Delaware
|
26-2593535
|
(State
or other jurisdiction of Incorporation or
organization)
|
(I.R.S.
Employer Identification No.)
|
Title
of Each Class
|
Name
of Each Exchange on Which Registered
|
Common Stock,
$0.0001 par value per share
|
The Nasdaq Stock
Market LLC
|
|
|
|
|
|
|
|
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☒
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☐
|
|
|
|
|
(Do not
check if a smaller reporting company)
|
|
|
|
PART I
|
4
|
ITEM 1—BUSINESS
|
4
|
ITEM 1A—RISK FACTORS
|
11
|
ITEM 1B—UNRESOLVED STAFF COMMENTS
|
23
|
ITEM 2—PROPERTIES
|
23
|
ITEM 3—LEGAL PROCEEDINGS
|
23
|
ITEM 4— MINE SAFETY DISCLOSURES
|
23
|
PART II
|
23
|
ITEM 5—MARKET FOR THE REGISTRANT’S COMMON EQUITY,
RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES
|
23
|
ITEM 6—SELECTED FINANCIAL DATA
|
25
|
ITEM 7—MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
26
|
ITEM 7A—QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
41
|
ITEM 8—CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
|
42
|
ITEM 9—CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
|
78
|
ITEM 9A—CONTROLS AND PROCEDURES
|
78
|
ITEM 9B—OTHER INFORMATION
|
80
|
PART III
|
80
|
PART IV
|
81
|
Year-Ended April 30, 2015
|
High
|
Low
|
First
Quarter
|
$5.18
|
$3.60
|
Second
Quarter
|
$4.40
|
$3.34
|
Third
Quarter
|
$4.76
|
$3.01
|
Fourth
Quarter
|
$3.54
|
$2.88
|
Transition Period Ended December 31, 2015
|
High
|
Low
|
First
Quarter
|
$3.88
|
$3.26
|
Second
Quarter
|
$3.98
|
$2.88
|
Two
Months Ended December 31, 2015
|
$3.40
|
$2.98
|
Year-Ended December 31, 2016
|
High
|
Low
|
First
Quarter
|
$3.37
|
$1.94
|
Second
Quarter
|
$2.94
|
$2.00
|
Third
Quarter
|
$2.77
|
$2.16
|
Fourth
Quarter
|
$2.43
|
$1.21
|
|
2011-4-30
|
2012-4-30
|
2013-4-30
|
2014-4-30
|
2015-4-30
|
2015-12-31
|
2016-12-31
|
Tenax
Therapeutics, Inc.
|
$100.00
|
$100.56
|
$14.12
|
$13.79
|
$9.66
|
$9.27
|
$5.51
|
Nasdaq
Composite
|
$100.00
|
$106.01
|
$115.84
|
$143.19
|
$171.96
|
$174.26
|
$187.33
|
Nasdaq
Biotechnology
|
$100.00
|
$116.54
|
$160.98
|
$215.04
|
$313.15
|
$316.91
|
$248.19
|
S&P
Global Heathcare
|
$100.00
|
$103.13
|
$130.72
|
$156.02
|
$184.01
|
$175.33
|
$162.00
|
|
Fiscal Year Ended December 31,
|
Eight Months Ended December 31,
|
Fiscal Year Ended April 30,
|
|||
|
2016
|
2015
|
2015
|
2014
|
2013
|
2012
|
|
|
|
|
|
|
|
Statements
of Operations Data:
|
|
|
|
|
|
|
Total
net revenue
|
$-
|
$-
|
$49,286
|
$158,926
|
$1,190,928
|
$363,781
|
Operating
loss
|
(52,650,739)
|
(10,425,498)
|
(14,816,743)
|
(16,611,120)
|
(5,189,072)
|
(8,220,197)
|
Net
loss
|
(43,923,904)
|
(10,067,964)
|
(14,081,812)
|
(19,541,839)
|
(9,415,800)
|
(15,712,410)
|
Diluted
net loss per share (1)
|
(1.57)
|
(0.36)
|
(0.50)
|
(2.71)
|
(6.68)
|
(14.07)
|
Balance
Sheet Data:
|
|
|
|
|
|
|
Cash,
short-term and long-term investments
|
21,866,681
|
38,208,001
|
48,101,534
|
58,320,555
|
783,528
|
1,879,872
|
Total
assets
|
23,340,175
|
72,987,078
|
82,908,344
|
93,429,440
|
3,180,643
|
4,141,934
|
Long-term
liabilities
|
-
|
7,962,100
|
7,962,100
|
7,973,032
|
3,049,102
|
1,361,110
|
Accumulated
deficit
|
(204,659,603)
|
(160,735,699)
|
(150,667,735)
|
(136,585,923)
|
(117,044,084)
|
(107,628,284)
|
Total
stockholders’ equity (deficit)
|
17,140,938
|
60,423,348
|
70,429,034
|
82,885,361
|
(1,778,036)
|
(346,046)
|
Statements
of Cash Flows Data:
|
|
|
|
|
|
|
Net
cash flows from operating activities
|
(15,871,300)
|
(8,950,610)
|
(9,748,794)
|
(9,261,571)
|
(4,921,283)
|
(8,278,366)
|
|
Year ended December 31,
|
Increase/ (Decrease)
|
% Increase/ (Decrease)
|
|
|
2016
|
2015
|
|
|
Legal
and professional fees
|
$1,878,032
|
$2,164,910
|
$(286,878)
|
(13)%
|
Personnel
costs
|
3,390,457
|
3,269,639
|
120,818
|
4%
|
Other
costs
|
824,307
|
1,024,092
|
(199,785)
|
(20)%
|
Facilities
|
140,575
|
153,227
|
(12,652)
|
(8)%
|
Depreciation
and amortization
|
12,587
|
59,700
|
(47,113)
|
(79)%
|
|
Year ended
December 31,
|
Increase/
(Decrease)
|
%
Increase/
(Decrease) |
|
|
2016
|
2015
|
|
|
Clinical
and preclinical development
|
$11,681,352
|
$7,775,366
|
$3,905,986
|
50%
|
Personnel
costs
|
785,550
|
594,306
|
191,244
|
32%
|
Consulting
|
640,088
|
490,210
|
149,878
|
31%
|
Other
costs
|
26,326
|
25,901
|
425
|
2%
|
Depreciation
|
6,365
|
19,004
|
(12,639)
|
(67)%
|
|
Year ended
December 31,
|
Increase/
(Decrease)
|
% Increase/
(Decrease)
|
|
|
2016
|
2015
|
|
|
Loss
on impairment of long-lived assets
|
$33,265,100
|
$1,034,863
|
$32,230,237
|
3114%
|
|
Year ended
December 31,
|
(Increase)/
Decrease |
|
|
2016
|
2015
|
|
Other
(income) expense, net
|
$(764,735)
|
$(633,632)
|
$(131,103)
|
|
Year ended
April 30,
|
Increase/
(Decrease)
|
% Increase/
(Decrease)
|
|
|
2014
|
2013
|
|
|
Personnel
costs
|
$10,593,234
|
$1,490,752
|
$9,102,482
|
611%
|
Legal
and professional fees
|
2,556,643
|
2,005,311
|
551,332
|
27%
|
Other
costs
|
350,855
|
(206,788)
|
557,643
|
270%
|
Facilities
|
157,449
|
167,693
|
(10,244)
|
(6)%
|
Depreciation
and amortization
|
115,042
|
111,012
|
4,030
|
4%
|
|
Eight months ended
December 31,
|
Increase/
(Decrease) |
%
Increase/
(Decrease) |
|
|
2015
|
2014
|
|
|
Clinical
and preclinical development
|
$5,560,860
|
$3,820,196
|
$1,740,664
|
46%
|
Consulting
|
470,335
|
15,231
|
455,104
|
2988%
|
Personnel
costs
|
427,873
|
359,129
|
68,744
|
19%
|
Other
costs
|
25,799
|
45,911
|
(20,112)
|
(44)%
|
|
Eight Months
ended
December 31, |
Increase/
(Decrease)
|
% Increase/
(Decrease)
|
|
|
2015
|
2014
|
|
|
Interest expense
|
$1,507
|
$46,736
|
$(45,229)
|
(97)%
|
|
Eight Months ended
December 31, |
(Increase)/
Decrease
|
|
|
2015
|
2014
|
|
Other
(income) expense, net
|
$(359,041)
|
$(509,420)
|
$150,379
|
|
Year ended
April 30,
|
Increase/
(Decrease)
|
% Increase/
(Decrease)
|
|
|
2015
|
2014
|
|
|
Product
revenue
|
$-
|
$25,731
|
$(25,731)
|
(100)%
|
Cost
of sales
|
-
|
129,800
|
(129,800)
|
(100)%
|
Gross
profit
|
$-
|
$(104,069)
|
$104,069
|
(100)%
|
|
Year ended
April 30,
|
Increase/
(Decrease)
|
% Increase/
(Decrease)
|
|
|
2015
|
2014
|
|
|
Government
grant revenue
|
$49,286
|
$262,995
|
$(213,709)
|
(81)%
|
|
Year ended
April 30,
|
Increase/
(Decrease) |
%
Increase/
(Decrease) |
|
|
2015
|
2014
|
|
|
Legal
and professional fees
|
$3,017,584
|
$2,556,643
|
$460,941
|
18%
|
Personnel
costs
|
2,986,589
|
10,593,234
|
(7,606,645)
|
(72)%
|
Other
costs
|
890,940
|
350,855
|
540,085
|
154%
|
Facilities
|
160,818
|
157,449
|
3,369
|
2%
|
Depreciation
and amortization
|
114,848
|
115,042
|
(194)
|
(0)%
|
|
Year ended
April 30,
|
Increase/
(Decrease)
|
% Increase/
(Decrease)
|
|
|
2015
|
2014
|
|
|
Clinical
and preclinical development
|
$6,034,702
|
$1,947,461
|
$4,087,241
|
210%
|
Personnel
costs
|
525,561
|
818,264
|
(292,703)
|
(36)%
|
Consulting
|
35,106
|
153,506
|
(118,400)
|
(77)%
|
Depreciation
|
33,292
|
35,447
|
(2,155)
|
(6)%
|
Other
costs
|
27,287
|
31,780
|
(4,493)
|
(14)%
|
Facilities
|
4,439
|
10,263
|
(5,824)
|
(57)%
|
|
Year ended
April 30,
|
Increase/
(Decrease)
|
% Increase/
(Decrease)
|
|
|
2015
|
2014
|
|
|
Interest
expense
|
$49,081
|
$2,212,283
|
$(2,163,202)
|
(98)%
|
|
Year ended
April 30,
|
(Increase)/
Decrease
|
|
|
2015
|
2014
|
|
Other
(income) expense, net
|
$(784,012)
|
$718,436
|
$(1,502,448)
|
|
Year ended December 31,
|
|
|
2016
|
2015
|
Net
cash used in operating activities
|
$(15,871,300)
|
$(12,057,891)
|
Net
cash provided by investing activities
|
22,206,802
|
4,206,244
|
Net
cash used in financing activities
|
-
|
(164,224)
|
|
Eight months ended December 31,
|
|
|
2015
|
2014
|
Net
cash used in operating activities
|
$(8,950,610)
|
$(6,632,268)
|
Net
cash provided by (used in) investing activities
|
4,784,732
|
(40,356,616)
|
Net
cash (used in) provided by financing activities
|
(100,160)
|
344,654
|
|
Year ended April 30,
|
|
|
2015
|
2014
|
Net
cash used in operating activities
|
$(9,748,794)
|
$(9,261,571)
|
Net
cash used in investing activities
|
(40,925,860)
|
(147,038)
|
Net
cash provided by financing activities
|
280,590
|
66,945,636
|
|
Payments Due by Period
|
||||
|
Total
|
Less than
1 Year
|
1-3 Years
|
3-5 Years
|
More than
5 Years
|
Operating
Lease Obligations
|
$528,655
|
$112,431
|
$354,421
|
$61,803
|
$-
|
CONSOLIDATED BALANCE SHEETS
|
43
|
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS
|
44
|
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
|
45
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
46
|
CONSOLIDATED STATEMENTS OF CASH FLOWS, continued
|
47
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
48
|
Raleigh, North Carolina
|
|
March 16, 2017
|
|
|
December 31, 2016
|
December 31, 2015
|
|
|
|
ASSETS
|
|
|
Current
assets
|
|
|
Cash
and cash equivalents
|
$9,995,955
|
$3,660,453
|
Marketable
securities
|
3,284,616
|
16,528,494
|
Accounts
receivable
|
72,599
|
49,448
|
Prepaid
expenses
|
275,005
|
321,958
|
Total
current assets
|
13,628,175
|
20,560,353
|
Marketable
securities
|
8,586,110
|
18,019,054
|
Property
and equipment, net
|
19,105
|
35,786
|
Intangible
assets, net
|
-
|
22,000,000
|
Goodwill
|
-
|
11,265,100
|
Other
assets
|
1,106,785
|
1,106,785
|
Total
assets
|
$23,340,175
|
$72,987,078
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
Current
liabilities
|
|
|
Accounts
payable
|
$727,599
|
$972,483
|
Accrued
liabilities
|
5,245,546
|
3,104,807
|
Warrant
liabilities
|
226,092
|
524,340
|
Total
current liabilities
|
6,199,237
|
4,601,630
|
Deferred
tax liability
|
-
|
7,962,100
|
Total
liabilities
|
6,199,237
|
12,563,730
|
|
|
|
|
|
|
Commitments
and contingencies; see Note H
|
|
|
Stockholders'
equity
|
|
|
Common
stock, par value $.0001 per share; authorized 400,000,000 shares;
issued and outstanding 28,120,021 and 28,119,694,
respectively
|
2,812
|
2,812
|
Additional
paid-in capital
|
221,816,447
|
221,285,677
|
Accumulated
other comprehensive loss
|
(18,718)
|
(129,442)
|
Accumulated
deficit
|
(204,659,603)
|
(160,735,699)
|
Total
stockholders’ equity
|
17,140,938
|
60,423,348
|
Total
liabilities and stockholders' equity
|
$23,340,175
|
$72,987,078
|
|
Year ended
December 31,
|
Eight
months ended December 31,
|
Year
ended April 30,
|
|
|
2016
|
2015
|
2015
|
2014
|
|
|
|
|
|
Product
revenue
|
$-
|
$-
|
$-
|
$25,731
|
Cost
of sales
|
-
|
-
|
-
|
129,800
|
Net
product revenue
|
-
|
-
|
-
|
(104,069)
|
Government
grant revenue
|
-
|
-
|
49,286
|
262,995
|
Total
net revenue
|
-
|
-
|
49,286
|
158,926
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
General
and administrative
|
6,245,958
|
3,940,631
|
7,170,779
|
13,773,325
|
Research
and development
|
13,139,681
|
6,484,867
|
6,660,387
|
2,996,721
|
Loss
on impairment of long-lived assets
|
33,265,100
|
-
|
1,034,863
|
-
|
Total
operating expenses
|
52,650,739
|
10,425,498
|
14,866,029
|
16,770,046
|
|
|
|
|
|
Net
operating loss
|
52,650,739
|
10,425,498
|
14,816,743
|
16,611,120
|
|
|
|
|
|
Interest
expense
|
-
|
1,507
|
49,081
|
2,212,283
|
Other
(income) expense
|
(764,735)
|
(359,041)
|
(784,012)
|
718,436
|
Income
tax benefit
|
(7,962,100)
|
-
|
-
|
-
|
Net
loss
|
$43,923,904
|
$10,067,964
|
$14,081,812
|
$19,541,839
|
|
|
|
|
|
Unrealized
(gain) loss on marketable securities
|
(110,724)
|
156,160
|
(26,718)
|
-
|
Total
comprehensive loss
|
$43,813,180
|
$10,224,124
|
$14,055,094
|
$19,541,839
|
|
|
|
|
|
Reconciliation
of net loss to net loss attributable to common
stockholders
|
|
|
|
|
Net
loss
|
$43,923,904
|
$10,067,964
|
$14,081,812
|
$19,541,839
|
Preferred
stock dividend
|
-
|
-
|
-
|
5,803,362
|
Net
loss attributable to common stockholders
|
$43,923,904
|
$10,067,964
|
$14,081,812
|
$25,345,201
|
|
|
|
|
|
|
|
|
|
|
Net
loss per share, basic and diluted
|
$(1.56)
|
$(0.36)
|
$(0.50)
|
$(2.71)
|
Weighted
average number of common shares outstanding, basic and
diluted
|
28,119,835
|
28,119,597
|
28,077,963
|
9,362,031
|
|
Preferred Stock
|
Common Stock
|
|
|
|
|
||
|
Number of
Shares |
Amount
|
Number of
Shares |
Amount
|
Additional paid-in capital
|
Accumulated other comprehensive gain
(loss)
|
Accumulated
deficit |
Total stockholders' equity
|
|
|
|
|
|
|
|
|
|
Balance at April
30, 2013
|
987
|
$1
|
1,930,078
|
$193
|
$115,265,854
|
$-
|
$(117,044,084)
|
$(1,778,036)
|
Preferred
stock sold, net of offering costs
|
5,369
|
1
|
|
|
4,895,187
|
|
|
4,895,188
|
Preferred
stock issued for convertible debt
|
4,600
|
3
|
|
|
4,599,997
|
|
|
4,600,000
|
Common and
preferred stock issued for asset purchase
|
32,992
|
3
|
1,366,844
|
137
|
24,046,860
|
|
|
24,047,000
|
Common stock
sold, net of offering costs
|
|
|
10,678,571
|
1,068
|
54,907,282
|
|
|
54,908,350
|
Common stock
issued for convertible preferred stock
|
(43,948)
|
(8)
|
9,056,415
|
906
|
(898)
|
|
|
-
|
Common stock
issued as interest on convertible debt
|
|
|
4,881
|
1
|
220,040
|
|
|
220,041
|
Common stock
issued as dividend on convertible preferred
stock
|
|
|
1,407,485
|
140
|
(140)
|
|
|
-
|
Compensation
on options and restricted stock issued
|
|
|
50,144
|
5
|
8,131,619
|
|
|
8,131,624
|
Common stock
issued for services rendered
|
|
|
198,668
|
20
|
499,980
|
|
|
500,000
|
Exercise of
warrants
|
|
|
3,161,145
|
316
|
7,135,753
|
|
|
7,136,069
|
Reclassification
of warrants from equity to derivative liability
|
|
|
|
|
(233,036)
|
|
|
(233,036)
|
Fractional shares of common stock
due to reverse stock split
|
|
|
3,769
|
|
|
|
|
-
|
Net
loss
|
|
|
|
|
|
|
(19,541,839)
|
(19,541,839)
|
Balance at April
30, 2014
|
-
|
$-
|
27,858,000
|
$2,786
|
$219,468,498
|
$-
|
$(136,585,923)
|
$82,885,361
|
Compensation
on options and restricted stock issued
|
|
|
29,956
|
3
|
465,151
|
|
|
465,154
|
Common stock
issued for services rendered
|
|
|
22,079
|
2
|
99,998
|
|
|
100,000
|
Common stock
issued as interest on convertible debt
|
|
|
255
|
-
|
11,500
|
|
|
11,500
|
Issuance of
warrants
|
|
|
|
|
478,115
|
|
|
478,115
|
Exercise of
warrants
|
|
|
209,230
|
21
|
543,977
|
|
|
543,998
|
Unrealized
gain (loss) on marketable securities
|
|
|
|
|
|
26,718
|
-
|
26,718
|
Net
loss
|
|
|
|
|
|
|
(14,081,812)
|
(14,081,812)
|
Balance at April
30, 2015
|
-
|
$-
|
28,119,520
|
$2,812
|
$221,067,239
|
$26,718
|
$(150,667,735)
|
$70,429,034
|
Compensation
on options and restricted stock issued
|
|
|
174
|
-
|
218,438
|
|
|
218,438
|
Unrealized
gain (loss) on marketable securities
|
|
|
|
|
|
(156,160)
|
|
(156,160)
|
Net
loss
|
|
|
|
|
|
|
(10,067,964)
|
(10,067,964)
|
Balance at
December 31, 2015
|
-
|
$-
|
28,119,694
|
$2,812
|
$221,285,677
|
$(129,442)
|
$(160,735,699)
|
$60,423,348
|
Compensation
on options and restricted stock issued
|
|
|
327
|
-
|
530,770
|
|
|
530,770
|
Unrealized
gain (loss) on marketable securities
|
|
|
|
|
|
110,724
|
|
110,724
|
Net
loss
|
|
|
|
|
|
|
(43,923,904)
|
(43,923,904)
|
Balance at
December 31, 2016
|
-
|
$-
|
28,120,021
|
$2,812
|
$221,816,447
|
$(18,718)
|
$(204,659,603)
|
$17,140,938
|
|
Year ended
December 31, |
Eight months
ended December 31,
|
Year ended April 30,
|
|
|
2016
|
2015
|
2015
|
2014
|
|
|
|
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
Net
Loss
|
$(43,923,904)
|
$(10,067,964)
|
$(14,081,812)
|
$(19,541,839)
|
Adjustments
to reconcile net loss to net cash used in operating
activities
|
|
|
|
|
Depreciation
and amortization
|
18,952
|
31,224
|
148,140
|
150,489
|
Interest
on debt instruments
|
-
|
-
|
45,606
|
2,181,955
|
Loss
on impairment, disposal and write down of long-lived
assets
|
33,265,100
|
-
|
1,034,863
|
-
|
Gain
on disposal of property and equipment
|
(74,388)
|
-
|
(6,050)
|
2,519
|
Issuance
and vesting of compensatory stock options and warrants
|
529,708
|
217,736
|
769,906
|
8,042,662
|
Issuance
of common stock as compensation
|
1,062
|
703
|
117,295
|
651,460
|
Change
in the fair value of warrants
|
(298,248)
|
(48,105)
|
(382,431)
|
721,840
|
Amortization
of premium on marketable securities
|
652,861
|
669,915
|
674,378
|
-
|
Deferred
income taxes
|
(7,962,100)
|
-
|
-
|
-
|
Changes
in operating assets and liabilities
|
|
|
|
|
Accounts
receivable, prepaid expenses and other assets
|
23,801
|
13,197
|
(793,148)
|
519,255
|
Inventory
|
-
|
-
|
-
|
99,204
|
Accounts
payable and accrued liabilities
|
1,895,856
|
232,684
|
2,724,459
|
(2,089,116)
|
Net
cash used in operating activities
|
(15,871,300)
|
(8,950,610)
|
(9,748,794)
|
(9,261,571)
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
Purchase
of marketable securities
|
(7,255,578)
|
(5,554,385)
|
(55,142,333)
|
-
|
Sale
of marketable securities
|
29,390,264
|
10,355,805
|
14,319,630
|
-
|
Purchase
of property and equipment
|
(2,884)
|
(16,688)
|
(4,234)
|
(9,804)
|
Proceeds
from the sale of property and equipment
|
75,000
|
-
|
6,500
|
-
|
Capitalization
of patent costs and license rights
|
-
|
-
|
(105,423)
|
(137,234)
|
Net
cash provided by (used in) investing activities
|
22,206,802
|
4,784,732
|
(40,925,860)
|
(147,038)
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
Proceeds
from sale of common stock and exercise of stock options and
warrants, net of related expenses and payments
|
-
|
-
|
543,998
|
62,044,419
|
Proceeds
from issuance of notes payable, net of issuance costs
|
-
|
-
|
172,025
|
141,320
|
Payments
on notes - short-term
|
-
|
(100,160)
|
(435,433)
|
(135,291)
|
Net
cash (used in) provided by financing activities
|
-
|
(100,160)
|
280,590
|
66,945,636
|
|
|
|
|
|
Net
change in cash and cash equivalents
|
6,335,502
|
(4,266,038)
|
(50,394,064)
|
57,537,027
|
Cash
and cash equivalents, beginning of period
|
3,660,453
|
7,926,491
|
58,320,555
|
783,528
|
Cash
and cash equivalents, end of period
|
$9,995,955
|
$3,660,453
|
$7,926,491
|
$58,320,555
|
|
|
|
|
|
Cash
paid for:
|
|
|
|
|
Interest
|
$-
|
$1,507
|
$3,475
|
$30,328
|
Laboratory
equipment
|
3
– 5 years
|
Office
equipment
|
5
years
|
Office
furniture and fixtures
|
7
years
|
Computer
equipment and software
|
3
years
|
Leasehold
improvements
|
Shorter
of useful life or remaining lease term
|
|
Year ended
December 31,
|
Eight months ended December 31,
|
Year ended April 30,
|
|
|
2016
|
2015
|
2015
|
2014
|
|
|
|
|
|
Options
to purchase common stock
|
4,742,032
|
4,032,698
|
3,718,298
|
3,647,858
|
Warrants
to purchase common stock
|
2,415,675
|
2,728,236
|
2,728,236
|
2,762,466
|
Restricted
stock grants
|
214
|
394
|
90
|
42,629
|
Convertible
note shares outstanding
|
-
|
-
|
-
|
6,652
|
Level
one
|
Quoted
market prices in active markets for identical assets or
liabilities;
|
Level
two
|
Inputs
other than level one inputs that are either directly or indirectly
observable; and
|
Level
three
|
Unobservable
inputs developed using estimates and assumptions; which are
developed by the reporting entity and reflect those assumptions
that a market participant would use.
|
|
December 31, 2016
|
||||
|
Amortized Cost
|
Accrued Interest
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Estimated Fair
Value
|
Corporate
debt securities
|
$11,780,631
|
$108,813
|
$5,385
|
$(24,103)
|
$11,870,726
|
|
December 31, 2016
|
December 31, 2015
|
Maturing
in one year or less
|
$3,284,616
|
$16,528,494
|
Maturing
after one year through three years
|
8,586,110
|
18,019,054
|
Total
investments
|
$11,870,726
|
$34,547,548
|
Series C Warrants
|
December 31, 2016
|
December 31, 2015
|
Closing
stock price
|
$1.95
|
$3.28
|
Expected
dividend rate
|
0%
|
0%
|
Expected
stock price volatility
|
79.60%
|
84.08%
|
Risk-free
interest rate
|
1.35%
|
1.44%
|
Expected
life (years)
|
2.56
|
3.56
|
|
|
|
Balance, at April 30, 2014
|
$954,876
|
Issuance
of warrants
|
-
|
Exercise
of warrants
|
-
|
Gain
included in income from change in fair value of warrants for the
period
|
(382,431)
|
Balance, at April 30, 2015
|
$572,445
|
Issuance
of warrants
|
-
|
Exercise
of warrants
|
-
|
Gain
included in income from change in fair value of warrants for the
period
|
(48,105)
|
Balance, at December 31, 2015
|
$524,340
|
Issuance
of warrants
|
-
|
Exercise
of warrants
|
-
|
Gain
included in income from change in fair value of warrants for the
period
|
(298,248)
|
Balance, at December 31, 2016
|
$226,092
|
|
|
Fair Value Measurements at Reporting Date Using
|
||
|
Balance as of
December 31, 2016
|
Quoted prices in Active Markets for Identical Securities
(Level 1)
|
Significant Other Observable Inputs (Level 2)
|
Significant Unobservable Inputs (Level 3)
|
Current
Assets
|
|
|
|
|
Cash
and cash equivalents
|
$9,995,955
|
$9,995,955
|
$-
|
$-
|
Marketable
securities
|
$3,284,616
|
$-
|
$3,284,616
|
$-
|
|
|
|
|
|
Long-term
Assets
|
|
|
|
|
Marketable
securities
|
$8,586,110
|
$-
|
$8,586,110
|
$-
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Warrant
liabilities
|
$226,092
|
$-
|
$-
|
$226,092
|
|
|
Fair Value Measurements at Reporting Date Using
|
||
|
Balance as of
December 31, 2015
|
Quoted prices in Active Markets for Identical Securities
(Level 1)
|
Significant Other Observable Inputs (Level 2)
|
Significant Unobservable Inputs (Level 3)
|
Current
Assets
|
|
|
|
|
Cash
and cash equivalents
|
$3,660,453
|
$3,660,453
|
$-
|
$-
|
Marketable
securities
|
$16,528,494
|
$-
|
$16,528,494
|
$-
|
|
|
|
|
|
Long-term
Assets
|
|
|
|
|
Marketable
securities
|
$18,019,054
|
$-
|
$18,019,054
|
$-
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Warrant
liabilities
|
$524,340
|
$-
|
$-
|
$524,340
|
|
December 31, 2016
|
December 31, 2015
|
Laboratory
equipment
|
$354,861
|
$514,214
|
Computer
equipment and software
|
101,677
|
139,984
|
Office
furniture and fixtures
|
130,192
|
130,192
|
|
586,730
|
784,390
|
Less:
Accumulated depreciation
|
(567,625)
|
(748,604)
|
|
$19,105
|
$35,786
|
|
December 31, 2016
|
December 31, 2015
|
Operating
costs
|
$4,361,538
|
$2,559,092
|
Employee
related
|
884,008
|
545,715
|
|
$5,245,546
|
$3,104,807
|
Common
stock
|
8,747,802
|
Series
E convertible preferred stock
|
15,299,198
|
Total
|
24,047,000
|
|
November 13, 2013
(As initially reported)
|
Measurement Period Adjustments (1)
|
November 13, 2013
(As adjusted)
|
IPR&D
|
$22,000,000
|
$-
|
$22,000,000
|
Trade
and other payables
|
(256,000)
|
-
|
(256,000)
|
Liabilities
arising from a contingency
|
(1,000,000)
|
-
|
(1,000,000)
|
Deferred
tax liability related to intangibles acquired
|
-
|
(7,962,100)
|
(7,962,100)
|
Total
identifiable net assets
|
20,744,000
|
(7,962,100)
|
12,781,900
|
Goodwill
|
3,303,000
|
7,962,100
|
11,265,100
|
Total
fair value of consideration
|
$24,047,000
|
$-
|
$24,047,000
|
(1)
|
The measurement period adjustments primarily reflect the recording
of a deferred tax liability and resulting goodwill. The
measurement period adjustments were made to reflect facts and
circumstances existing as of the acquisition date and did not
result from intervening events subsequent to the acquisition
date.
|
Asset Category
|
Weighted
Average Amortization Period (in Years)
|
Value Assigned
|
Accumulated
Amortization
|
Impairments
|
Carrying
Value (Net of Impairments and Accumulated
Amortization)
|
|
|
|
|
|
|
IPR&D
|
N/A
|
$22,000,000
|
$-
|
$(22,000,000)
|
$-
|
Total
|
|
$22,000,000
|
|
$(22,000,000)
|
$-
|
Asset Category
|
Weighted
Average Amortization Period (in Years)
|
Value Assigned
|
Accumulated
Amortization
|
Impairments
|
Carrying
Value (Net of Impairments and Accumulated
Amortization)
|
|
|
|
|
|
|
IPR&D
|
N/A
|
$22,000,000
|
$-
|
$-
|
$(22,000,000)
|
Total
|
|
$22,000,000
|
|
$-
|
$(22,000,000)
|
Conversion
|
Subject to certain ownership limitations, the Series D Stock is
convertible at any time at the option of the holder into shares of
the Company’s common stock at a conversion ratio determined
by dividing the stated value of the Series C Stock (or $1,000) by a
conversion price of $1.95 per share. The conversion price is
subject to adjustment in the case of stock splits, stock dividends,
combinations of shares and similar recapitalization
transactions.
Until such time that for at least 25 trading days during any 30
consecutive trading days, the volume weighted average price of the
Company’s common stock exceeds 250% of the initial conversion
price, if the Company sells or grants any option to purchase or
sell any common stock or common stock equivalents entitling any
person to acquire shares of common stock at an effective price per
share that is lower than the then conversion price, or the Base
Conversion Price, then the conversion price shall be reduced to
equal the Base Conversion Price.
|
Dividends and Make-Whole Payment
|
Until the third anniversary of the date of issuance of the Series D
Stock, the holder of the Series D Stock is entitled to receive
dividends at the rate of 8% per annum of the stated value for each
share of Series D Stock held by such holder payable quarterly on
January 1, April 1, July 1 and October 1, beginning on the first
such date after the original issue date, and on each dividend
payment date. The Company can elect to pay the dividends
in cash or in duly authorized, validly issued, fully paid and
non-assessable shares of common stock, or a combination
thereof. If the Company pays the dividends in shares of
common stock, the shares used to pay the dividends will be valued
at 90% of the average volume weighted average price for the 20
consecutive trading days ending on the trading day immediately
prior to the applicable dividend payment date. From and
after the third anniversary of the date of issuance of the Series D
Stock, the holder of Series D Stock will be entitled to receive
dividends equal, on an as-if-converted to common stock basis, to
and in the same form as dividends actually paid on shares of common
stock when, as, and if such dividends are paid on shares of common
stock. The Company has never paid dividends on its
common stock and the Company does not intend to do so for the
foreseeable future.
In the event OXBT Fund converts its Series D Stock prior to the
third anniversary of the date of issuance of the Series D Stock,
the Company must also pay to OXBT Fund in cash, or at the
Company’s option in common stock valued as described above,
or a combination of cash and shares of common stock, with respect
to the Series D Stock so converted, an amount equal to $240 per
$1,000 of the stated value of the Series D Stock, less the amount
of any dividends paid in cash or in common stock on such Series D
Stock on or before the date of conversion.
|
Liquidation
|
Upon any liquidation, dissolution or winding up of the Company
after payment or provision for payment of debts and other
liabilities of the Company, but before any distribution or payment
is made to the holders of any junior securities, the holder of
Series D Stock shall be entitled to be paid out of the assets of
the Company available for distribution to its stockholders an
amount equal to $1,000 per share, after which any remaining assets
of the Company shall be distributed among the holders of the other
class or series of stock in accordance with the Company’s
Certificate of Incorporation.
|
Voting rights
|
Shares of Series D Stock will generally have no voting rights,
except as required by law and except that the consent of the holder
of the outstanding Series D Stock will, among other things, be
required to amend the terms of the Series D Stock.
|
Conversion
|
Subject to certain ownership limitations, the Series C Stock is
convertible at any time at the option of the holder into shares of
the Company’s common stock at a conversion ratio determined
by dividing the stated value of the Series C Stock (or $1,000) by a
conversion price of $1.95 per share. The conversion price is
subject to adjustment in the case of stock splits, stock dividends,
combinations of shares and similar recapitalization
transactions.
Until such time that for at least 25 trading days during any 30
consecutive trading days, the volume weighted average price of the
Company’s common stock exceeds 250% of the initial conversion
price, if the Company sells or grants any option to purchase or
sell any common stock or common stock equivalents entitling any
person to acquire shares of common stock at an effective price per
share that is lower than the then conversion price, or the Base
Conversion Price, then the conversion price shall be reduced to
equal the Base Conversion Price.
|
Dividends and Make-Whole Payment
|
Until the third anniversary of the date of issuance of the Series C
Stock, each holder of the Series C Stock is entitled to receive
dividends at the rate of 8% per annum of the stated value for each
share of Series C Stock held by such holder payable quarterly on
January 1, April 1, July 1 and October 1, beginning on the first
such date after the original issue date, and on each dividend
payment date. The Company can elect to pay the dividends
in cash or in duly authorized, validly issued, fully paid and
non-assessable shares of common stock, or a combination
thereof. If the Company pays the dividends in shares of
common stock, the shares used to pay the dividends will be valued
at 90% of the average volume weighted average price for the 20
consecutive trading days ending on the trading day immediately
prior to the applicable dividend payment date. From and
after the third anniversary of the date of issuance of the Series C
Stock, each holder of Series C Stock will be entitled to receive
dividends equal, on an as-if-converted to common stock basis, to
and in the same form as dividends actually paid on shares of common
stock when, as, and if such dividends are paid on shares of common
stock. The Company has never paid dividends on its
common stock and the Company does not intend to do so for the
foreseeable future.
In the event a holder converts his, her or its Series C Stock prior
to the third anniversary of the date of issuance of the Series C
Stock, the Company must also pay to the holder in cash, or at the
Company’s option in common stock valued as described above,
or a combination of cash and shares of common stock, with respect
to the Series C Stock so converted, an amount equal to $240 per
$1,000 of the stated value of the Series C Stock, less the amount
of any dividends paid in cash or in common stock on such Series C
Stock on or before the date of conversion.
|
Liquidation
|
Upon any liquidation, dissolution or winding up of the Company
after payment or provision for payment of debts and other
liabilities of the Company, but before any distribution or payment
is made to the holders of any junior securities, the holders of
Series C Stock shall be entitled to be paid out of the assets of
the Company available for distribution to its stockholders an
amount equal to $1,000 per share, after which any remaining assets
of the Company shall be distributed among the holders of the other
class or series of stock in accordance with the Company’s
Certificate of Incorporation.
|
Voting rights
|
Shares
of Series C Stock will generally have no voting rights, except as
required by law and except that the consent of holders of a
majority of the outstanding Series C Stock will, among other
things, be required to amend the terms of the Series C
Stock.
|
Dividends
|
No
dividends shall be paid on shares of Preferred Stock.
|
Conversion
|
Holders
may elect to convert shares of Series B Stock into shares of common
stock at the then-existing conversion price at any time. The
initial conversion price is $5.00 per share of common stock, and is
subject to certain adjustments, including an anti-dilution
provision that reduces the conversion price upon the issuance of
any common stock or securities convertible into common stock at an
effective price per share less than the conversion price and a
one-time price reset following the effectiveness of a reverse split
of the Company’s outstanding common stock.
|
Liquidation
preference
|
In the
event of the Company’s voluntary or involuntary dissolution,
liquidation or winding up, each holder of Series B Stock will be
entitled to be paid a liquidation preference equal to the initial
stated value of such holder’s Series B Stock of $1,000 per
share, plus accrued and unpaid dividends and any other payments
that may be due on such shares, before any distribution of assets
may be made to holders of capital stock ranking junior to the
Series B Stock.
|
Voting
rights
|
Shares
of Series B Stock will generally have no voting rights, except as
required by law and except that the consent of holders of a
majority of the outstanding Series B Stock will among other things,
be required to amend the terms of the Series B Stock.
|
|
Warrants
|
Weighted
Average
Exercise Price
|
Outstanding at April 30, 2013
|
759,410
|
$11.00
|
Issued
|
5,165,862
|
2.60
|
Exercised
|
(3,161,145)
|
2.26
|
Forfeited
|
(1,661)
|
126.00
|
Outstanding at April 30, 2014
|
2,762,466
|
$4.28
|
Issued
|
175,000
|
4.00
|
Exercised
|
(209,230)
|
2.60
|
Outstanding at April 30, 2015
|
2,728,236
|
$4.39
|
Issued
|
-
|
-
|
Exercised
|
-
|
-
|
Outstanding at December 31, 2015
|
2,728,236
|
$4.39
|
Issued
|
-
|
-
|
Exercised
|
-
|
-
|
Forfeited
|
(312,561)
|
17.93
|
Outstanding at December 31, 2016
|
2,415,675
|
$2.64
|
|
Shares
Available for
Grant
|
Balances, at April 30, 2013
|
282,726
|
Additional
shares reserved
|
3,600,000
|
Options
granted
|
(3,637,822)
|
Options
cancelled/forfeited
|
1,300
|
Restricted
stock granted
|
(135,662)
|
Restricted
stock cancelled/forfeited
|
44,866
|
Balances, at April 30, 2014
|
155,408
|
Options
granted
|
(50,225)
|
Options
cancelled/forfeited
|
4,785
|
Restricted
stock granted
|
(2,624)
|
Restricted
stock cancelled/forfeited
|
15,055
|
Balances, at April 30, 2015
|
122,399
|
Additional
shares reserved
|
1,187,192
|
Options
granted
|
(315,050)
|
Options
cancelled/forfeited
|
650
|
Restricted
stock granted
|
(610)
|
Restricted
stock cancelled/forfeited
|
132
|
Balances, at December 31, 2015
|
994,713
|
Options
granted
|
(726,000)
|
Restricted
stock granted
|
(430)
|
Restricted
stock cancelled/forfeited
|
217
|
Balances, at December 31, 2016
|
268,500
|
|
Outstanding
Options
|
|
|
|
Number of Shares
|
Weighted Average
Exercise Price
|
Aggregate Intrinsic Value
|
Balances, at April 30, 2013
|
11,336
|
$57.00
|
|
Options
granted
|
3,637,822
|
$5.64
|
|
Options
cancelled
|
(1,300)
|
$43.90
|
|
Balances, at April 30, 2014
|
3,647,858
|
$5.79
|
|
Options
granted
|
50,225
|
$4.82
|
|
Options
cancelled
|
(4,785)
|
$63.84
|
|
Balances, at April 30, 2015
|
3,693,298
|
$5.70
|
|
Options
granted
|
315,050
|
$3.25
|
|
Options
cancelled
|
(650)
|
$35.09
|
|
Balances at December 31, 2015
|
4,007,698
|
$5.50
|
|
Options
granted
|
726,000
|
$2.12
|
|
Options
cancelled
|
-
|
$-
|
|
Balances at December 31, 2016
|
4,733,698
|
$4.98
|
$
-
(1)
|
(1)
|
Amount
represents the difference between the exercise price and $1.95, the
closing price of Tenax Therapeutics’ stock on December 31,
2016, as reported on the Nasdaq Capital Market, for all
in-the-money options outstanding.
|
|
Options Outstanding at
December 31, 2016
|
Options Exercisable and Vested at
December 31, 2016
|
||
Exercise Price
|
Number of
Options
|
Weighted Average Remaining
Contractual Life (Years)
|
Number of
Options
|
Weighted Average
Exercise Price
|
$2.07 to $3.16
|
956,000
|
9.7
|
76,666
|
$3.16
|
$3.35 to $4.76
|
124,938
|
7.8
|
124,838
|
$3.31
|
$4.82 to $5.65
|
3,647,880
|
3.3
|
1,861,440
|
$5.63
|
$14.80 to $138.00
|
4,880
|
4.4
|
4,880
|
$54.07
|
|
4,733,698
|
4.7
|
2,067,824
|
$5.54
|
|
Number of
Option Shares
|
Weighted Average
Exercise Price
|
Aggregate Intrinsic
Value (1)
|
Weighted Average Remaining Contractual Life (Years)
|
Vested
|
2,067,824
|
$5.54
|
$-
|
3.9
|
Vested
and expected to vest
|
2,743,720
|
$4.75
|
$-
|
5.3
|
(1)
|
Amount
represents the difference between the exercise price and $1.95, the
closing price of Tenax Therapeutics’ stock on December 31,
2016, as reported on the Nasdaq Capital Market, for all
in-the-money options outstanding.
|
|
For the year ended December 31,
|
For the eight months ended December 31,
|
For the year ended April 30
|
|
|
2016
|
2015
|
2015
|
2014
|
Risk-free
interest rate (weighted average)
|
2.28%
|
1.99%
|
2.23%
|
1.80%
|
Expected
volatility (weighted average)
|
83.38%
|
85.45%
|
98.43%
|
98.20%
|
Expected
term (in years)
|
7
|
7
|
7
|
6
|
Expected
dividend yield
|
0.00%
|
0.00%
|
0.00%
|
0.00%
|
Risk-Free
Interest Rate
|
The
risk-free interest rate assumption was based on U.S. Treasury
instruments with a term that is consistent with the expected term
of the Company’s stock options.
|
Expected
Volatility
|
The
expected stock price volatility for the Company’s common
stock was determined by examining the historical volatility and
trading history for its common stock over a term consistent with
the expected term of its options.
|
Expected
Term
|
The
expected term of stock options represents the weighted average
period the stock options are expected to remain outstanding. It was
calculated based on the historical experience that the Company has
had with its stock option grants.
|
Expected
Dividend Yield
|
The
expected dividend yield of 0% is based on the Company’s
history and expectation of dividend payouts. The Company has not
paid and do not anticipate paying any dividends in the near
future.
|
Forfeitures
|
As
stock-based compensation expense recognized in the statement of
operations for the year ended December 31, 2016, the eight months
ended December 31, 2015 and the fiscal years ended April 30, 2015
and 2014 is based on awards ultimately expected to vest, it has
been reduced for estimated forfeitures. ASC 718 requires
forfeitures to be estimated at the time of grant and revised, if
necessary, in subsequent periods if actual forfeitures differ from
those estimates. Forfeitures were estimated based on the
Company’s historical experience.
|
|
Number of
Shares
|
Weighted Average
Exercise Price
|
Inducement
Stock Options outstanding at April 30, 2014
|
-
|
$-
|
Options
granted
|
25,000
|
3.22
|
Options
exercised
|
-
|
-
|
Options
forfeited or expired
|
-
|
-
|
Inducement
Stock Options outstanding at April 30, 2015
|
25,000
|
$3.22
|
Options
granted
|
-
|
-
|
Options
exercised
|
-
|
-
|
Options
forfeited or expired
|
-
|
-
|
Inducement
Stock Options outstanding at December 31, 2015
|
25,000
|
$3.22
|
Options
granted
|
-
|
-
|
Options
exercised
|
-
|
-
|
Options
forfeited or expired
|
(16,666)
|
3.22
|
Inducement
Stock Options outstanding at December 31, 2016
|
8,334
|
$3.22
|
Options
exercisable at December 31, 2016
|
8,334
|
$3.22
|
|
Outstanding Restricted Stock
|
|
|
Number of Shares
|
Weighted Average Grant Date Fair Value
|
Balances, at April 30, 2013
|
1,917
|
$48.40
|
Restricted
stock granted
|
135,662
|
$3.00
|
Restricted
stock vested
|
(50,235)
|
$2.30
|
Restricted
stock cancelled
|
(31,503)
|
$1.67
|
Restricted
stock forfeited
|
(13,363)
|
$4.49
|
Balances, at April 30, 2014
|
42,478
|
$6.39
|
Restricted
stock granted
|
2,624
|
$4.90
|
Restricted
stock vested
|
(29,957)
|
$5.99
|
Restricted
stock cancelled
|
(15,055)
|
$6.95
|
Balances, at April 30, 2015
|
90
|
$4.01
|
Restricted
stock granted
|
610
|
$3.37
|
Restricted
stock vested
|
(174)
|
$3.61
|
Restricted
stock cancelled
|
(132)
|
$3.57
|
Balances, at December 31, 2015
|
394
|
$3.34
|
Restricted
stock granted
|
430
|
$2.72
|
Restricted
stock vested
|
(327)
|
$3.11
|
Restricted
stock cancelled
|
(283)
|
$3.13
|
Balances, at December 31, 2016
|
214
|
$2.72
|
Year ending December 31,
|
|
2017
|
$112,431
|
2018
|
115,220
|
2019
|
118,117
|
2020
|
121,084
|
2021
|
61,803
|
|
$528,655
|
|
December 31,
|
|
|
2016
|
2015
|
|
|
|
Current
federal income tax expense
|
$-
|
$-
|
Deferred
federal income tax benefit
|
(7,139,565)
|
-
|
Provision
for federal income taxes:
|
(7,139,565)
|
-
|
|
|
|
Current
state income tax expense
|
-
|
-
|
Deferred
state income tax benefit
|
(822,535)
|
-
|
Provision
for state income taxes:
|
(822,535)
|
-
|
|
|
|
Total
|
$(7,962,100)
|
$-
|
|
December 31,
|
|
|
2016
|
2015
|
U.S.
federal taxes (benefit) at statutory rate
|
$(17,641,231)
|
$(3,423,108)
|
State
income tax benefit, net of federal benefit
|
(2,031,238)
|
(394,142)
|
Stock
compensation
|
141,807
|
37,264
|
Other
nondeductible, including goodwill impairment
|
4,160,717
|
(15,287)
|
Change
in state tax rate
|
241,518
|
-
|
Other,
including effect of tax rate brackets
|
(57,490)
|
(72,808)
|
Change
in valuation allowance
|
7,223,817
|
3,868,081
|
|
$(7,962,100)
|
$-
|
|
December 31,
|
|
Deferred
Tax Assets
|
2016
|
2015
|
Net
operating loss carryforwards
|
$46,227,681
|
$39,190,436
|
Accruals
and other
|
902,546
|
691,341
|
Capital
loss carryforwards
|
12,395
|
-
|
Valuation
allowance
|
(47,086,442)
|
(39,862,626)
|
Net
deferred tax assets
|
56,180
|
19,151
|
Deferred
Tax Liabilities
|
|
|
IPR&D
|
-
|
(7,962,100)
|
Other
liabilities
|
(56,180)
|
(19,151)
|
Net
Deferred Tax Liabilities
|
$-
|
$(7,962,100)
|
|
Year
ended
December
31,
|
|
2015
|
|
(Unaudited)
|
Government
grant revenue
|
$49,286
|
Total
net revenue
|
49,286
|
|
|
Operating
expenses
|
|
General
and administrative
|
6,671,568
|
Research
and development
|
8,904,787
|
Loss
on impairment of long-lived assets
|
1,034,863
|
Total
operating expenses
|
16,611,218
|
|
|
Net
operating loss
|
16,561,932
|
|
|
Interest
expense
|
3,851
|
Other
(income) expense
|
(633,632)
|
Net
loss
|
$15,932,151
|
|
|
Unrealized
(gain) loss on marketable securities
|
(29,332)
|
Total
comprehensive loss
|
$15,902,819
|
|
|
Net
loss per share, basic and diluted
|
$(0.57)
|
Weighted
average number of common shares outstanding, basic and
diluted
|
28,119,538
|
|
Eight months ended December 31,
|
|
2014
|
|
(Unaudited)
|
Operating
expenses
|
|
General
and administrative
|
$4,439,842
|
Research
and development
|
4,240,467
|
Total
operating expenses
|
8,680,309
|
|
|
Net
operating loss
|
8,680,309
|
|
|
Interest
expense
|
46,736
|
Other
(income) expense
|
(509,420)
|
Net
loss
|
$8,217,625
|
|
|
Unrealized
loss (gain) on marketable securities
|
158,775
|
Total
comprehensive loss
|
$8,376,400
|
|
|
Net
loss per share, basic
|
$(0.29)
|
Weighted
average number of common shares outstanding, basic and
diluted
|
28,057,659
|
|
TENAX THERAPEUTICS,
INC.
|
|
|
|
|
|
|
Date: March 16,
2017
|
By:
|
/s/
John P.
Kelley
|
|
|
|
John P.
Kelley
|
|
|
|
Chief
Executive Officer
(Principal
Executive Officer)
|
|
Name
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
/s/
John P. Kelley
|
|
Chief Executive Officer and Director |
|
|
|
/s/
John P. Kelley
John
P. Kelley
|
|
(Principal
Executive Officer)
|
|
March
16, 2017
|
|
|
|
|
|
|
|
/s/
Michael B. Jebsen
|
|
Chief Financial Officer |
|
|
|
/s/
Michael B. Jebsen
Michael B.
Jebsen
|
|
(Principal
Financial Officer and Principal Accounting Officer)
|
|
March
16, 2017
|
|
|
|
|
|
||
/s/ Ronald R. Blanck, DO |
|
Director |
|
|
|
Ronald
R. Blanck, DO
|
|
|
|
March
16, 2017
|
|
|
|
|
|
|
|
/s/ Gregory
Pepin
|
|
Director |
|
|
|
Gregory
Pepin
|
|
|
|
March
16, 2017
|
|
|
|
|
|
|
|
/s/
James Mitchum
|
|
Director |
|
|
|
James
Mitchum
|
|
|
|
March
16, 2017
|
|
|
|
|
|
|
|
/s/
Chris A. Rallis
|
|
Director |
|
|
|
Chris
A. Rallis
|
|
|
|
March
16, 2017
|
|
|
|
|
|
|
|
/s/
Anthony DiTonno
|
|
Director |
|
|
|
Anthony
DiTonno
|
|
|
|
March
16, 2017
|
|
|
|
|
|
|
|
/s/
Gerald Proehl
|
|
Director |
|
|
|
Gerald
Proehl
|
|
|
|
March
16, 2017
|
Exhibit No.
|
|
Exhibits Required by Item 601 of Regulation S-K
|
2.1
|
|
Agreement and Plan
of Merger dated April 28, 2008 (1)
|
|
|
|
2.2
|
|
Asset
Purchase Agreement by and between Oxygen Biotherapeutics, Inc.,
Life Newco, Inc., Phyxius Pharma, Inc., and the stockholders of
Phyxius Pharma, Inc. dated October 21, 2013 (33)
|
|
|
|
3.1
|
|
Certificate of
Incorporation (1)
|
|
|
|
3.2
|
|
Certificate of
Amendment of the Certificate of Incorporation (14)
|
|
|
|
3.3
|
|
Certificate of
Amendment of the Certificate of Incorporation (30)
|
|
|
|
3.4
|
|
Certificate of
Amendment of the Certificate of Incorporation (37)
|
|
|
|
3.5
|
|
Third
Amended and Restated Bylaws (39)
|
|
|
|
4.1
|
|
Specimen Stock
Certificate (19)
|
|
|
|
10.1
|
|
Agreement with
Leland C. Clark, Jr., Ph.D. dated November 20, 1992 with
amendments, Assignment of Intellectual Property/ Employment
(2)
|
|
|
|
10.2
|
|
Agreement between
the Registrant and Keith R. Watson, Ph.D. Assignment of Invention
(2)
|
|
|
|
10.3
|
|
Children’s
Hospital Research Foundation License Agreement dated February 28,
2001 (2)
|
|
|
|
10.4
|
|
Exclusive License
Agreement with Virginia Commonwealth University dated May 22, 2008
(9)
|
|
|
|
10.5
|
|
Amendment no. 1 to
the Exclusive License Agreement with Virginia Commonwealth
University Intellectual Property Foundation (10)
|
|
|
|
10.6
|
|
Amendment no. 2 to
the Exclusive License Agreement with Virginia Commonwealth
University Intellectual Property Foundation (10)
|
|
|
|
10.7
|
|
Form
of Option issued to Executive Officers and Directors (2)
+
|
|
|
|
10.8
|
|
Form
of Option issued to Employees (2) +
|
|
|
|
10.9
|
|
Form
of Option Agreement with Form of Notice of Grant * +
|
|
|
|
10.10
|
|
Form
of Inducement Stock Option Award (40) +
|
|
|
|
10.11
|
|
Restricted Stock
Award Agreement (22) +
|
|
|
|
10.12
|
|
Form
of Warrant issued to Unsecured Note Holders 2006-2007
(3)
|
|
|
|
10.13
|
|
Form
of Convertible Note – 2008 (4)
|
|
|
|
10.14
|
|
Form
of Warrant issued to Convertible Note Holders (4)
|
|
|
|
10.15
|
|
Form of
Purchase Agreement – US Purchase (without exhibits, which are
included as exhibits 10.16 and 10.17, above) (4)
|
|
|
|
10.16
|
|
Form of
Purchase Agreement – Non-US Purchase (without exhibits, which
are included as exhibits 10.16 and 10.17, above) (4)
|
|
|
|
10.17
|
|
Form of
Purchase Agreement – US Note Exchange (without exhibits,
which are included as exhibits 10.16 and 10.17, above)
(4)
|
|
|
|
10.18
|
|
Form of
Purchase Agreement – Non-US Note Exchange (without exhibits,
which are included as exhibits 10.16 and 10.17, above)
(4
|
|
|
|
10.19
|
|
Form of
Warrant issued to Financing Consultants (5)
|
|
|
|
10.20
|
|
1999
Amended Stock Plan (amended 2008) (5) +
|
|
|
|
10.21
|
|
Amendment No. 1 to
Oxygen Biotherapeutics, Inc. 1999 Amended Stock Plan (38)
+
|
|
|
|
10.22
|
|
Amendment No. 2 to
Oxygen Biotherapeutics, Inc. 1999 Amended Stock Plan (38)
+
|
|
|
|
10.23
|
|
2016
Stock Incentive Plan (41) +
|
|
|
|
10.24
|
|
Employment
Agreement with John Kelley dated November 13, 2013 (34)
+
|
|
|
|
10.25
|
|
First
Amendment to Employment Agreement with John Kelley dated June 18,
2015 (36) +
|
|
|
|
10.26
|
|
Amended
and Restated Employment Agreement with Michael B. Jebsen dated May
19, 2011 (20) +
|
|
|
|
10.27
|
|
Second
Amended and Restated Employment Agreement with Michael Jebsen dated
November 13, 2013 (34) +
|
|
|
|
10.28
|
|
First
Amendment to Second Amended and Restated Employment Agreement with
Michael Jebsen dated June 18, 2015 (36) +
|
|
|
|
10.29
|
|
Form of
Indemnification Agreement (20) +
|
|
|
|
10.30
|
|
Description of
Non-Employee Director Compensation (25) +
|
|
|
|
10.31
|
|
Description of
Non-Employee Director Compensation, effective June 15, 2015 (39)
+
|
|
|
|
10.32
|
|
Securities Purchase
Agreement (including exhibits) between Oxygen Biotherapeutics and
Vatea Fund, Segregated Portfolio dated June 8, 2009
(6)
|
|
|
|
10.33
|
|
Amendment no. 1 to
the Securities Purchase Agreement between Oxygen Biotherapeutics
and Vatea Fund, Segregated Portfolio (11)
|
|
|
|
10.34
|
|
Amendment no. 2 to
the Securities Purchase Agreement between Oxygen Biotherapeutics
and Vatea Fund, Segregated Portfolio (12)
|
|
|
|
10.35
|
|
Amendment no. 3 to
the Securities Purchase Agreement between Oxygen Biotherapeutics
and Vatea Fund, Segregated Portfolio (23)
|
|
|
|
10.36
|
|
Form of
Exchange Agreement dated July 20, 2009 (7)
|
|
|
|
10.37
|
|
Waiver—Convertible
Note (10)
|
|
|
|
10.38
|
|
Amendment—Common
Stock Purchase Warrant (10)
|
|
|
|
10.39
|
|
Form of
Warrant for May 2010 offering (13)
|
|
|
|
10.40
|
|
Form of
Subscription Agreement for May 2010 offering (13)
|
|
|
|
10.41
|
|
Warrant
issued to Blaise Group International, Inc. (14)
|
|
|
|
10.41
|
|
Note
Purchase Agreement between Oxygen Biotherapeutics and JP SPC 1
Vatea, Segregated Portfolio (15)
|
|
|
|
10.42
|
|
Form of
Promissory Note under Note Purchase Agreement between Oxygen
Biotherapeutics and JP SPC 1 Vatea, Segregated Portfolio
(15)
|
|
|
|
10.44
|
|
First
Amendment to Note Purchase Agreement between Oxygen Biotherapeutics
and JP SPC 1 Vatea, Segregated Portfolio (17)
|
|
|
|
10.45
|
|
Lease
Agreement for North Carolina corporate office (18)
|
|
|
|
10.46
|
|
Standard Industrial
Lease relating to OBI’s California facility (12)
|
|
|
|
10.47
|
|
Task
Order between the Company and NextPharma, dated November 15, 2011
(23)
|
|
|
|
10.48
|
|
Form of
Convertible Note for July 2011 offering (included in exhibit
10.48)
|
|
|
|
10.49
|
|
Form of
Warrant for July 2011 offering (included in exhibit
10.48)
|
|
|
|
10.50
|
|
Form of
Convertible Note and Warrant Purchase Agreement for July 2011
offering (21)
|
|
|
|
10.51
|
|
Placement Agency
Agreement, dated December 8, 2011, between Oxygen Biotherapeutics,
Inc. and William Blair & Company, L.L.C., as placement agent
(24)
|
|
|
|
10.52
|
|
Form of
Warrant for December 2011 offering (24)
|
|
|
|
10.53
|
|
Form of
Securities Purchase Agreement for December 2011 offering
(24)
|
|
|
|
10.54
|
|
Form of
Amendment Agreement for December 2011 offering (26)
|
|
|
|
10.55
|
|
Form of
Lock-up Agreement for December 2011 offering (24)
|
|
|
|
10.56
|
|
Form of
Amendment Agreement for December 2011 offering (27)
|
|
|
|
10.57
|
|
Fluoromed Supply
Agreement (28)
|
|
|
|
10.58
|
|
Form of
Warrant for February 2013 offering (29)
|
|
|
|
10.59
|
|
Placement Agency
Agreement, dated February 22, 2013, between Oxygen Biotherapeutics,
Inc. and Ladenburg Thalmann & Co. Inc., as placement agent
(29)
|
|
|
|
10.60
|
|
Form of
Securities Purchase Agreement for February 2013 offering
(29)
|
|
|
|
10.61
|
|
Form of
Registration Rights Agreement for February 2013 offering
(29)
|
|
|
|
10.62
|
|
Form of
Warrant Exchange Agreement, dated February 21, 2013, between Oxygen
Biotherapeutics, Inc. and certain institutional investors party to
the Securities Purchase Agreement for December 2011 Offering
(29)
|
|
|
|
10.63
|
|
License
and Supply Agreement dated February 5, 2013, between Oxygen
Biotherapeutics, Inc. and Valor SA (38)
|
|
|
|
10.64
|
|
Settlement
Agreement, dated March 14, 2013, among Oxygen Biotherapeutics,
Inc., Tenor Opportunity Master Fund Ltd., Aria Opportunity Fund,
Ltd., and Parsoon Opportunity Fund, Ltd. (38)
|
|
|
|
10.65
|
|
Form of
Warrant for Series C 8% Convertible Preferred Stock Offering
(31)
|
|
|
|
10.66
|
|
Placement Agency
Agreement, dated July 21, 2013, between Oxygen Biotherapeutics,
Inc. and Ladenburg Thalmann & Co. Inc., as placement agent
(31)
|
|
|
|
10.67
|
|
Form of
Securities Purchase Agreement for Series C 8% Convertible Preferred
Stock Offering (31)
|
|
|
|
10.68
|
|
Lock-Up
Agreement, dated August 16, 2013, between Oxygen Biotherapeutics,
Inc. and JPS SPC 3 obo OXBT Fund, SP (32)
|
|
|
|
10.59
|
|
Warrant
for Series D 8% Convertible Preferred Stock Offering
(32)
|
|
|
|
10.70
|
|
Form of
February Warrant Amendment (32)
|
|
|
|
10.71
|
|
Form of
July Warrant Amendment (32)
|
|
|
|
10.72
|
|
Form of
Securities Purchase Agreement for Series D 8% Convertible Preferred
Stock Offering (33)
|
|
|
|
10.73
|
|
License
Agreement dated September 20, 2013 by and between Phyxius Pharma,
Inc. and Orion Corporation (35)
|
|
|
|
10.74
|
|
Amendment to Common
Stock Purchase Agreement (35)
|
|
|
|
10.75
|
|
Sales
Agreement dated as of February 23, 2015, between Tenax
Therapeutics, Inc. and Cowen and Company, LLC(40)
|
|
|
|
10.76
|
|
First
Amendment to Lease Agreement for North Carolina corporate office
(42)
|
|
|
|
21.1
|
|
Subsidiaries of
Tenax Therapeutics, Inc.(40)
|
|
|
|
23.1
|
|
Consent
of Independent Registered Accounting Firm*
|
|
|
|
31.1
|
|
Certification of
Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002*
|
|
|
|
31.2
|
|
Certification of
Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002*
|
|
|
|
32.1
|
|
Certification of
Chief Executive Officer Pursuant to 18 U.S.C. Section
1350*
|
|
|
|
32.2
|
|
Certification of
Chief Financial Officer Pursuant to 18 U.S.C. Section
1350*
|
|
|
|
101.INS
|
|
XBRL
Instance Document
|
|
|
|
101.SCH
|
|
XBRL
Taxonomy Extension Schema Document
|
|
|
|
101.CAL
|
|
XBRL
Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF
|
|
XBRL
Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB
|
|
XBRL
Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE
|
|
XBRL
Taxonomy Extension Presentation Linkbase Document
|
(1)
|
These
documents were filed as exhibits to the current report on Form 8-K
filed by Tenax Therapeutics with the SEC on June 30, 2008, and
are incorporated herein by this reference.
|
(2)
|
These
documents were filed as exhibits to the annual report on Form 10-K
filed by Tenax Therapeutics with the SEC on August 13, 2004,
and are incorporated herein by this reference.
|
(3)
|
These
documents were filed as exhibits to the current report on Form 8-K
filed by Tenax Therapeutics with the SEC on September 6, 2006,
and are incorporated herein by this reference.
|
(4)
|
These
documents were filed as exhibits to the quarterly report on Form
10-Q filed by Tenax Therapeutics with the SEC on March 21, 2008,
and are incorporated herein by this reference.
|
(5)
|
These
documents were filed as exhibits to the annual report on Form 10-K
filed by Tenax Therapeutics with the SEC on August 13, 2008,
and are incorporated herein by this reference.
|
(6)
|
This
document was filed as an exhibit to the current report on Form 8-K
filed by Tenax Therapeutics with the SEC on June 8, 2009, and
is incorporated herein by this reference.
|
(7)
|
This
document was filed as an exhibit to the current report on Form 8-K
filed by Tenax Therapeutics with the SEC on July 21, 2009, and
is incorporated herein by this reference.
|
(9)
|
This
document was filed as an exhibit to the quarterly report on Form
10-Q filed by Tenax Therapeutics with the SEC on September 22,
2008, and is incorporated herein by this reference.
|
(10)
|
These
documents were filed as exhibits to the quarterly report on Form
10-Q filed by Tenax Therapeutics with the SEC on March 19, 2010,
and are incorporated herein by this reference.
|
(11)
|
This
document was filed as an exhibit to the current report on Form 8-K
filed by Tenax Therapeutics with the SEC on September 2, 2009,
and is incorporated herein by this reference.
|
(12)
|
These
documents were filed as exhibits to the current report on Form 8-K
filed by Tenax Therapeutics with the SEC on April 28, 2010, and are
incorporated herein by this reference.
|
(13)
|
These
documents were filed as exhibits to the current report on Form 8-K
filed by Tenax Therapeutics with the SEC on May 4, 2010, and are
incorporated herein by this reference.
|
(14)
|
These
documents were filed as exhibits to the current report on Form 8-K
filed by Tenax Therapeutics with the SEC on November 13, 2009, and
are incorporated herein by reference.
|
(15)
|
These
documents were filed as exhibits to the current report on Form 8-K
filed by Tenax Therapeutics with the SEC on October 13, 2010, and
are incorporated herein by this reference.
|
(16)
|
These
documents were filed as exhibits to the quarterly report on Form
10-Q filed by Tenax Therapeutics with the SEC on December 9, 2010,
and are incorporated herein by this reference.
|
(17)
|
This
document was filed as an exhibit to the current report on Form 8-K
filed by Tenax Therapeutics with the SEC on December 30, 2010, and
is incorporated herein by this reference.
|
(18)
|
These
documents were filed as exhibits to the quarterly report on Form
10-Q filed by Tenax Therapeutics with the SEC on March 21, 2011,
and are incorporated herein by this reference.
|
(19)
|
These
documents were filed as exhibits to the annual report on Form 10-K
filed by Tenax Therapeutics with the SEC on July 23, 2010, and are
incorporated herein by this reference.
|
(20)
|
This
document was filed as an exhibit to the annual report on Form 10-K
filed by Tenax Therapeutics with the SEC on July 15, 2011, and is
incorporated herein by this reference.
|
(21)
|
This document was filed as an exhibit to the current report on Form
8-K/A filed by Tenax Therapeutics with the SEC on July 1, 2011, and is incorporated
herein by this reference.
|
(22)
|
This
document was filed as an exhibit to the quarterly report on Form
10-Q filed by Tenax Therapeutics with the SEC on December 15, 2011,
and is incorporated herein by this reference.
|
(23)
|
These
documents were filed as exhibits to the current report on Form 8-K
filed by Tenax Therapeutics with the SEC on November 16, 2011, and
are incorporated herein by this reference.
|
(24)
|
These
documents were filed as exhibits to the current report on Form 8-K
filed by Tenax Therapeutics with the SEC on December 9, 2011, and
are incorporated herein by this reference.
|
(25)
|
This
document was filed as an exhibit to the quarterly report on Form
10-Q filed by Tenax Therapeutics with the SEC on March 15, 2012,
and is incorporated herein by this reference.
|
(26)
|
This
document was filed as an exhibit to the current report on Form 8-K
filed by Tenax Therapeutics with the SEC on June 15, 2012, and is
incorporated herein by this reference.
|
(27)
|
This
document was filed as an exhibit to the current report on Form 8-K
filed by Tenax Therapeutics with the SEC on June 15, 2012, and is
incorporated herein by reference.
|
(28)
|
These
documents were filed as exhibits to the annual report on Form 10-K
filed by Tenax Therapeutics with the SEC on July 25, 2012, and are
incorporated herein by this reference.
|
(29)
|
These
documents were filed as exhibits to the current report on Form 8-K
filed by Tenax Therapeutics with the SEC on February 25, 2013, and
are incorporated herein by this reference.
|
(30)
|
This document was filed as an exhibit to the current report on Form
8-K filed by Tenax Therapeutics with the SEC on May 15, 2013, and is incorporated
herein by this reference.
|
(31)
|
These
documents were filed as exhibits to the current report on Form 8-K
filed by Tenax Therapeutics with the SEC on July 25, 2013, and are
incorporated herein by reference.
|
(32)
|
These
documents were filed as exhibits to the current report on Form 8-K
filed by Tenax Therapeutics with the SEC on August 26, 2013, and
are incorporated herein by reference.
|
(33)
|
This
document was filed as an exhibit to the current report on Form 8-K
filed by Tenax Therapeutics with the SEC on October 25, 2013, and
is incorporated herein by reference.
|
(34)
|
These
documents were filed as exhibits to the current report on Form 8-K
filed by Tenax Therapeutics with the SEC on November 19, 2013, and
are incorporated herein by reference
|
(35)
|
These
documents were filed as exhibits to the quarterly report on Form
10-Q filed by Tenax Therapeutics with the SEC on March 17, 2014,
and are incorporated herein by this reference.
|
(36)
|
These
documents were filed as exhibits to the current report on Form 8-K
filed by Tenax Therapeutics with the SEC on June 19, 2015, and are
incorporated herein by reference.
|
(37)
|
This
document was filed as an exhibit to the quarterly report on Form
10-Q filed by Tenax Therapeutics with the SEC on December 15, 2014,
and is incorporated herein by this reference.
|
(38)
|
These
documents were filed as exhibits to the annual report on Form 10-K
filed by Tenax Therapeutics with the SEC on July 29, 2014, and are
incorporated herein by this reference.
|
(39)
|
These
documents were filed as exhibits to the quarterly report on Form
10-Q filed by Tenax Therapeutics with the SEC on September 9, 2015,
and are incorporated herein by this reference.
|
(40)
|
These
documents were filed as exhibits to the annual report on Form 10-K
filed by Tenax Therapeutics with the SEC on July 14, 2015, and are
incorporated herein by this reference.
|
(41)
|
This
document was filed as an exhibit to the quarterly report on Form
10-Q filed by Tenax Therapeutics with the SEC on August 9, 2016,
and is incorporated herein by this reference.
|
(42)
|
This
document was filed as an exhibit to the transition report on Form
10-KT filed by Tenax Therapeutics with the SEC on March 14, 2016,
and is incorporated herein by this reference.
|
*
|
Filed
herewith.
|
+
|
Management
contract or compensatory plan or arrangement.
|
Optionee |
Tenax Therapeutics, Inc. |
|
|
|
|
|
|
|
|
________________________ | ________________________ |
Name: |
By: |
|
Title: |
|
____________________________________
Signature
|
|
TENAX THERAPEUTICS, INC.
|
|
|
|
|
|
|
Date:
March 16, 2017
|
By:
|
/s/
John P.
Kelley
|
|
|
|
John P.
Kelley
|
|
|
|
Chief Executive Officer
(Principal Executive Officer)
|
|
|
TENAX THERAPEUTICS, INC.
|
|
|
|
|
|
|
Date:
March 16, 2017
|
By:
|
/s/
Michael
B. Jebsen
|
|
|
|
Michael
B. Jebsen
|
|
|
|
Chief Financial Officer
(Principal Financial Officer)
|
|
|
|
|
|
Date:
March 16, 2017
|
By:
|
/s/
John
P. Kelley
|
|
|
|
John
P. Kelley
|
|
|
|
Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
|
Date:
March 16, 2017
|
By:
|
/s/
Michael
B. Jebsen
|
|
|
|
Michael B.
Jebsen
|
|
|
|
Chief Financial Officer
(Principal Financial Officer)
|
|
E)ZH#(TJ*5=/,\EU/,SJ?\ 6$$#!/3BJEIJ
M\]PNDH8;J,RLHDD=,*_[MB>?<@'\*W8[>.&+RHUP@Z#-,^QP".! @VP$&,9/
MRX!7^1-1ROH:<\;MV,.6>635[V-GU+:DJ(GV8#8H*(>?Q))^M.U6\$&IE9[J
M]B@6W$G^CQE\'
Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Mar. 09, 2017 |
Jun. 30, 2016 |
|
Document And Entity Information | |||
Entity Registrant Name | TENAX THERAPEUTICS, INC. | ||
Entity Central Index Key | 0000034956 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 68,589,804 | ||
Entity Common Stock, Shares Outstanding | 281,200,21. | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2016 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Stockholders' equity | ||
Preferred stock, undesignated, authorized | 10,000,000 | 10,000,000 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, authorized | 400,000,000 | 400,000,000 |
Common stock, issued | 28,120,021 | 28,119,694 |
Common stock, outstanding | 28,120,021 | 28,119,694 |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) |
8 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2016 |
Apr. 30, 2015 |
Apr. 30, 2014 |
|
AvailableForSaleSecuritiesEstimatedFairValue | ||||
Product Revenue | $ 0 | $ 0 | $ 0 | $ 25,731 |
Cost of sales | 0 | 0 | 0 | 129,800 |
Net product revenue | 0 | 0 | 0 | (104,069) |
Government grant revenue | 0 | 0 | 49,286 | 262,995 |
Total net revenue | 0 | 0 | 49,286 | 158,926 |
Operating expenses | ||||
General and administrative | 3,940,631 | 6,245,958 | 7,170,779 | 13,773,325 |
Research and development | 6,484,867 | 13,139,681 | 6,660,387 | 2,996,721 |
Loss on impairment of long-lived assets | 0 | 33,265,100 | 1,034,863 | 0 |
Total operating expenses | 10,425,498 | 52,650,739 | 14,866,029 | 16,770,046 |
Net operating loss | 10,425,498 | 52,650,739 | 14,816,743 | 16,611,120 |
Interest expense | 1,507 | 0 | 49,081 | 2,212,283 |
Other (income) expense | (359,041) | (764,735) | (784,012) | 718,436 |
Income tax benefit | 0 | (7,962,100) | 0 | 0 |
Net loss | 10,067,964 | 43,923,904 | 14,081,812 | 19,541,839 |
Unrealized loss (gain) on marketable securities | 156,160 | (110,724) | (26,718) | 0 |
Total comprehensive loss | 10,224,124 | 43,813,180 | 14,055,094 | 19,541,839 |
Reconciliation of net loss to net loss attributable to common stockholders | ||||
Net loss | 10,067,964 | 43,923,904 | 14,081,812 | 19,541,839 |
Preferred stock dividend | 0 | 0 | 0 | 5,803,362 |
Net loss attributable to common stockholders | $ 10,067,964 | $ 43,923,904 | $ 14,081,812 | $ 25,345,201 |
Net loss per share, basic and diluted | $ (0.36) | $ (1.56) | $ (0.50) | $ (2.71) |
Weighted average number of common shares outstanding, basic and diluted | 28,119,597 | 28,119,835 | 28,077,963 | 9,362,031 |
A. DESCRIPTION OF BUSINESS |
12 Months Ended |
---|---|
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
NOTE A-DESCRIPTION OF BUSINESS | Description of Business—Tenax Therapeutics (the “Company”) was originally formed as a New Jersey corporation in 1967 under the name Rudmer, David & Associates, Inc., and subsequently changed its name to Synthetic Blood International, Inc. On June 17, 2008, the stockholders of Synthetic Blood International approved the Agreement and Plan of Merger dated April 28, 2008, between Synthetic Blood International and Oxygen Biotherapeutics, Inc., a Delaware corporation. Oxygen Biotherapeutics was formed on April 17, 2008, by Synthetic Blood International to participate in the merger for the purpose of changing the state of domicile of Synthetic Blood International from New Jersey to Delaware. Certificates of Merger were filed with the states of New Jersey and Delaware, and the merger was effective June 30, 2008. Under the Plan of Merger, Oxygen Biotherapeutics was the surviving corporation and each share of Synthetic Blood International common stock outstanding on June 30, 2008 was converted to one share of Oxygen Biotherapeutics common stock. On September 19, 2014, the Company changed its name to Tenax Therapeutics, Inc.
On October 18, 2013, the Company created a wholly owned subsidiary, Life Newco, Inc., a Delaware corporation (“Life Newco”), to acquire certain assets of Phyxius Pharma, Inc., a Delaware corporation (“Phyxius”), pursuant to an Asset Purchase Agreement, dated October 21, 2013 (the “Asset Purchase Agreement”), by and among the Company, Life Newco, Phyxius and the stockholders of Phyxius (the “Phyxius Stockholders”). As further discussed in Note D below, on November 13, 2013, under the terms and subject to the conditions of the Asset Purchase Agreement, Life Newco acquired certain assets, including a license granting Life Newco an exclusive, sublicenseable right to develop and commercialize pharmaceutical products containing Levosimedan, 2.5 mg/ml concentrate for solution for infusion / 5ml vial in the United States and Canada.
Reverse Stock Split
The Company initiated a 1-for-20 reverse stock split effective May 10, 2013. All shares and per share amounts in these Consolidated Financial Statements and notes thereto have been retroactively adjusted to give effect to the reverse stock split. |
B. SUMMARY OF CRITICAL ACCOUNTING POLICIES |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NOTE B-SUMMARY OF CRITICAL ACCOUNTING POLICIES | Use of Estimates
The preparation of the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
On an ongoing basis, management reviews its estimates to ensure that these estimates appropriately reflect changes in the Company’s business and new information as it becomes available. If historical experience and other factors used by management to make these estimates do not reasonably reflect future activity, the Company’s results of operations and financial position could be materially impacted.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts and transactions of Tenax Therapeutics, Inc. and Life Newco, Inc. All material intercompany transactions and balances have been eliminated in consolidation.
Goodwill
Acquired businesses are accounted for using the acquisition method of accounting, which requires that assets acquired, including identifiable intangible assets, and liabilities assumed be recorded at fair value, with limited exceptions. Any excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. If the acquired net assets do not constitute a business, the transaction is accounted for as an asset acquisition and no goodwill is recognized.
Goodwill is reviewed for impairment on an annual basis or more frequently if events or circumstances indicate potential impairment. The Company’s goodwill evaluation is based on both qualitative and quantitative assessments regarding the fair value of goodwill relative to its carrying value. The Company assesses qualitative factors to determine if its sole reporting unit’s fair value is more likely than not to exceed its carrying value, including goodwill. In the event the Company determines that it is more likely than not that its reporting unit’s fair value is less than its carrying amount, quantitative testing is performed comparing recorded values to estimated fair values. If the fair value exceeds the carrying value, goodwill is not impaired. If the carrying value exceeds the fair value, an impairment charge is recognized through a charge to operations based upon the excess of the carrying value of goodwill over the implied fair value.
During the year ended December 31, 2016, the Company recognized an impairment charge of $33.3 million related to our levosimendan product in Phase III clinical trial, which represents approximately $22 million for in-process research and development (“IPR&D”) assets and approximately $11.3 million for goodwill.
The LEVO-CTS trial was completed in December of 2016. Based on the data from the trial, levosimendan, given prophylactically prior to cardiac surgery to patients with reduced left ventricular function, had no effect on the co-primary outcomes. The study did not achieve statistically significant reductions in the dual endpoint of death or use of a mechanical assist device at 30 days, nor in the quad endpoint of death, myocardial infarction, need for dialysis, or use of a mechanical assist device at 30 days. Based on the results of the LEVO-CTS trial, the Company does not anticipate additional development of levosimendan for the treatment of LCOS in patients undergoing cardiac surgery. As of December 31, 2016, management determined the IPR&D asset, and corresponding Goodwill, was more than temporarily impaired.
There was no impairment to goodwill recognized during 2015 and 2014.
Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity date of three months or less, when acquired, to be cash equivalents.
Cash Concentration Risk
On July 21, 2010, the Wall Street Reform and Consumer Protection Act permanently increased the Federal Deposit Insurance Corporation (the “FDIC”) insurance limits to $250,000 per depositor per insured bank. The Company had cash balances of $9,362,812 and $2,908,446 uninsured by the FDIC as of December 31, 2016 and 2015, respectively.
Liquidity and Capital Resources
The Company has financed its operations since September 1990 through the issuance of debt and equity securities and loans from stockholders. The Company had total current assets of $13,628,175 and $20,560,353 and working capital of $7,428,937 and $15,958,723 as of December 31, 2016 and 2015, respectively. Cash resources, including the fair value of the Company’s available for sale marketable securities as of December 31, 2016 were approximately $21.9 million, compared to approximately $38.2 million as of December 31, 2015. The Company expects to continue to incur expenses related to development of levosimendan for heart failure and other potential indications, as well as identifying and developing other potential product candidates. Based on its resources at December 31, 2016, the Company believes that it has sufficient capital to fund its planned operations through the first half of calendar year 2018. However, the Company will need substantial additional financing in order to fund its operations beyond such period and thereafter until it can achieve profitability, if ever. The Company depends on its ability to raise additional funds through various potential sources, such as equity and debt financing, or to license its product candidates to another pharmaceutical company. The Company will continue to fund operations from cash on hand and through sources of capital similar to those previously described. The Company cannot assure that it will be able to secure such additional financing, or if available, that it will be sufficient to meet its needs. To the extent that the Company raises additional funds by issuing shares of its common stock or other securities convertible or exchangeable for shares of common stock, stockholders will experience dilution, which may be significant. In the event the Company raises additional capital through debt financings, the Company may incur significant interest expense and become subject to covenants in the related transaction documentation that may affect the manner in which the Company conducts its business. To the extent that the Company raises additional funds through collaboration and licensing arrangements, it may be necessary to relinquish some rights to its technologies or product candidates, or grant licenses on terms that may not be favorable to the Company. Any or all of the foregoing may have a material adverse effect on the Company’s business and financial performance.
Deferred financing costs
Deferred financing costs represent legal, due diligence and other direct costs incurred to raise capital or obtain debt. Direct costs include only “out-of-pocket” or incremental costs directly related to the effort, such as a finder’s fee and accounting and legal fees. These costs will be capitalized if the efforts are successful, or expensed when unsuccessful. Indirect costs are expensed as incurred. Deferred financing costs related to debt are amortized over the life of the debt. Deferred financing costs related to issuing equity are charged to Additional Paid-in Capital.
Derivative financial instruments
The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risk. Terms of convertible promissory note instruments and other convertible equity instruments are reviewed to determine whether or not they contain embedded derivative instruments that are required under FASB ASC 815, Derivatives and Hedging (“ASC 815”) to be accounted for separately from the host contract, and recorded on the balance sheet at fair value. The fair value of derivative liabilities, if any, is required to be revalued at each reporting date, with corresponding changes in fair value recorded in current period operating results.
Freestanding warrants issued by the Company in connection with the issuance or sale of debt and equity instruments are considered to be derivative instruments, and are evaluated and accounted for in accordance with the provisions of ASC 815.
Beneficial conversion and warrant valuation
In accordance with FASB ASC 470-20, Debt with Conversion and Other Options, the Company records a beneficial conversion feature (“BCF”) related to the issuance of convertible debt that have conversion features at fixed rates that are in-the-money when issued and the fair value of warrants issued in connection with those instruments. The BCF for the convertible instruments is recognized and measured by allocating a portion of the proceeds to warrants, based on their relative fair value, and as a reduction to the carrying amount of the convertible debt equal to the intrinsic value of the conversion feature. As described in Note F, the discount recorded in connection with the BCF and warrant valuation is recognized as non-cash interest expense and is amortized over the life of the convertible note.
Preclinical Study and Clinical Accruals
The Company estimates its preclinical study and clinical trial expenses based on the services received pursuant to contracts with several research institutions and contract research organizations (“CROs”) that conduct and manage preclinical and clinical trials on its behalf. The financial terms of the agreements vary from contract to contract and may result in uneven expenses and payment flows. Preclinical study and clinical trial expenses include the following:
Property and Equipment, Net
Property and equipment are stated at cost, subject to adjustments for impairment, less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the following estimated useful lives:
Maintenance and repairs are charged to expense as incurred, improvements to leased facilities and equipment are capitalized.
Revenue Recognition
Revenues from merchandise sales are recognized upon transfer of ownership, including passage of title to the customer and transfer of the risk of loss related to those goods. Revenues are reported on a net sales basis, which is computed by deducting from gross sales the amount of actual product returns received, discounts, incentive arrangements with retailers and an amount established for anticipated product returns. The Company’s practice is to accept product returns from retailers only if properly requested, authorized and approved.
Revenues from a cost-reimbursement grant sponsored by the United States Army (“Grant Revenue”), are recognized as milestones under the Grant program are achieved. Grant Revenue is earned through reimbursements for the direct costs of labor, travel, and supplies, as well as the pass-through costs of subcontracts with third-party CROs.
Research and Development Costs
Research and development costs include, but are not limited to, (i) expenses incurred under agreements with CROs and investigative sites, which conduct our clinical trials and a substantial portion of our preclinical studies; (ii) the cost of manufacturing and supplying clinical trial materials; (iii) payments to contract service organizations, as well as consultants; (iv) employee-related expenses, which include salaries and benefits; and (v) facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent and maintenance of facilities and equipment, depreciation of leasehold improvements, equipment, laboratory and other supplies. All research and development expenses are expensed as incurred.
Income Taxes
Deferred tax assets and liabilities are recorded for differences between the financial statement and tax bases of the assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is recorded for the amount of income tax payable or refundable for the period increased or decreased by the change in deferred tax assets and liabilities during the period.
Stock-Based Compensation
The Company accounts for stock based compensation in accordance with ASC 718 Compensation — Stock Compensation, which requires the measurement and recognition of compensation expense for all stock-based payment awards granted, modified and settled to our employees and directors. The Company chose the “straight-line” attribution method for allocating compensation costs of each stock option on a straight-line basis over the requisite service period using the Black-Scholes Option Pricing Model to calculate the grant date fair value.
Loss Per Share
Basic loss per share, which excludes antidilutive securities, is computed by dividing net loss by the weighted-average number of common shares outstanding for that particular period. In contrast, diluted loss per share considers the potential dilution that could occur from other equity instruments that would increase the total number of outstanding shares of common stock. Such amounts include shares potentially issuable under outstanding options, restricted stock and warrants.
The following outstanding options, restricted stock grants, convertible note shares and warrants were excluded from the computation of basic and diluted net loss per share for the periods presented because including them would have had an anti-dilutive effect.
Operating Leases
The Company maintains operating leases for its office and laboratory facilities. The lease agreements may include rent escalation clauses and tenant improvement allowances. The Company recognizes scheduled rent increases on a straight-line basis over the lease term beginning with the date the company takes possession of the leased space. Differences between rental expense and actual rental payments are recorded as deferred rent liabilities and are included in “Other liabilities” on the consolidated balance sheets.
Recent Accounting Pronouncements
In January 2017, the Financial Accounting Standards Board (the “FASB”), issued a new accounting standard that provides guidance for evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The guidance provides a screen to determine when an integrated set of assets and activities, or a set, does not qualify to be a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in an identifiable asset or a group of similar identifiable assets, the set is not a business. If the screen is not met, the guidance requires a set to be considered a business to include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs and removes the evaluation as to whether a market participant could replace the missing elements. The new standard will be effective for the Company on January 1, 2018 and will be adopted on a prospective basis. Early adoption is permitted. The Company is currently evaluating the effect that the standard will have on its consolidated financial statements and related disclosures.
In August 2016, the FASB issued a new accounting standard that clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows where diversity in practice exists. The new standard is effective for the Company in its first quarter of fiscal 2018 and earlier adoption is permitted. The Company is currently evaluating the effect that the updated standard will have on its consolidated financial statements and related disclosures.
In June 2016, the FASB issued a new accounting standard that amends how credit losses are measured and reported for certain financial instruments that are not accounted for at fair value through net income. This new standard will require that credit losses be presented as an allowance rather than as a write-down for available-for-sale debt securities and will be effective for interim and annual reporting periods beginning January 1, 2020, with early adoption permitted, but not earlier than annual reporting periods beginning January 1, 2019. A modified retrospective approach is to be used for certain parts of this guidance, while other parts of the guidance are to be applied using a prospective approach. The Company is currently evaluating the impact that this new standard will have on its consolidated financial statements and related disclosures.
In March 2016, the FASB issued a new accounting standard intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. The new guidance includes provisions to reduce the complexity related to income taxes, statement of cash flows, and forfeitures when accounting for share-based payment transactions. The new standard is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted. The Company does not believe adoption of this standard will have a material impact on its consolidated financial statements and related disclosures .
In May 2014, the FASB issued a new accounting standard that supersedes nearly all existing revenue recognition guidance under GAAP. The new standard is principles-based and provides a five-step model to determine when and how revenue is recognized. The core principle of the new standard is that revenue should be recognized when a company transfers promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. In March 2016, the FASB issued a new standard to clarify the implementation guidance on principal versus agent considerations, and in April 2016, the FASB issued a new standard to clarify the implementation guidance on identifying performance obligations and licensing. The new standard also requires disclosure of qualitative and quantitative information surrounding the amount, nature, timing and uncertainty of revenues and cash flows arising from contracts with customers. In July 2015, the FASB agreed to defer the effective date of the standard from annual periods beginning after December 15, 2016, to annual periods beginning after December 15, 2017, with an option that permits companies to adopt the standard as early as the original effective date. Early application prior to the original effective date is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company has not yet selected a transition method and the Company does not believe adoption of this standard will have a material impact on its consolidated financial statements and related disclosures.
In February 2016, the FASB issued a new accounting standard intended to improve financial reporting regarding leasing transactions. The new standard will require the Company to recognize on the balance sheet the assets and liabilities for the rights and obligations created by all leased assets. The new standard will also require it to provide enhanced disclosures designed to enable users of financial statements to understand the amount, timing, and uncertainty of cash flows arising from all leases, operating and capital, with lease terms greater than 12 month. The new standard is effective for financial statements beginning after December 15, 2018, and interim periods within those annual periods. Early adoption is permitted. See Note H for the Company’s current lease commitments. The Company is currently evaluating the impact that this new standard will have on its financial statements and related disclosures.
In January 2016, the FASB issued a new accounting standard that will enhance the Company’s reporting for financial instruments. The new standard is effective for financial statements issued for annual periods beginning after December 15, 2017, and interim periods within those annual periods. Earlier adoption is permitted for interim and annual reporting periods as of the beginning of the fiscal year of adoption. The Company does not believe the adoption of this standard will have a material impact on its consolidated financial statements.
In November 2015, the FASB issued a new accounting standard that changes the balance sheet classifications of deferred income taxes. This standard amends existing guidance to require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. It is effective for annual reporting periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted. The Company does not expect adoption of this standard will have a material impact on its consolidated financial statements.
In August 2014, the FASB issued a new accounting standard that will require management to assess and evaluate whether conditions or events exist, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements issue date. It is effective for annual periods ending after December 15, 2016 and for annual and interim periods thereafter; early adoption is permitted. The adoption of this new standard did not have a material effect on the Company’s consolidated financial statements.
Fair Value
The Company determines the fair value of its financial assets and liabilities in accordance with the FASB Accounting Standards Codification (“ASC”) 820 Fair Value Measurements. The Company’s balance sheet includes the following financial instruments: cash and cash equivalents, investments in marketable securities, short-term notes payable, and warrant liabilities. The Company considers the carrying amount of its cash and cash equivalents and short-term notes payable to approximate fair value due to the short-term nature of these instruments.
Accounting for fair value measurements involves a single definition of fair value, along with a conceptual framework to measure fair value, with a fair value defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” The fair value measurement hierarchy consists of three levels:
The Company applies valuation techniques that (1) place greater reliance on observable inputs and less reliance on unobservable inputs and (2) are consistent with the market approach, the income approach and/or the cost approach, and include enhanced disclosures of fair value measurements in the Company’s consolidated financial statements.
Investments in Marketable Securities
The Company classifies all of its investments as available-for-sale. Unrealized gains and losses on investments are recognized in comprehensive income/(loss), unless an unrealized loss is considered to be other than temporary, in which case the unrealized loss is charged to operations. The Company periodically reviews its investments for other than temporary declines in fair value below cost basis and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company believes the individual unrealized losses represent temporary declines primarily resulting from interest rate changes. Realized gains and losses are reflected in other income (expense) in the Consolidated Statements of Operations and Comprehensive Loss and are determined using the specific identification method with transactions recorded on a settlement date basis.
For the year ended December 31, 2016, the Company recognized a loss of $41,955, and a loss of $43,871 for the eight months ended December 31, 2015. For the fiscal years ended April 30, 2015 and 2014, the Company recognized a gain of $1,025, and $0, respectively.
Investments with original maturities at date of purchase beyond three months and which mature at or less than 12 months from the balance sheet date are classified as current. Investments with a maturity beyond 12 months from the balance sheet date are classified as long-term. At December 31, 2016, the Company believes that the costs of its investments are recoverable in all material respects.
The following tables summarize the fair value of the Company’s investments by type. The estimated fair value of the Company’s fixed income investments are classified as Level 2 in the fair value hierarchy as defined in U.S. GAAP. These fair values are obtained from independent pricing services which utilize Level 2 inputs:
The following table summarizes the scheduled maturity for the Company’s investments at December 31, 2016 and 2015, respectively:
Warrant liability
On July 23, 2013, the Company issued common stock warrants in connection with the issuance of Series C 8% Preferred Stock (the “Series C Warrants”). As part of the offering, the Company issued 2,753,348 warrants at an exercise price of $2.60 per share and contractual term of 6 years. On November 11, 2013, the Company satisfied certain contractual obligations pursuant to the Series C offering which caused certain “down-round” price protection clauses in the outstanding warrants to become effective on that date. In accordance with ASC 815-40-35-9, the Company reclassified these warrants as a current liability and recorded a warrant liability of $1,380,883, which represents the fair market value of the warrants at that date. The initial fair value recorded as warrants within stockholders’ equity of $233,036 was reversed and the subsequent changes in fair value are recorded as a component of other expense.
Financial assets or liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. The Series C Warrants are measured using the Monte Carlo valuation model which is based, in part, upon inputs for which there is little or no observable market data, requiring the Company to develop its own assumptions. The assumptions used in calculating the estimated fair value of the warrants represent the Company’s best estimates; however, these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and different assumptions are used, the warrant liabilities and the change in estimated fair value of the warrants could be materially different.
Inherent in the Monte Carlo valuation model are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock based on historical volatility that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero.
The Monte Carlo model is used for the Series C Warrants to appropriately value the potential future exercise price adjustments triggered by the anti-dilution provisions. This requires Level 3 inputs which are based on the Company’s estimates of the probability and timing of potential future financings and fundamental transactions. The other assumptions used by the Company are summarized in the following table for the Series C Warrants that were outstanding as of December 31, 2016 and December 31, 2015:
As of December 31, 2016, the fair value of the warrant liability was $226,092. The Company recorded a gain of $298,248 for the change in fair value as a component of other expense on the consolidated statement of comprehensive loss for the year ended December 31, 2016.
The Company recorded a gain of $48,105 for the change in fair value as a component of other expense on the consolidated statement of comprehensive loss for the eight months ended December 31, 2015.
For the fiscal years ended April 30, 2015 and 2014, the Company recognized a gain of $382,431 and a loss of $721,840, respectively, for the change in fair value as a component of other expense on the consolidated statement of operations.
A roll-forward of fair value measurements using significant unobservable inputs (Level 3) for the warrants for the year ended December 31, 2016, for the eight months ended December 31, 2015 and the year ended April 30, 2015 are as follows:
As of December 31, 2016, 240,523 Series C Warrants are outstanding.
The following tables summarize information regarding assets and liabilities measured at fair value on a recurring basis as of December 31, 2016 and December 31, 2015:
There were no significant transfers between levels during the year ended December 31, 2016.
Change in Fiscal Year
In 2015, the Company’s Board of Directors approved a change in the Company’s fiscal year to a fiscal year beginning on January 1 and ending on December 31 of each year, such change beginning as of January 1, 2016. Accordingly, this annual report on Form 10-K includes financial statements as of and for (i) the calendar year ended December 31, 2016; (ii) the eight months ended December 31, 2015; and (iii) the fiscal years ended April 30, 2015 and 2014. For comparative purposes, an unaudited consolidated statement of operations and comprehensive loss has been included for the year ended December 31, 2015 and for the eight month period from May 1, 2014 to December 31, 2014. The financial information for the year ended December 31, 2015 and the eight months ended December 31, 2014 has not been audited and is derived from the Company’s books and records. In the opinion of management, the financial information for the year ended December 31, 2015 and the eight months ended December 31, 2014 reflects all adjustments necessary to present the financial position and results of operations in accordance with generally accepted accounting principles. Prior to the year-end change, the Company’s fiscal year ended on April 30 of each year.
|
C. BALANCE SHEET COMPONENTS |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NOTE C-BALANCE SHEET COMPONENTS | Property and equipment, net
Property and equipment consist of the following:
Depreciation and amortization expense was $18,952 and $31,224 for the year ended December 31, 2016 and for the eight months ended December 31, 2015, respectively.
For the fiscal years ended April 30, 2015 and 2014, depreciation and amortization expense was $77,836 and $88,300, respectively.
Accrued liabilities
Accrued liabilities consist of the following:
|
D. ACQUISITION |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NOTE D-ACQUISITION | On November 13, 2013, the Company, through its wholly owned subsidiary, Life Newco, acquired certain assets of Phyxius pursuant to the Asset Purchase Agreement. The acquisition was accounted for under the acquisition method of accounting for business combinations in accordance with FASB ASC 805, Business Combinations, which requires, among other things that the assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. Acquisition-related costs are not included as a component of the acquisition accounting, but are recognized as expenses in the periods in which the costs are incurred. Any changes within the measurement period resulting from facts and circumstances that existed as of the acquisition date may result in retrospective adjustments to the provisional amounts recorded at the acquisition date.
Under the terms and subject to the conditions of the Asset Purchase Agreement, Life Newco acquired (the “Acquisition”) certain assets, including that certain License Agreement (the “License”), dated September 20, 2013 by and between Phyxius and Orion Corporation, a global healthcare company incorporated under the laws of Finland (“Orion”), and that certain Side Letter, dated October 15, 2013 by and between Phyxius and Orion. The License grants Life Newco an exclusive, sublicenseable right to develop and commercialize pharmaceutical products containing Levosimedan, 2.5 mg/ml concentrate for solution for infusion / 5ml vial (the “Product”) in the United States and Canada (the “Territory”). Pursuant to the License, Life Newco must use Orion’s “Simdax®” trademark to commercialize the Product. The License also grants to Life Newco a right of first refusal to commercialize new developments of the Product, including developments as to the formulation, presentation, means of delivery, route of administration, dosage or indication. Orion’s ongoing role under the License includes sublicense approval, serving as the sole source of manufacture, holding a first right to enforce intellectual property rights in the Territory, and certain regulatory participation rights. Additionally, Life Newco must grant back to Orion a broad non-exclusive license to any patents or clinical trial data related to the Product developed by Life Newco under the License. The License has a fifteen (15) year term, provided, however, that the License will continue after the end of the fifteen year term in each country in the Territory until the expiration of Orion’s patent rights in the Product in such country (the “Term”). Orion had the right to terminate the License if the human clinical trial using the Product and studying reduction in morbidity and mortality of cardiac surgery patients at risk of low cardiac output syndrome (LCOS) as described in the US Food and Drug Administration (the “FDA”) agreed upon clinical study protocol (the “Study”) was not started by July 31, 2014. While the Company did not commence the trial by that date, on September 9, 2014, Orion notified the Company in writing that it did not intend to terminate the License so long as the trial was commenced on or before October 31, 2014. The Company subsequently commenced the human clinical trial for levosimendan on September 18, 2014 when the first patient was enrolled.
The following table summarizes the consideration transferred to acquire Phyxius and the amounts of identified assets acquired and liabilities assumed at the acquisition date.
Fair Value of Consideration Transferred:
The Company issued 1,366,844 shares of its common stock that had a total fair value of approximately $8.7 million based on the closing market price on November 13, 2013, the acquisition date. The Company also issued 32,992 shares of its Series E Convertible Preferred Stock (the “Series E Stock”), which are convertible into an aggregate of 3,299,200 shares of common stock that had a total fair value of approximately $15.3 million.
The rights, preferences and privileges of the Series E Stock are set forth in the Certificate of Designation of Series E Convertible Preferred Stock that the Company filed with the Secretary of State of the State of Delaware on November 13, 2013. Each share of Series E Stock automatically converted into 100 shares of common stock following receipt of stockholder approval for the transaction at the special meeting of stockholders held on March 13, 2014. Approximately 11% of the shares of converted common stock vested immediately upon receipt of stockholder approval for the transaction, while the remainder vested upon the closing of the Company’s underwritten offering of 9,285,714 shares of common stock on March 21, 2014, which resulted in net proceeds of approximately $55 million.
The Series E Stock was convertible into restricted common shares using a 100-for-one ratio at any time and in accordance with a vesting schedule contingent upon achievement of Company-specific non-financial conditions. As a result, the fair value of the Preferred Shares was inferred based on their common stock equivalent value given the conversion terms. The conditional vesting of the Series E Stock was accounted for by subtracting the fair value of an equal number of put options that would effectively protect the common stock equivalent stock value as of the closing date. The terms of the put options were as follows:
In accordance with the provisions of FASB ASC 805, the following table presents the preliminary allocation of the total fair value of consideration transferred, as discussed above, to the acquired tangible and intangible assets and assumed liabilities of Phyxius based on their estimated fair values as of the closing date of the transaction, measurement period adjustments recorded since the acquisition date and the adjusted allocation of the total fair value:
The fair value of the acquired IPR&D, intangible asset of approximately $22.0 million was determined using the multi-period excess earnings method. The Company did not acquire any other class of assets as a result of the acquisition.
Pursuant to the terms of the License, the Company paid to Orion a non-refundable up-front payment in the amount of $1 million.
The License also includes the following development milestones for which the Company shall make non-refundable payments to Orion no later than twenty-eight (28) days after the occurrence of the applicable milestone event: (i) $2.0 million upon the grant of FDA approval, including all registrations, licenses, authorizations and necessary approvals, to develop and/or commercialize the Product in the United States; and (ii) $1.0 million upon the grant of regulatory approval for the Product in Canada. Once commercialized, the Company is obligated to make certain non-refundable commercialization milestone payments to Orion, aggregating up to $13.0 million, contingent upon achievement of certain cumulative net sales amounts in the Territory. The Company must also pay Orion tiered royalties based on net sales of the Product in the Territory made by the Company and its sublicensees. After the end of the Term, the Company must pay Orion a royalty based on net sales of the Product in the Territory for as long as the Company sells the Product in the Territory.
In connection with the closing of the Acquisition, Phyxius’ co-founder, Chief Executive Officer and stockholder, John Kelley, became the Company’s Chief Executive Officer and two other Phyxius employees and stockholders, Doug Randall and Douglas Hay, PhD became employees of the Company as Vice President, Business and Commercial Operations and Vice President, Regulatory Affairs, respectively. Michael Jebsen, the Company’s prior Interim Chief Executive Officer and current Chief Financial Officer, continued serving as the Company’s Chief Financial Officer. In addition, Mr. Kelley was subsequently appointed to the Company’s Board of Directors, and Gerald T. Proehl, a designee of the Phyxius Stockholders, was appointed to the Board of Directors on April 3, 2014 following receipt of stockholder approval for the transaction. Pursuant to the Asset Purchase Agreement, the Company agreed to propose that its stockholders approve an amendment to the Company’s 1999 Stock Plan to increase the amount of stock options authorized for issuance under the 1999 Stock Plan to not less than 4,000,000 shares of common stock. On March 13, 2014, the Company received stockholder approval to increase the option plan. In accordance with terms of the Acquisition, the Company issued an aggregate of 3,572,880 stock options with a grant date fair value of $15,818,512, to the individuals described above. See Note G for additional details.
The common stock and Series E Stock issued as the consideration in the Acquisition were issued and sold without registration under the Securities Act of 1933 (the “Securities Act”) in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder and in reliance on similar exemptions under applicable state laws. Accordingly, the Phyxius Stockholders may sell the shares of common stock and Series E Stock only pursuant to an effective registration statement under the Securities Act covering the resale of those securities, an exemption under Rule 144 under the Securities Act or another applicable exemption under the Securities Act.
|
E. INTANGIBLE ASSETS |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NOTE E-INTANGIBLE ASSETS | The following table summarizes our intangible assets as of December 31, 2016:
The following table summarizes our intangible assets as of December 31, 2015:
There was no amortization expense for the year ended December 31, 2016 and the eight months ended December 31, 2015.
For the fiscal years ended April 30, 2015 and 2014 the aggregate amortization expense on intangible assets was $70,304 and $62,189, respectively.
In Process Research and Development— The levosimendan product in Phase III clinical trial represents an IPR&D asset. The IPR&D asset is a research and development project rather than a product or processes already in service or being sold. Research and development intangible assets are considered indefinite-lived until the abandonment or completion of the associated research and development efforts. If abandoned, the assets would be impaired. Research and development expenditures that are incurred after the acquisition, including those for completing the research and development activities related to the acquired intangible research and development assets, are generally expensed as incurred.
During the year ended December 31, 2016, the Company recognized an impairment charge of $33.3 million related to our levosimendan product in Phase III clinical trial, which represents approximately $22 million for IPR&D assets and approximately $11.3 million for goodwill.
The LEVO-CTS trial was completed in December of 2016. Based on the data from the trial, levosimendan, given prophylactically prior to cardiac surgery to patients with reduced left ventricular function, had no effect on the co-primary outcomes. The study did not achieve statistically significant reductions in the dual endpoint of death or use of a mechanical assist device at 30 days, nor in the quad endpoint of death, myocardial infarction, need for dialysis, or use of a mechanical assist device at 30 days. Based on the results of the LEVO-CTS trial, the Company does not anticipate additional development of levosimendan for the treatment of LCOS in patients undergoing cardiac surgery. As of December 31, 2016, the Company determined the IPR&D asset, and corresponding Goodwill, was more than temporarily impaired.
Patents and License Rights—The Company currently holds, has filed for, or owns exclusive rights to, U.S. and worldwide patents covering 9 various methods and uses of its perfluorocarbon (“PFC”) technology. It capitalizes amounts paid to third parties for legal fees, application fees and other direct costs incurred in the filing and prosecution of its patent applications. These capitalized costs are amortized on a straight-line method over their useful life or legal life, whichever is shorter. For the fiscal years ended April 30, 2015 and 2014, the Company capitalized patent costs of approximately $105,000 and $137,000, respectively.
The Company completed its annual impairment test of its patents and license rights during the fourth quarter of fiscal years 2015 and 2014. The Company wrote-off approximately $929,000 and $0 of capitalized costs for patent applications that were withdrawn or abandoned during the years ended April 30, 2015 and 2014, respectively. These asset impairment charges primarily related to the Company’s Oxycyte and other PFC formulations which were determined not to be a core component of the Company’s development strategy.
Trademarks—The Company currently holds, or has filed for, trademarks to protect the use of names and descriptions of its products and technology. It capitalizes amounts paid to third parties for legal fees, application fees and other direct costs incurred in the filing and prosecution of its trademark applications. These trademarks are evaluated annually for impairment in accordance with ASC 350, Intangibles – Goodwill and other. The Company evaluates (i) its expected use of the underlying asset, (ii) any laws, regulations, or contracts that may limit the useful life, (iii) the effects of obsolescence, demand, competition, and stability of the industry, and (iv) the level of costs to be incurred to commercialize the underlying asset. The Company wrote-off trademark costs of approximately $106,000 and $0, for the years ended April 30, 2015 and 2014, respectively. These asset impairment charges primarily related to the Company’s Oxycyte and other PFC formulations which were determined not to be a core component of the Company’s development strategy. |
F. NOTES PAYABLE |
12 Months Ended |
---|---|
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
NOTE F-NOTES PAYABLE | Convertible Note
On June 29, 2011, the Company issued a note (the “June Note”) with a principal amount of approximately $300,000 and Warrants to purchase 6,652 shares of common stock. On July 1, 2011, the Company issued a separate note (together with the June Note, the “Notes”) with a principal amount of $4,600,000 and warrants to purchase 101,996 shares of common stock. The aggregate gross proceeds to the Company from the offering were approximately $4.9 million, excluding any proceeds from the exercise of any warrants. The aggregate placement agent fees were $297,000 and legal fees associated with the offering were $88,839. These costs have been capitalized as debt issue costs and will be amortized as interest expense over the life of the Notes. The Company recorded amortization of debt issue costs of $21,427 and $128,616, for the years ended April 30, 2015 and 2014, respectively. All debt issue costs were fully amortized in the first quarter of fiscal year ending April 30, 2015.
Interest on the Notes accrues at a rate of 15% annually and will be paid in quarterly installments commencing on the third month anniversary of issuance. The Notes were scheduled to mature 36 months from the date of issuance. The Notes may be converted into shares of common stock at a conversion price of $45.10 per share (subject to adjustment for stock splits, dividends and combinations, recapitalizations and the like) (the "Conversion Price") in whole or in part, at any time at the option of the holders of the Notes. The Notes also will automatically convert into shares of common stock at the Conversion Price at the election of a majority-in-interest of the holders of notes issued under the purchase agreement or upon the acquisition or sale of all or substantially all of the assets of the Company. The Company could make each applicable interest payment or payment of principal in cash, shares of common stock at the Conversion Price, or any combination thereof. The Company could elect to prepay all or any portion of the Notes without prepayment penalties only with the approval of a majority-in-interest of the note holders under the purchase agreement at the time of the election. The Notes contained various events of default such as failing to timely make any payment under the Note when due, which would have resulted in all outstanding obligations under the Note becoming immediately due and payable.
On August 22, 2013 holders of $4.6 million of the Notes received 4,600 shares of the Company’s Series D 8% Convertible Preferred Stock (the “Series D Stock”) as consideration for cancelling their outstanding Notes. On that date, the Company recognized non-cash interest expense of $1,311,847 for the remaining unamortized debt discount associated with this Notes.
On June 29, 2014, the Company paid the remaining principal balance of $300,000 to the June Note holders upon maturity.
The Company recorded interest expense of $45,606 and $2,181,955 for the years ended April 30, 2015 and 2014, respectively.
The total value allocated to the warrants was $1,960,497 and was recorded as a debt discount against the proceeds of the notes. In addition, the beneficial conversion features related to the Notes were determined to be $2,939,504. As a result, the aggregate discount on the Notes totaled $4,900,001, and was amortized over the term of the notes. For the fiscal years ended April 30, 2015 and 2014, the Company recorded interest expense for the amortization of debt discount of $16,678 and $483,330, respectively.
|
G. STOCKHOLDERS' EQUITY |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NOTE G-STOCKHOLDERS' EQUITY | Preferred Stock
Under the Company’s Certificate of Incorporation, the Board of Directors is authorized, without further stockholder action, to provide for the issuance of up to 10,000,000 shares of preferred stock, par value $0.0001 per share, in one or more series, to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations and restrictions thereof.
On November 13, 2013, the Company filed a Certificate of Designation with the Secretary of State of the State of Delaware designating 32,992 shares of its authorized but unissued shares of preferred stock as Series E Stock.
On August 22, 2013, the Company filed a Certificate of Designation with the Secretary of State of the State of Delaware designating 4,600 shares of its authorized but unissued shares of preferred stock as Series D Stock.
On July 22, 2013, the Company filed a Certificate of Designation with the Secretary of State of the State of Delaware designating 5,369 shares of its authorized but unissued shares of preferred stock as Series C Stock.
On February 25, 2013, the Company filed a Certificate of Designation with the Secretary of State of the State of Delaware designating 1,600 shares and 500 shares of its authorized but unissued shares of preferred stock as Series B-1 Convertible Preferred Stock (the “Series B-1 Stock”) and Series B-2 Convertible Preferred Stock (the “Series B-2 Stock” and together with the Series B-1 Stock, the “Series B Stock”), respectively.
On December 8, 2011, the Company filed a Certificate of Designation with the Secretary of State of the State of Delaware designating 7,500 shares of its authorized but unissued shares of preferred stock as Series A Stock.
Series E Stock
As further discussed in Note D above, on November 13, 2013 the Company issued 32,992 shares of its Series E Stock, which were convertible into an aggregate of 3,299,200 shares of common stock, as partial consideration to acquire certain assets of Phyxius Pharma, Inc. pursuant to the Asset Purchase Agreement.
The rights, preferences and privileges of the Series E Stock are set forth in the Certificate of Designation of Series E Convertible Preferred Stock (the “Certificate of Designation”) that the Company filed with the Secretary of State of the State of Delaware on November 13, 2013. Each share of Series E Stock will automatically convert into 100 shares of common stock following receipt of stockholder approval for the transaction. Approximately 11% of the shares of converted common stock vest immediately upon receipt of stockholder approval for the transaction, while the remainder will vest upon achievement of certain performance milestones related to the development and commercialization of the levosimendan product in North America. In addition, all unvested converted common stock will vest if certain change of control transactions or significant equity financings occur within 24 months of the closing of the Acquisition. The number of shares of common stock into which the Series E Stock converts is subject to adjustment in the case of stock splits, stock dividends, combinations of shares and similar recapitalization transactions. The Series E Stock does not carry dividend or a liquidation preference. The Series E Stock carries voting rights aggregating 4.99% of the Company’s common stock voting power immediately prior to the closing of the Acquisition.
During the year ended April 30, 2014, all 32,992 shares of Series E Stock were converted into 3,299,200 shares of common stock. As of December 31, 2016 and December 31, 2015 there were no shares of Series E Stock outstanding.
Series D Stock
On August 22, 2013, the Company closed its private placement of an aggregate of $4.6 million of shares of the Company’s Series D Stock to JP SPC 3 obo OXBT FUND, SP (“OXBT Fund”). In connection with the purchase of shares of Series D Stock, OXBT Fund received a warrant to purchase 2,358,975 shares of common stock at an exercise price equal to $2.60 (the “Series D Warrant”). As consideration for the sale of the Series D Stock and Series D Warrant, $4.6 million in outstanding principal amount of a Note issued by the Company on July 1, 2011 and held by OXBT Fund was cancelled. The Note carried interest at a rate of 15% per annum and matured on July 1, 2014. Mr. Gregory Pepin, one of the Company’s directors, is the investment manager of OXBT Fund. Pursuant to the terms of a lock-up agreement (the “Lock-Up Agreement”) executed prior to the closing, OXBT Fund and its affiliates are prohibited from engaging in certain transactions with respect to shares of the Company’s common stock and common stock equivalents until such time as the lead investor in the Company’s offering of Series C Stock ceases to own at least 25% of the shares of Series C Stock originally issued to such investor.
The table below sets forth a summary of the designation, powers, preferences and rights of the Series D Stock.
During the year ended April 30, 2014, 4,600 shares of Series D Stock were converted into 2,358,974 shares of common stock and the Company issued 576,084 shares of its common stock in the form of Series D Stock dividends. As of December 31, 2016 and December 31, 2015 there were no shares of Series D Stock outstanding.
Series C Stock
On July 21, 2013, the Company entered into a Securities Purchase Agreement with certain investors providing for the issuance and sale by the Company (the “Series C Offering”) of an aggregate of approximately $5.4 million of shares of the Company’s Series C Stock, which are convertible into a combined total of 2,753,348 shares of common stock (the “Conversion Shares”). In connection with the purchase of shares of Series C Stock in the Series C Offering, each investor will receive a warrant to purchase a number of shares of common stock equal to 100% of the number of Conversion Shares at an exercise price equal to $2.60 (the “Warrants”). On July 23, 2013, the Company sold 5,369 units for net proceeds of approximately $4.9 million.
The table below sets forth a summary of the designation, powers, preferences and rights of the Series C Stock.
During the year ended April 30, 2014, 5,369 shares of Series C Stock were converted into 2,753,327 shares of common stock and the Company issued 831,401 shares of its common stock for the payment of $1,288,560 as dividends on the Series C Stock. As of December 31, 2016 and December 31, 2015 there were no shares of Series C Stock outstanding.
Series B Stock
On February 22, 2013, the Company entered into a Securities Purchase Agreement with an institutional investor providing for the issuance and sale by the Company of $1.6 million of shares of the Company’s Series B-1 Stock and $0.5 million of shares of the Company's Series B-2 Stock which are convertible into a combined total of 420,000 shares of common stock, subject to adjustment for subsequent equity sales.
On February 27, 2013, the Company sold 2,100 units for net proceeds of approximately $1.9 million. Each unit sold consisted of (i) one share of the Company’s Series B Stock and (ii) a Warrant representing the right to purchase 300 shares of common stock at a price of $1,000 per unit, less issuance costs. The shares of Series B Stock were immediately convertible upon issuance.
The table below sets forth a summary of the designation, powers, preferences and rights of the Series B Stock.
The Company will not affect any conversion of the Series B Stock, nor shall a holder convert its shares of Series B Stock, to the extent that such conversion would cause the holder to have acquired, through conversion of the Series B Stock or otherwise, beneficial ownership of a number shares of common stock in excess of 4.99% of the common stock outstanding immediately preceding the conversion.
During the year ended April 30, 2014, 987 shares of Series B Stock were converted into 644,915 shares of common stock. As of December 31, 2016 and December 31, 2015 there were no shares of Series B Stock outstanding.
On February 23, 2015, the Company filed certificates of elimination (the “Certificates of Elimination”) with the Secretary of State of Delaware effecting the elimination of the Certificates of Designations with respect to the Series A Stock, Series B-1 Stock, Series B-2 Stock, Series C Stock, Series D Stock and Series E Stock. No shares of the Preferred Stock were outstanding at the time of the filing of the Certificates of Elimination. The Certificates of Elimination, which were effective upon filing, canceled the Company’s Series A Stock, Series B-1 Stock, Series B-2 Stock, Series C Stock, Series D Stock and Series E Stock. At the time of filing the Certificates of Elimination, no shares of preferred stock remained outstanding. As of December 31, 2016, 10,000,000 shares of preferred stock are undesignated.
Common Stock
The Company’s Certificate of Incorporation authorizes it to issue 400,000,000 shares of $0.0001 par value common stock. As of December 31, 2016 and December 31, 2015 there were 28,120,021 and 28,119,694 shares of common stock issued and outstanding.
Warrants
On November 11, 2014, the Company issued common stock warrants in connection with the execution of a service agreement for investor relations and corporate communications. As part of the compensation under the agreement, the Company issued up to 175,000 warrants at an exercise price of $4.00 per share and contractual term of 5 years. The warrant is initially exercisable for 25,000 shares of common stock, and the number of shares of common stock exercisable under this warrant will be automatically increased by 50,000 upon the first occurrence of market price goals of $6.00, $8.00 and $10.00, respectively, during the eighteen month period beginning on the effective date. In accordance with ASC 815, these warrants are classified as equity and their estimated fair-value of $478,115 was recorded as an operating expense in the consolidated statement of operations and as additional paid in capital during the year ended April 30, 2015. The estimated fair value is determined using the Black-Scholes Option Pricing Model which is based on the value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrants, risk-free interest rates, expected dividends and expected volatility of the price of the underlying common stock.
Series D Warrants
On August 22, 2013, the Company closed its private placement of an aggregate of $4.6 million shares of the Company’s Series D Stock to OXBT Fund. In connection with the purchase of shares of Series D Stock, OXBT Fund received the Series D Warrant to purchase 2,358,975 shares of common stock at an exercise price equal to $2.60 and contractual term of 6 years. In accordance with ASC 815, these warrants are classified as equity and their relative fair-value of $1,531,167 was recognized as a deemed dividend on the Series D Stock during the year ended April 30, 2014. The estimated fair value is determined using the Black-Scholes Option Pricing Model which is based on the value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrants, risk-free interest rates, expected dividends and expected volatility of the price of the underlying common stock.
The Series D Warrant is exercisable beginning on the date of issuance and expires on August 22, 2019. The exercise price and the number of shares issuable upon exercise of Series D Warrant is subject to appropriate adjustment in the event of recapitalization events, stock dividends, stock splits, stock combinations, reclassifications, reorganizations or similar events affecting the Company’s common stock, and also upon any distributions of assets, including cash, stock or other property to the Company’s stockholders. In addition, if stockholder approval for the transaction is obtained, the Series D Warrant will be subject to anti-dilution provisions until such time that for 25 trading days during any 30 consecutive trading day period, the volume weighted average price of the Company’s common stock exceeds $6.50 and the daily dollar trading volume exceeds $350,000 per trading day.
On January 30, 2014, the Company entered into an agreement with the OXBT Fund to amend the terms of the outstanding Series D Warrants. The amendment replaced the price protection anti-dilution provision of each warrant with a covenant that the Company will not issue common stock or common stock equivalents at an effective price per share below the exercise price of such warrant without prior written consent, subject to certain exceptions.
The Series D Stock and the Series D Warrant were issued and sold without registration under the Securities Act in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder and in reliance on similar exemptions under applicable state laws. Accordingly, OXBT Fund may exercise the Warrant and sell the Series D Stock and underlying shares only pursuant to an effective registration statement under the Securities Act covering the resale of those securities, an exemption under Rule 144 under the Securities Act or another applicable exemption under the Securities Act.
During the year ended April 30, 2015, the Company received proceeds of $544,000 and issued 209,230 shares of common stock upon the exercise of the Series D warrants. As of December 31, 2016, 2,149,745 Series D Warrants are outstanding.
Series C Warrants
On July 23, 2013, as part of the offering of Series C Stock, the Company issued 2,753,348 Series C Warrants at an exercise price of $2.60 per share and contractual term of 6 years. In accordance with ASC 815, these warrants are classified as equity and their relative fair-value of $1,867,991 was recognized as a deemed dividend on the Series C Stock during the year ended April 30, 2014. The estimated fair value is determined using the Black-Scholes Option Pricing Model which is based on the value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrants, risk-free interest rates, expected dividends and expected volatility of the price of the underlying common stock.
In connection with the Series C Offering described above, the Company entered into a Placement Agency Agreement (the “Placement Agency Agreement”) with Ladenburg Thalmann & Co. Inc. (the “Placement Agent”) pursuant to which the Placement Agent agreed to act as the Company’s exclusive placement agent for the Series C Offering. In accordance with the Placement Agency Agreement, on July 23, 2013 the Company issued to the Placement Agent warrants to purchase 53,539 shares of common stock at an exercise price of $2.4375 per share and a contractual term of 3 years. In accordance with ASC 815, these warrants are classified as equity and their relative fair-value of $51,231 was recognized as additional paid in capital during the year ended April 30, 2014. The estimated fair value is determined using the Black-Scholes Option Pricing Model which is based on the value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrants, risk-free interest rates, expected dividends and expected volatility of the price of the underlying common stock.
During the year ended April 30, 2014, the Company received cash of approximately $6.5 million and issued 2,512,825 shares of common stock upon the exercise of outstanding Series C Warrants. As of December 31, 2016, 240,523 Series C Warrants are outstanding.
In accordance with ASC 815-40-35-8, the Company reassessed the classification of the remaining Series C Warrants. On November 11, 2013, the Company satisfied certain contractual obligations pursuant to the Series C offering which caused certain “down-round” price protection clauses in the outstanding warrants to become effective on that date. In accordance with ASC 815-40-35-9, on November 11, 2013, the Company reclassified these warrants as a current liability and recorded a warrant liability of $1,082,941 which represents the fair market value of the warrants at that date. The initial fair value recorded as warrants within stockholders’ equity of $233,036 was reversed and the change in fair value was recorded as a component of other expense.
The estimated fair value is determined using the Monte Carlo Model which is based on the value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrants, risk-free interest rates, expected dividends, expected volatility of the price of the underlying common stock as well as other estimates and assumptions.
As of December 31, 2016, the fair value of the warrant liability was $226,092. The Company recorded a gain of $298,248 for the change in fair value as a component of other expense on the consolidated statement of operations and comprehensive loss for the year ended December 31, 2016.
For the eight months ended December 31, 2015, the Company recognized a gain of $48,105 for the change in fair value as a component of other expense on the consolidated statements of operations and comprehensive loss.
For the fiscal years ended April 30, 2015 and 2014, the Company recognized a gain of $382,431 and a loss of $721,840, respectively, for the change in fair value as a component of other expense on the consolidated statements of operations and comprehensive loss.
Series B Warrants
In connection with the issuance of 2,100 shares of Series B Preferred Stock described above, on February 27, 2013 the Company issued Class A and Class B warrants to purchase an aggregate of 630,000 shares of common stock. The warrants were issued at an initial exercise price equal to $10.00 and were immediately exercisable. The Class A warrants were issued with a six-year term and the Class B warrants were issued with a two-year term.
During the year ended April 30, 2014, the Company received proceeds of $567,000 and issued 630,000 shares of common stock upon the exercise of the Series B warrants. As of December 31, 2016, there were no Series B warrants outstanding.
As of December 31, 2016, the Company has 2,415,675 warrants outstanding. During the year ended December 31, 2016, no warrants were issued or exercised.
The following table summarizes the Company’s warrant activity for the year ended December 31, 2016, the eight months ended December 31, 2015 and the fiscal years ended April 30, 2015 and 2014:
During the fiscal years ended April 30, 2015 and 2014, the Company received approximately $544,000 and $7.1 million, issuing 209,230 and 3,161,145 shares of common stock, respectively upon the exercise of outstanding warrants.
1999 Amended Stock Plan
In October 2000, the Company adopted the 1999 Stock Plan, as amended and restated on June 17, 2008 (the “Plan”). Under the Plan, with the approval of the Compensation Committee of the Board of Directors, the Company may grant stock options, restricted stock, stock appreciation rights and new shares of common stock upon exercise of stock options. On September 30, 2011, the Company’s stockholders approved an amendment to the Plan which increased the amount of shares authorized for issuance under the Plan to 300,000, up from 40,000 previously authorized.
Pursuant to the Asset Purchase Agreement described in Note D above, the Company agreed to propose that its stockholders approve an amendment to the Company’s 1999 Stock Plan to increase the amount of stock options authorized for issuance under the 1999 Stock Plan to not less than 4,000,000 shares of common stock. On March 13, 2014, the Company’s stockholders approved an amendment to the Plan which increased the number of shares of common stock authorized for issuance to a total of 4,000,000 shares, up from 300,000 previously authorized.
In accordance with terms of the Acquisition, the Company issued an aggregate of 3,572,880 stock options with a grant date fair value of $15,818,512, to the Chief Executive Officer, the Chief Financial Officer, the Executive Vice President, Business and Commercial Operations and the Executive Vice President, Regulatory Affairs. These options were issued with a six-year term and subject to multiple performance-based vesting conditions. During the year ended April 30, 2014, the Company recorded approximately $7.9 million of compensation expense for the vested options in its consolidated statements of operations. An additional $7.9 million of compensation expense related to these grants will be recognized as performance vesting conditions are achieved.
On September 15, 2015, the Company’s stockholders approved an additional amendment to the Plan which increased the number of shares of common stock authorized for issuance to a total of 5,000,000 shares, up from 4,000,000 previously authorized.
As of December 31, 2016 the Company had 268,500 shares of common stock available for grant under the Plan.
The following table summarizes the shares available for grant under the Plan for the year ended December 31, 2016, the eight months ended December 31, 2015 and the fiscal years ended April 30, 2015 and 2014:
Plan Stock Options
Stock options granted under the Plan may be either incentive stock options (“ISOs”), or nonqualified stock options (“NSOs”). ISOs may be granted only to employees. NSOs may be granted to employees, consultants and directors. Stock options under the Plan may be granted with a term of up to ten years and at prices no less than fair market value for ISOs and no less than 85% of the fair market value for NSOs. Stock options granted generally vest over one to three years.
The following table summarizes the outstanding stock options under the Plan for the year ended December 31, 2016, the eight months ended December 31, 2015 and the fiscal years ended April 30, 2015 and 2014:
The following table summarizes all options outstanding as of December 31, 2016:
The following table summarizes options outstanding that have vested and are expected to vest based on options outstanding as of December 31, 2016:
The Company chose the “straight-line” attribution method for allocating compensation costs of each stock option over the requisite service period using the Black-Scholes Option Pricing Model to calculate the grant date fair value.
The Company used the following assumptions to estimate the fair value of options granted under its stock option plans for the year ended December 31, 2016, the eight months ended December 31, 2015 and the fiscal years ended April 30, 2015 and 2014:
The weighted-average grant-date fair value of options granted during the year ended December 31, 2016 was $2.12.
The weighted-average grant-date fair value of options granted during the eight months ended December 31, 2015 was $3.25.
The weighted-average grant-date fair value of options granted during the years ended April 30, 2015 and 2014 was $4.82 and $5.64, respectively.
The Company recorded compensation expense for these stock options grants of $529,708 for the year ended December 31, 2016.
As of December 31, 2016, there were unrecognized compensation costs of approximately $963,000 related to non-vested stock option awards that will be recognized on a straight-line basis over the weighted average remaining vesting period of 2.1 years. Additionally, there were unrecognized compensation costs of approximately $8.1 million related to non-vested stock option awards subject to performance-based vesting milestones with a weighted average remaining life of 3.3 years. As of December 31, 2016, none of these milestones have been achieved.
Inducement Stock Options
The table below summarizes the employment inducement stock option award for 25,000 shares of common stock made to our Chief Medical Officer on February 15, 2015. This employment inducement stock option was awarded in accordance with the employment inducement award exemption provided by Nasdaq Rule 5635(c)(4) and was therefore not awarded under the Company’s stockholder approved equity plan. The option award will vest over a three year period, with one-third vesting per year, beginning one year from the grant date. The options have a 10-year term and an exercise price of $3.22 per share, the February 13, 2015 closing price of the Company’s common stock.
A summary of the activity and related information for our stock options follows:
Inducement stock option compensation expense was approximately $20,000 for the year ended December 31, 2016.
Inducement stock option compensation expense was approximately $26,000 for the eight months ended December 31, 2015.
For the years ended April 30, 2015 and 2014 Inducement stock option compensation expense totaled $9,830 and $0, respectively.
At December 31, 2016, there was $8,641 of remaining unrecognized compensation expense related to the inducement stock options. Inducement stock options outstanding as of December 31, 2016 had a weighted average remaining contractual life of two months.
The estimated weighted average fair value per inducement option share granted was $64,343 in 2015 using a Black-Scholes option pricing model based on market prices and the following assumptions at the date of inducement option grant: weighted average risk-free interest rate of 1.84%, dividend yield of 0%, volatility factor for our common stock of 93.90% and a weighted average expected life of 7 years for inducement options not forfeited.
Restricted Stock Grants
The following table summarizes the outstanding restricted stock under the Plan for the year ended December 31, 2016, the eight months ended December 31, 2015 and the fiscal years ended April 30, 2015 and 2014:
The Company recorded compensation expense for these restricted stock grants of $1,758 for the year ended December 31, 2016.
The Company recorded compensation expense for these restricted stock grants of $1,439 for the eight months ended December 31, 2015.
For the fiscal years ended April 30, 2015 and 2014, the Company recorded compensation expense for these restricted stock grants of $18,092 and $356,639 respectively.
As of December 31, 2016, there were unrecognized compensation costs of approximately $400 related to the non-vested restricted stock grants that will be recognized on a straight-line basis over the remaining vesting period.
2016 Stock Incentive Plan
On June 16, 2016, the Company’s stockholders approved the 2016 Stock Incentive Plan (the “2016 Plan”), which provides for the issuance of up to 3,000,000 shares of common stock. Under the 2016 Plan, with the approval of the Compensation Committee of the Board of Directors, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, cash-based awards or other stock-based awards.
As of December 31, 2016 the Company had not issued any awards under the 2016 Plan and there were 3,000,000 shares of common stock available for grant under the 2016 Plan.
|
H. COMMITMENTS AND CONTINGENCIES |
12 Months Ended | |||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 | ||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||
NOTE H-COMMITMENTS AND CONTINGENCIES | Operating Leases
The Company leases its office space under an operating lease that includes fixed annual increases and expires in June 2021. Total rent expense was $91,208 for the year ended December 31, 2016. Total rent expense was $75,933 for the eight months ended December 31, 2015.
For the fiscal years ended April 30, 2015 and 2014, total rent expense was $111,171 and $107,946, respectively.
The future minimum payments for the long-term, non-cancelable lease are as follows:
Simdax license agreement
As further discussed in Note D above, on November 13, 2013 the Company acquired the License which granted it an exclusive, sublicenseable right to develop and commercialize pharmaceutical products containing Levosimedan in the United States and Canada. Pursuant to the License, the Company must use Orion’s “Simdax®” trademark to commercialize the Product. The License also grants to the Company a right of first refusal to commercialize new developments of the Product, including developments as to the formulation, presentation, means of delivery, route of administration, dosage or indication.
Orion’s ongoing role under the License includes sublicense approval, serving as the sole source of manufacture, holding a first right to enforce intellectual property rights in the Territory, and certain regulatory participation rights. Additionally, the Company must grant back to Orion a broad non-exclusive license to any patents or clinical trial data related to the Product developed by the Company under the License. The License has a fifteen (15) year term, provided, however, that the License will continue after the end of the fifteen year term in each country in the Territory until the expiration of Orion’s patent rights in the Product in such country. Orion had the right to terminate the License if the Study is not started by July 31, 2014. While the Company did not commence the trial by that date, on September 9, 2014, Orion notified the Company in writing that it did not intend to terminate the License so long as the trial was commenced on or before October 31, 2014. The Company subsequently commenced the human clinical trial for levosimendan on September 18, 2014 when the first patient was enrolled.
The License includes the following development milestones for which the Company shall make non-refundable payments to Orion no later than twenty-eight (28) days after the occurrence of the applicable milestone event: (i) $2.0 million upon the grant of FDA approval, including all registrations, licenses, authorizations and necessary approvals, to develop and/or commercialize the Product in the United States; and (ii) $1.0 million upon the grant of regulatory approval for the Product in Canada. Once commercialized, the Company is obligated to make certain non-refundable commercialization milestone payments to Orion, aggregating up to $13.0 million, contingent upon achievement of certain cumulative net sales amounts in the Territory. The Company must also pay Orion tiered royalties based on net sales of the Product in the Territory made by the Company and its sublicensees. After the end of the Term, the Company must pay Orion a royalty based on net sales of the Product in the Territory for as long as Life Newco sells the Product in the Territory.
As of December 31, 2016, the Company has not met any of the developmental milestones and, accordingly, has not recorded any liability for the contingent payments due to Orion.
Agreement with Virginia Commonwealth University
In May 2008, the Company entered into a license agreement with Virginia Commonwealth University (“Licensor”, “VCU”) whereby it obtained a worldwide, exclusive license to valid claims under three of the Licensor's patent applications that relate to methods for non-pulmonary delivery of oxygen to tissue and the products based on those valid claims used or useful for therapeutic and diagnostic applications in humans and animals. The license includes the right to sub-license to third parties. The term of the agreement is the life of the patents covered by the patent applications unless the Company elects to terminate the agreement prior to patent expiration. Under the agreement, the Company has an obligation to diligently pursue product development and pursue, at its own expense, prosecution of the patent applications covered by the agreement. As part of the agreement, the Company is required to pay to VCU nonrefundable payments upon achieving development and regulatory milestones. As of April 30, 2015, the Company has not met any of the developmental milestones.
The agreement with VCU also requires the Company to pay royalties to VCU at specified rates based on annual net sales derived from the licensed technology. Pursuant to the agreement, the Company must make minimum annual royalty payments to VCU totaling $70,000 as long as the agreement is in force. These payments are fully creditable against royalty payments due for sales and sublicense revenue earned during the fiscal year as described above. This fee is recorded as an other current asset and is amortized over the fiscal year. Amortization expense was $70,000 for each of the years ended April 30, 2015 and 2014.
In September 2014, the Company discontinued the development of its Oxycyte product candidates. As part of the this change in business strategy, on May 5, 2015 the Company provided VCU its 90 day notice terminating the license agreement entered into with the Licensor, whose effective date was May 21, 2008. The license agreement gave the Company exclusive rights to intellectual property that was used for the development and commercialization of Oxycyte and is therefore no longer needed.
Litigation
The Company is subject to litigation in the normal course of business, none of which management believes will have a material adverse effect on the Company’s Consolidated Financial Statements. |
I. 401(k) BENEFIT PLAN |
12 Months Ended |
---|---|
Dec. 31, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
NOTE I-401(k) BENEFIT PLAN | The Company sponsors a 401(k) Retirement Savings Plan (the “401(k) Plan”) for all eligible employees. Full-time employees over the age of 18 are eligible to participate in the 401(k) Plan after 90 days of continuous employment. Participants may elect to defer earnings into the 401(k) Plan up to the annual IRS limits and the Company provides a matching contribution up to 5% of the participants’ annual salary in accordance with the 401(k) Plan documents. The 401(k) Plan is managed by a third-party trustee.
For the year ended December 31, 2016, the eight months ended December 31, 2015, the fiscal year ended April 30, 2015 and the fiscal year ended April 30, 2014, the Company recorded $83,589, $57,352, $82,185 and $47,087 for matching contributions expense, respectively. |
J. INCOME TAXES |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NOTE J-INCOME TAXES | The Company recorded an income tax benefit of $7,962,100 for the period ended December 31,2016.
The Company's provision for income taxes is summarized as follows:
The reconciliation of income tax expenses (benefit) at the statutory federal income tax rate of 34% for the periods ended December 31, 2016 and December 31, 2015 is as follows:
The tax effects of temporary differences and carry forwards that give rise to significant portions of the deferred tax assets are as follows:
The Company has established a valuation allowance against net deferred tax assets due to the uncertainty that such assets will be realized. The Company periodically evaluates the recoverability of the deferred tax assets. At such time that it is determined that it is more likely than not that deferred tax assets will be realizable, the valuation allowance will be reduced.
As of December 31, 2016, the Company had Federal and State net operating loss carryforwards of approximately $124.0 million and $101.8 million available to offset future federal and state taxable income, respectively. The federal and state net operating loss carryforwards begin to expire in 2018 and valuation allowances have been provided.
Utilization of the net operating loss carryforwards may be subject to an annual limitation due to the ownership percentage change limitations provided by the Internal Revenue Code of 1986 and similar state provisions. The annual limitations may result in the expiration of the net operating losses before utilization.
Management has evaluated all other tax positions that could have a significant effect on the financial statements and determined the Company had no uncertain income tax positions at December 31, 2016.
The Company files U.S. and state income tax returns with varying statutes of limitations. The tax years 2001 and forward remain open to examination due to the carryover of unused net operating losses or tax credits.
|
K. TRANSITION PERIOD COMPARATIVE BALANCES |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
K. Transition Period Comparative Balances | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NOTE K-TRANSITION PERIOD COMPARATIVE BALANCES | In 2015, the Company’s Board of Directors approved a change in the Company’s fiscal year to a fiscal year beginning on January 1 and ending on December 31 of each year, such change beginning as of January 1, 2016. In accordance with certain rules promulgated under the Securities Exchange Act of 1934, as amended, the required transition period of May 1, 2015 to December 31, 2015 is included in these financial statements. For comparative purposes, the unaudited consolidated statements of operations and comprehensive loss for the year ended December 31, 2015 and for the eight months ended December 31, 2014 are as follows:
|
B. SUMMARY OF CRITICAL ACCOUNTING POLICIES (Policies) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Use of Estimates | The preparation of the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
On an ongoing basis, management reviews its estimates to ensure that these estimates appropriately reflect changes in the Company’s business and new information as it becomes available. If historical experience and other factors used by management to make these estimates do not reasonably reflect future activity, the Company’s results of operations and financial position could be materially impacted. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principles of Consolidation | The accompanying consolidated financial statements include the accounts and transactions of Tenax Therapeutics, Inc. and Life Newco, Inc. All material intercompany transactions and balances have been eliminated in consolidation. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill | Acquired businesses are accounted for using the acquisition method of accounting, which requires that assets acquired, including identifiable intangible assets, and liabilities assumed be recorded at fair value, with limited exceptions. Any excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. If the acquired net assets do not constitute a business, the transaction is accounted for as an asset acquisition and no goodwill is recognized.
Goodwill is reviewed for impairment on an annual basis or more frequently if events or circumstances indicate potential impairment. The Company’s goodwill evaluation is based on both qualitative and quantitative assessments regarding the fair value of goodwill relative to its carrying value. The Company assesses qualitative factors to determine if its sole reporting unit’s fair value is more likely than not to exceed its carrying value, including goodwill. In the event the Company determines that it is more likely than not that its reporting unit’s fair value is less than its carrying amount, quantitative testing is performed comparing recorded values to estimated fair values. If the fair value exceeds the carrying value, goodwill is not impaired. If the carrying value exceeds the fair value, an impairment charge is recognized through a charge to operations based upon the excess of the carrying value of goodwill over the implied fair value.
During the year ended December 31, 2016, the Company recognized an impairment charge of $33.3 million related to our levosimendan product in Phase III clinical trial, which represents approximately $22 million for in-process research and development (“IPR&D”) assets and approximately $11.3 million for goodwill.
The LEVO-CTS trial was completed in December of 2016. Based on the data from the trial, levosimendan, given prophylactically prior to cardiac surgery to patients with reduced left ventricular function, had no effect on the co-primary outcomes. The study did not achieve statistically significant reductions in the dual endpoint of death or use of a mechanical assist device at 30 days, nor in the quad endpoint of death, myocardial infarction, need for dialysis, or use of a mechanical assist device at 30 days. Based on the results of the LEVO-CTS trial, the Company does not anticipate additional development of levosimendan for the treatment of LCOS in patients undergoing cardiac surgery. As of December 31, 2016, management determined the IPR&D asset, and corresponding Goodwill, was more than temporarily impaired.
There was no impairment to goodwill recognized during 2015 and 2014. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash and Cash Equivalents | The Company considers all highly liquid instruments with a maturity date of three months or less, when acquired, to be cash equivalents. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash Concentration Risk | On July 21, 2010, the Wall Street Reform and Consumer Protection Act permanently increased the Federal Deposit Insurance Corporation (the “FDIC”) insurance limits to $250,000 per depositor per insured bank. The Company had cash balances of $9,362,812 and $2,908,446 uninsured by the FDIC as of December 31, 2016 and 2015, respectively. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liquidity and Capital Resources |
The Company has financed its operations since September 1990 through the issuance of debt and equity securities and loans from stockholders. The Company had total current assets of $13,628,175 and $20,560,353 and working capital of $7,428,937 and $15,958,723 as of December 31, 2016 and 2015, respectively. Cash resources, including the fair value of the Company’s available for sale marketable securities as of December 31, 2016 were approximately $21.9 million, compared to approximately $38.2 million as of December 31, 2015. The Company expects to continue to incur expenses related to development of levosimendan for heart failure and other potential indications, as well as identifying and developing other potential product candidates. Based on its resources at December 31, 2016, the Company believes that it has sufficient capital to fund its planned operations through the first half of calendar year 2018. However, the Company will need substantial additional financing in order to fund its operations beyond such period and thereafter until it can achieve profitability, if ever. The Company depends on its ability to raise additional funds through various potential sources, such as equity and debt financing, or to license its product candidates to another pharmaceutical company. The Company will continue to fund operations from cash on hand and through sources of capital similar to those previously described. The Company cannot assure that it will be able to secure such additional financing, or if available, that it will be sufficient to meet its needs. To the extent that the Company raises additional funds by issuing shares of its common stock or other securities convertible or exchangeable for shares of common stock, stockholders will experience dilution, which may be significant. In the event the Company raises additional capital through debt financings, the Company may incur significant interest expense and become subject to covenants in the related transaction documentation that may affect the manner in which the Company conducts its business. To the extent that the Company raises additional funds through collaboration and licensing arrangements, it may be necessary to relinquish some rights to its technologies or product candidates, or grant licenses on terms that may not be favorable to the Company. Any or all of the foregoing may have a material adverse effect on the Company’s business and financial performance. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred financing costs | Deferred financing costs represent legal, due diligence and other direct costs incurred to raise capital or obtain debt. Direct costs include only “out-of-pocket” or incremental costs directly related to the effort, such as a finder’s fee and accounting and legal fees. These costs will be capitalized if the efforts are successful, or expensed when unsuccessful. Indirect costs are expensed as incurred. Deferred financing costs related to debt are amortized over the life of the debt. Deferred financing costs related to issuing equity are charged to Additional Paid-in Capital. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative financial instruments | The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risk. Terms of convertible promissory note instruments and other convertible equity instruments are reviewed to determine whether or not they contain embedded derivative instruments that are required under FASB ASC 815, Derivatives and Hedging (“ASC 815”) to be accounted for separately from the host contract, and recorded on the balance sheet at fair value. The fair value of derivative liabilities, if any, is required to be revalued at each reporting date, with corresponding changes in fair value recorded in current period operating results.
Freestanding warrants issued by the Company in connection with the issuance or sale of debt and equity instruments are considered to be derivative instruments, and are evaluated and accounted for in accordance with the provisions of ASC 815. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Beneficial conversion and warrant valuation | In accordance with FASB ASC 470-20, Debt with Conversion and Other Options, the Company records a beneficial conversion feature (“BCF”) related to the issuance of convertible debt that have conversion features at fixed rates that are in-the-money when issued and the fair value of warrants issued in connection with those instruments. The BCF for the convertible instruments is recognized and measured by allocating a portion of the proceeds to warrants, based on their relative fair value, and as a reduction to the carrying amount of the convertible debt equal to the intrinsic value of the conversion feature. As described in Note F, the discount recorded in connection with the BCF and warrant valuation is recognized as non-cash interest expense and is amortized over the life of the convertible note. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preclinical Study and Clinical Accruals | The Company estimates its preclinical study and clinical trial expenses based on the services received pursuant to contracts with several research institutions and contract research organizations (“CROs”) that conduct and manage preclinical and clinical trials on its behalf. The financial terms of the agreements vary from contract to contract and may result in uneven expenses and payment flows. Preclinical study and clinical trial expenses include the following:
- fees paid to CROs in connection with clinical trials, - fees paid to research institutions in conjunction with preclinical research studies, and - fees paid to contract manufacturers and service providers in connection with the production and testing of active pharmaceutical ingredients and drug materials for use in preclinical studies and clinical trials. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment, Net | Property and equipment are stated at cost, subject to adjustments for impairment, less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the following estimated useful lives:
Maintenance and repairs are charged to expense as incurred, improvements to leased facilities and equipment are capitalized.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | Revenues from merchandise sales are recognized upon transfer of ownership, including passage of title to the customer and transfer of the risk of loss related to those goods. Revenues are reported on a net sales basis, which is computed by deducting from gross sales the amount of actual product returns received, discounts, incentive arrangements with retailers and an amount established for anticipated product returns. The Company’s practice is to accept product returns from retailers only if properly requested, authorized and approved.
Revenues from a cost-reimbursement grant sponsored by the United States Army (“Grant Revenue”), are recognized as milestones under the Grant program are achieved. Grant Revenue is earned through reimbursements for the direct costs of labor, travel, and supplies, as well as the pass-through costs of subcontracts with third-party CROs. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Research and Development Costs | Research and development costs include, but are not limited to, (i) expenses incurred under agreements with CROs and investigative sites, which conduct our clinical trials and a substantial portion of our preclinical studies; (ii) the cost of manufacturing and supplying clinical trial materials; (iii) payments to contract service organizations, as well as consultants; (iv) employee-related expenses, which include salaries and benefits; and (v) facilities, depreciation and other allocated expenses, which include direct and allocated expenses for rent and maintenance of facilities and equipment, depreciation of leasehold improvements, equipment, laboratory and other supplies. All research and development expenses are expensed as incurred.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Deferred tax assets and liabilities are recorded for differences between the financial statement and tax bases of the assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is recorded for the amount of income tax payable or refundable for the period increased or decreased by the change in deferred tax assets and liabilities during the period. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | The Company accounts for stock based compensation in accordance with ASC 718 Compensation — Stock Compensation, which requires the measurement and recognition of compensation expense for all stock-based payment awards granted, modified and settled to our employees and directors. The Company chose the “straight-line” attribution method for allocating compensation costs of each stock option on a straight-line basis over the requisite service period using the Black-Scholes Option Pricing Model to calculate the grant date fair value. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss per Share | Basic loss per share, which excludes antidilutive securities, is computed by dividing net loss by the weighted-average number of common shares outstanding for that particular period. In contrast, diluted loss per share considers the potential dilution that could occur from other equity instruments that would increase the total number of outstanding shares of common stock. Such amounts include shares potentially issuable under outstanding options, restricted stock and warrants.
The following outstanding options, restricted stock grants, convertible note shares and warrants were excluded from the computation of basic and diluted net loss per share for the periods presented because including them would have had an anti-dilutive effect.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Leases | The Company maintains operating leases for its office and laboratory facilities. The lease agreements may include rent escalation clauses and tenant improvement allowances. The Company recognizes scheduled rent increases on a straight-line basis over the lease term beginning with the date the company takes possession of the leased space. Differences between rental expense and actual rental payments are recorded as deferred rent liabilities and are included in “Other liabilities” on the consolidated balance sheets. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recent Accounting Pronouncements | In January 2017, the Financial Accounting Standards Board (the “FASB”), issued a new accounting standard that provides guidance for evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The guidance provides a screen to determine when an integrated set of assets and activities, or a set, does not qualify to be a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in an identifiable asset or a group of similar identifiable assets, the set is not a business. If the screen is not met, the guidance requires a set to be considered a business to include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs and removes the evaluation as to whether a market participant could replace the missing elements. The new standard will be effective for the Company on January 1, 2018 and will be adopted on a prospective basis. Early adoption is permitted. The Company is currently evaluating the effect that the standard will have on its consolidated financial statements and related disclosures.
In August 2016, the FASB issued a new accounting standard that clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows where diversity in practice exists. The new standard is effective for the Company in its first quarter of fiscal 2018 and earlier adoption is permitted. The Company is currently evaluating the effect that the updated standard will have on its consolidated financial statements and related disclosures.
In June 2016, the FASB issued a new accounting standard that amends how credit losses are measured and reported for certain financial instruments that are not accounted for at fair value through net income. This new standard will require that credit losses be presented as an allowance rather than as a write-down for available-for-sale debt securities and will be effective for interim and annual reporting periods beginning January 1, 2020, with early adoption permitted, but not earlier than annual reporting periods beginning January 1, 2019. A modified retrospective approach is to be used for certain parts of this guidance, while other parts of the guidance are to be applied using a prospective approach. The Company is currently evaluating the impact that this new standard will have on its consolidated financial statements and related disclosures.
In March 2016, the FASB issued a new accounting standard intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. The new guidance includes provisions to reduce the complexity related to income taxes, statement of cash flows, and forfeitures when accounting for share-based payment transactions. The new standard is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted. The Company does not believe adoption of this standard will have a material impact on its consolidated financial statements and related disclosures .
In May 2014, the FASB issued a new accounting standard that supersedes nearly all existing revenue recognition guidance under GAAP. The new standard is principles-based and provides a five-step model to determine when and how revenue is recognized. The core principle of the new standard is that revenue should be recognized when a company transfers promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. In March 2016, the FASB issued a new standard to clarify the implementation guidance on principal versus agent considerations, and in April 2016, the FASB issued a new standard to clarify the implementation guidance on identifying performance obligations and licensing. The new standard also requires disclosure of qualitative and quantitative information surrounding the amount, nature, timing and uncertainty of revenues and cash flows arising from contracts with customers. In July 2015, the FASB agreed to defer the effective date of the standard from annual periods beginning after December 15, 2016, to annual periods beginning after December 15, 2017, with an option that permits companies to adopt the standard as early as the original effective date. Early application prior to the original effective date is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company has not yet selected a transition method and the Company does not believe adoption of this standard will have a material impact on its consolidated financial statements and related disclosures.
In February 2016, the FASB issued a new accounting standard intended to improve financial reporting regarding leasing transactions. The new standard will require the Company to recognize on the balance sheet the assets and liabilities for the rights and obligations created by all leased assets. The new standard will also require it to provide enhanced disclosures designed to enable users of financial statements to understand the amount, timing, and uncertainty of cash flows arising from all leases, operating and capital, with lease terms greater than 12 month. The new standard is effective for financial statements beginning after December 15, 2018, and interim periods within those annual periods. Early adoption is permitted. See Note H for the Company’s current lease commitments. The Company is currently evaluating the impact that this new standard will have on its financial statements and related disclosures.
In January 2016, the FASB issued a new accounting standard that will enhance the Company’s reporting for financial instruments. The new standard is effective for financial statements issued for annual periods beginning after December 15, 2017, and interim periods within those annual periods. Earlier adoption is permitted for interim and annual reporting periods as of the beginning of the fiscal year of adoption. The Company does not believe the adoption of this standard will have a material impact on its consolidated financial statements.
In November 2015, the FASB issued a new accounting standard that changes the balance sheet classifications of deferred income taxes. This standard amends existing guidance to require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. It is effective for annual reporting periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted. The Company does not expect adoption of this standard will have a material impact on its consolidated financial statements.
In August 2014, the FASB issued a new accounting standard that will require management to assess and evaluate whether conditions or events exist, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements issue date. It is effective for annual periods ending after December 15, 2016 and for annual and interim periods thereafter; early adoption is permitted. The adoption of this new standard did not have a material effect on the Company’s consolidated financial statements. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | The Company determines the fair value of its financial assets and liabilities in accordance with the FASB Accounting Standards Codification (“ASC”) 820 Fair Value Measurements. The Company’s balance sheet includes the following financial instruments: cash and cash equivalents, investments in marketable securities, short-term notes payable, and warrant liabilities. The Company considers the carrying amount of its cash and cash equivalents and short-term notes payable to approximate fair value due to the short-term nature of these instruments.
Accounting for fair value measurements involves a single definition of fair value, along with a conceptual framework to measure fair value, with a fair value defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” The fair value measurement hierarchy consists of three levels:
The Company applies valuation techniques that (1) place greater reliance on observable inputs and less reliance on unobservable inputs and (2) are consistent with the market approach, the income approach and/or the cost approach, and include enhanced disclosures of fair value measurements in the Company’s consolidated financial statements.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in Marketable Securities | The Company classifies all of its investments as available-for-sale. Unrealized gains and losses on investments are recognized in comprehensive income/(loss), unless an unrealized loss is considered to be other than temporary, in which case the unrealized loss is charged to operations. The Company periodically reviews its investments for other than temporary declines in fair value below cost basis and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company believes the individual unrealized losses represent temporary declines primarily resulting from interest rate changes. Realized gains and losses are reflected in other income (expense) in the Consolidated Statements of Operations and Comprehensive Loss and are determined using the specific identification method with transactions recorded on a settlement date basis.
For the year ended December 31, 2016, the Company recognized a loss of $41,955, and a loss of $43,871 for the eight months ended December 31, 2015. For the fiscal years ended April 30, 2015 and 2014, the Company recognized a gain of $1,025, and $0, respectively.
Investments with original maturities at date of purchase beyond three months and which mature at or less than 12 months from the balance sheet date are classified as current. Investments with a maturity beyond 12 months from the balance sheet date are classified as long-term. At December 31, 2016, the Company believes that the costs of its investments are recoverable in all material respects.
The following tables summarize the fair value of the Company’s investments by type. The estimated fair value of the Company’s fixed income investments are classified as Level 2 in the fair value hierarchy as defined in U.S. GAAP. These fair values are obtained from independent pricing services which utilize Level 2 inputs:
The following table summarizes the scheduled maturity for the Company’s investments at December 31, 2016 and 2015, respectively:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrant liability | On July 23, 2013, the Company issued common stock warrants in connection with the issuance of Series C 8% Preferred Stock (the “Series C Warrants”). As part of the offering, the Company issued 2,753,348 warrants at an exercise price of $2.60 per share and contractual term of 6 years. On November 11, 2013, the Company satisfied certain contractual obligations pursuant to the Series C offering which caused certain “down-round” price protection clauses in the outstanding warrants to become effective on that date. In accordance with ASC 815-40-35-9, the Company reclassified these warrants as a current liability and recorded a warrant liability of $1,380,883, which represents the fair market value of the warrants at that date. The initial fair value recorded as warrants within stockholders’ equity of $233,036 was reversed and the subsequent changes in fair value are recorded as a component of other expense.
Financial assets or liabilities are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. The Series C Warrants are measured using the Monte Carlo valuation model which is based, in part, upon inputs for which there is little or no observable market data, requiring the Company to develop its own assumptions. The assumptions used in calculating the estimated fair value of the warrants represent the Company’s best estimates; however, these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and different assumptions are used, the warrant liabilities and the change in estimated fair value of the warrants could be materially different.
Inherent in the Monte Carlo valuation model are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock based on historical volatility that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero.
The Monte Carlo model is used for the Series C Warrants to appropriately value the potential future exercise price adjustments triggered by the anti-dilution provisions. This requires Level 3 inputs which are based on the Company’s estimates of the probability and timing of potential future financings and fundamental transactions. The other assumptions used by the Company are summarized in the following table for the Series C Warrants that were outstanding as of December 31, 2016 and December 31, 2015:
As of December 31, 2016, the fair value of the warrant liability was $226,092. The Company recorded a gain of $298,248 for the change in fair value as a component of other expense on the consolidated statement of comprehensive loss for the year ended December 31, 2016.
The Company recorded a gain of $48,105 for the change in fair value as a component of other expense on the consolidated statement of comprehensive loss for the eight months ended December 31, 2015.
For the fiscal years ended April 30, 2015 and 2014, the Company recognized a gain of $382,431 and a loss of $721,840, respectively, for the change in fair value as a component of other expense on the consolidated statement of operations.
A roll-forward of fair value measurements using significant unobservable inputs (Level 3) for the warrants for the year ended December 31, 2016, for the eight months ended December 31, 2015 and the year ended April 30, 2015 are as follows:
As of December 31, 2016, 240,523 Series C Warrants are outstanding.
The following tables summarize information regarding assets and liabilities measured at fair value on a recurring basis as of December 31, 2016 and December 31, 2015:
There were no significant transfers between levels during the year ended December 31, 2016. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Change in Fiscal Year |
In 2015, the Company’s Board of Directors approved a change in the Company’s fiscal year to a fiscal year beginning on January 1 and ending on December 31 of each year, such change beginning as of January 1, 2016. Accordingly, this annual report on Form 10-K includes financial statements as of and for (i) the calendar year ended December 31, 2016; (ii) the eight months ended December 31, 2015; and (iii) the fiscal years ended April 30, 2015 and 2014. For comparative purposes, an unaudited consolidated statement of operations and comprehensive loss has been included for the year ended December 31, 2015 and for the eight month period from May 1, 2014 to December 31, 2014. The financial information for the year ended December 31, 2015 and the eight months ended December 31, 2014 has not been audited and is derived from the Company’s books and records. In the opinion of management, the financial information for the year ended December 31, 2015 and the eight months ended December 31, 2014 reflects all adjustments necessary to present the financial position and results of operations in accordance with generally accepted accounting principles. Prior to the year-end change, the Company’s fiscal year ended on April 30 of each year. |
B. SUMMARY OF CRITICAL ACCOUNTING POLICIES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Anti-dilutive securities |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair values of investments by type |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Scheduled of investments maturity |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Unobservable Inputs |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of warrant derivative liability |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements |
|
C. BALANCE SHEET COMPONENTS (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property Plant and Equipment |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Liabilities |
|
D. ACQUISITION (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
D. Acquisition Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Consideration Transferred |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recognized amounts of identifiable assets acquired and liabilities assumed |
|
E. INTANGIBLE ASSETS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets |
|
G. STOCKHOLDERS' EQUITY (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrant Activity |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares available for grant under the Plan |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding stock options |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Options Activity |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Options vested and expected to vest |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Assumptions |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock options |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted Stock Grants |
|
H. COMMITMENTS AND CONTINGENCIES (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 | ||||||||||||||||||||||||||||||||||||
H. Commitments And Contingencies Tables | ||||||||||||||||||||||||||||||||||||
Future lease payments |
|
J. INCOME TAXES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Provision for income taxes |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of income tax expenses (benefit) |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred tax assets |
|
K. TRANSITION PERIOD COMPARATIVE BALANCES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
K. Transition Period Comparative Balances | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unaudited consolidated statements of operations and comprehensive loss |
|
B. SUMMARY OF CRITICAL ACCOUNTING POLICIES (Details) - shares |
8 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2016 |
Apr. 30, 2015 |
Apr. 30, 2014 |
|
Options | ||||
Anti-dilutive securities | 4,032,698 | 4,742,032 | 3,718,298 | 3,647,858 |
Warrants | ||||
Anti-dilutive securities | 2,728,236 | 2,415,675 | 2,728,236 | 2,762,466 |
Restricted stock | ||||
Anti-dilutive securities | 394 | 214 | 90 | 42,629 |
Convertible note | ||||
Anti-dilutive securities | 0 | 0 | 0 | 6,652 |
B. SUMMARY OF CRITICAL ACCOUNTING POLICIES (Details 1) - Corporate debt securities |
12 Months Ended |
---|---|
Dec. 31, 2016
USD ($)
| |
Amortized Cost | $ 11,780,631 |
Accrued Interest | 108,813 |
Gross Unrealized Gains | 5,385 |
Gross Unrealized losses | (24,103) |
Estimated Fair Value | $ 11,870,726 |
B. SUMMARY OF CRITICAL ACCOUNTING POLICIES (Details 2) - USD ($) |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
B. Summary Of Critical Accounting Policies Details 2 | ||
Maturing in one year or less | $ 3,284,616 | $ 16,528,494 |
Maturing after one year through three years | 8,586,110 | 18,019,054 |
Total investments | $ 11,870,726 | $ 34,547,548 |
B. SUMMARY OF CRITICAL ACCOUNTING POLICIES (Details 3) - $ / shares |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
B. Summary Of Critical Accounting Policies Details 3 | ||
Closing stock price | $ 1.95 | $ 3.28 |
Expected dividend rate | 0.00% | 0.00% |
Expected stock price volatility | 79.60% | 84.08% |
Risk-free interest rate | 1.35% | 1.44% |
Expected life (years) | 2 years 6 months 22 days | 3 years 6 months 22 days |
B. SUMMARY OF CRITICAL ACCOUNTING POLICIES (Details 4) - USD ($) |
8 Months Ended | 12 Months Ended | |
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2016 |
Apr. 30, 2015 |
|
B. Summary Of Critical Accounting Policies Details 2 | |||
Beginning Balance | $ 572,445 | $ 524,340 | $ 954,876 |
Issuance of warrants | 0 | 0 | 0 |
Exercise of warrants | 0 | 0 | 0 |
(Gain)/Loss included in income from change in fair value of warrants for the period | (48,105) | (298,248) | (382,431) |
Ending Balance | $ 524,340 | $ 226,092 | $ 572,445 |
B. SUMMARY OF CRITICAL ACCOUNTING POLICIES (Details 5) - USD ($) |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Current Assets | ||
Cash and cash equivalents | $ 9,995,955 | $ 3,660,453 |
Marketable securities | 3,284,616 | 16,528,494 |
Long-term Assets | ||
Marketable securities | 8,586,110 | 18,019,054 |
Current Liabilities | ||
Warrant liabilities | 226,092 | 524,340 |
Level 1 | ||
Current Assets | ||
Cash and cash equivalents | 9,995,955 | 3,660,453 |
Marketable securities | 0 | 0 |
Long-term Assets | ||
Marketable securities | 0 | 0 |
Current Liabilities | ||
Warrant liabilities | 0 | 0 |
Level 2 | ||
Current Assets | ||
Cash and cash equivalents | 0 | 0 |
Marketable securities | 3,284,616 | 16,528,494 |
Long-term Assets | ||
Marketable securities | 8,586,110 | 18,019,054 |
Current Liabilities | ||
Warrant liabilities | 0 | 0 |
Level 3 | ||
Current Assets | ||
Cash and cash equivalents | 0 | 0 |
Marketable securities | 0 | 0 |
Long-term Assets | ||
Marketable securities | 0 | 0 |
Current Liabilities | ||
Warrant liabilities | $ 226,092 | $ 524,340 |
B. SUMMARY OF CRITICAL ACCOUNTING POLICIES (Details Narrative) - USD ($) |
8 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2016 |
Apr. 30, 2015 |
Apr. 30, 2014 |
|
B. Summary Of Critical Accounting Policies Details Narrative | ||||
Uninsured FDIC | $ 2,908,446 | $ 9,362,812 | ||
Current assets | 20,560,353 | 13,628,175 | ||
Working capital | 15,958,723 | 7,233,866 | ||
Cash | 38,200,000 | 21,900,000 | ||
Loss in marketable securities recognised | 43,871 | 41,955 | $ 1,025 | $ 0 |
Fair value of the warrant liability | 226,092 | |||
Change in fair value gain (loss) | $ 48,105 | $ 298,248 | $ 382,431 | $ (721,840) |
C. BALANCE SHEET COMPONENTS (Details) - USD ($) |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
C. Balance Sheet Components Details | ||
Laboratory equipment | $ 354,861 | $ 514,214 |
Computer equipment and software | 101,677 | 139,984 |
Office furniture and fixtures | 130,192 | 130,192 |
Subtotal | 586,730 | 784,390 |
Less: Accumulated depreciation | (567,625) | (748,604) |
Property Plant and Equipment | $ 19,105 | $ 35,786 |
C. BALANCE SHEET COMPONENTS (Details 1) - USD ($) |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
C. Balance Sheet Components Details 1 | ||
Operating costs | $ 4,361,538 | $ 2,559,092 |
Employee related | 884,008 | 545,715 |
Total | $ 5,245,546 | $ 3,104,807 |
C. BALANCE SHEET COMPONENTS (Details Narrative) - USD ($) |
8 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2016 |
Apr. 30, 2015 |
Apr. 30, 2014 |
|
Notes to Financial Statements | ||||
Depreciation and amortization expense | $ 31,224 | $ 18,952 | $ 77,836 | $ 88,300 |
D. ACQUISITION (Details) |
12 Months Ended |
---|---|
Dec. 31, 2016
USD ($)
| |
Total | $ 24,047,000 |
Common stock | |
Total | 8,747,802 |
Series E convertible preferred stock | |
Total | $ 15,299,198 |
D. ACQUISITION (Details 1) - USD ($) |
Dec. 31, 2016 |
Dec. 31, 2015 |
Nov. 13, 2013 |
---|---|---|---|
Goodwill | $ 0 | $ 11,265,100 | |
As initially reported [Member] | |||
IPR&D | $ 22,000,000 | ||
Trade and other payables | (256,000) | ||
Liability arising from a contingency | (1,000,000) | ||
Deferred tax liability related to intangibles acquired | 0 | ||
Total identifiable net assets | 20,744,000 | ||
Goodwill | 3,303,000 | ||
Total fair value of consideration | 24,047,000 | ||
Measurement Period Adjustments [Member] | |||
IPR&D | 0 | ||
Trade and other payables | 0 | ||
Liability arising from a contingency | 0 | ||
Deferred tax liability related to intangibles acquired | (7,962,100) | ||
Total identifiable net assets | (7,962,100) | ||
Goodwill | 7,962,100 | ||
Total fair value of consideration | 0 | ||
As adjusted [Member] | |||
IPR&D | 22,000,000 | ||
Trade and other payables | (256,000) | ||
Liability arising from a contingency | (1,000,000) | ||
Deferred tax liability related to intangibles acquired | (7,962,100) | ||
Total identifiable net assets | 12,781,900 | ||
Goodwill | 11,265,100 | ||
Total fair value of consideration | $ 24,047,000 |
E. INTANGIBLE ASSETS (Details) - USD ($) |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Value Assigned | $ 22,000,000 | $ 22,000,000 |
Accumulated Amortization | 0 | 0 |
Impairments | (22,000,000) | (22,000,000) |
Carrying Value (Net of Impairments and Accumulated Amortization) | 0 | 0 |
IPR&D | ||
Value Assigned | 22,000,000 | 22,000,000 |
Accumulated Amortization | 0 | 0 |
Impairments | (22,000,000) | (22,000,000) |
Carrying Value (Net of Impairments and Accumulated Amortization) | $ 0 | $ 0 |
E. INTANGIBLE ASSETS (Details Narrative) - USD ($) |
8 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2016 |
Apr. 30, 2015 |
Apr. 30, 2014 |
|
Amortization Of Intangible Assets | $ 0 | $ 0 | $ 70,304 | $ 62,189 |
Capitalized patent costs | 105,000 | 137,000 | ||
Trademark costs written off | $ 106,000 | $ 0 |
F. NOTES PAYABLE (Details Narrative) - USD ($) |
8 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2016 |
Apr. 30, 2015 |
Apr. 30, 2014 |
|
F. Notes Payable Details Narrative | ||||
Amortization of debt issue costs recorded | $ 21,427 | $ 128,616 | ||
Interest expense | $ 1,507 | $ 0 | 49,081 | 2,212,283 |
Interest expense for amortization of debt discount | $ 16,678 | $ 483,330 |
G. STOCKHOLDERS' EQUITY (Details) - $ / shares |
8 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2016 |
Apr. 30, 2015 |
Apr. 30, 2014 |
|
G. Stockholders Equity Details | ||||
Number of Warrants Outstanding, Beginning | 2,728,236 | 2,728,236 | 2,762,466 | 759,410 |
Number of Warrants Issued | 0 | 175,000 | 5,165,862 | |
Number of Warrants Exercised | 0 | (209,230) | (3,161,145) | |
Number of Warrants Forfeited | (312,561) | (1,661) | ||
Number of Warrants Outstanding, Ending | 2,728,236 | 2,415,675 | 2,728,236 | 2,762,466 |
Weighted Average Exercise Price Outstanding, Beginning | $ 4.39 | $ 4.39 | $ 4.28 | $ 11 |
Weighted Average Exercise Price Issued | 0.00 | 4 | 2.6 | |
Weighted Average Exercise Price Exercised | 0.00 | 2.6 | 2.26 | |
Weighted Average Exercise Price Forfeited | 17.93 | 126 | ||
Weighted Average Exercise Price Outstanding, Ending | $ 4.39 | $ 2.64 | $ 4.39 | $ 4.28 |
G. STOCKHOLDERS' EQUITY (Details 1) - shares |
8 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2016 |
Apr. 30, 2015 |
Apr. 30, 2014 |
|
Exercise of warrants [Default Label] | ||||
1999 Amended Stock Plan Shares available for grant. Beggining Balance | 122,399 | 994,713 | 155,408 | 282,726 |
Additional shares reserved | 1,187,192 | 3,600,000 | ||
Options granted | (315,050) | (726,000) | (50,225) | (3,637,822) |
Options cancelled/forfeited | 650 | 4,785 | 1,300 | |
Restricted stock granted | (610) | (430) | (2,624) | (135,662) |
Restricted stock cancelled/forfeited | 132 | 217 | 15,055 | 44,866 |
1999 Amended Stock Plan Shares available for grant, Ending balance | 994,713 | 268,500 | 122,399 | 155,408 |
G. STOCKHOLDERS' EQUITY (Details 2) - USD ($) |
8 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2016 |
Apr. 30, 2015 |
Apr. 30, 2014 |
|
Number of Options Outstanding, Ending | 4,733,698 | |||
Plan Stock Options [Member] | ||||
Number of Options Outstanding, Beginning | 3,693,298 | 4,007,698 | 3,647,858 | 11,336 |
Number of Options Granted | 315,050 | 726,000 | 50,225 | 3,637,822 |
Number of Options Cancelled | (650) | 0 | (4,785) | (1,300) |
Number of Options Outstanding, Ending | 4,007,698 | 4,733,698 | 3,693,298 | 3,647,858 |
Weighted Average Exercise Price Outstanding, Beginning | $ 5.7 | $ 5.5 | $ 5.79 | $ 57 |
Weighted Average Exercise Price Granted | 3.25 | 2.12 | 4.82 | 5.64 |
Weighted Average Exercise Price Canceled | 35.09 | 0 | 63.84 | 43.9 |
Weighted Average Exercise Price Outstanding, Ending | $ 5.5 | $ 4.98 | $ 5.7 | $ 5.79 |
Aggregate Intrinsic Value | $ 0 |
G. STOCKHOLDERS' EQUITY (Details 4) |
12 Months Ended |
---|---|
Dec. 31, 2016
USD ($)
$ / shares
shares
| |
G. Stockholders Equity Details 4 | |
Number of Option Shares Vested | shares | 2,067,824 |
Weighted Average Exercise Price Vested | $ / shares | $ 5.54 |
Aggregate Intrinsic Value Vested | $ | $ 0 |
Weighted Average Remaining Contractual Life (Years) Vested | 3 years 10 months 24 days |
Number of Option Shares Vested and expected to vest | shares | 2,743,720 |
Weighted Average Exercise Price Vested and expected to vest | $ / shares | $ 4.75 |
Aggregate Intrinsic Value Vested and expected to vest | $ | $ 0 |
Weighted Average Remaining Contractual Life (Years) Vested and expected to vest | 5 years 3 months 18 days |
G. STOCKHOLDERS' EQUITY (Details 5) |
8 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2016 |
Apr. 30, 2015 |
Apr. 30, 2014 |
|
Gain included in income from change in fair value of warrants for the period | ||||
Risk-free interest rate (weighted average) | 1.99% | 2.28% | 2.23% | 1.80% |
Expected volatility (weighted average) | 85.45% | 83.38% | 98.43% | 98.20% |
Expected term (in years) | 7 years | 7 years | 7 years | 6 years |
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
G. STOCKHOLDERS' EQUITY (Details 6) - $ / shares |
8 Months Ended | 12 Months Ended | |
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2016 |
Apr. 30, 2015 |
|
Number of Options Outstanding, Ending | 4,733,698 | ||
Stock Option [Member] | |||
Number of Options Outstanding, Beginning | 25,000 | 25,000 | 0 |
Options granted | 0 | 0 | 25,000 |
Options exercised | 0 | 0 | 0 |
Options forfeited or expired | 0 | (16,666) | 0 |
Number of Options Outstanding, Ending | 25,000 | 8,334 | 25,000 |
Options exercisable at April 30, 2016 | 8,334 | ||
Weighted Average Exercise Price Outstanding, Beginning | $ 3.22 | $ 3.22 | $ 0 |
Weighted Average Exercise Price, Option granted | 0 | 0 | 3.22 |
Weighted Average Exercise Price, Options exercised | 0 | 0 | 0 |
Weighted Average Exercise Price, Options forfeited or expired | 0 | 3.22 | 0 |
Weighted Average Exercise Price Outstanding, Ending | $ 3.22 | 3.22 | $ 3.22 |
Weighted Average Exercise Price, Options exercisable | $ 3.22 |
G. STOCKHOLDERS' EQUITY (Details 7) - $ / shares |
8 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2016 |
Apr. 30, 2015 |
Apr. 30, 2014 |
|
Ending Balance [Default Label] | ||||
Number of Restricted Stock Grants, Beginning | 90 | 394 | 42,478 | 1,917 |
Granted | 610 | 430 | 2,624 | 135,662 |
Vested | (174) | (327) | (29,957) | (50,235) |
Cancelled | (132) | (283) | (15,055) | (31,503) |
Forfeited | (13,363) | |||
Number of Restricted Stock Grants Ending | 394 | 214 | 90 | 42,478 |
Weighted Average Grant Date Fair Value, Beginning | $ 4.01 | $ 3.34 | $ 6.39 | $ 48.4 |
Weighted Average Grant Date Fair Value, Granted | 3.37 | 2.72 | 4.9 | 3 |
Weighted Average Grant Date Fair Value, Vested | 3.61 | 3.11 | 5.99 | 2.3 |
Weighted Average Grant Date Fair Value, Cancelled | 3.57 | 3.13 | 6.95 | 1.67 |
Weighted Average Grant Date Fair Value, Forfeited | 4.49 | |||
Weighted Average Grant Date Fair Value, Ending | $ 3.34 | $ 2.72 | $ 4.01 | $ 6.39 |
H. COMMITMENTS AND CONTINGENCIES (Details) |
Dec. 31, 2016
USD ($)
|
---|---|
H. Commitments And Contingencies Tables | |
2017 | $ 112,431 |
2018 | 115,220 |
2019 | 118,117 |
2020 | 121,084 |
2021 | 61,803 |
Total | $ 528,655 |
H. COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) |
8 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2016 |
Apr. 30, 2015 |
Apr. 30, 2014 |
|
Commitments and Contingencies Disclosure [Abstract] | ||||
Total rent expense | $ 75,933 | $ 91,208 | $ 111,171 | $ 107,946 |
Amortization expense | $ 70,000 | $ 70,000 |
I. 401(k) BENEFIT PLAN (Details Narrative) - USD ($) |
8 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2016 |
Apr. 30, 2015 |
Apr. 30, 2014 |
|
Compensation and Retirement Disclosure [Abstract] | ||||
Matching contributions expense for Retirement Savings Plan | $ 57,352 | $ 83,589 | $ 82,185 | $ 47,087 |
J. INCOME TAXES (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
J. Income Taxes Details | ||
Current federal income tax expense | $ 0 | $ 0 |
Deferred federal income tax benefit | (7,139,565) | 0 |
Provision for federal income taxes: | (7,193,565) | 0 |
Current state income tax expense | 0 | 0 |
Deferred state income tax benefit | (822,535) | 0 |
Provision for state income taxes: | (822,535) | 0 |
Total | $ (7,962,100) | $ 0 |
J. INCOME TAXES (Details 1) - USD ($) |
8 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Apr. 30, 2015 |
Apr. 30, 2014 |
|
Income Tax Disclosure [Abstract] | |||||
U.S. federal taxes (benefit) at statutory rate | $ (17,641,231) | $ (3,423,108) | |||
State income tax benefit, net of federal benefit | (2,031,238) | (394,142) | |||
Stock compensation | 141,807 | 37,264 | |||
Other nondeductible, including goodwill impairment | 4,160,717 | (15,287) | |||
Other, including expiration of NOL carryforwards | (57,490) | (72,808) | |||
Change in state tax rate | 241,518 | 0 | |||
Change in valuation allowance | 7,223,817 | 3,868,081 | |||
Income tax | $ 0 | $ (7,962,100) | $ 0 | $ 0 | $ 0 |
J. INCOME TAXES (Details 2) - USD ($) |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Deferred tax assets | ||
Net operating Loss Carryforwards | $ 46,227,681 | $ 39,190,436 |
Accruals and others | 902,546 | 691,341 |
Capital loss carryoforwards | 12,395 | 0 |
Valuation allowance | (47,086,442) | (39,862,626) |
Net deferred tax assets | 56,180 | 19,151 |
Deferred Tax Liabilities | ||
IPR&D | 0 | (7,962,100) |
Other liabilities | (56,180) | (19,151) |
Net Deferred Tax Liabilities | $ 0 | $ (7,962,100) |
J. INCOME TAXES (Details Narrative) |
Dec. 31, 2016
USD ($)
|
---|---|
Federal [Member] | |
Operating loss carryforwards | $ 124,000,000 |
State [Member] | |
Operating loss carryforwards | $ 101,800,000 |
K. TRANSITION PERIOD COMPARATIVE BALANCES (Details) - USD ($) |
8 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Apr. 30, 2015 |
Apr. 30, 2014 |
|
Government grant revenue | $ 0 | $ 0 | $ 49,286 | $ 262,995 | ||
Total net revenue | 0 | 0 | 49,286 | 158,926 | ||
Operating expenses | ||||||
Research and development | 6,484,867 | 13,139,681 | 6,660,387 | 2,996,721 | ||
Loss on impairment of long-lived assets | 0 | 33,265,100 | 1,034,863 | 0 | ||
Total operating expenses | 10,425,498 | 52,650,739 | 14,866,029 | 16,770,046 | ||
Net operating loss | (10,425,498) | (52,650,739) | (14,816,743) | (16,611,120) | ||
Interest expense | 1,507 | 0 | 49,081 | 2,212,283 | ||
Other (income) expense | 359,041 | 764,735 | 784,012 | (718,436) | ||
Net loss | (10,067,964) | (43,923,904) | (14,081,812) | (19,541,839) | ||
Unrealized loss (gain) on marketable securities | (156,160) | 110,724 | 26,718 | |||
Total comprehensive loss | $ 10,224,124 | $ 43,813,180 | $ 14,055,094 | $ 19,541,839 | ||
Weighted average number of common shares outstanding, basic and diluted | 28,119,597 | 28,119,835 | 28,077,963 | 9,362,031 | ||
Transition period [Member] | ||||||
Government grant revenue | $ 49,286 | |||||
Total net revenue | 49,286 | |||||
Operating expenses | ||||||
General and administrative | $ 4,439,842 | 6,671,568 | ||||
Research and development | 4,240,467 | 8,904,787 | ||||
Loss on impairment of long-lived assets | 1,034,863 | |||||
Total operating expenses | 8,680,309 | 16,611,218 | ||||
Net operating loss | 8,680,309 | 16,561,932 | ||||
Interest expense | 46,736 | 3,851 | ||||
Other (income) expense | (509,420) | (633,632) | ||||
Net loss | 8,217,625 | 15,932,151 | ||||
Unrealized loss (gain) on marketable securities | 158,775 | (29,332) | ||||
Total comprehensive loss | $ 8,376,400 | $ 15,902,819 | ||||
Net loss per share, basic | $ (0.29) | $ (0.57) | ||||
Weighted average number of common shares outstanding, basic and diluted | 28,057,659 |
O3<$>@0J44TW1(E\S2#13)0)/-$YHZ(C\ 1K# #%68^
M'SL2 (3 $CDHD?M\9Z^L :Q,E,=:V7%M)MF]?2M8Z]O#0ODELY>.(AR)Y9L3
4/PHLBLV8D=NI]+\(3)P>.O2F#
M,[8BWJ%XA]Y+P9,D8Y= -,<"[S''XYGWG8N.$B9]ZR%'^!^]F?C+;*HU%R"LEPK9* I\.W^>$H#
M/@)^<1CMZHQ")1>M7X+Q6!=X%Q(" 94+"LQO5[@#(8*03^-UUL1+R$!&H=JGC*?(ZO/D;4#02@!1D;!Z(RN"#OH
M"Y-[.3W50AU2H]'A4G[1]Y0QOE27M3[[+S;=3?\#LT-1T8-0XC'"W"K'$X
M(AJY#[<=A9N.P@U'BV,[#A@RVRDF<82QMW"TQN'8PWN/?.*(;#HB&XZ"A2.R
MSH[CG;?SEX>T!@8A"7
_4)JRU[A\)454-+5,+T4-GGAR%;)DV1WDBJI? #H[4QG2QR<=:\Z6 G W5N6R;_E,#%L F7X7O@N3G5V@9(D??L!#] _^QW
MTIS(K')H6NA4([I PG$3/BT?MYG%.\!+ X.ZV@>VDKT0K_;P]; )(VL(.%3:
M*C"S7& +G%LA8^/WI!G.*2WQ>O^N_MG5;FK9,P5;P7\U!UUOPBP,#G!D9ZZ?
MQ? %IGK2,)B*_P87X 9NG9@$;7E7&DM;Q=S :CSX-<3I^L_[5!J^#
M>6:2;T3UI]RKTS*F<;3G!W:NU*.X?N-#0"2.ANA_\ NO--PHT3YVHI+V/]J=
MI1+U8$5+J=EK_RP;^[SV;W(TT,($.!#@2-"^/R.@@8#>"=FG!#P0\#L!?TH@
M X$XA*2/W2;SGBFV6G3B&G5]/;3,E%UZ2_1V[
I.E-
MG"Q6O@4AD*4DCO%4$C25Q$^E2/ % U D0#4>6'42Q4TSN8/5TI1I1112AVE
MP2:]4OH :38JE*%"&2*4.4*9+T2F2LI1I1Q1RAVEW%,:D2A0B0*1*!R)PI.
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M1&L_::++=]7R+U!+ P04 " .A'!*-L24""@" "P!P &0 'AL+W=O
M
PH^5.>1)&YB>N"Z*^UZO_QB^\5+B.1(VQ%67;
M_7K;
8^"!,Y@P3H$L7701GF/A C(FH
MXV-/<(R)#\=D#K(IJ7"6A(-,?$@F