See accompanying notes, which are an integral part of these consolidated financial statements.
See accompanying notes, which are an integral part of these consolidated financial statements.
See accompanying notes, which are an integral part of these consolidated financial statements.
See accompanying notes, which are an integral part of these consolidated financial statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Organization and Liquidity
Organization
Taxus Cardium was incorporated in Delaware in December 2003. We are an operating company that manages a medical technologies portfolio of equity-based and potential royalty-driven investments as follows: (1) Angionetics, currently a majority-owned subsidiary focused on the late-stage clinical development and commercialization of Generx™, an angiogenic gene therapy product candidate designed for medical revascularization for the potential treatment of patients with myocardial ischemia and refractory angina due to advanced coronary artery disease; (2) Activation Therapeutics, a wholly owned subsidiary focused on the development and commercialization of the Excellagen® technology platform, an FDA-cleared flowable dermal matrix for advanced wound care that we believe has broad potential applications as a delivery platform for small molecule drugs, proteins and biologics; (3) LifeAgain a wholly-owned subsidiary that has developed an advanced medical data analytics (ADAPT®) technology platform focused on developing new and innovative products for the life insurance and healthcare sectors; and (4) a minority investment in Healthy Brands Collective, a functional food and nutraceutical company which acquired the Company’s To Go Brands® business.
Our business is focused on the acquisition and strategic development of product opportunities or businesses having the potential to address significant unmet medical needs, and having definable pathways to commercialization. Our business model is designed to create a portfolio of opportunities for success, avoiding reliance on any single technology platform or product type. We focus on late-stage product development bridging the critical gap between promising new technologies and product opportunities that are ready for commercialization. As our product opportunities and businesses are advanced and corresponding valuations established, we intend to consider various corporate development transactions designed to place our product candidates into larger organizations or with partners having existing commercialization, sales and marketing resources, and a need for innovative products. Such transactions could involve the sale, partnering or other monetization of particular product opportunities or businesses.
We have yet to generate positive cash flows from operations, and are essentially dependent on equity and debt funding to finance our operations.
Liquidity and Going Concern
As of December 31, 2016, we had $930,397 in cash and cash equivalents. Our working capital deficit at December 31, 2016 was approximately $3.5 million. We have incurred recurring losses and as of December 31, 2016, we have an accumulated deficit approximately of $117.4 million. During the years ended December 31, 2016 and 2015, we used approximately $2.0 million and $1.1 million of cash in our operating activities.
Our primary source of capital resources is from proceeds from sales of our equity securities. During the years ended December 31, 2016 and 2015, we raised proceeds of approximately $3.0 million and $0.6 million, respectively from the sale or subscription of common stock and preferred stock to be used for general corporate purposes, including, but not limited to, research and development activities and for working capital.
Our history of recurring losses and uncertainties as to whether our operations will become profitable raises substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments related to the recoverability of assets or classifications of liabilities that might be necessary should we be unable to continue as a going concern.
The accompanying consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplates our continuation as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business for at least one year from the issuance of these consolidated financial statements. Our ability to continue our operations is dependent on the execution of management’s plans, which include the raising of capital through the equity and/or debt markets, until such time that funds provided by operations are sufficient to fund working capital requirements. The consolidated financial statements contained in this report do not include any adjustments related to the recoverability of assets or classifications of liabilities that might be necessary should we be unable to continue as a going concern. If we were not to continue as a going concern, we would likely not be able to realize our assets at values comparable to the carrying value or the fair value estimates reflected in the balances set out in the consolidated financial statements.
We intend to secure additional working capital through sales of equity and debt securities to finance our operations, or the sale of certain equity interests in our businesses, technology platforms, products or product candidates and licensing agreements covering the marketing and sale of Excellagen and Generx in certain geographic markets and regions.
On June 7, 2016, Taxus Cardium and Angionetics entered into a Share Purchase Agreement with an entity affiliated with Huapont Life Sciences Co. Ltd, a China-based pharmaceutical and active pharmaceutical ingredient company (“Huapont”). Pursuant to the Share Purchase Agreement, Angionetics agreed to sell 600,000, shares of its newly authorized Series A Convertible Preferred Stock (the “Shares”) to the Huapont affiliate in exchange for $3,000,000 in cash. The agreement called for the investment from the Huapont affiliate to be made in two tranches—the closing of the initial tranche of 200,000 Shares for $1,000,000 shortly following the
-37-
execution of the agreement and the closing of the second tranche of 400,000 Shares for $2,000,000 was conditio
ned upon Angionetics securing FDA clearance to initiate a new U.S.-based Phase 3 clinical study (the AFFIRM study) to evaluate the safety and definitive efficacy of the Generx
TM
[Ad5FGF-4] product candidate for the treatment of patients with ischemic heart
disease and refractory angina. The closings took place, and the Shares were issued, on July 5, 2016 and September 28, 2016, respectively.
On April 4, 2015 we entered into a term sheet with Shenzhen Qianhai Taxus, whereby we proposed to sell Shenzhen Qianhai Taxus 600,000 shares of common stock in our Angionetics subsidiary in exchange for $3.0 million in cash. The $3.0 million was to be paid in tranches that were to be completed by May 31, 2015. Shenzhen Qianhai Taxus paid $600,000 of the financing, which was recorded as common stock issuable. Since Shenzhen Qianhai Taxus did not complete this transaction, instead Huapont agreed to fund the investment. Shenzhen Qianhai Taxus is eligible to apply this amount toward the purchase of common stock of the Company or its subsuduaries based on terms and conditions approved by the Company’s Board of Directors. This contribution is committed and not refundable to Shenzhen Qianhai Taxus.
Note 2—Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with U.S. GAAP and the rules and regulations of the Securities and Exchange Commission (“SEC”).
Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, advances from related party, and payable, approximate fair value due to the short term maturities of these instruments.
Use of Estimates and assumptions and critical accounting estimates and assumptions
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Critical accounting estimates are estimates for which (a) the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating performance is material.
Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates.
The most significant estimates impacting the financial statements contained in this report include valuing options and warrants using option pricing models. These significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.
Prior Period Reclassifications
Certain prior period amounts that were combined in the December 31, 2015 consolidated financial statements have been reclassified for comparability with the current presentation. These reclassifications had no effect on previously reported statement of operations.
Investments
We adjust the carrying amount of our investments for any impairments that might occur due to other-than-temporary impairment (“OTTI”) declines. We consider the need for impairment if and when indicators of other than temporary declines in value are present. Management evaluates investments for OTTI declines on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation.
Principles of Consolidation
The consolidated financial statements include the accounts of Taxus Cardium Pharmaceuticals Group, Inc. and its consolidated subsidiaries, Angionetics Inc., Activation Therapeutics, Inc. and LifeAgain Insurance Solutions, Inc. All significant inter-company transactions and balances have been eliminated in consolidation.
-38-
Controlling and Non-Controlling Interest
As a result of the issuance of 200,000 shares of Angionetics Series A Convertible Preferred Stock on July 5, 2016, the investor acquired a non-controlling interest of 5.6% of the voting interests of Angionerics for the purchase price of $1,000,000 (See Note
9
– Stockholders’ Equity – Preferred Stock – Angionetics Series A Convertible Preferred Stock.)
As a result of the issuance of 400,000 shares of Angionetics Series A Convertible Preferred Stock on September 28, 2016, the same investor acquired an additional non-controlling interest, which brought them to 15.0% of the aggregate voting interests of Angionerics, for an additional purchase price of $2,000,000 (See Note
9
– Stockholders’ Equity – Preferred Stock – Angionetics Series A Convertible Preferred Stock.)
The profits and losses of Angionetics are allocated among the controlling interest and the non-controlling interest in the same proportions as their ownership interests.
Business Acquisitions
Business combinations are accounted for using the acquisition method of accounting in accordance with ASC 850 “Business Combinations.” The cost of an acquisition is measured as the fair value of the consideration transferred on the acquisition date. When we acquire a business, we assess the acquired assets and liabilities assumed for the appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions at the acquisition date. The excess of the total consideration transferred over the net identifiable assets acquired and liabilities assumed is recognized as goodwill. If this consideration is lower than the fair value of the identifiable net assets acquired, the difference is recognized as a gain on business acquisition. Acquisition costs are expensed as incurred and included in general and administrative expenses in our consolidated statements of operations.
Cash and Cash Equivalents
We consider all highly liquid investments with maturities of three months or less when purchased to be cash equivalents.
Concentration of Credit Risk
Financial instruments that potentially subject us to significant concentrations of credit risk consist of cash and cash equivalents. At times, our cash and cash equivalents may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. As of December 31, 2016, we had no cash and cash equivalent balances in excess of the federally insured limit of $250,000.
Inventories, net
Inventories are stated at lower of cost or net realizable value and consist of raw materials associated with the Excellagen product. Inventories are valued on a first-in, first-out (FIFO) basis. We record reserves for inventories that are obsolete or exceed anticipated demand or carried at an amount that exceeds management’s estimate of net realizable value. In establishing such reserves, management considers historical sales of identical and/or similar goods, product development plans and expected market demand. Our inventory is fully reserved as of December 31, 2016 and 2015, respectively.
Property and Equipment, net
Property and equipment are stated at cost and include equipment, installation costs and materials less accumulated depreciation and amortization. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. Estimated useful lives of the assets range from 3 to 5 years. Leasehold improvements are amortized over the lesser of the useful lives or the term of the respective lease.
Expenditures for maintenance and repairs, which do not extend the useful life of the assets, are charged to expense as incurred. Gains or losses on disposal of property and equipment are reflected in general and administrative expenses in the statement of operations.
Impairment of Long-Lived Assets
Long-lived assets to be held and used, including property and equipment as well as intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable such as:
|
•
|
a significant decline in the observable market value of an asset;
|
|
•
|
a significant change in the extent or manner in which an asset is used; or
|
|
•
|
a significant adverse change that would indicate that the carrying amount of an asset or group of assets is not recoverable.
|
-39-
Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual dispositi
on. In the event that such cash flows are not expected to be sufficient to recover the carrying amount of the assets, the assets are written-down to their estimated fair values. Long-lived assets to be disposed of are carried at fair value less costs to se
ll.
Preferred Stock
We apply the accounting standards for distinguishing liabilities from equity when determining the classification and measurement of our preferred stock. Shares that are subject to mandatory redemption, if any, are classified as liability instruments and are measured at fair value. We classify conditionally redeemable preferred shares, which includes preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control, as temporary equity. At all other times, preferred shares are classified as stockholders’ equity.
Research and Development
In accordance with Accounting Standard Codification (“ASC”) Topic 730 “Research and Development”, research and development costs are expensed as incurred. Research and development expenses consist of purchased technology, purchased research and development rights and outside services for research and development activities associated with product development. In accordance with ASC Topic 730, the cost to purchase such technology and research and development rights are required to be charged to expense if there is currently no alternative future use for this technology and, therefore, no separate economic value.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period enacted. A valuation allowance is provided when it is more likely than not that a portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the reversal of deferred tax liabilities during the period in which related temporary differences become deductible. The benefit of tax positions taken or expected to be taken in the Company’s income tax returns are recognized in the consolidated financial statements if such positions are more likely than not to be sustained upon examination.
The portion of the benefit associated with tax positions taken that exceed the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. We follow the provision of ASC 740-10 “Income Taxes — Overall” related to Accounting for Uncertain Income Tax Positions. When tax returns are filed, there may be uncertainty about the merits of positions taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. As of December 31, 2016 and 2015, we did not have any unrecognized tax benefits. We do not expect that the amount of unrecognized tax benefits will significantly increase or decrease within the next twelve months. There were no interest or penalties for the years ended December 31, 2016 and 2015. Tax years from 2014 to 2016 are generally subject to examination by taxing authorities, (although net operating losses from all years are subject to examinations and adjustments for at least three years following the year in which the attributes are used.)
Common Stock Purchase Warrants
We account for common stock purchase warrants issued in connection with capital financing transactions in accordance with the provisions of ASC 815 “Derivatives and Hedging”. Based upon the provisions of ASC 815, we classify as equity any contracts that (i) require physical settlement or net-share settlement or (ii) give the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). We classify as assets or liabilities any contracts that (i) require net-cash settlement (including a requirement to net-cash settle the contract if an event occurs and if that event is outside the control of the Company) or (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement).
Earnings (Loss) Per Common Share
We compute earnings (loss) per share, in accordance with ASC 260 “Earnings per Share”, which requires dual presentation of basic and diluted earnings per share. Basic earnings (loss) per common share is computed by dividing earnings (loss) attributable to the controlling interest common stock holders by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per common share is computed by dividing earnings (loss) attributable to the controlling interest common stock holders by the weighted average number of common shares outstanding, plus the issuance of common shares, if dilutive, that could result from the exercise of outstanding stock options and warrants. As of December 31 2016 and 2015, potentially dilutive securities consist of 928
-40-
and 1,041 shares of preferred stock convertible into 5,154,674 and 3,4
68,804 shares of common stock, respectively and outstanding stock options and warrants to acquire 12,116,334 and 8,054,346 shares of common stock, respectively.
These potentially dilutive securities were not included in the calculation of loss attributable to the controlling interest common stock holders per common share for the years ended December 31, 2016 and 2015 because their effect would be anti-dilutive.
Fair Value Measurement
Valuation Hierarchy
The accounting standard of the FASB for fair value measurements establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.
The Company accounts for investments in other entities under the cost method of accounting when the Company does not hold significant interest in nor has any management control over those entities. Based on the assessment, the Company recorded impairment charges of $0 and $300,000 during the years ended December 31, 2016 and, 2015, respectively. (See Note 3) Investments are classified within Level 3 of the valuation hierarchy.
We have also fully impaired our $200,000 deposit on investment in SourceOne since we have determined it was probable it would not realize any benefit from its during the year ended December 31, 2015.
There were no transfers between level 1, 2 or 3 during the year ended December 31, 2015.
Change in Level 3 assets measured at fair value on a non-recurring basis for the years ended December 31, 2016 and 2015 is as follows:
Balance – January 1, 2015
|
|
$
|
300,000
|
|
Impairment of investment
|
|
|
(300,000
|
)
|
Balance – December 31, 2015
|
|
|
—
|
|
Balance – December 31, 2016
|
|
$
|
—
|
|
Stock-Based Compensation
We recognize compensation expense for all equity–based payments in accordance with ASC 718 “Compensation – Stock Compensation”. Under fair value recognition provisions, we recognize share–based compensation net of an estimated forfeiture rate and recognize compensation cost only for those shares expected to vest over the requisite service period of the award.
We have estimated the fair value of an option award on the date of grant using the Black–Scholes valuation model which approximates a binomial lattice model. The Black–Scholes option valuation model requires the development of assumptions that are input into the model. These assumptions are the expected stock volatility, the risk–free interest rate, the option’s expected life, the dividend yield on the underlying stock and the expected forfeiture rate. Expected volatility is calculated based on the historical volatility of our common stock over the expected option life and other appropriate factors. Risk–free interest rates are calculated based on continuously compounded risk–free rates for the appropriate term. The dividend yield is assumed to be zero as we have never paid or declared any cash dividends on its common stock and does not intend to pay dividends on its common stock in the foreseeable future. The expected forfeiture rate is estimated based on historical experience.
Determining the appropriate fair value model and calculating the fair value of equity–based payment awards requires the input of the subjective assumptions described above. The assumptions used in calculating the fair value of equity–based payment awards represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and we use different assumptions, equity–based compensation could be materially different in the future. In addition, we are required to estimate the expected forfeiture rate and recognize expense only for those shares expected to vest. If actual forfeiture rate is materially different from the estimates, the equity–based compensation could be significantly different from what we have recorded in the current period.
-41-
Total stock-based compensation expense included in the consolidated statements of operations was allocated to research a
nd development and general and administrative expenses as follows:
|
|
December 31,
|
|
|
|
2016
|
|
|
2015
|
|
Research and development
|
|
$
|
18,467
|
|
|
$
|
32,552
|
|
General and administrative
|
|
|
500,012
|
|
|
|
952,562
|
|
Total stock-based compensation
|
|
$
|
518,479
|
|
|
$
|
985,114
|
|
Recent Accounting Pronouncements
In March, 2016, the Financial Accounting Standards Board (
“
FASB
”
) issued (
“
ASU
”
)
ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting
. This standard is intended to improve the accounting for employee share-based payments and affects all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment award transactions are simplified, including income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The standard is effective for fiscal years beginning after December 15, 2016. Early adoption is permitted. We do not believe the adoption of this standard will have a material effect on our consolidated financial position and results of operations.
In February 2016, the FASB issued
ASU 2016-02, Leases (Topic 842).
ASU 2016-02 increases the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Certain qualitative and quantitative disclosures are required, as well as a retrospective recognition and measurement of impacted leases. The new ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2018, with early adoption permitted. We are currently evaluating this ASU to determine its impact on our consolidated net income, financial position, cash flows and disclosures.
In November 2015, the FASB issued
ASU 2015-17, Balance Sheet Classification of Deferred Taxes
. ASU 2015-17 simplifies the presentation of deferred taxes by requiring deferred tax assets and liabilities be classified as noncurrent on the balance sheet. ASU 2015-17 is effective for public companies for annual reporting periods beginning after December 15, 2016, and interim periods within those fiscal years. The guidance may be adopted prospectively or retrospectively and early adoption is permitted. We do not believe the adoption of this standard will have a material effect on our consolidated financial position and results of operations.
In July 2015, the FASB issued
ASU 2015-11, Simplifying the Measurement of Inventory
. ASU 2015-11 simplifies the subsequent measurement of inventory by requiring inventory to be measured at the lower of cost and net realizable value. ASU 2015-11 applies only to inventories for which cost is determined by methods other than last-in first-out and the retail inventory method. ASU 2015-11 is effective for public companies for annual reporting periods beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption of ASU 2015-11 is permitted. We do not believe the adoption of this standard will have a material effect on our consolidated financial position and results of operations.
In August 2014, the FASB issued Accounting Standards Update ASU 2014-15,
Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern
. This ASU is intended to provide guidance on the responsibility of reporting entity management. Specifically, this ASU provides guidance to management related to evaluating whether there is substantial doubt about the reporting entity’s ability to continue as a going concern and about related financial statement note disclosures. The FASB issued this guidance to require management evaluation and potential financial statement disclosures. ASU 2014-15 is effective for financial statements with periods ending after December 15, 2016. We adopted this standard, and its adoption did not have a material impact on our consolidated financial statements.
NOTE 3—Disposal of Long-Lived Assets and Investment
On November 15, 2013, we sold the business conducted by our To Go Brands, Inc. subsidiary to Healthy Brands Collective in exchange for 33,441
shares of preferred stock of Cell-nique Corporation (“Cell-nique”) (the parent company of Healthy Brands Collective) and the assumption of certain liabilities.
During the year ended December 31, 2015, we believed there were certain impairment triggering events and circumstances which warranted an evaluation of our investment in the Cell-nique preferred shares and a impairment charge of $300,000 was recorded.
-42-
Note 4—Inventories
Inventories consisted of the following:
|
|
December 31,
2016
|
|
|
December 31,
2015
|
|
Raw materials
|
|
$
|
467,761
|
|
|
$
|
467,761
|
|
|
|
|
467,761
|
|
|
|
467,761
|
|
Less provision for obsolete inventory
|
|
|
(467,761
|
)
|
|
|
(467,761
|
)
|
Inventories, net
|
|
$
|
—
|
|
|
$
|
—
|
|
Note 5—Property and Equipment
Property and equipment consisted of the following:
|
|
December 31,
|
|
|
|
2016
|
|
|
2015
|
|
Computer and telecommunication equipment
|
|
$
|
12,902
|
|
|
$
|
425,331
|
|
Machinery and equipment
|
|
|
—
|
|
|
|
31,779
|
|
Office equipment
|
|
|
4,006
|
|
|
|
11,490
|
|
Office furniture and equipment
|
|
|
7,396
|
|
|
|
223,206
|
|
Leasehold improvements
|
|
|
147,424
|
|
|
|
23,053
|
|
|
|
|
171,728
|
|
|
|
714,859
|
|
Accumulated depreciation and amortization
|
|
|
(13,501
|
)
|
|
|
(708,334
|
)
|
Property and equipment, net
|
|
$
|
158,227
|
|
|
$
|
6,525
|
|
Depreciation and amortization of property and equipment totaled $20,026 and $9,889 for the years ended December 31, 2016 and 2015, respectively.
Note 6—Accrued Liabilities
Accrued liabilities consisted of the following:
|
|
December 31,
|
|
|
|
2016
|
|
|
2015
|
|
Payroll and benefits
|
|
$
|
982,482
|
|
|
$
|
789,852
|
|
Other
|
|
|
687,858
|
|
|
|
305,000
|
|
Total
|
|
$
|
1,670,340
|
|
|
$
|
1,094,852
|
|
Note 7—Commitments and Contingencies
Lease Commitments
On August 15, 2013, we entered into a lease for approximately 4,419 square feet of office space in San Diego, California to be used as our corporate headquarters. The lease commenced on September 1, 2013 once improvements were completed and has a term of 36 months from the commencement date. In addition to monthly base rent, we are also required to pay our proportionate share of any building operating expenses in excess of 2014 levels. In connection with the lease, we paid a security deposit of $9,231. Monthly base rent is $9,678 during the first year of the lease and increases to $10,016 in year two and $10,367 in year three.
On June 23, 2016, we entered into a thirty-eight month lease agreement to lease office space commencing on September 30, 2016. The approximate base monthly rent in the first, second and third years is $3,500, $3,700, and $3,800 respectively. The base monthly rent in the final two months of the agreement is $3,900. The total base rent over the lease term equals $139,800.
Future annual minimum rental payments under the leases are as follows:
Year Ending December 31,
|
|
Facilities
(Operating Lease)
|
|
2017
|
|
$
|
42,790
|
|
2018
|
|
|
44,233
|
|
2019
|
|
|
41,997
|
|
Total
|
|
$
|
129,020
|
|
Rent expense was $80,166 and $125,203 for the years ended December 31, 2016 and 2015 respectively.
-43-
License Fees
In October 2005, we completed a transaction with Schering AG Group, Germany (now part of Bayer AG) and related licensors, including the University of California and New York University, for the transfer or license of certain assets and technology for potential use in treating ischemic and other cardiovascular conditions. Under the terms of the transaction, we paid Schering a $4 million fee, and would be required to pay a $10 million milestone payment upon the first commercial sale of each resulting product. We also may be obligated to pay the following future royalties to Schering: (i) 5% on net sales of an FGF-4 based product such as Generx, or (ii) 4% on net sales of other products developed based on technology transferred to Cardium by Schering.
As part of the Schering transaction, we acquired rights and corresponding obligations under the Regents of the University of California (Regents) September 1995 agreement, as amended. Under the University of California agreement, we are obligated to pay (1) an annual royalty fee of 2% based on net sales of products incorporating the technology licensed under the agreement, and (2) a minimum annual royalty fee (which may be offset against the net sales-based royalty fee) $100,000 for 2010, $100,000 for 2011, $150,000 for 2012, $150,000 for 2013 and $200,000 for 2014 and thereafter, payable on February 28 of the following year. We incurred the minimum license fee in 2013 and 2012. We may cancel that agreement at any time with 60 days’ notice, following which we would continue to be responsible only for obligations and liabilities accrued before termination.
The primary U.S. patent covering certain methods of gene therapy, covered by this University of California license agreement has expired, and the Company did not dispute the University’s decision to terminate this license agreement. As a result of such action, the University of California has asserted certain claims and unpaid expenses relating to this license agreement and asserted that an outstanding balance totaling $1,006,709. As of December 31, 2016, the Company had an accrued unpaid balance totaling $782,836. The Company booked an additional $223,873 to reflect the amount asserted by the University of California. While the Company has fully accounted for such amounts claimed due and payable the Company retains the right to challenge any amounts asserted to be outstanding.
As part of the Schering transaction, we acquired rights and corresponding obligations under the New York University March 1997 Agreement as amended, under which we may be obligated to pay an annual fee of $50,000 per year through the completion of the first full year of sales licensed technology as well as ongoing patent expenses incurred in connection with the licensed technologies. Should licensed products under the agreement reach the stage of filing of a product license application (PLA) and PLA approval or foreign equivalent thereof, we may be obligated to pay up to an aggregate amount of approximately $1.8 million for each product in milestone payments. In addition, beginning in the year in which we complete one full year of sales of licensed products and continuing thereafter until the agreement terminates or expires, we may also be obligated to pay annual royalty fees equal to 3% on net sales of products incorporating the licensed technology.
Legal Proceedings
In the course of our business, we are routinely involved in proceedings such as disputes involving goods or services provided by various third parties, which we do not consider likely to be material to the technology we develop or license, or the products we develop for commercialization, but which can result in costs and diversions of resources to pursue and resolve.
In October 2014, BioRASI LLC (“BioRASI”) filed a complaint in Broward County, Florida, seeking payments of approximately $0.5 million allegedly owed for services that BioRASI provided in connection with the Company’s clinical trial conducted in the Russian Federation. In June of 2015, BioRASI amended the complaint to include as plaintiffs additional parties affiliated with BioRASI including Vendevia Group, LLC, Biosciences Research Ltd., and Progressive Scientific Bioresearch, Ltd. We are defending the action and have filed counterclaims. Although at December 31, 2016, the probable outcome of this matter cannot be determined, we believe that we have supportable defenses and any negative decision, if any, is expected to be insignificant. Accordingly, we have not recorded any provisions related to this matter.
Note 8—Income Taxes
The Company files U. S. federal and state of California income tax returns. We are no longer subject to Federal and state income tax examinations by tax authorities for years prior to 2014.
The Company has U.S. federal and state net operating loss carryovers of $108.9 million and $106.2 million as of December 31, 2016 and 2015, respectively. The net operating losses begin to expire in 2023 for federal income purposes and in 2016 for state income tax purposes.
The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those net operating losses are available. We consider projected future taxable income and tax planning strategies in making our assessment. At present, we do not have a sufficient history of income to conclude that it is more-likely-than-not that we will be able to realize all of our tax benefits in the near future and therefore we have established a valuation allowance for the full value of the deferred tax asset.
-44-
A valuation allo
wance will be maintained until sufficient positive evidence exists to support the reversal of any portion or all of the valuation. For the years ended December 31, 2016 and 2015 the change in the valuation allowance was $305,665 and $1,459,897 respectively
.
Our net deferred tax asset consisted of the following at December 31, 2016 and 2015:
|
|
December 31,
|
|
|
|
2016
|
|
|
2015
|
|
Deferred tax asset:
|
|
|
|
|
|
|
|
|
Net operating loss carryforwards
|
|
$
|
42,436,541
|
|
|
$
|
42,315,384
|
|
Deferred compensation
|
|
|
1,681,158
|
|
|
|
1,474,625
|
|
Depreciation and amortization
|
|
|
842,073
|
|
|
|
1,010,636
|
|
Research and development credits
|
|
|
3,788,955
|
|
|
|
3,788,752
|
|
Accrued expenses
|
|
|
391,365
|
|
|
|
314,633
|
|
Impairment loss
|
|
|
730,831
|
|
|
|
850,334
|
|
Other
|
|
|
438,039
|
|
|
|
248,933
|
|
Total deferred tax assets
|
|
|
50,308,962
|
|
|
|
50,003,297
|
|
Less: Valuation allowance
|
|
|
(50,308,962
|
)
|
|
|
(50,003,297
|
)
|
Net deferred tax asset
|
|
$
|
—
|
|
|
$
|
—
|
|
The income tax provision (benefit) from income taxes consists of the following at December 31, 2016 and 2015:
|
|
Years Ended December 31,
|
|
|
|
2016
|
|
|
2015
|
|
Federal
|
|
|
|
|
|
|
|
|
Current
|
|
$
|
—
|
|
|
$
|
—
|
|
Deferred
|
|
|
(1,069,610
|
)
|
|
|
(1,246,071
|
)
|
State
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
Deferred
|
|
|
763,945
|
|
|
|
(213,826
|
)
|
Total
|
|
|
(305,665
|
)
|
|
|
(1,459,897
|
)
|
Change in valuation allowance
|
|
|
305,665
|
|
|
|
1,459,897
|
|
Income tax provision (benefit)
|
|
$
|
—
|
|
|
$
|
—
|
|
As a result of our significant operating loss carry forwards and the corresponding valuation allowance, no income tax benefit was recorded for the years ended December 31, 2016 or 2015. The provision for income taxes using the statutory federal tax rate as compared to our effective tax rate is summarized as follows:
|
|
December 31,
|
|
|
|
2016
|
|
|
2015
|
|
Federal income tax rate
|
|
|
(34.0
|
)%
|
|
|
(34.0
|
)%
|
State income tax rate, net of federal benefit
|
|
|
(5.8
|
)%
|
|
|
(4.8
|
)%
|
Deferred tax true-up
|
|
|
(1.7
|
)%
|
|
5.0
|
%
|
Other permanent differences
|
|
|
-
|
%
|
|
0.1
|
%
|
Net operating loss expiration
|
|
|
31.4
|
%
|
|
-
|
%
|
|
|
|
(10.1
|
)%
|
|
|
(33.7
|
)%
|
Change in valuation allowance
|
|
|
10.1
|
%
|
|
|
33.7
|
%
|
|
|
|
—
|
%
|
|
|
—
|
%
|
Note 9—Stockholders’ Equity
Common Stock
On April 4, 2015, we entered into a term sheet with Shenzhen Qianhai Taxus Capital Management Co., Ltd. (“Shenzhen Qianhai Taxus”), a company affiliated with Shanxi Taxus Pharmaceuticals Co. Ltd., whereby we proposed to sell Shenzhen Qianhai Taxus 600,000 shares of common stock in our Angionetics subsidiary in exchange for $3.0 million in cash. The $3.0 million was to be paid in tranches that were to be completed by May 31, 2015. Shenzhen Qianhai Taxus paid $600,000 of the financing, which was recorded as common stock issuable. Shenzhen Qianhai Taxus did not complete this transaction. This subscription is committed and not refundable to Shenzhen Qianhai Taxus. Shenzhen Qianhai Taxus is eligible to apply this amount toward the purchase of common stock of the Company or its subsidiaries based on terms and conditions approved by the Company’s Board of Directors.
-45-
Preferred Stock
Taxus Cardium Series A Convertible Preferred Stock.
On April 4, 2013, we entered into a securities purchase agreement with Sabby Healthcare Volatility Master Fund, Ltd. (“Sabby”), pursuant to which we sold 4,012 shares of our newly authorized Series A Convertible Preferred Stock (the “Preferred Stock”) for $4.0 million. The Preferred Stock was convertible into shares of our common stock at an initial conversion price of $0.6437 per share. The conversion price is subject to downward adjustment if we issue common stock or common stock equivalents at a price less than the then effective conversion price. Sabby is limited to hold no more than 10% of Taxus Cardium’s issued and outstanding common stock at any time. As long as the Preferred Stock is outstanding, we have also agreed not to incur specified indebtedness without the consent of the holders of the Preferred Stock. These factors may restrict our ability to raise capital through equity or debt offerings in the future.
On July 22, 2015, we entered into an Exchange and Redemption Agreement with Sabby relating to the 1,176 outstanding shares of Preferred Stock that remained outstanding at that time. Under the terms of the Exchange and Redemption Agreement, we agreed to reduce the conversion price of the Preferred Stock to $0.30 per share from $0.64 per share in exchange for a limited redemption right (which has now expired) and an increase in the limitation on certain indebtedness.
On September 23, 2016, we entered into a second Exchange and Redemption Agreement with Sabby covering the 1,000 shares of Preferred Stock outstanding at the time. Under the terms of the Exchange and Redemption Agreement, Taxus Cardium agreed to reduce the conversion price at which Sabby can convert shares of Preferred Stock to common shares to an effective price of $0.18 per share. The Exchange and Redemption Agreement granted Taxus Cardium a right to redeem any or all of the outstanding Preferred Stock for its Stated Value (approximately $1,000 per share) at any time after the date of the Agreement until November 29, 2016. As a result of the conversion price changing from $0.30 to $0.18 per share, the 1,000 shares of Preferred Stock outstanding are convertible to 5,554,667 shares of Taxus Cardium common stock, an additional 2,221,867 compared to before the conversion price change. A hypothetical conversion of all of the outstanding Preferred Stock into 5,154,674 shares of common stock would increase the common stock outstanding from 13,723,544 shares as of December 31, 2016, to 18,878,218, an increase of 37.6%. As a result of such holder entering into the Agreement, for which the fair value of preferred stock before and after the modification was substantially different, the modification was accounted for as an extinguishment. Consequently, we recorded a deemed dividend totaling $782,879 in the statement of operations in arriving at net loss to common shareholders.
Angionetics Series A Convertible Preferred Stock
On June 7, 2016, Taxus Cardium and Angionetics entered into a Share Purchase Agreement with Pineworld Capital Limited an entity affiliated with Huapont Life Sciences Co. Ltd, a China-based pharmaceutical, and active pharmaceutical ingredient company (“Huapont”). Pursuant to the Share Purchase Agreement, Angionetics agreed to sell 600,000, shares of its newly authorized Series A Convertible Preferred Stock (the “Shares”) to the Huapont affiliate in exchange for $3,000,000 in cash. The Shares represent an initial 15% equity interest in Angionetics, resulting in a post-money valuation of $20.0 million for Angionetics, subject to certain anti-dilution protection described below. The investment from the Huapont affiliate was made in two tranches. The closing of the initial tranche of 200,000 Shares for $1,000,000 occurred on July 5, 2016. The closing of the second tranche of 400,000 Shares for $2,000,000 was conditioned upon Angionetics securing FDA clearance to initiate a new U.S.-based Phase 3 clinical study (the AFFIRM study) to evaluate the safety and definitive efficacy of the Generx® [Ad5FGF-4] product candidate for the treatment of patients with ischemic heart disease and refractory angina. On September 28, 2016, following FDA clearance of the Phase 3 AFFIRM study, Angionetics received $2,000,000 from the closing of the second tranche.
The Angionetics Shares have the following rights, privileges and preferences:
|
•
|
Dividends
. Holders of the Shares are entitled to receive dividends as, when and if declared by the Angionetics board of directors on the Angionetics common stock, on an as-converted basis.
|
|
•
|
Liquidation
. In the event of a liquidation of Angionetics, including a change of control transaction, holders of the Shares are entitled to be paid an amount equal to their investment amount before any payment is made to Taxus Cardium or any other holders of Angionetics common stock.
|
|
•
|
Voting
. The Shares generally vote with the Angionetics common stock as a single class on an as-converted basis. Holders of the Shares also have certain special voting rights as a separate class including (a) the right to appoint a member to the Angionetics board of directors, (b) the right to approve any increase or decrease in the number of authorized shares of the Shares or the common stock, any merger or acquisition involving Angionetics, any liquidation or winding up of Angionetics, any increase in the number of directors and any dividend or distribution, and (c) the right to approve any amendment to the Angionetics certificate of incorporation in a manner that adversely affects the rights of the Shares. The voting rights under (a) and (b) terminate if Huapont does not complete the second closing under the share purchase agreement.
|
|
•
|
Conversion
. The Shares are convertible into shares of Angionetics common stock at any time at the holder’s election. The Shares automatically convert into common stock upon the closing of a firm commitment underwritten public offering of Angionetics common stock. The Shares are initially convertible on a one to one basis into Angionetics common stock. The Shares are subject to anti-dilution protection, such that in the event of a firm commitment underwritten public offering or a
|
-46-
|
|
change in control ea
ch Share will be convertible into a pro rata portion of 15% of the outstanding Angionetics common stock at the time of the public offering or change in control.
|
The Angionetics Series A Convertible Preferred Stock is classified as permanent equity, since the triggering of a liquidation event to sell, merge, or consolidate Angionetics, or to sell all or substantially all of its assets (a “change in control”) is solely within Taxus Cardium’s’ control. The Certificate of Designation for the Series A Convertible Preferred Stock does not provide the holders of Series A Convertible Preferred Stock the right to initiate such a change in control, through special voting privileges, majority representation on the Angionetics board of directors, or other rights. In the absence of special provisions in the Certificate of Designation, Delaware law requires the approval of the full Angionetics board of directors to initiate a change in control transaction.
Also, given the Preferred holders have acquired a 15% equity position in Angionetics on and as a converted Common Stock basis, and given the Preferred Stock holders have immediate substantive rights of the Common shareholders, the equity investment in Angionetcis was recorded as noncontrolling interest. A noncontrolling interest is the portion of equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. The noncontrolling interest in a subsidiary is part of the equity of the consolidated group.
Stockholder Rights Plan
On July 10, 2006, our Board of Directors approved the adoption of a Stockholder Rights Plan (“Rights Plan”). Pursuant to the Rights Plan, we issued a dividend of one right for each share of our common stock held by stockholders of record as of the close of business on July 21, 2006. The rights are not immediately exercisable and will become exercisable only upon the occurrence of certain events. In general, if a person or group acquires, or announces a tender or exchange offer that would result in the acquisition of, 15% or more of our common stock while the Rights Plan remains in place, then, unless the Board of Directors elects to redeem the rights for $0.001 per right, the rights will become exercisable by all rights holders except the acquiring person or group, for 0.001 of a share of newly created Series A Junior Participating Preferred Stock at an exercise price of $40.00. Until the rights become exercisable, the rights are represented by, and automatically trade with, our common stock certificates.
The Rights Plan was reviewed in 2012 and 2015 and will be evaluated every three years by a committee of independent directors of the Company’s Board of Directors to consider whether the plan continues to be in the best interests of Cardium and its stockholders. The Rights Plan could be amended or revoked by the Board of Directors at any time. The rights expired on July 10, 2016.
Stock Options and Other Equity Compensation Plans
We have an equity incentive plan that was established in 2005 under which 283,058 shares of the Company’s common stock were reserved for issuance to employees, non-employee directors and consultants. The 2005 Equity Incentive Plan expired on October 20, 2015, ten years after its adoption, and we are no longer able to issue share or awards under that plan. All options or other awards issued under the 2005 Equity Incentive Plan prior to its expiration remain outstanding in accordance with their terms.
At December 31, 2016, the following shares were outstanding and available for future issuance under the option plan:
Plan
|
|
Shares Outstanding
|
|
|
Shares Available
for Issuance
|
|
2005 Equity Incentive Plan
|
|
|
17,000
|
|
|
|
—
|
|
On March 23, 2015, outside of the 2005 Equity Incentive Plan, we issued 1,125,000 common stock warrants to directors, officers and chief medical advisor. The warrants were approved by our Board of Directors, have a ten year term and an exercise price of $0.60 per share, which represented a 215% premium to the closing stock price on the date of issuance. The warrants had a fair value of $0.10 per share and vested immediately.
On March 23, 2015, we issued 10,000 non-qualified stock options to directors. The options were approved by our Board of Directors, have a seven year term and an exercise price of $0.19 per share, which equaled the closing stock price on the date of issuance. The stock options had a fair value of $0.14 per share.
On May 1, 2015, outside of the 2005 Equity Incentive Plan, we issued 550,000 common stock warrants to directors and employees. The warrants were approved by our Board of Directors, have a ten year term and an exercise price of $0.60 per share, which represented a 20% premium to the closing stock price on the date of issuance. The warrants had a fair value of $0.37 per share. 300,000 vested immediately and 250,000 warrants vested on the one year anniversary of the date of grant.
-47-
On May 8, 2015, outside of the 2005 Equity Incentive Plan, we issued 100,000 common stock warrants to a consultant. The warrants were approved by our Board of Directors,
have a ten year term and an exercise price of $0.60 per share, which represented a 33% premium to the closing stock price on the date of issuance. The warrants had a fair value of $0.41 per share. 40,000 warrants vested immediately, and the remaining 60
,000 warrants vested over three quarters. On August 4, 2015, the consulting agreement was terminated and the remaining 60,000 unvested warrants were cancelled per the terms of the consulting agreement and the warrant.
On September 23, 2016, we entered into a second Exchange and Redemption Agreement with Sabby covering the 1,000 shares of Preferred Stock outstanding at the time. Under the terms of the Exchange and Redemption Agreement, Taxus Cardium agreed to reduce the conversion price at which Sabby can convert shares of Preferred Stock to common shares from $0.30 to an effective price of $0.18 per share. As a result of this reduction of the conversion price of the preferred stock, the Company was also required to issue an additional 4,823,736 of warrants, to such warrant holders (current and former employees), in accordance with the original terms of their agreements.
The following is a summary of stock option and warrant (employees and directors) activities issued during the years ended December 31, 2016 and 2015:
|
|
Number of
Options or
Warrants
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Weighted
Average
Remaining
Contractual
Life
(in years)
|
|
Balance outstanding, January 1, 2015
|
|
|
1,914,906
|
|
|
$
|
2.44
|
|
|
|
8.74
|
|
Granted
|
|
|
5,534,692
|
|
|
|
0.67
|
|
|
|
8.85
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Cancelled (unvested)
|
|
|
(60,000
|
)
|
|
|
0.60
|
|
|
|
—
|
|
Expired (vested)
|
|
|
(52,000
|
)
|
|
|
28.76
|
|
|
|
—
|
|
Balance outstanding, December 31, 2015
|
|
|
7,337,598
|
|
|
|
0.94
|
|
|
|
8.62
|
|
Granted
|
|
|
4,823,736
|
|
|
|
0.71
|
|
|
|
7.75
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Cancelled (unvested)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Expired (vested)
|
|
|
(45,000
|
)
|
|
|
0.73
|
|
|
|
—
|
|
Balance outstanding, December 31, 2016
|
|
|
12,116,334
|
|
|
$
|
0.73
|
|
|
|
7.67
|
|
Balance exercisable, December 31, 2016
|
|
|
12,110,078
|
|
|
$
|
0.73
|
|
|
|
7.67
|
|
We calculate the fair value of stock options using the Black-Scholes option-pricing model which approximates a bionomial lattice model. In determining the expected term, we separate groups of employees that have historically exhibited similar behavior with regard to option exercises and post-vesting cancellations. The option-pricing model requires the input of subjective assumptions, such as those included in the table below. The volatility rates are based principally on our historical stock prices and expectations of the future volatility of its common stock. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The total expense to be recorded in future periods will depend on several variables, including the number of share-based awards and expected vesting.
The following table summarizes the stock options and warrants that we granted during the year ended December 31, 2016 and 2015:
Grant Date
|
|
Quantity
Issued
|
|
|
Expected
Life
(Years)
|
|
|
Strike
Price
|
|
|
Volatility
|
|
|
Dividend
Yield
|
|
|
Risk-Free
Interest
Rate
|
|
|
Grant Date
Fair Value
Per Option
|
|
|
Aggregate
Fair Value
|
|
09/23/2016
|
|
|
2,501,511
|
|
|
|
3.7
|
|
|
$
|
0.80
|
|
|
|
114.76
|
%
|
|
|
0
|
%
|
|
|
1.01
|
%
|
|
$
|
0.09
|
|
|
$
|
225,136
|
|
09/23/2016
|
|
|
2,233,336
|
|
|
|
4.2
|
|
|
$
|
0.60
|
|
|
|
115.10
|
%
|
|
|
0
|
%
|
|
|
1.11
|
%
|
|
$
|
0.11
|
|
|
$
|
245,667
|
|
09/23/2016
|
|
|
88,889
|
|
|
|
7.4
|
|
|
$
|
0.80
|
|
|
|
108.45
|
%
|
|
|
0
|
%
|
|
|
1.49
|
%
|
|
$
|
0.13
|
|
|
$
|
10,355
|
|
Grant Date
|
|
Quantity
Issued
|
|
|
Expected
Life
(Years)
|
|
|
Strike
Price
|
|
|
Volatility
|
|
|
Dividend
Yield
|
|
|
Risk-Free
Interest
Rate
|
|
|
Grant Date
Fair Value
Per Option
|
|
|
Aggregate
Fair Value
|
|
03/23/2015
|
|
|
1,125,000
|
|
|
|
5.0
|
|
|
$
|
0.60
|
|
|
|
96.32
|
%
|
|
|
0
|
%
|
|
|
1.42
|
%
|
|
$
|
0.10
|
|
|
$
|
117,683
|
|
03/23/2015
|
|
|
10,000
|
|
|
|
4.5
|
|
|
$
|
0.19
|
|
|
|
98.09
|
%
|
|
|
0
|
%
|
|
|
1.36
|
%
|
|
$
|
0.14
|
|
|
$
|
1,354
|
|
05/01/2015
|
|
|
550,000
|
|
|
|
5.2
|
|
|
$
|
0.60
|
|
|
|
99.45
|
%
|
|
|
0
|
%
|
|
|
1.47
|
%
|
|
$
|
0.37
|
|
|
$
|
203,500
|
|
05/08/2015
|
|
|
100,000
|
|
|
|
4.8
|
|
|
$
|
0.60
|
|
|
|
106.91
|
%
|
|
|
0
|
%
|
|
|
2.18
|
%
|
|
$
|
0.41
|
|
|
$
|
33,000
|
|
07/22/2015
|
|
|
71,192
|
|
|
|
8.6
|
|
|
$
|
0.80
|
|
|
|
95.11
|
%
|
|
|
0
|
%
|
|
|
2.23
|
%
|
|
$
|
0.23
|
|
|
$
|
16,328
|
|
07/22/2015
|
|
|
2,003,500
|
|
|
|
4.3
|
|
|
$
|
0.80
|
|
|
|
105.07
|
%
|
|
|
0
|
%
|
|
|
1.54
|
%
|
|
$
|
0.18
|
|
|
$
|
360,630
|
|
07/22/2015
|
|
|
1,675,000
|
|
|
|
4.8
|
|
|
$
|
0.60
|
|
|
|
100.05
|
%
|
|
|
0
|
%
|
|
|
1.69
|
%
|
|
$
|
0.19
|
|
|
$
|
318,250
|
|
-48-
During the years ended December 31, 2016 and 2015, we recognized $518,479 and $985,114 of stock-based compensation expense, respectively.
As of December 31, 2016 and 2015, there was an aggregate of $0 and $1,400 intrinsic value to the outstanding and exercisable options and warrants, respectively.
Warrants
The following table summarizes warrant activities for the years ended December 31, 2016 and 2015:
|
|
Number of
Warrants
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Weighted
Average
Remaining
Contractual
Life
(in years)
|
|
Balance outstanding, January 1, 2015
|
|
|
873,336
|
|
|
$
|
17.79
|
|
|
|
1.0
|
|
Warrants issued
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Warrants exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Warrants expired
|
|
|
(156,588
|
)
|
|
|
26.07
|
|
|
|
—
|
|
Warrants cancelled
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Balance outstanding, December 31, 2016
|
|
|
716,748
|
|
|
|
15.98
|
|
|
|
0.22
|
|
Warrants issued
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Warrants exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Warrants expired
|
|
|
(716,748
|
)
|
|
|
15.98
|
|
|
|
—
|
|
Warrants cancelled
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Balance outstanding, December 31, 2016
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
Warrants exercisable at December 31, 2016
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
Note 10—Subsequent Events
We have evaluated events that occurred subsequent to December 31, 2016 and through the date the consolidated financial statements were issued.
FDA Approval of Phase 3 Clinical Trial for GenerxTM
On February 3, 2017, Angionetics received notice that the FDA has granted Fast Track designation for the Phase 3 clinical investigation of Generx [Ad5FGF-4] cardiovascular angiogenic gene therapy as a one-time treatment for improving exercise tolerance in patients who have angina that is refractory to standard medical therapy and not amenable to conventional revascularization procedures (coronary artery bypass surgery and percutaneous coronary intervention and stents). Under the FDA Modernization Act of 1997, designation as a Fast Track product means that FDA will take actions, as appropriate, to expedite the development and review of a biologics license application (BLA) for product approval. The FDA’s Fast Track process is designed to facilitate clinical and commercial development and expedite the review of new drugs and biologics that are intended to treat serious conditions that demonstrate the potential to address an unmet medical need.
Notice of Allowance on Patent Application Covering Excellagen®
On June 7, 2017, the Company’s wholly-owned subsidiary, Activation Therapeutics, received a Notice of Allowance from the U.S. Patent and Trademark Office (USPTO) for a new patent application (U.S. Application No. 13/648,255) entitled “Flowable Formulations for Tissue Repair and Regeneration.” The patent application includes claims covering methods to utilize formulations encompassing Excellagen [2.6%] as a topically applied flowable fibrillar collagen matrix for wound repair by promoting localized release of platelet derived growth factors and providing an
in situ
microstructural scaffold for cell migration.