0001654954-20-012485 | 10-Q | XBRL Viewer

8. STOCKHOLDERS EQUITY (Details 3) - 2016 Stock Incentive Plan	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Risk-free interest rate (weighted average)	1.02%	2.39%
Expected volatility (weighted average)	97.63%	106.74%
Expected term (in years)	7 years	7 years
Expected dividend yield	0.00%	0.00%

Balance Sheets (Unaudited) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Current assets
Cash and cash equivalents	$ 8,235,532	$ 4,905,993
Marketable securities	472,648	493,884
Prepaid expenses	189,275	780,952
Total current assets	8,897,455	6,180,829
Right of use asset	87,285	169,448
Property and equipment, net	3,461	6,559
Other assets	8,435	8,435
Total assets	8,996,636	6,365,271
Current liabilities
Accounts payable	1,052,824	1,661,054
Accrued liabilities	295,451	871,341
Note payable	30,900	0
Total current liabilities	1,379,175	2,532,395
Note payable	213,757	0
Lease liability	0	60,379
Total long term liabilities	213,757	60,379
Total liabilities	1,592,932	2,592,774
Commitments and contingencies; see Note 5
Stockholders' equity
Series A Preferred stock, par value $.0001, issued and outstanding 210 and 38,606, respectively	0	4
Common stock, par value $.0001 per share; authorized 400,000,000 shares; issued and outstanding 12,619,369 and 6,741,860, respectively	1,262	674
Additional paid-in capital	250,591,604	239,939,797
Accumulated other comprehensive gain	903	458
Accumulated deficit	(243,190,065)	(236,168,436)
Total stockholders' equity	7,403,704	3,772,497
Total liabilities and stockholders' equity	$ 8,996,636	$ 6,365,271

Statement of Stockholders' Equity (Unaudited) - USD ($)	Preferred Stock	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit	Total
Beginning balance, shares at Dec. 31, 2018	2,854,593	3,792,249
Beginning balance, amount at Dec. 31, 2018	$ 285	$ 379	$ 239,572,094	$ 516	$ (227,801,743)	$ 11,771,531
Compensation on options and restricted stock issued, shares		12,195
Compensation on options and restricted stock issued, amount		$ 1	60,294			60,295
Common stock issued for convertible preferred stock, shares	(2,299,990)	2,299,990
Common stock issued for convertible preferred stock, amount	$ (230)	$ 230				0
Exercise of warrants, shares		50,000
Exercise of warrants, amount		$ 5	96,495			96,500
Adoption of ASC 842: leases					27,670	27,670
Unrealized loss (gain) on marketable securities				1,289		1,289
Net loss					(1,617,445)	(1,617,445)
Ending balance, shares at Mar. 31, 2019	554,603	6,154,434
Ending balance, amount at Mar. 31, 2019	$ 55	$ 615	239,728,883	1,805	(229,391,518)	10,339,840
Beginning balance, shares at Dec. 31, 2018	2,854,593	3,792,249
Beginning balance, amount at Dec. 31, 2018	$ 285	$ 379	239,572,094	516	(227,801,743)	11,771,531
Ending balance, shares at Sep. 30, 2019	38,606	6,741,860
Ending balance, amount at Sep. 30, 2019	$ 4	$ 674	239,911,307	1,319	(233,376,759)	6,536,545
Beginning balance, shares at Mar. 31, 2019	554,603	6,154,434
Beginning balance, amount at Mar. 31, 2019	$ 55	$ 615	$ 239,728,883	1,805	(229,391,518)	$ 10,339,840
Compensation on options and restricted stock issued, shares			41,666			41,666
Common stock issued for convertible preferred stock, shares	(515,997)	515,997
Common stock issued for convertible preferred stock, amount	$ (51)	$ 52				$ 1
Unrealized loss (gain) on marketable securities				474		474
Net loss					(1,761,537)	(1,761,537)
Ending balance, shares at Jun. 30, 2019	554,603	6,154,434
Ending balance, amount at Jun. 30, 2019	$ 55	$ 615	$ 239,728,883	1,805	(229,391,518)	10,339,840
Compensation on options and restricted stock issued, amount			40,765			40,765
Common stock issued for services rendered, shares		71,429
Common stock issued for services rendered, amount		$ 7	99,993			100,000
Unrealized loss (gain) on marketable securities				(960)		(960)
Net loss					(2,223,704)	(2,223,704)
Ending balance, shares at Sep. 30, 2019	38,606	6,741,860
Ending balance, amount at Sep. 30, 2019	$ 4	$ 674	239,911,307	1,319	(233,376,759)	6,536,545
Beginning balance, shares at Dec. 31, 2019	38,606	6,741,860
Beginning balance, amount at Dec. 31, 2019	$ 4	$ 674	239,939,797	458	(236,168,436)	3,772,497
Common stock and pre-funded warrants sold, net of offering costs, shares		750,000
Common stock and pre-funded warrants sold, net of offering costs, amount		$ 75	2,129,930			2,130,005
Compensation on options and restricted stock issued, amount			72,376			72,376
Common stock issued for services rendered, shares		77,987
Common stock issued for services rendered, amount		$ 8	99,992			100,000
Common stock issued for convertible preferred stock, shares	(38,396)	38,396
Common stock issued for convertible preferred stock, amount	$ (4)	$ 4				0
Exercise of warrants, shares		400,000
Exercise of warrants, amount		$ 40				40
Unrealized loss (gain) on marketable securities				(1,622)		(1,622)
Net loss					(2,654,644)	(2,654,644)
Ending balance, shares at Mar. 31, 2020	210	8,008,243
Ending balance, amount at Mar. 31, 2020	$ 0	$ 801	242,242,095	(1,164)	(238,823,080)	3,418,652
Beginning balance, shares at Dec. 31, 2019	38,606	6,741,860
Beginning balance, amount at Dec. 31, 2019	$ 4	$ 674	239,939,797	458	(236,168,436)	3,772,497
Ending balance, shares at Sep. 30, 2020	210	12,619,369
Ending balance, amount at Sep. 30, 2020	$ 0	$ 1,262	250,591,604	903	(243,190,065)	7,403,704
Beginning balance, shares at Mar. 31, 2020	210	8,008,243
Beginning balance, amount at Mar. 31, 2020	$ 0	$ 801	242,242,095	(1,164)	(238,823,080)	3,418,652
Compensation on options and restricted stock issued, amount			63,166			63,166
Exercise of warrants, shares		2,087,515
Exercise of warrants, amount		$ 209	1,690,455			1,690,664
Unrealized loss (gain) on marketable securities				3,238		3,238
Net loss					(2,146,550)	(2,146,550)
Ending balance, shares at Jun. 30, 2020	210	10,095,758
Ending balance, amount at Jun. 30, 2020	$ 0	$ 1,010	243,995,716	2,074	(240,969,630)	3,029,170
Common stock and pre-funded warrants sold, net of offering costs, shares		2,523,611
Common stock and pre-funded warrants sold, net of offering costs, amount		$ 252	6,532,727			6,532,979
Compensation on options and restricted stock issued, amount			63,161			63,161
Unrealized loss (gain) on marketable securities				(1,171)		(1,171)
Net loss					(220,435)	(220,435)
Ending balance, shares at Sep. 30, 2020	210	12,619,369
Ending balance, amount at Sep. 30, 2020	$ 0	$ 1,262	$ 250,591,604	$ 903	$ (243,190,065)	$ 7,403,704

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include all adjustments (consisting of normal and recurring adjustments) necessary for a fair presentation of these financial statements. The condensed consolidated balance sheet on December 31, 2019 has been derived from the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2019. Certain footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted pursuant to Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”) rules and regulations. Operating results for the three- and nine-month period ended September 30, 2020 are not necessarily indicative of results for the full year or any other future periods. As such, it is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

Going Concern

Management believes the accompanying condensed consolidated financial statements have been prepared in conformity with GAAP, which contemplate continuation of the Company as a going concern. The Company has an accumulated deficit of $243 million on September 30, 2020 and $236 million on December 31, 2019 and used cash in operations of $7.3 million and $5.8 million during the nine months ended September 30, 2020 and 2019, respectively. The Company requires substantial additional funds to complete clinical trials and pursue regulatory approvals. Management is actively seeking additional sources of equity and/or debt financing; however, there is no assurance that any additional funding will be available.

In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying September 30, 2020 balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to meet its financing requirements on a continuing basis, to maintain present financing, and to generate cash from future operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.

Use of Estimates

In preparing the unaudited condensed consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the dates of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates and the operating results for the interim periods presented are not necessarily indicative of the results expected for the full year.

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 condensed consolidated financial statements include the accounts and transactions of the Company and Life Newco. All material intercompany transactions and balances have been eliminated in consolidation.

Liquidity and Management’s Plan

On September 30, 2020, the Company had cash and cash equivalents, including the fair value of its marketable securities, of approximately $8.7 million. The Company used $7.3 million of cash for operating activities during the nine months ended September 30, 2020 and had stockholders’ equity of $7.4 million, versus $3.8 million on December 31, 2019.

The Company expects to continue to incur expenses related to development of levosimendan for pulmonary hypertension and other potential indications, as well as identifying and developing other potential product candidates. Based on its resources at September 30, 2020, the Company believes that it has sufficient capital to fund its planned operations through the third quarter of calendar year 2021. 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.

COVID-19 Impact and Related Risks

The continued spread of COVID-19 globally could adversely affect the Company’s ability to retain principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19 if an outbreak occurs in their geography. Further, some of these investigators and site staff may be unable to comply with clinical trial protocols if quarantines or travel restrictions impede movement or interrupt healthcare services, or if they become infected with COVID-19 themselves, which would delay the Company’s ability to initiate and/or complete planned clinical and preclinical studies in the future.

The full extent to which the COVID-19 pandemic and the various responses to it might impact the Company’s business, operations and financial results will depend on numerous evolving factors that are not subject to accurate prediction and that are beyond the Company’s control.

Net Loss per Share

Basic net 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 net 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, convertible preferred shares and warrants.

The following outstanding options, convertible preferred 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.

	Nine months ended September 30,
	2020		2019

Warrants to purchase common stock		26,213,228		10,521,195
Options to purchase common stock		451,186		244,214
Convertible preferred shares outstanding		210		38,606

Leases

The Company determines if an arrangement includes a lease at inception. Operating leases are included in operating lease right-of-use assets, other current liabilities, and long-term lease liabilities in the Company’s condensed consolidated balance sheets. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the net present value of lease payments, the Company uses the incremental borrowing rate based on the information available at the lease commencement date. The operating lease right-of-use assets also include any lease payments made and exclude lease incentives. The Company’s leases may include options to extend or terminate the lease which are included in the lease term when it is reasonably certain that the Company will exercise any such option. Lease expense is recognized on a straight-line basis over the expected lease term. The Company has elected to account for leases with an initial term of 12 months or less similar to previous guidance for operating leases, under which the Company will recognize those lease payments in the consolidated statements of operations and comprehensive loss on a straight-line basis over the lease term.

Recent Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued an accounting standard intended to simplify accounting for income taxes. It removes certain exceptions to the general principles in Topic 740, Income Taxes and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020 and early adoption is permitted. The Company is currently evaluating this standard, but it does not believe the adoption of the new guidance will have a material impact on its consolidated financial statements.

In June 2016, the FASB issued an 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 standard requires 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, 2023, with early adoption permitted. 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 does not believe the adoption of this standard will have a material impact on its consolidated financial statements and related disclosures.

9. SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2020

Subsequent Events [Abstract]

9. SUBSEQUENT EVENTS

On October 9, 2020, the Company entered into an Amendment (the “Amendment”) to the License between the Company and Orion to include two new oral products containing levosimendan, in capsule and solid dosage form, and a subcutaneously administered product containing levosimendan to the scope of the License, subject to specified limitations. The Amendment also amends the tiered royalty payments based on net sales of the Product in the Territory (each as defined in the License, as amended by the Amendment) made by the Company and its sublicensees. Pursuant to the Amendment, the term of the License has been extended until 10 years after the launch of the Product in the Territory, provided that the License will continue after the end of the term in each country in the Territory until the expiration of Orion’s patent rights in the Product in such country. In the event that no regulatory approval for the Product has been granted in the United States on or before September 20, 2028, however, either party will have the right to terminate the License with immediate effect.

3. FAIR VALUE (Details)	9 Months Ended
3. FAIR VALUE (Details)	Sep. 30, 2020 USD ($)
Amortized cost	$ 469,409
Accrued interest	3,239
Gross unrealized gains	993
Gross unrealized losses	(94)
Estimated fair value	473,547
Corporate debt securities
Amortized cost	469,409
Accrued interest	3,239
Gross unrealized gains	993
Gross unrealized losses	(94)
Estimated fair value	$ 473,547

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Accounting Policies [Abstract]
Accumulated deficit	$ (243,190,065)		$ (236,168,436)
Cash used in operations	$ (7,285,410)	$ (5,829,920)

3. FAIR VALUE (Tables)

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

Schedule of investments in marketable securities

	September 30, 2020
	Amortized Cost		Accrued Interest		Gross Unrealized Gains		Gross Unrealized losses			Estimated Fair Value
Corporate debt securities	$	469,409	$	3,239	$	993	$	(94	)	$	473,547
Total investments	$	469,409	$	3,239	$	993	$	(94	)	$	473,547

Schedule of fair value on a recurring basis

			Fair Value Measurements at Reporting Date Using
	Balance as of September 30, 2020		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	$	8,235,532	$	8,235,532	$	-	$	-
Marketable securities	$	472,648	$	-	$	472,648	$	-

			Fair Value Measurements at Reporting Date Using
	Balance as of December 31, 2019		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	$	4,905,993	$	4,905,993	$	-	$	-
Marketable securities	$	493,884	$	-	$	493,884	$	-

7. COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

7. COMMITMENTS AND CONTINGENCIES

Simdax license agreement

On November 13, 2013, the Company acquired, through its wholly owned subsidiary, Life Newco, 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 the Company an exclusive, sublicenseable right to develop and commercialize pharmaceutical products containing levosimendan (the “Product”) in the United States and Canada (the “Territory”) from Orion. 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, i.e. line extension products. 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.

Pursuant to the terms of the License, the Company paid to Orion a non-refundable up-front payment in the amount of $1.0 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: (1) $2.0 million upon the grant of United States Food and Drug Administration approval, including all registrations, licenses, authorizations and necessary approvals, to develop and/or commercialize the Product in the United States; and (2) $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 of the License, 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.

As of September 30, 2020, the Company has not met any of the developmental milestones and, accordingly, has not recorded any liability for the contingent payments due to Orion.

On July 3, 2019, Orion filed a request for arbitration against the Company under the Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce seeking a declaration regarding the correct interpretation of the line extension provisions of the License and whether or not such provisions apply to the oral form of levosimendan recently developed by Orion. Additionally, Orion requested the Company reimburse Orion for all legal fees associated with the arbitration. The Company submitted its response to the request for arbitration on July 31, 2019 and rejected Orion’s position that the oral formation was not a line extension product under the License and requested Orion reimburse the Company for all legal fees associated with the arbitration. The hearing on this matter was held before the arbitral tribunal on April 7 and April 8, 2020. The Final Award was issued May 21, 2020 and held in favor of the Company. The tribunal determined that oral levosimendan was a line extension product under the License and ordered Orion to reimburse the Company approximately $358,000 for its direct arbitration costs, including legal fees incurred.

8. STOCKHOLDERS EQUITY (Tables)

9 Months Ended

Sep. 30, 2020

Stockholders' equity

Warrant activity

	Warrants			Weighted Average Exercise Price
Outstanding at December 31, 2019		10,519,945		$	1.94
Issued		11,310,480			0.98
Exercised		(877,202	)		1.93
Outstanding at September 30, 2020		20,953,223		$	1.42

Shares available for grant under the Plan

	Shares Available for Grant
Balances, at December 31, 2019		697,500
Options granted		(341,000	)
Balances, at September 30, 2020		356,500

Options activity

	Outstanding Options
	Number of Shares		Weighted Average Exercise Price
Balances at December 31, 2019		52,500	$	5.89
Options granted		341,000	$	1.18
Balances at September 30, 2020		393,500	$	1.81

Fair value assumptions

	For the nine months ended September 30,
	2020			2019
Risk-free interest rate (weighted average)		1.02	%		2.39	%
Expected volatility (weighted average)		97.63	%		106.74	%
Expected term (in years)		7			7
Expected dividend yield		0.00	%		0.00	%

Outstanding stock options under the 1999 plan

	Outstanding Options
	Number of Shares			Weighted Average Exercise Price
Balances at December 31, 2019		191,706		$	93.40
Options cancelled		(134,020	)	$	113.42
Balances at September 30, 2020		57,686		$	46.89

8. STOCKHOLDERS EQUITY

9 Months Ended

Sep. 30, 2020

Stockholders' equity

8. 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.

Series A Stock

On December 11, 2018, the Company closed its underwritten offering of 5,181,346 units for net proceeds of approximately $9 million. Each unit consists of (1) one share of the Company’s Series A convertible preferred stock, par value $0.0001 per share (the “Series A Stock”), (2) a two-year warrant to purchase one share of common stock at an exercise price of $1.93 (the “Series 1 Warrants”), and (3) a five-year warrant to purchase one share of common stock at an exercise price of $1.93 (the “Series 2 Warrants”). In accordance with ASC 480, the estimated fair value of $1,800,016 for the beneficial conversion feature was recognized as a deemed dividend on the Series A Stock during the year ended December 31, 2019.

The table below sets forth a summary of the designation, powers, preferences and rights of the Series A Stock.

Conversion	Subject to the ownership limitations described below, the Series A 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 A Stock by a conversion price of $1.93 per share. The conversion price is subject to adjustment in the case of stock splits, stock dividends, combinations of shares and similar recapitalization transactions. The Company will not effect any conversion of the Series A Stock, nor shall a holder convert its shares of Series A Stock, to the extent that such conversion would cause the holder to have acquired, through conversion of the Series A Stock or otherwise, beneficial ownership of a number shares of common stock in excess of 4.99% (or, at the election of the holder prior to the issuance of any shares of Series A Stock, 9.99%) of the common stock outstanding after giving effect to such exercise.
Dividends	In the event the Company pays dividends on its shares of common stock, the holders of the Series A Stock will be entitled to receive dividends on shares of Series A Stock equal, on an as-if-converted basis, to and in the same form as paid on the common stock. No other dividends will be paid on the shares of Series A Stock.
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, the holders of Series A Stock shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders an amount equal to the amount that a holder of common stock would receive if the Series A Stock were fully converted to common stock, which amounts will be paid pari passu with all holders of common stock.
Voting rights	Shares of Series A Stock will generally have no voting rights, except as required by law and except that the consent of holders of a majority of the then outstanding Series A Stock will be required to amend the terms of the Series A Stock or to take other action that adversely affects the rights of the holders of Series A Stock.

As of December 31, 2019, there were 38,606 shares of Series A Stock outstanding. During the nine months ended September 30, 2020; an additional 38,396 shares of Series A Stock were converted into 38,396 shares of common stock. As of September 30, 2020, there were 210 shares of Series A Stock outstanding.

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 September 30, 2020, and December 31, 2019, there were 12,619,369 and 6,741,860 shares of common stock issued and outstanding, respectively.

On March 13, 2020, the Company completed a registered direct offering to a single healthcare-focused institutional investor (the “Investor”) for the issuance and sale of 750,000 shares of its common stock at a purchase price of $1.1651 per share and pre-funded warrants to purchase up to 1,610,313 shares of its common stock, at a purchase price of $1.1650 per pre-funded warrant (which represents the per share offering price for the common stock less $0.0001, the exercise price of each pre-funded warrant), for gross proceeds of approximately $2.75 million, priced at-the-market under Nasdaq rules. Additionally, in a concurrent private placement, the Company issued to the Investor unregistered warrants to purchase up to 2,360,313 shares of its common stock. The unregistered warrants have an exercise price of $1.04 per share and exercise period commencing immediately upon the issuance date and a term of five and one-half years. The net proceeds from the offerings, after deducting placement agent fees and other direct offering expenses were approximately $2.125 million. The fair value allocated to the common stock, pre-funded warrants and warrants was $0.5 million, $1.1 million and $1.1 million, respectively.

On July 8, 2020, the Company completed a registered direct offering with the Investor for the issuance and sale of 2,523,611 shares of its common stock at a purchase price of $1.0278 per share and pre-funded warrants to purchase up to 652,313 shares of its common stock, at a purchase price of $1.0277 per pre-funded warrant (which represents the per share offering price for the common stock less $0.0001, the exercise price of each pre-funded warrant). The Company issued in a concurrent private placement unregistered pre-funded warrants to purchase up to 4,607,692 shares of common stock at the same purchase price as the registered pre-funded warrants, and unregistered common stock warrants to purchase up to 7,783,616 shares of common stock for aggregate gross proceeds of approximately $8.0 million, priced at-the-market under Nasdaq rules. The unregistered warrants have an exercise price of $0.903 per share and exercise period commencing immediately upon the issuance date and a term of five and one-half years. The net proceeds from the offerings, after deducting placement agent fees and other direct offering expenses were approximately $6.5 million. The fair value allocated to the common stock, pre-funded warrants and warrants was $1.5 million, $3.0 million and $3.5 million, respectively.

During the nine months ended September 30, 2020, the Company issued 1,610,313 shares of common stock upon the exercise of pre-funded warrants. As of September 30, 2020, there were 5,260,005 pre-funded warrants outstanding.

Warrants

March 2020 Warrants

As part of the March 2020 registered direct offering, the Company issued unregistered warrants to purchase 2,360,313 shares of its common stock at an exercise price of $1.04 per share and contractual term of five and one-half years. The unregistered warrants were offered in a private placement under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Regulation D promulgated thereunder and, along with the shares of common stock underlying the warrants, have not been registered under the Securities Act, or applicable state securities laws. In accordance with ASC 480, these warrants are classified as equity and their relative fair value of approximately $1.1 million was recognized as additional paid in capital. 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.

July 2020 Warrants

As part of the July 2020 offering, the Company issued unregistered warrants to purchase 7,783,616 shares of its common stock at an exercise price of $0.903 per share and contractual term of five and one-half years. The unregistered warrants were offered in a private placement under Section 4(a)(2) of the Securities Act, and Regulation D promulgated thereunder and, along with the shares of common stock underlying the warrants, have not been registered under the Securities Act, or applicable state securities laws. In accordance with ASC 480, these warrants are classified as equity and their relative fair value of approximately $3.5 million was recognized as additional paid in capital. 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.

Warrants Issued for Services

In connection with the March 2020 offering described above, the Company issued designees of the placement agent warrants to purchase 177,023 shares of common stock at an exercise price of $1.4564 and a contractual term of five years. In accordance with ASC 815, these warrants are classified as equity and its estimated fair value of $66,201 was recognized as additional paid in capital. Additionally, the Company issued to its previous underwriter a warrant to purchase 94,413 shares of common stock at an exercise price of $1.4564 per share and contractual term of five years. In accordance with ASC 815, this warrant is classified as equity and its estimated fair-value of $35,308 was recognized as additional paid in capital. 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 warrant, risk-free interest rates, expected dividends and expected volatility of the price of the underlying common stock.

In connection with the July 2020 offering described above, the Company issued designees of the placement agent warrants to purchase 583,771 shares of common stock at an exercise price of $1.2848 and a contractual term of five years. In accordance with ASC 815, these warrants are classified as equity and its estimated fair value of $399,445 was recognized as additional paid in capital. Additionally, the Company issued to its previous underwriter a warrant to purchase 311,345 shares of common stock at an exercise price of $1.2848 per share and contractual term of five years. In accordance with ASC 815, this warrant is classified as equity and its estimated fair-value of $213,038 was recognized as additional paid in capital. 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 warrant, risk-free interest rates, expected dividends and expected volatility of the price of the underlying common stock.

On June 2, 2020, the Company received approximately $1.7 million and issued 877,202 shares of common stock upon the exercise of previously outstanding warrants issued in connection with the Company’s December 2018 offering.

As of September 30, 2020, the Company has 20,953,223 warrants outstanding. The following table summarizes the Company’s warrant activity for the nine months ended September 30, 2020:

	Warrants			Weighted Average Exercise Price
Outstanding at December 31, 2019		10,519,945		$	1.94
Issued		11,310,480			0.98
Exercised		(877,202	)		1.93
Outstanding at September 30, 2020		20,953,223		$	1.42

2016 Stock Incentive Plan

In June 2016, the Company adopted the 2016 Stock Incentive Plan (the “2016 Plan”). 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. On June 16, 2016, the Company’s stockholders approved the 2016 Plan and authorized for issuance under the 2016 Plan a total of 150,000 shares of common stock. On June 13, 2019, the Company’s stockholders approved an amendment to the 2016 Plan which increased the number of shares of common stock authorized for issuance under the 2016 Plan to a total of 750,000 shares, up from 150,000 previously authorized.

The following table summarizes the shares available for grant under the 2016 Plan for the nine months ended September 30, 2020:

	Shares Available for Grant
Balances, at December 31, 2019		697,500
Options granted		(341,000	)
Balances, at September 30, 2020		356,500

2016 Plan Stock Options

Stock options granted under the 2016 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 2016 Plan may be granted with a term of up to ten years and at prices no less than fair market value at the time of grant. Stock options granted generally vest over three to four years.

The following table summarizes the outstanding stock options under the 2016 Plan for the nine months ended September 30, 2020:

	Outstanding Options
	Number of Shares		Weighted Average Exercise Price
Balances at December 31, 2019		52,500	$	5.89
Options granted		341,000	$	1.18
Balances at September 30, 2020		393,500	$	1.81

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 recorded compensation expense for these stock option grants of $52,659 and $16,279 for the three months ended September 30, 2020 and 2019, and $165,492 and $62,018 for the nine months ended September 30, 2020 and 2019, respectively.

As of September 30, 2020, there were unrecognized compensation costs of approximately $211,257 related to non-vested stock option awards under the 2016 Plan that will be recognized on a straight-line basis over the weighted average remaining vesting period of 1.39 years.

The Company used the following assumptions to estimate the fair value of options granted under the 2016 Plan for the nine months ended September 30, 2020:

	For the nine months ended September 30,
	2020			2019
Risk-free interest rate (weighted average)		1.02	%		2.39	%
Expected volatility (weighted average)		97.63	%		106.74	%
Expected term (in years)		7			7
Expected dividend yield		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 Company’s historical experience 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 does not anticipate paying any dividends in the near future.
Forfeitures	Stock compensation expense recognized in the statements of operations for the nine months ended September 30, 2020 is based on awards ultimately expected to vest, and 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.

1999 Amended Stock Plan

In October 2000, the Company adopted the 1999 Stock Plan, as amended and restated on June 17, 2008 (the “1999 Plan”). Under the 1999 Plan, with the approval of the Compensation Committee of the Board of Directors, the Company could grant stock options, restricted stock, stock appreciation rights and new shares of common stock upon exercise of stock options. On March 13, 2014, the Company’s stockholders approved an amendment to the 1999 Plan which increased the number of shares of common stock authorized for issuance under the 1999 Plan to a total of 200,000 shares, up from 15,000 previously authorized. On September 15, 2015, the Company’s stockholders approved an additional amendment to the 1999 Plan which increased the number of shares of common stock authorized for issuance under the 1999 Plan to a total of 250,000 shares, up from 200,000 previously authorized. The 1999 Plan expired on June 17, 2018 and no new grants may be made under that plan after that date. However, unexpired awards granted under the 1999 Plan remain outstanding and subject to the terms of the 1999 Plan.

1999 Plan Stock Options

Stock options granted under the 1999 Plan may be either ISOs or NSOs. ISOs could be granted only to employees. NSOs could be granted to employees, consultants and directors. Stock options under the 1999 Plan could 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 six years.

The following table summarizes the outstanding stock options under the 1999 Plan for the nine months ended September 30, 2020:

	Outstanding Options
	Number of Shares			Weighted Average Exercise Price
Balances at December 31, 2019		191,706		$	93.40
Options cancelled		(134,020	)	$	113.42
Balances at September 30, 2020		57,686		$	46.89

The Company recorded compensation expense for these stock option grants of $10,502 and $24,486 for the three months ended September 30, 2020 and 2019, and $33,211 and $80,708 for the nine months ended September 30, 2020 and 2019, respectively.

As of September 30, 2020, there were unrecognized compensation costs of approximately $2,896 related to non-vested stock option awards under the 1999 Plan that will be recognized on a straight-line basis over the weighted average remaining vesting period of 0.31 years.

8. STOCKHOLDERS EQUITY (Details 2) - 2016 Stock Incentive Plan	9 Months Ended
	Sep. 30, 2020 $ / shares shares
Number of options outstanding, beginning \| shares	52,500
Number of options granted \| shares	341,000
Number of options outstanding, ending \| shares	393,500
Weighted average exercise price outstanding, beginning \| $ / shares	$ 5.89
Weighted average exercise price granted \| $ / shares	1.18
Weighted average exercise price outstanding, ending \| $ / shares	$ 1.81

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2020	Nov. 12, 2020
Document And Entity Information
Entity Registrant Name	TENAX THERAPEUTICS, INC.
Entity Central Index Key	0000034956
Document Type	10-Q
Document Period End Date	Sep. 30, 2020
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		12,619,369
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2020
Entity Interactive Data Current	Yes
Entity Incorporation State Country Code	DE
Entity File Number	001-34600

6. NOTES PAYABLE (Details Narrative) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Note payable - current	$ 30,900	$ 0
Note payable - noncurrent	213,757	$ 0
PPP Loan
Note payable - current	30,900
Note payable - noncurrent	$ 213,757

5. LEASE (Tables)

9 Months Ended

Sep. 30, 2020

Leases [Abstract]

Lease liabilities

	September 30, 2020		December 31, 2019
Current portion included in accrued liabilities	$	89,182	$	111,353
Long term lease liability		-		60,379
	$	89,182	$	171,732

Maturities of operating lease liabilities

Year ending December 31,
2020	$	30,395
2021		61,803
Total lease payments	$	92,198
Less: Imputed interest		(3,016	)
Operating lease liability	$	89,182

Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2020	Dec. 31, 2019
Stockholders' equity
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, authorized	400,000,000	400,000,000
Common stock, issued	12,619,369	6,741,860
Common stock, outstanding	12,619,369	6,741,860
Series A Preferred Stock
Stockholders' equity
Preferred stock, par value	$ .0001	$ 0.0001
Preferred stock, authorized	9,999,790	9,961,394
Preferred stock, issued	210	38,606
Preferred stock, outstanding	210	38,606

1. DESCRIPTION OF BUSINESS

9 Months Ended

Sep. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

1. DESCRIPTION OF BUSINESS

Tenax Therapeutics, Inc. (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 7 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 levosimendan, 2.5 mg/ml concentrate for solution for infusion / 5ml vial in the United States and Canada.

3. FAIR VALUE (Details 1) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Current Assets
Cash and cash equivalents	$ 8,235,532	$ 4,905,993
Marketable securities	472,648	493,884
Level 1
Current Assets
Cash and cash equivalents	8,235,532	4,905,993
Marketable securities	0	0
Level 2
Current Assets
Cash and cash equivalents	0	0
Marketable securities	472,648	493,884
Level 3
Current Assets
Cash and cash equivalents	0	0
Marketable securities	$ 0	$ 0

8. STOCKHOLDERS EQUITY (Details 1) - 2016 Stock Incentive Plan	9 Months Ended
	Sep. 30, 2020 shares
Shares available for grant, beginning	697,500
Shares available for grant, options granted	(341,000)
Shares available for grant, ending	356,500

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Anti-dilutive securities

	Nine months ended September 30,
	2020		2019

Warrants to purchase common stock		26,213,228		10,521,195
Options to purchase common stock		451,186		244,214
Convertible preferred shares outstanding		210		38,606

4. BALANCE SHEET COMPONENTS (Details) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Balance Sheet Related Disclosures [Abstract]
Office furniture and fixtures	$ 43,034	$ 130,192
Computer equipment and software	19,816	80,669
Property and equipment, gross	62,850	210,861
Less: accumulated depreciation	(59,389)	(204,302)
Property and equipment, net	$ 3,461	$ 6,559

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Basis of Presentation

Going Concern

Use of Estimates

Principles of Consolidation

Liquidity and Management's Plan

Any or all of the foregoing may have a material adverse effect on the Company’s business and financial performance.

COVID-19 Impact and Related Risks

Net Loss per Share

	Nine months ended September 30,
	2020		2019

Warrants to purchase common stock		26,213,228		10,521,195
Options to purchase common stock		451,186		244,214
Convertible preferred shares outstanding		210		38,606

Leases

Recent Accounting Pronouncements

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - shares	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Warrants to purchase common stock
Anti-dilutive securities	26,213,228	10,521,195
Options to purchase common stock
Anti-dilutive securities	451,186	244,214
Convertible preferred shares
Anti-dilutive securities	210	38,606

Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
Statements of Operations (Unaudited) - USD ($)	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Operating expenses
General and administrative	$ 1,172,725	$ 1,343,429	$ 3,364,890	$ 3,692,843
Research and development	1,052,398	916,984	3,669,761	2,049,004
Total operating expenses	2,225,123	2,260,413	7,034,651	5,741,847
Net operating loss	2,225,123	2,260,413	7,034,651	5,741,847
Interest expense	610	0	1,016	0
Other expense (income), net	(5,298)	(36,709)	(14,038)	(139,161)
Net loss	2,220,435	2,223,704	7,021,629	5,602,686
Unrealized loss (gain) on marketable securities	1,171	960	(445)	(803)
Total comprehensive loss	$ 2,221,606	$ 2,224,664	$ 7,021,184	$ 5,601,883
Net loss per share, basic and diluted	$ (0.18)	$ (0.33)	$ (0.73)	$ (0.93)
Weighted average number of common shares outstanding, basic and diluted	12,427,355	6,741,084	9,590,741	6,011,304

4. BALANCE SHEET COMPONENTS (Tables)

9 Months Ended

Sep. 30, 2020

Balance Sheet Related Disclosures [Abstract]

Property, plant and equipment

	September 30, 2020			December 31, 2019
Office furniture and fixtures	$	43,034		$	130,192
Computer equipment and software		19,816			80,669
		62,850			210,861
Less: Accumulated depreciation		(59,389	)		(204,302	)
	$	3,461		$	6,559

Accrued liabilities

	September 30, 2020		December 31, 2019
Employee related	$	105,337	$	333,873
Operating costs		100,932		426,115
Lease liability		89,182		111,353
	$	295,451	$	871,341

4. BALANCE SHEET COMPONENTS (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Balance Sheet Related Disclosures [Abstract]
Depreciation expense	$ 900	$ 1,300	$ 3,100	$ 3,700

3. FAIR VALUE

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

3. FAIR VALUE

The Company determines the fair value of its financial assets and liabilities in accordance with the 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, and warrant liabilities. The Company considers the carrying amount of its cash and cash equivalents 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:

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.

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 condensed 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 in the condensed consolidated statements of comprehensive loss and are determined using the specific identification method with transactions recorded on a settlement date basis. 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. As of September 30, 2020, the Company believes that the costs of its investments are recoverable in all material respects.

The following table summarizes the fair value of the Company’s investments by type. The estimated fair value of the Company’s fixed income investments is classified as Level 2 in the fair value hierarchy as defined in GAAP. These fair values are obtained from independent pricing services which utilize Level 2 inputs:

	September 30, 2020
	Amortized Cost		Accrued Interest		Gross Unrealized Gains		Gross Unrealized losses			Estimated Fair Value
Corporate debt securities	$	469,409	$	3,239	$	993	$	(94	)	$	473,547
Total investments	$	469,409	$	3,239	$	993	$	(94	)	$	473,547

All of the Company’s investments have scheduled maturities of less than one year as of September 30, 2020 and December 31, 2019.

The following tables summarize information regarding assets and liabilities measured at fair value on a recurring basis as of September 30, 2020 and December 31, 2019:

			Fair Value Measurements at Reporting Date Using
	Balance as of September 30, 2020		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	$	8,235,532	$	8,235,532	$	-	$	-
Marketable securities	$	472,648	$	-	$	472,648	$	-

			Fair Value Measurements at Reporting Date Using
	Balance as of December 31, 2019		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	$	4,905,993	$	4,905,993	$	-	$	-
Marketable securities	$	493,884	$	-	$	493,884	$	-

There were no significant transfers between levels in the nine months ended September 30, 2020.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

5. LEASE

9 Months Ended

Sep. 30, 2020

Leases [Abstract]

5. LEASE

In January 2011, the Company entered into the Lease with Concourse Associates, LLC for office facilities located at the premises in Morrisville, North Carolina (the “Lease”). The Lease was amended in August 2015 to extend the term for the 5,954 square foot rental. The current term began on March 1, 2016 and continues for 64 months to June 30, 2021. Rent payments began on July 1, 2016, following the conclusion of a four-month rent abatement period. The Company has two five-year options to extend the Lease and a one-time option to terminate the Lease thirty-six months after the commencement of the initial term if no additional space (“Expansion Space”) became available; none of these optional periods have been considered in the determination of the right-of-use asset or the lease liability for the Lease as the Company did not consider it reasonably certain that it would exercise any such options. The Lease further provides that the Company is obligated to pay to the landlord certain variable costs, including taxes and operating expenses. The Company also has a right of first offer to lease the Expansion Space, of no less than 1,000 square feet, as that additional space becomes available adjacent to the premises over the remainder of the initial term of the Lease, at the same rate per square foot as the current premises, with an extension of the term of sixty additional months starting at the commencement date of acquiring the Expansion Space.

The Company performed an evaluation of its other contracts with customers and suppliers in accordance with ASC 842 and determined that, except for the Lease described above, none of the Company’s contracts contain a lease.

The balance sheet classification of our lease liabilities was as follows:

	September 30, 2020		December 31, 2019
Current portion included in accrued liabilities	$	89,182	$	111,353
Long term lease liability		-		60,379
	$	89,182	$	171,732

As of September 30, 2020, the maturities of our operating lease liabilities were as follows:

Year ending December 31,
2020	$	30,395
2021		61,803
Total lease payments	$	92,198
Less: Imputed interest		(3,016	)
Operating lease liability	$	89,182

Operating lease liabilities are based on the net present value of the remaining Lease payments over the remaining Lease term. In determining the present value of lease payments, the Company used the incremental borrowing rate based on the information available at the Lease commencement date. As of September 30, 2020, the remaining Lease term is 1 year and the discount rate used to determine the operating lease liability was 8.0%. For the nine months ending September 30, 2020, the Company paid $95,854 in total lease expenses, including $5,553 for common area maintenance charges.

5. LEASE (Details) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Leases [Abstract]
Current portion included in accrued liabilities	$ 89,182	$ 111,353
Long term lease liability	0	60,379
Total	$ 89,182	$ 171,732

4. BALANCE SHEET COMPONENTS (Details 1) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Balance Sheet Related Disclosures [Abstract]
Employee related	$ 105,337	$ 333,873
Operating costs	100,932	426,115
Lease liability	89,182	111,353
Total	$ 295,451	$ 871,341

Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
Statements of Cash Flows (Unaudited) - USD ($)	Sep. 30, 2020	Sep. 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (7,021,629)	$ (5,602,686)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization	3,098	3,709
Interest on debt instrument	1,016	0
Amortization of right of use asset	82,163	75,942
Loss on disposal of property and equipment	0	522
Issuance and vesting of compensatory stock options and warrants	198,703	142,726
Issuance of common stock for services rendered	75,000	66,667
Amortization of premium on marketable securities	5,078	(1,778)
Changes in operating assets and liabilities
Accounts receivable, prepaid expenses and other assets	616,676	57,230
Accounts payable and accrued liabilities	(1,185,136)	(498,145)
Long term portion of lease liability	(60,379)	(74,107)
Net cash used in operating activities	(7,285,410)	(5,829,920)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of marketable securities	(458,438)	(436,356)
Sale of marketable securities	475,041	455,026
Purchase of property and equipment	0	(3,574)
Net cash provided by investing activities	16,603	15,096
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of common stock and pre-funded warrants, net of issuance costs	8,662,985	0
Proceeds from the exercise of warrants	1,690,704	96,500
Proceeds from the issuance of notes payable	244,657	0
Net cash provided by financing activities	10,598,346	96,500
Net change in cash and cash equivalents	3,329,539	(5,718,324)
Cash and cash equivalents, beginning of period	4,905,993	12,367,321
Cash and cash equivalents, end of period	$ 8,235,532	$ 6,648,997

8. STOCKHOLDERS EQUITY (Details)	9 Months Ended
8. STOCKHOLDERS EQUITY (Details)	Sep. 30, 2020 $ / shares shares
Stockholders' equity
Number of warrants outstanding, beginning \| shares	10,519,945
Number of warrants, issued \| shares	11,310,480
Number of warrants, exercised \| shares	(877,202)
Number of warrants outstanding, ending \| shares	20,953,223
Weighted average exercise price outstanding, beginning \| $ / shares	$ 1.94
Weighted average exercise price, issued \| $ / shares	.98
Weighted average exercise price, exercised \| $ / shares	1.93
Weighted average exercise price outstanding, ending \| $ / shares	$ 1.42

8. STOCKHOLDERS EQUITY (Details 4) - 1999 Amended Stock Plan	9 Months Ended
	Sep. 30, 2020 $ / shares shares
Number of options outstanding, beginning \| shares	191,706
Number of options cancelled \| shares	(134,020)
Number of options outstanding, ending \| shares	57,686
Weighted average exercise price outstanding, beginning \| $ / shares	$ 93.40
Weighted average exercise price cancelled \| $ / shares	113.42
Weighted average exercise price outstanding, ending \| $ / shares	$ 46.89

4. BALANCE SHEET COMPONENTS

9 Months Ended

Sep. 30, 2020

Balance Sheet Related Disclosures [Abstract]

4. BALANCE SHEET COMPONENTS

Property and equipment, net

Property and equipment consist of the following as of September 30, 2020 and December 31, 2019:

	September 30, 2020			December 31, 2019
Office furniture and fixtures	$	43,034		$	130,192
Computer equipment and software		19,816			80,669
		62,850			210,861
Less: Accumulated depreciation		(59,389	)		(204,302	)
	$	3,461		$	6,559

Depreciation expense was approximately $900 and $1,300 for the three months ended September 30, 2020 and 2019, and approximately $3,100 and $3,700 for the nine months ended September 30, 2020 and 2019, respectively.

Accrued liabilities

Accrued liabilities consist of the following as of September 30, 2020 and December 31, 2019:

	September 30, 2020		December 31, 2019
Employee related	$	105,337	$	333,873
Operating costs		100,932		426,115
Lease liability		89,182		111,353
	$	295,451	$	871,341

8. STOCKHOLDERS EQUITY (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
8. STOCKHOLDERS EQUITY (Details Narrative) - USD ($)	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Common stock, par value	$ 0.0001		$ 0.0001		$ 0.0001
Common stock, authorized	400,000,000		400,000,000		400,000,000
Common stock, issued	12,619,369		12,619,369		6,741,860
Common stock, outstanding	12,619,369		12,619,369		6,741,860
Unrecognized compensation costs period for recognition			1 year 4 months 20 days
2016 Stock Incentive Plan
Compensation expense	$ 52,659	$ 16,279	$ 165,492	$ 62,018
Series A Preferred Stock
Preferred stock, par value	$ .0001		$ .0001		$ 0.0001
Preferred stock, authorized	9,999,790		9,999,790		9,961,394
Preferred stock, issued	210		210		38,606
Preferred stock, outstanding	210		210		38,606
Warrants outstanding	20,953,223		20,953,223
Unrecognized compensation costs	$ 211,257		$ 211,257

5. LEASE (Details 1) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Leases [Abstract]
2020	$ 30,395
2021	61,803
Total lease payments	92,198
Less: imputed interest	(3,016)
Operating lease liability	$ 89,182	$ 171,732

6. NOTES PAYABLE

9 Months Ended

Sep. 30, 2020

Notes Payable [Abstract]

6. NOTES PAYABLE

Payroll Protection Program Loan

On April 30, 2020, the Company received a loan pursuant to the Paycheck Protection Program (the “PPP Loan”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), as administered by the U.S. Small Business Administration. The PPP Loan in the principal amount of $244,657 was disbursed by First Horizon Bank (the “Lender”) pursuant to a promissory note issued by us (the “Note”).

The PPP Loan has a two-year term and bears interest at a rate of 1.00% per annum. Monthly principal and interest payments are deferred for sixteen months. Beginning September 30, 2021, the Company is required to make monthly payments of principal and interest of approximately $31,100 to the Lender. The Company did not provide any collateral or guarantees for the PPP Loan, nor did the Company pay any facility charge to obtain the PPP Loan. The Note provides for customary events of default, including, among others, those relating to failure to make payment, bankruptcy, breaches of representations, and material adverse effects. The Company may prepay the principal of the PPP Loan at any time, subject to certain notice requirements.

Under the terms of the CARES Act, Paycheck Protection Program loan recipients can apply for and be granted forgiveness for all or a portion of a loan granted under the program. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs and any payments of mortgage interest, rent, and utilities. The Company is using the proceeds from the PPP Loan to fund payroll costs in accordance with the relevant terms and conditions of the CARES Act. However, no assurance is provided that forgiveness for any portion of the PPP Loan will be obtained.

As of September 30, 2020, the current and long-term portions of the PPP Loan were $30,900 and $213,757, respectively.