[X]
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QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended March 31, 2015
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[ ]
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Nevada
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45-0692882
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(State or other jurisdiction
of incorporation or organization)
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(I.R.S. Employer
Identification No.)
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650 Town Center Drive, Suite 1770, Costa Mesa, CA 92626
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(Address of principal executive offices) (Zip Code)
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(949) 396-0330
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(Registrant's telephone number, including area code)
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Large accelerated filer
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☐
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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(Do not check if a smaller reporting company)
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Smaller reporting company
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☒
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|
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Item 1.
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4
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Item 2.
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18
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Item 3.
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20
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Item 4.
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20
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|
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|
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Item 1.
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21
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Item 1A.
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21
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Item 2.
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21
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Item 3.
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21
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Item 4.
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21
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Item 5.
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21
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Item 6.
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21
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· | the results of our research and development activities, including uncertainties relating to the discovery of potential product candidates and the preclinical and clinical testing of our product candidates; |
· | the early stage of our product candidates presently under development; |
· | our need for substantial additional funds in order to continue our operations, and the uncertainty of whether we will be able to obtain the funding we need; |
· | our ability to obtain and, if obtained, maintain regulatory approval of our current product candidates, and any of our other future product candidates, and any related restrictions, limitations, and/or warnings in the label of any approved product candidate; |
· | our ability to retain or hire key scientific or management personnel; |
· | our ability to protect our intellectual property rights that are valuable to our business, including patent and other intellectual property rights; |
· | our dependence on the University of Mississippi, third-party manufacturers, suppliers, research organizations, testing laboratories and other potential collaborators; |
· | our ability to develop successful sales and marketing capabilities in the future as needed; |
· | the size and growth of the potential markets for any of our approved product candidates, and the rate and degree of market acceptance of any of our approved product candidates; |
· | competition in our industry; and |
· | regulatory developments in the United States and foreign countries. |
ASSETS
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||||||||
(unaudited)
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||||||||
March 31,
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December 31,
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|||||||
2015
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2014
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|||||||
Current assets
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||||||||
Cash and cash equivalents
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$
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176,705
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$
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207,330
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||||
Prepaid expenses
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222,279
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64,489
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||||||
Other current assets
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32,110
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36,580
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||||||
Total current assets
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431,094
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308,399
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||||||
Property and equipment, net
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19,041
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21,354
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||||||
Other assets
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||||||||
Deposits and other assets
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18,594
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18,594
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||||||
Total other assets
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18,594
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18,594
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||||||
Total assets
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$
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468,729
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$
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348,347
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LIABILITIES AND STOCKHOLDERS' DEFICIT
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||||||||
(unaudited)
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||||||||
March 31,
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December 31,
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|||||||
2015
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2014
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|||||||
Current liabilities
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||||||||
Accounts payable
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$
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388,105
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$
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409,497
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||||
Accrued payroll and related expenses
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108,910
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45,566
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||||||
Accrued license and patent reimbursement fees
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-
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119,428
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||||||
Accrued expenses
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158,059
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125,799
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||||||
Stock subscription liability
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150,000
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100,000
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||||||
Income taxes payable
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400
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800
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||||||
Total current liabilities
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805,474
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801,090
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||||||
Noncurrent liabilities
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||||||||
Long-term liabilities
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1,611
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805
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||||||
Total liabilities
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807,085
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801,895
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||||||
Commitments and contingencies
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||||||||
(Note 3)
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||||||||
Stockholders' deficit
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||||||||
Common stock, $0.001 par value; 236 million shares
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||||||||
authorized; 16,265,663 issued and outstanding as
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||||||||
of March 31, 2015 and 16,000,000 issued and
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||||||||
outstanding as of December 31, 2014
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16,266
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16,000
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||||||
Additional paid-in-capital
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3,282,922
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2,257,771
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||||||
Warrants
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190,000
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190,000
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||||||
Accumulated deficit
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(3,827,544
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)
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(2,917,319
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)
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||||
Total stockholders' deficit
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(338,356
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)
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(453,548
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)
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||||
Total liabilities and stockholders' deficit
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$
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468,729
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$
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348,347
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Three Months Ended
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Three Months Ended
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|||||||
March 31,
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March 31,
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|||||||
2015
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2014
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|||||||
Operating expenses
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||||||||
Research and development
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$
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37,200
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$
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-
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||||
General and administrative
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872,625
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30,101
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||||||
Total operating expenses
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909,825
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30,101
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||||||
Operating loss
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(909,825
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)
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(30,101
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)
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||||
Provision for income taxes
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400
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-
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||||||
Net loss
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$
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(910,225
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)
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$
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(30,101
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)
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Basic and diluted loss per common share
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$
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(0.06
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)
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$
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(0.00
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)
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Shares used in computing basic and diluted loss per share
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16,233,641
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7,770,000
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Three
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Three
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|||||||
Months Ended
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Months Ended
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|||||||
March 31,
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March 31,
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|||||||
2015
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2014
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|||||||
Cash flows from operating activities:
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||||||||
Net loss
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$
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(910,225
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)
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$
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(30,101
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)
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Adjustments to reconcile net loss to net cash
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||||||||
used in operating activities:
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||||||||
Depreciation
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2,313
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-
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||||||
Stock-based compensation for employees
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136,348
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-
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||||||
Amortization of warrants and stock issued for services (1)
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50,202
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-
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||||||
Changes in assets and liabilities:
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||||||||
Prepaid expenses
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(39,992
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)
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-
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|||||
Other current assets
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4,470
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-
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||||||
Deposits and other assets
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-
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-
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||||||
Accounts payable
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(21,392
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)
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-
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|||||
Accrued payroll and related expenses
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63,344
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-
|
||||||
Accrued license and patent reimbursement fees
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(119,428
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)
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-
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|||||
Stock subscription liability
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50,000
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-
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||||||
Accrued expenses and other liabilities
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32,666
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30,101
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||||||
Net cash used in operating activities
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(751,694
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)
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-
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|||||
Cash flows from investing activities:
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||||||||
Purchases of property and equipment
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-
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-
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||||||
Net cash used in investing activities
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-
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-
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||||||
Cash flows from financing activities:
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||||||||
Proceeds from common stock issuance,
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||||||||
net of offering costs of $3,920
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721,069
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-
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||||||
Net cash provided by financing activities
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721,069
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-
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||||||
Net decrease in cash and cash equivalents
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(30,625
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)
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-
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|||||
Cash and cash equivalents
,
beginning of period
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207,330
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-
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||||||
Cash and cash equivalents, end of period
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$
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176,705
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$
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-
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||||
Supplemental disclosures of cash-flow information:
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||||||||
Cash paid during the period for:
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||||||||
Interest
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$
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-
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$
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-
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||||
Income taxes
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$
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800
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$
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-
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Supplemental disclosures of non-cash financing and investing activities:
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|||||||
(1)
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During the three months ended March 31, 2015, the Company was obligated to issue 90,000 warrants to purchase shares of our common stock for consulting services. The warrants were valued at $63,225. The Company also issued shares of common stock for consulting services valued at $168,000. Such amounts were recorded as a Prepaid Expense and are being amortized over the service period.
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Level 1: | Valuations for assets and liabilities traded in active markets from readily available pricing sources such as quoted prices in active markets for identical assets or liabilities. |
Level 2: | Observable inputs (other than Level 1 quoted prices) such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. |
Level 3: | Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. |
· | Exercise price - We determined the exercise price based on valuations using the best information available to management at the time of the valuations. |
· | Volatility – We estimate the stock price volatility based on industry peers who are also in the early development stage given the limited market data available in the public arena. |
· | Expected term - The expected term is based on a simplified method which defines the life as the average of the contractual term of the options and warrants and the weighted-average vesting period for all open awards. |
· | Risk-free rate - The risk-free interest rate for the expected term of the option or warrant is based on the average market rate on U.S. treasury securities in effect during the quarter in which the awards were granted. |
· | Dividends – The dividend yield assumption is based on our history and expectation of paying no dividends. |
1) | UM 1490 – transmucosal delivery of cannabinoids |
2) | UM 5070 – treatment for methicillin-resistant Staphylococcus aureus ("MRSA") infections |
3) | UM 8790 – ocular delivery of cannabinoids |
For the year ending December 31,
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||||
2015
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$
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130,100
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2016
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165,700
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|||
2017
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85,900
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|||
2018
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-
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|||
2019
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-
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|||
Thereafter
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-
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|||
Total
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$
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381,700
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· | Contemporaneous valuation prepared by an independent third-party valuation specialist effective as of June 30, 2014 and October 31, 2014, |
· | Its results of operations, financial position and the status of research and development efforts and achievement of enterprise milestones, |
· | The composition of, and changes to, the Company's management team and board of directors, |
· | The lack of liquidity of its common stock as a private company, |
· | The Company's stage of development, business strategy and the material risks related to its business and industry, |
· | The valuation of publicly-traded companies in the biotechnology sectors, |
· | External market conditions affecting the biotechnology industry sectors, |
· | The likelihood of achieving a liquidity event for the holders of its common stock, such as an initial public offering ("IPO") or a sale of the Company, given prevailing market conditions, and |
· | The state of the IPO market for similarly situated privately held biotechnology companies. |
OPTIONS OUTSTANDING
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||||||||||||||||
Shares Available
for Grant
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# of Shares
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Price per Share
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Wtd Average
Exercise Price
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|||||||||||||
Balance at December 31, 2013
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||||||||||||||||
Approval of authorized shares
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3,200,000
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|||||||||||||||
Options granted
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(1,730,000
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)
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1,730,000
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$
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0.42
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$
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0.42
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|||||||||
Options exercised
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||||||||||||||||
Options cancelled
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||||||||||||||||
Balance at December 31, 2014
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1,470,000
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1,730,000
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$
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0.42
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$
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0.42
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||||||||||
Options granted
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(40,000
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)
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40,000
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$
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3.00
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$
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3.00
|
|||||||||
Options exercised
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-
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-
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||||||||||||||
Options cancelled
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-
|
-
|
||||||||||||||
Balance at March 31, 2015
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1,430,000
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1,770,000
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$
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0.48
|
$
|
0.48
|
Three Month Ended March 31,
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|||
2015
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2014
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||
Dividend yield
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0.00%
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NA
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Volatility factor
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75.00%
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NA
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Risk-free interest rate
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1.68%
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NA
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Expected term (years)
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6.5
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NA
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Weighted-average fair value of options granted during the periods
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$6.08
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NA
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31.1
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31.2
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32.1+
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32.2+
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4.3
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4.4
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4.5
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101.ins
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Instance Document
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101.sch
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XBRL Taxonomy Schema Document
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101.cal
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XBRL Taxonomy Calculation Linkbase Document
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101.def
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XBRL Taxonomy Definition Linkbase Document
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101.lab
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XBRL Taxonomy Label Linkbase Document
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101.pre
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XBRL Taxonomy Presentation Linkbase Document
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Nemus Bioscience, Inc.,
a Nevada corporation
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May 13, 2015
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By:
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/s/ John Hollister |
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Its:
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John Hollister
Chief Executive Officer
(Principal Executive Officer)
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May 13, 2015
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By:
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/s/ Elizabeth Berecz |
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Its:
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Elizabeth Berecz
Chief Financial Officer
(Principal Financial and Accounting Officer)
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Warrant No.: 2015-__
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Warrant Shares: 100,000
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Initial Exercise Date: April 24, 2015
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NEMUS BIOSCIENCE, INC.
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By:__________________________________________
Name: John Hollister
Title: Chief Executive Officer
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Warrant No.: 2015-__
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Warrant Shares: 90,000
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Initial Exercise Date: April 28, 2015
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NEMUS BIOSCIENCE, INC.
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By:__________________________________________
Name: John Hollister
Title: Chief Executive Officer
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Warrant No.: 2015-___
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||
Warrant Shares: 6,000
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Initial Exercise Date: April 28, 2015
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NEMUS BIOSCIENCE, INC.
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|
By:__________________________________________
Name: John Hollister
Title: Chief Executive Officer
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|
1.
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I have reviewed this quarterly report on Form 10-Q of Nemus Bioscience, Inc.;
|
|
2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
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(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
|
5.
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The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
|
(a)
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All significant deficiencies and material weaknesses
in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ John Hollister
|
|
|
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John Hollister
Chief Executive Officer
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|
1.
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I have reviewed this quarterly report on Form 10-Q of Nemus Bioscience, Inc.;
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|
2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
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4.
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The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses
in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ Elizabeth Berecz
|
||||
Elizabeth Berecz
Chief Financial Officer
|
|
|
|
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
|
/s/ John Hollister
|
||||
John Hollister
Chief Executive Officer
May 13, 2015
|
|
|
|
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
|
/s/ Elizabeth Berecz
|
||||
Elizabeth Berecz
Chief Financial Officer
May 13, 2015
|
|
|
|
|