Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 12, 2019 | Jun. 30, 2018 | |
Document And Entity Information | |||
Entity Registrant Name | CorMedix Inc. | ||
Entity Central Index Key | 0001410098 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
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 | Non-accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 19,200,000 | ||
Entity Common Stock, Shares Outstanding | 119,014,093 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2018 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets | ||
Cash and cash equivalents | $ 17,623,770 | $ 10,379,729 |
Restricted cash | 171,553 | 171,553 |
Short-term investments | 0 | 1,604,198 |
Trade receivables, net | 10,904 | 64,148 |
Inventories, net | 428,515 | 594,194 |
Prepaid research and development expenses | 8,113 | 86,652 |
Other prepaid expenses and current assets | 422,199 | 367,177 |
Total current assets | 18,665,054 | 13,267,651 |
Property and equipment, net | 160,860 | 186,282 |
TOTAL ASSETS | 18,825,914 | 13,453,933 |
Current liabilities | ||
Accounts payable | 2,588,977 | 1,808,311 |
Accrued expenses | 5,166,224 | 4,363,867 |
Deferred revenue | 11,029 | 88,404 |
Total current liabilities | 7,766,230 | 6,260,582 |
Convertible note, related party, net | 6,125,428 | 0 |
TOTAL LIABILITIES | 13,891,658 | 6,260,582 |
COMMITMENTS AND CONTINGENCIES (Note 7) | ||
STOCKHOLDERS' EQUITY | ||
Preferred stock - $0.001 par value: 2,000,000 shares authorized; 419,585 shares issued and outstanding at December 31, 2018 and 2017 | 420 | 420 |
Common stock - $0.001 par value: 160,000,000 shares authorized at December 31, 2018; 108,875,866 and 71,413,790 shares issued and outstanding at December 31, 2018 and 2017, respectively | 108,876 | 71,414 |
Accumulated other comprehensive gain | 96,522 | 98,433 |
Additional paid-in capital | 183,716,536 | 159,197,950 |
Accumulated deficit | (178,988,098) | (152,174,866) |
TOTAL STOCKHOLDERS' EQUITY | 4,934,256 | 7,193,351 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 18,825,914 | $ 13,453,933 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 419,585 | 419,585 |
Preferred stock, shares outstanding | 419,585 | 419,585 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 160,000,000 | 160,000,000 |
Common stock, shares issued | 108,875,866 | 71,413,790 |
Common stock, shares outstanding | 108,875,866 | 71,413,790 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Revenue | ||
Net sales | $ 429,797 | $ 329,327 |
Cost of sales | (396,786) | (114,964) |
Gross profit | 33,011 | 214,363 |
OPERATING EXPENSES | ||
Research and development | (18,822,488) | (24,486,122) |
Selling, general and administrative | (8,074,719) | (8,652,351) |
Total operating expenses | (26,897,207) | (33,138,473) |
Loss From Operations | (26,864,196) | (32,924,110) |
Other Income (Expense) | ||
Interest income | 36,618 | 110,714 |
Foreign exchange transaction loss | (179) | (13,758) |
Change in fair value of derivative liabilities | 0 | (177,141) |
Interest expense | (1,873) | (5,619) |
Total income (expense) | 34,566 | (85,804) |
Net Loss | (26,829,630) | (33,009,914) |
Other Comprehensive Income (Loss) | ||
Unrealized gain from investments | 0 | 13,103 |
Foreign currency translation (loss) gain | (1,911) | 4,144 |
Total other comprehensive (loss) income | (1,911) | 17,247 |
Comprehensive Loss | $ (26,831,541) | $ (32,992,667) |
Net Loss Per Common Share - Basic and Diluted | $ (0.30) | $ (0.60) |
Weighted Average Common Shares Outstanding - Basic and Diluted | 89,083,119 | 55,141,133 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Shareholders Equity - USD ($) | Common Stock | Non-Voting Preferred Stock - Series C-2, C-3, Series D, Series E and Series F | Accumulated Other Comprehensive Gain (Loss) | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning balance, shares at Dec. 31, 2016 | 40,432,339 | 450,085 | ||||
Beginning balance, amount at Dec. 31, 2016 | $ 40,433 | $ 450 | $ 81,186 | $ 136,857,409 | $ (119,164,952) | $ 17,814,526 |
Stock issued in connection with ATM sale of common stock, net, shares | 8,925,504 | |||||
Stock issued in connection with ATM sale of common stock, net, amount | $ 8,925 | 5,534,131 | 5,543,056 | |||
Stock issued in connection with public offering, net, shares | 18,619,301 | |||||
Stock issued in connection with public offering, net, amount | $ 18,619 | 12,779,706 | 12,798,325 | |||
Stock issued in connection with warrants cashless exercised, shares | 970 | |||||
Stock issued in connection with warrants cashless exercised, amount | $ 1 | (1) | ||||
Conversion of Series C-3 non-voting preferred stock to common stock, shares | 325,000 | (32,500) | ||||
Conversion of Series C-3 non-voting preferred stock to common stock, amount | $ 325 | $ (32) | (293) | |||
Stock issued in connection with stock options exercised, shares | 10,000 | |||||
Stock issued in connection with stock options exercised, amount | $ 10 | 6,790 | 6,800 | |||
Stock issued in connection with sale of common stock, shares | 624,246 | |||||
Stock issued in connection with sale of common stock, amount | $ 624 | 299,016 | 299,640 | |||
Issuance of Series F non-voting preferred stock, net, shares | 2,000 | |||||
Issuance of Series F non-voting preferred stock, net, amount | $ 2 | 1,877,174 | 1,877,176 | |||
Stock issued for payment of deferred board compensation, shares | 4,869 | |||||
Stock issued for payment of deferred board compensation, amount | $ 5 | 10,213 | 10,218 | |||
Conversion of Series A warrants to common stock, shares | 2,471,561 | |||||
Conversion of Series A warrants to common stock, amount | $ 2,472 | (2,472) | ||||
Reclassification of derivative liability to equity | 3,910,682 | 3,910,682 | ||||
Warrants issued in connection with public offering | (3,733,542) | (3,733,542) | ||||
Stock-based compensation | 1,659,137 | 1,659,137 | ||||
Other comprehensive gain (loss) | 17,247 | 17,247 | ||||
Net loss | (33,009,914) | (33,009,914) | ||||
Ending balance, shares at Dec. 31, 2017 | 71,413,790 | 419,585 | ||||
Ending balance, amount at Dec. 31, 2017 | $ 71,414 | $ 420 | 98,433 | 159,197,950 | (152,174,866) | 7,193,351 |
Stock issued in connection with ATM sale of common stock, net, shares | 35,888,772 | |||||
Stock issued in connection with ATM sale of common stock, net, amount | $ 35,889 | 21,932,118 | 21,968,007 | |||
Value of warrants related to convertible note | 1,122,355 | 1,122,355 | ||||
Beneficial conversion feature related to convertible note | 143,431 | 143,431 | ||||
Stock issued in connection with warrants exercised, shares | 25,000 | |||||
Stock issued in connection with warrants exercised, amount | $ 25 | 26,225 | 26,250 | |||
Stock issued in connection with warrants cashless exercised, shares | 1,248,850 | |||||
Stock issued in connection with warrants cashless exercised, amount | $ 1,248 | (1,248) | 0 | |||
Stock issued in connection with stock options exercised, shares | 40,000 | |||||
Stock issued in connection with stock options exercised, amount | $ 40 | 11,560 | 11,600 | |||
Issuance of restricted stock units, shares | 131,826 | |||||
Issuance of restricted stock units, amount | $ 132 | (132) | 0 | |||
Stock issued for payment of deferred board compensation, shares | 127,628 | |||||
Stock issued for payment of deferred board compensation, amount | $ 128 | 173,645 | 173,773 | |||
Stock-based compensation | 1,110,632 | 1,110,632 | ||||
Cumulative effect of adoption of ASC 606 (Note 3) | 16,398 | 16,398 | ||||
Other comprehensive gain (loss) | (1,911) | (1,911) | ||||
Net loss | (26,829,630) | (26,829,630) | ||||
Ending balance, shares at Dec. 31, 2018 | 108,875,866 | 419,585 | ||||
Ending balance, amount at Dec. 31, 2018 | $ 108,876 | $ 420 | $ 96,522 | $ 183,716,536 | $ (178,988,098) | $ 4,934,256 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (26,829,630) | $ (33,009,914) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock-based compensation | 1,110,632 | 1,659,137 |
Inventory reserve | 0 | (327,000) |
Change in fair value of derivative liabilities | 0 | 177,141 |
Depreciation | 74,218 | 36,886 |
Changes in operating assets and liabilities: | ||
Decrease (increase) in trade receivables | 51,986 | (47,599) |
Decrease (increase) in inventory | 165,679 | (100,461) |
Decrease in prepaid expenses and other current assets | 23,165 | 869,431 |
Increase in accounts payable | 782,062 | 157,525 |
Increase in accrued expenses | 997,724 | 2,022,984 |
Decrease in deferred revenue | (76,401) | (25,310) |
Net cash used in operating activities | (23,700,565) | (28,587,180) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of short-term investments | 0 | (13,074,169) |
Sale of short-term investments | 1,604,307 | 23,583,995 |
Purchase of equipment | (48,893) | (151,988) |
Net cash provided by investing activities | 1,555,414 | 10,357,838 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from sale of common stock from at-the-market program, net | 21,968,007 | 5,543,056 |
Proceeds from senior convertible note | 7,500,000 | 0 |
Payment of debt issuance costs in connection with senior convertible note | (108,787) | 0 |
Proceeds from the public offering of common stock and warrants, net | 0 | 12,798,325 |
Proceeds from sale of Series F non-voting preferred stock, net | 0 | 1,877,176 |
Proceeds from sale of common stock | 0 | 299,640 |
Proceeds from exercise of warrants | 26,250 | 0 |
Proceeds from exercise of stock options | 11,600 | 6,800 |
Net cash provided by financing activities | 29,397,070 | 20,524,997 |
Foreign exchange effect on cash | (7,878) | 19,584 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 7,244,041 | 2,315,239 |
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH - BEGINNING OF YEAR | 10,551,282 | 8,236,043 |
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH - END OF YEAR | 17,795,323 | 10,551,282 |
Cash paid for interest | 1,873 | 5,619 |
Supplemental Disclosure of Non-Cash Financing Activities: | ||
Non-cash portion of debt discount on senior convertible notes | 1,271,861 | 0 |
Issuance of common stock for vested restricted stock units | (132) | 0 |
Issuance of common stock for payment of deferred fees | 173,773 | 10,218 |
Unrealized gain (loss) from investments | 0 | 13,103 |
Conversion of preferred stock to common stock | 0 | 325 |
Reclassification of derivative liabilities to equity | $ 0 | $ 3,910,682 |
1. Organization, Business and B
1. Organization, Business and Basis of Presentation | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Business and Basis of Presentation | Organization and Business: CorMedix Inc. (“CorMedix” or the “Company”) was incorporated in the State of Delaware on July 28, 2006. The Company is a biopharmaceutical company focused on developing and commercializing therapeutic products for the prevention and treatment of infectious and inflammatory diseases. In 2013, the Company formed a wholly-owned subsidiary, CorMedix Europe GmbH. The Company’s primary focus is to develop its lead product candidate, Neutrolin®, for potential commercialization in the United States (“U.S.”) and other key markets. The Company has in-licensed the worldwide rights to develop and commercialize Neutrolin, which is a novel anti-infective solution (a formulation of taurolidine, citrate and heparin 1000 u/ml) under development for the reduction and prevention of catheter-related infections and thrombosis in patients requiring central venous catheters in clinical settings such as dialysis, critical/intensive care, and oncology. The Company launched its first Phase 3 clinical trial in hemodialysis patients with catheters in the U.S. in December 2015. The clinical trial, named Catheter Lock Solution Investigational Trial or LOCK-IT-100, is a prospective, multicenter, randomized, double-blind, active control trial designed to demonstrate the efficacy and safety of Neutrolin in preventing catheter-related bloodstream infections, or CRBSI, in subjects receiving hemodialysis therapy as treatment for end stage renal disease. On July 25, 2018, the Company announced that the independent Data Safety Monitoring Board (“DSMB”) had completed its review of the interim analysis of the data from the LOCK-IT-100 study and, because the pre-specified level of statistical significance was reached and efficacy had been demonstrated, the DSMB recommended the study be terminated early. No safety concerns were reported by the DSMB based on the interim analysis. The interim analysis showed that the 72% reduction of CRBSI by Neutrolin was well in excess of the study’s assumed treatment effect size of a 55% reduction. Although two pivotal clinical trials to demonstrate safety and effectiveness of Neutrolin would generally be required by the U.S. Food and Drug Administration (“FDA”) to secure marketing approval in the U.S., based on the recently completed and unblinded topline results of the LOCK-IT-100 study the Company has begun discussions with the FDA to support regulatory approval for Neutrolin. The Company agreed to provide the FDA a detailed analysis of the full data set including secondary endpoints from the LOCK-IT-100 study to facilitate FDA’s consideration of its request to file the New Drug Application (“NDA”) for Neutrolin on the basis of the LOCK-IT-100 study results. These data became available following the locking and unblinding of the study data in late January 2019. The analysis is planned to be completed over the next several weeks. The Company can provide no assurances that the FDA will not require a second clinical trial prior to NDA submission for Neutrolin. The FDA also agreed that the Company could request consideration of Neutrolin for approval under the Limited Population Pathway for Antibacterial and Antifungal Drugs, or LPAD. LPAD, passed as part of the 21st Century Cures Act, is a new program intended to expedite the development of drug products which allows for the FDA’s determination of safety and effectiveness to reflect the risk-benefit profile of the drug in the intended limited population, taking into account the severity, rarity, or prevalence of the infection and the availability of alternative treatments in the limited population. The Company received CE Mark approval for Neutrolin in 2013 and commercially launched Neutrolin in Germany for the prevention of catheter-related bloodstream infections and maintenance of catheter patency in hemodialysis patients using a tunneled, cuffed central venous catheter for vascular access. Neutrolin is registered and is being sold in certain European Union and Middle Eastern countries. In September 2014, the TUV-SUD and The Medicines Evaluation Board of the Netherlands granted labeling for expanded indications for Neutrolin in the European Union (“EU”). In December 2014, the Company received approval from the Hessian District President in Germany to expand the label to include use in oncology patients receiving chemotherapy through intravenous (“IV”) administration, hydration and IV medications via central venous catheters. The expansion also adds patients receiving medication and IV fluids via central venous catheters in intensive or critical care units (cardiac care unit, surgical care unit, neonatal critical care unit, and urgent care centers). An indication for use in total parenteral, or IV, nutrition was also approved. The Company is using its current cash resources for the close out of the LOCK-IT-100 clinical trial, and the preparation and submission of the NDA for Neutrolin. Commercial preparations and, if necessary, the execution of a second Phase 3 clinical trial are dependent on the Company’s ability to raise sufficient additional funds through various potential sources, such as equity, debt financings, and/or strategic relationships. The Company can provide no assurances that financing or strategic relationships will be available on acceptable terms, or at all, to complete its clinical development program for Neutrolin. |
2. Liquidity and Uncertainties
2. Liquidity and Uncertainties | 12 Months Ended |
Dec. 31, 2018 | |
Liquidity And Uncertainties | |
Liquidity and Uncertainties | The financial statements have been prepared in conformity with generally accepted accounting principles which contemplate continuation of the Company as a going concern. To date, the Company’s commercial operations have not generated sufficient revenues to enable profitability. As of December 31, 2018, the Company had an accumulated deficit of $179.0 million, and incurred losses from operations of $26.8 million and $33.0 million for the years ended December 31, 2018 and 2017, respectively. Based on the Company’s current development plans for Neutrolin in both the U.S. and foreign markets and its other operating requirements, the Company’s existing cash and cash equivalents at December 31, 2018 are expected to fund its operations into the second quarter of 2020, after taking into consideration the net proceeds received through March 8, 2019 from the At-the-Market Issuance Sales Agreement (the “ATM program”), see Note 8, and the exercise of warrants, see Note 10. The Company’s continued operations will depend on its ability to raise additional capital through various potential sources, such as equity and/or debt financings, strategic relationships, or out-licensing of its products in order to undertake a second Phase 3 clinical trial, if required by the FDA, commercially launch Neutrolin upon NDA approval and until profitability is achieved, if ever. Management can provide no assurances that such financing or strategic relationships will be available on acceptable terms, or at all. At the financial reporting date, the Company has approximately $4.6 million available under its current ATM program and $30.3 million available under its current shelf registration for the issuance of equity, debt or equity-linked securities unrelated to the current ATM program. The Company’s operations are subject to a number of other factors that can affect its operating results and financial condition. Such factors include, but are not limited to: the results of clinical testing and trial activities of the Company’s product candidates; the ability to obtain regulatory approval to market the Company’s products; ability to manufacture successfully; competition from products manufactured and sold or being developed by other companies; the price of, and demand for, Company products; the Company’s ability to negotiate favorable licensing or other manufacturing and marketing agreements for its products; and the Company’s ability to raise capital to support its operations. |
3. Summary of Significant Accou
3. Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Basis of Consolidation The consolidated financial statements include the accounts of the Company and CorMedix Europe GmbH, a wholly owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation. Financial Instruments Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and short-term investments. The Company maintains its cash and cash equivalents in bank deposit and other interest-bearing accounts, the balances of which, at times, may exceed federally insured limits. The following table is the reconciliation of the recently adopted new accounting standard that modifies certain aspects of the recognition, measurement, presentation and disclosure of financial instruments as shown on the Company’s condensed consolidated statement of cash flows: December 31, 2018 2017 Cash and cash equivalents $ 17,623,770 $ 10,379,729 Restricted cash 171,553 171,553 Total cash, cash equivalents and restricted cash $ 17,795,323 $ 10,551,282 The appropriate classification of marketable securities is determined at the time of purchase and reevaluated as of each balance sheet date. Investments in marketable debt and equity securities classified as available-for-sale are reported at fair value. Fair value is determined using quoted market prices in active markets for identical assets or liabilities or quoted prices for similar assets or liabilities or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Changes in fair value that are considered temporary are reported net of tax in other comprehensive income (loss). Realized gains and losses, amortization of premiums and discounts and interest and dividends earned are included in income (expense). For declines in the fair value of equity securities that are considered other-than-temporary, impairment losses are charged to other (income) expense, net. The Company considers available evidence in evaluating potential impairments of its investments, including the duration and extent to which fair value is less than cost. There were no deemed permanent impairments at December 31, 2018 or 2017. The Company’s marketable securities are highly liquid and consist of U.S. government agency securities, high-grade corporate obligations and commercial paper with original maturities of more than 90 days. As of December 31, 2018 and 2017, all of the Company’s investments had contractual maturities which were less than one year. The following table summarizes the amortized cost, unrealized gains and losses and the fair value at December 31, 2018 and 2017: December 31, 2018: Amortized Cost Gross Unrealized Losses Gross Unrealized Gains Fair Value Money Market Funds included in Cash Equivalents $ 1,179,673 $ - $ - $ 1,179,673 Corporate Securities - - - - Commercial Paper - - - - Subtotal - - - - Total December 31, 2018 $ 1,179,673 $ - $ - $ 1,179,673 December 31, 2017: Money Market Funds included in Cash Equivalents $ 6,032,034 $ - $ - $ 6,032,034 Corporate Securities 905,625 (112 ) 3 905,516 Commercial Paper 698,682 - - 698,682 Subtotal 1,604,307 (112 ) 3 1,604,198 Total December 31, 2017 $ 7,636,341 $ (112 ) $ 3 $ 7,636,232 Fair Value Measurements The Company’s financial instruments recorded in the consolidated balance sheets include cash and cash equivalents, accounts receivable, investment securities, accounts payable and accrued expenses. The carrying value of certain financial instruments, primarily cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate their estimated fair values based upon the short-term nature of their maturity dates. The Company’s senior secured convertible note falls into the Level 3 category within the fair value level hierarchy. The fair value was determined using market data for valuation. The Company categorizes its financial instruments into a three-level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value, which is set out below. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument. ● Level 1 inputs—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 inputs— Significant other observable inputs (e.g., quoted prices for similar items in active markets, quoted prices for identical or similar items in markets that are not active, inputs other than quoted prices that are observable such as interest rate and yield curves, and market-corroborated inputs). ● Level 3 inputs—Unobservable inputs for the asset or liability, which are supported by little or no market activity and are The following table provides the carrying value and fair value of the Company’s financial assets measured at fair value as of December 31, 2018 and 2017: December 31, 2018: Carrying Value Level 1 Level 2 Level 3 Money Market Funds $ 1,179,673 $ 1,179,673 $ - $ - Available for sale securities: Corporate Securities - - - - Commercial Paper - - - - Subtotal - - - - Total December 31, 2018 $ 1,179,673 $ 1,179,673 $ - $ - December 31, 2017: Money Market Funds $ 6,032,034 $ 6,032,034 $ - $ - Available for sale securities: Corporate Securities 905,516 - 905,516 - Commercial Paper 698,682 - 698,682 - Subtotal 1,604,198 - 1,604,198 - Total December 31, 2017 $ 7,636,232 $ 6,032,034 $ 1,604,198 $ - Foreign Currency Translation and Transactions The consolidated financial statements are presented in U.S. Dollars (USD), the reporting currency of the Company. For the financial statements of the Company’s foreign subsidiary, whose functional currency is the EURO, foreign currency asset and liability amounts, if any, are translated into USD at end-of-period exchange rates. Foreign currency income and expenses are translated at average exchange rates in effect during the year. Translation gains and losses are included in other comprehensive loss. The Company had foreign currency translation loss of $1,911 in 2018 and a gain $4,144 in 2017. Foreign currency exchange transaction gain (loss) is the result of re-measuring transactions denominated in a currency other than the functional currency of the entity recording the transaction. Segment and Geographic Information The following table summarizes the segment and geographic information: December 31, 2018 2017 Reported revenues $ 429,797 $ 329,327 Revenues attributable to European and Mideast operations, which are based in Germany $ 420,973 $ 320,504 Total assets $ 18,825,914 $ 13,453,933 Total assets located in the United States, with the remainder in Germany $ 18,154,463 $ 12,597,231 Restricted Cash As of December 31, 2018 and 2017, the Company’s restricted cash is in connection with the patent and utility model infringement proceedings against TauroPharm (see Note 7). The Company was required by the District Court Mannheim to provide a security deposit of approximately $132,000 to cover legal fees in the event TauroPharm is entitled to reimbursement of these costs. The Company furthermore had to provide a deposit in the amount of $40,000 in connection with the unfair competition proceedings in Cologne. Prepaid Research and Development and Other Prepaid Expenses Prepaid expenses consist of payments made in advance to vendors relating to service contracts for clinical trial development, manufacturing, pre-clinical development and insurance policies. These advanced payments are amortized to expense either as services are performed or over the relevant service period using the straight-line method. Inventories, net Inventories are valued at the lower of cost or net realizable value on a first in, first out basis. Inventories consist of raw materials (including labeling and packaging), work-in-process, and finished goods, if any, for the Neutrolin product. Inventories consist of the following: December 31, 2018 2017 Raw materials $ 71,275 $ 141,233 Work in process 86,957 526,067 Finished goods 373,283 29,894 Inventory reserve (103,000 ) (103,000 ) Total $ 428,515 $ 594,194 Property and Equipment Property and equipment consist primarily of furnishings, fixtures, leasehold improvements, office equipment and computer equipment all of which are recorded at cost. Depreciation is provided for by the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized using the straight-line method over the remaining lease term or the life of the asset, whichever is shorter. Property and equipment, as of December 31, 2018 and 2017 were $160,860 and $186,282, respectively, net of accumulated depreciation of $218,948 and $154,836, respectively. Depreciation and amortization of property and equipment is included in selling, general and administrative expenses. Description Estimated Useful Life Office equipment and furniture 5 years Leasehold improvements 5 years Computer equipment 5 years Computer software 3 years Accrued Expenses Accrued expenses consist of the following: December 31, 2018 2017 Professional and consulting fees $ 258,352 $ 485,089 Accrued payroll and payroll taxes 1,102,143 755,221 Clinical trial related 3,408,032 2,531,608 Manufacturing development related 210,577 353,316 Product development 49,200 80,001 Market research - 116,466 Other 137,920 42,166 Total $ 5,166,224 $ 4,363,867 Revenue Recognition The Company adopted Accounting Standards Codification (“ASC”) 606, “ Revenue from Contracts with Customers,” The Company recognizes net sales upon shipment of product to the dialysis centers and upon meeting the five-step model prescribed by ASC 606 outlined above. In October 2015, the Company shipped product with less than 75% of its remaining shelf life to a customer and issued a guarantee that the specific product shipped would be replaced by the Company if the customer was not able to sell the product before it expired. As a result of this warranty, the Company may have an additional performance obligation (i.e. accept returned product and deliver new product to the customer) if the customer is unable to sell the short-dated product. As the result of the adoption of ASC 606, the Company accelerated the recognition of the deferred revenue and related cost of sales in the net amount of $70,500 and recorded the warranty obligation in the amount of $52,900 upon adoption. Deferred Revenue In August 2014, the Company entered into an exclusive distribution agreement (the “Wonik Agreement”) with Wonik Corporation, a South Korean company, to market, sell and distribute Neutrolin for hemodialysis and oncolytic patients upon receipt of regulatory approval in South Korea. Upon execution, Wonik paid the Company a non-refundable $50,000 payment and will pay an additional $50,000 upon receipt of the product registration necessary to sell Neutrolin in South Korea (the “Territory”). The term of the Wonik Agreement commenced on August 8, 2014 and will continue for three years after the first commercial sale of Neutrolin in the Territory. The non-refundable up-front payment has been recorded as deferred revenue and will be recognized as revenue on a straight-line basis over the contractual term of the Agreement. Deferred revenue related to this agreement at December 31, 2018 and 2017 amounted to approximately $11,000 and $20,000, respectively. Loss Per Common Share Basic loss per common share excludes dilution and is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted loss per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. The Company's outstanding Series C, Series D, Series E and Series F preferred stock entitle the holders to receive dividends on a basis equivalent to the dividends paid to holders of common stock. As a result, the Series C, Series D, Series E and Series F preferred stock meet the definition of participating securities requiring the application of the two-class method. Under the two-class method, earnings available to common shareholders, including both distributed and undistributed earnings, are allocated to each class of common stock and participating securities according to dividends declared and participating rights in undistributed earnings, which may cause diluted earnings per share to be more dilutive than the calculation using the treasury stock method. No loss has been allocated to these participating securities since they do not have contractual obligations that require participation in the Company’s losses. Since the Company has only incurred losses, basic and diluted loss per share are the same as potentially dilutive shares have been excluded from the calculation of diluted net loss per share as their effect would be anti-dilutive. The shares outstanding at the end of the respective periods presented below were excluded from the calculation of diluted net loss per share due to their anti-dilutive effect: December 31, 2018 2017 Series C non-voting preferred stock 2,540,000 2,540,000 Series D non-voting preferred stock 1,479,240 1,479,240 Series E non-voting preferred stock 1,959,759 1,959,759 Series F non-voting preferred stock 12,345,679 3,157,561 Shares issuable upon conversion of convertible debt 5,000,000 - Restricted stock units 29,087 66,414 Shares issuable for payment of deferred board compensation 142,892 199,355 Shares underlying outstanding warrants 16,595,016 23,417,891 Shares underlying outstanding stock options 5,056,326 4,962,795 Total potentially dilutive shares 45,147,999 37,783,015 Stock-Based Compensation Share-based compensation cost is measured at grant date, based on the estimated fair value of the award using the Black-Scholes option pricing model for options with service or performance-based conditions. Stock-based compensation is recognized as expense over the employee’s requisite service period on a straight-line basis. The Company accounts for stock options granted to non-employees on a fair value basis using the Black-Scholes option pricing model in accordance with ASC 718 and ASC No. 505-50, “Equity-Based Payments to Non-Employees” Research and Development Research and development costs are charged to expense as incurred. Research and development includes fees associated with operational consultants, contract clinical research organizations, contract manufacturing organizations, clinical site fees, contract laboratory research organizations, contract central testing laboratories, licensing activities, and allocated executive, human resources and facilities expenses. The Company accrues for costs incurred as the services are being provided by monitoring the status of the trial and the invoices received from its external service providers. As actual costs become known, the Company adjusts its accruals in the period when actual costs become known. Costs related to the acquisition of technology rights and patents for which development work is still in process are charged to operations as incurred and considered a component of research and development expense. Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their 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 recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when it is more likely than not that some or all of the deferred tax assets will not be realized. Debt Issuance Costs The Company accounts for debt issuance costs as a direct deduction from the carrying amount of the respective debt liability, consistent with debt discounts. The Company amortizes the debt discount, including debt issuance costs over the term of the associated debt using the effective interest method. Derivative Liability The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks; however, the Company had certain financial instruments in 2017 that qualified as derivatives and were classified as liabilities on the balance sheet. The Company evaluates all its financial instruments to determine if those instruments or any potential embedded components of those instruments qualify as derivatives that need to be separately accounted for in accordance with FASB ASC 815, “Derivatives and Hedging” The Company accounts for stock warrants as either equity instruments or derivative liabilities depending on the specific terms of the warrant agreement. Stock warrants are classified as derivative liabilities if they can be cash settled or if there are insufficient authorized and unissued shares available to settle the contract after considering all other commitments that may require the issuance of stock during the maximum period the warrant could remain outstanding. Liability classified warrants are adjusted to their estimated fair values at each reporting period, with any decrease or increase in the estimated fair value being recorded in other income (expense). In May 2017, the Company issued warrants that were liability-classified because there were insufficient shares of common stock available to settle the contracts. The carrying values of those warrants were adjusted to their estimated fair values at June 30, 2017 and again during the third quarter when sufficient additional common shares were authorized to cause the warrants to be reclassified as equity. The fair values on the issuance date and subsequent re-measurement dates were estimated using a probability-weighted option pricing model, requiring assumptions to be developed under different scenarios for the expected term, expected volatility, expected dividend yield and the risk-free interest rate. The Company estimated the expected term of the warrants based on the remaining contractual term. Expected volatility was calculated based on implied volatility of the stock price. The expected dividend yield is assumed to be zero in all scenarios because the Company has never, and has no plans at this time, to pay any dividends. To determine the risk free interest rate, the Company used the U.S. Treasury yield curve in effect at the time of the measurement with a term consistent with the remaining expected term of the warrant. Recently Adopted Authoritative Pronouncements The FASB issued new guidance in May 2014, as updated in April 2016 and May 2016, related to how an entity should recognize revenue. The guidance specifies that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. In addition, the guidance expands the required disclosures related to revenue and cash flows from contracts with customers. The Company adopted the new revenue recognition standard as of January 1, 2018 using the modified retrospective method, which requires the cumulative effect of adoption to be recognized as an adjustment to opening retained earnings in the period of adoption. The majority of the Company’s revenue relates to the sale of finished products to various customers, and the adoption did not have a material impact on revenue recognized from these transactions. The Company accelerated the remaining deferred revenue under these agreements and recorded the reserve for returns and allowances as cumulative effect adjustments to opening retained earnings at January 1, 2018 of $43,162. The following table presents the Company’s revenue for the year ended December 31, 2018 under the ASC 606 model as compared to revenue under the previous guidance: Revenue As Reported Revenue Under Previous Guidance Difference Net sales $ 420,974 $ 420,974 $ - Revenue recognized under agreement with warranty - 43,162 43,162 Revenue recognized under Wonik Agreement 8,823 8,823 - Total net sales $ 429,797 $ 472,959 $ 43,162 In May 2017, the FASB issued new guidance which clarifies the application of stock-based accounting guidance when a change is made to the terms or conditions of a share-based payment award. The guidance is effective for the Company beginning in the first quarter of fiscal year 2018. Early adoption is permitted. This adoption on January 1, 2018 did not have a material impact on the Company’s consolidated financial statements. In November 2016, the FASB issued new guidance which clarifies how restricted cash is presented and classified in the statement of cash flows. The guidance is effective for the Company beginning in the first quarter of fiscal year 2018. Early adoption is permitted. This adoption on January 1, 2018 did not have a material impact on the Company’s consolidated financial statements. In August 2016, the FASB issued new guidance which clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows in order to reduce diversity in practice. The guidance is effective for us beginning in the first quarter of fiscal year 2018. Early adoption is permitted. This adoption on January 1, 2018 did not have a material impact on the Company’s consolidated financial statements. In January 2016, the FASB issued a new standard that modifies certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. The accounting standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is permitted. This adoption on January 1, 2018 did not have a material impact on the Company’s consolidated financial statements. Recent Authoritative Pronouncements In November 2018, the FASB issued new guidance to clarify the interaction between the authoritative guidance for collaborative arrangements and revenue from contracts with customers. The new guidance clarifies that, when the collaborative arrangement participant is a customer in the context of a unit-of-account, revenue from contracts with customers guidance should be applied, adds unit-of-account guidance to collaborative arrangements guidance, and requires, that in a transaction with a collaborative arrangement participant who is not a customer, presenting the transaction together with revenue recognized under contracts with customers is precluded. The guidance is effective for the Company beginning in the first quarter of fiscal year 2020. Early adoption is permitted. The Company is assessing the impact of adopting this guidance on its consolidated financial statements. In August 2018, the FASB issued a new guidance which modifies the disclosure requirements on fair value measurements. The guidance is effective for the Company beginning in the first quarter of fiscal year 2020. Early adoption is permitted. The Company is assessing the impact of adopting this guidance on its consolidated financial statements. In June 2018, the FASB issued a new guidance which expands the scope of ASC 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The guidance is effective for the Company beginning in the first quarter of fiscal year 2019. Early adoption is permitted. This adoption on January 1, 2019 did not have a material impact on the Company’s consolidated financial statements. In July 2017, the FASB issued new guidance which changes the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features and recharacterizes the indefinite deferral of certain provisions within the guidance for distinguishing liabilities from equity. The guidance is effective for the Company beginning in the first quarter of fiscal year 2019. Early adoption is permitted. This adoption on January 1, 2019 did not have a material impact on the Company’s consolidated financial statements. In June 2016, the FASB issued new guidance which replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance is effective for the Company beginning in the first quarter of fiscal year 2020. Early adoption is permitted beginning in the first quarter of fiscal year 2019. The Company is evaluating the impact of adopting this guidance on its consolidated financial statements. In February 2016, the FASB issued new guidance related to how an entity should lease assets and lease liabilities. The guidance specifies that an entity who is a lessee under lease agreements should recognize lease assets and lease liabilities for those leases classified as operating leases under previous FASB guidance. Accounting for leases by lessors is largely unchanged under the new guidance. The guidance is effective for the Company beginning in the first quarter of 2019. Early adoption is permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. This adoption on January 1, 2019 did not have a material impact on the Company’s consolidated financial statements. |
4. Related Party Transactions
4. Related Party Transactions | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | On December 31, 2018, the Company entered into a securities purchase agreement with Manchester Securities Corp., an existing institutional investor and an affiliate of Elliott Associates, L.P. (“Elliott”), for the purchase and sale of a senior secured convertible note in the aggregate principal amount of $7,500,000 and a warrant to purchase up to an aggregate of 450,000 shares of the Company’s common stock, for gross proceeds of $7,500,000, see Note 6. The warrant with a grant date fair value of $433,365, is immediately exercisable, has an exercise price of $1.50 per share, subject to adjustment in the event of stock dividends and distributions, stock splits, stock combinations, or reclassifications affecting our common stock, and has a term of five years. The note has a conversion price of $1.50 per share. The conversion price is subject to appropriate adjustment in the event of stock dividends and distributions, stock splits, stock combinations, or reclassifications affecting our common stock. In December 2017, the Company issued an aggregate of 624,246 shares of its common stock in a financing transaction to its directors and executive officers and to certain of its employees at a per share purchase price of $0.48, which was the closing price of the stock on November 16, 2017, the date before the purchase agreements were executed. This common stock financing reduced the number of shares issuable under the warrants that the Company was required to issue to Elliott pursuant to the Backstop Agreement (see below). The Company realized gross proceeds of approximately $300,000. The following related parties participated in the common stock financing: Amount Number of Shares Khoso Baluch CEO and Director $ 50,000 104,166 Robert W. Cook CFO $ 25,000 52,083 John Armstrong Executive VP $ 10,000 20,833 Myron Kaplan Chairman of the Board $ 50,000 104,166 Janet Dillione Director $ 25,000 52,083 Gary Gelbfish Director $ 25,000 52,083 Mehmood Khan Director $ 25,000 52,083 Steven W. Lefkowitz Director $ 65,000 135,416 The terms of purchase were identical for each purchaser. The Audit Committee of the Board of Directors approved the purchase by these insiders. On November 29, 2017, the Company hired Dr. Gary Gelbfish, one of its directors, as a consultant to assist in the Company’s interim analysis for its LOCK-IT-100 clinical trial for Neutrolin. Pursuant to the consulting agreement between the Company and Dr. Gelbfish, in September 2018 the Company paid $210,000 in fees submitted by Dr. Gelbfish under the consulting agreement for his work in the data quality review for the interim analysis of the Company’s LOCK-IT-100 clinical trial for Neutrolin. Under the terms of the consulting agreement, Dr. Gelbfish was compensated at the rate of $800 per hour. The consulting agreement expired on September 30, 2018. In November 2017, the Company entered into a securities purchase agreement with Elliott, our largest shareholder, whereby they purchased a newly issued CorMedix Series F convertible preferred stock at $1,000 per share. (See Note 8 – Stockholders’ Equity). Separately, on November 9, 2017, the Company entered into a backstop agreement with the Elliott to purchase up to an additional $3.0 million of Series F convertible preferred stock at $1,000 per share, (the “Backstop Agreement”), at the Company’s sole discretion, beginning January 15, 2018, through March 31, 2018. Gross proceeds of the securities purchase agreement and the Backstop Agreement, if the Backstop Agreement were to be used in full, total an aggregate of $5.0 million. As consideration for the Backstop Agreement, the Company issued 564,858 warrants, exercisable for three years, to purchase shares of the Company’s common stock at a per share exercise price of $0.001. The number of shares issuable under the warrant was determined by the closing price of the Company’s common stock on November 8, 2017, which was $0.5278, reduced by the amount of equity capital raised from the Company’s ATM program and the sale of common stock to directors, executive officers and other certain employees of the Company totaling $2.4 million. Elliott may convert the preferred stock into common stock at its option at a price of $0.162 per share. The preferred stock was mandatorily convertible on April 2, 2018, subject to certain equity conditions. As of December 31, 2018, the last condition had not been met, which condition is the subordination of the outstanding Series C-3 preferred stock to the Series F Stock. Therefore, the Series F Stock is not mandatorily convertible as of December 31, 2018; the conversion price per share of $0.162, however, remains fixed, subject to anti-dilution adjustment, including full ratchet. When and if that condition is met, the Series F Stock will be mandatorily convertible. No warrants were issued under the securities purchase agreement. The Backstop Agreement expired on March 31, 2018 without being used and is no longer available to the Company. Until the date that none of the preferred stock or warrants that we issued to Elliott in November 2017 as part of the backstop financing are outstanding, we are prohibited from issuing or selling any securities convertible into common stock at a conversion price of below $0.162 per share on terms more favorable than the backstop financing terms and with a conversion, exchange or exercise price that is based upon and/or varies with the trading prices of or quotations for the shares of our common stock or that is subject to being reset at some future date or upon the occurrence of specified or contingent events directly or indirectly related to our business (other than pursuant to a customary “weighted average” anti-dilution provision) or the market for our common stock or enter into any agreement to sell securities at a future determined price (other than standard and customary “preemptive” or “participation” rights and other than pursuant to an at-the-market offering through a registered broker-dealer). Under certain conditions, this restriction could make raising capital through the sale of equity securities difficult and could have a material adverse impact on our business, financial condition and prospects. On April 28, 2017, the Company entered into an underwriting agreement with H.C. Wainwright & Co., LLC, relating to an underwritten public offering of 16,190,697 shares of its common stock, together with Series A warrants to purchase up to an aggregate of 12,143,022 shares of its common stock and Series B warrants to purchase up to an aggregate of 12,143,022 shares of its common stock, at a price to the public of $0.75 per share and related warrants. Pursuant to Manchester’s participation rights, Elliott Associates, L.P. and Elliott International, L.P., affiliates of Manchester (together, “Elliott”) collectively purchased an aggregate of 2,666,668 shares of common stock, Series A warrants to purchase up to 2,000,000 shares of common stock, and Series B warrants to purchase up to 2,000,000 shares of common stock. Gary Gelbfish, a director of the Company at that time, purchased 1,333,334 shares of common stock, Series A warrants to purchase up to 1,000,000 shares, and Series B warrants to purchase up to 1,000,000 shares of our common stock. The purchases by Elliott and Dr. Gelbfish were on the same terms as those for all other investors. In September 2014, as part of the removal of anti-dilution, price reset and change of control provisions in various securities that had caused those securities to be classified as derivative liabilities, the Company entered into a Consent and Exchange Agreement with Manchester Securities Corp., a subsidiary of Elliott Associates, L.P. (“Manchester”), pursuant to which Manchester had a right of 60% participation in equity financings undertaken by the Company prior to September 15, 2017. Pursuant to this right of participation, Manchester elected partial participation in the equity financing that the Company closed on May 3, 2017 and invested $2,000,000. |
5. Income Taxes
5. Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | The Company’s U.S. and foreign loss before income taxes are set forth below: December 31, 2018 2017 United States $ (25,882,114 ) $ (31,992,324 ) Foreign (947,516 ) (1,017,699 ) Total $ (26,829,630 ) $ (33,010,023 ) There were no current or deferred income tax provision for the years ended December 31, 2018 and 2017 because the Company has incurred operating losses since inception. The Company’s deferred tax assets consist of the following: December 31, 2018 2017 Net operating loss carryforwards – Federal $ 29,303,000 $ 23,833,000 Net operating loss carryforwards – State 8,441,000 7,264,000 Net operating loss carryforwards – Foreign 1,876,000 1,678,000 Capitalized licensing fees 912,000 1,068,000 Stock-based compensation 2,447,000 2,232,000 Accrued compensation 307,000 206,000 Other 110,000 65,000 Totals 43,396,000 36,346,000 Less valuation allowance (43,396,000 ) (36,346,000 ) Deferred tax assets $ - $ - The Company had the following potentially utilizable net operating loss tax carryforwards: December 31, 2018 2017 Federal $ 139,538,000 $ 113,492,000 State $ 118,719,000 $ 102,159,000 Foreign $ 6,250,000 $ 5,594,000 The net operating loss tax generated before January 1, 2018 carryforwards will start to expire in 2027 for Federal purposes and have already begun to expire for state purposes. The current Tax Cuts and Jobs Act (the “Act”) limits the net operating loss deduction to 80% of taxable income for losses arising in tax years beginning after December 31, 2017. However, the net operating losses now have an indefinite carryforward as opposed to the current 20-year carryforward. The foreign net operating loss tax carryforwards do not expire. Our federal and state operating loss carryforwards include windfall tax deductions from stock option exercises. The utilization of the Company’s federal and state net operating losses may be subject to a substantial limitation due to the “change of ownership provisions” under Section 382 of the Internal Revenue Code and similar state provisions. Such limitation may result in the expiration of the net operating loss carryforwards before their utilization. The Company’s foreign earnings are derived from its German subsidiary. The Company does not expect any foreign earnings to be repatriated in the U.S. in the near future. The Company’s effective tax rate varied from the statutory rate as follows: December 31, 2018 2017 Statutory Federal tax rate 21.0 % 34.0 % State income tax rate (net of Federal) 4.5 % 6.3 % Effect of foreign operations 1.1 % 0.9 % Non-deductible expenses associated with derivative liabilities 0.0 % 0.0 % Warrant related expenses 0.0 % 0.0 % Federal Deferred Tax Rate Change 0.0 % (45.7 )% Other permanent differences (0.3 )% 0.1 % Effect of valuation allowance (26.3 )% 4.4 % Effective tax rate 0.0 % 0.0 % In assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income of the appropriate character during the periods in which those temporary differences become deductible and the loss carryforwards are available to reduce taxable income. In making its assessment, the Company considered all sources of taxable income including carryback potential, future reversals of existing deferred tax liabilities, prudent and feasible tax planning strategies, and lastly, objectively verifiable projections of future taxable income exclusive of reversing temporary differences and carryforwards. At December 31, 2018 and 2017, the Company maintained a full valuation allowance against its net deferred tax assets. The Company will continue to assess all available evidence during future periods to evaluate the realization of its deferred tax assets. The following table presents the changes in the deferred tax asset valuation allowance for the periods indicated: Year Ended Balance at Beginning of Year Increase (Decrease) Charged (Credited) to Income Taxes (Benefit) Increase (Decrease) Charged (Credited) to OCI Balance at End of Year December 31, 2018 $ 36,346,000 $ 7,082,000 $ (32,000 ) $ 43,396,000 December 31, 2017 $ 37,811,000 $ (1,433,000 ) $ (32,000 ) $ 36,346,000 Accounting for uncertainty in income taxes requires uncertain tax positions to be classified as non-current income tax liabilities unless they are expected to be paid within one year. The Company has concluded that there are no uncertain tax positions requiring recognition in its consolidated financial statements as of December 31, 2018 and 2017. The Company recognizes interest and penalties related to uncertain tax positions if any as a component of income tax expense. The Company files income tax returns in the U.S. federal, state and foreign jurisdictions. Tax years 2014 to 2018 remain open to examination for both the U.S. federal and state jurisdictions. Tax years 2015 to 2017 remain open for Germany. |
6. Senior Secured Convertible N
6. Senior Secured Convertible Note | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Senior Secured Convertible Note | On December 31, 2018, the Company entered into a securities purchase agreement with Elliott, for the purchase and sale of a senior secured convertible note in the aggregate principal amount of $7,500,000 and a warrant to purchase up to an aggregate of 450,000 shares of our common stock, for gross proceeds of $7,500,000. The note is a senior obligation, secured by all of the Company’s assets. The note bears interest at the rate of 10.0% per annum, compounded quarterly. Interest is first payable on January 2, 2019, and on the first trading day of each month thereafter. The note matures on December 30, 2021. Any accrued but unpaid interest for the applicable interest period will be added to the principal outstanding under the notes. The not has a conversion price of $1.50 per share. The conversion price is subject to appropriate adjustment in the event of stock dividends and distributions, stock splits, stock combinations, or reclassifications affecting our common stock. The noteholder may convert its outstanding note principal amount, and any accrued and unpaid interest, at any time into shares of common stock at the conversion rate. Additionally, the note will automatically convert into shares of common stock if, prior to the maturity date, the average closing sale price of the Company’s common stock for any 20 trading days during any consecutive 30 trading days equals or exceeds 150% of the conversion price. The Company has the right to pay any accrued interest in cash for any calendar month during which the average closing sale price of its common stock averaged at least 150% of the conversion price of the notes. On or after July 1, 2020, the Company may prepay any principal amount outstanding on the notes in amounts of $2,000,000 (or in full, if less than $2,000,000), provided that if the prepayment occurs between July 2, 2020 and March 30, 2021, the prepayment amount will equal 110% of the principal amount being repaid and if the prepayment occurs after March 31, 2021, the prepayment amount will equal 105% of the principal amount being repaid. The warrant is immediately exercisable, has an exercise price of $1.50 per share, subject to adjustment in the event of stock dividends and distributions, stock splits, stock combinations, or reclassifications affecting our common stock, and has a term of five years. The closing of the note and warrant sale and purchase occurred simultaneously with entry into the securities purchase agreement. No placement agent or underwriter was involved in the offering. On the same date, and in connection with the sale of the note and warrant, the Company amended and restated the following warrants held by Elliott and its affiliates to reduce the exercise price of each warrant to $0.001 per share: warrants issued in May 2013 to purchase up to an aggregate of 500,000 shares of the Company’s common stock with a pre-amendment exercise price of $0.65 per share and an expiration date of May 30, 2019 (the “May 30, 2019 Warrants”); and warrants issued in October 2013 to purchase up to an aggregate of 750,000 shares of our common stock with a pre-amendment exercise price of $0.90 per share and an expiration date of October 22, 2019 (the “October 22, 2019 Warrants”). The amendment of these warrants was previously reported on December 21, 2018; the amendment and restatement of these warrants simply memorializes the amendment to the respective exercise prices. Also in conjunction with the closing of the sale and issuance, the Company and Elliott and certain of its affiliates that hold shares of various series of the Company’s preferred stock and warrants to purchase shares of the Company’s common stock agreed to waive any rights of conversion or exercise for all of the shares of its Series C-2, D, E and F preferred stock , as well as warrants to purchase an aggregate of 4,014,859 shares of its common stock (collectively with the shares of Series C-2, D, E, and F preferred stock, the "Elliott Derivative Securities"), until the earliest to occur of (i) the effective date on which the Company’s Certificate of Incorporation is amended to increase the number of authorized shares of common stock, (ii) the effective date on which the Company effects a reverse stock split of its common stock, (iii) one business day immediately prior to the consummation of a fundamental transaction (as defined in the instruments governing the applicable Elliott Derivative Securities), and (iv) April 30, 2019. The 1-for-5 reverse stock split that we have announced that we intend to effect on March 26, 2019, when effective, will satisfy this condition and Elliott will be able to convert and exercise all of the preferred shares and warrants cited above. As long as any of the Series C-2, Series D, Series E or Series F non-voting convertible preferred stock is outstanding, the Company cannot, without the consent of a majority of those series preferred holders, incur any indebtedness other than trade payables incurred in the ordinary course of business consistent with past practice, and letters of credit incurred in an aggregate amount of $3.0 million at any point in time. Elliott is the holder of all of the shares of the Series C-2, Series D, Series E and Series F non-voting convertible preferred stock and implicitly consented to the convertible note financing. The $7,500,000 in gross proceeds, along with the legal fees of approximately $109,000, were allocated between the senior secured convertible note and warrants based on their relative fair values. The portion of the proceeds allocated to the warrants of approximately $396,000, net of allocated fees of approximately $6,000, was accounted for as additional paid-in capital. The remainder of the proceeds of approximately $6,995,000, net of allocated fees of approximately $103,000 was allocated to the senior convertible note, with the fair value of the warrants resulting in a debt discount. In addition, the incremental cost of approximately $710,000 associated with the warrant modification was recorded as a debt discount. An additional debt discount of approximately $143,000 was recorded as a beneficial conversion feature as the stock price was greater than the effective conversion price (after allocation of the total proceeds) on the measurement date. The Company used a hybrid valuation model to determine the fair value of the senior secured convertible note. The hybrid model incorporated both a present value analysis and the use of the Black Scholes option pricing model to reflect the senior secured convertible note’s conversion feature. The Black-Scholes option pricing model was also used to determine the fair value of the warrants in order to allocate the gross proceeds based on relative fair values, see Note 8. ASC 820, Fair Value Measurements, states that the reporting entity should use the valuation technique(s) appropriate for the measurement, considering the availability of data with which to develop inputs that represent the assumptions that market participants would use when pricing the asset or liability. Market participants price options based on expected volatility, not historical volatility. In estimating, the expected volatility of the Company’s common stock followed the guidance of ASC 820 and considered a number of factors - including the implied volatility of the Company’s listed warrant contracts. A summary of the assumptions used in the Black Scholes pricing model are as follows: Conversion Option New Warrants At Issuance Date At Issuance Date Expected term (months) 36 60 Volatility 161.5 % 161.5 % Dividend yield 0 % 0 % Risk-free interest rate 2.43 % 2.48 % |
7. Commitments and Contingencie
7. Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Contingency Matters On September 9, 2014, the Company filed in the District Court of Mannheim, Germany a patent infringement action against TauroPharm GmbH and Tauro-Implant GmbH as well as their respective CEOs (the “Defendants”) claiming infringement of the Company’s European Patent EP 1 814 562 B1, which was granted by the European Patent Office (the “EPO”) on January 8, 2014 (the “Prosl European Patent”). The Prosl European Patent covers the formulation of taurolidine and citrate with low dose heparin in a catheter lock solution for maintaining patency and preventing infection in hemodialysis catheters. In this action, the Company claims that the Defendants infringe on the Prosl European Patent by manufacturing and distributing catheter locking solutions to the extent they are covered by the claims of the Prosl European Patent. The Company believes that its patent is sound and is seeking injunctive relief and raising claims for information, rendering of accounts, calling back, destruction and damages. Separately, TauroPharm has filed an opposition with the EPO against the Prosl European Patent alleging that it lacks novelty and inventive step. The Company cannot predict what other defenses the Defendants may raise, or the ultimate outcome of either of these related matters. In the same complaint against the same Defendants, the Company also alleged an infringement (requesting the same remedies) of ND Partners’ utility model DE 20 2005 022 124 U1 (the “Utility Model”), which the Company believes is fundamentally identical to the Prosl European Patent in its main aspects and claims. The Court separated the two proceedings and the Prosl European Patent and the Utility Model claims are now being tried separately. TauroPharm has filed a cancellation action against the Utility Model before the German Patent and Trademark Office (the “German PTO”) based on the similar arguments as those in the opposition against the Prosl European Patent. On March 27, 2015, the District Court held a hearing to evaluate whether the Utility Model has been infringed by TauroPharm in connection with the manufacture, sale and distribution of its TauroLock-HEP100TM and TauroLock-HEP500TM products. A hearing before the same court was held on January 30, 2015 on the separate, but related, question of infringement of the Prosl European Patent by TauroPharm. The Court issued its decisions on May 8, 2015, staying both proceedings. In its decisions, the Court found that the commercialization by TauroPharm in Germany of its TauroLock catheter lock solutions Hep100 and Hep500 infringes both the Prosl European Patent and the Utility Model and further that there is no prior use right that would allow TauroPharm to continue to make, use or sell its product in Germany. However, the Court declined to issue an injunction in favor of the Company that would preclude the continued commercialization by TauroPharm based upon its finding that there is a sufficient likelihood that the EPO, in the case of the Prosl European Patent, or the German PTO, in the case of the Utility Model, may find that such patent or utility model is invalid. Specifically, the Court noted the possible publication of certain instructions for product use that may be deemed to constitute prior art. As such, the District Court determined that it will defer any consideration of the request by the Company for injunctive and other relief until such time as the EPO or the German PTO made a final decision on the underlying validity of the Prosl European Patent and the Utility Model. The opposition proceeding against the Prosl European Patent before the EPO is ongoing. The EPO held a hearing in the opposition proceeding on November 25, 2015. In its preliminary consideration of the matter, the EPO (and the German PTO) had regarded the patent as not inventive or novel due to publication of prior art. However, the EPO did not issue a decision at the end of the hearing but adjourned the matter due to the fact that the panel was of the view that Claus Herdeis, one of the managing directors of TauroPharm, had to be heard as a witness in a further hearing in order to close some gaps in the documentation presented by TauroPharm as regards the publication of the prior art. The German PTO held a hearing in the validity proceedings relating to the Utility Model on June 29, 2016, at which the panel affirmed its preliminary finding that the Utility Model was invalid based upon prior publication of a reference to the benefits that may be associated with adding heparin to a taurolidine based solution. The decision has only a declaratory effect, as the Utility Model had expired in November 2015. Furthermore, it has no bearing on the ongoing consideration by the EPO of the validity and possible infringement of the Prosl European Patent. The Company filed an appeal against the ruling on September 7, 2016. In October 2016, TauroPharm submitted a further writ to the EPO requesting a date for the hearing and bringing forward further arguments, in particular in view of the June 2016 decision of the German PTO on the invalidity of the utility model, which the Company has appealed. On November 22, 2017, the EPO in Munich, Germany held a further oral hearing in this matter. At the hearing, the panel held that the Prosl European Patent would be invalidated because it did not meet the requirements of novelty based on a technical aspect of the European intellectual property law. The Company disagrees with this decision and, after the written opinion was issued by the Opposition Division in September 2018, has appealed the decision. The Company continues to believe that the Prosl European Patent is indeed novel and that its validity should be maintained. There can be no assurance that the Company will prevail in this matter with either the German PTO or the EPO. In addition, the ongoing Unfair Competition litigation brought by the Company against TauroPharm is not affected and will continue. On January 16, 2015, the Company filed a complaint against TauroPharm GmbH and its managing directors in the District Court of Cologne, Germany. In the complaint, the Company alleges violation of the German Unfair Competition Act by TauroPharm for the unauthorized use of its proprietary information obtained in confidence by TauroPharm. The Company alleges that TauroPharm is improperly and unfairly using its proprietary information relating to the composition and manufacture of Neutrolin, in the manufacture and sale of TauroPharm’s products TauroLockTM, TauroLock-HEP100 and TauroLock-HEP500. The Company seeks a cease and desist order against TauroPharm from continuing to manufacture and sell any product containing taurolidine (the active pharmaceutical ingredient (“API”) of Neutrolin) and citric acid in addition to possible other components, damages for any sales in the past and the removal of all such products from the market. An initial hearing in the District Court of Cologne, Germany, was held on November 19, 2015 to consider the Company’s claims. In this hearing, the presiding judge explained that the court needed more information with regard to several aspects of the case. As a consequence, the court issued an interim decision in the form of a court order outlining several issues of concern that relate primarily to the court's interest in clarifying the facts and reviewing any and all available documentation, in particular with regard to the question which specific know-how was provided to TauroPharm by whom and when. The Company's legal team prepared the requested reply and produced the respective documentation. TauroPharm also filed another writ within the same deadline and both parties filed further writs at the end of April 2016 setting out their respective argumentation in more detail. A further oral hearing in this matter was held on November 15, 2016. In this hearing, the court heard arguments from CorMedix and TauroPharm concerning the allegations of unfair competition. The court made no rulings from the bench and indicated that it is prepared to further examine the underlying facts of the Company's allegations. On March 7, 2017, the court issued another interim decision in the form of a court order outlining again several issues relating to the argumentation of both sides in the proceedings. In particular, the court requested the Company to further specify its requests and to further substantiate in even more detail which know-how was provided by Biolink to TauroPharm by whom and when. The court also raised the question whether the know-how provided at the time to TauroPharm could still be considered to be secret know-how or may have become public in the meantime. The court granted both sides the opportunity to reply to this court order and provide additional facts and evidence until May 15, 2017. Both parties submitted further writs in this matter and the court scheduled a further hearing on May 8, 2018. After having been rescheduled several times, the hearing took place on November 20, 2018. A decision was rendered by the court on December 11, 2018, dismissing the complaint in its entirety. However, the Company intends to continue to pursue this matter and still believes firmly that its claims are well-founded. Therefore, the Company appealed in January 2019. In connection with the aforementioned patent and utility model infringement proceedings against TauroPharm, the Company was required by the District Court Mannheim to provide a security deposit of approximately $132,000 to cover legal fees in the event TauroPharm is entitled to reimbursement of these costs. The Company recorded the deposit as restricted cash for the year ended December 31, 2015. The Company furthermore had to provide a deposit in the amount of $40,000 in connection with the unfair competition proceedings in Cologne. These amounts are shown as restricted cash on the condensed consolidated balance sheets. Commitments Clinical and Regulatory In December 2015, the Company entered into a Master Service Agreement and Work Orders (the “Master Service Agreement”) with a CRO to help the Company conduct its LOCK-IT-100 Phase 3 multicenter, double-blind, randomized active control study to demonstrate the safety and effectiveness of Neutrolin in preventing catheter-related bloodstream infections and blood clotting in subjects receiving hemodialysis therapy as treatment for end stage renal disease. In May 2017, the Company signed a contract modification with its CRO for an additional budgeted cost of $7.2 million to cover the extension of the estimated study timeline, incorporate several protocol amendments and assume several new tasks related to the enrollment sites. Given the changes to the study agreed with the FDA, the Company signed a second contract modification with its CRO increasing the budget by an additional $6.3 million, to cover the continuation of trial enrollment, the increased length of time in which patients are enrolled and additional activities related to the collection of retrospective data outside the treatment centers. During the years ended December 31, 2018 and 2017, the Company recognized $7,658,000 and $14,380,000 in research and development expense related to this agreement, respectively. Through December 31, 2018, approximately $28.4 million of clinical trial expense has been recorded in connection with the Master Service Agreement and new work orders, of which approximately $24.0 million has been paid. During 2018, the Company had contested a substantial amount of the unpaid clinical trial expense accrued during 2018 due to the unexpected delay and additional costs the Company incurred in preparing for the interim analysis of the LOCK-IT-100 study. Negotiations with the CRO concluded in November 2018 with the signing of a confidential settlement agreement in which the Company received cash, credits and other consideration in return for agreeing to make cumulative net payments to its CRO of approximately $6.2 million through January 2019, plus investigator fees and third-party costs that had not been invoiced as of September 30, 2018. Among other benefits, the settlement agreement resulted in full satisfaction of all outstanding accounts payable and accrued expenses recorded as of September 30, 2018 in connection with the Master Services Agreement. Additionally, in parallel with the settlement agreement, a new work order under the Master Service Agreement was executed specifying certain services the CRO will continue to provide to the Company related to the closeout of the study. The budgeted amount of the new work order is approximately $1.4 million of which $588,000 was incurred as of December 31, 2018. At December 31, 2018, the Company had accrued $4,372,000 in accounts payable and accrued expenses related to the settlement agreement and the new work order. In-Licensing In 2008, the Company entered into a License and Assignment Agreement (the “NDP License Agreement”) with ND Partners, LLP (“NDP”). Pursuant to the NDP License Agreement, NDP granted the Company exclusive, worldwide licenses for certain antimicrobial catheter lock solutions, processes for treating and inhibiting infections, a biocidal lock system and a taurolidine delivery apparatus, and the corresponding United States and foreign patents and applications (the “NDP Technology”). The Company acquired such licenses and patents through its assignment and assumption of NDP’s rights under certain separate license agreements by and between NDP and Dr. Hans-Dietrich Polaschegg, Dr. Klaus Sodemann and Dr. Johannes Reinmueller. As consideration in part for the rights to the NDP Technology, the Company paid NDP an initial licensing fee of $325,000 and granted NDP a 5% equity interest in the Company, consisting of 39,980 shares of the Company’s common stock. The Company is required to make payments to NDP upon the achievement of certain regulatory and sales-based milestones. Certain of the milestone payments are to be made in the form of shares of common stock currently held in escrow for NDP, and other milestone payments are to be paid in cash. The maximum aggregate number of shares issuable upon achievement of milestones is 145,543 shares. In 2014, a certain milestone was achieved resulting in the release of 36,386 shares held in escrow. The number of shares held in escrow as of December 31, 2018 is 109,157 shares of common stock. The maximum aggregate amount of cash payments due upon achievement of milestones is $3,000,000 with the balance being $2,500,000 as of December 31, 2018 and 2017. Events that trigger milestone payments include but are not limited to the reaching of various stages of regulatory approval and upon achieving certain worldwide net sales amounts. There were no milestones achieved during the years ended December 31, 2018 and 2017. The NDP License Agreement may be terminated by the Company on a country-by-country basis upon 60 days prior written notice. If the NDP License Agreement is terminated by either party, the Company’s rights to the NDP Technology will revert back to NDP. Other In September 2017, the Company entered into a sublease agreement for approximately 6,960 square feet of office space in Berkeley Heights, New Jersey, which sublease runs from September 15, 2017 to June 29, 2020. This sublease is rent-free to the Company. |
8. Stockholders' Equity
8. Stockholders' Equity | 12 Months Ended |
Dec. 31, 2018 | |
STOCKHOLDERS' EQUITY | |
Stockholders' Equity | Common Stock: The Company had a prior sales agreement with B. Riley for its ATM program, which expired on April 16, 2018, under which the Company could issue and sell up to an aggregate of $60.0 million of shares of its common stock. On March 9, 2018, the Company entered into a new agreement with B. Riley for the sale of up to $14.7 million of the Company’s common stock under the ATM program, pursuant to a registration statement filed on March 9, 2018 for an aggregate of $70 million of the Company’s securities, which became effective on April 16, 2018. The ATM program amount was increased by $25.0 million in November 2018. Under the ATM program, the Company may issue and sell common stock from time to time through B. Riley acting as agent, subject to limitations imposed by the Company and subject to B. Riley’s acceptance, such as the number or dollar amount of shares registered under the registration statement to which the offering relates. B. Riley is entitled to a commission of up to 3% of the gross proceeds from the sale of common stock sold under the ATM program. During the years ended December 31, 2018 and 2017, the Company sold 35,888,772 and 5,239,815 shares of common stock under the new and expired ATM programs, respectively, and realized net proceeds of approximately $22.0 million and $3.5 million during the years ended December 31, 2018 and 2017, respectively. At December 31, 2018, the Company has approximately $20.3 million available under its current ATM program and $30.3 million available under its current shelf registration for the issuance of equity, debt or equity-linked securities unrelated to the current ATM program. During the year ended December 31, 2018, the Company issued an aggregate of 131,826 shares of its common stock upon the vesting of restricted stock units issued to the Company’s board of directors. The Company also issued an aggregate of 127,628 shares of its common stock to its certain board members for payment of deferred fees. On May 3, 2017, the Company closed an underwritten public offering of 18,619,301 shares of its common stock, par value $0.001 per share, together with Series A warrants (“Series A Warrants”) to purchase up to an aggregate of 13,964,476 shares of its common stock and Series B warrants (“Series B Warrants”) to purchase up to an aggregate of 13,964,476 shares of its common stock. Series A Warrants had an exercise price of $0.75 per share of common stock and expired thirteen months following the Exercisable Date (defined below). Series B Warrants have an exercise price of $1.05 per share of common stock and will expire five years following the Exercisable Date. The net proceeds from this public offering was approximately $12.8 million. The Company issued to the underwriter warrants to purchase up to an aggregate of 1,117,158 shares of common stock, with an exercise price of $0.9375, which represents 125% of the public offering price per combined share and related warrants. The underwriter warrant expires five years following the Exercisable Date. Other than the exercise price, the terms of the underwriter warrants are the same as the Series B Warrants. In May 2017, the Company did not have a sufficient number of authorized shares of common stock to cover the shares issuable upon exercise of the warrants issued in the May 2017 public offering and therefore classified the fair value of the warrants as a derivative liability at June 30, 2017. On August 8, 2017, the Company’s shareholders approved the amendment of the Company’s amended and restated Certificate of Incorporation (the “Charter Amendment”) increasing the shares of authorized capital stock from 82,000,000 shares to 162,000,000 shares and increasing the number of authorized shares of common stock from 80,000,000 to 160,000,000 shares. The fair value of these warrants was re-measured on August 10, 2017, the date the warrants became exercisable (the “Exercisable Date”), with the increase in value recorded as a loss in the statement of operations. The fair value of the warrants at August 10, 2017 was reclassified then from liability to equity. In December 2017, the Company sold an aggregate of 624,246 shares of its common stock to its directors and executive officers and to certain of its employees at a per share purchase price of $0.48. The Company realized gross proceeds of approximately $300,000 (see Note 4 – Related Party Transactions). During the year ended December 31, 2017, the Company entered into warrant exchange agreements whereby the Company agreed to exchange with various investors (the “Investors”) Series A warrants issued in its May 2017 public offering of common stock and warrants. The exchanged warrants provided for the purchase of up to an aggregate of 9,886,250 shares of the Company’s common stock at an exercise price of $0.75, with an expiration date of September 10, 2018. The Company issued an aggregate of 2,471,561 shares of common stock to the Investors in exchange for these warrants. Restricted Stock Units During the year ended December 31, 2018 and 2017, the Company granted an aggregate of 94,500 and 112,931 restricted stock units (“RSUs”) to its officers and directors under its 2013 Stock Incentive Plan with a weighted average grant date fair value of $0.70 and $2.15 per share, respectively. These RSUs vest over various dates through October 2019. During the year ended December 31, 2018 and 2017, compensation expense recorded for these RSUs was $93,000 and $88,000, respectively. Unrecognized compensation expense as of December 31, 2018 and 2017 was $23,000 and $50,000, respectively. The expected weighted average period for the expense to be recognized is 0.34 years. During the year ended December 31, 2018, no RSUs were forfeited and 46,517 RSUs were forfeited during the year ended December 31, 2017. Preferred Stock The Company is authorized to issue up to 2,000,000 shares of preferred stock in one or more series without stockholder approval. The Company’s board of directors has the discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock. Of the 2,000,000 shares of preferred stock authorized, the Company’s board of directors has designated (all with par value of $0.001 per share) the following: As of December 31, 2018 and 2017 Preferred Shares Outstanding Liquidation Preference (Per Share) Total Liquidation Preference Series C-2 150,000 10.0 1,500,000 Series C-3 104,000 10.0 1,040,000 Series D 73,962 21.0 1,553,202 Series E 89,623 49.2 4,409,452 Series F 2,000 1,000 2,000,000 Total 419,585 10,502,654 On November 9, 2017, the Company entered into a securities purchase agreement with Elliott, pursuant to which, on November 16, 2017, the Company sold $2.0 million of its Series F convertible preferred stock (“Series F Stock”) at $1,000 per share. Based on the terms of the Series F Stock, the conversion price was set at $0.162 on April 2, 2018, and the shares are currently convertible anytime at Elliott’s option. The Series F Stock will be mandatorily convertible if certain equity conditions are met. As of December 31, 2018, the last condition had not been met, which condition is the subordination of the outstanding Series C-3 preferred stock to the Series F Stock. Therefore, the Series F Stock is not mandatorily convertible as of December 31, 2018; the conversion price per share of $0.162, however, remains fixed, subject to anti-dilution adjustment, including full ratchet. When and if that condition is met, the Series F Stock will be mandatorily convertible. Pursuant to the terms of the Series F Stock, a holder will be prohibited from converting shares of Series F Stock into shares of common stock if, as a result of such conversion, (i) such holder, together with its affiliates, would beneficially own more than 9.99% of the total number of shares of the Company’s common stock then issued and outstanding, or (ii) the Company would issue shares in an amount equal to or greater than 13,336,939 shares, which is 20% of the shares of common stock outstanding on November 9, 2017, unless the Company has received the approval of its stockholders for such overage. The Series F Stock is non-voting and has no dividend right outside of receiving dividends in the same form as the Company pays to holders of shares of its common stock. As long as any of the Series F non-voting convertible preferred stock is outstanding, the Company cannot, without the consent of a majority of the Series F holders, incur any indebtedness other than trade payables incurred in the ordinary course of business consistent with past practice, and letters of credit incurred in an aggregate amount of $3.0 million at any point in time. In the event of the Company’s liquidation, dissolution, or winding up, holders of the Series F Stock will receive a payment equal to $1,000 per share of Series F Stock, subject to adjustment, before any proceeds are distributed to the holders of common stock. Shares of the Series F Stock will rank: ● senior to all common stock and the Series C-2, Series C-3 Convertible Preferred Stock (subject to the Company obtaining any consent, waiver or other authorization from the holders of the Series C-3 Convertible Preferred Stock necessary for the subordination of the Series C-3 Convertible Preferred Stock to the Series F Preferred Stock), Series D Non-Voting Convertible Preferred Stock, Series E Non-Voting Convertible Stock; and ● senior to any class or series of capital stock hereafter created. in each case, as to distributions of assets upon our liquidation, dissolution or winding up whether voluntarily or involuntarily. As a part of the financing, the Company also entered into a registration rights agreement with Elliott whereby Elliott can demand that the Company register the shares issuable upon exercise of the warrants, and shares issuable upon conversion of the Series F Stock, if issued. The backstop agreement (see Warrant section of this Note) provides that until the later of (x) the date that no Series F preferred shares are outstanding and (y) the date the no warrants issued under the backstop agreement are outstanding, the Company may not issue any securities in a “variable rate transaction” other than at-the-market offerings through a registered broker-dealer or offerings of the Series F preferred stock. A “variable rate transaction” is a transaction on terms more favorable than those of the backstop agreement and the Series F preferred stock, in which the Company issues any convertible securities either (A) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the shares of the Company’s common Stock at any time after the initial issuance of such convertible securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such convertible securities or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for its common stock, other than pursuant to a customary “weighted average” anti-dilution provision or (ii) enters into any agreement (other than an at-the-market offering through a registered broker-dealer) whereby the Company may sell securities at a future determined price (other than standard and customary “preemptive” or “participation” rights). The following terms and conditions apply to the Series C, Series D, Series E and Series F non-voting convertible preferred stock outstanding at December 31, 2018 and 2017: Dividends Fundamental Transactions- Redemption Listing- Series C-2 and Series C-3 Non-Voting Convertible Preferred Stock and Warrants The Series C-2 non-voting preferred stock and Series C-3 non-voting preferred stock have identical rights, privileges and terms and are referred to collectively as the “Series C Stock.” Each share of Series C Stock is convertible into 10 shares of common stock at any time at the holder’s option at a conversion price of $1.00 per share. In the event of the Company’s liquidation, dissolution, or winding up, holders of the Series C Stock will receive a payment equal to $10.00 per share of Series C Stock, subject to adjustment, before any proceeds are distributed to the holders of common stock. Shares of the Series C Stock will not be entitled to receive any dividends, unless and until specifically declared by the Company’s board of directors. The Series C Preferred Stock ranks senior to the Company’s common stock; senior Series D Non-Voting Convertible Preferred Stock Each share of Series D non-voting convertible preferred stock is convertible into 20 shares of common stock (subject to adjustment) at a per share price of $0.35 at any time at the option of the holder, except that a holder will be prohibited from converting shares of Series D non-voting convertible preferred stock into shares of common stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own more than 9.99% of the total number of shares of the Company’s common stock then issued and outstanding. In the event of the Company’s liquidation, dissolution or winding up, holders of Series D non-voting convertible preferred stock will receive a payment equal to $21.00 per share of Series D non-voting convertible preferred stock on parity with the payment of the liquidation preference due the Series E non-voting convertible preferred stock, but before any proceeds are distributed to the holders of common stock, the Series C-2 non-voting convertible preferred stock. The Series D non-voting convertible preferred stock ranks senior to the Company’s common stock; senior to any class or series of capital stock created after the issuance of the Series D non-voting convertible preferred stock; senior to the Series C-2 non-voting convertible preferred stock and the Series C-3 non-voting convertible preferred stock; on parity with the Series E non-voting convertible preferred stock; and junior to the Series F non-voting convertible preferred stock. As long as any of the Series D non-voting convertible preferred stock is outstanding, the Company cannot, without the consent of a majority of the Series D holders, incur any indebtedness other than indebtedness existing prior to September 15, 2014, trade payables incurred in the ordinary course of business consistent with past practice, and letters of credit incurred in an aggregate amount of $3.0 million at any point in time. In addition to the debt restrictions above, as long as any shares of the Series D non-voting convertible preferred stock are outstanding, the Company cannot, among others things: create, incur, assume or suffer to exist any encumbrances on any of its assets or property; or redeem, purchase or otherwise acquire or pay or declare any dividend or other distribution on any junior securities. Series E Non-Voting Convertible Preferred Stock Each share of Series E non-voting convertible preferred stock was originally convertible into 21.8667 shares of the Company’s common stock (subject to adjustment) at a per share price of $0.75 at any time at the option of the holder, except that a holder will be prohibited from converting shares of Series E non-voting convertible preferred stock into shares of common stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own more than 9.99% of the total number of shares of the Company’s common stock then issued and outstanding. In the event of the Company’s liquidation, dissolution or winding up, holders of Series E preferred stock will receive a payment equal to $49.20 per share of Series E non-voting convertible preferred stock on parity with the payment of the liquidation preference due the Series D non-voting convertible preferred stock, but before any proceeds are distributed to the holders of common stock, the Series C-2 non-voting convertible preferred stock. The Series E non-voting convertible preferred stock ranks senior to the Company’s common stock; senior to any class or series of capital stock created after the issuance of the Series E non-voting preferred stock; senior to the Series C-2 and the Series C-3 non-voting convertible preferred stock; on parity with the Series D non-voting convertible preferred stock; and junior to the Series F non-voting convertible preferred stock. As long as any of the Series E non-voting convertible preferred stock is outstanding, the Company cannot, without the consent of a majority of the Series E holders, incur any indebtedness other than indebtedness existing prior to September 15, 2014, trade payables incurred in the ordinary course of business consistent with past practice, and letters of credit incurred in an aggregate amount of $3.0 million at any point in time. In addition to the debt restrictions above, as long as any the Series E non-voting convertible preferred stock is outstanding , the Company cannot, among others things: create, incur, assume or suffer to exist any encumbrances on any of our assets or property; redeem, repurchase or pay any cash dividend or distribution on any of our capital stock (other than as permitted); redeem, repurchase or prepay any indebtedness; or engage in any material line of business substantially different from our current lines of business. In the event the Company issues any options, convertible securities or rights to purchase stock or other securities pro rata to the holders of common stock, then holders of Series E non-voting convertible preferred stock will be entitled to acquire, upon the same terms a pro rata amount of such stock or securities as if the Series E non-voting convertible preferred stock had been converted to common stock. Stock Options: The Company’s 2013 Stock Incentive Plan (the “2013 Plan”) was approved by the shareholders in July 2013. The 2013 Plan provides for the issuance of equity grants in the form of options, restricted stock, stock awards and other forms of equity compensation. Awards under the 2013 Plan may be made to directors, officers, employees and consultants under the 2013 Plan. Initially, an aggregate of 5,000,000 shares of the Company’s common stock was reserved for issuance under the 2013 Plan. On January 19, 2016, the shareholders approved an increase of the shares issuable under the 2013 Plan from 5,000,000 to 8,000,000 and on June 13, 2016 from 8,000,000 to 11,000,000. During the year ended December 31, 2018, the Company granted ten-year qualified and non-qualified stock options to its officers, directors, employees and consultants covering an aggregate of 678,000 shares of the Company’s common stock under the 2013 Stock Incentive Plan. The weighted average exercise price of these options are $0.44 per share. During the years ended December 31, 2018 and 2017, total compensation expense for stock options issued to employees, directors, officers and consultants was $1,018,000 and $1,571,000, respectively. As of December 31, 2018, there was $1,619,000 total unrecognized compensation expense related to stock options granted which expense will be recognized over an expected remaining weighted average period of 1.33 years. All share-based awards are recognized on a straight-line method, assuming all awards granted will vest. Forfeitures of share-based awards are recognized in the period in which they occur. The fair value at grants dates of the grants issued subject to service and performance based vesting conditions were determined using the Black-Scholes option pricing model with the following assumptions: Year Ended December 31, 2018 2017 Risk-free interest rate 2.63% - 2.96% 1.77% - 2.40% Expected volatility 93% - 103% 95% - 106% Expected term (years) 5 years 5 - 10 years Expected dividend yield 0.0% 0.0% Weighted-average grant date fair value of options granted during the period $ 0.32 $ 1.18 The Company estimated the expected term of the stock options granted based on anticipated exercises in future periods. The expected term of the stock options granted to consultants is based upon the full term of the respective option agreements. The expected stock price volatility for the Company’s stock options is calculated based on the historical volatility since the initial public offering of the Company’s common stock in March 2010. The expected dividend yield of 0.0% reflects the Company’s current and expected future policy for dividends on the Company’s common stock. 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 which is 5 years for employees and 10 years for non-employees. The following table summarizes the Company’s stock options activity and related information for the year ended December 31, 2018: Shares Underlying Stock Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding at beginning of year 4,962,795 $ 2.04 7.5 $ 247,500 Granted 678,000 $ 0.44 572,610 Exercised (40,000 ) $ 0.29 42,400 Expired/Cancelled (90,531 ) $ 1.35 21,912 Forfeited (453,938 ) $ 1.89 113,348 Outstanding at end of year 5,056,326 $ 1.86 6.7 $ 1,006,743 Vested at end of year 3,478,053 $ 1.88 6.1 $ 639,369 Expected to vest in the future 1,578,273 $ 1.82 8.2 $ 367,374 The total intrinsic value of stock options exercised during the years ended December 31, 2018 and 2017 was $42,400 and $13,200, respectively. The aggregate intrinsic value is calculated as the difference between the exercise prices of the underlying options and the quoted closing price of the common stock of the Company at the end of the reporting period for those options that have an exercise price below the quoted closing price. Warrants: The following table is the summary of warrant activities: Shares Underlying Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Life Outstanding at December 31, 2017 23,417,891 $ 1.08 3.4 Issued 450,000 1.50 5.0 Exercised (2,442,376 ) 1.05 - Expired (4,830,499 ) 0.87 - Outstanding at December 31, 2018 16,595,016 $ 1.10 3.1 On December 31, 2018, the Company sold to Elliott a senior secured convertible note in the aggregate principal amount of $7,500,000 and a warrant to purchase up to an aggregate of 450,000 shares of common stock, for gross proceeds of $7,500,000. The warrant is immediately exercisable, has an exercise price of $1.50 per share, subject to adjustment in the event of stock dividends and distributions, stock splits, stock combinations, or reclassifications affecting the Company’s common stock, and has a term of five years (see Note 6). On December 31, 2018, the Company amended and restated the following warrants held by Elliott and its affiliates to reduce the exercise price of each warrant to $0.001 per share: warrants issued in May 2013 to purchase up to an aggregate of 500,000 shares of the Company’s common stock with a pre-amendment exercise price of $0.65 per share and an expiration date of May 30, 2019 (the “May 30, 2019 Warrants”); and warrants issued in October 2013 to purchase up to an aggregate of 750,000 shares of common stock with a pre-amendment exercise price of $0.90 per share and an expiration date of October 22, 2019 (the “October 22, 2019 Warrants”). The incremental cost of approximately $710,000 associated with the warrant modification was recorded as a debt discount. The fair value of the warrant was determined using a Black-Scholes option pricing model using the following assumptions at the grant date of the warrant: December 31, 2018 Expected Term 5.0 years Volatility 102.85 % Dividend yield 0.0 % Exercise Price $ 1.50 Risk-free interest rate 2.51 % On November 9, 2017, in addition to the securities purchase agreement issued to Elliott (See Note 8 Preferred Stock), the Company entered into a backstop agreement with Elliott to purchase additional Series F convertible preferred Stock at $1,000 per share, at the Company’s sole discretion, beginning January 15, 2018 through March 31, 2018. As consideration for the backstop agreement, the Company issued 564,858 warrants, exercisable for three years, to purchase shares of the Company’s common stock at a per share exercise price of $0.001. The number of shares issuable under the warrant was determined by the closing price of the Company’s common stock on November 8, 2017, which was $0.5278, reduced by the amount of equity capital raised from the ATM program and the sale of common stock to directors, executive officers and other certain employees of the Company totaling $2.4 million. On November 16, 2017, the Company recorded a derivative liability of $270,592 and a corresponding reduction to additional paid in capital based on the initial Black Scholes valuation. The warrants were initially classified as a liability as the Company had a conditional obligation to settle the warrants by issuing a variable number of shares with variations of the obligation based on inputs other than the fair value of the Company’s shares (i.e. the amount subject to the backstop agreement). The fair value of the warrants was determined using a Black-Scholes option pricing model using the following assumptions at the grant date of the warrants: November 16, 2017 Expected Term 3.0 years Volatility 98 % Dividend yield 0.0 % Exercise Price $ 0.00 Risk-free interest rate 1.83 % Fair value of warrants granted $ 270,592 Number of shares underlying warrants granted 564,858 On December 24, 2017, the derivative liability of $327,079 was reclassified to equity as the number of issued warrants was determined on that date. Prior to the reclassification to equity, an expense of $56,487 for the change in fair value of derivative liability was recorded on the Company’s consolidated statement of operations and comprehensive income (loss) for the year ended December 31, 2017, which represented the increase in the fair value of the derivative liability from November 16, 2017, the original valuation date of the warrants, and December 24, 2017, the date the warrants became classified as equity. As these warrants were liability-classified prior to the reclassification to equity, the fair value of the warrants were revalued at December 24, 2017 using the following assumptions: December 24, 2017 Expected Term 2.90 years Volatility 98 % Dividend yield 0.0 % Exercise Price $ 0.00 Risk-free interest rate 2.01 % Weighted average fair value of warrants granted $ 327,079 Number of shares underlying warrants granted 564,858 In the May 2017 public offering, the Company issued 29,046,110 warrants, of which 9,886,250 warrants were subsequently exchanged for 2,471,561 shares of the Company's common stock during the year ended December 31, 2017. In the May 2017 public offering, the Company did not have sufficient number of authorized shares of common stock available to reserve the shares issuable upon the exercise of 29,046,110 outstanding warrants issued in the May 2017 public offering. Therefore, these warrants were classified as liabilities at June 30, 2017 and were re-measured on August 10, 2017, which was the Exercisable Date, with any increase or decrease in value recorded as a loss or gain in the income statement. The Company recorded a loss of $1,974,019 during the year ended December 31, 2017. As of August 9, 2017, the Company had enough authorized shares to cover the issuance of these warrants, and therefore the derivative liability was reclassified to equity on that date in the amount of $3,854,195. The fair value of the warrants was determined using a probability-weighted Black-Scholes option pricing under different scenarios regarding the expected probability and timing of sufficient additional shares being authorized to allow the warrants to become exercisable. The following assumptions were used to value the warrants at the grant date. Series A Series B Underwriter’s Expected Term 1.18 – 1.33 years 5.10 – 5.25 years 5.10 – 5.25 years Volatility 55% 55% 55% Dividend yield 0.0% 0.0% 0.0% Exercise Price $0.75 $1.05 $0.94 Risk-free interest rate 1.13% - 1.16% 1.86% - 1.88% 1.86% - 1.88% Weighted average fair value of warrants granted $0.08 $0.17 $0.18 Number of shares underlying warrants granted 13,964,476 13,964,476 1,117,158 As these warrants are liability-classified, they were revalued at August 10, 2017 using the following assumptions: Series A Series B Underwriter’s Expected Term 1.09 5.00 5.00 Volatility 96.95% 96.95% 96.95% Dividend yield 0.0% 0.0% 0.0% Exercise Price $ 0.75 $ 1.05 $ 0.94 Risk-free interest rate 1.22% 1.76% 1.76% Weighted average fair value of warrants $ 0.06 $ 0.20 $ 0.20 Various warrants that the Company has issued contain a prohibition on the Company entering into a merger, sale of all or substantially all of its assets or similar transaction unless the acquiring entity assumes all of the obligations of the Company under the warrants and also is a publicly traded corporation whose common stock is quoted on or listed for trading on a securities exchange, provided that this prohibition will not apply to an all cash acquisition. Stock-based Deferred Compensation Plan for Non-Employee Directors During the third quarter of 2014, the Company established an unfunded stock-based deferred compensation plan, providing non-employee directors the opportunity to defer up to one hundred percent of fees and compensation, including restricted stock units. The amount of fees and compensation deferred by a non-employee director is converted into stock units, the number of which is determined based on the closing price of the Company’s common stock on the date such compensation would have otherwise been payable. At all times, the plan participants are one hundred percent vested in their respective deferred compensation accounts. On the tenth business day of January in the year following a director’s termination of service, the director will receive a number of common shares equal to the number of stock units accumulated in the director’s deferred compensation account. The Company accounts for this plan as stock based compensation under ASC 718. During the year ended December 31, 2018 and 2017, the amount of compensation that was deferred under this plan was $30,000 and $57,940, respectively. |
9. Concentrations
9. Concentrations | 12 Months Ended |
Dec. 31, 2018 | |
Risks and Uncertainties [Abstract] | |
Concentrations | At December 31, 2018, no net accounts receivable was due to a customer that exceeded 10% and for the year ended December 31, 2017, 81% was due from two customers (57% and 24%). During the year ended December 31, 2018, the Company had revenue from a single customer that exceeded 10% of its total sales (70%) and two customers (25% and 19%) for the year ended December 31, 2017. |
10. Subsequent Events
10. Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Through March 8, 2019, the Company issued an aggregate of 8,840,054 shares under its current ATM Program with a weighted average sale price of $1.78 per share, resulting in net proceeds of approximately $15.2 million. Through March 8, 2019, the Company issued an aggregate of 596,100 shares of its common stock upon the exercise of 596,100 warrants with a weighted average exercise price of $1.04 per share, resulting in net proceeds of approximately $0.6 million. On June 26, 2018, the Company’s stockholders approved an amendment to the Company’s Certificate of Incorporation to effect a reverse stock split at a ratio of between 1-for-5 and 1-for-10, as determined by the Company’s Board of Directors, at any time before June 26, 2019, if and as determined by the Board of Directors. On March 12, 2019, the Company’s Board of Directors approved a 1-for-5 reverse stock split of its common stock that is scheduled to become effective on March 26, 2019. Upon completion of the reverse stock split, the number of issued and outstanding shares of the Company’s common stock will decrease from approximately 109 million to approximately 22 million. The par value of the Company’s common stock will remain unchanged at $0.001 per share after the reverse stock split. Share and per share data presented in the accompanying consolidated financial statements have not been adjusted for the reverse stock split. Pro forma share and per share data, giving retroactive effect to the reverse stock split, are as follows (rounded to the nearest cent): Year Ended December 31, 2018 2017 Pro Forma Amounts Unaudited Net Loss Per Common Share – Basic and Diluted: Basic and diluted – as reported (pre-stock split) $ (0.30) $ (0.60) Basic and diluted – pro forma (post-stock split) (1.51) (2.99) Weighted average shares outstanding: Basic and diluted – as reported (pre-stock split) 89,083,119 55,141,133 Basic and diluted – pro forma (post-stock split) 17,816,624 11,028,227 The consolidated statements of changes in stockholders’ equity presented in the accompanying consolidated financial statements have not been adjusted for the reverse stock split. Pro forma stockholders’ equity, giving retroactive effect to the reverse stock split, is as follows: Year Ended December 31, 2018 2017 Pro Forma Amounts Unaudited Common stock - $0.001 par value: 160,000,000 shares authorized: Shares issued and outstanding – as reported (pre-stock split) 108,875,866 71,413,790 Shares issued and outstanding – pro forma (post-stock split) 21,775,174 14,282,758 Par value– as reported (pre-stock split) $ 108,876 $ 71,414 Par value– pro forma (post-stock split) $ 21,775 $ 14,283 Additional paid-in capital: As reported (pre-stock split) $ 183,716,536 $ 159,197,950 Pro forma (post-stock split) $ 183,803,637 $ 159,255,081 The reverse stock split will also proportionately affect the number of shares of common stock available for issuance under the Company’s equity incentive plans and will proportionately reduce the number of shares of common stock issuable upon the exercise of stock options, warrants and preferred stock outstanding immediately prior to the reverse split. The exercise prices of the Company’s outstanding options and warrants, and the conversion price of its outstanding preferred stock will be adjusted in accordance with their respective terms. . |
3. Summary of Significant Acc_2
3. Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Use of Estimates | The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. |
Basis of Consolidation | The consolidated financial statements include the accounts of the Company and CorMedix Europe GmbH, a wholly owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation. |
Financial Instruments | Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and short-term investments. The Company maintains its cash and cash equivalents in bank deposit and other interest-bearing accounts, the balances of which, at times, may exceed federally insured limits. The following table is the reconciliation of the recently adopted new accounting standard that modifies certain aspects of the recognition, measurement, presentation and disclosure of financial instruments as shown on the Company’s condensed consolidated statement of cash flows: December 31, 2018 2017 Cash and cash equivalents $ 17,623,770 $ 10,379,729 Restricted cash 171,553 171,553 Total cash, cash equivalents and restricted cash $ 17,795,323 $ 10,551,282 The appropriate classification of marketable securities is determined at the time of purchase and reevaluated as of each balance sheet date. Investments in marketable debt and equity securities classified as available-for-sale are reported at fair value. Fair value is determined using quoted market prices in active markets for identical assets or liabilities or quoted prices for similar assets or liabilities or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Changes in fair value that are considered temporary are reported net of tax in other comprehensive income (loss). Realized gains and losses, amortization of premiums and discounts and interest and dividends earned are included in income (expense). For declines in the fair value of equity securities that are considered other-than-temporary, impairment losses are charged to other (income) expense, net. The Company considers available evidence in evaluating potential impairments of its investments, including the duration and extent to which fair value is less than cost. There were no deemed permanent impairments at December 31, 2018 or 2017. The Company’s marketable securities are highly liquid and consist of U.S. government agency securities, high-grade corporate obligations and commercial paper with original maturities of more than 90 days. As of December 31, 2018 and 2017, all of the Company’s investments had contractual maturities which were less than one year. The following table summarizes the amortized cost, unrealized gains and losses and the fair value at December 31, 2018 and 2017: December 31, 2018: Amortized Cost Gross Unrealized Losses Gross Unrealized Gains Fair Value Money Market Funds included in Cash Equivalents $ 1,179,673 $ - $ - $ 1,179,673 Corporate Securities - - - - Commercial Paper - - - - Subtotal - - - - Total December 31, 2018 $ 1,179,673 $ - $ - $ 1,179,673 December 31, 2017: Money Market Funds included in Cash Equivalents $ 6,032,034 $ - $ - $ 6,032,034 Corporate Securities 905,625 (112 ) 3 905,516 Commercial Paper 698,682 - - 698,682 Subtotal 1,604,307 (112 ) 3 1,604,198 Total December 31, 2017 $ 7,636,341 $ (112 ) $ 3 $ 7,636,232 |
Fair Value Measurements | The Company’s financial instruments recorded in the consolidated balance sheets include cash and cash equivalents, accounts receivable, investment securities, accounts payable and accrued expenses. The carrying value of certain financial instruments, primarily cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate their estimated fair values based upon the short-term nature of their maturity dates. The Company’s senior secured convertible note falls into the Level 3 category within the fair value level hierarchy. The fair value was determined using market data for valuation. The Company categorizes its financial instruments into a three-level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value, which is set out below. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument. ● Level 1 inputs—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 inputs— Significant other observable inputs (e.g., quoted prices for similar items in active markets, quoted prices for identical or similar items in markets that are not active, inputs other than quoted prices that are observable such as interest rate and yield curves, and market-corroborated inputs). ● Level 3 inputs—Unobservable inputs for the asset or liability, which are supported by little or no market activity and are The following table provides the carrying value and fair value of the Company’s financial assets measured at fair value as of December 31, 2018 and 2017: December 31, 2018: Carrying Value Level 1 Level 2 Level 3 Money Market Funds $ 1,179,673 $ 1,179,673 $ - $ - Available for sale securities: Corporate Securities - - - - Commercial Paper - - - - Subtotal - - - - Total December 31, 2018 $ 1,179,673 $ 1,179,673 $ - $ - December 31, 2017: Money Market Funds $ 6,032,034 $ 6,032,034 $ - $ - Available for sale securities: Corporate Securities 905,516 - 905,516 - Commercial Paper 698,682 - 698,682 - Subtotal 1,604,198 - 1,604,198 - Total December 31, 2017 $ 7,636,232 $ 6,032,034 $ 1,604,198 $ - |
Foreign Currency Translation and Transactions | The consolidated financial statements are presented in U.S. Dollars (USD), the reporting currency of the Company. For the financial statements of the Company’s foreign subsidiary, whose functional currency is the EURO, foreign currency asset and liability amounts, if any, are translated into USD at end-of-period exchange rates. Foreign currency income and expenses are translated at average exchange rates in effect during the year. Translation gains and losses are included in other comprehensive loss. The Company had foreign currency translation loss of $1,911 in 2018 and a gain $4,144 in 2017. Foreign currency exchange transaction gain (loss) is the result of re-measuring transactions denominated in a currency other than the functional currency of the entity recording the transaction. |
Segment and Geographic Information | The following table summarizes the segment and geographic information: December 31, 2018 2017 Reported revenues $ 429,797 $ 329,327 Revenues attributable to European and Mideast operations, which are based in Germany $ 420,973 $ 320,504 Total assets $ 18,825,914 $ 13,453,933 Total assets located in the United States, with the remainder in Germany $ 18,154,463 $ 12,597,231 |
Restricted Cash | As of December 31, 2018 and 2017, the Company’s restricted cash is in connection with the patent and utility model infringement proceedings against TauroPharm (see Note 7). The Company was required by the District Court Mannheim to provide a security deposit of approximately $132,000 to cover legal fees in the event TauroPharm is entitled to reimbursement of these costs. The Company furthermore had to provide a deposit in the amount of $40,000 in connection with the unfair competition proceedings in Cologne. |
Prepaid Research and Development and Other Prepaid Expenses | Prepaid expenses consist of payments made in advance to vendors relating to service contracts for clinical trial development, manufacturing, pre-clinical development and insurance policies. These advanced payments are amortized to expense either as services are performed or over the relevant service period using the straight-line method. |
Inventories, net | Inventories are valued at the lower of cost or net realizable value on a first in, first out basis. Inventories consist of raw materials (including labeling and packaging), work-in-process, and finished goods, if any, for the Neutrolin product. Inventories consist of the following: December 31, 2018 2017 Raw materials $ 71,275 $ 141,233 Work in process 86,957 526,067 Finished goods 373,283 29,894 Inventory reserve (103,000 ) (103,000 ) Total $ 428,515 $ 594,194 |
Property and Equipment | Property and equipment consist primarily of furnishings, fixtures, leasehold improvements, office equipment and computer equipment all of which are recorded at cost. Depreciation is provided for by the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized using the straight-line method over the remaining lease term or the life of the asset, whichever is shorter. Property and equipment, as of December 31, 2018 and 2017 were $160,860 and $186,282, respectively, net of accumulated depreciation of $218,948 and $154,836, respectively. Depreciation and amortization of property and equipment is included in selling, general and administrative expenses. Description Estimated Useful Life Office equipment and furniture 5 years Leasehold improvements 5 years Computer equipment 5 years Computer software 3 years |
Accrued Expenses | Accrued expenses consist of the following: December 31, 2018 2017 Professional and consulting fees $ 258,352 $ 485,089 Accrued payroll and payroll taxes 1,102,143 755,221 Clinical trial related 3,408,032 2,531,608 Manufacturing development related 210,577 353,316 Product development 49,200 80,001 Market research - 116,466 Other 137,920 42,166 Total $ 5,166,224 $ 4,363,867 |
Revenue Recognition | The Company adopted Accounting Standards Codification (“ASC”) 606, “ Revenue from Contracts with Customers,” The Company recognizes net sales upon shipment of product to the dialysis centers and upon meeting the five-step model prescribed by ASC 606 outlined above. In October 2015, the Company shipped product with less than 75% of its remaining shelf life to a customer and issued a guarantee that the specific product shipped would be replaced by the Company if the customer was not able to sell the product before it expired. As a result of this warranty, the Company may have an additional performance obligation (i.e. accept returned product and deliver new product to the customer) if the customer is unable to sell the short-dated product. As the result of the adoption of ASC 606, the Company accelerated the recognition of the deferred revenue and related cost of sales in the net amount of $70,500 and recorded the warranty obligation in the amount of $52,900 upon adoption. |
Deferred Revenue | In August 2014, the Company entered into an exclusive distribution agreement (the “Wonik Agreement”) with Wonik Corporation, a South Korean company, to market, sell and distribute Neutrolin for hemodialysis and oncolytic patients upon receipt of regulatory approval in South Korea. Upon execution, Wonik paid the Company a non-refundable $50,000 payment and will pay an additional $50,000 upon receipt of the product registration necessary to sell Neutrolin in South Korea (the “Territory”). The term of the Wonik Agreement commenced on August 8, 2014 and will continue for three years after the first commercial sale of Neutrolin in the Territory. The non-refundable up-front payment has been recorded as deferred revenue and will be recognized as revenue on a straight-line basis over the contractual term of the Agreement. Deferred revenue related to this agreement at December 31, 2018 and 2017 amounted to approximately $11,000 and $20,000, respectively. |
Loss per common share | Basic loss per common share excludes dilution and is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted loss per common share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. The Company's outstanding Series C, Series D, Series E and Series F preferred stock entitle the holders to receive dividends on a basis equivalent to the dividends paid to holders of common stock. As a result, the Series C, Series D, Series E and Series F preferred stock meet the definition of participating securities requiring the application of the two-class method. Under the two-class method, earnings available to common shareholders, including both distributed and undistributed earnings, are allocated to each class of common stock and participating securities according to dividends declared and participating rights in undistributed earnings, which may cause diluted earnings per share to be more dilutive than the calculation using the treasury stock method. No loss has been allocated to these participating securities since they do not have contractual obligations that require participation in the Company’s losses. Since the Company has only incurred losses, basic and diluted loss per share are the same as potentially dilutive shares have been excluded from the calculation of diluted net loss per share as their effect would be anti-dilutive. The shares outstanding at the end of the respective periods presented below were excluded from the calculation of diluted net loss per share due to their anti-dilutive effect: December 31, 2018 2017 Series C non-voting preferred stock 2,540,000 2,540,000 Series D non-voting preferred stock 1,479,240 1,479,240 Series E non-voting preferred stock 1,959,759 1,959,759 Series F non-voting preferred stock 12,345,679 3,157,561 Shares issuable upon conversion of convertible debt 5,000,000 - Restricted stock units 29,087 66,414 Shares issuable for payment of deferred board compensation 142,892 199,355 Shares underlying outstanding warrants 16,595,016 23,417,891 Shares underlying outstanding stock options 5,056,326 4,962,795 Total potentially dilutive shares 45,147,999 37,783,015 |
Stock-Based Compensation | Share-based compensation cost is measured at grant date, based on the estimated fair value of the award using the Black-Scholes option pricing model for options with service or performance-based conditions. Stock-based compensation is recognized as expense over the employee’s requisite service period on a straight-line basis. The Company accounts for stock options granted to non-employees on a fair value basis using the Black-Scholes option pricing model in accordance with ASC 718 and ASC No. 505-50, “Equity-Based Payments to Non-Employees” |
Research and Development | Research and development costs are charged to expense as incurred. Research and development includes fees associated with operational consultants, contract clinical research organizations, contract manufacturing organizations, clinical site fees, contract laboratory research organizations, contract central testing laboratories, licensing activities, and allocated executive, human resources and facilities expenses. The Company accrues for costs incurred as the services are being provided by monitoring the status of the trial and the invoices received from its external service providers. As actual costs become known, the Company adjusts its accruals in the period when actual costs become known. Costs related to the acquisition of technology rights and patents for which development work is still in process are charged to operations as incurred and considered a component of research and development expense. |
Income Taxes | Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their 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 recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when it is more likely than not that some or all of the deferred tax assets will not be realized. |
Debt Issuance Costs | The Company accounts for debt issuance costs as a direct deduction from the carrying amount of the respective debt liability, consistent with debt discounts. The Company amortizes the debt discount, including debt issuance costs over the term of the associated debt using the effective interest method. |
Derivative Liability | The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks; however, the Company had certain financial instruments in 2017 that qualified as derivatives and were classified as liabilities on the balance sheet. The Company evaluates all its financial instruments to determine if those instruments or any potential embedded components of those instruments qualify as derivatives that need to be separately accounted for in accordance with FASB ASC 815, “Derivatives and Hedging” The Company accounts for stock warrants as either equity instruments or derivative liabilities depending on the specific terms of the warrant agreement. Stock warrants are classified as derivative liabilities if they can be cash settled or if there are insufficient authorized and unissued shares available to settle the contract after considering all other commitments that may require the issuance of stock during the maximum period the warrant could remain outstanding. Liability classified warrants are adjusted to their estimated fair values at each reporting period, with any decrease or increase in the estimated fair value being recorded in other income (expense). In May 2017, the Company issued warrants that were liability-classified because there were insufficient shares of common stock available to settle the contracts. The carrying values of those warrants were adjusted to their estimated fair values at June 30, 2017 and again during the third quarter when sufficient additional common shares were authorized to cause the warrants to be reclassified as equity. The fair values on the issuance date and subsequent re-measurement dates were estimated using a probability-weighted option pricing model, requiring assumptions to be developed under different scenarios for the expected term, expected volatility, expected dividend yield and the risk-free interest rate. The Company estimated the expected term of the warrants based on the remaining contractual term. Expected volatility was calculated based on implied volatility of the stock price. The expected dividend yield is assumed to be zero in all scenarios because the Company has never, and has no plans at this time, to pay any dividends. To determine the risk free interest rate, the Company used the U.S. Treasury yield curve in effect at the time of the measurement with a term consistent with the remaining expected term of the warrant. |
Recently Adopted Authoritative Pronouncements | The FASB issued new guidance in May 2014, as updated in April 2016 and May 2016, related to how an entity should recognize revenue. The guidance specifies that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. In addition, the guidance expands the required disclosures related to revenue and cash flows from contracts with customers. The Company adopted the new revenue recognition standard as of January 1, 2018 using the modified retrospective method, which requires the cumulative effect of adoption to be recognized as an adjustment to opening retained earnings in the period of adoption. The majority of the Company’s revenue relates to the sale of finished products to various customers, and the adoption did not have a material impact on revenue recognized from these transactions. The Company accelerated the remaining deferred revenue under these agreements and recorded the reserve for returns and allowances as cumulative effect adjustments to opening retained earnings at January 1, 2018 of $43,162. The following table presents the Company’s revenue for the year ended December 31, 2018 under the ASC 606 model as compared to revenue under the previous guidance: Revenue As Reported Revenue Under Previous Guidance Difference Net sales $ 420,974 $ 420,974 $ - Revenue recognized under agreement with warranty - 43,162 43,162 Revenue recognized under Wonik Agreement 8,823 8,823 - Total net sales $ 429,797 $ 472,959 $ 43,162 In May 2017, the FASB issued new guidance which clarifies the application of stock-based accounting guidance when a change is made to the terms or conditions of a share-based payment award. The guidance is effective for the Company beginning in the first quarter of fiscal year 2018. Early adoption is permitted. This adoption on January 1, 2018 did not have a material impact on the Company’s consolidated financial statements. In November 2016, the FASB issued new guidance which clarifies how restricted cash is presented and classified in the statement of cash flows. The guidance is effective for the Company beginning in the first quarter of fiscal year 2018. Early adoption is permitted. This adoption on January 1, 2018 did not have a material impact on the Company’s consolidated financial statements. In August 2016, the FASB issued new guidance which clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows in order to reduce diversity in practice. The guidance is effective for us beginning in the first quarter of fiscal year 2018. Early adoption is permitted. This adoption on January 1, 2018 did not have a material impact on the Company’s consolidated financial statements. In January 2016, the FASB issued a new standard that modifies certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. The accounting standard update is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is permitted. This adoption on January 1, 2018 did not have a material impact on the Company’s consolidated financial statements. |
Recent Authoritative Pronouncements | In November 2018, the FASB issued new guidance to clarify the interaction between the authoritative guidance for collaborative arrangements and revenue from contracts with customers. The new guidance clarifies that, when the collaborative arrangement participant is a customer in the context of a unit-of-account, revenue from contracts with customers guidance should be applied, adds unit-of-account guidance to collaborative arrangements guidance, and requires, that in a transaction with a collaborative arrangement participant who is not a customer, presenting the transaction together with revenue recognized under contracts with customers is precluded. The guidance is effective for the Company beginning in the first quarter of fiscal year 2020. Early adoption is permitted. The Company is assessing the impact of adopting this guidance on its consolidated financial statements. In August 2018, the FASB issued a new guidance which modifies the disclosure requirements on fair value measurements. The guidance is effective for the Company beginning in the first quarter of fiscal year 2020. Early adoption is permitted. The Company is assessing the impact of adopting this guidance on its consolidated financial statements. In June 2018, the FASB issued a new guidance which expands the scope of ASC 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The guidance is effective for the Company beginning in the first quarter of fiscal year 2019. Early adoption is permitted. This adoption on January 1, 2019 did not have a material impact on the Company’s consolidated financial statements. In July 2017, the FASB issued new guidance which changes the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features and recharacterizes the indefinite deferral of certain provisions within the guidance for distinguishing liabilities from equity. The guidance is effective for the Company beginning in the first quarter of fiscal year 2019. Early adoption is permitted. This adoption on January 1, 2019 did not have a material impact on the Company’s consolidated financial statements. In June 2016, the FASB issued new guidance which replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance is effective for the Company beginning in the first quarter of fiscal year 2020. Early adoption is permitted beginning in the first quarter of fiscal year 2019. The Company is evaluating the impact of adopting this guidance on its consolidated financial statements. In February 2016, the FASB issued new guidance related to how an entity should lease assets and lease liabilities. The guidance specifies that an entity who is a lessee under lease agreements should recognize lease assets and lease liabilities for those leases classified as operating leases under previous FASB guidance. Accounting for leases by lessors is largely unchanged under the new guidance. The guidance is effective for the Company beginning in the first quarter of 2019. Early adoption is permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. This adoption on January 1, 2019 did not have a material impact on the Company’s consolidated financial statements. |
3. Summary of Significant Acc_3
3. Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Cash and cash equivalents | December 31, 2018 2017 Cash and cash equivalents $ 17,623,770 $ 10,379,729 Restricted cash 171,553 171,553 Total cash, cash equivalents and restricted cash $ 17,795,323 $ 10,551,282 |
Schedule of investments | December 31, 2018: Amortized Cost Gross Unrealized Losses Gross Unrealized Gains Fair Value Money Market Funds included in Cash Equivalents $ 1,179,673 $ - $ - $ 1,179,673 Corporate Securities - - - - Commercial Paper - - - - Subtotal - - - - Total December 31, 2018 $ 1,179,673 $ - $ - $ 1,179,673 December 31, 2017: Money Market Funds included in Cash Equivalents $ 6,032,034 $ - $ - $ 6,032,034 Corporate Securities 905,625 (112 ) 3 905,516 Commercial Paper 698,682 - - 698,682 Subtotal 1,604,307 (112 ) 3 1,604,198 Total December 31, 2017 $ 7,636,341 $ (112 ) $ 3 $ 7,636,232 |
Carrying and fair value of financial assets | December 31, 2018: Carrying Value Level 1 Level 2 Level 3 Money Market Funds $ 1,179,673 $ 1,179,673 $ - $ - Available for sale securities: Corporate Securities - - - - Commercial Paper - - - - Subtotal - - - - Total December 31, 2018 $ 1,179,673 $ 1,179,673 $ - $ - December 31, 2017: Money Market Funds $ 6,032,034 $ 6,032,034 $ - $ - Available for sale securities: Corporate Securities 905,516 - 905,516 - Commercial Paper 698,682 - 698,682 - Subtotal 1,604,198 - 1,604,198 - Total December 31, 2017 $ 7,636,232 $ 6,032,034 $ 1,604,198 $ - |
Segment and geographic information | December 31, 2018 2017 Reported revenues $ 429,797 $ 329,327 Revenues attributable to European and Mideast operations, which are based in Germany $ 420,973 $ 320,504 Total assets $ 18,825,914 $ 13,453,933 Total assets located in the United States, with the remainder in Germany $ 18,154,463 $ 12,597,231 |
Schedule of inventories | December 31, 2018 2017 Raw materials $ 71,275 $ 141,233 Work in process 86,957 526,067 Finished goods 373,283 29,894 Inventory reserve (103,000 ) (103,000 ) Total $ 428,515 $ 594,194 |
Property and equipment | Description Estimated Useful Life Office equipment and furniture 5 years Leasehold improvements 5 years Computer equipment 5 years Computer software 3 years |
Schedule of accrued expenses | December 31, 2018 2017 Professional and consulting fees $ 258,352 $ 485,089 Accrued payroll and payroll taxes 1,102,143 755,221 Clinical trial related 3,408,032 2,531,608 Manufacturing development related 210,577 353,316 Product development 49,200 80,001 Market research - 116,466 Other 137,920 42,166 Total $ 5,166,224 $ 4,363,867 |
Schedule of anti-dilutive securities excluded from calculation of diluted net loss per share | December 31, 2018 2017 Series C non-voting preferred stock 2,540,000 2,540,000 Series D non-voting preferred stock 1,479,240 1,479,240 Series E non-voting preferred stock 1,959,759 1,959,759 Series F non-voting preferred stock 12,345,679 3,157,561 Shares issuable upon conversion of convertible debt 5,000,000 - Restricted stock units 29,087 66,414 Shares issuable for payment of deferred board compensation 142,892 199,355 Shares underlying outstanding warrants 16,595,016 23,417,891 Shares underlying outstanding stock options 5,056,326 4,962,795 Total potentially dilutive shares 45,147,999 37,783,015 |
Effect of new accounting pronouncement | Revenue As Reported Revenue Under Previous Guidance Difference Net sales $ 420,974 $ 420,974 $ - Revenue recognized under agreement with warranty - 43,162 43,162 Revenue recognized under Wonik Agreement 8,823 8,823 - Total net sales $ 429,797 $ 472,959 $ 43,162 |
4. Related Party Transactions (
4. Related Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related party transactions | Amount Number of Shares Khoso Baluch CEO and Director $ 50,000 104,166 Robert W. Cook CFO $ 25,000 52,083 John Armstrong Executive VP $ 10,000 20,833 Myron Kaplan Chairman of the Board $ 50,000 104,166 Janet Dillione Director $ 25,000 52,083 Gary Gelbfish Director $ 25,000 52,083 Mehmood Khan Director $ 25,000 52,083 Steven W. Lefkowitz Director $ 65,000 135,416 |
5. Income Taxes (Tables)
5. Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
US and Foreign loss | December 31, 2018 2017 United States $ (25,882,114 ) $ (31,992,324 ) Foreign (947,516 ) (1,017,699 ) Total $ (26,829,630 ) $ (33,010,023 ) |
Deferred tax assets | December 31, 2018 2017 Net operating loss carryforwards – Federal $ 29,303,000 $ 23,833,000 Net operating loss carryforwards – State 8,441,000 7,264,000 Net operating loss carryforwards – Foreign 1,876,000 1,678,000 Capitalized licensing fees 912,000 1,068,000 Stock-based compensation 2,447,000 2,232,000 Accrued compensation 307,000 206,000 Other 110,000 65,000 Totals 43,396,000 36,346,000 Less valuation allowance (43,396,000 ) (36,346,000 ) Deferred tax assets $ - $ - |
Net operating loss tax carryforwards | December 31, 2018 2017 Federal $ 139,538,000 $ 113,492,000 State $ 118,719,000 $ 102,159,000 Foreign $ 6,250,000 $ 5,594,000 |
Effective income tax rate reconciliation | December 31, 2018 2017 Statutory Federal tax rate 21.0 % 34.0 % State income tax rate (net of Federal) 4.5 % 6.3 % Effect of foreign operations 1.1 % 0.9 % Non-deductible expenses associated with derivative liabilities 0.0 % 0.0 % Warrant related expenses 0.0 % 0.0 % Federal Deferred Tax Rate Change 0.0 % (45.7 )% Other permanent differences (0.3 )% 0.1 % Effect of valuation allowance (26.3 )% 4.4 % Effective tax rate 0.0 % 0.0 % |
Changes in deferred tax asset valuation allowance | Year Ended Balance at Beginning of Year Increase (Decrease) Charged (Credited) to Income Taxes (Benefit) Increase (Decrease) Charged (Credited) to OCI Balance at End of Year December 31, 2018 $ 36,346,000 $ 7,082,000 $ (32,000 ) $ 43,396,000 December 31, 2017 $ 37,811,000 $ (1,433,000 ) $ (32,000 ) $ 36,346,000 |
6. Senior Secured Convertible_2
6. Senior Secured Convertible Note (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Assumptions used for convertible debt | Conversion Option New Warrants At Issuance Date At Issuance Date Expected term (months) 36 60 Volatility 161.5 % 161.5 % Dividend yield 0 % 0 % Risk-free interest rate 2.43 % 2.48 % |
8. Stockholders' Equity (Tables
8. Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
STOCKHOLDERS' EQUITY | |
Preferred stock | As of December 31, 2018 and 2017 Preferred Shares Outstanding Liquidation Preference (Per Share) Total Liquidation Preference Series C-2 150,000 10.0 1,500,000 Series C-3 104,000 10.0 1,040,000 Series D 73,962 21.0 1,553,202 Series E 89,623 49.2 4,409,452 Series F 2,000 1,000 2,000,000 Total 419,585 10,502,654 |
Fair value assumptions for Black-Scholes, stock options | Year Ended December 31, 2018 2017 Risk-free interest rate 2.63% - 2.96% 1.77% - 2.40% Expected volatility 93% - 103% 95% - 106% Expected term (years) 5 years 5 - 10 years Expected dividend yield 0.0% 0.0% Weighted-average grant date fair value of options granted during the period $ 0.32 $ 1.18 |
Summary of stock option activity | Shares Underlying Stock Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (Years) Aggregate Intrinsic Value Outstanding at beginning of year 4,962,795 $ 2.04 7.5 $ 247,500 Granted 678,000 $ 0.44 572,610 Exercised (40,000 ) $ 0.29 42,400 Expired/Cancelled (90,531 ) $ 1.35 21,912 Forfeited (453,938 ) $ 1.89 113,348 Outstanding at end of year 5,056,326 $ 1.86 6.7 $ 1,006,743 Vested at end of year 3,478,053 $ 1.88 6.1 $ 639,369 Expected to vest in the future 1,578,273 $ 1.82 8.2 $ 367,374 |
Summary of warrant activity | Shares Underlying Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Life Outstanding at December 31, 2017 23,417,891 $ 1.08 3.4 Issued 450,000 1.50 5.0 Exercised (2,442,376 ) 1.05 - Expired (4,830,499 ) 0.87 - Outstanding at December 31, 2018 16,595,016 $ 1.10 3.1 |
Fair value assumptions for Black-Scholes, warrants | The fair value of the warrant was determined using a Black-Scholes option pricing model using the following assumptions at the grant date of the warrant: December 31, 2018 Expected Term 5.0 years Volatility 102.85 % Dividend yield 0.0 % Exercise Price $ 1.50 Risk-free interest rate 2.51 % The fair value of the warrants was determined using a Black-Scholes option pricing model using the following assumptions at the grant date of the warrants: November 16, 2017 Expected Term 3.0 years Volatility 98 % Dividend yield 0.0 % Exercise Price $ 0.00 Risk-free interest rate 1.83 % Fair value of warrants granted $ 270,592 Number of shares underlying warrants granted 564,858 As these warrants were liability-classified prior to the reclassification to equity, the fair value of the warrants were revalued at December 24, 2017 using the following assumptions: December 24, 2017 Expected Term 2.90 years Volatility 98 % Dividend yield 0.0 % Exercise Price $ 0.00 Risk-free interest rate 2.01 % Weighted average fair value of warrants granted $ 327,079 Number of shares underlying warrants granted 564,858 |
Fair value assumptions for Black-Scholes, warrant scenarios | The fair value of the warrants was determined using a probability-weighted Black-Scholes option pricing under different scenarios regarding the expected probability and timing of sufficient additional shares being authorized to allow the warrants to become exercisable. The following assumptions were used to value the warrants at the grant date. Series A Series B Underwriter’s Expected Term 1.18 – 1.33 years 5.10 – 5.25 years 5.10 – 5.25 years Volatility 55% 55% 55% Dividend yield 0.0% 0.0% 0.0% Exercise Price $0.75 $1.05 $0.94 Risk-free interest rate 1.13% - 1.16% 1.86% - 1.88% 1.86% - 1.88% Weighted average fair value of warrants granted $0.08 $0.17 $0.18 Number of shares underlying warrants granted 13,964,476 13,964,476 1,117,158 As these warrants are liability-classified, they were revalued at August 10, 2017 using the following assumptions: Series A Series B Underwriter’s Expected Term 1.09 5.00 5.00 Volatility 96.95% 96.95% 96.95% Dividend yield 0.0% 0.0% 0.0% Exercise Price $ 0.75 $ 1.05 $ 0.94 Risk-free interest rate 1.22% 1.76% 1.76% Weighted average fair value of warrants $ 0.06 $ 0.20 $ 0.20 |
10. Subsequent Events (Tables)
10. Subsequent Events (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events Tables Abstract | |
Pro forma information | Year Ended December 31, 2018 2017 Pro Forma Amounts Unaudited Net Loss Per Common Share – Basic and Diluted: Basic and diluted – as reported (pre-stock split) $ (0.30) $ (0.60) Basic and diluted – pro forma (post-stock split) (1.51) (2.99) Weighted average shares outstanding: Basic and diluted – as reported (pre-stock split) 89,083,119 55,141,133 Basic and diluted – pro forma (post-stock split) 17,816,624 11,028,227 Year Ended December 31, 2018 2017 Pro Forma Amounts Unaudited Common stock - $0.001 par value: 160,000,000 shares authorized: Shares issued and outstanding – as reported (pre-stock split) 108,875,866 71,413,790 Shares issued and outstanding – pro forma (post-stock split) 21,775,174 14,282,758 Par value– as reported (pre-stock split) $ 108,876 $ 71,414 Par value– pro forma (post-stock split) $ 21,775 $ 14,283 Additional paid-in capital: As reported (pre-stock split) $ 183,716,536 $ 159,197,950 Pro forma (post-stock split) $ 183,803,637 $ 159,255,081 |
2. Liquidity, Going Concern and
2. Liquidity, Going Concern and Uncertainties (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Liquidity And Uncertainties | ||
Accumulated deficit | $ (178,988,098) | $ (152,174,866) |
Net loss | $ (26,829,630) | $ (33,009,914) |
3. Summary of Significant Acc_4
3. Summary of Significant Accounting Policies (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Accounting Policies [Abstract] | |||
Cash and cash equivalents | $ 17,623,770 | $ 10,379,729 | |
Restricted cash | 171,553 | 171,553 | |
Total cash, cash equivalents and restricted cash | $ 17,795,323 | $ 10,551,282 | $ 8,236,043 |
3. Summary of Significant Acc_5
3. Summary of Significant Accounting Policies (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Amortized cost | $ 1,179,673 | $ 7,636,341 |
Gross unrealized losses | 0 | (112) |
Gross unrealized gains | 0 | 3 |
Fair value | 1,179,673 | 7,636,232 |
Money Market Funds included in Cash Equivalents | ||
Amortized cost | 1,179,673 | 6,032,034 |
Gross unrealized losses | 0 | 0 |
Gross unrealized gains | 0 | 0 |
Fair value | 1,179,673 | 6,032,034 |
Corporate Securities | ||
Amortized cost | 0 | 905,625 |
Gross unrealized losses | 0 | (112) |
Gross unrealized gains | 0 | 3 |
Fair value | 0 | 905,516 |
Commercial Paper | ||
Amortized cost | 0 | 698,682 |
Gross unrealized losses | 0 | 0 |
Gross unrealized gains | 0 | 0 |
Fair value | 0 | 698,682 |
Subtotal | ||
Amortized cost | 0 | 1,604,307 |
Gross unrealized losses | 0 | (112) |
Gross unrealized gains | 0 | 0 |
Fair value | $ 0 | $ 1,604,198 |
3. Summary of Significant Acc_6
3. Summary of Significant Accounting Policies (Details 2) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Carrying value | $ 1,179,673 | $ 7,636,232 |
Level 1 | ||
Carrying value | 1,179,673 | 6,032,034 |
Level 2 | ||
Carrying value | 0 | 1,604,198 |
Level 3 | ||
Carrying value | 0 | 0 |
Money Market Funds included in Cash Equivalents | ||
Carrying value | 1,179,673 | 6,032,034 |
Money Market Funds included in Cash Equivalents | Level 1 | ||
Carrying value | 1,179,673 | 6,032,034 |
Money Market Funds included in Cash Equivalents | Level 2 | ||
Carrying value | 0 | 0 |
Money Market Funds included in Cash Equivalents | Level 3 | ||
Carrying value | 0 | 0 |
Corporate Securities | ||
Carrying value | 0 | 905,516 |
Corporate Securities | Level 1 | ||
Carrying value | 0 | 0 |
Corporate Securities | Level 2 | ||
Carrying value | 0 | 905,516 |
Corporate Securities | Level 3 | ||
Carrying value | 0 | 0 |
Commercial Paper | ||
Carrying value | 0 | 698,682 |
Commercial Paper | Level 1 | ||
Carrying value | 0 | 0 |
Commercial Paper | Level 2 | ||
Carrying value | 0 | 698,682 |
Commercial Paper | Level 3 | ||
Carrying value | 0 | 0 |
Subtotal | ||
Carrying value | 0 | 1,604,198 |
Subtotal | Level 1 | ||
Carrying value | 0 | 0 |
Subtotal | Level 2 | ||
Carrying value | 0 | 1,604,198 |
Subtotal | Level 3 | ||
Carrying value | $ 0 | $ 0 |
3. Summary of Significant Acc_7
3. Summary of Significant Accounting Policies (Details 3) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues | $ 429,797 | $ 329,327 |
Total assets | 18,825,914 | 13,453,933 |
European and Mideast Operations | ||
Revenues | 420,973 | 320,504 |
United States | ||
Total assets | $ 18,154,463 | $ 12,597,231 |
3. Summary of Significant Acc_8
3. Summary of Significant Accounting Policies (Details 4) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | ||
Raw materials | $ 71,275 | $ 141,233 |
Work in process | 86,957 | 526,067 |
Finished goods | 373,283 | 29,894 |
Inventory reserve | (103,000) | (103,000) |
Total | $ 428,515 | $ 594,194 |
3. Summary of Significant Acc_9
3. Summary of Significant Accounting Policies (Details 5) | 12 Months Ended |
Dec. 31, 2018 | |
Office equipment and furniture | |
Estimated useful life | 5 years |
Leasehold improvements | |
Estimated useful life | 5 years |
Computer equipment | |
Estimated useful life | 5 years |
Computer software | |
Estimated useful life | 3 years |
3. Summary of Significant Ac_10
3. Summary of Significant Accounting Policies (Details 6) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | ||
Professional and consulting fees | $ 258,352 | $ 485,089 |
Accrued payroll and payroll taxes | 1,102,143 | 755,221 |
Clinical trial related | 3,408,032 | 2,531,608 |
Manufacturing development related | 210,577 | 353,316 |
Product development | 49,200 | 80,001 |
Market research | 0 | 116,466 |
Other | 137,920 | 42,166 |
Total | $ 5,166,224 | $ 4,363,867 |
3. Summary of Significant Ac_11
3. Summary of Significant Accounting Policies (Details 7) - shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Antidilutive shares | 45,147,999 | 37,783,015 |
Series C | ||
Antidilutive shares | 2,540,000 | 2,540,000 |
Series D | ||
Antidilutive shares | 1,479,240 | 1,479,240 |
Series E | ||
Antidilutive shares | 1,959,759 | 1,959,759 |
Series F | ||
Antidilutive shares | 12,345,679 | 3,157,561 |
Shares issuable upon conversion of convertible debt | ||
Antidilutive shares | 5,000,000 | 0 |
Restricted stock units | ||
Antidilutive shares | 29,087 | 66,414 |
Shares issuable for payment of deferred board compensation | ||
Antidilutive shares | 142,892 | 199,355 |
Shares underlying outstanding warrants | ||
Antidilutive shares | 16,595,016 | 23,417,891 |
Shares underlying outstanding stock options | ||
Antidilutive shares | 5,056,326 | 4,962,795 |
3. Summary of Significant Ac_12
3. Summary of Significant Accounting Policies (Details 8) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Net sales | $ 420,974 | |
Revenue recognized under agreement with warranty | 0 | |
Revenue recognized under Wonik Agreement | 8,823 | |
Total net sales | 429,797 | $ 329,327 |
Revenue Under Previous Guidance | ||
Net sales | 420,974 | |
Revenue recognized under agreement with warranty | 43,162 | |
Revenue recognized under Wonik Agreement | 8,823 | |
Total net sales | 472,959 | |
Difference | ||
Net sales | 0 | |
Revenue recognized under agreement with warranty | 43,162 | |
Revenue recognized under Wonik Agreement | 0 | |
Total net sales | $ 43,162 |
3. Summary of Significant Ac_13
3. Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | ||
Foreign currency translation (loss) gain | $ (1,911) | $ 4,144 |
Property and equipment | 160,860 | 186,282 |
Property and equipment accumulated depreciation | 218,948 | 154,836 |
Deferred revenue | $ 11,029 | $ 88,404 |
4. Related Party Transactions_2
4. Related Party Transactions (Details) | 12 Months Ended |
Dec. 31, 2018USD ($)shares | |
Khoso Baluch | |
Description | CEO and Director |
Amount | $ | $ 50,000 |
Number of shares | shares | 104,166 |
Robert W. Cook | |
Description | CFO |
Amount | $ | $ 25,000 |
Number of shares | shares | 52,083 |
John Armstrong | |
Description | Executive VP |
Amount | $ | $ 10,000 |
Number of shares | shares | 20,833 |
Myron Kaplan | |
Description | Chairman of the Board |
Amount | $ | $ 50,000 |
Number of shares | shares | 104,166 |
Janet Dillione | |
Description | Director |
Amount | $ | $ 25,000 |
Number of shares | shares | 52,083 |
Gary Gelbfish | |
Description | Director |
Amount | $ | $ 25,000 |
Number of shares | shares | 52,083 |
Mehmood Khan | |
Description | Director |
Amount | $ | $ 25,000 |
Number of shares | shares | 52,083 |
Steven W. Lefkowitz | |
Description | Director |
Amount | $ | $ 65,000 |
Number of shares | shares | 135,416 |
5. Income Taxes (Details)
5. Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Loss before income taxes | $ (26,829,630) | $ (33,010,023) |
United States | ||
Loss before income taxes | (25,882,114) | (31,992,324) |
Foreign | ||
Loss before income taxes | $ (947,516) | $ (1,017,699) |
5. Income Taxes (Details 1)
5. Income Taxes (Details 1) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforwards - Federal | $ 29,303,000 | $ 23,833,000 |
Net operating loss carryforwards - State | 8,441,000 | 7,264,000 |
Net operating loss carryforwards - Foreign | 1,876,000 | 1,678,000 |
Capitalized licensing fees | 912,000 | 1,068,000 |
Stock-based compensation | 2,447,000 | 2,232,000 |
Accrued compensation | 307,000 | 206,000 |
Other | 110,000 | 65,000 |
Totals | 43,396,000 | 36,346,000 |
Less valuation allowance | (43,396,000) | (36,346,000) |
Deferred tax assets | $ 0 | $ 0 |
5. Income Taxes (Details 2)
5. Income Taxes (Details 2) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Federal | ||
Potentially utilizable net operating loss carryforwards | $ 139,538,000 | $ 113,492,000 |
State | ||
Potentially utilizable net operating loss carryforwards | 118,719,000 | 102,159,000 |
Foreign | ||
Potentially utilizable net operating loss carryforwards | $ 6,250,000 | $ 5,594,000 |
5. Income Taxes (Details 3)
5. Income Taxes (Details 3) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Statutory Federal tax rate | 21.00% | 34.00% |
State income tax rate (net of Federal) | 4.50% | 6.30% |
Effect of foreign operations | 1.10% | 0.90% |
Non-deductible expenses associated with derivative liabilities | 0.00% | 0.00% |
Warrant related expenses | 0.00% | 0.00% |
Federal deferred tax rate change | 0.00% | (45.70%) |
Other permanent differences | (0.30%) | 0.10% |
Effect of valuation allowance | (26.30%) | 4.40% |
Effective tax rate | 0.00% | 0.00% |
5. Income Taxes (Details 4)
5. Income Taxes (Details 4) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Deferred tax asset valuation allowance, beginning | $ 36,346,000 | |
Increase (decrease) charged (credited) to income taxes (benefit) | 7,082,000 | $ (1,433,000) |
Increase (decrease) charged (credited) to OCI | (32,000) | (32,000) |
Deferred tax asset valuation allowance, end | $ 43,396,000 | $ 36,346,000 |
6. Senior Secured Convertible_3
6. Senior Secured Convertible Note (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Conversion Option at Issuance Date | |
Expected term (months) | 36 months |
Volatility | 161.50% |
Dividend yield | 0.00% |
Risk-free interest rate | 2.43% |
New Warrants at Issuance Date | |
Expected term (months) | 60 months |
Volatility | 161.50% |
Dividend yield | 0.00% |
Risk-free interest rate | 2.43% |
7. Commitments and Contingenc_2
7. Commitments and Contingencies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Research and development expense | $ 18,822,488 | $ 24,486,122 |
Master Service Agreement | ||
Research and development expense | $ 7,658,000 | $ 14,380,000 |
8. Stockholders' Equity (Detail
8. Stockholders' Equity (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Preferred shares outstanding | 419,585 | 419,585 |
Total liquidation preference | $ 10,502,654 | $ 10,502,654 |
Series C-2 | ||
Preferred shares outstanding | 150,000 | 150,000 |
Liquidation preference (per share) | $ 10 | $ 10 |
Total liquidation preference | $ 1,500,000 | $ 1,500,000 |
Series C-3 | ||
Preferred shares outstanding | 104,000 | 104,000 |
Liquidation preference (per share) | $ 10 | $ 10 |
Total liquidation preference | $ 1,040,000 | $ 1,040,000 |
Series D | ||
Preferred shares outstanding | 73,962 | 73,962 |
Liquidation preference (per share) | $ 21 | $ 21 |
Total liquidation preference | $ 1,553,202 | $ 1,553,202 |
Series E | ||
Preferred shares outstanding | 89,623 | 89,623 |
Liquidation preference (per share) | $ 49.2 | $ 49.2 |
Total liquidation preference | $ 4,409,452 | $ 4,409,452 |
Series F | ||
Preferred shares outstanding | 2,000 | 2,000 |
Liquidation preference (per share) | $ 1,000 | $ 1,000 |
Total liquidation preference | $ 2,000,000 | $ 2,000,000 |
8. Stockholders' Equity (Deta_2
8. Stockholders' Equity (Details 1) - Stock Options - $ / shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Risk-free interest rate, minimum | 2.63% | 1.77% |
Risk-free interest rate, maximum | 2.96% | 2.40% |
Expected volatility, minimum | 93.00% | 95.00% |
Expected volatility, maximum | 103.00% | 106.00% |
Expected term | 5 years | |
Dividend yield | 0.00% | 0.00% |
Weighted-average fair value of options granted during the period | $ .32 | $ 1.18 |
Minimum | ||
Expected term | 5 years | |
Maximum | ||
Expected term | 10 years |
8. Stockholders' Equity (Deta_3
8. Stockholders' Equity (Details 2) | 12 Months Ended |
Dec. 31, 2018USD ($)$ / sharesshares | |
Number of Options | |
Number of options outstanding, beginning | shares | 4,962,795 |
Number of options granted | shares | 678,000 |
Number of options exercised | shares | (40,000) |
Number of options expired/cancelled | shares | (90,531) |
Number of options forfeited | shares | (453,938) |
Number of options outstanding, ending | shares | 5,056,326 |
Number of options outstanding vested | shares | 3,478,053 |
Number of options expected to vest in the future | shares | 1,578,273 |
Weighted Average Exercise Price | |
Weighted average exercise price outstanding, beginning | $ 2.04 |
Weighted average exercise price granted | .44 |
Weighted average exercise price exercised | .29 |
Weighted average exercise price expired/cancelled | 1.35 |
Weighted average exercise price forfeited | 1.89 |
Weighted average exercise price outstanding, ending | 1.86 |
Weighted average exercise price expected to vest | 1.88 |
Weighted average exercise price expected to vest in the future | $ 1.82 |
Weighted Average Remaining Contractual Life (in years) | |
Weighted average remaining contractual life (in years) outstanding, beginning | 7 years 6 months |
Weighted average remaining contractual life (in years) outstanding, ending | 6 years 8 months 12 days |
Weighted average remaining contractual life (in years) vested | 6 years 1 month 6 days |
Weighted average remaining contractual life (in years) expected to vest in the future | 8 years 2 months 12 days |
Aggregate Intrinsic Value | |
Aggregate intrinsic value outstanding, beginning | $ | $ 247,500 |
Aggregate intrinsic value granted | $ 572,610 |
Aggregate intrinsic value exercised | $ | $ 42,400 |
Aggregate intrinsic value expired/cancelled | $ 21,912 |
Aggregate intrinsic value forfeited | $ 113,348 |
Aggregate intrinsic value outstanding, ending | $ | $ 1,006,743 |
Aggregate intrinsic value vested | $ 639,369 |
Aggregate intrinsic value price expected to vest in the future | $ | $ 367,374 |
8. Stockholders' Equity (Deta_4
8. Stockholders' Equity (Details 3) | 12 Months Ended |
Dec. 31, 2018$ / sharesshares | |
Number of Warrants | |
Number of warrants outstanding, beginning | 23,417,891 |
Number of warrants issued | 450,000 |
Number of warrants exercised | (2,442,376) |
Number of warrants expired | (4,830,499) |
Number of warrants outstanding, ending | 16,595,016 |
Weighted Average Exercise Price | |
Weighted average exercise price outstanding, beginning | $ / shares | $ 1.08 |
Weighted average exercise price granted | 1.50 |
Weighted average exercise price expired | 1.05 |
Weighted average exercise price exercised | .87 |
Weighted average exercise price outstanding, ending | $ / shares | $ 1.10 |
Weighted Average Remaining Contractual Life | |
Weighted average remaining contractual life (in years) outstanding, beginning | 3 years 4 months 24 days |
Weighted average remaining contractual life (in years) issued | 5 years |
Weighted average remaining contractual life (in years) outstanding, ending | 3 years 1 month 6 days |
8. Stockholders' Equity (Deta_5
8. Stockholders' Equity (Details 4) | 12 Months Ended |
Dec. 31, 2018USD ($)$ / sharesshares | |
December 31, 2018 Warrants | |
Expected term | 5 years |
Volatility | 102.85% |
Dividend yield | 0.00% |
Exercise price | $ 1.50 |
Risk-free interest rate | 2.51% |
November 16, 2017 Warrants | |
Expected term | 3 years |
Volatility | 98.00% |
Dividend yield | 0.00% |
Exercise price | $ 0 |
Risk-free interest rate | 1.83% |
Fair value of warrants granted | $ | $ 270,592 |
Number of shares underlying warrants granted | shares | 564,858 |
December 24, 2017 Warrants | |
Expected term | 2 years 10 months 24 days |
Volatility | 98.00% |
Dividend yield | 0.00% |
Exercise price | $ .00 |
Risk-free interest rate | 2.01% |
Fair value of warrants granted | $ | $ 327,079 |
Number of shares underlying warrants granted | shares | 564,858 |
8. Stockholders' Equity (Deta_6
8. Stockholders' Equity (Details 5) | 12 Months Ended |
Dec. 31, 2018$ / sharesshares | |
Series A | Revaluation of Warrants | |
Expected term | 1 year 1 month 2 days |
Volatility | 96.95% |
Dividend yield | 0.00% |
Exercise price | $ .75 |
Risk-free interest rate | 1.22% |
Weighted-average fair value of warrants granted during the period | $ .06 |
Series A | Grant Date | |
Expected term, minimum | 1 year 2 months 5 days |
Expected term, maximum | 1 year 3 months 29 days |
Volatility | 55.00% |
Dividend yield | 0.00% |
Exercise price | $ .75 |
Risk-free interest rate, minimum | 1.13% |
Risk-free interest rate, maximum | 1.16% |
Weighted-average fair value of warrants granted during the period | $ .08 |
Number of shares underlying warrants granted | shares | 13,964,476 |
Series B | Revaluation of Warrants | |
Expected term | 5 years |
Volatility | 96.95% |
Dividend yield | 0.00% |
Exercise price | $ 1.05 |
Risk-free interest rate | 1.76% |
Weighted-average fair value of warrants granted during the period | $ .20 |
Series B | Grant Date | |
Expected term, minimum | 5 years 1 month 6 days |
Expected term, maximum | 5 years 3 months |
Volatility | 55.00% |
Dividend yield | 0.00% |
Exercise price | $ 1.05 |
Risk-free interest rate, minimum | 1.86% |
Risk-free interest rate, maximum | 1.88% |
Weighted-average fair value of warrants granted during the period | $ .17 |
Number of shares underlying warrants granted | shares | 13,964,476 |
Underwriter's | Revaluation of Warrants | |
Expected term | 5 years |
Volatility | 96.95% |
Dividend yield | 0.00% |
Exercise price | $ .94 |
Risk-free interest rate | 1.76% |
Weighted-average fair value of warrants granted during the period | $ .20 |
Underwriter's | Grant Date | |
Expected term, minimum | 5 years 1 month 6 days |
Expected term, maximum | 5 years 3 months |
Volatility | 55.00% |
Dividend yield | 0.00% |
Exercise price | $ .94 |
Risk-free interest rate, minimum | 1.86% |
Risk-free interest rate, maximum | 1.88% |
Weighted-average fair value of warrants granted during the period | $ .18 |
Number of shares underlying warrants granted | shares | 1,117,158 |
9. Concentrations (Details Narr
9. Concentrations (Details Narrative) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Accounts Receivable | Customer 1 | ||
Concentration risk | 57.00% | |
Accounts Receivable | Customer 2 | ||
Concentration risk | 24.00% | |
Revenue | Customer 1 | ||
Concentration risk | 70.00% | 25.00% |
Revenue | Customer 2 | ||
Concentration risk | 19.00% |
10. Subsequent Events (Details)
10. Subsequent Events (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Net Loss Per Common Share - Basic and Diluted: | ||
Basic and diluted - as reported (pre-stock split) | $ (0.30) | $ (0.60) |
Basic - pro forma (post-stock split) | (1.51) | (2.99) |
Diluted - pro forma (post-stock split) | $ (1.51) | $ (2.99) |
Weighted average shares outstanding: | ||
Basic and diluted - as reported (pre-stock split) | 89,083,119 | 55,141,133 |
Basic - pro forma (post-stock split) | 17,816,624 | 11,028,227 |
Diluted - pro forma (post-stock split) | 17,816,624 | 11,028,227 |
Common stock - $0.001 par value: 160,000,000 shares authorized: | ||
Shares issued and outstanding - as reported (pre-stock split) | 108,875,866 | 71,413,790 |
Shares issued and outstanding - pro forma (post-stock split) | 21,775,174 | 14,282,758 |
Par value - as reported (pre-stock split) | $ 108,876 | $ 71,414 |
Par value - pro forma (post-stock split) | 21,775 | 14,283 |
Additional paid-in capital: | ||
As reported (pre-stock split) | 183,716,536 | 159,197,950 |
Pro forma (post-stock split) | $ 183,803,637 | $ 159,255,081 |