Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Dec. 31, 2018 | Feb. 11, 2019 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | NEUROONE MEDICAL TECHNOLOGIES Corp | |
Entity Central Index Key | 1,500,198 | |
Trading Symbol | NMTC | |
Amendment Flag | false | |
Current Fiscal Year End Date | --09-30 | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2018 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,019 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 10,099,010 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Dec. 31, 2018 | Sep. 30, 2018 |
Current assets: | ||
Cash | $ 350,576 | $ 13,260 |
Prepaid expenses | 32,192 | 5,378 |
Total current assets | 382,768 | 18,638 |
Intangible assets, net | 194,770 | 200,081 |
Total assets | 577,538 | 218,719 |
Current liabilities: | ||
Accounts payable | 470,345 | 221,235 |
Accrued expenses | 1,740,893 | 1,591,022 |
Unsecured loans | 528,000 | 283,000 |
Convertible promissory notes, net and accrued interest | 1,657,828 | 1,393,804 |
Premium conversion derivatives | 314,660 | 308,395 |
Total current liabilities | 4,711,726 | 3,797,456 |
Warrant liability | 823,844 | 817,155 |
Total liabilities | 5,535,570 | 4,614,611 |
Commitments and contingencies (Note 4) | ||
Stockholders' deficit: | ||
Preferred stock, $0.001 par value; 10,000,000 shares authorized as of December 31, 2018 and September 30, 2018; no shares issued or outstanding as of December 31, 2018 and September 30, 2018. | ||
Common stock, $0.001 par value; 100,000,000 shares authorized as of December 31, 2018 and September 30, 2018; and 10,036,505 and 9,656,505 shares issued and outstanding as of December 31, 2018 and September 30, 2018, respectively. | 10,037 | 9,657 |
Additional paid-in capital | 6,842,465 | 6,052,161 |
Accumulated deficit | (11,810,534) | (10,457,710) |
Total stockholders' deficit | (4,958,032) | (4,395,892) |
Total liabilities and stockholders' deficit | $ 577,538 | $ 218,719 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2018 | Sep. 30, 2018 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 10,036,505 | 9,656,505 |
Common stock, shares outstanding | 10,036,505 | 9,656,505 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Operating expenses: | ||
General and administrative | $ 866,679 | $ 538,859 |
Research and development | 209,168 | 234,925 |
Total operating expenses | 1,075,847 | 773,784 |
Loss from operations | (1,075,847) | (773,784) |
Interest expense | (264,023) | (338,113) |
Net change in fair value for the warrant liability and premium conversion derivatives | (12,954) | (162,547) |
Loss on note extinguishments, net | (350,914) | |
Net loss | $ (1,352,824) | $ (1,625,358) |
Net loss per share: | ||
Basic and diluted | $ (0.14) | $ (0.21) |
Number of shares used in per share calculations: | ||
Basic and diluted | 9,763,244 | 7,864,994 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders' Deficit (Unaudited) - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Balance at Sep. 30, 2017 | $ 7,865 | $ 162,741 | $ (3,699,438) | $ (3,528,832) |
Balance, shares at Sep. 30, 2017 | 7,864,994 | |||
Issuance of additional warrants in connection with short-term notes modification | 117,280 | 117,280 | ||
Stock value adjustment associated with intellectual license agreement | 299 | 299 | ||
Net loss | (1,625,358) | (1,625,358) | ||
Balance at Dec. 31, 2017 | $ 7,865 | 280,320 | (5,324,796) | (5,036,611) |
Balance, shares at Dec. 31, 2017 | 7,864,994 | |||
Balance at Sep. 30, 2018 | $ 9,657 | 6,052,161 | (10,457,710) | (4,395,892) |
Balance, shares at Sep. 30, 2018 | 9,656,505 | |||
Issuance of common stock under 2018 private placement | $ 330 | 601,319 | 601,649 | |
Issuance of common stock under 2018 private placement, shares | 330,000 | |||
Issuance of warrants under 2018 private placement | 223,351 | 223,351 | ||
Issuance costs related to 2018 private placement | (149,316) | (149,316) | ||
Issuance of common stock for consulting services | $ 50 | 114,950 | 115,000 | |
Issuance of common stock for consulting services, shares | 50,000 | |||
Net loss | (1,352,824) | (1,352,824) | ||
Balance at Dec. 31, 2018 | $ 10,037 | $ 6,842,465 | $ (11,810,534) | $ (4,958,032) |
Balance, shares at Dec. 31, 2018 | 10,036,505 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Operating activities | ||
Net loss | $ (1,352,824) | $ (1,625,358) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Amortization | 5,311 | 4,265 |
Stock-based services expense | 118,980 | |
Non-cash interest on convertible notes | 30,800 | 39,508 |
Non-cash discount amortization on short-term notes convertible notes | 233,223 | 298,605 |
Revaluation of premium conversion derivatives | 6,265 | (108,175) |
Revaluation of warrant liability | 6,689 | 270,722 |
Loss on term notes extinguishments | 350,914 | |
Change in assets and liabilities: | ||
Prepaid expenses | (26,814) | |
Accounts payable and accrued expenses | 278,686 | 171,115 |
Net cash used in operating activities | (699,684) | (598,404) |
Investing activities | ||
Purchase of intangible assets | (91,709) | |
Net cash used in investing activities | (91,709) | |
Financing activities | ||
Proceeds from issuance of convertible promissory notes | 328,429 | |
Proceeds from issuance of warrants associated with convertible notes | 336,571 | |
Proceeds from unsecured loans | 245,000 | |
Issuance costs related to convertible notes | (9,779) | |
Issuance costs related to warrants | (8,670) | |
Proceeds from issuance of common stock in connection with private placement | 601,649 | |
Proceeds from issuance of warrants in connection with private placement | 223,351 | |
Proceeds from advances related to private placement | 40,000 | |
Issuance costs related to private placement | (73,000) | |
Net cash provided by financing activities | 1,037,000 | 646,551 |
Net increase (decrease) in cash | 337,316 | (43,562) |
Cash at beginning of period | 13,260 | 70,029 |
Cash at end of period | 350,576 | 26,467 |
Supplemental non-cash financing and investing transactions: | ||
Bifurcation of premium conversion derivative related to convertible notes | 128,525 | |
Issuance of warrants in connection with convertible notes | 117,280 | |
Stock value adjustment associated with intellectual license agreement | 299 | |
Accrued issuance costs attributed to private placement and convertible notes | 76,316 | 14,226 |
Purchased intangible assets in accrued expenses | $ 30,000 |
Description of Business and Bas
Description of Business and Basis of Presentation | 3 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Basis of Presentation | NOTE 1 – Description of Business and Basis of Presentation NeuroOne Medical Technologies Corporation (the “Company”), a Delaware Corporation, is an early-stage medical technology company focused on the development and commercialization of thin film electrode technology for continuous electroencephalogram (cEEG) and stereoelectroencephalography (sEEG) recording, brain stimulation and ablation solutions for patients suffering from epilepsy, Parkinson’s disease, dystonia, essential tremors and other related brain related disorders. Additionally, we are investigating the potential applications of our technology associated with artificial intelligence. To date, the Company has recorded no product sales and has a limited expense history. The Company is a development stage company and its activities to date have included raising capital to fund the development of its proprietary technology and seek regulatory clearances required to initiate commercial activities. The Company is based in Minnetonka, Minnesota. Basis of presentation The accompanying condensed consolidated financial statements have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated financial statements may not include all disclosures required by U.S. GAAP; however, the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and the notes thereto for the nine month transition period ended September 30, 2018 included in the Transition Report on Form 10-KT. The condensed consolidated balance sheet at September 30, 2018 was derived from the audited financial statements of the Company. In the opinion of management, all adjustments, consisting of only normal recurring adjustments that are necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, have been made. The results of operations for the interim periods are not necessarily indicative of the operating results for the full fiscal year or any future periods. |
Going Concern
Going Concern | 3 Months Ended |
Dec. 31, 2018 | |
Going Concern [Abstract] | |
Going Concern | NOTE 2 – Going Concern The accompanying condensed consolidated financial statements have been prepared on the basis that the Company will continue as a going concern. The Company has incurred losses since inception and had an accumulated deficit of $11,810,534 as of December 31, 2018. The Company does not have adequate liquidity to fund its operations throughout fiscal 2019 without raising additional funds. These factors raise substantial doubt about its ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this condition. Management intends to continue to seek additional financing to fund operations. If the Company is not able to raise additional working capital, it will have a material adverse effect on the operations of the Company and the development of its technology. Through December 31, 2018, the Company has completed a $528,000 unsecured loan financing, a $253,000 short-term promissory note financing (which notes were amended and restated to become convertible promissory notes), a $1,625,120 convertible promissory note financing of a planned $2.5 million subscription and a second $1,540,000 convertible promissory note financing of a planned $2 million subscription. In addition, the Company entered into a private placement transaction of its common stock beginning in July 2018, and as replaced in December 2018, whereby $1.9 million in gross proceeds were raised out of a planned $11.8 million maximum under the subscription amounts through December 31, 2018. See Note 13 – Subsequent Events for financings that have closed after December 31, 2018. The Company does not have adequate liquidity to fund its operations throughout fiscal 2019 without raising additional funds. Management intends to continue to seek additional debt and/or equity financing to fund operations. However, if the Company is unable to raise additional funds, or the Company’s anticipated operating results are not achieved, management believes planned expenditures may need to be reduced in order to extend the time period that existing resources can fund the Company’s operations. If management is unable to obtain the necessary capital, it may have to cease operations. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 3 – Summary of Significant Accounting Policies Management’s Use of Estimates The preparation of condensed consolidated 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 condensed consolidated financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. Concentration of Credit Risk Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash. The Company’s cash is held by one financial institution in the United States. Amounts on deposit may at times exceed federally insured limits. Management believes that the financial institution is financially sound, and accordingly, minimal credit risk exists with respect to the financial institution. As of December 31, 2018, the Company did have deposits in excess of federally insured amounts by $134,109. Common Stock Valuation Due to the limited market liquidity for the Company’s common stock, the Company utilized methodologies in accordance with the framework of the American Institute of Certified Public Accountants’ Technical Practice Aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation, to estimate the fair value of its common stock. The valuation methodology includes estimates and assumptions that require the Company’s judgment. These estimates and assumptions include a number of objective and subjective factors, including external market conditions affecting the biotechnology industry sector, and the likelihood of achieving a liquidity event, such as an offering or sale. Significant changes to the key assumptions used in the valuations may result in different fair values of common stock at each valuation date. The Company estimated its enterprise value on a continuing operations basis, using the market approach, with certain adjustments relating to the thinly traded status of the Company. The traded price of the Company was deemed not to be an entirely reliable indication of fair market value given the lack of trading liquidity. Therefore, in addition to applying partial weighting to the traded price, the Company relied on forward revenue multiples from guideline public companies (“GPC”) for calendar year 2019 and 2020. The resulting equity value from the GPC method was allocated to common stock using the option pricing method, and a discount for lack of marketability was applied. Based on the above methodology and weightings, the Company derived a valuation conclusion of $2.20 and $2.30 per common share as of December 31, 2018 and September 30, 2018, respectively. The fair value the Company’s common stock is used as an input into the fair value determination of the warrants, stock option or other equity awards that the Company has issued or are outstanding liabilities at the reporting date. Fair Value of Financial Instruments The Company’s accounting for fair value measurements of assets and liabilities that are recognized or disclosed at fair value in the condensed consolidated financial statements on a recurring or nonrecurring basis adheres to the Financial Accounting Standards Board (FASB) fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: ● Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the Company at the measurement date. ● Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. ● Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. As of December 31, 2018 and September 30, 2018, the fair values of cash, other assets, accounts payable, accrued expenses and the unsecured loans approximated their carrying values because of the short-term nature of these assets or liabilities. The estimated fair value of the convertible promissory notes of the Company was based on amortized cost which was deemed to approximate fair value. The fair value of the warrant liability and the premium conversion derivatives associated with the convertible promissory notes of the Company were based on both the estimated fair value of our common stock of $2.20 and $2.30 as of December 31, 2018 and September 30, 2018, respectively, and cash flow models discounted at current implied market rates evidenced in recent arms-length transactions representing expected returns by market participants for similar instruments and are based on Level 3 inputs. There were no transfers between fair value hierarchy levels during the three months ended December 31, 2018 and 2017. The fair value of financial instruments measured on a recurring basis is as follows: As of December 31, 2018 Description Total Level 1 Level 2 Level 3 Liabilities: Warrant liability $ 823,844 $ — $ — $ 823,844 Premium conversion derivatives 314,660 — — 314,660 Total liabilities at fair value $ 1,138,504 $ — $ — $ 1,138,504 As of September 30, 2018 Description Total Level 1 Level 2 Level 3 Liabilities: Warrant liability $ 817,155 $ — $ — $ 817,155 Premium conversion derivatives 308,395 — — 308,395 Total liabilities at fair value $ 1,125,550 $ — $ — $ 1,125,550 The following table provides a roll-forward of the warrant liability and premium debt conversion derivatives measured at fair value on a recurring basis using unobservable level 3 inputs for the three month periods ended December 31, 2018 and 2017: 2018 2017 Warrant liability Balance as of beginning of period – September 30 $ 817,155 $ 774,172 Value assigned to warrants in connection with convertible promissory notes — 336,571 Change in fair value of warrant liability 6,689 270,722 Balance as of end of period – December 31 $ 823,844 $ 1,381,465 2018 2017 Premium debt conversion derivatives Balance as of beginning of period – September 30 $ 308,395 $ 441,823 Value assigned to the underlying derivatives in connection with convertible promissory notes — 128,525 Change in fair value of premium debt conversion derivatives 6,265 (108,174 ) Balance as of end of period – December 31 $ 314,660 $ 462,174 Intellectual Property The Company has entered into two licensing agreements with major research institutions, which allows for access to certain patented technology and know-how. Payments under those agreements are capitalized and amortized to general and administrative expense over the expected useful life of the acquired technology. Impairment of Long-Lived Assets The Company evaluates its long-lived assets, which consists entirely of licensed intellectual property for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. The Company assesses the recoverability of long-lived assets by determining whether or not the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset. Through December 31, 2018, the Company has not impaired any long-lived assets. Debt Issuance Costs Debt issuance costs are recorded as a reduction of the convertible promissory notes when applicable. Amortization of debt issuance costs is calculated using the straight-line method over the term of the convertible promissory notes, which approximates the effective interest method, and is recorded in interest expense in the accompanying condensed consolidated statements of operations. Research and Development Costs Research and development costs are charged to expense as incurred. Research and development expenses may include costs incurred in performing research and development activities, including clinical trial costs, manufacturing costs for both clinical and pre-clinical materials as well as other contracted services, license fees, and other external costs. Nonrefundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity is performed or when the goods have been received, rather than when payment is made, in accordance with ASC 730, Research and Development Warrant Liability The Company issued warrants to purchase equity securities in connection with the issuance or amendment of the convertible promissory notes. The Company accounts for these warrants as a liability at fair value when the number of shares is not fixed and determinable in cases where warrant pricing protections in future equity financings are not available to other common stockholders. Additionally, issuance costs associated with the warrant liability are expensed as incurred and reflected as interest expense in the accompanying condensed consolidated statements of operations. The Company adjusts the liability for changes in fair value until the earlier of the exercise or expiration of the warrants for any period when pricing protections in future equity financings remain in place, or until such time, if any, as the number of shares to be exercised becomes fixed, at which point the warrants will be classified in stockholders’ (deficit) equity provided that there are sufficient authorized and unissued shares of common stock to settle the warrants and redeem any other contracts that may require settlement in shares of common stock. Any future change in fair value of the warrant liability, when outstanding, is recognized in the condensed consolidated statements of operations. Premium Debt Conversion Derivatives The Company evaluates all conversion and redemption features contained in a debt instrument to determine if there are any embedded derivatives that require separation from the host debt instrument. An embedded derivative that requires separation is bifurcated from its host debt instrument and a corresponding discount to the host debt instrument is recorded. The discount is amortized and recorded to interest expense over the term of the host debt instrument using the straight-line method which approximates the effective interest method. The separated embedded derivative is accounted for separately on a fair market value basis. The Company records the fair value changes of a separated embedded derivative at each reporting period in the condensed consolidated statements of operations. The Company determined that the redemption features under the convertible promissory notes qualified as embedded derivatives and were separated from their debt hosts. Income Taxes For the Company, income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax base and operating loss and tax credit carryforwards. 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. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. Net Loss Per Share For the Company, basic loss per share of common stock is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted earnings or loss per share of common stock is computed similarly to basic earnings or loss per share except the weighted average shares outstanding are increased to include additional shares from the assumed exercise of any common stock equivalents, if dilutive. The Company’s convertible promissory notes, warrants, and stock options while outstanding are considered common stock equivalents for this purpose. Diluted earnings is computed utilizing the treasury method for the warrants and stock options. Diluted earnings with respect to the convertible promissory notes utilizing the if-converted method was not applicable during the three month periods ended December 31, 2018 and 2017 as no conditions required for conversion had occurred during these periods. No incremental common stock equivalents were included in calculating diluted loss per share because such inclusion would be anti-dilutive given the net loss reported for the three month periods ended December 31, 2018 and 2017. The following potential common shares were not considered in the computation of diluted net loss per share as their effect would have been anti-dilutive for the three month periods ended December 31, 2018 and 2017: 2018 2017 Warrants 3,257,572 (1) 189,750 (1) Stock options 543,216 365,716 (1) There are additional potential warrants to be included which will be known, if and when a qualified financing event greater than $3 million or a change of control transaction occurs in the future. Recent Accounting Pronouncements In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share, Distinguishing Liabilities from Equity and Derivatives and Hedging In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting , Revenue from Contracts with Customers . In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (ASU 2018-13). ● Removals: 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. ● Modifications: for investments in certain entities that calculate net asset value, an entity is required to disclose the timing of liquidation of an investee’s assets and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the entity or announced the timing publicly; and the amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. ● Additions: the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period; and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. This guidance is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should all be applied prospectively for only the most recent interim or annual period presented in the initial year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted. An entity is permitted to early adopt any removed or modified disclosures upon issuance of ASU 2018-13 and delay adoption of the additional disclosures until their effective date. The Company is currently evaluating the impact of the new guidance on its financial statements. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 4 – Commitments and Contingencies Legal From time to time, the Company is subject to litigation and claims arising in the ordinary course of business. In May 2017, NeuroOne received a letter from PMT Corporation (“PMT”), the former employer of Mark Christianson and Wade Fredrickson. PMT claimed that these officers had breached their restrictive covenant obligations with PMT by virtue of their work for NeuroOne and such officer’s prior work during employment with the prior employer, that these officers had breached their confidentiality and non-disclosure obligations to PMT and federal and state law by misappropriating confidential and trade secret information, and that the Company is responsible for tortious interference with the contracts. The letter demanded that Mr. Fredrickson (who resigned from the Company in June 2017), Mr. Christianson and NeuroOne cease and desist all competitive activities, that Mr. Fredrickson step down from his position and that Mr. Christianson and NeuroOne provide the former employer access to NeuroOne’s systems to demonstrate that it is not using trade secrets or proprietary information nor competing with the former employer. On March 29, 2018, the Company was served with a complaint filed by PMT adding the Company, NeuroOne and Mr. Christianson to its existing lawsuit against Mr. Fredrickson. In the lawsuit, PMT claims that Mr. Fredrickson and Mr. Christianson breached their non-competition, non-solicitation and non-disclosure obligations, breached their fiduciary duty obligations, were unjustly enriched, engaged in unfair competition, engaged in a civil conspiracy, tortiously interfered with PMT’s contracts and prospective economic advantage, and breached a covenant of good faith and fair dealing. Against Mr. Fredrickson, PMT also alleges that he intentionally or negligently spoliated evidence, made negligent or fraudulent misrepresentations, misappropriated trade secrets in violation of Minnesota law, and committed the tort of conversion and statutory civil theft. Against the Company and NeuroOne, PMT alleges that the Company and NeuroOne were unjustly enriched and engaged in unfair competition. PMT asked the Court to impose a constructive trust over the shares held by Mr. Fredrickson and Mr. Christianson and to award compensatory damages, equitable relief, punitive damages, attorneys’ fees, costs and interest. On April 18, 2018, Mr. Christianson, the Company and NeuroOne, Inc. filed a motion for dismissal, which was heard by the Court on October 11, 2018. The motion for dismissal states that: the contract claims against Mr. Christianson fail because his agreement was not supported by consideration; the Minnesota Uniform Trade Secrets Act preempts plaintiff’s claims for unfair competition, civil conspiracy and unjust enrichment; plaintiff fails to state a claim regarding alleged breach of the duties of loyalty and good faith/fair dealing; plaintiff cannot legally obtain a constructive trust; plaintiff has insufficiently pled its tortious interference claims; and Plaintiff has not stated a claim for unfair competition. On January 7, 2019, the judge granted the motion for dismissal with respect to PMT’s claim for breach of the duty of good faith and fair dealing, and denied the motion for dismissal with respect to the other claims presented. The Company, NeuroOne, Inc. and Mr. Christianson (who has not worked for PMT since February 2012) intend to continue to defend themselves vigorously. The outcome and potential loss related to this matter is unknown and no reserve has been accrued for as of December 31, 2018 and as of the issuance of these condensed consolidated financial statements. |
Intangibles
Intangibles | 3 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangibles | NOTE 5 – Intangibles Intangible assets consisted of the following at December 31, 2018: Useful Life Net Intangibles, September 30, 2018 12-13 Years $ 200,081 Less: amortization (5,311 ) Net Intangibles, December 31, 2018 $ 194,770 Amortization expense was $5,311 and $4,265 for the three months ended December 31, 2018 and 2017, respectively. |
Accrued Expenses
Accrued Expenses | 3 Months Ended |
Dec. 31, 2018 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | NOTE 6 – Accrued Expenses Accrued expenses consisted of the following at December 31, 2018 and September 30, 2018: December 31, 2018 September 30, 2018 License fees $ 65,000 $ 65,000 Legal services 848,708 833,470 Accrued issuance costs 229,201 204,000 Accrued payroll 316,350 276,639 Advances 40,000 — Other 241,634 211,913 $ 1,740,893 $ 1,591,022 |
Short-Term Promissory Notes and
Short-Term Promissory Notes and Unsecured Loan | 3 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Short-Term Promissory Notes and Unsecured Loan | NOTE 7 – Short-Term Promissory Notes and Unsecured Loan Short-Term Promissory Notes The Company issued short-term unsecured and interest-free promissory notes (the “Short-Term Notes”) for aggregate gross proceeds of $253,000 in August 2017 which included free standing equity warrants. The Short-Term Notes were subsequently amended in November 2017 to extend the maturity date and increase the number of shares of Common Stock issuable upon exercise of the related warrants. The Short-Term Notes were also amended in March 2018 to become convertible, include new interest payment provisions and new conversion features and to provide for the issuance of a replacement warrant (the “Replacement Warrant”) and an additional warrant (the “Additional Warrant”) described more fully below. Effective July 2, 2018, the Company entered into debt conversion agreements with each Short-Term Note subscriber to (i) convert the outstanding principal and accrued and unpaid interest (the “Outstanding Balance”) under the Short-Term Notes into shares of the Company’s common stock based on the Outstanding Balance divided by $1.80 per share (the “Short-Term Note Conversion Shares”); (ii) cancel and extinguish the Short-Term Notes; and (iii) amend and restate the Replacement Warrants and Additional Warrants, as described more fully below, to make them immediately exercisable upon the conversion, at a per share exercise price equal to $1.80 per share. As consideration for the early conversion of the Short-Term Notes, the Company issued each subscriber a new warrant (the “Short-Term Note Payment Warrants”), exercisable for up to the number of shares of common stock equal to the number of Short-Term Note Conversion Shares received by such subscriber; at a per share exercise price of $1.80 per share. The Short-Term Note Payment Warrants became exercisable commencing on July 2, 2018, and expire on November 21, 2021. The November 2017 amendment resulted in a substantial modification to the original Short-Term Notes whereby additional warrant coverage was added and the maturity date of the Short-Term Notes was extended. The Company recorded the November 2017 Short-Term Note amendment under the provisions of extinguishment accounting. A loss on note extinguishments in the accompanying condensed consolidated statements of operations for the three months ended December 31, 2017 was recorded in the amount of $144,577, which represented the difference between the face value of the Short-Term Notes over the combined carrying values of the Short-Term Notes and warrants on the date of the amendment. The fair value increase of the Short-Term Notes and the warrants as amended over its adjusted carrying value at the time of the amendment was $117,280 which was recorded as additional paid-in capital. During the three months ended December 31, 2017, interest related to amortization of discounts associated with the separation of the equity warrants and issuance costs amounted to $21,627. As noted above, the Short-Term Notes were converted into shares of common stock and were not outstanding during the three month period ended December 31, 2018. Unsecured Loans In December 2018, the Company received gross proceeds from an unsecured loan represented by one promissory note in the amount of $100,000 from a stockholder owning over 5% of the Company’s common stock. The loan is interest free and requires that the Company repay the principal in full on the earlier of the closing of an equity round of financing of the Company resulting in more than $5 million in gross proceeds or December 12, 2019. In November 2018, the Company received cash gross proceeds from unsecured loans represented by two promissory notes in the amounts of $45,000 and $100,000 from a stockholder owning or a stockholder affiliated with stockholders owning over 5% of the Company’s common stock. The loans are interest free and require that the Company repay the principal in full on the earlier of the closing of an equity round of financing of the Company resulting in more than $5 million in gross proceeds or November 14, 2019. On May 17, 2018, the Company received cash proceeds of $168,000 from unsecured loans, represented by two promissory notes from a stockholder owning or a stockholder affiliated with stockholders owning over 5% of the Company’s common stock. The loans are interest free and require that the Company repay the principal in full on the earlier to occur of (i) May 17, 2019 or (ii) the closing of an equity round of financing of the Company that raises more than $5 million in gross proceeds. The loans include customary events of default provisions. On March 20, 2018, the Company received cash proceeds from an unsecured loan, represented by a promissory note, for $115,000 from a stockholder owning over 5% of the Company’s common stock. The loan is interest free and requires that the Company repay the principal in full on the earlier to occur of (i) March 20, 2019 or (ii) the closing of an equity round of financing of the Company that raises more than $3 million in gross proceeds. The loan includes customary events of default provisions. |
Convertible Promissory Notes an
Convertible Promissory Notes and Warrant Agreements | 3 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Convertible Promissory Notes and Warrant Agreements | NOTE 8 – Convertible Promissory Notes and Warrant Agreements As of December 31, As of 2017 convertible promissory notes, net of discounts $ 1,540,000 $ 1,306,776 Accrued interest 117,828 87,028 $ 1,657,828 $ 1,393,804 2016 Convertible Promissory Notes From November 2016 to June 2017, the Company issued convertible promissory notes (the “Convertible Notes”) in an aggregate principal amount of $1,625,120 and common stock purchase warrants (the “Warrants”) and entered into subscription agreements with subscribers. The Company amended the Convertible Notes in December 2016 and November 2017 and the Warrants in June 2017 and November 2017 to, among other things, change the terms of the underlying Warrants that included the removal of down round pricing protection. On July 2, 2018, the Company entered into debt conversion agreements with each Convertible Note subscriber to (i) convert the Outstanding Balance under the Convertible Notes into shares of the Company’s common stock based on the Outstanding Balance divided by $1.80 per share (the “2016 Note Conversion Shares”); (ii) cancel and extinguish the Convertible Notes; and (iii) amend and restate the Warrants to make them immediately exercisable upon the conversion, at a per share exercise price equal to $1.80 per share. As consideration for the early conversion of the Convertible Notes, the Company issued each subscriber an additional new warrant (the “2016 Note Payment Warrants”), exercisable for up to the number of shares of common stock equal to the number of 2016 Note Conversion Shares received by such subscriber; at a per share exercise price of $1.80 per share. The 2016 Note Payment Warrants became exercisable commencing on July 2, 2018 and expire on November 21, 2021. The November 2017 amendment to the notes resulted in a substantial modification to the original Convertible Notes whereby the maturity date was extended and the terms associated with the Warrants were revised. The Company recorded the Convertible Note amendment under the provisions of extinguishment accounting. The fair value of the underlying Convertible Notes was $97,223 lower than the carrying value of the Convertible Notes on the date of the modification. The $97,223 difference was recorded as a discount to the debt with a gain on convertible note extinguishments in the accompanying condensed consolidated statements of operations for the three months ended December 31, 2017. The discount of $97,223 was then amortized from November 21, 2017 to December 31, 2017 totaling $15,756. During the three months ended December 31, 2017, interest on the principal was $32,502 and interest related to amortization of discounts related to the bifurcation of premium derivative liability, separation of warrants, revaluation discounts and issuance costs amounted to $261,749. The fair value changes related to the underlying premium conversion derivative and warrant liability amounted to a benefit of ($108,641) and an expense of $272,059, respectively, during the three month period ended December 31, 2017. As noted above, the Convertible Notes were converted into shares of common stock and not outstanding during the three month period ended December 31, 2018. 2017 Convertible Notes From October 2017 to May 2018, the Company issued convertible notes (the “2017 Convertible Notes”) in an aggregate principal amount of $1,540,000 that bear interest at a fixed rate of 8% per annum and warrants to purchase shares of the Company’s capital stock (the “New Warrants”). The Company initially entered into a subscription agreement with certain accredited investors and closed the initial private placement of the 2017 Convertible Notes in October 2017. In December 2017, the Company and holders of a majority in aggregate principal amount of the 2017 Convertible Notes entered into an amended and restated subscription agreement to amend the terms of the 2017 Convertible Notes and New Warrants. On December 31, 2018, the 2017 Convertible Notes were amended again to extend the maturity date from December 31, 2018 to June 30, 2019. The amendment was accounted for as a troubled debt restructuring given the Company’s financial condition and given the concession granted by the lenders with regards to pushing out the maturity date to June 30, 2019 with no corresponding compensation paid for the extension. The future undiscounted cash flows of the of the 2017 Convertible Notes as amended exceeded their carrying value as of December 31, 2018. As such, no gain was recognized during the three months ended December 31, 2018 and no adjustments were made to the 2017 Convertible Note carrying value. The 2017 Convertible Notes require the Company to repay the principal and accrued and unpaid interest thereon on June 30, 2019 (the “2017 Convertible Notes Maturity Date”). If the Company consummates an equity round of financing resulting in more than $3 million in gross proceeds before June 30, 2019 (the “2017 Convertible Notes Qualified Financing”), the outstanding principal and accrued and unpaid interest on the 2017 Convertible Notes shall automatically convert into the securities issued by the Company in the 2017 Convertible Notes Qualified Financing equal to the outstanding principal and accrued interest on the 2017 Convertible Notes divided by 80% of the price per share of the securities issued by the Company in the 2017 Convertible Notes Qualified Financing. The New Warrants also become exercisable upon a 2017 Convertible Notes Qualified Financing for an amount of shares equal to the number of shares received by the holder in the 2017 Convertible Notes Qualified Financing at the same price per share of the securities issued in the 2017 Convertible Notes Qualified Financing. Prior to the December 2017 amendment, if the Company had raised more than $3,000,000 in an equity financing before October 4, 2022, the outstanding principal and accrued and unpaid interest on the 2017 Convertible Notes would have automatically converted into the securities issued by the Company in such financing based on the greater number of such securities resulting from either (i) the outstanding principal and accrued interest on the 2017 Convertible Notes divided by $2.25 or (ii) the outstanding principal and accrued interest on the 2017 Convertible Notes multiplied by 1.25, divided by the price paid per security in such financing. The New Warrants would have also become exercisable in conjunction with the 2017 Convertible Notes Qualified Financing. Lastly, if a change of control transaction occurs prior to the earlier of a 2017 Convertible Notes Qualified Financing or the 2017 Convertible Notes Maturity Date, the 2017 Convertible Notes would, at the election of the holders of a majority of the outstanding principal of the 2017 Convertible Notes, either become payable on demand as of the closing date of such transaction, or become convertible into shares of common stock immediately prior to such transaction at a price per share equal to the lesser of (i) the per share value of the common stock as determined by the Board as if in connection with the granting of stock based compensation or in a private sale to a third party in an arms-length transaction or (ii) at the per share consideration to be paid in such transaction. Change of control means a merger or consolidation with another entity in which the Company’s stockholders do not own more than 50% of the outstanding voting power of the surviving entity or the disposition of all or substantially all of the Company’s assets. The New Warrants also become exercisable upon a change of control transaction for an amount of shares equal to the number of shares received by the holder upon conversion in connection with such transaction at the same price per share that the 2017 Convertible Notes converted in the change of control transaction. The December 2017 amendment resulted in a substantial modification to the original 2017 Convertible Notes whereby the maturity date was moved up to December 2018 from October 2022 and the terms associated with the embedded features were revised as described previously. The Company recorded the 2017 Convertible Note amendment under the provisions of extinguishment accounting. The fair value of the underlying Convertible Notes was $294,615 higher than the carrying value of the Convertible Notes net of unamortized debt discount on the date of the modification. The $294,615 difference as well as legal costs associated with the amendment in the amount of $8,945 were recorded as a loss on convertible notes extinguishment totaling $303,560 in the accompanying condensed consolidated statements of operations for the three months ended December 31, 2017. After the modification, there remained a debt discount of $27,371 of which $6,574 and $1,286 was amortized during the three months ended December 31, 2018 and 2017, respectively. The 2017 Convertible Notes contain a conversion discount in the event of a 2017 Convertible Notes Qualified Financing to equal the outstanding principal and accrued interest on the 2017 Convertible Notes divided by 80% of the price per share of the securities issued by the Company in the 2017 Convertible Notes Qualified Financing. The embedded feature qualified as an embedded derivative and was separated from its debt host. The bifurcation of the embedded derivative from its debt host resulted in a discount to the 2017 Convertible Notes in the amount of $128,525 for the convertible debt issued during the three months ended December 31, 2017; there were no issuances of 2017 Convertible Notes during the three months ended December 31, 2018. The discount is being amortized to interest expense over the term of the 2017 Convertible Notes using the straight-line method which approximates the effective interest method. The amortization expense was $62,158 and $3,815 for the three months ended December 31, 2018 and 2017, respectively. The embedded derivative is accounted for separately on a fair market value basis. The Company recorded the fair value changes of the premium debt conversion derivative associated with all of the 2017 Convertible Notes in the condensed consolidated statements of operations which amounted to an expense of $6,265 and $466 for the three months ended December 31, 2018 and 2017, respectively. The New Warrants were deemed to be a free-standing instrument and were accounted for as a liability given the variable number of shares issuable in connection with a change of control conversion event. A Monte Carlo simulation model was used to estimate the aggregate fair value of the New Warrants. Input assumptions used were as follows: risk-free interest rate of 2.52% and 2.94% as of December 31, 2018 and September 30, 2018, respectively; expected volatility of 50% as of December 31, 2018 and September 30, 2018; expected life of 5.25 and 5.21 years as of December 31, 2018 and September 30, 2018, respectively; and expected dividend yield of 0% as of December 31, 2018 and September 30, 2018. The underlying stock price used in the analysis was on a non-marketable basis and was according to the market approach, considering both the traded price and forward multiples from guideline public companies, using allocation and marketability-discount methodologies. The 2017 Convertible Note proceeds assigned to the New Warrants were zero and $336,571 during the three month period ended December 31, 2018 and 2017, respectively, which represented their fair value at issuance and were discounted from the 2017 Convertible Notes and reflected as a warrant liability. The discount was being amortized to interest expense over the term of the 2017 Convertible Notes using the straight-line method which approximates the effective interest method. The amortization expense was $163,060 and $9,971 for the three month period ended December 31, 2018 and 2017, respectively. The Company also recorded the fair value changes of the warrant liability associated with all of the 2017 Convertible Notes in the condensed consolidated statements of operations which amounted to an expense of $6,689 and a benefit of ($1,337) for the three months ended December 31, 2018 and 2017, respectively. In connection with the 2017 Convertible Notes, the Company incurred original cost of issuance in the amount of $8,133 which consisted of legal costs and was recorded as an issuance cost discount to the 2017 Convertible Notes, of which $1,431 and $157 was amortized to interest expense during the three months ended December 31, 2018 and 2017, respectively. |
Defined Contribution Plan
Defined Contribution Plan | 3 Months Ended |
Dec. 31, 2018 | |
Retirement Benefits [Abstract] | |
Defined Contribution Plan | NOTE 9 – Defined Contribution Plan The Company adopted a 401(k) defined contribution plan (the “401K Plan”) on January 1, 2017, which was amended and restated on March 1, 2018 (the “Restatement”), for all employees over age 21. Employees can defer up to 100% of their compensation through payroll withholdings into the 401K Plan subject to federal law limits. The Company began matching in the fourth quarter of 2017 on deferrals at 100% of deferrals up to 3% of one’s contributions and 50% on deferrals over 3%, but not exceeding 5% of one’s contributions up through the Restatement. The Company’s matching contributions to employee deferrals became discretionary after the Restatement. The Company may also make discretionary profit sharing contributions under the 401K Plan in the future, but it has not done so through December 31, 2018. Employee contributions and any employer matching contributions made to satisfy certain non-discrimination tests required by the Internal Revenue Code are 100% vested upon contribution. Discretionary employer matches to employee deferrals vest over a six year period beginning on the second anniversary of an employee’s date of hire. Discretionary profit sharing contributions vest over a five year period beginning on the first anniversary of an employee’s date of hire. The amount of matching contributions made during the three month period ended December 31, 2018 and 2017 was a benefit reduction of $(4,359) and $27,000, respectively. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | NOTE 10 – Stock-Based Compensation During the three month periods ended December 31, 2018 and 2017, stock-based services expense related to stock-based awards amounted to $118,980 and zero, respectively, and was included in general and administrative costs in the accompanying condensed consolidated statements of operations. Stock Options During the three month period ended December 31, 2018, under the 2017 Equity Incentive Plan (the “2017 Plan”), the Company granted 175,000 stock options to its scientific advisory board members where vesting commences on January 1, 2019 over a 36 month period based on a time of service vesting condition. The grant date fair value of the scientific advisory board member grants was $1.14 per share. No stock-based expense related to the scientific advisory board grants was recognized during the three month period ended December 31, 2018. There were no stock options granted during the three month period ended December 31, 2017. Lastly, there were no restricted stock award grants during any of the periods presented. The weighted-average assumptions used in the Black-Scholes option-pricing model are as follows for the stock options granted during the three month period ended December 31, 2018: 2018 Expected stock price volatility 49.8 % Expected life of options (years) 5.8 Expected dividend yield 0 % Risk free interest rate 2.8 % See other stock-based awards section below for stock-based award grants committed, but not formally issued as of December 31, 2018. During the three months ended December 31, 2018 and 2017, there was no vesting of formally issued stock options or restricted stock awards. No stock options were forfeited during the three months ended December 31, 2018 and 2017. As of December 31, 2018, 1,533,596 shares were available for future issuance on a combined basis under the 2016 Equity Incentive Plan and 2017 Plan. Unrecognized stock-based compensation was $0.2 million as of December 31, 2018. All of the unrecognized compensation cost related to the scientific advisory board grants. The unrecognized share-based expense is expected to be recognized over a weighted average period of 2.9 years. Other Stock-Based Awards 250,000 shares of common stock were reserved in February 2018 as a result of a consulting agreement for investor relations services executed in February 2018. Under the agreement, 50,000 shares of common stock were awarded during the three month period ended December 31, 2018 on a time-based vesting condition that was met in November 2018. The compensation expense related to the vested common shares was included in the total stock-based services expense referenced above which totaled $115,000 for the three month period ended December 31, 2018. The expense was based on the fair value of the underlying common stock at the point of vesting which was $2.30 per share. The underlying stock price used in the analysis was on a non-marketable basis and was according to the market approach, considering both the traded price and forward multiples from guideline public companies, using allocation and marketability-discount methodologies. As of November 2018, all shares under the February 2018 share reserve were issued, but were not eligible for issuance under either of the 2016 or 2017 Plans as the consulting contract was not with an individual. As of December 31, 2018, the Company had a formal obligation to issue future common stock options relating to a consulting agreement. The estimated liability associated with the vested portions of these awards was recorded in accrued expenses in the accompanying condensed consolidated balance sheets as of December 31, 2018. The corresponding stock-based services expense related to the stock-based award liability amounted to $3,980 during the three months ended December 31, 2018 and was included in general and administrative expense in the accompanying condensed consolidated statements of operations. There was no corresponding stock-based services expense during the three month period ended December 31, 2017. The number of option shares and pricing under the consulting agreement will not be set until the occurrence of the award date which is defined as the earlier to occur of a public offering, qualified financing, or June 30, 2019. The number of option shares under the agreement is based on a $3,000 monthly compensation amount divided by the fair value of the underlying common stock on the award date. The exercise price will also be set at the fair value of the underlying common stock on the award date. The liability associated with the unissued options was based on an option share equivalent estimate that reflects the portion of the award where performance vesting conditions have been met as of December 31, 2018 and was based on the fair value of the Company’s common stock on December 31, 2018 as the award date has not occurred. The common stock fair value on December 31, 2018 was $2.20 per share and was determined based on a non-marketable basis and was according to the market approach, considering both the traded price and forward multiples from guideline public companies, using allocation and marketability-discount methodologies. The total accrued liability for this award at December 31, 2018 was $15,133. The weighted-average assumptions used in the Black-Scholes option-pricing model are as follows for the stock- option liability during the three month period ended December 31, 2018: 2018 Expected stock price volatility 49.8 % Expected life of options (years) 5 Expected dividend yield 0 % Risk free interest rate 2.5 % Upon the issuance of all of the unissued options associated with the stock-based award liabilities, the estimated number of shares available for future issuance as of December 31, 2018 would be reduced from 1,533,596 shares to 1,518,596 shares as a result of the potential stock option issuance under the second consulting agreement. |
Income Taxes
Income Taxes | 3 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 11 – Income Taxes The effective tax rate for the three months ended December 31, 2018 and 2017 was zero percent. As a result of the analysis of all available evidence as of December 31, 2018 and September 30, 2018, the Company recorded a full valuation allowance on its net deferred tax assets. Consequently, the Company reported no income tax benefit during the three months ended December 31, 2018 and 2017. If the Company’s assumptions change and the Company believes that it will be able to realize these deferred tax assets, the tax benefits relating to any reversal of the valuation allowance on deferred tax assets will be recognized as a reduction of future income tax expense. If the assumptions do not change, each period the Company could record an additional valuation allowance on any increases in the deferred tax assets. |
Stockholders' Deficit
Stockholders' Deficit | 3 Months Ended |
Dec. 31, 2018 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Deficit | NOTE 12 – Stockholders' Deficit 2018 Private Placement From July 9, 2018 through November 30, 2018 (the final closing), the Company entered into subscription agreements (each, a "Purchase Agreement") with certain accredited investors (the "Purchasers"), pursuant to which the Company, in a private placement (the "2018 Private Placement"), agreed to issue and sell to the Purchasers units (each, a "Unit"), each consisting of (i) 1 share (each, a "Share") of common stock and (ii) a warrant to purchase 1 share of common stock at an initial exercise price of $3.00 per share (the "2018 Warrants"). The initial closing of the 2018 Private Placement was consummated on July 9, 2018. As of the termination of the 2018 Private Placement on December 12, 2018, the Company had issued and sold an aggregate of 615,200 Units at a price of $2.50 per Unit to the Purchasers, for total gross proceeds to the Company of $1,538,000 before deducting offering expenses (170,000 Units were sold during the three months ended December 31, 2018). Under the Purchase Agreement, the Company agreed to use the net proceeds from the 2018 Private Placement to pay the outstanding principal and accrued interest on its 2017 Convertible Notes if such notes did not convert prior to maturity, to pay the principal on its unsecured term loans, for research and development, clinical studies, legal fees and sales and marketing expenses, as well as working capital and general corporate purposes. The Company granted the Purchasers indemnification rights with respect to its representations, warranties and agreements under the Purchase Agreement. The 2018 Warrants are exercisable beginning on the date of issuance and will expire on July 9, 2023, five years from the date of the first closing. The 2018 Warrants were accounted for as free standing equity instruments and classified as additional paid-in capital in the accompanying condensed consolidated balance sheets based on their relative fair value to the underlying common shares issued. The fair value of the 2018 Warrants issued during the three months ended December 31, 2018 was $144,005 and was based on the Black-Scholes pricing model. Input assumptions used were as follows on a weighted average basis: a risk-free interest rate of 2.85%; expected volatility of 49.8%; expected life of 4.62 years; and expected dividend yield of 0%. The underlying stock price used in the analysis was on a non-marketable basis and was according to the market approach, considering both the traded price and forward multiples from guideline public companies, using allocation and marketability-discount methodologies. In connection with the 2018 Private Placement, the Company recorded issuance costs in the amount of $59,694 during the three month period ended December 31, 2018. The issuance costs included commissions to the brokers equal to 10% of the gross proceeds from the sale of the Units that qualify for the commission which amounted to $42,500. In addition to the brokers' commission, the issuance costs included the estimated value of the 5-year warrants to be issued to the brokers to purchase an amount of common stock equal to 10% of the total amount of qualifying Shares sold in the 2018 Private Placement at an exercise price of $3.45 per share upon the close of the 2018 Private Placement. A commission liability increase in the amount of $9,854 was recorded during the three months ended December 31, 2018 related to the 50,520 broker warrants issuable upon the close of the 2018 Private Placement. Lastly, third party legal costs in the amount $7,340 comprised the balance of the issuance costs incurred during the three months ended December 31, 2018. See Note 13 – Subsequent Events for changes in the commission structure under the 2018 Private Placement. In connection with the 2018 Private Placement, the Company entered into registration rights agreements with each of the Purchasers pursuant to which the Company agreed to file a registration statement with the SEC covering the resale of the shares of common stock sold in the 2018 Private Placement and the shares of common stock issuable upon exercise of the 2018 Warrants. The Company agreed to file such registration statement within 75 days of the final closing of the 2018 Private Placement. Each registration rights agreement included customary indemnification rights in connection with the registration statement. 2019 Private Placement On December 12, 2018, the Board of Directors of the Company terminated the 2018 Private Placement. On December 28, 2018 and December 31, 2018, the Company entered into Subscription Agreements (each, a "2019 Purchase Agreement") with certain accredited investors (the "New Purchasers"), pursuant to which the Company, in a new private placement (the "2019 Private Placement"), agreed to issue and sell Units (the "2019 Units") to the New Purchasers. The initial closing of the 2019 Private Placement was consummated on December 28, 2018. On December 28, 2018 and December 31, 2018, the Company issued and sold an aggregate of 160,000 2019 Units at $2.50 per Unit to the New Purchasers, for total gross proceeds to the Company of approximately $400,000 before deducting offering expenses. In connection with the 2019 Private Placement, the Company has agreed to issue and sell to accredited investors up to a maximum of 4,000,000 2019 Units (the "Maximum Offering") at a price of $2.50 per 2019 Unit for total gross proceeds to the Company of up to $10,000,000. The Maximum Offering may be increased by the Company in its sole discretion, without notice. If the Company issues the Maximum Offering amount, 4,000,000 shares of common stock would be issuable upon exercise of the warrants (the "2019 Warrants"). Under the 2019 Purchase Agreement, the Company has agreed to use the net proceeds from the 2019 Private Placement to pay the outstanding principal and accrued interest on its convertible promissory notes if such notes do not convert prior to maturity, to pay the principal on its unsecured term loans, for research and development, clinical studies, legal fees and sales and marketing expenses, as well as working capital and general corporate purposes. The Company has granted the New Purchasers indemnification rights with respect to its representations, warranties and agreements under the 2019 Purchase Agreement. The 2019 Warrants are exercisable beginning on the date of issuance and will expire on December 28, 2023, five years from the date of the first closing of the 2019 Private Placement. Prior to expiration, subject to the terms and conditions set forth in the 2019 Warrants, the holders may exercise the 2019 Warrants for shares of common stock by providing notice to the Company and paying the $3.00 per share exercise price for each share so exercised. The fair value of the 2019 Warrants issued during the three months ended December 31, 2018 was $134,048 and was based on the Black-Scholes pricing model. Input assumptions used were on a weighted average basis as follows: a risk-free interest rate of 2.53%; expected volatility of 49.8%; expected life of 5.0 years; and expected dividend yield of 0%. The underlying stock price used in the analysis was on a non-marketable basis and was according to the market approach, considering both the traded price and forward multiples from guideline public companies, using allocation and marketability-discount methodologies. In connection with the 2019 Private Placement, the Company recorded issuance costs in the amount of $89,622 as of December 31, 2018. In connection with the 2019 Private Placement, Paulson Investment Company, LLC ("Paulson") will receive a cash commission equal to 12% of the gross proceeds from the sale of the 2019 Units. In addition to the brokers' commission, the Company will issue 5-year warrants to Paulson to purchase an amount of Common Stock equal to 10% of the total amount of Shares sold in the 2019 Private Placement at an exercise price of $2.75 per share. The issuance costs included commissions to the broker equal to 12% of the gross proceeds from the sale of the 2019 Units and related expenses that amounted to $73,000. In addition to the broker's commission, the issuance costs included the estimated value of the 5-year warrants to be issued to the broker to purchase an amount of common stock equal to 10% of the total amount of Shares sold in the 2019 Private Placement, at an exercise price of $2.75 per share, upon the close of the 2019 Private Placement. A liability in the amount of $13,875 was recorded as of December 31, 2018 related to the 16,000 broker warrants issuable as of December 31, 2018 under the 2019 Private Placement. Lastly, third party legal costs in the amount $2,747 comprised the balance of the issuance costs incurred as of December 31, 2018. See Note 13 – Subsequent Events for subsequent 2019 Unit issuances and changes in the commission structure under the 2019 Private Placement. In connection with the 2019 Private Placement, the Company entered into a registration rights agreement with each of the New Purchasers, each dated as of the respective closing dates (each, a "Registration Rights Agreement"), pursuant to which the Company has agreed to file a registration statement with the SEC covering the resale of the shares of common stock sold in the 2019 Private Placement and the shares of common stock issuable upon exercise of the 2019 Warrants. The Company has agreed to file such registration statement within 75 days of the final closing of the 2019 Private Placement. Each Registration Rights Agreement includes customary indemnification rights in connection with the registration statement. Warrant Activity and Summary The following table summarizes warrant activity during the three month period ended December 31, 2018: Exercise Weighted Average Warrants Per Exercise Outstanding and exercisable at September 30, 2018 2,927,572 $ 1.80 - 3.00 $ 1.98 Issued 330,000 $ 3.00 $ 3.00 Exercised — $ — $ — Forfeited — $ — $ — Outstanding and exercisable at December 31, 2018 3,257,572 $ 1.80 - $3.00 $ 2.09 As of December 31, 2018, 66,520 warrants are committed to be issued related to the 2018 and 2019 Private Placements at an exercise price of $3.45 and $2.75 per share, respectively. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 13 – Subsequent Events 2019 Private Placement – Subsequent Issuances and Broker Compensation Change The Company issued 2019 Units for aggregate gross proceeds of $295,000 from January 1, 2019 through February 12, 2019. See Note 12 – Stockholders Deficit for more information on the 2019 Units. In February 2019, the Company amended its engagement letter with HRA Capital ("HRA"), acting through its affiliate, Corinthian Partners, LLC, each of which are affiliates of one of the Company's greater than 5% stockholders. Pursuant to the original agreement (prior to the amendment), the Company agreed to pay HRA 10% of the gross proceeds (the "HRA Fee") received by the Company in subsequent private placement transactions from investors with whom HRA or Corinthian Partners, LLC had material contact with for purposes of the engagement letter (the "Prospects"), provided such compensation would only be paid in connection with private placement transactions that closed within 12 months of the expiration of the engagement letter (the "Tail Period"). The Company agreed to issue to HRA warrants to purchase shares of Common Stock (or common stock equivalents) in an amount equal to 10% of the shares purchased by Prospects during the Tail Period ("HRA Warrants"). In February 2019, the Company and HRA agreed (i) to extend the Tail Period until June 30, 2019, (ii) to modify the HRA Fee so that HRA is entitled to receive a cash fee equal to 8% of the gross proceeds received by the Company from Prospects in all subsequent private placement transactions and (iii) to modify the HRA Warrants so that they are exercisable to purchase shares of Common Stock (or common stock equivalents) in an amount equal to 8% of the shares of Common Stock purchased by Prospects in subsequent private placements (collectively, the "HRA Amendments"). Upon issuance, the HRA Warrants will be immediately exercisable and expire five years from the closing of the related transaction. The cash commission and broker's commission to be received by Paulson were not impacted by the changes to the agreement between the Company and HRA. 2018 Private Placement – Broker Compensation Change In connection with the 2018 Private Placement, the Company agreed to pay the brokers a cash commission equal to 10% of the gross proceeds from the sale of the Units sold to investors by such brokers. In addition to the brokers' commission, the Company agreed to issue 5-year warrants to the brokers to purchase an amount of Common Stock equal to 10% of the total amount of shares sold by such brokers in the 2018 Private Placement, at an exercise price of $3.45 per share. Notwithstanding the Company's agreement to pay to brokers the 10% cash commission and issue warrants for 10% of the shares sold in the 2018 Private Placement, the HRA Amendments modified the broker commission arrangements with respect to HRA. HRA was the only broker in the 2018 Private Placement. Pursuant to the Company's engagement letter with HRA (acting through the registered broker-dealer, Corinthian Partners, LLC), as amended in February 2019 by the HRA Amendments, the Company agreed to pay HRA a cash fee equal to 8% of the gross proceeds received by the Company from Prospects in the 2018 Private Placement and to issue warrants exercisable to purchase shares of Common Stock (or common stock equivalents) in an amount equal to 8% of the shares of Common Stock purchased by Prospects in the 2018 Private Placement. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Management's Use of Estimates | Management’s Use of Estimates The preparation of condensed consolidated 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 condensed consolidated financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash. The Company’s cash is held by one financial institution in the United States. Amounts on deposit may at times exceed federally insured limits. Management believes that the financial institution is financially sound, and accordingly, minimal credit risk exists with respect to the financial institution. As of December 31, 2018, the Company did have deposits in excess of federally insured amounts by $134,109. |
Common Stock Valuation | Common Stock Valuation Due to the limited market liquidity for the Company’s common stock, the Company utilized methodologies in accordance with the framework of the American Institute of Certified Public Accountants’ Technical Practice Aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation, to estimate the fair value of its common stock. The valuation methodology includes estimates and assumptions that require the Company’s judgment. These estimates and assumptions include a number of objective and subjective factors, including external market conditions affecting the biotechnology industry sector, and the likelihood of achieving a liquidity event, such as an offering or sale. Significant changes to the key assumptions used in the valuations may result in different fair values of common stock at each valuation date. The Company estimated its enterprise value on a continuing operations basis, using the market approach, with certain adjustments relating to the thinly traded status of the Company. The traded price of the Company was deemed not to be an entirely reliable indication of fair market value given the lack of trading liquidity. Therefore, in addition to applying partial weighting to the traded price, the Company relied on forward revenue multiples from guideline public companies (“GPC”) for calendar year 2019 and 2020. The resulting equity value from the GPC method was allocated to common stock using the option pricing method, and a discount for lack of marketability was applied. Based on the above methodology and weightings, the Company derived a valuation conclusion of $2.20 and $2.30 per common share as of December 31, 2018 and September 30, 2018, respectively. The fair value the Company’s common stock is used as an input into the fair value determination of the warrants, stock option or other equity awards that the Company has issued or are outstanding liabilities at the reporting date. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company’s accounting for fair value measurements of assets and liabilities that are recognized or disclosed at fair value in the condensed consolidated financial statements on a recurring or nonrecurring basis adheres to the Financial Accounting Standards Board (FASB) fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: ● Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the Company at the measurement date. ● Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. ● Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. As of December 31, 2018 and September 30, 2018, the fair values of cash, other assets, accounts payable, accrued expenses and the unsecured loans approximated their carrying values because of the short-term nature of these assets or liabilities. The estimated fair value of the convertible promissory notes of the Company was based on amortized cost which was deemed to approximate fair value. The fair value of the warrant liability and the premium conversion derivatives associated with the convertible promissory notes of the Company were based on both the estimated fair value of our common stock of $2.20 and $2.30 as of December 31, 2018 and September 30, 2018, respectively, and cash flow models discounted at current implied market rates evidenced in recent arms-length transactions representing expected returns by market participants for similar instruments and are based on Level 3 inputs. There were no transfers between fair value hierarchy levels during the three months ended December 31, 2018 and 2017. The fair value of financial instruments measured on a recurring basis is as follows: As of December 31, 2018 Description Total Level 1 Level 2 Level 3 Liabilities: Warrant liability $ 823,844 $ — $ — $ 823,844 Premium conversion derivatives 314,660 — — 314,660 Total liabilities at fair value $ 1,138,504 $ — $ — $ 1,138,504 As of September 30, 2018 Description Total Level 1 Level 2 Level 3 Liabilities: Warrant liability $ 817,155 $ — $ — $ 817,155 Premium conversion derivatives 308,395 — — 308,395 Total liabilities at fair value $ 1,125,550 $ — $ — $ 1,125,550 The following table provides a roll-forward of the warrant liability and premium debt conversion derivatives measured at fair value on a recurring basis using unobservable level 3 inputs for the three month periods ended December 31, 2018 and 2017: 2018 2017 Warrant liability Balance as of beginning of period – September 30 $ 817,155 $ 774,172 Value assigned to warrants in connection with convertible promissory notes — 336,571 Change in fair value of warrant liability 6,689 270,722 Balance as of end of period – December 31 $ 823,844 $ 1,381,465 2018 2017 Premium debt conversion derivatives Balance as of beginning of period – September 30 $ 308,395 $ 441,823 Value assigned to the underlying derivatives in connection with convertible promissory notes — 128,525 Change in fair value of premium debt conversion derivatives 6,265 (108,174 ) Balance as of end of period – December 31 $ 314,660 $ 462,174 |
Intellectual Property | Intellectual Property The Company has entered into two licensing agreements with major research institutions, which allows for access to certain patented technology and know-how. Payments under those agreements are capitalized and amortized to general and administrative expense over the expected useful life of the acquired technology. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company evaluates its long-lived assets, which consists entirely of licensed intellectual property for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. The Company assesses the recoverability of long-lived assets by determining whether or not the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the asset is considered to be impaired, the amount of any impairment is measured as the difference between the carrying value and the fair value of the impaired asset. Through December 31, 2018, the Company has not impaired any long-lived assets. |
Debt Issuance Costs | Debt Issuance Costs Debt issuance costs are recorded as a reduction of the convertible promissory notes when applicable. Amortization of debt issuance costs is calculated using the straight-line method over the term of the convertible promissory notes, which approximates the effective interest method, and is recorded in interest expense in the accompanying condensed consolidated statements of operations. |
Research and Development Costs | Research and Development Costs Research and development costs are charged to expense as incurred. Research and development expenses may include costs incurred in performing research and development activities, including clinical trial costs, manufacturing costs for both clinical and pre-clinical materials as well as other contracted services, license fees, and other external costs. Nonrefundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity is performed or when the goods have been received, rather than when payment is made, in accordance with ASC 730, Research and Development |
Warrant Liability | Warrant Liability The Company issued warrants to purchase equity securities in connection with the issuance or amendment of the convertible promissory notes. The Company accounts for these warrants as a liability at fair value when the number of shares is not fixed and determinable in cases where warrant pricing protections in future equity financings are not available to other common stockholders. Additionally, issuance costs associated with the warrant liability are expensed as incurred and reflected as interest expense in the accompanying condensed consolidated statements of operations. The Company adjusts the liability for changes in fair value until the earlier of the exercise or expiration of the warrants for any period when pricing protections in future equity financings remain in place, or until such time, if any, as the number of shares to be exercised becomes fixed, at which point the warrants will be classified in stockholders’ (deficit) equity provided that there are sufficient authorized and unissued shares of common stock to settle the warrants and redeem any other contracts that may require settlement in shares of common stock. Any future change in fair value of the warrant liability, when outstanding, is recognized in the condensed consolidated statements of operations. |
Premium Debt Conversion Derivatives | Premium Debt Conversion Derivatives The Company evaluates all conversion and redemption features contained in a debt instrument to determine if there are any embedded derivatives that require separation from the host debt instrument. An embedded derivative that requires separation is bifurcated from its host debt instrument and a corresponding discount to the host debt instrument is recorded. The discount is amortized and recorded to interest expense over the term of the host debt instrument using the straight-line method which approximates the effective interest method. The separated embedded derivative is accounted for separately on a fair market value basis. The Company records the fair value changes of a separated embedded derivative at each reporting period in the condensed consolidated statements of operations. The Company determined that the redemption features under the convertible promissory notes qualified as embedded derivatives and were separated from their debt hosts. |
Income Taxes | Income Taxes For the Company, income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax base and operating loss and tax credit carryforwards. 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. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. |
Net Loss Per Share | Net Loss Per Share For the Company, basic loss per share of common stock is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted earnings or loss per share of common stock is computed similarly to basic earnings or loss per share except the weighted average shares outstanding are increased to include additional shares from the assumed exercise of any common stock equivalents, if dilutive. The Company’s convertible promissory notes, warrants, and stock options while outstanding are considered common stock equivalents for this purpose. Diluted earnings is computed utilizing the treasury method for the warrants and stock options. Diluted earnings with respect to the convertible promissory notes utilizing the if-converted method was not applicable during the three month periods ended December 31, 2018 and 2017 as no conditions required for conversion had occurred during these periods. No incremental common stock equivalents were included in calculating diluted loss per share because such inclusion would be anti-dilutive given the net loss reported for the three month periods ended December 31, 2018 and 2017. The following potential common shares were not considered in the computation of diluted net loss per share as their effect would have been anti-dilutive for the three month periods ended December 31, 2018 and 2017: 2018 2017 Warrants 3,257,572 (1) 189,750 (1) Stock options 543,216 365,716 (1) There are additional potential warrants to be included which will be known, if and when a qualified financing event greater than $3 million or a change of control transaction occurs in the future. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share, Distinguishing Liabilities from Equity and Derivatives and Hedging In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting , Revenue from Contracts with Customers . In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (ASU 2018-13). ● Removals: 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. ● Modifications: for investments in certain entities that calculate net asset value, an entity is required to disclose the timing of liquidation of an investee’s assets and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the entity or announced the timing publicly; and the amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date. ● Additions: the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period; and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. This guidance is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should all be applied prospectively for only the most recent interim or annual period presented in the initial year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted. An entity is permitted to early adopt any removed or modified disclosures upon issuance of ASU 2018-13 and delay adoption of the additional disclosures until their effective date. The Company is currently evaluating the impact of the new guidance on its financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of fair value of financial instruments measured on a recurring basis | As of December 31, 2018 Description Total Level 1 Level 2 Level 3 Liabilities: Warrant liability $ 823,844 $ — $ — $ 823,844 Premium conversion derivatives 314,660 — — 314,660 Total liabilities at fair value $ 1,138,504 $ — $ — $ 1,138,504 As of September 30, 2018 Description Total Level 1 Level 2 Level 3 Liabilities: Warrant liability $ 817,155 $ — $ — $ 817,155 Premium conversion derivatives 308,395 — — 308,395 Total liabilities at fair value $ 1,125,550 $ — $ — $ 1,125,550 |
Schedule of warrant liability and premium debt conversion derivatives measured at fair value on a recurring basis | 2018 2017 Warrant liability Balance as of beginning of period – September 30 $ 817,155 $ 774,172 Value assigned to warrants in connection with convertible promissory notes — 336,571 Change in fair value of warrant liability 6,689 270,722 Balance as of end of period – December 31 $ 823,844 $ 1,381,465 2018 2017 Premium debt conversion derivatives Balance as of beginning of period – September 30 $ 308,395 $ 441,823 Value assigned to the underlying derivatives in connection with convertible promissory notes — 128,525 Change in fair value of premium debt conversion derivatives 6,265 (108,174 ) Balance as of end of period – December 31 $ 314,660 $ 462,174 |
Schedule of computation of diluted net loss per share | 2018 2017 Warrants 3,257,572 (1) 189,750 (1) Stock options 543,216 365,716 (1) There are additional potential warrants to be included which will be known, if and when a qualified financing event greater than $3 million or a change of control transaction occurs in the future. |
Intangibles (Tables)
Intangibles (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | Useful Life Net Intangibles, September 30, 2018 12-13 Years $ 200,081 Less: amortization (5,311 ) Net Intangibles, December 31, 2018 $ 194,770 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses | December 31, 2018 September 30, 2018 License fees $ 65,000 $ 65,000 Legal services 848,708 833,470 Accrued issuance costs 229,201 204,000 Accrued payroll 316,350 276,639 Advances 40,000 — Other 241,634 211,913 $ 1,740,893 $ 1,591,022 |
Convertible Promissory Notes _2
Convertible Promissory Notes and Warrant Agreements (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of convertible promissory notes and warrant agreements | As of December 31, As of 2017 convertible promissory notes, net of discounts $ 1,540,000 $ 1,306,776 Accrued interest 117,828 87,028 $ 1,657,828 $ 1,393,804 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Stock options [Member] | |
Offsetting Assets [Line Items] | |
Schedule of weighted-average assumptions used Black-Scholes option-pricing model | 2018 Expected stock price volatility 49.8 % Expected life of options (years) 5.8 Expected dividend yield 0 % Risk free interest rate 2.8 % |
Stock- option liability [Member] | |
Offsetting Assets [Line Items] | |
Schedule of weighted-average assumptions used Black-Scholes option-pricing model | 2018 Expected stock price volatility 49.8 % Expected life of options (years) 5 Expected dividend yield 0 % Risk free interest rate 2.5 % |
Stockholders' Deficit (Tables)
Stockholders' Deficit (Tables) | 3 Months Ended |
Dec. 31, 2018 | |
Stockholders' Equity Note [Abstract] | |
Summary of warrant activity | Exercise Weighted Average Warrants Per Exercise Outstanding and exercisable at September 30, 2018 2,927,572 $ 1.80 - 3.00 $ 1.98 Issued 330,000 $ 3.00 $ 3.00 Exercised — $ — $ — Forfeited — $ — $ — Outstanding and exercisable at December 31, 2018 3,257,572 $ 1.80 - $3.00 $ 2.09 |
Going Concern (Details)
Going Concern (Details) - USD ($) | 3 Months Ended | |
Dec. 31, 2018 | Sep. 30, 2018 | |
Going Concern (Textual) | ||
Accumulated deficit | $ 11,810,534 | $ 10,457,710 |
Unsecured loan | 528,000 | |
Short-term promissory note | 253,000 | |
Convertible promissory note financing | 1,625,120 | |
Second convertible promissory note financing | 1,540,000 | |
Convertible promissory note, subscription | 2,500,000 | |
Convertible promissory note, subscription one | 2,000,000 | |
Gross proceeds were raised out | 1,900,000 | |
Maximum subscription amount | $ 11,800,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | Dec. 31, 2018 | Sep. 30, 2018 |
Liabilities: | ||
Warrant liability | $ 823,844 | $ 817,155 |
Premium conversion derivatives | 314,660 | 308,395 |
Total liabilities at fair value | 1,138,504 | 1,125,550 |
Level 1 [Member] | ||
Liabilities: | ||
Warrant liability | ||
Premium conversion derivatives | ||
Total liabilities at fair value | ||
Level 2 [Member] | ||
Liabilities: | ||
Warrant liability | ||
Premium conversion derivatives | ||
Total liabilities at fair value | ||
Level 3 [Member] | ||
Liabilities: | ||
Warrant liability | 823,844 | 817,155 |
Premium conversion derivatives | 314,660 | 308,395 |
Total liabilities at fair value | $ 1,138,504 | $ 1,125,550 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) - Warrant liability [Member] - USD ($) | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Schedule of warrant liability [Abstract] | ||
Balance as of beginning of period | $ 817,155 | $ 774,172 |
Value assigned to warrants in connection with convertible promissory and short-term notes | 336,571 | |
Change in fair value of warrant liability | 6,689 | 270,722 |
Balance as of end of period | $ 823,844 | $ 1,381,465 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details 2) - Premium debt conversion derivatives [Member] - USD ($) | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Schedule of Premium debt conversion derivative [Abstract] | ||
Balance as of beginning of period | $ 462,174 | $ 441,823 |
Value assigned to the underlying derivatives in connection with convertible promissory notes | 128,525 | |
Change in fair value of premium debt conversion derivatives | 6,265 | (108,174) |
Balance as of end of period | $ 314,660 | $ 462,174 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details 3) - shares | 3 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | ||
Stock options [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive computation of diluted net loss per share | 543,216 | 365,716 | |
Warrants [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive computation of diluted net loss per share | [1] | 3,257,572 | 189,750 |
[1] | There are additional potential warrants to be included which will be known, if and when a qualified financing event greater than $3 million or a change of control transaction occurs in the future. |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies (Details Textual) | 3 Months Ended | |
Dec. 31, 2018USD ($)Agreements$ / shares | Sep. 30, 2018$ / shares | |
Summary of Significant Accounting Policies (Textual) | ||
Estimated fair value of our common stock | $ / shares | $ 2.20 | $ 2.30 |
Additional qualified financing amount triggering future warrant issuance | $ 3,000,000 | |
Number of licensing agreements | Agreements | 2 | |
Federally insured amounts | $ 134,109 |
Intangibles (Details)
Intangibles (Details) | 3 Months Ended |
Dec. 31, 2018USD ($) | |
Schedule of Intangible Assets [Abstract] | |
Net Intangibles, Beginning Balance | $ 200,081 |
Less: amortization | (5,311) |
Net Intangibles, Ending Balance | $ 194,770 |
Minimum [Member] | |
Schedule of Intangible Assets [Abstract] | |
Net Intangibles, Useful Life | 12 years |
Maximum [Member] | |
Schedule of Intangible Assets [Abstract] | |
Net Intangibles, Useful Life | 13 years |
Intangibles (Details Textual)
Intangibles (Details Textual) - USD ($) | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Intangibles (Textual) | ||
Amortization expense | $ 5,311 | $ 4,265 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) | Dec. 31, 2018 | Sep. 30, 2018 |
Payables and Accruals [Abstract] | ||
License fees | $ 65,000 | $ 65,000 |
Legal services | 848,708 | 833,470 |
Accrued issuance costs | 229,201 | 204,000 |
Accrued payroll | 316,350 | 276,639 |
Advances | 40,000 | |
Other | 241,634 | 211,913 |
Total accrued expenses | $ 1,740,893 | $ 1,591,022 |
Short-Term Promissory Notes a_2
Short-Term Promissory Notes and Unsecured Loan (Details Textual) - USD ($) | Mar. 20, 2018 | Nov. 30, 2018 | Jul. 02, 2018 | May 17, 2018 | Aug. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2018 |
Short-Term Promissory Notes and Unsecured Loan (Textual) | ||||||||
Short-term unsecured loan | $ 528,000 | $ 283,000 | ||||||
Amortization charged to interest expense related to issuance costs | $ 233,223 | $ 298,605 | ||||||
November 2017 amendment [Member] | ||||||||
Short-Term Promissory Notes and Unsecured Loan (Textual) | ||||||||
Loss on short-term notes extinguishment | 144,577 | |||||||
Issuance of additional warrants in connection with short term notes | 117,280 | |||||||
Equity warrants and issuance costs | $ 21,627 | |||||||
Short-Term Promissory Notes [Member] | ||||||||
Short-Term Promissory Notes and Unsecured Loan (Textual) | ||||||||
Aggregate gross proceeds of short-term unsecured promissory notes | $ 253,000 | |||||||
Short-term debt, description | (i) convert the outstanding principal and accrued and unpaid interest (the “Outstanding Balance”) under the Short-Term Notes into shares of the Company’s common stock based on the Outstanding Balance divided by $1.80 per share (the “Short-Term Note Conversion Shares”); (ii) cancel and extinguish the Short-Term Notes; and (iii) amend and restate the Replacement Warrants and Additional Warrants, as described more fully below, to make them immediately exercisable upon the conversion, at a per share exercise price equal to $1.80 per share. As consideration for the early conversion of the Short-Term Notes, the Company issued each subscriber a new warrant (the “Short-Term Note Payment Warrants”), exercisable for up to the number of shares of common stock equal to the number of Short-Term Note Conversion Shares received by such subscriber; at a per share exercise price of $1.80 per share. The Short-Term Note Payment Warrants became exercisable commencing on July 2, 2018, and expire on November 21, 2021. | |||||||
Unsecured Loan [Member] | ||||||||
Short-Term Promissory Notes and Unsecured Loan (Textual) | ||||||||
Short-term unsecured promissory notes maturity date | Mar. 20, 2019 | May 17, 2019 | ||||||
Gross proceeds from unsecured loan | $ 115,000 | $ 168,000 | ||||||
Gross proceeds upon equity qualified financing | $ 3,000,000 | $ 5,000,000 | ||||||
Unsecured Loan [Member] | Two promissory notes [Member] | ||||||||
Short-Term Promissory Notes and Unsecured Loan (Textual) | ||||||||
Short-term unsecured promissory notes maturity date | May 17, 2019 | |||||||
Gross proceeds from unsecured loan | $ 45,000 | |||||||
Amount of stockholder owning | $ 1,000,000 | |||||||
Stockholder ownership percentage | 5.00% | |||||||
Gross proceeds upon equity qualified financing | $ 5,000,000 | |||||||
Unsecured Loan [Member] | One promissory note [Member] | ||||||||
Short-Term Promissory Notes and Unsecured Loan (Textual) | ||||||||
Short-term unsecured promissory notes maturity date | Dec. 12, 2019 | |||||||
Gross proceeds from unsecured loan | $ 100,000 | |||||||
Stockholder ownership percentage | 5.00% | |||||||
Gross proceeds upon equity qualified financing | $ 5,000,000 |
Convertible Promissory Notes _3
Convertible Promissory Notes and Warrant Agreements (Details) - USD ($) | Dec. 31, 2018 | Sep. 30, 2018 |
Short-term Debt [Line Items] | ||
Accrued interest | $ 117,828 | $ 87,028 |
Convertible promissory notes, net | 1,657,828 | 1,393,804 |
2017 convertible promissory notes, net of discounts [Member] | ||
Short-term Debt [Line Items] | ||
Convertible promissory notes, net | $ 1,540,000 | $ 1,306,776 |
Convertible Promissory Notes _4
Convertible Promissory Notes and Warrant Agreements (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Jul. 02, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2018 | May 31, 2018 | Nov. 30, 2017 | Jun. 30, 2017 | |
Convertible Promissory Notes and Warrant Agreements (Textual) | |||||||
Loss on convertible notes extinguishment | $ (350,914) | ||||||
Conversion derivative related to convertible promissory notes | 128,525 | ||||||
New Warrants [Member] | |||||||
Convertible Promissory Notes and Warrant Agreements (Textual) | |||||||
Fair value of warrants risk-free interest rate | 2.52% | 2.94% | |||||
Fair value assumption expected volatility rate | 50.00% | 50.00% | |||||
Fair value assumption expected term | 5 years 3 months | 5 years 2 months 16 days | |||||
Fair value assumption expected dividend rate | 0.00% | 0.00% | |||||
Convertible promissory note proceeds assigned to warrants | $ 0 | $ 336,571 | |||||
Amortization expense | 163,060 | $ 9,971 | |||||
Fair value changes of warrant liability | 6,689 | (1,337) | |||||
Private placement agent [Member] | |||||||
Convertible Promissory Notes and Warrant Agreements (Textual) | |||||||
Cost of issuance | $ 59,694 | ||||||
2017 Convertible Note amendment [Member] | |||||||
Convertible Promissory Notes and Warrant Agreements (Textual) | |||||||
Convertible notes bear interest at fixed rate | 50.00% | ||||||
Maturity date, description | Maturity date was moved up to December 2018 from October 2022 | ||||||
Amortization expense | $ 6,574 | 1,286 | |||||
Amortization of discount to convertible notes | $ 27,371 | ||||||
Description of convertible notes issuance costs | Prior to the December 2017 amendment, if the Company had raised more than $3,000,000 in an equity financing before October 4, 2022, the outstanding principal and accrued and unpaid interest on the 2017 Convertible Notes would have automatically converted into the securities issued by the Company in such financing based on the greater number of such securities resulting from either (i) the outstanding principal and accrued interest on the 2017 Convertible Notes divided by $2.25 or (ii) the outstanding principal and accrued interest on the 2017 Convertible Notes multiplied by 1.25, divided by the price paid per security in such financing. The New Warrants would have also become exercisable in conjunction with the 2017 Convertible Notes Qualified Financing. | ||||||
Percentage of common stock purchase warrants | 80.00% | ||||||
Fair value change of the amended convertible notes carrying value at time of the amendment resulting in note discount | $ 294,615 | 294,615 | |||||
Loss on convertible notes extinguishment | 8,945 | ||||||
2016 Convertible Promissory Notes [Member] | |||||||
Convertible Promissory Notes and Warrant Agreements (Textual) | |||||||
Warrants exercisable date of issuance and expire | Nov. 21, 2021 | ||||||
Conversion agreements, description | (i) convert the Outstanding Balance under the Convertible Notes into shares of the Company's common stock based on the Outstanding Balance divided by $1.80 per share (the "2016 Note Conversion Shares"); (ii) cancel and extinguish the Convertible Notes; and (iii) amend and restate the Warrants to make them immediately exercisable upon the conversion, at a per share exercise price equal to $1.80 per share. As consideration for the early conversion of the Convertible Notes, the Company issued each subscriber an additional new warrant (the "2016 Note Payment Warrants"), exercisable for up to the number of shares of common stock equal to the number of 2016 Note Conversion Shares received by such subscriber; at a per share exercise price of $1.80 per share. | ||||||
Outstanding principal | $ 1,625,120 | ||||||
Interest on principal amount | 32,502 | ||||||
Interest related to amortization of discounts related to bifurcation of premium derivative liability, separation of warrants, revaluation discounts and issuance costs amount | 261,749 | ||||||
Fair value changes related to underlying premium conversion derivative and warrant liability amounted to benefit | (108,641) | ||||||
Fair value changes related to underlying premium conversion derivative and warrant liability amounted to expense | 272,059 | ||||||
2016 Convertible Promissory Notes [Member] | November 2017 amendment [Member] | |||||||
Convertible Promissory Notes and Warrant Agreements (Textual) | |||||||
Amortization expense | 15,756 | ||||||
Amortization of discount to convertible notes | 97,223 | ||||||
Discount to debt with gain on convertible note extinguishments | 97,223 | ||||||
Fair value change of the amended convertible notes carrying value at time of the amendment resulting in note discount | $ 97,223 | ||||||
2017 Convertible Notes [Member] | |||||||
Convertible Promissory Notes and Warrant Agreements (Textual) | |||||||
Convertible notes bear interest at fixed rate | 8.00% | ||||||
Principal amount | $ 1,540,000 | ||||||
Maturity date, description | Extend the maturity date from December 31, 2018 to June 30, 2019. | ||||||
Gross proceeds of equity qualified financing | $ 3,000,000 | ||||||
Description of outstanding principal and accrued interest | If the Company consummates an equity round of financing resulting in more than $3 million in gross proceeds before June 30, 2019 (the "2017 Convertible Notes Qualified Financing"), the outstanding principal and accrued and unpaid interest on the 2017 Convertible Notes shall automatically convert into the securities issued by the Company in the 2017 Convertible Notes Qualified Financing equal to the outstanding principal and accrued interest on the 2017 Convertible Notes divided by 80% of the price per share of the securities issued by the Company in the 2017 Convertible Notes Qualified Financing. | ||||||
Loss on convertible notes extinguishment | 303,560 | ||||||
Conversion derivative related to convertible promissory notes | 128,525 | ||||||
2017 Convertible Notes [Member] | New Warrants [Member] | |||||||
Convertible Promissory Notes and Warrant Agreements (Textual) | |||||||
Amortization of discount to convertible notes | 1,431 | 157 | |||||
Cost of issuance | 8,133 | ||||||
2017 Convertible Notes [Member] | Private placement agent [Member] | |||||||
Convertible Promissory Notes and Warrant Agreements (Textual) | |||||||
Amortization expense | 62,158 | 3,815 | |||||
Fair value changes on premium debt conversion derivative | $ 6,265 | $ 466 |
Defined Contribution Plan (Deta
Defined Contribution Plan (Details) - USD ($) | Mar. 01, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Defined Contribution Plan (Textual) | |||
Employees defer compensation, percentage | 100.00% | ||
Employee deferrals contributions, description | The Company began matching in the fourth quarter of 2017 on deferrals at 100% of deferrals up to 3% of one's contributions and 50% on deferrals over 3%, but not exceeding 5% of one's contributions up through the Restatement. | ||
Employee contributions, vesting percentage | 100.00% | ||
Employee deferrals, vesting term | 6 years | ||
Contributions cost | $ (4,359) | $ 27,000 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) | 3 Months Ended |
Dec. 31, 2018 | |
Offsetting Assets [Line Items] | |
Expected stock price volatility | 49.80% |
Expected life of options (years) | 4 years 7 months 13 days |
Expected dividend yield | 0.00% |
Risk free interest rate | 2.85% |
Stock options [Member] | |
Offsetting Assets [Line Items] | |
Expected stock price volatility | 49.80% |
Expected life of options (years) | 5 years 9 months 18 days |
Expected dividend yield | 0.00% |
Risk free interest rate | 2.80% |
Stock- option liability [Member] | |
Offsetting Assets [Line Items] | |
Expected stock price volatility | 49.80% |
Expected life of options (years) | 5 years |
Expected dividend yield | 0.00% |
Risk free interest rate | 2.50% |
Stock-Based Compensation (Det_2
Stock-Based Compensation (Details Textual) - USD ($) | 3 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Feb. 28, 2018 | |
Stock-Based Compensation (Textual) | |||
Stock-based services expense related to stock-based awards amount | $ 115,000 | ||
Unrecognized stock-based compensation | $ 200,000 | ||
Unrecognized share-based expense is expected to be recognized over a weighted average period | 2 years 10 months 25 days | ||
General and administrative costs [Member] | |||
Stock-Based Compensation (Textual) | |||
Stock-based services expense related to stock-based awards amount | $ 118,980 | $ 0 | |
Other Stock-Based Awards [Member] | |||
Stock-Based Compensation (Textual) | |||
Reserved shares of common stock for issuance | 250,000 | ||
Fair value of common stock price per share | $ 2.20 | ||
Monthly compensation amount | $ 3,000 | ||
Vested shares | 50,000 | ||
Vesting per share | $ 2.30 | ||
Stock-based services expense related to stock-based awards amount | $ 3,980 | ||
Total accrued liability | $ 15,133 | ||
Other Stock-Based Awards [Member] | Maximum [Member] | |||
Stock-Based Compensation (Textual) | |||
Reserved shares of common stock for issuance | 1,533,596 | ||
Other Stock-Based Awards [Member] | Minimum [Member] | |||
Stock-Based Compensation (Textual) | |||
Reserved shares of common stock for issuance | 1,518,596 | ||
Stock Options [Member] | |||
Stock-Based Compensation (Textual) | |||
Number of granted stock options | 175,000 | ||
Vesting term, description | Vesting commences on January 1, 2019 over a 36 month period. | ||
Grant date fair value of options price per share | $ 1.14 | ||
Stock Options [Member] | 2016 and 2017 Plans [Member] | |||
Stock-Based Compensation (Textual) | |||
Reserved shares of common stock for issuance | 1,533,596 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Taxes (Textual) | ||
Effective tax rate | 0.00% | 0.00% |
Stockholders' Deficit (Details)
Stockholders' Deficit (Details) - Warrant [Member] | 3 Months Ended |
Dec. 31, 2018$ / sharesshares | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Warrants, Outstanding and exercisable Beginning | shares | 2,927,572 |
Warrants, Issued | shares | 330,000 |
Warrants, Exercised | shares | |
Warrants, Forfeited | shares | |
Warrants, Outstanding and exercisable Ending | shares | 3,257,572 |
Exercise Price Per Warrant, Issued | $ 3 |
Exercise Price Per Warrant, Exercised | |
Exercise Price Per Warrant, Forfeited | |
Weighted Average Exercise Price, Outstanding and exercisable Beginning | 1.98 |
Weighted Average Exercise Price, Issued | 3 |
Weighted Average Exercise Price, Exercised | |
Weighted Average Exercise Price, Forfeited | |
Weighted Average Exercise Price, Outstanding and exercisable Ending | 2.09 |
Maximum [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Exercise Price Per Warrant, Outstanding and exercisable Beginning | 3 |
Exercise Price Per Warrant, Outstanding and exercisable Ending | 3 |
Minimum [Member] | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Exercise Price Per Warrant, Outstanding and exercisable Beginning | 1.80 |
Exercise Price Per Warrant, Outstanding and exercisable Ending | $ 1.80 |
Stockholders' Deficit (Details
Stockholders' Deficit (Details Textual) - USD ($) | Dec. 12, 2018 | Dec. 28, 2018 | Nov. 30, 2018 | Dec. 31, 2018 | Sep. 30, 2018 | Aug. 03, 2018 |
Stockholders' Deficit (Textual) | ||||||
Maximum Shares Issuable | 615,200 | 170,000 | ||||
Deducting offering expenses | $ 1,538,000 | |||||
Offering price, per share | $ 2.50 | |||||
Warrant issued | 144,005 | |||||
Risk free interest rate | 2.85% | |||||
Expected stock price volatility | 49.80% | |||||
Expected life of options (years) | 4 years 7 months 13 days | |||||
Expected dividend yield | 0.00% | |||||
Exercise price, per share | $ 2.75 | |||||
Liability | $ 5,535,570 | $ 4,614,611 | ||||
Legal costs | 848,708 | $ 833,470 | ||||
Brokerage commission | $ 73,000 | |||||
Paulson [Member] | ||||||
Stockholders' Deficit (Textual) | ||||||
Cash commission, percentage | 12.00% | |||||
Exercise price, per share | $ 2.75 | |||||
Warrant [Member] | ||||||
Stockholders' Deficit (Textual) | ||||||
Warrants exercisable, term | 5 years | |||||
Common Stock [Member] | ||||||
Stockholders' Deficit (Textual) | ||||||
Maximum offering, units | 4,000,000 | |||||
2018 Private Placement [Member] | ||||||
Stockholders' Deficit (Textual) | ||||||
Purchase agreement, description | (i) 1 share (each, a “Share”) of common stock and (ii) a warrant to purchase 1 share of common stock at an initial exercise price of $3.00 per share (the “2018 Warrants”). | |||||
Warrant issued | 50,520 | |||||
Cost of issuance | $ 59,694 | |||||
Cash commission, percentage | 10.00% | |||||
Exercise price, per share | $ 3.45 | |||||
Common stock purchase price, per share | 10.00% | |||||
Warrants exercisable, term | 5 years | |||||
Liability | $ 9,854 | |||||
Legal costs | 7,340 | |||||
Brokerage commission | $ 42,500 | |||||
Warrants are committed to be issued | 66,520 | |||||
Warrant exercise price | $ 2.75 | |||||
2019 Private Placement [Member] | ||||||
Stockholders' Deficit (Textual) | ||||||
Maximum Shares Issuable | 160,000 | 160,000 | ||||
Gross proceeds from private placement | $ 400,000 | $ 400,000 | ||||
Maximum offering, units | 4,000,000 | |||||
Offering price, per share | $ 2.50 | $ 2.50 | ||||
Warrant issued | 134,048 | |||||
Risk free interest rate | 2.53% | |||||
Expected stock price volatility | 49.80% | |||||
Expected life of options (years) | 5 years | |||||
Expected dividend yield | 0.00% | |||||
Cost of issuance | $ 89,622 | |||||
Cash commission, percentage | 12.00% | |||||
Exercise price, per share | $ 3 | |||||
Common stock purchase price, per share | 10.00% | |||||
Warrants exercisable, term | 5 years | |||||
Liability | $ 13,875 | |||||
Legal costs | 2,747 | |||||
Maximum potential gross proceeds from financing | $ 10,000,000 | |||||
Broker warrants issuable | 16,000 | |||||
Warrants are committed to be issued | 66,520 | |||||
Warrant exercise price | $ 3.45 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event [Member] | Feb. 12, 2019USD ($) |
2018 Private Placement [Member] | |
Subsequent Events (Textual) | |
Cash commission, description | The Company agreed to pay the brokers a cash commission equal to 10% of the gross proceeds from the sale of the Units sold to investors by such brokers. In addition to the brokers’ commission, the Company agreed to issue 5-year warrants to the brokers to purchase an amount of Common Stock equal to 10% of the total amount of shares sold by such brokers in the 2018 Private Placement, at an exercise price of $3.45 per share. Notwithstanding the Company’s agreement to pay to brokers the 10% cash commission and issue warrants for 10% of the shares sold in the 2018 Private Placement, the HRA Amendments modified the broker commission arrangements with respect to HRA. HRA was the only broker in the 2018 Private Placement. Pursuant to the Company’s engagement letter with HRA Capital (acting through the registered broker-dealer, Corinthian Partners, LLC), as amended in February 2019 by the HRA Amendments, the Company agreed to pay HRA a cash fee equal to 8% of the gross proceeds received by the Company from Prospects in the 2018 Private Placement and to issue warrants exercisable to purchase shares of Common Stock (or common stock equivalents) in an amount equal to 8% of the shares of Common Stock purchased by Prospects in the 2018 Private Placement. |
2019 Private Placement [Member] | |
Subsequent Events (Textual) | |
Gross proceeds from issuance of units | $ 295,000 |
HRA capital description | The Company amended its engagement letter with HRA Capital (“HRA”), acting through its affiliate, Corinthian Partners, LLC, each of which are affiliates of one of the Company’s greater than 5% stockholders. Pursuant to the original agreement (prior to the amendment), the Company agreed to pay HRA 10% of the gross proceeds (the “HRA Fee”) received by the Company in subsequent private placement transactions from investors with whom HRA or Corinthian Partners, LLC had material contact with for purposes of the engagement letter (the “Prospects”), provided such compensation would only be paid in connection with private placement transactions that closed within 12 months of the expiration of the engagement letter (the “Tail Period”). The Company agreed to issue to HRA warrants to purchase shares of Common Stock (or common stock equivalents) in an amount equal to 10% of the shares purchased by Prospects during the Tail Period (“HRA Warrants”). In February 2019, the Company and HRA agreed (i) to extend the Tail Period until June 30, 2019, (ii) to modify the HRA Fee so that HRA is entitled to receive a cash fee equal to 8% of the gross proceeds received by the Company from Prospects in all subsequent private placement transactions and (iii) to modify the HRA Warrants so that they are exercisable to purchase shares of Common Stock (or common stock equivalents) in an amount equal to 8% of the shares of Common Stock purchased by Prospects in subsequent private placements (collectively, the “HRA Amendments”). Upon issuance, the HRA Warrants will be immediately exercisable and expire five years from the closing of the related transaction. |