DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION - shares | 3 Months Ended | |
Mar. 31, 2020 | May 06, 2020 | |
Document And Entity Information | ||
Entity Registrant Name | CV Sciences, Inc. | |
Entity Central Index Key | 0001510964 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity's Reporting Status Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 99,851,942 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2020 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 7,097 | $ 9,107 |
Restricted cash | 501 | 501 |
Accounts receivable, net | 1,607 | 2,177 |
Inventory | 8,955 | 9,971 |
Prepaid expenses and other | 9,031 | 10,611 |
Total current assets | 27,191 | 32,367 |
Property & equipment, net | 3,821 | 3,615 |
Operating lease assets | 8,422 | 8,709 |
Intangibles, net | 3,757 | 3,766 |
Goodwill | 2,788 | 2,788 |
Other assets | 1,543 | 1,442 |
Total assets | 47,522 | 52,687 |
Current liabilities: | ||
Accounts payable | 718 | 1,617 |
Accrued expenses | 10,976 | 10,856 |
Operating lease liability - current | 819 | 723 |
Total current liabilities | 12,513 | 13,196 |
Liabilities, Noncurrent [Abstract] | ||
Operating lease liability | 9,161 | 9,517 |
Deferred tax liability | 263 | 421 |
Other liabilities | 171 | 406 |
Total liabilities | 22,108 | 23,540 |
Commitments and contingencies (Note 7) | ||
Stockholders' equity | ||
Preferred stock, par value $0.0001; 10,000 shares authorized; no shares issued and outstanding | 0 | 0 |
Common stock, par value $0.0001; 190,000,000 shares authorized; 99,852 and 99,416 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively | 10 | 10 |
Additional paid-in capital | 72,193 | 70,774 |
Accumulated deficit | (46,789) | (41,637) |
Total stockholders' equity | 25,414 | 29,147 |
Total liabilities and stockholders' equity | $ 47,522 | $ 52,687 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS Balance Sheet (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock par value (in USD per share) | $ 0.0001 | $ 0.0001 |
Preferred stock authorized (shares) | 10,000,000 | 10,000,000 |
Preferred stock issued (shares) | 0 | 0 |
Preferred stock outstanding (shares) | 0 | 0 |
Common stock par value (in USD per share) | $ 0.0001 | $ 0.0001 |
Common stock authorized (shares) | 190,000,000 | 190,000,000 |
Common stock issued (shares) | 99,852,000 | 99,416,000 |
Common stock outstanding (shares) | 99,852,000 | 99,416,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||
Product sales, net | $ 8,270 | $ 14,911 |
Cost of goods sold | 4,262 | 4,352 |
Gross Profit | 4,008 | 10,559 |
Operating expenses: | ||
Research and development | 1,509 | 1,342 |
Selling, general and administrative | 7,819 | 18,595 |
Total operating expenses | 9,328 | 19,937 |
Operating Loss | (5,320) | (9,378) |
Other Expenses [Abstract] | ||
Interest (income) expense, net | (10) | 6 |
Loss before income taxes | (5,310) | (9,384) |
Income tax benefit | (158) | 0 |
Net Loss | $ (5,152) | $ (9,384) |
Weighted average common shares outstanding, basic and diluted | 99,678 | 95,168 |
Net loss per common share, basic and diluted (in USD per share) | $ (0.05) | $ (0.10) |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings |
Beginning balance, shares at Dec. 31, 2018 | 94,940 | |||
Beginning balance, value at Dec. 31, 2018 | $ 30,116 | $ 9 | $ 55,134 | $ (25,027) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of common stock under employee benefit plan (shares) | 3,539 | |||
Issuance of common stock under employee benefit plan | 197 | $ 1 | 196 | |
Stock-based compensation | 2,091 | 2,091 | ||
Stock-based compensation associated with founders employment settlements | 7,857 | 7,857 | ||
Net loss | (9,384) | (9,384) | ||
Ending balance, shares at Mar. 31, 2019 | 98,479 | |||
Ending balance, value at Mar. 31, 2019 | 30,877 | $ 10 | 65,278 | (34,411) |
Beginning balance, shares at Dec. 31, 2019 | 99,416 | |||
Beginning balance, value at Dec. 31, 2019 | 29,147 | $ 10 | 70,774 | (41,637) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of common stock under employee benefit plan (shares) | 436 | |||
Issuance of common stock under employee benefit plan | 161 | $ 0 | 161 | |
Stock-based compensation | 1,258 | 1,258 | ||
Net loss | (5,152) | (5,152) | ||
Ending balance, shares at Mar. 31, 2020 | 99,852 | |||
Ending balance, value at Mar. 31, 2020 | $ 25,414 | $ 10 | $ 72,193 | $ (46,789) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
OPERATING ACTIVITIES | ||
Net loss | $ (5,152) | $ (9,384) |
Adjustments to reconcile net loss to net cash flows provided by (used in) operating activities: | ||
Depreciation and amortization | 185 | 177 |
Stock-based compensation | 1,258 | 2,091 |
Stock-based compensation associated with employment settlement | 0 | 7,857 |
Bad debt expense | 0 | 25 |
Inventory write-down | 46 | 0 |
Non-cash lease expense | 287 | 124 |
Deferred taxes | (158) | 0 |
Other | 98 | 0 |
Change in operating assets and liabilities: | ||
Accounts receivable | 570 | (456) |
Inventory | 970 | (121) |
Prepaid expenses and other | 1,479 | (551) |
Accounts payable and accrued expenses | (1,274) | 999 |
Net cash provided by (used in) operating activities | (1,691) | 761 |
INVESTING ACTIVITIES | ||
Purchase of property and equipment | (480) | (54) |
Net cash flows used in investing activities | (480) | (54) |
FINANCING ACTIVITIES | ||
Repayment of unsecured debt | 0 | (201) |
Proceeds from exercise of stock options | 161 | 197 |
Net cash flows provided by (used in) financing activities | 161 | (4) |
Net increase (decrease) in cash, cash equivalents and restricted cash | (2,010) | 703 |
Cash, cash equivalents and restricted cash, beginning of period | 9,608 | 12,935 |
Cash, cash equivalents and restricted cash, end of period | 7,598 | 13,638 |
Supplemental cash flow disclosures: | ||
Interest paid | 0 | 6 |
Income taxes paid | 18 | 4 |
Supplemental disclosures of non-cash transactions: | ||
Purchase of property and equipment in accounts payable and accrued expenses | $ 76 | $ 0 |
ORGANIZATION AND BUSINESS
ORGANIZATION AND BUSINESS | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BUSINESS | ORGANIZATION AND BUSINESS Historical Information - CV Sciences, Inc. (the “Company”) was incorporated under the name Foreclosure Solutions, Inc. in the State of Texas on December 9, 2010. On July 25, 2013, CannaVest Corp., a Texas corporation (“CannaVest Texas”), merged with the Company, a wholly-owned Delaware subsidiary of CannaVest Texas, to effectuate a change in the Company’s state of incorporation from Texas to Delaware. On January 4, 2016, the Company filed a Certificate of Amendment of Certificate of Incorporation reflecting its corporate name change to “CV Sciences, Inc.”, effective on January 5, 2016. In addition, on January 4, 2016, the Company amended its Bylaws to reflect its corporate name change to “CV Sciences, Inc.” Description of Business - The Company has two operating segments; consumer products and specialty pharmaceutical. The consumer products segment develops, manufactures and markets products based on hemp-based Cannabidiol ("CBD"), under the name PlusCBD™ in a variety of market sectors including nutraceutical, beauty care and specialty foods. The specialty pharmaceutical segment is developing drug candidates which use CBD as a primary active ingredient. Basis of Presentation - The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). All intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates – The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. Actual results may differ from these estimates. Significant estimates include the valuation of intangible assets, inputs for valuing equity awards, valuation of inventory, assumptions related to revenue recognition and the allowance for doubtful accounts. Fair Value Measurements – Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The accounting guidance establishes a three-level hierarchy for disclosure that is based on the extent and level of judgment used to estimate the fair value of assets and liabilities. • Level 1 - uses unadjusted quoted prices that are available in active markets for identical assets or liabilities. As of March 31, 2020 , the Company's Level 1 assets are comprised of $3.0 million in money market funds which are classified as cash equivalents, and restricted cash of $0.5 million comprised of certificates of deposit. As of December 31, 2019 , the Company's Level 1 assets are comprised of $4.0 million in money market funds which are classified as cash equivalents, and restricted cash of $0.5 million comprised of certificates of deposit. The carrying value of the cash equivalents and restricted cash approximated the fair value as of March 31, 2020 and December 31, 2019 . The Company does not have any liabilities that are valued using inputs identified under a Level 1 hierarchy as of March 31, 2020 and December 31, 2019 . • Level 2 - uses inputs other than quoted prices included in Level 1 that are either directly or indirectly observable through correlation with market data. These include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs to valuation models or other pricing methodologies that do not require significant judgment because the inputs used in the model, such as interest rates and volatility, can be corroborated by readily observable market data. The Company did not have any assets or liabilities that are valued using inputs identified under a Level 2 hierarchy as of March 31, 2020 and December 31, 2019 . • Level 3 - uses one or more significant inputs that are unobservable and supported by little or no market activity, and that reflect the use of significant management judgment. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, and significant management judgment or estimation. The Company did not have any assets or liabilities that are valued using inputs identified under a Level 3 hierarchy as of March 31, 2020 and December 31, 2019 . Cash, cash equivalents, and restricted cash – The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets to the total of the same amounts shown in the statement of cash flows for the three months ended March 31, 2020 and 2019 (in thousands): March 31, March 31, Cash and cash equivalents $ 7,097 $ 13,638 Restricted cash 501 — Total cash and restricted cash shown in the statements of cash flows $ 7,598 $ 13,638 Revenues – The following presents revenue product sales by channel for the three months ended March 31, 2020 and 2019 : Three months ended March 31, 2020 Three months ended March 31, 2019 Amount % of product sales, net Amount % of product sales, net (in thousands) (in thousands) Retail - FDM $ 431 5.2 % $ 97 0.6 % Retail - all other 5,825 70.4 % 12,524 84.0 % E-Comm 2,014 24.4 % 2,290 15.4 % Product sales, net $ 8,270 100.0 % $ 14,911 100.0 % Liquidity Considerations – In December 2019, a novel strain of coronavirus (“COVID-19”) was reported in Wuhan, China. The COVID-19 pandemic, as it was declared by the World Health Organization, has continued to spread and has already caused severe global disruptions. The extent of COVID-19’s effect on the Company's operational and financial performance will depend on future developments, including the duration, spread and intensity of the pandemic, all of which are uncertain and difficult to predict considering the rapidly evolving landscape. Management expects COVID-19, along with the resulting government-imposed restrictions on businesses, shelter-in place orders and temporary retail and grocery store closures to negatively impact its operations due to decreased consumer demand as well as potential production and warehouse limitations which results in an event or condition, before consideration of management’s plans, that could impact its ability to meet future obligations. In response to the continuing uncertainty resulting from COVID-19, management is in the process of implementing strategic cost reductions, including reductions in employee headcount and vendor spending, delay of expenses related to our drug development activities, and may be required to make further reductions in employee headcount. On April 17, 2020 , the Company received $2.9 million pursuant to the Paycheck Protection Program ("PPP") under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) as administered by the U.S. Small Business Administration (the "SBA"). The PPP loan, which took the form of a promissory note issued by the Company matures on April 15, 2022 and bears interest at a rate of 0.98% per annum. Monthly principal and interest payments, less the amount of any potential forgiveness, will commence on November 15, 2020 . The Company did not provide any collateral or guarantees for the PPP Loan, nor did the Company pay any facility charge to obtain the PPP Loan. Management believes that its cash and cash equivalents on hand and these cost reduction measures, as needed, will provide sufficient liquidity to fund its operations for the next 12 months from the issuance of the condensed consolidated financial statements. Recent Accounting Pronouncements Not Yet Adopted In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04 and ASU 2019-05 (collectively, “Topic 326”). Topic 326 requires measurement and recognition of expected credit losses for financial assets held. Topic 326 was to be effective for reporting periods beginning after December 15, 2019, with early adoption permitted. In November 2019, the FASB issued ASU 2019-10, Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) Effective Dates , which deferred the effective dates for the Company, as a smaller reporting company, until fiscal year 2023. The Company currently plans to adopt the guidance at the beginning of fiscal 2023. The Company is currently evaluating the potential impact of Topic 326 on the Company’s condensed consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”), which eliminates Step 2 from the goodwill impairment test. Instead, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should then recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. ASU 2017-04 requires the entity to apply these amendments on a prospective basis for which it is required to disclose the nature of and reason for the change in accounting upon transition. This disclosure shall be provided in the first annual period and in the interim period within the first annual period when the entity initially adopts the amendments. The Company shall adopt these amendments for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. Adoption of ASU 2017-04 will have no immediate impact on on the Company’s condensed consolidated financial statements and would only have the potential to impact the amount of any goodwill impairment recorded after the adoption of the ASU. In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes ("ASU 2019-12"), which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. The new standard is effective for fiscal years beginning after December 15, 2020. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company is currently evaluating the potential impact of ASU 2019-12 on the Company’s condensed consolidated financial statements. |
BALANCE SHEET DETAIL
BALANCE SHEET DETAIL | 3 Months Ended |
Mar. 31, 2020 | |
Condensed Financial Information Disclosure [Abstract] | |
BALANCE SHEET DETAILS | BALANCE SHEET DETAILS Inventory Inventory as of March 31, 2020 and December 31, 2019 was comprised of the following (in thousands): March 31, December 31, Raw materials $ 5,034 $ 4,503 Work in process 170 415 Finished goods 3,751 5,053 $ 8,955 $ 9,971 As of March 31, 2020 and December 31, 2019 , the Company had inventory outside the United States of $0.2 million and $0.3 million , respectively. Accrued expenses Accrued expenses as of March 31, 2020 and December 31, 2019 were as follows (in thousands): March 31, December 31, Accrued payroll expenses (1) $ 8,243 $ 8,787 Other accrued liabilities 2,733 2,069 $ 10,976 $ 10,856 (1) This includes a $6.2 million tax liability associated with a related party transaction as discussed in Note 10. |
INTANGIBLES, NET
INTANGIBLES, NET | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLES, NET | INTANGIBLES, NET Intangible assets consisted of the following at March 31, 2020 and December 31, 2019 (in thousands): Gross Carrying Amount Accumulated Amortization Net Carrying Amount Useful Life (Years) Balance - March 31, 2020: In-process research and development $ 3,730 $ — $ 3,730 — Trade names 100 85 15 5 Non-compete agreements 77 65 12 5 $ 3,907 $ 150 $ 3,757 Balance - December 31, 2019: In-process research and development $ 3,730 $ — $ 3,730 — Trade names 100 80 20 5 Non-compete agreements 77 61 16 5 $ 3,907 $ 141 $ 3,766 |
NOTES PAYABLE
NOTES PAYABLE | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | NOTES PAYABLE In October 2018, the Company entered into a finance agreement with First Insurance Funding in order to fund a portion of its insurance policies, which was amended in January 2019. The amount financed was $0.5 million and bears interest at a rate of 5.15% . The Company was required to make monthly payments of $0.1 million through July 2019. As of March 31, 2020 and December 31, 2019 , there was no outstanding balance. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | . STOCK-BASED COMPENSATION On June 11, 2019, the Company's stockholders approved an amendment to the CV Sciences, Inc. Amended and Restated 2013 Equity Incentive Plan (the "2013 Plan") to increase the number of shares that may be issued under the 2013 Plan by an additional 3,000,000 shares. The Company’s stockholders also approved to add an automatic “evergreen” provision regarding the number of shares to be annually added to the 2013 Plan. As a result, the number of shares of common stock that will be automatically added to the 2013 Plan on January 1 of each year during the term of the plan, starting with January 1, 2020, will be the lesser of: (a) 4% of the total shares of the Company’s common stock outstanding on December 31st of the prior year, (b) 4,000,000 shares of the Company’s common stock, or (c) a lesser number of shares of the Company’s common stock as determined by the Company’s Board of Directors. On January 1, 2020, the Company added 3,976,000 shares to the 2013 plan. There are currently 34,976,000 shares authorized for issuance under the 2013 Plan. As of March 31, 2020 , the Company had 8,982,000 of authorized unissued shares reserved and available for issuance upon exercise and conversion of outstanding awards under the 2013 Plan. The Company recognized stock-based compensation expense of $1.3 million and $9.9 million during the three months ended March 31, 2020 and 2019 , respectively. During the three months ended March 31, 2019 , the Company's former President and Chief Executive Officer ("Mona Jr.") and the Company entered into a Settlement Agreement (the “Settlement Agreement”), pursuant to which the Company agreed that Mona Jr.’s resignation from the Company on January 22, 2019 was for Good Reason (as defined in Mona Jr.’s Employment Agreement) and agreed to extend the deadline for Mona Jr.’s exercise of his stock options for a period of five years. In exchange, Mona Jr. agreed that notwithstanding the terms of his Employment Agreement providing for acceleration of vesting of all stock options and restricted stock units (RSU's) upon a Good Reason resignation, certain of his unvested stock options would not immediately vest, but rather continue to vest if, and only if, certain Company milestones are achieved related to the Company’s drug development efforts. These stock options were issued in July 2016 ( 6,000,000 options) and March 2017 ( 5,000,000 options). The Company and Mona Jr. also agreed to mutually release all claims arising out of and related to Mona Jr.’s resignation and separation from the Company. As a result of the Settlement Agreement, the Company recorded stock-based compensation expense related to the accelerated vesting of the RSU's of $5.1 million and the modification of certain stock options of $2.7 million during the three months ended March 31, 2019 . As of March 31, 2020 , total unrecognized compensation cost related to non-vested stock-based compensation arrangements was $4.8 million which is expected to be recognized over a weighted-average period of 1.8 years. The following summarizes activity related to the Company's stock options (in thousands, except per share data): Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contract Term (in years) Aggregate Intrinsic Value Outstanding - December 31, 2019 28,105 $ 0.80 5.4 $ 12,335 Granted 4,870 0.33 — — Exercised (436) 0.37 — — Forfeited (7,004) 0.65 — — Outstanding - March 31, 2020 25,535 0.76 6.3 3,003 Exercisable - March 31, 2020 19,667 0.67 5.4 2,047 Vested or expected to vest - March 31, 2020 25,535 $ 0.76 6.3 $ 3,003 The above table includes 5,000,000 performance-based options as of March 31, 2020 , which were issued outside of the 2013 Plan. The total intrinsic value of stock options exercised during the three months ended March 31, 2020 was $0.3 million . Upon option exercise, the Company issues new shares of stock. The total intrinsic value of stock options exercised during the three months ended March 31, 2019 was $3.3 million . The Company has established performance milestones in connection with the drug development efforts for its lead drug candidate CVSI-007. As of March 31, 2020 , there were 8,000,000 remaining unvested stock options granted outside of the 2013 Plan which vest upon the completion of future performance conditions, including those related to the Settlement Agreement with Mona Jr. The following table presents the weighted average grant date fair value of stock options granted and the weighted-average assumptions used to estimate the fair value on the date of grant using the Black-Scholes valuation model: Three months ended March 31, 2020 2019 Volatility 135.4% 113.9% Risk-Free Interest Rate 0.6% 2.5% Expected Term (in years) 5.29 5.72 Dividend Rate —% —% Fair Value Per Share on Grant Date $0.29 $4.03 The risk-free interest rates are based on the implied yield available on U.S. Treasury constant maturities with remaining terms equivalent to the respective expected terms of the options. Expected volatility for the three months ended March 31, 2020 is based on the historical volatility of the Company's common stock. Expected volatility the three months ended March 31, 2019 is calculated based on the Company’s peer group, consisting of five companies in the industry in which the Company operates because the Company did not have sufficient historical volatility data. The Company estimates the expected term for stock options awarded to employees, non-employees, officers and directors using the simplified method in accordance with ASC Topic 718, Stock Compensation, because the Company does not have sufficient relevant historical information to develop reasonable expectations about future exercise patterns. In the future, as the Company gains historical data for the actual term over which stock options are held, the expected term may change, which could substantially change the grant-date fair value of future stock option awards, and, consequently, compensation of future grants. |
NET LOSS PER SHARE
NET LOSS PER SHARE | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
NET LOSS PER SHARE | NET LOSS PER SHARE The Company computes basic net loss per share using the weighted-average number of common shares outstanding during the period. Diluted net loss per share is calculated by dividing net loss by the weighted-average number of common shares plus potential common shares. The Company's stock options, including those with performance conditions, are included in the calculation of diluted net loss per share using the treasury stock method when their effect is dilutive. Potential common shares are excluded from the calculation of diluted net loss per share when their effect is anti-dilutive. Anti-dilutive common share equivalents excluded from the computation of diluted net loss per share at March 31, 2020 consisted of stock options of 25,535,000 and unvested performance stock options of 8,000,000 . Anti-dilutive common share equivalents excluded from the computation of diluted net loss per share at March 31, 2019 consisted of stock options of 25,830,000 and unvested performance stock options of 10,750,000 . |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | . COMMITMENTS AND CONTINGENCIES On April 23, 2014, Tanya Sallustro filed a purported class action complaint (the “Complaint”) in the Southern District of New York (the “Court”) alleging securities fraud and related claims against the Company and certain of its officers and directors, and seeking compensatory damages including litigation costs. On December 11, 2015, the Company filed a motion to dismiss the consolidated amended complaint. On April 2, 2018, the Court issued a ruling granting in part and denying in part the motion to dismiss. Thereafter, plaintiff’s counsel agreed to dismiss the case in its entirety, with prejudice. On July 2, 2019, the Court entered a final order dismissing the Complaint with prejudice. The Company did not make any settlement payment, and at no time was there a finding of wrongdoing by the Company or any of its directors. On March 17, 2015, Michael Ruth filed a shareholder derivative suit in Nevada District Court alleging breach of fiduciary duty and gross mismanagement (the “Ruth Complaint”). The claims are premised on the same event as the Complaint. The Company and Mr. Ruth previously agreed to stay the action pending the conclusion of discovery in the Complaint. Now that the Complaint has been dismissed, the stay has been lifted. On September 20, 2019, the Company filed a motion to dismiss the Ruth Complaint. Mr. Ruth filed a response to our motion, and we are currently awaiting a ruling from the court. Management intends to vigorously defend the allegations. On August 24, 2018, David Smith filed a purported class action complaint in Nevada District Court (the "Smith Complaint") alleging certain misstatements in the Company's public filings that led to stock price fluctuations and financial harm. Several additional individuals filed similar claims, and the Smith suit and each of the other suits all arise out of a report published by Citron Research on Twitter on August 20, 2018, suggesting that the Company misled investors by failing to disclose that the Company’s efforts to secure patent protection for CVSI-007 had been “finally rejected” by the United States Patent and Trademark Office ("USPTO"). On November 15, 2018, the Court consolidated the actions and appointed Richard Ina, Trustee for the Ina Family Trust, as Lead Plaintiff for the consolidated actions. On January 4, 2019, Counsel for Lead Plaintiff Richard Ina, Trustee for the Ina Family Trust, filed a “consolidated amended complaint”. On March 5, 2019, we filed a motion to dismiss the action. The Court denied the motion to dismiss on December 10, 2019, and the parties have recently commenced discovery in the action. Management intends to vigorously defend the allegations. Four shareholder derivative suits have been filed which are premised on the same event as the Smith Complaint. Three of these derivative suits are currently stayed with a responsive pleading due in the fourth such suit on July 12, 2020. Additionally, on April 7, 2020, the USPTO issued a Notice of Allowance with respect to the patent application pertaining to CVSI-007. Management intends to vigorously defend the allegations. On December 3, 2019, Michelene Colette filed a purported class action complaint in the Central District of California, alleging the labeling on the Company’s products violated the Food, Drug, and Cosmetic Act of 1938 (the “Colette Complaint”). On February 6, 2020, the Company filed a motion to dismiss the Colette Complaint. Instead of opposing our motion, plaintiffs elected to file an amended complaint on February 25, 2020. On March 11, 2020, we filed a motion to dismiss the amended complaint. The motion has been fully briefed and the parties are awaiting a decision from the court. Management intends to vigorously defend the allegations. In the normal course of business, the Company is a party to a variety of agreements pursuant to which they may be obligated to indemnify the other party. It is not possible to predict the maximum potential amount of future payments under these types of agreements due to the conditional nature of our obligations, and the unique facts and circumstances involved in each particular agreement. Historically, payments made by us under these types of agreements have not had a material effect on our business, results of operations or financial condition. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | . SEGMENT INFORMATION The Company operates in two distinct business segments: a consumer products segment in manufacturing, marketing and selling hemp-based CBD products to a range of market sectors; and a specialty pharmaceutical segment focused on developing and commercializing novel therapeutics utilizing CBD. The Company’s segments maintain separate financial information for which operating results are evaluated on a regular basis by the Company’s senior management in deciding how to allocate resources and in assessing performance. The Company evaluates its consumer products segment based on net product sales, gross profit and operating income or loss. The Company currently evaluates its specialty pharmaceutical segment based on the progress of its clinical development programs. The following table presents information by reportable operating segment for the three months ended March 31, 2020 and 2019 (in thousands): Consumer Products Segment Specialty Pharmaceutical Segment Consolidated Totals Three months ended March 31, 2020: Product sales, net $ 8,270 $ — $ 8,270 Gross profit $ 4,008 $ — $ 4,008 Research and development 305 1,204 1,509 Selling, general and administrative 7,810 9 7,819 Operating loss $ (4,107 ) $ (1,213 ) $ (5,320 ) Three months ended March 31, 2019: Product sales, net $ 14,911 $ — $ 14,911 Gross profit $ 10,559 $ — $ 10,559 Research and development 699 643 1,342 Selling, general and administrative 18,585 10 18,595 Operating loss $ (8,725 ) $ (653 ) $ (9,378 ) The Company's specialty and pharmaceutical segment includes goodwill of $2.8 million as of March 31, 2020 and December 31, 2019 . In addition, the Company's intangible assets of $3.8 million as of March 31, 2020 and December 31, 2019 are included in the specialty pharmaceutical segment. All other assets are included in the consumer products segment as of March 31, 2020 and December 31, 2019 . The majority of the Company's sales are to U.S. based customers. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES For the three months ended March 31, 2020 , the Company has recognized tax benefit related to the change in 2019 net operating loss ("NOL") utilization as a result of the CARES Act. Also, for the three months ended March 31, 2020 , the Company generated a net loss for which no tax benefit has been recognized due to uncertainties regarding the future realization of the tax benefit. The tax effects of the net loss will be recognized when realization of the tax benefit becomes more likely than not or the tax effects of the previous interim losses are utilized. |
RELATED PARTIES
RELATED PARTIES | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
RELATED PARTIES | RELATED PARTIES As of March 31, 2020 , the Company has a payable to its founders recorded of $1.2 million . The amount is mostly related to termination benefits associated with their separation from the Company. The termination benefits are payable via regular payroll through June 2021. The Company recorded $1.0 million in accrued expenses and $0.2 million in other liabilities. As part of the Settlement Agreement, 2,950,000 RSUs vested and were issued to Mona Jr. The vesting of the RSU's is treated as taxable compensation, and thus, subject to income tax withholdings. No amounts were withheld (either in cash or the equivalent of shares of common stock from the vesting of the RSU's) and included in the Company’s payroll tax filing at the time of vesting. The compensation is subject to Federal and State income tax withholding and Federal Insurance Contributions Act (“FICA”) taxes withholding estimated to be $6.4 million for the employee portions. The employer portion of the FICA taxes is $0.2 million and has been recorded as a component of selling, general and administrative expenses in the condensed consolidated statement of operations for the three months ended March 31, 2019 . During the three months ended March 31, 2020 , the Company paid the employer portion of the FICA taxes of $0.2 million , and the employee portion of FICA taxes of $0.2 million . Although the primary tax liability is the responsibility of the employee, the Company is secondarily liable, and thus, has recorded the liability on its condensed consolidated balance sheet as of March 31, 2020 in an amount of $6.2 million which was recorded as a component of Accrued expenses. The Company has recorded an offsetting receivable for the total estimated Federal and State income taxes which should have been withheld. This resulted in a receivable of $6.2 million as of March 31, 2020 which was recorded in the line item Prepaid expenses and other on the condensed consolidated balance sheet. The associated liability would be relieved once the tax amount is paid by Mona Jr. and the Company has received the required taxing authority documentation from Mona Jr. However, if the amount is not paid, the Company would be liable for such withholding tax due and the Company would seek reimbursement from Mona Jr. Additionally, the Company could be subject to negligence penalties if the amounts are ultimately not paid. The Company does not believe that any such penalties are probable or reasonably possible as of March 31, 2020 . |
ORGANIZATION AND BUSINESS Organ
ORGANIZATION AND BUSINESS Organization and Business (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation - The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). All intercompany accounts and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates – The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. Actual results may differ from these estimates. Significant estimates include the valuation of intangible assets, inputs for valuing equity awards, valuation of inventory, assumptions related to revenue recognition and the allowance for doubtful accounts. |
Fair Value Measurements | Fair Value Measurements – Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The accounting guidance establishes a three-level hierarchy for disclosure that is based on the extent and level of judgment used to estimate the fair value of assets and liabilities. • Level 1 - uses unadjusted quoted prices that are available in active markets for identical assets or liabilities. As of March 31, 2020 , the Company's Level 1 assets are comprised of $3.0 million in money market funds which are classified as cash equivalents, and restricted cash of $0.5 million comprised of certificates of deposit. As of December 31, 2019 , the Company's Level 1 assets are comprised of $4.0 million in money market funds which are classified as cash equivalents, and restricted cash of $0.5 million comprised of certificates of deposit. The carrying value of the cash equivalents and restricted cash approximated the fair value as of March 31, 2020 and December 31, 2019 . The Company does not have any liabilities that are valued using inputs identified under a Level 1 hierarchy as of March 31, 2020 and December 31, 2019 . • Level 2 - uses inputs other than quoted prices included in Level 1 that are either directly or indirectly observable through correlation with market data. These include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs to valuation models or other pricing methodologies that do not require significant judgment because the inputs used in the model, such as interest rates and volatility, can be corroborated by readily observable market data. The Company did not have any assets or liabilities that are valued using inputs identified under a Level 2 hierarchy as of March 31, 2020 and December 31, 2019 . • Level 3 - uses one or more significant inputs that are unobservable and supported by little or no market activity, and that reflect the use of significant management judgment. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, and significant management judgment or estimation. The Company did not have any assets or liabilities that are valued using inputs identified under a Level 3 hierarchy as of March 31, 2020 and December 31, 2019 . |
Recent Issued and Newly Adopted Accounting Pronouncements | Recent Accounting Pronouncements Not Yet Adopted In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04 and ASU 2019-05 (collectively, “Topic 326”). Topic 326 requires measurement and recognition of expected credit losses for financial assets held. Topic 326 was to be effective for reporting periods beginning after December 15, 2019, with early adoption permitted. In November 2019, the FASB issued ASU 2019-10, Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) Effective Dates , which deferred the effective dates for the Company, as a smaller reporting company, until fiscal year 2023. The Company currently plans to adopt the guidance at the beginning of fiscal 2023. The Company is currently evaluating the potential impact of Topic 326 on the Company’s condensed consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”), which eliminates Step 2 from the goodwill impairment test. Instead, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should then recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. ASU 2017-04 requires the entity to apply these amendments on a prospective basis for which it is required to disclose the nature of and reason for the change in accounting upon transition. This disclosure shall be provided in the first annual period and in the interim period within the first annual period when the entity initially adopts the amendments. The Company shall adopt these amendments for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. Adoption of ASU 2017-04 will have no immediate impact on on the Company’s condensed consolidated financial statements and would only have the potential to impact the amount of any goodwill impairment recorded after the adoption of the ASU. In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes ("ASU 2019-12"), which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. The new standard is effective for fiscal years beginning after December 15, 2020. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company is currently evaluating the potential impact of ASU 2019-12 on the Company’s condensed consolidated financial statements. |
Organization and Business (Tabl
Organization and Business (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Cash, Cash Equivalents and Restricted Cash | The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets to the total of the same amounts shown in the statement of cash flows for the three months ended March 31, 2020 and 2019 (in thousands): March 31, March 31, Cash and cash equivalents $ 7,097 $ 13,638 Restricted cash 501 — Total cash and restricted cash shown in the statements of cash flows $ 7,598 $ 13,638 |
Revenue Product Sales by Channel | The following presents revenue product sales by channel for the three months ended March 31, 2020 and 2019 : Three months ended March 31, 2020 Three months ended March 31, 2019 Amount % of product sales, net Amount % of product sales, net (in thousands) (in thousands) Retail - FDM $ 431 5.2 % $ 97 0.6 % Retail - all other 5,825 70.4 % 12,524 84.0 % E-Comm 2,014 24.4 % 2,290 15.4 % Product sales, net $ 8,270 100.0 % $ 14,911 100.0 % |
BALANCE SHEET DETAILS (Tables)
BALANCE SHEET DETAILS (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Condensed Financial Information Disclosure [Abstract] | |
Schedule of inventory | Inventory as of March 31, 2020 and December 31, 2019 was comprised of the following (in thousands): March 31, December 31, Raw materials $ 5,034 $ 4,503 Work in process 170 415 Finished goods 3,751 5,053 $ 8,955 $ 9,971 |
Schedule of accrued expenses | Accrued expenses Accrued expenses as of March 31, 2020 and December 31, 2019 were as follows (in thousands): March 31, December 31, Accrued payroll expenses (1) $ 8,243 $ 8,787 Other accrued liabilities 2,733 2,069 $ 10,976 $ 10,856 (1) This includes a $6.2 million tax liability associated with a related party transaction as discussed in Note 10. |
INTANGIBLES, NET (Tables)
INTANGIBLES, NET (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | Intangible assets consisted of the following at March 31, 2020 and December 31, 2019 (in thousands): Gross Carrying Amount Accumulated Amortization Net Carrying Amount Useful Life (Years) Balance - March 31, 2020: In-process research and development $ 3,730 $ — $ 3,730 — Trade names 100 85 15 5 Non-compete agreements 77 65 12 5 $ 3,907 $ 150 $ 3,757 Balance - December 31, 2019: In-process research and development $ 3,730 $ — $ 3,730 — Trade names 100 80 20 5 Non-compete agreements 77 61 16 5 $ 3,907 $ 141 $ 3,766 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock option activity | The following summarizes activity related to the Company's stock options (in thousands, except per share data): Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contract Term (in years) Aggregate Intrinsic Value Outstanding - December 31, 2019 28,105 $ 0.80 5.4 $ 12,335 Granted 4,870 0.33 — — Exercised (436) 0.37 — — Forfeited (7,004) 0.65 — — Outstanding - March 31, 2020 25,535 0.76 6.3 3,003 Exercisable - March 31, 2020 19,667 0.67 5.4 2,047 Vested or expected to vest - March 31, 2020 25,535 $ 0.76 6.3 $ 3,003 |
Schedule of share-based payment award, stock options, valuation assumptions | The following table presents the weighted average grant date fair value of stock options granted and the weighted-average assumptions used to estimate the fair value on the date of grant using the Black-Scholes valuation model: Three months ended March 31, 2020 2019 Volatility 135.4% 113.9% Risk-Free Interest Rate 0.6% 2.5% Expected Term (in years) 5.29 5.72 Dividend Rate —% —% Fair Value Per Share on Grant Date $0.29 $4.03 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Schedule of segment reporting information | The following table presents information by reportable operating segment for the three months ended March 31, 2020 and 2019 (in thousands): Consumer Products Segment Specialty Pharmaceutical Segment Consolidated Totals Three months ended March 31, 2020: Product sales, net $ 8,270 $ — $ 8,270 Gross profit $ 4,008 $ — $ 4,008 Research and development 305 1,204 1,509 Selling, general and administrative 7,810 9 7,819 Operating loss $ (4,107 ) $ (1,213 ) $ (5,320 ) Three months ended March 31, 2019: Product sales, net $ 14,911 $ — $ 14,911 Gross profit $ 10,559 $ — $ 10,559 Research and development 699 643 1,342 Selling, general and administrative 18,585 10 18,595 Operating loss $ (8,725 ) $ (653 ) $ (9,378 ) |
Organization and Business (Deta
Organization and Business (Details) | 3 Months Ended | |
Mar. 31, 2020USD ($)segment | Dec. 31, 2019USD ($) | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Number of operating segments | segment | 2 | |
Level 1 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Money market funds classified as cash and cash equivalents | $ 3,000,000 | $ 4,000,000 |
Restricted cash comprised of certificates of deposit | 500,000 | 500,000 |
Liabilities | 0 | 0 |
Level 2 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Assets | 0 | 0 |
Liabilities | 0 | 0 |
Level 3 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Assets | 0 | 0 |
Liabilities | $ 0 | $ 0 |
ORGANIZATION AND BUSINESS - Cas
ORGANIZATION AND BUSINESS - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Cash and cash equivalents | $ 7,097 | $ 9,107 | $ 13,638 | |
Restricted cash | 501 | 501 | 0 | |
Total cash and restricted cash shown in the statement of cash flows | $ 7,598 | $ 9,608 | $ 13,638 | $ 12,935 |
ORGANIZATION AND BUSINESS - Rev
ORGANIZATION AND BUSINESS - Revenues (Details) - Product - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Disaggregation of Revenue [Line Items] | ||
Product sales, net | $ 8,270 | $ 14,911 |
% of product sales, net | 100.00% | 100.00% |
E-Comm | ||
Disaggregation of Revenue [Line Items] | ||
Product sales, net | $ 2,014 | $ 2,290 |
% of product sales, net | 24.40% | 15.40% |
FDM | Retail | ||
Disaggregation of Revenue [Line Items] | ||
Product sales, net | $ 431 | $ 97 |
% of product sales, net | 5.20% | 0.60% |
All Other | Retail | ||
Disaggregation of Revenue [Line Items] | ||
Product sales, net | $ 5,825 | $ 12,524 |
% of product sales, net | 70.40% | 84.00% |
ORGANIZATION AND BUSINESS - Liq
ORGANIZATION AND BUSINESS - Liquidity Considerations (Details) - Subsequent Event $ in Millions | Apr. 17, 2020USD ($) |
Debt Instrument [Line Items] | |
Amount received from Payroll Protection Program | $ 2.9 |
Stated interest rate | 0.98% |
BALANCE SHEET DETAILS - Invento
BALANCE SHEET DETAILS - Inventory (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Inventory [Line Items] | ||
Raw materials | $ 5,034 | $ 4,503 |
Work in process | 170 | 415 |
Finished goods | 3,751 | 5,053 |
Inventory | 8,955 | 9,971 |
Non-US | ||
Inventory [Line Items] | ||
Inventory | $ 200 | $ 300 |
BALANCE SHEET DETAILS - Accrued
BALANCE SHEET DETAILS - Accrued Expenses (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Accrued payroll expenses (1) | $ 8,243 | $ 8,787 |
Other accrued liabilities | 2,733 | 2,069 |
Total accrued expenses | 10,976 | $ 10,856 |
Accrued Expenses | Former President and CEO | ||
Payroll taxes payable | $ 6,200 |
INTANGIBLE, NET (Details - Inta
INTANGIBLE, NET (Details - Intangible asset schedule) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2018 | Dec. 31, 2019 | |
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | $ 3,907 | $ 3,907 | |
Accumulated Amortization | 150 | 141 | |
Net Carrying Amount | 3,757 | 3,766 | |
In Process Research and Development | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 3,730 | 3,730 | |
Accumulated Amortization | 0 | 0 | |
Net Carrying Amount | 3,730 | 3,730 | |
Trade Names | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 100 | 100 | |
Accumulated Amortization | 85 | 80 | |
Net Carrying Amount | $ 15 | 20 | |
Useful Life (Years) | 5 years | 5 years | |
Noncompete Agreements | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | $ 77 | 77 | |
Accumulated Amortization | 65 | 61 | |
Net Carrying Amount | $ 12 | $ 16 | |
Useful Life (Years) | 5 years | 5 years |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) - Unsecured Note Payable - Premium Finance Agreement - USD ($) | 1 Months Ended | |
Oct. 31, 2018 | Mar. 31, 2020 | |
Debt Instrument [Line Items] | ||
Amount financed | $ 533,000 | |
Stated interest rate | 5.15% | |
Monthly payment | $ 100,000 | |
Outstanding balance | $ 0 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details Narrative) - USD ($) $ in Millions | Jan. 01, 2020 | Jun. 11, 2019 | Jan. 22, 2019 | Mar. 31, 2017 | Jul. 31, 2016 | Mar. 31, 2020 | Mar. 31, 2019 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Unrecognized compensation cost | $ 4.8 | ||||||
Unrecognized weighted average period | 1 year 9 months 3 days | ||||||
Former President and CEO | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Extension of period to exercise stock options | 5 years | ||||||
Options outstanding, granted (shares) | 5,000,000 | 6,000,000 | |||||
Options and RSU's | Operating Income (Loss) | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Stock based compensation expense | $ 1.3 | $ 9.9 | |||||
Restricted Stock Units (RSUs) | Former President and CEO | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Stock based compensation expense | 5.1 | ||||||
Stock options | Operating Income (Loss) | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Intrinsic value of stock options exercised in the period | 0.3 | $ 3.3 | |||||
Stock options | Former President and CEO | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Stock based compensation expense | $ 2.7 | ||||||
Options Outside the Amended 2013 Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Options outstanding, granted (shares) | 5,000,000 | ||||||
Equity Option | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Options outstanding, granted (shares) | 4,870,000 | ||||||
Options outstanding, exercised (shares) | 436,000 | ||||||
Amended 2013 Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Additional shares authorized | 3,976,000 | 3,000,000 | |||||
Annual increase to shares authorized for issuance under the Plan as percent of common stock outstanding | 4.00% | ||||||
Annual increase to shares authorized for issuance under the Plan | 4,000,000 | ||||||
Shares authorized under plan | 34,976,000 | ||||||
Authorized unissued shares reserved and available for issuance upon exercise and conversion of outstanding awards | 8,982,000 |
STOCK-BASED COMPENSATION (Det_2
STOCK-BASED COMPENSATION (Details - Option activity) - Equity Option - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Options outstanding, beginning balance (shares) | 28,105 | |
Options outstanding, granted (shares) | 4,870 | |
Options outstanding, exercised (shares) | (436) | |
Options outstanding, forfeited (shares) | (7,004) | |
Options outstanding, ending balance (shares) | 25,535 | 28,105 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | ||
Weighted average exercise price, beginning balance (in USD per share) | $ 0.80 | |
Weighted average exercise price, granted (in USD per share) | 0.33 | |
Weighted average exercise price, exercised (in USD per share) | 0.37 | |
Weighted average exercise price, forfeited (in USD per share) | 0.65 | |
Weighted average exercise price, ending balance (in USD per share) | $ 0.76 | $ 0.80 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | ||
Options outstanding, exercisable (shares) | 19,667 | |
Options outstanding, vested or expected to vest (shares) | 25,535 | |
Weighted average exercise price, exercisable (in USD per share) | $ 0.67 | |
Weighted average exercise price, vested or expected to vest (in USD per share) | $ 0.76 | |
Weighted average remaining contract term | 6 years 4 months 2 days | 5 years 4 months 25 days |
Weighted average remaining contract term, exercisable | 5 years 5 months 4 days | |
Weighted average remaining contract term, vested or expected to vest | 6 years 4 months 2 days | |
Aggregate intrinsic value | $ 3,003 | $ 12,335 |
Aggregate intrinsic value, exercisable | 2,047 | |
Aggregate intrinsic value, vested or expected to vest | $ 3,003 |
STOCK-BASED COMPENSATION STOCK-
STOCK-BASED COMPENSATION STOCK-BASED COMPENSATION (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Volatility | 135.40% | 113.90% |
Risk-Free Interest Rate | 0.60% | 2.50% |
Expected Term (in years) | 5 years 3 months 13 days | 5 years 8 months 21 days |
Dividend Rate | 0.00% | 0.00% |
Fair Value Per Share on Grant Date (in USD per share) | $ 0.29 | $ 4.03 |
NET LOSS PER SHARE - Antidiluti
NET LOSS PER SHARE - Antidilutive Shares (Details) - shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from the computation of diluted loss per share | 25,535,000 | 25,830,000 |
Performance stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from the computation of diluted loss per share | 8,000,000 | 10,750,000 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Legal (Details) | 3 Months Ended |
Mar. 31, 2020lawsuit | |
Commitments and Contingencies Disclosure [Abstract] | |
Number of shareholder derivative suits filed | 4 |
Number of derivative lawsuits currently stayed | 3 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020USD ($)segment | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | |
Segment Reporting Information [Line Items] | |||
Number of operating segments | segment | 2 | ||
Product sales, net | $ 8,270 | $ 14,911 | |
Gross profit | 4,008 | 10,559 | |
Research and development | 1,509 | 1,342 | |
Selling, general and administrative | 7,819 | 18,595 | |
Operating Loss | (5,320) | (9,378) | |
Goodwill | 2,788 | $ 2,788 | |
Intangible assets | 3,757 | 3,766 | |
Consumer Products Segment | |||
Segment Reporting Information [Line Items] | |||
Product sales, net | 8,270 | 14,911 | |
Gross profit | 4,008 | 10,559 | |
Research and development | 305 | 699 | |
Selling, general and administrative | 7,810 | 18,585 | |
Operating Loss | (4,107) | (8,725) | |
Specialty Pharmaceutical Segment | |||
Segment Reporting Information [Line Items] | |||
Product sales, net | 0 | 0 | |
Gross profit | 0 | 0 | |
Research and development | 1,204 | 643 | |
Selling, general and administrative | 9 | 10 | |
Operating Loss | (1,213) | $ (653) | |
Goodwill | 2,800 | 2,800 | |
Intangible assets | $ 3,800 | $ 3,800 |
RELATED PARTIES (Details Narrat
RELATED PARTIES (Details Narrative) $ in Millions | 3 Months Ended |
Mar. 31, 2020USD ($)shares | |
Founders | |
Related Party Transaction [Line Items] | |
Accounts payable | $ 1.2 |
Employee portion of payroll taxes | 6.4 |
Founders | Accrued Expenses | |
Related Party Transaction [Line Items] | |
Accounts payable | 1 |
Payroll taxes payable | 6.2 |
Founders | Other Non-current Liabilities | |
Related Party Transaction [Line Items] | |
Accounts payable | 0.2 |
Founders | Prepaid Expenses and Other | |
Related Party Transaction [Line Items] | |
Due from founders | $ 6.2 |
Restricted Stock Units (RSUs) | Founders | |
Related Party Transaction [Line Items] | |
Vested RSU's (shares) | shares | 2,950,000 |
Selling, General and Administrative Expenses | |
Related Party Transaction [Line Items] | |
Payroll tax expense | $ 0.2 |