Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 28, 2018 | Jun. 30, 2017 | |
Document And Entity Information | |||
Entity Registrant Name | TENAX THERAPEUTICS, INC. | ||
Entity Central Index Key | 34,956 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 20,740,682 | ||
Entity Common Stock, Shares Outstanding | 1,428,037 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets | ||
Cash and cash equivalents | $ 1,604,810 | $ 9,995,955 |
Marketable securities | 6,122,400 | 3,284,616 |
Accounts receivable | 50,171 | 72,599 |
Prepaid expenses | 285,512 | 275,005 |
Total current assets | 8,062,893 | 13,628,175 |
Marketable securities | 1,809,428 | 8,586,110 |
Property and equipment, net | 9,945 | 19,105 |
Other assets | 8,435 | 1,106,785 |
Total assets | 9,890,701 | 23,340,175 |
Current liabilities | ||
Accounts payable | 611,861 | 727,599 |
Accrued liabilities | 363,306 | 5,245,546 |
Warrant liabilities | 33,673 | 226,092 |
Total current liabilities | 1,008,840 | 6,199,237 |
Total liabilities | 1,008,840 | 6,199,237 |
Commitments and contingencies; see Note I | ||
Stockholders' equity | ||
Common stock, par value $.0001 per share; authorized 400,000,000 shares; issued and outstanding 1,411,840 and 1,406,002, respectively | 141 | 2,812 |
Additional paid-in capital | 222,397,198 | 221,816,447 |
Accumulated other comprehensive loss | (16,193) | (18,718) |
Accumulated deficit | (213,499,285) | (204,659,603) |
Total stockholders' equity | 8,881,861 | 17,140,938 |
Total liabilities and stockholders' equity | $ 9,890,701 | $ 23,340,175 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Stockholders' equity | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, authorized | 400,000,000 | 400,000,000 |
Common stock, issued | 1,411,840 | 1,406,002 |
Common stock, outstanding | 1,411,840 | 1,406,002 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Operating expenses | ||
General and administrative | $ 5,678,581 | $ 6,245,958 |
Research and development | 3,527,317 | 13,139,681 |
Loss on impairment of long-lived assets | 0 | 33,265,100 |
Total operating expenses | 9,205,898 | 52,650,739 |
Net operating loss | 9,205,898 | 52,650,739 |
Other income | (366,216) | (764,735) |
Income tax benefit | 0 | (7,962,100) |
Net loss | 8,839,682 | 43,923,904 |
Unrealized gain on marketable securities | (2,525) | (110,724) |
Total comprehensive loss | $ 8,837,157 | $ 43,813,180 |
Net loss per share, basic and diluted | $ (6.27) | $ (31.24) |
Weighted average number of common shares outstanding, basic and diluted | 1,410,630 | 1,405,992 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) | Common Stock | Additional paid-in capital | Accumulated other comprehensive gain (loss) | Accumulated deficit | Total |
Beginning Balance, Shares at Dec. 31, 2015 | 1,405,985 | ||||
Beginning Balance, Amount at Dec. 31, 2015 | $ 2,812 | $ 221,285,677 | $ (129,442) | $ (160,735,699) | $ 60,423,348 |
Compensation on options and restricted stocks issued, Share | 17 | ||||
Compensation on options and restricted stocks issued, Amount | 530,770 | 530,770 | |||
Unrealized gain on marketable securities | 110,724 | 110,724 | |||
Net income (loss) | (43,923,904) | (43,923,904) | |||
Ending Balance, Shares at Dec. 31, 2016 | 1,406,002 | ||||
Ending Balance, Amount at Dec. 31, 2016 | $ 2,812 | 221,816,447 | (18,718) | 204,659,603 | 17,140,938 |
Compensation on options and restricted stocks issued, Share | 5,838 | ||||
Compensation on options and restricted stocks issued, Amount | $ 12 | 578,068 | 578,080 | ||
Par value adjustment due to reverse stock split | $ (2,683) | (2,683) | |||
Unrealized gain on marketable securities | 2,525 | 2,525 | |||
Net income (loss) | (8,839,682) | (8,839,682) | |||
Ending Balance, Shares at Dec. 31, 2017 | 1,411,840 | ||||
Ending Balance, Amount at Dec. 31, 2017 | $ 141 | $ 222,397,198 | $ (16,193) | $ (213,499,285) | $ 8,881,861 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net Loss | $ (8,839,682) | $ (43,923,904) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation and amortization | 13,621 | 18,952 |
Loss on impairment, disposal and write down of long-lived assets | 0 | 33,265,100 |
Loss (Gain) on disposal of property and equipment | 76 | (74,388) |
Issuance and vesting of compensatory stock options and warrants | 498,491 | 529,708 |
Issuance of common stock as compensation | 79,589 | 1,062 |
Change in the fair value of warrants | (192,419) | (298,248) |
Amortization of premium on marketable securities | 187,513 | 652,861 |
Deferred income taxes | 0 | (7,962,100) |
Changes in operating assets and liabilities | ||
Accounts receivable, prepaid expenses and other assets | 1,110,272 | 23,801 |
Accounts payable and accrued liabilities | (4,997,978) | 1,895,856 |
Net cash used in operating activities | (12,140,517) | (15,871,300) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of marketable securities | (299,172) | (7,255,578) |
Sale of marketable securities | 4,053,081 | 29,390,264 |
Purchase of property and equipment | (4,537) | (2,884) |
Proceeds from the sale of property and equipment | 0 | 75,000 |
Net cash provided by (used in) investing activities | 3,749,372 | 22,206,802 |
Net change in cash and cash equivalents | (8,391,145) | 6,335,502 |
Cash and cash equivalents, beginning of period | 9,995,955 | 3,660,453 |
Cash and cash equivalents, end of period | $ 1,604,810 | $ 9,995,955 |
A. DESCRIPTION OF BUSINESS
A. DESCRIPTION OF BUSINESS | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
DESCRIPTION OF BUSINESS | Description of Business—Tenax Therapeutics (the “Company”) was originally formed as a New Jersey corporation in 1967 under the name Rudmer, David & Associates, Inc., and subsequently changed its name to Synthetic Blood International, Inc. On June 17, 2008, the stockholders of Synthetic Blood International approved the Agreement and Plan of Merger dated April 28, 2008, between Synthetic Blood International and Oxygen Biotherapeutics, Inc., a Delaware corporation. Oxygen Biotherapeutics was formed on April 17, 2008, by Synthetic Blood International to participate in the merger for the purpose of changing the state of domicile of Synthetic Blood International from New Jersey to Delaware. Certificates of Merger were filed with the states of New Jersey and Delaware, and the merger was effective June 30, 2008. Under the Plan of Merger, Oxygen Biotherapeutics was the surviving corporation and each share of Synthetic Blood International common stock outstanding on June 30, 2008 was converted to one share of Oxygen Biotherapeutics common stock. On September 19, 2014, the Company changed its name to Tenax Therapeutics, Inc. On October 18, 2013, the Company created a wholly owned subsidiary, Life Newco, Inc., a Delaware corporation (“Life Newco”), to acquire certain assets of Phyxius Pharma, Inc., a Delaware corporation (“Phyxius”), pursuant to an Asset Purchase Agreement, dated October 21, 2013 (the “Asset Purchase Agreement”), by and among the Company, Life Newco, Phyxius and the stockholders of Phyxius (the “Phyxius Stockholders”). On November 13, 2013, under the terms and subject to the conditions of the Asset Purchase Agreement, Life Newco acquired certain assets, including a license granting Life Newco an exclusive, sublicenseable right to develop and commercialize pharmaceutical products containing levosimendan, 2.5 mg/ml concentrate for solution for infusion / 5ml vial in the United States and Canada. Reverse Stock Split The Company initiated a 1-for-20 reverse stock split effective February 23, 2018 at 5:00 p.m. All shares and per share amounts in these Consolidated Financial Statements and notes thereto have been retroactively adjusted to give effect to the reverse stock split. Going Concern Management believes the accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which contemplate continuation of the Company as a going concern. The Company has an accumulated deficit of $213,499,285 and $204,659,603 at December 31, 2017 and 2016, respectively, and used cash in operations of $12,140,517 and $15,871,300 during the years ended December 31, 2017 and 2016, respectively. The Company requires substantial additional funds to complete clinical trials and pursue regulatory approvals. Management is actively seeking additional sources of equity and/or debt financing; however, there is no assurance that any additional funding will be available. In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying December 31, 2017 balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to meet its financing requirements on a continuing basis, to maintain present financing, and to generate cash from future operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence. |
B. SUMMARY OF CRITICAL ACCOUNTI
B. SUMMARY OF CRITICAL ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
SUMMARY OF CRITICAL ACCOUNTING POLICIES | Use of Estimates The preparation of the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, management reviews its estimates to ensure that these estimates appropriately reflect changes in the Company’s business and new information as it becomes available. If historical experience and other factors used by management to make these estimates do not reasonably reflect future activity, the Company’s results of operations and financial position could be materially impacted. Principles of Consolidation The accompanying consolidated financial statements include the accounts and transactions of Tenax Therapeutics, Inc. and Life Newco, Inc. All material intercompany transactions and balances have been eliminated in consolidation. Goodwill Acquired businesses are accounted for using the acquisition method of accounting, which requires that assets acquired, including identifiable intangible assets, and liabilities assumed be recorded at fair value, with limited exceptions. Any excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. If the acquired net assets do not constitute a business, the transaction is accounted for as an asset acquisition and no goodwill is recognized. Goodwill is reviewed for impairment on an annual basis or more frequently if events or circumstances indicate potential impairment. The Company’s goodwill evaluation is based on both qualitative and quantitative assessments regarding the fair value of goodwill relative to its carrying value. The Company assesses qualitative factors to determine if its sole reporting unit’s fair value is more likely than not to exceed its carrying value, including goodwill. In the event the Company determines that it is more likely than not that its reporting unit’s fair value is less than its carrying amount, quantitative testing is performed comparing recorded values to estimated fair values. If the fair value exceeds the carrying value, goodwill is not impaired. If the carrying value exceeds the fair value, an impairment charge is recognized through a charge to operations based upon the excess of the carrying value of goodwill over the implied fair value. During the year ended December 31, 2016, the Company recognized an impairment charge of $33.3 million related to our levosimendan product in Phase 3 clinical trial, which represents approximately $22 million for in-process research and development (“IPR&D”) assets and approximately $11.3 million for goodwill. The LEVO-CTS trial was completed in December of 2016. Based on the data from the trial, levosimendan, given prophylactically prior to cardiac surgery to patients with reduced left ventricular function, had no effect on the co-primary outcomes. The study did not achieve statistically significant reductions in the dual endpoint of death or use of a mechanical assist device at 30 days, nor in the quad endpoint of death, myocardial infarction, need for dialysis, or use of a mechanical assist device at 30 days. Based on the results of the LEVO-CTS trial and subsequent U.S. Food and Drug Administration (“FDA”) feedback, the Company does not anticipate additional development of levosimendan for the treatment of low cardiac output syndrome (“LCOS”) in patients undergoing cardiac surgery. As of December 31, 2016, management determined the IPR&D asset, and corresponding goodwill, was more than temporarily impaired. Cash and Cash Equivalents The Company considers all highly liquid instruments with a maturity date of three months or less, when acquired, to be cash equivalents. Cash Concentration Risk On July 21, 2010, the Wall Street Reform and Consumer Protection Act permanently increased the Federal Deposit Insurance Corporation (the “FDIC”) insurance limits to $250,000 per depositor per insured bank. The Company had cash balances of $849,851 and $9,362,812 uninsured by the FDIC as of December 31, 2017 and 2016, respectively. Liquidity and Capital Resources The Company has financed its operations since September 1990 through the issuance of debt and equity securities and loans from stockholders. The Company had total current assets of $8,062,893 and $13,628,175 and working capital of $7,054,053 and $7,428,937 as of December 31, 2017 and 2016, respectively. Cash resources, including the fair value of the Company’s available for sale marketable securities as of December 31, 2017 were approximately $9.5 million, compared to approximately $21.9 million as of December 31, 2016. The Company expects to continue to incur expenses related to development of levosimendan for pulmonary hypertension and other potential indications, as well as identifying and developing other potential product candidates. Based on its resources at December 31, 2017, the Company believes that it has sufficient capital to fund its planned operations through the first quarter of calendar year 2019. However, the Company will need substantial additional financing in order to fund its operations beyond such period and thereafter until it can achieve profitability, if ever. The Company depends on its ability to raise additional funds through various potential sources, such as equity and debt financing, or to license its product candidates to another pharmaceutical company. The Company will continue to fund operations from cash on hand and through sources of capital similar to those previously described. The Company cannot assure that it will be able to secure such additional financing, or if available, that it will be sufficient to meet its needs. To the extent that the Company raises additional funds by issuing shares of its common stock or other securities convertible or exchangeable for shares of common stock, stockholders will experience dilution, which may be significant. In the event the Company raises additional capital through debt financings, the Company may incur significant interest expense and become subject to covenants in the related transaction documentation that may affect the manner in which the Company conducts its business. To the extent that the Company raises additional funds through collaboration and licensing arrangements, it may be necessary to relinquish some rights to its technologies or product candidates or grant licenses on terms that may not be favorable to the Company. Any or all of the foregoing may have a material adverse effect on the Company’s business and financial performance. Deferred financing costs Deferred financing costs represent legal, due diligence and other direct costs incurred to raise capital or obtain debt. Direct costs include only “out-of-pocket” or incremental costs directly related to the effort, such as a finder’s fee and accounting and legal fees. These costs will be capitalized if the efforts are successful or expensed when unsuccessful. Indirect costs are expensed as incurred. Deferred financing costs related to debt are amortized over the life of the debt. Deferred financing costs related to issuing equity are charged to Additional Paid-in Capital. Derivative financial instruments The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risk. Terms of convertible promissory note instruments and other convertible equity instruments are reviewed to determine whether or not they contain embedded derivative instruments that are required under FASB ASC 815, Derivatives and Hedging (“ASC 815”) to be accounted for separately from the host contract and recorded on the balance sheet at fair value. The fair value of derivative liabilities, if any, is required to be revalued at each reporting date, with corresponding changes in fair value recorded in current period operating results. Freestanding warrants issued by the Company in connection with the issuance or sale of debt and equity instruments are considered to be derivative instruments and are evaluated and accounted for in accordance with the provisions of ASC 815. Preclinical Study and Clinical Accruals The Company estimates its preclinical study and clinical trial expenses based on the services received pursuant to contracts with several research institutions and contract research organizations (“CROs”) that conduct and manage preclinical and clinical trials on its behalf. The financial terms of the agreements vary from contract to contract and may result in uneven expenses and payment flows. Preclinical study and clinical trial expenses include the following: - fees paid to CROs in connection with clinical trials, - fees paid to research institutions in conjunction with preclinical research studies, and - fees paid to contract manufacturers and service providers in connection with the production and testing of active pharmaceutical ingredients and drug materials for use in preclinical studies and clinical trials. Property and Equipment, Net Property and equipment are stated at cost, subject to adjustments for impairment, less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the following estimated useful lives: Laboratory equipment 3 – 5 years Office equipment 5 years Office furniture and fixtures 7 years Computer equipment and software 3 years Leasehold improvements Shorter of useful life or remaining lease term Maintenance and repairs are charged to expense as incurred, improvements to leased facilities and equipment are capitalized. Research and Development Costs Research and development costs include, but are not limited to, (i) expenses incurred under agreements with CROs and investigative sites, which conduct our clinical trials and a substantial portion of our preclinical studies; (ii) the cost of manufacturing and supplying clinical trial materials; (iii) payments to contract service organizations, as well as consultants; (iv) employee-related expenses, which include salaries and benefits; and (v) facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent and maintenance of facilities and equipment, depreciation of leasehold improvements, equipment, laboratory and other supplies. All research and development expenses are expensed as incurred. Income Taxes Deferred tax assets and liabilities are recorded for differences between the financial statement and tax bases of the assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is recorded for the amount of income tax payable or refundable for the period increased or decreased by the change in deferred tax assets and liabilities during the period. Stock-Based Compensation The Company accounts for stock based compensation in accordance with ASC 718 Compensation — Stock Compensation, which requires the measurement and recognition of compensation expense for all stock-based payment awards granted, modified and settled to our employees and directors. The Company chose the “straight-line” attribution method for allocating compensation costs of each stock option on a straight-line basis over the requisite service period using the Black-Scholes Option Pricing Model to calculate the grant date fair value. Loss Per Share Basic loss per share, which excludes antidilutive securities, is computed by dividing net loss by the weighted-average number of common shares outstanding for that particular period. In contrast, diluted loss per share considers the potential dilution that could occur from other equity instruments that would increase the total number of outstanding shares of common stock. Such amounts include shares potentially issuable under outstanding options, restricted stock and warrants. The following outstanding options, restricted stock grants, convertible note shares and warrants were excluded from the computation of basic and diluted net loss per share for the periods presented because including them would have had an anti-dilutive effect. Year ended December 31, 2017 2016 Options to purchase common stock 188,744 236,706 Warrants to purchase common stock 120,773 120,794 Restricted stock grants - 12 Operating Leases The Company maintains operating leases for its office and laboratory facilities. The lease agreements may include rent escalation clauses and tenant improvement allowances. The Company recognizes scheduled rent increases on a straight-line basis over the lease term beginning with the date the company takes possession of the leased space. Differences between rental expense and actual rental payments are recorded as deferred rent liabilities and are included in “Other liabilities” on the consolidated balance sheets. Recent Accounting Pronouncements In July 2017, the Financial Accounting Standards Board (the “FASB”), issued an accounting standard that changes the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. The standard will be effective on January 1, 2019. Early adoption is permitted, including adoption in an interim period. The Company does not believe adoption of this standard will have a material impact on its consolidated financial statements and related disclosures. In January 2017, the FASB issued an accounting standard that provides guidance for evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The guidance provides a screen to determine when an integrated set of assets and activities, or a set, does not qualify to be a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in an identifiable asset or a group of similar identifiable assets, the set is not a business. If the screen is not met, the guidance requires a set to be considered a business to include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs and removes the evaluation as to whether a market participant could replace the missing elements. The standard became effective on January 1, 2018 and was adopted on a prospective basis. The Company does not believe adoption of this standard will have a material impact on its consolidated financial statements and related disclosures. In August 2016, the FASB issued an accounting standard that clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows where diversity in practice exists. The standard is effective in the Company’s first quarter of fiscal 2018. The Company does not believe adoption of this standard will have a material impact on its consolidated financial statements and related disclosures. In June 2016, the FASB issued an accounting standard that amends how credit losses are measured and reported for certain financial instruments that are not accounted for at fair value through net income. This standard will require that credit losses be presented as an allowance rather than as a write-down for available-for-sale debt securities and will be effective for interim and annual reporting periods beginning January 1, 2020, with early adoption permitted, but not earlier than annual reporting periods beginning January 1, 2019. A modified retrospective approach is to be used for certain parts of this guidance, while other parts of the guidance are to be applied using a prospective approach. The Company does not believe adoption of this standard will have a material impact on its consolidated financial statements and related disclosures. In May 2014, the FASB issued an accounting standard that supersedes nearly all existing revenue recognition guidance under GAAP. The standard is principles-based and provides a five-step model to determine when and how revenue is recognized. The core principle of the standard is that revenue should be recognized when a company transfers promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. In March 2016, the FASB issued a standard to clarify the implementation guidance on principal versus agent considerations, and in April 2016, the FASB issued a standard to clarify the implementation guidance on identifying performance obligations and licensing. The standard also requires disclosure of qualitative and quantitative information surrounding the amount, nature, timing and uncertainty of revenues and cash flows arising from contracts with customers. In July 2015, the FASB agreed to defer the effective date of the standard from annual periods beginning after December 15, 2016, to annual periods beginning after December 15, 2017. Early application prior to the original effective date was not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company reviewed its current accounting policies and practices to assess the impact of the guidance on its business processes. Based on this evaluation, the adoption of this standard will not have a material impact on its consolidated financial statements and related disclosures. In February 2016, the FASB issued an accounting standard intended to improve financial reporting regarding leasing transactions. The standard will require the Company to recognize on the balance sheet the assets and liabilities for the rights and obligations created by all leased assets. The standard will also require it to provide enhanced disclosures designed to enable users of financial statements to understand the amount, timing, and uncertainty of cash flows arising from all leases, operating and capital, with lease terms greater than 12 months. The standard is effective for financial statements beginning after December 15, 2018, and interim periods within those annual periods. Early adoption is permitted. The Company is currently evaluating the impact that this standard will have on its consolidated financial statements and related disclosures. In January 2016, the FASB issued an accounting standard that will enhance the Company’s reporting for financial instruments. The standard is effective for financial statements issued for annual periods beginning after December 15, 2017, and interim periods within those annual periods. Earlier adoption is permitted for interim and annual reporting periods as of the beginning of the fiscal year of adoption. The Company does not believe adoption of this standard will have a material impact on its consolidated financial statements and related disclosures. Fair Value The Company determines the fair value of its financial assets and liabilities in accordance with the FASB Accounting Standards Codification (“ASC”) 820 Fair Value Measurements. The Company’s balance sheet includes the following financial instruments: cash and cash equivalents, investments in marketable securities and warrant liabilities. The Company considers the carrying amount of its cash and cash equivalents and short-term notes payable to approximate fair value due to the short-term nature of these instruments. Accounting for fair value measurements involves a single definition of fair value, along with a conceptual framework to measure fair value, with a fair value defined 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.” The fair value measurement hierarchy consists of three levels: Level one Quoted market prices in active markets for identical assets or liabilities; Level two Inputs other than level one inputs that are either directly or indirectly observable; and Level three Unobservable inputs developed using estimates and assumptions; which are developed by the reporting entity and reflect those assumptions that a market participant would use. The Company applies valuation techniques that (1) place greater reliance on observable inputs and less reliance on unobservable inputs and (2) are consistent with the market approach, the income approach and/or the cost approach, and include enhanced disclosures of fair value measurements in the Company’s consolidated financial statements. Investments in Marketable Securities The Company classifies all of its investments as available-for-sale. Unrealized gains and losses on investments are recognized in comprehensive income/(loss), unless an unrealized loss is considered to be other than temporary, in which case the unrealized loss is charged to operations. The Company periodically reviews its investments for other than temporary declines in fair value below cost basis and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company believes the individual unrealized losses represent temporary declines primarily resulting from interest rate changes. Realized gains and losses are reflected in other income (expense) in the Consolidated Statements of Operations and Comprehensive Loss and are determined using the specific identification method with transactions recorded on a settlement date basis. The Company recognized a gain of $422 and a loss $41,955 for the years ended December 31, 2017 and 2016, respectively. Investments with original maturities at date of purchase beyond three months and which mature at or less than 12 months from the balance sheet date are classified as current. Investments with a maturity beyond 12 months from the balance sheet date are classified as long-term. At December 31, 2017, the Company believes that the costs of its investments are recoverable in all material respects. The following tables summarize the fair value of the Company’s investments by type. The estimated fair value of the Company’s fixed income investments are classified as Level 2 in the fair value hierarchy as defined in U.S. GAAP. These fair values are obtained from independent pricing services which utilize Level 2 inputs: December 31, 2017 Amortized Cost Accrued Interest Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Corporate debt securities $ 7,878,955 $ 69,066 $ 2,322 $ (18,515 ) $ 7,931,828 The following table summarizes the scheduled maturity for the Company’s investments at December 31, 2017 and 2016, respectively: December 31, 2017 December 31, 2016 Maturing in one year or less $ 6,122,400 $ 3,284,616 Maturing after one year through three years 1,809,428 8,586,110 Total investments $ 7,931,828 $ 11,870,726 Warrant liability On July 23, 2013, the Company issued common stock warrants in connection with the issuance of Series C 8% Preferred Stock (the “Series C Warrants”). As part of the offering, the Company issued 137,668 warrants at an exercise price of $52.00 per share and contractual term of 6 years. On November 11, 2013, the Company satisfied certain contractual obligations pursuant to the Series C offering which caused certain “down-round” price protection clauses in the outstanding warrants to become effective on that date. In accordance with ASC 815-40-35-9, the Company reclassified these warrants as a current liability and recorded a warrant liability of $1,380,883, which represents the fair market value of the warrants at that date. The initial fair value recorded as warrants within stockholders’ equity of $233,036 was reversed and the subsequent changes in fair value are recorded as a component of other expense. Financial assets or liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. The Series C Warrants are measured using the Monte Carlo valuation model which is based, in part, upon inputs for which there is little or no observable market data, requiring the Company to develop its own assumptions. The assumptions used in calculating the estimated fair value of the warrants represent the Company’s best estimates; however, these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and different assumptions are used, the warrant liabilities and the change in estimated fair value of the warrants could be materially different. Inherent in the Monte Carlo valuation model are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock based on historical volatility that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero. The Monte Carlo model is used for the Series C Warrants to appropriately value the potential future exercise price adjustments triggered by the anti-dilution provisions. This requires Level 3 inputs which are based on the Company’s estimates of the probability and timing of potential future financings and fundamental transactions. The other assumptions used by the Company are summarized in the following table for the Series C Warrants that were outstanding as of December 31, 2017 and December 31, 2016: Series C Warrants December 31, 2017 December 31, 2016 Closing stock price $ 9.80 $ 39.00 Expected dividend rate 0 % 0 % Expected stock price volatility 81.26 % 79.60 % Risk-free interest rate 1.83 % 1.35 % Expected life (years) 1.56 2.56 As of December 31, 2017, the fair value of the warrant liability was $33,673. The Company recorded a gain of $192,419 for the change in fair value as a component of other expense on the consolidated statement of comprehensive loss for the year ended December 31, 2017. The Company recorded a gain of $298,248 for the change in fair value as a component of other expense on the consolidated statement of comprehensive loss for the year ended December 31, 2016. As of December 31, 2017, 12,035 Series C Warrants are outstanding. The following tables summarize information regarding assets and liabilities measured at fair value on a recurring basis as of December 31, 2017 and December 31, 2016: Fair Value Measurements at Reporting Date Using Balance as of December 31, 2017 Quoted prices in Active Markets for Identical Securities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Current Assets Cash and cash equivalents $ 1,604,810 $ 1,604,810 $ - $ - Marketable securities $ 6,122,400 $ - $ 6,122,400 $ - Long-term Assets Marketable securities $ 1,809,428 $ - $ 1,809,428 $ - Current Liabilities Warrant liabilities $ 33,673 $ - $ - $ 33,673 Fair Value Measurements at Reporting Date Using Balance as of December 31, 2016 Quoted prices in Active Markets for Identical Securities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Current Assets Cash and cash equivalents $ 9,995,955 $ 9,995,955 $ - $ - Marketable securities $ 3,284,616 $ - $ 3,284,616 $ - Long-term Assets Marketable securities $ 8,586,110 $ - $ 8,586,110 $ - Current Liabilities Warrant liabilities $ 226,092 $ - $ - $ 226,092 There were no significant transfers between levels during the year ended December 31, 2017. |
C. BALANCE SHEET COMPONENTS
C. BALANCE SHEET COMPONENTS | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
BALANCE SHEET COMPONENTS | Property and equipment, net Property and equipment consist of the following: December 31, 2017 December 31, 2016 Laboratory equipment $ 354,861 $ 354,861 Computer equipment and software 88,998 101,677 Office furniture and fixtures 130,192 130,192 574,051 586,730 Less: Accumulated depreciation (564,106 ) (567,625 ) $ 9,945 $ 19,105 Depreciation and amortization expense was $13,621 and $18,952 for the years ended December 31, 2017 and 2016, respectively. Accrued liabilities Accrued liabilities consist of the following: December 31, 2017 December 31, 2016 Operating costs $ 39,252 $ 4,361,538 Employee related 324,054 884,008 $ 363,306 $ 5,245,546 |
D. INTANGIBLE ASSETS
D. INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | In Process Research and Development During the year ended December 31, 2016, the Company recognized an impairment charge of $33.3 million related to our levosimendan product in Phase 3 clinical trial, which represents approximately $22 million for IPR&D assets and approximately $11.3 million for goodwill. The LEVO-CTS trial was completed in December of 2016. Based on the data from the trial, levosimendan, given prophylactically prior to cardiac surgery to patients with reduced left ventricular function, had no effect on the co-primary outcomes. The study did not achieve statistically significant reductions in the dual endpoint of death or use of a mechanical assist device at 30 days, nor in the quad endpoint of death, myocardial infarction, need for dialysis, or use of a mechanical assist device at 30 days. Based on the results of the LEVO-CTS trial and subsequent FDA feedback, the Company does not anticipate additional development of levosimendan for the treatment of LCOS in patients undergoing cardiac surgery. As of December 31, 2016, the Company determined the IPR&D asset, and corresponding Goodwill, was more than temporarily impaired. |
E. STOCKHOLDERS' EQUITY
E. STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | Preferred Stock Under the Company’s Certificate of Incorporation, the Board of Directors is authorized, without further stockholder action, to provide for the issuance of up to 10,000,000 shares of preferred stock, par value $0.0001 per share, in one or more series, to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations and restrictions thereof. As of December 31, 2017, 10,000,000 shares of preferred stock are undesignated. Common Stock The Company’s Certificate of Incorporation authorizes it to issue 400,000,000 shares of $0.0001 par value common stock. As of December 31, 2017, and December 31, 2016 there were 1,411,840 and 1,406,002 shares of common stock issued and outstanding. Warrants On November 11, 2014, the Company issued common stock warrants in connection with the execution of a service agreement for investor relations and corporate communications. As part of the compensation under the agreement, the Company issued up to 8,750 warrants at an exercise price of $80.00 per share and contractual term of 5 years. The warrant is initially exercisable for 1,250 shares of common stock, and the number of shares of common stock exercisable under this warrant would be automatically increased by 2,500 upon the first occurrence of market price goals of $120.00, $160.00 and $200.00, respectively, during the eighteen month period beginning on the effective date. Effective May 11, 2016, the additional 7,500 warrants were no longer exercisable as none of the market price goals were achieved. In accordance with ASC 815, these warrants are classified as equity and their estimated fair-value of $478,115 was recorded as an operating expense in the consolidated statement of operations and as additional paid in capital during the fiscal year ended April 30, 2015. The estimated fair value is determined using the Black-Scholes Option Pricing Model which is based on the value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrants, risk-free interest rates, expected dividends and expected volatility of the price of the underlying common stock. As of December 31, 2017, 1,250 of these warrants are outstanding. Series D Warrants On August 22, 2013, the Company closed its private placement of an aggregate of $4.6 million shares of the Company’s Series D Stock to OXBT Fund. In connection with the purchase of shares of Series D Stock, OXBT Fund received the Series D Warrant to purchase 117,949 shares of common stock at an exercise price equal to $52.00 and contractual term of 6 years. In accordance with ASC 815, these warrants are classified as equity and their relative fair-value of $1,531,167 was recognized as a deemed dividend on the Series D Stock during the prior fiscal year ended April 30, 2014. The estimated fair value is determined using the Black-Scholes Option Pricing Model which is based on the value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrants, risk-free interest rates, expected dividends and expected volatility of the price of the underlying common stock. The Series D Warrant is exercisable beginning on the date of issuance and expires on August 22, 2019. The exercise price and the number of shares issuable upon exercise of Series D Warrant is subject to appropriate adjustment in the event of recapitalization events, stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events affecting the Company’s common stock, and also upon any distributions of assets, including cash, stock or other property to the Company’s stockholders. In addition, if stockholder approval for the transaction is obtained, the Series D Warrant will be subject to anti-dilution provisions until such time that for 25 trading days during any 30 consecutive trading day period, the volume weighted average price of the Company’s common stock exceeds $130.00 and the daily dollar trading volume exceeds $350,000 per trading day. On January 30, 2014, the Company entered into an agreement with the OXBT Fund to amend the terms of the outstanding Series D Warrants. The amendment replaced the price protection anti-dilution provision of each warrant with a covenant that the Company will not issue common stock or common stock equivalents at an effective price per share below the exercise price of such warrant without prior written consent, subject to certain exceptions. The Series D Stock and the Series D Warrant were issued and sold without registration under the Securities Act in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder and in reliance on similar exemptions under applicable state laws. Accordingly, OXBT Fund may exercise the Warrant and sell the Series D Stock and underlying shares only pursuant to an effective registration statement under the Securities Act covering the resale of those securities, an exemption under Rule 144 under the Securities Act or another applicable exemption under the Securities Act. On June 17, 2014, the Company received proceeds of $544,000 and issued 10,461 shares of common stock upon the exercise of the Series D warrants. As of December 31, 2017, 107,488 Series D Warrants are outstanding. Series C Warrants On July 23, 2013, as part of the offering of Series C Stock, the Company issued 137,668 Series C Warrants at an exercise price of $52.00 per share and contractual term of 6 years. In accordance with ASC 815, these warrants are classified as equity and their relative fair-value of $1,867,991 was recognized as a deemed dividend on the Series C Stock during the prior fiscal year ended April 30, 2014. The estimated fair value is determined using the Black-Scholes Option Pricing Model which is based on the value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrants, risk-free interest rates, expected dividends and expected volatility of the price of the underlying common stock. In connection with the Series C Offering described above, the Company entered into a Placement Agency Agreement (the “Placement Agency Agreement”) with Ladenburg Thalmann & Co. Inc. (the “Placement Agent”) pursuant to which the Placement Agent agreed to act as the Company’s exclusive placement agent for the Series C Offering. In accordance with the Placement Agency Agreement, on July 23, 2013 the Company issued to the Placement Agent warrants to purchase 2,677 shares of common stock at an exercise price of $48.75 per share and a contractual term of 3 years. In accordance with ASC 815, these warrants are classified as equity and their relative fair-value of $51,231 was recognized as additional paid in capital during the prior fiscal year ended April 30, 2014. The estimated fair value is determined using the Black-Scholes Option Pricing Model which is based on the value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrants, risk-free interest rates, expected dividends and expected volatility of the price of the underlying common stock. Between October 2013 and April 2014, the Company received cash of approximately $6.5 million and issued 125,633 shares of common stock upon the exercise of outstanding Series C Warrants. As of December 31, 2017, 12,035 Series C Warrants are outstanding. In accordance with ASC 815-40-35-8, the Company reassessed the classification of the remaining Series C Warrants. On November 11, 2013, the Company satisfied certain contractual obligations pursuant to the Series C offering which caused certain “down-round” price protection clauses in the outstanding warrants to become effective on that date. In accordance with ASC 815-40-35-9, on November 11, 2013, the Company reclassified these warrants as a current liability and recorded a warrant liability of $1,082,941 which represents the fair market value of the warrants at that date. The initial fair value recorded as warrants within stockholders’ equity of $233,036 was reversed and the change in fair value was recorded as a component of other expense. The estimated fair value is determined using the Monte Carlo Model which is based on the value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrants, risk-free interest rates, expected dividends, expected volatility of the price of the underlying common stock as well as other estimates and assumptions. As of December 31, 2017, the fair value of the warrant liability was $33,673. The Company recorded a gain of $192,419 for the change in fair value as a component of other expense on the consolidated statement of operations and comprehensive loss for the year ended December 31, 2017. As of December 31, 2017, the Company has 120,773 warrants outstanding. During the years ended December 31, 2017 and 2016, no warrants were issued or exercised. The following table summarizes the Company’s warrant activity for the year ended December 31, 2017 and December 31, 2016 : Warrants Weighted Average Exercise Price Outstanding at December 31, 2015 136,423 $ 87.76 Issued - - Exercised - - Forfeited (15,629 ) 358.71 Outstanding at December 31, 2016 120,794 $ 52.71 Issued - - Exercised - - Forfeited (21 ) 2,460.00 Outstanding at December 31, 2017 120,773 $ 52.29 1999 Amended Stock Plan In October 2000, the Company adopted the 1999 Stock Plan, as amended and restated on June 17, 2008 (the “Plan”). Under the Plan, with the approval of the Compensation Committee of the Board of Directors, the Company may grant stock options, restricted stock, stock appreciation rights and new shares of common stock upon exercise of stock options. On September 30, 2011, the Company’s stockholders approved an amendment to the Plan which increased the number of shares authorized for issuance under the Plan to 15,000, up from 2,000 previously authorized. On March 13, 2014, the Company’s stockholders approved an amendment to the Plan which increased the number of shares of common stock authorized for issuance to a total of 200,000 shares, up from 15,000 previously authorized. In accordance with the terms of the acquisition of certain rights to levosimendan from Phyxius, the Company issued an aggregate of 178,644 stock options with a grant date fair value of $15,818,512, to the Chief Executive Officer, the Chief Financial Officer, the Executive Vice President, Business and Commercial Operations and the Executive Vice President, Regulatory Affairs. These options were issued with a six-year term and subject to multiple performance-based vesting conditions. During the year ended April 30, 2014, the Company recorded approximately $7.9 million of compensation expense for the vested options in its consolidated statements of operations. An additional $5.9 million of compensation expense related to these grants will be recognized as performance vesting conditions are achieved. On September 15, 2015, the Company’s stockholders approved an additional amendment to the Plan which increased the number of shares of common stock authorized for issuance to a total of 250,000 shares, up from 200,000 previously authorized. As of December 31, 2017 the Company had 55,561 shares of common stock available for grant under the Plan. The following table summarizes the shares available for grant under the Plan for the years ended December 31, 2017 and 2016: Shares Available for Grant Balances, at December 31, 2015 49,736 Options granted (36,300 ) Restricted stock granted (22 ) Restricted stock cancelled/forfeited 11 Balances, at December 31, 2016 13,425 Options granted (13,000 ) Options cancelled/forfeited 60,962 Restricted stock granted (10,691 ) Restricted stock cancelled/forfeited 4,865 Balances, at December 31, 2017 55,561 Plan Stock Options Stock options granted under the Plan may be either incentive stock options (“ISOs”), or nonqualified stock options (“NSOs”). ISOs may be granted only to employees. NSOs may be granted to employees, consultants and directors. Stock options under the Plan may be granted with a term of up to ten years and at prices no less than fair market value for ISOs and no less than 85% of the fair market value for NSOs. Stock options granted generally vest over one to three years. The following table summarizes the outstanding stock options under the Plan for the years ended December 31, 2017 and 2016: Outstanding Options Number of Shares Weighted Average Exercise Price Aggregate Intrinsic Value Balances at December 31, 2015 200,406 $ 110.00 Options granted 36,300 $ 42.40 Options cancelled - $ - Balances at December 31, 2016 236,706 $ 99.74 Options granted 13,000 $ 11.06 Options cancelled (60,962 ) $ 94.75 Balances at December 31, 2017 188,744 $ 95.24 $ - (1) (1) Amount represents the difference between the exercise price and $9.80, the closing price of Tenax Therapeutics’ stock on December 31, 2017, as reported on the Nasdaq Capital Market, for all in-the-money options outstanding. The following table summarizes all options outstanding as of December 31, 2017: Options Outstanding at December 31, 2017 Options Exercisable and Vested at December 31, 2017 Exercise Price Number of Options Weighted Average Remaining Contractual Life (Years) Number of Options Weighted Average Exercise Price $ 10.60 to $63.20 44,500 8.8 13,881 $ 53.64 $ 67.00 to $95.20 6,251 6.8 6,249 $ 77.14 $ 96.40 to $113.00 137,733 2.4 70,743 $ 112.41 $ 296.00 to $2,760.00 260 3.3 260 $ 1,105.85 188,744 4.0 91,133 $ 103.88 The following table summarizes options outstanding that have vested and are expected to vest based on options outstanding as of December 31, 2017: Number of Option Shares Weighted Average Exercise Price Aggregate Intrinsic Value (1) Weighted Average Remaining Contractual Life (Years) Vested 91,133 $ 103.88 $ - 3.7 Vested and expected to vest 118,389 $ 87.02 $ - 4.9 (1) Amount represents the difference between the exercise price and $9.80, the closing price of Tenax Therapeutics’ stock on December 31, 2017, as reported on the Nasdaq Capital Market, for all in-the-money options outstanding. The Company chose the “straight-line” attribution method for allocating compensation costs of each stock option over the requisite service period using the Black-Scholes Option Pricing Model to calculate the grant date fair value. The Company used the following assumptions to estimate the fair value of options granted under its stock option plans for the years ended December 31, 2017 and 2016: For the year ended December 31, 2017 2016 Risk-free interest rate (weighted average) 2.19 % 2.28 % Expected volatility (weighted average) 99.59 % 83.38 % Expected term (in years) 7 7 Expected dividend yield 0.00 % 0.00 % Risk-Free Interest Rate The risk-free interest rate assumption was based on U.S. Treasury instruments with a term that is consistent with the expected term of the Company’s stock options. Expected Volatility The expected stock price volatility for the Company’s common stock was determined by examining the historical volatility and trading history for its common stock over a term consistent with the expected term of its options. Expected Term The expected term of stock options represents the weighted average period the stock options are expected to remain outstanding. It was calculated based on the historical experience that the Company has had with its stock option grants. Expected Dividend Yield The expected dividend yield of 0% is based on the Company’s history and expectation of dividend payouts. The Company has not paid and do not anticipate paying any dividends in the near future. Forfeitures As stock-based compensation expense recognized in the statement of operations for the years ended December 31, 2017 and 2016 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based on the Company’s historical experience. The weighted-average grant-date fair value of options granted during the year ended December 31, 2017 was $11.00. The weighted-average grant-date fair value of options granted during the year ended December 31, 2016 was $42.40. The Company recorded compensation expense for these stock options grants of $498,491 and $529,708 for the years ended December 31, 2017 and 2016, respectively. As of December 31, 2017, there were unrecognized compensation costs of approximately $384,000 related to non-vested stock option awards that will be recognized on a straight-line basis over the weighted average remaining vesting period of 1.6 years. Additionally, there were unrecognized compensation costs of approximately $5.9 million related to non-vested stock option awards subject to performance-based vesting milestones with a weighted average remaining life of 2.3 years. As of December 31, 2017, none of these milestones have been achieved. Inducement Stock Options The table below summarizes the employment inducement stock option award for 1,250 shares of common stock made to our Chief Medical Officer on February 15, 2015. This employment inducement stock option was awarded in accordance with the employment inducement award exemption provided by Nasdaq Rule 5635(c)(4) and was therefore not awarded under the Company’s stockholder approved equity plan. The option award will vest over a three year period, with one-third vesting per year, beginning one year from the grant date. The options have a 10-year term and an exercise price of $64.40 per share, the February 13, 2015 closing price of the Company’s common stock. A summary of the activity and related information for our stock options follows: Number of Shares Weighted Average Exercise Price Inducement Stock Options outstanding at December 31, 2015 1,250 $ 64.40 Options granted - - Options exercised - - Options forfeited or expired (833 ) 64.40 Inducement Stock Options outstanding at December 31, 2016 417 $ 64.40 Options granted - - Options exercised - - Options forfeited or expired (417 ) 64.40 Inducement Stock Options outstanding at December 31, 2017 - $ - Options exercisable at December 31, 2017 - $ - Inducement stock option compensation expense was approximately $8,000 for the year ended December 31, 2017. Inducement stock option compensation expense was approximately $20,000 for the year ended December 31, 2016. There were no inducement stock options outstanding as of December 31, 2017. The estimated weighted average fair value per inducement option share granted was $64,343 in 2015 using a Black-Scholes option pricing model based on market prices and the following assumptions at the date of inducement option grant: weighted average risk-free interest rate of 1.84%, dividend yield of 0%, volatility factor for our common stock of 93.90% and a weighted average expected life of 7 years for inducement options not forfeited. Restricted Stock Grants The following table summarizes the outstanding restricted stock under the Plan for the years ended December 31, 2017 and 2016: Outstanding Restricted Stock Grants Number of Shares Weighted Average Grant Date Fair Value Balances, at December 31, 2015 20 $ 66.80 Restricted stock granted 22 $ 54.40 Restricted stock vested (16 ) $ 62.20 Restricted stock cancelled (14 ) $ 62.60 Balances, at December 31, 2016 12 $ 54.40 Restricted stock granted 10,691 $ 13.60 Restricted stock vested (5,838 ) $ 13.60 Restricted stock cancelled (4,865 ) $ 13.60 Balances, at December 31, 2017 - $ - The Company recorded compensation expense for these restricted stock grants of $560 and $1,758 for the years ended December 31, 2017 and 2016, respectively. As of December 31, 2017, there were no unrecognized compensation costs related to the non-vested restricted stock grants that will be recognized on a straight-line basis over the remaining vesting period. 2016 Stock Incentive Plan On June 16, 2016, the Company’s stockholders approved the 2016 Stock Incentive Plan (the “2016 Plan”), which provides for the issuance of up to 150,000 shares of common stock. Under the 2016 Plan, with the approval of the Compensation Committee of the Board of Directors, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, cash-based awards or other stock-based awards. As of December 31, 2017 the Company had not issued any awards under the 2016 Plan and there were 150,000 shares of common stock available for grant under the 2016 Plan. |
F. COMMITMENTS AND CONTINGENCIE
F. COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Operating Leases The Company leases its office space under an operating lease that includes fixed annual increases and expires in June 2021. Total rent expense was $112,431 and $91,208 for the years ended December 31, 2017 and 2016, respectively. The future minimum payments for the long-term, non-cancelable lease are as follows: Year ending December 31, 2018 115,220 2019 118,117 2020 121,084 2021 61,803 $ 416,224 Simdax license agreement On November 13, 2013 the Company acquired that certain License Agreement (the “License”), dated September 20, 2013, by and between Phyxius and Orion Corporation, a global healthcare company incorporated under the laws of Finland (“Orion”), which granted it an exclusive, sublicenseable right to develop and commercialize pharmaceutical products containing levosimendan in the United States and Canada. Pursuant to the License, the Company must use the “Simdax®” trademark owned by Orion to commercialize pharmaceutical products containing levosimendan, 2.5 mg/ml concentrate for solution for infusion / 5ml vial (the “Product”). The License also grants to the Company a right of first refusal to commercialize new developments of the Product, including developments as to the formulation, presentation, means of delivery, route of administration, dosage or indication. Orion’s ongoing role under the License includes sublicense approval, serving as the sole source of manufacture, holding a first right to enforce intellectual property rights in the United States and Canada (the “Territory”), and certain regulatory participation rights. Additionally, the Company must grant back to Orion a broad non-exclusive license to any patents or clinical trial data related to the Product developed by the Company under the License. The License has a fifteen (15) year term, provided, however, that the License will continue after the end of the fifteen year term in each country in the Territory until the expiration of Orion’s patent rights in the Product in such country. Orion had the right to terminate the License if the human clinical trial using the Product and studying reduction in morbidity and mortality of cardiac surgery patients at risk of LCOS was not started by July 31, 2014. While the Company did not commence the trial by that date, on September 9, 2014, Orion notified the Company in writing that it did not intend to terminate the License so long as the trial was commenced on or before October 31, 2014. The Company subsequently commenced the human clinical trial for levosimendan on September 18, 2014 when the first patient was enrolled. The License includes the following development milestones for which the Company shall make non-refundable payments to Orion no later than twenty-eight (28) days after the occurrence of the applicable milestone event: (i) $2.0 million upon the grant of FDA approval, including all registrations, licenses, authorizations and necessary approvals, to develop and/or commercialize the Product in the United States; and (ii) $1.0 million upon the grant of regulatory approval for the Product in Canada. Once commercialized, the Company is obligated to make certain non-refundable commercialization milestone payments to Orion, aggregating up to $13.0 million, contingent upon achievement of certain cumulative net sales amounts in the Territory. The Company must also pay Orion tiered royalties based on net sales of the Product in the Territory made by the Company and its sublicensees. After the end of the Term, the Company must pay Orion a royalty based on net sales of the Product in the Territory for as long as Life Newco sells the Product in the Territory. As of December 31, 2017, the Company has not met any of the developmental milestones and, accordingly, has not recorded any liability for the contingent payments due to Orion. Litigation The Company is subject to litigation in the normal course of business, none of which management believes will have a material adverse effect on the Company’s consolidated financial statements. |
G. 401(k) BENEFIT PLAN
G. 401(k) BENEFIT PLAN | 12 Months Ended |
Dec. 31, 2017 | |
Retirement Benefits [Abstract] | |
401(k) BENEFIT PLAN | The Company sponsors a 401(k) Retirement Savings Plan (the “401(k) Plan”) for all eligible employees. Full-time employees over the age of 18 are eligible to participate in the 401(k) Plan after 90 days of continuous employment. Participants may elect to defer earnings into the 401(k) Plan up to the annual IRS limits and the Company provides a matching contribution up to 5% of the participants’ annual salary in accordance with the 401(k) Plan documents. The 401(k) Plan is managed by a third-party trustee. For the years ended December 31, 2017 and 2016, the Company recorded $74,990 and $83,589 for matching contributions expense, respectively. |
H. INCOME TAXES
H. INCOME TAXES | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | The Company has not recorded any income tax expense (benefit) for the period ended December 31, 2017 due to its history of net operating losses. The Company's provision for income taxes is summarized as follows: December 31, 2017 2016 Current federal income tax expense $ - $ - Deferred federal income tax benefit - (7,139,565 ) Provision for federal income taxes: - (7,139,565 ) Current state income tax expense - - Deferred state income tax benefit - (822,535 ) Provision for state income taxes: - (822,535 ) Total $ - $ (7,962,100 ) The reconciliation of income tax expenses (benefit) at the statutory federal income tax rate of 34% for the periods ended December 31, 2017 and December 31, 2016 is as follows: December 31, 2017 2016 U.S. federal taxes (benefit) at statutory rate $ (3,005,491 ) $ (17,641,231 ) State income tax benefit, net of federal benefit (346,057 ) (2,031,238 ) Stock compensation 169,312 141,807 Other nondeductible, including goodwill impairment (71,044 ) 4,160,717 Change in state tax rate (426,159 ) 241,518 Change in the federal tax rate 17,474,188 - Federal and state net operating loss adjustments 774,875 - Other, including effect of tax rate brackets (265,181 ) (57,490 ) Change in valuation allowance (14,304,443 ) 7,223,817 $ - $ (7,962,100 ) The tax effects of temporary differences and carry forwards that give rise to significant portions of the deferred tax assets are as follows: December 31, Deferred Tax Assets 2017 2016 Net operating loss carryforwards $ 32,239,768 $ 46,227,681 Accruals and other 567,090 902,546 Capital loss carryforwards 16,466 12,395 Valuation allowance (32,781,999 ) (47,086,442 ) Net deferred tax assets 41,325 56,180 Deferred Tax Liabilities Other liabilities (41,325 ) (56,180 ) Net Deferred Tax Liabilities $ - $ - The Company has established a valuation allowance against net deferred tax assets due to the uncertainty that such assets will be realized. The Company periodically evaluates the recoverability of the deferred tax assets. At such time that it is determined that it is more likely than not that deferred tax assets will be realizable, the valuation allowance will be reduced. The net decrease in the valuation allowance during 2017 was approximately $14.3 million. On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law, which reduced the federal corporate income tax rate to 21% for tax years beginning after December 31, 2017. As a result of the newly enacted tax rate, the Company adjusted its deferred tax assets as of December 31, 2017, by applying the new 21% rate, which resulted in a decrease to the net deferred tax asset of approximately $17.5 million. The SEC staff issued SAB 118 which will allow the Company to record provisional amounts related to accounting for the Tax Act during a measurement period which is similar to the measurement period used when accounting for business combinations. The Company is following the guidance set forth by SAB 118 and any amounts calculated are provisional estimates and will be reevaluated as more information or guidance becomes available. The Company will continue to assess the impact of the recently enacted Tax Act on its business and consolidated financial statements. As of December 31, 2017, the Company had federal and state net operating loss carryforwards of approximately $132.2 million and $105.6 million available to offset future federal and state taxable income, respectively. The federal and state net operating loss carryforwards begin to expire in 2018 and valuation allowances have been provided. Utilization of the net operating loss carryforwards may be subject to an annual limitation due to the ownership percentage change limitations provided by the Internal Revenue Code of 1986 and similar state provisions. The annual limitations may result in the expiration of the net operating losses before utilization. Management has evaluated all other tax positions that could have a significant effect on the financial statements and determined the Company had no uncertain income tax positions at December 31, 2017. The Company files U.S. and state income tax returns with varying statutes of limitations. The tax years 2001 and forward remain open to examination due to the carryover of unused net operating losses or tax credits. |
I. SUBSEQUENT EVENTS
I. SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2017 | |
I. Subsequent Events | |
SUBSEQUENT EVENTS | On February 22, 2018, the Company filed a Certificate of Amendment to the Company’s Certificate of Incorporation with the Secretary of State of the State of Delaware (the “Amendment”) to effect a reverse stock split of the Company’s common stock at a ratio of one-for-twenty, effective as of February 23, 2018 at 5:00 p.m. The Amendment did not change the number of authorized shares or the par value of the Company’s common stock. The Amendment provides that every twenty shares of the Company’s issued and outstanding common stock were automatically combined into one issued and outstanding share of the Company’s common stock. The Amendment was approved by the stockholders of the Company at a special meeting of stockholders held on February 15, 2018, with the ratio of the reverse stock split to be not less than one-for-five and not more than one-for-fifty, as determined by the Company’s Board of Directors. The Company’s Board of Directors approved the Amendment with the one-for-twenty ratio on the same date. |
B. SUMMARY OF CRITICAL ACCOUN16
B. SUMMARY OF CRITICAL ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Use of Estimates | The preparation of the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, management reviews its estimates to ensure that these estimates appropriately reflect changes in the Company’s business and new information as it becomes available. If historical experience and other factors used by management to make these estimates do not reasonably reflect future activity, the Company’s results of operations and financial position could be materially impacted. |
Principles of Consolidation | The accompanying consolidated financial statements include the accounts and transactions of Tenax Therapeutics, Inc. and Life Newco, Inc. All material intercompany transactions and balances have been eliminated in consolidation. |
Goodwill | Acquired businesses are accounted for using the acquisition method of accounting, which requires that assets acquired, including identifiable intangible assets, and liabilities assumed be recorded at fair value, with limited exceptions. Any excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. If the acquired net assets do not constitute a business, the transaction is accounted for as an asset acquisition and no goodwill is recognized. Goodwill is reviewed for impairment on an annual basis or more frequently if events or circumstances indicate potential impairment. The Company’s goodwill evaluation is based on both qualitative and quantitative assessments regarding the fair value of goodwill relative to its carrying value. The Company assesses qualitative factors to determine if its sole reporting unit’s fair value is more likely than not to exceed its carrying value, including goodwill. In the event the Company determines that it is more likely than not that its reporting unit’s fair value is less than its carrying amount, quantitative testing is performed comparing recorded values to estimated fair values. If the fair value exceeds the carrying value, goodwill is not impaired. If the carrying value exceeds the fair value, an impairment charge is recognized through a charge to operations based upon the excess of the carrying value of goodwill over the implied fair value. During the year ended December 31, 2016, the Company recognized an impairment charge of $33.3 million related to our levosimendan product in Phase 3 clinical trial, which represents approximately $22 million for in-process research and development (“IPR&D”) assets and approximately $11.3 million for goodwill. The LEVO-CTS trial was completed in December of 2016. Based on the data from the trial, levosimendan, given prophylactically prior to cardiac surgery to patients with reduced left ventricular function, had no effect on the co-primary outcomes. The study did not achieve statistically significant reductions in the dual endpoint of death or use of a mechanical assist device at 30 days, nor in the quad endpoint of death, myocardial infarction, need for dialysis, or use of a mechanical assist device at 30 days. Based on the results of the LEVO-CTS trial and subsequent U.S. Food and Drug Administration (“FDA”) feedback, the Company does not anticipate additional development of levosimendan for the treatment of low cardiac output syndrome (“LCOS”) in patients undergoing cardiac surgery. As of December 31, 2016, management determined the IPR&D asset, and corresponding goodwill, was more than temporarily impaired. |
Cash and Cash Equivalents | The Company considers all highly liquid instruments with a maturity date of three months or less, when acquired, to be cash equivalents. |
Cash Concentration Risk | On July 21, 2010, the Wall Street Reform and Consumer Protection Act permanently increased the Federal Deposit Insurance Corporation (the “FDIC”) insurance limits to $250,000 per depositor per insured bank. The Company had cash balances of $849,851 and $9,362,812 uninsured by the FDIC as of December 31, 2017 and 2016, respectively. |
Liquidity and Capital Resources | The Company has financed its operations since September 1990 through the issuance of debt and equity securities and loans from stockholders. The Company had total current assets of $8,062,893 and $13,628,175 and working capital of $7,054,053 and $7,428,937 as of December 31, 2017 and 2016, respectively. Cash resources, including the fair value of the Company’s available for sale marketable securities as of December 31, 2017 were approximately $9.5 million, compared to approximately $21.9 million as of December 31, 2016. The Company expects to continue to incur expenses related to development of levosimendan for pulmonary hypertension and other potential indications, as well as identifying and developing other potential product candidates. Based on its resources at December 31, 2017, the Company believes that it has sufficient capital to fund its planned operations through the first quarter of calendar year 2019. However, the Company will need substantial additional financing in order to fund its operations beyond such period and thereafter until it can achieve profitability, if ever. The Company depends on its ability to raise additional funds through various potential sources, such as equity and debt financing, or to license its product candidates to another pharmaceutical company. The Company will continue to fund operations from cash on hand and through sources of capital similar to those previously described. The Company cannot assure that it will be able to secure such additional financing, or if available, that it will be sufficient to meet its needs. To the extent that the Company raises additional funds by issuing shares of its common stock or other securities convertible or exchangeable for shares of common stock, stockholders will experience dilution, which may be significant. In the event the Company raises additional capital through debt financings, the Company may incur significant interest expense and become subject to covenants in the related transaction documentation that may affect the manner in which the Company conducts its business. To the extent that the Company raises additional funds through collaboration and licensing arrangements, it may be necessary to relinquish some rights to its technologies or product candidates or grant licenses on terms that may not be favorable to the Company. Any or all of the foregoing may have a material adverse effect on the Company’s business and financial performance. |
Deferred financing costs | Deferred financing costs represent legal, due diligence and other direct costs incurred to raise capital or obtain debt. Direct costs include only “out-of-pocket” or incremental costs directly related to the effort, such as a finder’s fee and accounting and legal fees. These costs will be capitalized if the efforts are successful or expensed when unsuccessful. Indirect costs are expensed as incurred. Deferred financing costs related to debt are amortized over the life of the debt. Deferred financing costs related to issuing equity are charged to Additional Paid-in Capital. |
Derivative financial instruments | The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risk. Terms of convertible promissory note instruments and other convertible equity instruments are reviewed to determine whether or not they contain embedded derivative instruments that are required under FASB ASC 815, Derivatives and Hedging (“ASC 815”) to be accounted for separately from the host contract and recorded on the balance sheet at fair value. The fair value of derivative liabilities, if any, is required to be revalued at each reporting date, with corresponding changes in fair value recorded in current period operating results. Freestanding warrants issued by the Company in connection with the issuance or sale of debt and equity instruments are considered to be derivative instruments and are evaluated and accounted for in accordance with the provisions of ASC 815. |
Preclinical Study and Clinical Accruals | The Company estimates its preclinical study and clinical trial expenses based on the services received pursuant to contracts with several research institutions and contract research organizations (“CROs”) that conduct and manage preclinical and clinical trials on its behalf. The financial terms of the agreements vary from contract to contract and may result in uneven expenses and payment flows. Preclinical study and clinical trial expenses include the following: - fees paid to CROs in connection with clinical trials, - fees paid to research institutions in conjunction with preclinical research studies, and - fees paid to contract manufacturers and service providers in connection with the production and testing of active pharmaceutical ingredients and drug materials for use in preclinical studies and clinical trials. |
Property and Equipment, Net | Property and equipment are stated at cost, subject to adjustments for impairment, less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the following estimated useful lives: Laboratory equipment 3 – 5 years Office equipment 5 years Office furniture and fixtures 7 years Computer equipment and software 3 years Leasehold improvements Shorter of useful life or remaining lease term Maintenance and repairs are charged to expense as incurred, improvements to leased facilities and equipment are capitalized. |
Research and Development Costs | Research and development costs include, but are not limited to, (i) expenses incurred under agreements with CROs and investigative sites, which conduct our clinical trials and a substantial portion of our preclinical studies; (ii) the cost of manufacturing and supplying clinical trial materials; (iii) payments to contract service organizations, as well as consultants; (iv) employee-related expenses, which include salaries and benefits; and (v) facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent and maintenance of facilities and equipment, depreciation of leasehold improvements, equipment, laboratory and other supplies. All research and development expenses are expensed as incurred. |
Income Taxes | Deferred tax assets and liabilities are recorded for differences between the financial statement and tax bases of the assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is recorded for the amount of income tax payable or refundable for the period increased or decreased by the change in deferred tax assets and liabilities during the period. |
Stock-Based Compensation | The Company accounts for stock based compensation in accordance with ASC 718 Compensation — Stock Compensation, which requires the measurement and recognition of compensation expense for all stock-based payment awards granted, modified and settled to our employees and directors. The Company chose the “straight-line” attribution method for allocating compensation costs of each stock option on a straight-line basis over the requisite service period using the Black-Scholes Option Pricing Model to calculate the grant date fair value. |
Loss per Share | Basic loss per share, which excludes antidilutive securities, is computed by dividing net loss by the weighted-average number of common shares outstanding for that particular period. In contrast, diluted loss per share considers the potential dilution that could occur from other equity instruments that would increase the total number of outstanding shares of common stock. Such amounts include shares potentially issuable under outstanding options, restricted stock and warrants. The following outstanding options, restricted stock grants, convertible note shares and warrants were excluded from the computation of basic and diluted net loss per share for the periods presented because including them would have had an anti-dilutive effect. Year ended December 31, 2017 2016 Options to purchase common stock 188,744 236,706 Warrants to purchase common stock 120,773 120,794 Restricted stock grants - 12 |
Operating Leases | The Company maintains operating leases for its office and laboratory facilities. The lease agreements may include rent escalation clauses and tenant improvement allowances. The Company recognizes scheduled rent increases on a straight-line basis over the lease term beginning with the date the company takes possession of the leased space. Differences between rental expense and actual rental payments are recorded as deferred rent liabilities and are included in “Other liabilities” on the consolidated balance sheets. |
Recent Accounting Pronouncements | In July 2017, the Financial Accounting Standards Board (the “FASB”), issued an accounting standard that changes the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. The standard will be effective on January 1, 2019. Early adoption is permitted, including adoption in an interim period. The Company does not believe adoption of this standard will have a material impact on its consolidated financial statements and related disclosures. In January 2017, the FASB issued an accounting standard that provides guidance for evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The guidance provides a screen to determine when an integrated set of assets and activities, or a set, does not qualify to be a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in an identifiable asset or a group of similar identifiable assets, the set is not a business. If the screen is not met, the guidance requires a set to be considered a business to include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs and removes the evaluation as to whether a market participant could replace the missing elements. The standard became effective on January 1, 2018 and was adopted on a prospective basis. The Company does not believe adoption of this standard will have a material impact on its consolidated financial statements and related disclosures. In August 2016, the FASB issued an accounting standard that clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows where diversity in practice exists. The standard is effective in the Company’s first quarter of fiscal 2018. The Company does not believe adoption of this standard will have a material impact on its consolidated financial statements and related disclosures. In June 2016, the FASB issued an accounting standard that amends how credit losses are measured and reported for certain financial instruments that are not accounted for at fair value through net income. This standard will require that credit losses be presented as an allowance rather than as a write-down for available-for-sale debt securities and will be effective for interim and annual reporting periods beginning January 1, 2020, with early adoption permitted, but not earlier than annual reporting periods beginning January 1, 2019. A modified retrospective approach is to be used for certain parts of this guidance, while other parts of the guidance are to be applied using a prospective approach. The Company does not believe adoption of this standard will have a material impact on its consolidated financial statements and related disclosures. In May 2014, the FASB issued an accounting standard that supersedes nearly all existing revenue recognition guidance under GAAP. The standard is principles-based and provides a five-step model to determine when and how revenue is recognized. The core principle of the standard is that revenue should be recognized when a company transfers promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. In March 2016, the FASB issued a standard to clarify the implementation guidance on principal versus agent considerations, and in April 2016, the FASB issued a standard to clarify the implementation guidance on identifying performance obligations and licensing. The standard also requires disclosure of qualitative and quantitative information surrounding the amount, nature, timing and uncertainty of revenues and cash flows arising from contracts with customers. In July 2015, the FASB agreed to defer the effective date of the standard from annual periods beginning after December 15, 2016, to annual periods beginning after December 15, 2017. Early application prior to the original effective date was not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company reviewed its current accounting policies and practices to assess the impact of the guidance on its business processes. Based on this evaluation, the adoption of this standard will not have a material impact on its consolidated financial statements and related disclosures. In February 2016, the FASB issued an accounting standard intended to improve financial reporting regarding leasing transactions. The standard will require the Company to recognize on the balance sheet the assets and liabilities for the rights and obligations created by all leased assets. The standard will also require it to provide enhanced disclosures designed to enable users of financial statements to understand the amount, timing, and uncertainty of cash flows arising from all leases, operating and capital, with lease terms greater than 12 months. The standard is effective for financial statements beginning after December 15, 2018, and interim periods within those annual periods. Early adoption is permitted. The Company is currently evaluating the impact that this standard will have on its consolidated financial statements and related disclosures. In January 2016, the FASB issued an accounting standard that will enhance the Company’s reporting for financial instruments. The standard is effective for financial statements issued for annual periods beginning after December 15, 2017, and interim periods within those annual periods. Earlier adoption is permitted for interim and annual reporting periods as of the beginning of the fiscal year of adoption. The Company does not believe adoption of this standard will have a material impact on its consolidated financial statements and related disclosures. |
Fair Value | The Company determines the fair value of its financial assets and liabilities in accordance with the FASB Accounting Standards Codification (“ASC”) 820 Fair Value Measurements. The Company’s balance sheet includes the following financial instruments: cash and cash equivalents, investments in marketable securities and warrant liabilities. The Company considers the carrying amount of its cash and cash equivalents and short-term notes payable to approximate fair value due to the short-term nature of these instruments. Accounting for fair value measurements involves a single definition of fair value, along with a conceptual framework to measure fair value, with a fair value defined 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.” The fair value measurement hierarchy consists of three levels: Level one Quoted market prices in active markets for identical assets or liabilities; Level two Inputs other than level one inputs that are either directly or indirectly observable; and Level three Unobservable inputs developed using estimates and assumptions; which are developed by the reporting entity and reflect those assumptions that a market participant would use. The Company applies valuation techniques that (1) place greater reliance on observable inputs and less reliance on unobservable inputs and (2) are consistent with the market approach, the income approach and/or the cost approach, and include enhanced disclosures of fair value measurements in the Company’s consolidated financial statements. |
Investments in Marketable Securities | The Company classifies all of its investments as available-for-sale. Unrealized gains and losses on investments are recognized in comprehensive income/(loss), unless an unrealized loss is considered to be other than temporary, in which case the unrealized loss is charged to operations. The Company periodically reviews its investments for other than temporary declines in fair value below cost basis and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company believes the individual unrealized losses represent temporary declines primarily resulting from interest rate changes. Realized gains and losses are reflected in other income (expense) in the Consolidated Statements of Operations and Comprehensive Loss and are determined using the specific identification method with transactions recorded on a settlement date basis. The Company recognized a gain of $422 and a loss $41,955 for the years ended December 31, 2017 and 2016, respectively. Investments with original maturities at date of purchase beyond three months and which mature at or less than 12 months from the balance sheet date are classified as current. Investments with a maturity beyond 12 months from the balance sheet date are classified as long-term. At December 31, 2017, the Company believes that the costs of its investments are recoverable in all material respects. The following tables summarize the fair value of the Company’s investments by type. The estimated fair value of the Company’s fixed income investments are classified as Level 2 in the fair value hierarchy as defined in U.S. GAAP. These fair values are obtained from independent pricing services which utilize Level 2 inputs: December 31, 2017 Amortized Cost Accrued Interest Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Corporate debt securities $ 7,878,955 $ 69,066 $ 2,322 $ (18,515 ) $ 7,931,828 The following table summarizes the scheduled maturity for the Company’s investments at December 31, 2017 and 2016, respectively: December 31, 2017 December 31, 2016 Maturing in one year or less $ 6,122,400 $ 3,284,616 Maturing after one year through three years 1,809,428 8,586,110 Total investments $ 7,931,828 $ 11,870,726 |
Warrant liability | On July 23, 2013, the Company issued common stock warrants in connection with the issuance of Series C 8% Preferred Stock (the “Series C Warrants”). As part of the offering, the Company issued 137,668 warrants at an exercise price of $52.00 per share and contractual term of 6 years. On November 11, 2013, the Company satisfied certain contractual obligations pursuant to the Series C offering which caused certain “down-round” price protection clauses in the outstanding warrants to become effective on that date. In accordance with ASC 815-40-35-9, the Company reclassified these warrants as a current liability and recorded a warrant liability of $1,380,883, which represents the fair market value of the warrants at that date. The initial fair value recorded as warrants within stockholders’ equity of $233,036 was reversed and the subsequent changes in fair value are recorded as a component of other expense. Financial assets or liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. The Series C Warrants are measured using the Monte Carlo valuation model which is based, in part, upon inputs for which there is little or no observable market data, requiring the Company to develop its own assumptions. The assumptions used in calculating the estimated fair value of the warrants represent the Company’s best estimates; however, these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and different assumptions are used, the warrant liabilities and the change in estimated fair value of the warrants could be materially different. Inherent in the Monte Carlo valuation model are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock based on historical volatility that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero. The Monte Carlo model is used for the Series C Warrants to appropriately value the potential future exercise price adjustments triggered by the anti-dilution provisions. This requires Level 3 inputs which are based on the Company’s estimates of the probability and timing of potential future financings and fundamental transactions. The other assumptions used by the Company are summarized in the following table for the Series C Warrants that were outstanding as of December 31, 2017 and December 31, 2016: Series C Warrants December 31, 2017 December 31, 2016 Closing stock price $ 9.80 $ 39.00 Expected dividend rate 0 % 0 % Expected stock price volatility 81.26 % 79.60 % Risk-free interest rate 1.83 % 1.35 % Expected life (years) 1.56 2.56 As of December 31, 2017, the fair value of the warrant liability was $33,673. The Company recorded a gain of $192,419 for the change in fair value as a component of other expense on the consolidated statement of comprehensive loss for the year ended December 31, 2017. The Company recorded a gain of $298,248 for the change in fair value as a component of other expense on the consolidated statement of comprehensive loss for the year ended December 31, 2016. As of December 31, 2017, 12,035 Series C Warrants are outstanding. The following tables summarize information regarding assets and liabilities measured at fair value on a recurring basis as of December 31, 2017 and December 31, 2016: Fair Value Measurements at Reporting Date Using Balance as of December 31, 2017 Quoted prices in Active Markets for Identical Securities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Current Assets Cash and cash equivalents $ 1,604,810 $ 1,604,810 $ - $ - Marketable securities $ 6,122,400 $ - $ 6,122,400 $ - Long-term Assets Marketable securities $ 1,809,428 $ - $ 1,809,428 $ - Current Liabilities Warrant liabilities $ 33,673 $ - $ - $ 33,673 Fair Value Measurements at Reporting Date Using Balance as of December 31, 2016 Quoted prices in Active Markets for Identical Securities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Current Assets Cash and cash equivalents $ 9,995,955 $ 9,995,955 $ - $ - Marketable securities $ 3,284,616 $ - $ 3,284,616 $ - Long-term Assets Marketable securities $ 8,586,110 $ - $ 8,586,110 $ - Current Liabilities Warrant liabilities $ 226,092 $ - $ - $ 226,092 There were no significant transfers between levels during the year ended December 31, 2017. |
B. SUMMARY OF CRITICAL ACCOUN17
B. SUMMARY OF CRITICAL ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Anti-dilutive securities | Year ended December 31, 2017 2016 Options to purchase common stock 188,744 236,706 Warrants to purchase common stock 120,773 120,794 Restricted stock grants - 12 |
Fair values of investments by type | December 31, 2017 Amortized Cost Accrued Interest Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Corporate debt securities $ 7,878,955 $ 69,066 $ 2,322 $ (18,515 ) $ 7,931,828 |
Scheduled of investments maturity | December 31, 2017 December 31, 2016 Maturing in one year or less $ 6,122,400 $ 3,284,616 Maturing after one year through three years 1,809,428 8,586,110 Total investments $ 7,931,828 $ 11,870,726 |
Significant Unobservable Inputs | Series C Warrants December 31, 2017 December 31, 2016 Closing stock price $ 9.80 $ 39.00 Expected dividend rate 0 % 0 % Expected stock price volatility 81.26 % 79.60 % Risk-free interest rate 1.83 % 1.35 % Expected life (years) 1.56 2.56 |
Fair Value Measurements | Fair Value Measurements at Reporting Date Using Balance as of December 31, 2017 Quoted prices in Active Markets for Identical Securities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Current Assets Cash and cash equivalents $ 1,604,810 $ 1,604,810 $ - $ - Marketable securities $ 6,122,400 $ - $ 6,122,400 $ - Long-term Assets Marketable securities $ 1,809,428 $ - $ 1,809,428 $ - Current Liabilities Warrant liabilities $ 33,673 $ - $ - $ 33,673 Fair Value Measurements at Reporting Date Using Balance as of December 31, 2016 Quoted prices in Active Markets for Identical Securities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Current Assets Cash and cash equivalents $ 9,995,955 $ 9,995,955 $ - $ - Marketable securities $ 3,284,616 $ - $ 3,284,616 $ - Long-term Assets Marketable securities $ 8,586,110 $ - $ 8,586,110 $ - Current Liabilities Warrant liabilities $ 226,092 $ - $ - $ 226,092 |
C. BALANCE SHEET COMPONENTS (Ta
C. BALANCE SHEET COMPONENTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Notes to Financial Statements | |
Property Plant and Equipment | December 31, 2017 December 31, 2016 Laboratory equipment $ 354,861 $ 354,861 Computer equipment and software 88,998 101,677 Office furniture and fixtures 130,192 130,192 574,051 586,730 Less: Accumulated depreciation (564,106 ) (567,625 ) $ 9,945 $ 19,105 |
Accrued Liabilities | December 31, 2017 December 31, 2016 Operating costs $ 39,252 $ 4,361,538 Employee related 324,054 884,008 $ 363,306 $ 5,245,546 |
E. STOCKHOLDERS' EQUITY (Tables
E. STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Warrant Activity | Warrants Weighted Average Exercise Price Outstanding at December 31, 2015 136,423 $ 87.76 Issued - - Exercised - - Forfeited (15,629 ) 358.71 Outstanding at December 31, 2016 120,794 $ 52.71 Issued - - Exercised - - Forfeited (21 ) 2,460.00 Outstanding at December 31, 2017 120,773 $ 52.29 |
Shares available for grant under the Plan | Shares Available for Grant Balances, at December 31, 2015 49,736 Options granted (36,300 ) Restricted stock granted (22 ) Restricted stock cancelled/forfeited 11 Balances, at December 31, 2016 13,425 Options granted (13,000 ) Options cancelled/forfeited 60,962 Restricted stock granted (10,691 ) Restricted stock cancelled/forfeited 4,865 Balances, at December 31, 2017 55,561 |
Outstanding stock options | Outstanding Options Number of Shares Weighted Average Exercise Price Aggregate Intrinsic Value Balances at December 31, 2015 200,406 $ 110.00 Options granted 36,300 $ 42.40 Options cancelled - $ - Balances at December 31, 2016 236,706 $ 99.74 Options granted 13,000 $ 11.06 Options cancelled (60,962 ) $ 94.75 Balances at December 31, 2017 188,744 $ 95.24 $ - (1) |
Options Activity | Options Outstanding at December 31, 2017 Options Exercisable and Vested at December 31, 2017 Exercise Price Number of Options Weighted Average Remaining Contractual Life (Years) Number of Options Weighted Average Exercise Price $ 10.60 to $63.20 44,500 8.8 13,881 $ 53.64 $ 67.00 to $95.20 6,251 6.8 6,249 $ 77.14 $ 96.40 to $113.00 137,733 2.4 70,743 $ 112.41 $ 296.00 to $2,760.00 260 3.3 260 $ 1,105.85 188,744 4.0 91,133 $ 103.88 |
Options vested and expected to vest | Number of Option Shares Weighted Average Exercise Price Aggregate Intrinsic Value (1) Weighted Average Remaining Contractual Life (Years) Vested 91,133 $ 103.88 $ - 3.7 Vested and expected to vest 118,389 $ 87.02 $ - 4.9 |
Fair Value Assumptions | For the year ended December 31, 2017 2016 Risk-free interest rate (weighted average) 2.19 % 2.28 % Expected volatility (weighted average) 99.59 % 83.38 % Expected term (in years) 7 7 Expected dividend yield 0.00 % 0.00 % |
Stock options | Number of Shares Weighted Average Exercise Price Inducement Stock Options outstanding at December 31, 2015 1,250 $ 64.40 Options granted - - Options exercised - - Options forfeited or expired (833 ) 64.40 Inducement Stock Options outstanding at December 31, 2016 417 $ 64.40 Options granted - - Options exercised - - Options forfeited or expired (417 ) 64.40 Inducement Stock Options outstanding at December 31, 2017 - $ - Options exercisable at December 31, 2017 - $ - |
Restricted Stock Grants | Outstanding Restricted Stock Grants Number of Shares Weighted Average Grant Date Fair Value Balances, at December 31, 2015 20 $ 66.80 Restricted stock granted 22 $ 54.40 Restricted stock vested (16 ) $ 62.20 Restricted stock cancelled (14 ) $ 62.60 Balances, at December 31, 2016 12 $ 54.40 Restricted stock granted 10,691 $ 13.60 Restricted stock vested (5,838 ) $ 13.60 Restricted stock cancelled (4,865 ) $ 13.60 Balances, at December 31, 2017 - $ - |
F. COMMITMENTS AND CONTINGENC20
F. COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
F. Commitments And Contingencies Tables | |
Future lease payments | Year ending December 31, 2018 115,220 2019 118,117 2020 121,084 2021 61,803 $ 416,224 |
H. INCOME TAXES (Tables)
H. INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Provision for income taxes | December 31, 2017 2016 Current federal income tax expense $ - $ - Deferred federal income tax benefit - (7,139,565 ) Provision for federal income taxes: - (7,139,565 ) Current state income tax expense - - Deferred state income tax benefit - (822,535 ) Provision for state income taxes: - (822,535 ) Total $ - $ (7,962,100 ) |
Reconciliation of income tax expenses (benefit) | December 31, 2017 2016 U.S. federal taxes (benefit) at statutory rate $ (3,005,491 ) $ (17,641,231 ) State income tax benefit, net of federal benefit (346,057 ) (2,031,238 ) Stock compensation 169,312 141,807 Other nondeductible, including goodwill impairment (71,044 ) 4,160,717 Change in state tax rate (426,159 ) 241,518 Change in the federal tax rate 17,474,188 - Federal and state net operating loss adjustments 774,875 - Other, including effect of tax rate brackets (265,181 ) (57,490 ) Change in valuation allowance (14,304,443 ) 7,223,817 $ - $ (7,962,100 ) |
Deferred tax assets | December 31, Deferred Tax Assets 2017 2016 Net operating loss carryforwards $ 32,239,768 $ 46,227,681 Accruals and other 567,090 902,546 Capital loss carryforwards 16,466 12,395 Valuation allowance (32,781,999 ) (47,086,442 ) Net deferred tax assets 41,325 56,180 Deferred Tax Liabilities Other liabilities (41,325 ) (56,180 ) Net Deferred Tax Liabilities $ - $ - |
B. SUMMARY OF CRITICAL ACCOUN22
B. SUMMARY OF CRITICAL ACCOUNTING POLICIES (Details) - shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Options | ||
Anti-dilutive securities | 188,744 | 4,742,032 |
Warrants | ||
Anti-dilutive securities | 120,773 | 2,415,675 |
Restricted stock | ||
Anti-dilutive securities | 0 | 214 |
B. SUMMARY OF CRITICAL ACCOUN23
B. SUMMARY OF CRITICAL ACCOUNTING POLICIES (Details 1) - Corporate debt securities | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Amortized Cost | $ 7,878,955 |
Accrued Interest | 69,066 |
Gross Unrealized Gains | 2,322 |
Gross Unrealized losses | (18,515) |
Estimated Fair Value | $ 7,931,828 |
B. SUMMARY OF CRITICAL ACCOUN24
B. SUMMARY OF CRITICAL ACCOUNTING POLICIES (Details 2) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
B. Summary Of Critical Accounting Policies Details 2 | ||
Maturing in one year or less | $ 6,122,400 | $ 3,284,616 |
Maturing after one year through three years | 1,809,428 | 8,586,110 |
Total investments | $ 7,931,828 | $ 11,870,726 |
B. SUMMARY OF CRITICAL ACCOUN25
B. SUMMARY OF CRITICAL ACCOUNTING POLICIES (Details 3) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
B. Summary Of Critical Accounting Policies Details 3 | ||
Closing stock price | $ 9.80 | $ 39 |
Expected dividend rate | 0.00% | 0.00% |
Expected stock price volatility | 81.26% | 79.60% |
Risk-free interest rate | 1.83% | 1.35% |
Expected life (years) | 1 year 6 months 22 days | 2 years 6 months 22 days |
B. SUMMARY OF CRITICAL ACCOUN26
B. SUMMARY OF CRITICAL ACCOUNTING POLICIES (Details 5) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Current Assets | ||
Cash and cash equivalents | $ 1,604,810 | $ 9,995,955 |
Marketable securities | 6,122,400 | 3,284,616 |
Long-term Assets | ||
Marketable securities | 1,809,428 | 8,586,110 |
Current Liabilities | ||
Warrant liabilities | 33,673 | 226,092 |
Level 1 | ||
Current Assets | ||
Cash and cash equivalents | 1,604,810 | 9,995,955 |
Marketable securities | 0 | 0 |
Long-term Assets | ||
Marketable securities | 0 | 0 |
Current Liabilities | ||
Warrant liabilities | 0 | 0 |
Level 2 | ||
Current Assets | ||
Cash and cash equivalents | 0 | 0 |
Marketable securities | 6,122,400 | 3,284,616 |
Long-term Assets | ||
Marketable securities | 1,809,428 | 8,586,110 |
Current Liabilities | ||
Warrant liabilities | 0 | 0 |
Level 3 | ||
Current Assets | ||
Cash and cash equivalents | 0 | 0 |
Marketable securities | 0 | 0 |
Long-term Assets | ||
Marketable securities | 0 | 0 |
Current Liabilities | ||
Warrant liabilities | $ 33,673 | $ 226,092 |
B. SUMMARY OF CRITICAL ACCOUN27
B. SUMMARY OF CRITICAL ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
B. Summary Of Critical Accounting Policies Details Narrative | ||
Uninsured FDIC | $ 849,851 | $ 9,362,812 |
Current assets | 8,062,893 | 13,628,175 |
Working capital | 7,054,053 | 7,233,866 |
Cash | 9,500,000 | 21,900,000 |
Loss in marketable securities recognised | 422 | 41,955 |
Fair value of the warrant liability | 33,673 | 226,092 |
Change in fair value gain (loss) | $ 192,419 | $ 298,248 |
C. BALANCE SHEET COMPONENTS (De
C. BALANCE SHEET COMPONENTS (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
C. Balance Sheet Components Details | ||
Laboratory equipment | $ 354,861 | $ 354,861 |
Computer equipment and software | 88,998 | 101,677 |
Office furniture and fixtures | 130,192 | 130,192 |
Subtotal | 574,051 | 586,730 |
Less: Accumulated depreciation | (564,106) | (567,625) |
Property Plant and Equipment | $ 9,945 | $ 19,105 |
C. BALANCE SHEET COMPONENTS (29
C. BALANCE SHEET COMPONENTS (Details 1) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
C. Balance Sheet Components Details 1 | ||
Operating costs | $ 39,252 | $ 4,361,538 |
Employee related | 324,054 | 884,008 |
Total | $ 363,306 | $ 5,245,546 |
C. BALANCE SHEET COMPONENTS (30
C. BALANCE SHEET COMPONENTS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Notes to Financial Statements | ||
Depreciation and amortization expense | $ 13,621 | $ 18,952 |
E. STOCKHOLDERS' EQUITY (Detail
E. STOCKHOLDERS' EQUITY (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
E. Stockholders Equity Details | ||
Number of Warrants Outstanding, Beginning | 120,794 | 136,423 |
Number of Warrants Issued | 0 | 0 |
Number of Warrants Exercised | 0 | 0 |
Number of Warrants Forfeited | (21) | (15,629) |
Number of Warrants Outstanding, Ending | 120,773 | 120,794 |
Weighted Average Exercise Price Outstanding, Beginning | $ 52.71 | $ 87.76 |
Weighted Average Exercise Price Forfeited | 2,460 | 358.71 |
Weighted Average Exercise Price Outstanding, Ending | $ 52.29 | $ 52.71 |
E. STOCKHOLDERS' EQUITY (Deta32
E. STOCKHOLDERS' EQUITY (Details 1) - shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Exercise of warrants | ||
1999 Amended Stock Plan Shares available for grant. Beginning Balance | 13,425 | 49,736 |
Additional shares reserved | (36,300) | |
Options granted | (13,000) | |
Options cancelled/forfeited | 60,962 | |
Restricted stock granted | (10,691) | (22) |
Restricted stock cancelled/forfeited | 4,865 | 11 |
1999 Amended Stock Plan Shares available for grant, Ending balance | 55,561 | 13,425 |
E. STOCKHOLDERS' EQUITY (Deta33
E. STOCKHOLDERS' EQUITY (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Number of Options Outstanding, Ending | 188,744 | |
Plan Stock Options [Member] | ||
Number of Options Outstanding, Beginning | 236,706 | 200,406 |
Number of Options Granted | 13,000 | 36,300 |
Number of Options Cancelled | (60,962) | 0 |
Number of Options Outstanding, Ending | 188,744 | 236,706 |
Weighted Average Exercise Price Outstanding, Beginning | $ 99.74 | $ 110 |
Weighted Average Exercise Price Granted | 11.06 | 42.40 |
Weighted Average Exercise Price Canceled | 94.75 | 0 |
Weighted Average Exercise Price Outstanding, Ending | $ 95.24 | $ 99.74 |
Aggregate Intrinsic Value | $ 0 | $ 0 |
E. STOCKHOLDERS' EQUITY (Deta34
E. STOCKHOLDERS' EQUITY (Details 3) | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Number of Options Outstanding, Ending | 188,744 |
Weighted Average Remaining Contractual Life (Years) | 4 years |
Number of Options Exercisable and Vested | 91,133 |
Options Exercisable and Vested Weighted Average Exercise Price | $ / shares | $ 103.88 |
Exercise Price $10.60 to $63.20 | |
Number of Options Outstanding, Ending | 44,500 |
Weighted Average Remaining Contractual Life (Years) | 8 years 9 months 18 days |
Number of Options Exercisable and Vested | 13,881 |
Options Exercisable and Vested Weighted Average Exercise Price | $ / shares | $ 53.64 |
Exercise Price $67.00 to $95.20 | |
Number of Options Outstanding, Ending | 6,251 |
Weighted Average Remaining Contractual Life (Years) | 6 years 9 months 18 days |
Number of Options Exercisable and Vested | 6,249 |
Options Exercisable and Vested Weighted Average Exercise Price | $ / shares | $ 77.14 |
Exercise Price $96.40 to $113.00 | |
Number of Options Outstanding, Ending | 137,733 |
Weighted Average Remaining Contractual Life (Years) | 2 years 4 months 24 days |
Number of Options Exercisable and Vested | 70,743 |
Options Exercisable and Vested Weighted Average Exercise Price | $ / shares | $ 112.41 |
Exercise Price $14.80 to $138.00 | |
Number of Options Outstanding, Ending | 260 |
Weighted Average Remaining Contractual Life (Years) | 3 years 3 months 18 days |
Number of Options Exercisable and Vested | 260 |
Options Exercisable and Vested Weighted Average Exercise Price | $ / shares | $ 1,105.85 |
E. STOCKHOLDERS' EQUITY (Deta35
E. STOCKHOLDERS' EQUITY (Details 4) | 12 Months Ended |
Dec. 31, 2017USD ($)$ / sharesshares | |
E. Stockholders Equity Details 4 | |
Number of Option Shares Vested | shares | 91,133 |
Weighted Average Exercise Price Vested | $ / shares | $ 103.88 |
Aggregate Intrinsic Value Vested | $ | $ 0 |
Weighted Average Remaining Contractual Life (Years) Vested | 3 years 8 months 12 days |
Number of Option Shares Vested and expected to vest | shares | 118,389 |
Weighted Average Exercise Price Vested and expected to vest | $ / shares | $ 87.02 |
Aggregate Intrinsic Value Vested and expected to vest | $ | $ 0 |
Weighted Average Remaining Contractual Life (Years) Vested and expected to vest | 4 years 10 months 24 days |
E. STOCKHOLDERS' EQUITY (Deta36
E. STOCKHOLDERS' EQUITY (Details 5) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Gain included in income from change in fair value of warrants for the period | ||
Risk-free interest rate (weighted average) | 2.19% | 2.28% |
Expected volatility (weighted average) | 99.59% | 83.38% |
Expected term (in years) | 7 years | 7 years |
Expected dividend yield | 0.00% | 0.00% |
E. STOCKHOLDERS' EQUITY (Deta37
E. STOCKHOLDERS' EQUITY (Details 6) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Number of Options Outstanding, Ending | 188,744 | |
Stock Option [Member] | ||
Number of Options Outstanding, Beginning | 417 | 1,250 |
Options granted | 0 | 0 |
Options exercised | 0 | 0 |
Options forfeited or expired | (417) | (833) |
Number of Options Outstanding, Ending | 0 | 417 |
Options exercisable | 0 | |
Weighted Average Exercise Price Outstanding, Beginning | $ 64.40 | $ 64.40 |
Weighted Average Exercise Price, Option granted | 0 | 0 |
Weighted Average Exercise Price, Options exercised | 0 | 0 |
Weighted Average Exercise Price, Options forfeited or expired | 64.40 | 64.40 |
Weighted Average Exercise Price Outstanding, Ending | 0 | $ 64.40 |
Weighted Average Exercise Price, Options exercisable | $ 0 |
E. STOCKHOLDERS' EQUITY (Deta38
E. STOCKHOLDERS' EQUITY (Details 7) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Ending Balance | ||
Number of Restricted Stock Grants, Beginning | 12 | 20 |
Granted | 10,691 | 22 |
Vested | (5,838) | (16) |
Cancelled | (4,865) | (14) |
Number of Restricted Stock Grants Ending | 0 | 12 |
Weighted Average Grant Date Fair Value, Beginning | $ 54.40 | $ 66.80 |
Weighted Average Grant Date Fair Value, Granted | 13.60 | 54.40 |
Weighted Average Grant Date Fair Value, Vested | 13.60 | 62.20 |
Weighted Average Grant Date Fair Value, Cancelled | 13.60 | 62.60 |
Weighted Average Grant Date Fair Value, Ending | $ 0 | $ 54.40 |
E. STOCKHOLDERS' EQUITY (Deta39
E. STOCKHOLDERS' EQUITY (Details Narrative) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Common stock value | $ 141 | $ 2,812 |
Common stock, shares outstanding | 1,411,840 | 1,406,002 |
Common stock, issued | 1,411,840 | 1,406,002 |
Common stock available for grant | 55,561 | 13,425 |
Inducement stock option compensation expense | $ 8,000 | $ 20,000 |
Restricted stock | ||
Compensation expense for restricted stock grants | $ 560 | 1,758 |
Unrecognized compensation costs related to non-vested restricted stock grants | $ 400 |
F. COMMITMENTS AND CONTINGENC40
F. COMMITMENTS AND CONTINGENCIES (Details) | Dec. 31, 2017USD ($) |
F. Commitments And Contingencies Tables | |
2,018 | $ 115,220 |
2,019 | 118,117 |
2,020 | 121,084 |
2,021 | 61,803 |
Total | $ 416,224 |
F. COMMITMENTS AND CONTINGENC41
F. COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Total rent expense | $ 112,431 | $ 91,208 |
G. 401(k) BENEFIT PLAN (Details
G. 401(k) BENEFIT PLAN (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Retirement Benefits [Abstract] | ||
Matching contributions expense for Retirement Savings Plan | $ 74,990 | $ 83,589 |
H. INCOME TAXES (Details)
H. INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
H. Income Taxes Details | ||
Current federal income tax expense | $ 0 | $ 0 |
Deferred federal income tax benefit | 0 | (7,139,565) |
Provision for federal income taxes: | 0 | (7,139,565) |
Current state income tax expense | 0 | 0 |
Deferred state income tax benefit | 0 | (822,535) |
Provision for state income taxes: | 0 | (822,535) |
Total | $ 0 | $ (7,962,100) |
H. INCOME TAXES (Details 1)
H. INCOME TAXES (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
U.S. federal taxes (benefit) at statutory rate | $ (3,005,491) | $ (17,641,231) |
State income tax benefit, net of federal benefit | (346,057) | (2,031,238) |
Stock compensation | 169,312 | 141,807 |
Other nondeductible, including goodwill impairment | (71,044) | 4,160,717 |
Change in state tax rate | (426,159) | 241,518 |
Change in the federal tax rate | 17,474,188 | 0 |
Federal and state net operating loss adjustments | 774,875 | 0 |
Other, including expiration of NOL carryforwards | (265,181) | (57,490) |
Change in valuation allowance | (14,304,443) | 7,223,817 |
Income tax | $ 0 | $ (7,962,100) |
H. INCOME TAXES (Details 2)
H. INCOME TAXES (Details 2) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets | ||
Net operating Loss Carryforwards | $ 32,239,768 | $ 46,227,681 |
Accruals and others | 567,090 | 902,546 |
Capital loss carryoforwards | 16,466 | 12,395 |
Valuation allowance | (32,781,999) | (47,086,442) |
Net deferred tax assets | 41,325 | 56,180 |
Deferred Tax Liabilities | ||
Other liabilities | (41,325) | (56,180) |
Net Deferred Tax Liabilities | $ 0 | $ 0 |
H. INCOME TAXES (Details Narrat
H. INCOME TAXES (Details Narrative) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Federal and State [Member] | ||
Operating loss carryforwards | $ 132,200,000 | $ 105,600,000 |