Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

Summary of Significant Accounting Policies [Abstract]

(A)	Use of estimates:

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenues and expenses at the date of the consolidated financial statements and during the reporting periods, and to disclose contingent assets and liabilities at the date of the consolidated financial statements. Actual results could differ from those estimates. The most significant estimates relate to the recognition and measurement of assets acquired and liabilities assumed in the business acquisition, assessment of indicators of impairment of intangible assets and the fair value of securities underlying stock-based compensation and other equity awards.

Significant Risks and Uncertainties

(B)	Significant risks and uncertainties:

The Company’s operations are subject to a number of factors that may affect its operating results and financial condition. Such factors include, but are not limited to: the clinical and regulatory development of its products, the Company’s ability to preserve its cash resources, the Company’s ability to add product candidates to its pipeline, the Company’s intellectual property, competition from products manufactured and sold or being developed by other companies, the price of, and demand for, Company products if approved for sale, the Company’s ability to negotiate favorable licensing or other manufacturing and marketing agreements for its products, and the Company’s ability to raise capital.

The Company currently has no commercially approved products. As such, there can be no assurance that the Company’s future research and development programs will be successfully commercialized. Developing and commercializing a product requires significant time and capital and is subject to regulatory review and approval as well as competition from other biotechnology and pharmaceutical companies. The Company operates in an environment of rapid change and is dependent upon the continued services of its employees and consultants and obtaining and protecting its intellectual property.

Business Acquisition

(C)	Business acquisition:

The Company’s consolidated financial statements include the operations of an acquired business after the completion of the acquisition. We account for acquired businesses using the acquisition method of accounting, which requires, among other things, that most assets acquired and liabilities assumed be recognized at their estimated fair values as of the acquisition date and that the fair value of IPR&D be recorded on the balance sheet. Transaction costs are expensed as incurred.

The Company measures certain assets and liabilities at fair value, either upon initial recognition or for subsequent accounting or reporting. For example, we use fair value in the initial recognition of net assets acquired in a business combination and when measuring impairment losses. We estimate fair value using an exit price approach, which requires, among other things, that we determine the price that would be received to sell an asset or paid to transfer a liability in an orderly market. The determination of an exit price is considered from the perspective of market participants, considering the highest and best use of non-financial assets and, for liabilities, assuming that the risk of non-performance will be the same before and after the transfer.

When estimating fair value, depending on the nature and complexity of the asset or liability, we may use one or all of the following techniques:

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Income approach, which is based on the present value of a future stream of net cash flows.

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Market approach, which is based on market prices and other information from market transactions involving identical or comparable assets or liabilities.

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Cost approach, which is based on the cost to acquire or construct comparable assets, less an allowance for functional and/or economic obsolescence.

Our fair value methodologies depend on the following types of inputs:

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Quoted prices for identical assets or liabilities in active markets (Level 1 inputs).

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Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are directly or indirectly observable, or inputs that are derived principally from, or corroborated by, observable market data by correlation or other means (Level 2 inputs).

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Unobservable inputs that reflect estimates and assumptions (Level 3 inputs).

Cash Equivalents and Concentration of Cash Balance

(D)	Cash equivalents and concentration of cash balance:

The Company considers all highly liquid securities with a maturity weighted average of less than three months to be cash equivalents. The Company’s cash and cash equivalents in bank deposit accounts, at times, may exceed federally insured limits.

Property and Equipment

(E)	Property and equipment:

Property and equipment are recorded at cost. Depreciation is recorded for property and equipment using the straight-line method over the estimated useful lives of three to five years. The Company reviews the recoverability of all long-lived assets, including the related useful lives, whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset might not be recoverable.

Research and Development

(F)	Research and development:

Costs incurred in connection with research and development activities are expensed as incurred. These costs include licensing fees to use certain technology in the Company’s research and development projects as well as fees paid to consultants and entities that perform certain research and testing on behalf of the Company.

Patent Costs

(G)	Patent costs:

The Company expenses patent costs as incurred and classifies such costs as general and administrative expenses in the accompanying statements of operations and comprehensive loss.

Intangible Asset and Impairment

(H)	Intangibles asset and impairment:

As part of the reverse merger transaction on March 15, 2019, the Company acquired an in-process research and development (“IPR&D”) intangible asset valued at $2,974,000 using a discounted cash flow method. In determining the value of IPR&D, management considers, among other factors, the stage of completion of the project, the technological feasibility of the project, whether the project have an alternative future use, and the estimated residual cash flows that could be generated from the various projects and technologies over their respective projected economic lives. The discount rate used is determined at the time of acquisition and includes a rate of return which accounts for the time value of money, as well as risk factors reflecting the economic risk that the projected cash flows may not be realized.

The Company reviews all of its long-lived assets for impairment indicators throughout the year. The Company performs impairment testing for indefinite-lived intangible assets annually and for all other long-lived assets whenever impairment indicators are present. When necessary, the Company records charges for impairments of long-lived assets for the amount by which the fair value is less than the carrying value of these assets. The Company’s impairment review process is described in Note 7.

Stock-based Compensation

(I)	Stock-based compensation:

The Company accounts for its stock-based compensation in accordance with ASC Topic 718, Compensation—Stock Compensation (“ASC 718”). ASC 718 requires all stock-based payments to employees, directors and non-employees to be recognized as expense in the consolidated statements of operations and comprehensive loss based on their grant date fair values. The Company estimates the fair value of options granted using the Black-Scholes option pricing model for stock option grants to both employees and non-employees. Prior to 2019, the Company estimated the stock-based compensation for common stock awards based on the number of awards granted and the fair value of its common stock on the grant date. In 2019, the Company did not grant any common stock awards.

The Company expenses the fair value of its stock-based compensation awards to employees and directors on a straight-line basis over the requisite service period, which is generally the vesting period. Prior to January 1, 2019, the Company estimated forfeitures at the time of grant and revised, if necessary in subsequent periods if actual forfeitures differ from those estimates. Beginning on January 1, 2019, the Company recognizes forfeitures as they occur.

On January 1, 2019, the Company adopted Accounting Standards Update (“ASU”) No. ASU 2018-07, Improvements to Non-employee Share-Based Payment Accounting, which expands the scope of ASC 718, Compensation—Stock Compensation to include share-based payments issued to non-employees for goods or services. Consequently, the accounting for share-based payments to non-employees and employees will be substantially aligned. The adoption of ASU 2018-07 had no impact to the Company’s consolidated financial statements.

Net Loss per Common Share

(J)	Net loss per common share:

Basic net loss per common share is calculated by dividing the net loss by the weighted average number of common stock shares outstanding during the period. Diluted net loss per common share is the same as basic net loss per common share, because potentially dilutive securities would have an antidilutive effect as the Company incurred a net loss for the years ended December 31, 2019 and 2018.

The potentially dilutive securities excluded from the determination of diluted loss per share as their effect is antidilutive, are as follows:

	Year Ended December 31,
	2019		2018
Stock options to purchase Common Stock		1,421,797		1,658,883
Warrants to purchase Common Stock		258,825		475,694
Total		1,680,626		2,134,577

Income Taxes

(K)	Income taxes:

The Company provides for deferred income taxes under the asset and liability method, which requires deferred tax assets and liabilities to be recognized for the future tax consequences attributable to net operating loss carryforwards and for differences between the financial statement carrying amounts and the respective tax bases of assets and liabilities. Deferred tax assets are reduced if necessary by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Fair Value of Financial Instruments

(L)	Fair value of financial instruments:

FASB ASC 820, Fair Value Measurement Disclosures, specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

The three levels of the fair value hierarchy are as follows:

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Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities.

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Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted prices of similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active). Level 2 includes financial instruments that are valued using models or other valuation methodologies.

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Level 3 — Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable.

Subsequent Events

(M)	Subsequent events:

Subsequent events have been evaluated through the date these financial statements were issued. See Note 16.

New Accounting Standards

(N)	New accounting standards not yet adopted:

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820) (“ASU 2018-13”). ASU 2018-13 modifies disclosure requirements related to fair value measurement and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Implementation on a prospective or retrospective basis varies by specific disclosure requirement. Early adoption is permitted. ASU 2018-13 also allows for early adoption of any removed or modified disclosures upon issuance of ASU 2018-13 while delaying adoption of the additional disclosures until their effective date. The Company is currently evaluating the potential impact of ASU on its consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40) (“ASU 2018-15”). ASU 2018-15 reduces complexity for the accounting for costs of implementing a cloud computing service arrangement and aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). ASU 2018-15 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the potential impact of ASU 2018-15 on its consolidated financial statements.

(O)	New accounting standards adopted:

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The Company adopted the new lease standard, as of January 1, 2019, using the optional transition method under which comparative financial information will not be restated and continue to apply the provisions of the previous lease standard in its annual disclosures for the comparative periods. In addition, the new lease standard provides a number of optional practical expedients in transition. The Company elected the package of practical expedients. As such, the Company did not have to reassess whether expired or existing contracts are or contain a lease; did not have to reassess the lease classifications or reassess the initial direct costs associated with expired or existing leases. Furthermore, the Company did not have any leases impacted by ASC 842 on the adoption date. As part of the purchase price allocation from the reverse merger, the Company recorded a Right of Use asset and Liability of $1.4 million.

The new lease standard also provides practical expedients for an entity’s ongoing accounting. The Company elected the short-term lease recognition exemption under which the Company will not recognize right-of-use (“ROU”) assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases. The Company elected the practical expedient to not separate lease and non-lease components for certain classes of assets (office building).

The Company determines if an arrangement is a lease at inception. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term. Operating lease expense is recognized on a straight-line basis over the lease term, subject to any changes in the lease or expectations regarding the terms. Variable lease costs such as operating costs and property taxes are expensed as incurred.

In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Non-employee Share-Based Payment Accounting, which expands the scope of Topic 718, Compensation—Stock Compensation to include share-based payments issued to non-employees for goods or services. Consequently, the accounting for share-based payments to non-employees and employees will be substantially aligned. On January 1, 2019, the Company adopted ASU 2018-07 and there was no impact to its financial statements.

Immaterial Correction of an Error in Prior Periods

(P)	Immaterial Correction of an Error in Prior Periods:

During the quarter ended December 31, 2019, the Company identified errors related to the presentation of certain historical equity accounting and the treatment of certain expenses in the pre-merger period for private PDS. In accordance with Accounting Standards Codification (“ASC”) 250, Accounting Changes and Error Corrections, we evaluated the materiality of the errors from quantitative and qualitative perspectives and concluded that the errors were immaterial to the Company’s prior period interim and annual financial statements. Since these revisions were not material to any prior period interim or annual financial statements, no amendments to previously filed interim or annual periodic reports are required. Consequently, the Company has adjusted for these errors by revising its historical financial statements presented herein. The Company corrected this immaterial error by restating the 2018 consolidated financial statements and related notes included herein. The immaterial impacts of this error correction for the fiscal year ended December 31, 2018 were as follows:

For the year ended December 31, 2018, the Company determined that it incorrectly recognized patent license fees as intangible assets. The net effect of this error resulted in a reduction in net intangible assets of $41,692 and increases in research and development expenses, net loss and accumulated deficit of $41,692.

For the year ended December 31, 2018, the Company determined that it incorrectly recognized stock-based compensation expense for common stock awards that were granted to two Board Members in the fourth quarter of 2018. These awards were in lieu of payments for services performed by the Board Members through the grant date. The terms of the awards provided that they vested immediately. The Company amortized the stock-based compensation expense from October 2018 through March 15, 2019 instead of on the grant date. The net effect of these errors resulted in a reduction in prepaid expenses of $138,200 and increases to general and administrative expenses, net loss and accumulated deficit of $138,200.

For the year ended December 31, 2018, the Company determined that it incorrectly capitalized transaction costs related to a business combination and a consulting agreement. The net effect of these errors resulted in increases in net loss, general and administrative expenses, additional paid- in capital and accumulated deficit of $560,234.

For the year ended December 31, 2018, the Company determined that it incorrectly accounted for an extinguishment of a trade payable in accordance with ASC 470-50-40-2. Under ASC 470-50-40-2 the difference between the reacquisition price of the debt and the net carrying amount of the extinguished debt shall be recognized currently in income of the period of extinguishment as losses or gains and identified as a separate item. Gains and losses shall not be amortized to future periods. The reacquisition price includes the fair value of any assets transferred or equity securities issued. It also includes fees (which may include noncash fees) the reporting entity pays the original lender in connection with the extinguishment. The net effect of these errors resulted in an increase in warrant liability of $291,225; and increases in loss on extinguishment, net loss and accumulated deficit of $185,800 and a reduction in accounts payable of $105,425.

The following table sets forth the effect this immaterial error correction had on the Company's consolidated balance sheet as of December 31, 2018:

	Previously Reported			Year Ended December 31, 2018 Corrections				Restated

ASSETS

Prepaid expenses and other receivables	$	156,628		$	(138,200	)	B		18,428
Total current assets		260,323			(138,200	)			122,123
Intangible Assets, net		41,692			(41,692	)	A		-
Total assets	$	344,323		$	(179,892	)		$	164,431

Liabilities and Stockholders' (Deficit)

Current Liabilities:
Accounts payable	$	1,412,954		$	(105,425	)	D	$	1,307,529
Total current liabilities		2,014,843			(105,425	)			1,909,418
Warrant liability		-			291,225		D		291,225
Total liabilities		2,044,843			185,800				2,230,643
Stockholders' (Deficit)
Additional paid in capital		19,312,548			560,234		C		19,872,782
Accumulated deficit		(21,013,173	)		(41,692	)	A		(21,939,099	)
					(138,200	)	B
					(560,234	)	C
					(185,800	)	D
Total stockholders' (deficit)		(1,700,520	)		(365,692	)			(2,066,212	)
Total liabilities and stockholders' (deficit)	$	344,323		$	(179,892	)		$	164,431

The following table sets forth the effect this immaterial error correction had on the Company’s consolidated statement of operations and comprehensive loss for the year ended December 31, 2018:

	Previously Reported			Year Ended December 31, 2018 Corrections				Restated

Operating expenses:
Research and development	$	789,052		$	41,692		A	$	830,744
General and administrative		2,089,582			138,200		B		2,788,016
					560,234		C
Total operating expenses		2,906,060			740,126				3,646,186

Loss from operations		(2,906,060	)		(740,126	)			(3,646,186	)

Other income (expense):
Loss on extinguishment of debt		-			(185,800	)	D		(185,800	)
		(4,495	)		(185,800	)			(190,295	)

Net (loss)	$	(2,910,555	)	$	(925,926	)		$	(3,836,481	)

The following table sets forth the effect this immaterial error correction had on the Company's consolidated statement of cash flows for the year ended December 31, 2018:

	Previously Reported			Year Ended December 31, 2018 Corrections				Restated
Cash flows from operating activities:

Net loss	$	(2,910,555	)	$	(41,692	)	A	$	(3,836,481	)
					(138,200	)	B
					(560,234	)	C
					(185,800	)	D
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		27,426			41,692		A		69,118
Loss on extinguishment of debt					291,225		D		185,800
					(105,425	)	D
Changes in operating assets and liabilities:
Accounts payable		788,830
Prepaid expenses and other receivables		(101,825	)		138,200		B		36,375
Net cash used in operating activities		(1,009,343	)		(560,234	)			(1,569,577	)

Cash flows from finacing activities:
Issuance costs		(560,234	)		560,234		C		-
Net cash provided by financing activities		937,154			560,234				1,497,388

Net increase (decrease) in cash and cash equivalents		(72,189	)		-				(72,189	)
Cash and cash equivalents beginning of the year		175,884			-				175,884
Cash and cash equivalents end of the year	$	103,695		$	-			$	103,695