Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements of the Company have been prepared in accordance with US GAAP. Any reference in these notes to applicable guidance is meant to refer to US GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires the Company 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 expenses during the reporting period.

On an ongoing basis, the Company evaluates its estimates using historical experience and other factors, including the current economic environment. Significant items subject to such estimates are assumptions used for purposes of determining stock-based compensation and accounting for research and development activities. Management believes its estimates to be reasonable under the circumstances. Actual results could differ significantly from those estimates.

Fair Value of Financial Instruments

Fair value is the price that could be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value determination in accordance with applicable accounting guidance requires that a number of significant judgments be made. Additionally, fair value is used on a nonrecurring basis to evaluate assets for impairment or as required for disclosure purposes by applicable accounting guidance on disclosures about fair value of financial instruments. Depending on the nature of the assets and liabilities, various valuation techniques and assumptions are used when estimating fair value. The carrying amounts of certain of the Company’s financial instruments, including cash equivalents and accounts payable are shown at cost, which approximates fair value due to the short-term nature of these instruments. The Company follows the provisions of FASB ASC Topic

820,

Fair Value Measurement

, for financial assets and liabilities measured on a recurring basis. The guidance requires fair value measurements be classified and disclosed in

one

of the following

three

categories:

•

Level

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

•

Level

Quoted prices in markets that are

not

active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liabilities.

•

Level

Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or

market activity).

The following fair value hierarchy table presents information about the Company’s cash equivalents measured at fair value on a recurring basis:

	Fair value measurement at reporting date using
(in thousands)	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
December 31, 2019:
Assets:
Cash equivalents	$	14,006,193	$	—	$	—
December 31, 2018:
Assets:
Cash equivalents	$	7,990,900	$	—	$	—

Concentration of Credit Risk

Financial instruments that potentially expose the Company to concentrations of credit risk consist principally of cash on deposit with multiple financial institutions, the balances of which frequently exceed federally insured limits.

Cash and Cash Equivalents

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.

Property and Equipment

The Company records property and equipment at cost less accumulated depreciation and amortization. Costs of renewals and improvements that extend the useful lives of the assets are capitalized. Maintenance and repairs are expensed as incurred. Depreciation is recognized on a straight-line basis over the estimated useful lives of the assets, which generally range from

years. The Company amortizes leasehold improvements over the shorter of the estimated useful life of the asset or the term of the related lease. Upon retirement or disposition of assets, the costs and related accumulated depreciation and amortization are removed from the accounts with the resulting gains or losses, if any, reflected in results of operations.

Long-Lived Assets

Long-lived assets are reviewed for potential impairment whenever events indicate that the carrying amount of such assets

may

not

be recoverable. The Company does this by comparing the carrying value of the long-lived assets with the estimated future undiscounted cash flows expected to result from the use of the assets, including cash flows from disposition. If it is determined an impairment exists, the asset is written down to its estimated fair value. The Company has

not

recognized any impairment of long-lived assets during the years ended

December 31, 2019

and

2018.

Intangible Asset

The Company has an indefinite-lived In-Process Research and Development Asset (IPR&D) called RES-

529,

which has a balance of

$8.6

million at both

December 31, 2019

and

December 31, 2018.

RES-

529

is a

PI3K/Akt/mTOR

pathway inhibitor in preclinical development for oncology.

Intangible assets deemed to have indefinite lives are

not

amortized but rather are assessed for impairment annually on

October 1

of the Company’s fiscal year or more frequently if impairment indicators exist. There was

impairment to the Company’s RES-

529

intangible asset recognized during the years ended

December 31, 2019

and

2018.

Leases

February 2016,

the FASB issued a new standard related to leases to increase transparency and comparability among organizations by requiring the recognition of operating lease right-of-use (“ROU”) assets and lease liabilities on the balance sheet. Most prominent among the changes in the standard is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating leases. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. See Note

for further details.

Research and Development

Major components of research and development costs include internal research and development (such as salaries and related employee benefits, equity-based compensation, supplies and allocated facility costs) and contracted services (research and development activities performed on the Company’s behalf). Costs incurred for research and development are expensed as incurred.

At the end of the reporting period, the Company compares payments made to

third

-party service providers to the estimated progress toward completion of the research or development objectives. Such estimates are subject to change as additional information becomes available. Depending on the timing of payments to the service providers and the progress that the Company estimates has been made as a result of the services provided, the Company

may

record net prepaid or accrued expenses relating to these costs.

Upfront payments made to

third

parties who perform research and development services on the Company’s behalf are expensed as services are rendered.

Patent Costs

Patent costs, including related legal costs, are expensed as incurred and are recorded within general and administrative expenses in the statements of operations.

Income Taxes

As a corporation, the Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided when it is more likely than

not

that some portion or all of a deferred tax asset will

not

be realized. The Company recognizes the benefit of an uncertain tax position that it has taken or expects to take on its income tax return it files, if such a position is more likely than

not

to be sustained.

Stock-based Compensation

The Company measures stock-based awards at grant-date fair value and records compensation expense on a straight-line basis over the vesting period of the award. The Company uses the Black-Scholes option pricing model to value its stock option awards. Estimating the fair value of stock option awards requires management to apply judgment and make estimates, including the volatility of the Company’s common stock, the expected term of the Company’s stock options, the expected dividend yield and the fair value of the Company’s common stock on the measurement date. As a result, if factors change and management uses different assumptions, stock-based compensation expense could be materially different for future awards.

The expected term of stock options was estimated using the “simplified method” for employee options as the Company has

historical information to develop reasonable expectations about future exercise patterns and post vesting employment termination behavior for its stock option grants. The simplified method is based on the average of the vesting tranches and the contractual life of each grant. For options granted to non-employees, the Company uses the remaining contractual life. For stock price volatility, the Company uses a combination of their own historical stock price and comparable public companies as a basis for its expected volatility to calculate the fair value of option grants. The Company assumes

dividend yield because dividends are

not

expected to be paid in the near future, which is consistent with the Company’s history of

not

paying dividends. The risk-free interest rate is based on U.S. Treasury notes with a term approximating the expected life of the option. The Company accounts for forfeitures in the periods they occur.

Net Loss Per Common Share

Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during each period. Diluted net loss per share includes the effect, if any, from the potential exercise or conversion of securities, such as convertible preferred stock, common stock warrants, stock options and unvested restricted stock that would result in the issuance of incremental shares of common stock. In computing the basic and diluted net loss per share applicable to common stockholders, the weighted average number of shares remains the same for both calculations due to the fact that when a net loss exists, dilutive shares are

not

included in the calculation as the impact is anti-dilutive.

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

	December 31,
	2019		2018
Common stock warrants		22,385,141		2,087,012
Stock options		309,276		203,736
		22,694,417		2,290,748

Recently Issued But

Not

Yet Adopted Accounting Pronouncements

August 2018,

the FASB issued ASU

2018

03,

Disclosure Framework- Changes to the Disclosure Requirements for Fair Value Measurements,

which changes the fair value measurement disclosure requirements of ASC

820.

The goal of the ASU is to improve the effectiveness of ASC

820's

disclosure requirements. The guidance is applicable to public business entities for fiscal years beginning after

December 15, 2019

and interim periods within those years. The Company does

not

believe that the adoption of this standard will have a material impact on its related disclosures.

Recently Adopted Accounting Pronouncements

February 2016,

the FASB issued ASU

2016

02,

Leases (Topic

842

)

to increase transparency and comparability among organizations by requiring the recognition of operating lease right-of-use assets and lease liabilities on the balance sheet. Most prominent among the changes in the standard is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating leases. Under ASC

842,

disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases.

The Company adopted ASC

842,

effective

January 1, 2019

using a modified retrospective approach and elected to apply the available practical expedients. The standard had an impact on the Company’s consolidated balance sheet but did

not

have an impact on the Company’s consolidated statements of operations or consolidated statements of cash flows upon adoption. The most significant impact of ASC

842

was the recognition of a

$0.3

million ROU asset and corresponding lease liability for the Company's single operating lease.

January 1, 2019,

the Company adopted ASU

2018

07,

Compensation—Stock Compensation (Topic

718

): Improvements to Non-employee Share-Based Payment Accounting

(“ASU

No.

2018

07”

) which simplifies the accounting for share-based payments granted to non-employees for goods and services. The ASU supersedes ASC

505

Equity-based Payments to Non-employees

and expands the scope of ASC

718

to include all share-based payment arrangements related to the acquisition of goods and services from both non-employees and employees. The adoption of ASU

No.

2018

did

not

have an impact on the consolidated financial statements of the Company.