Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | May 10, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | RITTER PHARMACEUTICALS INC | |
Entity Central Index Key | 0001460702 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 9,042,330 | |
Trading Symbol | RTTR | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2019 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash and cash equivalents | $ 5,516,748 | $ 7,812,259 |
Accrued interest receivable | 17,393 | 54,456 |
Investments in marketable securities | 2,765,996 | 6,988,780 |
Prepaid expenses | 442,208 | 421,522 |
Total current assets | 8,742,345 | 15,277,017 |
Other assets | ||
Right-of-use assets | 172,615 | |
Other assets | 27,259 | 22,725 |
Other assets | 199,874 | 22,725 |
Property and equipment, net | 18,797 | 20,160 |
Total Assets | 8,961,016 | 15,319,902 |
Current liabilities | ||
Accounts payable | 2,133,386 | 4,512,316 |
Accrued expenses | 1,814,366 | 1,407,843 |
Lease liabilities | 113,790 | |
Other liabilities | 13,359 | |
Total current liabilities | 4,061,542 | 5,933,518 |
Lease liabilities, non-current | 70,854 | |
Total Liabilities | 4,132,396 | 5,933,518 |
Stockholders' equity | ||
Common stock, $0.001 par value; 225,000,000 shares authorized, 9,042,332 and 6,036,562 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively | 9,042 | 6,037 |
Additional paid-in capital | 75,105,378 | 71,505,160 |
Accumulated other comprehensive income (loss) | 1,511 | (923) |
Accumulated deficit | (74,906,834) | (70,200,145) |
Total stockholders' equity | 4,828,620 | 9,386,384 |
Total Liabilities and Stockholders' Equity | 8,961,016 | 15,319,902 |
Series A Preferred Stock [Member] | ||
Stockholders' equity | ||
Preferred stock value | 2,289,324 | 2,289,324 |
Series B Preferred Stock [Member] | ||
Stockholders' equity | ||
Preferred stock value | 2,090,199 | 3,906,931 |
Series C Preferred Stock [Member] | ||
Stockholders' equity | ||
Preferred stock value | $ 240,000 | $ 1,880,000 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2019 | Dec. 31, 2018 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 225,000,000 | 225,000,000 |
Common stock, shares issued | 9,042,332 | 6,036,562 |
Common stock, shares outstanding | 9,042,332 | 6,036,562 |
Series A Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 15,000,000 | 15,000,000 |
Preferred stock, shares issued | 4,080 | 4,080 |
Preferred stock, shares outstanding | 4,080 | 4,080 |
Series B Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 6,000 | 6,000 |
Preferred stock, shares issued | 3,000 | 5,608 |
Preferred stock, shares outstanding | 3,000 | 5,608 |
Series C Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,880 | 1,880 |
Preferred stock, shares issued | 240 | 1,880 |
Preferred stock, shares outstanding | 240 | 1,880 |
Condensed Statements of Operati
Condensed Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Operating costs and expenses: | ||
Research and development | $ 3,574,855 | $ 849,683 |
Patent costs | 48,625 | 63,088 |
General and administrative | 1,153,577 | 1,125,891 |
Total operating costs and expenses | 4,777,057 | 2,038,662 |
Operating loss | (4,777,057) | (2,038,662) |
Other income: | ||
Interest income | 71,291 | 25,972 |
Total other income | 71,291 | 25,972 |
Net loss | (4,705,766) | (2,012,690) |
Other comprehensive income: | ||
Unrealized gain on debt securities | 1,511 | |
Comprehensive loss | $ (4,704,255) | $ (2,012,690) |
Net loss per common share - basic and diluted | $ (0.58) | $ (0.41) |
Weighted average common shares outstanding - basic and diluted | 8,055,921 | 4,944,763 |
Statements of Changes in Stockh
Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) | Series A Preferred Stock [Member] | Series B Preferred Stock [Member] | Series C Preferred Stock [Member] | Common Stock [Member] | Paid-in Capital [Member] | Accumulated Deficit [Member] | Other Comprehensive Loss [Member] | Total |
Balance at Dec. 31, 2017 | $ 5,128,536 | $ 4,941 | $ 68,323,939 | $ (53,331,434) | $ 20,125,982 | |||
Balance, shares at Dec. 31, 2017 | 9,140 | 4,940,652 | ||||||
Stock-based compensation | 212,608 | 212,608 | ||||||
Conversion of preferred shares into common stock | $ (179,555) | $ 80 | 179,475 | |||||
Conversion of preferred shares into common stock, shares | (320) | 80,000 | ||||||
Net loss | (2,012,690) | (2,012,690) | ||||||
Balance at Mar. 31, 2018 | $ 4,948,981 | $ 5,021 | 68,716,022 | (55,344,124) | 18,325,900 | |||
Balance, shares at Mar. 31, 2018 | 8,820 | 5,020,652 | ||||||
Balance at Dec. 31, 2018 | $ 2,289,324 | $ 3,906,931 | $ 1,880,000 | $ 6,037 | 71,505,160 | (70,200,145) | $ (923) | 9,386,384 |
Balance, shares at Dec. 31, 2018 | 4,080 | 5,608 | 1,880 | 6,036,562 | ||||
Stock-based compensation | 146,491 | 146,491 | ||||||
Conversion of Series B preferred shares into common stock | $ (1,816,732) | $ 2,005 | 1,814,727 | |||||
Conversion of Series B preferred shares into common stock, shares | (2,608) | 2,005,770 | ||||||
Conversion of Series C preferred shares into common stock | $ (1,640,000) | $ 1,000 | 1,639,000 | |||||
Conversion of Series C preferred shares into common stock, shares | (1,640) | 1,000,000 | ||||||
Unrealized gain (loss) on investment in marketable securities | (923) | 2,434 | 1,511 | |||||
Net loss | (4,705,766) | (4,705,766) | ||||||
Balance at Mar. 31, 2019 | $ 2,289,324 | $ 2,090,199 | $ 240,000 | $ 9,042 | $ 75,105,378 | $ (74,906,834) | $ 1,511 | $ 4,828,620 |
Balance, shares at Mar. 31, 2019 | 4,080 | 3,000 | 240 | 9,042,332 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash flows from operating activities | ||
Net loss | $ (4,705,766) | $ (2,012,690) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 1,363 | 1,363 |
Amortization of right-of-use assets | 25,704 | |
Stock-based compensation | 146,491 | 212,608 |
Settlement of Covance accounts payable | (893,823) | |
Amortization of discount on available-for-sale debt securities | (26,665) | |
Unrealized gain on available-for-sale securities | 1,511 | |
Changes in operating assets and liabilities: | ||
Accrued interest receivable | 37,063 | |
Prepaid expenses | (20,686) | (9,685) |
Other assets | (4,534) | |
Accounts payable | (2,378,930) | (703,211) |
Accrued expenses | 406,523 | (309,036) |
Lease liabilities | (13,675) | |
Other liabilities | (13,359) | (454) |
Net cash used in operating activities | (6,544,960) | (3,714,928) |
Cash flows from investing activities | ||
Sale of investments in marketable debt securities | 4,249,449 | |
Net cash flows from investing activities | 4,249,449 | |
Net decrease in cash and cash equivalents | (2,295,511) | (3,714,928) |
Cash and cash equivalents at beginning of period | 7,812,259 | 22,631,971 |
Cash and cash equivalents at end of period | 5,516,748 | 18,917,043 |
Supplemental disclosure of cash flow activities: | ||
Cash paid for taxes | 185,980 | |
Supplemental disclosure of non-cash financing activities: | ||
Conversion of preferred stock to common stock | 3,453,726 | 179,555 |
Right-of-use assets obtained in exchange for lease liabilities | (198,319) | |
Lease liabilities arising from obtaining right-of-use assets | $ 184,644 |
Organization and Principal Acti
Organization and Principal Activities | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Principal Activities | NOTE 1 - ORGANIZATION AND PRINCIPAL ACTIVITIES Ritter Pharmaceuticals, Inc. (“Ritter” or the “Company”) is a Delaware corporation headquartered in Los Angeles, California. The Company was formed as a Nevada limited liability company in March 2004, under the name Ritter Natural Sciences, LLC, and converted into a Delaware corporation in September 2008. Ritter Pharmaceuticals, Inc. develops novel therapeutic products that modulate the gut microbiome to treat digestive disorders and gastrointestinal diseases. The Company’s lead product candidate, RP-G28, is an orally administered, high purity galacto-oligosaccharide, currently in Phase 3 clinical development for the treatment of lactose intolerance (“LI”), a condition that affects millions of people worldwide. RP-G28 is designed to selectively stimulate the growth of lactose-metabolizing bacteria in the colon, thereby effectively adapting the gut microbiome to assist in digesting lactose (the sugar found in milk) that reaches the large intestine. RP-G28 has the potential to become the first drug approved by the Food and Drug Administration (“FDA”) for the treatment of LI. The Company is further exploring the functionality and discovering the therapeutic potential that gut microbiome changes may have on treating/preventing a variety of conditions including gastrointestinal diseases, cancer, metabolic, and liver diseases. The Company intends to expand its product pipeline and create added value in the future by evaluating RP-G28 in other indications, developing additional products based on its underlying, microbiome-modulating technology or in-licensing complementary products to treat these, or other, conditions. The Company currently operates in one business segment focusing on the development and commercialization of RP-G28. The Company is not organized by market and is managed and operated as one business. A single management team reports to the chief operating decision maker, the Chief Executive Officer. The Company does not currently operate any separate lines of business or separate business entities. |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | NOTE 2 - BASIS OF PRESENTATION The accompanying interim period unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. However, in the opinion of management, all adjustments consisting of normal recurring adjustments considered necessary for a fair presentation of the financial position and results of operations have been included and management believes the disclosures that are made are adequate to make the information presented not misleading. The condensed balance sheet at December 31, 2018 has been derived from the audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 filed with the SEC on April 1, 2019 (the “2018 Annual Report”), but does not include all of the information and footnotes required by GAAP for complete financial statements. The results for the three months ended March 31, 2019 are not necessarily indicative of the results expected for the full fiscal year or any other period. The accompanying interim period unaudited condensed financial statements and related financial information included in this Quarterly Report on Form 10-Q (“Quarterly Report”) should be read in conjunction with the audited financial statements and notes thereto included in the Company’s 2018 Annual Report. All common share amounts and per share amounts have been adjusted to reflect a 1-for-10 reverse stock split of the Company’s common stock effected on March 23, 2018. Going Concern and Liquidity The accompanying condensed financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company has not generated any product revenue and has not achieved profitable operations. For the three months ended March 31, 2019, the Company had a net loss of approximately $4.7 million and had net cash used in operating activities of approximately $6.5 million. At March 31, 2019, the Company had working capital of approximately $4.7 million, an accumulated deficit of approximately $74.9 million, and cash, cash equivalents and investments in marketable securities of approximately $8.3 million. There is no assurance that profitable operations will ever be achieved, and, if achieved, could be sustained on a continuing basis. In addition, development activities, clinical and pre-clinical testing, and commercialization of the Company’s products will require significant financing. These matters, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Since inception, the operations of the Company have been funded through the sale of common shares, preferred shares, warrants and convertible debt. Management cannot be certain that additional funding will be available on acceptable terms, or at all. To the extent that the Company raises additional funds by issuing equity securities, the Company’s stockholders may experience significant dilution. Any debt financing, if available, may involve restrictive covenants that could impact the Company’s ability to conduct business. If the Company is not able to raise additional capital when required or on acceptable terms, the Company may have to (i) significantly delay, scale back or discontinue the development and/or commercialization of one or more product candidates; (ii) seek collaborators for product candidates at an earlier stage than otherwise would be desirable and on terms that are less favorable than might otherwise be available; or (iii) relinquish or otherwise dispose of rights to technologies, product candidates or products that the Company would otherwise seek to develop or commercialize. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES There have been no material changes in the Company’s significant accounting policies as of and for the three months ended March 31, 2019, as compared with the significant accounting policies described in the Company’s 2018 Annual Report, except for the recent adoption of new lease accounting pronouncement as disclosed below. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents Cash consists of amounts held in financial institutions and consists of immediately available fund balances. The funds are maintained at stable financial institutions, generally at amounts in excess of federally insured limits. Cash equivalents include money market funds and held-to-maturity securities with a maturity date of 90 days or less. As of March 31, 2019, cash and cash equivalents consisted of bank deposits, cash and investments in money market funds and held-to-maturity securities. The Company has not realized any losses in such accounts and management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held. Investments in Marketable Securities Investments in marketable securities are held in a custodial account at a financial institution and managed by the Company’s capital advisors based on the Company’s investment guidelines. All of the Company’s investments in marketable securities are classified as available-for-sale debt securities and are carried at fair value. Interest on these securities, as well as the amortization of discounts and premiums, is included in interest income in the Statements of Operations. The unrealized gains and losses on these securities are excluded from earnings and reported in other comprehensive income until realized, except when it considers declines in value to be other than temporary. Other than temporary impairment losses related to credit losses are considered to be realized losses. When available-for-sale debt securities are sold, the cost of the securities is specifically identified and is used to determine the realized gain or loss. Securities classified as current assets have maturity dates of less than or equal to one year from the balance sheet date. Operating Leases The Company determines if a contract contains a lease at inception. The Company’s material operating lease consists of a single office space. Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease assets represent the Company’s right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, the Company estimates incremental secured borrowing rates corresponding to the maturities of the leases. As the Company has no outstanding debt nor committed credit facilities, secured or otherwise, the Company estimates this rate based on prevailing financial market conditions, comparable company and credit analysis, and management judgment. The Company’s leases typically contain rent escalations over the lease term. The Company recognize expense for these leases on a straight-line basis over the lease term. Additionally, tenant incentives used to fund leasehold improvements are recognized when earned and reduce the Company’s right-of-use (“ROU”) asset related to the lease. These are amortized through the ROU asset as reductions of expense over the lease term. The Company’s lease agreement does not contain any material residual value guarantees or material restrictive covenants. The Company has no lease agreements with lease and non-lease components. Related to the adoption of Topic 842, the Company’s policy elections were as follows: Separation of lease and non-lease components While the Company does not currently have any lease agreement with lease and non-lease components, the Company elected this expedient to account for lease and non-lease components as separate components. Short-term policy The Company has elected the short-term lease recognition exemption for all applicable classes of underlying assets. Short-term disclosures include only those leases with a term greater than one month and 12 months or less, and expense is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less, that do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise, are not recorded on the balance sheet. Other information related to leases was as follows: Three Months Ended March 31, 2019 Supplemental Cash Flows Information Cash paid for amounts included in the measurement of lease liability: Operating cash flows from operating lease 28,745 Operating lease asset obtained in exchange for lease obligation: Operating lease $ 198,319 Remaining lease term Operating lease 1.8 years Discount rate Operating lease 6.00 % Future payments under noncancelable extended operating leases having initial or remaining terms of one year or more are as follows for the remaining fiscal year and thereafter: Future minimum lease payments year ending December 31, 2019 $ 90,824 2020 103,254 Total future minimum lease payments, undiscounted 194,078 Less imputed interest (9,434 ) Present value of lease liabilities $ 184,644 Operating lease liabilities reported as of March 31, 2019: Operating lease liabilities-current $ 113,790 Operating lease liabilities-non-current 70,854 Total $ 184,644 Equity-linked Financial Instruments The Company classifies outstanding common stock warrants with down-round features as equity, if the instrument would otherwise be classified in equity absent the down-round feature. The Company will recognize the value of a down-round feature when it is triggered and the warrant’s strike price has been adjusted downward, as a deemed dividend and reduction of income available to common shareholders in computing basic earnings per share. Net Loss Per Share The Company determines basic loss per share and diluted loss per share in accordance with the provisions of Accounting Standards Codification (“ASC”) 260, “Earnings per Share.” Basic net loss per share was calculated by dividing net loss by the weighted-average common shares outstanding during the period. Diluted net loss per share was calculated by dividing net loss by the weighted-average common shares outstanding during the period using the treasury stock method or the two-class method, whichever is more dilutive. The potentially dilutive stock options issued under the 2015 Stock Plan (described in Note 8), Series A, B and C Convertible Preferred Stock (described in Note 6) and warrants to purchase the Company’s common stock (described in Notes 6 and 7) were not considered in the computation of diluted net loss per share because they would be anti-dilutive. Comprehensive Income (Loss) Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. The Company is required to record all components of comprehensive income (loss) in the financial statements in the period in which they are recognized. Net income (loss) and other comprehensive income (loss), including foreign currency translation adjustments and unrealized gains and losses on investments are reported, net of their related tax effect, to arrive at comprehensive income (loss). For the three months ended March 31, 2019, comprehensive income consisted of unrealized gains on investments in available-for-sale debt securities. There were no unrealized gains (losses) on investments in available-for-sale debt securities and held-to-maturity debt securities for the three months ended March 31, 2018. Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, an amendment which modifies the measurement recognition of credit losses for most financial assets and certain other instruments. The amendment updates the guidance for measuring and recording credit losses on financial assets measured at amortized cost by replacing the “incurred loss” model with an “expected loss” model. Accordingly, these financial assets will be presented at the net amount expected to be collected. The amendment also requires that credit losses related to available-for-sale debt securities be recorded as an allowance through net income rather than reducing the carrying amount under the current, other-than-temporary-impairment model. The guidance is effective for public business entities that are U.S. Securities and Exchange Commission (SEC) filers, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For all other public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company does not expect the adoption of this guidance will have a material impact on its financial statements. In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement”, an amendment to the accounting guidance on fair value measurements. The guidance modifies the disclosure requirements on fair value measurements, including the removal of disclosures of the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels, and the valuation processes for Level 3 fair value measurements. The guidance also adds certain disclosure requirements related to Level 3 fair value measurements. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company does not expect the adoption of this guidance will have a material impact on its financial statements. Other accounting standard updates effective after March 31, 2019 are not expected to have a material effect on the Company’s financial statements. Recently Adopted Accounting Pronouncements In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. The amendments in ASU No. 2016-01 address certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The Company adopted ASU No. 2016-01 in the first quarter of 2018. The adoption of this new standard did not have a material impact on the Company’s financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) Leases (Topic 842) Targeted Improvements The Company elected the available package of practical expedients, but not the hindsight practical expedient, and implemented internal controls to enable the preparation of financial information on adoption as of January 1, 2019. The standard had a material impact on the Company’s balance sheets but did not have an impact on its statements of operations. The most significant impact was the recognition of a ROU asset and lease liability for the Company’s sole operating lease—the Company had no finance leases. Adoption of the standard did not require the Company to restate previously reported results as it elected to apply a modified retrospective approach at the beginning of the period of adoption rather than at the beginning of the earliest comparative period presented. On August 26, 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230), In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. In January 2017, the FASB issued ASU No. 2017-04 “ Intangibles – Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment In May 2017, the FASB issued ASU No. 2017-09, “ Stock Compensation – Scope of Modification Accounting” In March 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting Compensation—Stock Compensation Equity—Equity-Based Payments to Non-Employees In August 2018, the SEC adopted final rules under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders’ equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders’ equity presented in the balance sheets must be provided in a note or separate statement. The analysis must present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. These final rules became effective on November 5, 2018, with issuers required to provide their analysis of stockholders’ equity in quarterly reports on Form 10-Q beginning with reports for the quarter ended March 31, 2019. The Company has included the analysis of changes in stockholders’ equity in the interim period unaudited condensed financial statements included in this Quarterly Report and will continue to do so in the Company’s quarterly reports on Form 10-Q in the future. The Company does not anticipate that the adoption of these SEC amendments will have a material effect on the Company’s financial position, results of operations, cash flows or shareholders’ equity. |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | NOTE 4 - PROPERTY AND EQUIPMENT Property and equipment consists of the following: Estimated Life March 31, 2019 December 31,2018 Computers and equipment 5 years $ 15,589 $ 15,589 Furniture and fixtures 7 years 19,158 19,158 Total property and equipment 34,747 34,747 Accumulated depreciation (15,950 ) (14,587 ) Total property and equipment, net $ 18,797 $ 20,160 Depreciation expense of approximately $1,400 was recognized for each of the three months ended March 31, 2019 and 2018 and classified in general and administrative expense in the accompanying unaudited condensed statements of operations. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 5 - COMMITMENTS AND CONTINGENCIES Master Services Agreement In May 2018, the Company entered into an Amended and Restated Master Services Agreement (“Service Agreement”) with a clinical research organization (“CRO”), pursuant to which the CRO will perform certain services related to the management and execution of certain clinical trials involving the Company’s lead product candidate, RP-G28. The Services Agreement supersedes the Master Service Agreement, dated August 30, 2016, by and between the Company and the CRO. The precise services to be performed by the CRO under the Services Agreement will be mutually agreed upon by the parties in writing and set forth in one or more task orders. The Company is not obligated to purchase any minimum or specific volume or dollar amount of services under the Services Agreement. The term of the Services Agreement is four years from the effective date of the Service Agreement unless earlier terminated. The Company may terminate the Services Agreement or any task without cause immediately upon giving the CRO notice of such termination. The CRO may terminate a task order if the Company has materially defaulted on its obligations under the Services Agreement or any task order and has not cured such material default with advance notice to the Company, as described in the Services Agreement. Lease Agreement On July 9, 2015, the Company entered into a lease with a California limited partnership, pursuant to which the Company leased approximately 2,780 square feet of office space in Los Angeles, California for its headquarters. The lease provides for a term of sixty-one (61) months, commencing on October 1, 2015. The Company paid no rent for the first month of the term and paid base rent of $9,174 per month for months 2 through 13 of the term, with increasing base rent for each twelve-month period thereafter under the term of the lease to a maximum of $10,325 per month for months 50 through 61. The base rent payments do not include the Company’s proportionate share of any operating expenses, including real estate taxes. The Company has the option to extend the term of the lease for one five-year term, provided that the rent would be subject to market adjustment at the beginning of the renewal term. Rent expense, which is recognized on a straight-line basis over the lease term, was approximately $29,000 for the three months ended March 31, 2019 and 2018 for each period and is recorded in general and administrative expenses in the accompanying unaudited condensed statements of operations. Legal From time to time, the Company may be party to legal claims and proceedings that arise in the ordinary course of business, which may relate to our operations or assets. These may include disputes and lawsuits related to intellectual property, licensing, contract law and employee relations matters. Periodically, the Company reviews the status of significant matters, if any exist, and assesses its potential financial exposure. If the potential loss from any claim or legal claim is considered probable and the amount can be estimated, the Company accrues a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based on the best information available at the time. As additional information becomes available, the Company reassesses the potential liability related to pending claims and litigation. We do not believe that any individual legal claim or proceeding that is currently pending is material to the Company or that these claims and proceedings in the aggregate are material to the Company. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2019 | |
Equity [Abstract] | |
Stockholders' Equity | NOTE 6 - STOCKHOLDERS’ EQUITY Authorized Shares In September 2017, the Company amended its Amended and Restated Certificate of Incorporation to authorize the issuance of up to 225,000,000 shares of common stock, $0.001 par value per share, and 15,000,000 shares of preferred stock, $0.001 par value per share. All common share amounts and per share amounts were retroactively restated to reflect a 1-for-10 reverse stock split that was effective March 23, 2018. As of March 31, 2019, the Company had 9,042,332 shares of common stock, 4,080 shares of Series A convertible preferred stock, 3,000 shares of Series B convertible preferred stock and 240 shares of Series C convertible preferred stock issued and outstanding. Each share of the Company’s common stock is entitled to one vote, and all shares rank equally as to voting and other matters. Each share of Series A preferred stock is convertible by the holder at $4.00 per share; subject to adjustment for stock splits, stock dividends, subsequent rights offerings, pro rata distributions, and fundamental transactions. Each share of Series B preferred stock is convertible by the holder at $1.30 per share; subject to customary adjustment in the event of future stock dividends and stock splits. Each share of Series C preferred stock is convertible by the holder at $1.64 per share; subject to customary adjustment in the event of future stock dividends and stock splits. Holders are entitled to receive, and the Company shall pay, dividends on outstanding shares of Series A, Series B and Series C preferred stock, on an as-if-converted-to-common-stock basis, equal to and in the same form as dividends actually paid on outstanding common shares when, as and if such dividends are paid on outstanding common shares. Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of Series A, Series B and Series C preferred stock shall be entitled to receive out of the assets of the Company, whether capital or surplus, the same amount that a holder of common stock would receive if the Series A, Series B and Series C preferred stock were fully converted to common stock, which amounts shall be paid pari passu with all common stockholders. Holders of Series A, Series B and Series C preferred stock have no voting rights. However, as long as any shares of Series A, Series B and Series C preferred stock are outstanding, the Company may not, without the affirmative vote of the holders of a majority of the then outstanding shares of Series A, Series B and Series C preferred stock, (a) alter or change adversely the powers, preferences or rights given to the Series A, Series B and Series C preferred stock or alter or amend the applicable Certificate of Designation, (b) amend the Company’s certificate of incorporation or other charter documents in any manner that adversely affects any rights of the holders of Series A, Series B and Series C preferred stock, (c) increase the number of authorized shares of Series A, Series B and Series C preferred stock, or (d) enter into any agreement with respect to any of the foregoing. Aspire Capital Common Stock Purchase Agreement On May 4, 2017, the Company entered into a common stock purchase agreement with Aspire Capital Fund, LLC (“Aspire Capital”), which the Company and Aspire amended and restated on March 29, 2019 (as amended and restated, the “Aspire Purchase Agreement”). The Aspire Purchase Agreement was amended and restated to adjust certain provisions of the agreement to improve the Company’s access to funding under the agreement. The Aspire Purchase Agreement provides access to the Company of up to an aggregate of $6.5 million in proceeds through the sale of shares of its common stock through March 31, 2021. Under the Aspire Purchase Agreement, as amended, on any trading day the Company selects, it has the right, in its sole discretion, to present Aspire Capital with a purchase notice (each, a “Purchase Notice”), directing Aspire Capital (as principal) to purchase up to 100,000 shares of its common stock per trading day (which could be increased by as much as an additional 2,000,000 shares per trading day by mutual agreement), up to an aggregate of $6,500,000 of its common stock, at a per share price (the “Purchase Price”) equal to the lesser of: (i) the lowest sale price of the Company’s common stock on the sale date, or (ii) the arithmetic average of the three lowest closing sale prices for the Company’s common stock during the ten (10) consecutive trading days ending on the trading day immediately preceding the sale date. The aggregate purchase price payable by Aspire Capital on any one purchase date cannot exceed $500,000, unless otherwise mutually agreed. In addition, on any date on which the Company submits a Purchase Notice to Aspire Capital in an amount of at least 100,000 shares and its stock price is not less than $0.25 per share, the Company can also, in its sole discretion, present Aspire Capital with a volume-weighted average price purchase notice (each, a “VWAP Purchase Notice”) directing Aspire Capital to purchase an amount of its common stock equal to up to 30% of the aggregate shares of the Company’s common stock traded on its principal market on the next trading day (the “VWAP Purchase Date”), as determined by the Company. Under the terms of the Aspire Purchase Agreement, the number of shares that can be sold pursuant to Aspire Capital is limited to 1,807,562 (the “Exchange Cap”), which represented 19.99% of the Company’s outstanding shares of common stock as of March 29, 2019, the date the agreement was amended and restated, unless stockholder approval or an exception pursuant to the rules of the NASDAQ Capital Market was obtained to issue more than 19.99%. This limitation would not apply if, at any time the Exchange Cap was reached and at all times thereafter, the average price paid for all shares issued under the Aspire Purchase Agreement was equal to or greater than $0.86 (the “Minimum Price”), which was the closing price of the Company’s common stock immediately preceding the signing of the agreement. As of March 31, 2019, no shares of common stock have been sold or issued to Aspire Capital under the Aspire Purchase Agreement. |
Warrants
Warrants | 3 Months Ended |
Mar. 31, 2019 | |
Warrants and Rights Note Disclosure [Abstract] | |
Warrants | NOTE 7 - WARRANTS Warrants to purchase an aggregate of 8,413,017 shares of the Company’s common stock were outstanding at March 31, 2019. These warrants are all vested and exercisable, have exercise prices ranging from $1.30 to $93.00 per share, with a weighted average exercise price of $1.78, and expire at various dates through November 2023. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | NOTE 8 - STOCK-BASED COMPENSATION Equity Incentive Plans The Company has issued equity awards pursuant to its 2015 Equity Incentive Plan (the “2015 Plan”), 2009 Stock Plan and 2008 Stock Plan (collectively the “Plans”). The Plans permit the Company to grant non-statutory stock options, incentive stock options and other equity awards to the Company’s employees, outside directors and consultants; however, incentive stock options may only be granted to the Company’s employees. Beginning June 29, 2015, no further awards may be granted under the 2009 Stock Plan or 2008 Stock Plan. However, to the extent awards under the 2008 Plan or 2009 Plan are forfeited or lapse unexercised or are settled in cash, the common stock subject to such awards will be available for future issuance under the 2015 Plan. On June 2, 2017, the stockholders of the Company approved an amendment to the 2015 Plan at the 2017 annual meeting of stockholders, which among other things, increased the number of shares that may be issued pursuant to awards under the 2015 Plan by 83,800 shares of common stock. On September 15, 2017, the stockholders of the Company approved an amendment to the 2015 Plan at a special meeting of stockholders, which among other things, increased the number of shares that may be issued pursuant to awards under the 2015 Plan by 2,585,871 shares of common stock. As of March 31, 2019, the aggregate number of shares of common stock authorized for issuance under the 2015 Plan, as amended, was 2,750,000 and 1,596,124 shares were available for issuance as of March 31, 2019. The following represents a summary of the options granted to employees and non-employees that are outstanding at March 31, 2019 and changes during the period then ended: Options Weighted Average Exercise Price Aggregate Intrinsic Value Weighted Average Remaining Contractual Life (in years) Outstanding at December 31, 2018 673,885 $ 19.82 $ ― 8.2 Granted 668,750 $ 0.60 $ 182,000 9.9 Exercised/ Expired/ Forfeited (1,500 ) $ 3.40 $ ― - Outstanding at March 31, 2019 1,341,135 $ 10.25 $ 182,000 8.9 Exercisable at March 31, 2019 334,709 $ 44.10 $ 5,000 6.9 The exercise price for an option issued under the 2015 Plan is determined by the Board of Directors, but will be (i) in the case of an incentive stock option (A) granted to an employee who, at the time of grant of such option, is a 10% stockholder, no less than 110% of the fair market value per share on the date of grant; or (B) granted to any other employee, no less than 100% of the fair market value per share on the date of grant; and (ii) in the case of a non-statutory stock option, no less than 100% of the fair market value per share on the date of grant. The options awarded under the Plans will vest as determined by the Board of Directors but will not exceed a ten-year period. Fair Value of Equity Awards The Company utilizes the Black-Scholes option pricing model to value awards under its Plans. Key valuation assumptions include: ● Expected dividend yield. ● Expected stock-price volatility. ● Risk-free interest rate. ● Expected term. The material factors incorporated in the Black-Scholes model in estimating the fair value of the options granted for the periods presented were as follows (three months ended March 31, 2018 stock price adjusted for 1-for-10 reverse stock split): For the three months ended March 31, 2019 2018 Expected dividend yield 0.00 % 0.00 % Expected stock-price volatility 13.52% - 23.39 % 52.70% - 53.26 % Risk-free interest rate 2.41% - 2.60 % 2.46% - 2.88 % Expected average term of options 7.5 7.9 Stock price $0.60 - $0.87 $ 3.40 Restricted Stock Units Certain employees and consultants have been awarded restricted stock units. The restricted stock units vesting consists of milestone and time-based vesting. The following table summarizes restricted stock units activities for the three months ended March 31, 2019: Number of Units Weighted Average Grant Date Fair Value Nonvested at December 31, 2018 1,100,000 $ 2.73 Granted 35,000 0.63 Forfeited ― ― Vested (11,669 ) 0.63 Nonvested at March 31, 2019 1,123,331 $ 2.69 Stock-Based Compensation The Company recognized stock-based compensation expense for services within general and administrative expense in the accompanying statements of operations of approximately $146,000 and $213,000 for the three months ended March 31, 2019 and 2018, respectively. As of March 31, 2019, there was approximately $561,000 of total unrecognized compensation cost related to unvested stock-based compensation arrangements. This cost is expected to be recognized over a weighted average period of 0.8 years. No stock options were exercised during the three months ended March 31, 2019. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 9 - RELATED PARTY TRANSACTIONS A director of the Company is a managing director of Javelin Venture Partners GP, LLC, the general partner of Javelin Venture Partners GP, L.P., which holds a significant investment in the Company’s common stock and warrants. Two directors of the Company have acted as a managing director of Stonehenge Partners, LLC, which holds an investment in the Company’s common stock. The Company has not entered into or been a participant in any other transaction in which a related party had or will have a direct or indirect material interest. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash consists of amounts held in financial institutions and consists of immediately available fund balances. The funds are maintained at stable financial institutions, generally at amounts in excess of federally insured limits. Cash equivalents include money market funds and held-to-maturity securities with a maturity date of 90 days or less. As of March 31, 2019, cash and cash equivalents consisted of bank deposits, cash and investments in money market funds and held-to-maturity securities. The Company has not realized any losses in such accounts and management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held. |
Investments in Marketable Securities | Investments in Marketable Securities Investments in marketable securities are held in a custodial account at a financial institution and managed by the Company’s capital advisors based on the Company’s investment guidelines. All of the Company’s investments in marketable securities are classified as available-for-sale debt securities and are carried at fair value. Interest on these securities, as well as the amortization of discounts and premiums, is included in interest income in the Statements of Operations. The unrealized gains and losses on these securities are excluded from earnings and reported in other comprehensive income until realized, except when it considers declines in value to be other than temporary. Other than temporary impairment losses related to credit losses are considered to be realized losses. When available-for-sale debt securities are sold, the cost of the securities is specifically identified and is used to determine the realized gain or loss. Securities classified as current assets have maturity dates of less than or equal to one year from the balance sheet date. |
Operating Leases | Operating Leases The Company determines if a contract contains a lease at inception. The Company’s material operating lease consists of a single office space. Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease assets represent the Company’s right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, the Company estimates incremental secured borrowing rates corresponding to the maturities of the leases. As the Company has no outstanding debt nor committed credit facilities, secured or otherwise, the Company estimates this rate based on prevailing financial market conditions, comparable company and credit analysis, and management judgment. The Company’s leases typically contain rent escalations over the lease term. The Company recognize expense for these leases on a straight-line basis over the lease term. Additionally, tenant incentives used to fund leasehold improvements are recognized when earned and reduce the Company’s right-of-use (“ROU”) asset related to the lease. These are amortized through the ROU asset as reductions of expense over the lease term. The Company’s lease agreement does not contain any material residual value guarantees or material restrictive covenants. The Company has no lease agreements with lease and non-lease components. Related to the adoption of Topic 842, the Company’s policy elections were as follows: Separation of lease and non-lease components While the Company does not currently have any lease agreement with lease and non-lease components, the Company elected this expedient to account for lease and non-lease components as separate components. Short-term policy The Company has elected the short-term lease recognition exemption for all applicable classes of underlying assets. Short-term disclosures include only those leases with a term greater than one month and 12 months or less, and expense is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less, that do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise, are not recorded on the balance sheet. Other information related to leases was as follows: Three Months Ended March 31, 2019 Supplemental Cash Flows Information Cash paid for amounts included in the measurement of lease liability: Operating cash flows from operating lease 28,745 Operating lease asset obtained in exchange for lease obligation: Operating lease $ 198,319 Remaining lease term Operating lease 1.8 years Discount rate Operating lease 6.00 % Future payments under noncancelable extended operating leases having initial or remaining terms of one year or more are as follows for the remaining fiscal year and thereafter: Future minimum lease payments year ending December 31, 2019 $ 90,824 2020 103,254 Total future minimum lease payments, undiscounted 194,078 Less imputed interest (9,434 ) Present value of lease liabilities $ 184,644 Operating lease liabilities reported as of March 31, 2019: Operating lease liabilities-current $ 113,790 Operating lease liabilities-non-current 70,854 Total $ 184,644 |
Equity-linked Financial Instruments | Equity-linked Financial Instruments The Company classifies outstanding common stock warrants with down-round features as equity, if the instrument would otherwise be classified in equity absent the down-round feature. The Company will recognize the value of a down-round feature when it is triggered and the warrant’s strike price has been adjusted downward, as a deemed dividend and reduction of income available to common shareholders in computing basic earnings per share. |
Net Loss Per Share | Net Loss Per Share The Company determines basic loss per share and diluted loss per share in accordance with the provisions of Accounting Standards Codification (“ASC”) 260, “Earnings per Share.” Basic net loss per share was calculated by dividing net loss by the weighted-average common shares outstanding during the period. Diluted net loss per share was calculated by dividing net loss by the weighted-average common shares outstanding during the period using the treasury stock method or the two-class method, whichever is more dilutive. The potentially dilutive stock options issued under the 2015 Stock Plan (described in Note 8), Series A, B and C Convertible Preferred Stock (described in Note 6) and warrants to purchase the Company’s common stock (described in Notes 6 and 7) were not considered in the computation of diluted net loss per share because they would be anti-dilutive. |
Comprehensive Income (Loss) | Comprehensive Income (Loss) Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. The Company is required to record all components of comprehensive income (loss) in the financial statements in the period in which they are recognized. Net income (loss) and other comprehensive income (loss), including foreign currency translation adjustments and unrealized gains and losses on investments are reported, net of their related tax effect, to arrive at comprehensive income (loss). For the three months ended March 31, 2019, comprehensive income consisted of unrealized gains on investments in available-for-sale debt securities. There were no unrealized gains (losses) on investments in available-for-sale debt securities and held-to-maturity debt securities for the three months ended March 31, 2018. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, an amendment which modifies the measurement recognition of credit losses for most financial assets and certain other instruments. The amendment updates the guidance for measuring and recording credit losses on financial assets measured at amortized cost by replacing the “incurred loss” model with an “expected loss” model. Accordingly, these financial assets will be presented at the net amount expected to be collected. The amendment also requires that credit losses related to available-for-sale debt securities be recorded as an allowance through net income rather than reducing the carrying amount under the current, other-than-temporary-impairment model. The guidance is effective for public business entities that are U.S. Securities and Exchange Commission (SEC) filers, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For all other public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company does not expect the adoption of this guidance will have a material impact on its financial statements. In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement”, an amendment to the accounting guidance on fair value measurements. The guidance modifies the disclosure requirements on fair value measurements, including the removal of disclosures of the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels, and the valuation processes for Level 3 fair value measurements. The guidance also adds certain disclosure requirements related to Level 3 fair value measurements. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company does not expect the adoption of this guidance will have a material impact on its financial statements. Other accounting standard updates effective after March 31, 2019 are not expected to have a material effect on the Company’s financial statements. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. The amendments in ASU No. 2016-01 address certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The Company adopted ASU No. 2016-01 in the first quarter of 2018. The adoption of this new standard did not have a material impact on the Company’s financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) Leases (Topic 842) Targeted Improvements The Company elected the available package of practical expedients, but not the hindsight practical expedient, and implemented internal controls to enable the preparation of financial information on adoption as of January 1, 2019. The standard had a material impact on the Company’s balance sheets but did not have an impact on its statements of operations. The most significant impact was the recognition of a ROU asset and lease liability for the Company’s sole operating lease—the Company had no finance leases. Adoption of the standard did not require the Company to restate previously reported results as it elected to apply a modified retrospective approach at the beginning of the period of adoption rather than at the beginning of the earliest comparative period presented. On August 26, 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230), In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. In January 2017, the FASB issued ASU No. 2017-04 “ Intangibles – Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment In May 2017, the FASB issued ASU No. 2017-09, “ Stock Compensation – Scope of Modification Accounting” In March 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting Compensation—Stock Compensation Equity—Equity-Based Payments to Non-Employees In August 2018, the SEC adopted final rules under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders’ equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders’ equity presented in the balance sheets must be provided in a note or separate statement. The analysis must present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. These final rules became effective on November 5, 2018, with issuers required to provide their analysis of stockholders’ equity in quarterly reports on Form 10-Q beginning with reports for the quarter ended March 31, 2019. The Company has included the analysis of changes in stockholders’ equity in the interim period unaudited condensed financial statements included in this Quarterly Report and will continue to do so in the Company’s quarterly reports on Form 10-Q in the future. The Company does not anticipate that the adoption of these SEC amendments will have a material effect on the Company’s financial position, results of operations, cash flows or shareholders’ equity. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Supplemental Cash Flow Information Related to Leases | Other information related to leases was as follows: Three Months Ended March 31, 2019 Supplemental Cash Flows Information Cash paid for amounts included in the measurement of lease liability: Operating cash flows from operating lease 28,745 Operating lease asset obtained in exchange for lease obligation: Operating lease $ 198,319 Remaining lease term Operating lease 1.8 years Discount rate Operating lease 6.00 % |
Schedule of Future Minimum Lease Payments Under Non-cancelable Operating Leases | Future payments under noncancelable extended operating leases having initial or remaining terms of one year or more are as follows for the remaining fiscal year and thereafter: Future minimum lease payments year ending December 31, 2019 $ 90,824 2020 103,254 Total future minimum lease payments, undiscounted 194,078 Less imputed interest (9,434 ) Present value of lease liabilities $ 184,644 Operating lease liabilities reported as of March 31, 2019: Operating lease liabilities-current $ 113,790 Operating lease liabilities-non-current 70,854 Total $ 184,644 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consists of the following: Estimated Life March 31, 2019 December 31,2018 Computers and equipment 5 years $ 15,589 $ 15,589 Furniture and fixtures 7 years 19,158 19,158 Total property and equipment 34,747 34,747 Accumulated depreciation (15,950 ) (14,587 ) Total property and equipment, net $ 18,797 $ 20,160 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Stock Option Activity | The following represents a summary of the options granted to employees and non-employees that are outstanding at March 31, 2019 and changes during the period then ended: Options Weighted Average Exercise Price Aggregate Intrinsic Value Weighted Average Remaining Contractual Life (in years) Outstanding at December 31, 2018 673,885 $ 19.82 $ ― 8.2 Granted 668,750 $ 0.60 $ 182,000 9.9 Exercised/ Expired/ Forfeited (1,500 ) $ 3.40 $ ― - Outstanding at March 31, 2019 1,341,135 $ 10.25 $ 182,000 8.9 Exercisable at March 31, 2019 334,709 $ 44.10 $ 5,000 6.9 |
Schedule of Assumptions Used in Black-Scholes Option-Pricing Method | The material factors incorporated in the Black-Scholes model in estimating the fair value of the options granted for the periods presented were as follows (three months ended March 31, 2018 stock price adjusted for 1-for-10 reverse stock split): For the three months ended March 31, 2019 2018 Expected dividend yield 0.00 % 0.00 % Expected stock-price volatility 13.52% - 23.39 % 52.70% - 53.26 % Risk-free interest rate 2.41% - 2.60 % 2.46% - 2.88 % Expected average term of options 7.5 7.9 Stock price $0.60 - $0.87 $ 3.40 |
Schedule of Nonvested Restricted Stock Units | The following table summarizes restricted stock units activities for the three months ended March 31, 2019: Number of Units Weighted Average Grant Date Fair Value Nonvested at December 31, 2018 1,100,000 $ 2.73 Granted 35,000 0.63 Forfeited ― ― Vested (11,669 ) 0.63 Nonvested at March 31, 2019 1,123,331 $ 2.69 |
Basis of Presentation (Details
Basis of Presentation (Details Narrative) - USD ($) | Mar. 23, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Reverse stock split | 1-for-10 reverse stock split | 1-for-10 reverse stock | ||
Net loss | $ (4,705,766) | $ (2,012,690) | ||
Net cash used in operating activities | (6,544,960) | $ (3,714,928) | ||
Working capital | 4,200,000 | |||
Accumulated deficit | (74,906,834) | $ (70,200,145) | ||
Cash and cash equivalents and investments in marketable securities | $ 8,300,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Accounting Policies [Abstract] | ||
Unrealized gain on debt securities | $ 1,511 | |
Held-to-maturity debt securities |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Supplemental Cash Flow Information Related to Leases (Details) | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Accounting Policies [Abstract] | |
Operating cash flows from operating lease | $ 28,745 |
Operating lease | $ 198,319 |
Operating lease: Remaining lease term | 1 year 9 months 18 days |
Operating lease: Discount rate | 6.00% |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule of Future Minimum Lease Payments Under Non-cancelable Operating Leases (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Accounting Policies [Abstract] | ||
2019 | $ 90,824 | |
2020 | 103,254 | |
Total future minimum lease payments, undiscounted | 194,078 | |
Less imputed interest | (9,434) | |
Present value of lease liabilities | 184,644 | |
Operating lease liabilities-current | 113,790 | |
Operating lease liabilities-non-current | 70,854 | |
Total | $ 198,319 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 1,400 | $ 1,400 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 34,747 | $ 34,747 |
Accumulated depreciation | (15,950) | (14,587) |
Total property and equipment, net | $ 18,797 | 20,160 |
Computers and Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Life | 5 years | |
Total property and equipment | $ 15,589 | 15,589 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Life | 7 years | |
Total property and equipment | $ 19,158 | $ 19,158 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | 3 Months Ended | ||
Mar. 31, 2019USD ($) | Mar. 31, 2018USD ($) | Jul. 09, 2015ft² | |
Lease agreement term | 5 years | ||
Rent expense | $ 29,000 | $ 29,000 | |
Lease, option to extend | The Company has the option to extend the term of the lease for one five-year term, provided that the rent would be subject to market adjustment at the beginning of the renewal term. | ||
Century Park [Member] | |||
Area of lease | ft² | 2,780 | ||
Lease agreement term | 61 months | ||
Months 2 Through 13 [Member] | |||
Rent expense | $ 9,174 | ||
Lease term description | Months 2 through 13 of the term | ||
Months 50 Through 61 [Member] | |||
Rent expense | $ 10,325 | ||
Lease term description | Months 50 through 61 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) | Mar. 29, 2019shares | Mar. 23, 2018 | Mar. 31, 2019USD ($)Integer$ / sharesshares | Mar. 31, 2018 | Dec. 31, 2018$ / sharesshares | Sep. 30, 2017$ / sharesshares |
Common stock, shares authorized | 225,000,000 | 225,000,000 | 225,000,000 | |||
Common stock, par value | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |||
Preferred stock, shares authorized | 15,000,000 | |||||
Preferred stock, par value | $ / shares | $ 0.001 | |||||
Reverse split stock | 1-for-10 reverse stock split | 1-for-10 reverse stock | ||||
Common stock, shares outstanding | 9,042,332 | 6,036,562 | ||||
Common stock voting, description | Each share of the Company's common stock is entitled to one vote, and all shares rank equally as to voting and other matters. | |||||
2017 Aspire Purchase Agreement [Member] | ||||||
Number of common shares sold | 100,000 | |||||
Number of shares possible increase per trading day | 2,000,000 | |||||
Number of common shares sold, value | $ | $ 6,500,000 | |||||
Debt instrument convertible Consecutive trading days | Integer | 10 | |||||
Aggregate percentage of shares, direction under purchase | 30.00% | |||||
Number of common stock may be sold | 1,807,562 | |||||
Percentage for common stock outstanding | 19.99% | |||||
2017 Aspire Purchase Agreement [Member] | Maximum [Member] | ||||||
Maximum purchase price payable on one purchase date | $ | $ 500,000 | |||||
Percentage for common stock outstanding | 19.99% | |||||
2017 Aspire Purchase Agreement [Member] | Minimum [Member] | ||||||
Minimum number of shares to be purchased under purchase notice | 100,000 | |||||
Minimum stock price under purchase notice | $ / shares | $ 0.25 | |||||
Average price paid | $ / shares | $ 0.86 | |||||
2017 Aspire Purchase Agreement [Member] | Aspire Capital Fund LLC [Member] | March 31, 2021 [Member] | ||||||
Payments to acquire common stock | $ | $ 6,500,000 | |||||
Series A Preferred Stock [Member] | ||||||
Preferred stock, shares authorized | 15,000,000 | 15,000,000 | ||||
Preferred stock, par value | $ / shares | $ 0.001 | $ 0.001 | ||||
Preferred stock, shares issued | 4,080 | 4,080 | ||||
Preferred stock, shares outstanding | 4,080 | 4,080 | ||||
Preferred stock convertible into common stock conversion price per share | $ / shares | $ 4 | |||||
Series B Preferred Stock [Member] | ||||||
Preferred stock, shares authorized | 6,000 | 6,000 | ||||
Preferred stock, par value | $ / shares | $ 0.001 | $ 0.001 | ||||
Preferred stock, shares issued | 3,000 | 5,608 | ||||
Preferred stock, shares outstanding | 3,000 | 5,608 | ||||
Preferred stock convertible into common stock conversion price per share | $ / shares | $ 1.30 | |||||
Series C Preferred Stock [Member] | ||||||
Preferred stock, shares authorized | 1,880 | 1,880 | ||||
Preferred stock, par value | $ / shares | $ 0.001 | $ 0.001 | ||||
Preferred stock, shares issued | 240 | 1,880 | ||||
Preferred stock, shares outstanding | 240 | 1,880 | ||||
Preferred stock convertible into common stock conversion price per share | $ / shares | $ 1.64 |
Warrants (Details Narrative)
Warrants (Details Narrative) | 3 Months Ended |
Mar. 31, 2019$ / sharesshares | |
Issuance of warrants to purchase of common stock shares | shares | 8,413,017 |
Weighted average exercise price | $ 1.78 |
Warrant expiration date | Nov. 30, 2023 |
Minimum [Member] | |
Warrants exercise prices ranging | $ 1.30 |
Maximum [Member] | |
Warrants exercise prices ranging | $ 93 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details Narrative) - USD ($) | Mar. 23, 2018 | Sep. 15, 2017 | Mar. 31, 2019 | Mar. 31, 2018 | Jun. 02, 2017 |
Expected dividend yield | 0.00% | 0.00% | |||
Risk-free interest rate | 0.00% | ||||
Reverse split stock | 1-for-10 reverse stock split | 1-for-10 reverse stock | |||
Stock based compensation expense | $ 146,491 | $ 212,608 | |||
Unrecognized compensation cost related to un-vested stock based compensation | $ 561,000 | ||||
Weighted average period of compensation cost expected to be recognized | 9 months 18 days | ||||
Number of stock options exercised | |||||
2015 Equity Incentive Plan [Member] | |||||
Number of common stock shares authorized for issuance | 2,750,000 | ||||
Number of common stock available for issuance | 1,596,124 | ||||
2015 Equity Incentive Plan [Member] | Employee Stock Option [Member] | |||||
Aggregate number of shares of common stock authorized to issue | 83,800 | ||||
Common stock shares issued | 2,585,871 | ||||
2015 Stock Plan [Member] | Employee Stock Option [Member] | |||||
Stock option description | The exercise price for an option issued under the 2015 Plan is determined by the Board of Directors, but will be (i) in the case of an incentive stock option (A) granted to an employee who, at the time of grant of such option, is a 10% stockholder, no less than 110% of the fair market value per share on the date of grant; or (B) granted to any other employee, no less than 100% of the fair market value per share on the date of grant; and (ii) in the case of a non-statutory stock option, no less than 100% of the fair market value per share on the date of grant. The options awarded under the Plans will vest as determined by the Board of Directors but will not exceed a ten-year period. | ||||
Vesting period of options | 10 years |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Stock Option Activity (Details) | 3 Months Ended |
Mar. 31, 2019USD ($)$ / sharesshares | |
Share-based Payment Arrangement [Abstract] | |
Number of Shares, Options Outstanding, Beginning | shares | 673,885 |
Number of Shares, Options Granted | shares | 668,750 |
Number of Shares, Options Exercised/ Expired/ Forfeited | shares | (1,500) |
Number of Shares, Options Outstanding at Ending | shares | 1,341,135 |
Number of Shares, Options Exercisable | shares | 334,709 |
Weighted Average Exercise Price, Outstanding, Beginning | $ 19.82 |
Weighted Average Exercise Price, Options Granted | 0.60 |
Weighted Average Exercise Price, Options Exercised/ Expired/ Forfeited | 3.40 |
Weighted Average Exercise Price, Outstanding at Ending | 10.25 |
Weighted Average Exercise Price, Options Exercisable | $ 44.10 |
Aggregate Intrinsic Value, Outstanding, Beginning | $ | |
Aggregate Intrinsic Value, Options Granted | $ 182,000 |
Aggregate Intrinsic Value, Options Exercised/ Expired/ Forfeited | |
Aggregate Intrinsic Value, Outstanding at Ending | $ | $ 182,000 |
Aggregate Intrinsic Value, Options Exercisable | $ | $ 5,000 |
Weighted- Average Remaining Contractual Life (in Years), Outstanding, Beginning | 8 years 2 months 12 days |
Weighted- Average Remaining Contractual Life (in Years), Options Granted | 9 years 10 months 25 days |
Weighted- Average Remaining Contractual Life (in Years), Outstanding at Ending | 8 years 10 months 25 days |
Weighted- Average Remaining Contractual Life (in Years), Options Exercisable | 6 years 10 months 25 days |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Assumptions Used in Black-Scholes Option-Pricing Method (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Expected dividend yield | 0.00% | 0.00% |
Expected stock-price volatility, minimum | 13.52% | 52.70% |
Expected stock-price volatility, maximum | 23.39% | 53.26% |
Risk-free interest rate, minimum | 2.41% | 2.46% |
Risk-free interest rate, maximum | 2.60% | 2.88% |
Expected average term of options | 7 years 6 months | 7 years 10 months 25 days |
Stock price | $ 3.40 | |
Minimum [Member] | ||
Stock price | $ 0.60 | |
Maximum [Member] | ||
Stock price | $ 0.87 |
Stock-Based Compensation - Sc_2
Stock-Based Compensation - Schedule of Nonvested Restricted Stock Units (Details) | 3 Months Ended |
Mar. 31, 2019$ / sharesshares | |
Share-based Payment Arrangement [Abstract] | |
Number of Units Nonvested, Beginning balance | shares | 1,100,000 |
Number of Units Granted | shares | 35,000 |
Number of Units Forfeited | shares | |
Number of Units Vested | shares | (11,669) |
Number of Units Nonvested, Ending balance | shares | 1,123,331 |
Weighted Average Grant Date Fair Value Nonvested, Beginning balance | $ / shares | $ 2.73 |
Weighted Average Grant Date Fair Value Granted | $ / shares | 0.63 |
Weighted Average Grant Date Fair Value Forfeited | $ / shares | |
Weighted Average Grant Date Fair Value Vested | $ / shares | 0.63 |
Weighted Average Grant Date Fair Value Nonvested, Ending balance | $ / shares | $ 2.69 |