3.	Basis of Presentation and Summary of Significant Accounting Policies

The Summary of Significant Accounting Policies included in the Company's Form

-K for the year ended

December 31, 2016,

filed with the Securities and Exchange Commission on

March 31, 2017

have

not

materially changed, except as set forth below.

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information as found in the Accounting Standard Codification (“ASC”) and Accounting Standards Updates (“ASUs”) of the Financial Accounting Standards Board (“FASB”), and with the instructions to Form

-Q and Article

of Regulation S-

of the Securities and Exchange Commission (the “SEC”). In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements of the Company include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the financial statements) considered necessary to present fairly the Company’s financial position as of

June

30,

2017,

its results of operations for the

three

and

six

months ended

June

30,

2017

and

2016

and cash flows for the

six

months ended

June

30,

2017

and

2016.

Operating results for the

six

months ended

June

30,

2017

are

not

necessarily indicative of the results that

may

be expected for the year ending

December

31,

2017.

The unaudited interim condensed consolidated financial statements presented herein do

not

contain the required disclosures under GAAP for annual financial statements. The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the annual audited financial statements and related notes as of and for the year ended

December

31,

2016

filed with the SEC on Form

-K on

March 31, 2017.

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the date the financial statements and reported amounts of expense during the reporting period. Actual results could differ from those estimates. Due to the uncertainty of factors surrounding the estimates or judgments used in the preparation of the unaudited condensed consolidated financial statements, actual results

may

materially vary from these estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the unaudited condensed consolidated financial statements in the period they are deemed necessary.

Cash and Cash Equivalents and Certificate of Deposit

The Company considers any highly liquid investments, such as money market funds, with an original maturity of

three

months or less to be cash and cash equivalents. The Company's certificate of deposit has a maturity greater than

three

months but within

one

year of the date of purchase. This certificate of deposit is classified as held-to-maturity, and the estimated fair value of the investment approximates its amortized cost.

Fair Value of Financial Instruments

The carrying amounts of the Company’s financial instruments, including cash equivalents, certificate of deposit, accounts payable, and accrued expenses approximate fair value due to the short-term nature of those instruments. As of each of

June

30,

2017

and

December

31,

2016,

the fair value of the Company’s outstanding convertible notes was approximately

$2.6

million. The fair value of the convertible notes is determined using a binomial lattice model that utilizes certain unobservable inputs that fall within Level

of the fair value hierarchy.

Offering Costs

Offering costs consist principally of legal costs incurred through the balance sheet date related to the Company’s private placement financings and are recognized in other assets on the consolidated balance sheet. At

June

30,

2017

and

December 31, 2016,

there were

$93,000

and

$0.2

million in deferred offering costs, respectively. These costs are either expensed upon completion of the related financing or offset against the proceeds of the offering, depending upon the accounting treatment of the offering.

Intangible Assets and Goodwill

In connection with the Merger, the Company acquired indefinite-lived In-Process Research and Development Assets (“IPR&D”) RES-

529

and RES-

440,

with estimated fair values of

$8.6

million and

$1.0

million, respectively, and recognized

$6.9

million in goodwill. In the

third

quarter of

2016,

the IPR&D asset associated with RES-

440

was abandoned and written down to

$0.

RES-

529

and goodwill are assessed for impairment on each of

October 1

of the Company’s fiscal year or more frequently if impairment indicators exist. The Company has a single reporting unit and all goodwill relates to that reporting unit. There were

impairment indicators or impairments to RES-

529

or goodwill during the

three

and

six

months ended

June 30, 2017.

Net Income (Loss) Per Common Share

For the

three

months ended

June 30, 2017,

the Company used the

two

-class method to compute net income per common share because the Company has issued securities (Series A convertible preferred stock) that entitle the holder to participate in dividends and earnings of the Company. Under this method, net income is reduced by any dividends earned during the period. The remaining earnings (undistributed earnings) are allocated to common stock and the Series A convertible preferred stock to the extent that the Series A convertible preferred stock

may

share in earnings as if all of the earnings for the period had been distributed. The total earnings allocated to common stock is then divided by the number of outstanding shares to which the earnings are allocated to determine the earnings per share. The

two

-class method is

not

applicable during periods with a net loss, as the holders of the convertible preferred stock have

obligation to fund losses.

Diluted net income (loss) per common share is computed under the

two

-class method by using the weighted-average number of shares of common stock outstanding, plus, for periods with net income attributable to common stockholders, the potential dilutive effects of stock options, unvested restricted stock, warrants, and convertible debt. In addition, the Company analyzes the potential dilutive effect of the outstanding convertible preferred stock under the “if-converted” method when calculating diluted earnings per share, in which it is assumed that the outstanding convertible preferred stock converts into common stock at the beginning of the period or when issued, if later. The Company reports the more dilutive of the approaches (

two

class or “if-converted”) as its diluted net income per share during the period.

For the periods in which the Company reported a net loss, there was

dilutive effect under either the

two

-class or “if-converted” method. For the

three

months ended

June 30, 2017,

the Company presented diluted net income per common share using the

two

-class method, which was more dilutive than the “if-converted” method.

For purposes of calculating diluted loss per common share, the denominator includes both the weighted average common shares outstanding and the number of common stock equivalents if the inclusion of such common stock equivalents would be dilutive. Dilutive common stock equivalents potentially include stock options, unvested restricted stock awards and warrants using the treasury stock method. The diluted loss per common share calculation is also affected by the assumed exercise of the liability classified warrants using the treasury stock method, if dilutive, and adjusting the numerator for the change in fair value of the warrant liability. In addition, the Company considers the potential dilutive impact of its convertible debt instruments using the "if-converted" method.

The following table sets forth the computation of basic and diluted earnings per share:

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Basic net income (loss) per common share calculation:
Net income (loss)	$	20,387,741		$	(3,806,194	)	$	(8,251,037	)	$	(10,029,359	)
Accretion of Series A cumulative preferred dividends		(487,460	)		—			(546,305	)		—
Undistributed earnings allocated to participating securities		(10,416,153	)		—			—			—
Net income (loss) attributable to common stockholders	$	9,484,128			(3,806,194	)		(8,797,342	)		(10,029,359	)

Weighted average shares outstanding, basic		10,828,063			10,263,703			10,582,521			10,130,042
Net income (loss) per share of common stock, basic	$	0.88		$	(0.37	)	$	(0.83	)	$	(0.99	)

Diluted net income (loss) per common share calculation:
Net income (loss) attributable to common stockholders	$	9,484,128			(3,806,194	)		(8,797,342	)		(10,029,359	)
Change in fair value of warrant liability		(23,387,850	)		—			(10,468,176	)		—
Diluted net loss	$	(13,903,722	)		(3,806,194	)		(19,265,518	)		(10,029,359	)

Weighted average shares outstanding, basic		10,828,063			10,263,703			10,582,521			10,130,042
Shares from dilutive warrants		3,044,569			—			1,756,865			—
Weighted average shares outstanding, diluted		13,872,632			10,263,703			12,339,386			10,130,042
Net income (loss) per share of common stock, diluted	$	(1.00	)	$	(0.37	)	$	(1.56	)	$	(0.99	)

The following potentially dilutive securities outstanding as of

June

30,

2017

and

2016

have been excluded from the computation of diluted weighted average shares outstanding, as they would be anti-dilutive:

	June 30,
	2017		2016
Convertible debt		774,886		429,161
Convertible preferred stock		10,449,338		—
Common stock warrants		457,721		461,209
Stock options		2,525,989		1,797,812
Unvested restricted stock awards		6,132		12,273
		14,214,066		2,700,455

Amounts in the table reflect the common stock equivalents of the noted instruments.

Recent Accounting Pronouncements

July

2017,

the FASB issued ASU

2017

11,

Earnings Per Share (Topic

260

); Distinguishing Liabilities from Equity (Topic

480

); Derivatives and Hedging (Topic

815

): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part 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.

The

first

part of this update addresses the complexity of accounting for certain financial instruments with down round features and the

second

part addresses the complexity of distinguishing liabilities from equity. The guidance is applicable to public business entities for fiscal years beginning after

December 15, 2018

and interim periods within those years. The Company is currently evaluating the potential impact of the adoption of this standard on its consolidated results of operations, financial position and cash flows and related disclosures.

May 2017,

the FASB issued ASU

No.

2017

09,

Modification Accounting for Share-Based Payment Arrangements

, which amends the scope of modification accounting for share-based payment arrangements. The ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under ASC

718.

Specifically, an entity would

not

apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. The guidance is applicable to public business entities for fiscal years beginning after

December 15, 2017

and interim periods within those years. Early adoption is permitted, including adoption in any interim period. The Company does

not

expect this new guidance to have a material impact on its condensed consolidated financial statements.

March

2016,

the FASB issued ASU

2016

09,

Compensation – Improvements to Employee Share-Based Payment Accounting

, which simplifies several aspects of the accounting for employee share-based payment transactions including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The guidance is applicable to public business entities for fiscal years beginning after

December 15, 2016

and interim periods within those years. The Company adopted this standard in

2017

by electing to account for forfeitures in the period that they occur. Under ASU

2016

09,

accounting changes adopted using the modified retrospective method must be calculated as of the beginning of the period adopted and reported as a cumulative-effect adjustment. As a result, the Company recognized cumulative-effect adjustment of approximately

$1,000

January 1, 2017.

February 2016,

the FASB issued ASU

2016

02,

Leases (Topic

842

)

. The FASB issued the update to require the recognition of lease assets and liabilities on the balance sheet of lessees. The standard will be effective for fiscal years beginning after

December

15,

2018,

including interim periods within such fiscal years. The ASU requires a modified retrospective transition method with the option to elect a package of practical expedients. Early adoption is permitted. The Company is currently evaluating the potential impact of the adoption of this standard on its consolidated results of operations, financial position and cash flows and related disclosures.