates, dissolves or winds up its affairs, each holder of the Series B Preferred Stock will be entitled to receive out of the Company’s assets available for distribution to stockholders, after satisfaction of liabilities to creditors, if any, and payments due to holders of the Series A Preferred Stock but before any distribution of assets is made on the Company’s common stock or any of our other shares of stock ranking junior as to such a distribution to the Series B Preferred Stock, a liquidating distribution in the amount in the amount of the stated value of all such holder’s Series B Preferred Stock plus all accrued and unpaid dividends thereon. Voluntary Conversion Each share of Series B Preferred Stock is convertible at the holder’s option into the Company’s common stock in an amount equal to the stated value plus accrued and unpaid dividends thereon through the conversion date divided by the then applicable conversion price. The initial conversion price was $0.80 per share and is subject to customary adjustments for issuances of shares of common stock as a dividend or distribution on shares of the common stock, or mergers or reorganizations, as well as “full-ratchet” anti-dilution adjustments for future issuances of other Company securities. At December 31, 2016, the conversion price was $0.28 per share. During the year ended December 31, 2016, no voluntary conversions have taken place. During the year ended December 31, 2015, 312,500 shares of Series B Preferred Stock were converted into 714,285 shares of the Company’s common stock. Holders also have the option to convert their Series B Preferred Stock upon the occurrence of a fundamental transaction or one of the following triggering events: Johan (Thijs) Spoor ceases to be the chief executive officer of the Company; or there is a change in three of the five current members of the Company’s board of directors, such conversion will be on the same terms as a mandatory conversion. Mandatory Conversion The Series B Preferred Stock is subject to mandatory conversion at such time as the volume weighted average price of the Company’s common stock is at least $1.20 (subject to adjustments for stock splits and similar events) provided, that, on the mandatory conversion date, (A) a registration statement providing for the resale of the shares underlying the Series B Preferred Stock is effective, or such shares may be offered for sale to the public without limitations pursuant to Rule 144, (B) trading in the common stock shall not have been suspended by the SEC or exchange or market on which the common stock is trading), (C) the daily volume of the common stock is at least 50,000 shares per day for the applicable ten (10) consecutive trading days, and (D) the Company is in material compliance with the terms and conditions of the transaction documents. In the event of mandatory conversion, each share of Series B Preferred Stock will convert into the number of shares of common stock equal to the stated value plus accrued and unpaid dividends for the Accrual Period divided by the conversion price. Voting Rights The holders of the Series B Preferred Stock will be entitled to vote upon all matters upon which holders of common stock have the right to vote, such votes to be counted together with all other shares of capital stock having general voting powers and not separately as a class. The holders of the Series B Preferred Stock will be entitled to the number of votes equal to the number of common stock into which the Series B Preferred Stock are then convertible. In addition, as long as at least 25% of the Series B Preferred Stock remains outstanding, the Company will not, without the affirmative vote or consent of the holders of at least a majority of the outstanding Series B Preferred Stock, voting as a separate class, (i) amend, waive or repeal (including through a merger, consolidation or similar event) any provision of the Company’s articles of incorporation or by-laws in any manner that adversely affects the rights of the holders of the Series B Preferred Stock; (ii) alter or change adversely the preferences, rights, privileges, or restrictions of the Series B Preferred Stock; (iii) authorize or create any class or series of stock having rights, preferences or privileges in any respect senior to the Series B Preferred Stock; or (iv) reclassify, alter or amend any existing class or series of stock, if such reclassification, alteration or amendment would render such other class or series of stock as having rights, preferences or privileges in any respect senior to the Series B Preferred Stock. COMMON STOCK The Company has authorized 200,000,000 shares of its common stock, $0.001 par value, At December 31, 2016 and 2015, the Company had issued and outstanding 34,074,284 and 32,908,503, respectively, shares of its common stock. In January 2016, the Company issued an aggregate of 61,159 shares of common stock with fair value of $21,406 in settlement of certain outstanding liabilities to third parties. In December 2015, the Company issued an aggregate of 867,143 shares of common stock, with a total fair value of $337,250, for consulting services and in settlement of certain outstanding liabilities to third parties. As of December 31, 2015, $30,000 of this settlement, relates to services to be performed in 2016 and is included in prepaid expense in the consolidated balance sheet. In addition, certain settlement agreements included a provision to issue, upon a Subsequent Financing as defined, an amount of warrants equal to fifty percent of the number of shares of common stock issued by the Company in the Subsequent Financing. |
Stock Purchase Warrants
Stock Purchase Warrants | 12 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
Stock Purchase Warrants | Common Stock Warrants During the year ended December 31, 2016, the Company issued 200,000 common stock warrants at an exercise price of $0.28 per share with a five-year term to a consultant. The fair value of these warrants of $22,576 was recorded as expense in the year ended December 31, 2016. During the year ended December 31, 2016, 343,403 stock purchase warrants expired with a weighted average exercise price of $0.88. As a result of the amendment to the 2014 Notes entered into with existing convertible note holders on January 20, 2016, the conversion price of certain related warrants has been adjusted to $0.28 per share. During the year ended December 31, 2015, the Company issued 3,971,436 common stock warrants to investors and 406,859 common stock warrants to the placement agents in connection with issuance of the 2015 Convertible Notes (see Note 5). These warrants are recorded as a derivative liability. In addition, during the year ended December 31, 2015, the Company issued 607,229 common stock warrants at an exercise price of $0.50 per share with a five-year term. These warrants were issued in consideration of the warrant holder waiving its rights with respect to indebtedness incurred by the Company in excess of the amount permitted pursuant to the Certificate of Designation of Relative Rights and Preferences of the Company’s Series A Preferred Stock. The warrants had a fair value of $80,472 and are included in interest and other expense in the consolidated statement of operations. During the year ended December 31, 2015, 3,558,395 stock purchase warrants expired with a weighted average exercise price of $1.29. As a result of the issuance of the 2015 Convertible Notes, the exercise price of the 8,676,408 common stock warrants, which were issued in connection with the Company's Series B Preferred Stock in 2013 and 2014, was reduced to $0.35 per share. The following is a summary of all common stock warrant activity during the year ended December 31, 2016: Number of Shares Under Warrants Exercise Price Per Share Weighted Average Exercise Price Warrants issued and exercisable at December 31, 2015 16,281,164 $ 0.35 - 1.33 $ 0.48 Warrants Issued/Exchanged 200,000 $ 0.28 $ 0.28 Warrants Expired/Forfeited (343,403 ) $ 0.83 – 1.33 $ 0.88 Warrants issued and exercisable at December 31, 2016 16,137,761 $ 0.28 - 1.33 $ 0.37 The following represents additional information related to common stock warrants outstanding and exercisable at December 31, 2016: Exercise Price Number of Shares Under Warrants Weighted Average Remaining Contract Life in Years Weighted Average Exercise Price $ 0.28 13,054,703 2.42 $ 0.28 Total warrants accounted for as derivative liability 13,054,703 $ 2.42 0.28 $ 0.28 200,000 4.30 $ 0.28 $ 0.50 607,229 3.79 $ 0.50 $ 0.83 1,928,500 2.01 $ 0.83 $ 0.85 181,912 0.88 $ 0.85 $ 1.00 165,417 2.13 $ 1.00 Total warrants accounted for as equity 3,083,058 2.45 $ 0.79 Total for all warrants outstanding 16,137,761 2.42 $ .037 The Company used the Black-Scholes option price calculation to value the warrants granted in 2016 using the following assumptions: risk-free rate of 1.24%, volatility of 68.09%, actual term and exercise price of warrants granted. For warrants granted that are accounted for as a derivative liability, the Company used a Binomial Options Pricing model. The primary assumptions used to determine the grant date fair value of these warrants were: a risk free interest rate with the range from 1.01% - 1.93%, volatility of 68.89%, actual term and exercise price of the warrants granted. There were no material changes to the primary assumptions, as noted above, used to determine the fair value of the warrants as of December 31, 2016. The Company used the Black-Scholes option price calculation to value the warrants granted in 2015 using the following assumptions: risk-free rate of 1.76%, volatility of 49.42%, actual term and exercise price of warrants granted. For warrants granted that are accounted for as a derivative liability, the Company used a Binomial Options Pricing model. The primary assumptions used to determine the grant date fair value of these warrants were: a risk free interest rate with the range from 1.37% - 1.76%, volatility of 49.42%, actual term and exercise price of the warrants granted. There were no material changes to the primary assumptions, as noted above, used to determine the fair value of the warrants as of December 31, 2015. |
Common Stock Options
Common Stock Options | 12 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
COMMON STOCK OPTIONS | On February 11, 2011, the Company adopted its 2011 Equity Incentive Plan (the “Plan”) under which 6,475,750 shares of common stock were reserved for issuance under options or other equity interests as set forth in the Plan. Under the Plan, options are available for issuance to employees, officers, directors, consultants and advisors. The Plan provides that the board of directors will determine the exercise price and vesting terms of each option on the date of grant. Options granted under the Plan generally expire ten years from the date of grant. As of December 31, 2016, there were 3,577,661 shares available for issuance under the Plan. Under the Plan, the Company has issued 161,250 shares of fully paid and non-assessable restricted common stock to a director of the Company. These shares of restricted stock are subject to the terms of the Plan and are unvested and outstanding as of December 31, 2015 The shares shall vest upon the earlier of (i) the occurrence of a Change of Control, as defined in the Plan, (ii) the successful completion of a Phase II clinical trial for any of the Company’s products, or (iii) the determination by the board of directors to provide for immediate vesting. The weighted average grant-date fair value is $1.07 per share. The following is a summary of all common stock option activity for the year ended December 31, 2016: Options Outstanding Weighted Average Exercise Price Outstanding at December 31, 2015 4,996,095 $ 0.65 Options granted 125,411 $ 0.35 Options forfeited (2,384,667 ) $ 0.70 Options exercised - $ - Outstanding at December 31, 2016 2,736,839 $ 0.58 Options Exercisable Weighted Average Exercise Price per Share Exercisable at December 31, 2015 4,312,762 $ 0.68 Exercisable at December 31, 2016 2,283,506 $ 0.62 The weighted average fair value of options granted during the year ended December 31, 2016 was $0.14. The weighted average remaining contractual term for exercisable and outstanding options is 4.55 and 5.15 years, respectively. The aggregate intrinsic value of all of the Company’s exercisable and outstanding options is approximately $0 and $0, respectively. As of December 31, 2016, there was approximately $31,906 of unrecognized compensation cost related to non-vested options. The unrecognized compensation expense is estimated to be recognized over a period of 1.7 years at December 31, 2016. The Company used the Black-Scholes option pricing model to value all option grants (see Note 2, Summary of Significant Accounting Policies, “Accounting for Share Based Payments”). |
Retirement Plan
Retirement Plan | 12 Months Ended |
Dec. 31, 2016 | |
Retirement Plan | |
Retirement Plan | In 2011, the Company adopted a defined contribution plan intended to qualify under Section 401(k) of the Internal Revenue Code covering all eligible employees of the Company. All employees are eligible to become participants of the plan upon reaching age 21 on the first day of the month following the hire date. Each employee may elect, voluntarily, to contribute a percentage of their compensation to the plan each year, subject to certain limitations. The Company reserves the right to make additional contributions to the plan. The Company has elected to make “safe harbor” contributions equal to 100% of the first 6% of participants’ elective deferrals. In the years ended December 31, 2016 and 2015, the Company recognized expense related to its contributions of $31,300 and $37,175, respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes | |
Income Taxes | The Company is subject to taxation in the U.S. and the State of New Jersey. At December 31, 2016 and 2015, the Company had gross deferred tax assets calculated at an expected blended rate of 39.94% of approximately $12,267,597 and $11,149,349, respectively. As the Company cannot determine that it is more likely than not that the Company will realize the benefit of the deferred tax asset, a valuation allowance of approximately $12,266,000 and $11,149,000 has been established at December 31, 2016 and 2015, respectively. The significant components of the Company’s net deferred tax assets (liabilities) at December 31, 2016 and 2015 are as follows: December 31, 2016 December 31, 2015 Gross deferred tax assets: Net operating loss carry-forwards $ 10,144,390 $ 9,099,986 Stock based expenses 1,108,677 1,094,424 Tax credit carry-forwards 361,758 363,607 Capital loss carry-forwards 462,566 462,128 Long lived assets 190,206 129,204 12,267,597 11,149,349 Deferred tax asset valuation allowance (12,267,597 ) 11,149,349 ) Net deferred tax asset $ - $ - Income taxes computed using the federal statutory income tax rate differs from the Company’s effective tax rate primarily due to the following: December 31, 2016 December 31, 2015 Income taxes benefit (expense) at statutory rate 34.00 % 34.00 % State income tax, net of federal benefit (5.94 )% (5.94 )% Permanent differences Meals & entertainment (0.16 )% (0.01 )% Share-based compensation & warrant adjustments 14.00 % 2.56 % Change in valuation allowance (41.90 )% (30.62 )% 0 % 0 % At December 31, 2016, the Company has gross net operating loss carry-forwards for federal income tax purposes of approximately $26,800,000 which expire in the years 2023 through 2036. The Company has gross state net operating loss carryforwards of approximately $22,800,000 which expire in the years 2030 through 2035. The Company also has federal research and development carryforwards of approximately $362,000 which expire twenty years from the date of inception. The net increase in the valuation allowance in the years ended December 31, 2016 and 2015 was approximately $1,000,000 and $1,500,000, respectively. The Company is subject to the net operating loss utilization provisions of Section 382 of the Internal Revenue Code. Due to the reverse merger/recapitalization, the Company is restricted in the future use of net operating loss and tax credit carry-forwards generated by the Company before the effective date of the merger. Other ownership changes may cause the net operating losses to further be limited. Both of the separate loss years’ net operating losses will be subject to possible limitations concerning changes of control and other limitations under the Internal Revenue Code. The effect of an ownership change would be the imposition of an annual limitation on the use of NOL carryforwards attributable to periods before the change. The amount of the annual limitation depends upon the value of the Company immediately before the change, changes to the Company’s capital during a specified period prior to the change, and the federal published interest rate. Topic 740 in the Accounting Standards Codification (ASC 740) prescribes recognition threshold and measurement attributes for the financial statement recognition and measurement of uncertain tax positions taken or expected to be taken in a tax return. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. At December 31, 2016, the Company had taken no uncertain tax positions that would require disclosure under ASC 740. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
COMMITMENTS AND CONTINGENCIES | License Agreements On June 26, 2014, the Company and The General Hospital Corporation, d/b/a Massachusetts General Hospital (“MGH”) entered into two license agreements (the “Agreements”), which Agreements replace the single license agreement between the Company and MGH dated April 27, 2009, as amended by letter dated June 21, 2011 and agreement dated October 31, 2011 (the “Original Agreement”). The Agreements provide exclusive licenses for the Company’s two lead product candidates, BFPET and CardioPET, two of the three cardiac imaging technologies covered by the Original Agreement. The Agreements were entered into primarily for the purpose of separating the Company’s rights and obligations with respect to its different product development programs. Each of the Agreements requires the Company to pay MGH an initial license fee of $175,000 and annual license maintenance fees of $125,000 each. The Agreements require the Company to meet certain obligations, including, but not limited to, meeting certain development milestones relating to clinical trials and filings with the United States Food and Drug Administration. MGH has the right to cancel or make non-exclusive certain licenses on certain patents should the Company fail to meet stipulated obligations and milestones. Additionally, upon commercialization, the Company is required to make specified milestone payments and royalties on commercial sales. The Company pays annual maintenance fees of $125,000 for each of its license agreements. For the years ended December 31, 2016 and 2015, the Company has recorded license fee expenses of $250,000 and $153,332, respectively. On August 10, 2016, the Company entered into agreements with MGH to amend the Agreements to include the potential to license technical information in addition to intellectual property. The Company is current with all stipulated obligations and milestones under the Agreements and the Agreements remain in full force and effect. The Company believes that it maintains a good relationship with MGH and will be able to obtain waivers or extension of its obligations under the Agreement, should the need arise. If MGH were to refuse to provide the Company with a waiver or extension of any of its obligations or were to cancel or make the license non-exclusive, this would have a material adverse impact on the Company as it may be unable to commercialize products without exclusivity and would lose its competitive edge for portions of the patent portfolio. Executive Employment Contracts The Company maintains employment contracts with key Company executives that provide for the continuation of salary and the grant of certain options to the executives if terminated for reasons other than cause, as defined within the agreements. One contract also provides for a $1 million bonus should the Company execute transactions as specified in the contract, including the sale of substantially all of the Company’s assets or a stock, or merger transaction, any of which resulting in compensation to the Company’s stockholders aggregating in excess of $50 million for such transaction. Operating Lease Commitment Effective July 31, 2016, the Company terminated its existing lease agreement. Then on August 1, 2016, the Company entered into a new one year lease agreement. The annual minimum lease payments for this space are $25,966, payable in equal installments of $2,164 per month. The future minimum lease payments remaining through August 1, 2017 amount to $17,312. Rent expense, net of sublease income, was $37,551 and $76,975 for the years ended December 31, 2016 and 2015, respectively. Legal Contingencies The Company is not aware of any material, active, pending or threatened proceeding, nor is the Company, or any subsidiary, involved as a plaintiff or defendant in any other material proceeding or pending litigation. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2016 | |
Notes to Financial Statements | |
Subsequent Events | In 2017, Dr. Peter Conti, Mr. Johan (Thijs) Spoor, and Mr. Lawrence Atinsky resigned as directors. The resignations are not due to any disagreements on any matter relating to the Company’s operations, policies and practices. On March 13, 2017, the Company obtained majority approval to further amend the 2014 Notes to extend the maturity date of the Notes to June 22, 2017, with an effective date of January 22, 2017. In February 2017, the Company issued 187,980 shares of common stock pursuant to the conversion of 2014 Convertible Notes. During 2017, the Company issued promissory secured notes for the aggregate amount of $155,000 with terms substantially similar to the 2016 Convertible Notes (see Note 5). Effective as of February 24, 2017, Platinum Montaur, on behalf of itself and each of its successors and assigns, waived its Preferred Ratchet Rights and Warrant Ratchet Rights with respect to the Subsequent Financing, as defined, provided, however, that such waiver shall be automatically revoked and of no further force and effect if the Subsequent Financing is not completed by August 10, 2017. On March 30, 2017, the Company obtained majority approval to amend the 2016 Notes to extend the maturity date of the Notes to September 23, 2017, with an effective date of March 23, 2017. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Summary Of Significant Accounting Policies Policies | |
Cash and Cash Equivalents | The Company considers all highly liquid investments with maturities of three months or less from date of purchase to be cash equivalents. All cash balances were highly liquid at December 31, 2016 and 2015. |
Use of Estimates | The accompanying consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, and include certain estimates and assumptions which affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of expenses during the reporting period, including contingencies. Accordingly, actual results may differ from those estimates. |
Concentration of Risks | Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company primarily maintains its cash balances with financial institutions in federally insured accounts. The Company may from time to time have cash in banks in excess of FDIC insurance limits. The Company has not experienced any losses to date resulting from this practice. |
Principles of Consolidation | The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, FluoroPharma, Inc. Intercompany transactions and balances have been eliminated upon consolidation. |
Property and Equipment | Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The Company’s property and equipment at December 31, 2016 and 2015 consisted of computer and office equipment and machinery and equipment with estimated useful lives of three to five years. Depreciation was $4,918 and $7,372 in the years ended December 31, 2016 and 2015, respectively. |
Intangible Assets | The Company’s intangible assets consist of technology licenses and are carried at the legal cost to obtain them. Intangible assets are amortized using the straight-line method over the estimated useful life. Useful lives on technology licenses are 5 to 15 years. |
Impairments | The Company assesses the impairment of long-lived assets, including other intangible assets, whenever events or changes in circumstances indicate that their carrying value may not be recoverable in accordance with ASC Topic 360-10-35, “Impairment or Disposal of Long-Lived Assets.” The determination of related estimated useful lives and whether or not these assets are impaired involves significant judgments, related primarily to the future profitability and/or future value of the assets. The Company records an impairment charge if it believes an investment has experienced a decline in value that is other than temporary. Management has determined that no impairments were required as of December 31, 2016 and 2015, respectively. |
Derivative Financial Instruments | The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based derivative financial instruments, the Company uses a binomial pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. The Company has derivative liabilities at December 31, 2016 and 2015 relating to certain warrants and embedded conversion features that contain anti-dilution provisions. |
Fair Value of Financial Instruments | The Company's financial instruments primarily consist of cash, trading securities, accounts payable, notes payable and derivative liabilities. The fair value of these instruments is calculated using current market prices, or on a historical cost basis, which, due to the short maturity of these financial instruments, approximates the fair value at the reporting dates of these financial statements. The Company groups its assets and liabilities measured at fair value, in three levels based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Financial instruments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. The three levels of the fair value hierarchy are as follows: Level 1 – Valuation is based on quoted prices in active markets for identical assets or liabilities. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. Level 2 – Valuation is based on observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the financial instrument. The Company recognizes transfers between levels at the end of the reporting period as if the transfers occurred on the last day of the reporting period. Assets and liabilities measured at fair value on a recurring basis are summarized below: December 31, 2016 Level 1 Level 2 Level 3 Fair Value Current Liabilities: Derivative liabilities $ - $ -- $ 251,806 $ 251,806 December 31, 2015 Level 1 Level 2 Level 3 Fair Value Current Liabilities: Derivative liabilities $ - $ -- $ 1,526,060 $ 1,526,060 The following table sets forth the changes in the estimated fair value for our Level 3 classified derivative liabilities: Year Ended Year Ended December 31, 2016 December 31, 2015 Fair value at beginning of the year $ 1,526,060 $ 1,354,319 Issuance of warrants – 2015 Notes - 397,363 Embedded conversion feature – 2015 Notes - 490,340 Embedded conversion feature – Amended 2014 Notes 945,951 - Embedded conversion feature – 2016 Notes 95,407 - Embedded conversion feature – Amended 2014 Notes converted (15,271 ) - Change in fair value (2,300,341 ) (715,962 ) Fair value at end of the year $ 251,806 $ 1,526,060 |
Revenue Recognition | From time to time the Company enters into licensing agreements, the terms of which may include grants of licenses, or options to obtain licenses, to our intellectual property and research and development activities. Payments under these arrangements typically include one or more of the following: non-refundable, up-front license fees; funding of research and/or development efforts; amounts due upon the achievement of specified objectives; and/or royalties on future product sales. The Company recognizes milestone payments as revenue in their entirety upon the achievement of a substantive milestone if the consideration earned from the achievement of the milestone (i) is consistent with performance required to achieve the milestone or the increase in value to the delivered item, (ii) relates solely to past performance and (iii) is reasonable relative to all of the other deliverables and payments within the arrangement. Amounts received contractually designated to fund further research are recorded as a reduction to research and development expenses when the Company has satisfied all performance obligations to the licensee and expenses for specified development activities have been incurred. |
Income Taxes | The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to the differences between the financial statement carrying amounts of the existing assets and liabilities and the respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be realized or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in results of operations in the period that the tax rate change occurs. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company accounts for uncertain tax positions in accordance with FASB ASC Topic 740-10, Accounting for Uncertainty in Income Taxes. |
Accounting for Share-Based Payments | The Company follows the provisions of ASC Topic 718, which establishes the accounting for transactions in which an entity exchanges equity securities for services and requires companies to expense the estimated fair value of these awards over the requisite service period. The Company uses the Black-Scholes option pricing model in determining fair value. Accordingly, compensation cost has been recognized using the fair value method and expected term accrual requirements as prescribed, which resulted in stock-based compensation expense for the years ended December 31, 2016 and 2015 of $32,451 and $135,492, respectively. The Company accounts for share-based payments granted to non-employees in accordance with ASC Topic 505, “Equity Based Payments to Non-Employees.” The Company determines the fair value of the stock-based payment as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s performance is complete. To compute compensation expense, the Company estimated the fair value of each option award on the date of grant using the Black-Scholes-Merton option pricing model for employees, and calculated the fair value of each option award at the end of the period for non-employees. The Company based the expected volatility assumption on a volatility index of peer companies as the Company did not have sufficient historical market information to estimate the volatility of its own stock. The expected term of options granted represents the period of time that options are expected to be outstanding. The Company estimated the expected term of stock options by using the simplified method. The expected forfeiture rates are based on the historical employee forfeiture experiences. To determine the risk-free interest rate, the Company utilized the U.S. Treasury yield curve in effect at the time of grant with a term consistent with the expected term of the Company’s awards. The Company has not declared a dividend on its common stock since its inception and has no intentions of declaring a dividend in the foreseeable future and therefore used a dividend yield of zero. The fair value of each share-based payment is estimated on the measurement date using the Black-Scholes model with the following assumptions: 2016 2015 Risk-free interest rate 1.83 % 2.07 % Expected volatility 68.09 % 49.42 % Dividend yield none none Expected term 5 years 6.5 years |
Net Loss per Common Share | The Company computes net loss per common share in accordance with ASC Topic 260. Net loss per share is based upon the weighted average number of outstanding common shares and the dilutive effect of common share equivalents, such as options and warrants to purchase common stock, and convertible notes, if applicable, that are outstanding each year. Basic and diluted earnings per share were the same for all periods presented as including common stock equivalents in the calculation of diluted earnings per share would have been antidilutive. As of December 31, 2016, the Company had outstanding options exercisable for 2,736,839 shares of its common stock, warrants exercisable for 16,137,761 shares of its common stock, series A preferred stock (the “Series A Preferred Stock”) convertible into 27,775 shares of common stock, and series B preferred stock (the “Series B Preferred Stock”) convertible into 20,929,456 shares of common stock. As of December 31, 2015, the Company had outstanding options exercisable for 4,996,095 shares of its common stock, warrants exercisable for 16,281,164 shares of its common stock, series A preferred stock (the “Series A Preferred Stock”) convertible into 357,163 shares of common stock, and series B preferred stock (the “Series B Preferred Stock”) convertible into 15,278,717 shares of common stock. |
Research and Development Costs | Research and development costs are expensed as incurred. |
Segment Reporting | The Company has determined that it operates in only one segment currently, which is biopharmaceutical research and development. |
Recent Accounting Pronouncements | In August 2014, the FASB issued ASU 2014-15 “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” The core principle of the guidance is that an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are available to be issued. When management identifies conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern, management should consider whether its plans that are intended to mitigate those relevant conditions or events that will alleviate the substantial doubt are adequately disclosed in the footnotes to the financial statements. This guidance will be effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company adopted ASU 2014-15 as of December 31, 2016 and updated the related disclosures. Other than the updates to going concern related disclosures, the adoption of ASU 2014-15 did not have an impact on the Company’s financial statements. In April 2015, the FASB issued ASU 2015-03, 'Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs”. ASU 2015-03 is intended to simplify the presentation of debt issuance costs. These amendments require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The Company adopted ASU 2015-03 on January 1, 2016 and applied the standard retrospectively. The adoption of ASU 2015-03 resulted in the reclassification of $17,116 and $136,260 of unamortized debt issuance costs related to the Company's Convertible Notes (see Note 5) from prepaid expenses and other current assets to convertible notes payable within the Company’s condensed consolidated balance sheets as of December 31, 2016 and December 31, 2015, respectively. Other than this reclassification, the adoption of ASU 2015-03 did not have an impact on the Company's financial statements. In March 2016, the FASB issued ASU No. 2016-09, “Compensation – Stock Compensation”. The areas for simplification in this update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public entities, the amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted in any interim or annual period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The Company is currently evaluating the impact of adopting this ASU on the financial statements. On August 26, 2016, the FASB issued ASU No. 2016-15 “Statement of Cash Flows (Topic 230 )”, Management does not expect the above recently issued, but not yet effective, accounting standards to have a material effect on the accompanying financial statements. |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Summary Of Significant Accounting Policies Tables | |
Fair value of financial instruments | December 31, 2016 Level 1 Level 2 Level 3 Fair Value Current Liabilities: Derivative liabilities $ - $ -- $ 251,806 $ 251,806 December 31, 2015 Level 1 Level 2 Level 3 Fair Value Current Liabilities: Derivative liabilities $ - $ -- $ 1,526,060 $ 1,526,060 |
Fair value of Level 3 financial instruments | Year Ended Year Ended December 31, 2016 December 31, 2015 Fair value at beginning of the year $ 1,526,060 $ 1,354,319 Issuance of warrants – 2015 Notes - 397,363 Embedded conversion feature – 2015 Notes - 490,340 Embedded conversion feature – Amended 2014 Notes 945,951 - Embedded conversion feature – 2016 Notes 95,407 - Embedded conversion feature – Amended 2014 Notes converted (15,271 ) - Change in fair value (2,300,341 ) (715,962 ) Fair value at end of the year $ 251,806 $ 1,526,060 |
Accounting for Share-Based Payments | 2016 2015 Risk-free interest rate 1.83 % 2.07 % Expected volatility 68.09 % 49.42 % Dividend yield none none Expected term 5 years 6.5 years |
Other Balance Sheet Informati22
Other Balance Sheet Information (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Other Balance Sheet Information Tables | |
Components of selected captions in the accompanying balance sheets | December 31, 2016 December 31, 2015 Prepaid expenses and other: Prepaid insurance $ 20,038 $ 39,756 Annual license fee - 104,167 Other 3,022 74,232 Prepaid expenses and other $ 23,060 $ 218,155 Property and equipment: Computers and office equipment $ 75,204 $ 73,911 Machinery and equipment 112,421 112,421 Less: accumulated depreciation (180,201 ) (175,283 ) Property and equipment, net $ 7,424 $ 11,049 Accrued expenses and other: Professional fees $ 32,000 $ 49,703 Accrued dividends Series B Preferred Stock 1,554,591 1,041,894 Deferred salary 237,293 88,958 Accrued interest on Notes Payable 523,360 327,203 Accrued research and development 53,995 39,268 Funded research 77,316 - Other 136,926 56,579 Accrued expenses and other $ 2,615,481 $ 1,603,605 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Intangible Assets Tables | |
Intangible assets | December 31, 2016 December 31, 2015 Technology license $ 413,398 $ 413,398 Less: accumulated amortization (133,845 ) (94,851 ) Intangibles, net $ 279,553 $ 318,547 |
Convertible Notes Payable - S24
Convertible Notes Payable - Short Term (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Calculation of the loss on extinguishment | December 31, 2016 Fair value – Amended 2014 Notes $ 2,495,582 Fair value – embedded conversion feature 945,951 Total Amended 2014 Notes 3,441,533 Principal – 2014 Notes 2,198,416 Accrued interest – 2014 Notes 232,235 Deferred financing costs – 2014 Notes (11,638 ) Total 2014 Notes 2,419,013 Loss on Extinguishment from 2014 Note Amendment 1,022,520 Carrying value – Amended 2014 Notes converted 175,922 Value of interest accretion – Amended 2014 Notes converted 2,809 Fair value of embedded conversion feature – Amended 2014 Notes converted 15,271 Fair value – common stock issued upon conversion (167,217 ) Gain on Extinguishment from Amended 2014 Note Conversions 26,785 Loss on Extinguishment, net $ 995,735 |
Reconciliation of the Company's Convertible Notes Payable - Short Term | 2014 Amended Notes 2015 Convertible Notes 2016 Convertible Notes Total Principal $ 2,198,416 $ 2,780,005 $ 570,000 $ 5,548,421 Adjustments to fair value, net of accretion 496,681 - - 496,681 Conversions (175,922 ) - - (175,922 ) Debt discount - (44,268 ) (38,238 ) (82,506 ) Deferred financing costs - (13,404 ) (3,712 ) (17,116 ) $ 2,519,175 $ 2,722,333 $ 528,050 $ 5,769,558 |
Stock Purchase Warrants (Tables
Stock Purchase Warrants (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Stock Purchase Warrants Tables | |
Common stock warrant activity | Number of Shares Under Warrants Exercise Price Per Share Weighted Average Exercise Price Warrants issued and exercisable at December 31, 2015 16,281,164 $ 0.35 - 1.33 $ 0.48 Warrants Issued/Exchanged 200,000 $ 0.28 $ 0.28 Warrants Expired/Forfeited (343,403 ) $ 0.83 – 1.33 $ 0.88 Warrants issued and exercisable at December 31, 2016 16,137,761 $ 0.28 - 1.33 $ 0.37 |
Common stock warrants outstanding and exercisable | Exercise Price Number of Shares Under Warrants Weighted Average Remaining Contract Life in Years Weighted Average Exercise Price $ 0.28 13,054,703 2.42 $ 0.28 Total warrants accounted for as derivative liability 13,054,703 $ 2.42 0.28 $ 0.28 200,000 4.30 $ 0.28 $ 0.50 607,229 3.79 $ 0.50 $ 0.83 1,928,500 2.01 $ 0.83 $ 0.85 181,912 0.88 $ 0.85 $ 1.00 165,417 2.13 $ 1.00 Total warrants accounted for as equity 3,083,058 2.45 $ 0.79 Total for all warrants outstanding 16,137,761 2.42 $ .037 |
Common Stock Options (Tables)
Common Stock Options (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Common Stock Options Tables | |
Common stock option activity | Options Outstanding Weighted Average Exercise Price Outstanding at December 31, 2015 4,996,095 $ 0.65 Options granted 125,411 $ 0.35 Options forfeited (2,384,667 ) $ 0.70 Options exercised - $ - Outstanding at December 31, 2016 2,736,839 $ 0.58 Options Exercisable Weighted Average Exercise Price per Share Exercisable at December 31, 2015 4,312,762 $ 0.68 Exercisable at December 31, 2016 2,283,506 $ 0.62 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes Tables | |
Net deferred tax assets (liabilities) | December 31, 2016 December 31, 2015 Gross deferred tax assets: Net operating loss carry-forwards $ 10,144,390 $ 9,099,986 Stock based expenses 1,108,677 1,094,424 Tax credit carry-forwards 361,758 363,607 Capital loss carry-forwards 462,566 462,128 Long lived assets 190,206 129,204 12,267,597 11,149,349 Deferred tax asset valuation allowance (12,267,597 ) 11,149,349 ) Net deferred tax asset $ - $ - |
Reconciliation of federal statutory income tax rate to our effective income tax rate | December 31, 2016 December 31, 2015 Income taxes benefit (expense) at statutory rate 34.00 % 34.00 % State income tax, net of federal benefit (5.94 )% (5.94 )% Permanent differences Meals & entertainment (0.16 )% (0.01 )% Share-based compensation & warrant adjustments 14.00 % 2.56 % Change in valuation allowance (41.90 )% (30.62 )% 0 % 0 % |
Organization, Basis Of Presenta
Organization, Basis Of Presentation And Going Concern (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Organization Basis Of Presentation And Going Concern Details Narrative | ||
Cumulative losses attributable to stockholders | $ 35,177,640 | $ 32,604,374 |
Company raised net cash | $ 615,290 |
Summary of Significant Accoun29
Summary of Significant Accounting Policies (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Derivative liabilities | $ 251,806 | $ 1,526,060 |
Fair Value, Inputs, Level 1 [Member] | ||
Derivative liabilities | 0 | 0 |
Fair Value, Inputs, Level 2 [Member] | ||
Derivative liabilities | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | ||
Derivative liabilities | $ 251,806 | $ 1,526,060 |
Summary of Significant Accoun30
Summary of Significant Accounting Policies (Details 1) - Fair Value, Inputs, Level 3 [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Fair value at beginning of period | $ 1,526,060 | |
Issuance of warrants - 2015 Notes | 0 | $ 397,363 |
Embedded conversion feature – 2015 Notes | 0 | 490,340 |
Embedded conversion feature – Amended 2014 Notes | 945,951 | 0 |
Embedded conversion feature – 2016 Notes | 95,407 | 0 |
Embedded conversion feature – Amended 2014 Notes converted | (15,271) | 0 |
Change in fair value | (2,300,341) | (715,962) |
Fair value at end of the year | $ 251,806 | $ 1,526,060 |
Summary of Significant Accoun31
Summary of Significant Accounting Policies (Details 2) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Fair value of each share-based payment is estimated on the following assumptions | ||
Risk-free interest rate | 1.83% | 2.07% |
Expected volatility | 68.09% | 49.42% |
Dividend yield | 0.00% | 0.00% |
Expected term | 5 years | 6 years 6 months |
Summary of Significant Accoun32
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Line Items] | ||
Net loss on sale of trading securities | $ 0 | $ (11,946) |
Property and equipment, estimated useful lives | 3 to 5 years | 3 to 5 years |
Depreciation and amortization | $ 4,918 | $ 7,372 |
Employee stock-based compensation expense | $ 32,451 | $ 135,492 |
Outstanding options exercisable | 2,736,839 | 4,996,095 |
Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Intangible assets, useful life | 5 years | |
Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Intangible assets, useful life | 15 years | |
Common Stock | ||
Property, Plant and Equipment [Line Items] | ||
Outstanding options exercisable | 2,736,839 | 4,996,095 |
Preferred Stock A [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Outstanding options exercisable | 27,775 | |
Preferred Stock - Series B | ||
Property, Plant and Equipment [Line Items] | ||
Outstanding options exercisable | 20,929,456 | 15,278,717 |
WarrantMember | ||
Property, Plant and Equipment [Line Items] | ||
Outstanding options exercisable | 16,137,761 | 16,281,164 |
Preferred Stock -Series A | ||
Property, Plant and Equipment [Line Items] | ||
Outstanding options exercisable | 357,163 |
Other Balance Sheet Informati33
Other Balance Sheet Information (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Prepaid expenses and other: | ||
Prepaid insurance | $ 20,038 | $ 39,756 |
Annual license fee | 0 | 104,167 |
Other | 3,022 | 74,232 |
Prepaid expenses and other | 23,060 | 218,155 |
Property and equipment: | ||
Computers and office equipment | 75,204 | 73,911 |
Machinery and equipment | 112,421 | 112,421 |
Less: accumulated depreciation and amortization | (180,201) | (175,283) |
Property and equipment, net | 7,424 | 11,049 |
Accrued expenses and other: | ||
Professional fees | 32,000 | 49,703 |
Accrued dividends Series B Preferred Stock | 1,554,591 | 1,041,894 |
Deferred salary | 237,293 | 88,958 |
Accrued interest on Notes Payable | 523,360 | 327,203 |
Accrued research and development | 53,995 | 39,268 |
Funded research | 77,316 | 0 |
Other | 136,926 | 56,579 |
Accrued expenses | $ 2,615,481 | $ 1,603,605 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Intangible Assets Details | ||
Technology license | $ 413,398 | $ 413,398 |
Less: accumulated amortization | (133,845) | (94,851) |
Intangibles, net | $ 279,553 | $ 318,547 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Intangible Assets Details Narrative | ||
Amortization Expenses | $ 38,994 | $ 38,994 |
Future amortization Year 1 | 39,000 | |
Future amortization Year 2 | 39,000 | |
Future amortization Year 3 | 39,000 | |
Future amortization Year 4 | 39,000 | |
Future amortization Year 5 | $ 39,000 |
Convertible Notes Payable - S36
Convertible Notes Payable - Short Term (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Debt Disclosure [Abstract] | ||
Fair value - Amended 2014 Notes | $ 2,495,582 | |
Fair value - embedded conversion feature | 945,951 | |
Total Amended 2014 Notes | 3,441,533 | |
Principal - 2014 Notes | 2,198,416 | |
Accrued Interest - 2014 Notes | 232,235 | |
Deferred financing costs - 2014 Notes | (11,638) | |
Total 2014 Notes | 2,419,013 | |
Loss on Extinguishment from 2014 Note Amendment | 1,022,520 | |
Carrying value of conversions - Amended 2014 Notes | 175,922 | |
Value of interest accretion - Amended 2014 Notes | 2,809 | |
Fair value of embedded conversion feature of conversions- 2014 Notes | 15,271 | |
Fair value - common stock issued upon conversion | (167,217) | |
Gain on Extinguishment from Amended 2014 Note Conversions | 26,785 | |
Loss on debt extinguishment | $ (995,735) | $ 0 |
Convertible Notes Payable - S37
Convertible Notes Payable - Short Term (Details 1) | Dec. 31, 2016USD ($) |
Principal | $ 5,548,421 |
Adjustments to fair value, net of accretion | 496,681 |
Conversions | (175,922) |
Debt discount | (82,506) |
Deferred financing costs | (17,116) |
Total Convertible Notes Payable - Short Term | 5,769,558 |
2014 Amended Notes | |
Principal | 2,198,416 |
Adjustments to fair value, net of accretion | 496,681 |
Conversions | (175,922) |
Debt discount | 0 |
Deferred financing costs | 0 |
Total Convertible Notes Payable - Short Term | 2,519,175 |
2015 Convertible Notes | |
Principal | 2,780,005 |
Adjustments to fair value, net of accretion | 0 |
Conversions | 0 |
Debt discount | (44,268) |
Deferred financing costs | (13,404) |
Total Convertible Notes Payable - Short Term | 2,722,333 |
2016 Convertible Notes | |
Principal | 570,000 |
Adjustments to fair value, net of accretion | 0 |
Conversions | 0 |
Debt discount | (38,238) |
Deferred financing costs | (3,712) |
Total Convertible Notes Payable - Short Term | $ 528,050 |
Convertible Notes Payable - S38
Convertible Notes Payable - Short Term (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Convertible Notes Payable - Short Term Details Narrative | ||
Proceeds from other short - term financing | $ 155,000 | $ 365,000 |
Amortized expense | 199,515 | 199,515 |
Non-cash interest expense related to the amortization of the discount | 505,613 | 355,883 |
Amortization of deferred issuance costs and debt discounts related to the warrants | $ 117,217 | $ 155,479 |
Capital Stock (Details Narrativ
Capital Stock (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Notes to Financial Statements | ||
Preferred stock Series A, par value | $ 0.001 | $ 0.001 |
Preferred stock Series A,designated | 3,500,000 | 3,500,000 |
Preferred stock Series A, shares issued | 9,370 | 150,611 |
Preferred stock Series A, shares outstanding | 9,370 | 150,611 |
Shares of series A Preferred Stock converted, Shares | 2,931 | 17,033 |
Conversion of Series A shares into shares of common stock | 10,432 | 45,987 |
Series A Accrued preferred stock dividend | $ 10,708 | $ 64,635 |
Number of shares issued of Series A Preferred Stock in payment of such dividend | $ 9,370 | $ 57,353 |
Additional shares of common stock issued in terms of payment of such dividend | 45,987 | |
Preferred stock Series B, par value | $ 0.001 | $ 0.001 |
Preferred stock Series B, designated | 12,000,000 | 12,000,000 |
Preferred stock Series B, shares issued | 5,382,071 | 5,382,071 |
Preferred stock Series B, shares outstanding | 5,382,071 | 5,382,071 |
Series B Accrued preferred stock dividend | $ 512,697 | $ 509,399 |
Number of shares issued of Series B Preferred Stock in payment of such dividend | 312,500 | |
Number of Series B Preferred Stock converted to Common Stock | 312,500 | |
Conversion of Series B shares into shares of common stock | 714,285 | |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, Authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 34,074,284 | 32,908,503 |
Common stock, outstanding | 34,074,284 | 32,908,503 |
Common Stock issued for services performed pursuant to a consulting agreement | 867,143 | |
Fair Value of shares issued for services | $ 337,250 |
Stock Purchase Warrants (Detail
Stock Purchase Warrants (Details) - WarrantMember | 12 Months Ended |
Dec. 31, 2016$ / sharesshares | |
Number of Shares Under Warrants | |
Warrants issued and exercisable, Beginning Balance | shares | 16,281,164 |
Warrants Issued/Exchanged | shares | 200,000 |
Warrants Expired/Forfeited | shares | (343,403) |
Warrants issued and exercisable, Ending Balance | shares | 16,137,761 |
Exercise Price Share Per Share | |
Warrants Issued/Exchanged | $ 0.28 |
Weighted Average Exercise Price | |
Warrants issued and exercisable, Beginning Balance | 0.48 |
Warrants Issued/Exchanged | 0.28 |
Warrants Expired/Forfeited | 0.88 |
Warrants issued and exercisable, Ending Balance | 0.37 |
Minimum [Member] | |
Exercise Price Share Per Share | |
Warrants issued and exercisable, Beginning Balance | 0.35 |
Warrants Expired/Forfeited | 0.83 |
Warrants issued and exercisable, Ending Balance | 0.28 |
Maximum [Member] | |
Exercise Price Share Per Share | |
Warrants issued and exercisable, Beginning Balance | 1.33 |
Warrants Expired/Forfeited | 1.33 |
Warrants issued and exercisable, Ending Balance | $ 1.33 |
Stock Purchase Warrants (Deta41
Stock Purchase Warrants (Details 1) - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Stock Purchase Warrants | ||
Number of Shares | 16,137,761 | |
Weighted Average Remaining Contract Life in Years | 2 years 5 months 1 day | |
Weighted Average Exercise Price | $ 0.58 | $ 0.65 |
Exercise Price | $ 0.37 | |
Equity Warrant [Member] | ||
Stock Purchase Warrants | ||
Number of Shares | 3,083,058 | |
Weighted Average Remaining Contract Life in Years | 2 years 5 months 12 days | |
Weighted Average Exercise Price | $ 0.79 | |
Exercise Price | $ 0.79 | |
Warrant 1 [Member] | ||
Stock Purchase Warrants | ||
Number of Shares | 13,054,703 | |
Weighted Average Remaining Contract Life in Years | 2 years 5 months 1 day | |
Weighted Average Exercise Price | $ 0.28 | |
Exercise Price | $ 0.28 | |
Warrant 2 [Member] | ||
Stock Purchase Warrants | ||
Number of Shares | 200,000 | |
Weighted Average Remaining Contract Life in Years | 4 years 3 months 18 days | |
Weighted Average Exercise Price | $ 0.28 | |
Exercise Price | $ 0.28 | |
Warrant 3 [Member] | ||
Stock Purchase Warrants | ||
Number of Shares | 607,229 | |
Weighted Average Remaining Contract Life in Years | 3 years 9 months 15 days | |
Weighted Average Exercise Price | $ 0.5 | |
Exercise Price | $ 0.5 | |
Warrant 4 [Member] | ||
Stock Purchase Warrants | ||
Number of Shares | 1,928,500 | |
Weighted Average Remaining Contract Life in Years | 2 years 4 days | |
Weighted Average Exercise Price | $ 0.83 | |
Exercise Price | $ 0.83 | |
Warrant 5 [Member] | ||
Stock Purchase Warrants | ||
Number of Shares | 181,912 | |
Weighted Average Remaining Contract Life in Years | 10 months 17 days | |
Weighted Average Exercise Price | $ 0.85 | |
Exercise Price | $ 0.85 | |
Warrant 6 [Member] | ||
Stock Purchase Warrants | ||
Number of Shares | 165,417 | |
Weighted Average Remaining Contract Life in Years | 2 years 1 month 17 days | |
Weighted Average Exercise Price | $ 1 | |
Exercise Price | $ 1 |
Stock Purchase Warrants (Deta42
Stock Purchase Warrants (Details Narrative) | 12 Months Ended |
Dec. 31, 2016shares | |
Stock Purchase Warrants Details Narrative | |
Number of common stock warrants issued to non-employees for services | 200,000 |
Common Stock Options (Details)
Common Stock Options (Details) | 12 Months Ended |
Dec. 31, 2016$ / sharesshares | |
Summary of all common stock option activity | |
Outstanding shares, beginning of period | shares | 4,996,095 |
Options granted, shares | shares | 125,411 |
Options forfeited, shares | shares | (2,384,667) |
Options exercised | shares | 0 |
Outstanding shares, end of period | shares | 2,736,839 |
Exercisable shares, beginning of period | shares | 4,312,762 |
Exercisable shares,end of period | shares | 2,283,506 |
Outstanding weighted average exercise price, beginning | $ / shares | $ 0.65 |
Options granted, weighted average exercise price | $ / shares | 0.35 |
Options forfeited, weighted average exercise price | $ / shares | 0.70 |
Options exercised, weighted average exercise price | $ / shares | 0 |
Outstanding weighted average exercise price, ending | $ / shares | 0.58 |
Exercisable, weighted average exercise price, Beginning of period | $ / shares | 0.68 |
Exercisable, weighted average exercise price, End of period | $ / shares | $ 0.62 |
Common Stock Options (Details N
Common Stock Options (Details Narrative) | 12 Months Ended |
Dec. 31, 2016USD ($)$ / shares | |
Notes to Financial Statements | |
Weighted average fair value of options granted | $ / shares | $ 0.14 |
Weighted average remaining contract life, exercisable options | 4 years 6 months 18 days |
Weighted average remaining contract life, outstanding options | 5 years 1 month 24 days |
Unrecognized compensation cost related to non-vested options | $ | $ 31,906 |
Retirement Plan (Details Narrat
Retirement Plan (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Retirement Plan Details Narrative | ||
Recognized expense related to its contributions reserve | $ 31,300 | $ 37,175 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Gross deferred tax assets: | ||
Net operating loss carry-forwards | $ 10,144,390 | $ 9,099,986 |
Stock based expenses | 1,108,677 | 1,094,424 |
Tax credit carry-forwards | 361,758 | 363,607 |
Capital loss carry-forwards | 462,566 | 462,128 |
Long lived assets | 190,206 | 129,204 |
Total Gross | 12,267,597 | 11,149,349 |
Gross deferred tax liabilities: | ||
Deferred tax asset valuation allowance | (12,267,597) | 11,149,349 |
Net deferred tax asset (liability) | $ 0 | $ 0 |
Income Taxes (Details 1)
Income Taxes (Details 1) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Taxes Details 1 | ||
Income taxes benefit (expense) at statutory rate | 34.00% | 34.00% |
State income tax, net of federal benefit | (5.94%) | (5.94%) |
Permanent differences | ||
Meals & entertainment | (0.16%) | (0.01%) |
Share-based compensation Incentive Stock Options | 14.00% | 2.56% |
Change in valuation allowance | (41.90%) | (30.62%) |
Total | 0.00% | 0.00% |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Taxes Details Narrative | ||
Expected blended rate | 39.94% | |
Gross deferred tax assets | $ 12,267,597 | $ 11,149,349 |
Valuation allowance | 12,266,000 | 11,149,000 |
Gross net operating loss carry-forwards for federal income tax purposes | 26,800,000 | |
Gross state net operating loss carryforwards | 22,800,000 | |
Federal research and development carryforwards | 362,000 | |
Net increase in the valuation allowance | $ 1,000,000 | $ 1,500,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Commitments and contingencies additional details | ||
Payment of license fees | $ 250,000 | $ 153,332 |
Annual license maintenance fees | 125,000 | 125,000 |
Annual minimum lease payments for this office space | 17,312 | |
Rent expenses | $ 37,551 | $ 76,975 |