Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | May 13, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | CURE PHARMACEUTICAL HOLDING CORP. | |
Entity Central Index Key | 0001643301 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 30,547,469 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2019 | |
Entity Emerging Growth Company | true | |
Entity Small Business | true | |
Entity Ex Transition Period | true |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash | $ 2,593,976 | $ 500,962 |
Accounts receivable, net | 102,799 | |
Inventory | 39,801 | 37,776 |
Prepaid expenses and other assets | 965,641 | 946,386 |
Total current assets | 3,599,418 | 1,587,923 |
Property and equipment, net | 296,825 | 299,910 |
Intellectual property and patents, net | 1,212,961 | 1,206,011 |
Prepaid expenses and other assets | 133,116 | 232,407 |
Other assets | 59,153 | 69,837 |
Total assets | 5,301,473 | 3,396,088 |
Current liabilities: | ||
Accounts payable | 861,614 | 774,387 |
Accrued expenses | 274,491 | 508,733 |
Loan payable | 66,842 | 105,125 |
Notes payable, net | 699,375 | 920,000 |
Convertible promissory notes, net | 2,374,999 | 5,242,431 |
Derivative liability | 770,248 | 617,628 |
Deferred revenue | 311,275 | 383,275 |
Total current liabilities | 5,358,844 | 8,551,579 |
License Fees | 97,500 | |
Total liabilities | 5,456,344 | 8,551,579 |
Commitments and Contingencies (see Note 14) | ||
Stockholders' deficit: | ||
Common stock: $0.001 par value; authorized 75,000,000 shares; 30,366,794 shares and 26,784,019 issued and outstanding as of March 31, 2019 and December 31, 2018, respectively | 30,367 | 26,785 |
Additional paid-in capital | 37,097,902 | 23,424,737 |
Stock payable | 2,004,307 | 645,575 |
Accumulated deficit | (39,297,168) | (29,269,000) |
Total CURE Pharmaceutical Holding Corp stockholders deficit | (164,592) | (5,171,903) |
Noncontrolling interest | 9,721 | 16,412 |
Total stockholders' deficit | (154,871) | (5,155,491) |
Total liabilities and stockholders' deficit | $ 5,301,473 | $ 3,396,088 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2019 | Dec. 31, 2018 |
STOCKHOLDERS' DEFICIT | ||
Common Stock, Par Value Per Share | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 75,000,000 | 75,000,000 |
Common Stock, Shares Issued | 30,366,794 | 26,784,019 |
Common Stock, Shares Outstanding | 30,366,794 | 26,784,019 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenue: | ||
Net product sales | $ 69,322 | |
Consulting research & development income | 72,000 | 35,692 |
Shipping and other sales | 2,500 | |
Total revenues | 74,500 | 105,014 |
Cost of goods sold: | ||
Cost of goods sold | 2,584 | 59,086 |
Gross profit | 71,916 | 45,928 |
Operating expenses: | ||
Research and development expenses | 360,870 | 426,529 |
Selling, general and administrative expenses | 2,365,086 | 1,018,510 |
Total operating expenses | 2,725,956 | 1,445,039 |
Net Operating (loss) before other income (expense) | (2,654,040) | (1,399,111) |
Other income (expense): | ||
Interest income | ||
Other income | 7,533 | |
Change in fair value of derivative liability | (152,620) | 24,777 |
Other expense | (271,201) | (107,881) |
Interest expense | (3,297,480) | (433,830) |
Loss on conversion of convertible promissory notes | (3,659,518) | |
Other income (expense) | (7,380,819) | (509,401) |
Net loss before income taxes | (10,034,859) | (1,908,512) |
Provision for income taxes | ||
Net loss | (10,034,859) | (1,908,512) |
Net loss attributable to non-controlling interest | (6,691) | (6,676) |
Net loss attributable to Cure Pharmaceutical Holding Corp. | $ (10,028,168) | $ (1,901,836) |
Net loss per share, basic | ||
Basic and Diluted | $ (0.35) | $ (0.08) |
Weighted average common shares outstanding | ||
Basic and Diluted | 28,595,784 | 23,937,919 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders' Deficit (Unaudited) - USD ($) | Common Stock | Additional Paid-In Capital | Stock Payable | Accumulated Deficit | Noncontrolling Interest | Total |
Beginning Balance, Shares at Dec. 31, 2017 | 23,901,252 | |||||
Beginning Balance, Amount at Dec. 31, 2017 | $ 23,902 | $ 16,483,632 | $ 324,995 | $ (18,868,599) | $ 46,885 | $ (1,989,185) |
Issuance of common stock for professional services, Shares | 50,000 | |||||
Issuance of common stock for professional services, Amount | $ 50 | 73,950 | 1,228,333 | 1,302,333 | ||
Warrants granted | 37,137 | 37,137 | ||||
Beneficial conversion features | 646,126 | 646,126 | ||||
Noncontrolling interest of Oak Therapeutics, Inc. | (6,676) | (6,676) | ||||
Net loss | (1,901,836) | (1,901,836) | ||||
Ending Balance, Shares at Mar. 31, 2018 | 23,951,252 | |||||
Ending Balance, Amount at Mar. 31, 2018 | $ 23,952 | 17,240,845 | 1,553,328 | (20,770,435) | 40,209 | (1,912,101) |
Beginning Balance, Shares at Dec. 31, 2018 | 26,784,019 | |||||
Beginning Balance, Amount at Dec. 31, 2018 | $ 26,785 | 23,424,737 | 645,575 | (29,269,000) | 16,412 | (5,155,491) |
Issuance of common stock for professional services, Shares | 86,744 | |||||
Issuance of common stock for professional services, Amount | $ 87 | 165,371 | 355,952 | 521,410 | ||
Warrants granted | 3,035,190 | 3,035,190 | ||||
Issuance of common stock for extension of maturity dates relating to convertible promissory notes, Shares | 105,000 | |||||
Issuance of common stock for extension of maturity dates relating to convertible promissory notes, Amount | $ 105 | 320,744 | 320,849 | |||
Issuance of common stock for conversion of convertible promissory notes, Shares | 2,844,156 | |||||
Issuance of common stock for conversion of convertible promissory notes, Amount | $ 2,844 | 8,620,784 | 938,260 | 9,561,888 | ||
Issuance of common stock from the equity incentive plan, Shares | 130,208 | |||||
Issuance of common stock from the equity incentive plan, Amount | $ 130 | (130) | ||||
Issuance of common stock for cash, Shares | 416,667 | |||||
Issuance of common stock for cash, Amount | $ 416 | 499,584 | 500,000 | |||
Issuance of common stock for cancellation of accounts payable, Amount | 64,520 | 64,520 | ||||
Fair value of stock options and restricted stock granted | 230,291 | 230,291 | ||||
Net loss | (10,028,168) | (10,028,168) | ||||
Ending Balance, Shares at Mar. 31, 2019 | 30,366,794 | |||||
Ending Balance, Amount at Mar. 31, 2019 | $ 30,367 | $ 37,097,902 | $ 2,004,307 | $ (39,297,168) | $ 9,721 | $ (154,871) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (10,034,859) | $ (1,908,512) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock based compensation - services | 91,833 | |
Stock based compensation - prepaid | 468,146 | 237,689 |
Stock issued for amending convertible promissory notes | 320,850 | |
Loss on conversion of convertible promissory notes | 3,659,518 | |
Warrant expense from convertible promissory notes | 2,173,056 | |
Depreciation and amortization | 40,437 | 34,954 |
Amortization of loan discounts | 488,274 | 360,089 |
Recovery of bad debt expense | (7,500) | |
Inventory reserve for obsolesce | 2,436 | |
Change of fair value in derivative liabilities | 152,620 | (24,777) |
Fair value of vested stock options | 230,291 | |
Warrants granted for commission expense | 590,933 | 37,137 |
Warrants granted for broker fee expense | 271,201 | |
Change in other assets and liabilities: | ||
Accounts receivable | 110,299 | (35,543) |
Inventory | (4,461) | (24,991) |
Prepaid expenses and other assets | 41,466 | 58,813 |
Other assets | 10,684 | 8,687 |
Accounts payable | 151,747 | 14,225 |
Accrued expenses | 193,128 | 53,621 |
Deferred revenue | (72,000) | 35,022 |
License fees | 97,500 | |
Cash used in operating activities | (1,024,401) | (1,153,586) |
Cash flows from investing activities | ||
Purchase in intangible assets | (21,180) | (6,638) |
Acquisition of property and equipment, net | (23,122) | (15,549) |
Cash used in investing activities | (44,302) | (22,187) |
Cash flows from financing activities | ||
Proceeds from convertible notes payable | 3,425,000 | 2,025,000 |
Proceeds from common stock issuance | 500,000 | |
Repayment of convertible notes payable | (725,000) | |
Repayment of loans payable | (38,283) | (116,899) |
Cash provided by financing activities | 3,161,717 | 1,908,101 |
Net increase in cash and cash equivalents | 2,093,014 | 732,328 |
Cash and cash equivalents, beginning of period | 500,962 | 108,249 |
Cash and cash equivalents, end of period | 2,593,976 | 840,577 |
Cash paid for interest and income taxes: | ||
Interest | 81,341 | 19,973 |
Income taxes | ||
Non-cash financing activities: | ||
Common stock related to prepaid expenses | 1,323,562 | |
Warrants granted for discount on convertible promissory notes | 646,127 | |
Common stock issued for conversion of promissory notes and accrued interest | 5,373,781 | |
Common stock payable for note conversion | 528,589 | |
Common issued for settlement of accounts payable | 64,520 | |
Beneficial conversion features for convertible promissory notes | $ 801,331 |
ORGANIZATION AND DESCRIPTION OF
ORGANIZATION AND DESCRIPTION OF BUSINESS | 3 Months Ended |
Mar. 31, 2019 | |
Notes to Financial Statements | |
Note 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS | Business Operations CURE Pharmaceutical Holding Corp., its wholly-owned subsidiaries, CURE Pharmaceutical Corporation (“CURE Pharmaceutical”) and its 63% majority owned subsidiary Oak Therapeutics, Inc. (“Oak”) (collectively (the “Company,” “we,” “our,” “us,” or “CURE”) is an emerging growth company focusing on drug formulation and delivery technology company that researches and manufactures novel dosage forms to improve drug safety, efficacy and patient adherence. Our mission is to improve lives by redefining how medications are delivered and experienced. Our business strategy is to develop products using our proprietary technology, license the product rights to partners responsible for clinical development, regulatory approval, marketing and sales and retain exclusive manufacturing rights. We operate a 25,000 square foot cGMP manufacturing plant in Oxnard, CA. Our technology platform includes oral dissolving film (ODF) and transdermal formulations. We apply our technology to pharmaceutical drugs and dietary supplements. ODF products are about the size of a postage stamp and composed of excipients such as polymers, stabilizers, lipids and surfactants which are all generally recognized as safe. They can be designed to deliver active ingredients to the gastrointestinal tract (GI) when placed on the tongue and swallowed, or directly to the blood stream when placed under the tongue (sublingual) or on the inner lining of the cheek and lip (buccal). We currently have two commercial products and several development programs underway: Background CURE, formerly known as Makkanotti Group Corp, was incorporated in the State of Nevada on May 15, 2014. The Company was originally formed to engage in the business of manufacturing food paper bags in Nicosia, Cyprus. On November 7, 2016, the Company changed its name to CURE Pharmaceutical Holding Corp. On November 7, 2016, the Company, in a reverse take-over transaction, acquired CURE Pharmaceutical Corporation (“CURE Pharmaceutical”), a specialty pharmaceutical and bioscience company based in California that specializes in drug delivery technologies, by executing a Share Exchange Agreement and Conversion Agreement (“Exchange Agreement”) by and among the Company and a holder of a majority of the issued and outstanding capital stock of the registrant prior to the closing (the “Majority Stockholder”), on the one hand, and CURE Pharmaceutical, a California corporation, all of the shareholders of CURE Pharmaceutical’s issued and outstanding share capital (the “CURE Pharm Shareholders”) and the holders of certain convertible promissory notes of CURE Pharmaceutical (“CURE Pharm Noteholders”), on the other hand. Hereinafter, this share exchange transaction is described as the “Share Exchange.” As a result of the Share Exchange, CURE Pharmaceutical became a wholly owned subsidiary of the Company, and the CURE Pharm Shareholders and CURE Pharm Noteholders became the controlling shareholders of the Company. For accounting purposes, CURE Pharmaceutical was the surviving entity. The transaction was accounted for using the reverse acquisition method of accounting. As a result of the recapitalization and change in control, CURE Pharmaceutical was the acquiring entity in accordance with ASC 805, Business Combinations. We licensed our technology available to a private company, Oak Therapeutics (“Oak”), to develop products for sale in the developing world (“Territory”). On November 10, 2017, we received 269,000 shares of Oak as consideration for an exclusive license to our patent rights in the Territory, along with a royalty-free non-exclusive license to any improvements made by Oak. As a result of this transaction, we owned approximately 63% of Oak’s outstanding shares and have consolidated Oak’s financial statements as of the fourth quarter 2017. Due to the lack of performance by Oak under the license agreement, on April 15, 2019, we terminated all contractual relationships with Oak, including the license and surrendered our Oak shares to Oak. Further information can be found in NOTE 15 – SUBSEQUENT EVENTS. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2019 | |
Notes to Financial Statements | |
Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The summary of significant accounting policies presented below is designed to assist in understanding the Company’s financial statements. Such financial statements and accompanying notes are the representations of Company’s management, who is responsible for their integrity and objectivity. Principle of Consolidation and Basis of Presentation The condensed consolidated financial statements include the accounts of CURE Pharmaceutical Holding Corp (“CPHC”), its wholly-owned subsidiary, CURE Pharmaceutical Corporation (“CURE”) and its 63% majority owned subsidiary Oak Therapeutics, Inc. (“OAK”), collectively referred to as (“CURE”, “we”, “us”, “our” or the “Company”). All significant inter-company balances and transactions have been eliminated in consolidation. The Company’s film strip product represents the principal operations of the Company. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of March 31, 2019, and the results of operations and cash flows for the periods presented. The results of operations for the three months ended March 31, 2019 and 2018, are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in Form 10-K for the fiscal period ended December 31, 2018 filed with the Securities and Exchange Commission (the “SEC”) on April 1, 2019. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. These estimates and assumptions also affect the reported amounts of revenues, costs and expenses during the reporting period. Management evaluates these estimates and assumptions on a regular basis. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents. As of March 31, 2019 and December 31, 2018, the Company had no cash equivalents. At March 31, 2019 and December 31, 2018, the Company maintains its cash and cash equivalents in banks insured by the Federal Deposit Insurance Corporation (“FDIC”) in accounts that at times may be in excess of the federally insured limit of $250,000 per bank. The Company minimizes this risk by placing its cash deposits with major financial institutions. Investment in Associates An associate is an entity over which the Company has significant influence through a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but not control or joint control over those policies. The results of assets and liabilities of associates are incorporated in the condensed consolidated financial statements using the equity method of accounting. Under the equity method, investments in associates are carried in the consolidated balance sheet at cost as adjusted for post-acquisition changes in the Company’s share of the net assets of the associate, less any impairment in the value of the investment. Losses of an associate in excess of the Company’s interest in that associate are not recognized. Additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate. Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate recognized at the date of acquisition is recognized as goodwill. The goodwill is included within the carrying amount of the investment. On January 8, 2016, the Company received 50% ownership in Cure Innovations, Inc (“CI”). CI was created in 2015 by IncuBrands Studio, Inc (“IncuBrands”). The Company and IncuBrands each own 50% of the common stock of CI. The Company and IncuBrands entered into a Joint Venture agreement in 2013 to distribute several OTF products utilizing IncuBrands marketing and contacts in various industries as well as utilize the Company’s technology and capabilities of manufacturing OTF’s. On December 28, 2018, in agreement with IncuBrands, the Company dissolved CI as we did not see a viable future relating to this joint venture. On December 6, 2016, the Company entered into a Joint Venture Agreement (“Joint Venture”) with Pace Wellness, Inc. (“Pace”) to jointly develop three Active Pharmaceutical Ingredients (“API”) within the nonprescription and/or Over-the-Counter (OTC) medicines specifically utilizing the Company’s patented and proprietary CUREFilm™ Technology. The three API’s to be jointly developed are Diphenhydramine HCL, Omeprazole and a third API to be determined at a later date (“Products”). Pace shall be the exclusive global distributor of the Products under the Solves Strips® branding or other private or branded labels. All benefits, advantages, and liabilities derived from, or incurred in respect of the Joint Venture shall be borne by the parties in proportion of their respective participating interests of 50/50 equal interest. As of March 31, 2019, the Company has only contributed $5,000 to the Joint Venture. The Company is looking to dissolve this Joint Venture due to Pace’s insolvency and we are no longer looking to develop these Products. Property and Equipment The Company capitalizes expenditures related to property and equipment, subject to a minimum rule, that have a useful life greater than one year for: (1) assets purchased; (2) existing assets that are replaced, improved or the useful lives have been extended; or (3) all land, regardless of cost. Acquisitions of new assets, additions, replacements and improvements (other than land) costing less than the minimum rule in addition to maintenance and repair costs, including any planned major maintenance activities, are expensed as incurred. Depreciation has been provided using the straight-line method on the following estimated useful lives: Manufacturing equipment 5-7 Years Computer and other equipment 3-7 Years Leasehold Improvements Lesser of useful life or the term of the lease Accounts Receivable Accounts receivable are generally unsecured. The Company establishes an allowance for doubtful accounts receivable based on the age of outstanding invoices and management’s evaluation of collectability. Accounts are written off after all reasonable collection efforts have been exhausted and management concludes that likelihood of collection is remote. Any future recoveries are applied against the allowance for doubtful accounts. At March 31, 2019 and December 31, 2018, management determined that an allowance was necessary which amounted to approximately $0 and $7,500, respectively. Inventory Inventory is stated at the lower of cost or net realizable value. The Company determines the cost of its inventory, which includes amounts related to materials, direct labor, and manufacturing overhead, on a first-in, first-out basis. The Company performs an assessment of the recoverability of capitalized inventory during each reporting period and writes down any excess and obsolete inventories to their realizable value in the period in which the impairment is first identified. Impairment of Long-Lived Assets We review all of our long-lived assets for impairment indicators throughout the year and perform detailed testing whenever impairment indicators are present. In addition, we perform detailed impairment testing for indefinite-lived intangible assets, at least annually, at December 31. When necessary, we record charges for impairments. Specifically: • For finite-lived intangible assets, such as developed technology rights, and for other long-lived assets, we compare the undiscounted amount of the projected cash flows associated with the asset, or asset group, to the carrying amount. If the carrying amount is found to be greater, we record an impairment loss for the excess of book value over fair value. In addition, in all cases of an impairment review, we re-evaluate the remaining useful lives of the assets and modify them, as appropriate; and • For indefinite-lived intangible assets, such as acquired in-process R&D assets, each year and whenever impairment indicators are present, we determine the fair value of the asset and record an impairment loss for the excess of book value over fair value, if any. Management determined that no impairment indicators were present and that no impairment charges were necessary as of March 31, 2019 or December 31, 2018. Revenue Recognition We recognize revenue in accordance with Accounting Standards Codification (“ASC”) 606, “Revenue Recognition”. The Company adopted Topic 606 using a modified retrospective approach for the years ended December 31, 2017 and prior and has been applied prospectively in the Company’s financial statements beginning January 1, 2018. Revenues under Topic 606 are required to be recognized either at a “point in time” or “over time”, depending on the facts and circumstances of the arrangement, and will be evaluated using a five-step model. The adoption of Topic 606 did not have a material impact on the Company’s financial statements, at initial implementation nor will it have a material impact on an ongoing basis. To achieve the core principle of Topic 606, we perform the following steps: 1. Identify the contract(s) with customer; 2. Identify the performance obligations in the contract; 3. Determine the transactions price; 4. Allocate the transactions price to the performance obligations in the contract; and 5. Recognize revenue when (or as) we satisfy a performance obligation. We derive revenues from two primary sources: products and services. Product revenue includes the shipment of product according to the agreement with our customers. Services include research and development contracts for the development of OTF products utilizing our CureFilm™ Technology or our other proprietary technologies. Rarely, contracts with customers contain multiple performance obligations. For these contracts, the Company accounts for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. Standalone selling prices are typically estimated based on observable transactions when these services are sold on a standalone basis. The Company’s formulation and product development income include services for the development of OTF products utilizing our CureFilm™ Technology. Our development contracts have up to four phases. Revenue is recognized based on progress toward completion of the performance obligation in each phase. The method to measure progress toward completion requires judgment and is based on the nature of the products or services to be provided. The Company generally uses the input method to measure progress for its contracts because it best depicts the transfer of assets to the customer, which occurs as the Company incurs costs for the contracts. Under the cost-to-cost measure of progress, the progress toward completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenue is recorded proportionally as costs are incurred. Costs to fulfill these obligations mainly include materials, labor, supplies and consultants. Deferred revenue is shown separately in the condensed consolidated balance sheets. At March 31, 2019 and December 31, 2018 we had deferred revenues of $311,275 and $383,275, respectively. Advertising Expense The Company expenses marketing, promotions and advertising costs as incurred. Such costs are included in general and administrative expense in the accompanying statements of operations. The Company did not record advertising costs for the three months periods ended March 31, 2019 and 2018. Research and Development Costs incurred in connection with the development of new products and processes are charged to research and development expenses as incurred. The Company recorded research and development expenses of $360,870 and $426,529 for the three months periods ended March 31, 2019 and 2018, respectively. Income Taxes The Company utilizes FASB ASC 740, “Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized. The Company generated a deferred tax asset through net operating loss carry-forward. However, a valuation allowance of 100% has been established due to the uncertainty of the Company’s realization of the net operating loss carry forward prior to its expiration. Stock-Based Compensation Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date. Convertible Debentures Beneficial Conversion Feature If the conversion features of conventional convertible debt provides for a rate of conversion that is below market value, this feature is characterized as a beneficial conversion feature (“BCF”). A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20 ““Debt with Conversion and Other Options.” In those circumstances, the convertible debt is recorded net of the discount related to the BCF and the Company amortizes the discount to interest expense over the life of the debt using the effective interest method. Derivative Liabilities ASC 815-40 (formerly SFAS No. 133 “Accounting for derivative instruments and hedging activities”), requires that embedded derivative instruments be bifurcated and assessed, along with free-standing derivative instruments such as warrants, on their issuance date and in accordance with ASC 815-40-15 (formerly EITF 00-19 “Accounting for derivative financial instruments indexed to, and potentially settled in, a company’s own stock”) to determine whether they should be considered a derivative liability and measured at their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black-Scholes option pricing formula and present value pricing. At March 31, 2019 and December 31, 2018, the Company adjusted its derivative liability to its fair value, and reflected the change in fair value, in its consolidated statement of operations and comprehensive loss. Fair Value Measurements The Company follows FASB ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”), for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements and establishes a framework for measuring fair value and expands disclosure about such fair value measurements. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below: Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use. The carrying amounts reported in the balance sheet for cash, accounts receivable, accounts payable, accrued expenses and notes and loans payable approximate their estimated fair market value based on the short-term maturity of these instruments. The carrying amount of the notes and convertible promissory notes approximates the estimated fair value for these instruments as management believes that such notes constitute substantially all of the Company’s debt and the interest payable on the notes approximates the Company’s incremental borrowing rate. We measured the liability for price adjustable warrants and embedded derivative features in the convertible notes, using the probability adjusted Black-Scholes option pricing model (“Black-Scholes”), which management has determined approximates values using more complex methods, using Level 3 inputs. (See Note 10) Net Loss per Common Share Basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period, excluding any unvested restricted stock awards. Diluted net loss per share includes the effect of common stock equivalents (stock options, unvested restricted stock, and warrants) when, under either the treasury or if-converted method, such inclusion in the computation would be dilutive. Net loss is adjusted for the dilutive effect of the change in fair value liability for price adjustable warrants, if applicable. The following number of shares have been excluded from diluted net income (loss) since such inclusion would be anti-dilutive: Year ended December 31, March 31, 2019 December 31, 2018 Restricted stock and stock options outstanding - 97,742 Warrants 90,000 2,879,695 Shares to be issued upon conversion of convertible payable 115,047 236,475 Total 205,047 3,213,912 Going Concern and Management’s Liquidity Plans The accompanying condensed consolidated financial statements have been prepared on the basis that we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. At March 31, 2019, we had a significant accumulated deficit of approximately $39.3 million and a negative working capital of approximately $1.8 million. Our operating activities consume the majority of our cash resources. We anticipate that we will continue to incur operating losses as we execute our commercialization and research and development plans, as well as strategic and business development initiatives. In addition, we have had and will continue to have negative cash flows from operations, at least into the near future. We have previously funded, and plan to continue funding, our losses primarily through the sale of common and preferred stock, combined with or without warrants, the sale of notes, revenue provided from our license agreements and, to a lesser extent, equipment financing facilities and secured loans. However, we cannot be certain that we will be able to obtain such funds required for our operations at terms acceptable to us or at all. Specifically, management has identified that a minimum of $4,000,000 of capital is needed over the next 12 months in order sustain operations. These capital needs take into account, among other things, management’s plans to advance intellectual property, maintenance of patents, upgrades for manufacturing and to hire personnel for business development. Management has outlined a plan to raise between $8,000,000 to $10,000,000 in capital over the next 12 months through a merger and $1,000,000 to $2,000,000 through the issuance of shares of the Company’s common stock to accredited investors. Management believes that the capital raised through these methods will be sufficient to sustain operations for the next 12 to 18 months. However, the outcome of these matters cannot be predicted with certainty at this time. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern for one year from the issuance of the financial statements. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets and liabilities that might be necessary if the Company is unable to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability of and classification of assets carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern. Recently Issued Standards In February 2016, the FASB issued ASU 2016-02, "Leases" The new standard provides optional practical expedients in transition. We expect to only elect the "package of practical expedients" where, under the new standard, prior conclusions about lease identification, lease classification and initial direct costs do not need to be reassessed. The new standard also provides practical expedients for ongoing accounting and we do not expect to elect any of these practical expedients on adoption. We continue to assess the impact of the new standard and believe it will not have a material effect on the condensed consolidated balance sheet. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This new standard clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This new standard became effective for the Company on January 1, 2018. There are various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and did not have a material impact on the Company’s financial position, results of operations or cash flows. In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350). ASU. 2017-04 simplifies the subsequent measurement of goodwill by removing the second step of the two-step impairment test. The amendment requires an entity to perform its annual, or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 becomes effective for the Company on January 1, 2020 with early adoption permitted and will be applied prospectively. In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation: Scope of Modification Accounting, which provides clarification on when modification accounting should be used for changes to the terms or conditions of a share-based payment award. This ASU does not change the accounting for modifications but clarifies that modification accounting guidance should only be applied if there is a change to the value, vesting conditions or award classification and would not be required if the changes are considered non-substantive. The amendments of this ASU became effective for the Company in the first quarter of 2018. The adoption of ASU 2017-09 did not have an impact on the Company’s condensed consolidated financial statements. In June 2018, the FASB issued ASU No. 2018-7, Compensation – Stock Compensation (Topic 718) — Improvements to Nonemployee Share-Based Payment Accounting. This guidance supersedes ASC 505-50 and expands the scope of ASC 718 to include all share-based payment arrangements related to the acquisition of goods and services from both nonemployees and employees. The amendments should be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The guidance permits early adoption and was adopted by the Company in the first quarter of fiscal year 2019. The adoption of this ASU did not have any impact on the Company’s consolidated financial statements. There are various other updates recently issued, however, they are not expected to a have a material impact on the Company’s consolidated financial position, results of operations or cash flows. |
INVENTORY
INVENTORY | 3 Months Ended |
Mar. 31, 2019 | |
Notes to Financial Statements | |
Note 3 - INVENTORY | Inventory consists of raw materials, packaging components, work-in-process and finished goods. The Company’s inventory is stated at the lower of cost (FIFO cost basis) or market. The carrying value of inventory consisted of the following at March 31, 2019 and December 31, 2018: March 31, 2019 December 31, 2018 Raw materials $ 27,094 $ 25,297 Packaging components 7,687 7,687 Work-in-process 8,162 8,162 42,943 41,146 Reserve for obsolescence (3,142 ) (3,370 ) Total inventory $ 39,801 $ 37,776 |
PREPAID EXPENSES AND OTHER ASSE
PREPAID EXPENSES AND OTHER ASSETS | 3 Months Ended |
Mar. 31, 2019 | |
Notes to Financial Statements | |
Note 4 - PREPAID EXPENSES AND OTHER ASSETS | As of March 31, 2019 and December 31, 2018, prepaid expenses and other assets consisted of the following: March 31, 2019 December 31, 2018 Prepaid consulting services– stock-based compensation $ 897,313 $ 935,883 Prepaid consulting services 73,667 82,167 Prepaid insurance 87,911 120,877 Other receivables 2,666 2,666 Prepaid expenses 37,200 37,200 Prepaid expenses and other assets 1,098,757 1,178,793 Current portion of prepaid expenses and other assets (965,641 ) (946,386 ) Prepaid expenses and other assets less current portion $ 133,116 $ 232,407 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 3 Months Ended |
Mar. 31, 2019 | |
Notes to Financial Statements | |
Note 5 - PROPERTY AND EQUIPMENT | As of March 31, 2019 and December 31, 2018, property and equipment consisted of the following: March 31, 2019 December 31, 2018 Manufacturing equipment $ 857,612 $ 841,098 Computer and other equipment 186,655 183,346 Leasehold improvements 51,788 48,488 Less accumulated depreciation (799,230 ) (773,022 ) Property and Equipment, net $ 296,825 $ 299,910 For the three months periods ended March 31, 2019 and 2018, depreciation expense amounted to $26,207 and $24,055, respectively, which includes depreciation of $0 and $2,160 for capitalized leased assets for each of the periods ended, respectively. Accumulated depreciation for property held under capital leases were $43,201 and $39,337 for the three months periods ended March 31, 2019 and 2018, respectively. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2019 | |
Notes to Financial Statements | |
NOTE 6 - INTANGIBLE ASSETS | The Company incurred $21,180 and $6,638 of legal patent costs that were capitalized during the three months periods ended March 31, 2019 and 2018, respectively. In addition, the Company did not purchase any patents through issuance of common stock shares of the Company for the three months period ended March 31, 2019. The Company purchased $280,100 of patents through the issuance of 200,000 common stock shares of the Company during the year ended December 31, 2018. Intangible Asset Summary The following table summarizes the estimated fair values as of March 31, 2019 of the identifiable intangible assets acquired, their useful life, and method of amortization: Estimated Fair Value Remaining Estimated Useful Life (Years) Three Months Amortization Expense Intellectual Property $ 814,582 14.41 $ 10,206 Patents 600,344 17.96 4,024 Total $ 1,414,926 $ 14,230 Less: accumulated amortization (201,965 ) Intellectual property and patents, net 1,212,961 Less: pending patents not subject to amortization (272,415 ) Net intangible assets subject to amortization $ 940,546 The net intangible asset was $1,212,961, net of accumulated amortization of $201,965, as of March 31, 2019. Amortization expense was $14,230 and $10,899 for the three months periods ended March 31, 2019 and 2018, respectively. The estimated aggregate amortization expense over each of the next five years is as follows: 2019 $ 43,950 2020 58,600 2021 58,600 2022 58,600 2023 58,600 Thereafter 662,196 Total Amortization $ 940,546 |
LOAN PAYABLE
LOAN PAYABLE | 3 Months Ended |
Mar. 31, 2019 | |
Notes to Financial Statements | |
Note 7 - LOAN PAYABLE | Loan payable consists of the following at March 31, 2019 and December 31, 2018: March 31, 2019 December 31, 2018 Notes to a company due September 29, 2019, including interest at 6.00% per annum; unsecured; interest due monthly $ 66,842 $ 105,125 Current portion of loan payable (66,842 ) (105,125 ) Loan payable, less current portion $ - $ - Interest expense for the three months periods ended March 31, 2019 and 2018 was $2,230 and $800, respectively. |
NOTES PAYABLE
NOTES PAYABLE | 3 Months Ended |
Mar. 31, 2019 | |
Notes to Financial Statements | |
Note 8 - NOTES PAYABLE | Notes payable consist of the following at March 31, 2019 and December 31, 2018: March 31, 2019 December 31, 2018 Note to a company amended on August 27, 2017 and February 27, 2019, due on or before one month from the amended date and the maturity date shall be extended for one month periods as long as the Company is not in default, interest shall accrue at 10% per annum, secured by the Company’s intellectual property $ 400,000 $ 650,000 Note to an individual, non-interest bearing, unsecured and has no fixed terms of repayment 50,000 50,000 Note to an individual due April 1, 2019, interest payable at 6% per annum, unsecured, principal and accrued interest due at maturity. The Company issued 50,000 shares of its common stock on October 18, 2018 at a price per share of $2.88 as an equity kicker. This note and accrued interest was repaid on April 2, 2019, 150,000 150,000 Note to a company due December 15, 2018, interest payable at 5% per annum, unsecured, principal and accrued interest due at maturity. If this note is still outstanding as of the date of any bona fide sale of the Company’s preferred stock or common stock in excess of $4,000,000 in gross proceeds, in one transaction or a serious of related transactions, which offering definitively sets a price per share of common stock and results in a listing of the Company’s common stock on a national securities exchange. On January 1, 2019, we entered into an Amendment to extend the maturity date to June 30, 2019. 100,000 100,000 700,000 950,000 Unamortized discount (625 ) (30,000 ) Current portion of loan payable (699,375 ) (920,000 ) Loan payable, less current portion $ - $ - Interest expense for the three month periods ended March 31, 2019 and 2018 was $21,661 and $19,027, respectively. |
CONVERTIBLE PROMISSORY NOTES
CONVERTIBLE PROMISSORY NOTES | 3 Months Ended |
Mar. 31, 2019 | |
Notes to Financial Statements | |
Note 9 - CONVERTIBLE PROMISSORY NOTES | Convertible promissory notes consist of the following at March 31, 2019 and December 31, 2018: March 31, 2019 December 31, 2018 Convertible promissory notes totaling $1,400,000 due between December 31, 2018 and February 28, 2019, interest payable at 8% per annum; unsecured; principal and accrued interest convertible into common stock at the lower of $7.00 per share or the price per share of the latest closing of a debt or equity offering by the Company greater than $3,000,000; accrued interest due between December 31, 2018 and February 28, 2019. A total of $250,000 convertible promissory notes was repaid in 2018 and $450,000 convertible promissory notes were repaid in 2019. A total $400,000 of convertible promissory notes plus accrued interest of $71,342 have been converted in to 254,779 common stock shares of the Company in 2019. Remaining $550,000 of convertible promissory notes are currently in default. $ 550,000 $ 1,400,000 Convertible promissory notes totaling $1,275,000 due November 30, 2018 and $750,000 due February 28, 2019, interest payable at 9% per annum; unsecured; principal and accrued interest convertible into common stock at either the price per share equal to the average closing price of the Company’s Common Stock on the OTC Markets for the five consecutive trading days prior to the delivery of a Notice of Conversion (“Optional Conversion”) or price per share equal to 75% of the price of the Company’s next bona fide sale of its preferred stock or Common Stock in excess of $4,000,000 in gross proceeds, in one transaction or a series of related transactions, which offering definitively sets a price per share of the Company’s Common Stock or preferred stock and enables the Company to list its common stock on a national securities exchange; accrued interest to be paid quarterly beginning September 30, 2018, which has not yet been paid. During the first quarter of 2019, the Company repaid $275,000. On February 13, 2019, $750,000 of convertible promissory notes plus accrued interest and penalties of $135,825 were converted into 479,144 common stock shares of the Company. On February 15, 2019, $1,000,000 of convertible promissory notes plus accrued interest and penalties of $94,750 were converted into 591,757 common stock shares of the Company. - 2,025,000 Convertible promissory note totaling $500,000 due April 30, 2019, interest payable at 9% per annum; unsecured; principal and accrued interest convertible into common stock at a price per share (the “ Voluntary Conversion PPS “) equal to 75% of the average of the closing prices of the Company’s Common Stock on the OTC Market (or any other market on which the common stock of the Company is then listed for trading) over the thirty (30) consecutive trading days prior to the delivery of the notice of conversion by the Investor to the Company, or, if at the time of such conversion the shares of the Company’s Common Stock are not listed for trading, then the entire then outstanding Investment Amount shall be converted into that number of shares of the most senior class of shares of the Company existing at the time of such conversion, at a price per share equal to 75% of the fair market value of such Common Stock as shall be determined by the Board of Directors based on, among others, a valuation prepared by an independent third party and which shall have been submitted to the Company not more than 90 days prior to the date of such determination by the Board of Directors. In the event of the consummation by the Company, on or before the Maturity Date, of a transaction or series of related transactions in which the Company issues equity securities of the Company in consideration of at least US$4,000,000 (a “ Financing “), the then outstanding Investment Amount not previously converted hereunder shall be automatically converted, immediately prior to (but conditioned upon) the consummation of such Financing, into such number of shares (or a sub-class thereof) issued by the Company in the Financing, equal to the outstanding Investment Amount divided by a price per share equal to 75% of the lowest price per share paid to the Company in the Financing. In the event the Financing is not consummated by the Maturity Date, then the outstanding Investment Amount as of the Maturity Date not previously converted hereunder shall be automatically converted, on the Maturity Date, into such number of shares (or a sub-class thereof) issued by the Company in the Financing, equal to the outstanding Investment Amount divided by the Voluntary Conversion PPS. This convertible promissory note and accrued interest was repaid on April 29, 2019. 500,000 500,000 Convertible promissory note totaling $500,000 due December 31, 2018, interest payable at 9% per annum; secured by all assets of the company; principal and accrued interest convertible into common stock at either the price per share equal to the average closing price of the Company’s Common Stock on the OTC Markets for the five consecutive trading days prior to the delivery of a Notice of Conversion (“Optional Conversion”) or price per share equal to 75% of the price of the Company’s next bona fide sale of its preferred stock or Common Stock in excess of $4,000,000 in gross proceeds, in one transaction or a series of related transactions, which offering definitively sets a price per share of the Company’s Common Stock or preferred stock and enables the Company to list its common stock on a national securities exchange; accrued interest to be paid quarterly beginning September 30, 2018. In 2019, the noteholder of this convertible promissory note entered into a debt conversion agreement to convert this convertible promissory note plus accrued interest into common stock shares of the Company at a $1.85 conversion price. - 500,000 Convertible promissory notes totaling $575,000 due June 27, 2019, interest payable at 9% per annum; unsecured; principal and accrued interest convertible into common stock at either the price per share equal to the average closing price of the Company’s Common Stock on the OTC Markets for the five consecutive trading days prior to the delivery of a Notice of Conversion (“Optional Conversion”) or price per share equal to 75% of the price of the Company’s next bona fide sale of its preferred stock or Common Stock in excess of $4,000,000 in gross proceeds, in one transaction or a series of related transactions, which offering definitively sets a price per share of the Company’s Common Stock or preferred stock and enables the Company to list its common stock on a national securities exchange; accrued interest to be paid quarterly beginning December 31, 2018. $575,000 convertible promissory notes due June 27, 2019 plus accrued interest and penalties of $78,034 have been converted into 353,221 common stock shares of the Company in 2019. - 575,000 Convertible promissory notes totaling $2,000,000 due October 31, 2019, interest payable at 9% per annum; unsecured; principal and accrued interest convertible into common stock at either the price per share equal to the average closing price of the Company’s Common Stock on the OTC Markets for the five consecutive trading days prior to the delivery of a Notice of Conversion (“Optional Conversion”) or price per share equal to 75% of the price of the Company’s next bona fide sale of its preferred stock or Common Stock in excess of $4,000,000 in gross proceeds, in one transaction or a series of related transactions, which offering definitively sets a price per share of the Company’s Common Stock or preferred stock and enables the Company to list its common stock on a national securities exchange; accrued interest to be paid quarterly beginning December 31, 2018, which has not yet been paid. In 2019, the noteholder of this convertible promissory note entered into a debt conversion agreement to convert this convertible promissory note plus accrued interest into common stock shares of the Company at a $1.85 conversion price. - 575,000 Convertible demand note totaling $2,000,000 due on demand at any time after the earlier of (i) an Event of Default, (ii) the closing of a proposed merger (the “Merger”) of a wholly-owned subsidiary of the Company with and into Chemistry Holdings, Inc., a Delaware corporation, and (iii) May 13, 2019 if a binding definitive agreement and plan of merger with respect to the Merger has not been executed by that date, in each case if this Note has not previously converted into Common Stock. If the Merger has not been consummated by May 13, 2019, the outstanding principal balance of this Note (the “Outstanding Balance”) shall automatically be converted (the “Conversion”) into shares of common stock, par value $0.001 per share, of the Company at a price per share equal to $3.34 (the “Conversion Price”) effective as of May 13, 2019 (the “Conversion Date”), and the Outstanding Balance shall thereafter be considered repaid in full. Please see Note 15 - Subsequent Events footnote for further information. 2,000,000 - 3,050,000 5,575,000 Unamortized discount (675,001 ) (332,569 ) Current portion of convertible promissory notes 2,374,999 5,242,431 Convertible promissory notes, less current portion $ - $ - During the three month periods ended March 31, 2019 and 2018, the Company incurred $458,899 and $147,608, respectively, amortization of discount. Interest expense for the three month periods ended March 31, 2019 and 2018 was $72,813 and $303,174, respectively. |
DERIVATIVE LIABILITY
DERIVATIVE LIABILITY | 3 Months Ended |
Mar. 31, 2019 | |
Notes to Financial Statements | |
Note 10 - DERIVATIVE LIABILITY | The Company evaluates its convertible instruments, options, warrants or other contracts, to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and Hedging.” The result of this accounting treatment is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income (expense). Upon conversion or exercise of a derivative instruments, the instrument is marked to fair value at the conversion date then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date. The following table summarizes fair value measurements by level at March 31, 2019 for assets and liabilities measured at fair value on a recurring basis: Total Level 1 Level 2 Level 3 Fair value of Derivative Liability $ 770,248 $ - $ - $ 770,248 The following table summarizes fair value measurements by level at December 31, 2018 for assets and liabilities measured at fair value on a recurring basis: Total Level 1 Level 2 Level 3 Fair value of Derivative Liability $ 617,628 $ - $ - $ 617,628 The Company has issued convertible promissory notes during 2018 and 2017. The convertible notes require us to record the value of the conversion feature as a liability, at fair value, pursuant to ASC 815, including provisions in the notes that protect the holders from declines in the Company’s stock price, which is considered outside the control of the Company. The derivative liabilities are marked-to-market each reporting period and changes in fair value are recorded as a non-operating gain or loss in our statement of operations, until they are completely settled. The fair value of the conversion feature is determined each reporting period using the Black-Scholes option pricing model and is affected by changes in inputs to that model including our stock price, expected stock price volatility, dividends, interest rates and expected term. The assumptions used in valuing the derivative liability during 2019 were as follows: Significant assumptions: Risk-free interest rate at grant date 2.23 % Expected stock price volatility 138.42 % Expected dividend payout - Expected option life (in years) 1 Expected forfeiture rate 0 The following table presents a reconciliation of the derivative liability measured at fair value on a recurring basis from December 31, 2017 to March 31, 2019: Fair value of derivative liabilities Balance at December 31, 2017 $ 90,738 Initial fair value of derivative liability recorded as debt discount 297,599 Loss on change in fair value included in earnings 229,291 Balance at December 31, 2018 617,628 Loss on change in fair value included in earnings 152,620 Balance at March 31, 2019 $ 770,248 |
STOCK BASED AWARDS
STOCK BASED AWARDS | 3 Months Ended |
Mar. 31, 2019 | |
Notes to Financial Statements | |
NOTE 11 - STOCK BASED AWARDS | On December 29, 2017 (“Effective Date”), the Company adopted the CURE Pharmaceutical Holding Corp. 2017 Equity Incentive Plan (the “Plan”), pursuant to which an aggregate of 5,000,000 shares of the common stock of the Company are available for grant. The Board of Directors have determined that it is in the best interests of the Company and its stockholders to provide an additional incentive for certain employees, including executive officers, and non-employee members of the Board of Directors of the Company by granting to them awards with respect to the common stock of the Company pursuant to the Plan. The Plan seeks to achieve this purpose by providing for awards in the form of Options, Stock Appreciation Rights, Restricted Stock Awards, Restricted Stock Units, Performance Shares, Performance Units, Cash-Based Awards and Other Stock-Based Awards (“Awards”). The Plan will continue in effect until its termination by the Committee; provided, however, that all Awards must be granted, if at all, within ten (10) years from the Effective Date. The Company did not issue any Restricted Common Stock (“RCS”), Nonstatutory Stock Options (“NSO”) or Incentive Stock Options (“ISO”) to any employees, including executive officers, non-employee members of the Board of Directors of the Company, members of the Advisory Board Committee and consultants during the three months period ended March 31, 2019. Vesting period for awarded RCS, NSO and ISO’s range from immediate to quarterly over a 4 year period. For NSO’s and ISO awarded, the term to exercise their NSO or ISO is 10 years. Stock Options The Company’s stock option activity was as follows: Options Weighted Average Exercise Price Weighted Average Contractual Remaining Life Outstanding, December 31, 2017 2,313,050 0.79 9.27 Granted - - - Exercised - - - Forfeited/Expired (89,544 ) 0.74 - Outstanding, December 31, 2018 2,223,506 0.79 9.02 Exercisable at December 31, 2018 982,934 0.81 9.02 Range of Exercise Price Number of Awards Weighted Average Remaining Contractual Life (years) Weighted Average Exercise Price Number of Awards Exercisable Weighted Average Exercise Price $0.61 - $1.81 2,223,506 9.02 $ 0.79 982,934 $ 0.81 2,223,506 9.02 $ 0.79 982,934 $ 0.81 The aggregate intrinsic value of options outstanding and exercisable at March 31, 2019 was $7,926. The aggregate grant date fair value of options granted during the three months ended March 31, 2019 and year ended December 31, 2018 amounted to $1,488,070 and $1,541,353, respectively. Compensation expense related to stock options was $94,041 and $0 for the three months periods ended March 31, 2019 and 2018, respectively. As of March 31, 2019, the total unrecognized fair value compensation cost related to unvested stock options was $817,722, which is to be recognized over a remaining weighted average period of approximately 9.02 years. The weighted-average fair value of options granted during the three months ended March 31, 2019 and year ended December 31, 2018, and the weighted-average significant assumptions used to determine those fair values, using a Black-Scholes-Merton (“Black-Scholes”) option pricing model are as follows: March 31, 2019 December 31, 2018 Significant assumptions (weighted-average): Risk-free interest rate at grant date 2.23 % 2.51 % Expected stock price volatility 138.42 % 156.15 % Expected dividend payout - - Expected option life (in years) 10 10 Expected forfeiture rate 0 % 0 % Restricted Stock The Company’s restricted stock activity was as follows: Compensation expense related to restricted shares was $136,250 and $0 for the three months periods ended March 31, 2019 and 2018, respectively. Information relating to non-vested restricted award shares is as follows: Restricted Stock Shares Weighted Average Grant Date Fair Value Non-vested, December 31, 2018 317,708 1.44 Granted - - Vested (93,750 ) 1.44 Forfeited/Expired - - Non-vested, March 31, 2019 223,958 1.44 |
WARRANT AGREEMENTS
WARRANT AGREEMENTS | 3 Months Ended |
Mar. 31, 2019 | |
Notes to Financial Statements | |
Note 12 - WARRANT AGREEMENTS | On February 13, 2019, the Company issued 657,655 warrants at a fair market value of $1,792,965 and with an exercise price of $2.31 per share in connection with the conversion of $1,325,000 convertible promissory notes. On February 13, 2019, the Company issued 99,476 warrants at a fair market value of $271,202 and with an exercise price of $2.31 per share in connection with the broker fees earned from the conversion of $1,325,000 convertible promissory notes. On February 15, 2019, the Company issued 312,500 warrants at a fair market value of $866,620 and with an exercise price of $2.00 per share in connection with the conversion of $500,000 convertible promissory notes. On February 15, 2019, the Company issued 295,879 warrants at a fair market value of $814,834 and with an exercise price of $2.31 per share in connection with the conversion of $1,000,000 convertible promissory notes. Warrants that vest at the end of a one-year period are amortized over the vesting period using the straight-line method. The Company’s warrant activity was as follows: Warrants Weighted Average Exercise Price Weighted Average Contractual Remaining Life Outstanding, December 31, 2018 5,340,751 2.20 3.80 Granted 1,365,510 2.24 3.33 Exercised - - - Forfeited/Expired - - - Outstanding, March 31, 2019 6,706,261 2.01 2.08 Exercisable at March 31, 2019 5,682,261 2.01 2.15 Range of Exercise Price Number of Warrants Weighted Average Remaining Contractual Life (years) Weighted Average Exercise Price Number of Warrants Exercisable Weighted Average Exercise Price $ 1.00 – $7.00 6,706,261 2.08 $ 2.01 5,682,261 $ 2.01 5,340,751 2.08 $ 2.01 5,682,261 $ 2.01 The weighted-average fair value of warrants granted to during the three months ended March 31, 2019 and year ended December 31, 2018, and the weighted-average significant assumptions used to determine those fair values, using a Black-Scholes-Merton (“Black-Scholes”) option pricing model are as follows: March 31, 2019 December 31, 2018 Significant assumptions (weighted-average): Risk-free interest rate at grant date 2.23 % 2.51 % Expected stock price volatility 138.42 % 156.15 % Expected dividend payout - - Expected option life (in years) 3 3 Expected forfeiture rate 0 % 0 % |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2019 | |
Notes to Financial Statements | |
Note 13 - STOCKHOLDERS' EQUITY | Common Share Issuances On January 1, 2019, the Company issued 13,827 common stock shares at $2.26 per share for investor relations consulting services to be performed over a six-month period. The total value of this issuance was $31,249 and as of March 31, 2019, $6,388 is included in prepaid expenses and other assets. On December 14, 2018, the Company entered into an Advisory Consulting Agreement (“Agreement”). Per the terms of the Agreement, the Company is to issue 50,000 common stock shares of the Company that vest 30 days from December 14, 2018 and an additional 250,000 common stock shares of the Company that vest monthly over 24 months. On January 14, 2019, the Company issued 50,000 common stock shares of the Company at $1.84 per share per the terms of this Agreement. On February 14, 2019, the Company issued 10,417 common stock shares of the Company at $3.35 per share per the terms of this Agreement. On December 14, 2018, the Company entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor for the purchase of 833,333 shares of common stock of the Company (the “Shares” or “Securities”) at $1.20 per share (the “Share Price”) for a total purchase price of One Million Dollars ($1,000,000) (the “Purchase Price”). Per the terms of the SPA, the Company and the investor agreed to multiple Closings and Closing Dates (as hereinafter defined): (1) a Closing of $250,000 five (5) business days after the Closing Date; (2) a Closing of $250,000 ten (10) business days after the Closing Date; (3) a Closing of $250,000 thirty (30) business days after the Closing Date; and (4) a Closing $250,000 sixty (60) business days after the Closing Date. Each of the aforementioned being a Closing and the dates of each Closing being a Closing Date. The investor funded $250,000 on December 26, 2018 and the Company issued 208,333 common stock shares. The investor funded another $250,000 on December 31, 2018 and the Company issued another 208,333 common stock shares. The investor funded $250,000 on January 22, 2019 and another $250,000 on February 25, 2019 and the Company issued 208,333 common stock shares and 208,334 common stock shares, respectively. On February 1, 2019, the Company amended two convertible promissory notes totaling $600,000 to extend the maturity dates to February 28, 2019. For extending the maturity date, the Company will issue a total of 30,000 common stock shares of the Company at $2.32 price per share. The total value of this issuance was $69,600. The Company considered if the amendment of the convertible promissory note was a debt modification or extinguishment based on the guidelines of ASC 470-50, and concluded that the amendments of the convertible promissory notes were debt modifications. The Company recorded the fair market value of the 30,000 common stock shares issued as a debt discount that has been fully amortized as of March 31, 2019. On February 13, 2019, the Company entered into Debt Conversion Agreements (“Agreements”) with thirty convertible promissory note holders totaling $1,325,000 plus accrued interest and penalties of $213,859 that were converted into 832,365 common stock shares of the Company with a conversion price per share $1.85 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days. As a result of the lower conversion price compared to the fair market value of the common stock on the date of issuance, the Company recorded a loss on conversion of $812,241. In connection with the conversion of the convertible promissory notes, the Company will issue 657,655 warrants that were priced at $2.31 price per share. On February 14, 2019, the Company entered into a Debt Conversion Agreement (“Agreement”), where $250,000 (Two Hundred Fifty Thousand Dollars) of $650,000 (Six Hundred Fifty Thousand Dollars) of the Outstanding Balance under the Senior Secured Promissory Note effective April 27, 2017 which was replaced with an Amended and Restated Senior Secured Promissory Note dated August 27, 2017 (the “Note”) shall be converted into 135,135 (One Hundred Thirty-Five Thousand, One Hundred Thirty-Five) shares of Common Stock of the Company (the “Conversion Shares”) at a conversion price of $1.85 per share (a discounted rate calculated as an approximation based on 20% discount on 5 days volume weighted average price of the market rate). As a result of the lower conversion price compared to the fair market value of the common stock on the date of issuance, the Company recorded a loss on conversion of $201,351. On February 14, 2019, the Company entered into a First Amendment to Amended and Restated Senior Secured Promissory Note, that amends the Senior Secured Promissory Note effective April 27, 2017 which was replaced with an Amended and Restated Senior Secured Promissory Note effective August 27, 2017 (“Amended Agreement”) with the Note Holder (“Holder”). The Company and the Holder have agreed that the Maturity Date shall be extended to February 27, 2019 in exchange for 75,000 common stock shares of the Company at a price per share of $3.35. The total value of this issuance was $251,250. The Company considered if the amendment of the convertible promissory note was a debt modification or extinguishment based on the guidelines of ASC 470-50, and concluded that the amendments of the convertible promissory notes were debt modifications. The Company recorded the fair market value of the 75,000 common stock shares issued as a debt discount that has been fully amortized as of March 31, 2019. On February 15, 2019, the Company entered into a Debt Conversion Agreement (“Agreement”) to convert $400,000 of convertible promissory notes plus accrued interest of $71,342 into 254,779 common stock shares of the Company with a conversion price per share $1.85 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days. As a result of the lower conversion price compared to the fair market value of the common stock on the date of issuance, the Company recorded a loss on conversion of $630,238. On February 15, 2019, the Company entered into a Debt Conversion Agreement (“Agreement”) with a convertible promissory note holder totaling $1,000,000 plus accrued interest of $94,750 that were converted into 591,757 common stock shares of the Company with a conversion price per share $1.85 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days. As a result of the lower conversion price compared to the fair market value of the common stock on the date of issuance, the Company recorded a loss on conversion of $860,087. In connection with the conversion of the convertible promissory notes, the Company will issue 295,879 warrants that were priced at $2.31 price per share. On February 15, 2019, the Company entered into a Debt Conversion Agreement (“Agreement”) with a convertible promissory note holder totaling $1,575,000 plus accrued interest of $18,406 that were converted into 861,301 common stock shares of the Company with a conversion price per share $1.85 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days. As a result of the lower conversion price compared to the fair market value of the common stock on the date of issuance, the Company recorded a loss on conversion of $745,929. On February 19, 2019, the Company entered into a Debt Conversion Agreement (“Agreement”) with a convertible promissory note holder totaling $425,000 plus accrued interest of $425 that were converted into 168,819 common stock shares of the Company with a conversion price per share $2.52 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days. On February 19, 2019, the Company entered into a Consulting Agreement (“Agreement”) with a Company. Per the terms of the Agreement, the Company is to issue 25,000 common stock shares of the Company for providing investor relations services, where 12,500 common stock shares of the Company are due immediately and the remaining 12,500 common stock shares of the Company is due June 19, 2019. On February 19, 2019, the Company issued 250,000 common stock shares of the Company at $3.39 per share. On February 25, 2019, the Company issued 46,875 and 83,333 common stock shares of the Company at $0.74 and $1.81 per share, respectively, relating to restricted stock issued from the Company’s 2017 Equity Incentive Plan. Stock Payable On January 4, 2019, the Company entered into a Consulting Agreement (“Agreement”) with an individual. Per the terms of the Agreement, the Company is to issue 45,000 common stock shares of the Company for providing investor relations services. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares and has recorded a stock payable of $68,400. On January 15, 2019, the Company entered into an Advisory Consulting Agreement (“Agreement”) with an individual. Per the terms of the Agreement, the Company is to issue 50,000 common stock shares of the Company for providing investor relations services. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares and has recorded a stock payable of $92,000. On February 15, 2019, the Company entered into a Debt Conversion Agreement (“Agreement”) with a convertible promissory note holder totaling $500,000 plus accrued interest of $28,588 that were converted into 285,723 common stock shares of the Company with a conversion price per share $1.85 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares and has recorded a stock payable of $528,588. As a result of the lower conversion price compared to the fair market value of the common stock on the date of issuance, the Company recorded a loss on conversion of $409,672. In connection with the conversion of the convertible promissory notes, the Company will issue 312,500 warrants that were priced at $2.00 price per share. On February 26, 2019, the Company entered into a Media Advertising Agreement (“Agreement”). Per the terms of the Agreement, the Company was to issue 60,000 common stock shares at $3.78 per share for providing media and advertising services over a six month period. The total value of these issuances was $226,800 and as of March 31, 2019, $185,450 is included in prepaid expenses and other assets. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares and has recorded a stock payable of $226,800. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2019 | |
Notes to Financial Statements | |
Note 14 - COMMITMENTS AND CONTINGENCIES | Litigation: From time to time, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. The only significant matter of which the Company is aware of is discussed below. On May 22, 2017, Sandy Sierra Garate (“Applicant”), an employee of the Company, filed an application for benefits due to serious and willful misconduct of the employer pursuant to labor code section 4553 with the State of California Workers’ Compensation Appeals Board (“WCAB”) (WCAB Case No: ADJ 10686812) resulting in injury arising out of and in the course of the Applicant’s employment on August 5, 2016. The Applicant was requesting relief in this matter for a one-half increase in all compensation recoverable in connection with the injury of August 5, 2016, for the allowance of costs and expenses in an amount to be determined and for such further relief as is deemed appropriate. On February 13, 2019, the Company and the Applicant entered to into a Workers’ Compensation Appeals Board Compromise and Release Agreement (“Agreement”) where the Applicant was awarded a settlement amount of $8,500 relating to WCAB Case No: ADJ 10686812. Out of the settlement amount, $1,250 is to be paid to the Applicant’s attorney. On February 20, 2019, the Company received an Order Approving Compromise and Release of WCAB Case No: ADJ 10686812 based on the Agreement entered into with the Company and the Applicant. Operating leases The Company maintains its corporate offices and manufacturing facility at 1620 Beacon Place, Oxnard, CA 93033, which contains approximately 25,000 square feet. The Company is currently on a month-to-month lease. Total rent expense for the three months periods ended March 31, 2019 and 2018 was $63,028 and $74,178, respectively. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2019 | |
Notes to Financial Statements | |
Note 15 - SUBSEQUENT EVENTS | On April 8, 2019, the Company entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor for the purchase of 150,000 shares of common stock of the Company (the “Shares” or “Securities”) at $3.30 per share (the “Share Price”) for a total purchase price of $495,000. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares. On April 9, 2019, the Company entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor for the purchase of 100,000 shares of common stock of the Company (the “Shares” or “Securities”) at $3.30 per share (the “Share Price”) for a total purchase price of $330,000. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares. On April 12, 2019, the Company entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor for the purchase of 15,152 shares of common stock of the Company (the “Shares” or “Securities”) at $3.30 per share (the “Share Price”) for a total purchase price of $50,000. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares. On April 15, 2019, the Company entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor for the purchase of 60,606 shares of common stock of the Company (the “Shares” or “Securities”) at $3.30 per share (the “Share Price”) for a total purchase price of $200,000. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares. On April 15, 2019, the Company entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor for the purchase of 15,152 shares of common stock of the Company (the “Shares” or “Securities”) at $3.30 per share (the “Share Price”) for a total purchase price of $50,000. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares. On April 15, 2019, the Company entered into a Termination and Release Agreement (“Agreement”) with Oak Therapeutics (“Oak”) to surrender all of its Oak shares to Oak and terminating any rights the Company might have to acquire additional shares or interest in Oak. The parties terminated all contractual relationships between them, whether written or verbal, express or implied. All license or other rights previously granted by Oak to the Company or the Company to Oak were terminated, including all licenses or rights of any kind granted by the Company. On April 17, 2019, the Company entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor for the purchase of 127,273 shares of common stock of the Company (the “Shares” or “Securities”) at $3.30 per share (the “Share Price”) for a total purchase price of $420,000. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares. On May 6, 2019, the Company entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor for the purchase of 15,151 shares of common stock of the Company (the “Shares” or “Securities”) at $3.30 per share (the “Share Price”) for a total purchase price of $50,000. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares. On May 13, 2019, the Company entered into a Securities Purchase Agreement (the “SPA”) with an accredited investor for the purchase of 45,455 shares of common stock of the Company (the “Shares” or “Securities”) at $3.30 per share (the “Share Price”) for a total purchase price of $150,000. As of our filing of our Form 10-Q for the quarterly period ended March 31, 2019, the company has not yet issued these common stock shares. On May 14, 2019 (the “ Closing Date Company Merger Sub Merger Agreement Chemistry Holdings Merger Common Stock In connection with signing the Merger Agreement, the Company received an investment of $2,000,000 (the “ Principal Amount Note Closing Cash Requirement The maximum number of shares of Common Stock that may be issued to the stockholders of Chemistry Holdings in connection with the Merger, including escrowed shares and shares issuable pursuant to earn-out provisions and warrants, is 32,072,283 shares allocated as follows: (i) 5,700,000 shares of Common Stock as upfront consideration issued at the Closing (the “ Upfront Consideration In addition, certain stockholders of Chemistry Holdings agreed to return to the Company certain shares of Common Stock (approximately 231,294 shares) in satisfaction of their tax withholding obligations related to the exercise of Chemistry Holdings stock options in connection with the Merger. Unaudited pro forma results of operations for the three months ended March 31, 2019 and 2018, as if the Company and Chemistry Holdings had been combined as of the beginning of the period, follows. The pro forma results include estimates and assumptions which management believes are reasonable. However, pro forma results are not necessarily indicative of the results that would have occurred if the business combination had been in effect on the dates indicated, or which may result in the future. CURE Pharmaceutical Holding Corp for the Three Months Ended March 31, 2019 Chemistry Holdings Inc for the Three Months Ended March 31, 2019 Chemistry Spirits LLC for the Three Months Ended March 31, 2019 Chemistry Labs LLC for the Three Months Ended March 31, 2019 Consolidated Net revenues $ 74,500 $ - $ - $ - $ 74,500 Net loss (10,028,168 ) (5,054 ) (2,137 ) (26,323 ) (10,061,682 ) Net loss per share, basic and diluted $ (0.17 ) $ - $ - $ - $ (0.17 ) CURE Pharmaceutical Holding Corp for the Three Months Ended March 31, 2018 Chemistry Holdings Inc for the Three Months Ended March 31, 2018 Chemistry Spirits LLC for the Three Months Ended March 31, 2018 Chemistry Labs LLC for the Three Months Ended March 31, 2018 Consolidated Net revenues $ 105,014 $ - $ - $ 326,172 $ 431,186 Net income (loss) (1,901,836 ) 21,599 (88,535 ) 29,347 (1,939,425 ) Net loss per share, basic and diluted $ (0.03 ) $ - $ - $ - $ (0.03 ) |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Summary Of Significant Accounting Policies Policies | |
Basis of Presentation | The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The summary of significant accounting policies presented below is designed to assist in understanding the Company’s financial statements. Such financial statements and accompanying notes are the representations of Company’s management, who is responsible for their integrity and objectivity. |
Principle of Consolidation and Basis of Presentation | The condensed consolidated financial statements include the accounts of CURE Pharmaceutical Holding Corp (“CPHC”), its wholly-owned subsidiary, CURE Pharmaceutical Corporation (“CURE”) and its 63% majority owned subsidiary Oak Therapeutics, Inc. (“OAK”), collectively referred to as (“CURE”, “we”, “us”, “our” or the “Company”). All significant inter-company balances and transactions have been eliminated in consolidation. The Company’s film strip product represents the principal operations of the Company. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of March 31, 2019, and the results of operations and cash flows for the periods presented. The results of operations for the three months ended March 31, 2019 and 2018, are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in Form 10-K for the fiscal period ended December 31, 2018 filed with the Securities and Exchange Commission (the “SEC”) on April 1, 2019. |
Use of Estimates | The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. These estimates and assumptions also affect the reported amounts of revenues, costs and expenses during the reporting period. Management evaluates these estimates and assumptions on a regular basis. Actual results could differ from those estimates. |
Cash and Cash Equivalents | The Company considers all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents. As of March 31, 2019 and December 31, 2018, the Company had no cash equivalents. At March 31, 2019 and December 31, 2018, the Company maintains its cash and cash equivalents in banks insured by the Federal Deposit Insurance Corporation (“FDIC”) in accounts that at times may be in excess of the federally insured limit of $250,000 per bank. The Company minimizes this risk by placing its cash deposits with major financial institutions. |
Investment in Associates | An associate is an entity over which the Company has significant influence through a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but not control or joint control over those policies. The results of assets and liabilities of associates are incorporated in the condensed consolidated financial statements using the equity method of accounting. Under the equity method, investments in associates are carried in the consolidated balance sheet at cost as adjusted for post-acquisition changes in the Company’s share of the net assets of the associate, less any impairment in the value of the investment. Losses of an associate in excess of the Company’s interest in that associate are not recognized. Additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate. Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate recognized at the date of acquisition is recognized as goodwill. The goodwill is included within the carrying amount of the investment. On January 8, 2016, the Company received 50% ownership in Cure Innovations, Inc (“CI”). CI was created in 2015 by IncuBrands Studio, Inc (“IncuBrands”). The Company and IncuBrands each own 50% of the common stock of CI. The Company and IncuBrands entered into a Joint Venture agreement in 2013 to distribute several OTF products utilizing IncuBrands marketing and contacts in various industries as well as utilize the Company’s technology and capabilities of manufacturing OTF’s. On December 28, 2018, in agreement with IncuBrands, the Company dissolved CI as we did not see a viable future relating to this joint venture. On December 6, 2016, the Company entered into a Joint Venture Agreement (“Joint Venture”) with Pace Wellness, Inc. (“Pace”) to jointly develop three Active Pharmaceutical Ingredients (“API”) within the nonprescription and/or Over-the-Counter (OTC) medicines specifically utilizing the Company’s patented and proprietary CUREFilm™ Technology. The three API’s to be jointly developed are Diphenhydramine HCL, Omeprazole and a third API to be determined at a later date (“Products”). Pace shall be the exclusive global distributor of the Products under the Solves Strips® branding or other private or branded labels. All benefits, advantages, and liabilities derived from, or incurred in respect of the Joint Venture shall be borne by the parties in proportion of their respective participating interests of 50/50 equal interest. As of March 31, 2019, the Company has only contributed $5,000 to the Joint Venture. The Company is looking to dissolve this Joint Venture due to Pace’s insolvency and we are no longer looking to develop these Products. |
Property and Equipment | The Company capitalizes expenditures related to property and equipment, subject to a minimum rule, that have a useful life greater than one year for: (1) assets purchased; (2) existing assets that are replaced, improved or the useful lives have been extended; or (3) all land, regardless of cost. Acquisitions of new assets, additions, replacements and improvements (other than land) costing less than the minimum rule in addition to maintenance and repair costs, including any planned major maintenance activities, are expensed as incurred. Depreciation has been provided using the straight-line method on the following estimated useful lives: Manufacturing equipment 5-7 Years Computer and other equipment 3-7 Years Leasehold Improvements Lesser of useful life or the term of the lease |
Accounts Receivable | Accounts receivable are generally unsecured. The Company establishes an allowance for doubtful accounts receivable based on the age of outstanding invoices and management’s evaluation of collectability. Accounts are written off after all reasonable collection efforts have been exhausted and management concludes that likelihood of collection is remote. Any future recoveries are applied against the allowance for doubtful accounts. At March 31, 2019 and December 31, 2018, management determined that an allowance was necessary which amounted to approximately $0 and $7,500, respectively. |
Inventory | Inventory is stated at the lower of cost or net realizable value. The Company determines the cost of its inventory, which includes amounts related to materials, direct labor, and manufacturing overhead, on a first-in, first-out basis. The Company performs an assessment of the recoverability of capitalized inventory during each reporting period and writes down any excess and obsolete inventories to their realizable value in the period in which the impairment is first identified. |
Impairment of Long-Lived Assets | We review all of our long-lived assets for impairment indicators throughout the year and perform detailed testing whenever impairment indicators are present. In addition, we perform detailed impairment testing for indefinite-lived intangible assets, at least annually, at December 31. When necessary, we record charges for impairments. Specifically: · For finite-lived intangible assets, such as developed technology rights, and for other long-lived assets, we compare the undiscounted amount of the projected cash flows associated with the asset, or asset group, to the carrying amount. If the carrying amount is found to be greater, we record an impairment loss for the excess of book value over fair value. In addition, in all cases of an impairment review, we re-evaluate the remaining useful lives of the assets and modify them, as appropriate; and · For indefinite-lived intangible assets, such as acquired in-process R&D assets, each year and whenever impairment indicators are present, we determine the fair value of the asset and record an impairment loss for the excess of book value over fair value, if any. Management determined that no impairment indicators were present and that no impairment charges were necessary as of March 31, 2019 or December 31, 2018. |
Revenue Recognition | We recognize revenue in accordance with Accounting Standards Codification (“ASC”) 606, “Revenue Recognition”. The Company adopted Topic 606 using a modified retrospective approach for the years ended December 31, 2017 and prior and has been applied prospectively in the Company’s financial statements beginning January 1, 2018. Revenues under Topic 606 are required to be recognized either at a “point in time” or “over time”, depending on the facts and circumstances of the arrangement, and will be evaluated using a five-step model. The adoption of Topic 606 did not have a material impact on the Company’s financial statements, at initial implementation nor will it have a material impact on an ongoing basis. To achieve the core principle of Topic 606, we perform the following steps: 1. Identify the contract(s) with customer; 2. Identify the performance obligations in the contract; 3. Determine the transactions price; 4. Allocate the transactions price to the performance obligations in the contract; and 5. Recognize revenue when (or as) we satisfy a performance obligation. We derive revenues from two primary sources: products and services. Product revenue includes the shipment of product according to the agreement with our customers. Services include research and development contracts for the development of OTF products utilizing our CureFilm™ Technology or our other proprietary technologies. Rarely, contracts with customers contain multiple performance obligations. For these contracts, the Company accounts for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. Standalone selling prices are typically estimated based on observable transactions when these services are sold on a standalone basis. The Company’s formulation and product development income include services for the development of OTF products utilizing our CureFilm™ Technology. Our development contracts have up to four phases. Revenue is recognized based on progress toward completion of the performance obligation in each phase. The method to measure progress toward completion requires judgment and is based on the nature of the products or services to be provided. The Company generally uses the input method to measure progress for its contracts because it best depicts the transfer of assets to the customer, which occurs as the Company incurs costs for the contracts. Under the cost-to-cost measure of progress, the progress toward completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenue is recorded proportionally as costs are incurred. Costs to fulfill these obligations mainly include materials, labor, supplies and consultants. Deferred revenue is shown separately in the condensed consolidated balance sheets. At March 31, 2019 and December 31, 2018 we had deferred revenues of $311,275 and $383,275, respectively. |
Advertising Expense | The Company expenses marketing, promotions and advertising costs as incurred. Such costs are included in general and administrative expense in the accompanying statements of operations. The Company did not record advertising costs for the three months periods ended March 31, 2019 and 2018. |
Research and Development | Costs incurred in connection with the development of new products and processes are charged to research and development expenses as incurred. The Company recorded research and development expenses of $360,870 and $426,529 for the three months periods ended March 31, 2019 and 2018, respectively. |
Income Taxes | The Company utilizes FASB ASC 740, “Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized. The Company generated a deferred tax asset through net operating loss carry-forward. However, a valuation allowance of 100% has been established due to the uncertainty of the Company’s realization of the net operating loss carry forward prior to its expiration. |
Stock-Based Compensation | Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718 which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. Pursuant to ASC Topic 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date. |
Convertible Debentures | Beneficial Conversion Feature If the conversion features of conventional convertible debt provides for a rate of conversion that is below market value, this feature is characterized as a beneficial conversion feature (“BCF”). A BCF is recorded by the Company as a debt discount pursuant to ASC Topic 470-20 ““Debt with Conversion and Other Options.” In those circumstances, the convertible debt is recorded net of the discount related to the BCF and the Company amortizes the discount to interest expense over the life of the debt using the effective interest method. Derivative Liabilities ASC 815-40 (formerly SFAS No. 133 “Accounting for derivative instruments and hedging activities”), requires that embedded derivative instruments be bifurcated and assessed, along with free-standing derivative instruments such as warrants, on their issuance date and in accordance with ASC 815-40-15 (formerly EITF 00-19 “Accounting for derivative financial instruments indexed to, and potentially settled in, a company’s own stock”) to determine whether they should be considered a derivative liability and measured at their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black-Scholes option pricing formula and present value pricing. At March 31, 2019 and December 31, 2018, the Company adjusted its derivative liability to its fair value, and reflected the change in fair value, in its consolidated statement of operations and comprehensive loss. |
Fair Value Measurements | The Company follows FASB ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”), for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements and establishes a framework for measuring fair value and expands disclosure about such fair value measurements. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below: Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use. The carrying amounts reported in the balance sheet for cash, accounts receivable, accounts payable, accrued expenses and notes and loans payable approximate their estimated fair market value based on the short-term maturity of these instruments. The carrying amount of the notes and convertible promissory notes approximates the estimated fair value for these instruments as management believes that such notes constitute substantially all of the Company’s debt and the interest payable on the notes approximates the Company’s incremental borrowing rate. We measured the liability for price adjustable warrants and embedded derivative features in the convertible notes, using the probability adjusted Black-Scholes option pricing model (“Black-Scholes”), which management has determined approximates values using more complex methods, using Level 3 inputs. (See Note 10) |
Net Loss per Common Share | Basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period, excluding any unvested restricted stock awards. Diluted net loss per share includes the effect of common stock equivalents (stock options, unvested restricted stock, and warrants) when, under either the treasury or if-converted method, such inclusion in the computation would be dilutive. Net loss is adjusted for the dilutive effect of the change in fair value liability for price adjustable warrants, if applicable. The following number of shares have been excluded from diluted net income (loss) since such inclusion would be anti-dilutive: Year ended December 31, March 31, 2019 December 31, 2018 Restricted stock and stock options outstanding - 97,742 Warrants 90,000 2,879,695 Shares to be issued upon conversion of convertible payable 115,047 236,475 Total 205,047 3,213,912 |
Going Concern and Managements Liquidity Plans | The accompanying condensed consolidated financial statements have been prepared on the basis that we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. At March 31, 2019, we had a significant accumulated deficit of approximately $39.3 million and a negative working capital of approximately $1.8 million. Our operating activities consume the majority of our cash resources. We anticipate that we will continue to incur operating losses as we execute our commercialization and research and development plans, as well as strategic and business development initiatives. In addition, we have had and will continue to have negative cash flows from operations, at least into the near future. We have previously funded, and plan to continue funding, our losses primarily through the sale of common and preferred stock, combined with or without warrants, the sale of notes, revenue provided from our license agreements and, to a lesser extent, equipment financing facilities and secured loans. However, we cannot be certain that we will be able to obtain such funds required for our operations at terms acceptable to us or at all. Specifically, management has identified that a minimum of $4,000,000 of capital is needed over the next 12 months in order sustain operations. These capital needs take into account, among other things, management’s plans to advance intellectual property, maintenance of patents, upgrades for manufacturing and to hire personnel for business development. Management has outlined a plan to raise between $8,000,000 to $10,000,000 in capital over the next 12 months through a merger and $1,000,000 to $2,000,000 through the issuance of shares of the Company’s common stock to accredited investors. Management believes that the capital raised through these methods will be sufficient to sustain operations for the next 12 to 18 months. However, the outcome of these matters cannot be predicted with certainty at this time. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern for one year from the issuance of the financial statements. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets and liabilities that might be necessary if the Company is unable to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability of and classification of assets carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern. |
Recently Issued Standards | In February 2016, the FASB issued ASU 2016-02, "Leases" The new standard provides optional practical expedients in transition. We expect to only elect the "package of practical expedients" where, under the new standard, prior conclusions about lease identification, lease classification and initial direct costs do not need to be reassessed. The new standard also provides practical expedients for ongoing accounting and we do not expect to elect any of these practical expedients on adoption. We continue to assess the impact of the new standard and believe it will not have a material effect on the condensed consolidated balance sheet. In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This new standard clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This new standard became effective for the Company on January 1, 2018. There are various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and did not have a material impact on the Company’s financial position, results of operations or cash flows. In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350). ASU. 2017-04 simplifies the subsequent measurement of goodwill by removing the second step of the two-step impairment test. The amendment requires an entity to perform its annual, or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 becomes effective for the Company on January 1, 2020 with early adoption permitted and will be applied prospectively. In May 2017, the FASB issued ASU No. 2017-09, Compensation-Stock Compensation: Scope of Modification Accounting, which provides clarification on when modification accounting should be used for changes to the terms or conditions of a share-based payment award. This ASU does not change the accounting for modifications but clarifies that modification accounting guidance should only be applied if there is a change to the value, vesting conditions or award classification and would not be required if the changes are considered non-substantive. The amendments of this ASU became effective for the Company in the first quarter of 2018. The adoption of ASU 2017-09 did not have an impact on the Company’s condensed consolidated financial statements. In June 2018, the FASB issued ASU No. 2018-7, Compensation – Stock Compensation (Topic 718) — Improvements to Nonemployee Share-Based Payment Accounting. This guidance supersedes ASC 505-50 and expands the scope of ASC 718 to include all share-based payment arrangements related to the acquisition of goods and services from both nonemployees and employees. The amendments should be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The guidance permits early adoption and was adopted by the Company in the first quarter of fiscal year 2019. The adoption of this ASU did not have any impact on the Company’s consolidated financial statements. There are various other updates recently issued, however, they are not expected to a have a material impact on the Company’s consolidated financial position, results of operations or cash flows. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Summary Of Significant Accounting Policies Tables | |
Property and equipment | Manufacturing equipment 5-7 Years Computer and other equipment 3-7 Years Leasehold Improvements Lesser of useful life or the term of the lease |
Basic and diluted loss per share | Year ended December 31, March 31, 2019 December 31, 2018 Restricted stock and stock options outstanding - 97,742 Warrants 90,000 2,879,695 Shares to be issued upon conversion of convertible payable 115,047 236,475 Total 205,047 3,213,912 |
INVENTORY (Tables)
INVENTORY (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Inventory Tables | |
Schedule of inventory | March 31, 2019 December 31, 2018 Raw materials $ 27,094 $ 25,297 Packaging components 7,687 7,687 Work-in-process 8,162 8,162 42,943 41,146 Reserve for obsolescence (3,142 ) (3,370 ) Total inventory $ 39,801 $ 37,776 |
PREPAID EXPENSES AND OTHER AS_2
PREPAID EXPENSES AND OTHER ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Prepaid Expenses And Other Assets Tables | |
Schedule of prepaid expenses and other assets | March 31, 2019 December 31, 2018 Prepaid consulting services– stock-based compensation $ 897,313 $ 935,883 Prepaid consulting services 73,667 82,167 Prepaid insurance 87,911 120,877 Other receivables 2,666 2,666 Prepaid expenses 37,200 37,200 Prepaid expenses and other assets 1,098,757 1,178,793 Current portion of prepaid expenses and other assets (965,641 ) (946,386 ) Prepaid expenses and other assets less current portion $ 133,116 $ 232,407 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Property And Equipment And Intangible Assets Tables | |
Schedule of property and equipment, net | March 31, 2019 December 31, 2018 Manufacturing equipment $ 857,612 $ 841,098 Computer and other equipment 186,655 183,346 Leasehold improvements 51,788 48,488 Less accumulated depreciation (799,230 ) (773,022 ) Property and Equipment, net $ 296,825 $ 299,910 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Intangible Assets | |
Schedule of intangible assets, net | Estimated Fair Value Remaining Estimated Useful Life (Years) Three Months Amortization Expense Intellectual Property $ 814,582 14.41 $ 10,206 Patents 600,344 17.96 4,024 Total $ 1,414,926 $ 14,230 Less: accumulated amortization (201,965 ) Intellectual property and patents, net 1,212,961 Less: pending patents not subject to amortization (272,415 ) Net intangible assets subject to amortization $ 940,546 |
Schedule of future amortization expense | 2019 $ 43,950 2020 58,600 2021 58,600 2022 58,600 2023 58,600 Thereafter 662,196 Total Amortization $ 940,546 |
LOAN PAYABLE (Tables)
LOAN PAYABLE (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Loan Payable Tables | |
Schedule of loan Payable | March 31, 2019 December 31, 2018 Notes to a company due September 29, 2019, including interest at 6.00% per annum; unsecured; interest due monthly $ 66,842 $ 105,125 Current portion of loan payable (66,842 ) (105,125 ) Loan payable, less current portion $ - $ - |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Notes Payable Tables | |
Schedule of notes payable | March 31, 2019 December 31, 2018 Note to a company amended on August 27, 2017 and February 27, 2019, due on or before one month from the amended date and the maturity date shall be extended for one month periods as long as the Company is not in default, interest shall accrue at 10% per annum, secured by the Company’s intellectual property $ 400,000 $ 650,000 Note to an individual, non-interest bearing, unsecured and has no fixed terms of repayment 50,000 50,000 Note to an individual due April 1, 2019, interest payable at 6% per annum, unsecured, principal and accrued interest due at maturity. The Company issued 50,000 shares of its common stock on October 18, 2018 at a price per share of $2.88 as an equity kicker. This note and accrued interest was repaid on April 2, 2019, 150,000 150,000 Note to a company due December 15, 2018, interest payable at 5% per annum, unsecured, principal and accrued interest due at maturity. If this note is still outstanding as of the date of any bona fide sale of the Company’s preferred stock or common stock in excess of $4,000,000 in gross proceeds, in one transaction or a serious of related transactions, which offering definitively sets a price per share of common stock and results in a listing of the Company’s common stock on a national securities exchange. On January 1, 2019, we entered into an Amendment to extend the maturity date to June 30, 2019. 100,000 100,000 700,000 950,000 Unamortized discount (625 ) (30,000 ) Current portion of loan payable (699,375 ) (920,000 ) Loan payable, less current portion $ - $ - |
CONVERTIBLE PROMISSORY NOTES (T
CONVERTIBLE PROMISSORY NOTES (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Convertible Promissory Notes Tables | |
Schedule of convertible promissory notes | March 31, 2019 December 31, 2018 Convertible promissory notes totaling $1,400,000 due between December 31, 2018 and February 28, 2019, interest payable at 8% per annum; unsecured; principal and accrued interest convertible into common stock at the lower of $7.00 per share or the price per share of the latest closing of a debt or equity offering by the Company greater than $3,000,000; accrued interest due between December 31, 2018 and February 28, 2019. A total of $250,000 convertible promissory notes was repaid in 2018 and $450,000 convertible promissory notes were repaid in 2019. A total $400,000 of convertible promissory notes plus accrued interest of $71,342 have been converted in to 254,779 common stock shares of the Company in 2019. Remaining $550,000 of convertible promissory notes are currently in default. $ 550,000 $ 1,400,000 Convertible promissory notes totaling $1,275,000 due November 30, 2018 and $750,000 due February 28, 2019, interest payable at 9% per annum; unsecured; principal and accrued interest convertible into common stock at either the price per share equal to the average closing price of the Company’s Common Stock on the OTC Markets for the five consecutive trading days prior to the delivery of a Notice of Conversion (“Optional Conversion”) or price per share equal to 75% of the price of the Company’s next bona fide sale of its preferred stock or Common Stock in excess of $4,000,000 in gross proceeds, in one transaction or a series of related transactions, which offering definitively sets a price per share of the Company’s Common Stock or preferred stock and enables the Company to list its common stock on a national securities exchange; accrued interest to be paid quarterly beginning September 30, 2018, which has not yet been paid. During the first quarter of 2019, the Company repaid $275,000. On February 13, 2019, $750,000 of convertible promissory notes plus accrued interest and penalties of $135,825 were converted into 479,144 common stock shares of the Company. On February 15, 2019, $1,000,000 of convertible promissory notes plus accrued interest and penalties of $94,750 were converted into 591,757 common stock shares of the Company. - 2,025,000 Convertible promissory note totaling $500,000 due April 30, 2019, interest payable at 9% per annum; unsecured; principal and accrued interest convertible into common stock at a price per share (the “ Voluntary Conversion PPS “) equal to 75% of the average of the closing prices of the Company’s Common Stock on the OTC Market (or any other market on which the common stock of the Company is then listed for trading) over the thirty (30) consecutive trading days prior to the delivery of the notice of conversion by the Investor to the Company, or, if at the time of such conversion the shares of the Company’s Common Stock are not listed for trading, then the entire then outstanding Investment Amount shall be converted into that number of shares of the most senior class of shares of the Company existing at the time of such conversion, at a price per share equal to 75% of the fair market value of such Common Stock as shall be determined by the Board of Directors based on, among others, a valuation prepared by an independent third party and which shall have been submitted to the Company not more than 90 days prior to the date of such determination by the Board of Directors. In the event of the consummation by the Company, on or before the Maturity Date, of a transaction or series of related transactions in which the Company issues equity securities of the Company in consideration of at least US$4,000,000 (a “ Financing “), the then outstanding Investment Amount not previously converted hereunder shall be automatically converted, immediately prior to (but conditioned upon) the consummation of such Financing, into such number of shares (or a sub-class thereof) issued by the Company in the Financing, equal to the outstanding Investment Amount divided by a price per share equal to 75% of the lowest price per share paid to the Company in the Financing. In the event the Financing is not consummated by the Maturity Date, then the outstanding Investment Amount as of the Maturity Date not previously converted hereunder shall be automatically converted, on the Maturity Date, into such number of shares (or a sub-class thereof) issued by the Company in the Financing, equal to the outstanding Investment Amount divided by the Voluntary Conversion PPS. This convertible promissory note and accrued interest was repaid on April 29, 2019. 500,000 500,000 Convertible promissory note totaling $500,000 due December 31, 2018, interest payable at 9% per annum; secured by all assets of the company; principal and accrued interest convertible into common stock at either the price per share equal to the average closing price of the Company’s Common Stock on the OTC Markets for the five consecutive trading days prior to the delivery of a Notice of Conversion (“Optional Conversion”) or price per share equal to 75% of the price of the Company’s next bona fide sale of its preferred stock or Common Stock in excess of $4,000,000 in gross proceeds, in one transaction or a series of related transactions, which offering definitively sets a price per share of the Company’s Common Stock or preferred stock and enables the Company to list its common stock on a national securities exchange; accrued interest to be paid quarterly beginning September 30, 2018. In 2019, the noteholder of this convertible promissory note entered into a debt conversion agreement to convert this convertible promissory note plus accrued interest into common stock shares of the Company at a $1.85 conversion price. - 500,000 Convertible promissory notes totaling $575,000 due June 27, 2019, interest payable at 9% per annum; unsecured; principal and accrued interest convertible into common stock at either the price per share equal to the average closing price of the Company’s Common Stock on the OTC Markets for the five consecutive trading days prior to the delivery of a Notice of Conversion (“Optional Conversion”) or price per share equal to 75% of the price of the Company’s next bona fide sale of its preferred stock or Common Stock in excess of $4,000,000 in gross proceeds, in one transaction or a series of related transactions, which offering definitively sets a price per share of the Company’s Common Stock or preferred stock and enables the Company to list its common stock on a national securities exchange; accrued interest to be paid quarterly beginning December 31, 2018. $575,000 convertible promissory notes due June 27, 2019 plus accrued interest and penalties of $78,034 have been converted into 353,221 common stock shares of the Company in 2019. - 575,000 Convertible promissory notes totaling $2,000,000 due October 31, 2019, interest payable at 9% per annum; unsecured; principal and accrued interest convertible into common stock at either the price per share equal to the average closing price of the Company’s Common Stock on the OTC Markets for the five consecutive trading days prior to the delivery of a Notice of Conversion (“Optional Conversion”) or price per share equal to 75% of the price of the Company’s next bona fide sale of its preferred stock or Common Stock in excess of $4,000,000 in gross proceeds, in one transaction or a series of related transactions, which offering definitively sets a price per share of the Company’s Common Stock or preferred stock and enables the Company to list its common stock on a national securities exchange; accrued interest to be paid quarterly beginning December 31, 2018, which has not yet been paid. In 2019, the noteholder of this convertible promissory note entered into a debt conversion agreement to convert this convertible promissory note plus accrued interest into common stock shares of the Company at a $1.85 conversion price. - 575,000 Convertible demand note totaling $2,000,000 due on demand at any time after the earlier of (i) an Event of Default, (ii) the closing of a proposed merger (the “Merger”) of a wholly-owned subsidiary of the Company with and into Chemistry Holdings, Inc., a Delaware corporation, and (iii) May 13, 2019 if a binding definitive agreement and plan of merger with respect to the Merger has not been executed by that date, in each case if this Note has not previously converted into Common Stock. If the Merger has not been consummated by May 13, 2019, the outstanding principal balance of this Note (the “Outstanding Balance”) shall automatically be converted (the “Conversion”) into shares of common stock, par value $0.001 per share, of the Company at a price per share equal to $3.34 (the “Conversion Price”) effective as of May 13, 2019 (the “Conversion Date”), and the Outstanding Balance shall thereafter be considered repaid in full. Please see Note 15 - Subsequent Events footnote for further information. 2,000,000 - 3,050,000 5,575,000 Unamortized discount (675,001 ) (332,569 ) Current portion of convertible promissory notes 2,374,999 5,242,431 Convertible promissory notes, less current portion $ - $ - |
DERIVATIVE LIABILITY (Tables)
DERIVATIVE LIABILITY (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Derivative Liability Tables | |
Schedule of fair value measurements on recurring basis | The following table summarizes fair value measurements by level at March 31, 2019 for assets and liabilities measured at fair value on a recurring basis: Total Level 1 Level 2 Level 3 Fair value of Derivative Liability $ 770,248 $ - $ - $ 770,248 The following table summarizes fair value measurements by level at December 31, 2018 for assets and liabilities measured at fair value on a recurring basis: Total Level 1 Level 2 Level 3 Fair value of Derivative Liability $ 617,628 $ - $ - $ 617,628 |
Schedule of derivative liability assumptions used | Significant assumptions: Risk-free interest rate at grant date 2.23 % Expected stock price volatility 138.42 % Expected dividend payout - Expected option life (in years) 1 Expected forfeiture rate 0 |
Reconciliation of derivative liabilities | Fair value of derivative liabilities Balance at December 31, 2017 $ 90,738 Initial fair value of derivative liability recorded as debt discount 297,599 Loss on change in fair value included in earnings 229,291 Balance at December 31, 2018 617,628 Loss on change in fair value included in earnings 152,620 Balance at March 31, 2019 $ 770,248 |
STOCK BASED AWARDS (Tables)
STOCK BASED AWARDS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Stock Based Awards | |
Schedule of stock option activity | Options Weighted Average Exercise Price Weighted Average Contractual Remaining Life Outstanding, December 31, 2017 2,313,050 0.79 9.27 Granted - - - Exercised - - - Forfeited/Expired (89,544 ) 0.74 - Outstanding, December 31, 2018 2,223,506 0.79 9.02 Exercisable at December 31, 2018 982,934 0.81 9.02 Range of Exercise Price Number of Awards Weighted Average Remaining Contractual Life (years) Weighted Average Exercise Price Number of Awards Exercisable Weighted Average Exercise Price $0.61 - $1.81 2,223,506 9.02 $ 0.79 982,934 $ 0.81 2,223,506 9.02 $ 0.79 982,934 $ 0.81 |
Weighted-average fair value of options granted | March 31, 2019 December 31, 2018 Significant assumptions (weighted-average): Risk-free interest rate at grant date 2.23 % 2.51 % Expected stock price volatility 138.42 % 156.15 % Expected dividend payout - - Expected option life (in years) 10 10 Expected forfeiture rate 0 % 0 % |
Schedule of non-vested restricted award shares | Restricted Stock Shares Weighted Average Grant Date Fair Value Non-vested, December 31, 2018 317,708 1.44 Granted - - Vested (93,750 ) 1.44 Forfeited/Expired - - Non-vested, March 31, 2019 223,958 1.44 |
WARRANT AGREEMENTS (Tables)
WARRANT AGREEMENTS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Warrant Agreements Tables | |
Schedule of change in warrant | Warrants Weighted Average Exercise Price Weighted Average Contractual Remaining Life Outstanding, December 31, 2018 5,340,751 2.20 3.80 Granted 1,365,510 2.24 3.33 Exercised - - - Forfeited/Expired - - - Outstanding, March 31, 2019 6,706,261 2.01 2.08 Exercisable at March 31, 2019 5,682,261 2.01 2.15 Range of Exercise Price Number of Warrants Weighted Average Remaining Contractual Life (years) Weighted Average Exercise Price Number of Warrants Exercisable Weighted Average Exercise Price $ 1.00 – $7.00 6,706,261 2.08 $ 2.01 5,682,261 $ 2.01 5,340,751 2.08 $ 2.01 5,682,261 $ 2.01 |
Schedule of fair value of warrant valuation assumptions | March 31, 2019 December 31, 2018 Significant assumptions (weighted-average): Risk-free interest rate at grant date 2.23 % 2.51 % Expected stock price volatility 138.42 % 156.15 % Expected dividend payout - - Expected option life (in years) 3 3 Expected forfeiture rate 0 % 0 % |
SUBSEQUENT EVENTS (Tables)
SUBSEQUENT EVENTS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Subsequent Events | |
Schedule of business combination | CURE Pharmaceutical Holding Corp for the Three Months Ended March 31, 2019 Chemistry Holdings Inc for the Three Months Ended March 31, 2019 Chemistry Spirits LLC for the Three Months Ended March 31, 2019 Chemistry Labs LLC for the Three Months Ended March 31, 2019 Consolidated Net revenues $ 74,500 $ - $ - $ - $ 74,500 Net loss (10,028,168 ) (5,054 ) (2,137 ) (26,323 ) (10,061,682 ) Net loss per share, basic and diluted $ (0.17 ) $ - $ - $ - $ (0.17 ) CURE Pharmaceutical Holding Corp for the Three Months Ended March 31, 2018 Chemistry Holdings Inc for the Three Months Ended March 31, 2018 Chemistry Spirits LLC for the Three Months Ended March 31, 2018 Chemistry Labs LLC for the Three Months Ended March 31, 2018 Consolidated Net revenues $ 105,014 $ - $ - $ 326,172 $ 431,186 Net income (loss) (1,901,836 ) 21,599 (88,535 ) 29,347 (1,939,425 ) Net loss per share, basic and diluted $ (0.03 ) $ - $ - $ - $ (0.03 ) |
ORGANIZATION AND DESCRIPTION _2
ORGANIZATION AND DESCRIPTION OF BUSINESS (Details Narrative) | 3 Months Ended | ||
Mar. 31, 2019ft² | Nov. 10, 2017shares | Jan. 08, 2016 | |
State of Incorporation | Nevada | ||
Date of Incorporation | May 15, 2014 | ||
Ownership percentage | 50.00% | ||
Oxnard, CA [Member] | |||
Area of cGMP manufacturing plant | ft² | 25,000 | ||
Oak Therapeutics [Member] | |||
Shares received | shares | 269,000 | ||
Ownership percentage | 63.00% |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 3 Months Ended |
Mar. 31, 2019 | |
Manufacturing Equipment [Member] | Minimum [Member] | |
Estimated useful lives | 5 years |
Manufacturing Equipment [Member] | Maximum [Member] | |
Estimated useful lives | 7 years |
Computer and other equipment [Member] | Minimum [Member] | |
Estimated useful lives | 3 years |
Computer and other equipment [Member] | Maximum [Member] | |
Estimated useful lives | 7 years |
Leasehold Improvements [Member] | |
Estimated useful lives description | Lesser of useful life or the term of the lease |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - shares | Mar. 31, 2019 | Dec. 31, 2018 |
Summary Of Significant Accounting Policies | ||
Restricted stock and stock options outstanding | 97,742 | |
Warrants | 90,000 | 2,879,695 |
Shares to be issued upon conversion of convertible payable | 115,047 | 236,475 |
Total | 205,047 | 3,213,912 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | ||||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Nov. 10, 2017 | Jan. 08, 2016 | |
Federal deposit insurance corporation insured limit | $ 250,000 | $ 250,000 | |||
Ownership interest | 50.00% | ||||
Valuation allowance percentage | 100.00% | ||||
Accumulated deficit | $ (39,297,168) | (29,269,000) | |||
Working capital deficit | (1,800,000) | ||||
Research and development expense | 360,870 | $ 426,529 | |||
Advertising costs | 0 | 0 | |||
Joint venture contributions | 5,000 | ||||
Allowance for doubtful accounts | 0 | 7,500 | |||
Deferred revenue | 311,275 | $ 383,275 | |||
Minimum [Member] | |||||
Capital required to sustain in operations | $ 4,000,000 | ||||
Capital to be raised through a merger | 8,000,000 | ||||
Capital to be raised through issuance of common stock | $ 1,000,000 | ||||
Maximum [Member] | |||||
Capital to be raised through a merger | 10,000,000 | ||||
Capital to be raised through issuance of common stock | $ 2,000,000 | ||||
Oak Therapeutics [Member] | |||||
Ownership interest | 63.00% |
INVENTORY (Details)
INVENTORY (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Inventory Details | ||
Raw Materials | $ 27,094 | $ 25,297 |
Packaging Components | 7,687 | 7,687 |
Work-In-Process | 8,162 | 8,162 |
Inventory, Gross | 42,943 | 41,146 |
Reserve for Obsolescence | (3,142) | (3,370) |
Total inventory | $ 39,801 | $ 37,776 |
PREPAID EXPENSES AND OTHER AS_3
PREPAID EXPENSES AND OTHER ASSETS (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Prepaid Expenses And Other Assets Details | ||
Prepaid consulting services stock-based compensation | $ 897,313 | $ 935,883 |
Prepaid consulting services | 73,667 | 82,167 |
Prepaid insurance | 87,911 | 120,877 |
Other Receivables | 2,666 | 2,666 |
Prepaid expenses | 37,200 | 37,200 |
Prepaid expenses and other assets | 1,098,757 | 1,178,793 |
Current portion of prepaid expenses and other assets | (965,641) | (946,386) |
Prepaid expenses and other assets less current portion | $ 133,116 | $ 232,407 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Less accumulated depreciation | $ (799,230) | $ (773,022) |
Property and Equipment, net | 296,825 | 299,910 |
Computer and other equipment [Member] | ||
Property and Equipment | 186,655 | 183,346 |
Leasehold Improvements [Member] | ||
Property and Equipment | 51,788 | 48,488 |
Manufacturing equipment [Member] | ||
Property and Equipment | $ 857,612 | $ 841,098 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Depreciation expense | $ 26,207 | $ 24,055 |
Accumulated depreciation | 43,201 | 39,337 |
Capitalized Leased Assets [Member] | ||
Depreciation expense | $ 0 | $ 2,160 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Intellectual property and patents, gross | $ 1,414,926 | ||
Less accumulated amortization | (201,965) | ||
Intellectual property and patents, net | 1,212,961 | $ 1,206,011 | |
Less: pending patents not subject to amortization | (272,415) | ||
Net intangible assets subject to amortization | 940,546 | ||
Amortization Expense | 14,230 | $ 10,899 | |
Intellectual Property [Member] | |||
Intellectual property and patents, gross | $ 814,582 | ||
Remaining Estimated Useful Life (Years) | 14 years 4 months 28 days | ||
Amortization Expense | $ 10,206 | ||
Patents [Member] | |||
Intellectual property and patents, gross | $ 600,344 | ||
Remaining Estimated Useful Life (Years) | 17 years 11 months 15 days | ||
Amortization Expense | $ 4,024 |
INTANGIBLE ASSETS (Details 1)
INTANGIBLE ASSETS (Details 1) | Mar. 31, 2019USD ($) |
Property And Equipment And Intangible Assets Details 2 | |
2019 | $ 43,950 |
2020 | 58,600 |
2021 | 58,600 |
2022 | 58,600 |
2023 | 58,600 |
Thereafter | 662,196 |
Total Amortization | $ 940,546 |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Amortization expense | $ 14,230 | $ 10,899 | |
Intangible asset | 1,212,961 | $ 1,206,011 | |
Accumulated amortization | 201,965 | ||
Patents [Member] | |||
Patent costs capitalized | 21,180 | 6,638 | |
Amortization expense | $ 4,024 | ||
Purchase of patent | $ 280,100 | ||
Issuance of common stock shares | 200,000 |
LOAN PAYABLE (Details)
LOAN PAYABLE (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Loan payable | $ (66,842) | $ (105,125) |
Loan payable, less current portion | ||
Loans Payable [Member] | ||
Loan payable | $ 66,842 | $ 105,125 |
LOAN PAYABLE (Details Narrative
LOAN PAYABLE (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Interest expense | $ 3,297,480 | $ 433,830 |
Loans Payable [Member] | ||
Interest expense | $ 2,230 | $ 800 |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Notes payable | $ 700,000 | $ 950,000 |
Unamortized discount | (625) | (30,000) |
Current portion of loan payable | (699,375) | (920,000) |
Loan payable, less current portion | ||
Individual [Member] | ||
Notes payable | 50,000 | 50,000 |
Individual One [Member] | ||
Notes payable | 150,000 | 150,000 |
Company [Member] | ||
Notes payable | 400,000 | 650,000 |
Company One [Member] | ||
Notes payable | $ 100,000 | $ 100,000 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Interest expense | $ 3,297,480 | $ 433,830 |
NotePayable [Member] | ||
Interest expense | $ 21,661 | $ 19,027 |
CONVERTIBLE PROMISSORY NOTES (D
CONVERTIBLE PROMISSORY NOTES (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Total Convertible promissory notes | $ 3,050,000 | $ 5,575,000 |
Unamortized discount | (675,001) | (332,569) |
Current portion of convertible promissory notes | 2,374,999 | 5,242,431 |
Convertible promissory notes, less current portion | ||
Convertible Promissory Note [Member] | ||
Total Convertible promissory notes | 550,000 | 1,400,000 |
Convertible Promissory Notes One [Member] | ||
Total Convertible promissory notes | 2,025,000 | |
Convertible Promissory Notes Two [Member] | ||
Total Convertible promissory notes | 500,000 | 500,000 |
Convertible Promissory Notes Three [Member] | ||
Total Convertible promissory notes | 500,000 | |
Convertible Promissory Notes Four [Member] | ||
Total Convertible promissory notes | 575,000 | |
Convertible Promissory Notes Five [Member] | ||
Total Convertible promissory notes | 575,000 | |
Convertible Promissory Notes Six [Member] | ||
Total Convertible promissory notes | $ 2,000,000 |
CONVERTIBLE PROMISSORY NOTES _2
CONVERTIBLE PROMISSORY NOTES (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Interest expense | $ 3,297,480 | $ 433,830 |
Convertible promissory note [Member] | ||
Amortization of discount | 458,899 | 147,608 |
Interest expense | $ 72,813 | $ 303,174 |
DERIVATIVE LIABILITY (Details)
DERIVATIVE LIABILITY (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Fair value of Derivative Liability | $ 770,248 | $ 617,628 |
Fair Value, Inputs, Level 1 [Member] | ||
Fair value of Derivative Liability | ||
Fair Value, Inputs, Level 2 [Member] | ||
Fair value of Derivative Liability | ||
Fair Value, Inputs, Level 3 [Member] | ||
Fair value of Derivative Liability | $ 770,248 | $ 617,628 |
DERIVATIVE LIABILITY (Details 1
DERIVATIVE LIABILITY (Details 1) | 3 Months Ended |
Mar. 31, 2019 | |
Significant assumptions: | |
Risk-free interest rate at grant date | 2.23% |
Expected stock price volatility | 138.42% |
Expected dividend payout | |
Expected option life (in years) | 1 year |
Expected forfeiture rate | 0.00% |
DERIVATIVE LIABILITY (Details 2
DERIVATIVE LIABILITY (Details 2) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Derivative Liability Tables | ||
Derivative liability measured at fair value, beginning balance | $ 617,628 | $ 90,738 |
Initial fair value of derivative liability recorded as debt discount | 297,599 | |
Gain/loss on change in fair value included in earnings | 152,620 | 229,291 |
Derivative liability measured at fair value, ending balance | $ 770,248 | $ 617,628 |
STOCK BASED AWARDS (Details)
STOCK BASED AWARDS (Details) | 3 Months Ended |
Mar. 31, 2019$ / sharesshares | |
Stock option | |
Outstanding, March 31, 2019 | shares | 5,340,751 |
Exercisable at March 31, 2019 | shares | 5,682,261 |
Weighted Average Exercise Price | |
Outstanding, March 31, 2019 | $ / shares | $ 2.01 |
Exercisable at March 31, 2019 | $ / shares | $ 2.01 |
Weighted Average Contractual Remaining Life | |
Outstanding, December 31, 2018 | 2 years 29 days |
Stock Option [Member] | |
Stock option | |
Outstanding, December 31, 2018 | shares | 2,313,050 |
Granted | shares | |
Exercised | shares | |
Forfeited/Expired | shares | |
Outstanding, March 31, 2019 | shares | 2,223,506 |
Exercisable at March 31, 2019 | shares | 982,934 |
Weighted Average Exercise Price | |
Outstanding, December 31, 2018 | $ / shares | $ 0.79 |
Granted | $ / shares | |
Exercised | $ / shares | |
Forfeited/Expired | $ / shares | 0.74 |
Outstanding, March 31, 2019 | $ / shares | 0.79 |
Exercisable at March 31, 2019 | $ / shares | $ 0.81 |
Weighted Average Contractual Remaining Life | |
Outstanding, December 31, 2018 | 9 years 3 months 8 days |
Granted | 0 years |
Outstanding, March 31, 2019 | 9 years 7 days |
Exercisable at March 31, 2019 | 9 years 7 days |
STOCK BASED AWARDS (Details 1)
STOCK BASED AWARDS (Details 1) - $ / shares | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Number of Warrants | 5,340,751 | |
Weighted Average Exercise Price | $ 2.01 | |
Number of Warrants Exercisable | 5,682,261 | |
Weighted Average Exercise Price | $ 2.01 | |
Stock Option [Member] | ||
Number of Warrants | 2,223,506 | 2,313,050 |
Weighted Average Remaining Contractual Life (years) | 9 years 7 days | |
Weighted Average Exercise Price | $ 0.79 | $ 0.79 |
Number of Warrants Exercisable | 982,934 | |
Weighted Average Exercise Price | $ 0.81 | |
$0.61 - $1.81 [Member] | ||
Range of Exercise Price Lower Limit | 1 | |
Range of Exercise Price Upper Limited | $ 7 | |
Number of Warrants | 6,706,261 | |
Weighted Average Exercise Price | $ 2.01 | |
Number of Warrants Exercisable | 5,682,261 | |
Weighted Average Exercise Price | $ 2.01 | |
$0.61 - $1.81 [Member] | Stock Option [Member] | ||
Range of Exercise Price Lower Limit | 0.61 | |
Range of Exercise Price Upper Limited | $ 1.81 | |
Number of Warrants | 2,223,506 | |
Weighted Average Remaining Contractual Life (years) | 9 years 7 days | |
Weighted Average Exercise Price | $ 0.79 | |
Number of Warrants Exercisable | 982,934 | |
Weighted Average Exercise Price | $ 0.81 |
STOCK BASED AWARDS (Details 2)
STOCK BASED AWARDS (Details 2) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Significant assumptions (weighted-average): | ||
Risk-free interest rate at grant date | 2.23% | |
Expected stock price volatility | 138.42% | |
Expected dividend payout | ||
Expected option life (in years) | 1 year | |
Expected forfeiture rate | 0.00% | |
Stock Option [Member] | ||
Significant assumptions (weighted-average): | ||
Risk-free interest rate at grant date | 2.23% | 2.51% |
Expected stock price volatility | 138.42% | 156.15% |
Expected dividend payout | ||
Expected option life (in years) | 10 years | 10 years |
Expected forfeiture rate | 0.00% | 0.00% |
STOCK BASED AWARDS (Details 3)
STOCK BASED AWARDS (Details 3) - Stock Option [Member] | 3 Months Ended |
Mar. 31, 2019$ / sharesshares | |
Restricted Stock Shares | |
Non-vested, December 31, 2018 | shares | 317,708 |
Granted | shares | |
Vested | shares | (93,750) |
Forfeited/Expired | shares | |
Non-vested, March 31, 2019 | shares | 223,958 |
Weighted Average Grant Date Fair Value | |
Non-vested, December 31, 2018 | $ / shares | $ 1.44 |
Granted | $ / shares | |
Vested | $ / shares | 1.44 |
Forfeited/Expired | $ / shares | |
Non-vested, March 31, 2019 | $ / shares | $ 1.44 |
STOCK BASED AWARDS (Details Nar
STOCK BASED AWARDS (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |
Dec. 29, 2017 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Fair value of options granted | $ 1,488,070 | $ 1,541,353 | ||
Equity Incentive Plan [Member] | ||||
Common stock available for grant | 5,000,000 | |||
Equity incentive plan, description | The Plan will continue in effect until its termination by the Committee; provided, however, that all Awards must be granted, if at all, within ten (10) years from the Effective Date | |||
Restricted Common Stock [Member] | ||||
Awarded vesting period | 4 years | |||
Compensation expense | $ 136,250 | $ 0 | ||
Nonstatutory Stock Options [Member] | ||||
Awarded vesting period | 4 years | |||
Term of exercise period | 10 years | |||
Incentive Stock Options [Member] | ||||
Awarded vesting period | 4 years | |||
Term of exercise period | 10 years | |||
Stock Option [Member] | ||||
Aggregate intrinsic value | $ 7,926 | |||
Compensation expense | 94,041 | $ 0 | ||
Unrecognized fair value of compensation cost | $ 817,722 | |||
Weighted Average Remaining Contractual Life (years) | 9 years 7 days |
WARRANT AGREEMENTS (Details)
WARRANT AGREEMENTS (Details) | 3 Months Ended |
Mar. 31, 2019$ / sharesshares | |
Warrants | |
Outstanding, March 31, 2019 | shares | 5,340,751 |
Exercisable at March 31, 2019 | shares | 5,682,261 |
Weighted Average Exercise Price | |
Outstanding, March 31, 2019 | $ / shares | $ 2.01 |
Exercisable at March 31, 2019 | $ / shares | $ 2.01 |
Outstanding, December 31, 2018 | 2 years 29 days |
Warrant [Member] | |
Warrants | |
Outstanding, December 31, 2018 | shares | 5,340,751 |
Granted | shares | 1,365,510 |
Exercised | shares | |
Forfeited/Expired | shares | |
Outstanding, March 31, 2019 | shares | 6,706,261 |
Exercisable at March 31, 2019 | shares | 5,682,261 |
Weighted Average Exercise Price | |
Outstanding, December 31, 2018 | $ / shares | $ 2.20 |
Granted | $ / shares | 2.24 |
Exercised | $ / shares | |
Forfeited/Expired | $ / shares | |
Outstanding, March 31, 2019 | $ / shares | 2.01 |
Exercisable at March 31, 2019 | $ / shares | $ 2.01 |
Outstanding, December 31, 2018 | 3 years 9 months 18 days |
Granted | 3 years 3 months 29 days |
Outstanding, March 31, 2019 | 2 years 29 days |
Exercisable at March 31, 2019 | 2 years 1 month 24 days |
WARRANT AGREEMENTS (Details 1)
WARRANT AGREEMENTS (Details 1) | 3 Months Ended |
Mar. 31, 2019$ / sharesshares | |
Number of Warrants | shares | 5,340,751 |
Weighted Average Remaining Contractual Life (years) | 2 years 29 days |
Weighted Average Exercise Price | $ 2.01 |
Number of Warrants Exercisable | shares | 5,682,261 |
Weighted Average Exercise Price | $ 2.01 |
$1.00 - $7.00 [Member] | |
Range of Exercise Price Lower Limit | 1 |
Range of Exercise Price Upper Limited | $ 7 |
Number of Warrants | shares | 6,706,261 |
Weighted Average Remaining Contractual Life (years) | 2 years 29 days |
Weighted Average Exercise Price | $ 2.01 |
Number of Warrants Exercisable | shares | 5,682,261 |
Weighted Average Exercise Price | $ 2.01 |
WARRANT AGREEMENTS (Details 2)
WARRANT AGREEMENTS (Details 2) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Significant assumptions (weighted-average): | ||
Risk-free interest rate at grant date | 2.23% | |
Expected stock price volatility | 138.42% | |
Expected dividend payout | ||
Expected option life (in years) | 1 year | |
Expected forfeiture rate | 0.00% | |
Warrant [Member] | ||
Significant assumptions (weighted-average): | ||
Risk-free interest rate at grant date | 2.23% | 2.51% |
Expected stock price volatility | 138.42% | 156.15% |
Expected dividend payout | ||
Expected option life (in years) | 3 years | 3 years |
Expected forfeiture rate | 0.00% | 0.00% |
WARRANT AGREEMENTS (Details Nar
WARRANT AGREEMENTS (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Feb. 15, 2019 | Feb. 13, 2019 | Mar. 31, 2019 | Mar. 31, 2018 | |
Fair market value | $ 3,035,190 | $ 37,137 | ||
Warrant exercise price | $ 2 | |||
Warrant [Member] | ||||
Warrants issued | 312,500 | 657,655 | ||
Fair market value | $ 866,620 | $ 1,792,965 | ||
Warrant exercise price | $ 2 | $ 2.31 | ||
Warrant [Member] | Convertible promissory note [Member] | ||||
Debt conversion amount converted | $ 500,000 | $ 1,325,000 | ||
Warrant 1 [Member] | ||||
Warrants issued | 295,879 | 99,476 | ||
Fair market value | $ 814,834 | $ 271,202 | ||
Warrant exercise price | $ 2.31 | $ 2.31 | ||
Warrant 1 [Member] | Convertible promissory note [Member] | ||||
Debt conversion amount converted | $ 1,000,000 | $ 1,325,000 |
STOCKHOLDERS' EQUITY (Details N
STOCKHOLDERS' EQUITY (Details Narrative) - USD ($) | Jan. 15, 2019 | Jan. 04, 2019 | Dec. 14, 2018 | Feb. 19, 2019 | Feb. 15, 2019 | Feb. 14, 2019 | Feb. 13, 2019 | Mar. 31, 2019 | Mar. 31, 2018 | Feb. 26, 2019 | Feb. 25, 2019 | Jan. 22, 2019 | Jan. 14, 2019 | Dec. 31, 2018 | Dec. 26, 2018 | Jan. 24, 2018 |
Common stock, shares issued | 250,000 | 10,417 | 30,366,794 | 208,333 | 208,333 | 50,000 | 26,784,019 | 208,333 | ||||||||
Proceeds from issuance of common stock | $ 500,000 | |||||||||||||||
Prepaid expenses and other assets | 965,641 | $ 946,386 | ||||||||||||||
Vesting period description | vest monthly over 24 months. | |||||||||||||||
Stock payable | $ 528,588 | |||||||||||||||
Price per share | $ 3.35 | $ 1.84 | ||||||||||||||
Investor funded amount | $ 250,000 | $ 250,000 | $ 250,000 | $ 250,000 | ||||||||||||
Debt conversion, converted instrument, warrants issued | 312,500 | |||||||||||||||
Warrants exercised price | $ 2 | |||||||||||||||
Loss on conversion | $ 409,672 | |||||||||||||||
Common Stock | ||||||||||||||||
Common stock, shares issued | 13,827 | |||||||||||||||
Prepaid expenses and other assets | 6,388 | |||||||||||||||
Common stock issuances, value | $ 31,249 | |||||||||||||||
Price per share | $ 2.26 | |||||||||||||||
Advisory Consulting Agreement [Member] | ||||||||||||||||
Common stock, shares issued | 50,000 | |||||||||||||||
Vesting period description | vest 30 days from December 14, 2018 | |||||||||||||||
On February 1, 2019 [Member] | ||||||||||||||||
Stock payable | $ 30,000 | |||||||||||||||
Price per share | $ 2.32 | |||||||||||||||
Amended promissory note | $ 600,000 | |||||||||||||||
Amended maturity date | Feb. 28, 2019 | |||||||||||||||
Accredited Investor [Member] | Securities Purchase Agreement [Member] | ||||||||||||||||
Price per share | $ 1.20 | |||||||||||||||
Common stock shares purchase | 833,333 | |||||||||||||||
Total purchase price | $ 1,000,000 | |||||||||||||||
Hereinafter description | (1) a Closing of $250,000 five (5) business days after the Closing Date; (2) a Closing of $250,000 ten (10) business days after the Closing Date; (3) a Closing of $250,000 thirty (30) business days after the Closing Date; and (4) a Closing $250,000 sixty (60) business days after the Closing Date. Each of the aforementioned being a Closing and the dates of each Closing being a Closing Date. | |||||||||||||||
Equity Incentive Plan [Member] | ||||||||||||||||
Common stock, shares issued | 83,333 | |||||||||||||||
Price per share | $ 1.81 | |||||||||||||||
Equity Incentive Plan [Member] | ||||||||||||||||
Common stock, shares issued | 46,875 | |||||||||||||||
Price per share | $ 0.74 | |||||||||||||||
Media Advertising Agreement [Member] | ||||||||||||||||
Common stock, shares issued | 60,000 | |||||||||||||||
Proceeds from issuance of common stock | $ 226,800 | |||||||||||||||
Prepaid expenses and other assets | 185,450 | |||||||||||||||
Stock payable | $ 226,800 | |||||||||||||||
Price per share | $ 3.78 | |||||||||||||||
Advisory Consulting Agreement [Member] | ||||||||||||||||
Stock payable | $ 92,000 | |||||||||||||||
Consulting agreement description | the Company is to issue 50,000 common stock shares of the Company for providing investor relations services. | |||||||||||||||
Consulting Agreement [Member] | ||||||||||||||||
Common stock, shares issued | 250,000 | |||||||||||||||
Stock payable | $ 68,400 | |||||||||||||||
Price per share | $ 3.39 | |||||||||||||||
Consulting agreement description | the Company is to issue 45,000 common stock shares of the Company for providing investor relations services. | the Company is to issue 25,000 common stock shares of the Company for providing investor relations services, where 12,500 common stock shares of the Company are due immediately and the remaining 12,500 common stock shares of the Company is due June 19, 2019. | ||||||||||||||
Debt Conversion Agreements [Member] | ||||||||||||||||
Debt instrument converted amount, principal | $ 250,000 | $ 1,325,000 | ||||||||||||||
Debt instrument converted amount, interest | $ 213,859 | |||||||||||||||
Debt conversion, converted instrument, shares issued | 135,135 | 832,365 | ||||||||||||||
Debt instrument, convertible, conversion price description | Conversion price of $1.85 per share (a discounted rate calculated as an approximation based on 20% discount on 5 days volume weighted average price of the market rate). | Conversion price per share $1.85 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days. | ||||||||||||||
Debt conversion, converted instrument, warrants issued | 657,655 | |||||||||||||||
Warrants exercised price | $ 2.31 | |||||||||||||||
Loss on conversion | $ 201,351 | $ 812,241 | ||||||||||||||
Conversion price | $ 1.85 | |||||||||||||||
Debt Conversion Agreements [Member] | Senior Secured Promissory Note [Member] | ||||||||||||||||
Outstanding Balance | $ 650,000 | |||||||||||||||
Debt Conversion Agreements [Member] | Senior Secured Promissory Note [Member] | April 27, 2017 [Member] | ||||||||||||||||
Common stock, shares issued | 75,000 | |||||||||||||||
Common stock issuances, value | $ 251,250 | |||||||||||||||
Stock issuable | 75,000 | |||||||||||||||
Price per share | $ 3.35 | |||||||||||||||
Amended maturity date | Feb. 27, 2019 | |||||||||||||||
Debt Conversion Agreements [Member] | Convertible Promissory Note Holder [Member] | ||||||||||||||||
Debt instrument converted amount, principal | $ 500,000 | |||||||||||||||
Debt instrument converted amount, interest | $ 28,588 | |||||||||||||||
Debt conversion, converted instrument, shares issued | 285,723 | |||||||||||||||
Debt instrument, convertible, conversion price description | Conversion price per share $1.85 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days. | |||||||||||||||
Conversion price | $ 1.85 | |||||||||||||||
Debt Conversion Agreements [Member] | Convertible Promissory Note Holder [Member] | ||||||||||||||||
Debt instrument converted amount, principal | $ 425,000 | $ 1,000,000 | ||||||||||||||
Debt instrument converted amount, interest | $ 425 | $ 94,750 | ||||||||||||||
Debt conversion, converted instrument, shares issued | 168,819 | 591,757 | ||||||||||||||
Debt instrument, convertible, conversion price description | Conversion price per share $2.52 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days. | Conversion price per share $1.85 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days. | ||||||||||||||
Debt conversion, converted instrument, warrants issued | 295,879 | |||||||||||||||
Warrants exercised price | $ 2.31 | |||||||||||||||
Loss on conversion | $ 860,087 | |||||||||||||||
Conversion price | $ 2.52 | $ 1.85 | ||||||||||||||
Debt Conversion Agreements [Member] | Convertible Promissory Note Holder [Member] | ||||||||||||||||
Debt instrument converted amount, principal | $ 1,575,000 | |||||||||||||||
Debt instrument converted amount, interest | $ 18,406 | |||||||||||||||
Debt conversion, converted instrument, shares issued | 861,301 | |||||||||||||||
Debt instrument, convertible, conversion price description | Conversion price per share $1.85 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days. | |||||||||||||||
Loss on conversion | $ 745,929 | |||||||||||||||
Conversion price | $ 1.85 | |||||||||||||||
Debt Conversion Agreements [Member] | Convertible Promissory Note [Member] | ||||||||||||||||
Common stock, shares issued | 254,779 | |||||||||||||||
Debt instrument converted amount, principal | $ 400,000 | |||||||||||||||
Debt instrument converted amount, interest | $ 71,342 | |||||||||||||||
Debt instrument, convertible, conversion price description | Conversion price per share $1.85 which was based on a 20% discount to the average closing price of the Company’s common stock on the OTC Markets for five consecutive trading days. | |||||||||||||||
Loss on conversion | $ 630,238 | |||||||||||||||
Conversion price | $ 1.85 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) | 1 Months Ended | 3 Months Ended | |
May 22, 2017USD ($) | Mar. 31, 2019USD ($)ft² | Mar. 31, 2018USD ($) | |
Operating lease rent expense | $ 63,028 | $ 74,178 | |
Attorney [Member] | |||
Litigation settlement amount | $ 1,250 | ||
Sandy Sierra Garate [Member] | |||
Litigation settlement amount | $ 8,500 | ||
Offices And Manufacturing Facility [Member] | |||
Offices and manufacturing facility area | ft² | 25,000 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Net revenues | $ 74,500 | $ 105,014 |
Net income (loss) | $ (10,034,859) | $ (1,908,512) |
Net loss per share, basic and diluted | $ (0.35) | $ (0.08) |
Subsequent Event [Member] | CURE Pharmaceutical Holding Corp [Member] | ||
Net revenues | $ 74,500 | $ 105,014 |
Net income (loss) | $ (10,028,168) | $ (1,901,836) |
Net loss per share, basic and diluted | $ (0.17) | $ (0.03) |
Subsequent Event [Member] | Chemistry Holdings [Member] | ||
Net revenues | ||
Net income (loss) | $ (5,054) | $ 21,599 |
Net loss per share, basic and diluted | ||
Subsequent Event [Member] | Chemistry Spirits LLC [Member] | ||
Net revenues | ||
Net income (loss) | $ (2,137) | $ (88,535) |
Net loss per share, basic and diluted | ||
Subsequent Event [Member] | Chemistry Labs LLC [Member] | ||
Net revenues | $ 326,172 | |
Net income (loss) | $ (26,323) | $ 29,347 |
Net loss per share, basic and diluted | ||
Subsequent Event [Member] | Consolidated [Member] | ||
Net revenues | $ 74,500 | $ 431,186 |
Net income (loss) | $ (10,061,682) | $ (1,939,425) |
Net loss per share, basic and diluted | $ (0.17) | $ (0.03) |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | May 14, 2019 | May 13, 2019 | May 06, 2019 | Apr. 12, 2019 | Apr. 09, 2019 | Apr. 08, 2019 | Apr. 17, 2019 | Apr. 15, 2019 | Mar. 31, 2019 | Feb. 25, 2019 | Feb. 14, 2019 | Jan. 22, 2019 | Jan. 14, 2019 | Dec. 31, 2018 | Dec. 26, 2018 | Dec. 14, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Price per share | $ 3.35 | $ 1.84 | ||||||||||||||||
Cash balance | $ 2,593,976 | $ 500,962 | $ 840,577 | $ 108,249 | ||||||||||||||
Common Stock, Shares Issued | 30,366,794 | 208,333 | 10,417 | 208,333 | 50,000 | 26,784,019 | 208,333 | 250,000 | ||||||||||
Common stock, par value per share | $ 0.001 | $ 0.001 | ||||||||||||||||
Subsequent Event [Member] | Merger Agreement [Member] | ||||||||||||||||||
Common stock, par value per share | $ 0.001 | |||||||||||||||||
Subsequent Event [Member] | Merger Agreement [Member] | Convertible Note [Member] | ||||||||||||||||||
Debt instrument converted amount, principal | $ 2,000,000 | |||||||||||||||||
Subsequent Event [Member] | Chemistry Holdings [Member] | ||||||||||||||||||
Cash balance | $ 8,000,000 | |||||||||||||||||
Common stock including escrowed shares description | The maximum number of shares of Common Stock that may be issued to the stockholders of Chemistry Holdings in connection with the Merger, including escrowed shares and shares issuable pursuant to earn-out provisions and warrants, is 32,072,283 shares allocated as follows: (i) 5,700,000 shares of Common Stock as upfront consideration issued at the Closing (the “Upfront Consideration”); (ii) 7,128,913 shares to be held in escrow, subject to indemnification and clawback rights that lapse upon the achievement of certain milestones; (iii) 3,207,228 shares that may be issued pursuant to an earn-out over five years upon the achievement of certain technological implementations; (iv) 8,018,071 shares that may be issued pursuant to an earn-out over two years upon the achievement of certain revenue goals; and (v) 8,018,071 shares issuable upon exercise of warrants that become exercisable upon achieving certain revenue goals between the second and fourth anniversary of the Closing Date at an exercise price of $5.01 per share, exercisable, to the extent vested, for five years from the Closing Date. | |||||||||||||||||
Common Stock, Shares Issued | 231,294 | |||||||||||||||||
Subsequent Event [Member] | Investor [Member] | Securities Purchase Agreement [Member] | ||||||||||||||||||
Price per share | $ 3.30 | $ 3.30 | $ 3.30 | $ 3.30 | $ 3.30 | $ 3.30 | $ 3.30 | |||||||||||
Common stock shares purchase | 45,455 | 15,151 | 15,152 | 100,000 | 150,000 | 127,273 | 60,606 | |||||||||||
Total purchase price | $ 150,000 | $ 50,000 | $ 50,000 | $ 330,000 | $ 495,000 | $ 420,000 | $ 200,000 | |||||||||||
Subsequent Event [Member] | Investor [Member] | Securities Purchase Agreement [Member] | ||||||||||||||||||
Price per share | $ 3.30 | |||||||||||||||||
Common stock shares purchase | 15,152 | |||||||||||||||||
Total purchase price | $ 50,000 |