Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 07, 2018 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Adamis Pharmaceuticals Corp | |
Entity Central Index Key | 887,247 | |
Document Type | 10-Q | |
Trading Symbol | ADMP | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Voluntary Filer | No | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 47,291,358 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,018 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
CURRENT ASSETS | ||
Cash | $ 3,406,331 | $ 17,323,241 |
Restricted Cash | 1,015,728 | 1,009,461 |
Accounts Receivable, net | 1,245,318 | 830,090 |
Inventories, net | 2,609,840 | 1,824,558 |
Prepaid Expenses and Other Current Assets | 391,041 | 474,180 |
Total Current Assets | 8,668,258 | 21,461,530 |
LONG TERM ASSETS | ||
Security Deposits | 54,655 | 54,655 |
Intangible Assets, net | 14,448,642 | 15,686,687 |
Goodwill | 7,640,622 | 7,640,622 |
Fixed Assets, net | 8,542,250 | 6,559,664 |
Total Assets | 39,354,427 | 51,403,158 |
CURRENT LIABILITIES | ||
Accounts Payable | 5,163,811 | 2,919,120 |
Contract Liabilities | 22,075 | 14,758 |
Accrued Other Expenses | 2,568,796 | 2,300,672 |
Accrued Bonuses | 888,662 | 1,069,021 |
Bank Loans - Working Capital Line of Credit | 2,000,000 | 2,000,000 |
Bank Loans - Building and Equipment, current portion | 493,240 | 483,992 |
Total Current Liabilities | 11,136,584 | 8,787,563 |
LONG TERM LIABILITIES | ||
Deferred Tax Liability, net | 485,002 | 485,002 |
Building and Equipment Loans, net of current portion | 2,334,021 | 2,583,109 |
Total Liabilities | 13,955,607 | 11,855,674 |
COMMITMENTS AND CONTINGENCIES | ||
STOCKHOLDERS' EQUITY | ||
Common Stock - Par Value $.0001; 100,000,000 Shares Authorized; 33,697,670 and 33,696,920 Issued, 33,390,130 and 33,389,380 Outstanding at June 30, 2018 and December 31, 2017, respectively | 3,370 | 3,369 |
Additional Paid-in Capital | 156,719,009 | 153,546,932 |
Accumulated Deficit | (131,318,330) | (113,997,588) |
Treasury Stock - 307,540 Shares, at cost | (5,229) | (5,229) |
Total Stockholders' Equity | 25,398,820 | 39,547,484 |
Total Liabilities and Stockholders' Equity | $ 39,354,427 | $ 51,403,158 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Common Stock, par value (in dollars per share) | $ 0.0001 | $ .0001 |
Common Stock, authorized | 100,000,000 | 100,000,000 |
Common Stock, issued | 33,697,670 | 33,696,920 |
Common Stock, outstanding | 33,390,130 | 33,389,380 |
Treasury Stock, shares | 307,540 | 307,540 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Statement [Abstract] | ||||
REVENUE, net | $ 3,920,566 | $ 3,805,355 | $ 7,099,800 | $ 6,843,206 |
COST OF GOODS SOLD | 2,394,394 | 1,881,448 | 4,457,557 | 3,546,013 |
Gross Profit | 1,526,172 | 1,923,907 | 2,642,243 | 3,297,193 |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 6,362,931 | 5,655,074 | 12,836,746 | 11,227,804 |
RESEARCH AND DEVELOPMENT | 4,835,634 | 1,185,847 | 7,084,702 | 2,695,747 |
Loss from Operations | (9,672,393) | (4,917,014) | (17,279,205) | (10,626,358) |
OTHER INCOME (EXPENSE) | ||||
Interest Expense | (51,435) | (59,430) | (102,103) | (126,905) |
Interest Income | 21,457 | 5,241 | 60,566 | 9,264 |
Total Other Income (Expense), net | (29,978) | (54,189) | (41,537) | (117,641) |
Net (Loss) | $ (9,702,371) | $ (4,971,203) | $ (17,320,742) | $ (10,743,999) |
Basic and Diluted (Loss) Per Share: | ||||
Basic and Diluted (Loss) Per Share (in dollars per share) | $ (.29) | $ (0.19) | $ (.52) | $ (0.44) |
Basic and Diluted Weighted Average Shares Outstanding (in shares) | 33,389,600 | 26,221,137 | 33,389,505 | 24,180,915 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net (Loss) | $ (17,320,742) | $ (10,743,999) |
Adjustments to Reconcile Net (Loss) to Net | ||
Stock Based Compensation | 3,172,078 | 2,915,369 |
Provision for Bad Debts | 84,350 | 31,263 |
Depreciation and Amortization Expense | 1,544,003 | 1,560,348 |
Gain on Sale of Fixed Assets | (758) | |
(Increase) Decrease in: | ||
Accounts Receivable - Trade | (499,578) | (448,682) |
Inventories, net | (785,282) | (7,928) |
Prepaid Expenses and Other Current Assets | 83,139 | 11,871 |
Increase (Decrease) in: | ||
Accounts Payable | 1,227,391 | (256,487) |
Contract Liabilities | 7,317 | (43,541) |
Accrued Other Expenses and Bonuses | 87,765 | (830) |
Net Cash (Used) in Operating Activities | (12,400,317) | (6,982,616) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of Equipment | (1,270,486) | (615,519) |
Payment for Website Development | (16,162) | |
Net Cash (Used) in in Investing Activities | (1,270,486) | (631,681) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from Issuance of Common Stock, net of issuance cost | 16,036,134 | |
Proceeds from Exercise of Warrants | 321,110 | |
(Payments) of Bank Loan - Line of Credit | (1,864,880) | |
(Payments) of Bank Loans - Equipment and Building | (239,840) | (230,927) |
Net Cash Provided by (Used) in Financing Activities | (239,840) | 14,261,437 |
Increase (Decrease) in Cash and Restricted Cash | (13,910,643) | 6,647,140 |
Cash and Restricted Cash: | ||
Cash and Restricted Cash - Beginning | 18,332,702 | 5,095,760 |
Cash and Restricted Cash - Ending | 4,422,059 | 11,742,900 |
RECONCILIATION OF CASH AND RESTRICTED CASH | ||
Cash | 3,406,331 | 10,739,770 |
Restricted Cash | 1,015,728 | 1,003,130 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Cash Paid for Income Taxes | 8,650 | 13,645 |
Cash Paid for Interest | 108,796 | $ 130,901 |
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES | ||
Increase in Accrued Capital Expenditures | $ 1,017,300 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Note 1: Basis of Presentation T Inventories Inventories are valued at the lower of cost or net realizable value ("NRV"). The cost of inventories is determined using the first-in, first-out (“FIFO”) method. Inventories consist of compounding formulation raw materials, currently marketed products, and device supplies. A reserve for obsolescence is recorded monthly based on a review of inventory for obsolescence. Liquidity and Capital Resources The Company's cash was $4,422,059 and $18,332,702 at June 30, 2018 and December 31, 2017, respectively, including approximately $1.0 million in restricted cash held by the Bear State Bank, N.A. as collateral for a $2.0 million working capital line. The Company prepared the condensed consolidated financial statements assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities during the normal course of business. In preparing these condensed consolidated financial statements, consideration was given to the Company’s future business as described below, which may preclude the Company from realizing the value of certain assets. The Company has significant operating cash flow deficiencies. Additionally, the Company will need significant funding for future operations and the expenditures that it believes will be required to support commercialization of its products and conduct the clinical and regulatory activities relating to the Company’s product candidates, satisfy existing obligations and liabilities, and otherwise support the Company’s intended business activities and working capital needs. The preceding conditions raise substantial doubt about the Company's ability to continue as a going concern. Management’s plans include attempting to secure additional required funding through equity or debt financings, sales or out-licensing of intellectual property assets, seeking partnerships with other pharmaceutical companies or third parties to co-develop and fund research, development or commercialization efforts, or similar transactions. There is no assurance that the Company will be successful in obtaining the necessary funding to meet its business objectives. Basic and Diluted (Loss) per Share The Company computes basic loss per share by dividing the loss attributable to holders of common stock for the period by the weighted average number of shares of common stock outstanding during the period. The diluted loss per share calculation is based on the treasury stock method and gives effect to dilutive options, warrants, convertible notes, convertible preferred stock and other potential dilutive common stock. Except as noted below, the effect of common stock equivalents was anti-dilutive and was excluded from the calculation of weighted average shares outstanding. Potential dilutive securities, which are not included in dilutive weighted average shares as of June 30, 2018 and June 30, 2017 consist of outstanding equity classified warrants (3,166,995 and 8,904,714, respectively), outstanding options (9,352,243 and 6,399,649, respectively), and outstanding restricted stock units (1,642,212 and 1,300,000, respectively). R ecently Adopted Accounting Pronouncement Utilizing the deferred effective date of January 1, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) The Company evaluated the impact that adoption of this new standard will have on its consolidated financial statements and determined that the timing of revenue recognition and amount of revenue recognized is not materially impacted under the new standard. Accordingly, it did not have a material quantitative impact on the Company's revenue recognition relating to sales of compounded pharmacy formulations and other pharmacy products by U.S. Compounding, Inc. ("USC), a subsidiary. The Company also determined that the modified retrospective adoption will have no impact on either the timing or amount of prior period revenues. As a result, any comparative information has not been restated. See Note 2 for further details. In March 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 Recent Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases consolidated In June 2018, the FASB issued Accounting Standards Update No. 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. |
Revenues
Revenues | 6 Months Ended |
Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | Note 2: Revenues Revenue Recognition Revenue is recognized pursuant to ASC Topic 606, “ Revenue from Contracts with Customers 1. Identify the contract with the customer 2. Identify the performance obligations in the contract 3. Determine the transaction price 4. Allocate the transaction price to the performance obligations in the contract 5. Recognize revenue when (or as) each performance obligation is satisfied The Company’s revenues are entirely attributed to its USC subsidiary. The only performance obligation identified with the Company’s sales arrangement is the delivery of the products, so revenue is recognized upon delivery of the promised goods to the customers. Revenue is measured at the point control transfers and represents the amount of consideration the Company expects to receive in exchange for transferring the goods. USC is a registered drug compounding outsourcing facility under Section 503B of the U.S. Food, Drug & Cosmetic Act, as amended, or FDCA, and provides prescription compounded medications to humans and animals, including compounded sterile preparations or CSPs, and non-sterile compounds to patients, physician clinics, hospitals, surgery centers and other clients throughout most of the United States. Disaggregation of Revenue As operations under a sterile environment are covered by Section 503B of the FDCA, and the U.S. Drug Quality and Security Act, USC's operations are governed by specific regulatory and quality requirements. Any deviation from these exacting standards could result in a stoppage of operations, recall of products, and a significant reduction in revenues. The Company employs rigorous quality controls and outside testing facilities to minimize the likelihood of this occurrence. The following table presents the Company's revenues disaggregated by sterile and non-sterile regulatory environments for the three months and six months ended June 30, 2018 and 2017. Three Months Ended June 30 Six Months Ended June 30 2018 2017 2018 2017 Sterile $ 2,111,509 $ 2,405,709 $ 3,882,245 $ 4,218,912 Non-Sterile $ 1,809,057 $ 1,399,646 $ 3,217,555 $ 2,624,294 Total $ 3,920,566 $ 3,805,355 $ 7,099,800 $ 6,843,206 The revenues of the Company's pharmacy formulations rely, in large part, on sales generated from clinics/hospitals. Adverse economic conditions pose a risk that the Company's customers may reduce or cancel spending, which would impact the Company's revenue. The following table presents the Company's revenue disaggregated by end market for the three months and six months ended June 30, 2018 and 2017. Three Months Ended June 30 Six Months Ended June 30 2018 2017 2018 2017 Clinics/Hospitals $ 3,365,302 $ 3,390,355 $ 6,117,912 $ 6,044,634 Direct to Patients $ 555,264 $ 415,000 $ 981,888 $ 798,572 Total $ 3,920,566 $ 3,805,355 $ 7,099,800 $ 6,843,206 Contract Liabilities Contract liabilities are deferred revenue that the Company records when cash payments are received or due in advance of the Company's performance obligations. The Company’s performance obligation is met when control of the promised goods is transferred to the Company's customers. For the three months ended June 30, 2018 and 2017, $12,043 and $82,082 of the revenues recognized were reported as contract liabilities as of March 31, 2018 and 2017, respectively, and for the six months ended June 30, 2018 and 2017, $14,758 and $54,478 of the revenues recognized were reported as contract liabilities as of December 31, 2017 and 2016, respectively. Practical Expedients The Company pays commissions on certain sales once the customer payment has been received, which are accrued at the time of the sale. The Company generally expenses sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within sales and marketing expenses. |
Acquisition of U.S. Compounding
Acquisition of U.S. Compounding | 6 Months Ended |
Jun. 30, 2018 | |
Business Combinations [Abstract] | |
Acquisition of U.S. Compounding | Note 3: Acquisition of U.S. Compounding On April 11, 2016, the Company acquired the net assets and assumed the principal debt obligations of U.S. Compounding, Inc. in a merger transaction (the “Merger”) pursuant to which the Company acquired USC and USC continued as a wholly owned subsidiary of the Company. The acquisition is accounted for using the purchase method of accounting. USC is registered as a drug compounding outsourcing facility under Section 503B of the FDCA and the U.S. Drug Quality and Security Act, and provides prescription compounded medications, including compounded sterile preparation and certain nonsterile drugs, to patients, physician clinics, hospitals, surgery centers and other clients throughout most of the United States. USC also provides certain veterinary pharmaceutical drugs for animals. The total consideration for the transaction was $15,967,942. |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories | Note 4: Inventories Inventories, net of reserves, at June 30, 2018 and December 31, 2017 consisted of the following: June 30, 2018 December 31, 2017 Finished Goods $ 686,568 $ 256,050 Raw Material 496,223 560,828 Devices 1,427,049 1,007,680 $ 2,609,840 $ 1,824,558 Reserve for obsolescence as of June 30, 2018 and December 31, 2017 was approximately $3,494,000 and $795,000, respectively. |
Fixed Assets
Fixed Assets | 6 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Fixed Assets | Note 5: Fixed Assets Fixed assets at June 30, 2018 and December 31, 2017 are summarized in the table below: Description Useful Life June 30, 2018 December 31, 2017 Building 30 $ 3,040,000 $ 3,040,000 Machinery and Equipment 3 - 7 2,020,151 1,525,643 Furniture and Fixtures 7 126,654 126,654 Automobile 5 9,395 9,395 Leasehold Improvements 7 - 15 284,037 284,037 Total Fixed Assets 5,480,237 4,985,729 Less: Accumulated Depreciation (1,265,338 ) (959,380 ) Land 460,000 460,000 Construction In Progress - Equipment 3,867,351 2,073,315 Fixed Assets, net $ 8,542,250 $ 6,559,664 Depreciation expense for the three months ended June 30, 2018 and 2017 was approximately $154,000 and $159,000, respectively; and for the six months ended June 30, 2018 and 2017, depreciation expense was approximately $306,000 and $323,000, respectively. |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets and Goodwill | Note 6: Intangible Assets and Goodwill Intangible assets at June 30, 2018 and December 31, 2017 are summarized in the tables below: June 30, 2018 Gross Carrying Value Accumulated Amortization Net Carrying Amount Definite-lived Intangible assets, estimated lives in years: Patents, Taper DPI Intellectual Property, 10 years $ 9,708,700 $ (4,368,915 ) $ 5,339,785 Transition Services Agreement, 1 year 194,200 (194,200 ) — FDA 503B Registration & Compliance - USC, 10 years 3,963,000 (879,566 ) 3,083,434 Non-compete Agreement - USC, 3 years 1,639,000 (1,212,556 ) 426,444 Customer Relationships - USC, 10 years 5,572,000 (1,236,675 ) 4,335,325 Website Design - USC, 3 years 16,163 (7,183 ) 8,980 Total Definite-lived Assets 21,093,063 (7,899,095 ) 13,193,968 Trade Name and Brand - USC, Indefinite 1,245,000 — 1,245,000 Symjepi™ Domain Name 9,674 — 9,674 Balance, June 30, 2018 $ 22,347,737 $ (7,899,095 ) $ 14,448,642 December 31, 2017 Gross Carrying Value Accumulated Amortization Net Carrying Amount Definite-lived Intangible assets, estimated lives in years: Patents, Taper DPI Intellectual Property, 10 years $ 9,708,700 $ (3,883,480 ) $ 5,825,220 Transition Services Agreement, 1 year 194,200 (194,200 ) — FDA 503B Registration & Compliance - USC, 10 years 3,963,000 (681,416 ) 3,281,584 Non-compete Agreement, 3 years 1,639,000 (939,389 ) 699,611 Customer Relationships, 10 years 5,572,000 (958,074 ) 4,613,926 Website Design, 3 years 16,163 (4,491 ) 11,672 Total Definite-lived Assets 21,093,063 (6,661,050 ) 14,432,013 Trade Name and Brand - USC, Indefinite 1,245,000 — 1,245,000 Symjepi™ Domain Name 9,674 — 9,674 Balance, December 31, 2017 $ 22,347,737 $ (6,661,050 ) $ 15,686,687 Amortization expense for the three months ended June 30, 2018 and 2017 was approximately $619,000 and $619,000, respectively; and for the six months ended June 30, 2018 and 2017, amortization expense was approximately $1,238,000 and $1,237,000, respectively. Estimated amortization expense of definite-lived intangible assets at June 30, 2018 for each of the five succeeding years and thereafter is as follows: Year ending December 31, Remainder of 2018 $ 1,238,046 2019 2,083,034 2020 1,925,267 2021 1,924,370 2022 1,924,370 Thereafter 4,098,881 Total $ 13,193,968 Goodwill recorded at the acquisition of USC was approximately $2,225,000. In addition, for the year ended December 31, 2016, the Company recorded a deferred tax liability of approximately $5,416,000 through acquisition goodwill. The carrying value of the Company's goodwill as of June 30, 2018 and December 31, 2017 was approximately $7,641,000. |
Debt
Debt | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Debt | Note 7: Debt Ben Franklin Note Biosyn, Inc., a wholly owned subsidiary of the Company, issued a note payable to Ben Franklin Technology Center of Southeastern Pennsylvania (“Ben Franklin Note”) in October 1992, in connection with funding the development of Savvy, a compound then under development to prevent the transmission of HIV/AIDS. The Ben Franklin Note was recorded at its estimated fair value of $205,000 and was assumed by the Company as an obligation in connection with its acquisition of Biosyn in 2004. The repayment terms of the non-interest bearing obligation include the remittance of an annual fixed percentage of 3.0% applied to future revenues of Biosyn, if any, until the principal balance of $777,902 (face amount) is satisfied. Under the terms of the obligation, revenues are defined to exclude the value of unrestricted research and development funding received by Biosyn from nonprofit sources. Absent a material breach of contract or other event of default, there is no obligation to repay the amounts in the absence of future Biosyn revenues. The Company accreted the discount of $572,902 against earnings using the interest rate method (approximately 46%) over the discount period of five years, which was estimated in connection with the Ben Franklin Note’s valuation at the time of the acquisition. Accounting principles generally accepted in the United States emphasize market-based measurement through the use of valuation techniques that maximize the use of observable or market-based inputs. The Ben Franklin Note’s peculiar repayment terms outlined above affects its comparability with mainstream market issues and also affects its transferability. The value of the Ben Franklin Note would also be impacted by the ability to estimate Biosyn’s expected future revenues which in turn hinge largely upon future efforts to commercialize the product candidate, the results of which efforts are not known by the Company. Given the above factors and therefore the lack of market comparability, the Ben Franklin Note would be valued based on Level 3 inputs (see Note 8). As such, management has determined that the Ben Franklin Note will have no future cash flows, as we do not believe the product will create a revenue stream in the future. As a result, the Note had no fair market value at the time of the merger in April 2009 between the Company (which was then named Cellegy Pharmaceuticals, Inc.) and the corporation then-named Adamis Pharmaceuticals Corporation. Working Capital Line of Credit On March 28, 2016, the Company entered into a loan and security agreement (sometimes referred to as the “Adamis Working Capital Line”) with Bear State Bank, N.A. (the “Lender” or the “Bank”), pursuant to which the Company may borrow up to an aggregate of $2,000,000 to provide working capital to USC, subject to the terms and conditions of the loan agreement. Interest on amounts borrowed under the Adamis Working Capital Line accrues at a rate equal to the prime interest rate, as defined in the agreement. Interest payments are required to be made quarterly. As amended, the entire outstanding principal balance, and all accrued and unpaid interest and all other sums payable pursuant to the loan documents, were due and payable on June 1, 2018. The Company’s obligations under the loan agreement are secured by certain collateral, including without limitation its interest in amounts that it has loaned to USC, and a warrant that the Company issued to the Bank to purchase up to 1,000,000 shares of the Company’s common stock at an exercise price equal to par value per share. The warrant is exercisable only if the Company is in default under the loan agreement or related loan documents, the Lender delivers a notice to the Company and the Company does not cure the default within the applicable cure period. If the warrant becomes exercisable, then Lender may exercise the warrant in whole or in part, from time to time, to acquire warrant shares in a number that the Lender believes will, upon sale of such shares, be sufficient to cure or pay off the Company’s obligations due to the Lender under the loan documents. Under the terms of the Warrant, the Lender agreed that following any exercise of the warrant, Lender will use its best efforts to sell as promptly as reasonably practicable following such exercise, the shares of common stock acquired by the Lender upon such exercise, and that all of the net proceeds from such sales of warrant shares will be applied in satisfaction of the Company’s obligations under the loan documents. On June 28, 2018, the Company and the Lender amended the warrant and the loan and security agreement to provide that effective as of June 1, 2018, if the Company has not paid in full all amounts that are required to be paid to the Lender under the loan documents on or before the maturity date of the loan, then the Lender may exercise the Warrant, in whole or in part, to acquire a number of warrant shares as described above. As of June 30, 2018 and December 31, 2017, the loan balance on the Adamis Working Capital Line of credit was $2,000,000. Interest expense related to the loan for the three months ended June 30, 2018 and 2017 was approximately $24,000 and $20,000, respectively; and for the six months ended June 30, 2018 and 2017, interest expense was approximately $47,000 and $39,000, respectively. See Note 10 for further details. Loans Assumed from Acquisition of USC: Building Loan In connection with the closing of the USC Merger and the agreements relating to the transaction, 4 HIMS, LLC, an entity of which Eddie Glover, the chief executive officer of USC, and certain other former stockholders of USC are members, agreed to sell to the Company, the building and property owned by 4 HIMS on which USC’s offices are located, in consideration of the Company being added as an additional ”borrower” and assuming the obligations under the loan agreement, promissory note and related loan documents that 4 HIMS and certain other parties previously entered into with the Lender (the “4 HIMS Loan Documents”). On November 10, 2016, a Loan Amendment and Assumption Agreement was entered with into the Bank. Pursuant to the agreement, the Company agreed to pay the Bank monthly payments of principal and interest of $15,411, with a final monthly payment and any other amounts due under the 4 HIMS Loan Document due and payable in August 2019. As of June 30, 2018 and December 31, 2017, the outstanding principal balance owed on the applicable note was approximately $2,299,000 and $2,347,000, respectively. The loan currently bears an interest of 3.75% per year. Interest expense for the three months period June 30, 2018 and 2017 was approximately $22,000 and $23,000, respectively; and for the six months ended June 30, 2018 and 2017, interest expense was approximately $44,000 and $46,000, respectively. USC Working Capital Loan I On November 10, 2016, the Company and Lender agreed to amend the USC Working Capital Loan Documents to provide that the personal property securing the Borrower’s obligations under the loan documents will also secure the Borrower’s obligations under the other USC Loan Documents with the Lender. In addition, a new financial covenant replaced the previous financial covenants, providing that USC will, at all times during the term of the loan, maintain a “Cash Flow Coverage Ratio” of not less than 1.2:1. “Cash Flow Coverage Ratio” is defined as: (i) net income plus non-cash expense items including, but not limited to, depreciation expense, amortization expense and option expense for the month in which the measurement date occurs times 12; divided by (ii) the cash required for payments of interest for the prospective twelve (12) month period and current maturities of principal on all outstanding debt to any person or entity, including without limitation to debt by the Company to the Lender. The Cash Flow Coverage Ratio will be measured on the last day of each December, March, June and September, commencing on December 31, 2017. Under the amendment, in lieu of compliance with the foregoing covenant, Borrower has the option, at the time of each quarterly measuring period, of making a principal reduction in the amount of $250,000. In addition, pursuant to the amendment, Borrower and Lender agreed that certain other financial covenants set forth in the loan agreement included in the 4 HIMS Loan Documents, the loan agreement included in the Tribute Loan Documents, and the loan agreement included in the USC Equipment Loan Agreement, as well as the original USC Working Capital Loan Agreement described above, are waived for the remainder of the term of the respective loans. The amended loan had a maturity date of September 30, 2017. In May 2017, the Company paid the remaining balance of the USC Working Capital Loan. In November 2017, the Company agreed with the Lender to extend the term of the USC Working Capital Loan agreement to February 28, 2018. There was no outstanding balance on the USC Working Capital Line at its maturity date, and that agreement has not currently been renewed or extended. As of June 30, 2018 and December 31, 2017, the outstanding unpaid principal balance was $0. Interest expense for the three months ended June 30, 2018 and 2017 was approximately $0 and $7,000, respectively; and for the six months ended June 30, 2018 and 2017, interest expense was approximately $0 and $29,000, respectively. Equipment Loans, Consolidated Equipment Loan, Tribute USC Equipment Loan. Consolidated Equipment Loans Loan Amendment, Forbearance and Assumption Agreement In connection with the Company's acquisition of USC in April 2016, Lender, Adamis, USC, 4 HIMS and Tribute (USC, 4 HIMS and Tribute sometimes referred to as the “Initial Loan Parties” and together with Adamis, collectively the “Loan Parties”), and certain individual guarantors, entered into a Loan Amendment, Forbearance and Assumption Agreement (the “Loan Amendment Agreement”). Pursuant to the Loan Amendment Agreement, Adamis was added as a “Borrower” and co-borrower under the loan agreements and related loan documents between USC (and certain other entities) and Lender (the “USC Loan Documents”), and assumed all of the rights, duties, liabilities and obligations as a Borrower and a party under the USC Loan Documents, jointly and severally with the current borrower or borrowers under each of the USC Loan Documents. As part of the Loan Amendment Agreement, the parties also agreed that the real and personal property securing each of the USC Loans will also secure each of the other USC Loans, as well as the Adamis Working Capital Line of $2.0 million. Except as expressly set forth in the Loan Amendment Agreement, as amended, the terms and provisions set forth in the USC Loan Documents were not modified and remain in full force and effect. T At June 30, 2018, the outstanding principal maturities of the amended long-term debts were as follows: Years ending December 31, Building Loan Equipment Loan Total Remainder of 2018 $ 49,040 $ 195,103 $ 244,143 2019 2,249,512 333,606 2,583,118 Total $ 2,298,552 $ 528,709 $ 2,827,261 |
Fair Value Measurement
Fair Value Measurement | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | Note 8: Fair Value Measurements Fair value measurements adopted by the Company are based on the authoritative guidance provided by the FASB which defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. FASB authoritative guidance establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels, which are described below: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in inactive markets; or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data. Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. The carrying amounts reported in the Condensed Consolidated Balance Sheets for cash and cash equivalents, accounts receivable, inventory, accounts payable, notes payable, accrued liabilities and other payables approximate their fair values due to their short-term nature. |
Stock Option Plans, Shares Rese
Stock Option Plans, Shares Reserved and Warrants | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Option Plans, Shares Reserved and Warrants | Note 9: Stock Option Plans, Shares Reserved and Warrants The following summarizes the stock option activity for the six months ended June 30, 2018 below: Weighted Average 2009 Equity Incentive Plan Weighted Average Exercise Price Remaining Contract Life Outstanding Options as of December 31, 2017 6,726,594 $ 5.05 8.17 years Options Granted 2,778,289 2.96 9.66 years Options Exercised (4,166 ) 3.35 — Options Cancelled/Expired (148,474 ) 4.87 — Outstanding Options as of June 30, 2018 9,352,243 $ 4.43 8.30 years Exercisable at June 30, 2018 4,969,386 $ 5.20 7.05 years The aggregate intrinsic value (the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, multiplied by the number of in-the-money options) of the 9,352,243 and 6,726,594 stock options outstanding at June 30, 2018 and December 31, 2017 was approximately $1,052,000 and approximately $2,980,000, respectively. The aggregate intrinsic value of 4,969,386 and 3,835,992 stock options exercisable at June 30, 2018 and December 31, 2017 was approximately $179,000 and $1,009,000, respectively. The following summarizes warrants outstanding at June 30, 2018: Warrant Exercise Price Date Expiration Shares Per Share Issued Date Old Adamis Warrants 58,824 $ 8.50 November 15, 2007 November 15, 2018 Underwriter Warrants 28,108 $ 7.44 December 12, 2013 December 12, 2018 Underwriter Warrants 4,217 $ 7.44 January 16, 2014 January 16, 2019 Preferred Stock Series A-1 Warrants 1,183,432 $ 4.10 January 26, 2016 January 26, 2021 Bear State Bank, Collateral to Line of Credit 1,000,000 * $ 0.0001 March 28, 2016 Preferred Stock Series A-2 Warrants 192,414 $ 2.90 July 11, 2016 July 11, 2021 2016 Common Stock, Private Placement 700,000 $ 2.98 August 3, 2016 August 3, 2021 Total Warrants 3,166,995 *Exercisable upon default of the Line of Credit or if the Company has not paid in full all amounts that are required to be paid to the Lender under the loan documents on or before the maturity date of the loan, see Note 7 and Note 10 for further details. The following table summarizes the RSUs outstanding at June 30, 2018: RSU Shares Price Per Share at Grant Date Date of Grant Non-Employee Board of Directors 350,000 (1) $ 8.46 May 25, 2016 Company Executives 950,000 (1) $ 3.50 March 1, 2017 Company Executives 342,212 (2) $ 2.83 February 21, 2018 Total RSUs 1,642,212 (1) The RSUs will fully vest on the seventh anniversary of the date of grant if the recipient has provided continuous service or upon change of control or upon death or disability. (2) The RSUs vest ratably annually over a period of three years if the recipient has provided continuous service or upon change of control or upon death or disability. Expense related to RSUs for the three months ended June 30, 2018 and 2017 was approximately $305,000 and $225,000, respectively; and for the six months ended June 30, 2018 and 2017, expense related to RSUs was approximately $563,000 and $370,000, respectively. At June 30, 2018, the Company has reserved shares of common stock for issuance upon exercise of outstanding options and warrants, convertible preferred stock shares, and options and other awards that may be granted in the future under the 2009 Equity Incentive Plan, as follows: Warrants 3,166,995 Restricted Stock Units (RSU) 1,642,212 2009 Equity Incentive Plan 9,352,243 Total Shares Reserved 14,161,450 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 10: Subsequent Events Distribution and Commercialization Agreement On July 1, 2018, the Company announced that it had entered into a Distribution and Commercialization Agreement (the “Agreement”) with Sandoz Inc., a division of Novartis AG, to commercialize the Company’s Symjepi™ product for the emergency treatment of allergic reactions (Type I) including anaphylaxis. Under the terms of the Agreement, the Company appointed Sandoz as the exclusive distributor of Symjepi in the United States and related territories (“Territory”), in all fields including both the retail market and other markets, and granted Sandoz an exclusive license under the Company’s patent and other intellectual property rights and know-how to market, sell, and otherwise commercialize and distribute the product in the Territory, subject to the provisions of the Agreement, in partial consideration of an upfront fee by Sandoz and potential performance-based milestone payments. As part of the Agreement, Sandoz has commercial rights to the Company’s Symjepi Epinephrine Injection USP Injection (0.3mg/0.3mL) Injection pre-filled single dose syringe product, as well as the lower dose Symjepi (epinephrine) Injection 0.15mg product if approved by the FDA, which is intended for use in the treatment of anaphylaxis for patients weighing 33-65 pounds and for which the Company submitted a supplemental new drug application to the FDA on November 27, 2017. The Company retains rights to the intellectual property subject to the Agreement and to commercialize both products outside of the Territory, but has granted Sandoz a right of first negotiation regarding such territories. In addition, the Company may continue to use the licensed intellectual property (excluding certain of the licensed trademarks) to develop and commercialize other products (with certain exceptions), including products that utilize the Company’s Symject syringe product platform. The Agreement provides that Sandoz will pay to the Company 50% of the net profit from net sales, as each such term is defined in the Agreement, of the product in the Territory to third parties, determined on a quarterly basis. The Company will be the supplier of the product to Sandoz, and Sandoz will order and pay the Company a supply price for quantities of products ordered. The Company will be responsible for all manufacturing, component and supply costs related to manufacturing and supplying the product to Sandoz. The Company is responsible for component sourcing and regulatory compliance in the supply chain and for testing of lots of product. Sandoz has agreed to use commercially reasonable efforts to commercialize the product, subject to various conditions and to the other provisions of the Agreement. The Agreement does not include minimum payments to the Company by Sandoz, minimum requirements for sales of product by Sandoz or, with certain exceptions, minimum purchase commitments by Sandoz. Under the Agreement, Sandoz has sole discretion in determining pricing, terms of sale, marketing, and selling decisions relating to the product. Jefferies LLC acted as sole financial advisor to the Company in connection with the transaction. The Company has agreed to pay Jefferies a fee of $2.0 million, a portion of which is payable out of fees and milestone payments received with the balance payable in the fourth calendar quarter of 2018 or earlier in certain circumstances. Adamis Working Capital Line On June 28, 2018, the Company and the Lender amended the Adamis Working Capital Line loan and security agreement and warrant disclosed in Note 7 above to provide that effective as of June 1, 2018, if the Company has not paid in full all amounts that are required to be paid to the Lender under the loan documents on or before the maturity date of the loan, then the Lender may exercise the Warrant, in whole or in part, to acquire a number of warrant shares. In July 2018, the Lender delivered a notice of exercise of the warrant and sold warrant shares in an amount sufficient to satisfy substantially all of the outstanding principal balance of the loan. The Company paid the remaining principal and accrued unpaid interest, and there is no outstanding balance under the Adamis Working Capital Line. Exercised warrant shares that were not sold have been returned to the Company as treasury stock. In addition, the Lender released the Company’s $1.0 million restricted Certificate of Deposit that had served as additional collateral for the Adamis Working Capital Line, and the amount was no longer restricted cash. See Note 7. Public Offering On August 6, 2018, the Company completed the closing of an underwritten public offering of 13,416,667 shares of common stock at a public offering price of $3.00 per share, which included 1,750,000 shares pursuant to the full exercise of the over-allotment option granted to the underwriters. Net proceeds were approximately $37.6 million, after deducting approximately $2,660,000 in underwriting discounts and commissions and estimated offering expenses payable by the Company. Raymond James & Associates, Inc. acted as the sole book-running manager for the offering, B. Riley FBR acted as lead manager for the offering, and H.C. Wainwright & Co. and Maxim Group LLC acted as co-managers for the offering. The securities were issued by the Company pursuant to a “shelf” registration statement on Form S-3 that the Company previously filed with the Securities and Exchange Commission, and a prospectus supplement and an accompanying prospectus relating to the offering. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Inventories | Inventories Inventories are valued at the lower of cost or net realizable value (NRV). The cost of inventories is determined using the first-in, first-out (“FIFO”) method. Inventories consist of compounding formulation raw materials, currently marketed products, and device supplies. A reserve for obsolescence is recorded monthly based on a review of inventory for obsolescence. |
Liquidity and Capital Resources | Liquidity and Capital Resources The Company's cash was $4,422,059 and $18,332,702 at June 30, 2018 and December 31, 2017, respectively, including approximately $1.0 million in restricted cash held by the Bear State Bank, N.A. as collateral for a $2.0 million working capital line. The Company prepared the condensed consolidated financial statements assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities during the normal course of business. In preparing these condensed consolidated financial statements, consideration was given to the Company’s future business as described below, which may preclude the Company from realizing the value of certain assets. The Company has significant operating cash flow deficiencies. Additionally, the Company will need significant funding for future operations and the expenditures that it believes will be required to support commercialization of its products and conduct the clinical and regulatory activities relating to the Company’s product candidates, satisfy existing obligations and liabilities, and otherwise support the Company’s intended business activities and working capital needs. The preceding conditions raise substantial doubt about the Company's ability to continue as a going concern. Management’s plans include attempting to secure additional required funding through equity or debt financings, sales or out-licensing of intellectual property assets, seeking partnerships with other pharmaceutical companies or third parties to co-develop and fund research, development or commercialization efforts, or similar transactions. There is no assurance that the Company will be successful in obtaining the necessary funding to meet its business objectives. |
Basic and Diluted Net (Loss) Per Share | Basic and Diluted (Loss) per Share The Company computes basic loss per share by dividing the loss attributable to holders of common stock for the period by the weighted average number of shares of common stock outstanding during the period. The diluted loss per share calculation is based on the treasury stock method and gives effect to dilutive options, warrants, convertible notes, convertible preferred stock and other potential dilutive common stock. Except as noted below, the effect of common stock equivalents was anti-dilutive and was excluded from the calculation of weighted average shares outstanding. Potential dilutive securities, which are not included in dilutive weighted average shares as of June 30, 2018 and June 30, 2017 consist of outstanding equity classified warrants (3,166,995 and 8,904,714, respectively), outstanding options (9,352,243 and 6,399,649, respectively), and outstanding restricted stock units (1,642,212 and 1,300,000, respectively). |
Recently Accounting Pronouncements | R ecently Adopted Accounting Pronouncement Utilizing the deferred effective date of January 1, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606) The Company evaluated the impact that adoption of this new standard will have on its consolidated financial statements and determined that the timing of revenue recognition and amount of revenue recognized is not materially impacted under the new standard. Accordingly, it did not have a material quantitative impact on the Company's revenue recognition relating to sales of compounded pharmacy formulations and other pharmacy products by U.S. Compounding, Inc. ("USC), a subsidiary. The Company also determined that the modified retrospective adoption will have no impact on either the timing or amount of prior period revenues. As a result, any comparative information has not been restated. See Note 2 for further details. In March 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 Recent Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases consolidated In June 2018, the FASB issued Accounting Standards Update No. 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. |
Revenues (Tables)
Revenues (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of revenues | The following table presents the Company's revenues disaggregated by sterile and non-sterile regulatory environments for the three months and six months ended June 30, 2018 and 2017. Three Months Ended June 30 Six Months Ended June 30 2018 2017 2018 2017 Sterile $ 2,111,509 $ 2,405,709 $ 3,882,245 $ 4,218,912 Non-Sterile $ 1,809,057 $ 1,399,646 $ 3,217,555 $ 2,624,294 Total $ 3,920,566 $ 3,805,355 $ 7,099,800 $ 6,843,206 The following table presents the Company's revenue disaggregated by end market for the three months and six months ended June 30, 2018 and 2017. Three Months Ended June 30 Six Months Ended June 30 2018 2017 2018 2017 Clinics/Hospitals $ 3,365,302 $ 3,390,355 $ 6,117,912 $ 6,044,634 Direct to Patients $ 555,264 $ 415,000 $ 981,888 $ 798,572 Total $ 3,920,566 $ 3,805,355 $ 7,099,800 $ 6,843,206 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | Inventories, net of reserves, at June 30, 2018 and December 31, 2017 consisted of the following: June 30, 2018 December 31, 2017 Finished Goods $ 686,568 $ 256,050 Raw Material 496,223 560,828 Devices 1,427,049 1,007,680 $ 2,609,840 $ 1,824,558 |
Fixed Assets (Tables)
Fixed Assets (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of fixed assets | Fixed assets at June 30, 2018 and December 31, 2017 are summarized in the table below: Description Useful Life June 30, 2018 December 31, 2017 Building 30 $ 3,040,000 $ 3,040,000 Machinery and Equipment 3 - 7 2,020,151 1,525,643 Furniture and Fixtures 7 126,654 126,654 Automobile 5 9,395 9,395 Leasehold Improvements 7 - 15 284,037 284,037 Total Fixed Assets 5,480,237 4,985,729 Less: Accumulated Depreciation (1,265,338 ) (959,380 ) Land 460,000 460,000 Construction In Progress - Equipment 3,867,351 2,073,315 Fixed Assets, net $ 8,542,250 $ 6,559,664 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | Intangible assets at June 30, 2018 and December 31, 2017 are summarized in the tables below: June 30, 2018 Gross Carrying Value Accumulated Amortization Net Carrying Amount Definite-lived Intangible assets, estimated lives in years: Patents, Taper DPI Intellectual Property, 10 years $ 9,708,700 $ (4,368,915 ) $ 5,339,785 Transition Services Agreement, 1 year 194,200 (194,200 ) — FDA 503B Registration & Compliance - USC, 10 years 3,963,000 (879,566 ) 3,083,434 Non-compete Agreement - USC, 3 years 1,639,000 (1,212,556 ) 426,444 Customer Relationships - USC, 10 years 5,572,000 (1,236,675 ) 4,335,325 Website Design - USC, 3 years 16,163 (7,183 ) 8,980 Total Definite-lived Assets 21,093,063 (7,899,095 ) 13,193,968 Trade Name and Brand - USC, Indefinite 1,245,000 — 1,245,000 Symjepi™ Domain Name 9,674 — 9,674 Balance, June 30, 2018 $ 22,347,737 $ (7,899,095 ) $ 14,448,642 December 31, 2017 Gross Carrying Value Accumulated Amortization Net Carrying Amount Definite-lived Intangible assets, estimated lives in years: Patents, Taper DPI Intellectual Property, 10 years $ 9,708,700 $ (3,883,480 ) $ 5,825,220 Transition Services Agreement, 1 year 194,200 (194,200 ) — FDA 503B Registration & Compliance - USC, 10 years 3,963,000 (681,416 ) 3,281,584 Non-compete Agreement, 3 years 1,639,000 (939,389 ) 699,611 Customer Relationships, 10 years 5,572,000 (958,074 ) 4,613,926 Website Design, 3 years 16,163 (4,491 ) 11,672 Total Definite-lived Assets 21,093,063 (6,661,050 ) 14,432,013 Trade Name and Brand - USC, Indefinite 1,245,000 — 1,245,000 Symjepi™ Domain Name 9,674 — 9,674 Balance, December 31, 2017 $ 22,347,737 $ (6,661,050 ) $ 15,686,687 |
Schedule of estimated future amortization expense | Estimated amortization expense of definite-lived intangible assets at June 30, 2018 for each of the five succeeding years and thereafter is as follows: Year ending December 31, Remainder of 2018 $ 1,238,046 2019 2,083,034 2020 1,925,267 2021 1,924,370 2022 1,924,370 Thereafter 4,098,881 Total $ 13,193,968 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of principal maturities under the amended long-term debts | At June 30, 2018, the outstanding principal maturities of the amended long-term debts were as follows: Years ending December 31, Building Loan Equipment Loan Total Remainder of 2018 $ 49,040 $ 195,103 $ 244,143 2019 2,249,512 333,606 2,583,118 Total $ 2,298,552 $ 528,709 $ 2,827,261 |
Stock Option Plans, Shares Re22
Stock Option Plans, Shares Reserved and Warrants (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of stock option activity | The following summarizes the stock option activity for the six months ended June 30, 2018 below: Weighted Average 2009 Equity Incentive Plan Weighted Average Exercise Price Remaining Contract Life Outstanding Options as of December 31, 2017 6,726,594 $ 5.05 8.17 years Options Granted 2,778,289 2.96 9.66 years Options Exercised (4,166 ) 3.35 — Options Cancelled/Expired (148,474 ) 4.87 — Outstanding Options as of June 30, 2018 9,352,243 $ 4.43 8.30 years Exercisable at June 30, 2018 4,969,386 $ 5.20 7.05 years |
Schedule of warrants outstanding | The following summarizes warrants outstanding at June 30, 2018: Warrant Exercise Price Date Expiration Shares Per Share Issued Date Old Adamis Warrants 58,824 $ 8.50 November 15, 2007 November 15, 2018 Underwriter Warrants 28,108 $ 7.44 December 12, 2013 December 12, 2018 Underwriter Warrants 4,217 $ 7.44 January 16, 2014 January 16, 2019 Preferred Stock Series A-1 Warrants 1,183,432 $ 4.10 January 26, 2016 January 26, 2021 Bear State Bank, Collateral to Line of Credit 1,000,000 * $ 0.0001 March 28, 2016 Preferred Stock Series A-2 Warrants 192,414 $ 2.90 July 11, 2016 July 11, 2021 2016 Common Stock, Private Placement 700,000 $ 2.98 August 3, 2016 August 3, 2021 Total Warrants 3,166,995 |
Schedule of RSUs outstanding | The following table summarizes the RSUs outstanding at June 30, 2018: RSU Shares Price Date of Grant Non-Employee Board of Directors 350,000 (1) $ 8.46 May 25, 2016 Company Executives 950,000 (1) $ 3.50 March 1, 2017 Company Executives 342,212 (2) $ 2.83 February 21, 2018 Total RSUs 1,642,212 |
Schedule of reserved shares of common stock for issuance upon conversion or exercise | At June 30, 2018, the Company has reserved shares of common stock for issuance upon exercise of outstanding options and warrants, convertible preferred stock shares, and options and other awards that may be granted in the future under the 2009 Equity Incentive Plan, as follows: Warrants 3,166,995 Restricted Stock Units (RSU) 1,642,212 2009 Equity Incentive Plan 9,352,243 Total Shares Reserved 14,161,450 |
Basis of Presentation (Details
Basis of Presentation (Details Narrative) - USD ($) | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Bank Loan - Line of Credit | $ 2,000,000 | $ 2,000,000 | ||
Federal statutory tax rate | 21.00% | |||
Tax provision benefit | $ 339,000 | |||
Cash | $ 4,422,059 | $ 11,742,900 | 18,332,702 | $ 5,095,760 |
Stock Option [Member] | ||||
Potential dilutive securities, excluded from computation of earnings | 9,352,243 | 6,399,649 | ||
RSU [Member] | ||||
Potential dilutive securities, excluded from computation of earnings | 1,642,212 | 1,300,000 | ||
Warrants [Member] | ||||
Potential dilutive securities, excluded from computation of earnings | 3,166,995 | 8,904,714 | ||
Bear State Bank Line of Credit [Member] | ||||
Restricted Cash | $ 1,000,000 | |||
Bank Loan - Line of Credit | $ 2,000,000 | $ 2,000,000 |
Revenues (Details)
Revenues (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenue | $ 3,920,566 | $ 3,805,355 | $ 7,099,800 | $ 6,843,206 |
Clinics/Hospitals [Member] | ||||
Revenue | 3,365,302 | 3,390,355 | 6,117,912 | 6,044,634 |
Direct to Patients [Member] | ||||
Revenue | 555,264 | 415,000 | 981,888 | 798,572 |
Sterile [Member] | ||||
Revenue | 2,111,509 | 2,405,709 | 3,882,245 | 4,218,912 |
Non-Sterile [Member] | ||||
Revenue | $ 1,809,057 | $ 1,399,646 | $ 3,217,555 | $ 2,624,294 |
Revenues (Details Narrative)
Revenues (Details Narrative) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
Revenue from Contract with Customer [Abstract] | ||||
Contract liabilities | $ 12,043 | $ 14,758 | $ 82,082 | $ 54,478 |
Acquisition of U.S. Compoundi26
Acquisition of U.S. Compounding (Details Narrative) | Apr. 11, 2016USD ($) |
US Compounding [Member] | |
Total Purchase Price | $ 15,967,942 |
Inventories (Details)
Inventories (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Finished Goods | $ 686,568 | $ 256,050 |
Raw Material | 496,223 | 560,828 |
Devices | 1,427,049 | 1,007,680 |
Inventories | $ 2,609,840 | $ 1,824,558 |
Inventories (Details Narrative)
Inventories (Details Narrative) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Reserve for obsolescence | $ 3,494,000 | $ 795,000 |
Fixed Assets (Details)
Fixed Assets (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Costs | $ 5,480,237 | $ 4,985,729 |
Accumulated Depreciation | (1,265,338) | (959,380) |
Land | 460,000 | 460,000 |
CIP - Equipment | 3,867,351 | 2,073,315 |
Fixed Assets, net | 8,542,250 | 6,559,664 |
Building [Member] | ||
Costs | $ 3,040,000 | 3,040,000 |
Useful lives of fixed assets | 30 years | |
Machinery and Equipment [Member] | ||
Costs | $ 2,020,151 | 1,525,643 |
Machinery and Equipment [Member] | Minimum [Member] | ||
Useful lives of fixed assets | 3 years | |
Machinery and Equipment [Member] | Maximum [Member] | ||
Useful lives of fixed assets | 7 years | |
Furniture and Fixtures [Member] | ||
Costs | $ 126,654 | 126,654 |
Useful lives of fixed assets | 7 years | |
Automobiles [Member] | ||
Costs | $ 9,395 | 9,395 |
Useful lives of fixed assets | 5 years | |
Leasehold Improvements [Member] | ||
Costs | $ 284,037 | $ 284,037 |
Leasehold Improvements [Member] | Minimum [Member] | ||
Useful lives of fixed assets | 7 years | |
Leasehold Improvements [Member] | Maximum [Member] | ||
Useful lives of fixed assets | 15 years |
Fixed Assets (Details Narrative
Fixed Assets (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 154,000 | $ 159,000 | $ 306,000 | $ 323,000 |
Intangible Assets and Goodwil31
Intangible Assets and Goodwill (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Gross Carrying Value - Finite-Lived Assets | $ 21,093,063 | $ 21,093,063 |
Gross Carrying Value - intangibles | 22,347,737 | 22,347,737 |
Accumulated Amortization | (7,899,095) | (6,661,050) |
Net Carrying Amount - Finite-Lived Assets | 13,193,968 | 14,432,013 |
Net Carrying Amount | 14,448,642 | 15,686,687 |
Trade Name and Brand - USC [Member] | ||
Gross Carrying Value - indefinite-Lived Assets | 1,245,000 | 1,245,000 |
Net Carrying Amount | 1,245,000 | 1,245,000 |
Symjepi Domain Name [Member] | ||
Gross Carrying Value - indefinite-Lived Assets | 9,674 | 9,674 |
Net Carrying Amount | $ 9,674 | $ 9,674 |
Taper DPI Intellectual Property [Member] | ||
Amortization Period | 10 years | 10 years |
Gross Carrying Value - Finite-Lived Assets | $ 9,708,700 | $ 9,708,700 |
Accumulated Amortization | (4,368,915) | (3,883,480) |
Net Carrying Amount - Finite-Lived Assets | $ 5,339,785 | $ 5,825,220 |
Taper DPI Intellectual Property [Member] | Transmission Service Agreement [Member] | ||
Amortization Period | 1 year | 1 year |
Gross Carrying Value - Finite-Lived Assets | $ 194,200 | $ 194,200 |
Accumulated Amortization | $ (194,200) | $ (194,200) |
FDA 503B Registration & Compliance - USC [Member] | ||
Amortization Period | 10 years | 10 years |
Gross Carrying Value - Finite-Lived Assets | $ 3,963,000 | $ 3,963,000 |
Accumulated Amortization | (879,566) | (681,416) |
Net Carrying Amount - Finite-Lived Assets | $ 3,083,434 | $ 3,281,584 |
Non-compete Agreement - USC [Member] | ||
Amortization Period | 3 years | 3 years |
Gross Carrying Value - Finite-Lived Assets | $ 1,639,000 | $ 1,639,000 |
Accumulated Amortization | (1,212,556) | (939,389) |
Net Carrying Amount - Finite-Lived Assets | $ 426,444 | $ 699,611 |
Customer Relationships - USC [Member] | ||
Amortization Period | 10 years | 10 years |
Gross Carrying Value - Finite-Lived Assets | $ 5,572,000 | $ 5,572,000 |
Accumulated Amortization | (1,236,675) | (958,074) |
Net Carrying Amount - Finite-Lived Assets | $ 4,335,325 | $ 4,613,926 |
Website Design - USC [Member[ | ||
Amortization Period | 3 years | 3 years |
Gross Carrying Value - Finite-Lived Assets | $ 16,163 | $ 16,163 |
Accumulated Amortization | (7,183) | (4,491) |
Net Carrying Amount - Finite-Lived Assets | $ 8,980 | $ 11,672 |
Intangible Assets and Goodwil32
Intangible Assets and Goodwill (Details 1) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Estimated future amortization expense for the year ending December 31, | ||
Remainder of 2018 | $ 1,238,046 | |
2,019 | 2,083,034 | |
2,020 | 1,925,267 | |
2,021 | 1,924,370 | |
2,022 | 1,924,370 | |
Thereafter | 4,098,881 | |
Net Carrying Amount - Finite-Lived Assets | $ 13,193,968 | $ 14,432,013 |
Intangible Assets and Goodwil33
Intangible Assets and Goodwill (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Apr. 11, 2016 | |
Amortization expense | $ 619,000 | $ 619,000 | $ 1,238,000 | $ 1,237,000 | |||
Goodwill | $ 7,640,622 | $ 7,640,622 | $ 7,640,622 | ||||
US Compounding [Member] | |||||||
Goodwill | $ 2,225,000 | ||||||
Deferred income tax benefit of acquired goodwill | $ 5,416,000 |
Debt (Details)
Debt (Details) | Jun. 30, 2018USD ($) |
Principal Maturities during the year ending December 31, | |
Remainder of 2018 | $ 244,143 |
2,019 | 2,583,118 |
Total | 2,827,261 |
Building Loan [Member] | |
Principal Maturities during the year ending December 31, | |
Remainder of 2018 | 49,040 |
2,019 | 2,249,512 |
Total | 2,298,552 |
Consolidated Equipment Loans [Member] | |
Principal Maturities during the year ending December 31, | |
Remainder of 2018 | 195,103 |
2,019 | 333,606 |
Total | $ 528,709 |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2004 | Dec. 31, 2017 | Mar. 28, 2016 | |
Debt Instrument [Line Items] | |||||||
Bank loan - line of credit | $ 2,000,000 | $ 2,000,000 | $ 2,000,000 | ||||
Interest expense | 51,435 | $ 59,430 | 102,103 | $ 126,905 | |||
Bear State Bank Line of Credit [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | $ 2,000,000 | ||||||
Warrant shares | 1,000,000 | ||||||
Bank loan - line of credit | 2,000,000 | 2,000,000 | $ 2,000,000 | ||||
Interest expense | $ 24,000 | $ 20,000 | $ 47,000 | $ 39,000 | |||
Biosyn [Member] | Ben Franklin Note [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Debt fair value | $ 205,000 | ||||||
Debt face amount | 777,902 | ||||||
Accretion of debt discount | $ 572,902 | ||||||
Discount period | 5 years | ||||||
Annual fixed remittance | 3.00% | ||||||
Interest rate method | 46.00% |
Debt (Details Narrative 1)
Debt (Details Narrative 1) - USD ($) | Nov. 10, 2016 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 |
Loan Amendment and Assumption Agreement [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Frequency of periodic payment | Monthly | |||||
Periodic payment | $ 15,411 | |||||
Building Loan [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt amount | $ 2,299,000 | $ 2,299,000 | $ 2,347,000 | |||
Effective interest rate | 3.75% | 3.75% | 3.75% | |||
Interest expense | $ 22,000 | $ 23,000 | $ 44,000 | $ 46,000 | ||
USC Working Capital Loan [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt amount | 0 | 0 | $ 0 | |||
Interest expense | 0 | 7,000 | 0 | 29,000 | ||
Borrowing capacity under loan | $ 2,500,000 | $ 2,500,000 | ||||
Borrowing base - trade account receivables | 80.00% | 80.00% | ||||
Borrowing base - inventories | 50.00% | 50.00% | ||||
Cash flow coverage ratio | 120.00% | 120.00% | ||||
Quarterly prinicipal payment option | $ 250,000 | |||||
Equipment Loan - Tribune [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt amount | $ 518,000 | $ 518,000 | ||||
Interest rate | 4.75% | 4.75% | ||||
USC Equipment Loan [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt amount | $ 635,000 | $ 635,000 | ||||
Interest rate | 3.25% | 3.25% | ||||
Borrowing capacity under loan | $ 700,000 | $ 700,000 | ||||
Consolidated Equipment Loans [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Periodic payment | 33,940 | |||||
Debt amount | $ 1,152,890 | 529,000 | 529,000 | $ 720,000 | ||
Interest rate | 3.75% | |||||
Interest expense | $ 6,000 | $ 9,000 | $ 12,000 | $ 19,000 |
Stock Option Plans, Shares Re37
Stock Option Plans, Shares Reserved and Warrants (Details) - 2009 Equity Incentive Plan [Member] | 6 Months Ended |
Jun. 30, 2018$ / sharesshares | |
Number of options | |
Outstanding options, beginning | shares | 6,726,594 |
Options granted | shares | 2,778,289 |
Options exercised | shares | (4,166) |
Options canceled | shares | (148,474) |
Outstanding options, ending | shares | 9,352,243 |
Exercisable options | shares | 4,969,386 |
Weighted average exercise price | |
Outstanding options, beginning | $ / shares | $ 5.05 |
Options granted | $ / shares | 2.96 |
Options exercised | $ / shares | 3.35 |
Options canceled | $ / shares | 4.87 |
Outstanding options, ending | $ / shares | 4.43 |
Exercisable options | $ / shares | $ 5.20 |
Weighted average remaining contractual life | |
Balance | 8 years 2 months 1 day |
Options granted | 9 years 7 months 28 days |
Outstanding Options | 8 years 3 months 18 days |
Exercisable | 7 years 18 days |
Stock Option Plans, Shares Re38
Stock Option Plans, Shares Reserved and Warrants (Details 1) | 6 Months Ended | |
Jun. 30, 2018$ / sharesshares | ||
Old Adamis Warrants [Member] | ||
Class of Warrant or Right [Line Items] | ||
Warrant shares | 58,824 | |
Warrant exercise price | $ / shares | $ 8.50 | |
Date Issued | Nov. 15, 2007 | |
Expiration Date | Nov. 15, 2018 | |
Underwriter Warrants 1 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Warrant shares | 28,108 | |
Warrant exercise price | $ / shares | $ 7.44 | |
Date Issued | Dec. 12, 2013 | |
Expiration Date | Dec. 12, 2018 | |
Underwriter Warrants 2 [Member] | ||
Class of Warrant or Right [Line Items] | ||
Warrant shares | 4,217 | |
Warrant exercise price | $ / shares | $ 7.44 | |
Date Issued | Jan. 16, 2014 | |
Expiration Date | Jan. 16, 2019 | |
Preferred Stock Series A-1 Warrants [Member] | ||
Class of Warrant or Right [Line Items] | ||
Warrant shares | 1,183,432 | |
Warrant exercise price | $ / shares | $ 4.10 | |
Date Issued | Jan. 26, 2016 | |
Expiration Date | Jan. 26, 2021 | |
Bear State Collateral [Member] | ||
Class of Warrant or Right [Line Items] | ||
Warrant shares | 1,000,000 | [1] |
Warrant exercise price | $ / shares | $ 0.0001 | |
Date Issued | Mar. 28, 2016 | |
Preferred Stock Series A-2 Warrants [Member] | ||
Class of Warrant or Right [Line Items] | ||
Warrant shares | 192,414 | |
Warrant exercise price | $ / shares | $ 2.90 | |
Date Issued | Jul. 11, 2016 | |
Expiration Date | Jul. 11, 2021 | |
Common Stock Private 2016 Placement [Member] | ||
Class of Warrant or Right [Line Items] | ||
Warrant shares | 700,000 | |
Warrant exercise price | $ / shares | $ 2.98 | |
Date Issued | Aug. 3, 2016 | |
Expiration Date | Aug. 3, 2021 | |
Warrants [Member] | ||
Class of Warrant or Right [Line Items] | ||
Warrant shares | 3,166,995 | |
[1] | Exercisable upon default of Line of Credit at Bear State Bank, see Note 7. |
Stock Option Plans, Shares Re39
Stock Option Plans, Shares Reserved and Warrants (Details 2) | 6 Months Ended | |
Jun. 30, 2018$ / sharesshares | ||
RSU [Member] | ||
Total RSUs | 1,642,212 | |
Board of Directors [Member] | ||
Total RSUs | 350,000 | [1] |
Price per share at grant date | $ / shares | $ 8.46 | |
Date of grant | May 25, 2016 | |
Company Executives #1 [Member] | ||
Total RSUs | 950,000 | [1] |
Price per share at grant date | $ / shares | $ 3.50 | |
Date of grant | Mar. 1, 2017 | |
Company Executives #2 [Member] | ||
Total RSUs | 342,212 | [2] |
Price per share at grant date | $ / shares | $ 2.83 | |
Date of grant | Feb. 21, 2018 | |
[1] | The RSUs will fully vest on the seventh anniversary of the date of grant if the recipient has provided continuous service or upon change of control or upon death or disability. | |
[2] | The RSUs vest ratably annually over a period of three years if the recipient has provided continuous service or upon change of control or upon death or disability. |
Stock Option Plans, Shares Re40
Stock Option Plans, Shares Reserved and Warrants (Details 3) | Jun. 30, 2018shares |
Reserved shares of common stock for issuance upon exercise | 14,161,450 |
2009 Equity Incentive Plan [Member] | |
Reserved shares of common stock for issuance upon exercise | 9,352,243 |
RSU [Member] | |
Reserved shares of common stock for issuance upon exercise | 1,642,212 |
Warrants [Member] | |
Reserved shares of common stock for issuance upon exercise | 3,166,995 |
Stock Option Plans, Shares Re41
Stock Option Plans, Shares Reserved and Warrants (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Compensation expenses | $ 3,172,078 | $ 2,915,369 | |||
RSU [Member] | |||||
Compensation expenses | $ 305,000 | $ 225,000 | $ 563,000 | $ 370,000 | |
2009 Equity Incentive Plan [Member] | |||||
Options granted | 2,778,289 | ||||
Exercise price of options granted (in dollars per share) | $ 2.96 | ||||
Aggregate intrinsic value of stock options outstanding | 1,052,000 | $ 1,052,000 | $ 2,980,000 | ||
Aggregate intrinsic value of stock options exercisable | $ 179,000 | $ 179,000 | $ 1,009,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Aug. 06, 2018 | Jun. 30, 2017 | Jun. 28, 2018 |
Release of collateral - certificate of deposit | $ 1,000,000 | ||
Proceeds from Issuance of Common Stock, net of issuance cost | $ 16,036,134 | ||
Subsequent Event [Member] | Underwritten Public Offering [Member] | |||
Shares issued in public offering (shares) | 13,416,667 | ||
Sale price per share | $ 3 | ||
Proceeds from Issuance of Common Stock, net of issuance cost | $ 37,600,000 | ||
Underwriting discounts and commissions and estimated offering expenses payable | $ 2,660,000 | ||
Subsequent Event [Member] | Over Allotment Option - Public Offering [Member] | |||
Shares issued in public offering (shares) | 1,750,000 |