Quarterly report pursuant to Section 13 or 15(d)

Significant Accounting Policies (Policies)

v3.10.0.1
Significant Accounting Policies (Policies)
9 Months Ended
Sep. 30, 2018
Accounting Policies [Abstract]  
Basis of Accounting, Policy [Policy Text Block]
Basis of Presentation
 
In management’s opinion, the accompanying interim unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly our financial position, results of operations and cash flows. The unaudited condensed consolidated balance sheet at
December 31, 2017,
has been derived from audited financial statements as of that date. The interim results of operations are
not
necessarily indicative of the results that
may
occur for the full fiscal year. Certain information and footnote disclosure normally included in the financial statements prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP) have been condensed or omitted pursuant to instructions, rules and regulations prescribed by the U.S. Securities and Exchange Commission (“SEC”). We believe that the disclosures provided herein are adequate to make the information presented
not
misleading when these unaudited condensed consolidated financial statements are read in conjunction with the Financial Statements and Notes included in our Annual Report on Form
10
-K for the year ended
December 
31,
2017,
filed with the SEC, and as
may
be amended.
Use of Estimates, Policy [Policy Text Block]
Use of Estimates
 
The preparation of financial statements in accordance 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. The unaudited condensed consolidated financial statements include significant estimates for the expected economic life and value of our licensed technology and related patents, our net operating loss and related valuation allowance for tax purposes, the fair value of our liability classified warrants and our share-based compensation related to employees and directors, consultants and advisors, among other things. Because of the use of estimates inherent in the financial reporting process, actual results could differ significantly from those estimates.
Fair Value Measurement, Policy [Policy Text Block]
Fair Value Measurements
 
The carrying amounts of our short-term financial instruments, which primarily include cash and cash equivalents, short-term investments, accounts payable and accrued expenses, approximate their fair values due to their short maturities. The fair value of our long-term indebtedness was estimated based on the quoted prices for the same or similar issues or on the current rates offered to the Company for debt of the same remaining maturities and approximates the carrying value. The fair values of our liability classified warrants were estimated using Level
3
unobservable inputs. See Note
3
for further details.
Foreign Currency Transactions and Translations Policy [Policy Text Block]
Foreign Currency Translation
 
The functional currency of our wholly owned foreign subsidiary is its local currency.  Assets and liabilities of our foreign subsidiary are translated into United States dollars based on exchange rates at the end of the reporting period; income and expense items are translated at the weighted average exchange rates prevailing during the reporting period.  Translation adjustments for subsidiary are accumulated in other comprehensive income or loss, a component of stockholders' equity.   Transaction gains or losses are included in the determination of net loss.
Cash and Cash Equivalents, Policy [Policy Text Block]
Cash, Cash Equivalents, Short-Term Investments and Credit Risk
 
Cash equivalents consist of investments in low risk, highly liquid money market accounts and certificates of deposit with original maturities of
90
days or less. Cash deposited with banks and other financial institutions
may
exceed the amount of insurance provided on such deposits. If the amount of a deposit at any time exceeds the federally insured amount at a bank, the uninsured portion of the deposit could be lost, in whole or in part, if the bank were to fail.
 
Short-term investments consist entirely of fixed income certificates of deposit (“CDs”) with original maturities of greater than
90
days but
not
more than
one
year.
 
Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash equivalents and short-term investments. Our investment policy, approved by our Board of Directors, limits the amount we
may
invest in any
one
type of investment issuer, thereby reducing credit risk concentrations. In addition, our certificates of deposit are typically invested through the Certificate of Deposit Account Registry Service (“CDARS”) program which reduces or eliminates our risk related to concentrations of investments above FDIC insurance levels. We attempt to limit our credit and liquidity risks through our investment policy and through regular reviews of our portfolio against our policy. To date, we have
not
experienced any loss or lack of access to cash in our operating accounts or to our cash equivalents and short-term investments.
Revenue Recognition, Policy [Policy Text Block]
Revenue
 
On
January 1, 2018,
the Company adopted Topic
606,
Revenue from Contracts with Customer using the modified retrospective method applied to those contracts which were
not
completed as of
January 1, 2018.
The Company analyzes contracts to determine the appropriate revenue recognition using the following steps: (i) identification of contracts with customers; (ii) identification of distinct performance obligations in the contract; (iii) determination of contract transaction price; (iv) allocation of contract transaction price to the performance obligations; and (v) determination of revenue recognition based on timing of satisfaction of the performance obligation. The Company recognizes revenues upon the satisfaction of its performance obligation (upon transfer of control of promised goods or services to customers) in an amount that reflects the consideration to which it expects to be entitled to in exchange for those goods or services. Deferred revenue results from cash receipts from or amounts billed to customers in advance of the transfer of control of the promised services to the customer and is recognized as performance obligations are satisfied. When sales commissions or other costs to obtain contracts with customers are considered incremental and recoverable, those costs are deferred and then amortized as selling and marketing expenses on a straight-line basis over an estimated period of benefit.
Research and Development Expense, Policy [Policy Text Block]
Research and Development
 
Research and development costs are expensed as they are incurred. Research and development expenses consist primarily of costs associated with the pre-clinical development and clinical trials of our product candidates.  We record cost reimbursements under our Small Business Innovation Research (SBIR) grants as an offset to research and development expenses. For the
three
- and
nine
-month periods ended
September 30, 2018,
we recorded approximately
$143,000
and
$318,000,
respectively of such cost reimbursements as an offset to research and development expenses.
No
reimbursements were recorded in any of the periods of
2017.
Earnings Per Share, Policy [Policy Text Block]
Income (Loss) per Common Share
 
Basic income (loss) per common share is computed by dividing total net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period.
 
For periods of net income when the effects are dilutive, diluted earnings per share is computed by dividing net income available to common stockholders by the weighted average number of shares outstanding and the dilutive impact of all dilutive potential common shares. Dilutive potential common shares consist primarily of convertible preferred stock, stock options, restricted stock units and common stock purchase warrants. The dilutive impact of potential common shares resulting from common stock equivalents is determined by applying the treasury stock method. Our unvested restricted shares contain non-forfeitable rights to dividends, and therefore are considered to be participating securities; the calculation of basic and diluted income per share excludes net income attributable to the unvested restricted shares from the numerator and excludes the impact of the shares from the denominator.
 
Following is a reconciliation of diluted and basic earnings per share for all periods presented:
 
    Three Months Ended September 30,   Nine Months Ended September 30,
Numerator:   2018   2017   2018   2017
Net loss   $
(1,830,283
)   $
(133,783
)   $
(4,604,297
)   $
(12,350,229
)
Numerator for basic earnings per share   $
(1,830,283
)   $
(133,783
)   $
(4,604,297
)   $
(12,350,229
)
Adjustment for gain related to mark-to-market adjustment for liability classified warrants    
-
     
(2,398,453
)    
-
     
-
 
Numerator for diluted earnings per share   $
(1,830,283
)   $
(2,532,236
)   $
(4,604,297
)   $
(12,350,229
)
                                 
Denominator:                                
Denominator for basic earnings per share - weighted-average shares    
15,171,495
     
14,060,844
     
15,144,425
     
12,380,054
 
Effect of dilutive securities:  liability classified warrants    
-
     
102,228
     
-
     
-
 
Denominator for diluted earnings per share - weighted-average shares and assumed exercises    
15,171,495
     
14,163,072
     
15,144,425
     
12,380,054
 
 
A total of approximately
9.7
million potential dilutive shares have been excluded in the calculation of diluted net income per share for both the
three
- and
nine
-month periods ended
September 30, 2018,
as their inclusion would be anti-dilutive. A total of approximately
10.0
and
9.2
million potential dilutive shares have been excluded in the calculation of diluted net income per share for the
three
- and
nine
-month periods ended
September 30, 2017,
respectively, as their inclusion would be anti-dilutive.
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]
Share-Based Compensation
 
We account for share-based compensation at fair value. Share-based compensation cost for stock options and stock purchase warrants granted to employees and board members is generally determined at the grant date while awards granted to non-employee consultants are generally valued at the vesting date using an option pricing model that uses Level
3
unobservable inputs; share-based compensation cost for restricted stock and restricted stock units is determined at the grant date based on the closing price of our common stock on that date. The value of the award is recognized as expense on a straight-line basis over the requisite service period or based on probability of vesting for performance-based awards.
Goodwill and Intangible Assets, Policy [Policy Text Block]
Intangible and Long-Lived Assets
 
We assess impairment of our long-lived assets using a "primary asset" approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long-lived asset to be held and used. Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset
may
not
be recoverable. The carrying amount of a long-lived asset is
not
recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset.
No
significant impairment losses were recognized during the
three
- or
nine
-month periods ended
September 30, 2018
or
2017.
Income Tax, Policy [Policy Text Block]
Income Taxes
 
We account for income taxes using the asset and liability approach, which requires the recognition of future tax benefits or liabilities on the temporary differences between the financial reporting and tax bases of our assets and liabilities. A valuation allowance is established when necessary to reduce deferred tax assets to the amounts expected to be realized. We also recognize a tax benefit from uncertain tax positions only if it is “more likely than
not”
that the position is sustainable based on its technical merits. Our policy is to recognize interest and penalties on uncertain tax positions as a component of income tax expense.
 
Corporate tax rate changes resulting from the impacts of the Tax Cuts and Jobs Act of
2017
(the “Tax Act”) are reflected in deferred tax assets and liabilities as of
December 31, 2017
and
September 30, 2018.
New Accounting Pronouncements, Policy [Policy Text Block]
Significant New Accounting Pronouncements
 
Recently Adopted Guidance
 
In
May 2014,
the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”),
No.
2014
-
09,
Revenue from Contracts with Customers. This ASU consists of a comprehensive revenue recognition standard that superseded nearly all existing revenue recognition guidance under U.S. GAAP. The guidance is effective for interim and annual periods beginning after
December 15, 2017.
Either full retrospective adoption or modified retrospective adoption is permitted. In addition to expanded disclosures regarding revenue, this pronouncement
may
impact timing of recognition in some arrangements with variable consideration or contracts for the sale of goods or services. We adopted this guidance effective
January 1, 2018
on a modified retrospective basis and it did
not
have a material impact on the consolidated financial statements.
 
In
May 2017,
the FASB issued
ASU
No.
2017
-
09,
Compensation – Stock Compensation
. This ASU provides clarification regarding when changes to the terms or conditions of share-based payment awards should be accounted for as modifications. This guidance is effective for fiscal years beginning after
December 15, 2017
and early adoption is permitted. This guidance must be applied prospectively to awards modified after the adoption date. We adopted this guidance effective
January 1, 2018
and it did
not
have a material impact on the consolidated financial statements.
 
In
July 2017,
the FASB issued
ASU
No.
2017
-
11,
I. Accounting for Certain Financial Instrument with Down Round Features II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception.
Part I of this guidance simplifies the accounting for certain equity-linked financial instruments and embedded features with down round features that reduce the exercise price when the pricing of a future round of financing is lower (“down round protection”). Current accounting guidance provides that instruments with down round protection be classified as derivative liabilities with changes in fair value recorded through earnings. The updated guidance provides that instruments with down round protection are
no
longer precluded from being classified as equity. This guidance is effective for fiscal years beginning after
December 15, 2018
and early adoption is permitted. This guidance must be applied retrospectively. We adopted this guidance on
January 1, 2018,
and it did
not
have a material impact on the financial statements.
 
Unadopted Guidance
 
In
February 2016,
the FASB issued
ASU,
No.
2016
-
02,
Leases.
This ASU consists of a comprehensive lease accounting standard. The guidance requires lessees to recognize assets and liabilities related to long-term leases on the balance sheet and expands disclosure requirements regarding leasing arrangements. The guidance is effective for reporting periods beginning after
December 15, 2018
and early adoption is permitted. The guidance must be adopted on a modified retrospective basis and provides for certain practical expedients. We currently expect that the adoption of this guidance will likely change the way we account for our operating leases and will likely result in recording the future benefits of those leases and the related minimum lease payments on our consolidated balance sheets. We are currently in the process of evaluating the specific impacts of this guidance.
 
In
June 2016,
the FASB issued
ASU
No.
2016
-
13,
Financial Instrument’s – Credit Losses
. This ASU relates to measuring credit losses on financial instruments, including trade receivables. The guidance eliminates the probable initial recognition threshold that was previously required prior to recognizing a credit loss on financial instruments. The credit loss estimate can now reflect an entity's current estimate of all future expected credit losses. Under the previous guidance, an entity only considered past events and current conditions. The guidance is effective for fiscal years beginning after
December 15, 2019,
including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after
December 15, 2018,
including interim periods within those fiscal years. The adoption of certain amendments of this guidance must be applied on a modified retrospective basis and the adoption of the remaining amendments must be applied on a prospective basis. We currently expect that the adoption of this guidance will likely change the way we assess the collectability of our receivables and recoverability of other financial instruments. We have
not
yet begun to evaluate the specific impacts of this guidance nor have we determined the manner in which we will adopt this guidance.
 
In
June 2018,
the FASB issued
ASU
2018
-
07,
Compensation-Stock Compensation, Improvements to Nonemployee Share-Based Payment Accounting
. This ASU expands the scope of
ASC
718,
Compensation – Stock Compensation
to include share-based payment transactions for acquiring goods and services from nonemployees. This guidance provides for the following changes: (
1
) awards to nonemployees will be measured at the grant date fair value of equity instruments that the entity is obligated to issue, (
2
) performance-based awards to nonemployees will be measured based on the probability of the performance condition being met and (
3
) eliminating the need to reassess the classification (equity or liability) of awards to nonemployees upon vesting. We expect the adoption of this guidance will change the way we measure awards to nonemployees. We have
not
yet determined the specific impacts of this guidance upon adoption.
 
In
August 2018,
the FASB issued
ASU
2018
-
13,
Fair Value Measurement (Topic
820
): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement
. This ASU addresses the disclosure requirements for fair value measurements. The guidance intends to improve the effectiveness of the disclosures relating to recurring and nonrecurring fair value measurements. The guidance is effective for fiscal years beginning after
December 15, 2019.
Portions of the guidance are to be adopted prospectively while other portions are to be adopted retroactively. Early adoption is permitted. The Company is currently evaluating the impact, if any, that this guidance will have on the consolidated financial statements. The Company is currently evaluating the impact, if any, that this guidance will have on the consolidated financial statements.
 
In
August 2018,
the FASB issued
ASU
2018
-
15,
Intangibles – Goodwill and Other – Internal-Use Software
. This ASU addresses the accounting for implementation, setup and other upfront costs paid by a customer in a cloud computing or hosting arrangement. The guidance aligns the accounting treatment of these costs incurred in a hosting arrangement treated as a service contract with the requirements for capitalization and amortization costs to develop or obtain internal-use software. The guidance is effective for fiscal years beginning after
December 15, 2019.
The guidance can be adopted either retrospectively or prospectively. Early adoption is permitted. The Company is currently evaluating the impact, if any, that this guidance will have on the consolidated financial statements.
 
We have reviewed other recent accounting pronouncements and concluded that they are either
not
applicable to our business, or that
no
material effect is expected on the consolidated financial statements as a result of future adoption.